<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Market Street Fund, Inc.
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(Name of Registrant as Specified in Its Charter)
Market Street Fund, Inc.
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(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, schedule or registration statement no.:
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(3) Filing party:
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(4) Date filed:
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<PAGE> 2
MARKET STREET FUND, INC.
103 Bellevue Parkway
Wilmington, Delaware 19809
NOTICE OF SPECIAL MEETINGS OF SHAREHOLDERS
TO BE HELD ON APRIL 22, 1998
TO OWNERS OF VARIABLE LIFE INSURANCE POLICIES AND VARIABLE ANNUITY CONTRACTS
ISSUED BY PROVIDENT MUTUAL LIFE INSURANCE COMPANY ("PMLIC"), PROVIDENT MUTUAL
LIFE AND ANNUITY COMPANY OF AMERICA ("PLACA") OR NATIONAL LIFE INSURANCE COMPANY
("NLIC") ENTITLED TO GIVE VOTING INSTRUCTIONS IN CONNECTION WITH A SEPARATE
ACCOUNT OF PMLIC, PLACA OR NLIC.
Notice is hereby given that Special Meetings of Shareholders (the
"Meetings") of the International, Bond, Managed, Aggressive Growth, Money
Market, Sentinel Growth and Growth Portfolios (each, a "Portfolio," and
collectively, the "Portfolios") of Market Street Fund, Inc. (the "Fund") will be
held on April 22, 1998 at 10:00 a.m. local time at the offices of Provident
Mutual Life Insurance Company (in the third floor Executive Conference Room) at
1050 Westlakes Drive, Berwyn, Pennsylvania 19312.
The Meetings will be held for the following purposes:
1. To elect five (5) directors of the Fund to hold office indefinitely or
until their successors are elected and qualified;
2. To ratify or reject the selection of Coopers & Lybrand LLP as
independent auditors to the Fund for the fiscal year ending December 31,
1998;
3. The approval or disapproval of the amendment, restatement or
elimination of each Portfolio's fundamental investment restrictions; and
4. To transact such other business as may properly come before the
Meetings or any adjournment(s) thereof.
NLIC and certain separate accounts supporting variable life insurance
policies and variable annuity contracts issued by PMLIC, PLACA and NLIC,
respectively, are the only shareholders of the Portfolios. However, each of
PMLIC, PLACA and NLIC hereby solicits and agrees to vote the shares of the
applicable Portfolios at the Meetings in accordance with timely instructions
received from owners of variable life insurance policies and variable annuity
contracts ("variable contracts") having contract values allocated to separate
accounts invested in such shares.
As a variable contract owner of record at the close of business on March 6,
1998, you have the right to instruct PMLIC, PLACA or NLIC, as applicable, as to
the manner in which shares of any Portfolio attributable to your variable
contract should be voted. To assist you in giving your instructions, Voting
Instruction Forms are enclosed that reflect the number of shares of each of the
Portfolios for which you are entitled to give voting instructions. (There is a
separate Form for each Portfolio.) In addition, a Proxy Statement for the Fund
is attached to this Notice and describes the matters to be voted upon at the
Meetings or any adjournment(s) thereof. The Annual Report for the Fund for the
fiscal year ended December 31, 1997 previously has been mailed to all owners
invested in one of the Portfolios as of December 31, 1997.
<PAGE> 3
Copies of the Fund's annual report will be furnished without charge upon
request. Such request should be directed to Katherine De Peri at Provident
Mutual Life Insurance Company, 1050 Westlakes Drive, Berwyn, PA 19312, (800)
523-4681.
YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETINGS, PLEASE
COMPLETE, DATE AND SIGN THE ENCLOSED VOTING INSTRUCTION FORM OR FORMS AND RETURN
THEM PROMPTLY IN THE ENCLOSED POSTAGE PREPAID ENVELOPE.
By Order of the Board of Directors
Adam Scaramella
Secretary
Berwyn, Pennsylvania
March 23, 1998
<PAGE> 4
MARKET STREET FUND, INC.
103 Bellevue Parkway
Wilmington, Delaware 19809
MARCH 23, 1998
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P R O X Y S T A T E M E N T
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This Proxy Statement is being furnished on behalf of the board of directors
of Market Street Fund, Inc. (the "Fund") by Provident Mutual Life Insurance
Company ("PMLIC"), Providentmutual Life and Annuity Company of America ("PLACA")
and National Life Insurance Company ("NLIC") to owners of certain variable life
insurance policies and variable annuity contracts ("variable contracts") issued
by PMLIC, PLACA and NLIC, respectively. Each such variable contract has a
contract value on the record date allocated to a separate account of PMLIC,
PLACA or NLIC and is invested in classes of shares of the Fund ("Shares")
representing an interest in one or more of the Fund's following investment
portfolios: International Portfolio, Bond Portfolio, Managed Portfolio,
Aggressive Growth Portfolio, Money Market Portfolio, Sentinel Growth Portfolio
and Growth Portfolio (each, a "Portfolio," and collectively, the "Portfolios").
This Proxy Statement is being furnished in connection with the solicitation
of voting instructions as described herein from owners of variable contracts for
use at Special Meetings of Shareholders (the "Meetings"). The Meetings are to be
held on April 22, 1998, at 10:00 a.m. local time at the offices of Provident
Mutual Life Insurance Company (in the third floor Executive Conference Room),
1050 Westlakes Drive, Berwyn, Pennsylvania for the purposes set forth below and
in the accompanying Notice of Special Meetings. The approximate mailing date of
this Proxy Statement and the Voting Instruction Form(s) is March 23, 1998.
At the Meetings, shareholders will be asked:
1. To elect five (5) directors of the Fund to hold office indefinitely or
until their successors are elected and qualified;
2. To ratify or reject the selection of Coopers & Lybrand LLP as
independent auditors to the Fund for the fiscal year ending December 31,
1998;
3. The approval or disapproval of the amendment, restatement or
elimination of each Portfolio's fundamental investment restrictions; and
4. To transact such other business as may properly come before the
Meetings or any adjournment(s) thereof.
NLIC and certain separate accounts supporting variable contracts issued by
PMLIC, PLACA or NLIC, respectively, are the only shareholders of the Portfolios.
However, each of PMLIC, PLACA and NLIC has agreed to vote the applicable Shares
at the Meetings in accordance with the timely instructions received from owners
("owners") of variable contracts having contract values allocated to the
following separate accounts: Providentmutual Variable Life Separate Account and
Providentmutual Variable Annuity Separate Account, each a separate account of
PLACA; Provident Mutual Variable Annuity Separate Account, Provident Mutual
Variable Growth Separate Account, Provident Mutual Variable Money Market
Separate Account, Provident Mutual Variable Bond Separate Account, Provident
Mutual Variable Managed Separate Account, Provident
<PAGE> 5
Mutual Variable Aggressive Growth Separate Account and Provident Mutual Variable
International Separate Account, each a separate account of PMLIC; and National
Variable Life Insurance Account and National Variable Annuity Account II, each a
separate account of NLIC.
The following table indicates which shareholders are entitled to vote on
each proposal:
SUMMARY OF VOTING ON PROPOSALS
<TABLE>
<CAPTION>
PROPOSAL SHAREHOLDERS SOLICITED
-------- ----------------------
<S> <C> <C>
1. To elect five (5) directors of the Fund to hold Shares of all of the Portfolios voting
office indefinitely or until their successors together as one group.
are elected and qualified.
2. To ratify or reject the selection of Coopers & Shares of all of the Portfolios voting
Lybrand LLP as independent auditors to the Fund together as one group.
for the fiscal year ending December 31, 1998.
3(a) The approval or disapproval of the restatement Shares of each Portfolio voting as separate
of each Portfolio's investment restriction on groups.
issuer diversification.
3(b) The approval or disapproval of the amendment of Shares of each Portfolio voting as separate
each Portfolio's investment restriction on groups.
industry concentration.
3(c) The approval or disapproval of the amendment of Shares of each Portfolio voting as separate
each Portfolio's investment restriction on groups.
borrowing.
3(d) The approval or disapproval of the restatement Shares of each Portfolio voting as separate
of each Portfolio's investment restriction on groups.
lending securities.
3(e) The approval or disapproval of the restatement Shares of each Portfolio voting as separate
of each Portfolio's investment restriction on groups.
underwriting.
3(f) The approval or disapproval of the restatement Shares of each Portfolio voting as separate
of each Portfolio's investment restriction on groups.
investment in real estate.
3(g) The approval or disapproval of the amendment of Shares of each Portfolio voting as separate
each Portfolio's investment restriction on groups.
commodities.
3(h) The approval or disapproval of the restatement Shares of each Portfolio voting as separate
of each Portfolio's investment restriction on groups.
senior securities.
3(i) The approval or disapproval of the elimination Shares of each Portfolio voting as separate
of each Portfolio's investment restriction on groups.
investments to exercise control.
3(j) The approval or disapproval of the elimination Shares of each Portfolio voting as separate
of each Portfolio's investment restriction groups.
concerning other investment companies.
</TABLE>
2
<PAGE> 6
<TABLE>
<CAPTION>
PROPOSAL SHAREHOLDERS SOLICITED
-------- ----------------------
<S> <C> <C>
3(k) The approval or disapproval of the elimination Shares of each Portfolio (except the
of each Portfolio's (except the International International Portfolio) voting as separate
Portfolio) investment restriction on investment groups.
in restricted securities.
3(l) The approval or disapproval of the elimination Shares of the International Portfolio voting
of the International Portfolio's investment as a separate group.
restriction on investments in securities of
companies with a record of less than three (3)
years' continuous operations.
3(m) The approval or disapproval of the elimination Shares of the International Portfolio voting
of the International Portfolio's investment as a separate group.
restriction on illiquid securities.
</TABLE>
GENERAL VOTING INFORMATION
This Proxy Statement is being furnished to owners on behalf of the board of
directors of the Fund in connection with the solicitation by PMLIC, PLACA and
NLIC of voting instructions from owners with regard to the Meetings to be held
on April 22, 1998. The Fund's board of directors has called the Meetings to
consider and elect five (5) directors of the Fund, to ratify or reject the
selection of Coopers & Lybrand LLP as independent auditors to the Fund for the
fiscal year ending December 31, 1998, and to approve or disapprove the
amendment, restatement or elimination of each Portfolio's fundamental investment
restrictions.
NLIC and certain separate accounts supporting variable contracts issued by
PMLIC, PLACA and NLIC, respectively, are the only shareholders of the
Portfolios. PMLIC, PLACA and NLIC each will vote the Shares at the Meetings in
accordance with the timely instructions received from persons entitled to give
voting instructions under variable contracts funded through the separate
accounts of PMLIC, PLACA and NLIC, as applicable. Each owner (and in some cases
annuitants and/or beneficiaries) have the right to instruct PMLIC, PLACA or
NLIC, as applicable, as to the number of Shares (and fractional Shares) that,
when added together, have an aggregate value on the record date equal to the
contract value on the record date under that owner's contract allocated to each
separate account holding Shares.
PMLIC, PLACA and NLIC will vote Shares attributable to variable contracts
as to which no voting instructions are received in proportion (for, against or
abstain) to those for which timely instructions are received. If a Voting
Instruction Form is received that does not specify a choice, PMLIC, PLACA or
NLIC, as applicable, will consider its timely receipt as an instruction to vote
in favor of the proposal to which it relates. In certain circumstances, PMLIC,
PLACA and NLIC have the right to disregard voting instructions from certain
owners. PMLIC, PLACA and NLIC do not believe that these circumstances exist with
respect to matters currently before shareholders. Owners may revoke previously
submitted voting instructions given to PMLIC, PLACA or NLIC at any time prior to
the Meetings by notifying PMLIC, PLACA or NLIC, as appropriate, or the Secretary
of the Fund, in writing.
The Fund was incorporated in the State of Maryland on March 21, 1985, and
is registered with the Securities and Exchange Commission (the "SEC") as a
diversified open-end management investment company under the Investment Company
Act of 1940, as amended (the "1940 Act").
The board of directors of the Fund has fixed March 6, 1998 as the record
date for the determination of shareholders entitled to notice of and to vote at
the Meetings. As of the record date, NLIC owned beneficially 632,936.930 shares
of the Sentinel Growth Portfolio and 434,451.215 shares of the Growth Portfolio,
3
<PAGE> 7
constituting 78.97% and 2.68%, respectively, of such Portfolios' outstanding
shares. To the best knowledge of the board of directors of the Fund and PMLIC,
PLACA and NLIC, there are no owners, as of March 6, 1998, who have the right to
instruct PMLIC, PLACA or NLIC, as applicable, as to 5% or more of the stock of
any Portfolio.
The table below sets forth the numbers of shares of capital stock in each
Portfolio outstanding as of March 6, 1998.
<TABLE>
<CAPTION>
TOTAL SHARES
NAME OF PORTFOLIO OUTSTANDING
----------------- --------------
<S> <C>
Bond..................................................... 2,254,349.308
Managed.................................................. 3,531,530.164
Aggressive Growth........................................ 2,454,145.056
Money Market............................................. 68,516,265.820
Sentinel Growth.......................................... 801,483.124
Growth................................................... 16,183,366.731
International............................................ 4,988,526.777
</TABLE>
To be counted, PMLIC, PLACA or NLIC, as applicable, must receive an owner's
properly executed Voting Instruction Form at P.O. Box 15750, Wilmington,
Delaware 19885-9874 by 5:00 p.m. local time, April 21, 1998.
Election of each nominee as a director requires, as to the entire Fund, the
affirmative vote of a plurality of the Shares present (in person or by proxy) at
the Meetings, provided that at least a majority of the Shares entitled to vote
are present at the Meetings. Cumulative voting is not permitted.
Ratification of the selection of Coopers & Lybrand LLP as independent
auditors requires, as to the entire Fund, the affirmative vote of a majority of
the Shares present (in person or by proxy) at the Meetings, provided that at
least a majority of the Shares entitled to vote are present at the Meetings.
The approval of the amendment, restatement or elimination of a Portfolio's
fundamental investment restrictions requires the approval of a "1940 Act
majority" of that Portfolio's outstanding voting securities voting separately.
Approval by a "1940 Act majority" of a Portfolio's outstanding voting securities
means the approval by the lesser of (i) more than 50% of the Portfolio's
outstanding voting securities, or (ii) 67% or more of the Portfolio's
outstanding voting securities present at a meeting if the holders of more than
50% of the outstanding voting securities of the Portfolio are present (in person
or by proxy).
The Fund will bear all of the expenses of soliciting voting instructions
from the respective owners. The solicitation of instructions will be made
primarily by mail but may include (without cost to the Fund), telephone,
telegraphic or oral communications by employees of PMLIC, PLACA or NLIC, or
their respective affiliates.
4
<PAGE> 8
PROPOSAL 1:
ELECTION OF DIRECTORS
The Fund is not required to hold meetings of shareholders each year and has
not held annual meetings in recent years. A shareholder meeting is required by
law before a new director of the Fund may be appointed if, after such
appointment, fewer than two-thirds of the directors have been elected by the
shareholders. The last meeting of the Fund's shareholders at which directors
were elected was held on April 20, 1990.
Mr. Stanley R. Reber resigned his position as Chairman of the Board and
President of the Fund on November 7, 1997. Mr. John P. Lloyd resigned as a
director of the Fund on June 15, 1990. At a meeting held on February 11, 1998,
the board of directors appointed Mr. Leo Slack to fill Mr. Reber's place on the
board of directors. The board of directors, by unanimous written consent
executed on March 20, 1998, voted to nominate for re-election all of the current
directors of the Fund (Mssrs. Slack, Gart, Heebner and Stouch) and to nominate
Mr. Robert W. Kloss to fill the vacancy on the board resulting from Mr. Lloyd's
resignation.
The names of the nominees are listed below along with their current
addresses and principal occupations for the past five years. All of the nominees
have consented to being named in this Proxy Statement and to serve on the board
of directors if elected. Should any nominee become unable or unwilling to serve,
the persons appointed as proxies shall vote for the selection of such other
person as the board of directors shall recommend. If elected, all nominees will
serve until their successors are duly elected and qualified.
NOMINEES
<TABLE>
<S> <C>
MR. ROBERT W. KLOSS*................. President and Chief Executive Officer ("CEO") of PMLIC
Age 49 since November 1, 1994; 1984-1994, President and CEO of
1050 Westlakes Drive Covenant Life Insurance Company.
Berwyn, Pennsylvania 19312
DR. ALAN GART........................ Director since March 21, 1985; 1982-Present, President of
Age 57 Alan Gart, Inc. (a consulting firm); 1992-Present,
978 Warfield Lane Professor, Nova Southeastern University.
Huntingdon Valley, PA 19006
DR. A. GILBERT HEEBNER............... Director since May 12, 1989; 1987-Present, Distinguished
Age 71 Professor of Economics, Eastern College.
2 Etienne, Arbordeau
Devon, PA 19333
MR. EDWARD S. STOUCH................. Director since December 12, 1985; retired since 1983.
Age 80
216 Grandview Rd.
Media, PA 19063
MR. LEO SLACK........................ Director since February 1998; retired since 1996; 1964-1996
Age 63 Vice President, Combustion Engineers Corporation.
4700 White Tail Lane
Sarasota, FL 34238
</TABLE>
- ---------------
* "interested person" of the Fund for purposes of the 1940 Act
5
<PAGE> 9
OFFICERS
<TABLE>
<S> <C>
MS. ROSANNE GATTA.................... President; 1993-Present, Vice President and Treasurer of
Age 43 PMLIC.
MS. SARAH C. LANGE................... Vice President; 1983-Present, Vice President,
Age 42 Investments of PMLIC.
MR. JAMES D. KESTNER................. Vice President; 1994-Present, Vice President,
Age 50 Investments of PMLIC; 1975-1994, Vice President,
Investments of Covenant Life Insurance Company.
JAMES G. POTTER, JR., ESQ............ Vice President; 1997-Present, Executive Vice President,
Age 41 General Counsel and Secretary of PMLIC; 1989-1997, Chief
Legal Officer, Prudential Banks.
MR. ANTHONY T. GIAMPIETRO............ Treasurer; 1990-Present, Assistant Treasurer of PMLIC
Age 38
ADAM SCARAMELLA, ESQ................. Secretary and Legal Officer; 1995-Present, Counsel of
Age 34 PMLIC; 1994-1995, Counsel of The PMA Group; 1991-1994, New
Jersey Deputy Attorney General.
</TABLE>
The address for each officer listed above is 1050 Westlakes Drive, Berwyn,
Pennsylvania 19312.
REMUNERATION
During the fiscal year ended December 31, 1997, the directors and officers
of the Fund received compensation from the Fund as indicated below.
<TABLE>
<CAPTION>
AGGREGATE COMPENSATION
NAME FROM THE FUND
---- ----------------------
<S> <C>
Mr. Robert W. Kloss................................. $ 0
Dr. Alan Gart....................................... $7,500
Dr. A. Gilbert Heebner.............................. $6,000
Mr. Edward S. Stouch................................ $7,500
Mr. Leo Slack....................................... $ 0
Ms. Rosanne Gatta................................... $ 0
Ms. Sarah C. Lange.................................. $ 0
Mr. James D. Kestner................................ $ 0
James G. Potter, Jr., Esq........................... $ 0
Mr. Anthony T. Giampietro........................... $ 0
Adam Scaramella, Esq................................ $ 0
</TABLE>
As of March 6, 1998, the officers and directors of the Fund as a group
beneficially owned less than 1% of the outstanding shares of each Portfolio.
Directors and officers of the Fund who are interested persons of the Fund
receive no compensation allocable to their services to the Fund. Directors who
are not interested persons of the Fund are paid a fee of $2,000 per meeting,
plus actual out-of-pocket expenses by the Fund for each meeting of the board of
directors attended, plus an additional $2,000 per year. Directors and officers
of the Fund do not receive any benefits from the Fund upon retirement nor does
the Fund accrue any expenses for pension or retirement benefits. During the
fiscal year ended December 31, 1997, the Fund paid aggregate fees of $21,000 to
the "non-interested" directors of the Fund. During the fiscal year ended
December 31, 1997, the board of directors held four regular meetings. No
director attended fewer than three regular meetings.
6
<PAGE> 10
BOARD STRUCTURE
The board of directors consists of five directors, only one of whom is an
interested person by reason of his affiliation with PMLIC. Accordingly, its
members have not found it necessary to establish an audit, compensation,
nominating, or other committee for the efficient governance of the Fund.
In accordance with applicable provisions of the 1940 Act, matters relating
to the selection of independent auditors are determined by a majority of the
board of directors, including a majority of the four directors who are not
interested persons of the Fund and who have no known material relationship with
PMLIC, PLACA, NLIC or an investment adviser to the Fund which might adversely
affect the exercise of their independent business judgment in determining issues
coming before the board of directors.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE TO ELECT THE
FOREGOING
NOMINEES TO SERVE AS DIRECTORS OF THE FUND.
PROPOSAL 2
RATIFICATION OR REJECTION OF SELECTION OF INDEPENDENT AUDITORS
The board of directors of the Fund, including a majority of the directors
who are not interested persons of the Fund, has selected Coopers & Lybrand LLP,
2400 Eleven Penn Center, Philadelphia, Pennsylvania, to serve as independent
auditors to the Fund for the fiscal year ending December 31, 1998.
At the Meetings, shareholders will be asked to ratify or reject the
selection of Coopers & Lybrand LLP as independent auditors to the Fund for 1998.
It is the belief of the board of directors that the employment of the services
of Coopers & Lybrand LLP for the current fiscal year would be in the best
interests of the Fund. A representative of Coopers & Lybrand LLP will attend the
Meetings and will be afforded the opportunity to make a statement, as well as be
available to respond to appropriate questions submitted by shareholders. All
services rendered to the Fund by Coopers & Lybrand LLP have been provided in
connection with its professional audit functions, at customary rates and terms
which are subject to reconsideration if unexpected issues involving accounting
or auditing should be encountered. The Fund has no reason to expect that such
issues are likely to be encountered in 1998.
The Fund has been advised by Coopers & Lybrand LLP that, as of December 31,
1997, except for its appointment as independent auditors thereto, neither that
firm nor any of its partners had a direct or material indirect financial
interest in the Fund, PMLIC, PLACA, NLIC or any investment adviser of the Fund,
or any affiliate thereof. No director or officer of the Fund, or any associate
of any director or officer, has any financial interest, direct or indirect, in
the appointment of the independent auditors. Coopers & Lybrand LLP has acted as
independent auditors to Providentmutual Investment Management Company, the
investment adviser to certain of the Portfolios, for the past sixteen years.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS RATIFY THE SELECTION OF
COOPERS & LYBRAND LLP AS INDEPENDENT AUDITORS TO THE FUND.
PROPOSALS 3(a) -- 3(m)
GENERAL
The directors recommend that shareholders of each Portfolio approve the
proposals to amend, restate or eliminate the Portfolio's fundamental investment
restrictions. These investment restrictions are "fundamental policies," which
means that they may be changed only by the shareholders of a Portfolio.
Restrictions and policies that a Portfolio has not specifically designated as
fundamental are not considered to be fundamental,
7
<PAGE> 11
and may be changed by the Fund's board of directors without shareholder
approval. Amendment, restatement or elimination of a Portfolio's fundamental
investment restrictions requires the approval of a 1940 Act majority of that
Portfolio's outstanding voting securities. The Portfolios' current investment
restrictions, and the proposed amended and restated investment restrictions, are
set forth below and in Appendix A to this proxy statement.
Certain of the fundamental investment restrictions reflect regulatory,
business or industry conditions, practices or requirements which at one time led
the board of directors to impose them on the management of the Portfolios'
investments. The directors believe that the passage of time, changes in
regulatory standards, or the development of new practices have rendered certain
of the Portfolios' fundamental investment restrictions unnecessary or
unwarranted. In certain cases, investment restrictions were adopted in response
to state securities laws and regulations. Such restrictions no longer are
required because, with the enactment of the National Securities Markets
Improvement Act of 1996 ("NSMIA"), federal law preempts the application of state
securities laws to mutual funds. In other cases, fundamental restrictions
reflect federal regulatory requirements that remain in effect, but that are not
required to be fundamental restrictions.
The directors propose to amend or eliminate those investment restrictions
that are redundant or that are inconsistent with current regulatory standards or
industry practice. In particular, the directors propose to eliminate certain
fundamental investment restrictions that are no longer legally required, and to
amend certain fundamental investment restrictions that are more restrictive than
currently is required by law. The directors believe that eliminating or amending
such restrictions would afford the Portfolios greater flexibility in responding
to investment opportunities that may arise from time to time.
The directors also propose to eliminate other fundamental investment
restrictions that are not required to be fundamental. It is anticipated that if
the shareholders of a Portfolio vote to eliminate such a fundamental investment
restriction, the board of directors would adopt a non-fundamental policy in lieu
of that restriction. The directors believe that reducing the number of
restrictions that can be changed only by shareholder vote will result in an
enhanced ability to modify investment policies, as appropriate, to respond to
changing markets and new investment opportunities, and will minimize costs and
delay associated with soliciting shareholders when new opportunities or market
changes arise. Finally, the directors propose to restate certain of the
Portfolios' investment restrictions, as described below, in order to render
clearer and simpler statements of the Portfolios' fundamental policies.
The directors do not anticipate that the proposed amendment, restatement or
elimination of the Portfolios' investment restrictions will result in a material
change in the level of risk associated with an investment in any Portfolio. If
the proposed changes are approved by shareholders of a Portfolio at the
Meetings, that Portfolio's prospectus or prospectuses and statement of
additional information would be revised, as appropriate, to reflect such
changes. In the event that an amendment, restatement or elimination of a
restriction or restrictions is not approved by a Portfolio's shareholders, that
Portfolio will retain its current fundamental restriction or restrictions, as
applicable.
The following is a summary of the proposed changes to the Portfolios'
investment restrictions. Each proposal is summarized individually and will be
voted upon separately. The board of directors recommends that shareholders vote
to approve each of the Proposals set forth below.
PROPOSAL 3(a): THE APPROVAL OR DISAPPROVAL OF THE RESTATEMENT OF EACH
PORTFOLIO'S INVESTMENT RESTRICTION ON ISSUER DIVERSIFICATION.
The Portfolios are "diversified" within the meaning of the 1940 Act. This
means that each such Portfolio must not, with respect to 75% of its total
assets, invest more than 5% of its total assets in the securities of any
8
<PAGE> 12
one issuer or acquire more than 10% of the outstanding voting securities of any
one issuer. These restrictions apply only at the time of investment, and a
Portfolio may invest up to 25% of its total assets without regard to such
restrictions. In addition, these restrictions do not apply to Portfolio holdings
of or investments in cash, cash items, U.S. government securities or securities
of other investment companies. Each Portfolio currently has an investment
restriction that incorporates the foregoing standards.
The directors have determined that it is in the best interests of the
Portfolios to re-word and restate more clearly and succinctly the Portfolios'
investment restriction on issuer diversification. The proposed restatement of
the Portfolios' restriction does not represent a material change in investment
policy on issuer diversification. Set forth below is the Portfolios' current
fundamental investment restriction on issuer diversification, followed by the
proposed restriction in italicized text. The directors believe it is in the best
interests of each Portfolio and its shareholders to adopt the proposed
fundamental investment restriction in lieu of its current fundamental investment
restriction on diversification.
CURRENT RESTRICTION:
No Portfolio of the Fund is allowed to purchase securities of any issuer,
if (a) with respect to 75% of the market value of its total assets, more
than 5% of the account's total assets taken at market value would at the
time be invested in the securities of such issuer, unless such issuer is
the U.S. Government or its agency or instrumentality, or (b) such purchase
would at the time result in more than 10% of the outstanding voting
securities of such issuer being held by the Portfolio.
PROPOSED NEW RESTRICTION:
No Portfolio may, with respect to 75% of the Portfolio's total assets,
purchase securities of an issuer (other than the U.S. Government, its
agencies or instrumentalities), if (a) such purchase would cause more than
5% of the Portfolio's total assets taken at market value to be invested in
the securities of such issuer, or (b) such purchase would at the time
result in more than 10% of the outstanding voting securities of such issuer
being held by the Portfolio.
PROPOSAL 3(b): THE APPROVAL OR DISAPPROVAL OF THE AMENDMENT OF EACH PORTFOLIO'S
INVESTMENT RESTRICTION ON INDUSTRY CONCENTRATION.
The 1940 Act requires that an open-end investment company (a "mutual fund")
adopt a policy, which cannot be changed without shareholder approval, stating
whether or not 25% or more of the investment company's assets may be invested
(concentrated) in the securities of issuers in any one industry. For purposes of
an investment company's concentration policy, investments in U.S. Government
securities are not considered to be securities of one industry. Each of the
Growth, Sentinel Growth, Money Market, Aggressive Growth and International
Portfolios currently has a policy not to concentrate in the securities of any
one industry. The Bond and Managed Portfolios currently have a policy not to
concentrate in the securities of any one industry, other than the electric, gas
and telephone utility industries.
The board of directors has determined that it is in the best interests of
the Bond and Managed Portfolios to delete from their investment restriction on
industry concentration the provision permitting each such Portfolio to invest up
to 75% of its total assets in the electric, gas and telephone utility
industries. Each of the Bond and Managed Portfolios has not and does intend to
concentrate its investments in the electric, gas and telephone utility
industries, or in any other industry. Accordingly, the board of directors
proposes that the Bond and Managed Portfolios adopt a policy not to concentrate
in any one industry, which is the same concentration policy as the policy for
the Fund's other Portfolios.
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The directors also have determined that it is in the best interests of all
of the Portfolios to restate the Portfolios' investment restriction on
concentration so that it is more succinct. The current restriction contains
specific examples of how a few industries would be defined. The board of
directors believes that the restriction could be misconstrued as implying that
no other kinds of distinctions would be made for other industries. The board of
directors may determine to define or redefine industries as appropriate on the
basis of evolutionary changes in businesses. Amending the restriction as
proposed would clarify that the board of directors may from time to time define
and redefine industries in response to a changing business environment. The
directors also wish to amend this restriction to clarify that with respect to
each Portfolio, and not just the Money Market and Managed Portfolios, investment
in obligations issued by or guaranteed by the U.S. Government, its agencies or
instrumentalities are not considered investment in the same industry.
The board of directors also believes that the proposed investment
restriction on industry concentration follows more precisely the parameters set
forth under the 1940 Act for mutual funds that do not intend to concentrate.
Under the 1940 Act, a mutual fund that does not intend to concentrate must make
no further investment in any industry if, upon making the proposed investment,
25% or more of the value of the fund's total assets would be invested in such
industry. Under the current restrictions, the Portfolios that do not intend to
concentrate may invest up to 25% of their respective total assets in securities
of issuers in any one industry. The current restriction is slightly less
restrictive than the proposed restriction, which limits investment of 25% or
more of a Portfolio's assets in securities of issuers in any one industry.
Set forth below is each Portfolio's current fundamental investment
restriction on industry concentration, followed by the proposed restriction in
italicized text. The directors believe it is in the best interests of each
Portfolio and its shareholders to adopt the proposed fundamental investment
restriction in lieu of its current fundamental investment restriction on
industry concentration.
CURRENT RESTRICTIONS:
The Bond and Managed Portfolios will not purchase the securities of issuers
conducting their principal business activity in the same industry, other
than the electric, gas and telephone utility industries, if immediately
after such purchase the value of its investments in such industry would
exceed 25% of its total assets taken at market value; nor will it purchase
the securities of companies in the electric, gas or telephone utility
industries if, immediately after such purchase, the value of its
investments in all such industries would exceed 75% of its total assets
taken at market value.
The Growth, Sentinel Growth, Money Market, Aggressive Growth and
International Portfolios will not make any investment in an industry if
that investment would make the Portfolio's holding in that industry exceed
25% of the Portfolio's total assets. These restrictions on concentration do
not apply to investments by the Money Market and Managed Portfolios in
obligations issued by or guaranteed by the U.S. Government, its agencies or
instrumentalities, or certificates of deposit or securities issued or
guaranteed by domestic banks. Also, for these purposes, neither all finance
companies as a group, nor all utility companies as a group, will be
considered a single industry.
PROPOSED NEW RESTRICTION:
No Portfolio may invest 25% or more of its total assets in the securities
of one or more issuers conducting their principal business activities in
the same industry (excluding the U.S. Government or any of its agencies or
instrumentalities).
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PROPOSAL 3(c): THE APPROVAL OR DISAPPROVAL OF THE AMENDMENT OF EACH PORTFOLIO'S
INVESTMENT RESTRICTION ON BORROWING.
The 1940 Act requires that a mutual fund adopt a policy, which cannot be
changed without shareholder approval, on borrowing. Pursuant to the 1940 Act, a
mutual fund is prohibited from issuing any "senior security," including debt,
except that it may borrow from banks in an amount not exceeding one-third of its
total assets. A senior security includes any form of indebtedness (including
borrowing) that would have priority over a Portfolio's common stock as to the
distribution of assets or payment of dividends.
Under the current investment restriction on borrowing, each Portfolio,
except the International Portfolio, may borrow up to 5% of the market value of
its total assets at the time the borrowing is made, as a temporary measure for
emergency purposes or as necessary for clearance of securities transactions or
to permit the transfer of funds for various purposes. The International
Portfolio may borrow up to 20% of the market value of its total assets at the
time the borrowing is made as a temporary measure, such as to meet redemption
requests or to settle transactions. The directors propose that the Portfolios
adopt a uniform borrowing policy that permits each Portfolio to borrow from
banks amounts up to 30% of its total assets for any purpose, not just temporary
purposes, and an additional 5% of its total assets for temporary purposes.
The directors believe that the current restriction on borrowing is more
restrictive than is required by law and that it is in the best interests of each
Portfolio and its shareholders to expand that Portfolio's capability to engage
in borrowing to respond to contingencies or opportunities that may arise from
time to time. In addition, the proposed restriction would clarify that the
Portfolios may obtain short-term credits to effect transaction clearance and may
purchase securities on margin. Margin purchases involve the purchase of
securities with money borrowed from a broker. "Margin" is the cash or eligible
securities that the borrower places with its broker as collateral for this loan.
Finally, the directors propose to restate the Portfolios' investment restriction
on borrowing to delete redundant language and to render it a more clear and
succinct statement of the Portfolios' policy on borrowing.
Set forth below is each Portfolio's current fundamental investment
restriction on borrowing, followed by the proposed restriction in italicized
text. The directors believe it is in the best interests of each Portfolio and
its shareholders to adopt the proposed fundamental investment restriction in
lieu of its current fundamental investment restriction on borrowing.
CURRENT RESTRICTION:
No Portfolio of the Fund is allowed to borrow money, except from banks as a
temporary measure for emergency purposes or as necessary for clearance of
securities transactions or to permit the transfer of funds for various
purposes without interfering with the orderly liquidation of securities in
its portfolio, where such borrowings would not exceed 5% of the market
value of total assets at the time each such borrowing is made, except that
this restriction does not apply to: the International Portfolio which may
borrow up to 20% of the market value of its total assets from banks as a
temporary measure, such as to enable it to meet redemption requests or to
settle transactions on different stock markets where different settlement
dates apply which might otherwise require the sale of portfolio securities
at a time when it would not be in the Portfolio's best interests to do so;
and to reverse repurchase agreements entered into in accordance with the
Fund's investment policies.
PROPOSED NEW RESTRICTION:
No Portfolio may borrow money, except a Portfolio may (a) borrow from banks
(as defined in the 1940 Act) or through reverse repurchase agreements in
amounts up to 30% of its total assets (including the
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<PAGE> 15
amount borrowed), (b) to the extent permitted by applicable law, borrow up
to an additional 5% of its total assets for temporary purposes, (c) obtain
such short-term credits as may be necessary for the clearance of purchases
and sales of portfolio securities, and (d) purchase securities on margin to
the extent permitted by applicable law.
PROPOSAL 3(d): THE APPROVAL OR DISAPPROVAL OF THE RESTATEMENT OF EACH
PORTFOLIO'S INVESTMENT RESTRICTION ON LENDING SECURITIES.
The 1940 Act requires that a mutual fund adopt a policy, which cannot be
changed without shareholder approval, on lending securities. The directors
believe that securities lending and investment in repurchase agreements with
banks, broker-dealers and other financial institutions would be attractive
investments for the Portfolios. The directors also believe that the Portfolios'
current investment restriction on lending permits securities lending and
entering into repurchase agreements with appropriate institutional entities. The
directors believe, however, that the Portfolios' current investment restriction
on lending should be restated to clarify that the Portfolios may engage in
securities lending and may enter into repurchase agreements with banks,
broker-dealers and other financial institutions. The proposed restatement of the
Portfolios' restriction does not represent a material change in investment
policy.
Set forth below is each Portfolio's current fundamental investment
restriction on lending, followed by the proposed restriction in italicized text.
The directors believe it is in the best interests of each Portfolio and its
shareholders to adopt the proposed fundamental investment restriction in lieu of
its current fundamental investment restriction on lending.
CURRENT RESTRICTION:
No Portfolio of the Fund is allowed to make loans, other than through the
acquisition of obligations in which the Portfolio may invest consistent
with its objective and investment policies.
PROPOSED NEW RESTRICTION:
No Portfolio may make loans, except through (a) the purchase of debt
obligations in accordance with the Portfolio's investment objective and
policies, (b) repurchase agreements with banks, broker-dealers and other
financial institutions, and (c) loans of securities as permitted by
applicable law.
PROPOSAL 3(e): THE APPROVAL OR DISAPPROVAL OF THE RESTATEMENT OF EACH
PORTFOLIO'S INVESTMENT RESTRICTION ON UNDERWRITING.
The 1940 Act requires that a mutual fund adopt a policy, which cannot be
changed without shareholder approval, on underwriting securities issued by
others. The board of directors is proposing that the Portfolios' current
investment restriction on underwriting should be restated so that it is more
clear and succinct. The proposed restriction, which does not represent a
material change in investment policy, prohibits each Portfolio from underwriting
the securities of others.
Set forth below is each Portfolio's current fundamental investment
restriction on underwriting, followed by the proposed restriction in italicized
text. The directors believe it is in the best interests of each Portfolio and
its shareholders to adopt the proposed fundamental investment restriction in
lieu of its current fundamental investment restriction on underwriting.
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<PAGE> 16
CURRENT RESTRICTION:
No Portfolio of the Fund is allowed to engage in the underwriting of
securities of other issuers, except to the extent the Portfolio may be
deemed an underwriter in selling as part of an offering registered under
the Securities Act of 1933, securities which it has acquired.
PROPOSED NEW RESTRICTION:
No Portfolio may underwrite securities issued by others, except to the
extent that the sale of portfolio securities by the Portfolio may be
considered an underwriting.
PROPOSAL 3(f): THE APPROVAL OR DISAPPROVAL OF THE RESTATEMENT OF EACH
PORTFOLIO'S INVESTMENT RESTRICTION ON INVESTMENT IN REAL ESTATE.
The 1940 Act requires that a mutual fund adopt a policy, which cannot be
changed without shareholder approval, on acquiring interests in real estate. The
board of directors is proposing that the Portfolios' current investment
restriction on investment in real estate should be restated so that it is more
clear and succinct. In particular, the directors believe that, as proposed to be
restated, the investment restriction on investment in real estate would state
clearly that a Portfolio may hold and sell real estate acquired by that
Portfolio as a result of the ownership of securities. The proposed restriction
does not represent a material change in investment policy.
Set forth below is each Portfolio's current fundamental investment
restriction on investment in real estate, followed by the proposed restriction
in italicized text. The directors believe it is in the best interests of each
Portfolio and its shareholders to adopt the proposed fundamental investment
restriction in lieu of its current fundamental investment restriction on
investment in real estate.
CURRENT RESTRICTION:
No Portfolio of the Fund is allowed to purchase real estate or any interest
therein, except through the purchase of corporate or certain government
securities (including securities secured by a mortgage or a leasehold
interest or other interest in real estate). A security issued by a real
estate or mortgage investment trust is not treated as an interest in real
estate.
PROPOSED NEW RESTRICTION:
No Portfolio may purchase, hold or deal in real estate, although a
Portfolio may purchase and sell securities that are secured by real estate
or interests therein, securities of real estate investment trusts and
mortgage-related securities and may hold and sell real estate acquired by a
Portfolio as a result of the ownership of securities.
PROPOSAL 3(g): THE APPROVAL OR DISAPPROVAL OF THE AMENDMENT OF EACH PORTFOLIO'S
INVESTMENT RESTRICTION ON COMMODITIES.
The 1940 Act requires that a mutual fund have a fundamental investment
policy regarding investments in commodities. The Portfolios do not invest in
physical commodities or contracts on such commodities or in options contracts,
except that the Growth, Managed and Aggressive Growth Portfolios may write
covered call options on securities and enter into closing transactions and the
International Portfolio may enter into forward foreign currency exchange
contracts. Forward foreign currency exchange contracts and options thereon are
considered to be commodity contracts. Financial futures contracts (i.e., futures
contracts on securities indices,
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<PAGE> 17
Treasury Bonds and currency) and options thereon are also considered to be
commodity contracts, but none of the Portfolios currently may invest in these
instruments.
Although there is no present intent to have any of the Portfolios (other
than the International Portfolio) invest in financial futures contracts or
options thereon, the board of directors is proposing that the fundamental
restriction on investment in commodity contracts be liberalized to permit
investments in financial futures and options thereon to the full extent
permitted under applicable law. Broadening the restriction in this manner is
consistent with mutual fund industry practice for funds similar to the
Portfolios and will provide flexibility to invest in such instruments in the
future if the board of directors determines that investment in such instruments
would be advantageous to one or more Portfolios.
Set forth below is each Portfolio's current fundamental investment
restriction on commodities, followed by the proposed restriction in italicized
text. The directors believe it is in the best interests of each Portfolio and
its shareholders to adopt the proposed fundamental investment restriction in
lieu of its current fundamental investment restriction on commodities.
CURRENT RESTRICTION:
No Portfolio of the Fund is allowed to invest in commodities or in
commodity contracts, or in call options, except that the Growth, Managed
and Aggressive Growth Portfolios may write covered call options and enter
into closing transactions, as permitted by their investment policies and
the International Portfolio may enter into forward currency exchange
contracts as described [in the statement of additional information].
PROPOSED NEW RESTRICTION:
No Portfolio may invest in commodities or commodity contracts, except that
the Portfolio may invest in currency and financial instruments and
contracts that are commodities or commodity contracts.
PROPOSAL 3(h): THE APPROVAL OR DISAPPROVAL OF THE RESTATEMENT OF EACH
PORTFOLIO'S INVESTMENT RESTRICTION ON SENIOR SECURITIES.
As discussed above in proposal 3(c), the 1940 Act restricts the ability of
a mutual fund to issue "senior securities," as defined in the 1940 Act, and
requires that a fund adopt a fundamental policy on the issuance of senior
securities. Senior securities include any form of indebtedness that has priority
over a Portfolio's common stock as to the distribution of assets or payment of
dividends. Under the 1940 Act, a mutual fund is not permitted to issue senior
securities except for borrowings from banks.
The Portfolios' current investment restriction on senior securities
specifically permits the Portfolios to borrow money as permitted in the
statement of additional information and to enter into reverse repurchase
agreements and purchase securities on a when-issued or delayed-delivery basis in
accordance with the Portfolios' respective investment objectives and policies.
The board of directors believes that the restriction could be construed as
implying that no other kinds of investments may be excepted from the Portfolios'
restriction on investment in senior securities. The directors believe that the
regulatory environment may evolve over time, re-defining the types of securities
that are subject to the Portfolios' restriction on senior securities. To permit
a Portfolio maximum flexibility to respond to a changing regulatory environment,
the board of directors proposes restating the investment restriction on senior
securities so that it simply states that no Portfolio may issue senior
securities to the extent such issuance would violate applicable law. The board
of directors does not believe that the proposed restated investment restriction
on senior securities represents a material change in investment policy.
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<PAGE> 18
Set forth below is each Portfolio's current fundamental investment
restriction on senior securities, followed by the proposed restriction in
italicized text. The directors believe it is in the best interests of each
Portfolio and its shareholders to adopt the proposed fundamental investment
restriction in lieu of its current fundamental investment restriction on senior
securities.
CURRENT RESTRICTION:
No Portfolio of the Fund is allowed to issue senior securities, except to
the extent that a Portfolio may borrow money as permitted [in the statement
of additional information] and that a Portfolio, in accordance with its
investment objectives and policies, may enter into reverse repurchase
agreements and purchase securities on a when-issued or a delayed delivery
basis.
PROPOSED NEW RESTRICTION:
No Portfolio may issue senior securities to the extent such issuance would
violate applicable law.
PROPOSAL 3(i): THE APPROVAL OR DISAPPROVAL OF THE ELIMINATION OF EACH
PORTFOLIO'S INVESTMENT RESTRICTION ON INVESTMENTS TO EXERCISE CONTROL.
The Portfolios currently have a fundamental investment restriction that
prohibits them from investing in securities of a company for the purpose of
exercising control over or management of that company. This restriction was
mandated by certain state securities laws. The 1940 Act currently does not
contain any equivalent restrictions. As a result of the recent enactment of
NSMIA, state law restrictions on investment to exercise control or management no
longer apply to the Portfolios. The directors therefore have concluded that it
is in the best interests of each Portfolio and its shareholders to eliminate
such restriction, which is set forth below.
CURRENT RESTRICTION:
No Portfolio of the Fund is allowed to invest for the purpose of exercising
control over or management of any company.
PROPOSAL 3(j): THE APPROVAL OR DISAPPROVAL OF THE ELIMINATION OF EACH
PORTFOLIO'S INVESTMENT RESTRICTION CONCERNING OTHER INVESTMENT COMPANIES.
Each Portfolio currently has a fundamental investment restriction regarding
investments in securities issued by other investment companies. The 1940 Act
limits the extent to which mutual funds may invest in other investment
companies. The 1940 Act does not, however, require investment companies to adopt
a fundamental restriction with respect to investment in other investment
companies. The Portfolios' current fundamental investment restriction is
redundant in that it merely recites prohibitions set forth in the 1940 Act with
respect to investments in other investment companies. The board of directors
believes that such fundamental investment restriction is unnecessary, and should
be eliminated. Moreover, the board believes that the 1940 Act provisions
regarding investment in other investment companies may change from time to time,
and therefore the fundamental restriction on such investment should be
eliminated in order to permit a Portfolio maximum flexibility in responding to a
changing regulatory environment.
The directors believe it is in the best interests of each Portfolio and its
shareholders to eliminate the current restriction on investment in other
investment companies. The current restriction is set forth below.
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<PAGE> 19
CURRENT RESTRICTION:
No Portfolio of the Fund is allowed to unless received as a dividend or as
a result of an offer of exchange approved by the Securities and Exchange
Commission or of a plan of reorganization, purchase or otherwise acquire
any security issued by a U.S. or foreign investment company if the
Portfolio would immediately thereafter own (a) more than 3% of the
outstanding voting stock of the investment company, (b) securities of the
investment company having an aggregate value in excess of 5% of the
Portfolio's total assets, (c) securities of investment companies having an
aggregate value in excess of 10% of the Portfolio's total assets, or (d)
together with investment companies having the same investment adviser as
the Portfolio (and companies controlled by such investment companies), more
than 10% of the outstanding voting stock of any registered closed-end
investment company.
PROPOSAL 3(k): THE APPROVAL OR DISAPPROVAL OF THE ELIMINATION OF EACH
PORTFOLIO'S (EXCEPT THE INTERNATIONAL PORTFOLIO) INVESTMENT RESTRICTION ON
INVESTMENT IN RESTRICTED SECURITIES.
Each Portfolio, except the International Portfolio, currently has a
fundamental investment restriction limiting investment in restricted securities.
Restricted securities are those that are subject to legal or contractual delays
on resale. The current fundamental investment restriction limits investment in
all restricted securities, including "liquid" and "illiquid" restricted
securities. Illiquid securities are those which may not be sold or disposed of
in the ordinary course of business within seven days at approximately the value
at which a Portfolio has valued the investment. The types of securities that are
considered illiquid will vary over time based on changing market conditions and
regulatory interpretations. Under current SEC staff interpretations, a mutual
fund, other than a money market mutual fund, must limit investment in illiquid
securities to 15% of its net assets. A money market mutual fund must limit
illiquid investments to 10% of its net assets.
The board of directors believes that the Portfolios' current fundamental
investment restriction on restricted securities is more limiting than is
required under current law in that it encompasses both liquid and illiquid
restricted securities. The board proposes that the fundamental investment
restriction on restricted securities should be eliminated. If the shareholders
of a Portfolio vote to eliminate that Portfolio's investment restriction on
restricted securities, it is anticipated that the board of directors would adopt
for that Portfolio a non-fundamental policy on investment in illiquid securities
that is consistent with the SEC staff position. The change would expand a
Portfolio's ability to invest in securities which have restrictions on resale
but which may be determined to be liquid pursuant to guidelines and procedures
adopted by the board of directors. Such liquid restricted securities would
include securities with restrictions on resale that nonetheless have a readily
available institutional market, such as commercial paper and securities eligible
for resale under Rule 144A under the Securities Act of 1933, as amended. The
board of directors believes that eliminating the Portfolios' fundamental
restriction on restricted securities will permit these Portfolios to take
advantage of the increasingly liquid institutional trading markets.
Set forth below is each Portfolio's (other than the International
Portfolio) current investment restriction on restricted securities. The
directors believe it is in the best interests of these Portfolios and their
respective shareholders to eliminate the current fundamental restriction on
restricted securities.
CURRENT RESTRICTION:
No Portfolio of the Fund is allowed to purchase securities which are
subject to legal or contractual delays in or restrictions on resale (except
for the International Portfolio).
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PROPOSAL 3(l): THE APPROVAL OR DISAPPROVAL OF THE ELIMINATION OF THE
INTERNATIONAL PORTFOLIO'S INVESTMENT RESTRICTION ON INVESTMENTS IN SECURITIES OF
COMPANIES WITH A RECORD OF LESS THAN THREE (3) YEARS' CONTINUOUS OPERATIONS.
The International Portfolio currently has a fundamental investment
restriction that prohibits it from investing more than 5% of the market value of
its total assets in companies with a record of less than three years' continuous
operations (typically referred to as "unseasoned issuers"). This investment
restriction is based on restrictions on investment in unseasoned issuers
contained in certain state securities laws and regulations. The 1940 Act
currently does not contain any equivalent restrictions. As a result of the
recent enactment of NSMIA, state law restrictions on permissible investments no
longer apply to the International Portfolio. The directors therefore have
concluded that it is in the best interests of the International Portfolio and
its shareholders to eliminate the policy on unseasoned issuers. In addition, the
directors believe that elimination of this policy will increase the Portfolio's
flexibility to invest in unseasoned issuers that otherwise might meet its
investment objective and policies.
Securities of unseasoned issuers may be subject to greater risk than
securities of more established companies because these issuers have only a brief
operating history and may have more limited markets and financial resources.
However, the directors believe that the increasing prevalence of unseasoned
issuers, the investment opportunities offered by such issuers, and the fact that
any such investments will be made in accordance with the investment objective
and policies of the International Portfolio warrants the elimination of the
current policy.
The directors believe it is in the best interests of the International
Portfolio and its shareholders to eliminate the Portfolio's current restriction
on investment in unseasoned issuers. The current restriction is set forth below.
CURRENT RESTRICTION:
The International Portfolio will not invest more than 5% of the market
value of its total assets in companies with a record of less than three
years' operations.
PROPOSAL 3(m): THE APPROVAL OR DISAPPROVAL OF THE ELIMINATION OF THE
INTERNATIONAL PORTFOLIO'S INVESTMENT RESTRICTION ON ILLIQUID SECURITIES.
The International Portfolio's current investment restriction on illiquid
securities is fundamental. As discussed above under Proposal 3(k), current
applicable law does not require a mutual fund to state its limitation on
investment in illiquid securities as a fundamental restriction. The board of
directors proposes that the International Portfolio's fundamental investment
restriction on illiquid securities should be eliminated. If the shareholders of
the International Portfolio vote to eliminate the Portfolio's investment
restriction on illiquid securities, it is anticipated that the board of
directors would adopt a non-fundamental policy on investment in illiquid
securities. The directors believe that eliminating the Portfolio's fundamental
investment restriction on illiquid securities should afford the Portfolio
greater flexibility in responding to regulatory changes, and would be consistent
with the approach recommended for the other Portfolios under Proposal 3(k),
above.
Set forth below is the International Portfolio's current investment
restriction on illiquid securities. The directors believe it is in the best
interests of the Portfolio and its shareholders to eliminate the current
fundamental restriction on illiquid securities.
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CURRENT RESTRICTION:
The International Portfolio will not invest more than 5% of the market
value of its total assets in securities which are not readily marketable.
DIRECTORS' RECOMMENDATION
The directors believe that each proposed amendment, restatement or
elimination of the Portfolios' fundamental investment restrictions will more
clearly reflect current regulatory practice, will provide a more complete range
of investment opportunities, will promote uniformity among the Portfolios and
will simplify the Portfolios' restrictions.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS OF EACH PORTFOLIO VOTE
"FOR" THE APPROVAL OF THE AMENDMENT, RESTATEMENT OR ELIMINATION OF EACH OF THE
PORTFOLIOS' INVESTMENT RESTRICTIONS.
REPORTS AVAILABLE
Copies of the Fund's annual report will be furnished without charge upon
request. Such request should be directed to Katherine De Peri at Provident
Mutual Life Insurance Company, 1050 Westlakes Drive, Berwyn, PA 19312, (800)
523-4681.
SHAREHOLDER PROPOSALS
As a general matter, the Fund does not hold annual meetings of
shareholders, and, therefore, the anticipated date of the next special meeting
of shareholders of a Portfolio cannot be provided. Any shareholder proposal that
properly may be included in proxy solicitation materials for a special meeting
of shareholders must be received by the Fund a reasonable time prior to the date
voting instructions or proxy materials are mailed to shareholders.
INQUIRIES
Shareholders or owners may make inquiries by contacting their registered
sales representative or by writing or calling the Fund, PMLIC, PLACA or NLIC.
OTHER INFORMATION
Sentinel Advisors Company ("SAC") serves as investment adviser for the
Fund's Bond, Managed, Aggressive Growth, Money Market, Sentinel Growth and
Growth Portfolios. SAC is a general partnership owned and controlled by Sentinel
Advisors, Inc. (an indirectly wholly-owned subsidiary of NLIC), Providentmutual
Management Co., Inc. (an indirectly wholly-owned subsidiary of PMLIC), HTK of
Delaware, Inc. (a wholly-owned subsidiary of The Penn Mutual Life Insurance
Company ("Penn Mutual")) and Sentinel Management Company (a partnership of
wholly-owned subsidiaries of NLIC, PMLIC and Penn Mutual, which is SAC's
Managing General Partner). Providentmutual Investment Management Company
("PIMC"), an indirect wholly-owned subsidiary of PMLIC, serves as investment
adviser for the Fund's International Portfolio. PMIC has engaged The Boston
Company Asset Management, Inc. ("TBC") as the investment sub-adviser for the
International Portfolio. TBC is a corporation that is a wholly-owned subsidiary
of The Boston Company, Inc., which is a wholly-owned subsidiary of The Mellon
Bank Corporation.
Provident Financial Processing Corporation ("PFPC") provides certain
administrative services to the Fund pursuant to an administration agreement
between PFPC and the Fund. PFPC, located at 103 Bellevue Parkway, Wilmington,
Delaware 19809, is a wholly-owned subsidiary of PNC Bank.
18
<PAGE> 22
1717 Capital Management Company ("1717") (formerly PML Securities Company)
serves, without compensation from the Fund, as principal underwriter to the Fund
pursuant to an agreement between 1717 and the Fund. 1717 is located at 300
Continental Drive, Newark, Delaware 19713 and is a wholly-owned subsidiary of
Provident Mutual Holding Company.
OTHER BUSINESS
NLIC, PMLIC, PLACA and the Fund know of no other matters to be brought
before the Meetings other than the matters set forth in this Proxy Statement,
but should any other matter requiring the vote of shareholders arise, the
persons named in the enclosed Voting Instruction Form(s) or other substitute
will vote thereon according to their best judgment in the interest of the Fund.
19
<PAGE> 23
[This Page Intentionally Left Blank]
<PAGE> 24
APPENDIX A
CURRENT AND PROPOSED INVESTMENT RESTRICTIONS
CURRENT INVESTMENT RESTRICTIONS(1) PROPOSED INVESTMENT
No Portfolio of the Fund is allowed to: RESTRICTIONS
No Portfolio may:
(1) Purchase securities of any issuer, if (1) with respect to
75% of the Portfolio's
(a) with respect to 75% of the market value of total assets, purchase
its total assets, more than 5% of the account's securities of an
total assets taken at market value would at the issuer (other
time be invested in the securities of such than the U.S.
issuer, unless such issuer is the U.S. Government, its
Government or its agency or instrumentality, or agencies or
instrumentalities),
(b) such purchase would at the time result in if (a) such
more than 10% of the outstanding voting purchase would
securities of such issuer being held by the cause more than
Portfolio. 5% of the
Portfolio's total
assets taken at
market value to
be invested in
the securities of
such issuer, or
(b) such purchase
would at the time
result in more
than 10% of the
outstanding
voting securities
of such issuer
being held by the
Portfolio;
- ---------------
(1) The Portfolios' current investment
restrictions appear in a different order
in the Fund's statement of additional
information. They are re-ordered here for
ease of comparison.
A-1
<PAGE> 25
<TABLE>
<S> <C>
(2) The Bond and Managed Portfolios will not (2) invest 25% or
purchase the securities of issuers conducting more of its total
their principal business activity in the same assets in the
industry, other than the electric, gas and securities of one
telephone utility industries, if immediately or more issuers
after such purchase the value of its conducting their
investments in such industry would exceed 25% principal
of its total assets taken at market value; nor business
will it purchase the securities of companies in activities in the
the electric, gas or telephone utility same industry
industries if, immediately after such purchase, (excluding the
the value of its investments in all such U.S. Government
industries would exceed 75% of its total assets or any of its
taken at market value. agencies or
instrumentalities);
The Growth, Sentinel Growth, Money Market,
Aggressive Growth and International Portfolios
will not make any investment in an industry if
that investment would make the Portfolio's
holding in that industry exceed 25% of the
Portfolio's total assets. The International
Portfolio will not invest more than 5% of the
market value of its total assets in companies
with a record of less than three years'
operations or in securities which are not
readily marketable.
These restrictions on concentration do not
apply to investments by the Money Market and
Managed Portfolios in obligations issued by or
guaranteed by the U.S. Government, its agencies
or instrumentalities, or certificates of
deposit or securities issued or guaranteed by
domestic banks. Also, for these purposes,
neither all finance companies as a group, nor
all utility companies as a group, will be
considered a single industry.
</TABLE>
A-2
<PAGE> 26
<TABLE>
<S> <C>
(3) Borrow money, except from banks as a temporary (3) borrow money,
measure for emergency purposes or as necessary except a Portfolio may
for clearance of securities transactions or to (a) borrow from
permit the transfer of funds for various banks (as defined
purposes without interfering with the orderly in the 1940 Act)
liquidation of securities in its portfolio, or through
where such borrowings would not exceed 5% of reverse
the market value of total assets at the time repurchase
each such borrowing is made, except that this agreements in
restriction does not apply to: the amounts up to 30%
International Portfolio which may borrow up to of its total
20% of the market value of its total assets assets (including
from banks as a temporary measure, such as to the amount
enable it to meet redemption requests or to borrowed), (b) to
settle transactions on different stock markets the extent
where different settlement dates apply which permitted by
might otherwise require the sale of portfolio applicable law,
securities at a time when it would not be in borrow up to an
the Portfolio's best interests to do so; and to additional 5% of
reverse repurchase agreements entered into in its total assets
accordance with the Fund's investment policies. for temporary
purposes, (c)
obtain such
short-term
credits as may be
necessary for the
clearance of
purchases and
sales of
portfolio
securities, and
(d) purchase
securities on
margin to the
extent permitted
by applicable
law;
(4) Make loans, other than through the acquisition (4) make loans,
of obligations in which the Portfolio may except through (a) the
invest consistent with its objective and purchase of debt
investment policies. obligations in
accordance with
the Portfolio's
investment
objective and
policies, (b)
repurchase
agreements with
banks,
broker-dealers
and other
financial
institutions, and
(c) loans of
securities as
permitted by
applicable law;
(5) Engage in the underwriting of securities of (5) underwrite
other issuers, except to the extent the securities issued by
Portfolio may be deemed an underwriter in others, except to the
selling as part of an offering registered under extent that the
the Securities Act of 1933, securities which it sale of portfolio
has acquired. securities by the
Portfolio may be
considered an
underwriting;
(6) Purchase real estate or any interest therein, (6) purchase, hold or
except through the purchase of corporate or deal in real estate,
certain government securities (including although a
securities secured by a mortgage or a leasehold Portfolio may
interest or other interest in real estate). A purchase and sell
security issued by a real estate or mortgage securities that
investment trust is not treated as an interest are secured by
in real estate. real estate or
interests
therein,
securities of
real estate
investment trusts
and
mortgage-related
securities and
may hold and sell
real estate
acquired by a
Portfolio as a
result of the
ownership of
securities;
</TABLE>
A-3
<PAGE> 27
<TABLE>
<S> <C>
(7) Invest in commodities or in commodity (7) invest in
contracts, or in call options, except that the commodities or
Growth, Managed and Aggressive Growth commodity contracts,
Portfolios may write covered call options and except that the
enter into closing transactions, as permitted Portfolio may
by their investment policies and the invest in
International Portfolio may enter into forward currency and
currency exchange contracts as described [in financial
the statement of additional information]. instruments and
contracts that
are commodities
or commodity
contracts; or
(8) Issue senior securities, except to the extent (8) issue senior
that a Portfolio may borrow money as permitted securities to the
[in the statement of additional information] extent such issuance
and that a Portfolio, in accordance with its would violate
investment objectives and policies, may enter applicable law.
into reverse repurchase agreements and purchase
securities on a when-issued or a delayed
delivery basis.
(9) Invest for the purpose of exercising control N/A
over or management of any company.
(10) Unless received as a dividend or as a result of N/A
an offer of exchange approved by the Securities
and Exchange Commission or of a plan of
reorganization, purchase or otherwise acquire
any security issued by a U.S. or foreign
investment company if the Portfolio would
immediately thereafter own (a) more than 3% of
the outstanding voting stock of the investment
company, (b) securities of the investment
company having an aggregate value in excess of
5% of the Portfolio's total assets, (c)
securities of investment companies having an
aggregate value in excess of 10% of the
Portfolio's total assets, or (d) together with
investment companies having the same investment
adviser as the Portfolio (and companies
controlled by such investment companies), more
than 10% of the outstanding voting stock of any
registered closed-end investment company.
</TABLE>
A-4
<PAGE> 28
<TABLE>
<S> <C>
(11) Purchase securities which are subject to legal N/A
or contractual delays in or restrictions on
resale (except for the International
Portfolio).
(12) The International Portfolio will not invest N/A
more than 5% of the market value of its total
assets in companies with a record of less than
three years' operations.
(13) The International Portfolio will not invest N/A
more than 5% of the market value of its total
assets in securities which are not readily
marketable.
</TABLE>
A-5
<PAGE> 29
VOTING INSTRUCTION FORM
MARKET STREET FUND, INC.
VOTING INSTRUCTIONS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF PROVIDENT
MUTUAL LIFE INSURANCE COMPANY OR PROVIDENTMUTUAL LIFE AND ANNUITY COMPANY OF
AMERICA FOR SPECIAL MEETINGS OF SHAREHOLDERS OF THE INTERNATIONAL, BOND,
MANAGED, AGGRESSIVE GROWTH, MONEY MARKET AND GROWTH PORTFOLIOS OF MARKET STREET
FUND, INC. TO BE HELD ON APRIL 22, 1998.
I hereby instruct Provident Mutual Life Insurance Company ("PMLIC") or
Providentmutual Life and Annuity Company of America ("PLACA"), as appropriate,
to vote the shares of the Portfolio, specified below, of Market Street Fund,
Inc. (the "Fund") as to which I am entitled to give instructions at the Special
Meeting of Shareholders of the Fund (the "Meeting") to be held on April 22,
1998, at 10:00 a.m. local time, at 1050 Westlakes Drive, Berwyn, Pennsylvania
19312, or any adjournment(s) thereof, as follows:
<TABLE>
<CAPTION>
1. Election of Five (5) Directors of the Fund
NOMINEES: Robert W. Kloss, Alan Gart, A. Gilbert Heebner, Edward S. Stouch, Leo Slack
|_| VOTE FOR all nominees listed, except as marked to the contrary above.
(TO WITHHOLD YOUR VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE A LINE THROUGH THE
NOMINEE'S NAME IN THE LIST ABOVE.)
|_| VOTE WITHHELD for all nominees.
Approve Disapprove Abstain
------- ---------- -------
<S> <C> <C> <C>
2. To ratify or reject the selection of Coopers & Lybrand LLP as
independent auditors to the Fund for the fiscal year ending |_| |_| |_|
December 31, 1998.
3(a) The approval or disapproval of the restatement of the Portfolio's |_| |_| |_|
investment restriction on issuer diversification.
3(b) The approval or disapproval of the amendment of the |_| |_| |_|
Portfolio's investment restriction on industry concentration.
3(c) The approval or disapproval of the amendment of the Portfolio's |_| |_| |_|
investment restriction on borrowing.
3(d) The approval or disapproval of the restatement of the Portfolio's |_| |_| |_|
investment restriction on lending securities.
3(e) The approval or disapproval of the restatement of the Portfolio's |_| |_| |_|
investment restriction on underwriting.
3(f) The approval or disapproval of the restatement of the Portfolio's |_| |_| |_|
investment restriction on investment in real estate.
3(g) The approval or disapproval of the amendment of the |_| |_| |_|
Portfolio's investment restriction on commodities.
3(h) The approval or disapproval of the restatement of the Portfolio's |_| |_| |_|
investment restriction on senior securities.
3(i) The approval or disapproval of the elimination of the Portfolio's |_| |_| |_|
investment restriction on investments to exercise control.
3(j) The approval or disapproval of the elimination of the Portfolio's |_| |_| |_|
investment restriction concerning other investment companies.
3(k) The approval or disapproval of the elimination of the Portfolio's |_| |_| |_|
investment restriction on investment in restricted securities.
<CAPTION>
4. In each such entity's discretion, PMLIC or PLACA, as applicable, is authorized to vote upon such other business as
may properly come before the Meeting or any adjournment(s) thereof.
</TABLE>
(over)
<PAGE> 30
I hereby revoke any and all voting instructions with respect to such
shares heretofore given by me. I acknowledge receipt of the Proxy Statement
dated March 23, 1998. I REALIZE IF I SIGN THIS FORM WITHOUT CHECKING A BLOCK
WITH RESPECT TO THE ELECTION OF DIRECTORS OR ANY OTHER PROPOSAL LISTED ON THE
REVERSE SIDE, MY TIMELY RETURNING OF THIS FORM WILL BE DEEMED TO BE AN
INSTRUCTION TO VOTE FOR THE ELECTION OF ALL NOMINEES IDENTIFIED IN ITEM 1 OR TO
VOTE IN FAVOR OF THE PROPOSAL.
THESE VOTING INSTRUCTIONS MAY BE REVOKED AT ANY TIME PRIOR TO THE MEETING BY
NOTIFYING THE SECRETARY OF PMLIC OR PLACA, AS APPROPRIATE, OR THE SECRETARY OF
THE FUND, IN WRITING.
<TABLE>
<S> <C>
Date: _____________ ___, 1998 --------------------------------------------------------------
Signature - Please sign exactly as your name appears below.
Policy: WWWWWWWWWW Please sign, date and return this Form promptly. Signature
Insured: WWWWWWWWWWWWWWWWWWWW should be exactly as name or names appear on this Voting
Instruction Form. If the individual signing the form is a
fiduciary (e.g. attorney, executor, trustee, guardian, etc.) the
individual's signature must be followed by his or her full
title.
</TABLE>
NUMBER OF SHARES FOR WHICH YOU ARE ENTITLED TO GIVE VOTING INSTRUCTIONS:
WWWWWWWWWWWWWW WWWWWWWWWWWWWWWWWWWWWWWWWWWWWWWWWWWW
PLEASE RETURN THIS VOTING INSTRUCTION FORM PROMPTLY
WWWWWWWWWWWWWWWWWWWWWWWWWWWWWW
WWWWWWWWWWWWWWWWWWWWWWWWWWWWWW
WWWWWWWWWWWWWWWWWWWWWWWWWWWWWW
WWWWWWWWWWWWWWWWWWWWWWWWWWWWWW
<PAGE> 31
VOTING INSTRUCTION FORM
MARKET STREET FUND, INC.
VOTING INSTRUCTIONS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF PROVIDENT
MUTUAL LIFE INSURANCE COMPANY OR PROVIDENTMUTUAL LIFE AND ANNUITY COMPANY OF
AMERICA FOR SPECIAL MEETINGS OF SHAREHOLDERS OF THE INTERNATIONAL, BOND,
MANAGED, AGGRESSIVE GROWTH, MONEY MARKET AND GROWTH PORTFOLIOS OF MARKET STREET
FUND, INC. TO BE HELD ON APRIL 22, 1998.
I hereby instruct Provident Mutual Life Insurance Company ("PMLIC") or
Providentmutual Life and Annuity Company of America ("PLACA"), as appropriate,
to vote the shares of the International Portfolio of Market Street Fund, Inc.
(the "Fund") as to which I am entitled to give instructions at the Special
Meeting of Shareholders of the Fund (the "Meeting") to be held on April 22,
1998, at 10:00 a.m. local time, at 1050 Westlakes Drive, Berwyn, Pennsylvania
19312, or any adjournment(s) thereof, as follows:
<TABLE>
<CAPTION>
1. Election of Five (5) Directors of the Fund
NOMINEES: Robert W. Kloss, Alan Gart, A. Gilbert Heebner, Edward S. Stouch, Leo Slack
|_| VOTE FOR all nominees listed, except as marked to the contrary above.
(TO WITHHOLD YOUR VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE A LINE THROUGH THE
NOMINEE'S NAME IN THE LIST ABOVE.)
|_| VOTE WITHHELD for all nominees.
Approve Disapprove Abstain
------- ---------- -------
<S> <C> <C> <C>
2. To ratify or reject the selection of Coopers & Lybrand LLP as
independent auditors to the Fund for the fiscal year ending |_| |_| |_|
December 31, 1998.
3(a) The approval or disapproval of the restatement of the Portfolio's |_| |_| |_|
investment restriction on issuer diversification.
3(b) The approval or disapproval of the amendment of the Portfolio's |_| |_| |_|
investment restriction on industry concentration.
3(c) The approval or disapproval of the amendment of the Portfolio's |_| |_| |_|
investment restriction on borrowing.
3(d) The approval or disapproval of the restatement of the Portfolio's |_| |_| |_|
investment restriction on lending securities.
3(e) The approval or disapproval of the restatement of the Portfolio's |_| |_| |_|
investment restriction on underwriting.
3(f) The approval or disapproval of the restatement of the Portfolio's |_| |_| |_|
investment restriction on investment in real estate.
3(g) The approval or disapproval of the amendment of the Portfolio's |_| |_| |_|
investment restriction on commodities.
3(h) The approval or disapproval of the restatement of the Portfolio's |_| |_| |_|
investment restriction on senior securities.
3(i) The approval or disapproval of the elimination of the Portfolio's |_| |_| |_|
investment restriction on investments to exercise control.
3(j) The approval or disapproval of the elimination of the Portfolio's |_| |_| |_|
investment restriction concerning other investment companies.
3(k) Not applicable.
3(l) The approval or disapproval of the elimination of the Portfolio's |_| |_| |_|
investment restriction on investments in securities of companies
with a record of less than three (3) years' continuous operations.
3(m) The approval or disapproval of the elimination of the Portfolio's |_| |_| |_|
investment restriction on illiquid securities.
<CAPTION>
4. In each such entity's discretion, PMLIC or PLACA, as applicable, is authorized to vote upon such other business as
may properly come before the Meeting or any adjournment(s) thereof.
</TABLE>
(over)
<PAGE> 32
I hereby revoke any and all voting instructions with respect to such
shares heretofore given by me. I acknowledge receipt of the Proxy Statement
dated March 23, 1998. I REALIZE IF I SIGN THIS FORM WITHOUT CHECKING A BLOCK
WITH RESPECT TO THE ELECTION OF DIRECTORS OR ANY OTHER PROPOSAL LISTED ON THE
REVERSE SIDE, MY TIMELY RETURNING OF THIS FORM WILL BE DEEMED TO BE AN
INSTRUCTION TO VOTE FOR THE ELECTION OF ALL NOMINEES IDENTIFIED IN ITEM 1 OR TO
VOTE IN FAVOR OF THE PROPOSAL.
THESE VOTING INSTRUCTIONS MAY BE REVOKED AT ANY TIME PRIOR TO THE MEETING BY
NOTIFYING THE SECRETARY OF PMLIC OR PLACA, AS APPROPRIATE, OR THE SECRETARY OF
THE FUND, IN WRITING.
<TABLE>
<S> <C>
Date: _____________ ___, 1998 -------------------------------------------------------------
Signature - Please sign exactly as your name appears below.
Policy: WWWWWWWWWW Please sign, date and return this Form promptly. Signature
Insured: WWWWWWWWWWWWWWWWWWWW should be exactly as name or names appear on this Voting
Instruction Form. If the individual signing the form is a
fiduciary (e.g. attorney, executor, trustee, guardian, etc.) the
individual's signature must be followed by his or her full
title.
</TABLE>
NUMBER OF SHARES FOR WHICH YOU ARE ENTITLED TO GIVE VOTING INSTRUCTIONS:
WWWWWWWWWWWWWW WWWWWWWWWWWWWWWWWWWWWWWWWWWWWWWWWWWW
PLEASE RETURN THIS VOTING INSTRUCTION FORM PROMPTLY
WWWWWWWWWWWWWWWWWWWWWWWWWWWWWW
WWWWWWWWWWWWWWWWWWWWWWWWWWWWWW
WWWWWWWWWWWWWWWWWWWWWWWWWWWWWW
WWWWWWWWWWWWWWWWWWWWWWWWWWWWWW
<PAGE> 33
VOTING INSTRUCTION FORM
MARKET STREET FUND, INC.
VOTING INSTRUCTIONS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF NATIONAL
LIFE INSURANCE COMPANY FOR SPECIAL MEETINGS OF SHAREHOLDERS OF THE
INTERNATIONAL, BOND, MANAGED, AGGRESSIVE GROWTH, MONEY MARKET, SENTINEL GROWTH
AND GROWTH PORTFOLIOS OF MARKET STREET FUND, INC. TO BE HELD ON APRIL 22, 1998.
I hereby instruct National Life Insurance Company ("NLIC") to vote the shares of
the Portfolio, specified below, of Market Street Fund, Inc. (the "Fund") as to
which I am entitled to give instructions at the Special Meeting of Shareholders
of the Fund (the "Meeting") to be held on April 22, 1998, at 10:00 a.m. local
time, at 1050 Westlakes Drive, Berwyn, Pennsylvania 19312, or any adjournment(s)
thereof, as follows:
<TABLE>
<CAPTION>
1. Election of Five (5) Directors of the Fund
NOMINEES: Robert W. Kloss, Alan Gart, A. Gilbert Heebner, Edward S. Stouch, Leo Slack
|_| VOTE FOR all nominees listed, except as marked to the contrary above.
(TO WITHHOLD YOUR VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE A LINE THROUGH THE
NOMINEE'S NAME IN THE LIST ABOVE.)
|_| VOTE WITHHELD for all nominees.
Approve Disapprove Abstain
------- ---------- -------
<S> <C> <C> <C>
2. To ratify or reject the selection of Coopers & Lybrand LLP as
independent auditors to the Fund for the fiscal year ending |_| |_| |_|
December 31, 1998.
3(a) The approval or disapproval of the restatement of the |_| |_| |_|
Portfolio's investment restriction on issuer diversification.
3(b) The approval or disapproval of the amendment of the |_| |_| |_|
Portfolio's investment restriction on industry concentration.
3(c) The approval or disapproval of the amendment of the |_| |_| |_|
Portfolio's investment restriction on borrowing.
3(d) The approval or disapproval of the restatement of the |_| |_| |_|
Portfolio's investment restriction on lending securities.
3(e) The approval or disapproval of the restatement of the |_| |_| |_|
Portfolio's investment restriction on underwriting.
3(f) The approval or disapproval of the restatement of the |_| |_| |_|
Portfolio's investment restriction on investment in real estate.
3(g) The approval or disapproval of the amendment of the |_| |_| |_|
Portfolio's investment restriction on commodities.
3(h) The approval or disapproval of the restatement of the |_| |_| |_|
Portfolio's investment restriction on senior securities.
3(i) The approval or disapproval of the elimination of the Portfolio's |_| |_| |_|
investment restriction on investments to exercise control.
3(j) The approval or disapproval of the elimination of the Portfolio's |_| |_| |_|
investment restriction concerning other investment companies.
3(k) The approval or disapproval of the elimination of the Portfolio's |_| |_| |_|
investment restriction on investment in restricted securities.
<CAPTION>
4. NLIC is authorized, in its discretion, to vote upon such other business as may properly come before the Meeting or
any adjournment(s) thereof.
</TABLE>
(over)
<PAGE> 34
I hereby revoke any and all voting instructions with respect to such
shares heretofore given by me. I acknowledge receipt of the Proxy Statement
dated March 23, 1998. I REALIZE IF I SIGN THIS FORM WITHOUT CHECKING A BLOCK
WITH RESPECT TO THE ELECTION OF DIRECTORS OR ANY OTHER PROPOSAL LISTED ON THE
REVERSE SIDE, MY TIMELY RETURNING OF THIS FORM WILL BE DEEMED TO BE AN
INSTRUCTION TO VOTE FOR THE ELECTION OF ALL NOMINEES IDENTIFIED IN ITEM 1 OR TO
VOTE IN FAVOR OF THE PROPOSAL.
THESE VOTING INSTRUCTIONS MAY BE REVOKED AT ANY TIME PRIOR TO THE MEETING BY
NOTIFYING THE SECRETARY OF NLIC OR OF THE FUND, IN WRITING.
<TABLE>
<S> <C>
Date: _____________ ___, 1998 -------------------------------------------------------------
Signature - Please sign exactly as your name appears below.
Policy: WWWWWWWWWW Please sign, date and return this Form promptly. Signature
Insured: WWWWWWWWWWWWWWWWWWWW should be exactly as name or names appear on this Voting
Instruction Form. If the individual signing the form is a
fiduciary (e.g. attorney, executor, trustee, guardian, etc.) the
individual's signature must be followed by his or her full
title.
</TABLE>
NUMBER OF SHARES FOR WHICH YOU ARE ENTITLED TO GIVE VOTING INSTRUCTIONS:
WWWWWWWWWWWWWW WWWWWWWWWWWWWWWWWWWWWWWWWWWWWWWWWWWW
PLEASE RETURN THIS VOTING INSTRUCTION FORM PROMPTLY
WWWWWWWWWWWWWWWWWWWWWWWWWWWWWW
WWWWWWWWWWWWWWWWWWWWWWWWWWWWWW
WWWWWWWWWWWWWWWWWWWWWWWWWWWWWW
WWWWWWWWWWWWWWWWWWWWWWWWWWWWWW
<PAGE> 35
VOTING INSTRUCTION FORM
MARKET STREET FUND, INC.
VOTING INSTRUCTIONS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF NATIONAL
LIFE INSURANCE COMPANY FOR SPECIAL MEETINGS OF SHAREHOLDERS OF THE
INTERNATIONAL, BOND, MANAGED, AGGRESSIVE GROWTH, MONEY MARKET, SENTINEL GROWTH
AND GROWTH PORTFOLIOS OF MARKET STREET FUND, INC. TO BE HELD ON APRIL 22, 1998.
I hereby instruct National Life Insurance Company ("NLIC") to vote the
shares of the International Portfolio of Market Street Fund, Inc. (the "Fund")
as to which I am entitled to give instructions at the Special Meeting of
Shareholders of the Fund (the "Meeting") to be held on April 22, 1998, at 10:00
a.m. local time, at 1050 Westlakes Drive, Berwyn, Pennsylvania 19312, or any
adjournment(s) thereof, as follows:
<TABLE>
<CAPTION>
1. Election of Five (5) Directors of the Fund
NOMINEES: Robert W. Kloss, Alan Gart, A. Gilbert Heebner, Edward S. Stouch, Leo Slack
|_| VOTE FOR all nominees listed, except as marked to the contrary above.
(TO WITHHOLD YOUR VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE A LINE THROUGH THE
NOMINEE'S NAME IN THE LIST ABOVE.)
|_| VOTE WITHHELD for all nominees.
Approve Disapprove Abstain
------- ---------- -------
<S> <C> <C> <C>
2. To ratify or reject the selection of Coopers & Lybrand LLP as
independent auditors to the Fund for the fiscal year ending |_| |_| |_|
December 31, 1998.
3(a) The approval or disapproval of the restatement of the Portfolio's |_| |_| |_|
investment restriction on issuer diversification.
3(b) The approval or disapproval of the amendment of the Portfolio's |_| |_| |_|
investment restriction on industry concentration.
3(c) The approval or disapproval of the amendment of the Portfolio's |_| |_| |_|
investment restriction on borrowing.
3(d) The approval or disapproval of the restatement of the Portfolio's |_| |_| |_|
investment restriction on lending securities.
3(e) The approval or disapproval of the restatement of the Portfolio's |_| |_| |_|
investment restriction on underwriting.
3(f) The approval or disapproval of the restatement of the Portfolio's |_| |_| |_|
investment restriction on investment in real estate.
3(g) The approval or disapproval of the amendment of the Portfolio's |_| |_| |_|
investment restriction on commodities.
3(h) The approval or disapproval of the restatement of the Portfolio's |_| |_| |_|
investment restriction on senior securities.
3(i) The approval or disapproval of the elimination of the Portfolio's |_| |_| |_|
investment restriction on investments to exercise control.
3(j) The approval or disapproval of the elimination of the Portfolio's |_| |_| |_|
investment restriction concerning other investment companies.
3(k) Not applicable.
3(l) The approval or disapproval of the elimination of the Portfolio's
investment restriction on investments in securities of companies |_| |_| |_|
with a record of less than three(3) years' continuous operations.
3(m) The approval or disapproval of the elimination of the Portfolio's |_| |_| |_|
investment restriction on illiquid securities.
<CAPTION>
4. NLIC is authorized, in its discretion, to vote upon such other business as may properly come before the Meeting or
any adjournment(s) thereof.
</TABLE>
(over)
<PAGE> 36
I hereby revoke any and all voting instructions with respect to such
shares heretofore given by me. I acknowledge receipt of the Proxy Statement
dated March 23, 1998. I REALIZE IF I SIGN THIS FORM WITHOUT CHECKING A BLOCK
WITH RESPECT TO THE ELECTION OF DIRECTORS OR ANY OTHER PROPOSAL LISTED ON THE
REVERSE SIDE, MY TIMELY RETURNING OF THIS FORM WILL BE DEEMED TO BE AN
INSTRUCTION TO VOTE FOR THE ELECTION OF ALL NOMINEES IDENTIFIED IN ITEM 1 OR TO
VOTE IN FAVOR OF THE PROPOSAL.
THESE VOTING INSTRUCTIONS MAY BE REVOKED AT ANY TIME PRIOR TO THE MEETING BY
NOTIFYING THE SECRETARY OF NLIC OR OF THE FUND IN WRITING.
<TABLE>
<S> <C>
Date: _____________ ___, 1998 -------------------------------------------------------------
Signature - Please sign exactly as your name appears below.
Policy: WWWWWWWWWW Please sign, date and return this Form promptly. Signature
Insured: WWWWWWWWWWWWWWWWWWWW should be exactly as name or names appear on this Voting
Instruction Form. If the individual signing the form is a
fiduciary (e.g. attorney, executor, trustee, guardian, etc.) the
individual's signature must be followed by his or her full
title.
</TABLE>
NUMBER OF SHARES FOR WHICH YOU ARE ENTITLED TO GIVE VOTING INSTRUCTIONS:
WWWWWWWWWWWWWW WWWWWWWWWWWWWWWWWWWWWWWWWWWWWWWWWWWW
PLEASE RETURN THIS VOTING INSTRUCTION FORM PROMPTLY
WWWWWWWWWWWWWWWWWWWWWWWWWWWWWW
WWWWWWWWWWWWWWWWWWWWWWWWWWWWWW
WWWWWWWWWWWWWWWWWWWWWWWWWWWWWW
WWWWWWWWWWWWWWWWWWWWWWWWWWWWWW
