<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Market Street Fund, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
Market Street Fund, Inc.
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
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<PAGE> 2
MARKET STREET FUND, INC.
103 Bellevue Parkway
Wilmington, Delaware 19809
NOTICE OF SPECIAL MEETINGS OF SHAREHOLDERS
APRIL 22, 1998
To owners of variable life insurance policies and variable annuity contracts
issued by Provident Mutual Life Insurance Company ("PMLICO"), Providentmutual
Life and Annuity Company of America ("PLACA") or National Life Insurance
Company ("NLIC") entitled to give voting instructions in connection with a
separate account of PMLICO, PLACA or NLIC.
Notice is hereby given that Special Meetings of Shareholders
(the "Meetings") of the International, Bond, Managed, Aggressive Growth, Money
Market, Sentinel Growth and Growth Portfolios (each, a "Portfolio," and
collectively, the "Portfolios") of Market Street Fund, Inc. (the "Fund") will
be held on April 22, 1998 at 10:00 a.m. local time at the offices of Provident
Mutual Life Insurance Company (in the third floor Executive Conference Room) at
1050 Westlakes Drive, Berwyn, Pennsylvania 19312.
The Meetings will be held for the following purposes:
1. To elect five (5) directors of the Fund to hold
office indefinitely or until their successors are
elected and qualified;
2. To ratify or reject the selection of Coopers &
Lybrand LLP as the independent auditors to the Fund
for the fiscal year ending December 31, 1998;
3. The approval or disapproval of the amendment,
restatement or elimination of each Portfolio's
fundamental investment restrictions; and
4. To transact such other business as may properly come
before the Meetings or any adjournment(s) thereof.
NLIC and certain separate accounts supporting variable life
insurance policies and variable annuity contracts issued by PMLICO, PLACA and
NLIC, respectively, are the only shareholders of the Portfolios. However, each
of PMLICO, PLACA and NLIC hereby solicits and agrees to vote the shares of the
applicable Portfolios at the Meetings in accordance with timely instructions
received from owners of variable life insurance policies and variable annuity
contracts ("variable contracts") having contract values allocated to separate
accounts invested in such shares.
As a variable contract owner of record at the close of
business on March 6, 1998, you have the right to instruct PMLICO, PLACA or
NLIC, as applicable, as to the manner in which shares of any Portfolio
attributable to your variable contract should be voted. To assist you in
<PAGE> 3
giving your instructions, a Voting Instruction Form is enclosed that reflects
the number of shares of the Portfolio or Portfolios for which you are entitled
to give voting instructions. In addition, a Proxy Statement for the Fund is
attached to this Notice and describes the matters to be voted upon at the
Meetings or any adjournment(s) thereof. The Annual Report for the Fund for the
fiscal year ended December 31, 1997 has previously been mailed to all owners
entitled to instruct PMLICO, PLACA or NLIC, as applicable, as to the manner in
which shares of a Portfolio should be voted.
YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU EXPECT TO ATTEND THE
MEETINGS, PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED VOTING
INSTRUCTION FORM AND RETURN IT PROMPTLY IN THE ENCLOSED POSTAGE
PREPAID ENVELOPE.
By Order of the Board of Directors
Adam Scaramella
Secretary
Berwyn, Pennsylvania
March 22, 1998
<PAGE> 4
MARKET STREET FUND, INC.
103 Bellevue Parkway
Wilmington, Delaware 19809
MARCH 22, 1998
- --------------------------------------------------------------------------------
PROXY STATEMENT
- --------------------------------------------------------------------------------
This Proxy Statement is being furnished on behalf of the board
of directors of Market Street Fund, Inc. (the "Fund") by Provident Mutual Life
Insurance Company ("PMLICO"), Providentmutual Life and Annuity Company of
America ("PLACA") and National Life Insurance Company ("NLIC") to owners of
certain variable life insurance policies and variable annuity contracts
("variable contracts") issued by PMLICO, PLACA and NLIC, respectively. Each
such variable contract has a contract value on the record date allocated to a
separate account of PMLICO, PLACA or NLIC and is invested in classes of shares
of the Fund ("Shares") representing an interest in one or more of the Fund's
following investment portfolios: International Portfolio, Bond Portfolio,
Managed Portfolio, Aggressive Growth Portfolio, Money Market Portfolio,
Sentinel Growth Portfolio and Growth Portfolio (each, a "Portfolio," and
collectively, the "Portfolios").
This Proxy Statement is being furnished in connection with the
solicitation of voting instructions as described herein from owners of variable
contracts for use at Special Meetings of Shareholders (the "Meetings"). The
Meetings are to be held on April 22, 1998, at 10:00 a.m. local time at the
offices of Provident Mutual Life Insurance Company (in the third floor
Executive Conference Room), 1050 Westlakes Drive, Berwyn, Pennsylvania for the
purposes set forth below and in the accompanying Notice of Special Meeting. The
approximate mailing date of this Proxy Statement and the Voting Instruction
Form is March 22, 1998.
At the Meetings, shareholders will be asked:
1. To elect five (5) directors of the Fund to hold
office indefinitely or until their successors are
elected and qualified;
2. To ratify or reject the selection of Coopers &
Lybrand LLP as independent auditors to the Fund for
the fiscal year ending December 31, 1998;
3. The approval or disapproval of the amendment,
restatement or elimination of each Portfolio's
fundamental investment restrictions; and
4. To transact such other business as may properly come
before the Meetings or any adjournment(s) thereof.
<PAGE> 5
NLIC and certain separate accounts supporting variable
contracts issued by PMLICO, PLACA or NLIC, respectively, are the only
shareholders of the Portfolios. However, each of PMLICO, PLACA and NLIC has
agreed to vote the applicable Shares at the Meetings in accordance with the
timely instructions received from owners ("owners") of variable contracts
having contract values allocated to the following separate accounts:
Providentmutual Variable Life Separate Account and Providentmutual Variable
Annuity Separate Account, each a separate account of PLACA; Provident Mutual
Variable Annuity Separate Account, Provident Mutual Variable Growth Separate
Account, Provident Mutual Variable Money Market Separate Account, Provident
Mutual Variable Bond Separate Account, Provident Mutual Variable Managed
Separate Account, Provident Mutual Variable Aggressive Growth Separate Account
and Provident Mutual Variable International Separate Account, each a separate
account of PMLICO; and National Variable Life Insurance Account and National
Variable Annuity Account II, each a separate account of NLIC.
The following table indicates which shareholders are entitled
to vote on each proposal:
SUMMARY OF VOTING ON PROPOSALS
<TABLE>
<CAPTION>
PROPOSAL SHAREHOLDERS SOLICITED
-------- ----------------------
<S> <C>
1. To elect five (5) directors of Shares of all of the Portfolios voting together as one group.
the Fund to hold office
indefinitely or until their
successors are elected and
qualified.
2. To ratify or reject the selection Shares of all of the Portfolios voting together as one group.
of Coopers & Lybrand LLP as
independent auditors to the Fund
for the fiscal year ending
December 31, 1998.
3(a) The approval or disapproval of Shares of each Portfolio voting as separate groups.
the restatement of each
Portfolio's investment
restriction on issuer
diversification.
3(b) The approval or disapproval of Shares of each Portfolio voting as separate groups.
the amendment of each Portfolio's
investment restriction on
industry concentration.
3(c) The approval or disapproval of Shares of each Portfolio voting as separate groups.
the amendment of each Portfolio's
investment restriction on
borrowing.
</TABLE>
2
<PAGE> 6
<TABLE>
<S> <C>
3(d) The approval or disapproval of Shares of each Portfolio voting as separate groups.
the restatement of each
Portfolio's investment
restriction on lending.
3(e) The approval or disapproval of Shares of each Portfolio voting as separate groups.
the restatement of each
Portfolio's investment
restriction on underwriting.
3(f) The approval or disapproval of Shares of each Portfolio voting as separate groups.
the restatement of each
Portfolio's investment
restriction on investment in real
estate
3(g) The approval or disapproval of Shares of each Portfolio voting as separate groups.
the amendment of each Portfolio's
investment restriction on
commodities.
3(h) The approval or disapproval of Shares of each Portfolio voting as separate groups.
the restatement of each
Portfolio's investment
restriction on senior securities.
3(i) The approval or disapproval of Shares of each Portfolio voting as separate groups.
the elimination of each
Portfolio's investment
restriction on investments to
exercise control.
3(j) The approval or disapproval of Shares of each Portfolio voting as separate groups.
the elimination of each
Portfolio's investment
restriction concerning other
investment companies.
3(k) The approval or disapproval of Shares of each Portfolio (except the International Portfolio)
the elimination of each voting as separate groups.
Portfolio's, (except the
International Portfolio)
investment restriction on
investment in other investment
companies.
3(l) The approval or disapproval of Shares of the International Portfolio voting as a separate
the elimination of the group.
International Portfolio's
investment restriction on
investment in companies with a
record of less than three years'
operations.
3(m) The approval or disapproval of Shares of the International Portfolio voting as a separate
the elimination of the group.
International Portfolio's
investment restriction on
illiquid securities.
</TABLE>
3
<PAGE> 7
GENERAL VOTING INFORMATION
This Proxy Statement is being furnished to owners on behalf of the
board of directors of the Fund in connection with the solicitation by PMLICO,
PLACA and NLIC of voting instructions from owners with regard to the Meetings
to be held on April 22, 1998. The Fund's board of directors has called the
Meetings to consider and elect five (5) directors of the Fund, to ratify or
reject the selection of Coopers & Lybrand LLP as independent auditors to the
Fund for the fiscal year ending December 31, 1998, and to approve or disapprove
the amendment, restatement or elimination of each Portfolios' fundamental
investment restrictions.
NLIC and certain separate accounts supporting variable contracts
issued by PMLICO, PLACA and NLIC, respectively, are the only shareholders of
the Portfolios. PMLICO, PLACA and NLIC each will vote the Shares at the
Meetings in accordance with the timely instructions received from persons
entitled to give voting instructions under variable contracts funded through
the separate accounts of PMLICO, PLACA and NLIC, as applicable. Each owner
(and in some cases annuitants and/or beneficiaries) have the right to instruct
PMLICO, PLACA or NLIC, as applicable, as to the number of Shares (and
fractional Shares) that, when added together, have an aggregate value on the
record date equal to the contract value on the record date under that owner's
contract allocated to each separate account holding Shares.
PMLICO, PLACA and NLIC will vote Shares attributable to variable
contracts as to which no voting instructions are received in proportion (for,
against or abstain) to those for which timely instructions are received. If a
Voting Instruction Form is received that does not specify a choice, PMLICO,
PLACA or NLIC, as applicable, will consider its timely receipt as an
instruction to vote in favor of the proposal to which it relates. In certain
circumstances, PMLICO, PLACA and NLIC have the right to disregard voting
instructions from certain owners. PMLICO, PLACA and NLIC do not believe that
these circumstances exist with respect to matters currently before
shareholders. Owners may revoke previously submitted voting instructions given
to PMLICO, PLACA or NLIC at any time prior to the Meetings by notifying PMLICO,
PLACA or NLIC, as appropriate, or the Secretary of the Fund, in writing.
The Fund was incorporated in the State of Maryland on March 21, 1985,
and is registered with the Securities and Exchange Commission (the "SEC") as a
diversified open-end management investment company under the Investment Company
Act of 1940, as amended (the "1940 Act").
The board of directors of the Fund has fixed March 6, 1998 as the
record date for the determination of shareholders entitled to notice of and to
vote at the Meetings. As of the record date, NLIC owned beneficially
632,936.930 shares of the Sentinel Growth Portfolio and 434,451.215 shares of
the Growth Portfolio, constituting 78.97% and 2.68%, respectively, of such
Portfolios' outstanding shares. To the best knowledge of the board of
directors of the Fund and PMLICO, PLACA and NLIC, there are no owners, as of
March 6, 1998, who have the right to instruct PMLICO, PLACA or NLIC, as
applicable, as to 5% or more of the stock of any
4
<PAGE> 8
Portfolio. The table below sets forth the numbers of shares of capital stock
in each Portfolio outstanding as of March 6, 1998.
<TABLE>
<CAPTION>
NAME OF TOTAL SHARES
PORTFOLIO OUTSTANDING
<S> <C>
Bond 2,254,349.308
Managed 3,531,530.164
Aggressive 2,454,145.056
Growth
Money Market 68,516,265.820
Sentinel Growth 801,483.124
Growth 16,183,366.731
International 4,988,526.777
</TABLE>
To be counted, PMLICO, PLACA or NLIC, as applicable, must receive an
PLACA, owner's properly executed Voting Instruction Form (for PMLICO and PLACA,
at 1050 Westlakes Drive, Berwyn, Pennsylvania 19312; for NLIC at National Life
Drive, Montpelier, Vermont 05604) by 5:00 p.m. local time, April 21, 1998.
Election of each nominee as a director requires, as to the entire
Fund, the affirmative vote of a plurality of the Shares present (in person or
by proxy) at the Meetings, provided that at least a majority of the outstanding
Shares entitled to vote are present at the Meetings. Cumulative voting is not
permitted.
Ratification of the selection of Coopers & Lybrand LLP as independent
public auditors requires, as to the entire Fund, the affirmative vote of a
majority of the Shares present (in person or by proxy) at the Meetings,
provided that at least a majority of the Shares entitled to be cast are present
at the Meetings.
The approval of the amendment, restatement or elimination of a
Portfolio's fundamental investment restrictions requires the approval of a
"1940 Act majority" of that Portfolio's outstanding voting securities voting
separately. Approval by a "1940 Act majority" of a Portfolio's outstanding
voting securities means the approval by the lesser of (i) more than 50% of the
Portfolio's outstanding voting securities, or (ii) 67% or more of the
Portfolio's outstanding voting securities present at a meeting if the holders
of at least 50% of the outstanding voting securities of the Portfolio are
present (in person or by proxy).
PMLICO, PLACA and NLIC will bear all of the expenses of soliciting
voting instructions from the respective owners. The solicitation of
instructions will be made primarily by mail but may include (without cost to
the Fund), telephone, telegraphic or oral communications by employees of
PMLICO, PLACA or NLIC, or their respective affiliates.
5
<PAGE> 9
PROPOSAL 1:
ELECTION OF DIRECTORS
The Fund is not required to hold meetings of shareholders each year
and has not held annual meetings in recent years. A shareholder meeting is
required by law before a new director of the Fund may be appointed if, after
such appointment, fewer than two-thirds of the directors have been elected by
the shareholders. The last meeting of the Fund's shareholders at which
directors were elected was held on April 20, 1990.
Mr. Stanley R. Reber resigned his position as Chairman of the Board
and President of the Fund on November 7, 1997. Mr. John P. Lloyd resigned as
a director of the Fund on June 15, 1990. At a meeting held on February 11,
1998, the board of directors appointed Mr. Leo Slack to fill Mr. Reber's place
on the board of directors. The board of directors, by unanimous written
consent executed on March __, 1998, voted to nominate for re-election all of
the current directors of the Fund (Mssrs. Slack, Gart, Heebner and Stouch) and
to nominate Mr. Robert W. Kloss to fill the vacancy on the board resulting from
Mr. Lloyd's resignation.
The names of the nominees are listed below along with their current
addresses and principal occupations for the past five years. All of the
nominees have consented to being named in this Proxy Statement and to serve on
the board of directors if elected. Should any nominee become unable or
unwilling to serve, the persons appointed as proxies shall vote for the
selection of such other person as the board of directors shall recommend. If
elected, all nominees will serve until their successors are duly elected and
qualified.
NOMINEES
<TABLE>
<S> <C>
Mr. Robert W. Kloss* President and Chief Executive Officer ("CEO") of PMLICO since
Age 49 November 1, 1994; 1984-1994, President and CEO of Covenant
1050 Westlakes Drive Life Insurance Company.
Berwyn, Pennsylvania 19312
Dr. Alan Gart Director since March 21, 1985; 1982-Present, President of Alan
Age 57 Gart, Inc. (a consulting firm); 1992-Present, Professor, Nova
978 Warfield Lane Southeastern University.
Huntingdon Valley, PA 19006
Dr. A. Gilbert Heebner Director since May 12, 1989; 1987-Present, Distinguished Professor of
Age 71 Economics, Eastern College.
2 Etienne, Arbordeau
Devon, PA 19333
</TABLE>
6
<PAGE> 10
<TABLE>
<S> <C>
Mr. Edward S. Stouch Director since December 12, 1985; retired since 1983.
Age 80
216 Grandview Rd.
Media, PA 19063
Mr. Leo Slack Director since January 1998; retired since 1996; 1964-1996 Vice President,
Age __ Combustion Engineers Corporation.
4700 White Tail Lane
Sarasota, FL 34238
</TABLE>
* "interested person" of the Fund for purposes of the 1940 Act.
OFFICERS
<TABLE>
<S> <C>
Ms. Rosanne Gatta President; Vice President and Treasurer of PMLICO.
Age 43
Ms. Sarah C. Lange Vice President; 1983-Present, Vice President, Investments of PMLICO.
Age 42
Mr. James D. Kestner Vice President; 1994-Present, Vice President, Investments of PMLICO.
Age 50
James G. Potter, Jr., Esq. Vice President; 1997-Present, Executive Vice President, General Counsel and
Age 41 Secretary of PMLICO; 1989-1997, Chief Legal Officer, Prudential Banks.
Mr. Anthony T. Gianpietro Treasurer; 1990-Present, Assistant Treasurer of PMLICO
Age 38
Adam Scaramella, Esq. Secretary and Legal Officer-Present, Counsel of PMLICO; 1994- 1995, Counsel
Age 34 of The PMA Group; 1991-1994, New Jersey Deputy Attorney General.
</TABLE>
The address for each officer listed above is 1050 Westlakes Drive,
Berwyn, Pennsylvania 19312.
REMUNERATION
During the fiscal year ended December 31, 1997, the directors and
officers of the Fund received compensation from the Fund as indicated below.
7
<PAGE> 11
<TABLE>
<CAPTION>
AGGREGATE COMPENSATION
NAME FROM THE FUND
---- -------------
<S> <C>
Mr. Robert W. Kloss $0
Mr. Alan F. Hinkle $0
Dr. Alan Gart $7,500
Dr. A. Gilbert Heebner $6,000
Mr. Edward S. Stouch $7,500
Mr. Leo Slack $0
Ms. Rosanne Gatta $0
Ms. Sarah C. Lange $0
Mr. James D. Kestner $0
James G. Potter, Jr., Esq. $0
Mr. Anthony T. Gianpietro $0
Adam Scaramella, Esq. $0
</TABLE>
None of the officers or directors of the Fund owns, directly or
indirectly, any Shares. Directors and officers of the Fund who are interested
persons of the Fund receive no compensation allocable to their services to the
Fund. Directors who are not interested persons of the Fund are paid a fee of
$2,000 per meeting, plus actual out-of-pocket expenses by the Fund for each
meeting of the board of directors attended, plus an additional $2,000 per year.
Directors and officers of the Fund do not receive any benefits from the Fund
upon retirement nor does the Fund accrue any expenses for pension or retirement
benefits. During the fiscal year ended December 31, 1997, the Fund paid
aggregate fees of $21,000 to the "non-interested" directors of the Fund.
During the fiscal year ended December 31, 1997, the board of directors held
four regular meetings. No director attended fewer than three regular meetings.
BOARD STRUCTURE
The board of directors consists of five directors, only one of whom is
an interested person by reason of his affiliation with PMLICO, PLACA or NLIC
or an investment adviser to the Fund. Accordingly, its members have not found
it necessary to establish an audit, compensation, nominating, or other
committee for the efficient governance of the Fund.
8
<PAGE> 12
In accordance with applicable provisions of the 1940 Act, matters
relating to the selection of independent auditors are determined by a majority
of the board of directors, including a majority of the four directors who are
not interested persons of the Fund and who have no known material relationship
with PMLICO, PLACA, NLIC or an investment adviser to the Fund which might
adversely affect the exercise of their independent business judgment in
determining issues coming before the board.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE TO ELECT THE
FOREGOING NOMINEES TO SERVE AS DIRECTORS OF THE FUND.
PROPOSAL 2
RATIFICATION OR REJECTION OF SELECTION OF INDEPENDENT AUDITORS
The board of directors of the Fund, including a majority of the
directors who are not interested persons of the Fund, has selected Coopers &
Lybrand LLP, 2400 Eleven Penn Center, Philadelphia, Pennsylvania, to serve as
independent auditors of the Fund for the fiscal year ending December 31, 1998.
At the Meetings, shareholders will be asked to ratify or reject the
selection of Coopers & Lybrand LLP as independent auditors of the Fund for
1998. It is the belief of the board of directors that the employment of the
services of Coopers & Lybrand LLP for the current fiscal year would be in the
best interests of the Fund. A representative of Coopers & Lybrand LLP will
attend the Meetings and will be afforded the opportunity to make a statement,
as well as be available to respond to appropriate questions submitted by
shareholders. All services rendered to the Fund by Coopers & Lybrand LLP have
been provided in connection with its professional audit functions, at customary
rates and terms which are subject to reconsideration if unexpected issues
involving accounting or auditing should be encountered. The Fund has no reason
to expect that such issues are likely to be encountered in 1998.
The Fund has been advised by Coopers & Lybrand LLP that, as of
December 31, 1997, except for its appointment as independent auditors thereto,
neither that firm nor any of its partners had a direct or material indirect
financial interest in the Fund, PMLICO, PLACA, NLIC or any investment adviser
of Fund, or any affiliate thereof. No director or officer of the Fund, or any
associate of any director or officer, has any financial interest, direct or
indirect, in the appointment of the independent auditors. Coopers & Lybrand
LLP has acted as independent auditors to Providentmutual Investment Management
Company, the investment adviser to certain of the Portfolios, for the past
sixteen years.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS RATIFY THE SELECTION OF
COOPERS & LYBRAND LLP AS INDEPENDENT AUDITORS FOR THE FUND.
9
<PAGE> 13
PROPOSALS 3(a) - 3(m)
GENERAL
The directors recommend that shareholders of each Portfolio approve
the proposals to amend, restate or eliminate the Portfolio's fundamental
investment restrictions. These investment restrictions are "fundamental
policies," which means that they may be changed only by the shareholders of a
Portfolio. Restrictions and policies that a Portfolio has not specifically
designated as fundamental are not considered to be fundamental, and may be
changed by the Fund's board of directors without shareholder approval.
Amendment, restatement or elimination of a Portfolio's fundamental investment
restrictions requires the approval of a 1940 Act majority of that Portfolio's
outstanding voting securities. The Portfolios' current investment
restrictions, and the proposed amended and restated investment restrictions,
are set forth in below and in Appendix A to this proxy statement.
Certain of the fundamental investment restrictions reflect regulatory,
business or industry conditions, practices or requirements which at one time
led the board of directors to impose them on the management of the Portfolios'
investments. The directors believe that the passage of time, changes in
regulatory standards, or the development of new practices have rendered certain
of the Portfolios' fundamental investment restrictions unnecessary or
unwarranted. In certain cases, investment restrictions were adopted in
response to state securities laws and regulations. Such restrictions no longer
are required because, with the enactment of the National Securities Markets
Improvement Act of 1996 ("NSMIA"), federal law preempts the application of
state securities laws to mutual funds. In other cases, fundamental
restrictions reflect federal regulatory requirements that remain in effect, but
that are not required to be fundamental restrictions.
The directors propose to amend or eliminate those investment
restrictions that are redundant or that are inconsistent with current
regulatory standards or industry practice. In particular, the directors
propose to eliminate certain fundamental investment restrictions that are no
longer legally required, and to amend certain fundamental investment
restrictions that are more restrictive than currently is required by law. The
directors believe that eliminating or amending such restrictions would afford
the Portfolios greater flexibility in responding to investment opportunities
that may arise from time to time.
The directors also propose to eliminate other fundamental investment
restrictions that are not required to be fundamental. It is anticipated that
if the shareholders of a Portfolio vote to eliminate such a fundamental
investment restriction, the board of directors would adopt a non-fundamental
policy in lieu of that restriction. The directors believe that reducing the
number of restrictions that can be changed only by shareholder vote will result
in an enhanced ability to modify investment policies, as appropriate, to
respond to changing markets and new investment opportunities, and will minimize
costs and delay associated with soliciting shareholders when new opportunities
or market changes arise. Finally, the directors propose to restate certain of
the
10
<PAGE> 14
Portfolios' investment restrictions, as described below, in order to render
clearer and simpler statements of the Portfolios' fundamental policies.
The directors do not anticipate that the proposed amendment,
restatement or elimination of the Portfolios' investment restrictions will
result in a material change in the level of risk associated with an investment
in any Portfolio. If the proposed changes are approved by shareholders of a
Portfolio at the Meetings, that Portfolio's prospectus or prospectuses and
statement of additional information would be revised, as appropriate, to
reflect such changes. In the event that an amendment, restatement or
elimination of a restriction or restrictions is not approved by a Portfolio's
shareholders, that Portfolio will retain its current fundamental restriction or
restrictions, as applicable.
The following is a summary of the proposed changes to the Portfolios'
investment restrictions. Each proposal is summarized individually and will be
voted upon separately. The board of directors recommends that shareholders
vote to approve each of the Proposals set forth below.
PROPOSAL 3(a): THE APPROVAL OR DISAPPROVAL OF THE RESTATEMENT OF EACH
PORTFOLIO'S INVESTMENT RESTRICTION ON ISSUER DIVERSIFICATION.
The Portfolios are "diversified" within the meaning of the 1940 Act.
This means that each such Portfolio must not, with respect to 75% of its total
assets, invest more than 5% of its total assets in the securities of any one
issuer or acquire more than 10% of the outstanding voting securities of any one
issuer. These restrictions apply only at the time of investment, and a
Portfolio may invest up to 25% of its total assets without regard to such
restrictions. In addition, these restrictions do not apply to Portfolio
holdings of or investments in cash, cash items, U.S. government securities or
securities of other investment companies. Each Portfolio currently has an
investment restriction that incorporates the foregoing standards.
The directors have determined that it is in the best interest of the
Portfolios to re-word and restate more clearly and succinctly the Portfolios'
investment restriction on issuer diversification. The proposed restatement of
the Portfolios' restriction does not represent a material change in investment
policy on issuer diversification. Set forth below is the Portfolios' current
fundamental investment restriction on issuer diversification, followed by the
proposed restriction in italicized text. The directors believe it is in the
best interests of each Portfolio and its shareholders to adopt the proposed
fundamental investment restriction lieu of its current fundamental investment
restriction on diversification.
CURRENT RESTRICTION:
No Portfolio of the Fund is allowed to purchase securities of any
issuer, if (a) with respect to 75% of the market value of its total
assets, more than 5% of the account's total assets taken at market
value would at the time be invested in the securities of such issuer,
unless
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<PAGE> 15
such issuer is the U.S. Government or its agency or instrumentality,
or (b) such purchase would at the time result in more than 10% of the
outstanding voting securities of such issuer being held by the
Portfolio.
PROPOSED NEW RESTRICTION:
No Portfolio may, with respect to 75% of the Portfolio's total assets,
purchase securities of an issuer (other than the U.S. Government, its
agencies or instrumentalities), if (a) such purchase would cause more
than 5% of the Portfolio's total assets taken at market value to be
invested in the securities of such issuer, or (b) such purchase would
at the time result in more than 10% of the outstanding voting
securities of such issuer being held by the Portfolio.
PROPOSAL 3(b): THE APPROVAL OR DISAPPROVAL OF THE AMENDMENT OF EACH PORTFOLIO'S
INVESTMENT RESTRICTION ON INDUSTRY CONCENTRATION.
The 1940 Act requires that an open-end investment company (a "mutual
fund") adopt a policy, which cannot be changed without shareholder approval,
stating whether or not 25% or more of the investment company's assets may be
invested (concentrated) in the securities of issuers in any one industry. For
purposes of an investment company's concentration policy, investments in U.S.
Government securities are not considered to be securities of one industry. Each
of the Growth, Sentinel Growth, Money Market, Aggressive Growth and
International Portfolios currently has a policy not to concentrate in the
securities of any one industry. The Bond and Managed Portfolios currently have
a policy not to concentrate in the securities of any one industry, other than
the electric, gas and telephone utility industries.
The board of directors has determined that it is in the best interests
of the Bond and Managed Portfolios to delete from their investment restriction
on industry concentration the provision permitting each such Portfolio to
invest up to 75% of its total assets in the electric, gas and telephone utility
industries. Each of the Bond and Managed Portfolios has not and does intend to
concentrate its investments in the electric, gas and telephone utility
industries, or in any other industry. Accordingly, the board of directors
proposes that the Bond and Managed Portfolios adopt a policy not to concentrate
in any one industry, which is the same concentration policy as the policy for
the Fund's other Portfolios.
The directors also have determined that it is in the best interest of
all of the Portfolios to restate the Portfolios' investment restriction on
concentration so that it is more succinct. The current restriction contains
specific examples of how a few industries would be defined. The board of
directors believes that the restriction could be misconstrued as implying that
no other kinds of distinctions would be made for other industries. The board
of directors may determine to define or redefine industries as appropriate on
the basis of evolutionary changes in businesses. Amending the restriction as
proposed would clarify that the board of directors may from time to time define
and redefine industries in response to a changing business environment. The
directors
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<PAGE> 16
also wish to amend this restriction to clarify that with respect to each
Portfolio, and not just the Money Market and Managed Portfolios, investment in
obligations issued by or guaranteed by the U.S. Government, its agencies or
instrumentalities are not considered investment in the same industry.
The board of directors also believes that the proposed investment
restriction on industry concentration follows more precisely the parameters set
forth under the 1940 Act for mutual funds that do not intend to concentrate.
Under the 1940 Act, a mutual fund that does not intend to concentrate must make
no further investment in any industry if, upon making the proposed investment,
25% or more of the value of the fund's total assets would be invested in such
industry. Under the current restrictions, the Portfolios that do not intend to
concentrate may invest up to 25% of their respective total assets in securities
of issuers in any one industry. The current restriction is slightly less
restrictive than the proposed restriction, which limits investment of 25% or
more of a Portfolio's assets in securities of issuers in any one industry.
Set forth below is each Portfolio's current fundamental investment
restriction on industry concentration, followed by the proposed restriction in
italicized text. The directors believe it is in the best interests of each
Portfolio and its shareholders to adopt the proposed fundamental investment
restriction in lieu of its current fundamental investment restriction on
industry concentration.
CURRENT RESTRICTIONS:
The Bond and Managed Portfolios will not purchase the securities of
issuers conducting their principal business activity in the same
industry, other than the electric, gas and telephone utility
industries, if immediately after such purchase the value of its
investments in such industry would exceed 25% of its total assets
taken at market value; nor will it purchase the securities of
companies in the electric, gas or telephone utility industries if,
immediately after such purchase, the value of its investments in all
such industries would exceed 75% of its total assets taken at market
value.
The Growth, Sentinel Growth, Money Market, Aggressive Growth and
International Portfolios will not make any investment in an industry
if that investment would make the Portfolio's holding in that industry
exceed 25% of the Portfolio's total assets. These restrictions on
concentration do not apply to investments by the Money Market and
Managed Portfolios in obligations issued by or guaranteed by the U.S.
Government, its agencies or instrumentalities, or certificates of
deposit or securities issued or guaranteed by domestic banks. Also,
for these purposes, neither all finance companies as a group, or all
utility companies as a group, will be considered as a single industry.
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<PAGE> 17
PROPOSED NEW RESTRICTION:
No Portfolio may invest 25% or more of its total assets in the
securities of one or more issuers conducting their principal business
activities in the same industry (excluding the U.S. Government or any
of its agencies or instrumentalities).
PROPOSAL 3(c): THE APPROVAL OR DISAPPROVAL OF THE AMENDMENT OF EACH PORTFOLIO'S
INVESTMENT RESTRICTION ON BORROWING.
The 1940 Act requires that a mutual fund adopt a policy, which cannot
be changed without shareholder approval, on borrowing. Pursuant to the 1940
Act, a mutual fund is prohibited from issuing any "senior security," including
debt, except that such company may borrow from banks in an amount not exceeding
one-third of its total assets. A senior security includes any form of
indebtedness (including borrowing) that would have priority over a Portfolio's
common stock as to the distribution of assets or payment of dividends.
Under the current investment restriction on borrowing, each Portfolio,
except the International Portfolio, may borrow up to 5% of the market value of
its total assets at the time the borrowing is made, as a temporary measure for
emergency purposes or to permit the transfer of funds for various purposes.
The International Portfolio may borrow up to 20% of the market value of its
total assets at the time the borrowing is made as a temporary measure, such as
to meet redemption requests or to settle transactions. The directors propose
that the Portfolios adopt a uniform borrowing policy that permits each
Portfolio to borrow from banks amounts up to 30% of its total assets for any
purpose, not just temporary purposes, and an additional 5% of its total assets
for temporary purposes.
The directors believe that the current restriction on borrowing is
more restrictive than is required by law and that it is in the best interests
of each Portfolio and its shareholders to expand that Portfolio's capability to
engage in borrowing to respond to contingencies or opportunities that may arise
from time to time. In addition, the proposed restriction would clarify that
the Portfolios may obtain short-term credits to effect transaction clearance
and may purchase securities on margin. Margin purchases involve the purchase
of securities with money borrowed from a broker. "Margin" is the cash or
eligible securities that the borrower places with its broker as collateral for
this loan. Finally, the directors propose to restate the Portfolios'
investment restriction on borrowing to delete redundant language and to render
it a more clear and succinct statement of the Portfolios' policy on borrowing.
Set forth below is each Portfolio's current fundamental investment
restriction on borrowing, followed by the proposed restriction in italicized
text. The directors believe it is in the best interests of each Portfolio and
its shareholders to adopt the proposed fundamental investment restriction in
lieu of its current fundamental investment restriction on borrowing.
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<PAGE> 18
CURRENT RESTRICTION:
No Portfolio of the Fund is allowed to borrow money, except from banks
as a temporary measure for emergency purposes or as necessary for
clearance of securities transactions or to permit the transfer of
funds for various purposes without interfering with the orderly
liquidation of securities in its portfolio, where such borrowings
would not exceed 5% of the market value of total assets at the time
each such borrowing is made, except that this restriction does not
apply to: the International Portfolio which may borrow up to 20% of
the market value of its total assets from banks as a temporary
measure, such as to enable it to meet redemption requests or to settle
transactions on different stock markets where different settlement
dates apply which might otherwise require the sale of portfolio
securities at a time when it would not be in the Portfolio's best
interests to do so; and to reverse repurchase agreements entered into
in accordance with the Fund's investment policies.
PROPOSED NEW RESTRICTION:
No Portfolio may borrow money, except a Portfolio may (a) borrow from
banks (as defined in the 1940 Act) or through reverse repurchase
agreements in amounts up to 30% of its total assets (including the
amount borrowed), (b) to the extent permitted by applicable law,
borrow up to an additional 5% of its total assets for temporary
purposes, (c) obtain such short-term credits as may be necessary for
the clearance of purchases and sales of portfolio securities, and (d)
purchase securities on margin to the extent permitted by applicable
law.
PROPOSAL 3(d): THE APPROVAL OR DISAPPROVAL OF THE RESTATEMENT OF EACH
PORTFOLIO'S INVESTMENT RESTRICTION ON LENDING SECURITIES.
The 1940 Act requires that a mutual fund adopt a policy, which cannot
be changed without shareholder approval, on lending securities. The directors
believe that securities lending and investment in repurchase agreements with
banks, brokers-dealers and other financial institutions would be attractive
investments for the Portfolios. The directors also believe that the
Portfolios' current investment restriction on lending permits securities
lending and entering into repurchase agreements with appropriate institutional
entities. The directors believe, however, that the Portfolios' current
investment restriction on lending should be restated to clarify that the
Portfolios may engage in securities lending and may enter into repurchase
agreements with banks, brokers-dealers and other financial institutions. The
proposed restatement of the Portfolios' restriction does not represent a
material change in investment policy.
Set forth below is each Portfolio's current fundamental investment
restriction on lending, followed by the proposed restriction in italicized
text. The directors believe it is in the best interests of each Portfolio and
its shareholders to adopt the proposed fundamental investment restriction in
lieu of its current fundamental investment restriction on lending.
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<PAGE> 19
CURRENT RESTRICTION:
No Portfolio of the Fund is allowed to make loans, other than through
the acquisition of obligations in which the Portfolio may invest
consistent with its objective and investment policies.
PROPOSED NEW RESTRICTION:
No Portfolio may make loans, except through (a) the purchase of debt
obligations in accordance with the Portfolio's investment objective
and policies, (b) repurchase agreements with banks, brokers-dealers
and other financial institutions, and (c) loans of securities as
permitted by applicable law.
PROPOSAL 3(e): THE APPROVAL OR DISAPPROVAL OF THE RESTATEMENT OF EACH
PORTFOLIO'S INVESTMENT RESTRICTION ON UNDERWRITING.
The 1940 Act requires that a mutual fund adopt a policy, which cannot
be changed without shareholder approval, on underwriting securities issued by
others. The board of directors is proposing that the Portfolios' current
investment restriction on underwriting should be restated so that it is more
clear and succinct. The proposed restriction, which does not represent a
material change in investment policy, prohibits each Portfolio from
underwriting the securities of others.
Set forth below is each Portfolio's current fundamental investment
restriction on underwriting, followed by the proposed restriction in italicized
text. The directors believe it is in the best interests of each Portfolio and
its shareholders to adopt the proposed fundamental investment restriction in
lieu of its current fundamental investment restriction on underwriting.
CURRENT RESTRICTION:
No Portfolio of the Fund is allowed to engage in the underwriting of
securities of other issuers, except to the extent the Portfolio may be
deemed an underwriter in selling as part of an offering registered
under the Securities Act of 1933, securities which it has acquired.
PROPOSED NEW RESTRICTION:
No Portfolio may underwrite securities issued by others, except to the
extent that the sale of portfolio securities by the Portfolio may be
considered an underwriting.
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<PAGE> 20
PROPOSAL 3(f): THE APPROVAL OR DISAPPROVAL OF THE RESTATEMENT OF EACH
PORTFOLIO'S INVESTMENT RESTRICTION ON INVESTMENT IN REAL ESTATE.
The 1940 Act requires that a mutual fund adopt a policy, which cannot
be changed without shareholder approval, on acquiring interests in real estate.
The board of directors is proposing that the Portfolios' current investment
restriction on investment in real estate should be restated so that it is more
clear and succinct. In particular, the directors believe that, as proposed to
be restated, the investment restriction on investment in real estate would
state clearly that a Portfolio may hold and sell real estate acquired by that
Portfolio as a result of the ownership of securities. The proposed restriction
does not represent a material change in investment policy.
Set forth below is each Portfolio's current fundamental investment
restriction on investment in real estate, followed by the proposed restriction
in italicized text. The directors believe it is in the best interests of each
Portfolio and its shareholders to adopt the proposed fundamental investment
restriction in lieu of its current fundamental investment restriction on
investment in real estate.
CURRENT RESTRICTION:
No Portfolio of the Fund is allowed to purchase real estate or any
interest therein, except through the purchase of corporate or certain
government securities (including securities secured by a mortgage or a
leasehold interest or other interest in real estate). A security
issued by a real estate or mortgage investment trust is not treated as
an interest in real estate.
PROPOSED NEW RESTRICTION:
No Portfolio may purchase, hold or deal in real estate, although a
Portfolio may purchase and sell securities that are secured by real
estate or interests therein, securities of real estate investment
trusts and mortgage-related securities and may hold and sell real
estate acquired by a Portfolio as a result of the ownership of
securities.
PROPOSAL 3(g): THE APPROVAL OR DISAPPROVAL OF THE AMENDMENT OF EACH PORTFOLIO'S
INVESTMENT RESTRICTION ON COMMODITIES.
The 1940 Act requires that a mutual fund have a fundamental investment
policy regarding investments in commodities. The Portfolios do not invest in
physical commodities or contracts on such commodities or in options contracts,
except that the Growth, Managed and Aggressive Growth Portfolios may write
covered call options on securities and enter into closing transactions and the
International Portfolio may enter into forward foreign currency exchange
contracts. Forward foreign currency exchange contracts and options thereon are
considered to be commodity contracts. Financial futures contracts (i.e.,
futures contracts on securities indices,
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<PAGE> 21
Treasury Bonds and currency) and options thereon are also considered to be
commodity contracts, but none of the Portfolios currently may invest in these
instruments.
Although there is no present intent to have any of the Portfolios
(other than the International Portfolio) invest in financial futures contracts
or options thereon, the board of directors is proposing that the fundamental
restriction on investment in commodity contracts be liberalized to permit
investments in financial futures and options thereon to the full extent
permitted under applicable law. Broadening the restriction in this manner is
consistent with mutual fund industry practice for funds similar to the
Portfolios and will provide flexibility to invest in such instruments in the
future if the board of directors determines that investment in such instruments
would be advantageous to one or more Portfolios.
Set forth below is each Portfolio's current fundamental investment
restriction on commodities, followed by the proposed restriction in italicized
text. The directors believe it is in the best interests of each Portfolio and
its shareholders to adopt the proposed fundamental investment restriction in
lieu of its current fundamental investment restriction on commodities.
CURRENT RESTRICTION:
No Portfolio of the Fund is allowed to invest in commodities or
commodity contracts, or in call options, except that the Growth,
Managed and Aggressive Growth Portfolios may write covered call
options and enter into closing transactions, as permitted by their
investment policies and the International Portfolio may enter into
forward currency exchange contracts as described [in the statement of
additional information].
PROPOSED NEW RESTRICTION:
No Portfolio may invest in commodities or commodity contracts, except
that the Portfolio may invest in currency and financial instruments
and contracts that are commodities or commodity contracts.
PROPOSAL 3(h): THE APPROVAL OR DISAPPROVAL OF THE RESTATEMENT OF EACH
PORTFOLIO'S INVESTMENT RESTRICTION ON SENIOR SECURITIES
As discussed above in proposal 3(c), the 1940 Act restricts the
ability of a mutual fund to issue "senior securities," as defined in the 1940
Act, and requires that a fund adopt a fundamental policy on the issuance of
senior securities. Senior securities include any form of indebtedness that has
priority over a Portfolio's common stock as to the distribution of assets or
payment of dividends. Under the 1940 Act, a mutual fund is not permitted to
issue senior securities except for borrowings from banks.
The Portfolios' current investment restriction on senior securities
specifically permits the Portfolios to borrow money as permitted in the
statement of additional information and to enter
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<PAGE> 22
into reverse repurchase agreements and purchase securities on a when-issued or
delayed-delivery basis in accordance with the Portfolios' respective investment
objectives and policies. The board of directors believes that the restriction
could be construed as implying that no other kinds of investments may be
excepted from the Portfolios' restriction on investment in senior securities.
The directors believe that the regulatory environment may evolve over time,
re-defining the types of securities that are subject to the Portfolios'
restriction on senior securities. To permit a Portfolio maximum flexibility to
respond to a changing regulatory environment, the board of directors proposes
restating the investment restriction on senior securities so that it simply
states that no Portfolio may issue senior securities to the extent such
issuance would violate applicable law. The board does not believe that the
proposed restated investment restriction on senior securities represents a
material change in investment policy.
Set forth below is each Portfolio's current fundamental investment
restriction on senior securities, followed by the proposed restriction in
italicized text. The directors believe it is in the best interests of each
Portfolio and its shareholders to adopt the proposed fundamental investment
restriction in lieu of its current fundamental investment restriction on senior
securities.
CURRENT RESTRICTION:
No Portfolio of the Fund is allowed to issue senior securities, except
to the extent that a Portfolio may borrow money as permitted [in the
statement of additional information] and that a Portfolio, in
accordance with its investment objectives and policies, may enter into
reverse repurchase agreements and purchase securities on a when-issued
or a delayed delivery basis.
PROPOSED NEW RESTRICTION:
No Portfolio may issue senior securities to the extent such issuance
would violate applicable law.
PROPOSAL 3(i): THE APPROVAL OR DISAPPROVAL OF THE ELIMINATION OF EACH
PORTFOLIO'S INVESTMENT RESTRICTION ON INVESTMENTS TO EXERCISE CONTROL.
The Portfolios currently have a fundamental investment restriction
that prohibits them from investing in securities of a company for the purpose
of exercising control over or management of that company. This restriction was
mandated by certain state securities laws. The 1940 Act currently does not
contain any equivalent restrictions. As a result of the recent enactment of
NSMIA, state law restrictions on investment to exercise control or management
no longer apply to the Portfolios. The directors therefore have concluded that
it is in the best interests of each Portfolio and its shareholders to eliminate
such restriction, which is set forth below.
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<PAGE> 23
CURRENT RESTRICTION:
No Portfolio of the Fund is allowed to invest for the purpose of
exercising control over or management of any company.
PROPOSAL 3(j): THE APPROVAL OR DISAPPROVAL OF THE ELIMINATION OF EACH
PORTFOLIO'S INVESTMENT RESTRICTION CONCERNING OTHER INVESTMENT COMPANIES.
Each Portfolio currently has a fundamental investment restriction
regarding investments in securities issued by other investment companies. The
1940 Act limits the extent to which mutual funds may invest in other investment
companies. The 1940 Act does not, however, require investment companies to
adopt a fundamental restriction with respect to investment in other investment
companies. The Portfolios' current fundamental investment restriction is
redundant in that it merely recites prohibitions set forth in the 1940 Act with
respect to investments in other investment companies. The board of directors
believes that such fundamental investment restriction is unnecessary, and
should be eliminated. Moreover, the board believes that the 1940 Act
provisions regarding investment in other investment companies may change from
time to time, and therefore the fundamental restriction on such investment
should be eliminated in order to permit a Portfolio maximum flexibility in
responding to a changing regulatory environment.
The directors believe it is in the best interests of each Portfolio
and its shareholders to eliminate the current restriction on investment in
other investment companies. The current restriction is set forth below.
CURRENT RESTRICTION:
No Portfolio of the Fund is allowed to unless received as a dividend
or as a result of an offer of exchange approved by the Securities and
Exchange Commission or of a plan of reorganization, purchase or
otherwise acquire any security issued by a U.S. or foreign investment
company if the Portfolio would immediately thereafter own (a) more
than 3% of the outstanding voting stock of the investment company, (b)
securities of the investment company having an aggregate value in
excess of 5% of the Portfolio's total assets, (c) securities of
investment companies having an aggregate value in excess of 5% of the
Portfolio's total assets (c) securities of investment companies having
an aggregate value in excess of 10% of the Portfolio's total assets,
or (d) together with investment companies having the same investment
adviser as the Portfolio (and companies controlled by such investment
companies), more than 10% of the outstanding voting stock of any
registered closed-end investment company.
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<PAGE> 24
PROPOSAL 3(k): THE APPROVAL OR DISAPPROVAL OF THE ELIMINATION OF EACH
PORTFOLIO'S (EXCEPT THE INTERNATIONAL PORTFOLIO) RESTRICTION ON INVESTMENT IN
RESTRICTED SECURITIES.
Each Portfolio, except the International Portfolio, currently has a
fundamental investment restriction limiting investment in restricted
securities. Restricted securities are those that are subject to legal or
contractual delays on resale. The current fundamental investment restriction
limits investment in all restricted securities, including "liquid" and
"illiquid" restricted securities. Illiquid securities are those which may not
be sold or disposed of in the ordinary course of business within seven days at
approximately the value at which a Portfolio has valued the investment. The
types of securities that are considered illiquid will vary over time based on
changing market conditions and regulatory interpretations. Under current SEC
staff interpretations, a mutual fund, other than a money market mutual fund,
must limit investment in illiquid securities to 15% of its net assets. A money
market mutual fund must limit illiquid investments to 10% of its net assets.
The board of directors believes that the Portfolios' current
fundamental investment restriction on restricted securities is more limiting
than is required under current law in that it encompasses both liquid and
illiquid restricted securities. The board proposes that the fundamental
investment restriction on restricted securities should be eliminated. If the
shareholders of a Portfolio vote to eliminate that Portfolio's investment
restriction on restricted securities, it is anticipated that the board of
directors would adopt a non-fundamental policy on investment in illiquid
securities that is consistent with the SEC staff position. The change would
expand a Portfolio's ability to invest in securities which have restrictions on
resale but which may be determined to be liquid pursuant to guidelines and
procedures adopted by the board of directors. Such liquid restricted securities
would include securities with restrictions on resale that nonetheless have a
readily available institutional market, such as commercial paper and securities
eligible for resale under Rule 144A under the Securities Act of 1933, as
amended. The board of directors believes that eliminating the Portfolios'
fundamental restriction on restricted securities will permit these Portfolios
to take advantage of the increasingly liquid institutional trading markets.
Set forth below is each Portfolio's (other than the International
Portfolio) current investment restriction on restricted securities. The
directors believe it is in the best interests of these Portfolios and their
respective shareholders to eliminate the current fundamental restriction on
restricted securities.
CURRENT RESTRICTION:
No Portfolio of the Fund is allowed to purchase securities which are
subject to legal or contractual delays in or restrictions on resale
(except for the International Portfolio).
PROPOSAL 3(l): THE APPROVAL OR DISAPPROVAL OF THE ELIMINATION OF THE
INTERNATIONAL PORTFOLIO'S INVESTMENT RESTRICTION ON INVESTMENTS IN SECURITIES
OF COMPANIES WITH LESS THAN THREE (3) YEARS' CONTINUOUS OPERATIONS.
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<PAGE> 25
The International Portfolio currently has a fundamental investment
restriction that prohibits it from investing more than 5% of the market value
of its total assets in companies with a record of less than three years'
continuous operations (typically referred to as "unseasoned issuers"). This
investment restriction is based on restrictions on investment in unseasoned
issuers contained in certain state securities laws and regulations. The 1940
Act currently does not contain any equivalent restrictions. As a result of the
recent enactment of NSMIA, state law restrictions on permissible investments no
longer apply to the International Portfolio. The directors therefore have
concluded that it is in the best interest of the International Portfolio and
its shareholders to eliminate the policy on unseasoned issuers. In addition,
the directors believe that elimination of this policy will increase the
Portfolio's flexibility to invest in unseasoned issuers that otherwise might
meet its investment objective and policies.
Securities of unseasoned issuers may be subject to greater risk than
securities of more established companies because these issuers have only a
brief operating history and may have more limited markets and financial
resources. However, the directors believe that the increasing prevalence of
unseasoned issuers, the investment opportunities offered by such issuers, and
the fact that any such investments will be made in accordance with the
investment objective and policies of the International Portfolio warrants the
elimination of the current policy.
The directors believe it is in the best interests of the International
Portfolio and its shareholders to eliminate the Portfolio's current restriction
on investment in unseasoned issuers. The current restriction is set forth
below.
CURRENT RESTRICTION:
The International Portfolio will not invest more than 5% of the market
value of its total assets in companies with a record of less than
three years' operations.
PROPOSAL 3(m): THE APPROVAL OR DISAPPROVAL OF THE ELIMINATION OF THE
INTERNATIONAL PORTFOLIO'S INVESTMENT RESTRICTION ON ILLIQUID SECURITIES.
The International Portfolio's current investment restriction on
illiquid securities is fundamental. As discussed above under Proposal 3(k),
current applicable law does not require a mutual fund to state its limitation
on investment in illiquid securities as a fundamental restriction. The board of
directors proposes that the International Portfolio's fundamental investment
restriction on illiquid securities should be eliminated. If the shareholders
of the International Portfolio vote to eliminate the Portfolio's investment
restriction on illiquid securities, it is anticipated that the board of
directors would adopt a non-fundamental policy on investment in illiquid
securities. The directors believe that eliminating the Portfolio's fundamental
investment restriction on illiquid securities should afford the Portfolio
greater flexibility in responding to regulatory changes, and would be
consistent with the approach recommended for the other Portfolios under
Proposal 3(k), above.
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<PAGE> 26
Set forth below is the International Portfolio's current investment
restriction on illiquid securities. The directors believe it is in the best
interests of the Portfolio and its shareholders to eliminate the current
fundamental restriction on illiquid securities.
CURRENT RESTRICTION:
The International Portfolio will not invest more than 5% of the market
value of its total assets in securities which are not readily
marketable.
DIRECTORS' RECOMMENDATION
The directors believe that each proposed amendment, restatement or
elimination of the Portfolios' fundamental investment restrictions will more
clearly reflect current regulatory practice, will provide a more complete range
of investment opportunities, will promote uniformity among the Portfolios and
will simplify the Portfolios' restrictions.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS OF EACH PORTFOLIO VOTE
"FOR" THE APPROVAL OF THE AMENDMENT, RESTATEMENT OR ELIMINATION OF EACH OF THE
PORTFOLIOS' INVESTMENT RESTRICTIONS.
REPORTS AVAILABLE
Copies of the Fund's annual report and most recent semi-annual report
succeeding the annual report, if any, will be furnished without charge upon
request. Such request should be directed to Katherine De Peri at Provident
Mutual Life Insurance Company, 1050 Westlakes Drive, Berwyn, PA 19312, (800)
523-4681.
SHAREHOLDER PROPOSALS
As a general matter, the Fund does not hold annual meetings of
shareholders, and, therefore, the anticipated date of the next special meeting
of shareholders of a Portfolio cannot be provided. Any shareholder proposal
that properly may be included in proxy solicitation materials for a special
meeting of shareholders must be received by the Fund a reasonable time prior to
the date voting instructions or proxy materials are mailed to shareholders.
INQUIRIES
Shareholders or owners may make inquiries by contacting their
registered sales representative or by writing or calling the Fund, PMLICO,
PLACA or NLIC.
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OTHER INFORMATION
Sentinel Advisors Company ("SAC") serves as investment adviser for the
Fund's Bond, Managed, Aggressive Growth, Money Market, Sentinel Growth and
Growth Portfolios. SAC is a general partnership owned and controlled by
Sentinel Advisors, Inc. (an indirectly wholly-owned subsidiary of NLIC),
Providentmutual Management Co., Inc. (an indirectly wholly-owned subsidiary of
PMLICO), HTK of Delaware, Inc. (a wholly-owned subsidiary of The Penn Mutual
Life Insurance Company ("Penn Mutual")) and Sentinel Management Company (a
partnership of wholly-owned subsidiaries of NLIC, PMLICO and Penn Mutual, which
is SAC's Managing General Partner). Providentmutual Investment Management
Company ("PIMC"), an indirect wholly-owned subsidiary of PMLICO, serves as
investment adviser for the Fund's International Portfolio. PMIC has engaged
The Boston Company Asset Management, Inc. ("TBC") as the investment sub-adviser
for the International Portfolio. TBC is a corporation that is a wholly-owned
subsidiary of The Boston Company, Inc., which is a wholly-owned subsidiary of
The Mellon Bank Corporation.
Provident Financial Processing Corporation ("PFPC") provides certain
administrative services to the Fund pursuant to an administration agreement
between PFPC and the Fund. PFPC, located at 103 Bellevue Parkway, Wilmington,
Delaware 19809, is a wholly-owned subsidiary of PNC Bank.
1717 Capital Management Company ("1717") (formerly PML Securities
Company) serves, without compensation from the Fund, as principal underwriter
to the Fund pursuant to an agreement between 1717 and the Fund. 1717 is
located at 300 Continental Drive, Newark, Delaware 19713 and is a wholly-owned
subsidiary of Provident Mutual Holding Company.
OTHER BUSINESS
NLIC, PMLICO, PLACA and the Fund know of no other matters to be
brought before the Meetings other than the matters set forth in this Proxy
Statement, but should any other matter requiring the vote of shareholders
arise, the persons named in the enclosed Voting Instruction Forms or other
substitute will vote thereon according to their best judgment in the interest
of the Fund.
24
<PAGE> 28
APPENDIX A
CURRENT AND PROPOSED INVESTMENT RESTRICTIONS
<TABLE>
<CAPTION>
CURRENT INVESTMENT RESTRICTIONS(1) PROPOSED INVESTMENT RESTRICTIONS
No Portfolio of the Fund is allowed to: No Portfolio may:
<S> <C> <C> <C>
(1) Purchase securities of any issuer, if (1) with respect to 75% of the
Portfolio's total assets, purchase
(a) with respect to 75% of the market value securities of an issuer (other than
of its total assets, more than 5% of the the U.S. Government, its agencies
account's total assets taken at market or instrumentalities), if (a) such
value would at the time be invested in the purchase would cause more than 5%
securities of such issuer, unless such of the Portfolio's total assets
issuer is the U.S. Government or its agency taken at market value to be
or instrumentality, or invested in the securities of such
issuer, or (b) such purchase would
(b) such purchase would at the time result at the time result in more than 10%
in more than 10% of the outstanding voting of the outstanding voting
securities of such issuer being held by the securities of such issuer being
Portfolio. held by the Portfolio;
(2) The Bond and Managed Portfolios will not (2) invest 25% or more of its total
purchase the securities of issuers assets in the securities of one or
conducting their principal business more issuers conducting their
activity in the same industry, other than principal business activities in
the electric, gas and telephone utility the same industry (excluding the
industries, if immediately after such U.S. Government or any of its
purchase the value of its investments in agencies or instrumentalities);
such industry would exceed 25% of its total
assets taken at market value; nor will it
purchase the securities of companies in the
electric, gas or telephone utility
industries if, immediately after such
purchase, the value of its investments in
all such industries would exceed 75% of its
total assets taken at market value.
</TABLE>
(1) The Portfolios' current investment restrictions appear in a different
order in the Fund's statement of additional information. They are
re-ordered here for ease of comparison.
<PAGE> 29
<TABLE>
<S> <C>
The Growth, Sentinel Growth, Money Market,
Aggressive Growth and International
Portfolios will not make any investment in
an industry if that investment would make
the Portfolio's holding in that industry
exceed 25% of the Portfolio's total assets.
The International Portfolio will not invest
more than 5% of the market value of its
total assets in companies with a record of
less than three years' operations or in
securities which are not readily
marketable.
These restrictions on concentration
do not apply to investments by the
Money Market and Managed Portfolios
in obligations issued by or
guaranteed by the U.S. Government,
its agencies or instrumentalities,
or certificates of deposit or
securities issued or guaranteed by
domestic banks. Also, for these
purposes, neither all finance
companies as a group, or all
utility companies as a group, will
be considered as a single industry.
(3) Borrow money, except from banks as a (3) borrow money, except a Portfolio
temporary measure for emergency purposes or may (a) borrow from banks (as
as necessary for clearance of securities defined in the 1940 Act) or through
transactions or to permit the transfer of reverse repurchase agreements in
funds for various purposes without amounts up to 30% of its total
interfering with the orderly liquidation of assets (including the amount
securities in its portfolio, where such borrowed), (b) to the extent
borrowings would not exceed 5% of the permitted by applicable law, borrow
market value of total assets at the time up to an additional 5% of its total
each such borrowing is made, except that assets for temporary purposes, (c)
this restriction does not apply to: the obtain such short-term credits as
International Portfolio which may borrow up may be necessary for the clearance
to 20% of the market value of its total of purchases and sales of portfolio
assets from banks as a securities, and (d) purchase
securities on margin to the extent
permitted by applicable law;
</TABLE>
<PAGE> 30
<TABLE>
<S> <C> <C>
temporary measure, such as to enable it to
meet redemption requests or to settle
transactions on different stock markets
where different settlement dates apply
which might otherwise require the sale of
portfolio securities at a time when it
would not be in the Portfolio's best
interests to do so; and to reverse
repurchase agreements entered into in
accordance with the Fund's investment
policies.
(4) Make loans, other than through the (4) make loans, except through (a) the
acquisition of obligations in which the purchase of debt obligations in
Portfolio may invest consistent with its accordance with the Portfolio's
objectives and investment policies. investment objective and policies,
(b) repurchase agreements with
banks, brokers-dealers and other
financial institutions, and (c)
loans of securities as permitted by
applicable law;
(5) Engage in the underwriting of securities of (5) underwrite securities issued by
other issuers, except to the extent the others, except to the extent that
Portfolio may be deemed an underwriter in the sale of portfolio securities by
selling as part of an offering registered the Portfolio may be considered an
under the Securities Act of 1933, underwriting;
securities which it has acquired.
(6) Purchase real estate or any interest (6) purchase, hold or deal in real
therein, except through the purchase of estate, although a Portfolio may
corporate or certain government securities purchase and sell securities that
(including securities secured by a mortgage are secured by real estate or
or a leasehold interest or other interest interests therein, securities of
in real estate). A security issued by a real estate investment trusts and
real estate or mortgage investment trust is mortgage-related securities and may
not treated as an interest in real estate. hold and sell real estate acquired
by a Portfolio as a result of the
ownership of securities;
</TABLE>
<PAGE> 31
<TABLE>
<S> <C> <C>
(7) Invest in commodities or commodity (7) No Portfolio may invest in
contracts, or in call options, except that commodities or commodity contracts,
the Growth, Managed and Aggressive Growth except that the Portfolio may
Portfolios may write covered call options invest in currency and financial
and enter into closing transactions, as instruments and contracts that are
permitted by their investment policies and commodities or commodity contracts;
the International Portfolio may enter into or
forward currency exchange contracts as
described [in the statement of additional
information].
(8) Issue senior securities, except to the (8) issue senior securities to the
extent that a Portfolio may borrow money as extent such issuance would violate
permitted [in the statement of additional applicable law.
information] and that a Portfolio, in
accordance with its investment objectives
and policies, may enter into reverse
repurchase agreements and purchase
securities on a when-issued or a delayed
delivery basis.
</TABLE>
<PAGE> 32
VOTING INSTRUCTION FORM
MARKET STREET FUND, INC.
VOTING INSTRUCTIONS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF PROVIDENT
MUTUAL LIFE INSURANCE COMPANY OR PROVIDENTMUTUAL LIFE AND ANNUITY COMPANY OF
AMERICA FOR SPECIAL MEETINGS OF SHAREHOLDERS OF THE INTERNATIONAL, BOND,
MANAGED, AGGRESSIVE GROWTH, MONEY MARKET AND GROWTH PORTFOLIOS OF MARKET STREET
FUND, INC. TO BE HELD ON APRIL 22, 1998.
I hereby instruct Provident Mutual Life Insurance Company ("PMLICO") or
Providentmutual Life and Annuity Company of America ("PLACA"), as appropriate,
to vote the shares of the Bond Portfolio of Market Street Fund, Inc. (the
"Fund") as to which I am entitled to give instructions at the Special Meeting
of Shareholders of the Bond Portfolio of the Fund (the "Meeting") to be held
on April 22, 1998, at 10:00 a.m. local time, at 1050 Westlakes Drive, Berwyn,
Pennsylvania 19312, or any adjournment(s) thereof, as follows:
1. Election of Five (5) Directors of the Fund
NOMINEES: Robert W. Kloss, Dr. Alan Gart, Dr. A. Gilbert Heebner, Edward S.
Stouch, Leo Slack
|_| VOTE FOR all nominees listed, except as marked to the contrary above.
(TO WITHHOLD YOUR VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE A LINE THROUGH
THE NOMINEE'S NAME IN THE LIST ABOVE.)
|_| VOTE WITHHELD for all nominees.
<TABLE>
<CAPTION>
Approve Disapprove Abstain
--------- ------------ -------
<S> <C> <C> <C>
2. To ratify or reject the selection of Coopers & Lybrand LLP as |_| |_| |_|
independent auditors to the Fund for the fiscal year ending
December 31, 1998.
3(a) The approval or disapproval of the restatement of the |_| |_| |_|
Portfolio's investment restriction on issuer diversification.
3(b) The approval or disapproval of the amendment of the |_| |_| |_|
Portfolio's investment restriction on industry
concentration.
3(c) The approval or disapproval of the amendment of the |_| |_| |_|
Portfolio's investment restriction on borrowing.
3(d) The approval or disapproval of the restatement of the |_| |_| |_|
Portfolio's investment restriction on lending.
3(e) The approval or disapproval of the restatement of the |_| |_| |_|
Portfolio's investment restriction on underwriting.
3(f) The approval or disapproval of the restatement of the |_| |_| |_|
Portfolio's investment restriction on investment in
real estate.
3(g) The approval or disapproval of the amendment of the |_| |_| |_|
Portfolio's investment restriction on commodities.
3(h) The approval or disapproval of the restatement of the |_| |_| |_|
Portfolio's investment restriction on senior
securities.
3(i) The approval or disapproval of the elimination of the |_| |_| |_|
Portfolio's investment restriction on investments
to exercise control.
</TABLE>
<PAGE> 33
<TABLE>
<CAPTION>
Approve Disapprove Abstain
--------- ------------ -------
<S> <C> <C> <C>
3(j) The approval or disapproval of the elimination of the |_| |_| |_|
Portfolio's investment restriction concerning other investment
companies.
3(k) The approval or disapproval of the elimination of the |_| |_| |_|
Portfolio's investment restriction on investment in other
investment companies.
4. In each such entity's discretion, PMLICO or PLACA, as applicable, is
authorized to vote upon such other business as may properly come before
the Meeting or any adjournment(s) thereof.
</TABLE>
I hereby revoke any and all voting instructions with respect to such shares
heretofore given by me. I acknowledge receipt of the Proxy Statement dated
March __, 1998. I REALIZE IF I SIGN THIS FORM WITHOUT CHECKING A BLOCK WITH
RESPECT TO THE ELECTION OF DIRECTORS OR ANY OTHER PROPOSAL LISTED ON THE
REVERSE SIDE OR ABOVE, MY TIMELY RETURNING OF THIS FORM WILL BE DEEMED TO BE AN
INSTRUCTION TO VOTE FOR THE ELECTION OF ALL NOMINEES IDENTIFIED IN ITEM 1 OR TO
VOTE IN FAVOR OF THE PROPOSAL.
THESE VOTING INSTRUCTIONS MAY BE REVOKED AT ANY TIME PRIOR TO THE MEETING BY
NOTIFYING THE SECRETARY OF PMLICO OR PLACA, AS APPROPRIATE, OR THE SECRETARY
OF THE FUND, IN WRITING.
<TABLE>
<S> <C>
Date: , 1998
------------- --- --------------------------------------------------------------
Signature - Please sign exactly as your name appears below.
Policy:
Insured: Please sign, date and return this Form promptly. Signature
should be exactly as name or names appear on this Voting
Instruction Form. If the individual signing the form is a
fiduciary (e.g. attorney, executor, trustee, guardian, etc.) the
individual's signature must be followed by his or her full
title.
</TABLE>
NUMBER OF SHARES FOR WHICH YOU ARE
ENTITLED TO GIVE VOTING INSTRUCTIONS:
Bond Portfolio
PLEASE RETURN THIS VOTING INSTRUCTION FORM PROMPTLY
<PAGE> 34
VOTING INSTRUCTION FORM
MARKET STREET FUND, INC.
VOTING INSTRUCTIONS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF PROVIDENT
MUTUAL LIFE INSURANCE COMPANY OR PROVIDENTMUTUAL LIFE AND ANNUITY COMPANY OF
AMERICA FOR SPECIAL MEETINGS OF SHAREHOLDERS OF THE INTERNATIONAL, BOND,
MANAGED, AGGRESSIVE GROWTH, MONEY MARKET AND GROWTH PORTFOLIOS OF MARKET STREET
FUND, INC. TO BE HELD ON APRIL 22, 1998.
I hereby instruct Provident Mutual Life Insurance Company ("PMLICO") or
Providentmutual Life and Annuity Company of America ("PLACA"), as appropriate,
to vote the shares of the International Portfolio of Market Street Fund, Inc.
(the "Fund") as to which I am entitled to give instructions at the Special
Meeting of Shareholders of the International Portfolio of the Fund (the
"Meeting") to be held on April 22, 1998, at 10:00 a.m. local time, at 1050
Westlakes Drive, Berwyn, Pennsylvania 19312, or any adjournment(s) thereof, as
follows:
1. Election of Five (5) Directors of the Fund
NOMINEES: Robert W. Kloss, Dr. Alan Gart, Dr. A. Gilbert Heebner, Edward
S. Stouch, Leo Slack
|_| VOTE FOR all nominees listed, except as marked to the contrary above.
(TO WITHHOLD YOUR VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE A LINE THROUGH
THE NOMINEE'S NAME IN THE LIST ABOVE.)
|_| VOTE WITHHELD for all nominees.
<TABLE>
<CAPTION>
Approve Disapprove Abstain
--------- ------------ -------
<S> <C> <C> <C>
2. To ratify or reject the selection of Coopers & Lybrand LLP as |_| |_| |_|
independent auditors to the Fund for the fiscal year ending
December 31, 1998.
3(a) The approval or disapproval of the restatement of the |_| |_| |_|
Portfolio's investment restriction on issuer
diversification.
3(b) The approval or disapproval of the amendment of the |_| |_| |_|
Portfolio's investment restriction on industry concentration.
3(c) The approval or disapproval of the amendment of the |_| |_| |_|
Portfolio's investment restriction on borrowing.
3(d) The approval or disapproval of the restatement of the |_| |_| |_|
Portfolio's investment restriction on lending.
3(e) The approval or disapproval of the restatement of the |_| |_| |_|
Portfolio's investment restriction on underwriting.
3(f) The approval or disapproval of the restatement of the |_| |_| |_|
Portfolio's investment restriction on investment in real
estate.
3(g) The approval or disapproval of the amendment of the |_| |_| |_|
Portfolio's investment restriction on commodities.
3(h) The approval or disapproval of the restatement of the |_| |_| |_|
Portfolio's investment restriction on senior securities.
3(i) The approval or disapproval of the elimination of the |_| |_| |_|
Portfolio's investment restriction on investments to
exercise control.
</TABLE>
<PAGE> 35
<TABLE>
<CAPTION>
Approve Disapprove Abstain
--------- ------------ -------
<S> <C> <C> <C>
3(j) The approval or disapproval of the elimination of the |_| |_| |_|
Portfolio's investment restriction concerning other
investment companies.
3(l) The approval or disapproval of the elimination of the |_| |_| |_|
Portfolio's investment restriction on investment in
companies with a record of less than three years'
operations.
3(m) The approval or disapproval of the elimination of the |_| |_| |_|
Portfolio's investment restriction on illiquid securities.
4. NLIC is authorized, in its discretion, to vote upon such other business
as may properly come before the Meeting or any adjournment(s) thereof.
</TABLE>
I hereby revoke any and all voting instructions with respect to such
shares heretofore given by me. I acknowledge receipt of the Proxy Statement
dated March __, 1998. I REALIZE IF I SIGN THIS FORM WITHOUT CHECKING A BLOCK
WITH RESPECT TO THE ELECTION OF DIRECTORS OR ANY OTHER PROPOSAL LISTED ON THE
REVERSE SIDE OR ABOVE, MY TIMELY RETURNING OF THIS FORM WILL BE DEEMED TO BE AN
INSTRUCTION TO VOTE FOR THE ELECTION OF ALL NOMINEES IDENTIFIED IN ITEM 1 OR TO
VOTE IN FAVOR OF THE PROPOSAL.
THESE VOTING INSTRUCTIONS MAY BE REVOKED AT ANY TIME PRIOR TO THE MEETING BY
NOTIFYING THE SECRETARY OF PMLICO OR PLACA, AS APPROPRIATE, OR THE SECRETARY
OF THE FUND, IN WRITING.
<TABLE>
<S> <C>
Date: , 1998
------------- --- --------------------------------------------------------------
Signature - Please sign exactly as your name appears below.
Policy:
Insured: Please sign, date and return this Form promptly. Signature
should be exactly as name or names appear on this Voting
Instruction Form. If the individual signing the form is a
fiduciary (e.g. attorney, executor, trustee, guardian, etc.) the
individual's signature must be followed by his or her full
title.
</TABLE>
NUMBER OF SHARES FOR WHICH YOU ARE
ENTITLED TO GIVE VOTING INSTRUCTIONS:
International Portfolio
<PAGE> 36
PLEASE RETURN THIS VOTING INSTRUCTION FORM PROMPTLY
VOTING INSTRUCTION FORM
MARKET STREET FUND, INC.
VOTING INSTRUCTIONS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF NATIONAL
LIFE INSURANCE COMPANY FOR SPECIAL MEETINGS OF SHAREHOLDERS OF THE
INTERNATIONAL, BOND, MANAGED, AGGRESSIVE GROWTH, MONEY MARKET, SENTINEL GROWTH
AND GROWTH PORTFOLIOS OF MARKET STREET FUND, INC. TO BE HELD ON APRIL 22, 1998.
I hereby instruct National Life Insurance Company ("NLIC") to vote
the shares of the Bond Portfolio of Market Street Fund, Inc. (the "Fund") as to
which I am entitled to give instructions at the Special Meeting of Shareholders
of the Bond Portfolio of the Fund (the "Meeting") to be held on April 22, 1998,
at 10:00 a.m. local time, at 1050 Westlakes Drive, Berwyn, Pennsylvania 19312,
or any adjournment(s) thereof, as follows:
1. Election of Five (5) Directors of the Fund
NOMINEES: Robert W. Kloss, Dr. Alan Gart, Dr. A. Gilbert Heebner, Edward
S. Stouch, Leo Slack
|_| VOTE FOR all nominees listed, except as marked to the contrary above.
(TO WITHHOLD YOUR VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE A LINE THROUGH
THE NOMINEE'S NAME IN THE LIST ABOVE.)
|_| VOTE WITHHELD for all nominees.
<TABLE>
<CAPTION>
Approve Disapprove Abstain
--------- ------------ -------
<S> <C> <C> <C>
2. To ratify or reject the selection of Coopers & Lybrand LLP as |_| |_| |_|
independent auditors to the Fund for the fiscal year ending
December 31, 1998.
3(a) The approval or disapproval of the restatement of the |_| |_| |_|
Portfolio's investment restriction on issuer
diversification.
3(b) The approval or disapproval of the amendment of the |_| |_| |_|
Portfolio's investment restriction on industry
concentration.
3(c) The approval or disapproval of the amendment of the |_| |_| |_|
Portfolio's investment restriction on borrowing.
3(d) The approval or disapproval of the restatement of the |_| |_| |_|
Portfolio's investment restriction on lending.
3(e) The approval or disapproval of the restatement of the |_| |_| |_|
Portfolio's investment restriction on underwriting.
3(f) The approval or disapproval of the restatement of the |_| |_| |_|
Portfolio's investment restriction on investment in real
estate.
3(g) The approval or disapproval of the amendment of the |_| |_| |_|
Portfolio's investment restriction on commodities.
3(h) The approval or disapproval of the restatement of the |_| |_| |_|
Portfolio's investment restriction on senior
securities.
3(i) The approval or disapproval of the elimination of the |_| |_| |_|
Portfolio's investment restriction on investments to
exercise control.
</TABLE>
<PAGE> 37
<TABLE>
<CAPTION>
Approve Disapprove Abstain
--------- ------------ -------
<S> <C> <C> <C>
3(j) The approval or disapproval of the elimination of the |_| |_| |_|
Portfolio's investment restriction concerning other investment
companies.
3(k) The approval or disapproval of the elimination of the |_| |_| |_|
Portfolio's investment restriction on investment in other
investment companies.
4. In each such entity's discretion, PMLICO or PLACA, as applicable, is
authorized to vote upon such other business as may properly come before
the Meeting or any adjournment(s) thereof.
</TABLE>
I hereby revoke any and all voting instructions with respect to such
shares heretofore given by me. I acknowledge receipt of the Proxy Statement
dated March __, 1998. I REALIZE IF I SIGN THIS FORM WITHOUT CHECKING A BLOCK
WITH RESPECT TO THE ELECTION OF DIRECTORS OR ANY OTHER PROPOSAL LISTED ON THE
REVERSE SIDE OR ABOVE, MY TIMELY RETURNING OF THIS FORM WILL BE DEEMED TO BE AN
INSTRUCTION TO VOTE FOR THE ELECTION OF ALL NOMINEES IDENTIFIED IN ITEM 1 OR TO
VOTE IN FAVOR OF THE PROPOSAL.
THESE VOTING INSTRUCTIONS MAY BE REVOKED AT ANY TIME PRIOR TO THE MEETING BY
NOTIFYING THE SECRETARY OF NLIC OR OF THE FUND, IN WRITING.
<TABLE>
<S> <C>
Date: , 1998
------------- --- --------------------------------------------------------------
Signature - Please sign exactly as your name appears below.
Policy:
Insured: Please sign, date and return this Form promptly. Signature
should be exactly as name or names appear on this Voting
Instruction Form. If the individual signing the form is a
fiduciary (e.g. attorney, executor, trustee, guardian, etc.) the
individual's signature must be followed by his or her full
title.
</TABLE>
NUMBER OF SHARES FOR WHICH YOU ARE
ENTITLED TO GIVE VOTING INSTRUCTIONS:
Bond Portfolio
PLEASE RETURN THIS VOTING INSTRUCTION FORM PROMPTLY
<PAGE> 38
VOTING INSTRUCTION FORM
MARKET STREET FUND, INC.
VOTING INSTRUCTIONS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF NATIONAL
LIFE INSURANCE COMPANY FOR SPECIAL MEETINGS OF SHAREHOLDERS OF THE
INTERNATIONAL, BOND, MANAGED, AGGRESSIVE GROWTH, MONEY MARKET, SENTINEL GROWTH
AND GROWTH PORTFOLIOS OF MARKET STREET FUND, INC. TO BE HELD ON APRIL 22, 1998.
I hereby instruct National Life Insurance Company ("NLIC") to vote the
shares of the International Portfolio of Market Street Fund, Inc. (the "Fund")
as to which I am entitled to give instructions at the Special Meeting of
Shareholders of the International Portfolio of the Fund (the "Meeting") to be
held on April 22, 1998, at 10:00 a.m. local time, at 1050 Westlakes Drive,
Berwyn, Pennsylvania 19312, or any adjournment(s) thereof, as follows:
1. Election of Five (5) Directors of the Fund
NOMINEES: Robert W. Kloss, Dr. Alan Gart, Dr. A. Gilbert Heebner, Edward
S. Stouch, Leo Slack
|_| VOTE FOR all nominees listed, except as marked to the contrary above.
(TO WITHHOLD YOUR VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE A LINE THROUGH
THE NOMINEE'S NAME IN THE LIST ABOVE.)
|_| VOTE WITHHELD for all nominees.
<TABLE>
<CAPTION>
Approve Disapprove Abstain
--------- ------------ -------
<S> <C> <C> <C>
2. To ratify or reject the selection of Coopers & Lybrand LLP as |_| |_| |_|
independent auditors to the Fund for the fiscal year ending
December 31, 1998.
3(a) The approval or disapproval of the restatement of the |_| |_| |_|
Portfolio's investment restriction on issuer
diversification.
3(b) The approval or disapproval of the amendment of the |_| |_| |_|
Portfolio's investment restriction on industry
concentration.
3(c) The approval or disapproval of the amendment of the |_| |_| |_|
Portfolio's investment restriction on borrowing.
3(d) The approval or disapproval of the restatement of the |_| |_| |_|
Portfolio's investment restriction on lending.
3(e) The approval or disapproval of the restatement of the |_| |_| |_|
Portfolio's investment restriction on underwriting.
3(f) The approval or disapproval of the restatement of the |_| |_| |_|
Portfolio's investment restriction on investment in
real estate.
3(g) The approval or disapproval of the amendment of the |_| |_| |_|
Portfolio's investment restriction on commodities.
3(h) The approval or disapproval of the restatement of the |_| |_| |_|
Portfolio's investment restriction on senior securities.
3(i) The approval or disapproval of the elimination of the |_| |_| |_|
Portfolio's investment restriction on investments to
exercise control.
</TABLE>
<PAGE> 39
<TABLE>
<CAPTION>
Approve Disapprove Abstain
--------- ------------ -------
<S> <C> <C> <C>
3(j) The approval or disapproval of the elimination of the |_| |_| |_|
Portfolio's investment restriction concerning other
investment companies.
3(l) The approval or disapproval of the elimination of the |_| |_| |_|
Portfolio's investment restriction on investment in
companies with a record of less than three years'
operations.
3(m) The approval or disapproval of the elimination of the |_| |_| |_|
Portfolio's investment restriction on illiquid securities.
4. NLIC is authorized, in its discretion, to vote upon such other business
as may properly come before the Meeting or any adjournment(s) thereof.
</TABLE>
I hereby revoke any and all voting instructions with respect to such shares
heretofore given by me. I acknowledge receipt of the Proxy Statement dated
March __, 1998. I REALIZE IF I SIGN THIS FORM WITHOUT CHECKING A BLOCK WITH
RESPECT TO THE ELECTION OF DIRECTORS OR ANY OTHER PROPOSAL LISTED ON THE
REVERSE SIDE OR ABOVE, MY TIMELY RETURNING OF THIS FORM WILL BE DEEMED TO BE AN
INSTRUCTION TO VOTE FOR THE ELECTION OF ALL NOMINEES IDENTIFIED IN ITEM 1 OR TO
VOTE IN FAVOR OF THE PROPOSAL.
THESE VOTING INSTRUCTIONS MAY BE REVOKED AT ANY TIME PRIOR TO THE MEETING BY
NOTIFYING THE SECRETARY OF NLIC OR OF THE FUND IN WRITING.
<TABLE>
<S> <C>
Date: , 1998
------------- --- --------------------------------------------------------------
Signature - Please sign exactly as your name appears below.
Policy:
Insured: Please sign, date and return this Form promptly. Signature
should be exactly as name or names appear on this Voting
Instruction Form. If the individual signing the form is a
fiduciary (e.g. attorney, executor, trustee, guardian, etc.) the
individual's signature must be followed by his or her full
title.
</TABLE>
NUMBER OF SHARES FOR WHICH YOU ARE
ENTITLED TO GIVE VOTING INSTRUCTIONS:
International Portfolio
PLEASE RETURN THIS VOTING INSTRUCTION FORM PROMPTLY
