<PAGE> 1
As filed with the Securities and Exchange Commission on September 24, 1997
File No. 333-
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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
[ ] Pre-Effective Amendment No. [ ] Post-Effective Amendment No.
(Check appropriate box or boxes.)
MARKET STREET FUND, INC.
Exact Name of Registrant as Specified in Charter
1050 Westlakes Drive
Berwyn, PA 19312-2419
Address and Telephone Number (with Area Code)
of Principal Executive Offices
Adam Scaramella, Esq.
Secretary
Market Street Fund, Inc.
1050 Westlakes Drive
Berwyn, PA 19312-2419
Name and Address of Agent for Service
------------------------
Copy of all communications to:
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<S> <C>
Stephen E. Roth, Esq. D. Russell Morgan, Esq.
Sutherland, Asbill & Brennan LLP Counsel
1275 Pennsylvania Avenue, N.W. National Life Insurance Company
Washington, D.C. 20004-2404 One National Life Drive
Montpelier, VT 05604
</TABLE>
Approximate Date of Proposed Public Offering:
As soon as possible after effectiveness of this registration statement
The Registrant has filed a declaration registering an indefinite amount of
securities pursuant to Rule 24f-2 under the Investment Company Act of 1940, as
amended. Accordingly, no filing fee is required herewith. A Rule 24f-2 notice
for the fiscal year ended December 31, 1997, will be filed on or before February
28, 1998.
It is proposed that this filing will become effective on October 24, 1997,
pursuant to Rule 488 under the Securities Act of 1933.
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<PAGE> 2
MARKET STREET FUND, INC.
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement contains the following pages and documents:
Facing Page
Contents Page
Cross-Reference Sheet
PART A
Letter to Contract Owners
Proxy Statement
Prospectuses
Annual Reports to Shareholders
Semi-Annual Reports to Shareholders
Form of Proxy
PART B
Statements of Additional Information
PART C
Other Information
Signatures
Exhibits
<PAGE> 3
CROSS REFERENCE SHEET
Pursuant To Rule 481(a) Under the Securities Act of 1933
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<CAPTION>
LOCATION IN THE PROXY STATEMENT AND/OR
ITEM OF FORM N-14 ACCOMPANYING PROSPECTUS
----------------------------------------- -------------------------------------------
<C> <S> <C>
1. Beginning of Registration Statement and Cover Page; Cross Reference Sheet; Notice
Outside Front Cover Page of Prospectus of Special Meeting of Shareholders
2. Beginning and Outside Back Cover Page of Table of Contents
Prospectus
3. Synopsis Information and Risk Factors Synopsis; Principal Risk Factors
4. Information About the Transaction Synopsis; The Proposed Reorganization
5. Information About the Registrant Synopsis; The Proposed Reorganization;
Prospectus dated May 1, 1997, for Market
Street Fund, Inc.
6. Information About the Company Being Synopsis; The Proposed Reorganization;
Acquired Prospectus dated May 1, 1997, for Market
Street Fund, Inc.
7. Voting Information Notice of Special Meeting of
Shareholders; General Voting Information
8. Interest of Certain Persons and Experts (Not Applicable)
9. Additional Information Required for (Not Applicable)
Reoffering by Persons Deemed to be
Underwriters
ITEM OF FORM N-14 LOCATION IN THE STATEMENT OF ADDITIONAL
- ----------------------------------------------- INFORMATION
-----------------------------------------
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. Additional Information about the Statement of Additional Information dated
Registrant May 1, 1997, for Market Street Fund, Inc.
13. Additional Information about the Company Statement of Additional Information dated
Being Acquired May 1, 1997, for Market Street Fund, Inc.
14. Financial Statements Statement of Additional Information dated
May 1, 1997, for Market Street Fund,
Inc.; Semi-Annual Report dated June 30,
1997, for Market Street Fund, Inc.;
Annual Report dated December 31, 1996,
for Market Street Fund, Inc.
</TABLE>
PART C
Information required to be included in Part C is set forth under the
appropriate item, so numbered in Part C of this Registration Statement.
<PAGE> 4
PART A
INFORMATION REQUIRED IN THE PROSPECTUS
<PAGE> 5
NATIONAL LIFE INSURANCE COMPANY
One National Life Drive
Montpelier, VT 05604
November , 1997
Dear [Sentinel Advantage/VariTrak] Owner:
National Life is pleased to announce an improvement planned for your
[Sentinel Advantage/VariTrak] contract. Since this improvement must be voted on
and approved by the contract owners who have invested in the Market Street
Common Stock Fund, a proxy statement and voting instruction form are enclosed.
It is very important that you sign and return the voting instruction form in the
enclosed envelope.
Market Street Fund, Inc. proposes to combine the Common Stock Portfolio and
the Growth Portfolio of the Fund, with the Growth Portfolio becoming the
surviving Portfolio as described in the accompanying proxy statement. Under the
proposed plan, your contract values currently invested in the Common Stock
Portfolio would be invested in the Growth Portfolio. These two portfolios are
both managed by Sentinel Advisors Company, and have investment objectives and
policies that are substantially the same. Each of these portfolios is currently
managed in the same way as Sentinel Advisors Company's flagship mutual fund, the
Sentinel Common Stock Fund. Because the Growth Portfolio is substantially larger
than the Common Stock Portfolio in terms of total assets, its expense ratio is
significantly lower than that of the Common Stock Portfolio.
This proposed improvement is described in the enclosed proxy statement.
Please read it carefully, then SIGN AND RETURN THE VOTING INSTRUCTION FORM. A
postage paid envelope is enclosed for your convenience. YOUR VOTE IS IMPORTANT.
Thank you.
Sincerely,
PATRICK E. WELCH
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
<PAGE> 6
MARKET STREET FUND, INC.
103 Bellevue Parkway
Wilmington, Delaware 19809
COMMON STOCK PORTFOLIO
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
NOVEMBER , 1997
TO OWNERS OF VARITRAK VARIABLE LIFE INSURANCE POLICIES AND SENTINEL ADVANTAGE
VARIABLE ANNUITY CONTRACTS ISSUED BY NATIONAL LIFE INSURANCE COMPANY ("NLIC")
ENTITLED TO GIVE VOTING INSTRUCTIONS IN CONNECTION WITH A SEPARATE ACCOUNT OF
NLIC.
Notice is hereby given that a Special Meeting of Shareholders (the
"Meeting") of the Common Stock Portfolio of the Market Street Fund, Inc. (the
"Fund") will be held on December 5, 1997 at 9:00 a.m. Eastern Time, at the
offices of Providentmutual Life Insurance Company in the third floor Executive
Conference Room, at 1050 Westlakes Drive, Berwyn, Pennsylvania 19312.
The Meeting will be held for the following purposes:
1. To approve or disapprove a Plan of Reorganization to combine the Common
Stock Portfolio and the Growth Portfolio of the Fund, with the Growth
Portfolio becoming the surviving Portfolio as described in the
accompanying Proxy Statement; and
2. To transact such other business as may properly come before the Meeting
or any adjournment(s) thereof.
NLIC and the separate accounts of NLIC supporting VariTrak variable life
insurance policies and Sentinel Advantage variable annuity contracts issued by
NLIC are the only shareholders of the Common Stock Portfolio. However, NLIC
hereby solicits and agrees to vote the shares of the Common Stock Portfolio at
the Meeting in accordance with timely instructions received from owners of
VariTrak variable life insurance policies and Sentinel Advantage variable
annuity contracts ("variable contracts") having contract values allocated to a
separate account invested in such shares.
As a variable contract owner of record at the close of business on October
10, 1997, you have the right to instruct NLIC as to the manner in which shares
of the Common Stock Portfolio attributable to your variable contract should be
voted. To assist you in giving your instructions, a Voting Instruction Form is
enclosed that reflects the number of shares of the Common Stock Portfolio for
which you are entitled to give voting instructions. In addition, a Proxy
Statement for the Common Stock Portfolio is attached to this Notice and
describes the matter to be voted upon at the Meeting or any adjournment(s)
thereof.
YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING,
PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED VOTING INSTRUCTION FORM AND
RETURN IT PROMPTLY IN THE ENCLOSED POSTAGE PREPAID ENVELOPE.
By Order of the Board of Directors
Adam Scaramella
Secretary
Berwyn, Pennsylvania
November , 1997
<PAGE> 7
MARKET STREET FUND, INC.
103 Bellevue Parkway
Wilmington, Delaware 19809
NOVEMBER , 1997
- --------------------------------------------------------------------------------
PROXY STATEMENT
- --------------------------------------------------------------------------------
This Proxy Statement is being furnished on behalf of the board of directors
of Market Street Fund, Inc. (the "Fund") by National Life Insurance Company
("NLIC") to owners of VariTrak variable life insurance policies and Sentinel
Advantage variable annuity contracts ("variable contracts") issued by NLIC and
having contract values on the record date allocated to a separate account of
NLIC invested in the class of shares of the Fund representing an interest in the
Fund's Common Stock Portfolio ("Common Stock Portfolio shares").
This Proxy Statement is being furnished in connection with the solicitation
of voting instructions as to a proposed combination of the Common Stock
Portfolio and the Growth Portfolio with the Growth Portfolio becoming the
surviving Portfolio, as described herein, from owners of variable contracts for
use at a Special Meeting of holders of Common Stock Portfolio shares (the
"Meeting"). The Meeting is to be held on Friday, December 5, 1997, at 9:00 a.m.,
at the offices of Providentmutual Life Insurance Company in the third floor
Executive Conference Room, 1050 Westlakes Drive, Berwyn, Pennsylvania for the
purposes set forth below and in the accompanying Notice of Special Meeting. The
approximate mailing date of this Statement and the Voting Instruction Form is
November , 1997.
At the Meeting, holders of Common Stock Portfolio shares will be asked:
1. To approve or disapprove a Plan of Reorganization to combine the Common
Stock Portfolio and the Growth Portfolio of the Fund, with the Growth
Portfolio becoming the surviving Portfolio as described in the
accompanying Proxy Statement; and
2. To transact such other business as may properly come before the Meeting
or any adjournment(s) thereof.
NLIC and two of its separate accounts are the only holders of Common Stock
Portfolio shares. However, NLIC has agreed to vote the Common Stock Portfolio
shares at the meeting in accordance with the timely instructions received from
owners ("owners") of variable contracts having contract value allocated to
NLIC's separate accounts, National Variable Life Insurance Account and National
Variable Annuity Account II (the "Accounts"), and invested in Common Stock
Portfolio shares on the record date.
The Fund is an open-end, diversified management investment company
consisting of eight separate investment portfolios (each a "Portfolio"), each of
which has a different investment objective. The proposed reorganization would
result in the assets of the Common Stock Portfolio being consolidated with the
assets of the Growth Portfolio and holders of Common Stock Portfolio shares
exchanging such shares for shares of stock representing interests in the Fund's
Growth Portfolio ("Growth Portfolio shares") in an amount equal in value to
their Common Stock Portfolio shares on the date of the reorganization.
This Proxy Statement, which should be retained for future reference, sets
forth concisely the information about the proposed reorganization that an owner
should know before voting to approve or disapprove the proposed reorganization.
In addition, this Proxy Statement is accompanied by two prospectuses for the
Fund (each dated May 1, 1997): one containing a description of the Common Stock
Portfolio and the other containing a description of the Growth Portfolio. These
prospectuses, which should be retained for future reference, set forth concisely
the information about the Common Stock Portfolio and the Growth Portfolio that
an owner should know before voting to approve or disapprove the proposed
reorganization. Two Statements of Additional Information related to the two
prospectuses and also dated May 1, 1997, have been filed with the Securities and
Exchange Commission (the "Commission") and are incorporated into the
prospectuses by reference. Copies of the Statements of Additional Information
may be obtained without charge by writing to the Fund or NLIC at National Life
Drive, Montpelier, Vermont 05604, or by calling 1-800-537-7003. This Proxy
Statement is also accompanied by the Fund's 1996 Annual Report to shareholders
and the Fund's most recent Semi-Annual Report to shareholders. Additional copies
of these reports are available without charge by writing to the Fund or NLIC at
National Life Drive, Montpelier, Vermont 05604, or by calling 1-800-537-7003.
THIS PROXY STATEMENT IS NOT VALID UNLESS ACCOMPANIED BY A FUND ANNUAL REPORT TO
SHAREHOLDERS FOR THE YEAR ENDED DECEMBER 31, 1996, AND A SEMIANNUAL REPORT TO
SHAREHOLDERS FOR THE SIX MONTH FISCAL PERIOD ENDED JUNE 30, 1997. THIS PROXY
STATEMENT ALSO IS NOT VALID UNLESS ACCOMPANIED BY THE FUND'S PROSPECTUSES DATED
MAY 1, 1997.
<PAGE> 8
TABLE OF CONTENTS
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PAGE
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<S> <C>
GENERAL VOTING INFORMATION............................................................ 3
SUMMARY OF THE PROPOSAL............................................................... 4
PRINCIPAL RISK FACTORS................................................................ 5
REASONS FOR THE PROPOSED REORGANIZATION............................................... 6
THE PROPOSED REORGANIZATION........................................................... 7
Principal Features of the Plan................................................... 7
Description of Growth Portfolio Shares to be Issued.............................. 8
Federal Income Tax Aspects of the Proposed Reorganization........................ 8
PRO FORMA CAPITALIZATION TABLE........................................................ 9
GENERAL............................................................................... 9
APPENDIX A -- Plan of Reorganization.................................................. A-1
</TABLE>
2
<PAGE> 9
GENERAL VOTING INFORMATION
This Proxy Statement (the "Statement") is being furnished to owners on
behalf of the board of directors of the Fund in connection with the solicitation
by NLIC of voting instructions from owners with regard to a meeting of the
Fund's shareholders to be held on December 5, 1997. The Fund's board of
directors has called this meeting to consider and approve or disapprove a
proposed combination of the Common Stock Portfolio and the Growth Portfolio,
with the Growth Portfolio becoming the surviving Portfolio.
NLIC and the Accounts are the only holders of Common Stock Portfolio
shares. NLIC will vote the Common Stock Portfolio shares at the Meeting in
accordance with the timely instructions received from persons entitled to give
voting instructions under variable contracts funded through the Accounts. Owners
(and in some cases annuitants and/or beneficiaries) have the right to instruct
NLIC as to the number of shares (and fractional shares) that, when added
together, have an aggregate value on the record date equal to the contract value
on the record date under that owner's contract allocated to the subaccount of
each Account holding Common Stock Portfolio shares.
NLIC will vote shares attributable to variable contracts as to which no
voting instructions are received in proportion (for, against or abstain) to
those for which timely instructions are received. If a Voting Instruction Form
is received that does not specify a choice, NLIC will consider its timely
receipt as an instruction to vote in favor of the proposal to which it relates.
In certain circumstances, NLIC has the right to disregard voting instructions
from certain owners. NLIC does not believe that these circumstances exist with
respect to matters currently before shareholders. Owners may revoke previously
submitted voting instructions given to NLIC at any time prior to the Meeting by
notifying NLIC in writing.
The Fund was incorporated in the State of Maryland on March 21, 1985, and
is registered with the Commission as a diversified open-end management
investment company under the Investment Company Act of 1940, as amended (the
"1940 Act"). The Fund is comprised of eight separate investment portfolios, each
of which has a different investment objective, and issues a separate class of
common stock for each Portfolio representing an ownership interest in that
Portfolio.
Sentinel Advisors Company ("SAC") serves as investment adviser for both the
Common Stock Portfolio and the Growth Portfolio in addition to other Portfolios.
SAC is a general partnership owned and controlled by Sentinel Advisors, Inc. (an
indirectly wholly-owned subsidiary of NLIC), Providentmutual Management Co.,
Inc. (an indirectly wholly-owned subsidiary of Providentmutual Life Insurance
Company ("PMLIC")), HTK of Delaware, Inc. (a wholly-owned subsidiary of The Penn
Mutual Life Insurance Company ("Penn Mutual")) and Sentinel Management Company
(a partnership of wholly-owned subsidiaries of NLIC, PMLIC and Penn Mutual,
which is SAC's Managing General Partner).
The board of directors of the Fund has fixed October 10, 1997 as the record
date for the determination of shareholders entitled to notice of and to vote at
the Meeting. As of , 1997, there were outstanding shares of stock
representing an interest in the Common Stock Portfolio. None of the directors or
executive officers of the Fund beneficially owns, directly or indirectly, any
shares of the Fund. To the best knowledge of the board of directors of the Fund
and NLIC, there are no owners, as of , 1997, who have the right to
instruct NLIC as to 5% or more of the Common Stock Portfolio's stock. As of
, 1997, NLIC held directly approximately Common Stock Portfolio
shares representing approximately % of such shares outstanding.
To be counted, NLIC must receive an owner's properly executed Voting
Instruction Form at National Life Drive, Montpelier, VT 05604, by 1 p.m. Eastern
Standard Time, Thursday, December 4, 1997.
Approval of the proposed reorganization requires the affirmative vote of
two-thirds of the outstanding Common Stock Portfolio shares at the close of
business on the record date.
NLIC will bear all of the expenses of soliciting voting instructions. The
solicitation of instructions will be made primarily by mail but may include
(without cost to the Fund), telephone, telegraphic or oral
3
<PAGE> 10
communications by employees of NLIC or its affiliates. This Statement was first
mailed to owners on or about November , 1997.
SUMMARY OF THE PROPOSAL
The board of directors of the Fund has approved a Plan of Reorganization
(the "Plan"), attached to this Statement as Appendix A, pursuant to which the
Common Stock Portfolio and the Growth Portfolio would be combined, with the
Growth Portfolio becoming the surviving Portfolio (the "Proposed
Reorganization"). The Proposed Reorganization, if consummated, would result in
the assets and liabilities (if any) of the Common Stock Portfolio being
consolidated with the assets and liabilities (if any) of the Growth Portfolio
and holders of Common Stock Portfolio shares of stock having such shares
exchanged for Growth Portfolio shares of stock in an amount equal in value to
their Common Stock Portfolio shares on the date of the Proposed Reorganization.
Consequently, if owners vote to approve the Proposed Reorganization, each
owner's interest in the Common Stock Portfolio will be exchanged for an interest
of equal value in the Growth Portfolio.
Owners' indirect investment in the Common Stock Portfolio would be
transferred by the Proposed Reorganization to a Portfolio of the Fund (the
Growth Portfolio) that is substantially the same in every material respect but
size to the Common Stock Portfolio. The Growth Portfolio is substantially larger
than the Common Stock Portfolio. The Fund's board of directors anticipates that
the Proposed Reorganization would provide owners with potentially higher returns
over time through lower expenses and greater investment flexibility available to
portfolios of larger size. There is, nevertheless, no guarantee that such higher
returns could be achieved.
The operating expenses that owners would bear as investors in the Growth
Portfolio should be less than such expenses that they currently bear as indirect
investors in the Common Stock Portfolio. The ratios of total expenses to average
net assets for the Growth Portfolio has historically been less than this ratio
for the Common Stock Portfolio. Owners will not realize any capital gain or loss
as a result of the Proposed Reorganization.
NLIC currently reimburses the Fund for ordinary operating expenses of the
Common Stock Portfolio, excluding investment advisory fees, in excess of an
annual rate of 0.40% of the average daily net assets of the Common Stock
Portfolio. Since its inception, the Common Stock Portfolio's expense ratio has
been 0.80% per year, after substantial reimbursement of expenses by NLIC. PMLIC
is obligated to reimburse the Fund for ordinary operating expenses, excluding
investment advisory fees, in excess of an annual rate of 0.40% of the average
daily net asset value of the Growth Portfolio. The Growth Portfolio's expense
ratio in 1996 was 0.50%, with a lower expense ratio expected for 1997.
Therefore, PMLIC did not have to reimburse the Fund for the ordinary operating
expenses of the Growth Portfolio in 1996 and does not expect to be required to
make such reimbursement in the foreseeable future. If the Proposed
Reorganization occurs, the operating expense ratio overall for these two
Portfolios should be somewhat lower as a result of their consolidation, though
the burden of making the foregoing reimbursements would fall entirely on PMLIC.
If the Proposed Reorganization occurs, owners formerly invested in the Common
Stock Portfolio would benefit immediately from the fact that the current expense
ratio of the Growth Portfolio is less than that of the Common Stock Portfolio.
NLIC would also benefit because it would no longer be required to reimburse the
Common Stock Portfolio.
SAC, the investment manager to both the Common Stock Portfolio and the
Growth Portfolio, has suggested the Proposed Reorganization because it believes
that the assets contained in the Common Stock Portfolio would be better managed
and may also have the potential for future lower expenses if they are combined
with the assets of the Growth Portfolio.
NLIC will bear the costs of printing and mailing this Statement and
soliciting voting instructions as well as all other costs incurred in connection
with the Proposed Reorganization.
The investment objectives and policies of the Common Stock Portfolio are
substantially the same as those of the Growth Portfolio: The Common Stock
Portfolio seeks a combination of long-term growth of capital and current income
with relatively low risk, and pursues its objective by investing in common
stocks of
4
<PAGE> 11
a diversified group of well established companies; The Growth Portfolio seeks
intermediate and long-term growth of capital, with a reasonable level of income
as an important secondary objective, and pursues its objectives by investing
primarily in common stocks of companies believed to offer above-average growth
potential over both the intermediate and the long term. SAC manages both the
Common Stock Portfolio and the Growth Portfolio using a "value" oriented
investment approach where it attempts to select securities that it believes are
undervalued by the market and therefore have above-average growth potential. In
fact, the Common Stock Portfolio and the Growth Portfolio currently hold
substantially the same securities.
SAC became the adviser to the Growth Portfolio as of May 1, 1997. Prior to
that time, the Growth Portfolio was managed by a different adviser.
The Fund currently offers Common Stock Portfolio shares to NLIC for
allocation to the corresponding investment division of the Accounts. The shares
are purchased and redeemed by NLIC for this purpose for cash at their net asset
value without the imposition of any sales load. If the Proposed Reorganization
is consummated, the Growth Portfolio will offer its shares to the Accounts on
the same basis.
Based upon these and other factors set forth below, the board of directors
of the Fund, including those directors who are not interested persons of the
Fund as defined in the 1940 Act (the "non-interested directors"), has determined
the following:
- The Proposed Reorganization, as expressed in the Plan of Reorganization,
is in the best interests of the Fund and of the Common Stock Portfolio as
well as of the shareholders and owners indirectly invested in such
Portfolio; and
- the Proposed Reorganization will not result in the dilution of the
interests of shareholders or owners indirectly invested in the Common
Stock Portfolio.
The board of directors of the Fund, including the non-interested directors, have
made the same determination with regard to the Growth Portfolio and its
shareholders and owners indirectly invested therein.
THE BOARD OF DIRECTORS OF THE FUND UNANIMOUSLY RECOMMENDS APPROVAL OF THE PLAN.
PRINCIPAL RISK FACTORS
The principal risk factors of investing in the Growth Portfolio are the
same as those of the Common Stock Portfolio. These factors are discussed in the
prospectuses for the Fund which accompany this Statement. The Fund cannot assure
owners that the Growth Portfolio will achieve its investment objectives or
assure that such objectives will result in the preservation or growth of
capital.
At the current time, the Fund offers Growth Portfolio shares to subaccounts
of Providentmutual Variable Life Separate Account and Providentmutual Variable
Annuity Separate Account, both separate accounts of Providentmutual Life and
Annuity Company of America ("PLACA"), and PMLIC's Providentmutual Variable
Annuity Separate Account as well as to PMLIC's Growth Separate Account
(together, the "PMLIC and PLACA Accounts") on the same basis as the Fund
currently offers Common Stock Portfolio shares to the Accounts. The PMLIC and
PLACA Accounts support variable contracts issued by PMLIC and PLACA. After the
Proposed Reorganization, the Fund would offer Growth Portfolio shares to the
corresponding subaccounts of the Accounts and the PMLIC and PLACA Accounts.
NLIC and the Common Stock Portfolio do not currently foresee any
disadvantage to owners resulting, in the event the Proposed Reorganization
occurs, from the offering of Growth Portfolio shares to the Accounts and the
PMLIC and PLACA Accounts. However, since Growth Portfolio shares would be sold
to insurance company separate accounts to support variable annuity contracts and
variable life insurance policies, and to separate accounts of different
insurance companies, it is possible that material conflicts could arise between
the interests of variable annuity contract owners and variable life insurance
policy owners, or between the interests of owners of contracts or policies
issued by different insurance companies. Such material conflicts
5
<PAGE> 12
could include, for example, differences in the federal income tax treatment of
variable annuity contracts versus variable life insurance policies. The Fund
does not currently foresee any disadvantage to owners of variable annuity
contracts or variable life insurance policies arising from the fact that Growth
Portfolio shares will support both types of contracts or contracts of different
insurance companies. However, the board of directors of the Fund will
continually monitor events to identify any material irreconcilable conflicts
that may arise and to determine what action, if any, should be taken to resolve
such conflicts. Such action may include redeeming the shares of the Fund held by
separate accounts involved in any material irreconcilable conflict.
In making its determination, the board of directors recognized that SAC,
which proposed the Proposed Reorganization to the board, could benefit from such
a Proposed Reorganization. SAC expects that the expenses it must bear under the
current investment advisory agreements it has with the Fund in connection with
providing investment advisory services to the Common Stock Portfolio and the
Growth Portfolio could be somewhat lower after the Proposed Reorganization than
the aggregate of such expenses has been in the past for the two separate
Portfolios. In addition, NLIC, PMLIC and PLACA expect to achieve other
operational and marketing advantages by replacing two Portfolios with a single
Portfolio, such as somewhat lower prospectus printing costs than the aggregate
of similar costs for two separate Portfolios. The board of directors also
recognized that the burden of reimbursing the Common Stock Portfolio for
ordinary operating expenses above a certain level would shift from NLIC to PMLIC
as a result of the Proposed Reorganization.
REASONS FOR THE PROPOSED REORGANIZATION
The board of directors of the Fund, including the non-interested directors,
unanimously approved the Plan at a meeting held on July 25, 1997. The directors
specifically determined that the interests of existing holders of Common Stock
Portfolio shares (and the interests of owners indirectly invested in each) would
not be diluted as a result of the Proposed Reorganization and that the Proposed
Reorganization would be in the overall best interests of such shareholders (and
owners) and of the Fund. The board of directors also decided to recommend to
holders of Common Stock Portfolio shares (and owners indirectly invested in the
Portfolio), that they approve the Plan.
The board of directors of the Fund based its decision to recommend approval
of the Plan on an inquiry into a number of factors, including the following:
1. the total net assets of the Common Stock Portfolio and the Growth
Portfolio;
2. information regarding past expenses and performance of Common Stock
Portfolio and the Growth Portfolio;
3. based on 1 and 2 above, the potential overall benefits of the Proposed
Reorganization to shareholders of the Common Stock Portfolio and owners
indirectly invested in the Common Stock Portfolio;
4. the terms and conditions of the Plan and whether it would result in
dilution of any shareholder or owner interests;
5. the compatibility of the investment objectives and policies of the
Common Stock Portfolio with those of the Growth Portfolio;
6. the agreement of NLIC to assume all the expenses of carrying out the
Plan; and
7. the absence of any adverse tax consequences to shareholders or owners of
carrying out the Plan.
Owners, however, are likely to receive certain other benefits from the
Proposed Reorganization. The assets of the Common Stock Portfolio will be more
effectively managed if combined with those of the Growth Portfolio because the
Growth Portfolio is considerably larger than the Common Stock Portfolio.
Throughout the period since the inception of the Common Stock Portfolio,
expenses for the Growth Portfolio (after reimbursement by PMLIC) have been
consistently lower as a percentage of net assets than those for the
6
<PAGE> 13
Common Stock Portfolio (after reimbursement by NLIC). The ratio of expenses to
average net assets for each of the last five fiscal years is shown below for
each Portfolio.
<TABLE>
<CAPTION>
1997* 1996 1995 1994 1993 1992
----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
COMMON STOCK PORTFOLIO 0.80% 0.80% N/A N/A N/A N/A
GROWTH PORTFOLIO 0.47% 0.50% 0.61% 0.63% 0.76% 0.79%
</TABLE>
* The six month period ended June 30, 1997 (annualized).
Although actual expenses in the future may differ, the Growth Portfolio
historically has had slightly lower expenses.
The table below sets forth the average annual returns of the Common Stock
Portfolio and the Growth Portfolio for the periods shown. Over the relatively
short life of the Common Stock Portfolio, its performance has exceeded that of
the Growth Portfolio. While the Growth Portfolio is to become the surviving
Portfolio following the Proposed Reorganization, the investment adviser for the
Growth Portfolio over most of the periods for which returns are shown was
Newbold Asset Management. Sentinel Advisors Company, which has managed the
Common Stock Portfolio since its inception and the Growth Portfolio only since
May 1, 1997, will be the investment adviser for the surviving Portfolio
following the Proposed Reorganization.
<TABLE>
<CAPTION>
PERIODS ENDING JUNE 30, 1997
---------------------------------------------
INCEPTION OF
COMMON
1 YEAR STOCK* 5 YEARS 10 YEARS
------ ------------ ------- --------
<S> <C> <C> <C> <C>
COMMON STOCK PORTFOLIO 28.55 25.20 N/A N/A
GROWTH PORTFOLIO 23.86 13.92 15.12 12.76
</TABLE>
* The Common Stock Portfolio commenced operations on March 18, 1996.
The performance data quoted represents past performance only and the investment
return and principal value of an investment in both Portfolios fluctuated during
these periods.
THE PROPOSED REORGANIZATION
PRINCIPAL FEATURES OF THE PLAN
At the effective time of the Proposed Reorganization (the "Effective
Time"), the assets and liabilities of the Common Stock Portfolio will become the
assets and liabilities of the Growth Portfolio and the separate existence of the
Common Stock Portfolio will cease. At the Effective Time, holders of the class
of shares of the Fund's common stock representing interests in the Common Stock
Portfolio shall become holders of the class of shares of such stock representing
interests in the Growth Portfolio. In addition, the appropriate officers of the
Fund shall amend the Fund's articles of incorporation to reflect the
reclassification of Common Stock Portfolio shares as Growth Portfolio shares and
the elimination of the Common Stock Portfolio class of shares.
Transfer of Assets
Provided that all of the conditions precedent to the Reorganization set
forth in the Plan are fulfilled, then at the Effective Time, all of the assets
of the Common Stock Portfolio will be transferred to the Growth Portfolio in
exchange for Growth Portfolio shares and all of the liabilities of the Common
Stock Portfolio will be assumed by the Growth Portfolio.
7
<PAGE> 14
Conversion of Stock
At the Effective Time, the Common Stock Portfolio will exchange each
outstanding Common Stock Portfolio share for a number of Growth Portfolio shares
as set forth below. The number of full and fractional Growth Portfolio shares to
be issued to holders of Common Stock Portfolio shares will be determined on the
basis of the relative net asset values of the Common Stock Portfolio and the
Growth Portfolio as of 4:00 p.m. on the day of the Effective Time. The number of
Growth Portfolio shares to be issued to each holder of Common Stock Portfolio
shares shall be determined by multiplying the number of Common Stock Portfolio
shares to be exchanged by the shareholder by a fraction, the denominator of
which is the net asset value per share of Growth Portfolio shares and the
numerator of which is the net asset value per share of Common Stock Portfolio
shares. The net asset value of the Common Stock Portfolio and the net asset
value of the Growth Portfolio shall be determined in accordance with methods set
forth in the Fund's current Form N-1A registration statement, as supplemented.
Promptly after the Effective Time, the Fund shall cause to be registered on
its transfer agency books in the name of each record holder of Common Stock
Portfolio shares immediately prior to the Reorganization, without any action on
the part of such record holder, the number of Growth Portfolio shares (and
fractional interests in such shares) issued to such record holder in the
Reorganization.
The Plan provides that NLIC pay all the expenses of entering into and
carrying out the Plan. Consummation of the Plan is subject to the approval of
the shareholders of the Common Stock Portfolio. In addition, the Plan makes
consummation of the Proposed Reorganization contingent upon several events
including receipt of an opinion of tax counsel that the Proposed Reorganization
will qualify as a tax-free reorganization under the Internal Revenue Code of
1986, as amended, and the completion of certain federal securities law
requirements. The Plan may be terminated and the Proposed Reorganization
abandoned at any time upon certain conditions, before or after approval by
shareholders, prior to the Effective Time by the directors of the Fund.
DESCRIPTION OF GROWTH PORTFOLIO SHARES TO BE ISSUED
The Growth Portfolio is one of the Portfolios. Thus, the characteristics of
its shares are exactly the same as those of the Common Stock Portfolio.
Provided that the value of any share of stock subject to a transaction such
as a merger is the net asset value per share of such stock, Maryland law does
not provide appraisal rights for a shareholder of a registered open-end
management investment company such as the Fund. Even if such rights are
available, the Division of Investment Management of the Commission has taken the
position that Rule 22c-1 under the 1940 Act (which generally requires that the
stock of a registered open-end investment company be valued at the next
determined net asset value) supersedes dissenters' rights under state law.
Additional information about the Fund is contained in the prospectuses that
accompany this Statement, and are incorporated herein by reference. The Fund is
subject to the informational requirements of the Securities Exchange Act of
1934, as amended, and the 1940 Act, and in accordance therewith files reports,
proxy material and other information with the Commission.
Such reports, proxy material and other information can be inspected and
copied at the Public Reference Room maintained by the Commission at 450 Fifth
Street, N.W. Washington, D.C. 20549 and at its New York and Chicago Regional
Offices. Copies of such material can also be obtained from the Public Reference
Branch, Office of Consumer Affairs and Information Services, Securities and
Exchange Commission, 450 Fifth Street, N.W. Washington, D.C. 20549, at
prescribed rates or by contacting the Commission's contract copier, Bechtel
Information Services, 15740 Shady Grove Road, Gaithersburg, Maryland, 20877
(telephone: 800-231-DATA or 301-254-430 ).
FEDERAL INCOME TAX ASPECTS OF THE PROPOSED REORGANIZATION
The completion of the Proposed Reorganization is contingent upon the
receipt by the Fund of an opinion from tax counsel to the effect that the
Proposed Reorganization will constitute a tax-free reorganization. As such, no
gain or loss will be recognized by the Common Stock Portfolio or the Growth
Portfolio as a result of
8
<PAGE> 15
the Proposed Reorganization, the aggregate tax basis of the Growth Portfolio
shares received by holders of Common Stock Portfolio shares will be the same as
the tax basis of those shareholders' Common Stock Portfolio shares and the
aggregate basis of the assets of the Common Stock Portfolio in the possession of
the Growth Portfolio will be the same as the tax basis of such assets as held by
the Common Stock Portfolio prior to the Proposed Reorganization. The holding
period of the assets of the Common Stock Portfolio transferred to the Growth
Portfolio will include the period during which such assets were held by the
Common Stock Portfolio and the holding period of Growth Portfolio shares
received by holders of Common Stock Portfolio shares will include the holding
period of the Common Stock Portfolio shares exchanged therefor. In addition, the
Proposed Reorganization is contingent upon the receipt by the Common Stock
Portfolio and the Growth Portfolio of an opinion of tax counsel to the effect
that the Proposed Reorganization will not result in the recognition of any gain
or loss to owners.
PRO FORMA CAPITALIZATION TABLE
The following table shows the capitalization of the Common Stock Portfolio
and the Growth Portfolio as of June 30, 1997, and on a pro forma basis as of
that date giving effect to the Proposed Reorganization of the Common Stock
Portfolio with the Growth Portfolio at the then net asset value per share:
<TABLE>
<CAPTION>
PRO FORMA
COMMON COMBINED
STOCK GROWTH (BOTH)
PORTFOLIO PORTFOLIO PORTFOLIOS
--------- ----------- -----------
<S> <C> <C> <C>
Net Assets 9,424,432 228,045,353 237,469,785
Net Asset Value Per Share 13.12 17.91 17.91
Shares Outstanding 718,256 12,734,581 13,260,792
</TABLE>
GENERAL
ADDITIONAL INFORMATION
Information about the Common Stock Portfolio and the Growth Portfolio is
included in the prospectuses dated May 1, 1997, which accompany this Statement
and are incorporated herein by reference. Also, enclosed and incorporated herein
by reference, is a copy of the Fund's annual report to shareholders for the year
ended December 31, 1996, and its semi-annual report to shareholders for the
six-month period ended June 30, 1997.
NLIC, PMLIC, PLACA and the Fund know of no other matters to be brought
before the Meeting, but should any other matter requiring the vote of
shareholders arise, the persons named in the enclosed Voting Instruction Forms
or other substitute will vote in accordance with their best judgment in the
interest of the Fund and the Common Stock Portfolio and the Growth Portfolio.
SHAREHOLDER PROPOSALS
Since the Fund does not hold regular meetings of shareholders, the
anticipated date of the next special meeting of shareholders cannot be provided.
Any shareholder proposal that properly may be included in proxy solicitation
materials for a special meeting of shareholders must be received by the Fund a
reasonable time prior to the date voting instructions or proxy materials are
mailed to shareholders.
INQUIRIES
Shareholders or owners may make inquiries by contacting their registered
sales representative or by writing or calling the Fund, PMLIC, PLACA or NLIC.
9
<PAGE> 16
APPENDIX A
PLAN OF REORGANIZATION
MARKET STREET FUND, INC.
COMMON STOCK PORTFOLIO
GROWTH PORTFOLIO
RECITALS
Plan of Reorganization dated as of , 1997, by Market Street Fund, Inc.
(the "Fund") on behalf of its Common Stock Portfolio and Growth Portfolio.
The Fund is a corporation organized and existing under the laws of the State of
Maryland, having been incorporated on March 21, 1985, owning no interest in land
in Maryland, and having an authorized capital of 1,200,000,000 shares of common
stock, $.01 par value ($12,000,000 aggregate par value), 230,000,000 of which
are authorized to be issued in eight classes (six classes comprising 5,000,000
shares each, one class comprising 50,000,000 shares and one class comprising
150,000,000 shares), designated the Money Market Portfolio, Growth Portfolio,
Bond Portfolio, Managed Portfolio, Aggressive Growth Portfolio, International
Portfolio, Common Stock Portfolio, and Sentinel Growth Portfolio.
The Fund is registered under the Investment Company Act of 1940 as an open-end
diversified management investment company. It is comprised of eight investment
portfolios and each class of the Fund's common stock represents a fractional
undivided interest in a corresponding portfolio.
The Fund serves as an investment medium for variable annuity contracts and
variable life insurance policies issued by Provident Mutual Life Insurance
Company ("Provident Mutual"), National Life Insurance Company ("NLIC") of
Montpelier, Vermont, and Providentmutual Life and Annuity Company of America
("PLACA"). Other than shares sold directly to Provident Mutual to seed the
Managed, Aggressive Growth and International Portfolios, and to NLIC to seed the
Common Stock and the Sentinel Growth Portfolios, shares of the Fund currently
are held only by separate accounts of Provident Mutual, NLIC and PLACA.
The Growth Portfolio seeks intermediate and long-term growth of capital. A
reasonable level of income is an important secondary objective. The Growth
Portfolio pursues its objectives by investing primarily in common stocks of
companies believed to offer above-average growth potential over both the
intermediate and long-term.
The Common Stock Portfolio seeks a combination of long-term growth of capital
and current income with relatively low risk. The Common Stock Portfolio pursues
its objectives by investing in common stocks of a diversified group of
well-established companies.
Sentinel Advisors Company ("SAC") is the investment adviser to both the Common
Stock Portfolio and the Growth Portfolio. SAC is registered as an investment
adviser under the Investment Advisers Act of 1940.
The board of directors of the Fund has determined that it is in the best
interests of the Fund, the Common Stock Portfolio, the Growth Portfolio, and
owners of variable life insurance and variable annuity contracts indirectly
invested in each of these two Portfolios to combine the two Portfolios with the
Growth Portfolio becoming the surviving Portfolio in the manner set forth below.
The Fund intends that the transactions contemplated herein qualify as a "plan of
reorganization" within the meaning of Section 368(a)(1) of the Internal Revenue
Code of 1986, as amended (the "Code").
A-1
<PAGE> 17
ARTICLE I
The Effective Time
The Effective Time of the Reorganization ("Effective Time") shall be at 4:05
p.m. Eastern Standard Time on , 1997, or such other time as shall be
specified by the Fund's board of directors or the appropriate officers of the
Fund pursuant to authority granted by the board of directors.
In the event that trading on the New York Stock Exchange or on another exchange
or market on which securities or other investments held by the Common Stock
Portfolio or the Growth Portfolio is disrupted on the date of the Effective Time
so that, in the judgment of the Fund's board of directors (or appropriate Fund
officers acting under the authority of the board of directors), accurate
appraisal of the net assets of either Portfolio is impracticable, the Effective
Time shall be postponed until the first business day after the day on which
trading on such exchange or in such market shall have been resumed without
disruption.
The Reorganization
At the Effective Time, the assets and liabilities of the Common Stock Portfolio
will become the assets and liabilities of the Growth Portfolio and the separate
existence of the Common Stock Portfolio will cease. At the Effective Time,
holders of the class of shares of the Fund's common stock representing interests
in the Common Stock Portfolio ("Common Stock Portfolio shares") shall become
holders of the class of shares of such stock representing interests in the
Growth Portfolio ("Growth Portfolio shares"). In addition, the appropriate
officers of the Fund shall amend the Fund's articles of incorporation to
[reflect the reclassification of Common Stock Portfolio shares as Growth
Portfolio shares and the elimination of the Common Stock Portfolio class of
shares].
ARTICLE II
Transfer of Assets
Provided that all of the conditions precedent to the Reorganization described in
Article III are fulfilled, then at the Effective Time, all of the assets of the
Common Stock Portfolio will be transferred to the Growth Portfolio in exchange
for Growth Portfolio shares and all of the liabilities of the Common Stock
Portfolio will be assumed by the Growth Portfolio.
Conversion of Stock
At the Effective Time, the Common Stock Portfolio will exchange each outstanding
Common Stock Portfolio for a number of Growth Portfolio shares as set forth
below. The number of full and fractional Growth Portfolio shares to be issued to
holders of Common Stock Portfolio shares will be determined on the basis of the
relative net asset values of the Common Stock Portfolio and the Growth Portfolio
as of 4:00 p.m. on the day of the Effective Time. The number of Growth Portfolio
shares to be issued to each holder of Common Stock Portfolio shares shall be
determined by multiplying the number of Common Stock Portfolio shares to be
exchanged by the shareholder by a fraction, the denominator of which is the net
asset value per share of Growth Portfolio shares and the numerator of which is
the net asset value per share of Common Stock Portfolio shares. The net asset
value of the Common Stock Portfolio and the net asset value of the Growth
Portfolio shall be determined in accordance with methods set forth in the Fund's
current Form N-1A registration statement, as supplemented.
Promptly after the Effective Time, the Fund shall cause to be registered on its
transfer agency books in the name of each record holder of Common Stock
Portfolio shares immediately prior to the Reorganization, without any action on
the part of such record holder, the number of Growth Portfolio shares (and
fractional interests in such shares) issued to such record holder in the
Reorganization.
A-2
<PAGE> 18
ARTICLE III
Dividend Declaration
Prior to the Effective Time, the board of directors of the Fund (or appropriate
Fund officers acting under the authority of the board of directors) will declare
a dividend on Common Stock Portfolio shares representing substantially all of
the Portfolio's accrued but undistributed net investment income through the
Effective Time as well as any other dividend necessary to enable the Portfolio
to avoid any liability for excise taxes.
Other Conditions Precedent to the Reorganization
The board of directors of the Fund will call a meeting of the holders of the
Common Stock Portfolio shares in order to submit to such holders the Plan of
Reorganization for their approval or disapproval. Prior to the Effective Time,
the holders of the Common Stock Portfolio shares shall meet and approve the Plan
of Reorganization by the affirmative vote of two-thirds of the shares entitled
to vote at such meeting.
Prior to any meeting of the holders of Common Stock Portfolio shares, the Fund
shall distribute to such holders entitled to vote at such meeting (and to owners
of variable annuity contracts and variable life insurance policies indirectly
invested in the Common Stock Portfolio) a proxy statement and other proxy
materials (including voting instruction forms) that complies in all material
respects with the applicable provisions of Section 14(a) of the Securities
Exchange Act of 1934 and the rules and regulations promulgated thereunder.
Prior to the distribution of the proxy statement and other proxy materials
referenced above, the Fund shall file a registration statement under the
Securities Act of 1933 (the "1933 Act") with the Securities and Exchange
Commission relating to the Growth Portfolio shares to be issued in connection
with the Reorganization. This registration statement will be filed on Form N-14,
will become effective prior to the aforementioned issue of Growth Portfolio
shares and will comply in all material respects with the provisions of the 1933
Act and applicable rules and regulations promulgated thereunder, and will not
contain an untrue statement of material fact nor omit to state a material fact
required to be stated therein or necessary to make statements therein not
misleading.
Prior to the Effective Time, the Fund will receive an opinion of tax counsel
substantially to the effect that: (1) the acquisition, pursuant to the Plan of
Reorganization, by the Growth Portfolio of the assets of the Common Stock
Portfolio in exchange for Growth Portfolio shares will constitute a
reorganization within the meaning Section 368(a)(1)(D) of the Code, (2) no gain
or loss will be recognized by the Common Stock Portfolio upon the transfer of
all of its assets to the Growth Portfolio, (3) the tax basis of the assets of
the Common Stock Portfolio in the hands of the Growth Portfolio will be the same
as the tax basis of such assets in the hands of the Common Stock Portfolio
immediately prior to the transfer, (4) the holding period of the assets of the
Common Stock Portfolio transferred to the Growth Portfolio will include the
period during which such assets were held by the Common Stock Portfolio, (5) no
gain or loss will be recognized by the Growth Portfolio upon its receipt of the
assets of the Common Stock Portfolio in exchange for shares of the Growth
Portfolio, (6) no gain or loss will be recognized by the holders of Common Stock
Portfolio shares upon their receipt of Growth Portfolio shares in exchange for
their Common Stock Portfolio shares, (7) the basis of the Growth Portfolio
shares received by holders of Common Stock Portfolio shares will be the same as
the basis of the Common Stock Portfolio shares exchanged therefor, (8) the
holding period of Growth Portfolio shares received by holders of Common Stock
Portfolio shares will include the holding period of the Common Stock Portfolio
shares exchanged therefor, provided that, at the time of the exchange, the
Common Stock Portfolio shares were held as capital assets, and (9) no gain or
loss will be recognized by owners of variable life insurance contracts or
variable annuity contracts indirectly invested in the Common Stock Portfolio
upon the transfer of all the assets and liabilities of the Common Stock
Portfolio to the Growth Portfolio, the receipt of Growth Portfolio shares by the
holders of Common Stock Portfolio shares, or the combination of the Common Stock
subaccount and the Growth subaccount of any NLIC separate account into a single
subaccount of such separate account.
A-3
<PAGE> 19
ARTICLE IV
Miscellaneous
At any time prior to the Effective Time, the Plan of Reorganization may be
terminated by the board of directors of the Fund (or appropriate Fund officers
acting under the authority of the board of directors) or be abandoned. In either
event, the Plan of Reorganization shall become void and have no effect, without
liability on the part of either the Common Stock Portfolio or the Growth
Portfolio or the holders of Common Stock Portfolio shares or Growth Portfolio
shares or the Fund or the holders of shares of the other classes of the Fund's
common stock.
NLIC will pay the expenses of carrying out the Reorganization, including the
costs of soliciting voting instructions from owners of NLIC variable annuity
contracts or variable life insurance policies indirectly invested in the Common
Stock Portfolio.
The Plan of Reorganization and all amendments hereto shall be governed by and
construed in accordance with the laws of the State of Maryland.
A-4
<PAGE> 20
PROSPECTUSES DATED MAY 1, 1997
The Market Street Fund, Inc. has two prospectuses, both of which are
incorporated herein by reference to Post-Effective Amendment No. 16 to
Registrant's Form N-1A Registration Statement filed on April 30, 1997, File No.
2-98755.
<PAGE> 21
ANNUAL REPORT TO SHAREHOLDERS
The Annual Report to Shareholders for the fiscal year ended December 31, 1996 is
incorporated herein by reference to Registrant's Form N-SAR Report filed on
February 25, 1997, File No. 2-98755.
<PAGE> 22
SEMI-ANNUAL REPORT TO SHAREHOLDERS
The Semi-Annual Report to Shareholders for the six months ended June 30, 1997 is
incorporated herein by reference to Registrant's Form N-SAR Report filed on
August 27, 1997, File No. 2-98755.
<PAGE> 23
VOTING INSTRUCTION FORM
MARKET STREET FUND, INC.
VOTING INSTRUCTIONS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF NATIONAL
LIFE INSURANCE COMPANY FOR SPECIAL MEETING OF SHAREHOLDERS OF THE COMMON STOCK
PORTFOLIO OF MARKET STREET FUND, INC. TO BE HELD ON DECEMBER 5, 1997.
I hereby instruct National Life Insurance Company ("NLIC") to vote the
shares of the Common Stock Portfolio of Market Street Fund, Inc. (the "Fund") as
to which I am entitled to give instructions at the Special Meeting of
Shareholders of the Fund (the "Meeting") to be held on December 5, 1997, at 9:00
a.m. Eastern Time, or any adjournments thereof at 1050 Westlakes Drive, Berwyn,
Pennsylvania 19312 as follows:
<TABLE>
<CAPTION>
Approve Disapprove Abstain
-------- ----------- --------
<S> <C> <C> <C> <C>
1. To approve or disapprove a Plan of Reorganization to
combine the Common Stock Portfolio and the Growth
Portfolio of the Fund, with the Growth Portfolio
becoming the surviving Portfolio. [ ] [ ] [ ]
2. In the discretion of NLIC, it is authorized to vote upon such other business as may properly
come before the Meeting or any adjournment thereof.
</TABLE>
I hereby revoke any and all voting instructions with respect to such
shares heretofore given by me. I acknowledge receipt of the Proxy Statement
dated November , 1997. I REALIZE IF I SIGN THIS FORM WITHOUT CHECKING A BLOCK
WITH RESPECT TO A PROPOSAL LISTED ON THE REVERSE SIDE, MY TIMELY RETURNING OF
THIS FORM WILL BE DEEMED TO BE AN INSTRUCTION TO VOTE IN FAVOR OF THE PROPOSAL.
THESE VOTING INSTRUCTIONS MAY BE REVOKED AT ANY TIME PRIOR TO THE MEETING BY
NOTIFYING NLIC IN WRITING.
Date:____________, 1997 ------------------------------------------
Signature -- Please sign exactly as your
name appears below.
<TABLE>
<S> <C>
Policy: Please sign, date and
Insured: return this Form promptly.
Signature should be exactly
as name or names appear on
this Voting Instruction
Form. If the individual
signing the form is a
fiduciary (e.g. attorney,
executor, trustee,
guardian, etc.) the
individual's signature must
be followed by his or her
full title.
</TABLE>
NUMBER OF SHARES FOR WHICH YOU ARE
ENTITLED TO GIVE VOTING INSTRUCTIONS:
Common Stock Portfolio
PLEASE RETURN THIS VOTING INSTRUCTION FORM PROMPTLY
<PAGE> 24
PART B
INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION
<PAGE> 25
STATEMENTS OF ADDITIONAL INFORMATION DATED MAY 1, 1997
The Market Street Fund, Inc. has two Statements of Additional Information, both
of which are incorporated herein by reference to Post-Effective Amendment No. 16
to Registrant's Form N-1A Registration Statement filed on April 30, 1997, File
No. 2-98755.
<PAGE> 26
PART C. OTHER INFORMATION
ITEM 15. Indemnification
Under Section 2-418 of the Maryland General Corporation Law, with respect
to any proceedings against a present or former director, officer, agent or
employee ("corporate representative") of the registrant, except a proceeding
brought by or on behalf of the registrant, the registrant may indemnify the
corporate representative against expenses, including attorneys' fees and
judgments, fines, and amounts paid in settlement actually and reasonably
incurred by the corporate representative in connection with the proceeding, if:
(i) he acted in good faith and in a manner he reasonably believed to be in good
faith and in a manner he reasonably believed to be in or not opposed to the best
interests of the registrant; and (ii) with respect to any criminal proceeding,
he had no reasonable cause to believe his conduct was unlawful. The registrant
is also authorized under section 2-418 of the Maryland General Corporation Law
to indemnify a corporate representative under certain circumstances against
expenses incurred in connection with the defense of a suit or action by or in
the right of the registrant.
The By-laws of the Fund (Exhibit (2) of this Registration Statement)
provide that the Fund may indemnify its corporate representatives in a manner
that is consistent with the laws of the State of Maryland. The By-laws preclude
indemnification for "disabling conduct" (willful misfeasance, bad faith, gross
negligence, or reckless disregard of the duties involved in the conduct of
office) and sets forth reasonable and fair means for determining whether
indemnification shall be made.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any such action, suit or proceeding) is asserted by such
director, officer, or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question of whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
ITEM 16. Exhibits
The following exhibits are filed herewith:
<TABLE>
<S> <C>
1.a. Articles of Incorporation of the Market Street Fund, Inc. (the "Fund")(1)
1.b. Articles Supplementary(2)
1.c. Articles Supplementary(3)
2.a. By-Laws of the Fund(1)
2.b. Amendment to By-Laws(2)
3. Inapplicable
4. Plan filed as appendix to proxy.
5. Form of Certificate for Shares of Common Stock of the Fund(4)
6.a. Investment Advisory Agreement between the Fund and Newbold's Asset Management,
Inc.(5)
6.b. Investment Advisory Agreement between the Fund and Providentmutual Investment
Management Company(2)
6.c. Investment Advisory Agreement between the Fund and Sentinel Advisors Company(10)
6.d. Investment Advisory Agreement between the Fund and Providentmutual Investment
Management Company (PIMC) with respect to International Portfolio(3)
6.e. Investment Sub-Advisory Agreement between PIMC and The Boston Company Asset
Management, Inc.(10)
</TABLE>
C-1
<PAGE> 27
<TABLE>
<S> <C>
6.f. Amendment to Investment Advisory Agreement between the Fund and Sentinel Advisors
Company(11)
6.g. Amendment to Investment Advisory Agreement between the Fund and Sentinel Advisors
Company(12)
6.h. Investment Advisory Agreement between the Fund and Sentinel Advisors Company
respecting the Growth Portfolio(13)
7.a. Distribution Agreement between the Fund and PML Securities Company(6)
7.b. Amendments to Distribution Agreement between the Fund and PML Securities Company(2)
7.c. Amendment to Distribution Agreement between the Fund and PML Securities Company(3)
8. Inapplicable
9.a. Custodian Agreement between the Fund and Provident National Bank(7)
9.b. Amendment to Custodian Agreement between the Fund and Provident National Bank(2)
9.c. Amendment to Custodian Agreement between the Fund and Provident National Bank(3)
9.d. Amendment to Custodian Agreement between the Fund and Provident National Bank(11)
10. Inapplicable
11. Opinion of Adam Scaramella, Esquire
12. Opinion of Sutherland Asbill & Brennan LLP
13.a. Agreement and Plan of Reorganization among PVLICO, Providentmutual Variable Life
Growth Account, Providentmutual Variable Life Money Market Account, Providentmutual
Variable Life Bond Account and the Fund(1)
13.b. Reimbursement Agreement between Provident Mutual Life Insurance Company of
Philadelphia and the Fund(3)
13.c. Administration Agreement between the Fund and Provident Institutional Management
Corporation(7)
13.d. Amendment to Administration Agreement between the Fund and Provident Financial
Processing Corporation (PFPC)(2)
13.e. Amendment to Administration Agreement between the Fund and PFPC(2)
13.f. Amendment to Administration Agreement between the Fund and PFPC(11)
13.g. Transfer Agency Agreement between the Fund and PFPC, as amended(2)
13.h. Amendment to Transfer Agency Agreement between the Fund and PFPC(11)
13.i.(1) Participation Agreement among Market Street Fund, Inc. Provident Mutual Life
Insurance Company and PML Securities Company(9)
13.i.(2) Participation Agreement among Market Street Fund, Inc., Providentmutual Life and
Annuity Company of America and PML Securities Company (8)
13.i.(3) Participation Agreement among Market Street Fund, Inc., National Life Insurance
Company and PML Securities Company(11)
14.a. Consent of Sutherland, Asbill & Brennan LLP
14.b. Consent of Coopers & Lybrand L.L.P.
15. Inapplicable
16. Inapplicable
17. Registrant's currently effective declaration under Rule 24f-2.
</TABLE>
- ---------------
(1) Incorporated herein by reference to the initial Form N-1A Registration
Statement of the Market Street Fund, Inc., File No. 2-98755, filed on July
1, 1985.
(2) Incorporated herein by reference to Post-Effective Amendment No. 4 filed on
March 2, 1989, File No. 2-98755.
(3) Incorporated herein by reference to Post-Effective Amendment No. 7 filed on
August 30, 1991, File No. 2-98755.
(4) Incorporated herein by reference to Pre-Effective Amendment No. 2 filed on
December 16, 1985, File No. 2-98755.
(5) Incorporated herein by reference to Post-Effective Amendment No. 6 filed on
May 1, 1991, File No. 2-98755.
C-2
<PAGE> 28
(6) Incorporated herein by reference to Pre-Effective Amendment No. 1 filed on
November 19, 1985, File No. 2-98755.
(7) Incorporated herein by reference to Post-Effective Amendment No. 1 filed on
May 1, 1986, File No. 2-98755.
(8) Incorporated herein by reference to Post-Effective Amendment No. 8 filed on
May 1, 1992, File No. 2-98755.
(9) Incorporated herein by reference to Post-Effective Amendment No. 8 to Form
S-6 Registration Statement filed on May 1, 1992, File No. 33-2625.
(10) Incorporated herein by reference to Post-Effective Amendment No. 11 filed
on April 28, 1995, File No. 2-98755.
(11) Incorporated herein by reference to Post-Effective Amendment No. 13 filed
on February 28, 1996, File No. 2-98755.
(12) Incorporated herein by reference to Post-Effective Amendment No. 14 filed
on March 19, 1996, File No. 2-98755.
(13) Incorporated herein by reference to Post-Effective Amendment No. 16 filed
on April 30, 1997, File No. 2-98755.
ITEM 17. Undertakings
(1) The undersigned registrant agrees that prior to any public reoffering
of the securities registered through the use of a prospectus which is a part of
this registration statement by any person or party who is deemed to be an
underwriter within the meaning of Rule 145(c) of the Securities Act [17 CFR
230.145c], the reoffering prospectus will contain the information called for by
the applicable registration form for reofferings by persons who may be deemed
underwriters, in addition to the information called for by the other items of
the applicable form.
(2) The undersigned registrant agrees that every prospectus that is filed
under paragraph (1) above will be filed as a part of an amendment to the
registration statement and will not be used until the amendment is effective,
and that, in determining any liability under the 1933 Act, each post-effective
amendment shall be deemed to be a new registration statement for the securities
offered therein, and the offering of the securities at that time shall be deemed
to be the initial bona fide offering of them.
C-3
<PAGE> 29
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED ON BEHALF OF THE REGISTRANT BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF BERWYN, COMMONWEALTH OF
PENNSYLVANIA ON THIS 24TH DAY OF SEPTEMBER 1997.
MARKET STREET FUND, INC.
BY: /S/ STANLEY R. REBER
--------------------------------------
STANLEY R. REBER
PRESIDENT
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- ------------------------------------------------
<C> <S> <C>
/s/ STANLEY R. REBER Chairman and President September 24, 1997
- --------------------------------------------- (Principal Executive
STANLEY R. REBER Officer)
/s/ ROSANNE GATTA Treasurer and Comptroller September 24, 1997
- --------------------------------------------- (Principal Financial and
ROSANNE GATTA Accounting Officer)
/s/ ALAN GART Director September 23, 1997
- ---------------------------------------------
ALAN GART
/s/ A. GILBERT HEEBNER Director September 24, 1997
- ---------------------------------------------
A. GILBERT HEEBNER
</TABLE>
C-4
<PAGE> 30
EXHIBIT INDEX
<TABLE>
<S> <C>
11. Opinion of Adam Scaramella, Esquire
12. Form of Opinion of Sutherland, Asbill & Brennan LLP
14.a. Consent of Sutherland, Asbill & Brennan LLP
14.b. Consent of Coopers & Lybrand L.L.P.
17. Registrant's currently effective declaration under Rule 24f-2.
</TABLE>
<PAGE> 1
[LETTERHEAD OF MARKET STREET FUND, INC.]
September 23, 1997
Board of Directors
Market Street Fund, Inc.
1050 Westlakes Drive
Berwyn, PA 19312
Re: Form N-14 Registration Statement
Directors:
I have served as counsel to Market Street Fund, Inc. (the "Fund"), a
Maryland corporation, in connection with its registration as an open-end
management investment company under the Investment Company Act of 1940, as
amended, and in connection with its registration of an indefinite number of
shares of capital stock of its Growth Class (the "Shares") under the Securities
Act of 1933, as amended, to be issued in connection with a combination of the
Common Stock Portfolio and the Growth Portfolio of the Fund, with the Growth
Portfolio becoming the surviving Portfolio. In this connection, I have examined
the registration statement to be filed by you with the Securities and Exchange
Commission on Form N-14 (the "registration statement"). I also am familiar with
the actions taken by you at the board of directors meeting on July 25, 1997, in
connection with the authorization, issuance and sale of the Shares.
I have examined such Company records, certificates and other documents
and reviewed such questions of law as I have considered necessary or
appropriate for purposes of this opinion. In my examination of such materials,
I have assumed the genuineness of all signatures and the conformity to the
original documents of all copies submitted to me. As to various questions of
fact material to my opinion, I have relied upon statements of officers and
representatives of the Company and upon representations of the Company made in
the registration statement.
Based upon the foregoing, I am of the opinion that the Shares, when
issued and sold in the manner described in the registration statement, will be
legally issued, fully paid and non-assessable.
Very truly yours,
/s/ ADAM SCARAMELLA
Adam Scaramella
<PAGE> 1
[Letterhead of
Sutherland, Asbill & Brennan LLP]
Directors:
This letter responds to your request for our opinion concerning the
federal income tax consequences of the proposed reorganization and combination
of the Common Stock Portfolio of Market Street Fund, Inc. (the "Fund") and the
Growth Portfolio of the Fund, with the Growth Portfolio becoming the surviving
portfolio.
In rendering our opinion, we have relied solely on the representations
set forth below and on the factual statements, summarized below, contained in
the following documents: (a) the Plan of Reorganization dated as of [_____ __,]
1997 by the Fund on behalf of its Common Stock Portfolio and Growth Portfolio
(the "Plan of Reorganization"); and (b) the Form N-14 Registration Statement of
the Fund.
SUMMARY OF RELEVANT FACTS
Each of the Common Stock Portfolio and the Growth Portfolio (a) is
taxable as a corporation for federal income tax purposes by reason of Section
851(h);(1) (b) is qualified for treatment as a regulated investment company
under section 851 ("RIC") for its most recent taxable year and, subject to
completion of the proposed transaction, intends to so qualify for all
subsequent taxable years; and (c) is a series of the Fund which is registered
with the Securities and Exchange Commission under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end management investment
company. All of the shares of stock of the Growth Portfolio have the right to
vote.
- --------
(1)All section references are to the Internal Revenue Code of 1986, as amended.
<PAGE> 2
Board of Directors
September __, 1997
Page 2
As set forth in the Plan of Reorganization, the following transaction
(the "Reorganization") will occur:
(a) immediately prior to the close of business of the business
day preceding the closing date for the Reorganization (the
"Closing Date"), the Fund will declare and pay to its
shareholders one or more dividends or distributions on Common
Stock Portfolio shares so that the Common Stock Portfolio
will have distributed all of its ordinary income (as defined
in section 4982(e)(1)) and capital gain net income (as
defined in section 4982(e)(2)), if any, for all periods on
and prior to the Closing Date;
(b) on the Closing Date, the Fund will transfer all of the assets
of the Common Stock Portfolio to the Growth Portfolio in
exchange for Growth Portfolio shares of stock and the
assumption by the Growth Portfolio of all of the liabilities
of the Common Stock Portfolio. The aggregate number of such
shares of stock to be issued will be equal to the value of
the net assets transferred (computed using the valuation
procedures set forth in the Fund's then-current prospectus
and statement of additional information).
(c) on the Closing Date (or as soon thereafter as is practicable
but in any event within one year), the Common Stock Portfolio
will be liquidated; and
(d) also on the Closing Date, the Common Stock Portfolio will
distribute the Growth Portfolio shares received by it in the
Reorganization to its
<PAGE> 3
Board of Directors
September __, 1997
Page 3
shareholders pro rata in proportion to their respective
interests as part of the complete liquidation of the
Common Stock Portfolio described in paragraph (d) above.
National Life Insurance Company ("NLIC") contemplates that, following
the Reorganization, it will redeem the Growth Portfolio shares received by it
in the Reorganization that are attributable to its "seed money" investment in
the Common Stock Portfolio.
The exchange transaction between the Common Stock Portfolio and the
Growth Portfolio together with the liquidation of the Common Stock Portfolio
will be effected by the Growth Portfolio crediting to each shareholder of the
Common Stock Portfolio on the Growth Portfolio's share records the appropriate
number of Growth Portfolio shares of stock, whereupon the shareholder's shares
of Common Stock Portfolio stock will be canceled. No share certificates for
such Growth Portfolio shares will be issued to the shareholders of the Common
Stock Portfolio.
REPRESENTATIONS
Our opinion is conditioned upon the accuracy of the following
representations as of the Closing Date (Authorized representatives of the Fund
will represent to us that these representations, as well as the facts described
elsewhere in this opinion as applicable to such party, are true and correct.)
(a) The fair market value of the shares of stock of the Growth
Portfolio to be received by each shareholder of the Common
Stock Portfolio in the liquidation of the Common Stock
Portfolio will be equal to the fair market
<PAGE> 4
Board of Directors
September __, 1997
Page 4
value of the stock of the Common Stock Portfolio surrendered
in exchange therefor.
(b) There is no plan or intention by the shareholders of the
Common Stock Portfolio who own 5 percent or more of the stock
of the Common Stock Portfolio and, to the best of the
knowledge of the management of the Common Stock Portfolio,
there is no plan or intention on the part of the remaining
shareholders of such Common Stock Portfolio to sell,
exchange, or otherwise dispose of a number of shares of stock
of the Growth Portfolio to be received in the Reorganization
that would reduce the Common Stock Portfolio shareholders'
ownership of such shares of stock to a number of shares
having a value, as of the Closing Date, of less than 50
percent of the value of all the formerly outstanding stock of
the Common Stock Portfolio as of the same date. For purposes
of this representation, shares of stock of the Common Stock
Portfolio or shares of stock of the Growth Portfolio held by
shareholders of the Common Stock Portfolio otherwise sold,
redeemed, or disposed of in connection with the
Reorganization will be taken into account, except for shares
that are required to be redeemed in the ordinary course of
the Common Stock Portfolio's or the Growth Portfolio's
business as series of an open-end management investment
company under the 1940 Act (but taking into account any such
redemption by a 5 percent shareholder and by NLIC).
<PAGE> 5
Board of Directors
September __, 1997
Page 5
(c) There will be no Common Stock Portfolio shareholders entitled
to appraisal rights as a result of the Reorganization, no
cash will be paid to the shareholders of the Common Stock
Portfolio in lieu of fractional shares of stock, and no cash
or property other than stock will be received by or
distributed to the shareholders of the Common Stock Portfolio
in the transaction, except for the release of any cash
reserve, as described above.
(d) The Growth Portfolio will acquire at least 90 percent of the
fair market value of the net assets and at least 70 percent
of the fair market value of the gross assets held by the
Common Stock Portfolio immediately prior to the
Reorganization. For purposes of this representation, amounts
paid by the Common Stock Portfolio to effect all dividends,
distributions, or redemptions (except for dividends,
distributions, and redemptions occurring in the ordinary
course of its business as a series of an open-end management
investment company) immediately preceding, at the time of, or
following the Reorganization, including any amounts paid to
NLIC, will be included as assets of the Common Stock
Portfolio held immediately prior to the Reorganization.
(e) Except for redemptions in the ordinary course of its
business, the Growth Portfolio has no plan or intention to
acquire any of its stock issued in the Reorganization.
<PAGE> 6
Board of Directors
September __, 1997
Page 6
(f) At the time of the Reorganization, the Growth Portfolio will
have no plan or intention to sell or otherwise dispose of
more than 10 percent of the assets of the Common Stock
Portfolio to be acquired in the Reorganization, except for
dispositions to be made in the ordinary course of business
but including any dispositions to fund a redemption by NLIC.
(g) The Growth Portfolio will assume all of the Common Stock
Portfolio's liabilities, any such liabilities having been
incurred by the Common Stock Portfolio in the ordinary course
of its business and are associated with the assets to be
transferred.
(h) Following the Reorganization, the Growth Portfolio will use a
significant portion of the assets of the Common Stock
Portfolio in a business.
(i) The Growth Portfolio, the Common Stock Portfolio and the
shareholders of the Common Stock Portfolio will pay their
respective transaction expenses, except for expenses which
are solely and directly related to the Reorganization which
will be paid by NLIC.
(j) There is no intercorporate indebtedness between the Growth
Portfolio and the Common Stock Portfolio that was issued,
acquired, or will be settled at a discount.
(k) The Growth Portfolio does not own, directly or indirectly,
nor has it owned during the past five years, any stock of the
Common Stock Portfolio.
<PAGE> 7
Board of Directors
September __, 1997
Page 7
(l) The fair market value of the assets of the Common Stock
Portfolio to be transferred in the transaction to the Growth
Portfolio will exceed the sum of the liabilities to be
assumed by the Growth Portfolio.
(m) The Common Stock Portfolio is not under the jurisdiction of a
court in a title 11 or similar case within the meaning of
section 368(a)(3)(A).
(n) Other than as may result from redemption of Common Stock
Portfolio shares in the ordinary course of its business,
there will not be a significant change in the ownership of
the Common Stock Portfolio prior to the Reorganization.
(o) The Growth Portfolio and the Common Stock Portfolio have, for
all of their taxable periods, elected to be taxed as RICs as
defined in section 851, and after the transaction, the Growth
Portfolio intends to continue to elect to be taxed as a RIC.
(p) The Growth Portfolio and the Common Stock Portfolio meet the
requirements of section 368(a)(2)(F)(ii).
(q) The sole record shareholder of the Common Stock Portfolio is
NLIC, which holds such shares: (i) in its own capacity, (ii)
through two separate accounts (the "Variable Accounts") which
are registered with the Securities and Exchange Commission as
unit investment trusts under the 1940 Act and are also
segregated asset accounts under the insurance laws of the
State of Vermont. Each of the Variable Accounts is
administered
<PAGE> 8
Board of Directors
September __, 1997
Page 8
and accounted for as part of the general business of NLIC,
but its assets are not chargeable with liabilities arising
from the business of any other separate account or any other
business that NLIC may conduct. The Variable Accounts hold
only assets pursuant to variable contracts described in
section 817(d) of the Code and meet the diversification
requirements of section 817(h) of the Code. The Variable
Accounts are properly taxed as part of NLIC's operations and
are not separate taxable entities for federal income tax
purposes.
(r) The variable annuity contracts and variable life policies
issued by NLIC through the Variable Accounts will not differ
materially as a result of the Reorganization.
OPINION
Based on our analysis of the Internal Revenue Code of 1986, as
amended, the Income Tax Regulations, case law, published and private rulings of
the Internal Revenue Service, and other relevant legal authority, and in view
of facts summarized above and the representations set forth above, it is our
opinion that the following federal income tax consequences will result from the
Reorganization:
1. The Reorganization will constitute a "reorganization" within
the meaning of section [368(a)(1)(C)], and the Common Stock
Portfolio and the Growth Portfolio each will be a "party to a
reorganization" within the meaning of section 368(b).
<PAGE> 9
Board of Directors
September __, 1997
Page 9
2. No gain or loss will be recognized by the Common Stock
Portfolio on the transfer of its assets to the Growth
Portfolio in exchange solely for the Growth Portfolio shares
and the Growth Portfolio's assumption of all of the Common
Stock Portfolio liabilities and the subsequent distribution
by the Common Stock Portfolio of those shares to the
shareholders of the Common Stock Portfolio. Section 361.
3. No gain or loss will be recognized by the Growth Portfolio on
receipt of the assets transferred to it by the Common Stock
Portfolio in exchange for the Growth Portfolio shares and the
assumption of the Common Stock Portfolio's liabilities.
Section 1032.
4. The Growth Portfolio's basis in the assets received from the
Common Stock Portfolio will be the same as the Common Stock
Portfolio's tax basis for the assets immediately before the
Reorganization. Section 362(b).
5. The Growth Portfolio's holding period for the transferred
assets will include the Common Stock Portfolio's holding
period therefor. Section 1223(2).
6. No gain or loss will be recognized by the shareholders of the
Common Stock Portfolio on the exchange of their Common Stock
Portfolio shares solely for Growth Portfolio shares. Section
354.
<PAGE> 10
Board of Directors
September __, 1997
Page 10
7. The basis of the Growth Portfolio shares to be received by a
Common Stock Portfolio shareholder in the Reorganization will
be the same as the adjusted basis of that shareholder's
Common Stock Portfolio shares surrendered in exchange
therefor. Section 358.
8. The holding period of the Growth Portfolio shares received by
a Common Stock Portfolio shareholder will include the
shareholder's holding period for the Common Stock Portfolio
shares surrendered in exchange therefor, provided such Common
Stock Portfolio shares were held as capital assets on the
Closing Date. Section 1223(l).
9. The Growth Portfolio will succeed to and take into account
the items of the Common Stock Portfolio described in section
381(c), including any earnings and profits, or deficit
therein, of the Common Stock Portfolio as of the date of the
Closing Date, subject to the conditions and limitations
specified in sections 281, 382, 383, and 384.
10. No gain or loss will be recognized by the owners of variable
contracts issued by NLIC through the Variable Accounts on the
transfer of the Common Stock Portfolio's assets to the Growth
Portfolio in exchange solely for the shares of stock of the
Growth Portfolio and the Growth Portfolio's assumption of the
liabilities of the Common Stock Portfolio and the subsequent
distribution by the Common Stock Portfolio of those shares to
the Variable Accounts.
<PAGE> 11
Board of Directors
September __, 1997
Page 11
* * *
We are furnishing this opinion letter solely for the benefit of Market
Street Fund, Inc., including the Common Stock Portfolio and the Growth
Portfolio thereof, and the board of directors of the Fund and the shareholders
of each of these two Portfolios, and this letter is not to be used, circulated,
or quoted for any other purpose without our written consent. Our opinion
reflects our interpretation of the provisions of the Internal Revenue Code of
1986, as amended, as in effect as of the date hereof. Our opinion is limited to
the federal income tax consequences of the Reorganization; and we express no
opinion regarding any state, local, foreign or other tax or nontax
consequences. Absent your written request, we will revise or update this letter
to reflect subsequent changes in law only through the Closing Date.
Sincerely yours,
SUTHERLAND, ASBILL & BRENNAN LLP
<PAGE> 1
[LETTERHEAD OF]
[SUTHERLAND, ASBILL & BRENNAN LLP]
September 23, 1997
Board of Directors
Market Street Fund, Inc.
1050 Westlakes Drive
Berwyn, PA 19312-2419
Directors:
We hereby consent to the reference to our name under the caption "Legal
Matters" in the Statements of Additional Information filed as part of the
registration statement on Form N-14 for Market Street Fund, Inc. on September
24, 1997. In giving this consent, we do not admit that we are in the category of
persons whose consent is required under Section 7 of the Securities Act of 1933.
Sincerely,
SUTHERLAND, ASBILL & BRENNAN LLP
By: /s/ Stephen E. Roth
------------------------------------
Stephen E. Roth, Esq.
<PAGE> 1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the following with respect to the Registration Statement (No.
333- ) on Form N-14 under the Securities Act of 1933, as amended, of Market
Street Fund, Inc.:
- The inclusion of our report dated January 31, 1997 on our audit of the
financial statements and financial highlights of Market Street Funds,
Inc. in the Statement of Additional Information.
- The incorporation by reference of our report dated January 31, 1997 into
the Prospectus.
- The reference to our Firm under the heading "Financial Highlights" in the
Prospectus and under the heading "Other Services-Independent Accountants"
in the Statement of Additional Information.
COOPERS & LYBRAND L.L.P.
2400 Eleven Penn Center
Philadelphia, Pennsylvania
September 17, 1997
<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 30, 1997
REGISTRATION NO. 2-98755
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933 [ ]
PRE-EFFECTIVE AMENDMENT NO. [ ]
POST-EFFECTIVE AMENDMENT NO. 16 [X]
AND/OR
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940 [ ]
AMENDMENT NO. 17 [X]
MARKET STREET FUND, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
103 BELLEVUE PARKWAY
WILMINGTON, DE 19809
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (302) 791-1700
------------------------
<TABLE>
<S> <C>
M. DIANE KOKEN, ESQ. COPY TO:
MARKET STREET FUND, INC. STEPHEN E. ROTH, ESQ.
1050 WESTLAKES DRIVE SUTHERLAND, ASBILL & BRENNAN, L.L.P.
BERWYN, PA 19312 1275 PENNSYLVANIA AVENUE, N.W.
(NAME AND ADDRESS OF AGENT FOR WASHINGTON, DC 20004
SERVICE)
</TABLE>
IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE (CHECK APPROPRIATE BOX)
[ ] IMMEDIATELY UPON FILING PURSUANT TO PARAGRAPH (b) OF RULE 485
[X] ON MAY 1, 1997 PURSUANT TO PARAGRAPH (b) OF RULE 485
[ ] 60 DAYS AFTER FILING PURSUANT TO PARAGRAPH (a) OF RULE 485
[ ] ON (DATE) PURSUANT TO PARAGRAPH (a) OF RULE 485
[ ] 75 DAYS AFTER FILING PURSUANT TO PARAGRAPH (a)(2) OF RULE 485
[ ] ON (DATE) PURSUANT TO PARAGRAPH (a)(2) OF RULE 485
PURSUANT TO RULE 24f-2 UNDER THE INVESTMENT COMPANY ACT OF 1940, THE REGISTRANT
HAS REGISTERED AN INDEFINITE AMOUNT OF SECURITIES. THE REGISTRANT FILED THE
24F-2 NOTICE FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996 ON FEBRUARY 28, 1997.
================================================================================
