<PAGE> 1
Provident Mutual Letterhead
Dear Policyholder:
We are pleased to send you the semi-annual report for one of the fund groups
from your variable annuity contract or variable life insurance policy. In
additional mailings, you will also be receiving the semi-annual reports for
other fund groups in which you have invested. The investments available through
your variable contract are managed by some of the best fund management companies
in the country.
Your variable insurance product is unique in that it combines the protection and
tax advantages of traditional insurance with the growth potential of equity
investments. A leader in the variable products marketplace, Provident Mutual
Life Insurance Company can trace its roots back more than two centuries, giving
us the distinction of serving America's life insurance needs longer than any
other company. Our financial strength enables us to continually offer a variety
of financial products and services to help you meet your changing needs as you
move through the various stages of your life.
We are proud to include you among our policyholders, and we appreciate your
business. If you have a question about your policy, or would like more
information about our products and services, please contact your local agent or
our Customer Service Center at 1-800-688-5177.
Sincerely,
/s/ Robert W. Kloss
Robert W. Kloss
Chairman, President and CEO
<PAGE> 2
- --------------------------------------------------------------------------------
To Our Variable Life Policyholders and Variable Annuity Contractholders:
- --------------------------------------------------------------------------------
We are pleased to send you the 1999 Semi-Annual Report for the Market Street,
Inc., its Growth, Money Market, Bond, Managed, Aggressive Growth, International,
Sentinel Growth, Large Cap Growth, Large Cap Value, Small Cap Growth and Small
Cap Value Portfolios.
Economic Overview and Investment Perspective
During the first six months of 1999, the U.S. economy continued its robust
growth spurred on by consumer spending, low unemployment and relatively tame
inflation. The U.S. gross domestic product grew by an annual rate of 4.3% in the
first three months of 1999. At the end of June, the unemployment rate stood at
4.2% and inflation as measured by the Consumer Price Index rose at an annual
rate of 2%. On June 30, in an effort to curb economic growth, the Federal
Reserve increased the federal funds rate by 25bps.
For the first six months of 1999, the U.S. stock market continued its
unprecedented climb. The domestic equity market as measured by the Wilshire 5000
Equity Index gained 11.9% and the S&P 500 earned 12.4%. Large cap growth stocks,
albeit concentrated in a limited group of companies, continued to outperform
during the first quarter. Also in the first quarter, internet-related stocks
captured the attention of the media and helped push the Dow to 10,000. However,
in the second quarter the tide began to turn. Due to fears of rising interest
rates and improved prospects for global growth, investors began pouring money
into value and small cap stocks. For the second quarter, value stocks
outperformed growth by approximately 700 basis points and small cap stocks as
measured by the Russell 2000 advanced 15.6%.
The exuberance in the U.S. stock market did not extend to the U.S. fixed income
markets. There, investor fears of a robust economy brought on worries of
inflation and further changes in Federal Reserve policy. With the exception of
high yield bonds and mortgage backed securities, both government and corporate
bonds performed poorly. The Lehman Brothers Aggregate Bond Index posted a total
return of - 1.4% for the six months ended June 30. Yields on the 30 year U.S.
Treasury bond increased to 5.97% from 5.09% at the beginning of the year.
International equities as measured by the Morgan Stanley Capital International
EAFE Index earned 4% led by Japan where the government continues to stimulate
the economy with tax cuts. The gains in Japan were offset with losses in Europe
where fears of slower economic growth took its toll on the Euro.
Expectations for the remainder of the year call for a somewhat slower economic
expansion. Fears of further rate increases by the Federal Reserve persist but
only time will tell if there will be more than one rate hike. However, even with
another rate hike, the stock market should perform well over the long term as
long as earnings remain strong. Bond yields should decline as inflation is kept
in check.
Review of Fund Portfolio Performance
As always, it is important to recall in interpreting these results that the
advisers of the portfolios of the Market Street Fund do not engage in market
timing. That is to say that in all but times of great market turmoil, they
endeavor to keep the vast majority of portfolio assets fully invested. Thus,
they attempt to add value by security selection utilizing the methods and in the
markets specified in the Fund Prospectus. Their performance should be judged
according to how well they do relative to market indices measuring the same type
of activity.
1
<PAGE> 3
We appreciate the opportunity to have served you in the past and look forward to
serving you during the remainder of 1999 and many years into the future.
/s/ Rosanne Gatta
Rosanne Gatta
President
The Market Street Fund, Inc.
* Past performance is not predictive of future results. Moreover, the
relationship between the performance of the Fund Portfolios and the actual
increases or decreases in a policy's cash value is not directly proportional
due to certain charges deducted from premiums and under the policies which are
not reflected in the returns shown. Please see the current prospectus for an
explanation of these charges and for illustrations that take such charges into
account in calculating cash values.
2
<PAGE> 4
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Growth Portfolio
1999 Semi-Annual Review
Sentinel Advisors Company
- --------------------------------------------------------------------------------
The Market Street Fund Growth Portfolio achieved a total return of 7.9% for the
first six months of 1999, compared to 10.9% achieved by the median Lipper Growth
& Income fund and the 10.7% average return for the Morningstar Large Value
universe.
The Standard & Poor's 500 advanced 12.4% in the six month period. Most of the
market action was again in the large capitalization growth stocks that now
dominate the S&P 500 index, although as the second quarter got underway the
market's advance broadened to include more reasonably valued equities across the
market cap spectrum. The Portfolio's absolute performance was reasonably strong
in the first half, although broad exposure to sectors prized for their
consistent rates of earnings growth, such as consumer staples and healthcare,
which were lackluster performers, had a negative impact on relative returns. An
underweighting in the technology sector also detracted from the Portfolio's
results. During the first half of 1999, the Portfolio added exposure to the
basic materials sector, and trimmed financial sector exposure.
Strong performing sectors of the Portfolio included energy, capital goods and
consumer cyclicals, where there is broad representation. We also anticipate
improved relative returns during the second half of this year for stock holdings
in certain industries, such as food processing and pharmaceuticals, which fell
out of favor with investors during the first half of 1999. We expect to address
the under-representation in the technology sector on an opportunistic basis over
the remainder of the year.
We remain cautious with respect to the valuation levels of the broad market, and
in an environment of rising interest rates, believe the earnings multiples
afforded a number of widely held large capitalization growth stocks may be
excessive. The investment strategy of the Portfolio, which is focused on
providing competitive risk-adjusted returns with a bias for reasonably valued
stocks of fundamentally sound companies, should serve shareholders well both in
the near term and over an extended period of time.
Van Harissis, CFA
Daniel J. Manion, CFA
Hilary T. Roper, CFA
3
<PAGE> 5
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Growth Portfolio
Statement of Net Assets, June 30, 1999
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
- -----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK -- 96.2%
Aerospace & Defense -- 3.8%
Goodrich (B.F.) Co. ...................................... 155,000 $ 6,587,500
Raytheon Co., Class A..................................... 90,000 6,198,750
------------
12,786,250
------------
Automobiles -- 2.2%
Ford Motor Co. ........................................... 130,000 7,336,875
------------
Banks -- 5.6%
Bank of America Corp. .................................... 62,238 4,562,823
Bank of New York Co., Inc. ............................... 163,600 6,002,075
Chase Manhattan Corp. .................................... 50,000 4,331,250
First Union Corp. ........................................ 80,000 3,760,000
------------
18,656,148
------------
Beverages -- 2.0%
Pepsico, Inc. ............................................ 170,000 6,576,875
------------
Broadcasting & Publishing -- 3.7%
Gannett, Inc. ............................................ 90,000 6,423,750
McGraw-Hill, Inc. ........................................ 105,000 5,663,437
Time Warner, Inc. ........................................ 5,000 367,500
------------
12,454,687
------------
Building & Building Supplies -- 1.3%
Sherwin Williams Co. ..................................... 153,000 4,245,750
------------
Business & Consumer Services -- 5.2%
Automatic Data Processing, Inc. .......................... 115,000 5,060,000
Electronic Data Systems Corp. ............................ 65,000 3,676,562
Omnicom Group, Inc. ...................................... 105,000 8,400,000
------------
17,136,562
------------
Chemicals & Allied Products -- 1.4%
Du Pont (E.I.) de Nemours & Co. .......................... 70,000 4,781,875
------------
Communications -- 5.8%
Ameritech Corp. .......................................... 20,000 1,470,000
AT&T Corp. ............................................... 112,500 6,278,906
Comcast Corp., Class A.................................... 15,000 537,187
Comcast Corp., Special Class A Non-Voting................. 45,000 1,729,687
*General Instrument Corp. ................................ 20,500 871,250
GTE Corp. ................................................ 110,000 8,332,500
------------
19,219,530
------------
</TABLE>
4
<PAGE> 6
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Growth Portfolio
Statement of Net Assets, June 30, 1999 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
- -----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Computers -- 4.1%
Compaq Computer Corp. .................................... 133,500 $ 3,162,281
International Business Machines Corp. .................... 80,000 10,340,000
------------
13,502,281
------------
Consumer Products -- 4.4%
Fortune Brands, Inc. ..................................... 154,000 6,371,750
Kimberly-Clark Corp. ..................................... 144,000 8,208,000
------------
14,579,750
------------
Containers -- 0.8%
Bemis Co., Inc. .......................................... 68,800 2,734,800
------------
Drugs & Health Care -- 9.7%
Abbott Laboratories....................................... 124,000 5,642,000
American Home Products Corp. ............................. 137,500 7,906,250
Becton, Dickinson & Co. .................................. 92,000 2,760,000
*HCR Manor Care, Inc. .................................... 90,000 2,176,875
Johnson & Johnson......................................... 78,000 7,644,000
Pfizer, Inc. ............................................. 35,400 3,885,150
Schering Plough Corp. .................................... 44,000 2,332,000
------------
32,346,275
------------
Electrical Equipment -- 2.9%
Emerson Electric Co. ..................................... 93,000 5,847,375
General Electric Co. ..................................... 35,000 3,955,000
------------
9,802,375
------------
Energy -- 6.0%
Chevron Corp. ............................................ 43,500 4,140,656
Exxon Corp. .............................................. 37,500 2,892,188
FPL Group, Inc. .......................................... 45,000 2,458,125
Mobil Corp. .............................................. 64,000 6,336,000
Pacificorp................................................ 38,800 712,950
Royal Dutch Petroleum Co. ................................ 58,500 3,524,625
------------
20,064,544
------------
Entertainment -- 0.5%
Walt Disney Co. .......................................... 57,000 1,756,313
------------
Finance -- 6.1%
American Express Co. ..................................... 55,000 7,156,875
Associates First Capital Corp., Class A................... 70,000 3,101,875
Citigroup, Inc. .......................................... 127,500 6,056,250
Fannie Mae................................................ 56,400 3,856,350
------------
20,171,350
------------
</TABLE>
5
<PAGE> 7
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Growth Portfolio
Statement of Net Assets, June 30, 1999 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
- -----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Food & Food Distributors -- 4.3%
Bestfoods, Inc. .......................................... 70,000 $ 3,465,000
Hershey Foods Corp. ...................................... 64,800 3,847,500
McCormick & Co., Inc. .................................... 109,200 3,446,625
Sara Lee Corp. ........................................... 160,000 3,630,000
------------
14,389,125
------------
Industrial Diversified -- 2.3%
Parker-Hannifin Corp. .................................... 139,800 6,395,850
Praxair, Inc. ............................................ 25,000 1,223,438
------------
7,619,288
------------
Insurance -- 6.5%
Allstate Corp. ........................................... 115,000 4,125,625
American General Corp. ................................... 90,000 6,783,750
American International Group, Inc. ....................... 46,500 5,443,406
Jefferson-Pilot Corp. .................................... 73,000 4,831,688
------------
21,184,469
------------
Lodging -- 2.0%
Marriott International, Inc., Class A..................... 175,000 6,540,625
------------
Oil Field Equipment & Services -- 2.4%
Halliburton Co. .......................................... 97,500 4,411,875
Schlumberger Ltd. ........................................ 55,000 3,502,813
------------
7,914,688
------------
Paper & Forest Products -- 0.7%
International Paper Co. .................................. 48,000 2,424,000
------------
Railroads -- 1.7%
Union Pacific Corp., Series A............................. 97,500 5,685,469
------------
Real Estate -- 1.3%
Weyerhaeuser Co. ......................................... 62,500 4,296,875
------------
Retail Merchandising -- 3.7%
*Costco Companies, Inc. .................................. 72,000 5,764,500
Dayton Hudson Corp. ...................................... 39,900 2,593,500
May Department Stores Co. ................................ 94,500 3,862,688
------------
12,220,688
------------
</TABLE>
6
<PAGE> 8
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Growth Portfolio
Statement of Net Assets, June 30, 1999 -- Concluded
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MATURITY SHARES
DESCRIPTION AND PERCENTAGE OF PORTFOLIO DATE OR PAR VALUE
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCK (CONTINUED)
Semiconductors -- 0.8%
Intel Corp. .............................................. 45,000 $ 2,677,500
------------
Tobacco -- 0.8%
Philip Morris Cos., Inc. ................................. 70,000 2,813,125
------------
Utilities -- 4.3%
Duke Power Co. ........................................... 53,000 2,881,875
Enron Corp. .............................................. 100,000 8,175,000
Florida Progress Corp. ................................... 76,000 3,139,750
------------
14,196,625
------------
TOTAL COMMON STOCK (COST $241,584,296).................. 320,114,717
------------
COMMERCIAL PAPER -- 4.2%
Commercial Credit Corp., 4.95%............................ 07/02/1999 $6,000,000 5,999,175
Prudential Funding Corp., 5.11%........................... 07/07/1999 8,000,000 7,993,187
------------
TOTAL COMMERCIAL PAPER (COST $13,992,362)............... 13,992,362
------------
SHORT TERM INVESTMENTS -- 0.0%
Temporary Investment Fund, Inc. -- TempCash............... 97,771 97,771
------------
TOTAL SHORT TERM INVESTMENTS (COST $97,771)............. 97,771
------------
TOTAL INVESTMENTS -- 100.5% (COST $255,674,429)......... 334,204,850
LIABILITIES IN EXCESS OF OTHER ASSETS -- (0.5)%............. (1,609,102)
------------
NET ASSETS -- 100.0%
(Equivalent to $19.84 per share based on 16,764,024 shares
of capital stock outstanding)........................... $332,595,748
============
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE
($332,595,748/16,764,024 shares outstanding).............. $ 19.84
============
</TABLE>
*Non-income producing
See accompanying notes to financial statements.
7
<PAGE> 9
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Money Market Portfolio
Statement of Net Assets, June 30, 1999
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MATURITY
DESCRIPTION AND PERCENTAGE OF PORTFOLIO DATE PAR VALUE
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMERCIAL PAPER -- 100.8%
Agricultural Services -- 6.8%
Deere (John) Capital Corp., 5.00%......................... 07/29/1999 $1,800,000 $ 1,793,000
Monsanto Co., 4.87%....................................... 08/23/1999 5,000,000 4,964,151
------------
6,757,151
------------
Automobiles -- 11.2%
DaimlerChrysler North America Holding Corp., 4.85%........ 07/28/1999 2,200,000 2,191,998
Ford Motor Credit Co., 4.80%.............................. 07/08/1999 4,500,000 4,495,800
General Motors Acceptance Corp., 5.12%.................... 08/11/1999 4,500,000 4,473,760
------------
11,161,558
------------
Banking -- 14.1%
Morgan (J.P.) & Co., Inc., 5.20%.......................... 07/22/1999 5,000,000 4,984,833
National City Credit Corp., 5.18%......................... 08/13/1999 4,900,000 4,869,683
Northern Trust Co. (Chicago), 5.13%....................... 08/10/1999 4,200,000 4,176,060
------------
14,030,576
------------
Brokerage -- 7.7%
Merrill Lynch & Co., Inc., 4.78%.......................... 07/07/1999 3,700,000 3,697,052
Salomon Smith Barney Holdings, Inc., 4.81%................ 07/23/1999 4,000,000 3,988,242
------------
7,685,294
------------
Communications -- 3.0%
Bell Atlantic Network Funding, 4.96%...................... 07/20/1999 3,000,000 2,992,147
------------
Finance -- 40.5%
American Express Credit Corp., 5.06%...................... 07/21/1999 5,000,000 4,985,944
Associates Corp. of North America, 4.80%.................. 07/16/1999 4,000,000 3,992,000
C.I.T. Group Holdings, Inc., 5.00%........................ 08/02/1999 4,500,000 4,480,000
Caterpillar Financial Services, 4.80%..................... 07/19/1999 4,000,000 3,990,400
Commercial Credit Corp., 4.95%............................ 07/02/1999 4,500,000 4,499,381
Household Finance Corp., 5.02%............................ 08/16/1999 5,000,000 4,967,928
IBM Credit Corp., 4.98%................................... 07/20/1999 2,000,000 1,994,743
Met Life Funding Corp., 4.87%............................. 07/14/1999 4,000,000 3,992,966
Norwest Financial, Inc., 4.79%............................ 07/09/1999 4,000,000 3,995,742
Transamerica Financial Corp., 4.85%....................... 07/22/1999 3,500,000 3,490,098
------------
40,389,202
------------
Industrial -- 4.5%
Avnet, Inc., 4.90%........................................ 07/27/1999 4,500,000 4,484,075
------------
Leasing -- 4.0%
International Lease Financial Corp., 4.78%................ 07/06/1999 4,000,000 3,997,345
------------
</TABLE>
8
<PAGE> 10
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Money Market Portfolio
Statement of Net Assets, June 30, 1999 -- Concluded
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MATURITY
DESCRIPTION AND PERCENTAGE OF PORTFOLIO DATE PAR VALUE
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMERCIAL PAPER (CONTINUED)
Utilities -- 9.0%
General Electric Capital Corp., 4.81%..................... 07/30/1999 $2,850,000 $ 2,838,957
General Electric Capital Corp., 5.02%..................... 07/30/1999 1,300,000 1,294,743
Virginia Electric, 4.80%.................................. 07/13/1999 4,800,000 4,792,320
------------
8,926,020
------------
TOTAL COMMERCIAL PAPER (COST $100,423,368).............. 100,423,368
------------
TOTAL INVESTMENTS -- 100.8% (COST $100,423,368)......... 100,423,368
LIABILITIES IN EXCESS OF OTHER ASSETS -- (0.8%)............. (774,010)
------------
NET ASSETS -- 100.0%
(Equivalent to $1.00 per share based on 99,649,459 shares
of capital stock outstanding)........................... $ 99,649,358
============
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE
($99,649,358/99,649,459 shares outstanding)............... $ 1.00
============
</TABLE>
See accompanying notes to financial statements.
9
<PAGE> 11
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Bond Portfolio
1999 Semi-Annual Review
Sentinel Advisors Company
- --------------------------------------------------------------------------------
The Market Street Fund Bond Portfolio returned -3.7% versus a -1.4% return for
the Lehman Aggregate Bond Index and a -2.3% return for the Lehman Corporate Bond
Index.
To say the least, it has been an extremely difficult year, thus far, for the
bond market as interest rates have risen steadily all year. The 50-basis point
jump experienced in the first quarter of 1999, was followed by an additional
50-basis point increase during the second quarter, making the year-to-date
increase a whopping 100 basis points.
U.S. economic growth has remained surprisingly resilient with first quarter real
GDP growth at 4.3% and projections for the second quarter look to be about 3%,
well above the Federal Reserve's noninflationary target of 2.0 - 2.5%. However,
more damaging to the bond market was the change in inflation expectations
following the release of the April Consumer Price Index (CPI) which increased
0.7%. This put the year-over-year increase in the CPI to 2.3% in April, up
sharply from the 1.7% level in March. In addition, continued tight labor markets
prompted the Federal Reserve to take preemptive action, tightening monetary
policy 25 basis points on June 30th, the first tightening move in over two
years.
Against this backdrop, the yield on the 2-year U.S. Treasury Note rose 99 basis
points during the first half of the year to 5.52%, while the yield on the
30-year U.S. Treasury Bond jumped to 5.97%, an increase of 88 basis points. The
U.S. Treasury yield curve flattened 12 basis points to a current slope of +45
basis points, as measured by the 2-year Note to 30-year Bond spread. It is
interesting to note that the worst performing sectors of the fixed-income market
in 1998; high-yield and mortgage-backed securities; have been the best
performing sectors in 1999, thus far.
In the first half of the year, the effective duration of the Portfolio was
reduced from 6.7 years to 6.4 years. This was accomplished by swapping
intermediate U.S. Treasuries in favor of higher yielding mortgage-backed
securities. The Fund's relative underperformance was a direct result of its
longer duration.
Going forward, we are still constructive on the prospects for lower U.S.
interest rates. We believe that the April CPI statistic was an aberration and
not the beginning of a secular trend. In addition, we do not believe the Federal
Reserve will embark on a series of tightening moves like 1994, even though one
more move is clearly possible before the end of the year. The Fed is still
unclear as to what impact the Y2K situation will have on the global economy, if
any, and will be hesitant to be a catalyst for a recession. We think that U.S.
economic growth will slow to a more sustainable level in the third and fourth
quarters of 1999 and that increasing productivity in the U.S. labor markets will
keep inflation dormant.
William C. Kane, CFA
10
<PAGE> 12
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Bond Portfolio
Statement of Net Assets, June 30, 1999
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MATURITY
DESCRIPTION AND PERCENTAGE OF PORTFOLIO DATE PAR VALUE
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
U.S. TREASURY BONDS -- 13.7%
U.S. Treasury Bonds, 7.25%................................ 05/15/2016 $1,000,000 $ 1,099,307
U.S. Treasury Bonds, 6.00%................................ 02/15/2026 2,500,000 2,436,614
U.S. Treasury Bonds, 5.25%................................ 02/15/2029 1,500,000 1,345,889
-----------
TOTAL U.S. TREASURY BONDS (COST $5,234,079)............. 4,881,810
-----------
U.S. TREASURY NOTES -- 22.0%
U.S. Treasury Notes, 5.25%................................ 05/15/2004 2,000,000 1,966,606
U.S. Treasury Notes, 7.00%................................ 07/15/2006 250,000 264,751
U.S. Treasury Notes, 4.75%................................ 11/15/2008 4,500,000 4,128,359
U.S. Treasury Notes, 5.50%................................ 05/15/2009 1,500,000 1,467,681
-----------
TOTAL U.S. TREASURY NOTES (COST $8,063,576)............. 7,827,397
-----------
AGENCY OBLIGATIONS -- 17.4%
Federal Home Loan Mortgage Corp., 8.00%................... 11/01/2008 274,338 284,197
Federal Home Loan Mortgage Corp., 8.00%................... 08/01/2010 996,262 1,026,150
Federal Home Loan Mortgage Corp., 8.00%................... 03/01/2017 18,996 19,679
Federal National Mortgage Association, 10.5%.............. 11/01/2017 502,811 540,679
Federal National Mortgage Association, 8.50%.............. 09/01/2026 954,440 995,899
Federal National Mortgage Association, 6.00%.............. 04/01/2028 1,073,447 1,008,370
Federal National Mortgage Association, 8.50%.............. 04/01/2028 982,715 1,025,402
Federal National Mortgage Association, 7.00%.............. 09/01/2028 964,017 953,172
Federal National Mortgage Association, 7.00%.............. 11/01/2028 316,255 312,697
-----------
TOTAL AGENCY OBLIGATIONS (COST $6,232,377).............. 6,166,245
-----------
CORPORATE BONDS -- 40.2%
Automobiles -- 2.4%
Ford Motor Co., 6.375%.................................... 02/01/2029 1,000,000 870,000
-----------
Automotive & Equipment -- 0.7%
Lear Corp., 7.96%......................................... 05/15/2005 250,000 241,875
-----------
Chemicals & Allied Products -- 0.7%
Rohm and Haas Co., 7.40%.................................. 07/15/2009 250,000 249,940
-----------
Communications -- 6.8%
AT&T Corp., 6.50%......................................... 03/15/2029 1,000,000 902,500
Comsat Corp. Medium Term Note, 8.05%...................... 12/13/2006 500,000 537,549
Worldcom, Inc., 6.40%..................................... 08/15/2005 1,000,000 976,250
-----------
2,416,299
-----------
</TABLE>
11
<PAGE> 13
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Bond Portfolio
Statement of Net Assets, June 30, 1999 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MATURITY
DESCRIPTION AND PERCENTAGE OF PORTFOLIO DATE PAR VALUE
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CORPORATE BONDS (CONTINUED)
Finance -- 9.2%
Ahold Finance USA, Inc., 6.25%............................ 05/01/2009 $ 500,000 $ 471,875
Countrywide Home Loan, 6.85%.............................. 06/15/2004 1,000,000 988,750
ERAC USA Finance Co., 6.625%.............................. 05/15/2006 750,000 721,875
First Union Corp., 6.824%................................. 08/01/2006 600,000 603,000
Socgen Real Estate L.L.C., 7.64%.......................... 12/29/2049 500,000 469,375
-----------
3,254,875
-----------
Foreign Financial Institutions -- 1.3%
Banque Nationale de Paris, 7.738%......................... 12/31/2049 500,000 479,375
-----------
Industrial -- 5.6%
CMS Energy, 6.75%......................................... 01/15/2004 250,000 237,812
IMC Global, Inc., 7.40%................................... 11/01/2002 500,000 504,375
Nabors Industrial, 6.80%.................................. 04/15/2004 500,000 493,750
Owens Corning, 7.50%...................................... 05/01/2005 750,000 742,500
-----------
1,978,437
-----------
Oil -- 1.4%
Union Pacific Resources Group, 7.30%...................... 04/15/2009 500,000 482,500
-----------
Tobacco -- 1.0%
Dimon, Inc. Senior Notes, 8.875%.......................... 06/01/2006 400,000 365,500
-----------
Transportation -- 1.6%
Laidlaw, Inc., 7.65%...................................... 05/15/2006 600,000 585,000
-----------
Utilities -- 9.5%
Calenergy Co., Inc. Senior Notes, 7.52%................... 09/15/2008 750,000 752,813
Cleveland Electric Toledo Edison, 7.67%................... 07/01/2004 250,000 254,688
Israel Electric Corp. Ltd., 7.75%......................... 03/01/2009 500,000 493,125
Sprint Capital Corp., 6.875%.............................. 11/15/2028 1,000,000 913,750
US West Capital Funding, 6.25%............................ 07/15/2005 1,000,000 950,000
-----------
3,364,376
-----------
TOTAL CORPORATE BONDS (COST $14,835,825)................ 14,288,177
-----------
COMMERCIAL PAPER -- 13.7%
American Express Credit Corp., 5.25%...................... 07/06/1999 1,500,000 1,498,906
CIT Group, Inc., 4.84%.................................... 08/17/1999 1,400,000 1,391,006
FMC Discount Note, 4.79%.................................. 08/02/1999 2,000,000 1,991,343
-----------
TOTAL COMMERCIAL PAPER (COST $4,881,544)................ 4,881,255
-----------
</TABLE>
12
<PAGE> 14
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Bond Portfolio
Statement of Net Assets, June 30, 1999 -- Concluded
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
SHORT TERM INVESTMENTS -- 0.9%
Temporary Investment Fund, Inc. -- TempCash............... 309,089 $ 309,089
-----------
TOTAL SHORT TERM INVESTMENTS (COST $309,089)............ 309,089
-----------
TOTAL INVESTMENTS -- 107.9% (COST $39,556,490).......... 38,353,973
LIABILITIES IN EXCESS OF OTHER ASSETS -- (7.9%)............. (2,814,838)
-----------
NET ASSETS -- 100.0%
(Equivalent to $10.54 per share based on 3,373,095 shares
of capital stock outstanding)........................... $35,539,135
===========
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE
($35,539,135/3,373,095 shares outstanding)................ $ 10.54
===========
</TABLE>
See accompanying notes to financial statements.
13
<PAGE> 15
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Managed Portfolio
1999 Semi-Annual Review
Sentinel Advisors Company
- --------------------------------------------------------------------------------
The Market Street Fund Managed Portfolio achieved a total return of 3.8% for the
first half of 1999, compared to 5.3% for the median Lipper Balanced fund.
The Standard & Poor's 500 returned 12.4% during the first half, handily
outperforming the -1.4% return of the Lehman Aggregate Bond Index. The stock
market's strength during the period was initially focused in the very largest
market capitalization growth stocks that dominate the S&P 500, but broadened to
include more reasonably valued stocks of all market cap segments. At the end of
June, the asset allocation of the Market Street Managed Portfolio was 61% common
stocks, 35% fixed income and 4% cash. This is little changed from the 61% common
stocks, 37% fixed income and 2% cash positions as of the end of 1998.
First half performance was helped by a number of holdings in the energy, capital
goods and consumer cyclical areas, sectors where the Portfolio has broad
representation. Returns were negatively impacted by meaningful weights in
sectors with consistent rates of earnings growth, such as consumer staples and
healthcare, which were lackluster performers. During the first half of 1999, the
Portfolio trimmed its financial sector exposure and increased its holdings of
basic materials stocks, and we expect to opportunistically build the technology
sector over the balance of 1999.
To say the least, it has been an extremely difficult year for bonds as interest
rates have risen over 100 basis points. U.S. economic growth has remained
surprisingly strong with first quarter real GDP growth of 4.3% and projections
for second quarter growth look to be about 3%. However, more damaging to the
bond market was the change of inflation expectations following the release of
the April Consumer Price Index (CPI) which increased 0.7%. This put the
year-over-year increase in the CPI at 2.3% in April, up sharply from the 1.7%
level in March. In addition, continued tight labor markets prompted the Federal
Reserve to take preemptive action, tightening monetary policy 25 basis points on
June 30; the first tightening move in over two years. The duration of the bond
component of the Portfolio now stands at 6.0 years.
While we are reasonably optimistic about the continued strength of the domestic
economy and the outlook for corporate profits, we remain cautious with respect
to the valuation levels of many large capitalization growth stocks that have
come to dominate the returns of market indices like the S&P 500. We believe that
a disciplined value-oriented investment strategy is most appropriate for the
Portfolio in the current stock market environment. As for bonds, our primary
focus is on income, emphasizing mortgage-backed securities. As always, we
believe that a conservative balanced approach that emphasizes investment
quality, valuation and income should serve our policyholders well in both strong
markets and more turbulent ones.
David M. Brownlee, CFA
Van Harissis, CFA
Daniel J. Manion, CFA
14
<PAGE> 16
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Managed Portfolio
Statement of Net Assets, June 30, 1999
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
- ------------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK -- 60.7%
Aerospace & Defense -- 2.2%
Goodrich (B.F.) Co. ...................................... 20,400 $ 867,000
Raytheon Co., Class A..................................... 12,500 860,937
------------
1,727,937
------------
Automobiles -- 1.2%
Ford Motor Co. ........................................... 16,000 903,000
------------
Banks -- 3.3%
Bank of America Corp. .................................... 9,052 663,625
Bank of New York Co., Inc. ............................... 20,900 766,769
Chase Manhattan Corp. .................................... 7,500 649,687
First Union Corp. ........................................ 9,900 465,300
------------
2,545,381
------------
Beverages -- 1.6%
Pepsico, Inc. ............................................ 32,000 1,238,000
------------
Broadcasting & Publishing -- 3.1%
Gannett, Inc. ............................................ 14,000 999,250
McGraw-Hill, Inc. ........................................ 22,800 1,229,775
Time Warner, Inc. ........................................ 1,000 73,500
------------
2,302,525
------------
Building & Building Supplies -- 0.9%
Sherwin Williams Co. ..................................... 25,000 693,750
------------
Business & Consumer Services -- 2.9%
Automatic Data Processing, Inc. .......................... 14,200 624,800
Electronic Data Systems Corp. ............................ 9,000 509,062
Omnicom Group, Inc. ...................................... 13,500 1,080,000
------------
2,213,862
------------
Chemicals & Allied Products -- 1.1%
Du Pont (E.I.) de Nemours & Co. .......................... 12,000 819,750
------------
Communications -- 3.6%
Ameritech Corp. .......................................... 2,800 205,800
AT&T Corp. ............................................... 15,750 879,047
Comcast Corp., Class A.................................... 3,000 107,437
Comcast Corp., Special Class A Non-Voting................. 9,000 345,937
*General Instrument Corp. ................................ 2,900 123,250
GTE Corp. ................................................ 15,000 1,136,250
------------
2,797,721
------------
</TABLE>
15
<PAGE> 17
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Managed Portfolio
Statement of Net Assets, June 30, 1999 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
- ------------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Computers -- 2.4%
Compaq Computer Corp. .................................... 17,800 $ 421,637
International Business Machines Corp. .................... 11,000 1,421,750
------------
1,843,387
------------
Consumer Products -- 2.6%
Fortune Brands, Inc. ..................................... 20,000 827,500
Kimberly-Clark Corp. ..................................... 20,000 1,140,000
------------
1,967,500
------------
Containers -- 0.8%
Bemis Co., Inc. .......................................... 15,000 596,250
------------
Drugs & Health Care -- 6.1%
Abbott Laboratories....................................... 18,000 819,000
American Home Products Corp. ............................. 18,000 1,035,000
Becton, Dickinson & Co. .................................. 15,000 450,000
*HCR Manor Care, Inc. .................................... 15,000 362,812
Johnson & Johnson......................................... 10,000 980,000
Pfizer, Inc. ............................................. 4,300 471,925
Schering Plough Corp. .................................... 11,000 583,000
------------
4,701,737
------------
Electrical Equipment -- 1.8%
Emerson Electric Co. ..................................... 13,000 817,375
General Electric Co. ..................................... 4,700 531,100
------------
1,348,475
------------
Energy -- 3.3%
Chevron Corp. ............................................ 5,100 485,456
Exxon Corp. .............................................. 4,900 377,912
FPL Group, Inc. .......................................... 5,800 316,825
Mobil Corp. .............................................. 9,000 891,000
Royal Dutch Petroleum Co. ................................ 8,000 482,000
------------
2,553,193
------------
Entertainment -- 0.3%
*Walt Disney Co. ......................................... 8,000 246,500
------------
</TABLE>
16
<PAGE> 18
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Managed Portfolio
Statement of Net Assets, June 30, 1999 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
- ------------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Finance -- 3.2%
American Express Co. ..................................... 6,700 $ 871,837
Associates First Capital Corp., Class A................... 7,548 334,471
Citigroup, Inc. .......................................... 15,000 712,500
Fannie Mae................................................ 8,200 560,675
------------
2,479,483
------------
Food & Food Distributors -- 2.9%
Bestfoods, Inc. .......................................... 10,000 495,000
Hershey Foods Corp. ...................................... 9,000 534,375
McCormick & Co., Inc. .................................... 25,100 792,219
Sara Lee Corp. ........................................... 17,000 385,687
------------
2,207,281
------------
Industrial Diversified -- 1.7%
Parker-Hannifin Corp. .................................... 17,700 809,775
Praxair, Inc. ............................................ 10,000 489,375
------------
1,299,150
------------
Insurance -- 3.6%
Allstate Corp. ........................................... 15,000 538,125
American General Corp. ................................... 11,200 844,200
American International Group, Inc. ....................... 6,050 708,228
Jefferson-Pilot Corp. .................................... 10,050 665,184
------------
2,755,737
------------
Lodging -- 1.2%
Marriott International, Inc., Class A..................... 25,000 934,375
------------
Oil Field Equipment & Services -- 1.5%
Halliburton Co. .......................................... 15,000 678,750
Schlumberger Ltd. ........................................ 8,000 509,500
------------
1,188,250
------------
Paper & Forest Products -- 0.5%
International Paper Co. .................................. 7,000 353,500
------------
Railroads -- 1.1%
Union Pacific Corp., Series A............................. 15,000 874,688
------------
Real Estate -- 1.1%
Weyerhaeuser Co. ......................................... 12,500 859,375
------------
</TABLE>
17
<PAGE> 19
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Managed Portfolio
Statement of Net Assets, June 30, 1999 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MATURITY SHARES
DESCRIPTION AND PERCENTAGE OF PORTFOLIO DATE OR PAR VALUE
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCK (CONTINUED)
Retail Merchandising -- 2.6%
*Costco Companies, Inc. .................................. 10,000 $ 800,625
Dayton Hudson Corp. ...................................... 10,000 650,000
May Department Stores Co. ................................ 14,250 582,469
-----------
2,033,094
-----------
Semiconductors -- 0.8%
Intel Corp. .............................................. 10,000 595,000
-----------
Tobacco -- 0.4%
Philip Morris Cos., Inc. ................................. 8,500 341,594
-----------
Utilities -- 2.9%
Duke Power Co. ........................................... 10,000 543,750
Enron Corp. .............................................. 16,500 1,348,875
Florida Progress Corp. ................................... 8,700 359,419
-----------
2,252,044
-----------
TOTAL COMMON STOCK (COST $32,074,863)................... 46,672,539
-----------
U.S. TREASURY NOTES -- 4.8%
U.S. Treasury Notes, 5.50%................................ 05/15/2009 $3,750,000 3,669,202
-----------
TOTAL U.S. TREASURY NOTES (COST $3,608,438)............. 3,669,202
-----------
U.S. TREASURY BONDS -- 5.5%
U.S. Treasury Bonds, 7.25%................................ 05/15/2016 1,000,000 1,099,307
U.S. Treasury Bonds, 5.25%................................ 02/15/2029 3,500,000 3,140,409
-----------
TOTAL U.S. TREASURY BONDS (COST $4,222,958)............. 4,239,716
-----------
AGENCY OBLIGATIONS -- 14.0%
Federal Home Loan Mortgage Corp., 9.00%................... 08/01/2004 719,081 744,698
Federal Home Loan Mortgage Corp., 9.00%................... 12/01/2004 627,836 650,203
Federal Home Loan Mortgage Corp., 9.50%................... 03/01/2006 118,986 124,675
Federal Home Loan Mortgage Corp., 8.00%................... 11/01/2008 274,338 284,197
Federal Home Loan Mortgage Corp., 8.00%................... 06/01/2010 925,678 953,448
Federal National Mortgage Association, 7.00%.............. 03/01/2008 263,472 264,378
Federal National Mortgage Association, 7.75%.............. 03/01/2008 147,891 150,526
Federal National Mortgage Association, 7.75%.............. 05/01/2008 94,607 96,292
Federal National Mortgage Association, 8.00%.............. 12/01/2009 1,396,009 1,437,890
Federal National Mortgage Association, 10.50%............. 03/01/2018 455,505 489,810
Federal National Mortgage Association, 8.50%.............. 09/01/2026 954,440 995,899
Federal National Mortgage Association, 8.50%.............. 10/01/2026 1,197,616 1,249,637
Federal National Mortgage Association, 8.00%.............. 10/01/2027 734,425 753,015
Federal National Mortgage Association, 8.00%.............. 01/01/2028 937,149 960,871
Federal National Mortgage Association, 7.50%.............. 05/01/2028 505,997 511,215
</TABLE>
18
<PAGE> 20
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Managed Portfolio
Statement of Net Assets, June 30, 1999 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MATURITY
DESCRIPTION AND PERCENTAGE OF PORTFOLIO DATE PAR VALUE
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
AGENCY OBLIGATIONS (CONTINUED)
Government National Mortgage Association, 8.00%........... 03/15/2007 $ 197,582 $ 204,806
Government National Mortgage Association, 8.00%........... 08/15/2008 341,795 354,292
Government National Mortgage Association, 6.50%........... 01/15/2026 548,216 527,658
-----------
TOTAL AGENCY OBLIGATIONS (COST $10,795,534)............. 10,753,510
-----------
CORPORATE BONDS -- 11.3%
Automobiles -- 0.6%
Ford Motor Co., 6.375%.................................... 02/01/2029 500,000 435,000
-----------
Automotive & Equipment -- 0.9%
Lear Corp., 7.96%......................................... 05/15/2005 250,000 241,875
TRW, Inc., 7.125%......................................... 06/01/2009 500,000 488,125
-----------
730,000
-----------
Communications -- 1.9%
AT&T Corp., 6.50%......................................... 03/15/2029 500,000 451,250
Comsat Corp. Medium Term Note, 8.05%...................... 12/13/2006 500,000 537,549
Worldcom, Inc., 6.40%..................................... 08/15/2005 500,000 488,125
-----------
1,476,924
-----------
Finance -- 1.4%
ERAC USA Finance Co., 6.625%.............................. 05/15/2006 500,000 481,250
First Union Corp., 6.824%................................. 08/01/2006 600,000 603,000
-----------
1,084,250
-----------
Food & Food Distributors -- 0.6%
Archer Daniels Midland, 6.625%............................ 05/01/2029 500,000 458,750
-----------
Foreign Financial Institutions -- 0.3%
Banque Nationale de Paris, 7.738%......................... 12/31/2049 250,000 239,688
-----------
Industrial -- 2.3%
CMS Energy, 6.75%......................................... 01/15/2004 250,000 237,813
IMC Global, Inc., 7.40%................................... 11/01/2002 500,000 504,375
Nabors Industrial, 6.80%.................................. 04/15/2004 500,000 493,750
Owens Corning, 7.50%...................................... 05/01/2005 500,000 495,000
-----------
1,730,938
-----------
Oil -- 0.6%
Union Pacific Resources Group, 7.30%...................... 04/15/2009 500,000 482,500
-----------
Tobacco -- 0.5%
Dimon, Inc. Senior Notes, 8.875%.......................... 06/01/2006 400,000 365,500
-----------
Transportation -- 0.6%
Laidlaw, Inc., 7.65%...................................... 05/15/2006 500,000 487,500
-----------
</TABLE>
19
<PAGE> 21
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Managed Portfolio
Statement of Net Assets, June 30, 1999 -- Concluded
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MATURITY SHARES
DESCRIPTION AND PERCENTAGE OF PORTFOLIO DATE OR PAR VALUE
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Utilities -- 1.6%
Cleveland Electric Toledo Edison, 7.67%................... 07/01/2004 $ 250,000 $ 254,688
Israel Electric Corp. Ltd., 7.75%......................... 03/01/2009 500,000 493,125
Sprint Capital Corp., 6.875%.............................. 11/15/2028 500,000 456,875
-----------
1,204,688
-----------
TOTAL CORPORATE BONDS (COST $8,973,454)................. 8,695,738
-----------
COMMERCIAL PAPER -- 11.8%
Commercial Credit Corp., 5.05%............................ 07/02/1999 3,100,000 3,099,565
Merrill Lynch & Co., Inc., 4.81%.......................... 07/23/1999 2,500,000 2,492,533
Prudential Funding Corp., 5.25%........................... 07/06/1999 3,500,000 3,497,448
-----------
TOTAL COMMERCIAL PAPER (COST $9,089,664)................ 9,089,546
-----------
SHORT TERM INVESTMENTS -- 0.4%
Temporary Investment Fund, Inc. -- TempCash............... 320,601 320,601
-----------
TOTAL SHORT TERM INVESTMENTS (COST $320,601)............ 320,601
-----------
TOTAL INVESTMENTS -- 108.5% (COST $69,085,512).......... 83,440,852
LIABILITIES IN EXCESS OF OTHER ASSETS -- (8.5%)............. (6,511,339)
-----------
NET ASSETS -- 100.0%
(Equivalent to $17.30 per share based on 4,446,346 shares
of capital stock outstanding)........................... $76,929,513
===========
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE
($76,929,513/4,446,346 shares outstanding)................ $ 17.30
===========
</TABLE>
*Non-Income producing
See accompanying notes to financial statements.
20
<PAGE> 22
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Aggressive Growth Portfolio
1999 Semi-Annual Report
Sentinel Advisors Company
- --------------------------------------------------------------------------------
The Market Street Fund Aggressive Growth Portfolio achieved a total return of
8.6% for the first six months of 1999. The median return for the Lipper
Small-Cap fund universe was 6.7% and the average return for the Morningstar
Small-Cap Blend universe was 9.0%.
The Russell 2000 stock index, a good proxy for small-cap stocks, returned 9.2%
for the first half of 1999 while the S&P 600 Small Cap Index was up 5.0%. The
Market Street Fund Aggressive Growth Portfolio's weaker performance relative to
the Russell 2000 for the first six months of this year is mostly attributed to
poor stock selection in healthcare and the Portfolio's lack of exposure to the
very strong internet sector.
During the first half of 1999, new positions were started in several
communications related companies and in several profitable and fast growing
pharmaceutical companies. Early in the year, we also increased the Portfolio's
exposure to the energy service industry.
Our investment strategy going forward will continue to emphasize companies that
are likely to grow earnings consistently at a rate much faster than the overall
economy. However, with Japan and selected Asian economies seemingly on the
rebound, we are increasingly more interested in quality companies that will
benefit from stronger worldwide economic growth. Although the Portfolio's
exposure to technology remains focused on service providers and software
companies that enhance productivity, we will continue to look for additional
opportunities to gain exposure to the fast growing communications industry.
Regardless of which industry opportunity or trend we might be trying to exploit,
we remain committed to the idea of investing in superior businesses at
reasonable valuations.
Scott T. Brayman, CFA
Robert L. Lee, CFA
21
<PAGE> 23
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Aggressive Growth Portfolio
Statement of Net Assets, June 30, 1999
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
- -----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK -- 91.8%
Aerospace & Defense -- 0.6%
Goodrich (B.F.) Co. ...................................... 8,000 $ 340,000
-----------
Banks -- 1.4%
Cullen Frost Bankers, Inc. ............................... 10,000 275,625
Mercantile Bankshares Corp. .............................. 8,000 283,000
Wilmington Trust Corp. ................................... 5,000 286,875
-----------
845,500
-----------
Beverages -- 0.9%
*Robert Mondavi Corp., Class A............................. 14,000 509,250
-----------
Broadcasting & Publishing -- 0.5%
Meredith Corp. ........................................... 9,000 311,625
-----------
Building - Maintenance & Service -- 0.4%
American Building Maintenance Industries.................. 7,000 214,813
-----------
Business & Consumer Services -- 14.6%
*Acxiom Corp. ............................................. 45,000 1,122,187
*Administaff, Inc. ........................................ 15,000 240,000
*Affiliated Computer Services, Inc. ....................... 41,000 2,075,625
Analysts International Corp. ............................. 51,700 743,187
*Caci International, Inc. ................................. 34,000 765,000
*Catalina Marketing Corp. ................................. 11,600 1,067,200
*Healthcare Services Group................................. 41,700 406,575
*Sterling Commerce, Inc. .................................. 41,000 1,496,500
Unifirst Corp. ........................................... 45,000 826,875
-----------
8,743,149
-----------
Chemicals & Allied Products -- 4.9%
*Bush Boake Allen, Inc. ................................... 44,000 1,287,000
Cambrex Corp. ............................................ 62,000 1,627,500
-----------
2,914,500
-----------
Communications -- 2.3%
*Dynatech Corp. ........................................... 7,000 24,062
True North Communications................................. 45,000 1,350,000
-----------
1,374,062
-----------
Computers -- 0.3%
*Ciber, Inc. .............................................. 9,000 172,125
-----------
Containers -- 1.6%
Bemis Co., Inc. .......................................... 24,000 954,000
-----------
</TABLE>
22
<PAGE> 24
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Aggressive Growth Portfolio
Statement of Net Assets, June 30, 1999 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
- -----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Cosmetics and Toiletries -- 1.7%
Alberto-Culver Co., Class A............................... 45,000 $ 1,026,562
-----------
Drugs & Health Care -- 4.0%
*Barr Laboratories, Inc. .................................. 5,000 199,375
*Covance, Inc. ............................................ 69,000 1,651,687
Jones Pharma, Inc. ....................................... 7,000 275,625
*Monarch Dental Corp. ..................................... 26,000 82,063
*Roberts Pharmaceutical Corp. ............................. 8,000 194,000
-----------
2,402,750
-----------
Electrical Equipment -- 1.4%
*Sawtek, Inc. ............................................. 18,000 825,750
-----------
Electronics -- 8.2%
*C-COR Electronics, Inc. .................................. 9,000 250,875
*C-Cube Microsystems, Inc. ................................ 12,000 380,250
CTS Corp. ................................................ 5,000 350,000
Harman International Industries, Inc. .................... 22,000 968,000
Methode Electronics, Inc., Class A........................ 90,000 2,058,750
*Photronics, Inc. ......................................... 27,000 661,500
*Unitrode Corp. ........................................... 9,000 258,188
-----------
4,927,563
-----------
Energy -- 2.0%
*MidAmerican Energy Holdings Co. .......................... 34,000 1,177,250
-----------
Environmental Control -- 2.9%
Donaldson Co., Inc. ...................................... 45,000 1,102,500
*Tetra Technologies, Inc. ................................. 66,000 606,375
-----------
1,708,875
-----------
Financial -- 4.6%
Duff & Phelps Credit Rating Co. .......................... 23,000 1,538,125
Waddell & Reed Financial, Inc. ........................... 30,000 823,125
Waddell & Reed Financial, Inc., Class B................... 14,000 378,000
-----------
2,739,250
-----------
Food & Food Distributors -- 3.6%
Smart & Final, Inc. ...................................... 24,000 252,000
*Smart & Final Rights...................................... 24,000 0
*Whole Foods Market, Inc. ................................. 32,000 1,538,000
Worthington Foods, Inc. .................................. 23,000 379,500
-----------
2,169,500
-----------
</TABLE>
23
<PAGE> 25
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Aggressive Growth Portfolio
Statement of Net Assets, June 30, 1999 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
- -----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Health Care Providers -- 0.4%
HealthPlan Services Corp. ................................ 36,000 $ 245,250
-----------
Insurance -- 4.5%
Enhance Financial Services Group, Inc. ................... 32,000 632,000
HCC Insurance Holdings, Inc. ............................. 68,000 1,542,750
Horace Mann Educators Corp. .............................. 20,000 543,750
-----------
2,718,500
-----------
Manufacturing -- 4.6%
AptarGroup, Inc. ......................................... 45,000 1,350,000
*Plexus Corp. ............................................. 8,000 241,000
Robbins & Myers, Inc. .................................... 10,000 223,125
Tyco International Ltd. .................................. 10,000 947,500
-----------
2,761,625
-----------
Medical Equipment & Supplies -- 5.7%
Ballard Medical Products.................................. 35,000 815,938
Diagnostic Products Corp. ................................ 5,400 149,175
Hillenbrand Industries, Inc. ............................. 12,000 519,000
Mentor Corp. ............................................. 71,000 1,322,375
Minntech Corp. ........................................... 40,000 590,000
-----------
3,396,488
-----------
Oil & Gas -- 0.4%
*Cal Dive International, Inc. ............................. 9,000 268,875
-----------
Oil Equipment & Services -- 2.1%
CARBO Ceramics, Inc. ..................................... 10,000 304,375
*Oceaneering International, Inc. .......................... 9,000 145,125
*Smith International, Inc. ................................ 18,000 781,875
-----------
1,231,375
-----------
Personal Services -- 0.2%
Strayer Education, Inc. .................................. 4,800 147,300
-----------
Railroads -- 0.4%
*Railtex, Inc. ............................................ 18,000 249,750
-----------
Real Estate -- 2.3%
Chateau Communities, Inc. ................................ 45,000 1,347,188
-----------
</TABLE>
24
<PAGE> 26
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Aggressive Growth Portfolio
Statement of Net Assets, June 30, 1999 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MATURITY SHARES
DESCRIPTION AND PERCENTAGE OF PORTFOLIO DATE OR PAR VALUE
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCK (CONTINUED)
Restaurants -- 5.0%
Applebee's International, Inc. ........................... 24,000 $ 723,000
Ruby Tuesday, Inc. ....................................... 58,000 1,102,000
*Sbarro, Inc. ............................................. 44,000 1,190,750
-----------
3,015,750
-----------
Retail Merchandising -- 3.3%
Casey General Stores, Inc. ............................... 22,000 330,000
Ethan Allen Interiors, Inc. .............................. 33,000 1,245,750
*The Wet Seal, Inc., Class A............................... 14,000 400,750
-----------
1,976,500
-----------
Semiconductors -- 3.1%
Dallas Semiconductor Corp. ............................... 26,400 1,333,200
*Novellus Systems, Inc. ................................... 8,000 546,000
-----------
1,879,200
-----------
Software -- 1.3%
*Filenet Corp. ............................................ 66,000 754,875
-----------
Transportation -- 2.6%
*Eagle USA Airfreight, Inc. ............................... 6,000 254,625
Robinson (C.H.) Worldwide, Inc. .......................... 36,000 1,323,000
-----------
1,577,625
-----------
TOTAL COMMON STOCK (COST $45,845,713)................... 54,926,825
-----------
CORPORATE BONDS -- 0.1%
Phoenix Investment Partners Ltd., 6.00%................... 11/01/2015 $ 62,500 71,440
-----------
TOTAL CORPORATE BONDS (COST $67,141).................... 71,440
-----------
COMMERCIAL PAPER -- 7.4%
Ford Motor Credit Corp., 5.22%............................ 07/09/1999 2,700,000 2,696,868
General Electric Capital Corp., 5.11%..................... 07/06/1999 1,700,000 1,698,793
-----------
TOTAL COMMERCIAL PAPER (COST $4,395,661)................ 4,395,661
-----------
SHORT TERM INVESTMENTS -- 0.4%
Temporary Investment Fund, Inc. -- TempCash............... 232,633 232,633
-----------
TOTAL SHORT TERM INVESTMENTS (COST $232,633)............ 232,633
-----------
TOTAL INVESTMENTS -- 99.7% (COST $50,541,148)........... 59,626,559
OTHER ASSETS IN EXCESS OF LIABILITIES -- 0.3%............... 176,017
-----------
</TABLE>
25
<PAGE> 27
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Aggressive Growth Portfolio
Statement of Net Assets, June 30, 1999 -- Concluded
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO VALUE
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NET ASSETS -- 100.0%
(Equivalent to $20.57 per share bases on 2,907,961 shares
of capital stock outstanding)........................... $59,802,576
===========
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE
($59,802,576/2,907,961 shares outstanding)................ $ 20.57
===========
</TABLE>
* Non-income producing
See accompanying notes to financial statements.
26
<PAGE> 28
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The International Portfolio
1999 Semi-Annual Review
The Boston Company Asset Management, Inc.
- --------------------------------------------------------------------------------
For the six months ended June 30, 1999, the Market Street Fund International
Portfolio outperformed the Morgan Stanley Capital International EAFE index by
over five hundred basis points. The Portfolio returned 9.8% for the six months
to date. The EAFE index returned 4% for the year to date. The primary reasons
for the out performance lie in the Portfolio's over weight position in Japan and
its positioning in value stocks which have recently been benefiting from
corporate restructuring and consolidation.
Japan continues to pose investors a dilemma. Increased stock market liquidity
combined with a surprisingly strong first quarter annualized GDP growth of 7.3%
has resulted in a mini bull market run up of 20.7% for the year to date. The
question plaguing investors is the growth in the economy for real and more to
the point is it sustainable. Has Japan indeed turned the corner on its
fifteen-month recession?
One can certainly make the case that certain stocks and even certain sectors are
inexpensive relative to their international peers. The case for value, in Japan,
has only recently returned. Realization of that value will require momentum.
Investors need to be convinced that restructuring is occurring within domestic
Japan and not stopping at the border. At the same time, Japanese consumers need
to feel more secure and return to some measure of consumer spending.
In the United Kingdom, restructuring and consolidation picked up momentum in the
first half of 1999 and the Portfolio benefitted from several acquisitions that
occurred at a premium to the market price. Bank stocks have enjoyed significant
appreciation on the back of declining UK interest rates and a more positive
outlook in the UK economy.
While still trading weak relative to the dollar, the Euro, and the underlying
transition to a more market economy, is beginning to pay benefits. Consolidation
has taken root in Continental Europe. Leading the pack, was the hotly contested
battle for Telecom Italia by Deutsche Telecom and Olivetti. While Olivetti
ultimately won, the global arrangement of telecom alliances has been changed yet
again. Your portfolio owned the savings shares of Telecom Italia.
At the sector level, Continental European banks commenced a round of
consolidation that has yet to be finished. Cross border mergers should
increasingly become part of the competitive landscape.
Looking into the next six months, we are seeing a number of new or secondary
issues coming to the market. Companies worldwide have been rushing to market in
order to beat any fall out from a rise in interest rates. The recent US Federal
Reserve tightening by twenty-five basis points must serve as at least a
cautionary yellow flag to investors concerned about valuation and growth.
Sandor Cseh, CFA
27
<PAGE> 29
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The International Portfolio
Statement of Net Assets, June 30, 1999
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
- -----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON AND PREFERRED STOCK -- 97.7%
Australia -- 2.4%
Australia & New Zealand Bank Group Ltd. .................. 138,916 $ 1,021,491
Boral Ltd. ............................................... 1 2
Goodman Fielder Ltd. ..................................... 385,000 343,270
Pacific Dunlop Ltd. ...................................... 301,642 435,267
-----------
1,800,030
-----------
Austria -- 0.3%
EVN AG.................................................... 1,300 190,104
-----------
Brazil -- 0.2%
Telecomunicacoes Brasileiras SA ADR....................... 1,811 163,330
-----------
Denmark -- 0.8%
Jyske Bank................................................ 6,290 599,108
-----------
Finland -- 0.8%
Kesko Oyj................................................. 42,600 573,313
-----------
France -- 10.6%
*Alstom S.A............................................... 12,315 394,080
Assurances Generales de France............................ 9,680 466,191
Bongrain.................................................. 1,227 463,124
*CNP Assurances........................................... 7,100 193,960
Credit Local de France.................................... 4,400 588,978
Elf Aquitaine ADR......................................... 10,551 776,158
L'Air Liquide............................................. 6,436 1,012,334
Michelin-(CGDE)........................................... 9,653 394,908
Pechiney SA............................................... 11,300 485,711
PSA Peugeot Citroen....................................... 4,900 773,142
Societe Generale.......................................... 5,728 1,009,524
*Thomson CSF.............................................. 22,419 779,144
*Usinor Sacilor........................................... 39,000 581,171
-----------
7,918,425
-----------
Germany -- 11.6%
Bayer AG.................................................. 26,000 1,083,244
Deutsche Bank AG.......................................... 12,777 779,391
Deutsche Lufthansa AG..................................... 28,800 522,135
*GEA AG................................................... 21,200 638,396
Hoechst AG................................................ 13,500 611,181
Hugo Boss AG.............................................. 230 308,349
Km Europa Metal AG........................................ 4,600 239,564
Merck KGAA................................................ 25,789 838,818
</TABLE>
28
<PAGE> 30
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The International Portfolio
Statement of Net Assets, June 30, 1999 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
- -----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON AND PREFERRED STOCK (CONTINUED)
Germany (Continued)
Rheinmetall AG............................................ 13,900 $ 249,422
Siemens AG................................................ 14,700 1,133,941
Tarkett AG................................................ 11,000 98,125
Veba AG................................................... 17,200 1,011,055
Viag AG................................................... 1,460 689,588
Volkswagen................................................ 7,600 486,717
-----------
8,689,926
-----------
Greece -- 0.7%
Hellenic Telecommunications............................... 46,855 518,333
-----------
Hong Kong -- 2.2%
Henderson Investment Ltd. ................................ 705,000 490,681
Hong Kong Electric........................................ 264,864 853,452
HSBC Holdings Plc......................................... 7,463 272,216
-----------
1,616,349
-----------
Italy -- 3.6%
Banca Popolare di Bergamo Credito Varesino SpA............ 21,400 470,073
Ente Nazionale Idrocarburi SpA............................ 17,000 1,020,000
Istituto Bancario San Paolo di Torino ADR................. 11,756 323,290
*Telecom Italia SpA....................................... 158,300 858,694
-----------
2,672,057
-----------
Japan -- 25.7%
Aiful Corp. .............................................. 3,500 428,550
Canon, Inc. .............................................. 39,000 1,121,318
Credit Saison Co. ........................................ 39,500 825,662
Dai-Tokyo Fire and Marine Insurance....................... 143,000 513,937
Fuji Machine.............................................. 21,000 647,162
Honda Motor Co. Ltd. ..................................... 18,000 762,912
Ito Yokado Co. Ltd. ...................................... 4,000 267,689
Mabuchi Motors............................................ 14,000 1,301,264
Marubeni Corp. ........................................... 270,000 564,377
Matsumotokiyoshi.......................................... 17,500 1,048,240
Mineba Co. Ltd. .......................................... 87,000 970,371
Mitsubishi Heavy Industries Ltd. ......................... 110,000 446,230
Murata Manufacturing Co. Ltd. ............................ 21,000 1,360,255
Namco Ltd. ............................................... 21,500 577,307
Nichiei................................................... 11,100 981,277
Nishimatsu Construction................................... 80,000 458,706
</TABLE>
29
<PAGE> 31
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The International Portfolio
Statement of Net Assets, June 30, 1999 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
- -----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON AND PREFERRED STOCK (CONTINUED)
Japan (Continued)
Rinnai Corp. ............................................. 32,000 $ 734,987
Rohm Co. Ltd. ............................................ 8,000 1,243,926
Sankyo Co. Ltd. .......................................... 19,000 908,902
Sankyo Company Ltd. ...................................... 25,000 629,977
Sekisui Chemical Co. ..................................... 75,000 434,994
Sony Corp. ............................................... 12,000 1,293,828
Toyota Motor Corp. ....................................... 21,000 664,512
Yamanouchi Pharmaceuticals................................ 29,000 1,109,338
-----------
19,295,721
-----------
Korea -- 1.1%
*Korea Electric Power ADR................................. 24,200 496,100
*Pohang Iron & Steel Co., Ltd. ADR........................ 8,600 289,175
-----------
785,275
-----------
Mexico -- 0.3%
Telefonos de Mexico SA ADR................................ 3,208 259,246
-----------
Netherlands -- 7.5%
ABN Amro Holding.......................................... 43,089 933,162
AKZO N.V. ADR............................................. 15,500 656,812
Buhrmann N.V. ............................................ 28,985 467,799
Hollandsche Beton......................................... 37,826 483,708
Hunter Douglas N.V. ...................................... 26,319 903,827
Koninklijke (Royal) Philips Electronics N.V. ADR.......... 6,328 638,337
KPN ADS................................................... 18,508 888,384
Stork N.V. ............................................... 26,853 612,007
-----------
5,584,036
-----------
New Zealand -- 1.1%
Fletcher Challenge Paper.................................. 427,822 319,663
Telecom Corporation of New Zealand Ltd. .................. 114,600 491,904
-----------
811,567
-----------
Norway -- 0.5%
Orkla..................................................... 26,000 353,394
-----------
Peru -- 0.5%
Telefonica del Peru S.A. ADR.............................. 27,000 408,375
-----------
</TABLE>
30
<PAGE> 32
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The International Portfolio
Statement of Net Assets, June 30, 1999 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
- -----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON AND PREFERRED STOCK (CONTINUED)
Portugal -- 1.3%
Banco Pinto & Sotto Mayor SA.............................. 21,140 $ 375,413
Portugal Telecom SA....................................... 13,774 560,375
Portugal Telecom SA Rights................................ 13,774 142
-----------
935,930
-----------
Singapore -- 1.5%
Development Bank.......................................... 81,000 989,621
United Overseas Bank, Ltd. ............................... 20,000 139,797
-----------
1,129,418
-----------
Spain -- 4.5%
Argentaria Caja Postal y Banco Hipotecario SA ADR......... 13,000 598,000
Banco Popular Espanol SA.................................. 10,200 733,696
Endesa SA................................................. 25,300 539,564
Gas y Electricidad SA..................................... 8,591 675,546
Repsol ADR................................................ 40,600 824,687
-----------
3,371,493
-----------
Sweden -- 0.8%
Autoliv, Inc. SDR......................................... 18,500 563,590
-----------
Switzerland -- 3.9%
*Barry Callebaut AG - Registered Shares................... 4,018 615,136
Forbo Holding AG - Registered Shares...................... 1,430 568,471
Sulzer AG - Registered Shares............................. 1,150 699,059
Swisscom AG - Registered Shares........................... 400 150,522
United Bank of Switzerland - Registered Shares............ 2,970 886,459
-----------
2,919,647
-----------
United Kingdom -- 15.8%
Barclays Plc.............................................. 21,137 615,051
BOC Group Plc............................................. 45,060 880,743
British Airways Plc....................................... 33,622 231,999
British Airways Plc ADR................................... 3,000 214,312
Bunzl Plc................................................. 210,146 1,041,784
Laird Group Ordinary...................................... 116,000 482,723
Medeva Plc................................................ 151,752 248,773
Morgan Crucible Co. Plc................................... 160,315 683,561
Powergen UK Plc........................................... 91,000 981,146
Rexam Plc................................................. 185,000 746,531
Rio Tinto Plc............................................. 51,845 869,121
Royal & Sun Alliance Insurance Group...................... 108,868 976,447
</TABLE>
31
<PAGE> 33
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The International Portfolio
Statement of Net Assets, June 30, 1999 -- Concluded
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
- -----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON AND PREFERRED STOCK (CONTINUED)
United Kingdom (Continued)
Royal Bank of Scotland Group Plc.......................... 36,000 $ 733,164
Safeway Plc............................................... 220,244 882,676
Storehouse Plc............................................ 261,395 562,427
Tomkins Plc............................................... 241,028 1,044,808
Wolseley Plc.............................................. 90,000 677,411
-----------
11,872,677
-----------
TOTAL COMMON AND PREFERRED STOCK (COST $65,666,445)..... 73,031,344
-----------
SHORT TERM INVESTMENTS -- 1.4%
Temporary Investment Fund, Inc. -- TempCash............... 1,041,221 1,041,221
-----------
TOTAL SHORT TERM INVESTMENTS (COST $1,041,221).......... 1,041,221
-----------
TOTAL INVESTMENTS -- 99.1% (COST $66,707,666)........... 74,072,565
OTHER ASSETS IN EXCESS OF LIABILITIES -- 0.9%............... 682,836
-----------
NET ASSETS -- 100.0%
(Equivalent to $14.16 per share based on 5,279,355 shares
of capital stock outstanding)........................... $74,755,401
===========
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE
($74,755,401/5,279,355 shares outstanding)................ $ 14.16
===========
</TABLE>
* Non-income producing
See accompanying notes to financial statements.
32
<PAGE> 34
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Sentinel Growth Portfolio
1999 Semi-Annual Report
Sentinel Advisors Company
- --------------------------------------------------------------------------------
For the six months ended June 30, 1999, the Market Street Fund Sentinel Growth
Portfolio earned a total return of 15.8%. Over the same period, the S&P 500
earned a 12.4% return, and the median return for the Lipper Mid Cap fund
universe was 10.2%.
In the first three months of the year, the market was led by the same relatively
narrow group of large cap growth stocks that dominated the market in 1998.
Telecommunications stocks and technology stocks, particularly the internet
stocks, led the market's advance during the period. The portfolio performed well
(gaining 5.1% during the quarter), and was well ahead of the median mid cap
fund, which was down 2.3%.
During the second quarter, investors rotated away from large cap growth stocks
toward medium and small cap cyclical stocks. This shift was caused by rising
interest rates (which made long duration growth stocks less attractive) and by a
gain in the number of strong earnings reports from smaller companies. The
portfolio was well-positioned for the market's shift in emphasis since, in March
and April, we had eliminated a number of large cap growth names and added to mid
and small cap cyclicals.
The strongest performing sectors of the market during the second quarter were
energy, capital goods, technology, and basic materials. The portfolio benefited
from our overweighted positions in energy and capital goods and our
underweighted positions in healthcare and financial stocks.
Our strategy for the portfolio continues to emphasize market-dominant companies
with defensible "franchises" in growth industries. These companies usually
possess proprietary technology, dominant brands, and superior new products or
outstanding management. Typically, our largest sector weightings are in the
fastest growing areas of the market such as technology, healthcare, or consumer
growth stocks. We seek to purchase companies that are selling at relatively
modest price/earnings and price/cash flow multiples and that are demonstrating
positive revenue and earnings trends. We continue today to find more companies
that meet our criteria in the mid-cap and small-cap sectors because of the
significant price gains made by large-cap stocks during the last four years.
Robert L. Lee, CFA
33
<PAGE> 35
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Sentinel Growth Portfolio
Statement of Net Assets, June 30, 1999
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
- --------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK -- 97.6%
Aerospace & Defense -- 4.9%
Goodrich (B.F.) Co. ...................................... 14,400 $ 612,000
Raytheon Co., Class A..................................... 2,000 137,750
-----------
749,750
-----------
Banks -- 3.3%
Cullen Frost Bankers, Inc. ............................... 7,400 203,962
Mercantile Bankshares Corp. .............................. 8,600 304,225
-----------
508,187
-----------
Building & Building Supplies -- 0.5%
Sherwin Williams Co. ..................................... 2,500 69,375
-----------
Business & Consumer Services -- 12.2%
*Acxiom Corp. ............................................ 14,500 361,594
*Affiliated Computer Services, Inc. ...................... 7,200 364,500
*Catalina Marketing Corp. ................................ 3,500 322,000
Electronic Data Systems Corp. ............................ 2,000 113,125
*Sodexho Marriott Services, Inc. ......................... 17,500 335,781
Sterling Commerce, Inc. .................................. 9,800 357,700
-----------
1,854,700
-----------
Business Equipment -- 2.6%
*Lexmark International Group, Inc., Class A............... 6,000 396,375
-----------
Chemicals & Allied Products -- 2.5%
*Bush Boake Allen, Inc. .................................. 2,000 58,500
Cambrex Corp. ............................................ 7,300 191,625
Du Pont (E.I.) de Nemours & Co. .......................... 2,000 136,625
-----------
386,750
-----------
Communications -- 2.0%
AT&T Corp. ............................................... 2,100 117,206
True North Communications................................. 6,500 195,000
-----------
312,206
-----------
Consumer Products -- 1.0%
Fortune Brands, Inc. ..................................... 3,500 144,812
-----------
Containers -- 3.8%
Bemis Co., Inc. .......................................... 14,600 580,350
-----------
</TABLE>
34
<PAGE> 36
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Sentinel Growth Portfolio
Statement of Net Assets, June 30, 1999 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
- --------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Drugs & Health Care -- 3.6%
*Covance, Inc. ........................................... 17,800 $ 426,087
HCR Manor Care, Inc. ..................................... 5,000 120,937
-----------
547,024
-----------
Electrical Equipment -- 4.1%
*Sawtek, Inc. ............................................ 13,700 628,487
-----------
Electronics -- 4.2%
*C-Cube Microsystems, Inc. ............................... 3,500 110,906
CTS Corp. ................................................ 1,500 105,000
Motorola, Inc. ........................................... 3,800 360,050
*Photronics, Inc. ........................................ 2,700 66,150
-----------
642,106
-----------
Energy -- 2.7%
MidAmerican Energy Holdings Co. .......................... 12,100 418,962
-----------
Environmental Control -- 0.6%
Donaldson Co., Inc. ...................................... 4,000 98,000
-----------
Food & Food Distributors -- 4.8%
McCormick & Co., Inc. .................................... 12,600 397,687
*Whole Foods Market, Inc. ................................ 7,000 336,438
-----------
734,125
-----------
Insurance -- 2.1%
AFLAC, Inc. .............................................. 4,000 191,500
Enhance Financial Services Group, Inc. ................... 6,600 130,350
-----------
321,850
-----------
Lodging -- 2.3%
Marriott International, Inc., Class A..................... 9,300 347,588
-----------
Medical Equipment & Supplies -- 5.2%
*Biomet, Inc. ............................................ 9,000 357,750
Hillenbrand Industries, Inc. ............................. 10,000 432,500
-----------
790,250
-----------
Oil & Gas -- 1.1%
*Cal Dive International, Inc. ............................ 5,500 164,313
-----------
Oil Equipment & Services -- 4.0%
*Smith International, Inc. ............................... 14,000 608,125
-----------
</TABLE>
35
<PAGE> 37
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Sentinel Growth Portfolio
Statement of Net Assets, June 30, 1999 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
- --------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Restaurants -- 9.0%
*Applebee's International, Inc. .......................... 15,700 $ 472,963
*Outback Steakhouse, Inc. ................................ 14,700 577,894
Ruby Tuesday, Inc. ....................................... 16,800 319,200
-----------
1,370,057
-----------
Retail - Clothing and Apparel -- 4.1%
*Lands' End, Inc. ........................................ 12,800 620,800
-----------
Retail Merchandising -- 5.7%
Ethan Allen Interiors, Inc. .............................. 14,250 537,938
*The Wet Seal, Inc., Class A.............................. 11,500 329,188
-----------
867,126
-----------
Semiconductors -- 3.3%
Dallas Semiconductor Corp. ............................... 8,300 419,150
*Novellus Systems, Inc. .................................. 1,200 81,900
-----------
501,050
-----------
Software -- 3.2%
*Filenet Corp. ........................................... 11,000 125,813
*Novell, Inc. ............................................ 13,500 357,750
-----------
483,563
-----------
Tobacco -- 0.8%
UST, Inc. ................................................ 4,100 119,925
-----------
Transportation -- 4.0%
*Eagle USA Airfreight, Inc. .............................. 4,500 190,969
Robinson (C.H.) Worldwide, Inc. .......................... 11,400 418,950
-----------
609,919
-----------
TOTAL COMMON STOCK (COST $12,707,895)................... 14,875,775
-----------
</TABLE>
36
<PAGE> 38
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Sentinel Growth Portfolio
Statement of Net Assets, June 30, 1999 -- Concluded
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
- --------------------------------------------------------------------------------------
<S> <C> <C>
SHORT TERM INVESTMENTS -- 2.2%
Temporary Investment Fund, Inc. -- TempCash............... 331,129 $ 331,129
-----------
TOTAL SHORT TERM INVESTMENTS (COST $331,129)............ 331,129
-----------
TOTAL INVESTMENTS -- 99.8% (COST $13,039,024)........... 15,206,904
OTHER ASSETS IN EXCESS OF LIABILITIES -- 0.2%............... 32,141
-----------
NET ASSETS -- 100.0%
(Equivalent to $14.84 per share based on 1,027,043 shares
of capital stock outstanding)........................... $15,239,045
===========
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE
($15,239,045/1,027,043 shares outstanding)................ $ 14.84
===========
</TABLE>
*Non-Income producing
See accompanying notes to financial statements.
37
<PAGE> 39
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Large Cap Growth Portfolio
1999 Semi-Annual Review
Providentmutual Investment Management Company
- --------------------------------------------------------------------------------
The total return for the Large Cap Growth Portfolio for the first half of 1999
was 12.68%. This performance easily surpassed the 10.37% return of the Wilshire
Large Growth Index: the benchmark we use to assess the performance of this
portfolio.
In the first half of 1999 we reduced the number of sub-advisers who perform the
day-to-day management of the portfolio. The following two sub-advisers possess a
proven large cap growth orientation and discipline.
<TABLE>
<CAPTION>
APPROXIMATE
MANAGER PORTFOLIO %
------- -----------
<S> <C>
Geewax Terker & Co. .................................... 50%
Cohen, Klingenstein & Marks............................. 50%
Total Portfolio......................................... 100%
</TABLE>
The majority of the portfolio's return occurred in the first quarter when the
market environment was more favorable to the large cap growth investment style
and investors were willing to pay for companies that delivered high quality,
consistent earnings. The portfolio's excellent stock selection, and weighting in
technology companies and growth retailers were the primary reasons for this
outperformance. The portfolio emphasizes large, industry-leading companies where
"big is better".
Large cap growth stocks did not dominate second quarter performance. During the
quarter the US stock market experienced a reversal of the trend seen in the
first quarter, and in fact, a reversal of a pattern that has been in place for
several years. The second quarter witnessed a broadening of the marketplace into
previously scorned companies such as small cap and deep cyclical names. This was
in part a reflection of the surprising strength in the US economy and the
resurgence of the international markets. With this growth, inflation concerns
surfaced and the markets were on Fed alert status. The resultant rise in
Treasury yields put pressure on the valuations of large cap names.
The largest sector holdings of the fund include:
<TABLE>
<CAPTION>
SECTOR %
------ -----
<S> <C>
Drugs and Health Care....................................... 17.7%
Computers................................................... 9.0%
Retail Merchandising........................................ 9.0%
Software.................................................... 8.9%
Communications.............................................. 8.2%
</TABLE>
During the second half of 1999 we will continue to invest in those companies
that deliver the best earnings growth. Wall Street is very unforgiving for those
firms that have disappointing earnings and the interest rate environment is
still unsettled. However, we will continue to stick with out investment
discipline and our long-term investment horizon.
We look forward to your continued support.
Sarah C. Lange, CFA
38
<PAGE> 40
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Large Cap Growth Portfolio
Statement of Net Assets, June 30, 1999
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
- --------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK -- 97.6%
Airlines -- 0.3%
*Midwest Express Holdings, Inc. .......................... 200 $ 6,800
Southwest Airlines Co. ................................... 2,450 76,256
-----------
83,056
-----------
Banks -- 2.4%
Fifth Third Bancorp....................................... 800 53,250
First Tennessee National Corp. ........................... 700 26,819
Firstar Corp. ............................................ 3,250 91,000
National Community Bancorp................................ 575 12,578
Northern Trust Corp. ..................................... 800 77,600
U.S. Bancorp.............................................. 10,500 357,000
Zions Bancorp............................................. 200 12,700
-----------
630,947
-----------
Beverages -- 2.8%
Anheuser-Busch Companies, Inc. ........................... 2,000 141,875
Coca Cola Co. ............................................ 9,700 606,250
-----------
748,125
-----------
Broadcasting & Publishing -- 0.7%
Gannett, Inc. ............................................ 300 21,412
McGraw-Hill, Inc. ........................................ 900 48,544
Time Warner, Inc. ........................................ 1,100 80,850
Tribune Co. .............................................. 300 26,137
-----------
176,943
-----------
Building & Building Supplies -- 0.4%
Ecolab, Inc. ............................................. 2,000 87,250
Lowe's Cos., Inc. ........................................ 400 22,675
-----------
109,925
-----------
</TABLE>
39
<PAGE> 41
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Large Cap Growth Portfolio
Statement of Net Assets, June 30, 1999 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
- --------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Business & Consumer Services -- 5.3%
*3Com Corp. .............................................. 14,025 $ 374,292
*America Online, Inc. .................................... 5,190 573,495
Cintas Corp. ............................................. 700 47,031
*Fiserv, Inc. ............................................ 500 15,656
Interpublic Group of Cos., Inc. .......................... 700 60,637
*Lycos, Inc. ............................................. 400 36,750
Omnicom Group, Inc. ...................................... 300 24,000
Viad Corp. ............................................... 200 6,187
*Yahoo!, Inc. ............................................ 1,610 277,322
-----------
1,415,370
-----------
Business Equipment -- 0.2%
*Lexmark International Group, Inc., Class A............... 1,000 66,062
-----------
Cable TV Systems -- 0.1%
*Cablevision Systems Corp. ............................... 500 35,000
-----------
Communications -- 8.2%
*ADC Telecommunications, Inc. ............................ 900 41,006
*Adelphia Communications Corp., Class A................... 200 12,725
ALLTEL Corp. ............................................. 900 64,350
Ameritech Corp. .......................................... 1,200 88,200
*Applied Materials, Inc. ................................. 1,260 93,082
*At Home Corp., Series A.................................. 1,740 93,851
AT&T Corp................................................. 3,132 174,805
Comcast Corp., Special Class A Non-Voting................. 3,800 146,062
*Cox Communications, Inc.................................. 1,400 51,537
*MCI WorldCom, Inc........................................ 8,035 693,018
SBC Communications, Inc. ................................. 3,200 185,600
*Sprint Corp. (PCS Group)................................. 8,775 501,272
*Western Wireless Corp., Class A.......................... 900 24,300
-----------
2,169,808
-----------
</TABLE>
40
<PAGE> 42
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Large Cap Growth Portfolio
Statement of Net Assets, June 30, 1999 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
- --------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Computers -- 9.0%
*Cisco Systems, Inc. ..................................... 17,780 $ 1,146,810
Compaq Computer Corp...................................... 14,275 338,139
*Comverse Technology, Inc................................. 600 45,300
*EMC Corp................................................. 3,350 184,250
International Business Machines Corp...................... 1,750 226,188
*Intuit, Inc.............................................. 300 27,038
*Seagate Technology, Inc. ................................ 12,900 330,562
*SunGard Data Systems, Inc................................ 1,000 34,500
*Veritas Software Corp.................................... 500 47,469
-----------
2,380,256
-----------
Consumer Products -- 0.1%
Clorox Co................................................. 220 23,499
-----------
Cosmetics and Toiletries -- 1.4%
Avon Products, Inc........................................ 6,800 377,400
-----------
Drugs & Health Care -- 17.7%
Abbott Laboratories....................................... 12,335 561,243
American Home Products Corp............................... 7,400 425,500
*Amgen Corp............................................... 7,100 432,213
*Biogen, Inc. ............................................ 600 38,588
Becton, Dickinson & Co.................................... 13,000 390,000
Bristol-Myers Squibb Co................................... 12,110 852,998
Cardinal Health, Inc...................................... 1,267 81,246
CVS Corp. ................................................ 1,000 51,125
Gillette Co............................................... 1,360 55,760
Johnson & Johnson......................................... 1,500 147,000
Lilly (Eli) & Co.......................................... 700 50,138
McKesson HBOC, Inc........................................ 11,675 375,059
*Medimmune, Inc........................................... 50 3,388
Merck & Co., Inc. ........................................ 12,310 910,940
Schering Plough Corp...................................... 5,600 296,800
-----------
4,671,998
-----------
Electrical Equipment -- 3.6%
*American Power Conversion Corp. ......................... 1,400 28,175
General Electric Co....................................... 8,210 927,730
-----------
955,905
-----------
</TABLE>
41
<PAGE> 43
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Large Cap Growth Portfolio
Statement of Net Assets, June 30, 1999 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
- --------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Electronics -- 1.8%
Tandy Corp................................................ 10,000 $ 488,750
-----------
Finance -- 7.8%
American Express Co....................................... 100 13,013
Associates First Capital Corp., Class A................... 1,200 53,175
*Berkshire Hathaway, Inc., Class B........................ 85 191,165
Capital One Financial Corp. .............................. 1,875 104,414
Citigroup, Inc. .......................................... 4,575 217,313
Franklin Resources, Inc................................... 10,350 420,469
MBNA Corp................................................. 13,900 425,688
Paychex, Inc.............................................. 3,525 112,359
Providian Financial Corp.................................. 5,625 525,938
-----------
2,063,534
-----------
Finance - Investment & Other -- 2.0%
Standard & Poor's Depositary Receipts..................... 3,950 540,965
-----------
Food & Food Distributors -- 0.3%
*Kroger Co................................................ 2,000 55,875
Quaker Oats Co............................................ 100 6,638
Sysco Corp................................................ 700 20,869
-----------
83,382
-----------
Industrial -- 0.3%
Danaher Corp.............................................. 1,300 75,563
-----------
Insurance -- 1.9%
American International Group, Inc......................... 1,100 128,769
Conseco, Inc.............................................. 12,500 380,469
-----------
509,238
-----------
Leisure & Amusements -- 1.7%
Harley-Davidson, Inc...................................... 1,200 65,250
Mattel, Inc............................................... 14,375 380,039
-----------
445,289
-----------
Medical Instruments -- 1.9%
*Boston Scientific Corp. ................................. 9,200 404,225
*Guidant Corp. ........................................... 1,300 66,869
Stryker Corp.............................................. 500 30,063
-----------
501,157
-----------
</TABLE>
42
<PAGE> 44
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Large Cap Growth Portfolio
Statement of Net Assets, June 30, 1999 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
- --------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Office Equipment & Supplies -- 2.3%
Pitney Bowes, Inc. ....................................... 2,400 $ 154,200
*Staples, Inc............................................. 3,500 108,281
Xerox Corp................................................ 6,100 360,281
-----------
622,762
-----------
Restaurants -- 1.6%
McDonald's Corp........................................... 10,000 413,125
-----------
Retail - Clothing and Apparel -- 2.0%
Gap, Inc.................................................. 10,575 532,715
-----------
Retail Food Chains -- 0.4%
*Safeway, Inc............................................. 2,300 113,850
-----------
Retail Merchandising -- 9.0%
*Abercrombie & Fitch Co., Class A......................... 900 43,200
*Amazon.com, Inc.......................................... 625 78,203
*Bed, Bath & Beyond, Inc. ................................ 11,200 431,200
*BJ's Wholesale Club, Inc. ............................... 1,300 39,081
*Costco Companies, Inc.................................... 1,775 142,111
Dollar General Corp....................................... 13,250 384,250
*Dollar Tree Stores, Inc.................................. 900 39,600
Family Dollar Stores, Inc................................. 600 14,400
Home Depot, Inc........................................... 5,600 360,850
*Kohls Corp............................................... 700 54,031
TJX Companies, Inc........................................ 1,200 39,975
Wal-Mart Stores, Inc. .................................... 15,900 767,175
-----------
2,394,076
-----------
Semiconductors -- 3.5%
Intel Corp................................................ 15,700 934,150
-----------
Software -- 8.9%
Computer Associates International, Inc.................... 7,400 407,000
*DoubleClick, Inc......................................... 340 31,195
*Microsoft Corp. ......................................... 11,400 1,028,138
*Oracle Corp. ............................................ 14,800 549,450
*Parametric Technology Corp............................... 25,600 355,200
-----------
2,370,983
-----------
TOTAL COMMON STOCK (COST $22,371,394)................... 25,933,833
-----------
</TABLE>
43
<PAGE> 45
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Large Cap Growth Portfolio
Schedule of Net Assets, June 30, 1999 -- Concluded
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
- --------------------------------------------------------------------------------------
<S> <C> <C>
SHORT TERM INVESTMENTS -- 3.0%
Temporary Investment Fund, Inc. -- TempCash............. 785,252 $ 785,252
-----------
TOTAL SHORT TERM INVESTMENTS (COST $785,252)............ 785,252
-----------
TOTAL INVESTMENTS -- 100.6% (COST $23,156,646).......... 26,719,085
LIABILITIES IN EXCESS OF OTHER ASSETS -- (0.6%)............. (172,503)
-----------
NET ASSETS -- 100.0%
(Equivalent to $13.26 per share based on 2,002,107 shares
of capital stock outstanding)........................... $26,546,582
===========
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE
($26,546,582/2,002,107 shares outstanding)................ $ 13.26
===========
</TABLE>
* Non-Income producing
See accompanying notes to financial statements.
44
<PAGE> 46
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Large Cap Value Portfolio
1999 Semi-Annual Review
Providentmutual Investment Management Company
- --------------------------------------------------------------------------------
The total return for the Large Cap Value Portfolio for the first half of 1999
was 9.01%. This performance lagged the 12.73% return of the Wilshire Large Value
Index: the benchmark we use to assess the performance of this portfolio.
The following three sub-advisers perform the day-to-day management of the
portfolio. The three firms possess a proven large cap value orientation and
discipline.
<TABLE>
<CAPTION>
APPROXIMATE
MANAGER PORTFOLIO %
------- -----------
<S> <C>
Mellon Equity Advisors.................................. 45%
Equinox Capital......................................... 45%
Harris Associates....................................... 10%
Total Portfolio......................................... 100%
</TABLE>
The first quarter proved to be difficult for value investors as large cap growth
names dominated performance. During the second quarter, the US stock market
experienced a reversal of this trend which had been in place for several years.
The second quarter witnessed a broadening of the marketplace. This was in part a
reflection of the surprising strength in the US economy and the resurgence of
the international markets. Previously scorned companies such as small cap and
deep cyclical names (energy and basic materials) outperformed. Recovery in the
commodity and cyclical stocks led to a strong recovery in the "value" portion of
the market.
Portfolio performance lagged the Wilshire benchmark due to stock selection
difficulty in the technology sector. The stocks selected generated good positive
returns but far behind those in the technology portion of Wilshire's Large Value
index. Certain portfolio holdings in the technology sector have been sold.
The largest sector holdings of the portfolio include:
<TABLE>
<CAPTION>
SECTOR %
------ -----
<S> <C>
Communications.............................................. 11.3%
Finance..................................................... 11.1%
Banks....................................................... 9.1%
Energy...................................................... 6.5%
</TABLE>
We believe that the tremendous valuation disparity between growth and value
style investing may be unwinding. The second quarter taught us that the market
does pay attention to high valuation levels. We look forward to benefiting from
the improvement under way in the value portion of the market and we appreciate
your support.
Sarah C. Lange, CFA
45
<PAGE> 47
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Large Cap Value Portfolio
Statement of Net Assets, June 30, 1999
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
- -------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK -- 95.9%
Aerospace & Defense -- 2.2%
Allied Signal, Inc. ...................................... 1,600 $ 100,800
Boeing Co. ............................................... 1,600 70,700
Lockheed Martin Corp. .................................... 5,300 197,425
United Technologies Corp. ................................ 1,923 137,855
-----------
506,780
-----------
Airlines -- 1.4%
*Alaska Air Group, Inc. .................................. 900 37,575
*AMR Corp. ............................................... 1,700 116,025
Delta Air Lines, Inc. .................................... 3,200 184,400
-----------
338,000
-----------
Apparel -- 0.3%
Nike, Inc., Class B....................................... 1,300 82,306
-----------
Appliances -- 1.1%
Black & Decker Corp. ..................................... 1,300 82,062
Maytag Corp. ............................................. 500 34,844
Whirlpool Corp. .......................................... 2,000 148,000
-----------
264,906
-----------
Automobiles -- 2.1%
Ford Motor Co. ........................................... 6,400 361,200
General Motors Corp. ..................................... 1,900 125,400
-----------
486,600
-----------
Automotive & Equipment -- 0.6%
Dana Corp. ............................................... 2,000 92,125
*Lear Corp. .............................................. 1,200 59,700
-----------
151,825
-----------
Banks -- 9.1%
Banc One Corp. ........................................... 3,430 204,299
Bank of America Corp. .................................... 8,123 595,518
Chase Manhattan Corp. .................................... 7,200 623,700
Firstar Corp. ............................................ 3,500 98,000
Morgan (J.P.) & Co., Inc. ................................ 600 84,300
National City Corp. ...................................... 700 45,850
PNC Bank Corp. ........................................... 3,700 213,212
Southtrust Corp. ......................................... 2,400 92,100
Wells Fargo Co. .......................................... 4,200 179,550
-----------
2,136,529
-----------
</TABLE>
46
<PAGE> 48
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Large Cap Value Portfolio
Statement of Net Assets, June 30, 1999 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
- -------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Beverages -- 0.6%
Anheuser-Busch Companies, Inc. ........................... 700 $ 49,656
Pepsico, Inc. ............................................ 2,200 85,112
-----------
134,768
-----------
Broadcasting & Publishing -- 3.7%
*Fox Entertainment Group, Inc. ........................... 1,900 51,181
Gannett, Inc. ............................................ 1,400 99,925
Knight-Ridder, Inc. ...................................... 1,400 76,912
McGraw-Hill, Inc. ........................................ 1,500 80,906
*MediaOne Group, Inc. .................................... 2,000 148,750
Time Warner, Inc. ........................................ 1,000 73,500
Tribune Co. .............................................. 3,300 287,512
*Viacom, Inc., Class B.................................... 1,400 61,600
-----------
880,286
-----------
Building & Building Supplies -- 0.7%
Armstrong World Industries, Inc. ......................... 600 34,687
Lafarge Corp. ............................................ 1,400 49,612
Masco Corp. .............................................. 2,700 77,963
-----------
162,262
-----------
Business & Consumer Services -- 2.0%
Dun & Bradstreet Corp. ................................... 2,300 81,506
Electronic Data Systems Corp. ............................ 5,200 294,125
XL Capital Ltd. .......................................... 1,800 101,700
-----------
477,331
-----------
Business Equipment -- 0.3%
*Lexmark International Group, Inc., Class A............... 1,000 66,062
-----------
Cable TV Systems -- 0.5%
Unicom Corp. ............................................. 3,300 127,256
-----------
Chemicals & Allied Products -- 2.2%
Dow Chemical Co. ......................................... 2,300 291,812
Du Pont (E.I.) de Nemours & Co. .......................... 2,700 184,443
Union Carbide Corp. ...................................... 900 43,875
-----------
520,130
-----------
</TABLE>
47
<PAGE> 49
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Large Cap Value Portfolio
Statement of Net Assets, June 30, 1999 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
- -------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Communications -- 11.3%
ALLTEL Corp. ............................................. 1,000 $ 71,500
Ameritech Corp. .......................................... 4,400 323,400
AT&T Corp. ............................................... 7,850 438,128
Bell Atlantic Corp. ...................................... 9,000 588,374
BellSouth Corp. .......................................... 5,700 267,187
Lucent Technologies, Inc. ................................ 1,800 121,387
*MCI WorldCom, Inc. ...................................... 6,400 552,000
SBC Communications, Inc. ................................. 5,400 313,200
-----------
2,675,176
-----------
Computers -- 3.3%
*Compuware Corp. ......................................... 1,400 44,537
*EMC Corp. ............................................... 1,200 66,000
International Business Machines Corp. .................... 4,300 555,775
*Siebel Systems, Inc. .................................... 1,800 119,475
-----------
785,787
-----------
Consumer Products -- 0.5%
Fortune Brands, Inc. ..................................... 2,800 115,850
-----------
Drugs & Health Care -- 2.6%
Abbott Laboratories....................................... 1,800 81,900
Baxter International, Inc. ............................... 2,800 169,750
Bristol-Myers Squibb Co. ................................. 2,200 154,962
McKesson HBOC, Inc. ...................................... 2,800 89,950
Schering Plough Corp. .................................... 2,100 111,300
-----------
607,862
-----------
Electric Utilities -- 0.2%
Texas Utilities Co. ...................................... 1,200 49,500
-----------
Electronics -- 0.5%
*LAM Research Corp. ...................................... 2,400 112,050
-----------
</TABLE>
48
<PAGE> 50
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Large Cap Value Portfolio
Statement of Net Assets, June 30, 1999 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
- -------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Energy -- 6.5%
Ashland, Inc. ............................................ 600 $ 24,075
Chevron Corp. ............................................ 1,100 104,706
Consolidated Edison, Inc. ................................ 4,100 185,525
Energy East Corp. ........................................ 2,400 62,400
Exxon Corp. .............................................. 7,700 593,863
FPL Group, Inc. .......................................... 1,700 92,862
Mobil Corp. .............................................. 2,800 277,200
PECO Energy Co. .......................................... 2,200 92,125
Southern Co. ............................................. 3,400 90,100
-----------
1,522,856
-----------
Finance -- 11.1%
American Express Co. ..................................... 600 78,075
Associates First Capital Corp., Class A................... 1,300 57,606
Citigroup, Inc. .......................................... 6,500 308,750
Comerica, Inc. ........................................... 2,600 154,538
Edwards (A.G.), Inc. ..................................... 2,000 64,500
Fannie Mae................................................ 4,500 307,688
Financial Security Assurance Holdings Ltd. ............... 900 46,800
First Data Corp. ......................................... 1,800 88,088
Fleet Financial Group, Inc. .............................. 8,500 377,187
Golden West Financial Corp. .............................. 600 58,800
H & R Block, Inc. ........................................ 1,200 60,000
Hartford Financial Services, Inc. ........................ 3,300 192,431
MBNA Corp. ............................................... 1,900 58,188
Morgan Stanley Dean Witter & Co. ......................... 4,000 410,000
SLM Holding Corp. ........................................ 1,700 77,881
Transamerica Corp. ....................................... 1,100 82,500
Washington Mutual, Inc. .................................. 5,566 196,897
-----------
2,619,929
-----------
Food & Food Distributors -- 2.1%
ConAgra, Inc. ............................................ 3,200 85,200
Heinz (H.J.) Co. ......................................... 1,700 85,213
IBP, Inc. ................................................ 900 21,375
Nabisco Holdings Corp., Class A........................... 1,900 82,175
Quaker Oats Co. .......................................... 700 46,463
Ralston Purina Group...................................... 4,200 127,838
Sara Lee Corp. ........................................... 1,700 38,569
-----------
486,833
-----------
</TABLE>
49
<PAGE> 51
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Large Cap Value Portfolio
Statement of Net Assets, June 30, 1999 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
- -------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Healthcare Services -- 1.2%
Columbia/HCA Healthcare Corp. ............................ 12,200 $ 278,313
-----------
Hotel/Restaurants -- 0.7%
Host Marriott Corp. ...................................... 5,687 67,533
*Promus Hotel Corp. ...................................... 2,800 86,800
-----------
154,333
-----------
Housewares -- 0.2%
Premark International, Inc. .............................. 1,200 45,000
-----------
Insurance -- 4.3%
Aetna, Inc. .............................................. 1,800 160,988
Allstate Corp. ........................................... 11,000 394,626
Ambac Financial Group, Inc. .............................. 2,200 125,675
Conseco, Inc. ............................................ 4,900 149,144
Jefferson-Pilot Corp. .................................... 700 46,331
Lincoln National Corp. ................................... 600 31,388
Marsh & McLennan Cos., Inc. .............................. 600 45,300
Old Republic International Corp. ......................... 2,100 36,356
Partner Re Ltd. .......................................... 800 29,900
-----------
1,019,708
-----------
Leisure & Amusements -- 0.6%
Brunswick Corp. .......................................... 1,600 44,600
Mattel, Inc. ............................................. 3,400 89,888
-----------
134,488
-----------
Machinery & Heavy Equipment -- 1.3%
Caterpillar, Inc. ........................................ 5,200 312,000
-----------
Manufacturing -- 2.8%
Alcoa, Inc. .............................................. 1,600 99,000
Deere & Co. .............................................. 5,500 217,938
Eaton Corp. .............................................. 700 64,400
Hasbro, Inc. ............................................. 1,650 46,097
Textron, Inc. ............................................ 1,300 107,006
Tyco International Ltd. .................................. 900 85,275
U.S. Industries, Inc. .................................... 2,100 35,700
-----------
655,416
-----------
</TABLE>
50
<PAGE> 52
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Large Cap Value Portfolio
Statement of Net Assets, June 30, 1999 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
- -------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Manufacturing Equipment -- 1.0%
Illinois Tool Works, Inc. ................................ 600 $ 49,200
Ingersoll Rand Co. ....................................... 2,900 187,413
-----------
236,613
-----------
Materials & Processing -- 0.4%
Vulcan Materials Co. ..................................... 1,800 86,850
-----------
Metals -- Iron & Steel -- 0.9%
AK Steel Holding Corp. ................................... 2,100 47,250
Alcan Aluminium, Ltd. .................................... 1,300 41,519
Reynolds Metals Co. ...................................... 2,000 118,000
-----------
206,769
-----------
Office Equipment & Supplies -- .7%
Xerox Corp. .............................................. 3,000 177,188
-----------
Oil & Gas -- 4.2%
Amerada Hess Corp. ....................................... 3,300 196,350
Coastal Corp. ............................................ 6,000 240,000
Conoco, Inc. ............................................. 6,400 178,400
Enron Oil & Gas........................................... 2,300 46,575
Texaco, Inc. ............................................. 2,500 156,250
Unocal Corp. ............................................. 3,600 142,650
USX-Marathon Group........................................ 1,300 42,331
-----------
1,002,556
-----------
Oil Equipment & Services -- 0.3%
Diamond Offshore Drilling, Inc. .......................... 700 19,863
National Fuel Gas Co. .................................... 900 43,650
-----------
63,513
-----------
Paper & Forest Products -- 2.8%
Boise Cascade Corp. ...................................... 900 38,700
Champion International Corp. ............................. 1,300 62,238
Fort James Corp. ......................................... 5,900 223,463
International Paper Co. .................................. 5,100 257,550
Louisiana-Pacific Corp. .................................. 2,500 59,375
Temple Inland, Inc. ...................................... 400 27,300
-----------
668,626
-----------
Photography Equipment & Supplies -- 0.9%
Eastman Kodak Co. ........................................ 3,100 210,025
-----------
</TABLE>
51
<PAGE> 53
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Large Cap Value Portfolio
Statement of Net Assets, June 30, 1999 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
- -------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Railroads -- 1.1%
Union Pacific Corp., Series A............................. 4,400 $ 256,576
-----------
Real Estate -- 0.2%
*Catellus Development Corp. .............................. 2,800 43,400
-----------
Retail -- Clothing and Apparel -- 0.6%
Limited, Inc. ............................................ 3,100 140,663
-----------
Retail Food Chains -- 0.7%
Albertson's, Inc. ........................................ 1,890 97,453
*Safeway, Inc. ........................................... 1,600 79,200
-----------
176,653
-----------
Retail Merchandising -- 1.9%
*Abercrombie & Fitch Co., Class A......................... 1,200 57,600
*Kmart Corp. ............................................. 9,530 156,649
Sears, Roebuck & Co. ..................................... 3,400 151,513
TJX Companies, Inc. ...................................... 2,800 93,275
-----------
459,037
-----------
Semiconductors -- 1.5%
Intel Corp. .............................................. 5,864 348,908
-----------
Software -- 0.3%
*Oracle Corp. ............................................ 1,700 63,113
-----------
Tobacco -- 0.4%
Philip Morris Cos., Inc. ................................. 1,800 72,337
UST, Inc. ................................................ 700 20,475
-----------
92,812
-----------
Utilities -- 2.0%
Baltimore Gas & Electric Co. ............................. 2,600 77,025
Consolidated Natural Gas Co. ............................. 600 36,450
DTE Energy Co. ........................................... 1,500 60,000
El Paso Energy Corp. ..................................... 2,300 80,931
Enron Corp. .............................................. 800 65,400
Pinnacle West Capital Corp. .............................. 1,800 72,450
Public Service Enterprise Group, Inc. .................... 2,000 81,750
-----------
474,006
-----------
TOTAL COMMON STOCK (COST $20,734,348)............... 22,617,450
-----------
</TABLE>
52
<PAGE> 54
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Large Cap Value Portfolio
Statement of Net Assets, June 30, 1999 -- Concluded
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
- -------------------------------------------------------------------------------------
<S> <C> <C>
SHORT TERM INVESTMENTS -- 4.0%
Temporary Investment Fund, Inc. -- TempCash............... 935,845 $ 935,845
-----------
TOTAL SHORT TERM INVESTMENTS (COST $935,845)............ 935,845
-----------
TOTAL INVESTMENTS -- 99.9% (COST $21,670,193)........... 23,553,295
OTHER ASSETS IN EXCESS OF LIABILITIES -- 0.1%............... 11,931
-----------
NET ASSETS -- 100.0%
(Equivalent to $10.72 per share based on 2,198,751 shares
of capital stock outstanding)............................. $23,565,226
===========
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE
($23,565,226/2,198,751 shares outstanding)................ $ 10.72
===========
</TABLE>
* Non-Income producing
See accompanying notes to financial statements.
53
<PAGE> 55
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Small Cap Growth Portfolio
1999 Semi-Annual Review
Providentmutual Investment Management Company
- --------------------------------------------------------------------------------
The total return for the Small Cap Growth Portfolio for the first half of 1999
was 26.63%. This return is far in excess of the 14.01% return of the Wilshire
Small Growth Index: the benchmark we use to assess the performance of this
portfolio.
The following two sub-advisers perform the day-to-day management of the
portfolio. The two firms possess a proven small cap growth orientation and
discipline.
<TABLE>
<CAPTION>
APPROXIMATE
MANAGER PORTFOLIO %
- ------- -----------
<S> <C>
Husic Capital Management................................ 60%
Standish, Ayer & Wood................................... 40%
Total Portfolio............................... 100%
</TABLE>
In the second quarter it was the small cap growth stocks that generated the best
US stock market returns. This represented a significant reversal of the trend
that had been in place for 1998 and the first quarter of 1999: that of the
performance dominance of the large caps. The broadening of the market was a
direct result of stronger US and worldwide growth. Small cap stocks,
particularly technology-related stocks, soared in the quarter. Superior stock
selection by both sub-advisers explains the excellent portfolio performance.
The largest sector holdings of the fund include:
<TABLE>
<CAPTION>
SECTOR %
- ------ -----
<S> <C>
Electronics................................................. 10.2%
Computers................................................... 8.3%
Broadcasting & Publishing................................... 8.1%
Business & Consumer Services................................ 7.8%
</TABLE>
We expect small US companies to continue to be the beneficiaries of robust
growth. The investment process used for the portfolio positions it in dynamic
growth sectors of the economy with investments in innovative, aggressive
companies. The portfolio is also positioned to benefit from the profound nature
of the Internet as an agent of change in communications and commerce.
We look forward to your continued support.
Sarah C. Lange, CFA
54
<PAGE> 56
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Small Cap Growth Portfolio
Statement of Net Assets, June 30, 1999
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
- --------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK -- 93.0%
Airlines -- 2.5%
*Atlantic Coast Airlines, Inc. ........................... 4,900 $ 93,100
*Mesa Airlines, Inc. ..................................... 13,800 103,716
*Ryanair Holdings Plc..................................... 5,100 270,300
-----------
467,116
-----------
Apparel -- 0.3%
*Skechers USA, Inc., Class A.............................. 5,300 55,650
-----------
Automotive & Equipment -- 0.9%
*Excelsior-Henderson Motorcycle........................... 4,700 28,200
Exide Corp................................................ 10,100 148,975
-----------
177,175
-----------
Banks -- 2.3%
*First Republic Bank, Inc. ............................... 10,600 306,737
Westamerica Bancorporation................................ 3,800 138,700
-----------
445,437
-----------
Broadcasting & Publishing -- 8.1%
*Ascent Entertainment Group............................... 19,400 274,025
*Citadel Communications Corp. ............................ 3,600 130,275
*Emmis Broadcasting Corp., Class A........................ 2,300 113,562
*Metro Networks, Inc. .................................... 3,200 170,800
Scandinavian Broadcasting S.A. ........................... 5,500 177,375
*TCI Music, Inc., Class A................................. 10,200 360,825
*USA Networks, Inc........................................ 8,100 325,012
-----------
1,551,874
-----------
Business & Consumer Services -- 7.8%
*AdForce, Inc. ........................................... 1,400 32,900
*AHL Services, Inc. ...................................... 4,500 112,219
*CBT Group Plc ADR........................................ 5,100 84,150
*Charles River Associates, Inc. .......................... 4,200 105,262
*Corporate Executive Board Co. ........................... 3,500 124,469
*Education Management Corp. .............................. 7,000 145,250
*F.Y.I., Inc. ............................................ 2,500 78,437
*First Consulting Group................................... 4,200 44,625
*Flycast Communications Corp. ............................ 2,000 38,250
*Getty Images, Inc. ...................................... 1,500 28,312
IT Group, Inc. ........................................... 13,800 221,662
*MAXIMUS, Inc. ........................................... 3,600 103,500
*Sportsline USA, Inc. .................................... 2,400 86,100
*TMP Worldwide, Inc. ..................................... 4,200 266,700
-----------
1,471,836
-----------
</TABLE>
55
<PAGE> 57
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Small Cap Growth Portfolio
Statement of Net Assets, June 30, 1999 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
- --------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Cable TV Systems -- 1.7%
*Cablevision Systems Corp. ............................... 4,600 $ 322,000
-----------
Chemicals & Allied Products -- 1.0%
Geon Co. ................................................. 6,200 199,950
-----------
Communications -- 7.7%
*Adelphia Communications Corp., Class A................... 5,200 330,850
Gray Communications....................................... 1,050 14,831
*GST Telecommunications, Inc. ............................ 4,400 58,025
*Harmonic Lightwaves, Inc. ............................... 4,300 246,981
*ICG Communications, Inc. ................................ 10,500 224,438
*Pinnacle Holdings, Inc. ................................. 7,200 176,400
*Voicestream Wireless Corp. .............................. 8,000 227,500
*Western Wireless Corp., Class A.......................... 7,200 194,400
-----------
1,473,425
-----------
Computers -- 8.3%
*Applied Micro Circuits Corp. ............................ 1,900 156,275
*Computer Network Technology Corp. ....................... 7,400 160,025
*Cybex Computer Products Corp. ........................... 2,900 80,837
*Digital Island........................................... 4,700 84,306
*Digital River, Inc. ..................................... 2,200 73,150
*Emulex Corp. ............................................ 700 77,831
*Excalibur Technologies Corp. ............................ 5,400 76,950
*Globespan, Inc. ......................................... 1,400 55,650
*Infospace.Com, Inc. ..................................... 1,600 75,200
*Mercury Interactive Corp. ............................... 3,200 113,200
*QLogic Corp. ............................................ 1,200 158,400
*SBS Technologies......................................... 1,400 28,350
*Siebel Systems, Inc. .................................... 5,000 331,875
*WorldGate Communications, Inc. .......................... 1,700 87,125
-----------
1,559,174
-----------
</TABLE>
56
<PAGE> 58
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Small Cap Growth Portfolio
Statement of Net Assets, June 30, 1999 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
- --------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Drugs & Health Care -- 7.3%
Bindley Western Industries, Inc. ......................... 13,200 $ 304,425
*ChiRex, Inc. ............................................ 2,300 73,887
*Coulter Pharmaceutical, Inc. ............................ 3,600 81,225
*Cytyc Corp. ............................................. 3,200 62,400
*Emisphere Technologies, Inc. ............................ 2,500 17,656
*IMPATH, Inc. ............................................ 1,200 32,400
*Inhale Therapeutic Systems............................... 3,100 73,819
*Ligand Pharmaceuticals, Inc., Class B.................... 3,400 37,825
*MedQuist, Inc. .......................................... 2,200 96,250
*Novoste Corp. ........................................... 1,200 25,200
*Oxford Health Plans, Inc. ............................... 15,500 241,219
*Pharmaceutical Product Development, Inc. ................ 2,300 62,962
*Priority Healthcare Corp., Class B....................... 6,774 233,703
*Vical, Inc. ............................................. 3,000 36,375
-----------
1,379,346
-----------
Electrical Equipment -- 1.5%
*Micrel, Inc. ............................................ 1,600 118,400
*Quanta Services, Inc. ................................... 3,900 171,600
-----------
290,000
-----------
Electronic Instruments -- 1.3%
*ATMI, Inc. .............................................. 5,400 160,650
*Veeco Instruments, Inc. ................................. 2,500 85,000
-----------
245,650
-----------
Electronics -- 10.2%
*Cree Research, Inc. ..................................... 1,200 92,325
*LAM Research Corp. ...................................... 6,100 284,794
*Photronics, Inc. ........................................ 4,500 110,250
*PLX Technology, Inc. .................................... 12,800 606,400
*SDL, Inc. ............................................... 5,900 301,269
*Semtech Corp. ........................................... 3,700 192,862
*Triquint Semiconductor, Inc. ............................ 3,600 204,525
*Unitrode Corp. .......................................... 5,500 157,781
-----------
1,950,206
-----------
Entertainment -- 0.5%
*Cinar Films, Inc. ....................................... 4,200 102,900
-----------
</TABLE>
57
<PAGE> 59
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Small Cap Growth Portfolio
Statement of Net Assets, June 30, 1999 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
- --------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Finance -- 4.0%
*Golden State Bancorp, Inc. .............................. 7,600 $ 167,200
Investment Technology Group, Inc. ........................ 3,400 110,075
Jefferies Group, Inc. .................................... 3,400 102,000
*Nextcard, Inc. .......................................... 7,300 247,744
*NCO Group, Inc. ......................................... 1,600 60,800
*Net.B@nk, Inc. .......................................... 1,800 68,400
-----------
756,219
-----------
Finance - Investment & Other -- 1.3%
*Nasdaq-100 Shares........................................ 1,000 115,063
S & P 400 Mid-Cap Depositary Receipts..................... 1,800 141,075
-----------
256,138
-----------
Food & Food Distributors -- 0.5%
*United Natural Foods, Inc. .............................. 4,200 103,950
-----------
Hotel/Restaurants -- 1.5%
*Mandalay Resort Group.................................... 13,400 283,075
-----------
Industrial & Commercial Services -- 0.1%
*Access Worldwide Communications, Inc. ................... 3,800 23,750
-----------
Insurance -- 0.5%
*FPIC Insurance Group, Inc. .............................. 2,000 97,000
-----------
Leasing -- 0.2%
*Indigo Aviation AB ADR................................... 7,000 46,375
-----------
Leisure & Amusements -- 3.9%
*Bally Total Fitness Holding Corp. ....................... 11,300 320,638
*Hibbett Sporting Goods, Inc. ............................ 2,600 57,200
*Racing Champions Corp. .................................. 3,000 21,375
*Preview Travel, Inc. .................................... 5,900 129,431
*Steiner Leisure Ltd. .................................... 4,300 130,344
*Tweeter Home Entertainment Group, Inc. .................. 2,300 90,275
-----------
749,263
-----------
Manufacturing -- 2.1%
Kennametal, Inc. ......................................... 8,200 254,200
*MotivePower Industries, Inc. ............................ 4,650 82,538
*Westinghouse Air Brake, Inc. ............................ 2,300 59,656
-----------
396,394
-----------
</TABLE>
58
<PAGE> 60
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Small Cap Growth Portfolio
Statement of Net Assets, June 30, 1999 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
- --------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Medical & Medical Services -- 0.7%
*Closure Medical Corp. ................................... 4,300 $ 129,000
-----------
Metals - Iron & Steel -- 0.2%
*Mueller Industries, Inc. ................................ 1,300 44,119
-----------
Oil & Gas -- 0.3%
*Cal Dive International, Inc. ............................ 1,900 56,763
-----------
Oil Equipment & Services -- 5.8%
*BJ Services Co. ......................................... 10,700 314,981
*Core Laboratories N.V. .................................. 1,700 23,694
*Marine Drilling.......................................... 18,700 255,956
*Rowan Cos., Inc. ........................................ 16,700 307,906
*Smith International, Inc. ............................... 4,800 208,500
-----------
1,111,037
-----------
Real Estate -- 0.5%
*Realty Information Group, Inc. .......................... 2,200 95,700
-----------
Restaurants -- 1.0%
Applebee's International, Inc. ........................... 4,000 120,500
*Buca, Inc. .............................................. 4,000 66,000
-----------
186,500
-----------
Retail - Clothing and Apparel -- 1.2%
*Buckle, Inc. ............................................ 3,772 108,445
*The Finish Line, Inc., Class A........................... 10,500 118,125
-----------
226,570
-----------
Retail Food Chains -- 0.5%
TCBY Enterprises, Inc. ................................... 14,400 87,300
-----------
Retail Merchandising -- 1.2%
*Bebe Stores, Inc. ....................................... 2,800 95,200
*The Wet Seal, Inc., Class A.............................. 4,500 128,813
-----------
224,013
-----------
Security Services -- 0.5%
*Kroll-O'Gara Co. ........................................ 4,200 92,663
-----------
</TABLE>
59
<PAGE> 61
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Small Cap Growth Portfolio
Statement of Net Assets, June 30, 1999 -- Concluded
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
- --------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Software -- 2.8%
Abovenet Communications, Inc. ............................ 3,200 $ 129,200
*Concentric Networking Corp. ............................. 2,200 87,450
*Landmark Systems Corp. .................................. 2,800 29,050
*Pervasive Software, Inc. ................................ 5,800 144,275
*Security First Technologies.............................. 1,900 85,738
*TSI International Software Ltd. ......................... 2,000 56,750
-----------
532,463
-----------
Technology -- 0.1%
Diamond Technology Partners, Inc. ........................ 500 11,188
-----------
Transportation -- 2.3%
*Atlas Air, Inc. ......................................... 6,900 222,525
*Eagle USA Airfreight, Inc. .............................. 3,400 144,288
*Forward Air Corp. ....................................... 2,700 75,938
-----------
442,751
-----------
Waste Management -- 0.4%
*Waste Connections, Inc. ................................. 2,300 70,150
-----------
TOTAL COMMON STOCK (COST $14,782,456)................... 17,714,120
-----------
SHORT TERM INVESTMENTS -- 9.3%
Temporary Investment Fund, Inc. -- TempCash............... 1,775,452 1,775,452
-----------
TOTAL SHORT TERM INVESTMENTS (COST $1,775,452).......... 1,775,452
-----------
TOTAL INVESTMENTS -- 102.3% (COST $16,557,908).......... 19,489,572
LIABILITIES IN EXCESS OF OTHER ASSETS -- (2.3%)............. (443,728)
-----------
NET ASSETS -- 100.0%
(Equivalent to $12.40 per share based on 1,536,063 shares
of capital stock outstanding)........................... $19,045,844
===========
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE
($19,045,844/1,536,063 shares outstanding)................ $ 12.40
===========
</TABLE>
* Non-Income producing
See accompanying notes to financial statements.
60
<PAGE> 62
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Small Cap Value Portfolio
1999 Semi-Annual Review
Providentmutual Investment Management Company
- --------------------------------------------------------------------------------
The total return for the Small Cap Value Portfolio for the first half of 1999
was -1.12%. This return significantly lagged the 6.82% return of the Wilshire
Small Value Index: the benchmark we use to assess the performance of the
portfolio.
The following two sub-advisers perform the day-to-day management of the
portfolio. The two firms possess a small cap value orientation and discipline.
<TABLE>
<CAPTION>
APPROXIMATE
MANAGER PORTFOLIO %
- ------- -----------
<S> <C>
Denver Investment Advisors.............................. 60%
1838 Investment Advisors................................ 40%
Total Portfolio......................................... 100%
</TABLE>
The market environment for the first quarter clearly favored large cap and
growth names. The second quarter was quite different from the first. Renewed
investor confidence in our economic expansion created a healthy environment for
small cap stocks and value investing in general. Second quarter performance of
the portfolio was strong: up 16.4%, but this rebound could not offset the weak
performance of the first quarter.
The largest sector holdings of the fund include:
<TABLE>
<CAPTION>
SECTOR %
- ------ -----
<S> <C>
Retail Merchandising........................................ 7.0%
Insurance................................................... 6.5%
Real Estate................................................. 6.2%
</TABLE>
Conditions were certainly better for value investors in the second quarter and
we believe these conditions can continue. Investors have taken notice of the low
relative valuations of small and mid cap stocks with good earnings potential.
These valuations stand in sharp contrast to the somewhat lofty valuations of the
large cap names.
The portfolio targets stable or improving businesses at low multiples of price
to earnings, price to book value, and price to cash flow. The investment
discipline used prohibits paying up for expensive stocks and targets inexpensive
stocks relative to their fundamentals. The environment is also ripe for mergers
and acquisitions. We look forward to your continued support and to our long-term
goal of capital appreciation.
Sarah C. Lange, CFA
61
<PAGE> 63
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Small Cap Value Portfolio
Statement of Net Assets, June 30, 1999
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
- -----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK -- 96.1%
Aerospace & Defense -- 3.2%
AAR Corp. ................................................ 1,400 $ 31,762
*Alliant Techsystems, Inc. ............................... 1,100 95,150
Ducommun, Inc. ........................................... 2,200 26,262
Kellstrom Industries, Inc. ............................... 3,500 63,875
Primex Technologies, Inc. ................................ 600 12,937
*Remec, Inc. ............................................. 1,500 24,187
Thiokol Corp. ............................................ 2,000 90,375
-----------
344,548
-----------
Airlines -- 1.0%
*Alaska Air Group, Inc. .................................. 800 33,400
*America West Airlines, Inc. ............................. 4,150 78,331
-----------
111,731
-----------
Auto Manufacturers -- 0.3%
Winnebago Industries, Inc. ............................... 1,600 36,000
-----------
Automobiles -- 1.1%
*Dura Automotive Systems, Inc. ........................... 1,800 59,850
Terex Corp. .............................................. 1,900 57,831
-----------
117,681
-----------
Automotive Equipment -- 1.3%
Arvin Industries, Inc. ................................... 1,100 41,662
*Delco Remy International, Inc. .......................... 410 4,510
*Tower Automotive, Inc. .................................. 3,900 99,206
-----------
145,378
-----------
Banks -- 1.9%
Andover Bancorp, Inc. .................................... 800 25,100
Chittenden Corp. ......................................... 1,807 56,469
Colonial BancGroup, Inc. ................................. 2,000 27,875
Dime Community Bancorp, Inc. ............................. 2,150 49,987
Riggs National Corp. ..................................... 2,000 41,125
-----------
200,556
-----------
Beverages -- 0.9%
*Canandaigua Brands, Inc., Class A........................ 1,300 68,169
Coors (Adolph) Co., Class B............................... 600 29,700
-----------
97,869
-----------
</TABLE>
62
<PAGE> 64
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Small Cap Value Portfolio
Statement of Net Assets, June 30, 1999 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
- -----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Broadcasting & Publishing -- 1.5%
*World Color Press, Inc. ................................. 4,500 $ 123,750
Valassis Communications, Inc. ............................ 1,050 38,456
-----------
162,206
-----------
Building & Building Supplies -- 5.2%
BMC West Corp. ........................................... 3,320 38,180
Coachmen Industries, Inc. ................................ 2,250 52,312
Engle Homes, Inc. ........................................ 1,260 17,325
Florida Rock Industries, Inc. ............................ 500 22,750
Holophane Corp. .......................................... 1,460 55,662
Horton (D.R.), Inc. ...................................... 3,320 55,195
Lafarge Corp. ............................................ 2,300 81,506
Lone Star Industries, Inc. ............................... 1,950 144,616
M/I Schottenstein Homes, Inc. ............................ 500 9,219
Texas Industries, Inc. ................................... 1,000 38,750
*Toll Brothers, Inc. ..................................... 2,150 46,091
-----------
561,606
-----------
Business & Consumer Services -- 2.8%
ADVO, Inc. ............................................... 2,630 54,572
*Personnel Group of America, Inc. ........................ 4,100 41,000
*Seitel, Inc. ............................................ 4,000 64,750
Sterling Software, Inc. .................................. 5,300 141,443
-----------
301,765
-----------
Chemicals & Allied Products -- 0.5%
General Cable Corp. ...................................... 3,710 59,360
-----------
Communications -- 0.6%
CommScope, Inc. .......................................... 1,300 39,975
*Teltrend, Inc. .......................................... 1,000 21,250
-----------
61,225
-----------
</TABLE>
63
<PAGE> 65
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Small Cap Value Portfolio
Statement of Net Assets, June 30, 1999 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
- -----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Computers -- 3.4%
Bel Fuse, Inc., Class B................................... 900 $ 23,400
*Black Box Corp. ......................................... 1,350 67,669
*Brooktrout Technology, Inc. ............................. 1,500 24,094
*In Focus Systems, Inc. .................................. 2,800 42,000
*InterVoice, Inc. ........................................ 4,600 66,413
*Pomeroy Computer Resources, Inc. ........................ 2,300 32,056
Software Spectrum, Inc. .................................. 1,200 19,500
*Symantec Corp. .......................................... 3,500 89,250
-----------
364,382
-----------
Construction -- 1.1%
M.D.C. Holdings, Inc. .................................... 2,400 51,600
Morrison Knudsen Corp. ................................... 6,600 68,062
-----------
119,662
-----------
Consumer Products -- 0.3%
Central Garden & Pet Co. ................................. 2,910 29,827
-----------
Containers -- 1.1%
*Ivex Packaging Corp. .................................... 2,640 58,080
*Shorewood Packaging...................................... 500 9,219
*US Can Corp. ............................................ 2,150 47,837
-----------
115,136
-----------
Cosmetics & Toiletries -- 0.1%
Helen of Troy Ltd. ....................................... 600 10,763
-----------
Drugs & Health Care -- 2.2%
Bindley Western Industries, Inc. ......................... 4,933 113,775
Roberts Pharmaceutical Corp. ............................. 5,000 121,250
-----------
235,025
-----------
Electrical Equipment -- 0.7%
Cable Design Technologies, Inc. .......................... 1,400 21,612
UCAR International, Inc. ................................. 2,240 56,560
-----------
78,172
-----------
</TABLE>
64
<PAGE> 66
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Small Cap Value Portfolio
Statement of Net Assets, June 30, 1999 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
- -----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Electronics -- 4.4%
*Aeroflex, Inc. .......................................... 2,300 $ 45,425
AVX Corp. ................................................ 3,750 91,406
BEC Energy................................................ 2,100 86,625
*Benchmark Electronics, Inc. ............................. 1,400 50,312
Burr-Brown Corp. ......................................... 1,760 64,460
*DII Group, Inc. ......................................... 1,160 43,282
*Oak Industries, Inc. .................................... 1,370 59,852
*Stoneridge, Inc. ........................................ 1,300 17,550
TNP Enterprises, Inc. .................................... 600 21,750
-----------
480,662
-----------
Energy -- 0.6%
*Calpine Corp. ........................................... 900 48,600
Dynegy, Inc. ............................................. 900 18,337
-----------
66,937
-----------
Engineering -- 0.5%
URS Corp. ................................................ 1,700 49,831
-----------
Entertainment -- 0.7%
*Harrah's Entertainment, Inc. ............................ 3,310 72,820
-----------
Finance -- 4.5%
Advest Group, Inc. ....................................... 1,400 27,912
Astoria Financial Corp. .................................. 2,000 87,875
Dain Rauscher Corp. ...................................... 800 43,300
Downey Financial Corp. ................................... 1,800 39,487
*Golden State Bancorp, Inc. .............................. 4,900 107,800
Heller Financial, Inc. ................................... 5,830 162,147
MAF Bancorp, Inc. ........................................ 700 16,975
-----------
485,496
-----------
Finance - Investment & Other -- 0.3%
Southwest Securities Group, Inc. ......................... 500 35,875
-----------
</TABLE>
65
<PAGE> 67
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Small Cap Value Portfolio
Statement of Net Assets, June 30, 1999 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
- -----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Food & Food Distributors -- 5.3%
*Ben & Jerry's Homemade, Inc., Class A.................... 1,400 $ 38,850
Earthgrains Co. .......................................... 4,200 108,412
Fresh Del Monte Produce, Inc. ............................ 2,420 34,182
Great Atlantic & Pacific Tea Co., Inc. ................... 1,600 54,100
Pilgrim's Pride Corp., Class B............................ 900 27,000
*Ralcorp Holdings, Inc. .................................. 6,100 97,981
*Smithfield Foods, Inc. .................................. 4,820 161,169
*Suiza Foods Corp. ....................................... 800 33,500
*Sylvan, Inc. ............................................ 1,940 22,553
-----------
577,747
-----------
Healthcare Services -- 2.3%
Conventry Health Care, Inc. .............................. 4,090 44,734
*Trigon Healthcare, Inc. ................................. 5,570 202,609
-----------
247,343
-----------
Home Furnishings -- 1.3%
American Woodmark Corp. .................................. 1,070 37,718
*Furniture Brands International, Inc. .................... 2,830 78,886
*LADD Furniture, Inc. .................................... 1,000 21,000
-----------
137,604
-----------
Hotel/Restaurants -- 0.9%
Innkeepers USA Trust, Inc. ............................... 4,000 40,000
Sun International Hotels Ltd. ............................ 1,370 61,308
-----------
101,308
-----------
Industrial -- 0.8%
*UNIFI, Inc. ............................................. 4,100 87,125
-----------
</TABLE>
66
<PAGE> 68
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Small Cap Value Portfolio
Statement of Net Assets, June 30, 1999 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
- -----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Insurance -- 6.5%
Allmerica Financial Corp. ................................ 880 $ 53,515
Chicago Title Corp. ...................................... 1,300 46,394
*CNA Surety Corp. ........................................ 3,710 56,809
Delphi Financial Group, Inc., Class A..................... 1,238 44,413
Enhance Financial Services Group, Inc. ................... 1,200 23,700
Everest Re Holdings, Inc. ................................ 2,240 73,080
FBL Financial Group, Inc. ................................ 1,000 19,500
*FPIC Insurance Group, Inc. .............................. 1,170 56,745
Fremont General Corp. .................................... 2,900 54,738
Harleysville Group, Inc. ................................. 2,140 43,870
HCC Insurance Holdings, Inc. ............................. 3,320 75,323
LandAmerica Financial Group, Inc. ........................ 2,000 57,500
LaSalle Re Holdings Ltd. ................................. 2,000 34,000
*Penn Treaty American Corp. .............................. 1,160 27,913
State Auto Financial...................................... 2,340 31,590
-----------
699,090
-----------
Leasing -- 3.9%
*Avis Rent A Car, Inc. ................................... 5,400 157,275
Dollar Thrifty Automotive Group, Inc. .................... 2,300 53,475
*Indigo Aviation AB ADR................................... 1,650 10,931
Rent Way, Inc. ........................................... 3,300 81,263
Rollins Truck Leasing..................................... 5,250 58,406
Varlen Corp. ............................................. 1,500 60,750
-----------
422,100
-----------
Machinery & Heavy Equipment -- 0.7%
Oshkosh Truck Corp. ...................................... 800 40,250
Tecumseh Products Co., Class A............................ 500 30,281
-----------
70,531
-----------
</TABLE>
67
<PAGE> 69
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Small Cap Value Portfolio
Statement of Net Assets, June 30, 1999 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
- -----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Manufacturing -- 4.4%
AptarGroup, Inc. ......................................... 2,600 $ 78,000
*Buckeye Technologies, Inc. .............................. 2,620 39,791
Fedders Corp., Class A.................................... 3,910 23,949
Koala Corp. .............................................. 300 8,025
*Monaco Coach Corp. ...................................... 1,350 57,122
Moog, Inc., Class A....................................... 800 27,500
Oxford Industries, Inc. .................................. 1,000 28,313
Quanex Corp. ............................................. 2,050 58,425
Ruddick Corp. ............................................ 3,700 74,000
*Velcro Industries N.V.................................... 2,910 35,284
*Wolverine Tube, Inc. .................................... 1,850 46,481
-----------
476,890
-----------
Manufacturing Equipment -- 0.3%
Transportation Technologies Industries.................... 2,300 30,475
-----------
Medical Equipment & Supplies -- 0.3%
*Del Global Technologies Corp. ........................... 3,620 35,295
-----------
Medical & Medical Services -- 2.3%
Bard (C.R.), Inc. ........................................ 800 38,250
CONMED Corp. ............................................. 1,800 55,125
*Dura Pharmaceuticals, Inc. .............................. 3,300 39,394
*Medco Research, Inc. .................................... 1,000 26,250
*Medicis Pharmaceutical Corp., Class A.................... 800 20,300
*Polymedica Corp. ........................................ 1,800 18,000
US Oncology, Inc. ........................................ 4,042 48,504
-----------
245,823
-----------
Metals - Iron & Steel -- 0.5%
AK Steel Holding Corp. ................................... 1,000 22,500
Ryerson Tull, Inc. ....................................... 1,500 33,844
-----------
56,344
-----------
Office Equipment & Supplies -- 0.4%
United Stationers, Inc. .................................. 1,850 40,700
-----------
</TABLE>
68
<PAGE> 70
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Small Cap Value Portfolio
Statement of Net Assets, June 30, 1999 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
- -----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Oil & Gas -- 2.5%
*Cal Dive International, Inc. ............................ 1,270 $ 37,941
Louis Dreyfus Natural Gas Co. ............................ 1,800 38,812
Pennzoil-Quaker State Co. ................................ 2,700 40,500
Southwest Gas Corp. ...................................... 1,900 54,388
*Tesoro Petroleum Corp. .................................. 5,900 94,031
-----------
265,672
-----------
Oil Equipment & Services -- 0.8%
*SEACOR SMIT, Inc. ....................................... 1,670 89,345
-----------
Paper & Forest Products -- 1.1%
Boise Cascade Corp. ...................................... 1,300 55,900
Chesapeake Corp. ......................................... 1,700 63,644
-----------
119,544
-----------
Real Estate -- 6.2%
Annaly Mortgage Management, Inc. ......................... 1,300 14,625
Bradley Real Estate, Inc. ................................ 1,200 24,900
Brandywine Realty Trust................................... 4,260 84,402
Chelsea GCA Realty, Inc. ................................. 1,370 50,861
Eastgroup Properties...................................... 1,800 36,113
Essex Property Trust, Inc. ............................... 1,600 56,600
Healthcare Realty Trust................................... 1,320 27,720
Health Care REIT, Inc. ................................... 2,700 62,775
Liberty Property Trust.................................... 3,200 79,600
Mack-Cali Realty Corp. ................................... 1,600 49,500
Mills Corp. .............................................. 1,400 30,363
Pacific Gulf Properties, Inc. ............................ 1,560 35,295
Parkway Properties, Inc. ................................. 1,500 49,688
Prentiss Properties Trust................................. 3,000 70,500
-----------
672,942
-----------
Restaurants -- 1.2%
*O'Charleys, Inc. ........................................ 2,380 38,080
*RARE Hospitality International, Inc. .................... 3,430 87,465
-----------
125,545
-----------
</TABLE>
69
<PAGE> 71
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Small Cap Value Portfolio
Statement of Net Assets, June 30, 1999 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
- -----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Retail - Clothing and Apparel -- 1.8%
Blair Corp. .............................................. 1,000 $ 26,938
Cato Corp., Class A....................................... 3,100 36,038
*The Finish Line, Inc., Class A........................... 3,220 36,225
Tropical Sportswear International Corp. .................. 2,970 94,669
-----------
193,870
-----------
Retail Merchandising -- 7.0%
*Ames Department Stores, Inc. ............................ 1,250 57,031
BJ's Wholesale Club, Inc. ................................ 2,920 87,783
Claire's Stores, Inc. .................................... 1,750 44,844
*Elder-Beerman Stores Corp. .............................. 4,100 29,981
Haverty Furniture Companies, Inc. ........................ 900 31,669
Pier 1 Imports, Inc. ..................................... 6,410 72,113
*Rex Stores Corp. ........................................ 1,000 29,813
ShopKo Stores, Inc. ...................................... 4,400 159,500
*Zale Corp. .............................................. 6,750 270,000
-----------
782,734
-----------
Semiconductors -- 0.3%
*Integrated Device Technology, Inc. ...................... 3,200 34,800
-----------
Software -- 0.6%
*Best Software, Inc. ..................................... 2,400 38,700
*GT Interactive Software Corp. ........................... 3,780 13,230
Progress Software Corp. .................................. 400 11,300
-----------
63,230
-----------
Transportation -- 1.7%
Arkansas Best Corp. ...................................... 2,800 27,825
*Consolidated Freightways Corp. .......................... 1,400 17,981
Roadway Express, Inc. .................................... 1,300 25,188
Sea Containers Ltd., Class A.............................. 2,200 73,838
USFreightways Corp. ...................................... 900 41,681
-----------
186,513
-----------
Utilities -- 2.0%
Central Hudson Gas & Electric Corp. ...................... 1,400 58,800
Cleco Corp. .............................................. 1,600 48,600
Rochester Gas and Electric Corp. ......................... 2,600 69,063
United Illuminating Co. .................................. 900 38,194
-----------
214,657
-----------
</TABLE>
70
<PAGE> 72
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Small Cap Value Portfolio
Statement of Net Assets, June 30, 1999 -- Concluded
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
- -----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Waste Management -- 0.8%
*Safety-Kleen Corp. ...................................... 4,975 $ 90,172
-----------
TOTAL COMMON STOCK (COST $9,793,602).................... 10,411,912
-----------
SHORT TERM INVESTMENTS -- 6.5%
Temporary Investment Fund, Inc. -- TempCash............... 706,996 706,996
-----------
TOTAL SHORT TERM INVESTMENTS (COST $706,996)............ 706,996
-----------
TOTAL INVESTMENTS -- 102.6% (COST $10,500,598).......... 11,118,908
LIABILITIES IN EXCESS OF OTHER ASSETS -- (2.6)%............. (284,200)
-----------
NET ASSETS -- 100.0%
(Equivalent to $8.14 per share based on 1,331,688 shares
of capital stock outstanding)........................... $10,834,708
===========
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE
($10,834,708/1,331,688 shares outstanding)................ $ 8.14
===========
</TABLE>
* Non-Income producing
See accompanying notes to financial statements.
71
<PAGE> 73
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
Statement of Operations for the Six Months Ended June 30, 1999
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MONEY
GROWTH MARKET BOND
PORTFOLIO PORTFOLIO PORTFOLIO
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends................................................. $ 2,554,570 $ -- $ --
Interest.................................................. 341,731 2,418,045 1,139,600
Less: foreign taxes withheld............................ (7,821) -- --
----------- ---------- -----------
Total Investment Income................................. 2,888,480 2,418,045 1,139,600
----------- ---------- -----------
EXPENSES:
Investment advisory fee................................... 508,438 121,628 62,025
Administration fee........................................ 114,537 34,926 12,737
Directors' fee............................................ 12,713 3,756 1,378
Transfer agent fee........................................ 3,391 1,551 1,038
Custodian fee............................................. 16,132 6,158 3,619
Legal fees................................................ 27,085 7,615 2,949
Audit fees................................................ 19,036 5,305 1,924
Printing.................................................. 41,360 10,424 3,801
Insurance................................................. 8,644 2,345 843
Miscellaneous............................................. 2,356 754 597
----------- ---------- -----------
753,692 194,462 90,911
Less: expenses waived by Administrator and/or reimbursed
by affiliated insurance company......................... (6,384) (2,750) (1,067)
----------- ---------- -----------
Total expenses.......................................... 747,308 191,712 89,844
----------- ---------- -----------
Net investment income (loss)............................ 2,141,172 2,226,333 1,049,756
----------- ---------- -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND
FOREIGN CURRENCY TRANSACTIONS
Net realized gain (loss) from:
Investments............................................. 8,764,510 (43) (411,978)
Foreign Currency related translations................... -- -- --
----------- ---------- -----------
8,764,510 (43) (411,978)
----------- ---------- -----------
Net change in unrealized appreciation (depreciation) from:
Investments............................................. 13,506,076 -- (1,968,350)
Foreign currency related translations................... -- -- --
----------- ---------- -----------
13,506,076 -- (1,968,350)
----------- ---------- -----------
Net gain (loss) on investments and foreign currency
transactions.......................................... 22,270,586 (43) (2,380,328)
----------- ---------- -----------
Net increase (decrease) in net assets resulting from
operations............................................ $24,411,758 $2,226,290 $(1,330,572)
=========== ========== ===========
</TABLE>
See accompanying notes to financial statements.
72
<PAGE> 74
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
Statement of Operations for the Six Months Ended June 30, 1999 -- (Concluded)
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
AGGRESSIVE SENTINEL LARGE LARGE SMALL SMALL
MANAGED GROWTH INTERNATIONAL GROWTH CAP CAP CAP CAP
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO GROWTH VALUE GROWTH VALUE
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 344,871 $ 211,475 $1,215,573 $ 40,233 $ 56,994 $ 151,166 $ 5,834 $ 48,273
922,749 98,140 36,629 15,919 17,963 21,196 31,483 15,550
(869) -- (75,688) -- -- (25) -- --
---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------
1,266,751 309,615 1,176,514 56,152 74,957 172,337 37,317 63,823
---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------
143,193 110,148 266,011 33,050 66,319 62,699 58,260 36,943
25,198 19,237 37,192 4,736 6,755 6,401 4,611 2,938
2,790 1,813 2,823 498 608 575 428 265
1,326 1,188 1,332 853 900 892 850 812
3,830 4,249 23,102 2,471 4,686 7,552 5,829 7,847
5,856 4,558 5,923 1,113 1,167 1,112 844 523
4,119 2,583 4,307 727 1,019 970 663 441
7,521 5,741 7,598 2,331 2,017 1,911 1,376 877
1,828 1,564 2,073 301 349 354 160 154
699 510 968 998 587 585 576 566
---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------
196,360 151,591 351,329 47,078 84,407 83,051 73,597 51,366
(298) (240) (8,117) 0 (2,411) (3,532) (1,580) (1,091)
---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------
196,062 151,351 343,212 47,078 81,996 79,519 72,017 50,275
---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------
1,070,689 158,264 833,302 9,074 (7,039) 92,818 (34,700) 13,548
---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------
991,385 1,729,499 3,646,507 1,512,242 1,297,679 347,826 1,390,904 (634,314)
-- -- (120,897) -- -- -- -- --
---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------
991,385 1,729,499 3,525,610 1,512,242 1,297,679 347,826 1,390,904 (634,314)
---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------
509,352 2,675,919 2,378,550 483,451 845,065 1,173,106 1,653,886 733,260
-- -- (12,965) -- -- -- -- --
---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------
509,352 2,675,919 2,365,585 483,451 845,065 1,173,106 1,653,886 733,260
---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------
1,500,737 4,405,418 5,891,195 1,995,693 2,142,744 1,520,932 3,044,790 98,946
---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------
$2,571,426 $4,563,682 $6,724,497 $2,004,767 $2,135,705 $1,613,750 $3,010,090 $ 112,494
========== ========== ========== ========== ========== ========== ========== =========
</TABLE>
73
<PAGE> 75
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED JUNE 30, 1999
(UNAUDITED)
MONEY AGGRESSIVE
GROWTH MARKET BOND MANAGED GROWTH INTERNATIONAL
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INCREASE IN NET ASSETS
Operations:
Net investment income (loss)............ $ 2,141,172 $ 2,226,333 $ 1,049,756 $ 1,070,689 $ 158,264 $ 833,302
Net realized gain (loss) on investments
and foreign currency related
transactions........................... 8,764,510 (43) (411,978) 991,385 1,729,499 3,525,610
Net change in unrealized appreciation
(depreciation) on investments and
foreign currency translations.......... 13,506,076 -- (1,968,350) 509,352 2,675,919 2,365,585
------------ ----------- ----------- ----------- ----------- -----------
Net increase (decrease) in net assets
resulting from operations.............. 24,411,758 2,226,290 (1,330,572) 2,571,426 4,563,682 6,724,497
Distributions:
From net investment income.............. (1,058,688) (2,226,333) (506,981) (499,598) (293,724) (813,330)
From net realized gains................. (6,184,504) -- (398,338) (3,406,936) (7,283,996) (4,172,939)
Capital share transactions:
Net contributions from affiliated life
insurance companies.................... 128,661 8,196,480 929,104 10,459,310 6,321,299 1,653,964
------------ ----------- ----------- ----------- ----------- -----------
Total increase in net assets........... 17,297,227 8,196,437 (1,306,787) 9,124,202 3,307,261 3,392,192
NET ASSETS
Beginning of period....................... 315,298,521 91,452,921 36,845,922 67,805,311 56,495,315 71,363,209
------------ ----------- ----------- ----------- ----------- -----------
End of Period............................. $332,595,748 $99,649,358 $35,539,135 $76,929,513 $59,802,576 $74,755,401
============ =========== =========== =========== =========== ===========
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1998
MONEY AGGRESSIVE
GROWTH MARKET BOND MANAGED GROWTH INTERNATIONAL
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INCREASE IN NET ASSETS
Operations:
Net investment income (loss)............ $ 4,452,995 $ 4,067,363 $ 1,728,246 $ 1,980,933 $ 293,724 $ 736,418
Net realized gain (loss) on investments
and foreign currency related
transactions........................... 6,148,289 -- 398,338 3,402,294 7,283,996 4,178,860
Net change in unrealized appreciation
(depreciation) on investments and
foreign currency translations.......... 26,998,570 -- 132,450 1,925,076 (3,566,325) 1,384,334
------------ ----------- ----------- ----------- ----------- -----------
Net increase (decrease) in net assets
resulting from operations.............. 37,599,854 4,067,363 2,259,034 7,308,303 4,011,395 6,299,612
Distributions:
From net investment income.............. (4,464,024) (4,067,363) (1,551,787) (1,940,488) (391,790) (478,318)
From net realized gains................. (35,634,593) -- (3,599) (2,699,617) (3,740,193) (4,341,196)
Capital share transactions:
Net contributions from affiliated life
insurance companies.................... 50,407,953 27,114,010 12,791,904 9,069,604 8,041,798 7,369,655
------------ ----------- ----------- ----------- ----------- -----------
Total increase in net assets........... 47,909,190 27,114,010 13,495,552 11,737,802 7,921,210 8,849,753
NET ASSETS
Beginning of period....................... 267,389,331 64,338,911 23,350,370 56,067,509 48,574,105 62,513,456
------------ ----------- ----------- ----------- ----------- -----------
End of Period............................. $315,298,521 $91,452,921 $36,845,922 $67,805,311 $56,495,315 $71,363,209
============ =========== =========== =========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
74
<PAGE> 76
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
Statements of Changes in Net Assets -- (Concluded)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED JUNE 30, 1999
(UNAUDITED)
SENTINEL LARGE LARGE SMALL SMALL
GROWTH CAP CAP CAP CAP
PORTFOLIO GROWTH VALUE GROWTH VALUE
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INCREASE IN NET ASSETS
Operations:
Net investment income (loss)............................. $ 9,074 $ (7,039) $ 92,818 $ (34,700) $ 13,548
Net realized gain (loss) on investments and foreign
currency related transactions........................... 1,512,242 1,297,679 347,826 1,390,904 (634,314)
Net change in unrealized appreciation (depreciation) on
investments and foreign currency translations........... 483,451 845,065 1,173,106 1,653,886 733,260
----------- ----------- ----------- ----------- -----------
Net increase (decrease) in net assets resulting from
operations.............................................. 2,004,767 2,135,705 1,613,750 3,010,090 112,494
Distributions:
From net investment income............................... (23,574) (3,102) (105,080) -- (17,055)
From net realized gains.................................. (537,394) -- -- -- --
Capital share transactions:
Net contributions from affiliated life insurance
companies............................................... 1,628,267 10,107,324 6,440,655 6,350,489 2,666,010
----------- ----------- ----------- ----------- -----------
Total increase in net assets............................ 3,072,066 12,239,927 7,949,325 9,360,579 2,761,449
NET ASSETS
Beginning of period........................................ 12,166,979 14,306,655 15,615,901 9,685,265 8,073,259
----------- ----------- ----------- ----------- -----------
End of Period.............................................. $15,239,045 $26,546,582 $23,565,226 $19,045,844 $10,834,708
=========== =========== =========== =========== ===========
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE YEAR OR PERIOD ENDED DECEMBER 31, 1998
SENTINEL LARGE LARGE SMALL SMALL
GROWTH CAP CAP CAP CAP
PORTFOLIO GROWTH* VALUE* GROWTH* VALUE*
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INCREASE IN NET ASSETS
Operations:
Net investment income (loss)............................. $ 23,575 $ 3,102 $ 105,080 $ (5,142) $ 17,080
Net realized gain (loss) on investments and foreign
currency related transactions........................... 537,394 (331,257) (614,547) (783,976) (649,795)
Net change in unrealized appreciation (depreciation) on
investments and foreign currency translations........... 1,001,393 2,717,374 709,996 1,277,778 (114,950)
----------- ----------- ----------- ---------- ----------
Net increase (decrease) in net assets resulting from
operations.............................................. 1,562,362 2,389,219 200,529 488,660 (747,665)
Distributions:
From net investment income............................... (25,069) -- -- -- --
From net realized gains.................................. (1,668,898) -- -- -- --
Capital share transactions:
Net contributions from affiliated life insurance
companies............................................... 3,936,595 11,917,436 15,415,372 9,196,605 8,820,924
----------- ----------- ----------- ---------- ----------
Total increase in net assets............................ 3,804,990 14,306,655 15,615,901 9,685,265 8,073,259
NET ASSETS
Beginning of period........................................ 8,361,989 -- -- -- --
----------- ----------- ----------- ---------- ----------
End of Period.............................................. $12,166,979 $14,306,655 $15,615,901 $9,685,265 $8,073,259
=========== =========== =========== ========== ==========
</TABLE>
* Commencement of operations was May 4, 1998.
See accompanying notes to financial statements.
75
<PAGE> 77
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
Financial Highlights
- --------------------------------------------------------------------------------
Selected data for a share of capital stock outstanding throughout the periods:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------
01/01/99
TO 01/01/98 01/01/97 01/01/96 01/01/95 01/01/94
06/30/99 TO TO TO TO TO
(UNAUDITED) 12/31/98 12/31/97 12/31/96 12/31/95 12/31/94
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.......... $18.82 $19.46 $18.10 $16.36 $14.00 $14.09
------- ------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income......................... .13 .27 .35 .46 .47 .43
Net realized and unrealized gain (loss) on
investments.................................. 1.32 1.97 3.49 2.54 3.41 (.10)
------- ------- ------- ------- ------- -------
Total from investment operations........... 1.45 2.24 3.84 3.00 3.88 .33
------- ------- ------- ------- ------- -------
LESS DISTRIBUTIONS:
Dividends to shareholders from net investment
income....................................... (.06) (.29) (.38) (.48) (.46) (.41)
Dividends to shareholders from net capital
gains........................................ (.37) (2.59) (2.10) (.78) (1.06) (.01)
------- ------- ------- ------- ------- -------
Total distributions........................ (.43) (2.88) (2.48) (1.26) (1.52) (.42)
------- ------- ------- ------- ------- -------
Net asset value, end of period................ $19.84 $18.82 $19.46 $18.10 $16.36 $14.00
======= ======= ======= ======= ======= =======
Total return............................... 7.88%(2) 13.70% 24.32% 19.58% 30.39% 2.40%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period $(000).............. 332,596 315,299 267,389 198,948 161,899 115,191
Ratios of expenses to average net assets(1)
(annualized)................................. .47% .46% .43% .50% .61% .63%
Ratios of net investment income to average net
assets(annualized)........................... 1.34% 1.53% 2.01% 2.80% 3.20% 3.10%
Portfolio turnover............................ 10% 30% 108% 72% 61% 63%
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
(1.) Expense ratios for the Growth Portfolio before reimbursement of expense by
affiliated insurance company for the period ended June 30, 1999, and the
years ended December 31, 1998, 1997, 1996, 1995, and 1994 were as follows:
0.47%, 0.47%, 0.43%, 0.50%, 0.61% and 0.67% respectively.
(2.) Total returns for periods less than one year are not annualized.
See accompanying notes to financial statements.
76
<PAGE> 78
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
Financial Highlights -- Continued
- --------------------------------------------------------------------------------
Selected data for a share of capital stock outstanding throughout the periods:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MONEY MARKET PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------
01/01/99
TO 01/01/98 01/01/97 01/01/96 01/01/95 01/01/94
06/30/99 TO TO TO TO TO
(UNAUDITED) 12/31/98 12/31/97 12/31/96 12/31/95 12/31/94
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.......... $1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income......................... .02 .05 .05 .05 .05 .04
------ ------ ------ ------ ------ ------
Total from investment operations.......... .02 .05 .05 .05 .05 .04
------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends to shareholders from net investment
income...................................... (.02) (.05) (.05) (.05) (.05) (.04)
------ ------ ------ ------ ------ ------
Total distributions....................... (.02) (.05) (.05) (.05) (.05) (.04)
------ ------ ------ ------ ------ ------
Net asset value, end of period................ $1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
====== ====== ====== ====== ====== ======
Total return.............................. 2.29%(2) 5.29% 5.33% 5.15% 5.61% 3.81%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period $(000).............. 99,649 91,453 64,339 54,197 34,165 21,040
Ratios of expenses to average net assets(1)
(annualized)................................ .40% .40% .39% .44% .50% .55%
Ratios of net investment income to average net
assets (annualized)......................... 4.58% 5.15% 5.21% 5.03% 5.47% 3.86%
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
(1.) Expense ratios for the Money Market Portfolio before reimbursement of
expense by affiliated insurance company for the period ended June 30, 1999,
and the years ended December 31, 1998, 1997, 1996, 1995 and 1994 were as
follows: 0.40%, 0.42%, 0.39%, 0.44%, 0.50% and 0.59% respectively.
(2.) Total returns for periods less than one year are not annualized.
See accompanying notes to financial statements.
77
<PAGE> 79
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
Financial Highlights -- Continued
- --------------------------------------------------------------------------------
Selected data for a share of capital stock outstanding throughout the periods:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
BOND PORTFOLIO
- ----------------------------------------------------------------------------------------------------------------------
01/01/99
TO 01/01/98 01/01/97 01/01/96 01/01/95 01/01/94
06/30/99 TO TO TO TO TO
(UNAUDITED) 12/31/98 12/31/97 12/31/96 12/31/95 12/31/94
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.............. $11.22 $10.98 $10.67 $11.00 $ 9.73 $11.21
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income............................. .31 .63 .64 .63 .65 .62
Net realized and unrealized gain (loss) on
investments...................................... (.72) .25 .33 (.34) 1.27 (1.23)
------ ------ ------ ------ ------ ------
Total from investment operations............... (.41) .88 .97 .29 1.92 (.61)
------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends to shareholders from net investment
income........................................... (.15) (.64) (.66) (.62) (.65) (.60)
Dividends to shareholders from net capital
gains............................................ (.12) (.00) (.00) (.00) (.00) (.27)
------ ------ ------ ------ ------ ------
Total distributions............................ (.27) (.64) (.66) (.62) (.65) (.87)
------ ------ ------ ------ ------ ------
Net asset value, end of period.................... $10.54 $11.22 $10.98 $10.67 $11.00 $ 9.73
====== ====== ====== ====== ====== ======
Total return................................... (3.67)%(2) 8.22% 9.50% 2.86% 20.45% (5.62)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period $(000).................. 35,539 36,846 23,350 17,087 14,402 10,098
Ratios of expenses to average net assets(1)
(annualized)..................................... .51% .53% .57% .56% .60% .68%
Ratios of net investment income to average net
assets (annualized).............................. 5.92% 6.03% 6.24% 6.08% 6.36% 6.14%
Portfolio turnover................................ 148% 163% 105% 133% 206% 151%
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
(1.) Expense ratios for the Bond Portfolio before reimbursement of expense by
affiliated insurance company for the period ended June 30, 1999, and the
years ended December 31, 1998, 1997, 1996, 1995 and 1994 were as follows:
0.51%, 0.55%, 0.57%, 0.56%, 0.60% and 0.70% respectively.
(2.) Total returns for periods less than one year are not annualized.
See accompanying financial statements.
78
<PAGE> 80
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
Financial Highlights -- Continued
- --------------------------------------------------------------------------------
Selected data for a share of capital stock outstanding throughout the periods:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MANAGED PORTFOLIO
- ----------------------------------------------------------------------------------------------------------------------
01/01/99
TO 01/01/98 01/01/97 01/01/96 01/01/95 01/01/94
06/30/99 TO TO TO TO TO
(UNAUDITED) 12/31/98 12/31/97 12/31/96 12/31/95 12/31/94
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.............. $17.68 $ 17.06 $ 14.68 $ 14.19 $ 11.94 $ 13.27
------- ------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income............................. .24 .54 .54 .51 .55 .53
Net realized and unrealized gain (loss) on
investments...................................... .40 1.45 2.49 1.07 2.28 (.77)
------- ------- ------- ------- ------- -------
Total from investment operations............... .64 1.99 3.03 1.58 2.83 (.24)
------- ------- ------- ------- ------- -------
LESS DISTRIBUTIONS:
Dividends to shareholders from net investment
income........................................... (.13) (.55) (.53) (.51) (.57) (.49)
Dividends to shareholders from net capital
gains............................................ (.89) (.82) (.12) (.58) (.01) (.60)
------- ------- ------- ------- ------- -------
Total distributions............................ (1.02) (1.37) (.65) (1.09) (.58) (1.09)
------- ------- ------- ------- ------- -------
Net asset value, end of period.................... $ 17.30 $17.68 $ 17.06 $ 14.68 $ 14.19 $ 11.94
======= ======= ======= ======= ======= =======
Total return................................... 3.81%(2) 12.54% 21.23% 11.88% 24.43% (1.82)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period $(000).................. 76,930 67,805 56,068 43,431 36,002 29,363
Ratios of expenses to average net assets(1)
(annualized)..................................... .56% .57% .58% .60% .66% .67%
Ratios of net investment income to average net
assets (annualized).............................. 3.05% 3.22% 3.47% 3.68% 4.22% 4.34%
Portfolio turnover................................ 87% 203% 99% 106% 130% 75%
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
(1.) Expense ratios for the Managed Portfolio before reimbursement of expense by
affiliated insurance company for the period ended June 30, 1999, and the
years ended December 31, 1998, 1997, 1996, 1995 and 1994 were as follows:
0.56%, 0.58%, 0.58%, 0.60%,0.66% and 0.73% respectively.
(2.) Total returns for periods less than one year are not annualized.
See accompanying financial statements.
79
<PAGE> 81
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
Financial Highlights -- Continued
- --------------------------------------------------------------------------------
Selected data for a share of capital stock outstanding throughout the periods:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
AGGRESSIVE GROWTH PORTFOLIO
- --------------------------------------------------------------------------------------------------------------------------
01/01/99
TO 01/01/98 01/01/97 01/01/96 01/01/95 01/01/94
06/30/99 TO TO TO TO TO
(UNAUDITED) 12/31/98 12/31/97 12/31/96 12/31/95 12/31/94
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.............. $21.91 $22.19 $18.52 $17.38 $15.45 $15.45
------- ------- ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income............................. .05 .11 .17 .17 .20 (.01)
Net realized and unrealized gain (loss) on
investments...................................... 1.55 1.50 3.72 3.03 1.86 .01
------- ------- ------ ------ ------ ------
Total from investment operations............... 1.60 1.61 3.89 3.20 2.06 .00
------- ------- ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends to shareholders from net investment
income........................................... (.11) (.18) (.18) (.19) (.00) (.00)
Dividends to shareholders from net capital
gains............................................ (2.83) (1.71) (.04) (1.87) (.13) (.00)
------- ------- ------ ------ ------ ------
Total distributions............................ (2.94) (1.89) (.22) (2.06) (.13) (.00)
------- ------- ------ ------ ------ ------
Net asset value, end of period.................... $20.57 $21.91 $22.19 $18.52 $17.38 $15.45
======= ======= ====== ====== ====== ======
Total return................................... 8.57%(2) 7.99% 21.21% 21.00% 13.48% 0.00%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period $(000).................. 59,803 56,495 48,574 34,098 23,822 15,430
Ratios of expenses to average net assets(1)
(annualized)..................................... .56% .61% .63% .68% .76% .86%
Ratios of net investment income to average net
assets (annualized).............................. .59% .56% .95% 1.14% 1.32% (.10)%
Portfolio turnover................................ 17% 41% 37% 47% 89% 60%
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1.) Expense ratios for the Growth Portfolio before reimbursement of expense by
affiliated insurance company for the period ended June 30, 1999, and the
years ended December 31, 1998, 1997, 1996, 1995 and 1994 were as follows:
0.57%, 0.62%, 0.63%, 0.68%, .76% and 0.89%, respectively.
(2.) Total returns for periods less than one year are not annualized.
See accompanying notes to financial statements.
80
<PAGE> 82
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
Financial Highlights -- Continued
- --------------------------------------------------------------------------------
Selected data for a share of capital stock outstanding throughout the periods:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INTERNATIONAL PORTFOLIO
- --------------------------------------------------------------------------------------------------------------------------
01/01/99
TO 01/01/98 01/01/97 01/01/96 01/01/95 01/01/94
06/30/99 TO TO TO TO TO
(UNAUDITED) 12/31/98 12/31/97 12/31/96 12/31/95 12/31/94
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.............. $13.85 $13.61 $13.41 $12.86 $11.63 $11.87
------- ------- ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income............................. .15 .15 .11 .11 .16 .05
Net realized and unrealized gain (loss) on
investments...................................... 1.13 1.14 1.08 1.23 1.45 (.02)
------- ------- ------ ------ ------ ------
Total from investment operations............... 1.28 1.29 1.19 1.34 1.61 .03
------- ------- ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends to shareholders from net investment
income........................................... (.16) (.10) (.11) (.16) (.07) (.03)
Dividends to shareholders from net capital
gains............................................ (.81) (.95) (.88) (.63) (.31) (.24)
------- ------- ------ ------ ------ ------
Total distributions............................ (.97) (1.05) (.99) (.79) (.38) (.27)
------- ------- ------ ------ ------ ------
Net asset value, end of period.................... $14.16 $13.85 $13.61 $13.41 $12.86 $11.63
======= ======= ====== ====== ====== ======
Total return................................... 9.79%(2) 10.13% 9.66% 10.89% 14.31% .26%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period $(000).................. 74,755 71,363 62,513 50,955 36,642 26,212
Ratios of expenses to average net assets(1)
(annualized)..................................... .97% 1.00% 1.02% 1.05% 1.15% 1.32%
Ratios of net investment income to average net
assets (annualized).............................. 2.01% 1.18% 1.13% 1.08% 1.21% .76%
Portfolio turnover................................ 18% 37% 37% 35% 45% 32%
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1.) Expense ratios for the International Portfolio before reimbursement of
expense by affiliated insurance company for the period ended June 30, 1999,
and the years ended December 31, 1998, 1997, 1996, 1995 and 1994 were as
follows: 1.00%, 1.00%, 1.02%, 1.05%, 1.15% and 1.32% respectively.
(2.) Total returns for periods less than one year are not annualized.
See accompanying notes to financial statements.
81
<PAGE> 83
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
Financial Highlights -- Continued
- --------------------------------------------------------------------------------
Selected data for a share of capital stock outstanding throughout the periods:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SENTINEL GROWTH PORTFOLIO
- -------------------------------------------------------------------------------------------------------------
01/01/99
TO 01/01/98 01/01/97 03/18/96(2)
06/30/99 TO TO TO
(UNAUDITED) 12/31/98 12/31/97 12/31/96
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period................... $13.43 $14.59 $11.14 $10.00
-------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income.................................. .01 .03 .04 .05
Net realized and unrealized gain (loss) on
investments.......................................... 2.02 1.76 3.47 1.09
-------- ------- ------- -------
Total from investment operations................... 2.03 1.79 3.51 1.14
-------- ------- ------- -------
LESS DISTRIBUTIONS:
Dividends to shareholders from net investment income... (.03) (.04) (.05) (.00)
Dividends to shareholders from net capital gains....... (.59) (2.91) (.01) (.00)
-------- ------- ------- -------
Total distributions................................ (.62) (2.95) (.06) (.00)
-------- ------- ------- -------
Net asset value, end of period......................... $14.84 $13.43 $14.59 $11.14
======== ======= ======= =======
Total return....................................... 15.79%(3) 15.98% 31.58% 11.40%(3)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period $(000)....................... 15,239 12,167 8,362 5,664
Ratios of expenses to average net assets(1)
(annualized)......................................... .71% .82% .90% .90%
Ratios of net investment income to average net assets
(annualized)......................................... .14% .23% .36% .57%
Portfolio turnover..................................... 56% 87% 155% 75%
- -------------------------------------------------------------------------------------------------------------
</TABLE>
(1.) Expense ratios for the Sentinel Growth Portfolio before reimbursement of
expense by affiliated insurance company for the period ended June 30, 1999,
and the years ended December 31, 1998, 1997 and 1996 were as follows:
0.70%, 0.83%, 1.35% and 1.51%, respectively.
(2.) Commencement of operations.
(3.) Total returns for periods less than one year are not annualized.
See accompanying notes to financial statements.
82
<PAGE> 84
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
Financial Highlights -- Continued
- --------------------------------------------------------------------------------
Selected data for a share of capital stock outstanding throughout the periods:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LARGE CAP LARGE CAP
GROWTH VALUE
PORTFOLIO PORTFOLIO
- -------------------------------------------------------------------------------------------------------------
01/01/99 01/01/99
TO 05/04/98(2) TO 05/04/98(2)
06/30/99 TO 06/30/99 TO
(UNAUDITED) 12/31/98 (UNAUDITED) 12/31/98
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period............. $11.77 $10.00 $9.90 $10.00
------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)..................... (.01) .00 .04 .07
Net realized and unrealized gain (loss) on
investments.................................... 1.50 1.77 .85 (.17)
------- ------- ------- -------
Total from investment operations............. 1.49 1.77 .89 (.10)
------- ------- ------- -------
LESS DISTRIBUTIONS:
Dividends to shareholders from net investment
income......................................... (.00) (.00) (.07) (.00)
Dividends to shareholders from net capital
gains.......................................... (.00) (.00) (.00) (.00)
------- ------- ------- -------
Total distributions.......................... (.00) (.00) (.07) (.00)
------- ------- ------- -------
Net asset value, end of period................... $13.26 $11.77 $10.72 $9.90
======= ======= ======= =======
Total return................................. 12.68%(3) 17.70%(3) 9.01%(3) (1.00)%(3)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period $(000)................. 26,547 14,307 23,565 15,616
Ratios of expenses to average net assets(1)
(annualized)................................... .87% .90% .89% .95%
Ratios of net investment income to average net
assets (annualized)............................ .07% .04% 1.04% 1.31%
Portfolio turnover............................... 47% 64% 27% 39%
- -------------------------------------------------------------------------------------------------------------
</TABLE>
(1.) Expense ratios for the Large Cap Growth Portfolio and the Large Cap Value
Portfolio before reimbursement of expense by affiliated insurance company
for the periods ended June 30, 1999 and December 31, 1998 were as follows:
0.89%, 0.92%, 0.93%, 0.97%, (annualized), respectively.
(2.) Commencement of operations.
(3.) Total returns for periods less than one year are not annualized.
See accompanying notes to financial statements.
83
<PAGE> 85
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
Financial Highlights -- Concluded
- --------------------------------------------------------------------------------
Selected data for a share of capital stock outstanding throughout the periods:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SMALL CAP SMALL CAP
GROWTH VALUE
PORTFOLIO PORTFOLIO
- -------------------------------------------------------------------------------------------------------------
01/01/99 01/01/99
TO 05/04/98(2) TO 05/04/98(2)
06/30/99 TO 06/30/99 TO
(UNAUDITED) 12/31/98 (UNAUDITED) 12/31/98
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period............. $9.80 $10.00 $8.25 $10.00
------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)..................... (.02) (.01) .01 .02
Net realized and unrealized gain (loss) on
investments.................................... 2.62 (.19) (.10) (1.77)
------- ------- ------- -------
Total from investment operations............. 2.60 (.20) (.09) (1.75)
------- ------- ------- -------
LESS DISTRIBUTIONS:
Dividends to shareholders from net investment
income......................................... (.00) (.00) (.02) (.00)
Dividends to shareholders from net capital
gains.......................................... (.00) (.00) (.00) (.00)
------- ------- ------- -------
Total distributions.......................... (.00) (.00) (.02) (.00)
------- ------- ------- -------
Net asset value, end of period................... $12.40 $9.80 $8.14 $8.25
======= ======= ======= =======
Total return................................. 26.63%(3) (2.00)%(3) (1.12)%(3) (17.50)%(3)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period $(000)................. 19,046 9,685 10,835 8,073
Ratios of expenses to average net assets(1)
(annualized)................................... 1.11% 1.24% 1.22% 1.28%
Ratios of net investment income to average net
assets (annualized)............................ (.54)% (.14)% .33% .48%
Portfolio turnover............................... .68% 82% 46% 38%
- -------------------------------------------------------------------------------------------------------------
</TABLE>
(1.) Expense ratios for the Small Cap Growth Portfolio and the Small Cap Value
Portfolio before reimbursement of expense by affiliated insurance company
for the periods ended June 30, 1999 and December 31, 1998 were as follows:
1.14%, 1.25%, 1.25% and 1.36% (annualized), respectively.
(2.) Commencement of operations.
(3.) Total returns for periods less than one year are not annualized.
See accompanying notes to financial statements.
84
<PAGE> 86
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
Notes to Financial Statements, June 30, 1999
(Unaudited)
- --------------------------------------------------------------------------------
1. ORGANIZATION
The Market Street Fund, Inc. (Fund) is registered as an open-end diversified
management company under the Investment Company Act of 1940, as amended. As a
"series" type of mutual fund, the Fund issues separate classes (or series) of
stock currently consisting of the Growth Portfolio, Money Market Portfolio, Bond
Portfolio, Managed Portfolio, Aggressive Growth Portfolio, International
Portfolio, Sentinel Growth Portfolio, Large Cap Growth Portfolio, Large Cap
Value Portfolio, Small Cap Growth Portfolio, and Small Cap Value Portfolio. The
Fund serves as an investment medium for modified premium and flexible premium
adjustable variable life insurance policies and individual flexible premium
deferred variable annuity contracts (Policies) issued by Provident Mutual Life
Insurance Company (PMLIC) and for flexible premium deferred variable annuity
contracts issued by Providentmutual Life and Annuity Company of America (PLACA)
and policies issued by National Life Insurance Company of Vermont (NLICV). The
Fund also serves as the investment medium for single premium and scheduled
premium variable life insurance policies which are no longer being issued.
2. ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by each
Fund in preparation of its financial statements. The preparation of financial
statements in accordance with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported amounts
and disclosures in the financial statements. Actual results could differ from
those estimates.
Valuation of Investments
Bonds are carried at market value based on the last bid price on a national
securities exchange or on quoted prices from a third-party pricing service.
Investments in common and preferred stocks primarily traded on recognized U.S.
or foreign securities exchanges are valued at the last sale price on exchanges
on the last business day of the period, or, if there was no sale, at the last
bid price on that day. Short-term investments with maturities of less than 60
days and Money Market Portfolio investments are valued at amortized cost which
approximates market value.
Investments
Security transactions are accounted for on the trade date. The cost of
investment securities sold is determined by use of the specific identification
method for both financial reporting and income tax purposes. Interest income is
recorded on the accrual basis; dividend income is recorded on the ex-dividend
date.
Dollar Rolls
The Bond and Managed Portfolios may enter into dollar rolls in which the
Portfolio sells securities for delivery and simultaneously contracts to
repurchase the same security at a fixed price on a specified future date. During
the roll period the Portfolio forgoes accrued interest paid on the securities.
The Portfolio will be compensated by the interest earned on the cash proceeds of
the initial sale (which are invested in short-term investments) and by the lower
repurchase price at the future date (the "drop"). The drop, which is recorded as
deferred income, is amortized over the period between the trade date and the
settlement date. All realized gains are recorded at the
85
<PAGE> 87
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
Notes to Financial Statements, June 30, 1999 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
beginning of each roll. A portfolio engages in dollar rolls for the purpose of
enhancing its yield. Dollar Rolls involve a risk of loss if the value of the
security to be repurchased declines prior to settlement date, which risk is in
addition to the risk of decline in the value of a Portfolio's other assets. The
balance of dollar rolls outstanding during the period ended June 30, 1999 was
$3,440,747 in the Bond Portfolio and $6,651,486 in the Managed Portfolio.
Foreign Currency Translations
Foreign currency amounts are translated into U.S. Dollars on the following
bases:
(i) Market value of investment securities, assets and liabilities, at the
daily rate of exchange;
(ii) Purchases and sales of investment securities, at the rate of exchange
prevailing on the respective dates of such transactions. Exchange gains or
losses are recognized upon settlement;
(iii) Income and expenses, at the rate of exchange prevailing on the
respective dates of such transactions. Exchange gains or losses are
recognized upon ultimate receipt or disbursement.
Foreign security and currency transactions may involve certain considerations
and risks not typically associated with those of U.S. dollar denominated
transactions as a result of, among other factors, the lack of governmental
supervision and regulation of foreign securities markets and the possibility of
political or economic instability.
The Fund does not isolate that portion of the results of operations derived from
changes in foreign exchange rates on investments from the fluctuations arising
from changes in market prices of securities held. Such fluctuations are included
with the net realized and unrealized gain or loss from investments.
Dividends to Shareholders
Dividends of investment income of the Money Market Portfolio are declared daily
and paid monthly. The Growth Portfolio, Bond Portfolio, Managed Portfolio,
Aggressive Growth Portfolio, International Portfolio, Sentinel Growth Portfolio,
Large Cap Growth Portfolio, Large Cap Value Portfolio, Small Cap Growth
Portfolio, and Small Cap Value Portfolio declare and pay dividends of investment
income annually. For all Portfolios, distributions of capital gains are declared
and paid annually.
Federal Income Taxes
No provision is made for Federal taxes as it is the Fund's intention to have
each Portfolio continue to qualify as a regulated investment company and to make
the requisite distributions to its shareholders which will be sufficient to
relieve it from Federal income taxes.
3. INVESTMENT ADVISORY FEES AND RELATED PARTY TRANSACTIONS
Investment advisory agreements have been approved, whereby Sentinel Advisors
Company (SAC), a Vermont General Partnership, is adviser for the Growth, Money
Market, Bond, Managed, Aggressive Growth, Common Stock and Sentinel Growth
Portfolios. With respect to the Growth Portfolio, SAC is compensated monthly at
an effective annual rate of 0.50% of the first $20 million of the average daily
net assets of the portfolio, 0.40% of the next $20 million and 0.30%
86
<PAGE> 88
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
Notes to Financial Statements, June 30, 1999 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
of net assets in excess of $40 million. SAC is compensated monthly at an
effective annual rate of 0.25% of the average daily net assets of the Money
Market Portfolio. With respect to the Bond Portfolio, SAC is compensated monthly
at the effective annual rate of 0.35% of the first $100 million of the average
daily net assets of the portfolio and 0.30% of net assets in excess of $100
million. With respect to the Managed Portfolio, SAC is compensated monthly at
the effective annual rate of 0.40% of the first $100 million of the average
daily net assets of the portfolio and 0.35% of net assets in excess of $100
million. With respect to the Aggressive Growth Portfolio, SAC is compensated
monthly at the effective annual rate of 0.50% of the first $20 million of the
average daily net assets of the portfolio, 0.40% of the next $20 million and
0.30% of net assets in excess of $40 million. With respect to the Sentinel
Growth Portfolio, SAC is compensated monthly at an effective annual rate of
0.50% of the first $20 million of the average daily net assets of the portfolio,
0.40% of the next $20 million and 0.30% of the net assets in excess of $40
million. Provident Mutual Investment Management Co. (PIMC) is the adviser for
the International, Large Cap Growth, Large Cap Value, Small Cap Growth, and
Small Cap Value Portfolios. With respect to the Large Cap Growth Portfolio and
the Large Cap Value Portfolio, PIMC is compensated monthly at an effective
annual rate of 0.70% of the average daily net assets. With respect to the Small
Cap Growth Portfolio and the Small Cap Value Portfolio, PIMC is compensated
monthly at an effective annual rate of 0.90% of the average daily net assets.
With respect to the International Portfolio, PIMC is compensated monthly at an
effective annual rate of 0.75% of the first $500 million of the average daily
net assets of the portfolio and 0.60% of assets in excess of $500 million.
PMLIC agrees to reimburse the Growth, Money Market, Bond, Managed, Aggressive
Growth, Large Cap Growth, Large Cap Value, Small Cap Growth, and Small Cap Value
Portfolios for operating expenses, excluding investment advisory fees, and costs
of litigation and indemnification not covered by insurance, in excess of an
annual rate of 0.40% of the average daily net asset values. The International
Portfolio is reimbursed for such expenses in excess of an annual rate of 0.75%
of the average daily net asset value. NLICV agrees to reimburse Sentinel Growth
Portfolio for operating expenses, excluding investment advisory fees and costs
of litigation and indemnification not covered by insurance, in excess of an
annual rate of .40% of the average net asset values.
87
<PAGE> 89
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
Notes to Financial Statements, June 30, 1999 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
4. NET ASSETS
At June 30, 1999, the Portfolios' net assets consisted of:
<TABLE>
<CAPTION>
MONEY
GROWTH MARKET BOND MANAGED
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net contribution from shareholders........... $245,331,815 $99,649,459 $36,103,874 $60,512,099
Undistributed net investment income.......... 2,141,172 -- 1,049,756 1,070,689
Undistributed net realized gain.............. 8,764,510 -- -- 991,385
Accumulated loss on investment
transactions................................ -- (101) (411,978) --
Net unrealized appreciation (depreciation) on
investments and foreign currency............ 76,358,251 -- (1,202,517) 14,355,340
------------ ----------- ----------- -----------
$332,595,748 $99,649,358 $35,539,135 $76,929,513
============ =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
AGGRESSIVE SENTINEL
GROWTH INTERNATIONAL GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net contribution from shareholders........... $48,829,401 $63,113,497 $11,549,849
Undistributed net investment income.......... 158,264 712,404 9,074
Undistributed net realized gain.............. 1,729,499 3,575,516 1,512,242
Accumulated loss on investment
transactions................................ -- -- --
Net unrealized appreciation (depreciation) on
investments and foreign currency............ 9,085,412 7,353,984 2,167,880
----------- ----------- -----------
$59,802,576 $74,755,401 $15,239,045
=========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
LARGE CAP LARGE CAP SMALL CAP SMALL CAP
GROWTH VALUE GROWTH VALUE
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net contribution from shareholders........... $22,024,760 $21,856,027 $15,541,952 $11,486,934
Undistributed net investment Income (loss)... (7,039) 92,818 (34,700) 13,548
Undistributed net realized gain.............. 966,422 -- 606,928 --
Accumulated loss on investment
transactions................................ -- (266,722) -- (1,284,084)
Net unrealized appreciation (depreciation) on
investments and foreign currency............ 3,562,439 1,883,103 2,931,664 618,310
----------- ----------- ----------- -----------
$26,546,582 $23,565,226 $19,045,844 $10,834,708
=========== =========== =========== ===========
</TABLE>
88
<PAGE> 90
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
Notes to Financial Statements, June 30, 1999 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
5. PURCHASES AND SALES OF INVESTMENTS (EXCLUDING SHORT-TERM SECURITIES)
Purchases and proceeds on sales of investments for the portfolios, for the
period ended June 30, 1999, were as follows:
<TABLE>
<CAPTION>
MONEY AGGRESSIVE
GROWTH MARKET BOND MANAGED GROWTH INTERNATIONAL
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PURCHASES
U.S. Gov't Obligations....................... $ -- $ -- $27,733,192 $51,517,940 $ -- $ --
Corporate Bonds.............................. -- -- 24,719,974 8,567,095 -- --
Common and Preferred Stock................... 30,944,998 -- -- 7,086,988 8,692,119 12,607,776
----------- ----------- ----------- ----------- ---------- -----------
Total Purchases.............................. $30,944,998 -- $52,453,166 $67,172,023 $8,692,119 $12,607,776
=========== =========== =========== =========== ========== ===========
SALES
U.S. Gov't Obligations....................... $ -- $ -- $28,870,394 $47,549,896 $ -- $ --
Corporate Bonds.............................. -- -- 21,074,129 7,225,370 -- --
Common and Preferred Stock................... 33,630,956 -- -- 4,915,355 9,373,664 13,768,875
----------- ----------- ----------- ----------- ---------- -----------
Total Sales.................................. $33,630,956 -- $49,944,523 $59,690,621 $9,373,664 $13,768,875
=========== =========== =========== =========== ========== ===========
</TABLE>
<TABLE>
<CAPTION>
SENTINEL LARGE CAP LARGE CAP SMALL CAP SMALL CAP
GROWTH GROWTH VALUE GROWTH VALUE
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PURCHASES
U.S. Gov't Obligations....................... $ -- $ -- $ -- $ -- $ --
Corporate Bonds.............................. -- -- -- -- --
Common and Preferred Stock................... 8,450,704 18,048,919 10,905,698 13,597,033 6,438,251
---------- ----------- ----------- ----------- ----------
Total Purchases.............................. $8,450,704 $18,048,919 $10,905,698 $13,597,033 $6,438,251
========== =========== =========== =========== ==========
SALES
U.S. Gov't Obligations....................... $ -- $ -- $ -- $ -- $ --
Corporate Bonds.............................. -- -- -- -- --
Common and Preferred Stock................... 7,128,275 8,680,001 4,779,421 8,264,738 3,603,425
---------- ----------- ----------- ----------- ----------
Total Sales.................................. $7,128,275 $ 8,680,001 $ 4,779,421 $ 8,264,738 $3,603,425
========== =========== =========== =========== ==========
</TABLE>
89
<PAGE> 91
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
Notes to Financial Statements, June 30, 1999 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
6. TAX BASIS OF INVESTMENTS
Investment information based on the cost of the securities for Federal income
tax purposes held at June 30, 1999 is as follows:
<TABLE>
<CAPTION>
MONEY AGGRESSIVE
GROWTH MARKET BOND MANAGED GROWTH INTERNATIONAL
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Aggregate gross unrealized appreciation... $ 79,827,003 $ -- $ 70,555 $15,114,780 $11,998,814 $12,702,128
Aggregate gross unrealized depreciation... (3,468,752) -- (1,273,072) (759,440) (2,913,403) (5,412,417)
------------ ------------ ----------- ----------- ----------- -----------
Net unrealized appreciation
(depreciation)........................... $ 76,358,251 $ -- $(1,202,517) $14,355,340 $ 9,085,411 $ 7,289,711
============ ============ =========== =========== =========== ===========
Aggregate cost of securities for federal
income tax purposes...................... $255,674,429 $100,423,368 $39,556,490 $69,085,512 $50,541,148 $66,778,656
============ ============ =========== =========== =========== ===========
Capital loss carryover (available to
offset possible future gains). The
carryover expires as follows: Money
Market Portfolio -- $57 in 2005.......... $ -- $ 57 $ -- $ -- $ -- $ --
============ ============ =========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
SENTINEL LARGE CAP LARGE CAP SMALL CAP SMALL CAP
GROWTH GROWTH VALUE GROWTH VALUE
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Aggregate gross unrealized appreciation...... $ 2,511,123 $ 4,128,762 $ 2,415,055 $ 3,433,193 $ 1,063,388
Aggregate gross unrealized depreciation...... (343,243) (566,323) (539,643) (572,210) (495,731)
----------- ----------- ----------- ----------- -----------
Net unrealized appreciation (depreciation)... $ 2,167,880 $ 3,562,439 $ 1,875,412 $ 2,860,983 $ 567,657
=========== =========== =========== =========== ===========
Aggregate cost of securities for federal
income tax purposes......................... $13,039,024 $23,156,646 $21,677,883 $16,628,588 $10,551,251
=========== =========== =========== =========== ===========
Capital loss carryover (available to offset
possible future gains). The carryover
expires as follows:
Large Cap Growth -- $331,257 in 2006; Large
Cap Value -- $606,858 in 2006; Small Cap
Growth -- $713,295 in 2006; Small Cap
Value -- $599,117 in 2006................. $ -- $ 331,257 $ 606,858 $ 713,295 $ 599,117
=========== =========== =========== =========== ===========
</TABLE>
90
<PAGE> 92
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
Notes to Financial Statements, June 30, 1999 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
7. AUTHORIZED CAPITAL STOCK AND CAPITAL STOCK TRANSACTIONS
On June 30, 1999, there were 1.2 billion shares of $0.01 par value capital stock
authorized for the Fund. The shares of capital stock are divided into eleven
series: Growth Portfolio, Money Market Portfolio, Bond Portfolio, Managed
Portfolio, Aggressive Growth Portfolio, International Portfolio, Sentinel Growth
Portfolio, Large Cap Growth Portfolio, Large Cap Value Portfolio, Small Cap
Growth Portfolio and Small Cap Value Portfolio. The Growth Portfolio consists of
75 million shares, the Money Market Portfolio consists of 150 million shares;
each of the four All Pro Series Portfolios consist of 50 million shares and each
of the other series consists of 5 million shares.
On June 30, 1999, Provident Mutual Life Insurance Company owned 0 shares of
Large Cap Growth, 976,130 shares of Large Cap Value, 244,088 shares of Small Cap
Growth and 400,853 shares of Small Cap Value.
Transactions in capital stock for the period ended June 30, 1999 were as
follows:
<TABLE>
<CAPTION>
GROWTH PORTFOLIO MONEY MARKET PORTFOLIO BOND PORTFOLIO
- --------------------------------------------------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold................ 675,518 $ 12,888,624 107,144,602 $ 107,144,602 526,181 $ 5,652,994
Shares redeemed............ (1,051,529) (20,003,155) (101,164,077) (101,164,077) (521,110) (5,629,209)
Shares reinvested.......... 390,679 7,243,192 2,215,955 2,215,955 83,209 905,319
---------- ------------ ------------ ------------- -------- -----------
Net contributions from
affiliated insurance
companies................. 14,668 $ 128,661 8,196,480 $ 8,196,480 88,280 $ 929,104
========== ============ ============ ============= ======== ===========
<CAPTION>
MANAGED PORTFOLIO
- --------------------------- ----------------------
SHARES AMOUNT
- --------------------------- ----------------------
<S> <C> <C>
Shares sold................ 791,591 $13,558,308
Shares redeemed............ (413,594) (7,005,532)
Shares reinvested.......... 233,644 3,906,534
-------- -----------
Net contributions from
affiliated insurance
companies................. 611,641 $10,459,310
======== ===========
</TABLE>
<TABLE>
<CAPTION>
AGGRESSIVE GROWTH INTERNATIONAL SENTINEL GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO
- ---------------------------------------------------------------------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold.............................................. 273,632 $ 5,116,868 271,926 $ 3,585,611 93,933 $1,293,763
Shares redeemed.......................................... (347,050) (6,373,289) (524,611) (6,917,916) (16,246) (226,464)
Shares reinvested........................................ 403,285 7,577,720 380,631 4,986,269 43,352 560,968
-------- ----------- -------- ----------- ------- ----------
Net contributions from affiliated insurance companies.... 329,867 $ 6,321,299 127,946 $ 1,653,964 121,039 $1,628,267
======== =========== ======== =========== ======= ==========
</TABLE>
<TABLE>
<CAPTION>
LARGE CAP LARGE CAP SMALL CAP SMALL CAP
GROWTH PORTFOLIO VALUE PORTFOLIO GROWTH PORTFOLIO VALUE PORTFOLIO
- ---------------------------------------------------------------------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shares sold................. 1,747,006 $ 22,340,293 768,257 $ 7,908,736 765,798 $ 8,723,565 628,139 $ 4,794,585
Shares redeemed............. (960,546) (12,236,071) (156,846) (1,573,161) (217,889) (2,373,076) (277,509) (2,145,630)
Shares reinvested........... 258 3,102 10,603 105,080 0 0 2,087 17,055
--------- ------------ -------- ----------- -------- ----------- -------- -----------
Net contributions from
affiliated insurance
companies.................. 786,718 $ 10,107,324 622,014 $ 6,440,655 547,909 $ 6,350,489 352,717 $ 2,666,010
========= ============ ======== =========== ======== =========== ======== ===========
</TABLE>
91
<PAGE> 93
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
Notes to Financial Statements, June 30, 1999 -- Concluded
(Unaudited)
- --------------------------------------------------------------------------------
Transactions in capital stock for the year ended December 31, 1998 were as
follows:
<TABLE>
<CAPTION>
GROWTH PORTFOLIO MONEY MARKET PORTFOLIO BOND PORTFOLIO
- ---------------------------------------------------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold................ 1,837,947 $ 32,406,592 165,155,447 $ 165,155,447 1,435,423 $15,864,807
Shares redeemed............ (1,249,358) (22,097,256) (142,035,980) (142,035,980) (417,928) (4,628,289)
Shares reinvested.......... 2,418,983 40,098,617 3,994,543 3,994,543 140,681 1,555,386
---------- ------------ ------------ ------------- --------- -----------
Net contributions from
affiliated insurance
companies................. 3,007,572 $ 50,407,953 27,114,010 $ 27,114,010 1,158,176 $12,791,904
========== ============ ============ ============= ========= ===========
<CAPTION>
MANAGED PORTFOLIO
- --------------------------- ----------------------
SHARES AMOUNT
- --------------------------- ----------------------
<S> <C> <C>
Shares sold................ 623,703 $10,481,421
Shares redeemed............ (360,939) (6,051,923)
Shares reinvested.......... 285,692 4,640,106
-------- -----------
Net contributions from
affiliated insurance
companies................. 548,456 $ 9,069,604
======== ===========
</TABLE>
<TABLE>
<CAPTION>
AGGRESSIVE GROWTH INTERNATIONAL SENTINEL GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO
- ---------------------------------------------------------------------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold.............................................. 493,256 $10,260,111 796,247 $10,834,572 240,467 $2,911,418
Shares redeemed.......................................... (309,019) (6,350,296) (615,500) (8,284,431) (56,545) (668,790)
Shares reinvested........................................ 205,061 4,131,983 378,012 4,819,514 148,986 1,693,967
-------- ----------- -------- ----------- ------- ----------
Net contributions from affiliated insurance companies.... 389,298 $ 8,041,798 558,759 $ 7,369,655 332,908 $3,936,595
======== =========== ======== =========== ======= ==========
</TABLE>
<TABLE>
<CAPTION>
LARGE CAP LARGE CAP SMALL CAP SMALL CAP
GROWTH PORTFOLIO VALUE PORTFOLIO GROWTH PORTFOLIO VALUE PORTFOLIO
- ---------------------------------------------------------------------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shares sold................ 1,711,101 $17,230,972 1,685,241 $16,459,222 1,153,905 $10,747,921 1,084,795 $9,720,129
Shares redeemed............ (495,712) (5,313,536) (108,503) (1,043,850) (165,750) (1,551,316) (105,824) (899,205)
Shares reinvested.......... 0 0 0 0 0 0 0 0
--------- ----------- --------- ----------- --------- ----------- --------- ----------
Net contributions from
affiliated insurance
companies................. 1,215,389 $11,917,436 1,576,738 $15,415,372 988,155 $ 9,196,605 978,971 $8,820,924
========= =========== ========= =========== ========= =========== ========= ==========
</TABLE>
8. PRINCIPAL UNDERWRITER
1717 Capital Management Company serves, without compensation, as the principal
underwriter for sale of the Fund shares to the Accounts. 1717 Capital Management
Company is an indirect wholly-owned subsidiary of PMLIC.
92
<PAGE> 94
Form 16170 6.99
[provident mutual logo]
[provident mutual logo]
