<PAGE> 1
LOGO
Dear Policyholder:
We are pleased to send you the semi-annual report for one of the Fund groups
from your variable annuity contract or variable life insurance policy. In
additional mailings, you will also be receiving the semi-annual reports for
other Fund groups in which you have invested. The investments available through
your variable contract are managed by some of the best fund management companies
in the country.
Your variable insurance product is unique in that it combines the protection and
tax advantages of traditional insurance with the growth potential of equity
investments. A leader in the variable products marketplace, Provident Mutual
Life Insurance Company can trace its roots back to 1717, giving us the
distinction of serving America's life insurance needs longer than any other
company. Our financial strength enables us to continually offer a variety of
life insurance policies and annuity contracts designed to help you meet your
financial planning goals, including retirement planning, college funding, and
estate planning.
We are proud to include you among our policyholders, and we appreciate your
business. If you have a question about your policy, or would like more
information about our products and services, please contact your local agent or
our Customer Service Center at 1-800-688-5177.
Sincerely,
LOGO
Robert W. Kloss
President
<PAGE> 2
- --------------------------------------------------------------------------------
To Our Variable Life Policyholders and Variable Annuity Contractholders:
- --------------------------------------------------------------------------------
We are pleased to send you the 1998 Semi-Annual Report for the Market Street
Fund, Inc. On May 4, 1998 in an effort to broaden your investment options, we
added four new style specific portfolios -- the All Pro Large Cap Growth, All
Pro Small Cap Growth, All Pro Large Cap Value and All Pro Small Cap Value
Portfolios. All four Portfolios seek capital growth and differ from the other
existing Portfolios of the Fund in that they each have several investment
sub-advisers that manage a portion of their respective assets according to their
style discipline.
Economic Overview and Investment Perspective
After expanding at a rate of nearly 4% in 1997, the U.S. economy expanded at a
robust 5.4% annual pace in the first quarter of 1998 driven by a consumer
spending spree. The unemployment rate fell to 4.5% in June, the lowest rate in a
decade.
Inflation as measured by the Consumer Price Index averaged only 1.4% over the
first half of the year. The S&P 500 gained 17.7% in the six month period
although most of that gain occurred in the first quarter and was concentrated in
a small number of large cap growth stocks. Bond yields continued to decline
especially in the second quarter due to the continuing financial problems in
Asia, which caused a "flight to quality" into U.S. Treasuries. The decline in
bond yields was also spurred on by the low inflation and the strengthening of
the U.S. dollar. The yield on the thirty year U.S. Treasury Bond declined from
5.92% at the beginning of the year to 5.57% in mid-June, the lowest level since
the Treasury began issuing thirty year bonds in the seventies. The Lehman
Aggregate Bond Index, a benchmark used by many investment professionals,
provided
a 3.9% return. In the international arena, the Morgan Stanley EAFE Index
returned 15.9% for the six months ended June 30. Most of that return occurred in
the first quarter since the economic Asian crises worsened significantly in the
second quarter. Most of the European countries continued to exhibit strong
performance during the first half due to a strengthening of their economies,
increased corporate efficiencies and confidence in the planned adoption of the
European Monetary Union. The Asian markets continued their slump and weakened
further due to the economic recession in Japan.
It appears that the pace of U.S. economic growth in the second quarter has
slowed sharply and will continue at a slower pace for the remainder of the year
due to falling exports and a contraction of inventory buildup. Inflation, too,
is expected to remain low. This should bode well for bond prices. Our outlook
for the equity markets remains cautiously optimistic. As long as corporate
earnings do not disappoint and interest rates remain steady, stock prices should
benefit.
Review of Fund Portfolio Performance
As always, it is important to recall in interpreting the accompanying
Semi-Annual Reviews that the advisers of the equity portfolios of Market Street
Fund do not engage in market timing. That is to say that in all but times of
great market turmoil, they endeavor to keep the vast majority of portfolio
assets invested in common stocks. Thus, they attempt to add value by stock
selection utilizing the methods and in the markets specified in the Fund
Prospectus. Their performance should be judged according to how well they do
relative to market indices measuring the same type of activity.
1
<PAGE> 3
We appreciate the opportunity to have served you in the past and look forward to
serving you during the remainder of 1998 and many years into the future.
/s/ Rosanne Gatta
Rosanne Gatta
President
The Market Street Fund, Inc.
*Past Performance is not predictive of future results. Moreover, the
relationship between the performance of the Fund Portfolios and the actual
increases or decreases in a policy's cash value is not directly proportional
due to certain charges deducted from premiums and under the policies which are
not reflected in the following pages. Please see the current prospectus for an
explanation of these charges and for illustrations, which take such charges
into account in calculating cash values.
2
<PAGE> 4
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Market Street Fund, Inc.
The Growth Portfolio
1998 Semi-Annual Review
Sentinel Advisors Company
- --------------------------------------------------------------------------------
The Market Street Fund Growth Portfolio achieved a total return of 10.5% for the
first six months of 1998, compared to 12.0% achieved by the median Lipper Growth
& Income Fund.
The S&P 500 advanced 17.7% in the six month period. Most of the market action
was again in the largest capitalization blue chip stocks that dominate the S&P
500. The Portfolio's focus on larger capitalization stocks contributed
positively to performance in this environment. The Portfolio's absolute
performance was very strong in the first half, with exceptional performance from
holdings in healthcare and consumer cyclical sectors, although an underweighting
in technology had a negative impact.
The stock market environment appears to be getting more fragile. The advance in
1998 has to a large extent become narrowly focused, with most of the rise
attributable to increases in a relatively small number of large capitalization
growth stocks (the largest fifty stocks in the S&P 500 are up 22.5% year-
to-date, while the remaining 450 are up only 12.2%). We remain cautious that our
risk averse value discipline will serve shareholders well in this environment.
Richard A. Pender, CFA
Daniel J. Manion, CFA
3
<PAGE> 5
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Growth Portfolio
Statement of Net Assets, June 30, 1998
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
- -----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK -- 93.3%
Aerospace -- 2.1%
Goodrich (B.F.) Co. ...................................... 127,000 $ 6,302,375
------------
Automobiles -- 2.2%
Ford Motor Co. ........................................... 115,000 6,785,000
------------
Banks -- 7.8%
Bank of New York Co., Inc. ............................... 81,400 4,939,962
BankAmerica Corp. ........................................ 55,000 4,754,062
Chase Manhattan Corp. .................................... 74,000 5,587,000
Citicorp.................................................. 22,000 3,283,500
First Union Corp. ........................................ 84,000 4,893,000
------------
23,457,524
------------
Building Materials -- 1.8%
Sherwin Williams Co. ..................................... 165,000 5,465,625
------------
Business & Consumer Services -- 2.2%
Omnicom Group, Inc. ...................................... 125,000 6,234,375
Sodexho Marriott Services, Inc. .......................... 11,075 321,175
------------
6,555,550
------------
Business Data Processing -- 1.2%
Automatic Data Processing, Inc. .......................... 50,000 3,643,750
------------
Computers -- 1.5%
Hewlett Packard Co. ...................................... 75,000 4,490,625
------------
Consumer Products -- 4.2%
Fortune Brands, Inc. ..................................... 154,000 5,919,375
Kimberly-Clark Corp. ..................................... 152,000 6,973,000
------------
12,892,375
------------
Containers -- 0.8%
Bemis Co., Inc. .......................................... 60,000 2,452,500
------------
Drugs -- 3.9%
American Home Products Corp. ............................. 137,400 7,110,450
Pfizer, Inc. ............................................. 42,400 4,608,350
------------
11,718,800
------------
Electrical Equipment -- 2.6%
Emerson Electric Co. ..................................... 78,400 4,733,400
General Electric Co. ..................................... 35,000 3,185,000
------------
7,918,400
------------
</TABLE>
4
<PAGE> 6
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Growth Portfolio
Statement of Net Assets, June 30, 1998 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
- -----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Energy -- 5.9%
Amoco Corp. .............................................. 76,000 $ 3,163,500
Chevron Corp. ............................................ 37,000 3,073,312
Exxon Corp. .............................................. 45,000 3,209,062
Mobil Corp. .............................................. 73,700 5,647,262
Royal Dutch Petroleum Co. ................................ 52,500 2,877,656
------------
17,970,792
------------
Finance -- 6.6%
American Express Co. ..................................... 60,000 6,840,000
Associates First Capital Corp. Class A.................... 30,139 2,316,936
*First Data Corp. ........................................ 120,000 3,997,500
Travelers Group, Inc. .................................... 111,750 6,774,844
------------
19,929,280
------------
Foods -- 5.5%
Bestfoods, Inc. .......................................... 106,000 6,154,625
Hershey Foods Corp. ...................................... 10,600 731,400
McCormick & Co., Inc. .................................... 90,000 3,214,687
Sara Lee Corp. ........................................... 115,500 6,460,781
------------
16,561,493
------------
Health -- 1.7%
Abbott Laboratories....................................... 124,000 5,068,500
------------
Industrial Diversified -- 4.2%
Crown Cork & Seal Co., Inc. .............................. 57,500 2,731,250
Parker-Hannifin Corp. .................................... 121,100 4,616,937
Praxair, Inc. ............................................ 117,000 5,477,063
------------
12,825,250
------------
Insurance -- 6.5%
Allstate Corp. ........................................... 59,000 5,402,188
American General Corp. ................................... 90,000 6,406,875
American International Group, Inc. ....................... 33,000 4,818,000
Jefferson-Pilot Corp. .................................... 55,500 3,215,531
------------
19,842,594
------------
Lodging -- 1.4%
Marriott International, Inc., Class A..................... 132,900 4,302,638
------------
Machinery & Instrumentation -- 1.5%
Deere & Co. .............................................. 85,000 4,494,375
------------
</TABLE>
5
<PAGE> 7
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Growth Portfolio
Statement of Net Assets, June 30, 1998 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
- -----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Medical Equipment & Supplies -- 4.1%
Becton, Dickinson & Co. .................................. 42,500 $ 3,299,063
Johnson & Johnson......................................... 100,000 7,375,000
Schering Plough Corp. .................................... 20,000 1,832,500
------------
12,506,563
------------
Office Equipment & Supplies -- 1.9%
International Business Machines Corp. .................... 50,000 5,740,625
------------
Oil Field Equipment & Services -- 2.3%
Halliburton Co. .......................................... 88,500 3,943,781
Schlumberger Ltd. ........................................ 42,500 2,903,281
------------
6,847,062
------------
Publishing -- 3.4%
Gannett, Inc. ............................................ 84,000 5,969,250
McGraw-Hill, Inc. ........................................ 52,500 4,282,031
------------
10,251,281
------------
Railroads -- 3.4%
Canadian Pacific Ltd. .................................... 240,000 6,810,000
Union Pacific Corp., Series A............................. 80,000 3,530,000
------------
10,340,000
------------
Retail -- 3.8%
May Department Stores Co. ................................ 63,000 4,126,500
Sears, Roebuck & Co. ..................................... 120,000 7,327,500
------------
11,454,000
------------
Retail - Apparel -- 1.2%
Gap, Inc. ................................................ 60,000 3,697,500
------------
Retail Merchandising -- 0.5%
*Costco Companies, Inc. .................................. 22,600 1,425,213
------------
Semiconductors -- .05%
Intel Corp. .............................................. 22,500 1,667,813
------------
Tobacco -- 0.7%
Philip Morris Cos., Inc. ................................. 57,500 2,264,063
------------
Utilities - Electric -- 3.9%
Duke Power Co. ........................................... 53,000 3,140,250
Florida Progress Corp. ................................... 76,000 3,125,500
FPL Group, Inc. .......................................... 45,000 2,835,000
Pacificorp................................................ 120,000 2,715,000
------------
11,815,750
------------
</TABLE>
6
<PAGE> 8
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Growth Portfolio
Statement of Net Assets, June 30, 1998 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MATURITY SHARES
DESCRIPTION AND PERCENTAGE OF PORTFOLIO DATE OR PAR VALUE
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCK (CONTINUED)
Utilities - Gas -- 2.1%
Enron Corp. .............................................. 79,000 $ 4,270,938
Sonat, Inc. .............................................. 58,100 2,244,113
------------
6,515,051
------------
Utilities - Telephone -- 1.9%
GTE Corp. ................................................ 105,000 5,840,625
------------
TOTAL COMMON STOCK (COST $225,673,781).................. 283,042,992
------------
PREFERRED STOCK -- 0.7%
Microsoft Corp., Preferred Series A Convertible, 2.75%.... 22,000 2,090,000
------------
TOTAL PREFERRED STOCK (COST $1,874,124)................. 2,090,000
------------
COMMERCIAL PAPER -- 5.6%
Associates Corp. of North America, 5.56%.................. 07/10/1998 $3,000,000 2,995,830
Household Finance Corp., 5.60%............................ 07/15/1998 5,000,000 4,989,111
Merrill Lynch & Co., Inc., 5.60%.......................... 07/07/1998 4,300,000 4,295,987
Norwest Corp., 5.55%...................................... 07/01/1998 4,800,000 4,800,000
------------
TOTAL COMMERCIAL PAPER (COST $17,080,928)............... 17,080,928
------------
SHORT TERM INVESTMENTS -- 0.2%
Temporary Investment Fund, Inc. -- TempCash............... 636,026 636,026
------------
TOTAL SHORT TERM INVESTMENTS (COST $636,026)............ 636,026
------------
TOTAL INVESTMENTS -- 99.8% (COST $245,264,859)........ 302,849,946
OTHER ASSETS IN EXCESS OF LIABILITIES -- 0.2%............... 527,097
------------
NET ASSETS -- 100.0%
(Equivalent to $18.44 per share based on 16,455,820 shares
of capital stock outstanding)........................... $303,377,043
============
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE
($303,377,043/16,455,820 shares outstanding).............. $ 18.44
============
</TABLE>
*Non-income producing
See accompanying notes to financial statements.
7
<PAGE> 9
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Money Market Portfolio
Statement of Net Assets, June 30, 1998
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MATURITY
DESCRIPTION AND PERCENTAGE OF PORTFOLIO DATE PAR VALUE
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMERCIAL PAPER -- 98.3%
Banking -- 20.5%
BankAmerica Corp., 5.50%.................................. 07/13/1998 $1,500,000 $ 1,497,250
Bank of New York Co., Inc., 5.53%......................... 07/07/1998 3,000,000 2,997,235
Morgan (J. P.) & Co., Inc., 5.535%........................ 07/01/1998 3,500,000 3,500,000
National City Credit Corp., 5.49%......................... 08/18/1998 3,800,000 3,772,184
NationsBank, 5.50%........................................ 07/08/1998 3,000,000 2,996,792
-----------
14,763,461
-----------
Brokerage -- 5.1%
Merrill Lynch & Co., Inc., 5.52%.......................... 07/16/1998 2,300,000 2,294,710
Merrill Lynch & Co., Inc., 5.53%.......................... 07/28/1998 1,400,000 1,394,193
-----------
3,688,903
-----------
Consumer Finance -- 7.6%
American Express Credit Corp., 5.50%...................... 07/09/1998 3,000,000 2,996,333
American General Finance Corp., 5.52%..................... 07/10/1998 2,500,000 2,496,550
-----------
5,492,883
-----------
Electric Power -- 4.2%
Virginia Electric., 5.51%................................. 07/14/1998 3,000,000 2,994,031
-----------
Finance -- 56.5%
Associates Corp. of North America, 5.51%.................. 08/14/1998 2,500,000 2,483,164
Avco Financial Services, Inc., 5.52%...................... 09/09/1998 3,000,000 2,967,800
Bell Atlantic Corp., 5.54%................................ 08/03/1998 2,000,000 1,989,843
C.I.T. Group Holdings, Inc., 5.51%........................ 07/23/1998 3,000,000 2,989,898
Commercial Credit Corp., 5.51%............................ 07/15/1998 2,500,000 2,494,643
Ford Motor Credit Co., 5.51%.............................. 07/10/1998 2,000,000 1,997,245
Ford Motor Credit Co., 5.50%.............................. 07/13/1998 1,000,000 998,167
General Electric Capital Corp., 5.53%..................... 08/21/1998 1,000,000 992,166
General Electric Capital Corp., 5.53%..................... 08/24/1998 2,500,000 2,479,262
General Motors Acceptance Corp., 5.52%.................... 08/07/1998 2,500,000 2,485,817
GTE Finance Corp., 5.52%.................................. 07/06/1998 2,000,000 1,998,467
Household Finance Corp., 5.53%............................ 08/26/1998 3,000,000 2,974,193
John Deere Capital Corp., 5.50%........................... 07/29/1998 3,400,000 3,385,456
Norwest Corp., 5.55%...................................... 08/05/1998 1,000,000 994,604
Norwest Financial, Inc., 5.52%............................ 08/24/1998 1,000,000 991,720
Private Export Funding Corp., 5.48%....................... 07/17/1998 2,500,000 2,493,911
Prudential Funding Corp., 5.51%........................... 07/31/1998 3,300,000 3,284,848
Transamerica Financial Corp., 5.50%....................... 07/24/1998 1,700,000 1,694,026
Transamerica Financial Corp., 5.51%....................... 08/11/1998 1,000,000 993,725
-----------
40,688,955
-----------
</TABLE>
8
<PAGE> 10
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Money Market Portfolio
Statement of Net Assets, June 30, 1998 -- Concluded
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MATURITY SHARES OR
DESCRIPTION AND PERCENTAGE OF PORTFOLIO DATE PAR VALUE
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMERCIAL PAPER (CONTINUED)
Oil -- 4.4%
Chevron Corp., 5.50%...................................... 07/21/1998 $3,200,000 $ 3,190,222
-----------
TOTAL COMMERCIAL PAPER (COST $70,818,455)............... 70,818,455
-----------
SHORT TERM INVESTMENTS -- 2.2%
Temporary Investment Fund, Inc. -- TempCash............... 1,602,649 1,602,649
-----------
TOTAL SHORT TERM INVESTMENTS (COST $1,602,649).......... 1,602,649
-----------
TOTAL INVESTMENTS -- 100.5% (COST $72,421,104).......... 72,421,104
LIABILITIES IN EXCESS OF OTHER ASSETS -- (0.5)%............. (345,319)
-----------
NET ASSETS -- 100.00%
(Equivalent to $1.00 per share based on 72,075,842 shares
of capital stock outstanding)........................... $72,075,785
===========
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE
($72,075,785/72,075,842 shares outstanding)............... $ 1.00
===========
</TABLE>
See accompanying notes to financial statements.
9
<PAGE> 11
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Bond Portfolio
1998 Semi-Annual Review
Sentinel Advisors Company
- --------------------------------------------------------------------------------
The Market Street Fund Bond Portfolio returned 4.09% for the first half of 1998.
The Lehman Brothers Aggregate Bond Index, a good gauge of the overall fixed
income market, returned 3.93% for the same time period.
The first quarter of 1998 saw economic growth at an unsustainable pace,
accompanied by low inflation and low unemployment. By the second quarter, the
Asian economic "flu" finally began to slow the U.S. economy, thus reducing the
threat of a move by the Federal Reserve Board to tighten credit. In this
environment, long rates as measured by the 30-year U.S. Treasury Index declined
by 30 basis points, while the 2-year U.S. Treasury Index declined by 22 basis
points. This flattening of the yield curve resulted in long-dated assets
significantly outperforming short-dated assets.
During 1998 the Portfolio's duration was extended to a high of 6.5 years by
February, and then slowly reduced to 6.1 years by the end of June. The
Portfolio's duration and yield curve positioning contributed positively to
performance. Cash was committed to corporate bonds, pushing the asset mix to 55%
corporate bonds versus 42% at the beginning of the year. Finally, the Treasury
position was reduced to 23% from 34%. Looking forward, we believe bonds
represent an attractive asset class given their real rates of return.
Richard D. Temple
William C. Kane, CFA
10
<PAGE> 12
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Bond Portfolio
Statement of Net Assets, June 30, 1998
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MATURITY
DESCRIPTION AND PERCENTAGE OF PORTFOLIO DATE PAR VALUE
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
U.S. TREASURY BONDS -- 5.5%
U.S. Treasury Bonds, 6.00%................................ 02/15/2026 $1,450,000 $ 1,509,131
-----------
TOTAL U.S. TREASURY BONDS (COST $1,462,860)............. 1,509,131
-----------
U.S. TREASURY NOTES -- 17.1%
U.S. Treasury Notes, 5.375%............................... 06/30/2003 500,000 497,845
U.S. Treasury Notes, 7.25%................................ 08/15/2004 100,000 108,705
U.S. Treasury Notes, 7.50%................................ 02/15/2005 1,250,000 1,382,650
U.S. Treasury Notes, 6.875%............................... 05/15/2006 1,500,000 1,623,300
U.S. Treasury Notes, 7.00%................................ 07/15/2006 500,000 545,840
U.S. Treasury Notes, 5.625%............................... 05/15/2008 500,000 506,640
-----------
TOTAL U.S. TREASURY NOTES (COST $4,483,201)............. 4,664,980
-----------
AGENCY OBLIGATIONS -- 17.7%
Collateralized Mortgage Obligation Trust, 7.95%........... 05/01/2017 321,627 331,839
Federal Home Loan Mortgage Corp., 8.00%................... 11/01/2008 350,419 365,531
Federal Home Loan Mortgage Corp., 9.00%................... 11/01/2016 1,679 1,785
Federal Home Loan Mortgage Corp., 8.00%................... 03/01/2017 27,950 29,155
Federal National Mortgage Association, 7.00%.............. 07/25/2008 500,000 507,031
Federal National Mortgage Association, 6.00%.............. 04/01/2028 1,188,669 1,157,095
Government National Mortgage Association, 7.00%........... 02/15/2013 994,268 1,018,813
Government National Mortgage Association, 7.00%........... 10/15/2023 906,967 921,421
Government National Mortgage Association, 7.50%........... 03/15/2028 493,208 506,771
-----------
TOTAL AGENCY OBLIGATIONS (COST $4,818,854).............. 4,839,441
-----------
CORPORATE BONDS -- 55.0%
Entertainment -- 1.8%
Mirage Resorts, Inc., 6.625%.............................. 02/01/2005 500,000 496,250
-----------
Finance -- 3.0%
Fairfax Financial Holdings Ltd., 7.375%................... 04/15/2018 800,000 815,000
-----------
Financial Institutions -- 21.3%
Bankers Trust Corp., 7.25%................................ 10/15/2011 750,000 795,000
Credit Suisse, 7.90%...................................... 05/01/2007 500,000 539,375
Fred Meyer, Inc., 7.45%................................... 03/01/2008 400,000 401,500
First Union Corp., 6.824%................................. 08/01/2006 600,000 642,750
Lehman Brothers Holdings, Inc., 8.50%..................... 08/01/2015 500,000 591,250
Providian National Bank, 6.70%............................ 03/15/2003 500,000 503,125
Salomon, Inc., 6.875%..................................... 12/15/2003 750,000 769,688
</TABLE>
11
<PAGE> 13
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Bond Portfolio
Statement of Net Assets, June 30, 1998 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MATURITY
DESCRIPTION AND PERCENTAGE OF PORTFOLIO DATE PAR VALUE
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CORPORATE BONDS (CONTINUED)
Societe Generale, 7.85%................................... 04/30/2007 $1,000,000 $ 1,068,750
Sumitomo Bank Treasury Co., 9.40%......................... 12/29/2049 500,000 493,750
-----------
5,805,188
-----------
Foreign -- 7.7%
Banque Nationale de Paris, 7.738%......................... 12/31/2049 1,000,000 1,016,250
BCH Cayman Islands Ltd., 7.70%............................ 07/15/2006 500,000 535,000
Midland Bank Plc, 7.65%................................... 05/01/2025 500,000 553,750
-----------
2,105,000
-----------
Industrial -- 7.3%
News America, Inc., 6.625%................................ 01/09/2008 1,000,000 993,750
Owens Corning, 7.50%...................................... 05/01/2005 750,000 759,375
Tenet Healthcare Corp., 7.625%............................ 06/01/2008 250,000 251,250
-----------
2,004,375
-----------
Industrial Diversified -- 1.5%
Dimon, Inc. Senior Notes, 8.875%.......................... 06/01/2006 400,000 409,500
-----------
Insurance -- 2.6%
Farmers Insurance Exchange, 8.625%........................ 05/01/2024 600,000 712,500
-----------
Telecommunications -- 5.6%
Comsat Corp. Medium Term Note, 8.05%...................... 12/13/2006 500,000 574,450
Continental Cablevision Senior Notes, 8.30%............... 05/15/2006 850,000 939,250
-----------
1,513,700
-----------
Utilities - Electric -- 3.9%
Niagara Mohawk Power Corp., 8.50%......................... 07/01/2023 500,000 535,625
Waterford 3 Funding, 8.09%................................ 01/02/2017 500,000 518,750
-----------
1,054,375
-----------
Utilities - Gas -- 0.3%
Consolidated Natural Gas Co., 8.625%...................... 12/01/2011 77,000 80,658
-----------
TOTAL CORPORATE BONDS (COST $14,587,138)................ 14,996,546
-----------
COMMERCIAL PAPER -- 8.4%
General Electric Capital Corp., 5.48%..................... 07/01/1998 500,000 500,000
Merrill Lynch & Co., Inc., 5.70%.......................... 07/10/1998 1,300,000 1,298,148
Prudential Funding Corp., 5.57%........................... 07/07/1998 500,000 499,536
-----------
TOTAL COMMERCIAL PAPER (COST $2,297,684)................ 2,297,684
-----------
</TABLE>
12
<PAGE> 14
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Bond Portfolio
Statement of Net Assets, June 30, 1998 -- Concluded
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CORPORATE BONDS (CONTINUED)
SHORT TERM INVESTMENTS -- 0.3%
Temporary Investment Fund, Inc. -- TempCash............... 86,682 $ 86,682
-----------
TOTAL SHORT TERM INVESTMENTS (COST $86,682)............. 86,682
-----------
TOTAL INVESTMENTS -- 104.0% (COST $27,736,419).......... 28,394,464
-----------
LIABILITIES IN EXCESS OF OTHER ASSETS -- (4.0%)............. (1,092,143)
-----------
NET ASSETS -- 100.0%
(Equivalent to $11.11 per share based on 2,457,412 shares
of capital stock outstanding)........................... $27,302,321
===========
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE
($27,302,321/2,457,412 shares outstanding)................ $ 11.11
===========
</TABLE>
See accompanying notes to financial statements.
13
<PAGE> 15
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Managed Portfolio
1998 Semi-Annual Review
Sentinel Advisors Company
- --------------------------------------------------------------------------------
The Market Street Fund Managed Portfolio achieved a total return of 8.2% for the
first half of 1998, compared to 8.6% for the median Lipper Balanced Fund.
The S&P 500 returned 17.7% during the first half, handily outperforming the 3.9%
return of the Lehman Aggregate Bond Index. However, stock market strength during
the period was focused in the very largest market capitalization stocks that
dominate the S&P 500. At the end of June, the asset allocation of the Portfolio
was 57% common stocks, 38% fixed income and 5% cash. This is little changed from
the 59% common stocks, 35% fixed income and 6% cash positions as of the end of
1997. The duration of the bond component of the Portfolio increased over the
first half of the year, 5.0 years to 6.2 years.
With most of the market strength during the first half in large blue chip
stocks, the Portfolio's continued focus on that capitalization segment for its
stock market exposure had a positive impact on performance. During the first
half of 1998, the Portfolio trimmed or eliminated a number of its capital goods,
utility and energy holdings in an effort to moderately reduce our overweightings
in these groups. The proceeds were used to increase exposure to healthcare,
technology and consumer related sectors, which continue to be strong relative
performers.
Interest rates fell during the first six months with the yield on the 30-year
U.S. Treasury Bond falling from 5.92% to 5.57%. This most recent bond market
rally can in part be attributed to positive comments by Federal Reserve Chairman
Alan Greenspan, who stated that the U.S. economy was just now beginning to feel
the effects of the Asian economic crisis, and would soon be slowing from the
torrid 5.4% real GDP growth rate of the first quarter of 1998. Also, the
strengthening of the U.S. dollar relative to most global currencies kept
inflation fears at bay.
The Portfolio remains defensively positioned. The stock market advance has
become fairly narrowly focused, with most of the recent rise attributable to
increases in a relatively small number of large capitalization growth stocks. We
believe that a disciplined value-oriented investment strategy is most
appropriate in such a stock market environment. As for bonds, with the recent
rally in fixed income markets, it seems most appropriate to emphasize income as
a way to maximize returns over the near term. As always, we believe that a
conservative balanced approach that emphasizes investment quality, valuation and
income should serve our policyholders well in both strong markets and more
turbulent ones.
David M. Brownlee, CFA
Richard A. Pender, CFA
14
<PAGE> 16
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Managed Portfolio
Statement of Net Assets, June 30, 1998
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
- ------------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK -- 57.2%
Aerospace -- 1.1%
Goodrich (B.F.) Co. ...................................... 14,500 $ 719,562
------------
Automobiles -- 1.4%
Ford Motor Co. ........................................... 14,400 849,600
------------
Banks -- 4.7%
Bank of New York Co., Inc. ............................... 11,000 667,562
BankAmerica Corp. ........................................ 7,200 622,350
Chase Manhattan Corp. .................................... 7,680 579,840
Citicorp.................................................. 2,800 417,900
First Union Corp. ........................................ 11,000 640,750
------------
2,928,402
------------
Building Materials -- 1.0%
Sherwin Williams Co. ..................................... 19,000 629,375
------------
Business & Consumer Services -- 1.3%
Omnicom Group, Inc. ...................................... 15,500 773,062
Sodexho Marriott Services, Inc. .......................... 1,500 43,500
------------
816,562
------------
Business Data Processing -- 0.6%
Automatic Data Processing, Inc. .......................... 5,600 408,100
------------
Computer Products -- 0.9%
Hewlett Packard Co. ...................................... 9,000 538,875
------------
Consumer Products -- 2.4%
Fortune Brands, Inc. ..................................... 18,500 711,094
Kimberly-Clark Corp. ..................................... 17,500 802,812
------------
1,513,906
------------
Containers -- 0.5%
Bemis Co., Inc. .......................................... 7,000 286,125
------------
Drugs -- 2.4%
American Home Products Corp. ............................. 19,000 983,250
Pfizer, Inc. ............................................. 5,100 554,306
------------
1,537,556
------------
Drugs & Health Care -- 0.4%
Schering Plough Corp. .................................... 2,500 229,062
------------
</TABLE>
15
<PAGE> 17
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Managed Portfolio
Statement of Net Assets, June 30, 1998 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
- ------------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Electrical Equipment -- 2.6%
Emerson Electric Co. ..................................... 10,800 $ 652,050
General Electric Co. ..................................... 4,700 427,700
Grainger (W.W.), Inc. .................................... 11,600 577,825
------------
1,657,575
------------
Energy -- 3.2%
Amoco Corp. .............................................. 12,800 532,800
Exxon Corp. .............................................. 5,700 406,481
Mobil Corp. .............................................. 9,400 720,275
Royal Dutch Petroleum Co. ................................ 6,500 356,281
------------
2,015,837
------------
Finance -- 3.4%
American Express Co. ..................................... 6,500 741,000
Associates First Capital Corp. Class A.................... 3,774 290,126
*First Data Corp. ........................................ 15,000 499,687
Travelers Group, Inc. .................................... 9,750 591,094
------------
2,121,907
------------
Foods -- 3.3%
Bestfoods, Inc. .......................................... 14,000 812,875
Hershey Foods Corp. ...................................... 1,400 96,600
McCormick & Co., Inc. .................................... 12,000 428,625
Sara Lee Corp. ........................................... 12,800 716,000
------------
2,054,100
------------
Health -- 1.0%
Abbott Laboratories....................................... 16,000 654,000
------------
Industrial Diversified -- 3.1%
Crown Cork & Seal Co., Inc. .............................. 6,800 323,000
Dover Corp. .............................................. 10,000 342,500
Parker-Hannifin Corp. .................................... 16,100 613,812
Praxair, Inc. ............................................ 14,000 655,375
------------
1,934,687
------------
Insurance -- 3.9%
Allstate Corp. ........................................... 6,500 595,156
American General Corp. ................................... 10,300 733,231
American International Group, Inc. ....................... 4,300 627,800
Jefferson-Pilot Corp. .................................... 8,250 477,984
------------
2,434,171
------------
</TABLE>
16
<PAGE> 18
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Managed Portfolio
Statement of Net Assets, June 30, 1998 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
- ------------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Lodging -- 0.9%
Mariott International, Inc., Class A...................... 18,500 $ 598,937
------------
Medical & Medical Services -- 0.8%
Becton, Dickinson & Co. .................................. 6,500 504,562
------------
Medical Equipment & Supplies -- 1.5%
Johnson & Johnson......................................... 12,500 921,875
------------
Oil Field Equipment & Services -- 2.1%
Chevron Corp. ............................................ 5,100 423,619
Halliburton Co. .......................................... 11,000 490,187
Schlumberger Ltd. ........................................ 5,600 382,550
------------
1,296,356
------------
Publishing -- 2.3%
Gannett, Inc. ............................................ 10,200 724,838
McGraw-Hill, Inc. ........................................ 8,700 709,594
------------
1,434,432
------------
Railroads -- 2.0%
Canadian Pacific Ltd. .................................... 31,000 879,625
Union Pacific Corp., Series A............................. 8,800 388,300
------------
1,267,925
------------
Retail -- 2.3%
May Department Stores Co. ................................ 8,000 524,000
Sears, Roebuck & Co. ..................................... 15,000 915,938
------------
1,439,938
------------
Retail -- Apparel -- 0.8%
Gap, Inc. ................................................ 8,000 493,000
------------
Retail Merchandising -- 0.3%
*Costco Companies, Inc. .................................. 2,800 176,575
------------
Technology -- 1.5%
Intel Corp. .............................................. 2,500 185,313
International Business Machines Corp. .................... 6,600 757,763
------------
943,076
------------
Tobacco -- 0.5%
Philip Morris Cos., Inc. ................................. 7,800 307,125
------------
</TABLE>
17
<PAGE> 19
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Managed Portfolio
Statement of Net Assets, June 30, 1998 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MATURITY SHARES
DESCRIPTION AND PERCENTAGE OF PORTFOLIO DATE OR PAR VALUE
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCK (CONTINUED)
Utilities - Electric -- 2.3%
Duke Power Co. ........................................... 6,300 $ 373,275
Florida Progress Corp. ................................... 8,700 357,788
FPL Group, Inc. .......................................... 5,800 365,400
Pacificorp................................................ 15,000 339,375
------------
1,435,838
------------
Utilities - Gas -- 1.5%
Enron Corp. .............................................. 11,000 594,688
Sonat, Inc. .............................................. 8,700 336,038
------------
930,726
------------
Utilities - Telephone -- 1.2%
GTE Corp. ................................................ 13,000 723,125
------------
TOTAL COMMON STOCK (COST $22,800,900)................... 35,802,892
------------
PREFERRED STOCK -- 0.4%
Microsoft Corp., Preferred Series A Convertible, 2.75%.... 2,700 256,500
------------
TOTAL PREFERRED STOCK (COST $215,887)................... 256,500
------------
U.S. TREASURY NOTES -- 11.2%
U.S. Treasury Notes, 5.375%............................... 06/30/2003 $4,500,000 $ 4,480,605
U.S. Treasury Notes, 5.375%............................... 05/15/2008 2,500,000 2,533,200
------------
TOTAL U.S. TREASURY NOTES (COST $7,026,982)............. 7,013,805
------------
U.S. TREASURY BONDS -- 3.4%
U.S. Treasury Bond, 6.125%................................ 11/15/2027 2,000,000 2,143,020
------------
TOTAL U.S. TREASURY BONDS (COST $2,036,875)............. 2,143,020
------------
AGENCY OBLIGATIONS -- 8.9%
Collateralized Mortgage Obligation Trust, 7.950%.......... 05/01/2017 321,627 331,839
Federal Home Loan Mortgage Corp., 9.50%................... 03/01/2006 175,679 184,463
Federal Home Loan Mortgage Corp., 8.00%................... 11/01/2008 350,419 365,531
Federal Home Loan Mortgage Corp., 6.50%................... 01/01/2011 693,187 697,952
Federal National Mortgage Association, 7.00%.............. 03/01/2008 400,002 407,377
Federal National Mortgage Association, 7.75%.............. 03/01/2008 197,740 203,857
Federal National Mortgage Association, 7.75%.............. 05/01/2008 117,073 120,695
Federal National Mortgage Association, 7.00%.............. 07/25/2008 1,500,000 1,521,094
Federal National Mortgage Association, 8.00%.............. 11/01/2022 524,503 543,352
Federal National Mortgage Association, 6.00%.............. 09/01/2025 481,482 468,692
</TABLE>
18
<PAGE> 20
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Managed Portfolio
Statement of Net Assets, June 30, 1998 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO MATURITY PAR VALUE
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
AGENCY OBLIGATIONS (CONTINUED)
Government National Mortgage Association, 8.00%........... 03/15/2007 $ 308,649 $ 319,838
Government National Mortgage Association, 8.00%........... 08/15/2008 404,737 419,409
------------
TOTAL AGENCY OBLIGATIONS (COST $5,540,989).............. 5,584,099
------------
CORPORATE BONDS -- 14.3%
Broker -- 1.8%
Lehman Brothers Holdings, Inc., 8.50%..................... 08/01/2015 500,000 591,250
Salomon, Inc., 6.875%..................................... 12/15/2003 500,000 513,125
------------
1,104,375
------------
Entertainment -- 0.8%
Mirage Resorts, Inc., 6.625%.............................. 02/01/2005 500,000 496,250
------------
Finance -- 0.9%
Fairfax Financial Holdings Ltd., 7.375%................... 04/15/2018 550,000 560,313
------------
Financial Institutions -- 1.9%
Credit Suisse, 7.90%...................................... 05/01/2007 500,000 539,375
First Union Corp., 6.824%................................. 08/01/2006 600,000 642,750
------------
1,182,125
------------
Foreign Financial Institutions -- 3.0%
Banque Nationale de Paris, 7.738%......................... 12/31/2049 500,000 508,125
BCH Cayman Islands Ltd., 7.70%............................ 07/15/2006 500,000 535,000
Midland Bank Plc, 7.65%................................... 05/01/2025 550,000 609,125
Sumitomo Bank Treasury Co., 9.40%......................... 12/29/2049 250,000 246,875
------------
1,899,125
------------
Industrial -- 0.8%
Owens Corning, 7.50%...................................... 05/01/2005 500,000 506,250
------------
Insurance -- 1.3%
Farmers Insurance Exchange, 8.625%........................ 05/01/2024 700,000 831,250
------------
Retail Food Chains -- 0.5%
Fred Meyer, Inc., 7.45%................................... 03/01/2008 300,000 301,125
------------
Telecommunications -- 1.8%
Comsat Corp. Medium Term Note, 8.05%...................... 12/13/2006 500,000 574,450
Continental Cablevision Senior Notes, 8.30%............... 05/15/2006 500,000 552,500
------------
1,126,950
------------
Tobacco -- 0.6%
Dimon, Inc. Senior Notes, 8.875%.......................... 06/01/2006 400,000 409,500
------------
</TABLE>
19
<PAGE> 21
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Managed Portfolio
Statement of Net Assets, June 30, 1998 -- Concluded
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MATURITY SHARES
DESCRIPTION AND PERCENTAGE OF PORTFOLIO DATE OR PAR VALUE
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CORPORATE BONDS (CONTINUED)
Utilities -- 0.9%
Niagara Mohawk Power Corp., 8.50%......................... 07/01/2023 $ 500,000 $ 535,625
------------
TOTAL CORPORATE BONDS (COST $8,607,106)................. 8,952,888
------------
COMMERCIAL PAPER--20.0%
Associates Corp. of North America, 5.56%.................. 07/23/1998 2,500,000 2,491,506
Commercial Credit Corp., 5.57%............................ 07/15/1998 3,000,000 2,993,502
Merrill Lynch & Co., Inc., 5.60%.......................... 07/10/1998 1,500,000 1,497,900
Merrill Lynch & Co., Inc., 5.60%.......................... 07/07/1998 1,000,000 999,067
Norwest Corp., 5.57%...................................... 07/20/1998 3,000,000 2,991,181
Prudential Funding Corp., 5.53%........................... 07/21/1998 1,600,000 1,595,084
------------
TOTAL COMMERCIAL PAPER (COST $12,568,240)............... 12,568,240
------------
SHORT TERM INVESTMENTS -- 0.9%
Temporary Investment Fund, Inc. -- TempCash............... 574,612 574,612
------------
TOTAL SHORT TERM INVESTMENTS (COST $574,612)............ 574,612
------------
TOTAL INVESTMENTS -- 116.3% (COST $59,371,591).......... 72,896,056
LIABILITIES IN EXCESS OF OTHER ASSETS -- (16.3%)............ (10,203,354)
------------
NET ASSETS -- 100.0%
(Equivalent to $17.28 per share based on 3,628,713 shares
of capital stock outstanding)........................... $ 62,692,702
============
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE
($62,692,702/3,628,713 shares outstanding)................ $ 17.28
============
</TABLE>
*Non-Income Producing
See accompanying notes to financial statements.
20
<PAGE> 22
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Aggressive Growth Portfolio
1998 Semi-Annual Report
Sentinel Advisors Company
- --------------------------------------------------------------------------------
The Market Street Fund Aggressive Growth Portfolio achieved a total return of
7.4% for the first six months of 1998, compared to 6.0% for the median Lipper
Small Company fund.
The Russell 2000 stock index (a good proxy for small stocks) returned 5.3% for
the first half of 1998. The Market Street Fund Aggressive Growth Portfolio's
somewhat better relative performance for the first six months of this year is
mostly attributed to the strong relative performance of selected holdings in the
consumer staples, healthcare, financial and technology sectors. The Portfolio's
above-average exposure to the computer services and software industries also has
been helpful so far this year. The Portfolio's six-month returns were muted by
its exposure to the energy service industry.
Our investment strategy going forward will continue to emphasize non-cyclical
companies that are likely to grow earnings consistently at a rate much faster
than the overall economy. The Portfolio's exposure to technology remains
concentrated in service providers and software companies that enhance
productivity. With an eye toward important and potentially rewarding trends and
a bias for valuable brands or "franchises," we continue to look for
opportunities to own superior businesses at reasonable valuations.
Scott T. Brayman, CFA
Robert L. Lee, CFA
21
<PAGE> 23
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Aggressive Growth Portfolio
Statement of Net Assets, June 30, 1998
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
- -----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK -- 90.5%
Banks -- 4.1%
Cullen Frost Bankers, Inc. ............................... 15,000 $ 813,750
Mercantile Bankshares Corp. .............................. 18,000 626,625
Wilmington Trust Corp. ................................... 13,000 791,375
-----------
2,231,750
-----------
Beverages -- 0.6%
*Robert Mondavi Corp., Class A............................ 11,000 312,125
-----------
Business & Consumer Services -- 11.7%
*Affiliated Computer Services, Inc. ...................... 56,000 2,156,000
Analysts International Corp. ............................. 40,000 1,135,000
*Caci International, Inc. ................................ 42,000 884,625
*Healthcare Services Group................................ 48,500 769,937
*Sterling Commerce, Inc................................... 31,000 1,503,500
-----------
6,449,062
-----------
Business Services, Media, Etc. -- 3.9%
*Catalina Marketing Corp. ................................ 21,000 1,090,687
*Unifirst Corp. .......................................... 42,000 1,050,000
-----------
2,140,687
-----------
Communications -- 0.6%
*Dynatech Corp. .......................................... 7,000 21,875
*True North Communications................................ 11,000 321,750
-----------
343,625
-----------
Cosmetics and Toiletries -- 2.1%
Alberto-Culver Co. Class A................................ 46,000 1,167,250
-----------
Drugs -- 3.2%
*Scherer (R.P.) Corp...................................... 20,000 1,772,500
-----------
Electronics -- 6.0%
Dallas Semiconductor Corp. ............................... 23,000 713,000
Harman International Industries, Inc. .................... 22,000 847,000
Methode Electronics, Inc. Class A......................... 75,000 1,162,500
*Photronics Labs, Inc. ................................... 25,900 571,419
-----------
3,293,919
-----------
Energy -- 1.5%
*Calenergy Company, Inc. ................................. 28,000 841,750
-----------
</TABLE>
22
<PAGE> 24
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Aggressive Growth Portfolio
Statement of Net Assets, June 30, 1998 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
- -----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Environmental Control -- 3.2%
Donaldson Co., Inc. ...................................... 40,200 $ 949,725
*Tetra Technologies, Inc. ................................ 49,000 808,500
-----------
1,758,225
-----------
Financial -- 2.1%
Duff & Phelps Credit Rating Co. .......................... 21,000 1,170,750
-----------
Food & Food Distributors -- 4.4%
Goodmark Foods, Inc. ..................................... 25,100 743,587
Smart & Final, Inc. ...................................... 24,000 411,000
Tootsie Roll Industries, Inc. ............................ 16,000 1,228,000
*Worthington Foods, Inc. ................................. 2,500 52,344
-----------
2,434,931
-----------
Healthcare Providers -- 3.3%
*Genesis Health Ventures, Inc. ........................... 47,000 1,175,000
HealthPlan Services Corp. ................................ 36,000 630,000
-----------
1,805,000
-----------
Industrial Diversified -- 6.1%
*Bush Boake Allen, Inc. .................................. 48,000 1,407,000
Cambrex Corp. ............................................ 60,000 1,575,000
Lawter International, Inc. ............................... 35,500 386,062
-----------
3,368,062
-----------
Insurance -- 4.5%
Enhance Financial Services Group, Inc. ................... 22,000 742,500
Executive Risk, Inc. ..................................... 2,000 147,500
*HCC Insurance Holdings, Inc. ............................ 12,400 272,800
*Horace Mann Educators Corp. ............................. 9,000 310,500
Life Re Corp. ............................................ 12,500 1,025,000
-----------
2,498,300
-----------
Manufacturing - Diversified -- 4.8%
AptarGroup, Inc. ......................................... 21,000 1,305,937
Tyco International Ltd. .................................. 21,000 1,323,000
-----------
2,628,937
-----------
</TABLE>
23
<PAGE> 25
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Aggressive Growth Portfolio
Statement of Net Assets, June 30, 1998 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
- -----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Medical Equipment & Supplies -- 7.1%
Ballard Medical Products.................................. 31,000 $ 558,000
Hillenbrand Industries, Inc. ............................. 29,000 1,740,000
Life Technologies, Inc. .................................. 36,000 1,129,500
*Minntech Corp. .......................................... 38,000 470,250
-----------
3,897,750
-----------
Oil Field Equipment & Services -- 1.3%
*Smith International, Inc. ............................... 21,000 731,063
-----------
Railroads -- 0.4%
*Railtex, Inc. ........................................... 14,000 185,500
-----------
Real Estate -- 2.5%
Chateau Communities, Inc. ................................ 48,000 1,380,000
-----------
Restaurants -- 5.1%
Applebee's International, Inc. ........................... 18,000 402,750
Ruby Tuesday, Inc. ....................................... 86,000 1,333,000
Sbarro, Inc. ............................................. 40,000 1,085,000
-----------
2,820,750
-----------
Retail - Clothing and Apparel -- 4.2%
*Gymboree Corp. .......................................... 18,000 272,813
*Lands' End, Inc. ........................................ 17,000 537,625
*The Wet Seal, Inc., Class A.............................. 46,000 1,472,000
-----------
2,282,438
-----------
Retail Stores -- 4.5%
Casey General Stores, Inc. ............................... 40,000 662,500
Ethan Allen Interiors, Inc. .............................. 18,000 898,875
*Petco Animal Supplies, Inc. ............................. 47,000 937,063
-----------
2,498,438
-----------
Semiconductors -- 1.1%
*Novellus Systems, Inc. .................................. 17,000 606,688
-----------
Software -- 2.2%
*Filenet Corp. ........................................... 42,000 1,212,750
-----------
TOTAL COMMON STOCK (COST $40,449,016)................... 49,832,250
-----------
</TABLE>
24
<PAGE> 26
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Aggressive Growth Portfolio
Statement of Net Assets, June 30, 1998 -- Concluded
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MATURITY SHARES
DESCRIPTION AND PERCENTAGE OF PORTFOLIO DATE OR PAR VALUE
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CORPORATE BOND -- 0.1%
Phoenix Investment Partners Ltd., 6.00%................... 11/01/2015 $ 62,500 $ 71,440
-----------
TOTAL CORPORATE BOND (COST $70,602)..................... 71,440
-----------
COMMERCIAL PAPER -- 8.3%
General Electric Capital Corp., 5.62%..................... 07/07/1998 2,600,000 2,597,565
Norwest Corp., 5.53%...................................... 07/01/1998 2,000,000 2,000,000
-----------
TOTAL COMMERCIAL PAPER (COST $4,597,565)................ 4,597,565
-----------
SHORT TERM INVESTMENTS -- 1.0%
Temporary Investment Fund, Inc. - TempCash................ 564,901 564,901
-----------
TOTAL SHORT TERM INVESTMENTS (COST $564,901)............ 564,901
-----------
TOTAL INVESTMENTS -- 99.9% (COST $45,682,084)........... 55,066,156
-----------
OTHER ASSETS IN EXCESS OF LIABILITIES -- 0.1%............... 31,228
-----------
NET ASSETS -- 100.0%
(Equivalent to $21.80 per share based on 2,527,470 shares
of capital stock outstanding)........................... $55,097,384
===========
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE
($55,097,384/2,527,470 shares outstanding)................ $ 21.80
===========
</TABLE>
* Non-income producing.
See accompanying notes to financial statements.
25
<PAGE> 27
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The International Portfolio
1998 Semi-Annual Review
The Boston Company Asset Management, Inc.
- --------------------------------------------------------------------------------
The Market Street Fund International Portfolio earned a total return of 13.64%
during the first six months of 1998. Over the same period, the MSCI EAFE Index
earned 15.9%. Economic turbulence in Asia held down performance of the equity
markets all around the world in the second quarter. The first quarter
performance for the Portfolio and the Index had been very strong. The
underperformance in the second quarter was largely due to value stocks lagging
in Europe in June. The situation in Asia has worsened over the past few months.
The newly industrialized nations of the region are facing an economic recession
and the area's stronger economies, such as Hong Kong and Singapore, are feeling
the effects of their economic collapse. Japan's index alone was down 2.6% for
the first half.
The Asian crisis has affected the European markets both directly and indirectly
through trade linkages. However, the European stock markets proved to be
remarkably resilient with the MSCI European index rising 26.5%. The core
domestic European economy has been strong. European Monetary Union, less than
six months away, is perceived to be a catalyst in unlocking economic value
through positive economic reforms and improved corporate efficiencies.
The world economic backdrop with slower economic growth forecasts, low bond
yields and the developments in Asian and European markets did not favor value
stocks in the second quarter. We viewed this as an opportunity to initiate
positions on good quality, undervalued companies with sound fundamentals. We
continue to adhere to our value discipline sincerely and are confident that as
the year unfolds, our strategy will pay off.
Sandor Cseh, CFA
26
<PAGE> 28
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The International Portfolio
Statement of Net Assets, June 30, 1998
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
- -----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON AND PREFERRED STOCK -- 94.7%
Argentina -- 0.7%
YPF Sociedad Anonima ADR.................................. 17,000 $ 511,062
-----------
Australia -- 2.4%
*Australia & New Zealand Bank Group Ltd................... 110,178 760,055
Boral Ltd................................................. 231,547 434,457
*Orica Ltd................................................ 29,500 174,458
*Pacific Dunlop Ltd....................................... 229,642 371,156
-----------
1,740,126
-----------
Austria -- 1.1%
Bank Austria AG........................................... 8,400 681,974
Bank Austria AG -- Preferred.............................. 2,000 143,633
-----------
825,607
-----------
Denmark -- 0.6%
*Jyske Bank............................................... 3,590 423,475
-----------
Finland -- 0.8%
Kesko Oyj................................................. 35,000 551,811
-----------
France -- 10.3%
*Alstom S.A............................................... 18,315 596,382
Bongrain.................................................. 800 401,718
Credit Local de France.................................... 4,000 538,535
Danone.................................................... 2,954 814,471
Elf Aquitaine ADR......................................... 16,451 1,168,021
Guyenne Et Gascogne SA.................................... 1,500 611,558
L'Air Liquide............................................. 3,037 502,311
*Michelin-(CGDE).......................................... 8,075 466,120
Pechiney SA............................................... 9,000 362,469
Societe Generale.......................................... 5,728 1,190,880
*Thomson CSF.............................................. 14,419 548,520
*Usinor Sacilor........................................... 27,000 417,100
-----------
7,618,085
-----------
Germany -- 13.0%
Bayer AG.................................................. 20,600 1,065,932
Deutsche Bank AG.......................................... 11,500 972,228
Deutsche Lufthansa AG..................................... 27,800 699,994
GEA AG.................................................... 1,600 624,920
Hoechst AG................................................ 13,000 653,590
Hugo Boss AG.............................................. 170 374,841
*Km Europa Metal AG....................................... 1,000 126,314
</TABLE>
27
<PAGE> 29
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The International Portfolio
Statement of Net Assets, June 30, 1998
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
- -----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON AND PREFERRED STOCK (CONTINUED)
Germany (Continued)
Merck KGAA................................................ 13,000 $ 582,650
*Rheinmetall AG........................................... 13,900 396,586
Siemens AG................................................ 17,000 1,037,407
Tarkett AG................................................ 11,000 365,645
Veba AG................................................... 13,250 890,782
*Viag AG.................................................. 1,470 1,011,473
Volkswagen................................................ 800 772,508
-----------
9,574,870
-----------
Greece -- 0.6%
Hellenic Telecommunications............................... 32,000 408,000
-----------
Hong Kong -- 2.3%
Guoco Group Ltd........................................... 76,000 79,937
Henderson Investment Ltd.................................. 865,000 449,324
Hong Kong Electric........................................ 230,000 712,389
HSBC Holdings Plc......................................... 14,632 357,841
Swire Pacific Ltd. B...................................... 200,000 120,022
-----------
1,719,513
-----------
Italy -- 3.0%
Ente Nazionale Idrocarburi SpA............................ 16,000 1,040,000
Istituto Mobiliare Italiano ADR........................... 7,500 357,656
Telecom Italia SpA........................................ 165,000 798,754
-----------
2,196,410
-----------
Japan -- 22.2%
Canon, Inc................................................ 39,000 885,182
Credit Saison Co.......................................... 39,500 782,685
Dai-Tokyo Fire and Marine Insurance....................... 143,000 497,669
Fuji Machine.............................................. 21,000 556,832
Hitachi Ltd............................................... 75,000 489,066
Honda Motor Co. Ltd....................................... 18,000 640,703
Ito Yokado Co. Ltd........................................ 15,000 705,768
Kao Corp.................................................. 53,000 817,235
Mabuchi Motors............................................ 16,000 1,014,519
Marubeni Corp............................................. 210,000 419,137
Matsumotokiyoshi.......................................... 14,500 509,853
Mikuni Coca-Cola Bottling Co. Ltd......................... 18,000 308,679
Mineba Co. Ltd............................................ 87,000 865,706
Mitsubishi Heavy Industries Ltd........................... 110,000 415,319
Murata Manufacturing Co. Ltd.............................. 26,000 839,284
</TABLE>
28
<PAGE> 30
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The International Portfolio
Statement of Net Assets, June 30, 1998
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
- -----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON AND PREFERRED STOCK (CONTINUED)
Japan (Continued)
Namco Ltd................................................. 19,200 $ 448,233
Nichiei................................................... 10,300 705,047
Nishimatsu Construction................................... 65,000 318,478
Rinnai Corp............................................... 37,000 559,859
Rohm Co. Ltd.............................................. 7,000 716,216
Sankyo Co. Ltd............................................ 19,000 308,030
Sekisui Chemical Co....................................... 75,000 383,687
Sekisui House............................................. 25,000 193,645
Sony Corp................................................. 12,000 1,033,253
Toshiba Corp.............................................. 103,000 420,802
Toyota Motor Corp......................................... 21,000 543,214
Yamanouchi Pharmaceuticals................................ 32,000 666,354
Yamato Transportation..................................... 33,000 369,745
-----------
16,414,200
-----------
Korea -- 0.0%
Kookmin Bank GDR.......................................... 574 2,197
-----------
Netherlands -- 7.4%
ABN Amro Holding.......................................... 39,937 934,511
AKZO N.V. ADR............................................. 6,100 676,337
Hollandsche Beton......................................... 35,080 731,183
Hunter Douglas N.V........................................ 18,193 988,249
Koninklijke K.N.P......................................... 25,400 655,534
KPN ADS................................................... 9,490 603,801
Philips Electronics N.V. ADR.............................. 6,500 552,500
*Stork N.V................................................ 10,000 318,550
-----------
5,460,665
-----------
New Zealand -- 0.2%
Air New Zealand........................................... 101,091 108,624
*Fletcher Challenge Paper................................. 64,514 71,666
-----------
180,290
-----------
Norway -- 0.8%
*Fred Olsen Energy ASA.................................... 19,750 262,525
Orkla..................................................... 16,000 336,742
-----------
599,267
-----------
Peru -- 0.4%
*Telefonica del Peru S.A. ADR............................. 13,200 269,775
-----------
</TABLE>
29
<PAGE> 31
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The International Portfolio
Statement of Net Assets, June 30, 1998
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
- -----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON AND PREFERRED STOCK (CONTINUED)
Portugal -- 0.5%
*Banco Pinto & Sotto Mayor SA............................. 14,400 $ 357,427
-----------
Singapore -- 1.0%
Development Bank.......................................... 136,000 752,658
-----------
Spain -- 5.2%
Corporacion Bancaria de Espanol ADR....................... 22,700 1,024,337
Endesa SA................................................. 39,700 870,034
Gas y Electricidad SA..................................... 8,591 654,889
Repsol ADR................................................ 23,000 1,265,000
-----------
3,814,260
-----------
Sweden -- 3.3%
Autoliv, Inc.............................................. 32,000 1,023,204
Pharmacia & Upjohn, Inc. -- ADR........................... 21,400 987,075
Scania AB, -- Class A -- ADR.............................. 14,800 360,027
Scania AB, -- Class B -- ADR.............................. 3,000 72,790
-----------
2,443,096
-----------
Switzerland -- 3.7%
*Barry Callebaut AG -- Registered Shares.................. 1,628 350,971
Forbo Holding AG -- Registered Shares..................... 1,430 727,817
Sulzer AG -- Registered Shares............................ 830 655,000
*United Bank of Switzerland -- Registered Shares.......... 2,750 1,022,541
-----------
2,756,329
-----------
United Kingdom -- 15.2%
British Airways Plc ADR................................... 4,000 430,250
British Airways Plc....................................... 18,384 198,919
BTR Ordinary Plc.......................................... 227,543 645,414
Bunzl Plc................................................. 192,146 904,080
*Laird Group Ordinary..................................... 110,000 512,063
Lucasvarity Plc........................................... 250,605 995,161
Medeva Plc................................................ 127,000 362,348
*Powergen Plc............................................. 74,288 1,026,296
Rio Tinto Plc............................................. 62,845 707,784
*Royal & Sun Alliance Insurance Group Plc................. 95,106 983,054
*Safeway Plc.............................................. 149,168 976,881
Stakis Plc................................................ 275,000 557,488
*Standard Chartered Bank.................................. 66,000 749,924
</TABLE>
30
<PAGE> 32
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The International Portfolio
Statement of Net Assets, June 30, 1998 -- Concluded
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
- -----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON AND PREFERRED STOCK (CONTINUED)
United Kingdom (Continued)
*Storehouse Plc........................................... 222,000 $ 929,722
Tomkins Plc............................................... 232,436 1,261,383
-----------
11,240,767
-----------
TOTAL COMMON AND PREFERRED STOCK (COST $62,122,171)..... 69,859,890
-----------
SHORT-TERM INVESTMENTS -- 3.5%
Temporary Investment Fund, Inc. -- TempCash............... 2,614,694 2,614,694
-----------
TOTAL SHORT-TERM INVESTMENTS (COST $2,614,694).......... 2,614,694
-----------
TOTAL INVESTMENTS -- 98.2% (COST $64,736,865)........... 72,474,584
-----------
OTHER ASSETS IN EXCESS OF LIABILITIES -- 1.8%............... 1,345,163
-----------
NET ASSETS -- 100.0%
(Equivalent to $14.33 per share based on 5,150,593 shares
of capital stock outstanding)........................... $73,819,747
===========
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE
($73,819,747/5,150,593 shares outstanding)................ $ 14.33
===========
</TABLE>
* Non-income producing.
See accompanying notes to financial statements.
31
<PAGE> 33
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Sentinel Growth Portfolio
1998 Semi-Annual Report
Sentinel Advisors Company
- --------------------------------------------------------------------------------
The Market Street Fund Sentinel Growth Portfolio earned a total return of 7.3%
during the first six months of 1998. Over the same period, the S&P 500 earned a
17.7% return, the S&P mid Cap Index earned an 8.6% return, and the median fund
in the Lipper Growth Universe earned a 15.6% return.
Large capitalization stocks, continuing a pattern established in the first
quarter, outperformed mid-cap and small-cap stocks by a wide margin. The primary
reasons for the strong performance of large cap stocks appear to be a preference
among U.S. investors for companies with earnings, predictability and trading
liquidity; and a preference among foreign investors for large, well-known
companies. The Portfolio, which is focused on reasonably valued stocks across
all market caps, did not participate fully in the large cap rally during the
six-month period but did perform in line with the S&P mid Cap Index.
Contributing positively to the fund during the first half were healthcare stocks
and technology stocks. The Portfolio's positions in specialty retailers, tobacco
stocks, and selected small cap technology stocks hurt performance during the
first half.
Our strategy continues to emphasize "franchise" companies that are selling at
modest price/earnings and price/cash flow multiples. In addition, we seek
companies that are demonstrating positive revenue and earnings trends.
Robert L. Lee, CFA
32
<PAGE> 34
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Sentinel Growth Portfolio
Statement of Net Assets, June 30, 1998
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
- -------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK -- 95.6%
Aerospace -- 2.0%
Goodrich (B.F.) Co. ...................................... 4,300 $ 213,387
-----------
Banks -- 3.0%
BankAmerica Corp. ........................................ 700 60,506
Cullen Frost Bankers, Inc. ............................... 2,700 146,475
Mercantile Bankshares Corp. .............................. 3,400 118,362
-----------
325,343
-----------
Business & Consumer Services -- 6.3%
*Catalina Marketing Corp. ................................ 3,200 166,200
Omnicom Group, Inc. ...................................... 4,400 219,450
Sodexho Marriot Services, Inc. ........................... 525 15,225
*Sterling Commerce, Inc. ................................. 5,600 271,600
-----------
672,475
-----------
Business Data Processing -- 0.6%
Automatic Data Processing, Inc. .......................... 800 58,300
-----------
Chemicals - Specialty -- 2.8%
*Bush Boake Allen, Inc. .................................. 2,700 79,144
Cambrex Corp. ............................................ 5,000 131,250
Praxair, Inc. ............................................ 2,000 93,625
-----------
304,019
-----------
Communications -- 2.3%
AT&T Corp. ............................................... 900 51,412
*Cox Communications, Inc. ................................ 4,000 193,750
-----------
245,162
-----------
Computer Peripherals -- 1.0%
*Cisco Systems, Inc. ..................................... 1,200 110,475
-----------
Computer Products -- 1.1%
Hewlett Packard Co. ...................................... 2,000 119,750
-----------
Computer Services -- 4.8%
*Affiliated Computer Services, Inc. ...................... 10,400 400,400
Electronic Data Systems Corp. ............................ 3,000 120,000
-----------
520,400
-----------
Drug Delivery -- 2.8%
*Scherer (R.P.) Corp. .................................... 2,200 194,975
Schering Plough Corp. .................................... 1,200 109,950
-----------
304,925
-----------
</TABLE>
33
<PAGE> 35
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Sentinel Growth Portfolio
Statement of Net Assets, June 30, 1998 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
- -------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Electric Power -- 1.0%
*Calenergy Company, Inc. ................................. 3,600 $ 108,225
-----------
Electronics -- 1.3%
Motorola, Inc. ........................................... 2,700 141,919
-----------
Finance -- 2.6%
American Express Co. ..................................... 800 91,200
SLM Holding Corp. ........................................ 3,850 188,650
-----------
279,850
-----------
Foods -- 1.0%
McCormick & Co., Inc. .................................... 3,000 107,156
-----------
Health -- 3.8%
Abbott Laboratories....................................... 1,300 53,137
American Home Products Corp. ............................. 3,000 155,250
Medtronic, Inc. .......................................... 1,800 114,750
Merck & Co., Inc. ........................................ 600 80,250
-----------
403,387
-----------
Healthcare Providers -- 4.7%
Becton Dickinson & Co. ................................... 3,000 232,875
Columbia/HCA Healthcare Corp. ............................ 2,850 83,006
*Genesis Health Ventures, Inc. ........................... 7,700 192,500
-----------
508,381
-----------
Industrial Diversified -- 1.1%
Parker-Hannifin Corp. .................................... 3,200 122,000
-----------
Insurance -- 4.8%
Allstate Corp. ........................................... 1,500 137,344
Enhance Financial Services Group, Inc. ................... 3,600 121,500
Executive Risk, Inc. ..................................... 1,400 103,250
Life Re Corp. ............................................ 1,900 155,800
-----------
517,894
-----------
Lodging -- 1.3%
Marriott International, Inc., Class A..................... 4,200 135,975
-----------
Manufacturing - Diversified -- 2.9%
Tyco International Ltd. .................................. 5,000 315,000
-----------
Medical Equipment & Supplies -- 1.9%
Hillenbrand Industries, Inc. ............................. 3,500 210,000
-----------
</TABLE>
34
<PAGE> 36
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Sentinel Growth Portfolio
Statement of Net Assets, June 30, 1998 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
- -------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Oil Field Equipment & Services -- 1.1%
Schlumberger Ltd. ........................................ 1,800 $ 122,962
-----------
Restaurants -- 5.6%
*Outback Steakhouse, Inc. ................................ 4,300 167,700
Ruby Tuesday, Inc. ....................................... 16,800 260,400
Sbarro, Inc. ............................................. 6,400 173,600
-----------
601,700
-----------
Retail - Apparel -- 0.5%
Gap, Inc. ................................................ 900 55,462
-----------
Retail - Clothing and Apparel -- 4.1%
*Gymboree Corp. .......................................... 6,000 90,938
*Lands' End, Inc. ........................................ 4,400 139,150
*The Wet Seal, Inc., Class A.............................. 6,500 208,000
-----------
438,088
-----------
Retail Merchandising -- 0.5%
Costco Companies, Inc. ................................... 800 50,450
-----------
Retail Stores -- 7.3%
Ethan Allen Interiors, Inc. .............................. 3,200 159,800
Home Depot, Inc. ......................................... 600 49,838
TJX Companies, Inc. ...................................... 13,400 323,275
Wal-Mart Stores, Inc. .................................... 4,100 249,075
-----------
781,988
-----------
Semiconductors -- 5.9%
Belden, Inc. ............................................. 3,800 116,375
Dallas Semiconductor Corp. ............................... 3,800 117,800
Intel Corp. .............................................. 2,200 163,075
*Novellus Systems, Inc. .................................. 5,000 178,438
*Photronics Labs, Inc. ................................... 2,800 61,775
-----------
637,463
-----------
Software -- 4.6%
Filenet Corp. ............................................ 4,000 115,500
Microsoft Corp. .......................................... 2,000 216,750
*Novell, Inc. ............................................ 13,000 165,750
-----------
498,000
-----------
</TABLE>
35
<PAGE> 37
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Sentinel Growth Portfolio
Statement of Net Assets, June 30, 1998 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MATURITY SHARES
DESCRIPTION AND PERCENTAGE OF PORTFOLIO DATE OR PAR VALUE
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCK (CONTINUED)
Telecommunications -- 7.5%
*Airtouch Communications, Inc. ........................... 4,500 $ 262,969
*Applied Materials, Inc. ................................. 5,800 171,100
*KLA-Tencor Corp. ........................................ 4,700 130,131
Lucent Technologies, Inc. ................................ 1,800 149,738
*WorldCom, Inc. .......................................... 2,000 96,875
-----------
810,813
-----------
Tobacco -- 3.4%
Philip Morris Cos., Inc. ................................. 6,500 255,938
UST, Inc. ................................................ 4,100 110,700
-----------
366,638
-----------
Utilities - Telephone -- 2.0%
GTE Corp. ................................................ 3,900 216,938
-----------
TOTAL COMMON STOCK (COST $9,521,435).................... 10,304,525
-----------
COMMERCIAL PAPER -- 3.7%
Merrill Lynch & Co., Inc., 5.90%.......................... 07/02/1998 $ 400,000 399,934
-----------
TOTAL COMMERCIAL PAPER (COST $399,934).................. 399,934
-----------
SHORT TERM INVESTMENTS -- 0.6%
Temporary Investment Fund, Inc. -- TempCash............... 63,302 63,302
-----------
TOTAL SHORT TERM INVESTMENTS (COST $63,302)............. 63,302
-----------
TOTAL INVESTMENTS -- 99.9% (COST $9,984,671)............ 10,767,761
-----------
OTHER ASSETS IN EXCESS OF LIABILITIES -- 0.1%........... 7,560
-----------
NET ASSETS -- 100%
(Equivalent to $12.42 per share based on 867,914 shares of
capital stock outstanding).............................. $10,775,321
===========
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE
($10,775,321/867,914 shares outstanding).................. $ 12.42
===========
</TABLE>
* Non-Income Producing
See accompanying notes to financial statements.
36
<PAGE> 38
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Large Cap Growth Portfolio
1998 Semi-Annual Review
Providentmutual Investment Management Company
- --------------------------------------------------------------------------------
The total return for the Market Street Fund Large Cap Growth Portfolio since
inception on May 4, 1998 through June 30 was 2.4%. This return is only for a
short time period and compares to the portfolio's style benchmark for the same
period of 3.65%. The Wilshire series of style indices referred to as the
"Quantum" indices are the style benchmarks with which we compare the portfolio's
performance.
Providentmutual Investment Management Company has selected the following
sub-advisers to perform the day-to-day management of the portfolio. The three
firms chosen possess a proven large cap growth orientation and discipline.
<TABLE>
<CAPTION>
MANAGER FUND %
------- ------
<S> <C>
Geewax Terker & Co. ........................................ 45%
Cohen, Klingenstein & Marks................................. 45%
Oak Associates.............................................. 10%
Total Fund.................................................. 100%
</TABLE>
During the second quarter performance was broad based, with most areas showing
good results. Computer networking stocks and telecommunications stocks posted
healthy gains due to improved earnings and rapid industry consolidation. Medical
equipment stocks and pharmaceutical stocks also turned in solid results given
improving near term earnings results and several new product introductions.
Finally, financial stocks were strong due to merger activity and the overall
strength of the financial markets.
The largest sector holdings of the fund include:
<TABLE>
<CAPTION>
SECTOR %
------ -----
<S> <C>
Computer Peripherals........................................ 9.8%
Computers................................................... 8.5%
Healthcare & Medical Equip. ................................ 20.4%
Telecommunications.......................................... 7.2%
Finance..................................................... 5.6%
</TABLE>
The portfolio is positioned to continue to be the beneficiary of the significant
outperformance both year-to-date and in the second quarter of growth versus
value investment styles and the continued investor preference for large cap
names. Looking ahead to the next six months we believe that our positioning in
high growth industries will serve the portfolio well. The portfolio will
continue to focus on technology companies. Clearly Asia and its impact on
earnings may weigh on the market in the second half, but we look to long term
performance in what may be an unsettled market near term.
We look forward to your support and to our long term goal of capital
appreciation!
Sarah C. Lange, CFA
37
<PAGE> 39
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Large Cap Growth Portfolio
Statement of Net Assets, June 30, 1998
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
- --------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK -- 97.4%
Aerospace -- 0.2%
AlliedSignal, Inc. ....................................... 400 $ 17,750
-----------
Airlines -- 0.1%
Northwest Airlines Corp.- Class A......................... 100 3,856
Southwest Airlines Co. ................................... 200 5,925
-----------
9,781
-----------
Automobiles -- 0.1%
*Republic Industries, Inc. ............................... 600 15,000
-----------
Banks -- 4.1%
Associates First Capital Corp. Class A.................... 200 15,375
Citicorp.................................................. 400 59,700
Fifth Third Bancorp....................................... 400 25,200
Green Tree Financial Corp. ............................... 3,300 141,281
NationsBank, Corp. ....................................... 700 53,550
Northern Trust Corp. ..................................... 300 22,875
U.S. Bancorp.............................................. 3,800 163,400
-----------
481,381
-----------
Beverages -- 3.5%
Coca Cola Co. ............................................ 4,800 410,400
-----------
Broadcasting & Publishing -- 0.5%
*Mediaone Group, Inc. .................................... 700 30,756
Times Mirror Co. ......................................... 100 6,287
Tribune Co. .............................................. 200 13,762
-----------
50,805
-----------
Building Materials -- 0.3%
Ecolab, Inc. ............................................. 600 18,600
Lowe's Cos., Inc. ........................................ 400 16,225
-----------
34,825
-----------
Business Data Processing -- 0.1%
Reynolds & Reynolds Co. Class A........................... 100 1,819
Sterling Commerce, Inc. .................................. 100 4,850
-----------
6,669
-----------
</TABLE>
38
<PAGE> 40
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Large Cap Growth Portfolio
Statement of Net Assets, June 30, 1998 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
- --------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Business Services, Media, Etc. -- 2.6%
*AccuStaff, Inc. ......................................... 200 $ 6,250
America Online, Inc. ..................................... 400 42,400
Automatic Data Processing, Inc. .......................... 300 21,862
*BMC Software, Inc. ...................................... 400 20,775
Cendant Corp. ............................................ 1,700 35,487
*Cisco Systems, Inc. ..................................... 1,300 119,681
Cognizant Corp. .......................................... 200 12,600
*Fiserv, Inc. ............................................ 300 12,741
Interpublic Group of Cos., Inc. .......................... 200 12,137
Robert Half International, Inc. .......................... 300 16,762
-----------
300,695
-----------
Chemicals -- 1.6%
Praxair, Inc. ............................................ 300 14,044
Union Carbide Corp. ...................................... 3,300 176,137
-----------
190,181
-----------
Communications -- 0.4%
Advanced Fibre Communications, Inc. ...................... 200 8,012
*Airtouch Communications, Inc. ........................... 600 35,062
-----------
43,074
-----------
Computer Peripherals -- 9.8%
*3Com Corp. .............................................. 5,900 181,056
*Cisco Systems, Inc. ..................................... 2,600 239,363
Linear Technology Corp. .................................. 700 42,219
*Microsoft Corp. ......................................... 3,300 357,637
*Network Associates, Inc. ................................ 300 14,362
*Oracle Corp. ............................................ 6,100 149,831
*Parametric Technology Corp. ............................. 6,100 165,462
-----------
1,149,930
-----------
</TABLE>
39
<PAGE> 41
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Large Cap Growth Portfolio
Statement of Net Assets, June 30, 1998 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
- --------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Computers -- 8.5%
*Ascend Communications, Inc. ............................. 1,200 $ 59,475
Compaq Computer Corp. .................................... 6,800 192,949
Computer Associates International, Inc. .................. 600 33,337
*Compuware Corp. ......................................... 300 15,337
*Dell Computer Corp. ..................................... 900 83,531
*Gateway 2000, Inc. ...................................... 300 15,187
HBO & Co. ................................................ 800 28,200
Intel Corp. .............................................. 5,000 370,626
*LSI Logic Corp. ......................................... 300 6,919
*Maxim Integrated Products, Inc. ......................... 300 9,506
*PeopleSoft, Inc. ........................................ 300 14,100
*Seagate Technology, Inc. ................................ 6,200 147,637
*SunGard Data Systems, Inc. .............................. 300 11,512
-----------
988,316
-----------
Consumer Discretionary -- 1.3%
Mattel, Inc. ............................................. 3,700 156,556
-----------
Consumer Products -- 0.3%
Clorox Co. ............................................... 300 28,612
Estee Lauder Co. Class-A.................................. 100 6,969
-----------
35,581
-----------
Cosmetics and Toiletries -- 2.3%
Avon Products, Inc. ...................................... 2,150 166,625
Procter & Gamble Co. ..................................... 1,200 109,275
-----------
275,900
-----------
Diversified -- 5.1%
Minnesota Mining & Manufacturing Co. ..................... 200 16,437
Standard & Poor's Depositary Receipts (Spiders)........... 5,100 577,894
-----------
594,331
-----------
</TABLE>
40
<PAGE> 42
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Large Cap Growth Portfolio
Statement of Net Assets, June 30, 1998 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
- --------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Drugs & Health Care -- 18.1%
Abbott Laboratories....................................... 5,500 $ 224,813
American Home Products Corp. ............................. 4,200 217,350
*Amgen Corp. ............................................. 2,400 156,900
Baxter International, Inc. ............................... 400 21,525
Becton Dickinson & Co. ................................... 2,200 170,775
Bristol-Myers Squibb Co. ................................. 2,550 293,091
Colgate-Palmolive Co. .................................... 500 44,000
CVS Corp. ................................................ 400 15,575
*Genentech, Inc. ......................................... 200 13,575
Gillette Co. ............................................. 1,400 79,363
*Health Management Associates, Inc. Class A............... 300 10,031
Johnson & Johnson......................................... 1,100 81,125
Merck & Co., Inc. ........................................ 3,050 407,938
Omnicare, Inc. ........................................... 100 3,812
Pfizer, Inc. ............................................. 2,000 217,375
Schering Plough Corp. .................................... 900 82,463
Walgreen Co. ............................................. 600 24,787
Warner-Lambert Co. ....................................... 1,000 69,375
-----------
2,133,873
-----------
Electric Power -- 0.1%
AES Corp. ................................................ 300 15,769
-----------
Electrical Equipment -- 0.3%
*American Power Conversion Corp. ......................... 300 9,000
Analog Devices, Inc. ..................................... 300 7,369
Emerson Electric Co. ..................................... 300 18,112
-----------
34,481
-----------
Electronics -- 2.8%
*Applied Materials, Inc. ................................. 1,500 44,250
Honeywell, Inc. .......................................... 200 16,712
Linear Technology Corp. .................................. 100 6,031
*Maxim Integrated Products, Inc. ......................... 1,500 47,531
Tandy Corp. .............................................. 3,400 180,413
*Xilinx, Inc. ............................................ 1,000 34,000
-----------
328,937
-----------
</TABLE>
41
<PAGE> 43
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Large Cap Growth Portfolio
Statement of Net Assets, June 30, 1998 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
- --------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Entertainment -- 0.6%
Harley-Davidson, Inc. .................................... 200 $ 7,750
Walt Disney Co. .......................................... 600 63,038
-----------
70,788
-----------
Finance -- 4.0%
MBNA Corp. ............................................... 5,300 174,900
Morgan Stanley, Dean Witter, & Co. ....................... 400 36,550
Paychex, Inc. ............................................ 450 18,309
Providian Financial Corp. ................................ 2,600 204,262
Travelers Group, Inc. .................................... 500 30,313
-----------
464,334
-----------
Finance - Investment & Other -- 1.6%
Franklin Resources, Inc. ................................. 3,300 178,200
Price (T. Rowe) Associates, Inc. ......................... 300 11,269
-----------
189,469
-----------
Foods -- 0.5%
Heinz (H.J.) Co. ......................................... 300 16,838
Quaker Oats Co. .......................................... 100 5,494
Sara Lee Corp. ........................................... 700 39,156
-----------
61,488
-----------
Home Furnishings/Housewares -- 0.9%
Home Depot, Inc. ......................................... 1,100 91,369
Newell Co. ............................................... 300 14,944
-----------
106,313
-----------
Household Products -- 0.1%
Sherwin Williams Co. ..................................... 300 9,938
-----------
9,938
-----------
Industrial -- 1.0%
Crane Co. ................................................ 100 4,856
Danaher Corp. ............................................ 400 14,675
Dover Corp. .............................................. 300 10,275
Du Pont (E.I.) de Nemours & Co. .......................... 1,200 89,550
-----------
119,356
-----------
</TABLE>
42
<PAGE> 44
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Large Cap Growth Portfolio
Statement of Net Assets, June 30, 1998 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
- --------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Insurance -- 0.6%
American International Group, Inc. ....................... 400 $ 58,400
MGIC Investment Corp. .................................... 200 11,413
-----------
69,813
-----------
International Advertising -- 0.1%
Omnicom Group, Inc. ...................................... 300 14,963
-----------
14,963
-----------
Leisure & Amusements -- 0.4%
*Apollo Group, Inc. ...................................... 200 6,613
Carnival Corp., Class A................................... 800 31,700
Mattel, Inc. ............................................. 200 8,463
-----------
46,776
-----------
Machinery -- 0.2%
Illinois Tool Works, Inc. ................................ 300 20,006
-----------
Manufacturing -- 2.8%
General Electric Co. ..................................... 3,400 309,400
United Technologies Corp. ................................ 300 27,750
-----------
337,150
-----------
Medical Instruments -- 2.3%
*Boston Scientific Corp. ................................. 2,300 164,738
Guidant Corp. ............................................ 200 14,263
Medtronic, Inc. .......................................... 1,300 79,875
Stryker Corp. ............................................ 200 7,675
-----------
266,551
-----------
Metals & Mining -- 0.0%
Freeport-McMoran Copper & Gold, Inc. ..................... 100 1,519
-----------
Multimedia -- 0.2%
Gannett, Inc. ............................................ 400 28,425
-----------
Office Equipment & Supplies -- 2.3%
Avery-Dennison Corp. ..................................... 100 5,375
Pitney Bowes, Inc. ....................................... 700 33,688
*Office Depot, Inc. ...................................... 300 9,469
*Staples, Inc. ........................................... 1,100 31,831
Xerox Corp. .............................................. 1,900 193,088
-----------
273,451
-----------
</TABLE>
43
<PAGE> 45
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Large Cap Growth Portfolio
Statement of Net Assets, June 30, 1998 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
- --------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Oil -- 0.4%
Anadarko Petroleum Corp. ................................. 100 $ 6,719
Schlumberger Ltd. ........................................ 500 34,156
Tosco Corp. .............................................. 200 5,875
Transocean Offshore, Inc. ................................ 200 8,900
-----------
55,650
-----------
Pollution Control -- 0.1%
*Thermo Instrument Systems, Inc. ......................... 200 5,250
-----------
Publishing -- 0.0%
*Synopsys, Inc. .......................................... 100 4,575
-----------
Retail - Apparel -- 0.4%
Gap, Inc. ................................................ 500 30,813
TJX Companies, Inc. ...................................... 600 14,475
-----------
45,288
-----------
Retail - Food Chains -- 1.8%
McDonald's Corp. ......................................... 3,000 207,000
-----------
Retail Stores -- 4.2%
*Bed, Bath & Beyond, Inc. ................................ 3,100 160,619
Dollar General Corp. ..................................... 4,000 158,250
*General Nutrition Companies, Inc. ....................... 200 6,225
*Kohls Corp. ............................................. 300 15,563
Wal-Mart Stores, Inc. .................................... 2,600 157,950
-----------
498,607
-----------
Services -- 0.2%
*Quintiles Transnational Corp. ........................... 100 4,919
Service Corp. International............................... 400 17,150
-----------
22,069
-----------
Software -- 2.1%
Computer Associated International, Inc. .................. 2,800 155,575.00
*Electronic Arts.......................................... 100 5,400
*Parametric Technology Corp. ............................. 1,600 43,400
*Synopsys, Inc. .......................................... 1,100 50,325
-----------
254,700
-----------
Sporting Goods -- 1.1%
Callaway Golf Co. ........................................ 6,650 130,922
-----------
</TABLE>
44
<PAGE> 46
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Large Cap Growth Portfolio
Schedule of Net Assets, June 30, 1998 -- Concluded
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
- --------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Technology -- 0.1%
Sundstrand Corp. ......................................... 200 $ 11,450
-----------
Telecommunications -- 7.2%
360 Communications Company................................ 5,100 163,200
*3Com Corp. .............................................. 1,600 49,100
Ameritech Corp. .......................................... 1,000 44,875
*Ascend Communications, Inc. ............................. 400 19,825
Bell Atlantic Corp. ...................................... 400 18,250
U S West, Inc. ........................................... 19 893
*CIENA, Corp. ............................................ 1,000 69,625
Corning Glass, Inc. ...................................... 100 3,475
GTE Corp. ................................................ 800 44,500
Lucent Technologies, Inc. ................................ 1,400 116,463
SBC Communications, Inc. ................................. 1,600 64,000
Sprint Corp. ............................................. 2,050 144,525
*Tellabs, Inc. ........................................... 1,100 78,788
*WorldCom, Inc. .......................................... 500 24,219
-----------
841,738
-----------
Textiles -- 0.1%
*Jones Apparel Group, Inc. ............................... 200 7,313
-----------
TOTAL COMMON STOCK (COST $11,002,606)................... 11,442,137
-----------
SHORT TERM INVESTMENTS -- 3.8%
Temporary Investment Fund, Inc. -- TempCash............. 454,033 454,033
-----------
TOTAL SHORT TERM INVESTMENTS (COST $454,033)............ 454,033
-----------
TOTAL INVESTMENTS -- 101.2% (COST $11,456,639).......... 11,896,170
LIABILITIES IN EXCESS OF OTHER ASSETS -- (1.2%)......... (145,114)
-----------
NET ASSETS -- 100.0%
(Equivalent to $10.24 per share based on 1,147,605 shares
of capital stock outstanding)........................... $11,751,056
===========
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE
($11,751,056/1,147,605 shares outstanding)................ $ 10.24
===========
</TABLE>
* Non-Income Producing
See accompanying notes to financial statements.
45
<PAGE> 47
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Large Cap Value Portfolio
1998 Semi-Annual Review
Providentmutual Investment Management Company
- --------------------------------------------------------------------------------
The total return for the Market Street Fund Large Cap Value Portfolio since
inception on May 4, 1998 through June 30 was -1.3%. This return reflects a very
short time period and compares to the portfolio's style benchmark for the same
period of -1.18%. The Wilshire series of style indices referred to as the
"Quantum" indices are the style benchmarks with which we compare the portfolio's
performance.
Providentmutual Investment Management Company has selected the following
sub-advisers to perform the day-to-day management of the portfolio. The three
firms chosen possess a proven large cap value orientation and discipline.
<TABLE>
<CAPTION>
MANAGER FUND %
------- ------
<S> <C>
Mellon Equity Advisors.................................... 45%
Equinox Capital........................................... 45%
Harris Associates......................................... 10%
Total Fund................................................ 100%
</TABLE>
The largest sector holdings of the portfolio include:
<TABLE>
<CAPTION>
SECTOR %
------ ----
<S> <C>
Finance..................................................... 13.1%
Telecommunications.......................................... 10.1%
Banks....................................................... 9.1%
Oil......................................................... 7.3%
Insurance................................................... 5.3%
</TABLE>
During 1998 there has been a wide divergence in performance both year-to-date
and in the second quarter between the performance of value versus growth
investment styles. Value returns, in general, have suffered relative to growth
returns due to a greater weight in the more economic sensitive categories of
capital goods and industrial commodities, both of which have suffered from the
Asian turmoil.
Looking forward the environment should be favorable for sectors which have a
high domestic exposure e.g. retailing, or are consolidating e.g.
telecommunications and finance. The valuation disparity between the S&P 500 and
much of the rest of the market (particularly value stocks) is compelling. There
are excellent bargains in the universe of value stocks today.
We look forward to your support and to our long term goal of capital
appreciation!
Sarah C. Lange, CFA
46
<PAGE> 48
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Large Cap Value Portfolio
Statement of Net Assets, June 30, 1998
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
- -------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK -- 96.3%
Aerospace & Defense -- 1.9%
Boeing Co. ............................................... 800 $ 35,650
Lockheed Martin Corp. .................................... 400 42,350
Northrop Grumman Holdings Corp. .......................... 400 41,250
Raytheon Co., Class B..................................... 800 47,300
United Technologies Corp. ................................ 600 55,500
-----------
222,050
-----------
Airlines -- 2.1%
AMR Corp. ................................................ 1,600 133,200
Delta Air Lines, Inc. .................................... 900 116,325
-----------
249,525
-----------
Apparel -- 0.4%
Gucci Group N.V. ......................................... 800 42,400
-----------
Auto Manufacturers -- 2.7%
Chrysler Corp. ........................................... 1,700 95,837
Ford Motor Co. ........................................... 2,300 135,700
General Motors Corp. ..................................... 1,300 86,856
-----------
318,393
-----------
Automotive & Equipment -- 0.5%
*Lear Corp. .............................................. 600 30,787
TRW, Inc. ................................................ 500 27,312
-----------
58,099
-----------
Banks -- 9.1%
Associates First Capital Corp. Class A.................... 600 46,125
Banc One Corp. ........................................... 700 39,069
BankAmerica Corp. ........................................ 2,000 172,874
Bankers Trust New York Corp. ............................. 1,500 174,094
First Chicago NBD Corp. .................................. 1,200 106,350
Mellon Bank Corp. ........................................ 400 27,850
National City Corp. ...................................... 700 49,700
NationsBank Corp. ........................................ 3,900 298,350
Republic New York Corp. .................................. 1,600 100,700
Southtrust Corp. ......................................... 1,300 56,550
-----------
1,071,662
-----------
</TABLE>
47
<PAGE> 49
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Large Cap Value Portfolio
Statement of Net Assets, June 30, 1998 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
- -------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Beverages -- 1.3%
Anheuser-Busch Companies, Inc. ........................... 1,600 $ 75,500
Pepsico, Inc. ............................................ 1,900 78,256
-----------
153,756
-----------
Broadcasting & Publishing -- 3.7%
Gannett, Inc. ............................................ 800 56,850
Knight-Ridder, Inc. ...................................... 600 33,038
*MediaOne Group, Inc. .................................... 3,500 153,781
New York Times Co. ....................................... 900 71,325
Tribune Co. .............................................. 1,800 123,863
-----------
438,857
-----------
Building & Building Supplies -- 0.7%
Armstrong World Industries, Inc. ......................... 400 26,950
Foster Wheeler Corp. ..................................... 1,500 32,156
Lafarge Corp. ............................................ 500 19,656
-----------
78,762
-----------
Business Equipment -- 0.5%
*Lexmark International Group, Inc., Class A............... 1,000 61,000
-----------
Business Services, Media, Etc. -- 1.5%
*Dun & Bradstreet Corp. .................................. 1,100 39,737
Electronic Data Systems Corp. ............................ 3,500 140,000
-----------
179,737
-----------
Cable TV Systems -- 0.1%
*Tele-Communications, Inc., Class A....................... 400 15,375
-----------
Chemicals -- 1.2%
Dow Chemical Co. ......................................... 600 58,012
Eastman Chemical Co. ..................................... 500 31,125
Millennium Chemicals...................................... 1,400 47,425
-----------
136,562
-----------
Computers -- 2.9%
Compaq Computer Corp. .................................... 2,000 56,750
Hewlett Packard Co. ...................................... 700 41,912
International Business Machines Corp. .................... 2,100 241,106
-----------
339,768
-----------
</TABLE>
48
<PAGE> 50
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Large Cap Value Portfolio
Statement of Net Assets, June 30, 1998 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
- -------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Diversified -- 0.8%
Fortune Brands, Inc. ..................................... 900 $ 34,594
General Mills, Inc. ...................................... 900 61,537
-----------
96,131
-----------
Drug & Healthcare -- 3.2%
Avon Products, Inc. ...................................... 200 15,500
Baxter International, Inc. ............................... 1,200 64,575
Bristol-Myers Squibb Co. ................................. 700 80,456
*Healthsouth Corp. ....................................... 2,000 53,375
Johnson & Johnson......................................... 400 29,500
Schering Plough Corp. .................................... 1,500 137,437
-----------
380,843
-----------
Electric Power -- 2.2%
Consolidated Edison, Inc. ................................ 900 41,456
DQE, Inc. ................................................ 700 25,200
Edison International...................................... 1,300 38,431
GPU, Inc. ................................................ 1,200 45,375
Pacific Gas & Electric Co. ............................... 3,300 104,156
-----------
254,618
-----------
Electrical Equipment -- 0.4%
Eaton Corp. .............................................. 600 46,650
-----------
Electronics -- 0.4%
Philips Electronics NV.................................... 500 42,500
-----------
Energy -- 1.2%
Ashland, Inc. ............................................ 416 21,475
FPL Group, Inc. .......................................... 800 50,400
Honeywell, Inc. .......................................... 200 16,712
Pacificorp................................................ 2,500 56,563
-----------
145,150
-----------
Entertainment -- 0.6%
Time Warner, Inc. ........................................ 800 68,350
-----------
</TABLE>
49
<PAGE> 51
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Large Cap Value Portfolio
Statement of Net Assets, June 30, 1998 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
- -------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Finance -- 13.9%
Bear Stearns Companies, Inc. ............................. 1,400 $ 79,625
Chase Manhattan Corp. .................................... 4,900 369,950
Comerica, Inc. ........................................... 1,400 92,750
Conseco, Inc. ............................................ 1,000 46,750
*Firstplus Financial Group, Inc. ......................... 900 32,400
Fleet Financial Group, Inc. .............................. 1,200 100,200
Freddie Mac............................................... 2,600 144,262
Golden West Financial Corp. .............................. 500 53,156
H & R Block, Inc. ........................................ 1,200 50,550
H. F. Ahmanson & Company.................................. 1,100 78,100
Hartford Financial Services, Inc. ........................ 500 57,188
Morgan Stanley, Dean Witter, & Co. ....................... 2,500 228,437
Pinnacle West Capital Corp. .............................. 1,400 63,000
SLM Holding Corp. ........................................ 800 39,200
SunAmerica, Inc. ......................................... 800 45,950
Transamerica Corp. ....................................... 400 46,050
Travelers Group, Inc. .................................... 1,100 66,688
Washington Mutual, Inc. .................................. 850 36,922
-----------
1,631,178
-----------
Foods -- 1.8%
American Stores Co. ...................................... 1,600 38,700
Conagra, Inc. ............................................ 2,400 76,050
Nabisco Holdings Corp., Class A........................... 900 32,456
Ralston Purina Group...................................... 500 58,406
-----------
205,612
-----------
Healthcare Services -- 0.9%
Columbia/HCA Healthcare Corp. ............................ 3,700 107,762
-----------
Home Appliances -- 1.2%
Black & Decker Corp. ..................................... 700 42,700
Whirlpool Corp. .......................................... 1,400 96,250
-----------
138,950
-----------
Hotel/Restaurants -- 0.9%
Host Marriott Corp. ...................................... 2,000 35,625
*Promus Hotel Corp. ...................................... 1,800 69,300
-----------
104,925
-----------
</TABLE>
50
<PAGE> 52
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Large Cap Value Portfolio
Statement of Net Assets, June 30, 1998 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
- -------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Insurance -- 5.3%
Aetna, Inc. .............................................. 1,200 $ 91,350
Allstate Corp. ........................................... 1,600 146,500
Ambac Financial Group, Inc. .............................. 1,500 87,750
Aon Corp. ................................................ 500 35,125
Exel Limited.............................................. 1,400 108,938
Old Republic International Corp. ......................... 3,850 112,853
Partner Re Ltd. .......................................... 800 40,800
-----------
623,316
-----------
Leasing -- 0.4%
Ryder System, Inc. ....................................... 1,400 44,188
-----------
Leisure & Amusements -- 1.6%
Brunswick Corp. .......................................... 1,200 29,700
Carnival Corp., Class A................................... 2,200 87,175
Mattel, Inc. ............................................. 1,600 67,700
-----------
184,575
-----------
Machinery & Heavy Equipment -- 0.8%
Caterpillar, Inc. ........................................ 1,800 95,175
-----------
Manufacturing -- 2.7%
F.M.C. Corp. ............................................. 600 40,913
General Electric Co. ..................................... 900 81,900
Hasbro, Inc. ............................................. 1,300 51,106
New Holland NV............................................ 1,500 29,438
Parker-Hannifin Corp. .................................... 1,000 38,125
PPG Industries, Inc. ..................................... 700 48,694
U.S. Industries, Inc. .................................... 1,300 32,175
-----------
322,351
-----------
Materials & Processing -- 0.5%
Vulcan Materials Co. ..................................... 500 53,344
-----------
Metals & Mining -- 0.7%
De Beers Consolidated Mines Ltd. ......................... 2,100 36,750
Reynolds Metals Co. ...................................... 800 44,750
-----------
81,500
-----------
Office Equipment & Supplies -- 1.1%
Xerox Corp. .............................................. 1,300 132,113
-----------
</TABLE>
51
<PAGE> 53
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Large Cap Value Portfolio
Statement of Net Assets, June 30, 1998 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
- -------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Oil -- 7.5%
Amerada Hess Corp. ....................................... 1,300 $ 70,606
Atlantic Richfield Co. ................................... 600 46,875
Burlington Resources, Inc. ............................... 900 38,756
Coastal Corp. ............................................ 1,300 90,757
Exxon Corp. .............................................. 5,100 363,694
Mobil Corp. .............................................. 2,000 153,251
Texaco, Inc. ............................................. 1,900 113,407
-----------
877,346
-----------
Oil Equipment & Services -- 0.9%
*Nabors Industries, Inc. ................................. 900 17,831
National Fuel Gas Co. .................................... 600 26,138
Phillips Petroleum Co. ................................... 1,200 57,825
-----------
101,794
-----------
Paper & Forest Products -- 1.5%
Fort James Corp. ......................................... 2,800 124,600
International Paper Co. .................................. 1,200 51,600
-----------
176,200
-----------
Photo-Optics -- 0.6%
Eastman Kodak Co. ........................................ 1,000 73,063
-----------
Real Estate -- 0.3%
*Catellus Development Corp. .............................. 1,900 33,606
-----------
Retail - Apparel -- 0.8%
Burlington Northern Santa Fe Corp. ....................... 500 49,094
TJX Companies, Inc. ...................................... 1,800 43,425
-----------
92,519
-----------
Retail Food Chains -- 0.3%
*Safeway, Inc. ........................................... 900 36,619
-----------
Retail Stores -- 2.8%
Dayton Hudson Corp. ...................................... 500 24,250
*Federated Department Stores, Inc. ....................... 2,488 133,886
J.C. Penny Co., Inc. ..................................... 1,300 94,006
K Mart Corp. ............................................. 1,000 19,250
Sears, Roebuck & Co. ..................................... 1,000 61,063
-----------
332,455
-----------
Steel -- 0.1%
USX-U.S. Steel Group, Inc. ............................... 500 16,500
-----------
</TABLE>
52
<PAGE> 54
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Large Cap Value Portfolio
Statement of Net Assets, June 30, 1998 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
- -------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Telecommunications -- 10.1%
*Airtouch Communications, Inc. ........................... 600 $ 35,063
ALLTEL Corp. ............................................. 500 23,250
Ameritech Corp. .......................................... 2,500 112,188
AT&T Corp. ............................................... 4,700 268,488
Bell Atlantic Corp. ...................................... 5,200 237,250
BellSouth Corp. .......................................... 1,600 107,400
GTE Corp. ................................................ 1,400 77,875
*Oracle Corp. ............................................ 1,700 41,756
SBC Communications, Inc. ................................. 2,800 112,000
*WorldCom, Inc. .......................................... 3,500 169,531
-----------
1,184,801
-----------
Tobacco -- 0.3%
Philip Morris Cos., Inc. ................................. 800 31,500
-----------
Utilities -- 2.2%
Baltimore Gas & Electric Co. ............................. 1,400 43,488
Consolidated Edison, Inc. ................................ 1,300 59,881
Consolidated Natural Gas Co. ............................. 600 35,325
FPL Group, Inc. .......................................... 800 50,400
Rowan Cos., Inc. ......................................... 900 17,494
Texas Utilities Co. ...................................... 1,200 49,950
-----------
256,538
-----------
TOTAL COMMON STOCK (COST $11,419,275)............... 11,303,299
-----------
</TABLE>
53
<PAGE> 55
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Large Cap Value Portfolio
Statement of Net Assets, June 30, 1998 -- Concluded
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
- -------------------------------------------------------------------------------------
<S> <C> <C>
SHORT TERM INVESTMENTS -- 4.1%
Temporary Investment Fund, Inc. -- TempCash............... 484,325 $ 484,325
-----------
TOTAL SHORT TERM INVESTMENTS (COST $484,325)............ 484,325
-----------
TOTAL INVESTMENTS -- 100.4% (COST $11,903,601).......... 11,787,624
-----------
LIABILITIES IN EXCESS OF OTHER ASSETS -- (0.4%)......... (52,300)
-----------
NET ASSETS -- 100.0%
(Equivalent to $9.87 per share based on 1,189,019 shares
of capital stock outstanding)............................. $11,735,324
===========
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE
($11,735,324/1,189,019 shares outstanding)................ $ 9.87
===========
</TABLE>
* Non-Income Producing
See accompanying notes to financial statements.
54
<PAGE> 56
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Small Cap Growth Portfolio
1998 Semi-Annual Review
Providentmutual Investment Management Company
- --------------------------------------------------------------------------------
The total return for the Market Street Fund Small Cap Growth Portfolio since
inception on May 4, 1998 through June 30 was 1.4%. This return is only for a
short time period and compares very favorably to the portfolio's style benchmark
for the same period of -3.9%. The Wilshire series of style indices referred to
as the "Quantum" indices are the style benchmarks with which we compare the
portfolio's performance.
Providentmutual Investment Management Company has selected the following two
sub-advisers to perform the day-to-day management of the portfolio. The two
firms chosen possess a proven small cap growth orientation and discipline.
<TABLE>
<CAPTION>
MANAGER FUND %
------- ------
<S> <C>
Husic Capital Management.................................... 60%
Standish, Ayer & Wood....................................... 40%
Total Fund........................................ 100%
</TABLE>
The market for small cap stocks has continued the erratic return established
earlier in the year, and these stocks are still experiencing the same general
lack of investor respect compared to the largest cap stocks. However, the
portfolio had a strong performance even for this short time period. The strong
performance can be attributed portfolio weightings in software and internet
technology, media, and financial intermediaries.
The largest sector holdings of the fund include:
<TABLE>
<CAPTION>
SECTOR %
------ ----
<S> <C>
Computers................................................... 13.1%
Retail...................................................... 8.6%
Airlines.................................................... 6.6%
Cable TV Systems............................................ 5.2%
</TABLE>
We believe the persistence of the large cap stock preference is not sustainable
for the long term. The investment process used for the portfolio positions it in
the most dynamic sectors of the economy with investments in innovative,
aggressive companies. The earnings prospects for small cap growth stocks, in
general, are less dependent on broad macroeconomic factors and more affected by
innovation and market share gains.
We look forward to your support and to our long term goal of capital
appreciation!
Sarah C. Lange, CFA
55
<PAGE> 57
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Small Cap Growth Portfolio
Statement of Net Assets, June 30, 1998
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
- --------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK -- 90.0%
Aerospace -- 0.8%
*Hawker Pacific Aerospace................................. 1,000 $ 11,125
*Kellstrom Industries, Inc. .............................. 700 20,278
*Tristar Aerospace Co. ................................... 600 9,300
-----------
40,703
-----------
Airlines -- 6.6%
*Atlantic Coast Airlines, Inc. ........................... 800 24,000
*Indigo Aviation AB ADR................................... 1,600 17,400
*Mesa Airlines, Inc. ..................................... 8,800 71,500
*Midwest Express Holdings, Inc. .......................... 650 23,522
*Ryanair Holdings Plc..................................... 2,200 78,375
US Airways Group, Inc. ................................... 1,800 142,650
-----------
357,447
-----------
Apparel -- 0.3%
*Ashworth, Inc. .......................................... 1,000 13,875
-----------
Automobiles -- 0.3%
*Excelsior-Henderson Motorcycle........................... 2,400 15,900
-----------
Automotive & Equipment -- 0.5%
*Rental Service Corp. .................................... 800 26,900
-----------
Banks -- 4.3%
*First Republic Bank, Inc. ............................... 2,600 93,924
Imperial Bancorp.......................................... 2,400 72,000
Westamerica Bancorporation................................ 1,800 57,825
West Coast Bank, Inc. .................................... 400 9,850
-----------
233,599
-----------
Broadcasting -- 2.9%
*Emmis Broadcasting Corp. Class A......................... 500 23,906
*Scandinavian Broadcasting System......................... 2,300 69,431
*Sinclair Broadcast Group, Inc. -- A...................... 2,200 63,250
-----------
156,587
-----------
Building & Building Supplies -- 0.9%
McDermott (J. Ray), S.A................................... 1,200 49,800
-----------
Business Data Processing -- 1.3%
*CCC Information Services Group........................... 1,100 18,150
*Deltek Systems, Inc. .................................... 1,200 29,400
*Pegasystems, Inc. ....................................... 900 24,412
-----------
71,962
-----------
</TABLE>
56
<PAGE> 58
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Small Cap Growth Portfolio
Statement of Net Assets, June 30, 1998 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
- --------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Business Services, Media, Etc. -- 5.0%
*Abacus Direct Corp. ..................................... 400 $ 20,775
*Billing Information Concepts Corp. ...................... 700 10,850
*Charles River Associates, Inc. .......................... 300 7,500
*Computer Learning Centers, Inc. ......................... 2,400 59,700
*Data Processing Resources Corp. ......................... 400 12,425
*F.Y.I., Inc. ............................................ 900 25,650.00
*Intelligroup, Inc. ...................................... 1,400 24,850
*International Telecommunication Data Systems, Inc. ...... 700 20,300
*Metzler Group, Inc. ..................................... 900 32,962
*On Assignment, Inc. ..................................... 600 20,962
*Personnel Group of America, Inc. ........................ 1,500 30,000
Unitrode Corp. ........................................... 700 8,050
-----------
274,024
-----------
Cable TV Systems -- 5.2%
*Adelphia Communications Corp. Class A.................... 2,700 100,237
*Cablevision Systems Corp. ............................... 1,200 100,200
*USA Networks, Inc. ...................................... 3,300 82,912
-----------
283,349
-----------
Communications -- 0.4%
Gray Communications....................................... 700 22,662
-----------
Computers -- 13.1%
*Applied Micro Circuits Corp. ............................ 800 20,700
Computer Task Group, Inc. ................................ 100 3,344
*CMG Information.......................................... 3,000 212,250
*Daou Systems, Inc. ...................................... 500 11,437
*Davox Corp. ............................................. 900 19,687
*Excite, Inc. ............................................ 1,600 149,600
*Infinium Software, Inc. ................................. 1,600 22,200
*PC Connection, Inc. ..................................... 1,700 25,925
*Pixar, Inc. ............................................. 1,400 84,525
*QuadraMed Corp. ......................................... 600 16,387
*SBS Technologies......................................... 700 21,087
*Siebel Systems, Inc. .................................... 3,100 99,975
*SPR, Inc. ............................................... 900 28,012
-----------
715,129
-----------
Consumer Products -- 1.5%
*Sunglass Hut International............................... 7,300 80,756
-----------
</TABLE>
57
<PAGE> 59
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Small Cap Growth Portfolio
Statement of Net Assets, June 30, 1998 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
- --------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Drug Manufacturers -- 1.1%
*ChiRex, Inc. ............................................ 800 $ 14,050
*Coulter Pharmaceutical, Inc. ............................ 700 21,262
*Pharmaceutical Product Development, Inc. ................ 1,200 26,400
-----------
61,712
-----------
Electrical Equipment -- 0.9%
*AFC Cable Systems, Inc. ................................. 700 24,850
*Micrel, Inc. ............................................ 400 13,000
*PCD, Inc. ............................................... 600 10,275
-----------
48,125
-----------
Electronic Instruments -- 1.3%
*ATMI, Inc. .............................................. 1,100 16,500
*Lecroy Corp. ............................................ 900 20,588
*Parlex Corp. ............................................ 800 10,800
*Photronics Labs, Inc. ................................... 1,100 24,269
-----------
72,157
-----------
Electronics -- 0.8%
*DSP Group, Inc. ......................................... 700 13,825
*Semtech Corp. ........................................... 400 7,075
*Triumph Group, Inc. ..................................... 600 25,200
-----------
46,100
-----------
Entertainment -- 0.5%
N2K, Inc. ................................................ 1,400 26,424
-----------
Finance -- 4.0%
*First Sierra Financial, Inc. ............................ 700 21,350
*Hambrecht & Quist Group.................................. 1,100 39,944
Jefferies Group, Inc. .................................... 1,900 77,900
*NCO Group, Inc. ......................................... 700 15,400
S & P 400 Mid-Cap Depositary Receipts..................... 900 62,663
-----------
217,257
-----------
Food and Beverages -- 0.3%
*United Natural Foods Inc. ............................... 500 14,250
-----------
Health -- 0.4%
*IMPATH, Inc. ............................................ 1,000 24,313
-----------
</TABLE>
58
<PAGE> 60
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Small Cap Growth Portfolio
Statement of Net Assets, June 30, 1998 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
- --------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Healthcare Services -- 2.3%
*Envoy Corp. ............................................. 1,800 $ 85,275
*Leukosite, Inc. ......................................... 1,200 8,850
*Neurogen Corp. .......................................... 900 15,975
*Specialty Care Network, Inc. ............................ 1,700 11,475
-----------
121,575
-----------
Industrial & Commercial Services -- 1.3%
*Aviation Sales Co. ...................................... 400 15,850
*Cultural Access Worldwide, Inc. ......................... 1,600 15,600
*Eagle USA Airfreight, Inc. .............................. 700 24,281
*Hagler Bailly, Inc. ..................................... 600 15,525
-----------
71,256
-----------
Machinery & Heavy Equipment -- 0.3%
*LINC Capital, Inc. ...................................... 1,000 17,250
-----------
Manufacturing -- 1.3%
*Ballantyne of Omaha, Inc. ............................... 1,350 11,306
Westinghouse Air Brake, Inc. ............................. 2,300 60,663
-----------
71,969
-----------
Manufacturing Equipment -- 0.1%
*Gasonics International Corp. ............................ 900 6,300
-----------
Medical & Medical Services -- 3.2%
Bindley Western Industries, Inc. ......................... 2,400 79,200
*CN Biosciences, Inc. .................................... 1,000 25,000
*Guilford Pharmaceuticals, Inc. .......................... 800 14,100
*Inhale Therapeutic Systems............................... 1,000 24,750
*National Surgery Centers, Inc. .......................... 700 20,344
*Vical, Inc. ............................................. 800 13,550
-----------
176,944
-----------
Medical Equipment & Supplies -- 1.0%
*Cytyc Corp. ............................................. 1,000 16,313
*Geron Corp. ............................................. 1,200 11,250
*Ligand Pharmaceuticals, Inc. Class B..................... 1,400 18,025
*Novoste Corp. ........................................... 600 13,238
-----------
58,826
-----------
</TABLE>
59
<PAGE> 61
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Small Cap Growth Portfolio
Statement of Net Assets, June 30, 1998 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
- --------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Metals - Iron & Steel -- 1.8%
*Mueller Industries, Inc. ................................ 2,600 $ 96,525
-----------
Oil & Gas -- 0.4%
*Cal Dive International, Inc. ............................ 700 19,294
-----------
Oil Equipment & Services -- 2.5%
Daniel Industries, Inc. .................................. 3,700 70,300
*Friede Goldman International, Inc. ...................... 700 20,213
Global Industries Ltd. ................................... 2,800 47,250
-----------
137,763
-----------
Recreational -- 4.0%
*Bally Total Fitness Holding Corp. ....................... 2,300 82,800
*Coastcast Corp. ......................................... 4,100 73,800
*Hibbett Sporting Goods, Inc. ............................ 700 28,000
*North Face (The), Inc. .................................. 700 16,800
*Steiner Leisure Ltd. .................................... 600 18,150
-----------
219,550
-----------
Retail - Apparel -- 2.6%
*Buckle, Inc. ............................................ 3,600 106,200
*Gadzooks, Inc. .......................................... 800 22,050
*The Wet Seal, Inc., Class A.............................. 500 16,000
-----------
144,250
-----------
Retail Food Chains -- 1.2%
TCBY Enterprises, Inc. ................................... 7,300 67,070
-----------
Retail Merchandising -- 4.8%
*Amazon.com, Inc. ........................................ 2,000 199,500
*Barnett, Inc. ........................................... 800 16,200
*Stein Mart Inc. ......................................... 1,700 22,950
*Wilmar Industries, Inc. ................................. 800 20,400
-----------
259,050
-----------
Services -- 1.0%
*Inspire Insurance Solutions, Inc. ....................... 400 13,300
*Service Experts, Inc. ................................... 800 27,600
*Sportsline USA, Inc. .................................... 300 10,969
-----------
51,869
-----------
</TABLE>
60
<PAGE> 62
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Small Cap Growth Portfolio
Statement of Net Assets, June 30, 1998 -- Concluded
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
- --------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Software -- 1.3%
*Best Software, Inc. ..................................... 1,100 $ 23,238
*Datastream Systems, Inc. ................................ 800 15,250
*Pervasive Software, Inc. ................................ 1,300 13,488
*TSI International Software Ltd. ......................... 700 16,012
-----------
67,988
-----------
Telecommunications -- 4.4%
*IXC Communication, Inc. ................................. 2,100 101,850
*Paging Network, Inc. .................................... 3,800 53,200
Telegroup, Inc. .......................................... 700 6,475
*US LEC Corp. Class A..................................... 700 14,613
*Western Wireless Corp. Class A........................... 3,300 65,794
-----------
241,932
-----------
Transportation -- 0.9%
MotivePower Industries, Inc. ............................. 1,800 44,100
*Trailer Bridge, Inc. .................................... 1,500 6,000
-----------
50,100
-----------
Travel -- 2.1%
*Ambassadors International, Inc. ......................... 300 9,094
*Preview Travel, Inc. .................................... 2,500 85,938
*Resortquest International, Inc. ......................... 1,100 17,944
-----------
112,976
-----------
Waste Management -- 1.1%
*American Disposal Services, Inc. ........................ 1,300 60,938
-----------
TOTAL COMMON STOCK (COST $4,656,699).................... 4,906,456
-----------
SHORT TERM INVESTMENTS -- 12.7%
Temporary Investment Fund, Inc. -- TempCash............. 692,047 692,047
-----------
TOTAL SHORT TERM INVESTMENTS (COST $692,047)............ 692,047
-----------
TOTAL INVESTMENTS -- 102.7% (COST $5,348,746)........... 5,598,503
LIABILITIES IN EXCESS OF OTHER ASSETS -- (2.7%)....... (147,933)
-----------
NET ASSETS -- 100.0%
(Equivalent to $10.13 per share based on 537,814 shares of
capital stock outstanding).............................. $ 5,450,570
===========
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE
($5,450,570/537,814 shares outstanding)................... $ 10.13
===========
</TABLE>
* Non-Income Producing
See accompanying notes to financial statements.
61
<PAGE> 63
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Small Cap Value Portfolio
1998 Semi-Annual Review
Providentmutual Investment Management Company
- --------------------------------------------------------------------------------
The total return for the Market Street Fund Small Cap Value Portfolio since
inception on May 4, 1998 through June 30 was -5.5%. This return reflects a very
short time period and compares to the portfolio's style benchmark for the same
period of -5.08%. The Wilshire series of style indices referred to as the
"Quantum" indices are the style benchmarks with which we compare the portfolio's
performance.
Providentmutual Investment Management Company has selected the following two
sub-advisers to perform the day-to-day management of the portfolio. The two
firms chosen possess a proven small cap value orientation and discipline.
<TABLE>
<CAPTION>
MANAGER FUND %
------- ------
<S> <C>
Denver Investment Advisors.................................. 60%
1838 Investment Advisors.................................... 40%
Total Fund.................................................. 100%
</TABLE>
The market for small cap stocks has continued the erratic return established
earlier in the year, and these stocks are still experiencing the same general
lack of investor respect compared to the largest cap stocks. The meltdown of
Asian economies has encouraged foreign money to flow into the US as a safe haven
and typically into the well-known large cap names. The popularity of indexing
and the desire for liquidity also has benefited large cap names. Lastly, merger
and acquisition excitement has been dominated by the mega-deals of the very
large companies. Investors have paid a substantial premium for the liquidity of
large cap names. In this environment the valuations of small cap stocks appear
increasingly compelling.
The portfolio targets stable or improving businesses at low multiples of price
to earnings, price to book value, and price to cash flow. The investment
discipline used prohibits paying up for expensive stocks with the expectation
long term of attractive total returns.
The largest sector holdings of the portfolio include:
<TABLE>
<CAPTION>
SECTOR %
------ ----
<S> <C>
Retail...................................................... 10.2%
Manufacturing............................................... 7.2%
Insurance................................................... 6.9%
Financial Institutions...................................... 5.5%
</TABLE>
Looking forward, the earnings growth of small caps may exceed that of large
caps. Small cap stocks typically have domestically-oriented businesses that are
more insulated from changes in the US dollar. The strong US dollar is now
putting pressure on US exports. Historically over the long term a strong dollar
has been associated with the outperformance of small cap stocks over large cap
stocks. The slackening trade demand from abroad and its ramifications for large
cap stocks may reward small cap investors in the second half of 1998.
We look forward to your support and to our long term goal of capital
appreciation!
Sarah C. Lange, CFA
62
<PAGE> 64
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Small Cap Value Portfolio
Statement of Net Assets, June 30, 1998
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
- -----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK -- 92.4%
Aerospace & Defense -- 3.0%
Ducommun, Inc. ........................................... 2,000 $ 40,000
Kaman Corporation Class A................................. 1,900 36,159
Primex Technologies, Inc. ................................ 200 10,250
Thiokol Corp. ............................................ 1,500 69,187
-----------
155,596
-----------
Airlines -- 1.3%
Alaska Air Group, Inc. ................................... 500 27,281
*America West Airlines, Inc. ............................. 1,300 37,131
-----------
64,412
-----------
Automotive Equipment & Services -- 1.0%
Arvin Industries, Inc. ................................... 800 29,050
*Copart, Inc. ............................................ 400 9,250
*Delco Remy International, Inc. .......................... 1,100 14,162
-----------
52,462
-----------
Banks -- 1.9%
Dime Community Bancorp, Inc. ............................. 1,100 30,525
Riggs National Corp. ..................................... 1,700 49,671
*Southern Pacific Funding Corp. .......................... 1,200 18,825
-----------
99,021
-----------
Building & Building Supplies -- 3.9%
BMC West Corp. ........................................... 1,400 19,337
*Cameron Ashley Building Products, Inc. .................. 600 10,125
Coachmen Industries, Inc. ................................ 1,000 26,125
Engle Homes, Inc. ........................................ 800 12,500
*Holophane Corp. ......................................... 600 15,300
Lone Star Industries, Inc. ............................... 400 30,825
Texas Industries, Inc. ................................... 1,100 58,300
*Toll Brothers, Inc. ..................................... 800 22,950
*Willbros Group, Inc. .................................... 500 7,812
-----------
203,274
-----------
Chemicals -- 2.4%
General Cable Corp. ...................................... 1,400 40,425
General Chemical Group, Inc. ............................. 900 24,975
O.M. Group, Inc. ......................................... 400 16,500
Wellman, Inc. ............................................ 1,900 43,106
-----------
125,006
-----------
</TABLE>
63
<PAGE> 65
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Small Cap Value Portfolio
Statement of Net Assets, June 30, 1998 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
- -----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Computers -- 3.9%
*Adept Technology, Inc. .................................. 1,100 $ 8,319
*HMT Technology Corp. .................................... 1,100 9,212
*Software Spectrum, Inc. ................................. 700 14,175
Sterling Software, Inc. .................................. 1,500 44,344
*Symantec Corp. .......................................... 1,200 31,350
The Learning Company, Inc. ............................... 1,300 38,512
*Wall Data, Inc. ......................................... 900 14,400
*Wang Labs, Inc. ......................................... 1,600 40,700
-----------
201,012
-----------
Construction -- 1.1%
M.D.C. Holdings, Inc. .................................... 900 17,775
*Morrison Knudsen Corp. .................................. 2,900 40,781
-----------
58,556
-----------
Containers -- .7%
Shorewood Packaging....................................... 1,300 20,637
*US Can Corp. ............................................ 900 13,219
-----------
33,856
-----------
Cosmetics and Toiletries -- 0.8%
*American Safety Razor Corp. ............................. 2,000 29,250
*French Fragrances, Inc. ................................. 700 10,937
-----------
40,187
-----------
Drugs & Healthcare -- 2.0%
Block Drug Co. Class A.................................... 300 11,400
*Bio-Rad Labs, Inc. Class A............................... 300 9,188
*Chronimed, Inc. ......................................... 800 10,300
*Del Global Technologies Corp. ........................... 1,300 13,000
*Haemonetics Corp. ....................................... 800 12,800
*Marquiette Medical Systems, Inc. Class A................. 700 17,959
*Medco Research, Inc. .................................... 400 10,200
*Polymedica Corp. ........................................ 800 7,200
-----------
92,047
-----------
</TABLE>
64
<PAGE> 66
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Small Cap Value Portfolio
Statement of Net Assets, June 30, 1998 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
- -----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Electronics -- 3.7%
AVX Corp. ................................................ 1,500 $ 24,094
Belden, Inc. ............................................. 800 24,500
*Burr-Brown Corp. ........................................ 700 14,700
Esco Electronics Corp. ................................... 2,100 39,900
*Marshall Industries, Inc. ............................... 600 16,350
Oak Industries, Inc. ..................................... 800 28,300
Richardson Electronics, Ltd. ............................. 1,000 13,500
Tektronix, Inc. .......................................... 700 24,762
-----------
186,106
-----------
Engineering -- 0.2%
URS Corp. ................................................ 600 10,200
-----------
Entertainment -- 1.2%
*Hastings Entertainment, Inc. ............................ 1,000 11,000
*Primadonna Resorts, Inc. ................................ 1,500 21,516
*Rio Hotel and Casino, Inc. .............................. 1,100 20,762
Royal Olympic Cruise Lines................................ 800 8,000
-----------
61,278
-----------
Financial Institutions -- 4.8%
Advest Group, Inc. ....................................... 600 17,325
Astoria Financial Corp. .................................. 700 37,450
Downey Financial Corp. ................................... 1,000 32,687
Enhance Financial Services Group, Inc. ................... 2,600 87,750
Everen Capital Corp. ..................................... 1,100 30,800
MAF Bancorp, Inc. ........................................ 600 21,825
The PMI Group, Inc. ...................................... 300 22,012
-----------
249,849
-----------
</TABLE>
65
<PAGE> 67
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Small Cap Value Portfolio
Statement of Net Assets, June 30, 1998 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
- -----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Food & Food Distributors -- 4.7%
*Ben & Jerry's Homemade, Inc. Class A..................... 900 $ 17,437
*Chock Full O'Nuts Corp. ................................. 3,100 21,119
Dean Foods Co. ........................................... 500 27,469
Earthgrains Co. .......................................... 700 39,112
Michael Foods, Inc. ...................................... 1,000 29,375
*Ralcorp Holdings, Inc. .................................. 2,000 37,750
*Smithfield Foods, Inc. .................................. 900 27,450
Smucker (J.M.) Co. Class A................................ 400 9,925
*Suiza Foods Corp. ....................................... 200 11,937
*Sylvan, Inc. ............................................ 1,200 18,900
Worthington Foods, Inc. .................................. 200 4,187
-----------
244,661
-----------
Healthcare Services -- 3.9%
*Ameripath, Inc. ......................................... 700 8,269
*Beverly Enterprises, Inc. ............................... 1,700 23,481
*Genesis Health Ventures, Inc. ........................... 900 22,500
Integrated Health Services, Inc. ......................... 800 30,000
*Mariner Health Group, Inc. .............................. 400 6,650
*NovaCare, Inc. .......................................... 1,800 21,150
*Paragon Health Network, Inc. ............................ 800 12,900
Retirement Care Associates, Inc. ......................... 1,600 11,600
*Sun Healthcare Group, Inc. .............................. 700 10,237
*Trigon Healthcare, Inc. ................................. 1,500 54,281
-----------
201,068
-----------
Home Furnishings -- 1.7%
American Woodmark Corp. .................................. 500 13,687
Crown Crafts, Inc. ....................................... 700 10,762
*Furniture Brands International, Inc. .................... 800 22,450
LADD Furniture, Inc. ..................................... 900 27,000
*Quaker Fabric Corp. ..................................... 900 12,994
-----------
86,893
-----------
</TABLE>
66
<PAGE> 68
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Small Cap Value Portfolio
Statement of Net Assets, June 30, 1998 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
- -----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Hotel/Restaurants -- 1.4%
Innkeepers USA Trust, Inc. ............................... 1,500 $ 18,937
*O'Charleys, Inc. ........................................ 1,050..... 15,750
Prime Hospitality Corp. .................................. 1,100 19,181
*RARE Hospitality International, Inc. .................... 400....... 5,875
Servico, Inc. ............................................ 900 13,500
-----------
73,243
-----------
Household Products -- 1.3%
*American Safety Razor Corp. ............................. 700 10,237
Ekco Group, Inc. ......................................... 2,100 16,538
Global Tech Appliance Inc. ............................... 700 10,063
Libbey, Inc. ............................................. 600 22,988
Royal Appliance Manufacturing Co. ........................ 1,000 6,250
-----------
66,076
-----------
Insurance -- 6.9%
Allmerica Financial Group................................. 400 26,000
Berkley (W.R.) Corp. ..................................... 400 16,025
Blanch (E.W.) Holdings.................................... 700 25,725
Everest Re Holdings, Inc. ................................ 500 19,219
*Delphi Financial Group, Inc. Class A..................... 500 28,156
*Farm Family Holdings, Inc. .............................. 200 7,788
FBL Financial Group, Inc. ................................ 800 20,500
*Fpic Insurance Group, Inc. .............................. 600 20,175
Fremont General Corp. .................................... 800 43,350
Harleysville Group, Inc. ................................. 900 18,675
HCC Insurance Holdings, Inc. ............................. 800 17,600
LandAmerica Financial Group, Inc. ........................ 700 40,075
Life USA Holding, Inc. ................................... 1,200 15,525
Paula Financial........................................... 900 18,113
*Penn Treaty American Corp. .............................. 300 9,450
State Auto Financial...................................... 400 12,750
Stirling Cooke Brown Holding Ltd. ........................ 400 11,250
Zenith National Insurance Corp. .......................... 300 8,456
-----------
358,832
-----------
</TABLE>
67
<PAGE> 69
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Small Cap Value Portfolio
Statement of Net Assets, June 30, 1998 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
- -----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Leasing -- 3.7%
*Avis Rent A Car, Inc. ................................... 1,500 $ 37,125
*Budget Group, Inc., Class A.............................. 1,100 35,131
*Indigo Aviation AB ADR................................... 1,000 10,875
Rent Way, Inc. ........................................... 400 12,200
Rollins Truck Leasing..................................... 4,000 49,501
Varlen Corp. ............................................. 1,400 48,300
-----------
193,132
-----------
Machinery & Heavy Equipment -- 0.8%
CTB International Corp. .................................. 700 9,494
Innovative Valve Technologies, Inc. ...................... 700 5,163
Mac-Gray Corp. ........................................... 2,200 28,050
-----------
42,707
-----------
Manufacturing -- 7.2%
*Anixter International, Inc. ............................. 1,300 24,781
Avondale Industries, Inc. ................................ 800 22,075
*Buckeye Technologies, Inc. .............................. 1,400 32,988
*Coastcast Corp. ......................................... 100 18,000
Fedders Corp. Class A..................................... 1,700 10,838
*Hawk Corp. .............................................. 600 10,575
*M & F Worldwide Corp. ................................... 1,100 10,931
*Monaco Coach Corp. ...................................... 1,400 40,950
Oregon Steel Mills, Inc. ................................. 1,000 18,625
Oxford Industries, Inc. .................................. 1,500 52,406
*Pameco Corp. ............................................ 500 10,000
Quanex Corp. ............................................. 700 21,219
*Quicksilver, Inc. ....................................... 700 13,956
Ruddick Corp. ............................................ 1,500 27,188
*Silgan Holdings, Inc. ................................... 600 16,800
Velcro Industries N.V. ................................... 100 13,925
*Wolverine Tube, Inc. .................................... 500 19,000
*Worldtex, Inc. .......................................... 900 5,231
-----------
369,488
-----------
Office Equipment & Supplies -- 0.8%
*American Pad & Paper Co. ................................ 700 3,150
*Day Runner, Inc. ........................................ 500 12,594
Kentek Information Systems, Inc. ......................... 900 7,763
United Stationers, Inc. .................................. 300 19,425
-----------
42,932
-----------
</TABLE>
68
<PAGE> 70
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Small Cap Value Portfolio
Statement of Net Assets, June 30, 1998 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
- -----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Oil Equipment & Services -- 1.5%
*HS Resources, Inc. ...................................... 2,000 $ 29,125
SEACOR SMIT, Inc. ........................................ 400 24,525
Tesoro Petroleum Corp. ................................... 1,600 25,400
-----------
79,050
-----------
Paper & Forest Products -- 0.8%
Chesapeake Corp. ......................................... 800 31,150
Schweitzer-Mauduit International, Inc. ................... 400 11600
-----------
42,750
-----------
Pharmaceuticals -- 1.9%
Bindley Western Industries, Inc. ......................... 2,000 66,000
Roberts Pharmaceutical Corp. ............................. 1,400 32,200
-----------
98,200
-----------
Printing & Publishing -- 2.2%
Bowne & Co., Inc. ........................................ 500 22,500
*Journal Register Co. .................................... 600 10,050
McClatchy Newspapers, Inc. ............................... 500 17,313
*World Color Press, Inc. ................................. 1,700 59,500
-----------
109,363
-----------
Real Estate -- 3.6%
Annaly Mortgage Management Inc. .......................... 700 6,344
Brandywine Realty Trust................................... 800 17,900
Burnham Pacific Properties, Inc. ......................... 1,100 15,606
CCA Prison Realty Trust................................... 300 9,188
Eastgroup Properties...................................... 1,600 32,100
Healthcare Realty Trust................................... 500 13,625
Health Care REIT, Inc. ................................... 1,000 25,500
M/I Schottenstein Homes, Inc. ............................ 400 8,650
Pacific Gulf Properties, Inc. ............................ 500 10,656
Parkway Properties, Inc. ................................. 800 23,600
Sunstone Hotel Investors, Inc. ........................... 1,800 23,963
-----------
187,132
-----------
</TABLE>
69
<PAGE> 71
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Small Cap Value Portfolio
Statement of Net Assets, June 30, 1998 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
- -----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Retail - Apparel -- 4.3%
Blair Corp. .............................................. 300 $ 9,600
*Bon Ton Stores, Inc. .................................... 800 12850
*Brylane, Inc. ........................................... 400 18,400
Burlington Coat Factory Warehouse......................... 100 2,250
Cato Corp. Class A........................................ 2,100 36,553
*Footstar, Inc. .......................................... 1,300 62,400
*Gerber Childrenswear, Inc. .............................. 900 13,894
*Maxwell Shoe Co., Inc. Class A........................... 1,700 33,788
*Paul Harris Stores, Inc. ................................ 700 9,275
*Tropical Sportswear International Corp. ................. 1,100 23,375
-----------
222,385
-----------
Retail Merchandising -- 5.9%
BJ's Wholesale Club, Inc. ................................ 1,000 40,626
*Cole National Corp. Class A.............................. 500 20,000
*Duckwall-Alco Stores, Inc. .............................. 600 10,500
*Finlay Enterprises, Inc. ................................ 600 14,475
Fred's, Inc. - Class A.................................... 2,000 51,000
Huffy Corporation......................................... 1,000 18,125
*Jan Bell Marketing, Inc. ................................ 600 3,900
*Rex Stores Corp. ........................................ 600 7,575
ShopKo Stores, Inc. ...................................... 1,600 54,400
*Zale Corp. .............................................. 2,700 85,894
-----------
306,495
-----------
Steel -- 1.2%
*Citation Corp. .......................................... 2,400 48,000
*Coastcast Corp. ......................................... 800 14,400
-----------
62,400
-----------
Telecommunications -- 0.6%
*Bel Fuse, Inc. .......................................... 1,400 31,150
-----------
Textiles -- 1.2%
*Burlington Industries, Inc. ............................. 1,500 21,094
*Dan River, Inc. Class A.................................. 1,200 20,400
*Galey & Lord, Inc. ...................................... 300 4,463
Guilford Mills, Inc. ..................................... 900 18,000
-----------
63,957
-----------
</TABLE>
70
<PAGE> 72
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Small Cap Value Portfolio
Statement of Net Assets, June 30, 1998 -- Concluded
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
- -----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Transportation -- 2.9%
Airborne Freight Corp. ................................... 1,300 $ 45,419
Canadian National Railway Co. ............................ 300 15,938
*Consolidated Freightways Corp. .......................... 2,200 30,663
Offshore Logistics, Inc. ................................. 1,600 28,400
Sea Containers, Ltd. ..................................... 800 30,600
-----------
151,020
-----------
Utilities -- 1.9%
Central Hudson Gas & Electric Corp. ...................... 700 32,113
Cleco Corp. .............................................. 900 26,775
Interstate Energy Corp. .................................. 400 13,000
Rochester Gas and Electric Corp. ......................... 900 28,744
-----------
100,632
-----------
Waste Management -- 0.3%
Laidlaw Environmental Services, Inc. ..................... 3,900 14,138
-----------
TOTAL COMMON STOCK (COST $4,980,204).................... 4,780,566
-----------
SHORT-TERM INVESTMENTS -- 8.0%
Temporary Investment Fund, Inc. -- Temp Cash.............. 411,516 411,516
-----------
TOTAL SHORT TERM INVESTMENTS (COST $411,516)............ 411,516
-----------
TOTAL INVESTMENTS -- 100.4% (COST $5,391,720)........... 5,192,082
LIABILITIES IN EXCESS OF OTHER ASSETS -- (0.4%)......... (19,248)
-----------
NET ASSETS -- 100.0%
(Equivalent to $9.46 per share based on 546,961 shares of
capital stock outstanding).............................. $ 5,172,834
===========
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE
($5,172,834 / 546,961 shares outstanding)................. $ 9.46
===========
</TABLE>
* Non-Income Producing.
See accompanying notes to financial statements.
71
<PAGE> 73
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
Statements of Operations for the Six Months Ended June 30, 1998
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MONEY
GROWTH MARKET BOND
PORTFOLIO PORTFOLIO PORTFOLIO
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends................................................. $ 2,495,950 $ 0 $ 0
Interest.................................................. 309,881 1,918,582 842,058
Less: foreign taxes withheld............................ (18,521) 0 0
----------- ---------- ----------
Total Income............................................ 2,787,310 1,918,582 842,058
----------- ---------- ----------
EXPENSES:
Investment advisory fee................................... 458,444 85,070 44,302
Administration fee........................................ 73,299 23,725 15,078
Directors' fee............................................ 10,989 2,603 971
Transfer agent fee........................................ 2,556 1,176 904
Custodian fee............................................. 17,123 5,172 2,280
Legal fees................................................ 18,832 4,480 1,675
Audit fees................................................ 13,887 3,306 1,234
Printing.................................................. 27,072 8,828 3,276
Insurance................................................. 10,129 2,539 862
Miscellaneous............................................. 1,128 647 553
----------- ---------- ----------
633,459 137,546 71,135
Less: expenses waived by Administrator and reimbursed by
affiliated insurance company............................ (23,052) (5,729) (2,401)
----------- ---------- ----------
Total expenses.......................................... 610,407 131,817 68,734
----------- ---------- ----------
Net investment income................................... 2,176,903 1,786,765 773,324
----------- ---------- ----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND
FOREIGN CURRENCY TRANSACTIONS
Net realized gain (loss) from:
Investments:............................................ 6,707,518 0 226,812
Foreign Currency related translations................... (15,122) -- --
----------- ---------- ----------
6,692,396 0 226,812
----------- ---------- ----------
Net change in unrealized appreciation (depreciation) from:
Investments............................................. 19,559,311 0 24,662
Foreign currency related translations................... -- -- --
----------- ---------- ----------
19,559,311 -- 24,662
----------- ---------- ----------
Net gain (loss) on investments and foreign currency
transactions.......................................... 26,251,707 0 251,474
----------- ---------- ----------
Net increase (decrease) in net assets resulting from
operations............................................ $28,428,610 $1,786,765 $1,024,798
=========== ========== ==========
</TABLE>
* Commencement of operations was May 4, 1998.
See accompanying notes to financial statements.
72
<PAGE> 74
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
Statements of Operations for the Six Months Ended June 30, 1998 -- (Concluded)
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
AGGRESSIVE SENTINEL LARGE LARGE SMALL SMALL
MANAGED GROWTH INTERNATIONAL GROWTH CAP CAP CAP CAP
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO GROWTH* VALUE* GROWTH* VALUE*
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 318,041 $ 159,380 $ 914,449 $ 40,654 $ 15,087 $ 34,941 $ 586 $ 5,378
806,260 122,190 86,942 15,877 8,626 8,822 9,395 10,251
(1,554) 0 (78,710) 0 0 (119) 0 0
---------- ---------- ---------- -------- -------- --------- -------- ---------
1,122,747 281,570 922,681 56,531 23,713 43,644 9,981 15,629
---------- ---------- ---------- -------- -------- --------- -------- ---------
119,726 115,157 259,122 24,171 11,728 11,845 6,518 6,582
26,826 25,500 41,051 16,803 1,413 1,427 612 467
2,262 2,022 2,659 374 147 148 63 64
1,119 1,077 1,182 805 254 254 243 243
5,265 5,470 20,880 2,552 1,339 2,721 1,577 3,093
3,886 3,458 4,570 640 325 328 141 142
2,867 2,551 3,367 471 220 223 95 96
7,655 6,819 8,934 420 268 270 116 117
2,205 1,611 2,445 293 0 0 0 0
625 615 4,737 516 165 165 160 160
---------- ---------- ---------- -------- -------- --------- -------- ---------
172,436 164,280 348,947 47,045 15,859 17,381 9,525 10,964
(4,490) (3,739) 0 (5,187) 667 (694) (840) (2,194)
---------- ---------- ---------- -------- -------- --------- -------- ---------
167,946 160,541 348,947 41,858 16,526 16,687 8,685 8,770
---------- ---------- ---------- -------- -------- --------- -------- ---------
954,801 121,029 573,734 14,673 7,187 26,957 1,296 6,859
---------- ---------- ---------- -------- -------- --------- -------- ---------
2,072,834 4,138,115 4,031,063 528,501 (143,033) (29,679) (124,275) (48,448)
(1,959) -- (50,889) -- -- -- -- --
---------- ---------- ---------- -------- -------- --------- -------- ---------
2,070,875 4,138,115 3,980,174 528,501 (143,033) (29,679) (124,275) (48,448)
---------- ---------- ---------- -------- -------- --------- -------- ---------
1,603,553 (591,745) 3,828,207 100,054 439,531 (115,977) 249,757 (199,638)
-- -- (13,618) -- -- -- -- --
---------- ---------- ---------- -------- -------- --------- -------- ---------
1,603,553 (591,745) 3,814,589 100,054 439,531 (115,977) 249,757 (199,638)
---------- ---------- ---------- -------- -------- --------- -------- ---------
3,674,428 3,546,370 7,794,763 628,555 296,498 (145,656) 125,482 (248,086)
---------- ---------- ---------- -------- -------- --------- -------- ---------
$4,629,229 $3,667,399 $8,368,497 $643,228 $303,685 $(118,699) $126,778 $(241,227)
========== ========== ========== ======== ======== ========= ======== =========
</TABLE>
73
<PAGE> 75
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED JUNE 30, 1998
(UNAUDITED)
MONEY AGGRESSIVE
GROWTH MARKET BOND MANAGED GROWTH INTERNATIONAL
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INCREASE IN NET ASSETS
Operations:
Net investment income................... $ 2,176,903 $ 1,786,765 $ 773,324 $ 954,801 $ 121,029 $ 573,734
Net realized gain (loss) on investments
and foreign currency related
transactions........................... 6,692,396 0 226,812 2,070,875 4,138,115 3,980,174
Net change in unrealized appreciation
(depreciation) on investments and
foreign currency translations.......... 19,559,311 0 24,662 1,603,553 (591,745) 3,814,589
------------ ----------- ----------- ----------- ----------- -----------
Net increase (decrease) in net assets
resulting from operations.............. 28,428,610 1,786,765 1,024,798 4,629,229 3,667,399 8,368,497
Distributions:
From net investment income.............. (2,198,383) (1,786,765) (695,163) (930,791) (391,790) (78,005)
From net realized gains................. (35,634,593) 0 (3,599) (2,699,617) (3,740,193) (4,341,196)
Capital share transactions:
Net contributions from affiliated life
insurance companies.................... 45,392,078 7,736,874 3,625,915 5,626,372 6,987,863 7,356,995
------------ ----------- ----------- ----------- ----------- -----------
Total increase in net assets........... 35,987,712 7,736,874 3,951,951 6,625,193 6,523,279 11,306,291
NET ASSETS
Beginning of period....................... 267,389,331 64,338,911 23,350,370 56,067,509 48,574,105 62,513,456
------------ ----------- ----------- ----------- ----------- -----------
End of Period............................. $303,377,043 $72,075,785 $27,302,321 $62,692,702 $55,097,384 $73,819,747
============ =========== =========== =========== =========== ===========
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1997
MONEY AGGRESSIVE
GROWTH MARKET BOND MANAGED GROWTH INTERNATIONAL
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INCREASE IN NET ASSETS
Operations:
Net investment income................... $ 4,610,554 $ 3,164,621 $ 1,205,822 $ 1,707,727 $ 391,789 $ 662,481
Net realized gain (loss) on investments
and foreign currency related
transactions........................... 35,589,649 (57) 177,501 2,697,609 3,740,193 4,167,248
Net change in unrealized appreciation
(depreciation) on investments and
foreign currency translations.......... 9,025,359 -- 449,185 4,950,546 3,790,949 178,783
------------ ----------- ----------- ----------- ----------- -----------
Net increase (decrease) in net assets
resulting from operations.............. 49,225,562 3,164,564 1,832,508 9,355,882 7,922,931 5,008,512
Distributions:
From net investment income.............. (4,690,830) (3,164,621) (1,143,012) (1,626,361) (326,522) (427,579)
From net realized gains................. (23,067,604) -- -- (344,551) (64,760) (3,347,494)
Capital share transactions:
Shares exchanged in acquisition of
Common Stock Portfolio................. 13,633,276 -- -- -- -- --
Net contributions from affiliated life
insurance companies.................... 33,340,861 10,142,244 5,573,996 5,251,369 6,944,174 10,324,894
------------ ----------- ----------- ----------- ----------- -----------
Total increase (decrease) in net
assets............................... 68,441,265 10,142,187 6,263,492 12,636,339 14,475,823 11,558,333
NET ASSETS
Beginning of period....................... 198,948,066 54,196,724 17,086,878 43,431,170 34,098,282 50,955,123
------------ ----------- ----------- ----------- ----------- -----------
End of Period............................. $267,389,331 $64,338,911 $23,350,370 $56,067,509 $48,574,105 $62,513,456
============ =========== =========== =========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
74
<PAGE> 76
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
Statements of Changes in Net Assets -- (Concluded)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED JUNE 30, 1998
(UNAUDITED)
SENTINEL LARGE LARGE SMALL SMALL
GROWTH CAP CAP CAP CAP
PORTFOLIO GROWTH* VALUE* GROWTH* VALUE*
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INCREASE IN NET ASSETS
Operations:
Net investment income.................................... $ 14,673 $ 7,187 $ 26,957 $ 1,296 $ 6,859
Net realized gain (loss) on investments and foreign
currency related transactions........................... 528,501 (143,033) (29,679) (124,275) (48,448)
Net change in unrealized appreciation (depreciation) on
investments and foreign currency translations........... 100,054 439,531 (115,977) 249,757 (199,638)
----------- ----------- ----------- ---------- ----------
Net increase (decrease) in net assets resulting from
operations.............................................. 643,228 303,685 (118,699) 126,778 (241,227)
Distributions:
From net investment income............................... (25,069) 0 0 0 0
From net realized gains.................................. (1,668,898) 0 0 0 0
Capital share transactions:
Net contributions from affiliated life insurance
companies............................................... 3,464,071 11,447,371 11,854,023 5,323,792 5,414,061
----------- ----------- ----------- ---------- ----------
Total increase in net assets............................ 2,413,332 11,751,056 11,735,324 5,450,570 5,172,834
NET ASSETS
Beginning of period........................................ 8,361,989 0 0 0 0
----------- ----------- ----------- ---------- ----------
End of Period.............................................. $10,775,321 $11,751,056 $11,735,324 $5,450,570 $5,172,834
=========== =========== =========== ========== ==========
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1997
SENTINEL LARGE LARGE SMALL SMALL
GROWTH CAP CAP CAP CAP
PORTFOLIO GROWTH VALUE GROWTH VALUE
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INCREASE IN NET ASSETS
Operations:
Net investment income.................................... $ 25,069
Net realized gain (loss) on investments and foreign
currency related transactions........................... 1,668,898
Net change in unrealized appreciation (depreciation) on
investments and foreign currency translations........... 132,149
-----------
Net increase (decrease) in net assets resulting from
operations.............................................. 1,826,116
Distributions:
From net investment income............................... (23,408)
From net realized gains.................................. (3,259)
Capital share transactions:
Shares exchanged in acquisition of Common Stock
Portfolio............................................... --
Net contributions from affiliated life insurance
companies............................................... 898,951
-----------
Total increase (decrease) in net assets................. 2,698,400
NET ASSETS
Beginning of period........................................ 5,663,589
-----------
End of Period.............................................. $ 8,361,989
===========
</TABLE>
* Commencement of operations was May 4, 1998.
See accompanying notes to financial statements.
75
<PAGE> 77
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
Financial Highlights
- --------------------------------------------------------------------------------
Selected data for a share of capital stock outstanding throughout the periods:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GROWTH PORTFOLIO
- --------------------------------------------------------------------------------------------------------------------------
01/01/98
TO 01/01/97 01/01/96 01/01/95 01/01/94 01/01/93
06/30/98 TO TO TO TO TO
(UNAUDITED) 12/31/97 12/31/96 12/31/95 12/31/94 12/31/93
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period............... $19.46 $18.10 $16.36 $14.00 $14.09 $13.73
------- ------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income.............................. .12 .35 .46 .47 .43 .38
Net realized and unrealized gain (loss) on
investments....................................... 1.60 3.49 2.54 3.41 (.10) .94
------- ------- ------- ------- ------- -------
Total from investment operations................ 1.72 3.84 3.00 3.88 .33 1.32
------- ------- ------- ------- ------- -------
LESS DISTRIBUTIONS:
Dividends to shareholders from net investment
income............................................ (.15) (.38) (.48) (.46) (.41) (.39)
Dividends to shareholders from net capital gains... (2.59) (2.10) (.78) (1.06) (.01) (.35)
Dividends to shareholders in excess of net
investment income................................. -- (.00) (.00) (.00) (.00) (.22)
------- ------- ------- ------- ------- -------
Total distributions............................. (2.74) (2.48) (1.26) (1.52) (.42) (.96)
------- ------- ------- ------- ------- -------
Net asset value, end of period..................... $18.44 $19.46 $18.10 $16.36 $14.00 $14.09
======= ======= ======= ======= ======= =======
Total return.................................... 10.51%(2) 24.32% 19.58% 30.39% 2.40% 9.43%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period $(000)................... 303,377 267,389 198,948 161,899 115,191 109,534
Ratios of expenses to average net assets
(annualized)(1)................................... .43% .43% .50% .61% .63% .76%
Ratios of net investment income to average net
assets (annualized)............................... 1.51% 2.01% 2.80% 3.20% 3.10% 2.86%
Portfolio turnover................................. 15% 108% 72% 61% 63% 51%
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1.) Expense ratios for the Growth Portfolio before reimbursement of expense by
affiliated insurance company for the period ended June 30, 1998, and the
years ended December 31, 1997, 1996, 1995, 1994 and 1993 were as follows:
0.44%, 0.43%, 0.50%, 0.61%, 0.67% and 0.76% respectively.
(2.) Total returns for periods less than one year are not annualized.
See accompanying notes to financial statements.
76
<PAGE> 78
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
Financial Highlights -- Continued
- --------------------------------------------------------------------------------
Selected data for a share of capital stock outstanding throughout the periods:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MONEY MARKET PORTFOLIO
- ----------------------------------------------------------------------------------------------------------------------
01/01/98
TO 01/01/97 01/01/96 01/01/95 01/01/94 01/01/93
06/30/98 TO TO TO TO TO
(UNAUDITED) 12/31/97 12/31/96 12/31/95 12/31/94 12/31/93
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.......... $1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income......................... .03 .05 .05 .05 .04 .03
------ ------ ------ ------ ------ ------
Total from investment operations.......... .03 .05 .05 .05 .04 .03
------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends to shareholders from net investment
income...................................... (.03) (.05) (.05) (.05) (.04) (.03)
------ ------ ------ ------ ------ ------
Total distributions....................... (.03) (.05) (.05) (.05) (.04) (.03)
------ ------ ------ ------ ------ ------
Net asset value, end of period................ $1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
====== ====== ====== ====== ====== ======
Total return.............................. 2.63%(2) 5.33% 5.15% 5.61% 3.81% 2.59%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period $(000).............. 72,076 64,339 54,197 34,615 21,040 12,506
Ratios of expenses to average net assets
(annualized)(1)............................. .40% .39% .44% .50% .55% .65%
Ratios of net investment income to average net
assets (annualized)......................... 5.24% 5.21% 5.03% 5.47% 3.86% 2.56%
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
(1.) Expense ratios for the Money Market Portfolio before reimbursement of
expense by affiliated insurance company for the period ended June 30, 1998,
and the years ended December 31, 1997, 1996, 1995, 1994, and 1993 were as
follows: 0.39%, 0.39%, 0.44%, 0.50%, 0.59% and 0.65% respectively.
(2.) Total returns for periods less than one year are not annualized.
See accompanying notes to financial statements.
77
<PAGE> 79
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
Financial Highlights -- Continued
- --------------------------------------------------------------------------------
Selected data for a share of capital stock outstanding throughout the periods:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
BOND PORTFOLIO
- --------------------------------------------------------------------------------------------------------------------------
01/01/98
TO 01/01/97 01/01/96 01/01/95 01/01/94 01/01/93
06/30/98 TO TO TO TO TO
(UNAUDITED) 12/31/97 12/31/96 12/31/95 12/31/94 12/31/93
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.............. $10.98 $10.67 $11.00 $ 9.73 $11.21 $10.73
------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income............................. .32 .64 .63 .65 .62 .60
Net realized and unrealized gain (loss) on
investments...................................... .12 .33 (.34) 1.27 (1.23) .48
------ ------ ------ ------ ------ ------
Total from investment operations............... .44 .97 .29 1.92 (.61) 1.08
------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends to shareholders from net investment
income........................................... (.31) (.66) (.62) (.65) (.60) (.60)
Dividends to shareholders from net capital
gains............................................ .00 (.00) (.00) (.00) (.27) (.00)
------ ------ ------ ------ ------ ------
Total distributions............................ (.31) (.66) (.62) (.65) (.87) (.60)
------ ------ ------ ------ ------ ------
Net asset value, end of period.................... $11.11 $10.98 $10.67 $11.00 $ 9.73 $11.21
====== ====== ====== ====== ====== ======
Total return................................... 4.09%(2) 9.50% 2.86% 20.45% (5.62)% 10.32%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period $(000).................. 27,302 23,350 17,087 14,402 10,098 10,160
Ratios of expenses to average net assets
(annualized)(1).................................. .54% .57% .56% .60% .68% .75%
Ratios of net investment income to average net
assets (annualized).............................. 6.11% 6.24% 6.08% 6.36% 6.14% 5.53%
Portfolio turnover................................ 79% 105% 133% 206% 151% 71%
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1.) Expense ratios for the Bond Portfolio before reimbursement of expense by
affiliated insurance company for the period ended June 30, 1998, and the
years ended December 31, 1997, 1996, 1995, 1994, and 1993 were as follows:
0.56%, 0.57%, 0.56%, 0.60%, 0.70% and 0.75% respectively.
(2.) Total returns for periods less than one year are not annualized.
See accompanying financial statements.
78
<PAGE> 80
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
Financial Highlights -- Continued
- --------------------------------------------------------------------------------
Selected data for a share of capital stock outstanding throughout the periods:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MANAGED PORTFOLIO
- --------------------------------------------------------------------------------------------------------------------------
01/01/98
TO 01/01/97 01/01/96 01/01/95 01/01/94 01/01/93
06/30/98 TO TO TO TO TO
(UNAUDITED) 12/31/97 12/31/96 12/31/95 12/31/94 12/31/93
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.............. $17.06 $ 14.68 $ 14.19 $ 11.94 $ 13.27 $ 12.25
------- ------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income............................. .27 .54 .51 .55 .53 .40
Net realized and unrealized gain (loss) on
investments...................................... 1.05 2.49 1.07 2.28 (.77) 1.00
------- ------- ------- ------- ------- -------
Total from investment operations............... 1.32 3.03 1.58 2.83 (.24) 1.40
------- ------- ------- ------- ------- -------
LESS DISTRIBUTIONS:
Dividends to shareholders from net investment
income........................................... (.27) (.53) (.51) (.57) (.49) (.38)
Dividends to shareholders from net capital
gains............................................ (.83) (.12) (.58) (.01) (.60) (.00)
------- ------- ------- ------- ------- -------
Total distributions............................ (1.10) (.65) (1.09) (.58) (1.09) (.38)
------- ------- ------- ------- ------- -------
Net asset value, end of period.................... $ 17.28 $17.06 $ 14.68 $ 14.19 $ 11.94 $ 13.27
======= ======= ======= ======= ======= =======
Total return................................... 8.20%(2) 21.23% 11.88% 24.43% (1.82)% 11.62%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period $(000).................. 62,693 56,068 43,431 36,002 29,363 28,984
Ratios of expenses to average net assets
(annualized)(1).................................. .57% .58% .60% .66% .67% .80%
Ratios of net investment income to average net
assets (annualized).............................. 3.23% 3.47% 3.68% 4.22% 4.34% 3.36%
Portfolio turnover................................ 115% 99% 106% 130% 75% 89%
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1.) Expense ratios for the Managed Portfolio before reimbursement of expense by
affiliated insurance company for the period ended June 30, 1998, and the
years ended December 31, 1997, 1996, 1995, 1994, and 1993 were as follows:
0.58%, 0.58%, 0.60%, 0.66%, 0.73% and 0.80% respectively.
(2.) Total returns for periods less than one year are not annualized.
See accompanying financial statements.
79
<PAGE> 81
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
Financial Highlights -- Continued
- --------------------------------------------------------------------------------
Selected data for a share of capital stock outstanding throughout the periods:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
AGGRESSIVE GROWTH PORTFOLIO
- --------------------------------------------------------------------------------------------------------------------------
01/01/98
TO 01/01/97 01/01/96 01/01/95 01/01/94 01/01/93
06/30/98 TO TO TO TO TO
(UNAUDITED) 12/31/97 12/31/96 12/31/95 12/31/94 12/31/93
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.............. $22.19 $18.52 $17.38 $15.45 $15.45 $14.72
------- ------- ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income............................. .20 .17 .17 .20 (.01) (.01)
Net realized and unrealized gain (loss) on
investments...................................... 1.3 3.72 3.03 1.86 .01 .77
------- ------- ------ ------ ------ ------
Total from investment operations............... 1.50 3.89 3.20 2.06 .00 .76
------- ------- ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends to shareholders from net investment
income........................................... (.18) (.18) (.19) (.00) (.00) (.03)
Dividends to shareholders from net capital
gains............................................ (1.71) (.04) (1.87) (.13) (.00) (.00)
------- ------- ------ ------ ------ ------
Total distributions............................ (1.89) (.22) (2.06) (.13) (.00) (.03)
------- ------- ------ ------ ------ ------
Net asset value, end of period.................... $21.80 $22.19 $18.52 $17.38 $15.45 $15.45
======= ======= ====== ====== ====== ======
Total return................................... 7.45%(2) 21.21% 21.00% 13.48% 0.00% 5.20%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period $(000).................. 55,097 48,574 34,098 23,822 15,430 12,223
Ratios of expenses to average net assets
(annualized)(1).................................. .61% .63% .68% .76% .86% .90%
Ratios of net investment income to average net
assets (annualized).............................. .46% .95% 1.14% 1.32% (.10)% (.07)%
Portfolio turnover................................ 21% 37% 47% 89% 60% 60%
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1.) Expense ratios for the Aggressive Growth Portfolio before reimbursement of
expense by affiliated insurance company for the period ended June 30, 1998,
and the years ended December 31, 1997, 1996, 1995, 1994, and 1993 were as
follows: 0.62%, 0.63%, 0.68%, 0.76%, 0.89%, and 0.90%, respectively.
(2.) Total returns for periods less than one year are not annualized.
See accompanying notes to financial statements.
80
<PAGE> 82
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
Financial Highlights -- Continued
- --------------------------------------------------------------------------------
Selected data for a share of capital stock outstanding throughout the periods:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INTERNATIONAL PORTFOLIO
- --------------------------------------------------------------------------------------------------------------------------
01/01/98
TO 01/01/97 01/01/96 01/01/95 01/01/94 01/01/93
06/30/98 TO TO TO TO TO
(UNAUDITED) 12/31/97 12/31/96 12/31/95 12/31/94 12/31/93
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.... $13.61 $13.41 $12.86 $11.63 $11.87 $9.00
------- ------- ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income................... .09 .11 .11 .16 .05 .06
Net realized and unrealized gain (loss)
on investments......................... 1.64 1.08 1.23 1.45 (.02) 3.09
------- ------- ------ ------ ------ ------
Total from investment operations..... 1.73 1.19 1.34 1.61 .03 3.15
------- ------- ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends to shareholders from net
investment income...................... (.06) (.11) (.16) (.07) (.03) (.08)
Dividends to shareholders from net
capital gains.......................... (.95) (.88) (.63) (.31) (.24) (.20)
------- ------- ------ ------ ------ ------
Total distributions.................. (1.01) (.99) (.79) (.38) (.27) (.28)
------- ------- ------ ------ ------ ------
Net asset value, end of period.......... $14.33 $13.61 $13.41 $12.86 $11.63 $11.87
======= ======= ====== ====== ====== ======
Total return......................... 13.64%(2) 9.66% 10.89% 14.31% .26% 36.11%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period $(000)........ 73,820 62,513 50,955 36,642 26,212 13,682
Ratios of expenses to average net assets
(annualized)(1)........................ 1.01% 1.02% 1.05% 1.15% 1.32% 1.50%
Ratios of net investment income to
average net assets (annualized)........ 1.51% 1.13% 1.08% 1.21% .76% .68%
Portfolio turnover...................... 23% 37% 35% 45% 32% 37%
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1.) Expense ratios for the International Portfolio before reimbursement of
expense by affiliated insurance company for the period ended June 30, 1998,
and the years ended December 31, 1997, 1996, 1995, 1994, and 1993 were as
follows: 1.00%, 1.02%, 1.05%, 1.15%, 1.32%, and 1.50%, respectively.
(2.) Total returns for periods less than one year are not annualized.
See accompanying notes to financial statements.
81
<PAGE> 83
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
Financial Highlights -- Continued
- --------------------------------------------------------------------------------
Selected data for a share of capital stock outstanding throughout the periods:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SENTINEL GROWTH PORTFOLIO
- -------------------------------------------------------------------------------------------------------
01/01/98
TO 01/01/97 03/18/96(2)
06/30/98 TO TO
(UNAUDITED) 12/31/97 12/31/96
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period........................ $14.59 $11.14 $10.00
-------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income....................................... .02 .04 .05
Net realized and unrealized gain (loss) on investments...... .76 3.47 1.09
-------- ------- -------
Total from investment operations........................ .78 3.51 1.14
-------- ------- -------
LESS DISTRIBUTIONS:
Dividends to shareholders from net investment income........ (.04) (.05) (.00)
Dividends to shareholders from net capital gains............ (2.91) (.01) (.00)
-------- ------- -------
Total distributions..................................... (2.95) (.06) (.00)
-------- ------- -------
Net asset value, end of period.............................. $12.42 $14.59 $11.14
======== ======= =======
Total return............................................ 7.26%(3) 31.58% 11.40%(3)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period $(000)............................ 10,755 8,362 5,664
Ratios of expenses to average net assets (annualized)(1).... .87% .90% .90%
Ratios of net investment income to average net assets
(annualized).............................................. .30% .36% .57%
Portfolio turnover.......................................... 51% 155% 75%
- -------------------------------------------------------------------------------------------------------
</TABLE>
(1.) Expense ratios for the Sentinel Growth Portfolio before reimbursement of
expense by affiliated insurance company for the year ended June 30, 1998,
and the year ended December 31, 1997, and the period ended December 31,
1996 was as follows: 0.97%, 1.35%, 1.51% (annualized).
(2.) Commencement of operations.
(3.) Total returns for periods less than one year are not annualized.
See accompanying notes to financial statements.
82
<PAGE> 84
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
Financial Highlights -- Concluded
- --------------------------------------------------------------------------------
Selected data for a share of capital stock outstanding throughout the periods:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LARGE CAP LARGE CAP SMALL CAP SMALL CAP
GROWTH VALUE GROWTH VALUE
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- -------------------------------------------------------------------------------------------------------------
05/04/98(2) 05/04/98(2) 05/04/98(2) 05/04/98(2)
TO TO TO TO
06/30/98 06/30/98 06/30/98 06/30/98
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period............. $ 10.00 $ 10.00 $ 10.00 $ 10.00
------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income............................ .01 .02 .00 .01
Net realized and unrealized gain (loss) on
investments.................................... .23 (.15) .13 (.55)
------- ------- ------- -------
Total from investment operations............. .24 (.13) .13 (.54)
------- ------- ------- -------
LESS DISTRIBUTIONS:
Dividends to shareholders from net investment
income......................................... .00 .00 .00 .00
Dividends to shareholders from net capital
gains.......................................... .00 .00 .00 .00
------- ------- ------- -------
Total Distributions.......................... .00 .00 .00 .00
------- ------- ------- -------
Net asset value, end of period................... $ 10.24 $ 9.87 $ 10.13 $ 9.46
======= ======= ======= =======
Total return................................. 2.40%(3) (1.30)%(3) 1.40%(3) (5.50)%(3)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period $(000)................. 11,751 11,735 5,451 5,173
Ratios of expenses to average net assets
(annualized)(1)................................ .65% .65% .79% .79%
Ratios of net investment income to average net
assets (annualized)............................ .28% 1.05% .24% (.62)%
Portfolio turnover............................... 41% 7% 12% 15%
- -------------------------------------------------------------------------------------------------------------
</TABLE>
(1.) Expense ratios for the Large Cap Growth Portfolio, Large Cap Value
Portfolio, Small Cap Growth Portfolio and Small Cap Value Portfolio before
reimbursement of expense by affiliated insurance company for the period
ended June 30, 1998 were as follows: 0.66%, 0.68%, 0.87% and 0.99%
(annualized), respectively.
(2.) Commencement of operations.
(3.) Total returns for periods less than one year are not annualized.
See accompanying notes to financial statements.
83
<PAGE> 85
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
Notes to Financial Statements, June 30, 1998
(Unaudited)
- --------------------------------------------------------------------------------
1. ORGANIZATION
The Market Street Fund, Inc. (Fund) is registered as an open-end diversified
management company under the Investment Company Act of 1940, as amended. As a
"series" type of mutual fund, the Fund issues separate classes (or series) of
stock currently consisting of the Growth Portfolio, Money Market Portfolio, Bond
Portfolio, Managed Portfolio, Aggressive Growth Portfolio, International
Portfolio, Sentinel Growth Portfolio, Large Cap Growth Portfolio, Large Cap
Value Portfolio, Small Cap Growth Portfolio, and Small Cap Value Portfolio. The
Fund serves as an investment medium for modified premium and flexible premium
adjustable variable life insurance policies and individual flexible premium
deferred variable annuity contracts (Policies) issued by Provident Mutual Life
Insurance Company (PMLIC) and for flexible premium adjustable variable life
insurance policies and individual flexible premium deferred variable annuity
contracts issued by Providentmutual Life and Annuity Company of America (PLACA)
and policies issued by National Life Insurance Company of Vermont (NLICV). The
Fund also serves as the investment medium for single premium and scheduled
premium variable life insurance policies which are no longer being issued.
2. ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by each
Fund in preparation of its financial statements. The preparation of financial
statements in accordance with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported amounts
and disclosures in the financial statements. Actual results could differ from
those estimates.
Valuation of Investments
Bonds are carried at market value based on the last bid price on a national
securities exchange or on quoted prices from a third-party pricing service.
Investments in common and preferred stocks primarily traded on recognized U.S.
or foreign securities exchanges are valued at the last sale price on exchanges
on the last business day of the period, or, if there was no sale, at the last
bid price on that day. Short-term investments with maturities of less than 60
days and Money Market Portfolio investments are valued at amortized cost which
approximates market value.
Investments
Security transactions are accounted for on the trade date. The cost of
investment securities sold is determined by use of the specific identification
method for both financial reporting and income tax purposes. Interest income is
recorded on the accrual basis; dividend income is recorded on the ex-dividend
date.
Dollar Rolls
The Bond and Managed Portfolios may enter into dollar rolls in which the
Portfolio sells securities for delivery and simultaneously contracts to
repurchase the same security at a fixed price on a specified future date. During
the roll period the Portfolio forgoes accrued interest paid on the securities.
The Portfolio will be compensated by the interest earned on the cash proceeds of
the initial sale (which are invested in short-term investments) and by the lower
repurchase price at the future date (the "drop"). The drop, which is recorded as
deferred income, is amortized over
84
<PAGE> 86
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
Notes to Financial Statements, June 30, 1998 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
the period between the trade date and the settlement date. All realized gains
are recorded at the beginning of each roll. A portfolio engages in dollar rolls
for the purpose of enhancing its yield. Dollar Rolls involve a risk of loss if
the value of the security to be repurchased declines prior to settlement date,
which risk is in addition to the risk of decline in the value of a Portfolio's
other assets. The balance of dollar rolls outstanding during the year ended June
30, 1998 was $1,007,833 in the Bond Portfolio and $9,063,857 in the Managed
Portfolio.
Foreign Currency Translations
Foreign currency amounts are translated into U.S. Dollars on the following
bases:
(i) Market value of investment securities, assets and liabilities, at the
daily rate of exchange;
(ii) Purchases and sales of investment securities, at the rate of exchange
prevailing on the respective dates of such transactions. Exchange gains or
losses are recognized upon settlement;
(iii) Income and expenses, at the rate of exchange prevailing on the
respective dates of such transactions. Exchange gains or losses are
recognized upon ultimate receipt or disbursement.
Foreign security and currency transactions may involve certain considerations
and risks not typically associated with those of U.S. dollar denominated
transactions as a result of, among other factors, the lack of governmental
supervision and regulation of foreign securities markets and the possibility of
political or economic instability.
The Fund does not isolate that portion of the results of operations derived from
changes in foreign exchange rates on investments from the fluctuations arising
from changes in market prices of securities held. Such fluctuations are included
with the net realized and unrealized gain or loss from investments.
Dividends to Shareholders
Dividends of investment income of the Money Market Portfolio are declared daily
and paid monthly. The Growth Portfolio, Bond Portfolio, and Managed Portfolio
declare and pay dividends of investment income quarterly. The Aggressive Growth
Portfolio, International Portfolio, Sentinel Growth Portfolio, Large Cap Growth
Portfolio, Large Cap Value Portfolio, Small Cap Growth Portfolio, and Small Cap
Value Portfolio declare and pay dividends of investment income annually. For all
Portfolios, distributions of capital gains are declared and paid annually.
Federal Income Taxes
No provision is made for Federal taxes as it is the Fund's intention to have
each Portfolio continue to qualify as a regulated investment company and to make
the requisite distributions to its shareholders which will be sufficient to
relieve it from Federal income taxes.
3. INVESTMENT ADVISORY FEES AND RELATED PARTY TRANSACTIONS
Investment advisory agreements have been approved, whereby Sentinel Advisors
Company (SAC), a Vermont General Partnership, is adviser for the Growth, Money
Market, Bond, Managed, Aggressive Growth and Sentinel Growth Portfolios. With
respect to the Growth Portfolio, SAC is compensated monthly at an effective
annual rate
85
<PAGE> 87
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
Notes to Financial Statements, June 30, 1998 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
of 0.50% of the first $20 million of the average daily net assets of the
portfolio, 0.40% of the next $20 million and 0.30% of net assets in excess of
$40 million. SAC is compensated monthly at an effective annual rate of 0.25% of
the average daily net assets of the Money Market Portfolio. With respect to the
Bond Portfolio, SAC is compensated monthly at the effective annual rate of 0.35%
of the first $100 million of the average daily net assets of the portfolio and
0.30% of net assets in excess of $100 million. With respect to the Managed
Portfolio, SAC is compensated monthly at the effective annual rate of 0.40% of
the first $100 million of the average daily net assets of the portfolio and
0.35% of net assets in excess of $100 million. With respect to the Aggressive
Growth Portfolio, SAC is compensated monthly at the effective annual rate of
0.50% of the first $20 million of the average daily net assets of the portfolio,
0.40% of the next $20 million and 0.30% of net assets in excess of $40 million.
With respect to the Sentinel Growth Portfolio, SAC is compensated monthly at an
effective annual rate of 0.50% of the first $20 million of the average daily net
assets of the portfolio, 0.40% of the next $20 million and 0.30% of the net
assets in excess of $40 million. Providentmutual Investment Management Co.
(PIMC) is the adviser for the International, Large Cap Growth, Large Cap Value,
Small Cap Growth, and Small Cap Value Portfolios. With respect to the Large Cap
Growth Portfolio and the Large Cap Value Portfolio, PIMC is compensated monthly
at an effective annual rate of 0.70% of the average daily net assets. With
respect to the Small Cap Growth Portfolio and the Small Cap Value Portfolio,
PIMC is compensated monthly at an effective annual rate of 0.90% of the average
daily net assets. With respect to the International Portfolio, PIMC is
compensated monthly at an effective annual rate of 0.75% of the first $500
million of the average daily net assets of the portfolio and 0.60% of assets in
excess of $500 million. The Boston Company Asset Management, Inc. ("TBC") is
sub-advisor to the International Portfolio.
PMLIC agrees to reimburse the Growth, Money Market, Bond, Managed, Aggressive
Growth, Large Cap Growth, Large Cap Value, Small Cap Growth, and Small Cap Value
Portfolios for operating expenses, excluding investment advisory fees, and costs
of litigation and indemnification not covered by insurance, in excess of an
annual rate of 0.40% of the average daily net asset values. The International
Portfolio is reimbursed for such expenses in excess of an annual rate of 0.75%
of the average daily net asset value. NLICV agrees to reimburse Sentinel Growth
Portfolio for operating expenses, excluding investment advisory fees and costs
of litigation and indemnification not covered by insurance, in excess of an
annual rate of .40% of the average net asset values.
86
<PAGE> 88
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
Notes to Financial Statements, June 30, 1998 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
4. NET ASSETS
At June 30, 1998, the Portfolios' net assets consisted of:
<TABLE>
<CAPTION>
MONEY AGGRESSIVE
GROWTH MARKET BOND MANAGED GROWTH INTERNATIONAL
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net contribution from shareholders......... $240,187,278 $72,075,842 $26,008,780 $46,609,557 $41,454,168 $61,348,105
Undistributed net investment income........ 1,069,331 -- 408,684 485,846 121,029 723,002
Undistributed net realized gain............ 6,707,518 -- 226,812 2,072,834 4,138,115 4,031,063
Accumulated loss on investment
transactions.............................. -- (57) -- -- -- --
Net unrealized appreciation (depreciation)
on investments and Foreign currency....... 55,412,916 -- 658,045 13,524,465 9,384,072 7,717,577
------------ ----------- ----------- ----------- ----------- -----------
$303,377,043 $72,075,785 $27,302,231 $62,692,702 $55,097,384 $73,819,747
============ =========== =========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
SENTINEL LARGE CAP LARGE CAP SMALL CAP SMALL CAP
GROWTH GROWTH VALUE GROWTH VALUE
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net contribution from shareholders........... $ 9,449,057 $11,447,371 $11,854,023 $ 5,323,791 $ 5,414,061
Undistributed net investment income.......... 14,673 7,187 26,957 1,298 6,859
Undistributed net realized gain.............. 528,501 -- -- -- --
Accumulated loss on investment
transactions................................ -- (143,033) (29,679) (124,276) (48,448)
Net unrealized appreciation (depreciation) on
investments and Foreign currency............ 783,090 439,531 (115,977) 249,757 (199,638)
------------ ----------- ----------- ----------- -----------
$ 10,775,321 $11,751,056 $11,735,324 $ 5,450,570 $ 5,172,834
============ =========== =========== =========== ===========
</TABLE>
5. PURCHASES AND SALES OF INVESTMENTS (EXCLUDING SHORT-TERM SECURITIES)
Purchases and proceeds on sales of investments for the portfolios, for the
period ended June 30, 1998, were as follows:
<TABLE>
<CAPTION>
MONEY AGGRESSIVE
GROWTH MARKET BOND MANAGED GROWTH INTERNATIONAL
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PURCHASES
U.S. Gov't Obligations...................... $ -- $ -- $12,783,849 $61,210,528 $ -- $ --
Corporate Bonds............................. $ -- -- 10,217,709 4,074,355 -- --
Common and Preferred Stock.................. 44,893,852 -- -- 5,071,893 12,086,449 17,067,061
----------- ----------- ----------- ----------- ----------- -----------
Total Purchases............................. $44,893,852 -- $23,001,558 $70,356,776 $12,086,449 $17,067,061
=========== =========== =========== =========== =========== ===========
SALES
U.S. Gov't Obligations...................... $ -- $ -- $ 5,007,122 $57,740,327 $ -- $ --
Corporate Bonds............................. $ -- -- -- 2,524,564 -- --
Common and Preferred Stock.................. 41,999,242 -- 13,915,630 5,342,109 10,045,078 14,707,610
----------- ----------- ----------- ----------- ----------- -----------
Total Sales................................. $41,999,242.. -- $18,922,752 $65,607,000 $10,045,078 $14,707,610
=========== =========== =========== =========== =========== ===========
</TABLE>
87
<PAGE> 89
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
Notes to Financial Statements, June 30, 1998 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SENTINEL LARGE CAP LARGE CAP SMALL CAP SMALL CAP
GROWTH GROWTH VALUE GROWTH VALUE
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PURCHASES
U.S. Gov't Obligations....................... $ -- $ -- $ -- $ -- $ --
Corporate Bonds.............................. -- -- -- -- --
Common and Preferred Stock................... 6,604,163 15,473,114 12,237,903 5,178,440 5,564,172
---------- ----------- ----------- ---------- ----------
Total Purchases.............................. $6,604,163 $15,473,114 $12,237,903 $5,178,440 $5,564,172
========== =========== =========== ========== ==========
SALES
U.S. Gov't Obligations....................... $ -- $ -- $ -- $ -- --
Corporate Bonds.............................. -- -- -- -- --
Common and Preferred Stock................... 4,744,818 4,470,508 789,949 508,512 621,088
---------- ----------- ----------- ---------- ----------
Total Sales.................................. $4,744,818 $ 4,470,508 $ 789,949 $ 508,512 $ 621,088
========== =========== =========== ========== ==========
</TABLE>
6. TAX BASIS OF INVESTMENTS
Investment information based on the cost of the securities for Federal income
tax purposes held at June 30, 1998 is as follows:
<TABLE>
<CAPTION>
MONEY AGGRESSIVE
GROWTH MARKET BOND MANAGED GROWTH INTERNATIONAL
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Aggregate gross unrealized appreciation.... $ 61,733,919 $ -- $ 669,338 $13,600,990 $11,110,965 $13,765,351
Aggregate gross unrealized depreciation.... (4,148,832) -- (11,293) (76,525) (1,726,893) (6,029,768)
------------ ----------- ----------- ----------- ----------- -----------
Net unrealized appreciation
(depreciation)............................ $ 57,585,087 $ -- $ (658,045) $13,524,465 $ 9,384,072 $ 7,735,583
============ =========== =========== =========== =========== ===========
Aggregate cost of securities for federal
income tax purposes....................... $245,264,859 $72,421,104 $27,736,419 $59,371,591 $45,682,084 $66,941,737
============ =========== =========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
SENTINEL LARGE CAP LARGE CAP SMALL CAP SMALL CAP
GROWTH GROWTH VALUE GROWTH VALUE
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Aggregate gross unrealized appreciation...... $1,340,466 $ 761,967 $ 317,106 $ 478,027 $ 121,903
Aggregate gross unrealized depreciation...... (557,376) (322,436) (433,083) (228,270) (321,541)
---------- ----------- ----------- ---------- ----------
Net unrealized appreciation (depreciation)... $ 783,090 $ 439,531 $ (155,977) $ 249,757 $ (199,638)
========== =========== =========== ========== ==========
Aggregate cost of securities for federal
income tax purposes......................... $9,984,671 $11,456,639 $11,903,601 $5,348,746 $5,391,720
========== =========== =========== ========== ==========
</TABLE>
88
<PAGE> 90
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
Notes to Financial Statements, June 30, 1998 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
7. AUTHORIZED CAPITAL STOCK AND CAPITAL STOCK TRANSACTIONS
On June 30, 1998, there were 1.2 billion shares of $0.01 par value capital stock
authorized for the Fund. The shares of capital stock are divided into eleven
series: Growth Portfolio, Money Market Portfolio, Bond Portfolio, Managed
Portfolio, Aggressive Growth Portfolio, International Portfolio, Sentinel Growth
Portfolio, Large Cap Growth Portfolio, Large Cap Value Portfolio, Small Cap
Growth Portfolio and Small Cap Value Portfolio. The Growth Portfolio consists of
75 million shares, the Money Market Portfolio consists of 150 million shares,
each of the four All-Pro Series portfolios consist of 50 million shares and;
each of the other series consists of 5 million shares.
Transactions in capital stock for the period ended June 30, 1998 were as
follows:
<TABLE>
<CAPTION>
GROWTH PORTFOLIO MONEY MARKET PORTFOLIO BOND PORTFOLIO
- ---------------------------------------------------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold................... 920,003 $16,365,322 67,075,931 $ 67,075,931 423,285 $ 4,643,418
Shares redeemed............... (491,494) (8,806,220) (61,110,953) (61,110,953) (156,295) (1,716,265)
Shares reinvested............. 2,285,527 37,832,976 1,771,895 1,771,895 63,784 698,762
---------- ----------- ------------ ------------ -------- -----------
Net contributions from
affiliated
insurance companies.......... 2,714,036 $45,392,078 7,736,873 $ 7,736,873 330,774 $ 3,625,915
========== =========== ============ ============ ======== ===========
<CAPTION>
MANAGED PORTFOLIO
- ------------------------------ ----------------------
SHARES AMOUNT
- ------------------------------ ----------------------
<S> <C> <C>
Shares sold................... 282,535 $ 4,754,794
Shares redeemed............... (164,609) (2,758,831)
Shares reinvested............. 224,539 3,630,409
-------- -----------
Net contributions from
affiliated
insurance companies.......... 342,465 $ 5,626,372
======== ===========
</TABLE>
<TABLE>
<CAPTION>
AGGRESSIVE GROWTH INTERNATIONAL SENTINEL GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO
- ---------------------------------------------------------------------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold............................................... 229,141 $ 4,927,294 443,084 $ 6,164,778 154,479 $1,872,476
Shares redeemed........................................... (95,530) (2,071,414) (249,444) (3,427,141) (8,647) (102,372)
Shares reinvested......................................... 205,061 4,131,983 364,302 4,619,358 148,986 1,693,967
------- ----------- -------- ----------- ------- ----------
Net contributions from affiliated insurance companies..... 338,672 $ 6,987,863 557,942 $ 7,356,995 294,818 $3,464,071
======= =========== ======== =========== ======= ==========
</TABLE>
<TABLE>
<CAPTION>
LARGE CAP LARGE CAP SMALL CAP SMALL CAP
GROWTH PORTFOLIO VALUE PORTFOLIO GROWTH PORTFOLIO VALUE PORTFOLIO
- ---------------------------------------------------------------------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shares sold..................... 1,154,119 $11,514,069 1,189,752 $11,861,170 540,836 $5,354,358 547,157 $5,415,950
Shares redeemed................. (6,514) (66,698) (734) (7,147) (3,022) (30,566) (196) (1,889)
Shares reinvested............... 0 0 0 0 0 0 0 0
--------- ----------- --------- ----------- ------- ---------- ------- ----------
Net contributions from
affiliated insurance
companies...................... 1,147,605 $11,447,371 1,189,018 $11,854,023 537,814 $5,323,792 546,961 $5,414,061
========= =========== ========= =========== ======= ========== ======= ==========
</TABLE>
89
<PAGE> 91
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
Notes to Financial Statements, June 30, 1998 -- Concluded
(Unaudited)
- --------------------------------------------------------------------------------
Transactions in capital stock for the year ended December 31, 1997 were as
follows:
<TABLE>
<CAPTION>
MONEY MARKET
GROWTH PORTFOLIO PORTFOLIO BOND PORTFOLIO
- --------------------------------------------------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold................ 1,328,421 $ 23,557,083 116,153,761 $ 116,153,761 608,494 $ 6,478,790
Shares redeemed............ (1,033,097) (18,272,623) (109,109,613) (109,109,613) (192,816) (2,047,805)
Shares reinvested.......... 1,736,600 28,056,401 3,098,096 3,098,096 108,875 1,143,011
---------- ------------ ------------ ------------- -------- -----------
Net contributions from
affiliated insurance
companies................. 2,031,924 $ 33,340,861 10,142,244 $ 10,142,244 524,553 $ 5,573,996
========== ============ ============ ============= ======== ===========
Shares exchanged in
acquisition of Common
Stock Portfolios.......... 716,786 13,633,276 -- -- -- --
---------- ------------ ------------ ------------- -------- -----------
<CAPTION>
MANAGED PORTFOLIO
- --------------------------- ----------------------
SHARES AMOUNT
- --------------------------- ----------------------
<S> <C> <C>
Shares sold................ 538,094 $ 8,544,898
Shares redeemed............ (338,821) (5,264,441)
Shares reinvested.......... 129,171 1,970,912
-------- -----------
Net contributions from
affiliated insurance
companies................. 328,444 $ 5,251,369
======== ===========
Shares exchanged in
acquisition of Common
Stock Portfolios.......... -- --
-------- -----------
</TABLE>
<TABLE>
<CAPTION>
AGGRESSIVE GROWTH INTERNATIONAL SENTINEL GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO
- ---------------------------------------------------------------------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold................................................ 513,839 $10,376,849 970,932 $13,015,260 69,861 $ 976,211
Shares redeemed............................................ (187,215) (3,823,958) (484,512) (6,465,439) (7,419) (103,927)
Shares reinvested.......................................... 21,347 391,283 305,922 3,775,073 2,383 26,667
-------- ----------- -------- ----------- ------ ---------
Net contributions from affiliated insurance companies...... 347,971 $ 6,944,174 792,342 $10,324,894 64,825 $ 898,951
======== =========== ======== =========== ====== =========
Shares exchanged in acquisition of Common Stock
Portfolios................................................ -- -- -- -- -- --
-------- ----------- -------- ----------- ------ ---------
</TABLE>
8. PRINCIPAL UNDERWRITER
1717 Capital Management Company serves, without compensation, as the principal
underwriter for sale of the Fund shares to the Accounts. 1717 Capital Management
Company is an indirect wholly-owned subsidiary of PMLIC.
9. SUBSEQUENT DIVIDEND
On June 30, 1998 the Board of Directors declared the following net investment
income and capital gain dividends to shareholders of record on June 30, 1998,
ex-dividend date July 2, 1998, payable on July 6, 1998 as follows:
<TABLE>
<CAPTION>
TOTAL PER SHARE
------------------------ --------------------
NET NET
INVESTMENT CAPITAL INVESTMENT CAPITAL
PORTFOLIO INCOME GAIN INCOME GAIN
- --------------------- ---------- ----------- ---------- -------
<S> <C> <C> <C> <C>
Growth............... $1,069,331 -- $.0649 --
Bond................. 408,684 -- .1663 --
Managed.............. 485,846 -- .1339 --
Aggressive Growth.... -- -- -- --
International........ 200,156 -- .0389 --
Common Stock......... -- -- -- --
Sentinel Growth...... -- -- -- --
Large Cap Growth..... -- -- -- --
Large Cap Value...... -- -- -- --
Small Cap Growth..... -- -- -- --
Small Cap Value...... -- -- -- --
</TABLE>
90
<PAGE> 92
Form 16170 6.98
[provident mutual logo]
[provident mutual logo]
