<PAGE> 1
- --------------------------------------------------------------------------------
To Our Variable Life Policyholders and Variable Annuity Contractholders:
- --------------------------------------------------------------------------------
We are pleased to send you the 1997 Semi-Annual Report for Market Street Fund,
Inc., its Growth, Money Market, Bond, Managed, Aggressive Growth, International,
Common Stock, and Sentinel Growth Portfolios.
Economic Overview and Investment Perspective
The U.S. economy and all major domestic financial markets continued their
outstanding performances during the first half of 1997. Moreover, the second
quarter was far better than the first, and July recorded truly outstanding
numbers. How much longer will the good performance last?
Past readers of this report know that they will find no answer to this question
here. All we can do is give our thanks for past performance and make some
observations about the factors that should underlie future performance. Future
financial market performance is a function of future economic performance and
current valuation levels. The outlook for the U.S. economy is, in a word,
superb. Growth continues unabated with inflation showing no signs of
reaccelerating. Interest rates declined in July as both the Fed and domestic
credit markets recognized this reality. The recently enacted budget bill, while
not improving the economic fundamentals, is certainly not a negative. The risk
seems to lie more in current valuation levels, which may be overvaluing future
economic performance, than in the economy itself.
How then to position oneself in the face of the economic and financial
uncertainty which is, of course, a constant companion of any investor? Be a long
term, patient investor, not a market timer. And take comfort and pride in the
conservative, value oriented management styles of the Market Street Fund
investment advisors with whom you have entrusted your policy dollars.
Review of Fund Portfolio Performance*
As always, it is important to recall in interpreting the accompanying
Semi-Annual Reviews that the advisers of the equity portfolios of Market Street
Fund do not engage in market timing. That is to say that in all but times of
great market turmoil, they endeavor to keep the vast majority of portfolio
assets invested in common stocks. Thus, they attempt to add value by stock
selection utilizing the methods and in the markets specified in the Fund
Prospectus. Their performance should be judged according to how well they do
relative to market indices measuring the same type of activity.
We appreciate the opportunity to have served you in the past and look forward to
serving you during the remainder of 1997 and many years into the future.
/s/ Stanley R. Reber
Stanley R. Reber
President
The Market Street Fund, Inc.
*Past performance is not predictive of future results. Moreover, the
relationship between the performance of the Fund Portfolios and the actual
increases or decreases in a policy's cash value is not directly proportional
due to certain charges deducted from premiums and under the policies which are
not reflected in the above figures. Please see the current prospectus for an
explanation of these charges and for illustrations which take such charges into
account in calculating cash values.
1
<PAGE> 2
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Market Street Fund, Inc.
The Growth Portfolio
1997 Semi-Annual Review
Sentinel Advisors Company
- --------------------------------------------------------------------------------
Sentinel Advisors Company assumed investment management responsibilities
for the Market Street Growth Portfolio effective May 1, 1997. In the two month
period ending June 30, 1997, the Portfolio achieved a total return of 7.6%.
Official Lipper growth & income group averages are unavailable for this initial
two month period. The Lipper Growth & Income Index, an average of the 30 largest
growth & income mutual funds, was up about 9.9% during the two month period.
There was significant activity in the Portfolio during May and June, as
adjustments were made to bring the holdings in line with Sentinel's current
investment thinking. By the end of June, the vast majority of planned
adjustments had been completed.
The economic outlook has been described by various Wall Street pundits
recently as "the best of all worlds": moderate growth, modest inflation and
relatively low interest rates. In such an environment, the bull market of the
1990's has continued unabated. However, the combination of record high valuation
measures for the stock market, an almost unquestioned faith in continued
economic nirvana and strong earnings growth, and almost euphoric investor
sentiment suggests to us that the market has entered an extremely risky phase.
In this higher risk market environment, we remain strongly committed to a
defensive focus on quality, consistency and stability in our stock selection
process.
Keniston P. Merrill
Richard A. Pender, CFA
Daniel J. Manion, CFA
2
<PAGE> 3
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Market Street Fund, Inc.
The Growth Portfolio
Schedule of Net Assets, June 30, 1997
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK -- 93.5%
Automobiles -- 3.2%
*Chrysler Corp..................................................................... 98,000 $ 3,215,625
Ford Motor Co...................................................................... 112,000 4,228,000
------------
7,443,625
------------
Automotive & Equipment -- 1.9%
*Echlin, Inc....................................................................... 77,000 2,772,000
*Pep Boys - Manny, Moe & Jack...................................................... 48,000 1,635,000
------------
4,407,000
------------
Banks -- 8.5%
Bank of New York Co., Inc.......................................................... 77,000 3,349,500
BankAmerica Corp................................................................... 56,000 3,615,500
Chase Manhattan Corp............................................................... 40,000 3,882,500
Citicorp........................................................................... 27,000 3,255,187
First Union Corp................................................................... 35,000 3,237,500
Morgan (J.P.) & Co., Inc........................................................... 19,000 1,983,125
------------
19,323,312
------------
Beverages -- 1.0%
Coca Cola Co....................................................................... 35,000 2,362,500
------------
Building & Building Supplies -- 1.5%
*Sherwin Williams Co............................................................... 112,000 3,458,000
------------
Business & Consumer Services -- 3.1%
Electronic Data Systems Corp....................................................... 77,000 3,157,000
*Omnicom Group, Inc................................................................ 63,000 3,882,375
------------
7,039,375
------------
Computers -- 0.4%
Hewlett Packard Co................................................................. 19,000 1,064,000
------------
Consumer Products -- 4.8%
Fortune Brands, Inc................................................................ 74,000 2,761,125
Gillette Co........................................................................ 25,000 2,368,750
Kimberly-Clark Corp................................................................ 73,000 3,631,750
Rubbermaid, Inc.................................................................... 75,000 2,231,250
------------
10,992,875
------------
Drugs -- 3.8%
American Home Products Corp........................................................ 63,000 4,819,500
Pfizer, Inc........................................................................ 32,000 3,824,000
------------
8,643,500
------------
</TABLE>
3
<PAGE> 4
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Market Street Fund, Inc.
The Growth Portfolio
Schedule of Net Assets, June 30, 1997 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Electrical Equipment -- 3.8%
Emerson Electric Co................................................................ 70,000 $ 3,854,375
General Electric Co................................................................ 74,000 4,837,750
------------
8,692,125
------------
Electronic Distribution -- 1.7%
Avnet, Inc......................................................................... 67,000 3,852,500
------------
Energy -- 9.6%
Amoco Corp......................................................................... 36,000 3,129,750
Chevron Corp....................................................................... 34,000 2,513,875
Exxon Corp......................................................................... 89,000 5,473,500
Mobil Corp......................................................................... 66,000 4,611,750
Royal Dutch Petroleum Co........................................................... 112,000 6,090,000
------------
21,818,875
------------
Financial -- 4.8%
American Express Co................................................................ 60,000 4,470,000
Travelers Group, Inc............................................................... 101,533 6,402,925
------------
10,872,925
------------
Foods -- 3.7%
*CPC International, Inc............................................................ 46,000 4,246,375
*Sara Lee Corp..................................................................... 98,000 4,079,250
------------
8,325,625
------------
Healthcare Services -- 1.7%
*Columbia/HCA Healthcare Corp...................................................... 100,000 3,931,250
------------
Hotel/Restaurants -- 1.0%
*Marriott International, Inc....................................................... 39,000 2,393,625
------------
Industrial Diversified -- 6.5%
Boeing Co.......................................................................... 4,000 212,250
Crown Cork & Seal Co., Inc......................................................... 56,000 2,992,500
Parker-Hannifin Corp............................................................... 91,000 5,522,562
PPG Industries, Inc................................................................ 45,000 2,615,625
Rockwell International Corp........................................................ 60,000 3,540,000
------------
14,882,937
------------
Insurance -- 5.9%
Allstate Corp...................................................................... 60,000 4,380,000
American General Corp.............................................................. 88,000 4,202,000
American International Group, Inc.................................................. 32,000 4,780,000
------------
13,362,000
------------
</TABLE>
4
<PAGE> 5
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Market Street Fund, Inc.
The Growth Portfolio
Schedule of Net Assets, June 30, 1997 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Machinery & Instrumentation -- 2.3%
Deere & Co......................................................................... 96,600 5,300,925
------------
Medical Equipment & Supplies -- 2.0%
Johnson & Johnson.................................................................. 70,000 4,506,250
------------
Oil Field Equipment & Services -- 2.8%
Halliburton Co..................................................................... 40,000 3,170,000
Schlumberger, Ltd.................................................................. 25,000 3,125,000
------------
6,295,000
------------
Publishing -- 2.6%
*Gannett, Inc...................................................................... 35,000 3,456,250
McGraw-Hill, Inc................................................................... 42,000 2,470,125
------------
5,926,375
------------
Railroads -- 2.6%
Canadian Pacific, Ltd.............................................................. 105,000 2,985,937
Union Pacific Corp. Series A....................................................... 42,000 2,961,000
------------
5,946,937
------------
Retail -- 2.8%
May Department Stores Co........................................................... 52,000 2,457,000
Sears, Roebuck & Co................................................................ 71,000 3,816,250
------------
6,273,250
------------
Telecommunications Equipment -- 1.2%
Lucent Technologies, Inc........................................................... 37,000 2,666,313
------------
Tobacco -- 1.7%
Gallaher Group Plc ADR............................................................. 74,000 1,364,375
Philip Morris Cos., Inc............................................................ 55,000 2,440,625
------------
3,805,000
------------
Utilities - Electric -- 5.2%
Duke Power Co...................................................................... 42,000 2,013,375
FPL Group, Inc..................................................................... 63,000 2,901,938
Florida Progress Corp.............................................................. 94,000 2,943,375
Pacificorp......................................................................... 183,000 4,026,000
------------
11,884,688
------------
Utilities - Gas -- 2.5%
Enron Corp......................................................................... 74,000 3,020,125
Sonat, Inc......................................................................... 53,000 2,716,250
------------
5,736,375
------------
</TABLE>
5
<PAGE> 6
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Market Street Fund, Inc.
The Growth Portfolio
Schedule of Net Assets, June 30, 1997 -- Concluded
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT OR
NUMBER
MATURITY OF SHARES VALUE
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCK (CONTINUED)
Utilities--Telephone -- 0.9%
GTE Corp............................................................. 46,000 $ 2,018,250
------------
TOTAL COMMON STOCK (COST $195,494,597)............................. 213,225,412
------------
PREFERRED STOCK -- 0.8%
Microsoft Corp., Preferred Series A Convertible, 2.75%............... 21,000 1,827,000
------------
TOTAL PREFERRED STOCK (COST $1,793,499)............................ 1,827,000
------------
COMMERCIAL PAPER -- 5.0%
Merrill Lynch & Co., Inc., 5.53%..................................... 07/01/1997 $4,000,000 4,000,000
Prudential Funding Corp., 5.53%...................................... 07/03/1997 7,500,000 7,497,696
------------
TOTAL COMMERCIAL PAPER (COST $11,497,696).......................... 11,497,696
------------
SHORT-TERM INVESTMENTS -- 0.7%
Temporary Investment Fund, Inc.--TempCash............................ 1,559,173 1,559,173
------------
TOTAL SHORT-TERM INVESTMENTS (COST $1,559,173)..................... 1,559,173
------------
TOTAL INVESTMENTS -- 100.0% (COST $210,344,965)........................ 228,109,281
LIABILITIES IN EXCESS OF OTHER ASSETS -- 0.0%.......................... (63,928)
------------
NET ASSETS -- 100.0%
(Equivalent to $17.91 per share based on 12,734,581 shares of capital
stock outstanding)................................................. $228,045,353
=============
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE
($228,045,353/12,734,581 shares outstanding)......................... $ 17.91
=============
</TABLE>
- ---------------
* Non-income producing.
See accompanying notes to financial statements.
6
<PAGE> 7
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Market Street Fund, Inc.
The Money Market Portfolio
Schedule of Net Assets June 30, 1997
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
MATURITY AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
AGENCY OBLIGATIONS -- 3.3%
Federal National Mortgage Association, 8.95%.......................... 07/10/1997 $2,000,000 $ 2,001,586
-----------
TOTAL AGENCY OBLIGATIONS (COST $2,001,586).............................. 2,001,586
-----------
BANKERS' ACCEPTANCES -- 15.8%
Bank of America, 5.56%................................................ 07/07/1997 2,000,000 1,998,147
Bank of New York, 5.55%............................................... 07/22/1997 1,000,000 996,780
First Chicago Corp., 5.60%............................................ 07/24/1997 1,000,000 996,422
First Chicago Corp.,5.60%............................................. 07/28/1997 2,000,000 1,991,600
Union Bank Los Angeles, 5.56%......................................... 07/09/1997 1,500,000 1,498,147
Union Bank Los Angeles,5.54%.......................................... 08/01/1997 1,174,433 1,168,830
Wachovia Bank of Georgia, 5.55%....................................... 07/01/1997 1,000,000 1,000,000
-----------
TOTAL BANKER'S ACCEPTANCES (COST $9,649,926) 9,649,926
-----------
COMMERCIAL PAPER -- 78.5%
Bank -- 17.9%
Bank of New York, 5.54%............................................... 08/22/1997 1,000,000 991,998
Mellon Financial Co., 5.60%........................................... 07/02/1997 3,000,000 2,999,533
National City Credit Corp., 5.56%..................................... 07/22/1997 1,450,000 1,445,297
NationsBank NC, 5.55%................................................. 08/07/1997 3,000,000 2,982,887
Northern Trust Co. (Chicago), 5.52%................................... 07/25/1997 2,500,000 2,490,800
-----------
10,910,515
-----------
Brokerage -- 4.9%
Merrill Lynch & Co., Inc., 5.57%...................................... 08/20/1997 3,000,000 2,976,792
-----------
Consumer Finance -- 9.6%
Beneficial Corp., 5.53%............................................... 07/18/1997 1,265,000 1,261,697
Beneficial Corp., 5.55%............................................... 08/11/1997 1,750,000 1,738,938
Household Finance Corp., 5.57%........................................ 08/05/1997 2,900,000 2,884,296
-----------
5,884,931
-----------
Finance -- 36.3%
Associates Corp. of North America, 5.54%.............................. 08/08/1997 3,000,000 2,982,457
C.I.T. Group Holdings, Inc., 5.55%.................................... 08/22/1997 1,500,000 1,487,975
Commercial Credit Corp., 5.56%........................................ 07/16/1997 2,500,000 2,494,208
Deere (John) Capital Corp., 5.55%..................................... 07/30/1997 2,200,000 2,190,164
General Electric Capital Corp., 5.57%................................. 07/11/1997 1,500,000 1,497,679
General Electric Capital Corp., 5.57%................................. 08/01/1997 1,000,000 995,204
IBM Credit Corp., 5.54%............................................... 07/31/1997 2,900,000 2,886,612
Norwest Corp., 6.00%.................................................. 07/01/1997 3,000,000 3,000,000
Prudential Funding Corp., 5.53%....................................... 07/14/1997 1,000,000 998,003
</TABLE>
7
<PAGE> 8
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Money Market Portfolio
Schedule of Net Assets June 30, 1997 -- Concluded
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT OR
NUMBER OF
MATURITY SHARES VALUE
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMERCIAL PAPER (CONTINUED)
Prudential Funding Corp., 5.56%....................................... 08/06/1997 $1,000,000 $ 994,440
Prudential Funding Corp., 5.54%....................................... 08/20/1997 1,000,000 992,305
Transamerica Financial Corp., 5.60%................................... 07/10/1997 1,600,000 1,597,760
-----------
22,116,807
-----------
Industrial -- 4.9%
Avnet, Inc., 5.54%.................................................... 07/29/1997 2,000,000 1,991,382
Avnet, Inc., 5.55%.................................................... 08/15/1997 1,000,000 993,062
-----------
2,984,444
-----------
Utility - Electric -- 4.9%
Virginia Electric & Power, 5.55%...................................... 08/12/1997 3,000,000 2,980,575
-----------
TOTAL COMMERCIAL PAPER (COST $47,854,064)........................... 47,854,064
-----------
SHORT-TERM INVESTMENTS -- 2.7%
Temporary Investment Fund, Inc. -- TempCash........................... 1,622,832 1,622,832
-----------
TOTAL SHORT-TERM INVESTMENTS (COST $1,622,832)...................... 1,622,832
-----------
TOTAL INVESTMENTS -- 100.3%............................................. 61,128,408
LIABILITIES IN EXCESS OF OTHER ASSETS (0.3%)............................ (212,526)
-----------
NET ASSETS -- 100.0%
(Equivalent to $1.00 per share based on 60,915,906 shares of capital
stock outstanding).................................................. $60,915,882
===========
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE
($60,915,882/60,915,906 shares outstanding)........................... $ 1.00
===========
</TABLE>
- ---------------
See accompanying notes to financial statements.
8
<PAGE> 9
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Bond Portfolio
1997 Semi-Annual Review
Sentinel Advisors Company
- --------------------------------------------------------------------------------
The Market Street Bond Portfolio's total return for the first half of 1997
was 2.5%. The Lehman Aggregate Bond Index returned 3.1% for the same period.
Interest rates, as measured by the U.S. Treasury 10-year index, reached a
high of 6.98% on April 14. Since that time, rates have trended lower closing the
period at 6.50%, only 13 basis points higher than the low of 6.37% set on June
20. Corporate securities in general continued to outperform Treasury securities
as quality spreads narrowed. Trust preferreds, surplus notes, and the tobacco
sector did not participate in this narrowing, and, in fact, widened versus
Treasuries. Mortgage-backed securities kept pace with the general market.
The Market Street Bond Portfolio's average quality was relatively high at
AA2. Treasury securities represented 34% of net assets while corporate bonds and
mortgage securities represented 40% and 20%, respectively. Trading activity
involved selling short Treasury securities to buy short mortgage securities and
selling 10-year corporates to buy 10-year Treasuries. Corporate bonds were
reduced to 40% of assets, mortgage securities were increased to 20%, and cash
was reduced to 4%. Treasuries ended the quarter at 34% of assets.
The current economic condition of slow growth, modest inflation, and low
interest rates projected for as long as one can predict seems to us to be an
unsustainable economic nirvana. Economic growth should quicken, inflation should
stir, albeit moderately, and the Federal Reserve should ultimately act to
restrict credit further. The Portfolio will continue to maintain a relatively
short duration emphasizing corporates and mortgages to enhance income.
Richard D. Temple
9
<PAGE> 10
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Bond Portfolio
Schedule of Net Assets, June 30, 1997
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
MATURITY AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
U.S. TREASURY NOTES -- 33.6%
U.S. Treasury Notes, 5.50%............................................. 12/31/2000 $1,750,000 $ 1,705,077
U.S. Treasury Notes, 7.50%............................................. 02/15/2005 2,000,000 2,114,740
U.S. Treasury Notes, 6.88%............................................. 05/15/2006 1,500,000 1,530,270
U.S. Treasury Notes, 7.00%............................................. 07/15/2006 500,000 514,140
U.S. Treasury Notes, 6.63%............................................. 05/15/2007 500,000 503,770
-----------
TOTAL U.S. TREASURY NOTES (COST $6,391,197).......................... 6,367,997
-----------
AGENCY OBLIGATIONS -- 20.3%
Collateralized Mortgage Obligation Trust, 7.95%........................ 05/01/2017 421,218 432,795
Federal Home Loan Mortgage Corp., 6.50%................................ 05/01/2008 523,734 513,750
Federal Home Loan Mortgage Corp., 8.00%................................ 11/01/2008 469,180 480,030
Federal Home Loan Mortgage Corp., 9.00%................................ 11/01/2016 4,517 4,773
Federal Home Loan Mortgage Corp., 8.00%................................ 03/01/2017 35,752 36,578
Federal National Mortgage Association, 7.50%........................... 12/01/2006 423,554 432,422
Federal National Mortgage Association, 7.50%........................... 12/01/2007 446,801 453,224
Government National Mortgage Association, 8.50%........................ 02/15/2002 480,701 499,479
Government National Mortgage Association, 8.00%........................ 12/15/2008 961,765 994,525
-----------
TOTAL AGENCY OBLIGATIONS (COST $3,841,801)........................... 3,847,576
-----------
CORPORATE BONDS -- 40.4%
Financial Institutions -- 20.3%
Banque Nationale de Paris, 7.20%....................................... 01/15/2007 500,000 496,875
CS First Boston, 7.75%................................................. 05/15/2006 600,000 621,000
First Union Corp., 6.82%............................................... 08/01/2006 600,000 600,750
Lehman Brothers Holdings, Inc., 8.50%.................................. 08/01/2015 500,000 533,125
Midland Bank Plc, 7.65%................................................ 05/01/2025 500,000 521,250
Provident Capital Trust I, 8.60%....................................... 12/01/2026 500,000 490,000
Salomon, Inc., 6.88%................................................... 12/15/2003 600,000 589,500
-----------
3,852,500
-----------
Foreign -- 5.4%
BCH Cayman Islands Ltd., 7.70%......................................... 07/15/2006 500,000 512,500
Swedish Export Credit Corp., 9.88%..................................... 03/15/2038 475,000 507,063
-----------
1,019,563
-----------
Insurance -- 3.3%
Farmers Insurance Exchange, 8.63%...................................... 05/01/2024 600,000 624,000
-----------
</TABLE>
10
<PAGE> 11
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Bond Portfolio
Schedule of Net Assets June 30, 1997 -- Concluded
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT OR
NUMBER OF
MATURITY SHARES VALUE
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CORPORATE BONDS (CONTINUED)
Telecommunications -- 5.7%
Comsat Corp. Medium Term Note, 8.05%.................................. 12/13/2006 $ 500,000 $ 543,110
Continental Cablevision Senior Notes, 8.30%........................... 05/15/2006 500,000 531,875
-----------
1,074,985
-----------
Tobacco -- 2.2%
Dimon, Inc. Senior Notes, 8.88%....................................... 06/01/2006 400,000 417,000
-----------
Utilities -- 2.7%
New Orleans Public Service, Inc., 8.00%............................... 03/01/2006 500,000 505,625
-----------
Utilities - Gas -- 0.8%
Consolidated Natural Gas Co., 8.63%................................... 12/01/2011 156,000 160,875
-----------
TOTAL CORPORATE BONDS (COST $7,638,437)............................. 7,654,548
-----------
COMMERCIAL PAPER -- 5.8%
Household Finance Corp., 5.47%........................................ 07/02/1997 500,000 499,924
Norwest Corp., 5.51%.................................................. 07/08/1997 600,000 599,357
-----------
TOTAL COMMERCIAL PAPER (COST $1,099,281)............................ 1,099,281
-----------
SHORT-TERM INVESTMENTS -- 3.6%
Temporary Investment Fund, Inc. -- TempCash........................... 668,202 668,202
-----------
TOTAL SHORT-TERM INVESTMENTS (COST $668,202)........................ 668,202
-----------
TOTAL INVESTMENTS -- 103.7% (COST $19,638,918).......................... 19,637,604
LIABILITIES IN EXCESS OF OTHER ASSETS (3.7%)............................ (695,018)
-----------
NET ASSETS -- 100.0%
(Equivalent to $10.59 per share based on 1,788,901 shares of capital
stock outstanding).................................................. $18,942,586
===========
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE
($18,942,586/1,788,901 shares outstanding)............................ $ 10.59
===========
</TABLE>
- ---------------
See accompanying notes to financial statements.
11
<PAGE> 12
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Managed Portfolio
1997 Semi-Annual Review
Sentinel Advisors Company
- --------------------------------------------------------------------------------
The Market Street Managed Portfolio achieved a total return for the
year-to-date period of 11.5%, solidly outdistancing the median Lipper balanced
fund's 10.1%.
The stock market meaningfully outperformed the bond market during the
second quarter, with the Standard & Poor's 500 achieving a total return of 17.5%
while the Lehman Aggregate Bond Index was up 3.3%. At the end of June, the asset
allocation of the Market Street Managed Portfolio was 62% common stocks, 35%
fixed income, and 3% cash. This is slightly more aggressive than the 58% common
stocks, 33% fixed income, and 9% cash positions as of the end of the first
quarter. The change in allocation was primarily the result of strong stock
market performance and a modest reduction in cash.
The stock market rally continued for the tenth consecutive quarter, a feat
unmatched in over 40 years. The stock market has achieved quarterly returns of
this magnitude only four times in the last 50 years. As has been the case in the
last several years, the financial stocks led the rally during the quarter, with
strength broadening beyond the banking stocks to the diversified financial
service, insurance, and security brokerage companies. Also soaring were the
defensive consumer staples companies, with particular strength noted in the soft
drink and pharmaceutical stocks. Only two major industry groups suffered
declines in the second quarter: the electric utility and precious metals stocks.
Although smaller capitalization stocks recovered, with the Russell 2000 up
15.7%, the strongest market action was clearly among the larger capitalization
issues that dominate the S&P 500, many of which were up 25% or more.
At the end of the period, the yield on the 2-year Treasury Note was 6.06%,
while the 30-year Treasury Bond yields were 6.78%. The duration (a measure of
interest rate sensitivity) of the fixed income segment of the Portfolio ended at
4.8 years. This was accomplished by swapping US Treasuries and corporate bonds
in favor of mortgage-backed securities.
The economic outlook has been described by various Wall Street pundits
recently as "the best of all worlds": moderate growth, modest inflation and
relatively low interest rates. In such an environment, the bull market of the
1990's has continued unabated. However, the combination of record high valuation
measures for the stock market, an almost unquestioned faith in continued
economic nirvana and strong earnings growth, and euphoric investor sentiment
suggests to us that the stock market has entered an extremely risky phase. In
this higher risk market environment, we are strongly committed to our
disciplined investment process which focuses on quality companies with
consistent operating earnings trading at reasonable valuation levels.
David M. Brownlee, CFA
Richard A. Pender, CFA
12
<PAGE> 13
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Managed Portfolio
Schedule of Net Assets, June 30, 1997
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK -- 61.5%
Automobiles -- 2.1%
Chrysler Corp. .................................................................... 13,200 $ 433,125
Ford Motor Co. .................................................................... 16,600 626,650
-----------
1,059,775
-----------
Automotive & Equipment -- 1.2%
Echlin, Inc. ...................................................................... 10,000 360,000
Pep Boys - Manny, Moe & Jack....................................................... 6,700 228,219
-----------
588,219
-----------
Banks -- 5.0%
Bank of New York Co., Inc. ........................................................ 11,000 478,500
BankAmerica Corp. ................................................................. 7,200 464,850
Chase Manhattan Corp. ............................................................. 3,840 372,720
Citicorp........................................................................... 3,600 434,025
First Union Corp. ................................................................. 4,800 444,000
Morgan (J.P.) & Co., Inc. ......................................................... 2,500 260,937
-----------
2,455,032
-----------
Beverages -- 0.6%
Coca Cola Co. ..................................................................... 4,500 303,750
-----------
Building Materials -- 1.1%
Sherwin Williams Co. .............................................................. 17,400 537,225
-----------
Business & Consumer Services -- 2.3%
Electronic Data Systems Corp. ..................................................... 10,835 444,235
Omnicom Group, Inc. ............................................................... 10,900 671,712
-----------
1,115,947
-----------
Computers -- 0.3%
Hewlett Packard Co. ............................................................... 2,800 156,800
-----------
Consumer Products -- 2.4%
Fortune Brands, Inc. .............................................................. 10,000 373,125
Kimberly-Clark Corp. .............................................................. 10,000 497,500
Rubbermaid, Inc. .................................................................. 10,900 324,275
-----------
1,194,900
-----------
Drugs -- 2.6%
American Home Products Corp. ...................................................... 8,700 665,550
Pfizer, Inc. ...................................................................... 5,100 609,450
-----------
1,275,000
-----------
</TABLE>
13
<PAGE> 14
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Managed Portfolio
Schedule of Net Assets, June 30, 1997 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Electrical Equipment -- 3.5%
Emerson Electric Co. .............................................................. 10,800 $ 594,675
General Electric Co. .............................................................. 10,000 653,750
Grainger (W.W.), Inc. ............................................................. 5,800 453,487
-----------
1,701,912
-----------
Energy -- 6.1%
Amoco Corp. ....................................................................... 6,400 556,400
Chevron Corp. ..................................................................... 5,100 377,081
Exxon Corp. ....................................................................... 11,000 676,500
Mobil Corp. ....................................................................... 8,600 600,925
Royal Dutch Petroleum Co. ......................................................... 14,000 761,250
-----------
2,972,156
-----------
Financial -- 1.4%
American Express Co. .............................................................. 9,000 670,500
-----------
Foods -- 2.9%
CPC International, Inc. ........................................................... 6,500 600,031
Hannaford Bros. Co. ............................................................... 7,000 248,937
Sara Lee Corp. .................................................................... 13,800 574,425
-----------
1,423,393
-----------
Healthcare Providers -- 1.1%
Columbia/HCA Healthcare Corp. ..................................................... 14,100 554,306
-----------
Hotel/Restaurants -- 0.7%
*Marriott International, Inc. ..................................................... 5,500 337,563
-----------
Industrial - Diversified -- 5.2%
Boeing Co. ........................................................................ 672 35,658
Crown Cork & Seal Co., Inc. ....................................................... 8,000 427,500
Dover Corp. ....................................................................... 5,000 307,500
Parker-Hannifin Corp. ............................................................. 13,800 837,488
PPG Industries, Inc. .............................................................. 6,500 377,813
Rockwell International Corp. ...................................................... 9,400 554,600
-----------
2,540,559
-----------
Insurance -- 5.1%
Allstate Corp. .................................................................... 9,000 657,000
American General Corp. ............................................................ 12,300 587,325
American International Group, Inc. ................................................ 4,500 672,188
Equitable of Iowa.................................................................. 10,000 560,000
-----------
2,476,513
-----------
</TABLE>
14
<PAGE> 15
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Managed Portfolio
Schedule of Net Assets, June 30, 1997 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Medical Equipment & Supplies -- 1.4%
Johnson & Johnson.................................................................. 10,400 $ 669,500
-----------
Oil Field Equipment & Services -- 1.8%
Halliburton Co. ................................................................... 5,500 435,875
Schlumberger Ltd. ................................................................. 3,500 437,500
-----------
873,375
-----------
Publishing -- 2.1%
Gannett, Inc. ..................................................................... 5,100 503,625
McGraw-Hill, Inc. ................................................................. 8,700 511,669
-----------
1,015,294
-----------
Railroads -- 2.6%
Canadian Pacific Ltd. ............................................................. 15,000 426,563
Illinois Central Corp. ............................................................ 11,850 414,009
Union Pacific Corp. Series A....................................................... 5,800 408,900
-----------
1,249,472
-----------
Retail Merchandising -- 2.3%
May Department Stores Co. ......................................................... 8,000 378,000
Sears, Roebuck & Co. .............................................................. 13,500 725,625
-----------
1,103,625
-----------
Telecommunications Equipment -- 0.7%
Lucent Technologies, Inc. ......................................................... 4,600 331,488
-----------
Tobacco -- 1.1%
Gallaher Group Plc ADR............................................................. 10,000 184,375
Philip Morris Cos., Inc. .......................................................... 7,800 346,125
-----------
530,500
-----------
Utilities - Electric -- 3.1%
Duke Power Co. .................................................................... 6,000 287,625
Florida Progress Corp. ............................................................ 10,000 313,125
FPL Group, Inc. ................................................................... 8,700 400,744
Pacificorp......................................................................... 24,000 528,000
-----------
1,529,494
-----------
Utilities - Gas -- 1.8%
Enron Corp. ....................................................................... 11,000 448,938
Sonat, Inc. ....................................................................... 8,700 445,875
-----------
894,813
-----------
</TABLE>
15
<PAGE> 16
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Managed Portfolio
Schedule of Net Assets, June 30, 1997 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT OR
NUMBER OF
MATURITY SHARES VALUE
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCK (CONTINUED)
Utilities - Telephone -- 1.0%
GTE Corp. ............................................................ 11,000 $ 482,625
-----------
TOTAL COMMON STOCK (COST $19,588,354)............................... 30,043,736
-----------
PREFERRED STOCK -- 0.5%
Microsoft Corp., Preferred Series A Convertible, 2.75%................ 2,700 234,900
-----------
TOTAL PREFERRED STOCK (COST $215,888)............................... 234,900
-----------
U.S. TREASURY NOTES -- 7.1%
U.S. Treasury Notes, 5.50%............................................ 12/31/2000 $1,000,000 974,330
U.S. Treasury Notes, 7.00%............................................ 07/15/2006 500,000 514,140
U.S. Treasury Notes, 6.63%............................................ 05/15/2007 1,000,000 1,007,540
U.S. Treasury Bonds, 6.50%............................................ 11/15/2026 1,000,000 957,670
-----------
TOTAL U.S. TREASURY NOTES (COST $3,463,699)......................... 3,453,680
-----------
AGENCY OBLIGATIONS -- 15.3%
Collateralized Mortgage Obligation Trust, 7.95%....................... 05/01/2017 421,218 432,795
Federal Home Loan Mortgage Corp., 9.50%............................... 03/01/2006 254,661 266,996
Federal Home Loan Mortgage Corp., 8.00%............................... 03/01/2007 979,941 1,008,114
Federal Home Loan Mortgage Corp., 8.00%............................... 11/01/2008 469,180 480,030
Federal Home Loan Mortgage Corp., 6.50%............................... 01/01/2011 851,706 835,471
Federal National Mortgage Association, 7.75%.......................... 03/01/2008 252,881 255,963
Federal National Mortgage Association, 7.75%.......................... 05/01/2008 138,847 140,539
Federal National Mortgage Bonds, 7.50%................................ 12/01/2007 446,801 453,224
Federal National Mortgage Bonds, 7.00%................................ 03/01/2008 486,917 486,004
Government National Mortgage Association, 8.50%....................... 02/15/2002 578,186 600,772
Government National Mortgage Association, 8.00%....................... 03/15/2007 506,018 522,464
Government National Mortgage Association, 8.00%....................... 08/15/2008 506,301 522,756
Government National Mortgage Association, 8.00%....................... 12/15/2008 961,765 994,525
Government National Mortgage Association, 8.00%....................... 06/15/2017 462,423 479,330
-----------
TOTAL AGENCY OBLIGATIONS (COST $7,472,948).......................... 7,478,983
-----------
CORPORATE BONDS -- 12.2%
Banks -- 1.0%
BCH Cayman Islands, 7.70%............................................. 07/15/2006 500,000 512,500
-----------
</TABLE>
16
<PAGE> 17
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Managed Portfolio
Schedule of Net Assets June 30, 1997 -- Concluded
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT OR
NUMBER OF
MATURITY SHARES VALUE
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CORPORATE BONDS (CONTINUED)
Financial Institutions -- 6.6%
CS First Boston, 7.75%................................................ 05/15/2006 $ 500,000 $ 517,500
First Union Corp., 6.82%.............................................. 08/01/2006 600,000 600,750
Lehman Brothers Holdings, 8.50%....................................... 08/01/2015 500,000 533,125
Midland Bank Plc, 7.65%............................................... 05/01/2025 550,000 573,375
Provident Capital Trust I, 8.60%...................................... 12/01/2026 500,000 490,000
Salomon, Inc., 6.88%.................................................. 12/15/2003 500,000 491,250
-----------
3,206,000
-----------
Insurance -- 1.5%
Farmers Insurance Exchange, 8.63%..................................... 05/01/2024 700,000 728,000
-----------
Telecommunications -- 2.2%
Comsat Medium Term Note, 8.05%........................................ 12/13/2006 500,000 543,110
Continental Cablevision, 8.30%........................................ 05/15/2006 500,000 531,875
-----------
1,074,985
-----------
Tobacco -- 0.9%
Dimon, Inc., 8.88%.................................................... 06/01/2006 400,000 417,000
-----------
TOTAL CORPORATE BONDS (COST $5,970,653)............................. 5,938,485
-----------
COMMERCIAL PAPER -- 1.6%
Merrill Lynch & Co., Inc., 5.58% 07/01/1997 800,000 800,000
-----------
TOTAL COMMERCIAL PAPER (COST $800,000).............................. 800,000
-----------
SHORT TERM INVESTMENTS -- 1.5%
Temporary Investment Fund, Inc. -- TempCash........................... 751,915 751,915
-----------
TOTAL SHORT TERM INVESTMENTS (COST $751,915)........................ 751,915
-----------
TOTAL INVESTMENTS -- 99.7% (COST $38,263,457)........................... 48,701,699
OTHER ASSETS IN EXCESS OF LIABILITIES -- 0.3%........................... 157,861
-----------
NET ASSETS -- 100.0%
(Equivalent to $15.95 per share based on 3,062,681 shares of capital
stock outstanding).................................................. $48,859,560
===========
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE
($48,859,560/3,062,681 shares outstanding)............................ $ 15.95
===========
</TABLE>
- ---------------
* Non-income producing.
See accompanying notes to financial statements.
17
<PAGE> 18
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Aggressive Growth Portfolio
1997 Semi-Annual Review
Sentinel Advisors Company
- --------------------------------------------------------------------------------
The Market Street Aggressive Growth Portfolio achieved a total return of
11.6% for the first half of 1997, compared to 9.9% for the median Lipper small
company fund.
The Russell 2000 stock index (a good proxy for small stocks) returned 15.7%
for the three month period ending March 31, 1997 and 9.3% since December 31,
1996. The Lipper small company fund's below median relative performance for the
second quarter may be attributed to its relatively low exposure to the
rebounding high technology stocks and interest sensitive financial stocks. That
many of our largest holdings consolidated their relatively strong first quarter
gains, while most other small company stocks were bouncing back from deeply
oversold levels, also contributed to the poor relative performance during the
second quarter.
Our intention is to keep the Aggressive Growth Portfolio's median market
capitalization below $1 billion and to position our shareholders to be duly
exposed to the small company sector. To further these objectives, we will
continue to work opportunistically to reduce the Portfolio's exposure to
companies with large market capitalizations that typically have been received as
a result of a merger. Generally speaking, smaller company shares appear to offer
much better value than the shares of most of the largest companies that dominate
the S&P 500 or NASDAQ Composite equity indices.
Keniston P. Merrill
Scott T. Brayman, CFA
Robert L. Lee, CFA
18
<PAGE> 19
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Aggressive Growth Portfolio
Schedule of Net Assets, June 30, 1997
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK -- 84.2%
Auto Parts & Repair -- 2.2%
Pep Boys - Manny, Moe & Jack........................................................ 27,000 $ 919,687
---------
Beverages -- 1.2%
*Robert Mondavi Corp., Class A...................................................... 11,000 519,750
---------
Business & Consumer Services -- 7.1%
Analysts International Corp. ....................................................... 19,300 646,550
*Healthcare Services Group.......................................................... 48,500 582,000
Kelly Services, Inc. ............................................................... 17,600 552,200
Olsten Corp. ....................................................................... 22,000 427,625
*Sterling Commerce, Inc. ........................................................... 23,200 762,700
---------
2,971,075
---------
Communications -- 4.3%
*Dynatech Corp. .................................................................... 25,000 893,750
*Hewlett Packard Co................................................................. 16,000 896,000
---------
1,789,750
---------
Drugs -- 2.9%
*Alpha Beta Technology, Inc......................................................... 17,000 155,125
*Scherer (R.P.) Corp................................................................ 20,500 1,058,313
---------
1,213,438
---------
Electronics -- 5.2%
Harman International Industries, Inc................................................ 20,000 842,500
Methode Electronics, Inc. Class A................................................... 66,000 1,311,750
---------
2,154,250
---------
Energy -- 2.2%
*Calenergy Co., Inc................................................................. 24,000 912,000
---------
Environmental Control -- 4.5%
Calgon Carbon Corp.................................................................. 69,000 957,375
*Waste Management International Plc-ADR............................................. 100,000 912,500
---------
1,869,875
---------
Financial -- 4.1%
Duff & Phelps Credit Rating Co...................................................... 15,000 455,625
Mercantile Bankshares Corp.......................................................... 12,000 480,000
Wilmington Trust Corp............................................................... 17,000 777,750
---------
1,713,375
---------
</TABLE>
19
<PAGE> 20
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Aggressive Growth Portfolio
Schedule of Net Assets, June 30, 1997 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Food & Food Distributors -- 6.7%
Goodmark Foods, Inc................................................................. 32,000 $ 600,000
Hannaford Bros. Co.................................................................. 15,100 536,994
Smart & Final, Inc.................................................................. 31,000 759,500
Tootsie Roll Industries, Inc........................................................ 19,978 889,021
-----------
2,785,515
-----------
Healthcare Providers -- 1.9%
*Genesis Health Ventures, Inc....................................................... 24,000 810,000
-----------
Industrial Diversified -- 11.3%
*Bush Boake Allen, Inc.............................................................. 37,000 1,151,625
Cambrex Corp........................................................................ 9,900 392,287
*Computational Systems, Inc......................................................... 21,800 302,475
Donaldson, Inc...................................................................... 26,000 988,000
Lawter International, Inc........................................................... 57,000 719,625
Life Technologies, Inc.............................................................. 16,000 444,000
*Material Sciences Corp............................................................. 46,000 710,125
-----------
4,708,137
-----------
Insurance -- 1.0%
Conseco, Inc........................................................................ 11,000 407,000
-----------
Medical Equipment & Supplies -- 6.1%
Allergan, Inc....................................................................... 23,000 731,687
Ballard Medical Products............................................................ 20,000 401,250
Hillenbrand Industries, Inc......................................................... 22,000 1,045,000
*Minntech Corp...................................................................... 33,000 346,500
-----------
2,524,437
-----------
</TABLE>
20
<PAGE> 21
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Aggressive Growth Portfolio
Schedule of Net Assets, June 30, 1997 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT OR
NUMBER OF
MATURITY SHARES VALUE
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCK (CONTINUED)
Oil Field Equipment & Services -- 5.1%
Halliburton Co. ...................................................... 10,000 $ 792,500
*Smith International, Inc. ........................................... 22,000 1,336,500
-----------
2,129,000
-----------
Real Estate Investment Trust -- 2.3%
Chateau Communities, Inc. ............................................ 34,000 973,250
-----------
Restaurants -- 2.3%
Sbarro, Inc. ......................................................... 34,000 943,500
-----------
Retail Stores -- 9.0%
Casey General Stores, Inc. ........................................... 34,000 732,063
Ethan Allen Interiors, Inc. .......................................... 21,000 1,197,000
Talbots, Inc. ........................................................ 33,000 1,122,000
*The Wet Seal, Inc., Class A.......................................... 22,300 703,844
-----------
3,754,907
-----------
Security Services -- 3.5%
ADT Ltd. ............................................................. 44,000 1,452,000
-----------
Software -- 1.3%
*Filenet Corp. ....................................................... 38,000 551,000
-----------
TOTAL COMMON STOCK (COST $26,712,726)............................... 35,101,946
-----------
PREFERRED STOCK -- 0.1%
Phoenix Duff & Phelps Preferred Convertible Series A, $1.50........... 2,500 68,438
-----------
TOTAL PREFERRED STOCK (COST $71,441)................................ 68,438
-----------
COMMERCIAL PAPER -- 15.1%
C.I.T. Group Holdings, Inc., 5.56%.................................... 07/17/1997 $1,400,000 1,396,541
Commercial Credit Corp., 5.50%........................................ 07/03/1997 1,200,000 1,199,633
Ford Motor Credit Co., 5.54%.......................................... 07/14/1997 1,600,000 1,596,799
</TABLE>
21
<PAGE> 22
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Aggressive Growth Portfolio
Schedule of Net Assets, June 30, 1997 -- Concluded
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT OR
NUMBER
MATURITY OF SHARES VALUE
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMERCIAL PAPER (CONTINUED)
Merrill Lynch & Co., Inc., 5.53%.................................... 07/01/1997 $1,000,000 $ 1,000,000
Prudential Funding Corp., 5.53%..................................... 07/09/1997 1,100,000 1,098,648
TOTAL COMMERCIAL PAPER (COST $6,291,621).......................... 6,291,621
----------
SHORT TERM INVESTMENTS -- 0.7%
Temporary Investment Fund, Inc.--TempCash........................... 276,819 276,819
----------
TOTAL SHORT TERM INVESTMENTS (COST $276,819)...................... 276,819
----------
TOTAL INVESTMENTS -- 100.1% (COST $33,352,607)........................ 41,738,824
LIABILITIES IN EXCESS OF OTHER ASSETS -- (0.1%)....................... (37,265)
----------
NET ASSETS -- 100.0%
(Equivalent to $20.43 per share based on 2,040,882 shares of capital
stock outstanding)................................................ $41,701,559
==========
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE
($41,701,559/2,040,882 shares outstanding).......................... $ 20.43
==========
</TABLE>
- ---------------
* Non-income producing.
See accompanying notes to financial statements.
22
<PAGE> 23
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The International Portfolio
1997 Semi-Annual Review
The Boston Company Asset Management, Inc.
- --------------------------------------------------------------------------------
The Market Street Fund International Portfolio outperformed the MSCI EAFE
Index in the first half of 1997, returning 13.9%, compared with the EAFE Index,
net dividends reinvested, which returned 11.2%.
Value stocks in the United Kingdom did not perform well in the second
quarter. Stocks in the value universe underperformed by 2% in the quarter and
4.6% year to date. During the past year the gap between growth stocks and value
stocks has widened significantly. Although it is difficult to predict the exact
timing of when this trend will reverse we believe there are excellent long term
opportunities for value stocks in the United Kingdom.
In Japan, the Topix index went from being among the worst performing
indexes (losing 14% in dollar terms) during the first quarter to one of the best
during the second, gaining 22%. Our portfolio of Japanese stocks continued to
outperform the Topix picking up an additional 1.6% after outperforming by 8%
during the first quarter.
The Asian ex-Japan markets have been weak. The markets that experienced the
weakest performance were Thailand and Malaysia. Your portfolio did not hold any
Thai equities. In Malaysia, fortunately, we are underweighted and security
positions were small.
Given the lackluster performance of Asian markets, we are finding select
opportunities. At present, we are underweight in the Hong Kong market. The
equities market has performed quite well in the last twelve months in advance of
the hand over to China. Similarly, in Europe, we owned several stocks that
performed quite well during the second quarter.
As we look into the remainder 1997, we are actively examining the market's
perception of value. We believe that a critical review of value will continue to
help your portfolio achieve a positive risk reward profile.
Sandor Cseh, CFA
23
<PAGE> 24
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The International Portfolio
Schedule of Net Assets, June 30, 1997
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
COMMON AND PREFERRED STOCK -- 94.4%
Argentina -- 0.9%
YPF Sociedad Anonima ADR........................................................... 19,000 $ 584,250
-----------
Australia -- 2.3%
*Australia & New Zealand Bank Group Ltd............................................ 105,000 785,085
*Boral Ltd. ....................................................................... 209,094 658,521
-----------
1,443,606
-----------
Austria -- 0.7%
*Bank Austria AG................................................................... 8,400 257,579
Creditanstalt PS................................................................... 1,200 161,650
-----------
419,229
-----------
Denmark -- 0.7%
Tele Danmark ADR................................................................... 17,500 457,188
-----------
France -- 9.5%
*Alcatel Alsthom ADR............................................................... 40,016 1,010,404
AXA -- UAP......................................................................... 4,000 248,851
*C.S.F. (Thomson-C.S.F.)........................................................... 11,419 294,270
CLF -- Dexia France................................................................ 5,000 486,809
Danone............................................................................. 3,604 595,657
*Elf Aquitaine ADR................................................................. 18,751 1,020,758
*Michelin (CGDE)................................................................... 8,000 480,545
*Rhone Poulenc S.A. -- ADR......................................................... 14,295 595,029
Societe Generale................................................................... 6,748 767,262
*Usinor Sacilor.................................................................... 20,000 360,851
-----------
5,860,436
-----------
Germany -- 8.3%
Bayer AG........................................................................... 16,000 615,392
Deutsche Bank AG................................................................... 15,000 877,188
GEA AG............................................................................. 1,600 630,818
Siemens AG......................................................................... 17,000 1,010,244
Tarkett AG......................................................................... 15,000 387,374
Veba AG............................................................................ 10,000 562,410
*Viag AG........................................................................... 1,400 637,131
Volkswagen......................................................................... 550 422,009
-----------
5,142,566
-----------
Greece -- 0.6%
*Hellenic Telecommunications....................................................... 32,000 364,800
-----------
</TABLE>
24
<PAGE> 25
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The International Portfolio
Schedule of Net Assets, June 30, 1997 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
COMMON AND PREFERRED STOCK (CONTINUED)
Hong Kong -- 2.1%
Cheung Kong Holdings............................................................... 45,000 $ 444,348
Hong Kong Electric................................................................. 110,000 442,993
*HSBC Holdings Plc................................................................. 13,653 410,612
-----------
1,297,953
-----------
Indonesia -- 0.5%
Indonesian Satellite............................................................... 10,000 299,375
-----------
Italy -- 3.6%
*Ente Nazionale Idrocarburi SpA.................................................... 11,000 625,625
*Fiat SpA.......................................................................... 105,000 377,856
Istituto Mobiliare Italiano ADR.................................................... 19,000 517,750
STET Di Risp....................................................................... 200,000 693,852
-----------
2,215,083
-----------
Japan -- 28.8%
Canon, Inc. ....................................................................... 38,000 1,035,911
Chudenko Corp. .................................................................... 7,000 187,768
Credit Saison Co. ................................................................. 47,150 1,153,517
Dai-Tokyo Fire and Marine Insurance................................................ 117,000 678,794
Fuji Machine....................................................................... 11,000 398,864
Hitachi Ltd. ...................................................................... 75,000 838,794
Honda Motor Co. Ltd. .............................................................. 17,000 512,451
Ito-Yokado Co. Ltd. ............................................................... 15,000 871,560
Kao Corp. ......................................................................... 70,000 972,477
*Mabuchi Motors.................................................................... 11,200 650,765
*Matsumotokiyoshi.................................................................. 9,000 382,176
Mikuni Coca-Cola Bottling Co. Ltd. ................................................ 36,000 534,731
Mineba Co. Ltd. ................................................................... 82,000 874,093
Mitsubishi Heavy industries Ltd. .................................................. 110,000 844,823
Murata Manufacturing Co. Ltd. ..................................................... 22,000 868,851
Nichiei............................................................................ 6,500 761,031
Nishimatsu Construction............................................................ 65,000 454,347
Ono Pharmaceutical................................................................. 8,000 280,297
Sankyo Co. Ltd. ................................................................... 19,000 571,079
Sekisui Chemical Co. .............................................................. 42,000 425,688
Sekisui House...................................................................... 48,000 486,501
Sony Corp. ........................................................................ 9,000 785,583
Toshiba Corp. ..................................................................... 120,000 772,739
Toyota Motor Corp. ................................................................ 23,000 679,249
</TABLE>
25
<PAGE> 26
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The International Portfolio
Schedule of Net Assets, June 30, 1997 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
COMMON AND PREFERRED STOCK (CONTINUED)
Japan (Continued)
Yamanouchi Pharmaceuticals......................................................... 27,000 $ 726,606
Yamato Transportation.............................................................. 75,000 937,090
-----------
17,685,785
-----------
Korea -- 0.5%
*Kookmin Bank GDR.................................................................. 14,317 309,963
-----------
Malaysia -- 0.8%
*Affin Holdings.................................................................... 100,000 237,765
IOI Properties Berhad.............................................................. 43,000 81,791
*Perusahaan Otomobil Nasional BHD.................................................. 42,000 196,394
-----------
515,950
-----------
Netherlands -- 5.9%
*ABN Amro Holding.................................................................. 27,060 504,786
AKZO N.V. ADR...................................................................... 6,500 449,313
*Hollandsche Beton................................................................. 2,108 481,014
*Hunter Douglas N.V. .............................................................. 6,963 592,667
Koninklijke K.N.P. ................................................................ 24,000 546,789
KPN ADS............................................................................ 8,863 351,196
Philips Electronics N.V. ADR....................................................... 9,500 682,813
-----------
3,608,578
-----------
New Zealand -- 0.7%
Air New Zealand.................................................................... 61,091 186,801
Fletcher Energy.................................................................... 75,000 226,783
*Fletcher Forest................................................................... 3,000 4,362
-----------
417,946
-----------
Norway -- 1.1%
Christiana Bank.................................................................... 87,000 297,070
Orkla.............................................................................. 5,500 373,352
-----------
670,422
-----------
Peru -- 0.5%
*Telefonica del Peru S.A. ADR...................................................... 12,000 314,250
-----------
Philippines -- 0.4%
Philippine Long Distance Telephone Co. ADR......................................... 4,300 276,275
-----------
Portugal -- 0.4%
*Banco Totta & Acores--Reg B....................................................... 13,000 216,482
-----------
</TABLE>
26
<PAGE> 27
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The International Portfolio
Schedule of Net Assets, June 30, 1997 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
COMMON AND PREFERRED STOCK (CONTINUED)
Singapore -- 1.5%
Development Bank................................................................... 50,000 $ 629,371
*Singapore Airlines.................................................................. 32,000 286,434
-----------
915,805
-----------
Spain -- 3.8%
Corporacion Bancaria de Espanol ADR................................................ 34,000 964,750
Gas y Electricidad, SA............................................................. 8,591 467,010
Repsol ADR......................................................................... 22,000 933,625
-----------
2,365,385
-----------
Sweden -- 1.1%
Marieberg Tidnings AB.............................................................. 14,000 351,472
Scania AB, Class A--ADR............................................................ 8,000 237,000
Scania AB, Class B--ADR............................................................ 3,000 89,250
-----------
677,722
-----------
Switzerland -- 4.7%
*Magazine Zum Globus............................................................... 100 61,707
*Magazine Zum Globus Participating Certificates, Zurich............................ 800 428,934
Nestle SA.......................................................................... 300 396,160
*Schweizerischer Bankverein........................................................ 3,000 800,137
Sulzer AG--Registered Shares....................................................... 630 538,210
*Sulzer AG Rights.................................................................. 630 0
Zurich Versicherungs............................................................... 1,600 637,367
-----------
2,862,515
-----------
United Kingdom -- 14.0%
BTR Ordinary Plc................................................................... 185,823 635,235
*Bunzl Plc......................................................................... 126,146 408,146
Cable & Wireless ADR............................................................... 22,000 614,625
*D.S. Smith........................................................................ 71,787 224,505
Laird Group Ordinary............................................................... 65,000 377,906
*Lucasvarity Plc................................................................... 175,000 605,514
*Medeva Plc........................................................................ 95,000 405,353
*National Westminster Bank......................................................... 77,151 1,036,351
*Powergen Plc...................................................................... 73,443 873,533
RTZ Corp........................................................................... 52,845 919,954
*Safeway Plc....................................................................... 121,000 699,460
Scapa Group........................................................................ 70,603 247,815
Severn Trent Water................................................................. 20,000 258,674
</TABLE>
27
<PAGE> 28
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The International Portfolio
Schedule of Net Assets, June 30, 1997 -- Concluded
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
COMMON AND PREFERRED STOCK (CONTINUED)
United Kingdom (Continued)
Stakis Plc........................................................................... 205,000 $ 351,248
*Tomkins Plc......................................................................... 215,277 931,095
-----------
8,589,414
-----------
United States -- 1.0%
*Pharmacia & Upjohn, Inc............................................................. 17,000 590,750
-----------
TOTAL COMMON AND PREFERRED STOCK (COST $49,497,774)................................ 58,101,728
-----------
SHORT TERM INVESTMENTS -- 1.6%
Temporary Investment Fund, Inc.--TempCash............................................ 957,369 957,369
-----------
TOTAL SHORT TERM INVESTMENTS (COST $957,369)....................................... 957,369
-----------
TOTAL INVESTMENTS -- 96.0% (COST $50,455,143).......................................... 59,059,097
OTHER ASSETS IN EXCESS OF LIABILITES -- 4.0%........................................... 2,453,384
-----------
NET ASSETS -- 100.0%
(Equivalent to $14.13 per share based on 4,352,667 shares of capital stock
outstanding)....................................................................... $61,512,481
===========
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE
($61,512,481/4,352,667 shares outstanding)........................................... $ 14.13
===========
</TABLE>
- ---------------
* Non-Income producing.
See accompanying financial statements.
28
<PAGE> 29
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Common Stock Portfolio
1997 Semi-Annual Review
Sentinel Advisors Company
- --------------------------------------------------------------------------------
The Market Street Common Stock Portfolio achieved a total return of 16.9%
for the first half of 1997, ahead of the 15.9% achieved by the typical Lipper
growth & income fund.
The Standard & Poor's 500 gained 17.5% during the second quarter, the tenth
consecutive quarter of positive stock market returns, a feat unmatched in over
40 years. The stock market has achieved quarterly returns of this magnitude only
four times in the last 50 years. As has been the case in the last several years,
the financial stocks led the rally during the quarter, with strength broadening
beyond the banking stocks to the diversified financial service, insurance, and
security brokerage companies. Also soaring were the defensive consumer staples
companies, with particular strength noted in the soft drink and pharmaceutical
stocks. Only two major industry groups suffered declines in the second quarter;
the electric utility and precious metals stocks. Although smaller capitalization
stocks recovered, with the Russell 2000 up 15.7%, the strongest market action
was clearly among the larger capitalization issues that dominate the S&P 500,
many of which were up 25% or more.
The economic outlook has been described by various Wall Street pundits
recently as "the best of all worlds": moderate growth, modest inflation and
relatively low interest rates. In such an environment, the bull market of the
1990's has continued unabated. However, the combination of record high valuation
measures for the stock market, an almost unquestioned faith in continued
economic nirvana and strong earnings growth, and almost euphoric investor
sentiment suggests to us that the market has entered an extremely risky phase.
In this higher risk market environment, we remain strongly committed to a
defensive focus on quality, consistency and stability in our stock selection
process.
Keniston P. Merrill
Richard A. Pender, CFA
Daniel J. Manion, CFA
29
<PAGE> 30
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Common Stock Portfolio
Schedule of Net Assets, June 30, 1997
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK -- 92.2%
Automobiles -- 3.6%
Chrysler Corp. ...................................................................... 4,500 $ 147,656
Ford Motor Co. ...................................................................... 5,000 188,750
----------
336,406
----------
Automotive & Equipment -- 2.0%
Echlin, Inc. ........................................................................ 3,300 118,800
Pep Boys - Manny, Moe & Jack......................................................... 1,900 64,719
----------
183,519
----------
Banks -- 8.6%
Bank of New York Co., Inc. .......................................................... 3,300 143,550
BankAmerica Corp. ................................................................... 2,400 154,950
Chase Manhattan Corp. ............................................................... 1,700 165,006
Citicorp............................................................................. 1,100 132,619
First Union Corp. ................................................................... 1,400 129,500
Morgan (J.P.) & Co., Inc. ........................................................... 800 83,500
----------
809,125
----------
Beverages -- 0.9%
Coca-Cola Co. ....................................................................... 1,200 81,000
----------
Building Materials -- 1.6%
Sherwin Williams Co. ................................................................ 5,000 154,375
----------
Business & Consumer Services -- 3.2%
Electronic Data Systems Corp. ....................................................... 3,200 131,200
Omnicom Group, Inc. ................................................................. 2,700 166,387
----------
297,587
----------
Computers -- 0.6%
Hewlett Packard Co. ................................................................. 1,000 56,000
----------
Consumer Products -- 4.9%
Fortune Brands, Inc. ................................................................ 3,300 123,131
Gillette Co. ........................................................................ 800 75,800
Kimberly-Clark Corp. ................................................................ 3,200 159,200
Rubbermaid, Inc. .................................................................... 3,500 104,125
----------
462,256
----------
Drugs -- 4.2%
American Home Products Corp. ........................................................ 3,000 229,500
Pfizer, Inc. ........................................................................ 1,400 167,300
----------
396,800
----------
</TABLE>
30
<PAGE> 31
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Common Stock Portfolio
Schedule of Net Assets, June 30, 1997 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Electrical Equipment -- 4.1%
Emerson Electric Co. ................................................................ 3,500 $ 192,719
General Electric Co. ................................................................ 3,000 196,125
----------
388,844
----------
Energy -- 9.8%
Amoco Corp. ......................................................................... 1,600 139,100
Chevron Corp. ....................................................................... 1,500 110,906
Exxon Corp. ......................................................................... 3,800 233,700
Mobil Corp. ......................................................................... 2,600 181,675
Royal Dutch Petroleum Co. ........................................................... 4,800 261,000
----------
926,381
----------
Financial -- 2.0%
American Express Co. ................................................................ 2,500 186,250
----------
Foods -- 3.9%
CPC International, Inc. ............................................................. 2,000 184,625
Sara Lee Corp. ...................................................................... 4,500 187,312
----------
371,937
----------
Healthcare Services -- 1.8%
Columbia/HCA Healthcare Corp. ....................................................... 4,300 169,044
----------
Hotel/Restaurants -- 1.3%
*Marriott International, Inc. ....................................................... 2,000 122,750
----------
Industrial Diversified -- 6.9%
Boeing Co. .......................................................................... 192 10,188
Crown Cork & Seal Co., Inc. ......................................................... 2,500 133,594
Parker-Hannifin Corp. ............................................................... 4,000 242,750
PPG Industries, Inc. ................................................................ 1,800 104,625
Rockwell International Corp. ........................................................ 2,700 159,300
----------
650,457
----------
Insurance -- 6.3%
Allstate Corp. ...................................................................... 2,600 189,800
American General Corp. .............................................................. 4,000 191,000
American International Group, Inc. .................................................. 1,400 209,125
----------
589,925
----------
Medical Equipment & Supplies -- 2.4%
Johnson & Johnson.................................................................... 3,500 225,312
----------
</TABLE>
31
<PAGE> 32
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Common Stock Portfolio
Schedule of Net Assets, June 30, 1997 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Oil Field Equipment & Services -- 2.9%
Halliburton Co. ..................................................................... 1,700 $ 134,725
Schlumberger, Ltd. .................................................................. 1,100 137,500
----------
272,225
----------
Publishing -- 2.9%
Gannett, Inc. ....................................................................... 1,600 158,000
McGraw-Hill, Inc. ................................................................... 2,000 117,625
----------
275,625
----------
Railroads -- 3.0%
Canadian Pacific, Ltd. .............................................................. 5,000 142,187
Union Pacific Corp. ................................................................. 2,000 141,000
----------
283,187
----------
Retail -- 2.8%
May Department Stores Co. ........................................................... 2,200 103,950
Sears, Roebuck & Co. ................................................................ 3,000 161,250
----------
265,200
----------
Telecommunications Equipment -- 1.2%
Lucent Technologies, Inc. ........................................................... 1,600 115,300
----------
Tobacco -- 1.8%
Gallaher Group Plc-ADR............................................................... 3,300 60,844
Philip Morris Cos., Inc. ............................................................ 2,500 110,938
----------
171,782
----------
Utilities - Electric -- 5.7%
Duke Power Co. ...................................................................... 2,000 95,875
Florida Progress Corp. .............................................................. 4,000 125,250
FPL Group, Inc. ..................................................................... 3,000 138,188
PacifiCorp........................................................................... 8,000 176,000
----------
535,313
----------
Utilities - Gas -- 2.9%
Enron Corp. ......................................................................... 3,500 142,844
Sonat, Inc. ......................................................................... 2,500 128,125
----------
270,969
----------
Utilities-Telephone -- 0.9%
GTE Corp. ........................................................................... 2,000 87,750
----------
TOTAL COMMON STOCK (COST $6,931,382)............................................... 8,685,319
----------
</TABLE>
32
<PAGE> 33
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Common Stock Portfolio
Schedule of Net Assets, June 30, 1997 -- Concluded
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT OR
NUMBER
MATURITY OF SHARES VALUE
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PREFERRED STOCK -- 0.8%
Microsoft Corp., Preferred Series A, Convertible, 2.75%............. 900 $ 78,300
----------
TOTAL PREFERRED STOCK (COST $71,925).............................. 78,300
----------
COMMERCIAL PAPER -- 5.3%
C.I.T. Group Holdings Inc., 5.56%................................... 07/08/1997 $ 250,000 249,730
Prudential Funding Corp., 5.52%..................................... 07/02/1997 250,000 249,962
----------
TOTAL COMMERCIAL PAPER (COST $499,692)............................ 499,692
SHORT TERM INVESTMENTS -- 1.3%
Temporary Investment Fund, Inc. -- TempCash......................... 122,559 122,559
----------
TOTAL SHORT TERM INVESTMENTS (COST $122,559)...................... 122,559
----------
TOTAL INVESTMENTS -- 99.6% (COST $7,625,558).......................... 9,385,870
OTHER ASSETS IN EXCESS OF LIABILITIES -- 0.4% 38,562
----------
NET ASSETS -- 100.0%
(Equivalent to $13.12 per share based on 718,256 shares of capital
stock outstanding)................................................ $ 9,424,432
==========
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE
($9,424,432/718,256 shares outstanding)............................. $ 13.12
==========
</TABLE>
- ---------------
* Non-income producing.
See accompanying notes to financial statements.
33
<PAGE> 34
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Sentinel Growth Portfolio
1997 Semi-Annual Review
Sentinel Advisors Company
- --------------------------------------------------------------------------------
The Market Street Sentinel Growth Portfolio earned, for the year-to-date
period, a total return of 15.9%, while the median Lipper growth fund earned
15.2%. Over the twelve month period ending in June, the portfolio earned a 26.7%
return compared to 25.9% for the median Lipper growth fund.
The best performing sectors during the second quarter were technology,
healthcare, and financials. Outstanding gainers in these sectors included
Applied Materials, Methode Electronics, Integrated Health Services, Sallie Mae,
and American Express. Selected biotechnology stocks were weak during the
quarter, although Genzyme was up nicely.
We will continue to focus on companies that dominate their markets and hold
strong franchise positions. In addition, we look for companies with
shareholder-oriented managements, improving earnings fundamentals, and positive
cash flow. We are confident that a portfolio of companies with these attributes
will deliver superior risk-adjusted returns over a full market cycle.
Robert L. Lee, CFA
34
<PAGE> 35
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Sentinel Growth Portfolio
Schedule of Net Assets, June 30, 1997
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK -- 94.8%
Banks -- 5.9%
BankAmerica Corp. .................................................................. 800 $ 51,650
Chase Manhattan Corp. .............................................................. 600 58,237
Citicorp............................................................................ 700 84,394
First Union Corp. .................................................................. 2,200 203,500
----------
397,781
----------
Business & Consumer Services -- 6.5%
Omnicom Group, Inc. ................................................................ 3,700 228,012
*Sterling Commerce, Inc. ........................................................... 6,300 207,113
----------
435,125
----------
Computers -- 1.7%
Hewlett Packard Co. ................................................................ 2,000 112,000
----------
Drugs -- 14.9%
Amgen Corp. ........................................................................ 2,100 122,062
*Biogen, Inc. ...................................................................... 4,700 159,212
*Centocor, Inc. .................................................................... 4,300 133,569
*Chiron Corp. ...................................................................... 4,800 100,200
*Genzyme Corp. ..................................................................... 5,900 163,725
Pfizer, Inc. ....................................................................... 300 35,850
*Scherer (R.P.) Corp. .............................................................. 4,500 232,312
Schering Plough Corp. .............................................................. 1,000 47,875
----------
994,805
----------
Electronics -- 12.3%
*Applied Materials, Inc. ........................................................... 1,000 70,812
*KLA-Tencor Corp. .................................................................. 2,000 97,500
*LAM Research Corp. ................................................................ 5,400 200,138
Methode Electronics, Inc. Class A................................................... 11,400 226,575
Motorola, Inc....................................................................... 3,000 228,000
----------
823,025
----------
Environmental Control -- 2.4%
*U. S. Filter Corp. ................................................................ 5,900 160,775
----------
Finance -- 4.2%
American Express Co. ............................................................... 3,600 268,200
Student Loan Marketing Association.................................................. 100 12,700
----------
280,900
----------
</TABLE>
35
<PAGE> 36
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Sentinel Growth Portfolio
Schedule of Net Assets, June 30, 1997 -- (Continued)
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Healthcare Services -- 9.5%
Columbia/HCA Healthcare Corp. ...................................................... 3,850 $ 151,353
Integrated Health Services, Inc. ................................................... 6,200 238,700
United Healthcare Corp. ............................................................ 4,700 244,400
----------
634,453
----------
Hotel/Restaurants -- 1.9%
*Marriott International, Inc. ...................................................... 2,100 128,888
----------
Industrial Diversified -- 5.8%
Crown Cork & Seal Co., Inc. ........................................................ 2,100 112,219
Parker-Hannifin Corp. .............................................................. 4,600 279,163
----------
391,382
----------
Insurance -- 3.3%
Conseco, Inc. ...................................................................... 900 33,300
Equitable of Iowa................................................................... 3,300 184,800
----------
218,100
----------
Medical Equipment & Supplies -- 4.2%
Dentsply International, Inc. ....................................................... 1,800 88,200
Hillenbrand Industries, Inc. ....................................................... 3,300 156,750
Johnson & Johnson................................................................... 600 38,625
----------
283,575
----------
Office Equipment & Supplies -- 3.5%
*Staples, Inc. ..................................................................... 10,100 234,825
----------
Oil Field Equipment -- 0.7%
Halliburton Co. .................................................................... 300 23,775
Schlumberger Ltd. .................................................................. 200 25,000
----------
48,775
----------
Restaurants -- 2.9%
*Outback Steakhouse, Inc. .......................................................... 7,900 191,081
----------
Retail Stores -- 5.9%
CVS Corp. .......................................................................... 1,300 66,625
Ethan Allen Interiors, Inc. ........................................................ 4,400 250,800
Sears, Roebuck & Co. ............................................................... 1,400 75,250
----------
392,675
----------
Software -- 0.4%
*Microsoft Corp. ................................................................... 200 25,275
----------
</TABLE>
36
<PAGE> 37
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Sentinel Growth Portfolio
Schedule of Net Assets, June 30, 1997 -- Concluded
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT OR
NUMBER
MATURITY OF SHARES VALUE
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCK (CONTINUED)
Telecommunications -- 5.5%
*Airtouch Communications, Inc.......................................... 7,900 $ 216,263
Lucent Technologies, Inc............................................... 2,100 151,331
----------
367,594
----------
Tobacco -- 3.3%
Philip Morris Cos., Inc................................................ 700 31,063
UST, Inc............................................................... 6,900 191,475
----------
222,538
----------
TOTAL COMMON STOCK (COST $5,486,778)................................. 6,343,572
----------
COMMERCIAL PAPER -- 3.7%
Prudential Funding Corp., 5.52%........................................ 07/02/1997 $250,000 249,962
----------
TOTAL COMMERCIAL PAPER (COST $249,962)............................... 249,962
----------
SHORT-TERM INVESTMENTS -- 1.3%...........................................
Temporary Investment Fund, Inc. -- TempCash............................ 87,200 87,200
----------
TOTAL SHORT-TERM INVESTMENTS (COST $87,200).......................... 87,200
----------
TOTAL INVESTMENTS -- 99.8% (COST $5,823,940)............................. 6,680,734
OTHER ASSETS IN EXCESS OF LIABILITIES -- 0.2%............................ 13,898
----------
NET ASSETS -- 100.0%
(Equivalent to $12.85 per share based on 520,844 shares of capital
stock outstanding)................................................... $6,694,632
==========
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE
($6,694,632/520,844 shares outstanding)................................ $ 12.85
==========
</TABLE>
- ---------------
* Non-Income producing.
See accompanying notes to financial statements.
37
<PAGE> 38
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
Statement of Operations for the Six Months Ended June 30, 1997
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MONEY AGGRESSIVE
GROWTH MARKET BOND MANAGED GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends.............................................. $ 2,327,193 $ -- $ -- $ 314,797 $ 159,729
Interest............................................... 454,067 1,569,583 617,061 619,883 186,429
Less: foreign taxes withheld......................... (27,474) -- -- (2,048) --
----------- ----------- --------- ---------- ----------
Total Income......................................... 2,753,786 1,569,583 617,061 932,632 346,158
----------- ----------- --------- ---------- ----------
EXPENSES:
Investment advisory fee................................ 344,372 70,793 30,955 91,760 83,077
Administration fee..................................... 74,450 20,152 6,280 16,137 13,005
Directors' fee......................................... 5,411 1,310 470 1,151 919
Transfer agent fee..................................... 2,610 1,355 974 810 1,218
Custodian fee.......................................... 16,488 5,481 (4,620) 5,176 4,811
Legal fees............................................. 10,733 2,307 583 1,773 1,724
Audit fees............................................. 10,133 2,787 873 2,473 1,745
Printing............................................... 25,287 10,236 9,971 8,220 6,605
Taxes.................................................. 691 8 8 6 13
Miscellaneous.......................................... 7,852 2,983 890 2,821 1,010
----------- ----------- --------- ---------- ----------
498,027 117,412 46,384 130,327 114,127
Less: expenses reimbursed by affiliated insurance
company.............................................. -- -- -- -- --
----------- ----------- --------- ---------- ----------
Total expenses....................................... 498,027 117,412 46,384 130,327 114,127
----------- ----------- --------- ---------- ----------
Net investment income (loss)......................... 2,255,759 1,452,171 570,677 802,305 232,031
----------- ----------- --------- ---------- ----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND
FOREIGN CURRENCY TRANSACTIONS
Net realized gain (loss) from:
Investments.......................................... 33,455,350 (24) 68,119 717,651 1,832,738
Foreign Currency related translations................ (36,843) -- -- (831) --
----------- ----------- --------- ---------- ----------
33,418,507 (24) 68,119 716,820 1,832,738
----------- ----------- --------- ---------- ----------
Net change in unrealized appreciation (depreciation)
from:
Investments.......................................... (9,063,930) -- (185,513) 3,467,876 2,201,349
Foreign currency related translations................ -- -- -- -- --
----------- ----------- --------- ---------- ----------
(9,063,930) -- (185,513) 3,467,876 2,201,349
----------- ----------- --------- ---------- ----------
Net gain (loss) on investments and foreign currency
transactions........................................ 24,354,577 (24) (117,394) 4,184,696 4,034,087
----------- ----------- --------- ---------- ----------
Net increase (decrease) in net assets resulting from
operations.......................................... $26,610,336 $1,452,147 $453,283 $4,987,001 $4,266,118
=========== =========== ========= ========== ==========
<CAPTION>
COMMON SENTINEL
INTERNATIONAL STOCK GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO
- --------------------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends.............................................. $ 675,166 $ 83,250 $ 25,654
Interest............................................... 61,896 16,347 6,481
Less: foreign taxes withheld......................... (63,049) (631) --
---------- ---------- --------
Total Income......................................... 674,013 98,966 32,135
---------- ---------- --------
EXPENSES:
Investment advisory fee................................ 202,549 15,425 15,133
Administration fee..................................... 29,061 17,466 14,174
Directors' fee......................................... 1,330 223 182
Transfer agent fee..................................... 850 753 735
Custodian fee.......................................... 18,880 2,907 3,432
Legal fees............................................. 4,129 577 479
Audit fees............................................. 2,563 459 374
Printing............................................... 9,750 855 730
Taxes.................................................. 4 -- 1
Miscellaneous.......................................... 2,087 869 843
---------- ---------- --------
271,203 39,534 36,083
Less: expenses reimbursed by affiliated insurance
company.............................................. -- (8,685) (8,845)
---------- ---------- --------
Total expenses....................................... 271,203 30,849 27,238
---------- ---------- --------
Net investment income (loss)......................... 402,810 68,117 4,897
---------- ---------- --------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND
FOREIGN CURRENCY TRANSACTIONS
Net realized gain (loss) from:
Investments.......................................... 2,043,530 107,769 597,123
Foreign Currency related translations................ (67,907) (229) --
---------- ---------- --------
1,975,623 107,540 597,123
---------- ---------- --------
Net change in unrealized appreciation (depreciation)
from:
Investments.......................................... 5,045,814 1,060,374 305,906
Foreign currency related translations................ 104 -- --
---------- ---------- --------
5,045,918 1,060,374 305,906
---------- ---------- --------
Net gain (loss) on investments and foreign currency
transactions........................................ 7,021,541 1,167,914 903,029
---------- ---------- --------
Net increase (decrease) in net assets resulting from
operations.......................................... $ 7,424,351 $1,236,031 $907,926
========== ========== ========
</TABLE>
See accompanying notes to financial statements.
38
<PAGE> 39
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
Statements of Changes in Net Assets for the Six Months Ended June 30, 1997
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MONEY AGGRESSIVE
GROWTH MARKET BOND MANAGED GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INCREASE IN NET ASSETS:
Operations:
Net investment income (loss)................ $ 2,255,759 $ 1,452,171 $ 570,677 $ 802,305 $ 232,031
Net realized gain (loss) on investments and
foreign currency related transactions...... 33,418,507 (24) 68,119 716,820 1,832,738
Net change in unrealized appreciation
(depreciation) on investments and foreign
currency translations...................... (9,063,930) -- (185,513) 3,467,876 2,201,349
----------- ---------- ---------- ---------- ----------
Net increase (decrease) in net assets
resulting from operations.................. 26,610,336 1,452,147 453,283 4,987,001 4,266,118
Distributions:
From net investment income.................. (2,290,020) (1,452,171) (546,084) (769,914) (326,522)
From net realized gains..................... (23,067,604) -- -- (344,551) (64,760)
Capital share transactions:
Net contributions from affiliated life
insurance companies........................ 27,844,575 6,719,182 1,948,509 1,555,854 3,728,441
----------- ---------- ---------- ---------- ----------
Total increase in net assets................ 29,097,287 6,719,158 1,855,708 5,428,390 7,603,277
NET ASSETS
Beginning of period........................... 198,948,066 54,196,724 17,086,878 43,431,170 34,098,282
----------- ---------- ---------- ---------- ----------
End of period (including undistributed net
investment income in the Growth Portfolio of
$1,160,049; Bond Portfolio $292,306; Managed
Portfolio $415,997; Aggressive Portfolio
$232,031; International Portfolio $334,903;
Common Stock Portfolio $38,538 and Sentinel
Growth Portfolio $4,897).................... $228,045,353 $60,915,882 $18,942,586 $48,859,560 $41,701,559
=========== ========== ========== ========== ==========
<CAPTION>
COMMON SENTINEL
INTERNATIONAL STOCK GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO
- -----------------------------------------------
<S> <C> <C> <C>
INCREASE IN NET ASSETS:
Operations:
Net investment income (loss)................ $ 402,810 $ 68,117 $ 4,897
Net realized gain (loss) on investments and
foreign currency related transactions...... 1,975,623 107,540 597,123
Net change in unrealized appreciation
(depreciation) on investments and foreign
currency translations...................... 5,045,918 1,060,374 305,906
---------- -------- --------
Net increase (decrease) in net assets
resulting from operations.................. 7,424,351 1,236,031 907,926
Distributions:
From net investment income.................. (427,579) (55,391) (23,408)
From net realized gains..................... (3,347,494) -- (3,259)
Capital share transactions:
Net contributions from affiliated life
insurance companies........................ 6,908,080 1,679,168 149,784
---------- -------- --------
Total increase in net assets................ 10,557,358 2,859,808 1,031,043
NET ASSETS
Beginning of period........................... 50,955,123 6,564,624 5,663,589
---------- -------- --------
End of period (including undistributed net
investment income in the Growth Portfolio of
$1,160,049; Bond Portfolio $292,306; Managed
Portfolio $415,997; Aggressive Portfolio
$232,031; International Portfolio $334,903;
Common Stock Portfolio $38,538 and Sentinel
Growth Portfolio $4,897).................... $61,512,481 $9,424,432 $6,694,632
========== ======== ========
</TABLE>
See accompanying notes to financial statements.
39
<PAGE> 40
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
Statements of Changes in Net Assets for the Year Ended December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MONEY AGGRESSIVE
GROWTH MARKET BOND MANAGED GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INCREASE IN NET ASSETS
Operations:
Net investment income (loss)................... $ 5,018,462 $ 2,277,978 $ 934,224 $ 1,445,837 $ 326,522
Net realized gain (loss) on sale of
investments................................... 23,063,427 -- (125,017) 344,291 64,760
Net change in unrealized appreciation
(depreciation) on investments and foreign
currency translations......................... 4,147,912 -- (333,487) 2,694,823 5,078,163
------------ ----------- ----------- ----------- -----------
Net increase (decrease) in net assets resulting
from operations............................... 32,229,801 2,277,978 475,720 4,484,951 5,469,445
Distributions:
From net investment income..................... (4,995,312) (2,277,978) (874,882) (1,390,871) (255,039)
From net realized gains........................ (7,732,422) -- -- (1,471,361) (2,569,743)
Capital share transactions:
Net contributions from affiliated life
insurance companies........................... 17,547,048 19,581,572 3,083,685 5,806,085 7,631,188
------------ ----------- ----------- ----------- -----------
Total increase in net assets.................. 37,049,115 19,581,572 2,684,523 7,428,804 10,275,851
NET ASSETS
Beginning of period.............................. 161,898,951 34,615,152 14,402,355 36,002,366 23,822,431
------------ ----------- ----------- ----------- -----------
End of period (including undistributed net
investment income in the Growth Portfolio
$1,231,513; Bond Portfolio $267,713; Managed
Portfolio $384,437 and International Portfolio
$427,579)...................................... $198,948,066 $54,196,724 $17,086,878 $43,431,170 $34,098,282
============ =========== =========== =========== ===========
<CAPTION>
COMMON SENTINEL
INTERNATIONAL STOCK GROWTH
PORTFOLIO PORTFOLIO* PORTFOLIO*
- --------------------------------------------------
<S> <<C> <C> <C>
INCREASE IN NET ASSETS
Operations:
Net investment income (loss)................... $ 472,406 $ 79,759 $ 23,408
Net realized gain (loss) on sale of
investments................................... 3,302,667 (22,148) 3,259
Net change in unrealized appreciation
(depreciation) on investments and foreign
currency translations......................... 781,570 699,937 550,887
----------- ---------- ----------
Net increase (decrease) in net assets resulting
from operations............................... 4,556,643 757,548 577,554
Distributions:
From net investment income..................... (442,343) (53,716) --
From net realized gains........................ (1,793,161) -- --
Capital share transactions:
Net contributions from affiliated life
insurance companies........................... 11,991,902 5,860,792 5,086,035
----------- ---------- ----------
Total increase in net assets.................. 14,313,041 6,564,624 5,663,589
NET ASSETS
Beginning of period.............................. 36,642,082 -- --
----------- ---------- ----------
End of period (including undistributed net
investment income in the Growth Portfolio
$1,231,513; Bond Portfolio $267,713; Managed
Portfolio $384,437 and International Portfolio
$427,579)...................................... $50,955,123 $6,564,624 $5,663,589
=========== ========== ==========
</TABLE>
* The Common Stock and Sentinel Growth Portfolios commenced operations on
03/18/96.
See accompanying notes to financial statements.
40
<PAGE> 41
- --------------------------------------------------------------------------------
Market Street Funds, Inc.
Financial Highlights
- --------------------------------------------------------------------------------
Selected data for a share of capital stock outstanding throughout the periods:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------
01/01/97
TO 01/01/96 01/01/95 01/01/94 01/01/93 01/01/92
06/30/97 TO TO TO TO TO
(UNAUDITED) 12/31/96 12/31/95 12/31/94 12/31/93 12/31/92
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.............. $18.10 $16.36 $14.00 $14.09 $13.73 $13.88
------- ------- ------- ------- ------- ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income............................. .17 .46 .47 .43 .38 .46
Net realized and unrealized gain (loss) on
investments...................................... 1.94 2.54 3.41 (.10) .94 .17
------- ------- ------- ------- ------- ------
Total from investment operations............... 2.11 3.00 3.88 .33 1.32 .63
------- ------- ------- ------- ------- ------
LESS DISTRIBUTIONS:
Dividends to shareholders from net investment
income........................................... (.20) (.48) (.46) (.41) (.39) (.46)
Dividends to shareholders from net capital
gains............................................ (2.10) (.78) (1.06) (.01) (.35) (.32)
Dividends to shareholders in excess of net
investment income................................ -- -- -- -- (.22) --
------- ------- ------- ------- ------- ------
Total distributions............................ (2.30) (1.26) (1.52) (.42) (.96) (.78)
------- ------- ------- ------- ------- ------
Net asset value, end of period.................... $17.91 $18.10 $16.36 $14.00 $14.09 $13.73
======= ======= ======= ======= ======= ======
Total return................................... 13.28%(2) 19.58% 30.39% 2.40% 9.43% 4.74%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period $(000).................. 228,045 198,948 161,899 115,191 109,534 82,881
Ratios of expenses to average net assets
(annualized)(1).................................. .47% .50% .61% .63% .76% .79%
Ratios of net investment income to average net
assets (annualized).............................. 2.12% 2.80% 3.20% 3.10% 2.86% 3.53%
Portfolio turnover................................ 99% 72% 61% 63% 51% 35%
Average commission rate(3)........................ $0.0697 $0.0600 N/A N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
(1.) Expense ratios for the Growth Portfolio before reimbursement of expenses by
affiliated insurance company for the period ended June 30, 1997, and the
years ended December 31, 1996, 1995, 1994, 1993 and 1992 were as follows:
0.48%, 0.50%, 0.61%, 0.67% , 0.76% and 0.82%, respectively.
(2.) Total returns for periods less than one year are not annualized.
(3.) Computed by dividing the total amount of commission paid by the total
number of shares purchased and sold during the period for which there was a
commission. This disclosure is required by the S.E.C. for all financial
statements with fiscal years beginning after September 1, 1995.
See accompanying notes to financial statements.
41
<PAGE> 42
- --------------------------------------------------------------------------------
Market Street Funds, Inc.
Financial Highlights -- Continued
- --------------------------------------------------------------------------------
Selected data for a share of capital stock outstanding throughout the periods:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MONEY MARKET PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------
01/01/97
TO 01/01/96 01/01/95 01/01/94 01/01/93 01/01/92
06/30/97 TO TO TO TO TO
(UNAUDITED) 12/31/96 12/31/95 12/31/94 12/31/93 12/31/92
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.............. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------ ------ ------ ------ ------ -----
INCOME FROM INVESTMENT OPERATIONS:
Net investment income............................. .03 .05 .05 .04 .03 .03
------ ------ ------ ------ ------ -----
Total from investment operations............... .03 .05 .05 .04 .03 .03
------ ------ ------ ------ ------ -----
LESS DISTRIBUTIONS:
Dividends to shareholders from net investment
income........................................... (.03) (.05) (.05) (.04) (.03) (.03)
------ ------ ------ ------ ------ -----
Total distributions............................ (.03) (.05) (.05) (.04) (.03) (.03)
------ ------ ------ ------ ------ -----
Net asset value, end of period.................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
====== ====== ====== ====== ====== =====
Total return................................... 2.57%(2) 5.15% 5.61% 3.81% 2.59% 3.18%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period $(000).................. 60,916 54,197 34,615 21,040 12,506 8,138
Ratios of expenses to average net assets
(annualized)(1).................................. .40% .44% .50% .55% .65% .65%
Ratios of net investment income to average net
assets (annualized).............................. 5.06% 5.03% 5.47% 3.86% 2.56% 3.12%
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Expense ratios for the Money Market Portfolio before reimbursement of
expenses by affiliated insurance company for the period ended June 30, 1997,
and the years ended December 31, 1996, 1995, 1994, 1993 and 1992 were as
follows: 0.41%, 0.44%, 0.50% , 0.59%, 0.65% and 0.73%, respectively.
(2) Total returns for periods less than one year are not annualized.
See accompanying notes to financial statements.
42
<PAGE> 43
- --------------------------------------------------------------------------------
Market Street Funds, Inc.
Financial Highlights -- Continued
- --------------------------------------------------------------------------------
Selected data for a share of capital stock outstanding throughout the periods:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
BOND PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------
01/01/97
TO 01/01/96 01/01/95 01/01/94 01/01/93 01/01/92
06/30/97 TO TO TO TO TO
(UNAUDITED) 12/31/96 12/31/95 12/31/94 12/31/93 12/31/92
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.............. $ 10.67 $ 11.00 $ 9.73 $11.21 $10.73 $10.80
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income............................. .33 .63 .65 .62 .60 .64
Net realized and unrealized gain (loss) on
investments...................................... (.08) (.34) 1.27 (1.23) .48 (.03)
------ ------ ------ ------ ------ ------
Total from investment operations............... .25 .29 1.92 (.61) 1.08 .61
------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends to shareholders from net investment
income........................................... (.33) (.62) (.65) (.60) (.60) (.68)
Dividends to shareholders from net capital
gains............................................ (.00) (.00) (.00) (.27) (.00) (.00)
------ ------ ------ ------ ------ ------
Total distributions............................ (.33) (.62) (.65) (.87) (.60) (.68)
------ ------ ------ ------ ------ ------
Net asset value, end of period.................... $ 10.59 $ 10.67 $11.00 $ 9.73 $11.21 $10.73
====== ====== ====== ====== ====== ======
Total return................................... 2.47%(2) 2.86% 20.45% (5.62)% 10.32% 5.95%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period $(000).................. 18,943 17,087 14,402 10,098 10,160 6,710
Ratios of expenses to average net assets
(annualized)(1).................................. .52% .56% .60% .68% .75% .75%
Ratios of net investment income to average net
assets (annualized).............................. 6.45% 6.08% 6.36% 6.14% 5.53% 6.34%
Portfolio turnover................................ 63% 133% 206% 151% 71% 4%
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
(1.) Expense ratios for the Bond Portfolio before reimbursement of expenses by
affiliated insurance company for the period ended June 30, 1997, and the
years ended December 31, 1996, 1995, 1994, 1993 and 1992 were as follows:
0.53%, 0.56%, 0.60%, 0.70%, 0.75% and 0.81%, respectively.
(2.) Total returns for periods less than one year are not annualized.
See accompanying notes to financial statements.
43
<PAGE> 44
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
Financial Highlights -- Continued
- --------------------------------------------------------------------------------
Selected data for a share of capital stock outstanding throughout the periods:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MANAGED PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------
01/01/97
TO 01/01/96 01/01/95 01/01/94 01/01/93 01/01/92
06/30/97 TO TO TO TO TO
(UNAUDITED) 12/31/96 12/31/95 12/31/94 12/31/93 12/31/92
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.............. $ 14.68 $ 14.19 $11.94 $13.27 $12.25 $11.40
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income............................. .26 .51 .55 .53 .40 .44
Net realized and unrealized gain (loss) on
investments...................................... 1.39 1.07 2.28 (.77) 1.00 .88
------ ------ ------ ------ ------ ------
Total from investment operations............... 1.65 1.58 2.83 (.24) 1.40 1.32
------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends to shareholders from net investment
income........................................... (.26) (.51) (.57) (.49) (.38) (.47)
Dividends to shareholders from net capital
gains............................................ (.12) (.58) (.01) (.60) (.00) (.00)
------ ------ ------ ------ ------ ------
Total distributions............................ (.38) (1.09) (.58) (1.09) (.38) (.47)
------ ------ ------ ------ ------ ------
Net asset value, end of period.................... $ 15.95 $ 14.68 $14.19 $11.94 $13.27 $12.25
====== ====== ====== ====== ====== ======
Total return................................... 11.47%(2) 11.88% 24.43% (1.82)% 11.62% 11.96%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period $(000).................. 48,860 43,431 36,002 29,363 28,984 15,946
Ratios of expenses to average net assets
(annualized)(1).................................. .57% .60% .66% .67% .80% .80%
Ratios of net investment income to average net
assets (annualized).............................. 3.53% 3.68% 4.22% 4.34% 3.36% 3.88%
Portfolio turnover................................ 36% 106% 130% 75% 89% 32%
Average commission rate(3)........................ $0.0600 $0.0600 N/A N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
(1.) Expense ratios for the Managed Portfolio before reimbursement of expenses
by affiliated insurance company for the period ended June 30, 1997, and the
years ended December 31, 1996, 1995, 1994, 1993 and 1992 were as follows:
0.57%, 0.60%, 0.66%, 0.73% , 0.80% and 0.84%, respectively.
(2.) Total returns for periods less than one year are not annualized.
(3.) Computed by dividing the total amount of commission paid by the total
number of shares purchased and sold during the period for which there was a
commission. This disclosure is required by the S.E.C. for all financial
statements with fiscal years beginning after September 1, 1995.
See accompanying notes to financial statements.
44
<PAGE> 45
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
Financial Highlights -- Continued
- --------------------------------------------------------------------------------
Selected data for a share of capital stock outstanding throughout the periods:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
AGGRESSIVE GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------
01/01/97
TO 01/01/96 01/01/95 01/01/94 01/01/93 01/01/92
06/30/97 TO TO TO TO TO
(UNAUDITED) 12/31/96 12/31/95 12/31/94 12/31/93 12/31/92
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.............. $18.52 $17.38 $15.45 $15.45 $14.72 $16.68
----- ----- ----- ----- ----- -----
INCOME FROM INVESTMENT OPERATIONS:
Net investment income............................. .11 .17 .20 (.01) (.01) .03
Net realized and unrealized gain (loss) on
investments...................................... 2.02 3.03 1.86 .01 .77 .38
----- ----- ----- ----- ----- -----
Total from investment operations............... 2.13 3.20 2.06 .00 .76 .41
----- ----- ----- ----- ----- -----
LESS DISTRIBUTIONS:
Dividends to shareholders from net investment
income........................................... (.18) (.19) (.00) (.00) (.03) (.07)
Dividends to shareholders from net capital
gains............................................ (.04) (1.87) (.13) (.00) (.00) (2.30)
----- ----- ----- ----- ----- -----
Total distributions............................ (.22) (2.06) (.13) (.00) (.03) (2.37)
----- ----- ----- ----- ----- -----
Net asset value, end of period.................... $20.43 $18.52 $17.38 $15.45 $15.45 $14.72
===== ===== ===== ===== ===== =====
Total return................................... 11.60%(2) 21.00% 13.48% 0.00% 5.20% 2.58%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period $(000).................. 41,702 34,098 23,822 15,430 12,223 8,029
Ratios of expenses to average net assets
(annualized)(1).................................. .62% .68% .76% .86% .90% .90%
Ratios of net investment income to average net
assets (annualized).............................. 1.27% 1.14% 1.32% (.10)% (.07)% .37%
Portfolio turnover................................ 12% 47% 89% 60% 60% 18%
Average commission rate(3)........................ $0.0600 $0.0600 N/A N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Expense ratios for the Aggressive Growth Portfolio before reimbursement of
expenses by affiliated insurance company for the period ended June 30, 1997,
and the years ended December 31, 1996, 1995, 1994, 1993 and 1992 were as
follows: 0.63%, 0.68%, 0.76%, 0.89%, 0.90% and 1.00%, respectively.
(2) Total returns for periods less than one year are not annualized.
(3) Computed by dividing the total amount of commission paid by the total number
of shares purchased and sold during the period for which there was a
commission. This disclosure is required by the S.E.C. for all financial
statements with fiscal years beginning after September 1, 1995.
See accompanying notes to financial statements.
45
<PAGE> 46
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
Financial Highlights -- Continued
- --------------------------------------------------------------------------------
Selected data for a share of capital stock outstanding throughout the periods:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INTERNATIONAL PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------
01/01/97
TO 01/01/96 01/01/95 01/01/94 01/01/93 01/01/92
06/30/97 TO TO TO TO TO
(UNAUDITED) 12/31/96 12/31/95 12/31/94 12/31/93 12/31/92
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.............. $13.41 $12.86 $11.63 $11.87 $9.00 $9.74
------- ------- ------- ------- ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income............................. .08 .11 .16 .05 .06 .08
Net realized and unrealized gain (loss) on
investments...................................... 1.63 1.23 1.45 (.02) 3.09 (.81)
------- ------- ------- ------- ------ ------
Total from investment operations............... 1.71 1.34 1.61 .03 3.15 (.73)
------- ------- ------- ------- ------ ------
LESS DISTRIBUTIONS:
Dividends to shareholders from net investment
income........................................... (.11) (.16) (.07) (.03) (.08) (.00)
Dividends to shareholders from net capital
gains............................................ (.88) (.63) (.31) (.24) (.20) (.01)
------- ------- ------- ------- ------ ------
Total distributions............................ (.99) (.79) (.38) (.27) (.28) (.01)
------- ------- ------- ------- ------ ------
Net asset value, end of period.................... $14.13 $13.41 $12.86 $11.63 $11.87 $9.00
======= ======= ======= ======= ====== ======
Total return................................... 13.85%(2) 10.89% 14.31% .26% 36.11% (7.30)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period $(000).................. 61,512 50,955 36,642 26,212 13,682 6,727
Ratios of expenses to average net assets
(annualized)(1).................................. 1.00% 1.05% 1.15% 1.32% 1.50% 1.50%
Ratios of net investment income to average net
assets (annualized).............................. 1.24% .98% 1.21% .72% .68% 1.05%
Portfolio turnover................................ 20% 35% 45% 32% 37% 35%
Average commission rate(3)........................ $0.0207 $0.0376 N/A N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Expense ratios for the International Portfolio before reimbursement of
expenses by affiliated insurance company for the period ended June 30, 1997,
and the years ended December 31, 1996, 1995, 1994, 1993 and 1992 were as
follows: 1.00%, 1.05%, 1.15%, 1.32%, 1.50% and 2.65%, respectively.
(2) Total returns for periods less than one year are not annualized.
(3) Computed by dividing the total amount of commission paid by the total number
of shares purchased and sold during the period for which there was a
commission. This disclosure is required by the S.E.C. for all financial
statements with fiscal years beginning after September 1, 1995.
See accompanying notes to financial statements.
46
<PAGE> 47
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
Financial Highlights -- Continued
- --------------------------------------------------------------------------------
Selected data for a share of capital stock outstanding throughout the periods:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COMMON STOCK PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------
01/01/97
TO 03/18/96(2)
06/30/97 TO
(UNAUDITED) 12/31/96
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of period............................................... $11.31 $10.00
------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income.............................................................. .10 .15
Net realized and unrealized gain (loss) on investments............................. 1.80 1.26
------- -------
Total from investment operations............................................... 1.90 1.41
------- -------
LESS DISTRIBUTIONS:
Dividends to shareholders from net investment income............................... (.09) (.10)
Dividends to shareholders from net capital gains................................... -- --
------- -------
Total distributions............................................................ (.09) (.10)
------- -------
Net asset value, end of period..................................................... $13.12 $11.31
======= =======
Total return................................................................... 16.93%(3) 14.22%(3)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period $(000)................................................... 9,424 6,565
Ratios of expenses to average net assets (annualized)(1)........................... .80% .80%
Ratios of net investment income to average net assets (annualized)................. 1.76% 1.82%
Portfolio turnover................................................................. 8% 13%
Average commission rate(4)......................................................... $0.0600 $0.0600
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Expense ratios for the Common Stock Portfolio before reimbursement of
expenses by affiliated insurance company for the periods ended June 30, 1997
and December 31, 1996 were as follows: 1.03% and 1.43%.
(2) Commencement of operations.
(3) Total returns for periods less then one year are not annualized.
(4) Computed by dividing the total amount of commission paid by the total number
of shares purchased and sold during the period for which there was a
commission. This disclosure is required by the S.E.C. for all financial
statements with fiscal years beginning after September 1, 1995.
See accompanying notes to financial statements.
47
<PAGE> 48
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
Financial Highlights -- Concluded
- --------------------------------------------------------------------------------
Selected data for a share of capital stock outstanding throughout the periods:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SENTINEL GROWTH
PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------
01/01/97
TO 03/18/96(2)
06/30/97 TO
(UNAUDITED) 12/31/96
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of period............................................... $11.14 $10.00
------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income.............................................................. .01 .05
Net realized and unrealized gain (loss) on investments............................. 1.76 1.09
------- -------
Total from investment operations............................................... 1.77 1.14
------- -------
LESS DISTRIBUTIONS:
Dividends to shareholders from net investment income............................... (.05) --
Dividends to shareholders from net capital gains................................... (.01) --
------- -------
Total distributions............................................................ (.06) --
------- -------
Net asset value, end of period..................................................... $12.85 $11.14
======= =======
Total return................................................................... 15.89%(3) 11.40%(3)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period $(000)................................................... 6,695 5,664
Ratios of expenses to average net assets (annualized)(1)........................... .90% .90%
Ratios of net investment income to average net assets (annualized)................. .16% .57%
Portfolio turnover................................................................. 77% 75%
Average commission rate(4)......................................................... $0.0600 $0.0594
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Expense ratios for the Sentinel Growth Portfolio before reimbursement of
expenses by affiliated insurance company for the periods ended June 30, 1997
and December 31, 1996 were as follows: 1.19% and 1.51%.
(2) Commencement of operations.
(3) Total returns for periods less then one year are not annualized.
(4) Computed by dividing the total amount of commission paid by the total number
of shares purchased and sold during the period for which there was a
commission. This disclosure is required by the S.E.C. for all financial
statements with fiscal years beginning after September 1, 1995.
See accompanying notes to financial statements.
48
<PAGE> 49
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
Notes to Financial Statements, June 30, 1997
(Unaudited)
- --------------------------------------------------------------------------------
1. ORGANIZATION
The Market Street Fund, Inc. (Fund) is registered as an open-end diversified
management company under the Investment Company Act of 1940, as amended. As a
"series" type of mutual fund, the Fund issues separate classes (or series) of
stock currently consisting of the Growth Portfolio, Money Market Portfolio, Bond
Portfolio, Managed Portfolio, Aggressive Growth Portfolio, International
Portfolio, Common Stock Portfolio and Sentinel Growth Portfolio. The Fund serves
as an investment medium for modified premium and flexible premium adjustable
variable life insurance policies and individual flexible premium deferred
variable annuity contracts (Policies) issued by Provident Mutual Life Insurance
Company (PMLIC) and for flexible premium deferred variable annuity contracts
issued by Providentmutual Life and Annuity Company of America (PLACA) and
policies issued by National Life Insurance Company of Vermont (NLICV). The Fund
also serves as the investment medium for single premium and scheduled premium
variable life insurance policies which are no longer being issued.
2. ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by each
Fund in preparation of its financial statements. The preparation of financial
statements in accordance with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported amounts
and disclosures in the financial statements. Actual results could differ from
those estimates.
Valuation of Investments
Bonds are carried at market value based on the last bid price on a national
securities exchange or on quoted prices from a third-party pricing service.
Investments in common and preferred stocks primarily traded on recognized U.S.
or foreign securities exchanges are valued at the last sale price on exchanges
on the last business day of the period, or, if there was no sale, at the last
bid price on that day. Short-term investments with maturities of less than 60
days and Money Market Portfolio investments are valued at amortized cost which
approximates market value.
Investments
Security transactions are accounted for on the trade date. The cost of
investment securities sold is determined by use of the specific identification
method for both financial reporting and income tax purposes. Interest income is
recorded on the accrual basis; dividend income is recorded on the ex-dividend
date.
Foreign Currency Translations
Foreign currency amounts are translated into U.S. Dollars on the following
bases:
(i) Market value of investment securities, assets and liabilities, at the
daily rate of exchange;
(ii) Purchases and sales of investment securities, at the rate of exchange
prevailing on the respective dates of such transactions. Exchange gains or
losses are recognized upon settlement;
(iii) Income and expenses, at the rate of exchange prevailing on the
respective dates of such transactions. Exchange gains or
49
<PAGE> 50
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
Notes to Financial Statements, June 30, 1997 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
losses are recognized upon ultimate receipt or disbursement.
Foreign security and currency transactions may involve certain considerations
and risks not typically associated with those of U.S. dollar denominated
transactions as a result of, among other factors, the lack of governmental
supervision and regulation of foreign securities markets and the possibility of
political or economic instability.
The Fund does not isolate that portion of the results of operations derived from
changes in foreign exchange rates on investments from the fluctuations arising
from changes in market prices of securities held. Such fluctuations are included
with the net realized and unrealized gain or loss from investments.
Dividends to Shareholders
Dividends of investment income of the Money Market Portfolio are declared daily
and paid monthly. The Growth Portfolio, Bond Portfolio, Managed Portfolio, and
Common Stock Portfolio declare and pay dividends of investment income quarterly.
The Aggressive Growth Portfolio, International Portfolio, and Sentinel Growth
Portfolio declare and pay dividends of investment income annually. For all
Portfolios, distributions of capital gains are declared and paid annually.
Federal Income Taxes
No provision is made for Federal taxes as it is the Fund's intention to have
each Portfolio continue to qualify as a regulated investment company and to make
the requisite distributions to its shareholders which will be sufficient to
relieve it from Federal income taxes.
3. INVESTMENT ADVISORY FEES AND RELATED PARTY TRANSACTIONS
Investment advisory agreements have been approved, whereby Sentinel Advisors
Company (SAC), a Vermont General Partnership, is adviser for the Growth, Money
Market, Bond, Managed, Aggressive Growth, Common Stock and Sentinel Growth
Portfolios. With respect to the Growth Portfolio, SAC is compensated monthly at
an effective annual rate of 0.50% of the first $20 million of the average daily
net assets of the portfolio, 0.40% of the next $20 million and 0.30% of net
assets in excess of $40 million. SAC is compensated monthly at an effective
annual rate of 0.25% of the average daily net assets of the Money Market
Portfolio. With respect to the Bond Portfolio, SAC is compensated monthly at the
effective annual rate of 0.35% of the first $100 million of the average daily
net assets of the portfolio and 0.30% of net assets in excess of $100 million.
With respect to the Managed Portfolio, SAC is compensated monthly at the
effective annual rate of 0.40% of the first $100 million of the average daily
net assets of the portfolio and 0.35% of net assets in excess of $100 million.
With respect to the Aggressive Growth Portfolio, SAC is compensated monthly at
the effective annual rate of 0.50% of the first $20 million of the average daily
net assets of the portfolio, 0.40% of the next $20 million and 0.30% of net
assets in excess of $40 million. With respect to the Common Stock Portfolio, SAC
is compensated monthly at the effective annual rate of 0.40% of the first $100
million of the average daily net assets of the portfolio and 0.35% of net assets
in excess of $100 million.
50
<PAGE> 51
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
Notes to Financial Statements, June 30, 1997 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
With respect to the Sentinel Growth Portfolio, SAC is compensated monthly at an
effective annual rate of 0.50% of the first $20 million of the average daily net
assets of the portfolio, 0.40% of the next $20 million and 0.30% of the net
assets in excess of $40 million. Provident Mutual Investment Management Co.
(PIMC) is the adviser for the International Portfolio and is compensated monthly
at an effective annual rate of 0.75% of the first $500 million of the average
daily net assets of the portfolio and 0.60% of assets in excess of $500 million.
The Boston Company Asset Management, Inc. ("TBC") is sub-advisor to the
International Portfolio.
PMLIC agrees to reimburse the Growth, Money Market, Bond, Managed, and
Aggressive Growth Portfolios for operating expenses, excluding investment
advisory fees, and costs of litigation and indemnification not covered by
insurance, in excess of an annual rate of 0.40% of the average daily net asset
values. The International Portfolio is reimbursed for such expenses in excess of
an annual rate of 0.75% of the average daily net asset value. NLICV agrees to
reimburse the Common Stock and Sentinel Growth Portfolio for operating expenses,
excluding investment advisory fees and costs of litigation and indemnification
not covered by insurance, in excess of an annual rate of .40% of the average net
asset values.
4. NET ASSETS
At June 30, 1997, the Portfolios' net assets consisted of:
<TABLE>
<CAPTION>
MONEY AGGRESSIVE
GROWTH MARKET BOND MANAGED GROWTH INTERNATIONAL
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net contribution from shareholders............ $175,665,638 $60,915,906 $18,757,378 $37,287,670 $31,250,573 $50,574,296
Undistributed net investment income........... 1,160,049 -- 292,306 415,997 232,031 334,903
Undistributed net realized gain............... 33,455,350 -- -- 717,651 1,832,738 2,043,530
Accumulated loss on investment transactions... -- (24) (105,784) -- -- --
Net unrealized appreciation (depreciation) on
investments and Foreign currency............. 17,764,316 -- (1,314) 10,438,242 8,386,217 8,559,752
------------ ----------- ----------- ----------- ----------- -----------
$228,045,353 $60,915,882 $18,942,586 $48,859,560 $41,701,559 $61,512,481
============ =========== =========== =========== =========== ===========
<CAPTION>
COMMON SENTINEL
STOCK GROWTH
PORTFOLIO PORTFOLIO
---------- ----------
<S> <C> <C>
Net contribution from shareholders............ $7,539,961 $5,235,819
Undistributed net investment income........... 38,538 4,897
Undistributed net realized gain............... 85,621 597,122
Accumulated loss on investment transactions... -- --
Net unrealized appreciation (depreciation) on
investments and Foreign currency............. 1,760,312 856,794
---------- ----------
$9,424,432 $6,694,632
========== ==========
</TABLE>
51
<PAGE> 52
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
Notes to Financial Statements, June 30, 1997 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
5. PURCHASES AND SALES OF INVESTMENTS (EXCLUDING SHORT-TERM SECURITIES)
Purchases and proceeds on sales of investments for the portfolios, for the
period ended June 30, 1997, were as follows:
<TABLE>
<CAPTION>
MONEY AGGRESSIVE
GROWTH MARKET BOND MANAGED GROWTH INTERNATIONAL
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PURCHASES
U.S. Gov't Obligations....................... $ -- $ -- $10,275,179 $14,252,240 $ -- $ --
Corporate Bonds.............................. -- -- 2,675,791 1,782,788 -- --
Common and Preferred Stock................... 197,855,207 -- -- 4,966,606 7,221,243 14,003,036
------------ ----------- ----------- ----------- ----------- -----------
Total Purchases.............................. $197,855,207 -- $12,950,970 $21,001,634 $7,221,243 $14,003,036
============ =========== =========== =========== =========== ===========
SALES
U.S. Gov't Obligations....................... $ -- $ -- $ 4,792,262 $10,503,320 $ -- $ --
-- -- 5,245,306 2,711,808 -- --
Common and Preferred Stock................... 198,087,538 -- -- 2,310,039 3,654,444 10,430,353
------------ ----------- ----------- ----------- ----------- -----------
Total Sales.................................. $198,087,538 -- $10,037,568 $15,525,167 $3,654,444 $10,430,353
============ =========== =========== =========== =========== ===========
<CAPTION>
COMMON SENTINEL
STOCK GROWTH
PORTFOLIO PORTFOLIO
--------------------------------------
<S> <C> <C>
PURCHASES
U.S. Gov't Obligations....................... $ -- $ --
Corporate Bonds.............................. -- --
Common and Preferred Stock................... 2,180,406 4,688,889
---------- ----------
Total Purchases.............................. $2,180,406 $4,688,889
========== ==========
SALES
U.S. Gov't Obligations....................... $ -- $ --
-- --
Common and Preferred Stock................... 694,258 4,521,918
---------- ----------
Total Sales.................................. $ 694,258 $4,521,918
========== ==========
</TABLE>
6. TAX BASIS OF INVESTMENTS
Investment information based on the cost of the securities for Federal income
tax purposes held at June 30, 1997 is as follows:
<TABLE>
<CAPTION>
MONEY AGGRESSIVE
GROWTH MARKET BOND MANAGED GROWTH INTERNATIONAL
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Aggregate gross unrealized appreciation...... $ 19,169,836 $ -- $ 91,152 $10,608,396 $ 9,352,386 $10,186,974
Aggregate gross unrealized depreciation...... (1,405,520) -- (92,466) (170,154) (966,169) (1,627,222)
------------ ----------- ----------- ----------- ----------- -----------
Net unrealized appreciation (depreciation)... $ 17,764,316 $ -- $ (1,314) $10,438,242 $ 8,386,217 $ 8,559,752
============ =========== =========== =========== =========== ===========
Aggregate cost of securities for federal
income tax purposes......................... $210,344,965 $61,128,408 $19,638,918 $38,263,457 $33,352,607 $50,455,143
============ =========== =========== =========== =========== ===========
Capital loss carryover (available to offset
possible future capital gains.) The
carryover expires as follows: Bond
Portfolio--$48,885 in 2002; $125,017 in
2003; Common Stock Portfolio $22,148 in
2003........................................ $ -- -- $ (173,902) $ -- -- $ --
============ =========== =========== =========== =========== ===========
<CAPTION>
COMMON SENTINEL
STOCK GROWTH
PORTFOLIO PORTFOLIO
--------------------------------------
<S> <C> <C>
Aggregate gross unrealized appreciation...... $1,792,679 $ 953,963
Aggregate gross unrealized depreciation...... (32,367) (97,169)
---------- ----------
Net unrealized appreciation (depreciation)... $1,760,312 $ 856,794
========== ==========
Aggregate cost of securities for federal
income tax purposes......................... $7,625,558 $5,823,940
========== ==========
Capital loss carryover (available to offset
possible future capital gains.) The
carryover expires as follows: Bond
Portfolio--$48,885 in 2002; $125,017 in
2003; Common Stock Portfolio $22,148 in
2003........................................ $ (22,148) $ --
========== ==========
</TABLE>
52
<PAGE> 53
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
Notes to Financial Statements, June 30, 1997 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
7. AUTHORIZED CAPITAL STOCK AND CAPITAL STOCK TRANSACTIONS
On June 30, 1997, there were 200 million shares of $0.01 par value capital stock
authorized for the Fund. The shares of capital stock are divided into eight
series: Growth Portfolio, Money Market Portfolio, Bond Portfolio, Managed
Portfolio, Aggressive Growth Portfolio, International Portfolio, Common Stock
Portfolio and Sentinel Growth Portfolio. The Growth Portfolio consists of 15
million shares, the Money Market Portfolio consists of 75 million shares; each
of the other series consists of 5 million shares.
Transactions in capital stock for the period ended June 30, 1997 were as
follows:
<TABLE>
<CAPTION>
GROWTH PORTFOLIO MONEY MARKET BOND
PORTFOLIO PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT SHARES
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Shares sold............................................. 657,770 $11,002,270 51,291,853 $ 51,291,853 222,480
Shares redeemed......................................... (509,288) (8,515,319) (45,994,493) (45,994,493) (88,338)
Shares reinvested....................................... 1,593,025 25,357,624 1,421,822 1,421,822 52,673
--------- ----------- ----------- ------------ -------
Net contributions from affiliated insurance companies... 1,741,507 $27,844,575 6,719,182 $ 6,719,182 186,815
========= =========== =========== ============ =======
<CAPTION>
MANAGED PORTFOLIO
- --------------------------------------------------------
AMOUNT SHARES AMOUNT
- --------------------------------------------------------
<S> <C> <C> <C>
Shares sold............................................. $2,327,135 237,060 $ 3,565,285
Shares redeemed......................................... (924,710) (209,364) (3,123,896)
Shares reinvested....................................... 546,084 77,181 1,114,465
---------- -------- -----------
Net contributions from affiliated insurance companies... $1,948,509 104,877 $ 1,555,854
========== ======== ===========
</TABLE>
<TABLE>
<CAPTION>
AGGRESSIVE INTERNATIONAL COMMON
GROWTH PORTFOLIO STOCK
PORTFOLIO PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT SHARES
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Shares sold....................................................... 257,860 $ 4,817,005 464,479 $ 5,901,834 134,119
Shares redeemed................................................... (79,150) (1,479,846) (218,043) (2,768,827) (1,005)
Shares reinvested................................................. 21,346 391,282 305,922 3,775,073 4,875
------- ----------- -------- ----------- -------
Net contributions from affiliated insurance companies............. 200,056 $ 3,728,441 552,358 $ 6,908,080 137,989
======= =========== ======== =========== =======
<CAPTION>
SENTINEL GROWTH
PORTFOLIO
- ------------------------------------------------------------------
AMOUNT SHARES AMOUNT
- ------------------------------------------------------------------
<S> <C> <C> <C>
Shares sold....................................................... $1,635,783 10,852 $131,007
Shares redeemed................................................... (12,006) (662) (7,890)
Shares reinvested................................................. 55,391 2,383 26,667
---------- ------ --------
Net contributions from affiliated insurance companies............. $1,679,168 12,573 $149,784
========== ====== ========
</TABLE>
Transactions in capital stock for the year ended December 31, 1996 were as
follows:
<TABLE>
<CAPTION>
GROWTH PORTFOLIO MONEY MARKET BOND
PORTFOLIO PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT SHARES
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Shares sold........................................... 1,276,805 $20,944,472 82,625,391 $ 82,625,391 382,375
Shares redeemed....................................... (981,738) (16,125,158) (65,247,831) (65,247,831) (173,162)
Shares reinvested..................................... 803,008 12,727,734 2,204,012 2,204,012 83,086
--------- ----------- ------- ------------ --------
Net contributions from affiliated insurance
companies............................................ 1,098,075 $17,547,048 19,581,572 $ 19,581,572 292,299
========= =========== ======= ============ ========
<CAPTION>
MANAGED PORTFOLIO
- ------------------------------------------------------
AMOUNT SHARES AMOUNT
- ------------------------------------------------------
<S> <C> <C> <C>
Shares sold........................................... $ 4,040,320 506,385 $ 7,070,251
Shares redeemed....................................... (1,831,517) (296,312) (4,126,398)
Shares reinvested..................................... 874,882 209,781 2,862,232
----------- -------- --------
Net contributions from affiliated insurance
companies............................................ $ 3,083,685 419,854 $ 5,806,085
=========== ======== ========
</TABLE>
53
<PAGE> 54
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
Notes to Financial Statements, June 30, 1997 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
AGGRESSIVE INTERNATIONAL COMMON
GROWTH PORTFOLIO STOCK
PORTFOLIO PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT SHARES
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Shares sold.................................................... 441,008 $ 7,446,728 987,809 $12,532,647 577,728
Shares redeemed................................................ (156,497) (2,640,322) (218,584) (2,776,249) (2,588)
Shares reinvested.............................................. 185,719 2,824,782 180,866 2,235,504 5,127
-------- --------- -------- ----------- -------
Net contributions from affiliated insurance companies.......... 470,230 $ 7,631,188 950,091 $11,991,902 580,267
======== ========= ======== =========== =======
<CAPTION>
SENTINEL GROWTH
PORTFOLIO
- ---------------------------------------------------------------
AMOUNT SHARES AMOUNT
- ---------------------------------------------------------------
<S> <C> <C> <C>
Shares sold.................................................... $5,835,026 508,648 $5,090,047
Shares redeemed................................................ (27,950) (377) (4,012)
Shares reinvested.............................................. 53,716 -- --
---------- ------- ----------
Net contributions from affiliated insurance companies.......... $5,860,792 508,271 $5,086,035
========== ======= ==========
</TABLE>
54
<PAGE> 55
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
Notes to Financial Statements, June 30, 1997 -- Concluded
- --------------------------------------------------------------------------------
8. PRINCIPAL UNDERWRITER
PML Securities Company serves, without compensation, as the principal
underwriter for sale of the Fund shares to the Accounts. PML Securities Company
is an indirect wholly-owned subsidiary of PMLIC.
9. SUBSEQUENT DIVIDEND
On June 25, 1997 the Board of Directors declared the following net investment
income and capital gain dividends to shareholders of record on June 30, 1997,
ex-dividend date July 2, 1997, payable on July 3, 1997 as follows:
<TABLE>
<CAPTION>
TOTAL PER SHARE
------------------------- ---------------------
NET NET
INVESTMENT CAPITAL INVESTMENT CAPITAL
PORTFOLIO INCOME GAIN INCOME GAIN
- ------------------ ---------- ----------- ---------- -------
<S> <C> <C> <C> <C>
Growth............ $1,160,049 -- $.0911 --
Bond.............. 292,306 -- .1634 --
Managed........... 415,997 -- .1358 --
Aggressive
Growth........... -- -- -- --
International..... -- -- -- --
Common Stock...... 38,538 -- .0537 --
Sentinel Growth... -- -- -- --
</TABLE>
55
