MARKET STREET FUND INC, 485BPOS, 1997-11-12

MARKET STREET FUND INC
485BPOS, 1997-11-12

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<PAGE> 1

As filed with the Securities and Exchange Commission on November 12, 1997

File No. 333-36289

================================================================================

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. [X] Post-Effective Amendment No. 1

(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:

<TABLE>
<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 immediately pursuant to
Rule 485(b) under the Securities Act of 1933.

================================================================================
<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

<TABLE>
<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

LOCATION IN THE STATEMENT OF ADDITIONAL
---------------------------------------
ITEM OF FORM N-14 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 14, 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.

The improvement is the proposed combination by Market Street Fund, Inc. of
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. The
Growth Portfolio became a client of Sentinel Advisors Company in May of this
year, and there is no reason to operate two separate Portfolios that are managed
in the same way. 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 lower expense
ratio will be reflected in commensurately higher returns to you than if the
combination does not take place.

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,

/s/ Patrick E. Welch

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 14, 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 14, 1997

<PAGE> 7

MARKET STREET FUND, INC.
103 Bellevue Parkway
Wilmington, Delaware 19809

NOVEMBER 14, 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 14, 1997.

At the Meeting, holders of Common Stock Portfolio shares will be asked:

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

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 Provident Mutual 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 October 10, 1997, there were outstanding 842,417.54 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 October 10, 1997, who
have the right to instruct NLIC as to 5% or more of the Common Stock Portfolio's
stock. As of October 10, 1997, NLIC held directly approximately 513,027.17
Common Stock Portfolio shares representing approximately 60.9% 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 communications, by
employees of NLIC or its affiliates. This Statement was first mailed to owners
on or about November 14, 1997.

3
<PAGE> 10

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 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

4
<PAGE> 11

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 Provident Mutual 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 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.

5
<PAGE> 12

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 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.

6
<PAGE> 13

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.

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.

7
<PAGE> 14

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 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.

8
<PAGE> 15

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 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>

PRO FORMA FEE TABLE

The following table shows the per share fees of the Common Stock Portfolio
and the Growth Portfolio as of December 31, 1996, and on a pro forma basis as of
that date, giving effect to the Proposed Reorganization:

<TABLE>
<CAPTION>
PRO FORMA
COMMON COMBINED
ANNUAL EXPENSES (AS A PERCENTAGE OF AVERAGE NET STOCK GROWTH (BOTH)
ASSETS) PORTFOLIO(1) PORTFOLIO PORTFOLIOS
---------------------------------------------------- ------------ --------- ---------
<S> <C> <C> <C>
Management Fees
(Investment Advisory Fees) 0.40% 0.33% 0.33%
Other Expenses 0.40% 0.17% 0.17%
Total Portfolio Annual Expenses 0.80% 0.50% 0.50%
</TABLE>

- ---------------

(1) The expenses shown above reflect certain reimbursements by NLIC. In the
absence of any expense reimbursements, the "Other Expenses" would have been
1.03%, and the "Total Portfolio Expenses" would have been 1.43%. Any
reimbursement not yet made as of the Effective Time will pass to the Growth
Portfolio along with all other assets of the Common Stock Portfolio.

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 July 25, 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 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.

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)(C) 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 14, 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(14)
12. Form of Opinion of Sutherland Asbill & Brennan LLP(14)
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. Powers of Attorney
17. Registrant's currently effective declaration under Rule 24f-2(14)
</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 to the
Form N-1A registration statement filed on March 2, 1989, File No. 2-98755.

(3) Incorporated herein by reference to Post-Effective Amendment No. 7 to the
Form N-1A registration statement filed on August 30, 1991, File No.
2-98755.

(4) Incorporated herein by reference to Pre-Effective Amendment No. 2 to the
Form N-1A registration statement filed on December 16, 1985, File No.
2-98755.

(5) Incorporated herein by reference to Post-Effective Amendment No. 6 to the
Form N-1A registration statement filed on May 1, 1991, File No. 2-98755.

C-2
<PAGE> 28

(6) Incorporated herein by reference to Pre-Effective Amendment No. 1 to the
Form N-1A registration statement filed on November 19, 1985, File No.
2-98755.

(7) Incorporated herein by reference to Post-Effective Amendment No. 1 to the
Form N-1A registration statement filed on May 1, 1986, File No. 2-98755.

(8) Incorporated herein by reference to Post-Effective Amendment No. 8 to the
Form N-1A registration statement 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 to the
Form N-1A registration statement filed on April 28, 1995, File No. 2-98755.

(11) Incorporated herein by reference to Post-Effective Amendment No. 13 to the
Form N-1A registration statement filed on February 28, 1996, File No.
2-98755.

(12) Incorporated herein by reference to Post-Effective Amendment No. 14 to the
Form N-1A registration statement filed on March 19, 1996, File No. 2-98755.

(13) Incorporated herein by reference to Post-Effective Amendment No. 16 to the
Form N-1A registration statement filed on April 30, 1997, File No. 2-98755.

(14) Incorporated herein by reference to the initial Form N-14 registration
statement filed on September 24, 1997, File No. 333-36289.

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 7TH DAY OF NOVEMBER 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 November 7, 1997
- --------------------------------------------- (Principal Executive
STANLEY R. REBER Officer)

* Treasurer and Comptroller November 7, 1997
- --------------------------------------------- (Principal Financial and
ROSANNE GATTA Accounting Officer)

* Director November 7, 1997
- ---------------------------------------------
ALAN GART

* Director November 7, 1997
- ---------------------------------------------
A. GILBERT HEEBNER

*By: /s/ ADAM SCARAMELLA
- ---------------------------------------------
ADAM SCARAMELLA
ATTORNEY-IN-FACT
</TABLE>

C-4
<PAGE> 30

EXHIBIT INDEX

<TABLE>
<S> <C>
14.a. Consent of Sutherland, Asbill & Brennan LLP
14.b. Consent of Coopers & Lybrand L.L.P.
16. Powers of Attorney
</TABLE>

<PAGE> 1

[LETTERHEAD OF]
[SUTHERLAND, ASBILL & BRENNAN LLP]

November 11, 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 included in the
registration statement on Form N-14 for Market Street Fund, Inc. (File No.
333-36289). 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.
333-36289) 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.

/s/ Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P.

2400 Eleven Penn Center
Philadelphia, Pennsylvania
November 10, 1997

<PAGE> 1
POWER OF ATTORNEY

Know all men by these presents:

That I, A. Gilbert Heebner, a member of the Board of Directors of MARKET STREET
FUND, INC., do hereby make constitute and appoint as my true and lawful
attorneys in fact, ADAM SCARAMELLA and WILLIAM P. LOESCHE, or either of them
severally for me and in my name, place and stead to sign the following
registration statements and any and all amendments thereto on behalf of MARKET
STREET FUND, INC. and file with the Securities and Exchange Commission:

Registration Statements under the Securities Act of 1933 and/or the
Investment Company Act of 1940.

Such appointment shall remain valid and in effect for so long as I shall be a
member of the Board of Directors of MARKET STREET FUND, INC. and for so long as
either ADAM SCARAMELLA and/or WILLIAM P. LOESCHE shall be employees of
PROVIDENT MUTUAL LIFE INSURANCE COMPANY.

IN WITNESS WHEREOF, I have hereunto set my hand this 23rd day of October, 1997.

/s/ A. GILBERT HEEBNER
--------------------------
A. GILBERT HEEBNER

Commonwealth of PENNSYLVANIA
:ss
County of CHESTER

On this 23rd day of October, 1997, before me personally appeared A. Gilbert
Heebner, to me known and known to me to be the person mentioned and described
in and who executed the foregoing instrument and he duly acknowledged to me
that he executed the same.

My commission expires: /s/ JENNIFER J. AVILES
--------------------------
Notary Public

NOTARIAL SEAL
JENNIFER J. AVILES, Notary Public
Tredylfrin Twp., Chester County
My Commission Expires July 24, 2000

<PAGE> 2
POWER OF ATTORNEY

Know all men by these presents:

That I, Edward Stouch, a member of the Board of Directors of MARKET STREET
FUND, INC., do hereby make constitute and appoint as my true and lawful
attorneys in fact, ADAM SCARAMELLA and WILLIAM P. LOESCHE, or either of them
severally for me and in my name, place and stead to sign the following
registration statements and any and all amendments thereto on behalf of MARKET
STREET FUND, INC. and file with the Securities and Exchange Commission:

Registration Statements under the Securities Act of 1933 and/or the
Investment Company Act of 1940.

IN WITNESS WHEREOF, I have hereunto set my hand this 23rd day of October, 1997.

/s/ EDWARD STOUCH
--------------------------
Edward Stouch

Commonwealth of PENNSYLVANIA
:ss
County of CHESTER

On this 23rd day of October, 1997, before me personally appeared Edward Stouch,
to me known and known to me to be the person mentioned and described in and who
executed the foregoing instrument and he duly acknowledged to me that he
executed the same.

My commission expires: /s/ JENNIFER J. AVILES
--------------------------
Notary Public

NOTARIAL SEAL
JENNIFER J. AVILES, Notary Public
Tredylfrin Twp., Chester County
My Commission Expires July 24, 2000

<PAGE> 3
POWER OF ATTORNEY

Know all men by these presents:

That I, Alan Gart, a member of the Board of Directors of MARKET STREET
FUND, INC., do hereby make constitute and appoint as my true and lawful
attorneys in fact, ADAM SCARAMELLA and WILLIAM P. LOESCHE, or either of them
severally for me and in my name, place and stead to sign the following
registration statements and any and all amendments thereto on behalf of MARKET
STREET FUND, INC. and file with the Securities and Exchange Commission:

Registration Statements under the Securities Act of 1933 and/or the
Investment Company Act of 1940.

IN WITNESS WHEREOF, I have hereunto set my hand this 23rd day of October, 1997.

/s/ ALAN GART
--------------------------
ALAN GART

Commonwealth of PENNSYLVANIA
:ss
County of CHESTER

On this 23rd day of October, 1997, before me personally appeared ALAN GART, to
me known and known to me to be the person mentioned and described in and who
executed the foregoing instrument and he duly acknowledged to me that he
executed the same.

My commission expires: /s/ JENNIFER J. AVILES
--------------------------
Notary Public

NOTARIAL SEAL
JENNIFER J. AVILES, Notary Public
Tredylfrin Twp., Chester County
My Commission Expires July 24, 2000