<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 2, 2000
REGISTRATION NOS. 2-98755
811-4350
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
POST-EFFECTIVE AMENDMENT NO. 27
AND
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940
AMENDMENT NO. 28
MARKET STREET FUND
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
103 BELLEVUE PARKWAY
WILMINGTON, DE 19809
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (302) 791-1700
----------------
COPY TO:
JAMES BERNSTEIN., ESQ. STEPHEN E. ROTH, ESQ.
MARKET STREET FUND. SUTHERLAND ASBILL & BRENNAN LLP
1000 CHESTERBROOK BOULEVARD 1275 PENNSYLVANIA AVENUE, N.W.
BERWYN, PA 19312 WASHINGTON, DC 20004
(NAME AND ADDRESS OF AGENT FOR SERVICE)
IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE (CHECK APPROPRIATE BOX)
[ ] IMMEDIATELY UPON FILING PURSUANT TO PARAGRAPH (b) OF RULE 485
[ ] ON [DATE] PURSUANT TO PARAGRAPH (b) OF RULE 485
[x] 60 DAYS AFTER FILING PURSUANT TO PARAGRAPH (a)(1) OF RULE 485
[ ] ON JANUARY 1, 2001 PURSUANT TO PARAGRAPH (a)(1) OF RULE 485
[ ] 75 DAYS AFTER FILING PURSUANT TO PARAGRAPH(a)(2) OF RULE 485
[ ] ON [DATE] PURSUANT TO PARAGRAPH (a)(2) OF RULE 485
IF APPROPRIATE, CHECK THE FOLLOWING BOX:
[ ] THIS POST-EFFECTIVE AMENDMENT DESIGNATES A NEW EFFECTIVE DATE FOR A
PREVIOUSLY FILED POST-EFFECTIVE AMENDMENT.
TITLE OF SECURITIES: SHARES OF BENEFICIAL INTEREST
<PAGE> 2
EFFECTIVE AS OF JANUARY 1, 2001, MARKET STREET FUND, INC. (A MARYLAND
CORPORATION) (THE "COMPANY") REORGANIZED AS MARKET STREET FUND (A DELAWARE
BUSINESS TRUST) (THE "FUND"). THE FUND HEREBY FILES THIS POST-EFFECTIVE
AMENDMENT NO. 27 TO THE COMPANY'S REGISTRATION STATEMENT, AS AMENDED, ON FORM
N-1A AND EXPRESSLY ADOPTS THIS REGISTRATION STATEMENT AS ITS OWN FOR ALL
PURPOSES OF THE SECURITIES ACT OF 1933, THE SECURITIES EXCHANGE ACT OF 1934, AND
THE INVESTMENT COMPANY ACT OF 1940.
<PAGE> 3
MARKET STREET FUND
PROSPECTUS
January 1, 2001
[ ] All Pro Broad Equity Portfolio
[ ] All Pro Large Cap Growth Portfolio
[ ] All Pro Large Cap Value Portfolio
[ ] All Pro Small Cap Growth Portfolio
[ ] All Pro Small Cap Value Portfolio
[ ] Equity 500 Index Portfolio
[ ] International Portfolio
[ ] Mid Cap Growth Portfolio
[ ] Balanced Portfolio
[ ] Bond Portfolio
[ ] Money Market Portfolio
This prospectus provides essential information about these portfolios. For your
benefit and protection, please read it and keep it for future reference.
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED SHARES OF
THE FUND OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE> 4
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
OVERVIEW .................................. 1
INTRODUCTION TO THE ALL PRO PORTFOLIOS .... 3
All Pro Broad Equity Portfolio
All Pro Large Cap Growth Portfolio ...... 6
All Pro Large Cap Value Portfolio ....... 8
All Pro Small Cap Growth Portfolio ...... 10
All Pro Small Cap Value Portfolio ....... 12
ABOUT THE OTHER PORTFOLIOS ................ 15
Equity 500 Index Portfolio .............. 15
International Portfolio ................. 16
Mid Cap Growth Portfolio ................ 20
Balanced Portfolio ...................... 22
Bond Portfolio .......................... 24
Money Market Portfolio .................. 26
RISKS OF INVESTING IN THE PORTFOLIOS ...... 28
INVESTMENT TECHNIQUES ..................... 31
MANAGEMENT ................................ 38
DESCRIPTION OF THE FUND'S SHARES .......... 44
APPENDIX A -- TERMS USED IN THIS PROSPECTUS A-1
APPENDIX B -- FINANCIAL HIGHLIGHTS ........ B-1
APPENDIX C -- PLAN OF REORGANIZATION ...... C-1
ADDITIONAL INFORMATION ABOUT THE FUND ..... Back Cover
</TABLE>
<PAGE> 5
OVERVIEW
This prospectus describes eleven Portfolios offered by the Fund. Each Portfolio
is a separate investment portfolio with its own investment objective or
objectives, policies, restrictions and risks. An investor should consider each
Portfolio separately to determine if it is an appropriate investment. There is
no assurance that a Portfolio will achieve its investment objective or
objectives, and investors should not consider any one Portfolio alone to be a
complete investment program. As with any mutual fund, there is a risk that an
investor could lose money by investing in a Portfolio.
The different types of securities, investments, and investment techniques that
each Portfolio uses all have attendant risks of varying degrees. For example,
with respect to equity securities, there can be no assurance of capital
appreciation. Moreover, an investment in any stock is subject to the risk that
the stock market as a whole may decline, thereby depressing the stock's price
(market risk), or the risk that the price of a particular issuer's stock may
decline due to its financial results (financial risk). With respect to debt
securities, the risk exists that the issuer of the security may not be able to
meet its obligations on interest or principal payments at the time required by
the instrument (credit risk, a type of financial risk). In addition, the value
of debt and other income bearing securities generally rises and falls inversely
with prevailing current interest rates (interest rate risk, a type of market
risk). As described below, an investment in certain Portfolios entails special
additional risks because the Portfolios may invest a substantial portion of
their assets in foreign investments or securities of issuers in new or emerging
industries. See "Risks of Investing in the Portfolios," below.
The following chart provides a brief outline of the relative principal
characteristics of each Portfolio:
MARKET STREET FUND, INC.
<TABLE>
<CAPTION>
NAME OF GROWTH INCOME SHORT-TERM TYPICAL
PORTFOLIO POTENTIAL POTENTIAL RISK INVESTMENTS
--------- --------- --------- ---- -----------
<S> <C> <C> <C> <C>
All Pro Broad Equity securities of
Equity............. High Low High U.S. companies
All Pro Large Equity securities of large
Cap Growth........ High Low High U.S. companies
All Pro Large Equity securities of large
Cap Value......... High Low High U.S. companies
All Pro Small Equity securities of small
Growth............ High Low High U.S. companies
All Pro Small Cap Equity securities of small
Cap Value......... High Low High U.S. companies
Equity 500 Index.... High Low High Equity securities of large
U.S. companies
International....... High Low High Equity securities of
foreign issuers
Mid Cap Growth...... High Low High Equity securities of
U.S. mid cap companies
Balanced............ Moderate-High Moderate-High Moderate-High Equity and debt
securities
Bond................. Moderate Moderate Moderate Income bearing debt
securities
Money Market........ None Low-Moderate Low Money market instruments
</TABLE>
-1-
<PAGE> 6
Each Portfolio's investment objective or objectives are fundamental and may not
be changed unless by a vote of a majority of the outstanding voting shares of
the Portfolio. Each Portfolio's investment policies are not fundamental and may
be changed by the Fund's board of trustees without shareholder approval, unless
otherwise stated in this Prospectus or the statement of additional information.
Notwithstanding the applicable investment objective, in unusual market
conditions, for temporary defensive purposes, all or part of each Portfolio's
assets may be invested in cash and/or money market instruments of the type in
which Money Market Portfolio may invest. To the extent that a Portfolio adopts a
temporary defensive position, the Portfolio may not achieve its investment
objective.
SHARES OF THE FUND AND THE PORTFOLIOS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED OR ENDORSED BY, ANY FINANCIAL INSTITUTION, AND ARE NOT INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY. MONEY
MARKET PORTFOLIO SEEKS TO PRESERVE THE VALUE OF AN INVESTMENT AT $1.00 PER
SHARE, BUT IT IS POSSIBLE, ALTHOUGH UNLIKELY, THAT THE PORTFOLIO MAY NOT BE ABLE
TO DO SO. AN INVESTMENT IN THE FUND AND THE PORTFOLIOS IS SUBJECT TO INVESTMENT
RISKS, INCLUDING POSSIBLE LOSS OF MONEY INVESTED.
Shares of the Portfolios are available only through the purchase of certain
variable annuity and variable life insurance contracts (the "variable
contracts") issued by various life insurance companies, some of which may be
affiliated persons of the Portfolios. This prospectus should be read in
conjunction with the separate prospectus for each separate account and its
related contract and retained for future reference.
See "Appendix A -- Terms Used in This Prospectus" for more information about
some of the terms we use in this prospectus.
-2-
<PAGE> 7
INTRODUCTION TO THE ALL PRO PORTFOLIOS
THE ALL PRO ADVANTAGE
The Fund currently offers five All Pro Portfolios, each of which seeks long-term
capital appreciation. The All Pro Portfolios differ from the other Portfolios in
that the investment adviser, Market Street Investment Management Company ("MSIM"
or the "adviser"), has selected a unique team of investment subadvisers for each
All Pro Portfolio, and each subadviser manages a segment of the relevant All Pro
Portfolio's assets. MSIM uses a manager-of-managers strategy to seek out
managers with a niche investment management specialty rather than those who try
to be all things to all clients.
Except for All Pro Broad Equity Portfolio, each All Pro Portfolio represents a
specific domestic equity style discipline (at times, the "pure-style"
disciplines). Each Portfolio has a specific style benchmark index developed by
Wilshire Associates, Inc. ("Wilshire"). All Pro Broad Equity Portfolio
represents a blend of the four domestic equity pure-style disciplines used by
the four other All Pro Portfolios. The five Portfolios include the following:
- All Pro Broad Equity Portfolio
- All Pro Large Cap Growth Portfolio
- All Pro Large Cap Value Portfolio
- All Pro Small Cap Growth Portfolio
- All Pro Small Cap Value Portfolio
The four pure-style All Pro Portfolios differ from All Pro Broad Equity
Portfolio in that All Pro Broad Equity Portfolio blends each of the four
pure-style disciplines. Thus, All Pro Broad Equity Portfolio invests in both
LARGE and SMALL capitalization stocks that are both GROWTH-ORIENTED and
VALUE-ORIENTED.
The four pure-style All Pro Portfolios differ from each other in that two
Portfolios invest principally in securities of companies with relatively large
market capitalizations, while the other two Portfolios invest principally in
securities of companies with relatively small market capitalizations. Within
each pair of pure-style Portfolios, one pursues the investment objective through
"growth-oriented" investments, and the other pursues the investment objective
through "value-oriented" investments.
GROWTH-ORIENTED INVESTMENTS involve seeking securities of issuers with above
average recent earnings growth rates and a reasonable likelihood of maintaining
such rates in the foreseeable future.
VALUE-ORIENTED INVESTMENTS involve seeking securities that appear attractive on
a dividend discount model or can be acquired for less than what a subadviser
believes is the issuer's intrinsic value.
-3-
<PAGE> 8
GROWTH STOCKS:
- Generally exhibit higher than median price-to-earnings and
price-to-book ratios but below-average dividend yields;
- Are securities of well-established issuers with a strong competitive
position within their industry or less-established issuers with a
competitive position within a very strong industry;
- Are considered by many to be relatively aggressive given their
valuation by the marketplace; and
- Are, in some cases, high-volatility "momentum" stocks.
VALUE STOCKS:
- Generally exhibit lower than median price-to-earnings and price-to-book
ratios but above-average dividend yields;
- Are considered by many to be relatively conservative given their
valuation by the marketplace; and
- May involve "special situation" companies, such as companies with
management changes, corporate or asset restructuring, or significantly
undervalued assets.
Each Portfolio seeks to achieve its objective by combining the talents of
multiple institutional investment management firms. MSIM has retained Wilshire,
an independent and highly regarded investment consulting firm, to assist MSIM in
identifying potential subadvisers and performing the quantitative analysis
necessary to assess these subadvisers' styles and performance.
Wilshire:
- Begins with a universe of over 1,000 independent institutional
investment management firms;
- Through its process, makes available the expertise of investment
management firms that rarely are available to the owners of other
registered products; and
- Conducts intensive research and due diligence with MSIM to ensure that
the best available managers are recommended and blended together
according to their asset class styles and management strategies.
-4-
<PAGE> 9
MSIM selects investment subadvisers believed to be best suited to a Portfolio
according to the Portfolio's investment objective and strategies and the
subadviser's management style. MSIM then assigns each subadviser a prescribed
percentage of each Portfolio's assets to manage. These combinations are
optimized for each Portfolio in order to control the risk exposure as compared
to the Portfolio's target benchmark. Moreover, MSIM believes that multiple
managers can contribute to diversification of investment risk in a Portfolio.
Rebalancings of Portfolio cashflows to the targeted percent allocations are
performed daily if necessary.
On an ongoing basis, MSIM and Wilshire monitor the performance, style and
continuity of management of the current investment subadvisers to ensure optimal
performance. Quantitative models are used to monitor the subadviser's investment
management style over time to ensure the subadviser adheres to its prescribed
style mandate. Both the target allocations and the subadvisers themselves are
subject to change over time. MSIM replaces subadvisers who consistently
underperform the relevant benchmark or fail to meet other established criteria.
As a result of a change in a subadviser, each All Pro Portfolio is subject to
the risk of increased portfolio turnover with correspondingly higher brokerage
expenses and other acquisition costs due to restructuring of the investment
portfolio by the new subadviser, which, in turn, would result in decreased
short-term performance for the Portfolio.
-5-
<PAGE> 10
[ ] ALL PRO BROAD EQUITY PORTFOLIO
INVESTMENT OBJECTIVE -- LONG-TERM CAPITAL APPRECIATION
PRIMARY INVESTMENT STRATEGIES
The Portfolio invests primarily in equity securities of both larger and smaller
companies included in the Wilshire 5000 Equity Universe at the time of purchase,
that the subadvisers believe offer above-average potential for growth in future
earnings. All Pro Broad Equity Portfolio uses four benchmarks, for each of the
Portfolio's four pure-style segments: for large cap stocks, the indices include
the Wilshire Large Cap Growth Index and the Wilshire Large Cap Value Index,
which are market cap weighted indices that include growth or value securities,
respectively, from the largest 750 stocks in the Wilshire 5000 equity universe;
and for small cap stocks, the indices include the Wilshire Small Cap Growth
Index and the Wilshire Small Cap Value Index, which are market cap weighted
indices that include growth or value securities, respectively, from number 751
to number 2,500 in market capitalization as derived from the Wilshire 5000
equity universe.
Currently, different segments of the Portfolio's assets are managed as follows:
ALLIANCE CAPITAL Approximately 42.5% of its assets are
MANAGEMENT L.P. managed by an investment subadviser that
uses a bottom-up investment approach that
combines a quantitative scoring system and
analyst judgment to identify companies with
strong relative earnings growth and
reasonable valuations to determine which
securities to purchase for the Portfolio.
(Segment usually holds 45-55 stocks.)
SANFORD C. BERNSTEIN Approximately 42.5% of the Portfolio's
& CO., LLC assets are managed by an investment
subadviser whose investment approach is
bottom-up and price driven. Companies are
ranked based on expected internal rates of
return. Top-ranked companies are then
subjected to intensive field research.
HUSIC CAPITAL MANAGEMENT Approximately 7.5% of the Portfolio's assets
are managed by an investment subadviser
whose rigorous, bottom-up research process
seeks to identify fundamental or secular
changes in companies or industries that
often signal higher than anticipated
earnings growth. The selection process
focuses on stocks of companies most likely
to benefit from those changes.
REAMS ASSET MANAGEMENT Approximately 7.5% of the Portfolio's assets
COMPANY, LLC are managed by an investment subadviser that
seeks securities of companies that have the
potential of high returns. This subadviser
uses quantitative research analysis,
including probability-weighted scenario
analysis, to supplement its fundamental
research about these companies.
PRINCIPAL RISKS OF INVESTING IN THE PORTFOLIO
All Pro Broad Equity Portfolio is subject to MARKET RISK and FINANCIAL RISK.
Certain investments held by this Portfolio entail a significant degree of SMALL
COMPANY RISK. Smaller companies may have limited product lines, markets or
financial resources and their securities may trade less frequently and in more
limited volume than the securities of larger or more established companies. The
prices of securities of smaller companies may fluctuate to a greater degree than
the prices of securities of other issuers.
-6-
<PAGE> 11
These risks, and the risks associated with other higher-risk securities and
practices that the Portfolio may utilize, are described in more detail later in
this Prospectus. Investors should carefully read "Risks of Investing in the
Portfolios" and "Investment Techniques" below before investing in this
Portfolio.
MANAGER CHANGE
The performance presented below represents the Portfolio's performance under
different investment strategies and managed by a different investment adviser.
The Portfolio was operated as a single-manager portfolio prior to [December 1,
2000] when the current investment adviser and subadvisers assumed
responsibilities for the management of the assets. If the current investment
adviser and subadvisers had managed the Portfolio for the periods presented, the
performance would have differed from the above-presented financial information.
THE PORTFOLIO PERFORMANCE
The bar chart and table shown below provide an indication of the risks of
investing in All Pro Broad Equity Portfolio by showing changes in the
Portfolio's performance from year to year over a 10-year period and by showing
how the Portfolio's average annual returns for one, five, and ten years compare
to those of the S&P 500 Index. How the Portfolio has performed in the past is
not necessarily an indication of how the Portfolio will perform in the future.
MARKET STREET FUND, INC.
[BAR CHART]
<TABLE>
<CAPTION>
ALL PRO BROAD
EQUITY
PORTFOLIO*
----------
<S> <C>
1990 2.39%
1991 18.50%
1992 4.74%
1993 10.21%
1994 2.40%
1995 30.39%
1996 19.58%
1997 24.32%
1998 13.70%
1999 2.98%
</TABLE>
During the 10-year period shown in the bar chart, the highest return for a
quarter was 18.73% (quarter ended March 31, 1991) and the lowest return for a
quarter was -11.73% (quarter ended September 30, 1998).
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS PAST ONE
(for the periods ended December 31, 1999) YEAR PAST 5 YEARS PAST 10 YEARS
----------------------------------------- ---- ------------ -------------
<S> <C> <C> <C>
All Pro Broad Equity Portfolio*............. 2.98% 17.81% 12.53%
S&P 500 Index............................... 21.06% 28.58% 18.18%
Wilshire 5000 Index......................... 23.56% 27.06% 17.59%
</TABLE>
* Formerly "Growth Portfolio", managed by a different adviser.
The S&P 500 Index is a widely recognized, unmanaged index of 500 U.S. common
stocks. The Wilshire 5000 Index is a widely recognized, unmanaged broad market
index of approximately 5000 U.S. common stocks.
The performance information presented does not include the fees and charges
associated with the variable contracts, and returns would have been lower if
those fees and charges were included.
-7-
<PAGE> 12
[ ] All Pro Large Cap Growth Portfolio
INVESTMENT OBJECTIVE -- LONG-TERM CAPITAL APPRECIATION
PRIMARY INVESTMENT STRATEGIES
The Portfolio invests primarily in equity securities of larger companies
included in the Wilshire 5000 Equity Universe that, at the time of purchase, the
subadvisers believe offer above-average potential for growth in future earnings.
The Wilshire Large Cap Growth Index, the Portfolio's benchmark, is a market cap
weighted index that includes securities from the largest 750 stocks in the
Wilshire 5000 equity universe.
Currently, different segments of the Portfolio's assets are managed as follows:
ALLIANCE CAPITAL MANAGEMENT L.P. Approximately 50% of its assets are managed
by an investment subadviser that uses a
bottom-up investment approach that combines
a quantitative scoring system and analyst
judgment to identify companies with strong
relative earnings growth and reasonable
valuations to determine which securities to
purchase for the Portfolio. (Segment usually
holds approximately 45 - 55 stocks.)
GEEWAX TERKER & CO. Approximately 50% of its assets are managed
by an investment subadviser that uses
financial quality, sustainable growth, and
downside volatility screens to eliminate
issuers from consideration and purchases
securities from the remaining issuers.
(Segment usually holds approximately 100-200
stocks.)
PRINCIPAL RISKS OF INVESTING IN THE PORTFOLIO
All Pro Large Cap Growth Portfolio is subject to MARKET RISK and FINANCIAL RISK.
These risks, and the risks associated with other higher-risk securities and
practices that the Portfolio may utilize, are described in more detail later in
this Prospectus. Investors should carefully read "Risks of Investing in the
Portfolios" and "Investment Techniques" below before investing in this
Portfolio.
THE PORTFOLIO PERFORMANCE
The bar chart and table shown below provide an indication of the risks of
investing in All Pro Large Cap Growth Portfolio by showing the Portfolio's
performance over a 1-year period and by showing how the Portfolio's average
annual returns for one year, and the period since inception, compare to those of
the Wilshire Large Cap Growth Index. How the Portfolio has performed in the past
is not necessarily an indication of how the Portfolio will perform in the
future.
MARKET STREET FUND, INC.
[BAR CHART]
<TABLE>
<CAPTION>
ALL PRO LARGE CAP GROWTH PORTFOLIO
----------------------------------
<S> <C>
One Year 25.52%
</TABLE>
During the 1-year period shown on the bar chart, the highest return for a
quarter was 19.50% (quarter ended December 31, 1999) and the lowest return for a
quarter was -6.79% (quarter ended September 30, 1999).
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN 1 YEAR FROM INCEPTION(1)
--------------------------- ------ ---------------
<S> <C> <C>
Portfolio's Average Annual Total
Return............................. 25.52% 26.45%
Wilshire Large Cap Growth Index.... 34.73% 33.98%
</TABLE>
-8-
<PAGE> 13
(1) The Portfolio commenced operations on May 4, 1998.
The performance information presented does not include the fees and charges
associated with the variable contracts, and returns would have been lower if
those fees and charges were included.
-9-
<PAGE> 14
[ ] All Pro Large Cap Value Portfolio
INVESTMENT OBJECTIVE -- LONG-TERM CAPITAL APPRECIATION
PRIMARY INVESTMENT STRATEGIES
The Portfolio invests primarily in undervalued equity securities of larger
companies included in the Wilshire 5000 equity universe at the time of purchase
that the subadvisers believe offer potential for long-term growth in future
earnings. The Wilshire Large Cap Value Index, the Portfolio's benchmark, is a
market cap weighted index that includes securities from the largest 750 stocks
in the Wilshire 5000 equity universe.
Currently, different segments of the Portfolio's assets are managed as follows:
MELLON EQUITY
ASSOCIATES, LLP Approximately 50% of this Portfolio's assets
are managed by an investment subadviser that
seeks securities of companies with low risk
and solid long-term growth potential through
an investment process that integrates
quantitative analysis and fundamental
research.
SANFORD C. BERNSTEIN Approximately 50% of the Portfolio's assets
& CO., LLC are managed by an investment subadviser
whose value-oriented investment approach is
bottom-up and price driven. Companies are
ranked based on expected internal rates of
return. Top-ranked companies are then
subjected to intensive field research.
PRINCIPAL RISKS OF INVESTING IN THE PORTFOLIO
All Pro Large Cap Value Portfolio is subject to MARKET RISK and FINANCIAL RISK.
These risks, and the risks associated with other higher-risk securities and
practices that the Portfolio may utilize, are described in more detail later in
this Prospectus. Investors should carefully read "Risks of Investing in the
Portfolios" and "Investment Techniques" below before investing in this
Portfolio.
-10-
<PAGE> 15
THE PORTFOLIO PERFORMANCE
The bar chart and table shown below provide an indication of the risks of
investing in All Pro Large Cap Value Portfolio by showing the Portfolio's
performance over a 1-year period and by showing how the Portfolio's average
annual returns for one year, and the period since inception, compare to those of
the Wilshire Large Cap Value Index. How the Portfolio has performed in the past
is not necessarily an indication of how the Portfolio will perform in the
future.
MARKET STREET FUND, INC.
[BAR CHART]
<TABLE>
<CAPTION>
ALL PRO LARGE CAP VALUE
PORTFOLIO
-----------------------
<S> <C>
One Year 1.49%
</TABLE>
During the 1-year period shown on the bar chart, the highest return for a
quarter was 16.75% (quarter ended December 31, 1998) and the lowest return for a
quarter was -14.08% (quarter ended September 30, 1998).
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN 1 YEAR FROM INCEPTION(1)
--------------------------- ------ -----------------
<S> <C> <C>
Portfolio's Average Annual Total 1.49% 0.29%
Return.............................
Wilshire Large Cap Value Index..... 8.27% 5.30%
</TABLE>
(1) The Portfolio commenced operations on May 4, 1998.
The performance information presented does not include the fees and charges
associated with the variable contracts, and returns would have been lower if
those fees and charges were included.
-11-
<PAGE> 16
[ ] All Pro Small Cap Growth Portfolio
INVESTMENT OBJECTIVE -- LONG-TERM CAPITAL APPRECIATION
PRIMARY INVESTMENT STRATEGIES
The Portfolio invests primarily in equity securities of smaller companies
included in the Wilshire 5000 equity universe that, at the time of purchase, the
subadvisers believe offer above-average potential for growth in future earnings.
The Wilshire Small Cap Growth Index, the Portfolio's benchmark, is a market cap
weighted index that includes securities ranked from number 751 to number 2,500
in market capitalization as derived from the Wilshire 5000 equity universe.
Currently, different segments of the Portfolio's assets are managed as follows:
HUSIC CAPITAL MANAGEMENT Approximately 60% of the Portfolio's assets
are managed by an investment subadviser
whose rigorous, bottom-up research process
seeks to identify fundamental or secular
changes in companies or industries that
often signal higher than anticipated
earnings growth. The selection process
focuses on stocks of companies most likely
to benefit from those changes.
LEE MUNDER INVESTMENTS LTD. Approximately 40% of the Portfolio's assets
are managed by an investment subadviser that
seeks securities of companies that have
established above-average growth, superior
business positions and strong management.
This subadviser emphasizes high growth
sectors such as healthcare, technology and
business services.
PRINCIPAL RISKS OF INVESTING IN THE PORTFOLIO
All Pro Small Cap Growth Portfolio is subject to MARKET RISK and FINANCIAL RISK.
Investments held by this Portfolio entail a significant degree of SMALL COMPANY
RISK. Smaller companies may have limited product lines, markets or financial
resources and their securities may trade less frequently and in more limited
volume than the securities of larger or more established companies. The prices
of securities of smaller companies may fluctuate to a greater degree than the
prices of securities of other issuers.
These risks, and the risks associated with other higher-risk securities and
practices that the Portfolio may utilize, are described in more detail later in
this Prospectus. Investors should carefully read "Risks of Investing in the
Portfolios" and "Investment Techniques" below before investing in this
Portfolio.
-12-
<PAGE> 17
THE PORTFOLIO PERFORMANCE
The bar chart and table shown below provide an indication of the risks of
investing in All Pro Small Cap Growth Portfolio by showing the Portfolio's
performance over a 1-year period and by showing how the Portfolio's average
annual returns for one year, and the period since inception, compare to those of
the Wilshire Small Cap Growth Index. How the Portfolio has performed in the past
is not necessarily an indication of how the Portfolio will perform in the
future.
MARKET STREET FUND, INC.
[BAR CHART]
<TABLE>
<CAPTION>
ALL PRO SMALL CAP GROWTH
PORTFOLIO
------------------------
<S> <C> <C>
One Year 92.14%
</TABLE>
During the 1-year period shown on the bar chart, the highest return for a
quarter was 54.98% (quarter ended December 31, 1999) and the lowest return for a
quarter was -22.78% (quarter ended September 30, 1998).
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN 1 YEAR FROM INCEPTION(1)
--------------------------- ------ -----------------
<S> <C> <C>
Portfolio's Average Annual Total 92.14% 46.31%
Return.............................
Wilshire Small Cap Growth Index.... 52.56% 23.53%
</TABLE>
(1) The Portfolio commenced operations on May 4, 1998.
The performance information presented does not include the fees and charges
associated with the variable contracts, and returns would have been lower if
those fees and charges were included.
-13-
<PAGE> 18
[ ] All Pro Small Cap Value Portfolio
INVESTMENT OBJECTIVE -- LONG-TERM CAPITAL APPRECIATION
PRIMARY INVESTMENT STRATEGIES
The Portfolio invests primarily in undervalued equity securities of smaller
companies included in the Wilshire 5000 equity universe at the time of purchase,
which the subadvisers believe offer potential for long-term growth in future
earnings. The Wilshire Small Cap Value Index, the Portfolio's benchmark, is a
market cap weighted index that includes securities ranked from number 751 to
number 2,500 in market capitalization as derived from the Wilshire 5000 equity
universe.
Currently, different segments of the Portfolio's assets are managed as follows:
REAMS ASSET MANAGEMENT Approximately 50% of the Portfolio's assets
COMPANY, LLC are managed by an investment subadviser that
seeks securities of companies that have the
potential of high returns. This subadviser
uses quantitative research analysis,
including probability-weighted scenario
analysis, to supplement its fundamental
research about these companies.
STERLING CAPITAL MANAGEMENT
COMPANY Approximately 50% of the Portfolio's assets
are managed by an investment subadviser that
uses fundamental research to seek securities
of companies and issuers trading at prices
below their intrinsic value. This subadviser
analyzes an issuer's intrinsic value by
evaluating the issuer's normalized free cash
flow and return on capital to supplement its
fundamental research.
PRINCIPAL RISKS OF INVESTING IN THE PORTFOLIO
All Pro Small Cap Value Portfolio is subject to MARKET RISK and FINANCIAL RISK.
Investments held by the Portfolio entail a high degree of SMALL COMPANY RISK.
Smaller companies may have limited product lines, markets or financial resources
and their securities may trade less frequently and in more limited volume than
the securities of larger or more established companies. The prices of securities
of smaller companies may fluctuate to a greater degree than the prices of
securities of other issuers.
These risks, and the risks associated with other higher-risk securities and
practices that the Portfolio may utilize, are described in more detail later in
this Prospectus. Investors should carefully read "Risks of Investing in the
Portfolios" and "Investment Techniques" below before investing in this
Portfolio.
-14-
<PAGE> 19
THE PORTFOLIO PERFORMANCE
The bar chart and table shown below provide an indication of the risks of
investing in All Pro Small Cap Value Portfolio by showing the Portfolio's
performance over a 1-year period and by showing how the Portfolio's average
annual returns for one year, and the period since inception, compare to those of
the Wilshire Small Cap Value Index. How the Portfolio has performed in the past
is not necessarily an indication of how the Portfolio will perform in the
future.
MARKET STREET FUND, INC.
[BAR CHART]
<TABLE>
<CAPTION>
ALL PRO SMALL CAP VALUE
PORTFOLIO
-----------------------
<S> <C>
One Year -8.05%
</TABLE>
During the 1-year period shown on the bar chart, the highest return for a
quarter was 16.45% (quarter ended June 30, 1999) and the lowest return for a
quarter was -21.90% (quarter ended September 30, 1998).
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN 1 YEAR FROM INCEPTION(1)
--------------------------- ------ ---------------
<S> <C> <C>
Portfolio's Average Annual Total Return.... -8.05% -15.31%
Wilshire Small Cap Value Index............. -1.41% -10.96%
</TABLE>
(1) The Portfolio commenced operations on May 4, 1998.
The performance information presented does not include the fees and charges
associated with the variable contracts, and returns would have been lower if
those fees and charges were included.
ABOUT THE OTHER PORTFOLIOS
The Fund currently offers six additional Portfolios, each with different
investment objectives and strategies. Equity 500 Index and International
Portfolios are managed by subadvisers selected by the investment adviser, MSIM.
All of the other Portfolios are managed by the investment adviser, MSIM.
[ ] EQUITY 500 INDEX PORTFOLIO
INVESTMENT OBJECTIVE -- LONG-TERM CAPITAL APPRECIATION
PRIMARY INVESTMENT STRATEGIES
Equity 500 Index Portfolio invests primarily in common stocks included in the
S&P 500 Composite Stock Price Index (the "S&P 500 Index")* The S&P 500 Index
consists of approximately 500 selected common stocks, most of which are listed
in the New York Stock
* "Standard & Poor's(R)", "S&P(R)", "S&P 500(R)", "Standard & Poor's 500", and
"500" are trademarks of The McGraw-Hill Companies, Inc. and have been licensed
for use by Provident Mutual Life Insurance Company and its affiliates and
subsidiaries. Equity 500 Index Portfolio is not sponsored, endorsed, sold or
promoted by Standard & Poor's and Standard & Poor's makes no representation
regarding the advisability or investing in the Portfolio. Please see the
Statement of Additional Information, which sets forth certain additional
disclaimers and limitations of liabilities on behalf of S&P.
-15-
<PAGE> 20
Exchange. Standard & Poor's selects the stocks included in the S&P 500 Index on
a market capitalization basis, and the S&P 500 Index is heavily weighted toward
stocks with large capitalizations.
The Portfolio employs a passive management strategy designed to track the stock
composition, on a market capitalization basis, of the S&P 500 Index. The
subadviser purchases and sells securities for the Portfolio in an attempt to
produce investment results that substantially duplicate the performance of the
common stocks represented in the S&P 500 Index.
The Portfolio expects to substantially replicate the composition of the S&P 500
Index.
PRINCIPAL RISKS OF INVESTING IN THE PORTFOLIO
Equity 500 Index Portfolio is subject to MARKET RISK and FINANCIAL RISK. For
equity securities, market risk is the risk that the stock market as a whole may
decline, depressing the price of securities in which the Portfolio invests. For
equity securities, financial risk is the risk that the price of a particular
issuer's stock may decline because of its financial results.
These risks, and the risks associated with other higher-risk securities and
practices that the Portfolio may utilize, are described in more detail later in
this Prospectus. Investors should carefully read "Risks of Investing in the
Portfolios" and "Investment Techniques" below before investing in this
Portfolio.
THE PORTFOLIO PERFORMANCE
Equity 500 Index Portfolio commenced operations on February 7, 2000.
Accordingly, we did not include a bar chart and average annual return
information for the Portfolio.
-16-
<PAGE> 21
[ ] INTERNATIONAL PORTFOLIO
INVESTMENT OBJECTIVE -- LONG-TERM GROWTH OF CAPITAL PRIMARILY THROUGH
INVESTMENTS IN A DIVERSIFIED PORTFOLIO OF MARKETABLE EQUITY SECURITIES OF
ESTABLISHED FOREIGN ISSUER COMPANIES
PRIMARY INVESTMENT STRATEGIES
International Portfolio invests primarily in equity securities of established
foreign issuer companies or of companies organized in the United States having
their principal activities and interests outside the United States that the
subadviser believes have potential for long-term capital growth. Many of these
securities are non-U.S. dollar securities. The Portfolio also may invest in
other foreign issuer securities such as those of foreign governments or agencies
or instrumentalities of foreign governments. The Portfolio's subadviser uses a
VALUE-ORIENTED investing strategy, which is discussed on pages 3-4, to select
investment for the Portfolio.
Under normal market conditions, the Portfolio invests at least 75% of its total
assets in the securities of foreign issuers located (or, in the case of the
securities, traded) in at least five different countries other than the United
States. Nonetheless, under certain economic and business conditions the
Portfolio may invest up to 35% of its total assets in the securities of issuers
located (or, in the case of the securities, traded) in any one of the following
countries:
- Australia
- Canada
- France
- Japan
- The United Kingdom
- Germany
International Portfolio also may invest in securities of foreign issuers in the
form of sponsored and unsponsored ADRs, EDRs, and GDRs (see "Investment
Techniques"). International Portfolio may invest in restricted securities,
including restricted securities eligible for resale to "qualified institutional
buyers" under Rule 144A of the Securities Act of 1933. International Portfolio
also may, under normal market conditions, invest up to 35% of its total assets
in investment-grade debt securities of foreign issuers. See "Risks of Investing
in the Portfolios," below.
-17-
<PAGE> 22
PRINCIPAL RISKS OF INVESTING IN THE PORTFOLIO
International Portfolio is subject to MARKET RISK and FINANCIAL RISK. The
Portfolio is subject to a significant degree of FOREIGN ISSUER AND NON-DOLLAR
SECURITIES RISK. Securities of foreign issuers and non-dollar securities entail
risks not associated with domestic securities or U.S. dollar-denominated
securities. For example, foreign issuers often are subject to securities laws,
and accounting and reporting practices, less stringent than those in the U.S.,
and these issuers may be adversely impacted by political or economic instability
or changes in currency exchange rates.
The Portfolio's investments in securities of issuers located in countries with
emerging economies or securities markets entail EMERGING MARKETS RISK. The risks
of investing in securities of foreign issuers and non-dollar securities are even
greater in emerging markets than in Japan or most Western European countries.
Emerging market countries are undergoing rapid development and may lack the
social, political and economic stability characteristic of more developed
countries.
These risks, and the risks associated with other higher-risk securities and
practices that the Portfolio may utilize, are described in more detail later in
this Prospectus. Investors should carefully read "Risks of Investing in the
Portfolios" and "Investment Techniques" below before investing in this
Portfolio.
-18-
<PAGE> 23
THE PORTFOLIO PERFORMANCE
The bar chart and table shown below provide an indication of the risks of
investing in International Portfolio by showing changes in the Portfolio's
performance from year to year over an 8-year period and by showing how the
Portfolio's average annual returns for one and five years, and the period since
inception, compare to those of the Morgan Stanley Capital International Europe,
Australasia, Far East ("EAFE") Index. How the Portfolio has performed in the
past is not necessarily an indication of how the Portfolio will perform in the
future.
MARKET STREET FUND, INC.
[BAR CHART]
<TABLE>
<CAPTION>
INTERNATIONAL PORTFOLIO
-----------------------
<S> <C>
1992 -7.30%
1993 36.11%
1994 0.26%
1995 14.31%
1996 10.89%
1997 9.66%
1998 10.13%
1999 29.33%
</TABLE>
During the 8-year period shown in the bar chart, the highest return for a
quarter was [15.71%] (quarter ended December 31, 1998) and the lowest return for
a quarter was [16.25%] (quarter ended September 30, 1998).
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS PAST 5
(for the periods ended December 31, 1999) PAST ONE YEAR YEARS FROM INCEPTION(1)
------------------------------------------- ------------- ----- ---------------
<S> <C> <C> <C>
International Portfolio..................... 29.33% 14.64% 11.50%
EAFE Index.................................. 26.97% 12.83% 10.73%
</TABLE>
(1) The Portfolio commenced operations on November 1, 1991.
The EAFE Index is a widely recognized, unmanaged index of more than 900
companies from Europe, Australia, Asia and the Far East. The EAFE Index reflects
the prices of these common stocks translated into U.S. dollars with dividends
reinvested net of any foreign taxes.
The performance information presented does not include the fees and charges
associated with the variable contracts, and returns would have been lower if
those fees and charges were included.
-19-
<PAGE> 24
[ ] MID CAP GROWTH PORTFOLIO
INVESTMENT OBJECTIVE -- A HIGH LEVEL OF LONG-TERM CAPITAL APPRECIATION
PRIMARY INVESTMENT STRATEGIES
Mid Cap Growth Portfolio invests primarily in:
- mid cap companies whose earnings the subadviser expects to grow at a
faster rate than the average company
- mid cap companies are those companies whose market capitalization falls
within the range of companies in the S&P Mid Cap 400 Index or the
Wilshire Mid Growth Index
PRINCIPAL RISKS OF INVESTING IN THE PORTFOLIO
Mid Cap Growth Portfolio invests in securities that generally entail
above-average MARKET RISK and FINANCIAL risk. The Portfolio also is subject to
MID CAP COMPANY RISK. The stocks of mid cap companies entail greater risk and
are usually more volatile than the shares of large companies. In addition,
growth stocks can be volatile for several reasons. Since they usually reinvest a
high proportion of earnings in their own businesses, they may lack the dividends
usually associated with value stocks that can cushion their decline in a falling
market. Also, since investors buy these stocks because of their expected
superior earnings growth, earnings disappointments often result in sharp price
declines.
As a "growth" investor, the Subadviser believes that when a company's earnings
grow faster than both inflation and the overall economy, the market will
eventually reward it with a higher stock price.
In selecting investments, the Subadviser generally favors companies that:
- have proven products or services; have a record of above average
earnings growth;
- have demonstrated potential to sustain earnings growth; operating in
industries experiencing increasing demand; or
- have stock prices that appear to undervalue their growth prospects.
While most assets will be invested in U.S. common stocks, other securities may
also be purchased, including foreign stocks, futures, and options, in keeping
with fund objectives. To the extent that the Portfolio invests in certain
securities, Mid Cap Growth Portfolio assumes additional risks relating to ADRs,
GDRs, and EDRs (i.e., the risks of investing in the securities of foreign
issuers and non-dollar securities). Securities of foreign issuers and non-U.S.
dollar securities entail risks not associated with domestic securities or U.S.
dollar-denominated securities. For example, foreign issuers often are subject to
securities laws, and accounting and reporting practices, less stringent than
those in the U.S., and these issuers may be adversely impacted by political or
economic instability or changes in currency exchange rates. Fund investments in
futures and options, if any, are subject to additional volatility and potential
losses.
-20-
<PAGE> 25
These risks, and the risks associated with other higher-risk securities and
practices that the Portfolio may utilize, are described in more detail later in
this Prospectus. Investors should carefully read "Risks of Investing in the
Portfolios" and "Investment Techniques" below before investing in this
Portfolio.
MANAGER CHANGE
Effective [December 1, 2000] the Portfolio's name was changed from Aggressive
Growth to Mid Cap Growth Portfolio. The performance presented below represents
the Portfolio's performance under different investment strategies and managed by
a different investment adviser prior to [December 1, 2000], when the current
investment adviser and subadviser assumed responsibilities for the management of
the assets. The current subadviser's performance is compared with two new
indices: the S&P Mid Cap 400 Index and the Wilshire Mid Growth Index. If the
current investment adviser and subadviser had managed the Portfolio for the
periods presented, the performance would have differed from the above-presented
financial information.
-21-
<PAGE> 26
THE PORTFOLIO PERFORMANCE
The bar chart and table shown below are intended to provide an indication of the
risks of investing in Mid Cap Growth Portfolio by showing changes in the
Portfolio's performance from year to year over a 10-year period and by showing
how the Portfolio's average annual returns for one, five and ten years compare
to those of the Russell 2000 Index. How the Portfolio has performed in the past
is not necessarily an indication of how the Portfolio will perform in the
future.
MARKET STREET FUND, INC.
[BAR CHART]
<TABLE>
<CAPTION>
MID CAP GROWTH PORTFOLIO*
-------------------------
<S> <C>
1990 10.77%
1991 56.33%
1992 2.58%
1993 5.20%
1994 0.00%
1995 13.48%
1996 21.00%
1997 21.21%
1998 7.99%
1999 15.96%
</TABLE>
During the 10-year period shown in the bar chart, the highest return for a
quarter was 27.72% (quarter ended March 31, 1991) and the lowest return for a
quarter was -24.51% (quarter ended September 30, 1990).
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
(for the periods ended December 31, 1999) PAST ONE
YEAR PAST 5 YEARS PAST 10 YEARS
----------------------------------- -------- ------------ -------------
<S> <C> <C> <C>
Mid Cap Growth Portfolio*................... 15.96% 15.82% 14.56%
Russell 2000 Index**........................ 21.36% 16.78% 13.44%
S&P Mid Cap 400............................. 14.72% 23.05% N/A
Wilshire Mid Growth 62.35% 26.30% 17.85%
</TABLE>
* Formerly named "Aggressive Growth Portfolio and managed by another
adviser.
** Price appreciation only.
The Russell 2000 Index is a widely recognized, unmanaged index of small
capitalization companies.
The performance information presented does not include the fees and charges
associated with the variable contracts, and returns would have been lower if
those fees and charges were included.
-22-
<PAGE> 27
[ ] Balanced Portfolio
INVESTMENT OBJECTIVE -- AS HIGH A LEVEL OF LONG-TERM TOTAL RATE OF RETURN AS IS
CONSISTENT WITH PRUDENT INVESTMENT RISK
PRIMARY INVESTMENT STRATEGIES
Balanced Portfolio's equity portion is invested primarily in equity securities,
such as common or preferred stocks, that are listed on U.S. exchanges or trade
in the over-the-counter markets. The Portfolio's subadviser uses a
GROWTH-ORIENTED strategy as described on page 3. The subadviser believes that
these companies tend to fall into two categories:
- High Unit Volume Growth -- vital, creative companies that
offer goods or services to a rapidly expanding marketplace.
These companies include both established and emerging firms,
offering new or improved products, or firms simply fulfilling
an increased demand for an existing line.
- Positive Life Cycle Changes -- companies experiencing a major
change that is expected to produce advantageous results. These
changes may be as varied as new management, products or
technologies; restructuring or reorganization; or merger or
acquisition.
The subadviser focuses on stocks of companies with growth potential and
fixed-income securities, with emphasis on income-producing securities that
appear to have some potential for capital appreciation. Normally, the Portfolio
invests in common stocks and fixed-income securities that include commercial;
paper and bonds rated within the 4 highest rating categories by an established
rating agency or, if not rated, that are determined by the subadviser to be of
comparable quality. Ordinarily, at least 25% of the Portfolio's net assets are
invested in fixed-income securities.
PRINCIPAL RISKS OF INVESTING IN THE PORTFOLIO
Generally Balanced Portfolio is subject to MARKET RISK, FINANCIAL RISK, CREDIT
RISK and INTEREST RATE RISK. To the extent that the Portfolio invests in
"growth" stocks, your investment may be more volatile than if you had invested
in other types of investments you could make. The returns of a fund
concentrating in "growth" stocks tend to vary more than the returns of a fund
concentration in "value" stocks; prices of growth stocks tend to be higher in
relation to their companies' earnings and may be more sensitive to market,
political, and economic developments than other stocks. All of these factors
make growth-stock prices more volatile than the prices of value stocks. Because
the Portfolio may buy a security and sell it in a relatively short time to take
advantage of current gains, the Portfolio may assume additional risks relating
to SHORT-TERM TRADING. Short-term trading may result in higher turnover and
transaction expenses for the Portfolio.
The fixed-income portion of the Portfolio is subject to additional risks,
including the sensitivity of these securities to interest-rate movements and the
potential for a decline in the Portfolio's market value in the event of an
issuer's falling credit rating or actual default.
These risks, and the risks associated with other higher-risk securities and
practices that the Portfolio may utilize, are described in more detail later in
this Prospectus. Investors should carefully read "Risks of Investing in the
Portfolios" and "Investment Techniques" below before investing in this
Portfolio.
-23-
<PAGE> 28
MANAGER CHANGE
Effective [December 1, 2000] the Portfolio's name was changed from Managed to
Balanced Portfolio. The performance presented below represents the Portfolio's
performance under different investment strategies and managed by a different
investment adviser prior to [December 1, 1999] when the current investment
adviser and subadviser assumed responsibilities for the management of the
assets. If the current investment adviser and subadviser had managed the
Portfolio for the periods presented, the performance would have differed from
the above-presented financial information.
-24-
<PAGE> 29
THE PORTFOLIO PERFORMANCE
The bar chart and table shown below provide an indication of the risks of
investing in Balanced Portfolio by showing changes in the Portfolio's
performance from year to year over a 10-year period and by showing how the
Portfolio's average annual returns for one, five, and ten years compare to those
of the S&P 500 Index and the Lehman Aggregate Bond Index. How the Portfolio has
performed in the past is not necessarily an indication of how the Portfolio will
perform in the future.
MARKET STREET FUND, INC.
[BAR CHART]
<TABLE>
<CAPTION>
BALANCED PORTFOLIO*
-------------------
<S> <C>
1990 - 8.61%
1991 20.49%
1992 11.96%
1993 11.62%
1994 - 1.82%
1995 24.43%
1996 11.88%
1997 21.23%
1998 12.54%
1999 0.75%
</TABLE>
During the 10-year period shown in the bar chart, the highest return for a
quarter was 13.32% (quarter ended March 31, 1991) and the lowest return for a
quarter was -15.85% (quarter ended September 30, 1990).
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
(for the periods ended December 31, PAST ONE
1999) YEAR PAST 5 YEARS PAST 10 YEARS
------------------------------------ --------- ----------- -------------
<S> <C> <C> <C>
Balanced Portfolio*......................... 0.75% 13.86% 9.96%
S&P 500 Index............................... 21.06% 28.58% 18.18%
Lehman Aggregate Bond Index................. -0.82% 7.74% 7.86%
</TABLE>
* Formerly, "Managed" Portfolio, and managed by a different adviser.
The Portfolio's investments in equity securities are compared to the S&P 500
Index, a widely recognized, unmanaged index of 500 U.S. common stocks.
The Portfolio's investments in debt securities are compared to the Lehman
Aggregate Bond Index, a widely recognized, unmanaged index of bonds reflecting
average prices in the bond market.
The performance information presented does not include the fees and charges
associated with the variable contracts, and returns would have been lower if
those fees and charges were included.
-25-
<PAGE> 30
[ ] Bond Portfolio
INVESTMENT OBJECTIVE -- A HIGH LEVEL OF CURRENT INCOME CONSISTENT WITH PRUDENT
INVESTMENT RISK
PRIMARY INVESTMENT STRATEGIES
Bond Portfolio invests primarily in a diversified portfolio of fixed income
securities of U.S. and foreign issuers. The Portfolio's subadviser use active
fixed income management by focusing on four key areas: sector and sub-sector
allocation; issue selection; duration; and term structure.
PRINCIPAL RISKS OF INVESTING IN THE PORTFOLIO
Bond Portfolio is subject to MARKET RISK, CREDIT RISK and INTEREST RATE RISK. To
the extent that the Portfolio invests in certain securities, Bond Portfolio may
assume additional risks relating to LOWER QUALITY DEBT INSTRUMENTS, SHORT-TERM
TRADING and SECURITIES OF FOREIGN ISSUERS. Lower quality debt instruments are
subject to above-average interest rate risk and credit risk, tend to have a
higher default rate, and are speculative with only an adequate capacity to repay
principal and interest. Short-term trading may result in higher turnover and
transaction expenses for the Portfolio. Securities of foreign issuers entail
risks not associated with domestic securities. For example, foreign issuers
often are subject to securities laws, and accounting and reporting practices,
less stringent than those in the U.S., and these issuers may be adversely
impacted by political or economic instability or changes in currency exchange
rates.
These risks, and the risks associated with other higher-risk securities and
practices that the Portfolio may utilize, are described in more detail later in
this Prospectus. Investors should carefully read "Risks of Investing in the
Portfolios" and "Investment Techniques" below before investing in this
Portfolio.
MANAGER CHANGES
The performance presented represents the Portfolio's performance under different
investment strategies and managed by a different investment adviser prior to
[December 1, 2000] when the current investment adviser and subadviser assumed
responsibilities for the management of the assets. If the current investment
adviser and subadviser had managed the Portfolio for the periods presented, the
performance would likely have differed from the below-presented financial
information.
-26-
<PAGE> 31
THE PORTFOLIO PERFORMANCE
The bar chart and table shown below provide an indication of the risks of
investing in Bond Portfolio by showing changes in the Portfolio's performance
from year to year over a 10-year period and by showing how the Portfolio's
average annual returns for one, five, and ten years compare to those of the
Lehman Aggregate Bond Index. How the Portfolio has performed in the past is not
necessarily an indication of how the Portfolio will perform in the future.
MARKET STREET FUND, INC.
[BAR CHART]
<TABLE>
<CAPTION>
BOND
PORTFOLIO*
----------
<S> <C>
1990 7.70%
1991 13.93%
1992 5.95%
1993 10.32%
1994 -5.62%
1995 20.45%
1996 2.86%
1997 9.50%
1998 8.22%
1999 -3.31%
</TABLE>
During the 10-year period shown in the bar chart, the highest return for a
quarter was 7.32% (quarter ended June 30, 1995) and the lowest return for a
quarter was -4.18% (quarter ended March 31, 1994).
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
(for the periods ended December 31, PAST ONE
1999) YEAR PAST 5 YEARS PAST 10 YEARS
------------------------------------ --------- ------------ -------------
<S> <C> <C> <C>
Bond Portfolio*............................. -3.31% 7.26% 6.75%
Lehman Aggregate Bond Index................. -0.82% 7.74% 7.86%
</TABLE>
* Prior to December 1, 2000, managed by a different adviser.
The Lehman Aggregate Bond Index is a widely recognized, unmanaged index of bonds
reflecting average prices in the bond market.
The performance information presented does not include the fees and charges
associated with the variable contracts, and returns would have been lower if
those fees and charges were included.
-27-
<PAGE> 32
[ ] Money Market Portfolio
INVESTMENT OBJECTIVE
Maximum current income consistent with capital preservation and liquidity.
PRIMARY INVESTMENT STRATEGIES
Money Market Portfolio invests exclusively in U.S. dollar-denominated money
market instruments that present minimal credit risks. These include U.S.
government securities, bank obligations, repurchase agreements, commercial
paper, and other corporate debt obligations. See Appendix A to the SAI for a
complete discussion of the money market instruments in which the Portfolio may
invest.
All of Money Market Portfolio's money market instruments mature in 397 days (13
months) or less. The average maturity of these securities, based on their
weighted dollar value, does not exceed 90 days. The Portfolio intends to
maintain a stable net asset value of $1.00 per share. All of the Portfolio's
assets are rated in the two highest short-term categories (or their unrated
equivalents) by a nationally recognized statistical rating organization ("Rating
Agency"), and 95% of the Portfolio's assets are rated in the highest category
(or its unrated equivalent) by a Rating Agency. A more detailed description of
the rating categories is contained in the SAI and the Appendix to the SAI.
PRINCIPAL RISKS OF INVESTING IN THE PORTFOLIO
While Money Market Portfolio only invests in high quality money market
instruments, these investments are not entirely without risk. High quality money
market instruments generally do not yield as high a level of income as
longer-term or lower-grade securities, which may be considered "opportunity"
risk. In addition, the yield of the Portfolio varies with changes in interest
rates. There is a remote possibility that the Portfolio's share value could fall
below $1.00, which could reduce the value of your investment in the Portfolio.
To the extent that the Portfolio invests in certain securities, Money Market
Portfolio may be affected by additional risks relating to REPURCHASE AGREEMENTS
(credit risk) and WHEN-ISSUED SECURITIES (market, opportunity, and leverage
risks). However, these risks may be lessened by the high quality of the
securities in which the Portfolio invests.
These risks are described in more detail later in this Prospectus. SHARES OF THE
PORTFOLIO ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, ANY
FINANCIAL INSTITUTION, AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION OR ANY OTHER GOVERNMENT AGENCY. Investors should carefully read
"Risks of Investing in the Portfolios" and "Investment Techniques" below before
investing in this Portfolio.
MANAGER CHANGES
The performance presented represents the Portfolio's performance under different
investment strategies and managed by a different investment adviser prior to
[December 1, 2000] when the current investment adviser assumed responsibilities
for the management of the assets. If the
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<PAGE> 33
current investment adviser had managed the Portfolio for the periods presented,
the performance might have differed from the above-presented financial
information.
-29-
<PAGE> 34
THE PORTFOLIO PERFORMANCE
The bar chart and table shown below provide an indication of the risks of
investing in Money Market Portfolio by showing changes in the Portfolio's
performance from year to year over a 10-year period and by showing the
Portfolio's average annual returns for one, five, and ten years. How the
Portfolio has performed in the past is not necessarily an indication of how the
Portfolio will perform in the future.
MARKET STREET FUND, INC.
[BAR CHART]
<TABLE>
<CAPTION>
MONEY MARKET
PORTFOLIO*
----------
<S> <C>
1990 8.00%
1991 5.69%
1992 3.18%
1993 2.59%
1994 3.81%
1995 5.61%
1996 5.15%
1997 5.33%
1998 5.29%
1999 4.91%
</TABLE>
During the 10-year period shown in the bar chart, the highest return for a
quarter was 1.97% (quarter ended June 30, 1990) and the lowest return for a
quarter was 0.62% (quarter ended June 30, 1993). The Portfolio's seven-day yield
was 5.53% for the period ended December 31, 1999.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
(FOR THE PERIODS ENDED DECEMBER 31, PAST ONE
1999) YEAR PAST 5 YEARS PAST 10 YEARS
----------------------------------- -------- ------------ -------------
<S> <C> <C> <C>
Money Market Portfolio*..................... 4.91% 5.26% 4.95%
Salomon Smith Barney 3-Month Treasury Index. 4.74% 5.21% 5.06%
</TABLE>
The performance information presented does not include the fees and charges
associated with the variable contracts, and returns would have been lower if
those fees and charges were included.
-30-
<PAGE> 35
RISKS OF INVESTING IN THE PORTFOLIOS
Each Portfolio is subject to the risk that the Portfolio may not achieve its
investment objective, and an investor may lose money (including the principal
invested) by investing in the Portfolio. No one Portfolio alone should be
considered a complete investment program, and any Portfolio's performance could
fall below that of other possible investments. Except for Money Market
Portfolio, each Portfolio's price per share will fluctuate based on changed in
the market prices of the underlying investments that each Portfolio holds.
Because each Portfolio invests in a different mix of securities and employs a
different strategy for achieving the Portfolio's goals, the risks associated
with each Portfolio vary. While the actual performance of any mutual fund cannot
be predicted, investors should consider the possible risks associated with a
Portfolio's investments. These risks include:
CORRELATION RISK. A measure of how closely two variables move together through
time. For example, utility stocks tend to have a high degree of correlation
because many of the same economic forces influence their share prices.
Conversely, gold stock prices are not closely correlated with utility stock
prices because they are influenced by very different factors. In building a
diversified portfolio, investors often try to combine investments that are not
closely correlated with one another.
CREDIT RISK. The risk that the issuer of a security, or the counterparty to a
contract, will default or otherwise not honor a financial obligation.
CURRENCY RISK. The risk that fluctuations in the exchange rates between the U.S.
dollar and foreign currencies may adversely affect the value of an investment.
Currency fluctuations may negatively impact a Portfolio's investments and,
therefore, the value of its portfolio even if the foreign stock has not declined
in value in its own currency. For example:
- A decline in the U.S. dollar value of other currencies would reduce the
value of certain portfolio investments denominated in those currencies
- A Portfolio may have to sell portfolio securities to pay dividends to
shareholders if the exchange rate for the currency in which a Portfolio
receives interest payments declines against the U.S. dollar before the
interest is paid to shareholders.
EXTENSION RISK. The risk that an unexpected rise in prevailing interest rates
will extend the life of an outstanding mortgage-backed security by reducing the
expected number of mortgage prepayments, typically reducing the security's
value.
FINANCIAL RISK. For debt securities, credit risk. For equity securities, the
risk that the issuer's earning prospects and overall financial position will
deteriorate, causing a decline in the security's value.
RISKS OF INVESTING IN SECURITIES OF FOREIGN ISSUERS AND NON-U.S. DOLLAR
SECURITIES. Investments in the securities of foreign issuers or investments in
non-U.S. dollar securities involve significant risks that are not typically
associated with investing in U.S. dollar-denominated securities or securities of
domestic issuers. These investments may be affected by changes in currency
exchange rates, changes in foreign or U.S. laws or restrictions applicable to
-31-
<PAGE> 36
these investments and in currency exchange control regulations. Some foreign
stock markets (and other securities markets) may have substantially less volume
than, for example, the New York Stock Exchange (or other domestic markets), and
securities of some foreign issuers may be less liquid than securities of
comparable domestic issuers. Commissions and dealer mark-ups on transactions in
securities of foreign issuers and non-dollar securities may be higher than for
similar transactions in the United States. In addition, clearance and settlement
procedures may be different in foreign countries, and, in certain markets and on
certain occasions, these procedures have been unable to keep pace with the
volume of securities transactions, thus making it difficult to conduct these
transactions. The inability of a Portfolio to make intended investments due to
settlement problems could cause it to miss attractive investment opportunities.
Inability to dispose of portfolio securities or other investments due to
settlement problems could result either in losses to a Portfolio due to
subsequent declines in value of the portfolio investment or, if the Portfolio
has entered into a contract to sell the investment, could result in possible
liability to the purchaser.
Foreign issuers are not generally subject to uniform accounting, auditing, and
financial reporting standards comparable to those applicable to domestic
companies, and there may be less publicly available information about a foreign
issuer than about a domestic one. In addition, there is generally less
government regulation of stock exchanges, brokers, and listed and unlisted
issuers in foreign countries than in the United States. Furthermore, with
respect to certain foreign countries, there is a possibility of expropriation or
confiscatory taxation, imposition of withholding taxes on dividend or interest
payments, limitations on the removal of cash or other assets of the Portfolio,
or political or social instability or diplomatic developments that could affect
investments in those countries. Individual foreign economies also may differ
favorably or unfavorably from the U.S. economy in such respects as growth of
gross national product, rate of inflation, capital reinvestment, resource
self-sufficiency, and balance of payments position.
All Portfolios except Money Market Portfolio may invest in securities of issuers
located in countries with emerging economies and/or securities markets. These
countries are located in the Asia-Pacific region, Eastern Europe, Central and
South America, and Africa. Political and economic structures and institutions in
many of these countries are undergoing significant evolution and rapid
development, and these countries may lack the social, political and economic
stability characteristic of more developed countries. Certain of these countries
have in the past failed to recognize private property rights and have at times
nationalized or expropriated assets of private companies. In addition,
unanticipated political or social developments may affect the values of
investments in these countries and the ability of a Portfolio to make additional
investments in them. The small size, inexperience, and limited trading volume of
the securities markets in certain of these countries may also make investments
in these countries more volatile and less liquid than investments in securities
traded in markets in Japan and Western European countries. As a result, these
Portfolios may be required to establish special custody or other arrangements
before making certain investments in these countries. There may be little
financial or accounting information available with respect to issuers located in
certain of these countries, and it may be difficult as a result to assess the
value or prospects of an investment in these issuers. The laws of some foreign
countries may limit the ability of these Portfolios to invest in securities of
certain issuers located or doing business in these countries.
HEDGING RISK. When a Portfolio hedges an asset it holds, any gain or loss
generated by the hedge should be substantially offset by losses or gains on the
hedged asset. Hedging is a useful
-32-
<PAGE> 37
way to reduce or eliminate risk of loss, but it also reduces or eliminates the
potential for investment gains.
INFORMATION RISK. The risk that key information about a security or market is
inaccurate or unavailable.
INTEREST RATE RISK. The risk that the market value of a debt or other
income-bearing security will decline because of changes in prevailing interest
rates. Generally, a rise in interest rates typically causes the market values of
these securities to decline, particularly fixed-rate securities.
RISKS OF INVESTING IN LOWER QUALITY DEBT INSTRUMENTS. Lower quality debt
instruments usually pay a higher interest rate than higher quality debt
instruments, particularly lower quality debt instruments rated below
investment-grade, but with the higher interest rate comes higher risks. Lower
quality debt instruments may have the following characteristics:
- Are speculative with only an adequate capacity to pay principal and
interest;
- Have a higher risk of default, tend to be less liquid, and may be more
difficult to value;
- Are issued by entities whose ability to make principal and interest
payments is more likely than entities issuing higher-rated debt
instruments to be affected by changes in economic conditions or other
circumstances;
- Have limited prospects for reaching investment-grade standing and,
although unlikely, may be in default;
- May be more severely affected than some other financial instruments by
economic recession or substantial interest rate increases, by changing
public perceptions of the market, or by legislation that limits their
use in connection with corporate reorganizations or limits their tax or
other advantages; and
- Are more likely to react to developments affecting market risk and
financial risk than are higher quality debt instruments, which react
primarily to movements in the general level of interest rates.
LEVERAGE RISK. The risks associated with securities or investment practices that
enhance return (or loss) without increasing the amount of investment, such as
buying securities on margin or using certain derivative contracts or derivative
securities. A Portfolio's gain or loss on a leveraged position may be greater
than the actual market gain or loss in the underlying security or instrument. A
Portfolio may also incur additional costs in taking a leveraged position (such
as interest on borrowings) that may not be incurred in taking a non-leveraged
position.
LIQUIDITY RISK. The risk that certain securities or other investments may be
difficult or impossible to sell at the time the Portfolio would like to sell
them or at the price these securities or other investments are valued.
-33-
<PAGE> 38
MANAGEMENT RISK. The risk a strategy that a Portfolio's adviser or subadviser
uses does not produce the intended result. For example, the adviser's or
subadviser's judgment about the value or potential appreciation of a particular
stock may prove to be incorrect.
MARKET RISK. The risk that the market value of a security may increase or
decrease, sometimes rapidly and unpredictably, due to factors unrelated to the
issuer. This risk is common to all stocks and bonds and the mutual funds that
invest in them.
NATURAL EVENT RISK. The risk of losses that are attributable to natural
disasters, crop failures and similar events.
OPPORTUNITY RISK. The risk of missing out on an investment opportunity when the
assets necessary to take advantage of the opportunity are tied up in less
advantageous investments.
POLITICAL RISK. The risk of losses that are directly attributable to government
actions or political events of any sort. Foreign countries may experience
political or social instability or diplomatic developments that could affect
investments in those countries.
PREPAYMENT RISK. The risk that an unexpected fall in prevailing interest rates
will shorten the life of an outstanding mortgage-backed security by increasing
the expected number of mortgage prepayments.
SMALL COMPANY RISK. The risk of investing in securities of smaller companies.
These smaller companies may have limited product lines, markets, or financial
resources and their securities may trade less frequently and in more limited
volume than the securities of larger or more established companies. These
companies are typically subject to a greater degree of changes in earnings and
business prospects than are larger, more established issuers. As a result, the
prices of securities of smaller companies may fluctuate to a greater degree than
the prices of securities of other issuers. Although investing in securities of
smaller companies offers potential for above-average returns, the risk exists
that the companies will not succeed and the prices of the companies' shares
could significantly decline in value.
MID CAP COMPANY RISK. The stocks of mid cap companies entail greater risk and
are usually more volatile than the shares of larger companies.
GROWTH STOCK RISK. Growth stocks can be volatile for several reasons. Since they
usually reinvest a high portion of earnings in their own businesses, they may
lack the dividends usually associated with value stocks that can cushion their
decline in a falling market. Also since investors buy these stocks because of
their expected superior earnings growth, earnings disappointments often result
in sharp price declines.
SPECULATION RISK. Speculation involves assuming a higher than average risk of
loss in anticipation of gain. If a Portfolio uses a derivative contract or
derivative security to speculate rather than hedge, it is directly exposed to
the risks of that derivative contract or security. Gains or losses from
speculative positions in a derivative contract or security may be substantially
greater than the derivative contract or security's original cost.
VALUATION RISK. The risk that the market value of an investment falls
substantially below the Portfolio's valuation of the investment. The risk may be
exaggerated in volatile markets.
-34-
<PAGE> 39
INVESTMENT TECHNIQUES
The Portfolios are permitted to use, within limits established by the Fund's
Board, certain other securities and investment practices that may have higher
risks and opportunities associated with them. On the following pages are brief
descriptions of these securities and practices, along with certain of their
associated risks.
HIGHER-RISK SECURITIES AND PRACTICES
<TABLE>
<CAPTION>
SECURITY OR PRACTICE DESCRIPTION RELATED RISKS
<S> <C> <C>
------------------------------- -------------------------------------------- ---------------------------------------
American Depositary Receipts ADRs are receipts typically issued by a Market, currency, information, natural
(ADRs) U.S. financial institution which evidence event, and political risks (i.e., the
ownership of underlying securities of risks of investing in foreign issuers
foreign corporate issuers. Generally, and non-U.S. dollar securities).
ADRs are in registered form and are
designed for trading in U.S. markets.
------------------------------- -------------------------------------------- ---------------------------------------
Borrowing The borrowing of money directly from banks Credit risk and interest rate risks.
or through reverse repurchase agreements.
No Portfolio will borrow money for
leveraging purposes.
------------------------------- -------------------------------------------- ---------------------------------------
Writing Covered Call Option A call option is the right to purchase a Interest rate, market, hedging,
Contracts on Securities security for an agreed-upon price at any correlation, liquidity, credit, and
time prior to an expiration date. By
opportunity risks. writing (selling) a call
option, a Portfolio gives this right to a
buyer for a fee. A "covered" call option
contract is one where the Portfolio owns the
securities subject to the option so long as
the option is outstanding.
------------------------------- -------------------------------------------- ---------------------------------------
Emerging Market Securities Any securities primarily traded on Credit, market, currency, information,
exchanges (or other markets) located in, liquidity, interest rate, valuation,
or issued by companies organized or natural event, and political risks and
primarily operating in, countries with the risks of investing in securities of
emerging economies and/or securities foreign issuers and non-dollar
markets (typically located in Asia, the securities.
Asia-Pacific region, Eastern Europe, Central
and South America and Africa).
------------------------------- -------------------------------------------- ---------------------------------------
European and Global Depositary EDRs and GDRs are receipts evidencing an Market, currency, information, natural
Receipts (EDRs and GDRs) arrangement with a non-U.S. financial event, and political risks (i.e., the
institution similar to that for ADRs and risks of investing in securities of
are designed for use in non-U.S. foreign issuers and non-dollar
securities markets. EDRs and GDRs are not securities).
necessarily quoted in the same currency as
the underlying security.
------------------------------- -------------------------------------------- ---------------------------------------
Securities of Foreign Issuers Securities of (1) companies organized Market, currency, information, interest
outside the United States, (2) companies rate, natural event, and political
whose securities are principally traded risks.
outside the United States, and (3) foreign
governments or agencies and instrumentalities
of foreign governments.
------------------------------- -------------------------------------------- ---------------------------------------
Foreign Money Market Securities Short-term debt obligations issued by Market, currency, information, interest
foreign financial institutions or by rate, natural event, and political
foreign branches of U.S. financial risks.
institutions or foreign issuers.
------------------------------- -------------------------------------------- ---------------------------------------
Forward Foreign Currency Contracts involving the right or Currency, liquidity, credit and leverage
Exchange Contracts obligation to buy or sell a given amount risks. When used for hedging, also has
of foreign currency at a specified price hedging, correlation, and opportunity
and future date. risks.
------------------------------- -------------------------------------------- ---------------------------------------
Illiquid Assets An investment that is difficult or Liquidity, valuation and market risks.
impossible to sell at approximately the
time that a Portfolio would like to sell
it for the price at which the investment
is valued.
------------------------------- -------------------------------------------- ---------------------------------------
Mortgage-Backed Securities Securities backed by pools of mortgages, Credit, extension, prepayment, and
including pass-through certificates and interest rate risks.
collateralized mortgage obligations (CMOs).
------------------------------- -------------------------------------------- ---------------------------------------
</TABLE>
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<PAGE> 40
<TABLE>
<CAPTION>
SECURITY OR PRACTICE DESCRIPTION RELATED RISKS
<S> <C> <C>
---------------------------------- -------------------------------------------- -------------------------------------
Mortgage Dollar Rolls A Portfolio sells securities for delivery Interest rate and prepayment, risks.
in the current month and simultaneously
contracts with the same counterparty to
repurchase similar securities on a
specified future date. The Portfolio may
benefit to the extent of any difference
between the price received for securities
sold and the lower forward price for the
future purchase or fee income plus the
interest earned on the cash proceeds of
the securities sold until the settlement
date of the forward purchase.
---------------------------------- -------------------------------------------- -------------------------------------
Non-Dollar Securities Securities issued, denominated or quoted Currency and liquidity risks.
in foreign currencies.
---------------------------------- -------------------------------------------- -------------------------------------
Lower Quality Debt Instruments Debt securities rated BB+ and below by S&P Credit, market, liquidity, valuation,
or Ba1 and below by Moody's (or by other and information risks, and risks of
rating agencies such as Fitch, or investing in lower-quality debt
comparable unrated securities (see the instruments.
Appendix to the SAI)).
---------------------------------- -------------------------------------------- -------------------------------------
Asset-Backed Securities Securities backed primarily by pools of Credit, extension, prepayment, and
non-mortgage related collateral such as interest rate risks.
credit cards, auto loans, equipment lease
receivables, etc.
---------------------------------- -------------------------------------------- -------------------------------------
Equity Interests in Real Estate Pooled investment vehicles that invest Credit, market, financial, prepayment,
Investment Trusts (REITs) primarily in income producing real estate extension, and interest rate risks.
or real estate related loans or interests.
REITs may include operating companies that
invest in and manage income-producing real
estate or real estate-related businesses.
---------------------------------- -------------------------------------------- -------------------------------------
Repurchase Agreements The purchase of a security that the issuer Credit risk.
agrees to buy back later at the same price
plus interest.
---------------------------------- -------------------------------------------- -------------------------------------
Reverse Repurchase Agreements The lending of short-term debt securities, Leverage and credit risks.
often used to facilitate borrowing.
---------------------------------- -------------------------------------------- -------------------------------------
Securities Lending The lending of securities to financial Credit risk.
institutions, which provide a Portfolio
with cash, or other liquid debt or equity
securities as collateral.
---------------------------------- -------------------------------------------- -------------------------------------
Short-Term Trading Selling a security shortly after purchase Market risk.
or repurchasing it shortly after it was sold
(which can lead to higher turnover and
transaction expenses).
---------------------------------- -------------------------------------------- -------------------------------------
Small Capitalization Companies Smaller companies included in the Wilshire Market and small company risk.
5000 equity universe that rank typically
from number 751 to number 2,500 by market
capitalization.
---------------------------------- -------------------------------------------- -------------------------------------
---------------------------------- -------------------------------------------- -------------------------------------
Mid Capitalization Companies Mid Cap companies include those companies Market and Mid cap Company Risk
whose market capitalization falls within the
range of companies in the S&P 400 Index or
Wilshire Mid Growth Index
---------------------------------- -------------------------------------------- -------------------------------------
Standard & Poor's Depositary SPDRs are securities that represent Market, hedging or speculation,
Receipts ("SPDRs") ownership in a long-term unit investment leverage, correlation, liquidity,
trust that holds a portfolio of common stocks and opportunity.
designed to track the performance of the S&P
500 Index.
---------------------------------- -------------------------------------------- -------------------------------------
Stock Index Futures Contracts An agreement to buy or sell a specific Market, hedging or speculation,
and Options on Futures Contracts amount of a stock index at a particular leverage, correlation, liquidity,
price on a stipulated future date. Unlike an and opportunity.
option, a futures contract obligates the
buyer to buy and the seller to sell the
underlying commodity or financial instrument
at the agreed-upon price and date or to pay
or receive money in an amount equal to such
price. An option on a futures contract gives
the portfolio the right, for a specified
price, to sell or to purchase the underlying
futures contract at any time during the
option period.
---------------------------------- -------------------------------------------- -------------------------------------
When-Issued Securities and The purchase and sale of securities for Market, opportunity, interest rate,
Forward Commitments delivery at a future date; market value credit, and leverage risks.
may change before delivery.
---------------------------------- -------------------------------------------- -------------------------------------
</TABLE>
-36-
<PAGE> 41
HIGHER RISK SECURITIES AND PRACTICES TABLE. The following table shows each
Portfolio's investment limitations with respect to certain securities and
practices that may be somewhat more risky, as a percentage of portfolio assets.
<TABLE>
<CAPTION>
ALL ALL ALL ALL
ALL PRO PRO PRO PRO
PRO LARGE LARGE SMALL SMALL EQUITY
BROAD CAP CAP CAP CAP 500 INTER- MID CAP MONEY
EQUITY GROWTH VALUE GROWTH VALUE INDEX NATIONAL GROWTH BALANCED BOND MARKET
------ ------ ----- ------ ----- ----- -------- ------ -------- ---- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT PRACTICES
Borrowing; Reverse
Repurchase Agreements.. 30 30 30 30 30 30 30 30 30 30 30
-- -- -- -- -- -- -- -- --- --- --
Mortgage Dollar Rolls.. x x x x x x x x # # x
-- -- -- -- -- -- -- -- --- --- --
Repurchase Agreements.. # # # # # # # * # # #
-- -- -- -- -- -- -- -- --- --- --
REITs.................. # # # # * # # # # # #
-- -- -- -- -- -- -- -- --- --- --
Securities Lending..... 30 30 30 30 30 30 30 30 30 30 30
-- -- -- -- -- -- -- -- --- --- --
Short-term Trading..... * * * * * * * * * * *
-- -- -- -- -- -- -- -- --- --- --
Smaller Capitalization
Companies.............. # # # # # # # # # x x
-- -- -- -- -- -- -- -- --- --- --
When-Issued Securities; 10 10 10 10 10 10 10 10 10 10 10
Forward Commitments(1).
-- -- -- -- -- -- -- -- --- --- --
CONVENTIONAL SECURITIES
ADRs, EDRs and GDRs.... * # # # # # * # # x x
-- -- -- -- -- -- -- -- --- --- --
Lower Quality Debt x x x x x x x x 252 252 x
Instruments............
-- -- -- -- -- -- -- -- --- --- --
Securities of Foreign
Issuers and Non-U.S.
Dollar Securities...... 25 25 25 25 25 25 # 25 25 25 25
-- -- -- -- -- -- -- -- --- --- --
Emerging Market
Securities............. # # # # # # # # # # x
-- -- -- -- -- -- -- -- --- --- --
Illiquid Assets(1)..... 15 15 15 15 15 x 15 15 15 15 10
-- -- -- -- -- -- -- -- --- --- --
DERIVATIVE SECURITIES
AND CONTRACTS
Covered Call Option
Contracts 25 25 25 25 25 25 25 25 25 x x
-- -- -- -- -- -- -- -- --- --- --
Forward Foreign
Currency Exchange
Contracts.............. # # # # # # # # # # x
-- -- -- -- -- -- -- -- --- --- --
Mortgage-Backed x x x x x x x x # # x
Securities.............
-- -- -- -- -- -- -- -- --- --- --
Standard & Poor's
Depositary Receipts.... # # # # # # x # # x x
-- -- -- -- -- -- -- -- --- --- --
Stock Index Futures # # # # # # # # # x x
Contracts..............
-- -- -- -- -- -- -- -- --- --- --
</TABLE>
(1) Numbers in this row refer to net, rather than total, assets.
(2) May only invest up to 25% of the value of its corporate debt securities
(other than commercial paper) in such securities.
(3) Excluding ADRs or other U.S. dollar-denominated securities of foreign
issuers.
LEGEND
30 A number indicates the maximum percentage of total assets (but see note 1)
that the Portfolio is permitted to invest in that practice or type of
security. Numbers in this table show allowable usage only; for actual usage,
consult the Portfolio's annual and semi-annual reports.
* A bold check mark means that there is no policy limitation on the
Portfolio's usage of that practice or type of security, and that the
Portfolio may be currently using that practice or investing in that type of
security.
# A thin check mark means that the Portfolio is permitted to use that practice
or invest in that type of security, but is not expected to do so on a
regular basis.
x An "x" mark means that the Portfolio is not permitted to use that practice
or invest in that type of security.
-37-
<PAGE> 42
MANAGEMENT
INVESTMENT ADVISER
Under the terms of the investment advisory agreement, Market Street Investment
Management Company ("MSIM" or the "adviser"), at MSIM's own expense and subject
to the supervision of the Fund's board of trustees, provides each Portfolio with
investment advice and manages, or arranges for the management of, the investment
and reinvestment of a Portfolio's assets. MSIM also performs research services
and evaluates statistical and financial data relevant to a Portfolio's
investment policies, and provides the Fund's Board with regular reports as to a
Portfolio's overall investment plan, schedule of investments and other assets,
and recent purchases and sales. The compensation (as a percentage of each
Portfolio's average daily net assets) paid monthly by the Fund to MSIM is
described in the table below.
ALL PRO BROAD EQUITY, ALL PRO LARGE CAP GROWTH, ALL PRO LARGE CAP VALUE, ALL PRO
SMALL CAP GROWTH, AND ALL PRO SMALL CAP VALUE PORTFOLIOS. As the investment
adviser, MSIM uses a "manager-of-managers" approach for the All Pro Portfolios
through which MSIM allocates each All Pro Portfolio's assets among two or more
"specialist" investment subadvisers. MSIM selects subadvisers for an All Pro
Portfolio based on a continuing quantitative and qualitative evaluation of their
skills and proven abilities in managing assets pursuant to a particular
investment style. Short-term performance is not by itself a significant factor
in selecting or terminating investment subadvisers, and, therefore, MSIM does
not anticipate frequent changes in investment subadvisers. Criteria for
employment of investment subadvisers include, but are not limited to, proven
discipline and thoroughness in pursuit of stated investment objectives, long
term above-average performance, an ability to preserve capital in declining
markets, and the expertise and level of service of the investment subadviser's
staff and organization. Investment subadvisers may have different investment
styles and security selection disciplines.
MSIM selects subadvisers for an All Pro Portfolio that MSIM believes can invest
segments of the Portfolio in a manner such that the Portfolio overall will have
characteristics and performance dynamics similar to the applicable
Wilshire-style benchmark index. To this end, MSIM may select subadvisers that
specialize in some but not necessarily all of the securities comprising the
benchmark index. By using more than one subadviser, MSIM can acquire the
expertise believed to result in optimal performance for the Portfolio.
MSIM monitors the performance of each investment subadviser and of each All Pro
Portfolio. To the extent MSIM deems it appropriate to achieve a Portfolio's
investment objective, MSIM reallocates Portfolio assets among individual
subadvisers or recommends to the Fund that a Portfolio employ or terminate
particular investment subadvisers. The Fund and MSIM may employ or terminate
subadvisers without shareholder approval. In the event that a new subadviser is
employed for a Portfolio segment, investors in that Portfolio will be sent
additional information about the subadviser. Typically a new subadviser will
restructure the investment holdings of the Portfolio segment in accordance with
the new subadviser's investment style and approach. For a new subadviser who
manages 50% of the Portfolio, the result could be a portfolio turnover rate
from 25% to 50% of the Portfolio. Higher portfolio turnover rates cause
increased brokerage expenses and other acquisition costs, which, in turn, can
have a negative impact on the All Pro Portfolio's short-term performance. The
adviser believes that a new subadviser's longer-term performance can more than
compensate for the increased brokerage expenses and other acquisition costs.
MSIM has retained Wilshire Associates Incorporated (Wilshire) as an investment
management consultant to assist MSIM in identifying and evaluating the
performance of potential subadvisers for each All Pro Portfolio. Wilshire does
not participate in the selection of portfolio securities for any Portfolio or in
any way participate in the day-to-day management of the All Pro
-38-
<PAGE> 43
Portfolios or the Fund. Wilshire assists MSIM in gathering data and performing
the quantitative analysis necessary to identify the styles and past performance
of potential subadvisers. Wilshire also assists MSIM in performing similar
ongoing quantitative analysis of the performance of each All Pro Portfolio's
subadvisers and in determining whether changes in a subadviser would be
desirable for a Portfolio. Wilshire is located at 1299 Ocean Avenue, Suite 700,
Santa Monica CA 90401.
On behalf of the All Pro Portfolios, and after consultation with Wilshire, MSIM
has selected each of the subadvisers listed below.
SUBADVISERS TO ALL PRO BROAD EQUITY PORTFOLIO. The assets of All Pro Broad
Equity Growth Portfolio are managed in part by Alliance Capital Management L.P.
("Alliance"), in part by Sanford C. Bernstein & Co., LLC. ("Bernstein"), in part
by Husic Capital Management ("Husic"), and in part by Reams Asset Management
Company, LLC ("Reams").
Alliance. Alliance, an experienced large-capitalization manager with global
resources. Alliance, is located at_1345 Avenue of the Americas, New York,
New York, currently manages approximately $388 billion in assets.
Bernstein. Bernstein has over 30 years of experience in managing large cap
value money for institutional clients and high net worth individuals.
Bernstein, which is located at 767 Fifth Avenue, New York, New York 10153,
currently manages approximately $85 billion in assets.
Husic. Husic, located at 555 California Street, Suite 2900, San Francisco,
California, offers products across the market capitalization spectrum and is
dedicated to growth style management. Husic manages more than $4 billion on
behalf of institutions and individuals.
Reams. Reams, located at 227 Washington Street, Columbus, Indiana, provides
investment management services primarily to institutional clients. Reams
offers primarily small-cap and small- to mid cap value products for its
clients and has approximately $8 billion in assets under management.
SUBADVISERS TO ALL PRO LARGE CAP GROWTH PORTFOLIO. The assets of All Pro Large
Cap Growth Portfolio are managed in part by Alliance and in part by Geewax,
Terker & Co. ("Geewax").
Alliance. Alliance, which is described above, serves as one of All Pro Large
Cap Growth Portfolio's subadvisers.
Geewax. Geewax has expertise in large-capitalization growth equity
management. Geewax is located at 99 Starr St., Phoenixville, Pennsylvania
and provides portfolio management for approximately $8 billion in assets.
SUBADVISERS TO ALL PRO LARGE CAP VALUE PORTFOLIO. The assets of All Pro Large
Cap Value Portfolio are managed in part by Mellon Equity Associates, LLP
("Mellon Equity") and in part by Bernstein.
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<PAGE> 44
Mellon Equity. Mellon Equity, located at 500 Grant Street, Suite 4200,
Pittsburgh, Pennsylvania is a Pennsylvania limited liability partnership.
Mellon Bank, N.A. is the 99% limited partner and MMIP, Inc. is the 1%
general partner of Mellon Equity. MMIP, Inc. is a wholly owned subsidiary of
Mellon Bank, N.A. Mellon Equity manages all of its own research, portfolio
management, marketing and client contact. Mellon Equity manages
approximately $39 billion in assets.
Bernstein. Bernstein, which is described above, serves as another of All Pro
Large Cap Value Portfolio's subadvisers..
SUBADVISERS TO ALL PRO SMALL CAP GROWTH PORTFOLIO. The assets of All Pro Small
Cap Growth Portfolio are managed in part by Husic and in part by Lee Munder
Investments, Ltd.").
Husic. Husic, which is described above, serves as one of All Pro Small Cap
Growth Portfolio's subadvisers.
Lee Munder. Lee Munder is located at 200 Clarendon Street, Boston,
Massachusetts. Lee Munder emphasizes companies that have established a
pattern of business success: above average growth, superior financial
characteristics, superior business positions, and strong management. Lee
Munder has approximately $400 million in assets under management.
SUBADVISERS TO ALL PRO SMALL CAP VALUE PORTFOLIO. The assets of All Pro Small
Cap Value Portfolio are managed in part by Reams and in part by Sterling Capital
Management Company ("Sterling").
Reams. Reams, which is described above, serves as one of All Pro Small Cap
Value Portfolio's subadvisers.
Sterling. Sterling, located at 301 South College Street, Charlotte, North
Carolina, offers a small capitalization approach that focuses on the
intrinsic worth of companies based on their normalized free cash flow.
Sterling has total assets under management of approximately $3.4 billion.
EQUITY 500 INDEX, INTERNATIONAL, MID CAP GROWTH, BALANCED, BOND, AND MONEY
MARKET PORTFOLIOS. MSIM also serves as investment adviser for Equity 500 Index,
International, Mid Cap Growth, Balanced, Bond, and Money Market Portfolios. To
manage the investments of the assets of these Portfolios, MSIM has engaged the
following subadvisers, as listed below, each of whom serves subject to the
general oversight of the Fund's Board of Trustees and subject to the monitoring
and supervision of MSIM.
State Street Global Advisors ("SSgA") has been engaged to manage the investments
of Equity 500 Index Portfolio's assets. SSgA has approximately $738 billion in
assets under management. SSgA is located at One International Place, Boston, MA
02110.
The Boston Company Asset Management, LLC ("TBC") has been engaged to manage the
investments of International Portfolio's assets. TBC is located at One Boston
Place, Boston, MA 02108. TBC has assets under management of approximately $26
billion.
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<PAGE> 45
T. Rowe Price Associates, Inc. ("T. Rowe Price") has been engaged by MSIM to
manage the investments of Mid Cap Growth Portfolio's assets. T. Rowe Price is
located at 100 East Pratt Street, Baltimore, MD. T. Rowe Price has assets under
management of approximately $179 billion.
Fred Alger Management Inc. ("Fred Alger") has been engaged to manage the
investments of Balanced Portfolio's assets. Fred Alger is located at 1 World
Trade Center, New York, New York. Fred Alger has assets under management of
approximately $21 billion.
Western Asset Management Company ("Western Asset") has been engaged to manage
the investments of Bond Portfolio's assets. Western Asset is located at 117 East
Colorado Blvd., Pasadena, CA. Western Asset has assets under management of
approximately $65 billion.
COMPENSATION OF MSIM
<TABLE>
<CAPTION>
FEE PAID IN 1999 MAXIMUM
(AS % OF AVERAGE ANNUAL RATE
DAILY NET (AS % OF AVERAGE
PORTFOLIO ADVISER ASSETS)* DAILY NET ASSETS)
--------- ------- -------- -----------------
<S> <C> <C> <C>
All Pro Broad Equity ... MSIM 0.32%** 0.50%
All Pro Large Cap Growth MSIM 0.70% 0.70%
All Pro Large Cap Value. MSIM 0.70% 0.70%
All Pro Small Cap Growth MSIM 0.90% 0.90%
All Pro Small Cap Value. MSIM 0.90% 0.90%
Equity 500 Index........ MSIM N/A*** 0.24%
International........... MSIM 0.75% 0.75%
Mid Cap Growth.......... MSIM 0.41% 0.50%
Balanced................ MSIM 0.40% 0.40%
Bond.................... MSIM 0.35% 0.35%
Money Market............ MSIM 0.25% 0.25%
</TABLE>
------------
With respect to each of the Portfolios (except the All Pro Portfolios and Money
Market Portfolio) the fee payable by a Portfolio to MSIM is graduated so that
increases in the respective Portfolio's net assets may result in a lower fee and
decreases in the Portfolio's net assets may result in a higher fee. The maximum
annual rate payable to the Adviser is indicated by the right-hand column above.
See "Management of the Fund" in the SAI for further information.
** Fees for 11 months of the 2000 calendar year were paid to the Portfolio's
former investment adviser. *** Portfolio commenced operations on February 2,
2000.
PORTFOLIO MANAGERS
ALL PRO PORTFOLIOS. Assets of each All Pro Portfolio are managed by two or more
subadvisers that have contracted with MSIM to bring a specific asset management
strategy to the management of that Portfolio. Sarah Lange, CFA, President of
MSIM, is the principal person responsible for evaluating the performance of
subadvisers and recommending their employment or termination. Ms. Lange also
serves as Chief Investment Officer and Senior Vice President of Provident Mutual
Life Insurance Company. Ms. Lange has a B.A. in Economics from Dickinson College
and an M.B.A. from Baruch College of the City University of New York. Ms. Lange
is
-41-
<PAGE> 46
a Chartered Financial Analyst and has been with MSIM since 1983. Ms. Lange has
over 20 years investment experience and previous employers include Penn Mutual
Life Insurance Company and Mellon Bank.
-42-
<PAGE> 47
The table below summarizes the background data with respect to each subadviser's
portfolio managers that provide the day-to-day management of the All Pro
Portfolios' assets.
<TABLE>
<S> <C> <C>
ALL PRO BROAD EQUITY AND Alliance Alliance's following professionals have served as portfolio
LARGE CAP GROWTH managers to All Pro Broad Equity and Large Cap Growth Portfolios
PORTFOLIOS: since December 1, 2000: (1) Stephen W. Pelensky, Penn State
University; M.B.A., University of Pennsylvania; joined Alliance
in 1994, began investment experience in 1979; and (2) William D.
Baird, University of Michigan; M.B.A., New York University;
joined Alliance in 1994, began investment experience in 1992.
ALL PRO LARGE CAP GROWTH Geewax: Geewax's following investment professionals have served as
PORTFOLIO portfolio managers to All Pro Large Cap Growth Portfolio
since May 1, 1998: (1) John J. Geewax: B.S., M.B.A., J.D.,
Ph.D. (ABD), University of Pennsylvania; joined Geewax in
1982, began investment experience in 1980; and (2)
Christopher P. Ouimet: B.S., Albright College; M.B.A., St.
Joseph's University; joined Geewax in 1994.
ALL PRO LARGE CAP Mellon Equity: Mellon Equity's following investment professionals have
VALUE PORTFOLIO served as portfolio managers to All Pro Large Cap Value
Portfolio since May 1, 1998: (1) William P. Rydell, CFA:
degree in Economics, Wabash College; M.B.A., University of
Michigan; joined Mellon Equity in 1986, began investment
experience in 1973; (2) Robert A. Wilk, CFA: B.S. in
Management and Electrical Engineering, M.I.T.; M.S. in
Finance, M.I.T.; joined Mellon Equity in 1990, began
investment experience in 1971; (3) John R. O'Toole, CFA:
B.A. in Economics, University of Pennsylvania; M.B.A. in
Finance, University of Chicago; Joined Mellon Equity in
1990, began investment experience in 1979.
ALL PRO BROAD EQUITY AND Bernstein: Bernstein's following investment professionals have served
ALL PRO LARGE CAP VALUE as portfolio managers to All Pro Large Cap Value Portfolio
PORTFOLIOS since April 13, 2000 and to All Pro Broad Equity Portfolio
since December 1, 2000: (1) Marilyn G. Fedak, Chief
Investment Officer and Chairman of the U.S. Equity
Investment Policy Group at Bernstein since 1972; has
managed portfolio investments since 1976; joined Bernstein
in 1984; B.A. Smith College; M.B.A., Harvard Business
School; and (2) Steven Pisarkiewicz, with Bernstein since
1989; Senior Portfolio Manager since 1997; B.S.,
University of Missouri; M.B.A., University of California
at Berkeley.
ALL PRO BROAD EQUITY AND Husic: Husic's following investment professionals have served as
SMALL CAP GROWTH portfolio managers to All Pro Small Cap Growth Portfolio
PORTFOLIOS: since May 1, 1998 and to All Pro Broad Equity Portfolio
since December 1, 2000: Frank J. Husic, CFA: B.S.
Mathematics, Youngstown State University; M.S. in
Industrial Administration, Carnegie Mellon University;
M.A. Economics, University of Pennsylvania; founded Husic
in 1986, began investment experience in 1971; and Ronald
J. Leong, CFA: B.S. with High Honors in Banking and
Finance, San Francisco State University; joined Husic in
1989, began investment experience in 1989.
</TABLE>
-43-
<PAGE> 48
<TABLE>
<S> <C> <C>
ALL PRO SMALL CAP GROWTH Lee Munder: Lee Munder's following investment professionals have served as
PORTFOLIO portfolio managers to All Pro Small Cap Growth Portfolio since
August 24, 2000; and these same professionals, while employed
for another investment adviser, served as portfolio managers for
the Portfolio from May 1, 1998 to August 24, 2000: (1) Nicholas
S. Battelle, CFA: degrees from Duke University and Columbia
University Graduate School of Business; joined SAW in 1982 and
began investment experience in 1970; and (2) Jonathan F. Stone:
undergraduate degree from Brown University and M.B.A. Harvard
University; joined SAW in 1997, began investment experience in
1990.
ALL PRO BROAD EQUITY AND Reams: Reams' following investment professionals have served as
SMALL CAP VALUE portfolio managers to All Pro Small Cap Value Portfolio
PORTFOLIOS: since December 1999 and to All Pro Broad Equity Portfolio
since December 1, 2000: (1) David R. Milroy: B.B.A. and
M.S., University of Wisconsin; joined Reams in 1990 and
began investment experience in 1986; (2) Fred W. Reams:
B.A. and M.A., Western Michigan University; joined Reams
in 1981, and began investment experience in 1967.
ALL PRO SMALL CAP VALUE Sterling: Sterling's following investment professionals have served
PORTFOLIO as portfolio managers to All Pro Small Cap Value Portfolio
since February 2000: (1) David M. Ralston: B.S.B.A.,
Appalachian State University; joined Sterling in 1991; (2)
Brian R. Walton, CFA: B.S., Indiana University; M.B.A.,
University of NC-Chapel Hill; joined Sterling in 1995; and
(3) Eduardo A. Brea, CFA: B.S. University of Florida;
M.B.A., University of South Florida; joined Sterling in
1995.
EQUITY 500 INDEX SSgA Anne Eisenburg, Portfolio Manager and Principal from State
PORTFOLIO Street Global Advisors, uses a sophisticated computer
program.
INTERNATIONAL PORTFOLIO TBC Sandor Cseh, Senior Vice President and Director of
International Equities of TBC, and D. Kirk Henry, Senior
Vice President of TBC, have been the co-managers for
International Portfolio since 1991. Mr. Cseh has over 23
years experience in investment management. Mr. Henry has
over 17 years experience in investment management.
MID CAP GROWTH PORTFOLIO T. Rowe Price Mid Cap Growth Portfolio is managed by an investment
advisory committee chaired by Brian Berghuis, Managing
Director. Mr. Berghuis and Mr. John Wakeman have been the
lead portfolio managers of the Portfolio since December 1,
2000. Mr. Berghuis is a Chartered Financial Analyst, and
has been with T. Rowe Price since 1985. Mr. Wakeman has
been with T. Rowe Price since 1989.
</TABLE>
-44-
<PAGE> 49
<TABLE>
<S> <C> <C>
BALANCED PORTFOLIO Fred Alger Alger's following investment professionals serve as
portfolio managers to the Balanced Portfolio: (1) David D.
Alger: A.B. Harvard University; M.B.A. University of
Michigan; serves as President and Chief Investment
Officer, joined Alger in 1971; (2) Ron Tartaro: B.S. and
M.S. Columbia University; serves as Senior Vice President,
joined Alger in 1990; (3) Steve Thumm: B.S. Hofstra
University; serves as Vice President, joined Alger in 1991.
BOND PORTFOLIO Western Asset Western Asset's following investment professionals have
served as portfolio managers to the Bond Portfolio: (1)
S. Kenneth Leech: B.A. University of Pennsylvania; M.B.A.
Wharton School; serves as Chief Investment Officer, joined
firm in 1991; (2) Stephen A. Walsh, Deputy: B.A. Duke
University; M.B.A. Dartmouth College; serves as Chief
Investment Officer, joined firm in 1990.
MONEY MARKET PORTFOLIO MSIM Dina M. Welch and Kathleen Larrabee have been the persons
responsible for the day-to-day management of the Portfolio
since December 1, 2000. Ms. Welch, Vice President, serves
as the portfolio manager and has 17 years experience
managing fixed income investments, including money market
investments. Ms. Welch has been employed by MSIM since
1991. Ms. Larrabee, Investment Officer, has over 16 years
of investment experience and has been employed by MSIM
since 1999.
</TABLE>
DESCRIPTION OF THE FUND'S SHARES
GENERAL
The Fund issues a separate class of shares of beneficial interest for each
Portfolio. The Fund may establish additional portfolios in the future and
additional classes of shares for the existing or new portfolios.
Based on current federal securities law requirements, the Fund expects that its
insurance company shareholders will offer owners of their variable life
insurance contracts and variable annuity contracts the opportunity to instruct
the shareholders as to how to vote shares allocable to their contracts regarding
certain matters, such as the election of trustees and, absent exemptive relief
from the requirements of section 15 of the Investment Company Act of 1940, the
approval of investment advisory agreements. The Fund currently has section 15
exemptive relief for the All Pro Portfolios and other Portfolios, subject to
certain conditions. Fund shares not attributable to variable life insurance or
annuity contracts, or for which no timely instructions are received by insurance
company shareholders, generally are voted by each insurance company in the same
proportion as the voting instructions that are received by that company for all
contracts of the company participating in each Portfolio. The voting
instructions received from contract holders may be disregarded in certain
circumstances that are described in the prospectuses for the variable contracts.
-45-
<PAGE> 50
DETERMINATION OF NET ASSET VALUE
Each Portfolio's net asset value per share (except Money Market Portfolio) is
normally determined once daily as of the close of regular trading on the New
York Stock Exchange, currently 4:00 p.m. Eastern time, on each day when the New
York Stock Exchange is open for business. Money Market Portfolio's net asset
value normally is determined once daily on each day that both the New York Stock
Exchange and the Federal Reserve Bank of Philadelphia are open for business. The
New York Stock Exchange and the Federal Reserve Bank of Philadelphia are each
scheduled to be open Monday through Friday throughout the year, except for
certain respective federal bank or national and other holidays. Each Portfolio's
net asset value is computed by dividing the sum of the value of the portfolio
securities, cash, and other assets, minus all liabilities, by the total number
of outstanding shares of the Portfolio.
The value of each Portfolio's securities and assets, except those of Money
Market Portfolio and certain short-term debt securities held by other
Portfolios, is determined on the basis of their market values. All of the
securities and assets of Money Market Portfolio and short-term debt securities
having remaining maturities of sixty days or less held by other Portfolios are
valued by the amortized-cost method, which approximates market value.
Investments for which market quotations are not readily available are valued at
their fair value as determined in good faith by, or under authority delegated
by, the Fund's Board of Trustees. A Portfolio may invest in securities primarily
listed on foreign exchanges that trade on days when the Portfolio does not price
its shares. Therefore, the net asset value of the Portfolio's shares may change
on days when shareholders may not be able to redeem Portfolio shares. See
"Determination of Net Asset Value" in the SAI.
OFFER, PURCHASE AND REDEMPTION OF SHARES
Shares of the Fund are not available directly to the public. Currently, shares
of the Fund are sold, without sales charge, at each Portfolio's net asset value
per share, only to variable life insurance and variable annuity separate
accounts of Provident Mutual Life Insurance Company ("Provident Mutual") and
Providentmutual Life and Annuity Company of America ("PLACA"); and to variable
life insurance separate accounts of certain other insurance companies. In the
future, the Fund may offer shares of one or more of the Portfolios (including
new portfolios that might be added to the Fund) to other separate accounts of
Provident Mutual, PLACA, or other insurance companies to support variable life
insurance policies or variable annuity contracts, or shares may also be sold to
other insurance company separate accounts to fund variable life insurance
policies and variable annuity contracts. In the future, shares of certain other
portfolios may be sold to retail customers but, in that event, would not be sold
to insurance company separate accounts to support variable life insurance
contracts and variable annuity contracts. Each Portfolio's price per share is
based on the next daily calculation of net asset value after an order is
received.
Shares of certain Portfolios are sold in a continuous offering and are
authorized to be offered to insurance company separate accounts to support
variable life insurance contracts and variable annuity contracts. Net premiums
or net purchase payments under the respective contract or contracts are placed
in one or more subaccounts of a separate account, and the assets of each
separate account are invested in the shares of the Portfolio corresponding to
that subaccount. A
-46-
<PAGE> 51
separate account purchases and redeems shares of the Portfolios for its
subaccounts at net asset value without sales or redemption charges.
On each day that a Portfolio's net asset value is calculated, a separate account
transmits to the Fund any orders to purchase or redeem shares of the Portfolio
based on the premiums, purchase payments, redemption (surrender) requests, and
transfer requests from contract owners, annuitants, and beneficiaries that have
been processed on that day. A separate account purchases and redeems shares of
each Portfolio at the Portfolio's net asset value per share calculated as of the
same day, although these purchases and redemptions may be executed the next
morning. Money received by the Fund from a separate account for the purchase of
shares of International Portfolio may not be invested by that Portfolio until
the day following the execution of the purchases.
Please refer to the separate prospectus for each separate account and its
related contract for a more detailed description of the procedures whereby a
contract owner, annuitant, or beneficiary may allocate his or her interest in a
separate account to a subaccount using the shares of one of the Portfolios as an
underlying investment medium.
DIVIDENDS, DISTRIBUTIONS, AND TAXES
The Fund intends that each Portfolio will continue to qualify as a regulated
investment company ("RIC") under the Internal Revenue Code of 1986, as amended
(the "Code"), and will meet certain diversification requirements applicable to
mutual funds underlying variable insurance products. For a discussion regarding
what it means to qualify as a RIC and a general discussion concerning some of
the possible tax consequences associated with the operation of the Fund, please
refer to the section entitled "Taxes" in the SAI.
Shares of the current Portfolios are offered only to insurance company separate
accounts. Under the Code, no tax is imposed on an insurance company with respect
to income of a qualifying separate account properly allocable to the value of
eligible variable life insurance or variable annuity contracts. Accordingly, no
gain or loss should be recognized on account of ordinary income or capital-gain
distributions to the Fund's insurance company shareholders or upon the sale or
redemption of shares of the Portfolios. Please refer to the appropriate tax
disclosure in the respective prospectuses for a separate account and its related
contract for more information on the taxation of life insurance companies,
separate accounts, as well as the tax treatment of variable life insurance and
variable annuity contracts and the holders thereof.
For more information about the tax status of the Fund,
see "Taxes" in the SAI.
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<PAGE> 52
APPENDIX A -- TERMS USED IN THIS PROSPECTUS
ADVISER: Any of the investment adviser and subadvisers to the Portfolios.
- Market Street Investment Management Company ("MSIM") (formerly,
Providentmutual Investment Management Company) serves as investment
adviser to the All Pro Portfolios, Equity 500 Index, International, Mid
Cap Growth, Balanced, Bond and Money Market Portfolios.
- The Boston Company Asset Management, LLC ("TBC") serves as investment
subadviser to International Portfolio
- State Street Global Advisors ("SSgA") serves as investment subadviser to
Equity 500 Index Portfolio.
- T. Rowe Price Associates, Inc. ("T. Rowe Price") serves as investment
subadviser to Mid Cap Growth Portfolio.
- Fred Alger Management Inc. ("Fred Alger") serves as investment
subadviser to Balanced Portfolio.
- Western Asset Management Company ("Western Asset") serves as investment
subadviser to Bond Portfolio.
- Several investment subadvisers serve as portfolio managers for the All
Pro Portfolios
- A non-discretionary investment management consultant, Wilshire
Associates Incorporated ("Wilshire"), assists MSIM in identifying and
evaluating investment subadvisers to the All Pro Portfolios.
EQUITY SECURITIES: Equity securities include common stock, preferred stock,
securities convertible or exchangeable into common stock, including convertible
debt securities, convertible preferred stock and warrants or rights to acquire
common stock.
FOREIGN ISSUERS: (1) Companies organized outside the United States, (2)
companies whose securities are principally traded outside of the United States,
and (3) foreign governments and agencies or instrumentalities of foreign
governments.
INVESTMENT-GRADE SECURITIES: Securities rated, at the time of purchase,
"investment grade" by a nationally-recognized statistical rating organization
("Rating Agency") (e.g. Baa3 or higher by Moody's Investors Service ("Moody's")
or BBB -- or higher by Standard & Poor's ("S&P")) or unrated securities that the
Adviser or a subadviser determines to be of comparable quality. (See Appendix A
to the statement of additional information for an explanation of ratings.)
NON-U.S. DOLLAR SECURITIES: Securities denominated or quoted in a foreign
currency.
A-1
<PAGE> 53
PRIMARILY: Where the description of a Portfolio indicates that it invests
primarily in certain types of securities, this means that, under normal
circumstances, it invests at least 65% of its total assets in such securities.
SAI: The Fund's statement of additional information, or SAI, contains additional
information about the Fund and the Portfolios and has been filed with the
Securities and Exchange Commission. Investors may obtain a free copy of the SAI
by contacting the Fund at the toll-free number or address shown on the back
cover page of this prospectus.
A-2
<PAGE> 54
APPENDIX B -- FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand each
Portfolio's (except the Equity 500 Index and All Pro Portfolios) financial
performance for the past 5 years and for each All Pro Portfolio's financial
performance for the periods presented since commencement of operations in 1998.
Certain information reflects financial results for a single Portfolio share. The
total returns in the table represent the rate that an investor would have earned
on an investment in the Fund (assuming reinvestment of all dividends and
distributions). Information for each fiscal period has been audited by
PricewaterhouseCoopers LLP, independent accountants. The accountants' report,
along with the Fund's financial statements, are attached to the SAI, which is
available upon request.
<TABLE>
<CAPTION>
ALL PRO BROAD EQUITY PORTFOLIO(1)
(FOR PERIODS ENDED)
-------------------
01/01/00
TO 01/01/99 01/01/98 01/01/97 01/01/96 01/01/95
06/30/00 TO TO TO TO TO
(UNAUDITED) 12/31/99 12/31/98 12/31/1997(2) 12/31/1996 12/31/1995
----------- -------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period $ 18.94 $ 18.82 $ 19.46 $ 18.10 $ 16.36 $ 14.00
--------- -------- -------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income .12 .27 .27 .35 .46 .47
Net realized and unrealized gain
(loss) on investments .02 .28 1.97 3.49 2.54 3.41
--------- -------- -------- -------- -------- --------
Total from investment operations .14 .55 2.24 3.84 3.00 3.88
--------- -------- -------- -------- -------- --------
LESS DISTRIBUTIONS:
Dividends to shareholders from net
investment income (.26) (.06) (.29) (.38) (.48) (.46)
Dividends to shareholders from net
capital gains (1.19) (.37) (2.59) (2.10) (.78) (1.06)
--------- -------- -------- -------- -------- --------
Total distributions (1.45) (.43) (2.88) (2.48) (1.26) (1.52)
--------- -------- -------- -------- -------- --------
Net asset value, end of period $ 17.63 $ 18.94 $ 18.82 $ 19.46 $ 18.10 $ 16.36
========= ======== ======== ======== ======== ========
Total Returns .78%(3) 2.98% 13.70% 24.32% 19.58% 30.39%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period $(000) 276, 899 302,262 315,299 267,389 198,948 161,899
--------- -------- -------- -------- -------- --------
Ratios of expenses to average net
assets (annualized)(4) .47% .48% .46% .43% .50% .61%
Ratios of net investment income to
average net assets (annualized) 1.34% 1.35% 1.53% 2.01% 2.80% 3.20%
Portfolio turnover rate 22% 46% 30% 108% 72% 61%
</TABLE>
(1) Effective December 1, 2000, "Growth Portfolio" was renamed "All Pro Broad
Equity Portfolio" and the investment adviser was changed from Sentinel
Advisors Company to Market Street Investment Management Company.
(2) On May 1, 1997, the investment adviser was changed from Newbold's Asset
Management, Inc. to Sentinel Advisors Company.
(3) Total returns for periods less than one year are not annualized.
(4) Expense ratios before reimbursement of expenses by an affiliated insurance
company for the period ended June 30, 2000, and the years ended December 31,
1999, 1998, 1997, 1996, and 1995 were as follows: 0.47% (annualized), 0.48%,
0.47%, 0.43%, 0.50%, and 0.61%, respectively.
B-1
<PAGE> 55
<TABLE>
<CAPTION>
ALL PRO LARGE CAP
GROWTH PORTFOLIO
(FOR THE PERIODS ENDED)
-----------------------
01/01/00
TO 01/01/99 05/04/98(1)
06/30/00 TO TO
(UNAUDITED) 12/31/99 12/31/98
----------- -------- --------
<S> <C> <C> <C>
Net asset value, beginning of period........................ $14.77 $11.77 $10.00
------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)............................. .01 (.01) .00
Net realized and unrealized gain (loss) on investments... (.04) 3.01 1.77
------ ------ ------
Total from investment operations....................... (.03) 3.00 1.77
------ ------ ------
LESS DISTRIBUTIONS:
Dividends to shareholders from net investment income..... (.00) (.00) (.00)
Dividends to shareholders from net capital gains......... (.58) (.00) (.00)
------ ------ ------
Total distributions.................................... (.58) (.00) (.00)
------ ------ ------
Net asset value, end of period.............................. $14.16 $14.77 $11.77
====== ====== ======
Total returns.......................................... (.26)% 25.52% 17.70%(2)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period $(000)......................... 50,388 37,961 14,307
Ratios of expenses to average net assets(annualized)(3).. .86% .89% .90%
Ratios of net investment income to average net assets
(annualized)........................................... .09% (.09)% .04%
Portfolio turnover....................................... 28% 83% 64%
</TABLE>
(1) Commencement of operations.
(2) Total returns for periods less than one year are not annualized.
(3) Expense ratio before reimbursement of expenses by an affiliated insurance
company for the period ended June 30, 2000, the year ended December 31,
1999, and the period ended December 31, 1998 were as follows: 0.86%
(annualized), 0.89%, and 0.92% (annualized), respectively.
B-2
<PAGE> 56
<TABLE>
<CAPTION>
ALL PRO LARGE CAP
VALUE PORTFOLIO
(FOR THE PERIODS ENDED)
-----------------------
01/01/00
TO 01/01/99 05/04/98(1)
06/30/00 TO TO
(UNAUDITED) 12/31/99 12/31/98
----------- -------- --------
<S> <C> <C> <C>
Net asset value, beginning of period........................ $ 9.98 $ 9.90 $ 10.00
------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss).............................. .05 .09 .07
Net realized and unrealized gain (loss) on investments.... (.72) .06 (.17)
------- -------
Total from investment operations........................ (.67) .15 (.10)
------- ------- -------
LESS DISTRIBUTIONS:
Dividends to shareholders from net investment income...... (.09) (.07) (.00)
Dividends to shareholders from net capital gains.......... (.00) (.00) (.00)
------- -------
Total distributions..................................... (.09) (.07) (.00)
------- ------- -------
Net asset value, end of period............................... $ $9.22 $ 9.98 $ 9.90
======= ======= =======
Total returns........................................... (6.74)%(2) 1.49% (1.0)%(2)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period $(000).......................... 24,406 24,319 15,616
Ratios of expenses to average net assets (annualized)(3).. .90% .91% .95%
Ratios of net investment income to average net assets
(annualized)............................................ 1.24% 1.07% 1.31%
Portfolio turnover........................................ 63% 64% 39%
</TABLE>
(1) Commencement of operations.
(2) Total returns for periods less than one year are not annualized.
(3) Expense ratios before reimbursement of expenses by an affiliated insurance
company for the period ended June 30, 2000, the year ended December 31,
1999, and the period ended December 31, 1998 were as follows: 0.91%
(annualized), 0.91%, and 0.97% (annualized), respectively.
B-3
<PAGE> 57
<TABLE>
<CAPTION>
ALL PRO SMALL CAP
GROWTH PORTFOLIO
(FOR THE PERIODS ENDED)
-----------------------
01/01/00
TO 01/01/99 05/04/98(1)
06/30/00 TO TO
(UNAUDITED) 12/31/99 12/31/98
----------- -------- --------
<S> <C> <C> <C>
Net asset value, beginning of period........................ $18.83 $ 9.80 $10.00
------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)............................. .04 (.04) (.01)
Net realized and unrealized gain (loss) on investments... 1.76 9.07 (.19)
------ ------ ------
Total from investment operations....................... 1.72 9.03 (.20)
------ ------ ------
LESS DISTRIBUTIONS:
Dividends to shareholders from net investment income..... (.00) (.00) (.00)
Dividends to shareholders from net capital gains......... (.63) (.00) (.00)
------ ------
Total distributions.................................... (.63) (.00) (.00)
------ ------
Net asset value, end of period.............................. $19.92 $18.83 $ 9.80
====== ====== ======
Total returns.......................................... 9.28%(2) 92.14% (2.00%)(2)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period $(000)......................... 84,416 45,200 9,685
Ratios of expenses to average net assets
(annualized)(3)........................................ 1.06% 1.11% 1.24%
Ratios of net investment income to average net assets
(annualized)........................................... (.51)% (.57)% (.14)%
Portfolio turnover....................................... 52% 114% 82%
</TABLE>
(1) Commencement of operations.
(2) Total returns for periods less than one year are not annualized.
(3) Expense ratios before reimbursement of expenses by an affiliated insurance
company for the period ended June 30, 2000, the year ended December 31,
1999, and the period ended December 31, 1998 were as follows: 1.06%
(annualized), 1.11%, and 1.25% (annualized), respectively.
B-4
<PAGE> 58
<TABLE>
<CAPTION>
ALL PRO SMALL CAP
VALUE PORTFOLIO
(FOR THE PERIODS ENDED)
-----------------------
01/01/00
TO 01/01/99 05/04/98(1)
06/30/00 TO TO
(UNAUDITED) 12/31/99 12/31/98
----------- -------- --------
<S> <C> <C> <C>
Net asset value, beginning of period......................... $ 7.57 $ 8.25 $ 10.00
------- ------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss).............................. .03 .02 .02
Net realized and unrealized gain (loss) on investments.... .10 (.68) (1.77)
------- --------
Total from investment operations........................ .13 (.66) (1.75)
------- ------- --------
LESS DISTRIBUTIONS:
Dividends to shareholders from net investment income...... (.02) (.02) (.00)
Dividends to shareholders from net capital gains.......... (.00) (.00) (.00)
------- --------
Total distributions..................................... (.02) (.02) (.00)
------- --------
Net asset value, end of period............................... $ 7.68 $ 7.57 $ 8.25
======= ======= ========
Total returns........................................... (1.80)%(2) (8.05)% (17.50%)(2)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period $(000).......................... 15,012 11,300 8,073
Ratios of expenses to average net assets (annualized)(3).. 1.13% 1.20% 1.28%
Ratios of net investment income to average net assets
(annualized)............................................ .87% .39% .48%
Portfolio turnover........................................ 93% 114% 38%
</TABLE>
(1) Commencement of operations.
(2) Total returns for periods less than one year are not annualized.
(3) Expense ratios before reimbursement of expenses by an affiliated insurance
company for the period ended June 30, 2000, the year ended December 31,
1999, and the period ended December 31, 1998 were as follows: 1.17%
(annualized), 1.21%, and 1.36% (annualized), respectively.
B-5
<PAGE> 59
<TABLE>
<CAPTION>
EQUITY 500 INDEX PORTFOLIO
----------------
02/07/00(1)
TO
06/30/00
(UNAUDITED)
-----------
<S> <C>
Net asset value, beginning of period............................................................. $10.00
------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income............................................................................ .04
Net realized and unrealized gain (loss) on investments........................................... .20
------
Total from investment operations............................................................... .24
------
LESS DISTRIBUTIONS:
Dividends to shareholders from net investment income............................................. (.00)
Dividends to shareholders from net capital gains................................................. (.00)
Total distributions............................................................................ (.00)
Net asset value, end of period................................................................... $10.24
======
Total returns.................................................................................. 2.40%(2)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period $(000)................................................................. 397,052
Ratios of expenses to average net assets (annualized)(3)......................................... .28%
Ratios of net investment income to average net assets (annualized)............................... 1.05%
Portfolio turnover............................................................................... 3%
</TABLE>
(1) Commencement of Operations.
(2) Total returns for periods less than one year are not annualized.
(3) Expense ratio before reimbursement of expense by an affiliated insurance
company for the period ended June 30, 2000 was as follows: 0.38%
(annualized).
B-6
<PAGE> 60
<TABLE>
<CAPTION>
INTERNATIONAL PORTFOLIO
(FOR PERIODS ENDED)
------------------------------------------------------------------------------------
01/01/00
TO 01/01/99 01/01/98 01/01/97 01/01/96 01/01/95
06/30/00 TO TO TO TO TO
(UNAUDITED) 12/31/99 12/31/98 12/31/97(2) 12/31/96 12/31/95
---------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period..................... $16.68 $13.85 $13.61 $13.41 $12.86 $11.63
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income........ .13 .19 .15 .11 .11 .16
Net realized and unrealized gain
(loss) on investments...... (.23) 3.61 1.14 1.08 1.23 1.45
------ ------ ------ ------ ------ ------
Total from investment
operations................. (.10) 3.80 1.29 1.19 1.34 1.61
------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends to shareholders from net
investment income.......... (.19) (.16) (.10) (.11) (.16) (.07)
Dividends to shareholders from net
capital gains.............. (1.91) (.81) (.95) (.88) (.63) (.31)
------ ------ ------ ------ ------
Total distributions........ (2.10) (.97) (1.05) (.99) (.79) (.38)
------ ------ ------ ------ ------ ------
Net asset value, end of
period..................... $14.48 $16.68 $13.85 $13.61 $13.41 $12.86
====== ====== ====== ====== ====== ======
Total Returns.............. (.41%)(1) 29.33% 10.13% 9.66% 10.89% 14.31%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of
period $(000).............. 87,821 88,796 71,363 62,513 50,955 36,642
Ratios of expenses to average net
assets (annualized)(2)...... .94% .98% 1.00% 1.02% 1.05% 1.15%
Ratios of net investment income to
average net assets
(annualized)............... 1.83% 1.32% 1.18% 1.13% 1.08% 1.21%
Portfolio turnover........... 20% 41% 37% 37% 35% 45%
</TABLE>
(1) Total returns for periods less than one year are not annualized.
(2) Expense ratios before reimbursement of expenses by an affiliated insurance
company and fee waivers by the administrator for the period ended June 30,
2000, and the years ended December 31, 1999, 1998, 1997, 1996, and 1995 were
as follows: 0.94% (annualized), 0.98%, 1.00%, 1.02%, 1.05%, and 1.15%,
respectively.
B-7
<PAGE> 61
<TABLE>
<CAPTION>
MID CAP GROWTH PORTFOLIO(1)
(FOR YEAR ENDED)
-----------------------------------------------------------------------------------
01/01/00
TO 01/01/99 01/01/98 01/01/97 01/01/96 01/01/95
06/30/00 TO TO TO TO TO
(UNAUDITED) 12/31/99 12/31/98 12/31/97(2) 12/31/96 1995
----------- -------- -------- -------- -------- ----
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period..................... $21.97 $21.91 $22.19 $18.52 $17.38 $15.45
----------- -------- -------- -------- -------- ----
INCOME FROM INVESTMENT OPERATIONS:
Net investment income........ .06 .11 .11 .17 .17 .20
Net realized and unrealized gain
(loss) on investments...... 4.10 2.89 1.50 3.72 3.03 1.86
----------- -------- -------- -------- -------- ----
Total from investment
operations................ 4.16 3.00 1.61 3.89 3.20 2.06
----------- -------- -------- -------- -------- ----
LESS DISTRIBUTIONS:
Dividends to shareholders from net
investment income.......... (.11) (.11) (.18) (.18) (.19) (.00)
Dividends to shareholders from net
capital gains.............. (1.81) (2.83) (1.71) (.04) (1.87) (.13)
Total distributions........ (1.92) (2.94) (1.89) (.22) (2.06) (.13)
----------- -------- -------- -------- -------- ----
Net asset value, end
of period.................. $24.21 $21.97 $21.91 $22.19 $18.52 $17.38
=========== ======== ======== ======== ======== ====
Total Returns.............. 20.78%(2) 15.96% 7.99% 21.21% 21.00% 13.48%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of
period $(000).............. 77,464 62,513 56,495 48,574 34,098 23,822
Ratios of expenses to average net
assets (annualized)(2)..... .54% .57% .61% .63% .68% .76%
Ratios of net investment income to
average net assets
(annualized)............... .59% .59% .56% .95% 1.14% 1.32%
Portfolio turnover rate...... 43% 46% 41% 37% 47% 89%
</TABLE>
(1) Effective December 1, 2000, "Aggressive Growth Portfolio" was renamed "Mid
Cap Growth Portfolio" and the investment adviser was changed from Sentinel
Advisors Company to Market Street Investment Management Company.
(2) Total returns for periods less than one year are not annualized.
(3) Expense ratios before reimbursement of expenses by an affiliated insurance
company and fee waivers by the administrator for the period ended June 30,
2000, and the years ended December 31, 1999, 1998, 1997, 1996, and 1995 were
as follows: 0.54% (annualized), 0.57%, 0.62%, 0.63%, 0.68%, and 0.76%,
respectively.
B-8
<PAGE> 62
<TABLE>
<CAPTION>
BALANCED PORTFOLIO(1)
(FOR PERIODS ENDED)
-------------------
01/01/00
TO 01/01/99 01/01/98 01/01/97 01/01/96 01/01/95
06/30/00 TO TO TO TO TO
(UNAUDITED) 12/31/99 12/31/98 12/31/97(2) 12/31/96 12/31/95
----------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period........................... $ 16.79 $ 17.68 $ 17.06 $ 14.68 $ 14.19 $ 11.94
------- ------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income.............. .30 .54 .54 .54 .51 .55
Net realized and unrealized gain
(loss) on investments............ .37 (.41) 1.45 2.49 1.07 2.28
------- ------- ------- ------- ------- -------
Total from investment operations... .37 .13 1.99 3.03 1.58 2.83
------- ------- ------- ------- ------- -------
LESS DISTRIBUTIONS:
Dividends to shareholders from net
investment income............... (.54) (.13) (.55) (.53) (.51) (.57)
Dividends to shareholders from net
capital gains................... (.81) (.89) (.82) (.12) (.58) (.01)
------- ------- ------- ------- ------- -------
Total distributions............. (1.35) (1.02) (1.37) (.65) (1.09) (.58)
------- ------- ------- ------- ------- -------
Net asset value, end of period...... $ 15.81 $ 16.79 $ 17.68 $ 17.06 $ 14.68 $ 14.19
======= ======= ======= ======= ======= =======
Total Returns................... 2.41%(2) 0.75% 12.54% 21.23% 11.88% 24.43%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period $(000).. 68,997 73,986 67,805 56,068 43,431 36,002
Ratios of expenses to average net
assets (annualized)(2).......... .55% .57% .57% .58% .60% .66%
Ratios of net investment income to
average net assets (annualized) 3.72% 3.25% 3.22% 3.47% 3.68% 4.22%
Portfolio turnover rate........... 93% 156% 203% 99% 106% 130%
</TABLE>
(1) Effective December 1, 2000, "Managed Portfolio" was renamed "Balanced
Portfolio" and the investment adviser was changed from Sentinel Advisors
Company to Market Street Investment Management Company.
(2) Total returns for periods less than one year are not annualized.
(3) Expense ratios before reimbursement of expenses by an affiliated insurance
company and fee waivers by the administrator for the period ended June 30,
2000, and the years ended December 31, 1999, 1998, 1997, 1996, and 1995 were
as follows: 0.55% (annualized), 0.57%, 0.58%, 0.58%, 0.60%, and 0.66%,
respectively.
B-9
<PAGE> 63
<TABLE>
<CAPTION>
BOND PORTFOLIO(1)
(FOR PERIODS ENDED)
-------------------
01/01/00
TO 01/01/99 01/01/98 01/01/97 01/01/96 01/01/95
06/30/00 TO TO TO TO TO
(UNAUDITED) 12/31/99 12/31/98 12/31/97 12/31/96 12/31/95
----------- -------- -------- ----------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period........................... $10.58 $11.22 $10.98 $10.67 $11.00 $ 9.73
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income.............. .35 .62 .63 .64 .63 .65
Net realized and unrealized gain
(loss) on investments............ (.06) (.99) .25 .33 (.34) 1.27
------ ------ ------ ------ ------ ------
Total from investment operations... .29 (.37) .88 .97 .29 1.92
------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends to shareholders from net
investment income................ (.62) (.15) (.64) (.66) (.62) (.65)
Dividends to shareholders from net
capital gains.................... (.00) (.12) (.00) (.00) (.00) (.00)
------ ------ ------ ------ ------ ------
Total distributions.............. (.62) (.27) (.64) (.66) (.62) (.65)
------ ------ ------ ------ ------ ------
Net asset value, end of period. $10.25 $10.58 $11.22 $10.98 $10.67 $11.00
====== ====== ====== ====== ====== ======
Total Returns.................... 2.95%(2) (3.31)% 8.22% 9.50% 2.86% 20.45%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period $(000)... 36,493 38,182 36,846 23,350 17,087 14,402
Ratios of expenses to average net
assets (annualized)(3)........... .51% .52% .53% .57% 56% .60%
Ratios of net investment income to
average net assets (annualized) 6.75% 6.19% 6.03% 6.24% 6.08% 6.36%
Portfolio turnover................. 107% 202% 163% 105% 133% 206%
</TABLE>
(1) Effective December 1, 2000, Bond Portfolio's investment adviser was changed
from Sentinel Advisors Company to Market Street Investment Management
Company.
(2) Total returns for periods less than one year are not annualized.
(3) Expense ratios before reimbursement of expenses by an affiliated insurance
company and fee waivers by the administrator for the period ended June 30,
2000, and the years ended December 31, 1999, 1998, 1997, 1996, and 1995 were
as follows: 0.51% (annualized), 0.52%, 0.55%, 0.57%, 0.56%, and 0.60%,
respectively.
B-10
<PAGE> 64
<TABLE>
<CAPTION>
MONEY MARKET PORTFOLIO
(FOR PERIODS ENDED)
-------------------
01/01/00
TO 1/01/99 01/01/98 01/01/97 01/01/96 01/01/95
06/30/00 TO TO TO TO TO
(UNAUDITED) 12/31/99 12/31/98 12/31/97 12/31/96(2) 12/31/95
----------- ------- -------- -------- -------- --------
<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............. .03 .05 .05 .05 .05 .05
----- ----- ----- ----- ----- -----
Total from investment operations .03 .05 .05 .05 .05 .05
----- ----- ----- ----- ----- -----
LESS DISTRIBUTIONS:
Dividends to shareholders from net
investment income.............. (.03) (.05) (.05) (.05) (.05) (.05)
----- ----- ----- ----- ----- -----
Total distributions........... (.03) (.05) (.05) (.05) (.05) (.05)
----- ----- ----- ----- ----- -----
Net asset value, end of period.... $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
===== ===== ===== ===== ===== =====
Total Returns................. 2.90%(3) 4.91% 5.29% 5.33% 5.15% 5.61%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period $(000) 100,019 116,887 91,453 64,339 54,197 34,165
Ratios of expenses to average net
assets (annualized)(4)......... .40% .40% .40% .39% .44% .50%
Ratios of net investment income to
average net assets
(annualized)................... 5.76% 4.81% 5.15% 5.21% 5.03% 5.47%
</TABLE>
(1) Effective December 1, 2000, Money Market Portfolio's investment adviser was
changed from Sentinel Advisors Company to Market Street Investment
Management Company.
(2) On may 1, 1996 the investment adviser was changed from Providentmutual
Investment Management Company to Sentinel Advisors Company.
(3) Total returns for periods less than one year are not annualized.
(4) Expense ratios before reimbursement of expenses by an affiliated insurance
company and fee waivers by the administrator for the period ended June 30,
2000, and the years ended December 31, 1999, 1998, 1997, 1996, and 1995 were
as follows: 0.40% (annualized), 0.40%, 0.42%, 0.39%, 0.44%, and 0.50%,
respectively.
B-11
<PAGE> 65
ADDITIONAL INFORMATION ABOUT THE FUND
ANNUAL/SEMI-ANNUAL REPORTS TO SHAREHOLDERS:
Additional information about the Fund's investments is available in the Fund's
annual and semi-annual reports to shareholders. In the Fund's annual report, you
will find a discussion of the market conditions and investment strategies that
significantly affected the Fund's performance during its last fiscal year.
STATEMENT OF ADDITIONAL INFORMATION ("SAI"):
The SAI, which contains additional information about the Fund, has been filed
with the SEC and is incorporated herein by reference. Information about the Fund
(including the SAI) can be reviewed and copied at the SEC's Public Reference
Room in Washington, D.C. Information on the operation of the Public Reference
Room may be obtained by calling the SEC at 1-800-SEC-0330. Reports and other
information about the Fund are available on the SEC's Internet site at
http://www.sec.gov, and copies of this information may be obtained, upon payment
of a duplicating fee, by writing the Public Reference Section of the SEC,
Washington, D.C. 20549-6009.
A free copy of the Fund's SAI and annual and semi-annual reports may be obtained
and further inquiries can be made by calling the Fund at 1-800-688-5177 or by
writing to the Fund at 103 Bellevue Parkway, Wilmington, Delaware 19809.
Investment Company Act File No.: 811-4350
<PAGE> 66
MARKET STREET FUND
103 BELLEVUE PARKWAY
WILMINGTON, DE 19809
1-800-688-5177
STATEMENT OF ADDITIONAL INFORMATION
JANUARY 1, 2001
This Statement of Additional Information ("SAI") is not a prospectus. It should
be read in conjunction with the Market Street Fund prospectus (a "Prospectus"),
also dated January 1, 2001, and retained for future reference.
A copy of the Prospectus to which this Statement of Additional Information
relates is available at no charge by writing to Market Street Fund at the above
address or by calling the telephone number listed above. Terms not defined in
this SAI shall have the same meaning as given them in the Prospectuses.
----------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
General Information and History .............................. 2
Control Persons .............................................. 2
Investment Objectives of the Portfolios ...................... 2
Investment Restrictions ...................................... 3
Investment Techniques and Risks .............................. 4
Portfolio Turnover ........................................... 16
Management of the Fund ....................................... 18
Investment Advisory and Other Services ....................... 19
Portfolio Transactions and Brokerage Allocation .............. 26
Determination of Net Asset Value ............................. 28
Redemption of Shares ......................................... 29
Taxes ........................................................ 30
Capital Stock ................................................ 31
Code of Ethics ............................................... 32
Other Services ............................................... 33
Audited Financial Statements ................................. F-1
Unaudited Financial Statements ............................... F-
Appendix -- Description of Money Market Instruments and
Commercial Paper and Bond Ratings .......................... A-1
</TABLE>
<PAGE> 67
GENERAL INFORMATION AND HISTORY
Market Street Fund, Inc., a Maryland corporation, was incorporated in the state
of Maryland on March 21, 1985 and reorganized into Market Street Fund, a
Delaware business trust created on October 30, 2000, as of January 1, 2001
(together, Market Street Fund, Inc. and Market Street Fund are referred to as
the "Fund"). Each of the Fund's Portfolios is an open-end diversified management
investment company as defined in the Investment Company Act of 1940, as amended
(the "1940 Act"). As a "series" type of mutual fund, the Fund issues separate
series of shares of beneficial interest for each investment portfolio
representing fractional undivided interests in that portfolio. Currently there
are eleven separate investment portfolios (each a "Portfolio," together, the
"Portfolios"). Each current Portfolio, or a new portfolio organized in the
future, may offer one or more classes of shares in a single investment
portfolio. A Portfolio investor is entitled to a pro-rata share of all dividends
and distributions arising from the net income and capital gains on the
investments of that Portfolio, as well as a pro-rata share in any losses of that
Portfolio. None of the Portfolios intends to concentrate its respective
investments in a particular industry or group of industries.
Certain of the Fund's Portfolios (the "Dedicated Portfolios") serve as
investment media for variable life insurance contracts and variable annuity
contracts issued by Provident Mutual Life Insurance Company ("PMLIC"),
Providentmutual Life and Annuity Company of America ("PLACA"), and, from time to
time, certain other insurance companies. Each of PMLIC and PLACA is located at
1000 Chesterbrook Boulevard, Berwyn, PA 19312. Other than the shares sold
directly to PMLIC to seed the All Pro Broad Equity, All Pro Large Cap Growth,
All Pro Large Cap Value, All Pro Small Cap Growth, All Pro Small Cap Value,
Equity 500 Index, International, Mid Cap Growth, Balanced, Bond and Money Market
Portfolios, shares of the Dedicated Portfolios are sold only to separate
accounts of PMLIC and PLACA, and may be sold to separate accounts of other
affiliated or unaffiliated insurance companies, in order to fund variable
annuity contracts or variable life insurance policies.
CONTROL PERSONS
As of the date of this SAI, certain separate accounts supporting variable
contracts issued by PMLIC and PLACA are the only controlling shareholders of the
Portfolios. As the primary holders of the shares of the Dedicated Portfolios,
PMLIC and PLACA together currently are deemed to "control" these Portfolios
under the 1940 Act because each holds in excess of 25% of a Portfolio's
outstanding shares. PMLIC and PLACA will continue in this position with respect
to the Fund's Dedicated Portfolios until other insurance companies, selling
significant amounts of variable life insurance and variable annuities, have made
substantial investments in the Portfolios' shares. For purposes of voting on
matters submitted to shareholders, any person who holds a "controlling" interest
in a fund, or a series thereof, may be able to significantly influence the
outcome of any shareholder vote. However, each of PMLIC and PLACA generally
votes the relevant shares at the shareholders' meetings in accordance with the
timely instructions received from owners of variable contracts having contract
values allocated to the relevant separate accounts.
As of September 30, 2000, no policyholder owned a policy or contract that
individually or in the aggregate had a total interest in any Portfolio of more
than 5%. As of September 30, 2000, the
<PAGE> 68
officers and directors of the Fund as a group did not beneficially own as
policyholders more than a 1% interest in any Portfolio.
INVESTMENT OBJECTIVES OF THE PORTFOLIOS
The investment objective or objectives of each Portfolio are set forth below.
These investment objectives are fundamental and may not be changed unless
authorized for each Portfolio by the vote of a "1940 Act majority" of the
outstanding voting shares of the affected Portfolio, voting separately. Approval
by a "1940 Act majority" of a Portfolio's outstanding voting securities means
the approval by the lesser of (1) more than 50% of the Portfolio's outstanding
voting securities, or (2) 67% or more of the Portfolio's outstanding voting
securities present at a meeting if the holders of more than 50% of the
outstanding voting securities of the Portfolio are present (in person or by
proxy) (hereinafter referred to as a "1940 Act Vote"). Each Portfolio is
diversified as that term is defined under the 1940 Act.
<TABLE>
<CAPTION>
NAME OF PORTFOLIO INVESTMENT OBJECTIVE
----------------- --------------------
<S> <C>
All Pro Broad Equity Portfolio......... Long-term capital appreciation.
All Pro Large Cap Growth Portfolio..... Long-term capital appreciation.
All Pro Large Cap Value Portfolio...... Long-term capital appreciation.
All Pro Small Cap Growth Portfolio..... Long-term capital appreciation.
All Pro Small Cap Value Portfolio...... Long-term capital appreciation.
Equity 500 Index Portfolio............. Long-term capital appreciation.
International Portfolio................ Long-term growth of capital
primarily through investments
in a diversified portfolio of
marketable equity securities
of established foreign issuer
companies.
Mid Cap Growth Portfolio............... A high level of long-term capital
appreciation.
Balanced Portfolio..................... As high a level of long-term total
rate of return as is consistent
with prudent investment risk.
Bond Portfolio......................... A high level of current income
consistent with prudent investment
risk.
Money Market Portfolio................. Maximum current income consistent
with capital preservation and
liquidity.
</TABLE>
INVESTMENT RESTRICTIONS
The following specific restrictions supplement the discussion of the Portfolios'
investment objectives and policies set forth in each Prospectus.
The Fund has adopted the following fundamental restrictions relating to the
investment of assets of the eleven Portfolios. These restrictions may not be
changed except by holders of a 1940 Act majority of outstanding voting shares of
each Portfolio affected. The Fund's fundamental investment restrictions provide
that no Portfolio of the Fund may:
(1) with respect to 75% of the Portfolio's total assets, purchase
securities of an issuer (other than the U.S. Government, its agencies or
instrumentalities), if (a) such purchase would cause more than 5% of the
Portfolio's total assets taken at market value to be invested in the
securities of such issuer, or (b) such purchase would at the time result in
more than 10% of the outstanding voting securities of such issuer being held
by the Portfolio;
(2) invest 25% or more of its total assets in the securities of one or
more issuers conducting their principal business activities in the same
industry (excluding the U.S. Government or any of its agencies or
instrumentalities);
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(3) borrow money, except a Portfolio may (a) borrow from banks (as defined
in the 1940 Act) or through reverse repurchase agreements in amounts up to
30% of its total assets (including the amount borrowed), (b) to the extent
permitted by applicable law, borrow up to an additional 5% of its total
assets for temporary purposes, (c) obtain such short-term credits as may be
necessary for the clearance of purchases and sales of portfolio securities,
and (d) purchase securities on margin to the extent permitted by applicable
law;
(4) make loans, except through (a) the purchase of debt obligations in
accordance with the Portfolio's investment objective and policies, (b)
repurchase agreements with banks, broker-dealers and other financial
institutions, and (c) loans of securities as permitted by applicable law;
(5) underwrite securities issued by others, except to the extent that the
sale of portfolio securities by the Portfolio may be considered an
underwriting;
(6) purchase or deal in real estate, although a Portfolio may purchase and
sell securities that are secured by real estate or interests therein,
securities of real estate investment trusts and mortgage-related securities
and may hold and sell real estate acquired by a Portfolio as a result of the
ownership of securities;
(7) invest in commodities or commodity contracts, except that the
Portfolio may invest in currency and financial instruments and contracts that
are commodities or commodity contracts; or
(8) issue senior securities to the extent such issuance would violate
applicable law.
The following restrictions are not fundamental policies and may be changed
without the approval of the outstanding voting shares of the affected Portfolio.
No Portfolio may:
(1) sell securities short or maintain a short position except for short
sales against the box; or
(2) invest more than 25% of the value of its total assets in the
securities of foreign issuers and non-dollar securities, except this policy
does not apply to the International Portfolio; or
(3) acquire any security which is not readily marketable if more than 15%
of the net assets of the Portfolio (other than the Money Market Portfolio),
and 10% of the net assets of the Money Market Portfolio, taken at market
value, would be invested in such securities; or
(4) enter into a stock index futures contract (by exercise of any option
or otherwise) or acquire any options thereon, if immediately thereafter, the
total of the initial margin deposits required with respect to all open
futures positions, at the time such positions were established, plus the sum
of the premiums paid for all unexpired options on stock index futures
contracts would exceed 5% of the value of its total assets.
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Except for the limitations on borrowing from banks, if the above percentage
restrictions are adhered to at the time of investment, a later increase or
decrease in such percentage resulting from a change in values of securities or
amount of net assets will not be considered a violation of any of the foregoing
restrictions.
INVESTMENT TECHNIQUES AND RISKS
The following disclosure supplements the discussion of the Portfolios'
investment objectives and policies set forth in the Prospectuses.
CASH RESERVES AND TEMPORARY DEFENSIVE POSITIONS
Notwithstanding their investment objective(s), each Portfolio may, for temporary
defensive purposes to preserve capital, invest all or part of its assets in cash
and/or money market instruments of the type in which Money Market Portfolio may
invest. For temporary defensive purposes to preserve capital, the International
Portfolio may hold part or all of its assets in foreign currency or in non-U.S.
dollar short-term debt securities.
BANK OBLIGATIONS
These are certificates of deposit, bankers' acceptances and other short-term
debt obligations. Certificates of deposit are short-term obligations of
commercial banks. A banker's acceptance is a time draft drawn on a commercial
bank by a borrower, usually in connection with international commercial
transactions. Certificates of deposit may have fixed or variable rates.
A Portfolio will not invest in any debt security issued by a commercial bank
unless: (a) the bank has total assets of at least $1 billion, or the equivalent
in other currencies, or, in the case of domestic banks which do not have total
assets of at least $1 billion, the aggregate investment made in any one such
bank is limited to $100,000 and the principal amount of such investment is
insured in full by the Federal Deposit Insurance Corporation, (b) in the case of
U.S. banks, it is a member of the Federal Deposit Insurance Corporation, and (c)
in the case of foreign banks, the security is, in the opinion of MSIM or a
subadviser, of an investment quality comparable to other debt securities that
may be purchased by a Portfolio. These limitations do not prohibit investments
in securities issued by foreign branches of U.S. banks, provided such U.S. banks
meet the foregoing requirements.
FOREIGN BANK OBLIGATIONS
Investments by a Portfolio in foreign bank obligations and obligations of
foreign branches of domestic banks present certain risks, including the impact
of future political and economic developments, the possible imposition of
withholding taxes on interest income, the possible seizure or nationalization of
foreign deposits, the possible establishment of exchange controls and/or the
addition of other foreign governmental restrictions that might affect adversely
the payment of principal and interest on these obligations. In addition, there
may be less publicly available and reliable information about a foreign bank
than about domestic banks owing to different accounting, auditing, reporting and
recordkeeping standards. In view of these risks, MSIM or a subadviser carefully
evaluates these investments on a case-by-case basis.
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<PAGE> 71
SHORT-TERM CORPORATE DEBT SECURITIES
These are outstanding nonconvertible corporate debt securities (e.g., bonds and
debentures) that have one year or less remaining to maturity. Corporate notes
may have fixed, variable or floating rates.
COMMERCIAL PAPER
These are short-term promissory notes issued by corporations primarily to
finance short-term credit needs.
VARIABLE RATE MASTER DEMAND NOTES
These are unsecured instruments that permit the indebtedness thereunder to vary
and provide for periodic adjustments in the interest rate. Because these notes
are direct lending arrangements between a Portfolio and the issuer, the notes
are not normally traded. Although no active secondary market may exist for these
notes, a Portfolio may demand payment of principal and accrued interest at any
time or may resell the note to a third party. While the notes are not typically
rated by credit rating agencies, issuers of variable rate master demand notes
must satisfy MSIM or a subadviser that the same criteria for issuers of
commercial paper are met. In addition, when purchasing variable rate master
demand notes, MSIM or a subadviser considers the earning power, cash flows and
other liquidity ratios of the issuers of the notes and will continuously monitor
their financial status and ability to meet payment on demand. In the event an
issuer of a variable rate master demand note were to default on its payment
obligations, a Portfolio might be unable to dispose of the note because of the
absence of a secondary market and could, for this or other reasons, suffer a
loss to the extent of the default.
REPURCHASE AGREEMENTS
Each Portfolio may invest in repurchase agreements with banks meeting the
qualifications described above in "Bank Obligations" or with dealers in U.S.
Government securities who are reporting dealers on the Federal Reserve Bank of
New York's list of primary reporting dealers or their affiliates. A repurchase
agreement customarily obligates the seller at the time it sells securities to
the Portfolio to repurchase the securities at a mutually agreed upon price and
date (ordinarily a week or less). The total amount received on repurchase is
calculated to exceed the price paid by the Portfolio, reflecting an agreed upon
market rate of interest for the period from the time of the repurchase agreement
to the settlement date, and is not necessarily related to the interest rate on
the underlying securities. The underlying securities are ordinarily U.S.
Government securities, but may consist of other securities in which the
respective Portfolios may otherwise invest. Each Portfolio (except the Money
Market Portfolio) will not invest more than 15%, and the Money Market Portfolio
will not invest more than 10%, of its net assets in repurchase agreements that
have maturities of more than seven days and will not invest in repurchase
agreements with maturities of over 30 days. Repurchase agreements will be fully
collateralized at all times and interest on the underlying security will not be
taken into account for valuation purposes. Under no circumstances will a
Portfolio enter into a repurchase agreement with an adviser or an affiliate of
an adviser.
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<PAGE> 72
The primary risk of investing in repurchase agreements is that, to the extent
that the proceeds from any sale of the underlying securities and other
collateral relating to a repurchase agreement upon a default in the obligation
to repurchase were less than the repurchase price, the Portfolio would suffer a
loss. The Portfolio might also incur disposition costs in connection with
liquidating its collateral and, if bankruptcy proceedings are commenced with
respect to the seller, realization upon the collateral by the Portfolio may be
delayed or limited and a loss (including loss of interest on or principal of the
security) may be incurred if the collateral securing the repurchase agreement
declines in value during the bankruptcy proceedings. To minimize the possibility
of losses due to the default or bankruptcy of the seller, the Fund will conduct
all repurchase agreement transactions with counterparties that meet standards of
credit worthiness [described above] for banks or broker-dealers with which the
Fund enters into repurchase agreements, and the Board may review compliance with
these credit standards by all parties periodically.
ILLIQUID AND RESTRICTED SECURITIES
Equity 500 Index Portfolio does not invest in illiquid assets. However, no
Portfolio (other than Money Market Portfolio) may invest more than 15%, and
Money Market Portfolio may not invest more than 10%, of the value of its net
assets in securities that are not readily marketable. This limit does not apply
to a Portfolio's investment in securities purchased or sold pursuant to Rule
144A under the Securities Act of 1933 that the Board or its delegate has
determined are liquid. This restriction does apply to repurchase agreements
maturing in more than seven days and to securities received as a result of a
corporate reorganization or similar transaction affecting readily marketable
securities already held by the Fund's Portfolios.
Each Portfolio may purchase and sell restricted securities (i.e., those that are
required to be registered under the Securities Act of 1933 before distribution
to the general public), including restricted securities eligible for resale
under Rule 144A. The Board may adopt guidelines and delegate to the adviser or a
subadviser the daily function of determining and monitoring liquidity. The
Board, however, will retain oversight and monitor the determinations.
BORROWING
Each Portfolio may borrow from banks, and other financial institutions that meet
the requirements of the 1940 Act, or through reverse repurchase agreements, in
amounts up to 30% of its total assets (including the amount borrowed). Each
Portfolio also may, to the extent permitted by applicable law, borrow from a
bank up to an additional 5% of its total assets, for temporary purposes, and may
obtain such short-term credits as may be necessary for the clearance of
purchases and sales of portfolio securities and purchase securities on margin to
the extent permitted by applicable law. No Portfolio will borrow money for
leveraging purposes, and no Portfolio will purchase additional securities while
its borrowings exceed the above-specified limits. As required by the 1940 Act,
each Portfolio will maintain continuous asset coverage of at least 300% of the
amount borrowed. In the event that a Portfolio's asset coverage falls below
300%, the Portfolio may be required to sell securities within three days to
reduce the amount of its borrowing and restore the 300% asset coverage. These
sales of securities may occur at a time that is disadvantageous for a Portfolio.
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<PAGE> 73
REVERSE REPURCHASE AGREEMENTS
Each Portfolio may enter into reverse repurchase agreements with banks and
broker-dealers. These agreements have the characteristics of borrowing and
involve the sale of securities held by a Portfolio with an agreement to
repurchase the securities at an agreed upon date and price that reflects a rate
of interest paid for the use of funds for the period. These transactions are
advantageous only if a Portfolio has the opportunity to earn a greater rate of
interest on the cash derived from the transaction than the interest cost of
obtaining that cash. A Portfolio may be unable to realize a rate of return from
the use of the proceeds equal to or greater than the interest expense of the
repurchase agreement. Thus, a Portfolio intends to enter into such agreements
only when it appears advantageous to do so. The use of reverse repurchase
agreements may magnify any increase or decrease in the value of a Portfolio's
investments. The Fund's custodian will maintain, in a segregated account, cash
or fully liquid securities of each Portfolio's investment portfolio, that have a
value equal to or greater than that Portfolio's commitments under reverse
repurchase agreements. The value of securities subject to reverse repurchase
agreements will not exceed 30% of the value of the respective Portfolio's total
assets. Under no circumstances will a Portfolio enter into a reverse repurchase
agreement with an adviser or any affiliate of an adviser.
COVERED CALL OPTION CONTRACTS
The All Pro, Mid Cap Growth, and Balanced Portfolios may engage in certain
limited options strategies. These options strategies are limited to writing
(selling) covered call options that are traded on a domestic securities exchange
with respect to securities in which a Portfolio may invest and entering into
"closing purchase transactions" in order to terminate its obligation as a writer
of a call option prior to the expiration of the option. A Portfolio will not
write a call option if the securities covered by such options exceed 25% of the
Portfolio's total assets at that time. Moreover, in order to maintain
qualification for treatment as a regulated investment company for federal income
tax law purposes, the writing of covered calls may be further limited.
A covered call option gives the purchaser of the option the right to purchase
the underlying security from a Portfolio at a fixed exercise price at any time
prior to the expiration of the option, regardless of the market price of the
security during the option period. As consideration for the option, the
purchaser pays the Portfolio a premium, which the Portfolio retains whether or
not the option is exercised. A covered call option will benefit a Portfolio if,
over the option period, the underlying security declines in value or does not
appreciate above the aggregate value of the exercise price plus the premium.
However, the Portfolio risks the loss of profits if the underlying security
appreciates above the aggregate value of the exercise price and premium.
So long as a Portfolio remains obligated as a writer of a call, the Portfolio
forgoes the opportunity to profit from increases in the market price of the
underlying security above the call price. The Portfolio may close out a covered
call option position by purchasing on the same exchange a call option on the
same security, with the same exercise price and the same expiration date as the
call previously written on that security. Although writing only call options
which are traded on a national securities exchange increases the likelihood of
being able to make
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<PAGE> 74
closing purchase transactions, there is no assurance that the Portfolio will be
able to do so at any particular time or at an acceptable price. Depending upon
the premium paid for the option relative to the premium received on the option
written, the Portfolio may realize a profit or loss on a closing transaction.
The writing of call options could result in increases in the turnover rate of
the Portfolio, especially during periods when market prices of the underlying
securities appreciate, which could result in higher brokerage costs. In
addition, a Portfolio will pay brokerage commissions on both establishing and
closing out an option position.
A Portfolio may write covered call options on particular portfolio securities
when the Portfolio's adviser or subadviser believes that the market value of
those securities will either decline or will not increase over the period
covered by the option. In this manner, the adviser or subadviser hopes that the
option price received (net of transaction costs) may offset any decline in the
market value of the security or otherwise generate income for the Portfolio.
SHORT-TERM TRADING
Other than Money Market Portfolio, the Portfolios may trade in securities for
short-term gains. The adviser or a subadviser may, from time to time, make
short-term investments when the adviser or subadviser believes that such
investments will benefit a Portfolio and may dispose of any investment without
regard to the length of time that the investment has been held. Each of Balanced
and Bond Portfolios intends to use short-term trading of securities if the
Portfolio's adviser or subadviser believes the transactions net of costs
(including any commission) will benefit that Portfolio for the purposes of:
(a) avoiding potential depreciation in the value of a security held in the
investment portfolio where the Portfolio anticipates that the security may
decline in market value as a result of unfavorable earnings trends and/or
unfavorable investment environment; or
(b) increasing the return by taking advantage of yield disparities between
various fixed-income securities in order to realize capital gains or improved
income on the investment portfolio.
INVESTMENT-GRADE SECURITIES
Investment-grade securities include securities rated, at the time of purchase,
"investment grade" by a nationally recognized statistical rating organization (a
"Rating Agency") (e.g., Baa3 or higher by Moody's Investors Service ("Moody's")
or BBB- or higher by Standard & Poor's Corporation ("Standard & Poor's")) or
unrated securities that the adviser determines to be of comparable quality. (See
Appendix A to this SAI for an explanation of ratings.) Unrated securities of a
quality comparable to rated securities may nonetheless trade in the market at a
discount from the price of comparable rated securities.
LOWER QUALITY DEBT INSTRUMENTS
Up to 25% of the total assets of each of Bond and Managed Portfolios may be
invested in lower quality debt instruments (rated "BB+" and below by Standard &
Poor's or "Ba1" and below by Moody's, or another nationally recognized rating
agency, or comparable unrated securities).
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<PAGE> 75
Furthermore, debt instruments with higher ratings, and especially those rated as
investment-grade but not high quality (as described above) may, after purchase
by the Portfolio, have their ratings lowered due to the deterioration of the
issuer's financial position. In the event that the rating of a bond held by the
Portfolio drops below "BBB-" or "Baa3", the decision whether to retain or
dispose of the bond is made on a case-by-case basis. However, in no event will
the amount of assets held in lower quality debt instruments be greater than that
set forth above.
Lower-quality debt instruments entail certain risks. Lower-rated debt
instruments are subject to market risk, are considered, on balance, as
predominantly speculative with respect to capacity to pay interest and repay
principal in accordance with the terms of the obligation, and generally involve
more credit risk than securities in the higher rating categories. In some cases,
these securities may be highly speculative, have poor prospects for reaching
investment-grade standing and be in default. The market values of these
securities tend to reflect market risk and credit risk, as well as individual
corporate developments, to a greater extent than do higher-rated securities,
which react primarily to fluctuations in the general level of interest rates.
These lower-rated securities also tend to be more sensitive to economic
conditions than higher-rated securities. Adverse publicity and investor
perceptions, whether or not based on fundamental analysis, regarding lower-rated
bonds may depress prices and liquidity for such securities. To the extent a
Portfolio invests in these securities, factors adversely affecting the market
value of lower-quality, high-yielding securities adversely affect a Portfolio's
net asset value.
Lower-rated, higher-yielding securities may be issued by corporations in the
growth stage of their development. These securities may also be issued in
connection with a corporate reorganization or as part of a corporate takeover.
Companies that issue these higher-yielding securities are often highly leveraged
and may not have available to them more traditional methods of financing.
Therefore, the risk associated with acquiring the securities of such issuers
generally is greater than is the case with higher-rated securities. For example,
during an economic downturn or a sustained period of rising interest rates,
highly leveraged issuers of high-yielding securities may experience financial
stress. During these periods, these issuers may not have sufficient revenues to
meet their interest payment obligations. The issuer's ability to service its
debt obligations may also be adversely affected by specific corporate
developments, the issuer's inability to meet specific projected business
forecasts, or the unavailability of additional financing. The risk of loss due
to default by the issuer is significantly greater for the holders of
high-yielding securities because these securities are generally unsecured and
are often subordinated to other creditors of the issuers.
A Portfolio may have difficulty disposing of certain high-yielding securities
that have a thin trading market. Because not all dealers maintain markets in all
high-yielding securities, there is no established retail secondary market for
many of these securities, and an adviser or subadviser anticipates that they
could be sold only to a limited number of dealers or institutional investors. To
the extent there is a secondary trading market for high-yielding securities, it
is generally not as liquid as that for higher-rated securities. The lack of a
liquid secondary market for certain securities may make it more difficult to
obtain accurate market quotations for purposes of valuing a Portfolio's assets.
Market quotations are generally available on many high-yield issues only from a
limited number of dealers and may not necessarily represent firm bids of such
dealers or prices for actual sales.
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<PAGE> 76
The market for high-yielding securities has not weathered a major economic
recession, and the impact of such a recession on that market is unknown. It is
likely, however, that any such recession could severely affect the market for
and the values of such securities, as well as the ability of the issuers of such
securities to repay principal and pay interest thereon. Moreover, such a
recession could also increase the incidence of defaults of high-yielding
securities.
A Portfolio may acquire high-yielding securities that are sold without
registration under the federal securities laws and, therefore, carry
restrictions on resale. A Portfolio may incur special costs in disposing of such
securities but will generally incur no costs when the issuer is responsible for
registering the securities.
A Portfolio also may acquire high-yielding securities during an initial
underwriting. Such securities involve special risks because they are new issues.
The Fund has no arrangement with any person concerning the acquisition of such
securities, and an adviser or subadviser carefully reviews the credit and other
characteristics pertinent to such new issues.
From time to time, there have been proposals for legislation designed to limit
the use of certain high-yielding securities in connection with leveraged
buy-outs, mergers and acquisitions, or to limit the deductibility of interest
payments on such securities. Such proposals, if enacted into law, could
generally reduce the market for such securities, could negatively affect the
financial condition of issuers of high-yielding securities by removing or
reducing a source of future financing, and could negatively affect the value of
specific high-yield issues. However, the likelihood of any such legislation or
the effect thereof is uncertain.
STOCK INDEX FUTURES CONTRACTS
Certain Portfolios may purchase and sell futures contracts on various equity
indices, such as the S&P 500 Index. The Portfolios engages in futures
transactions only for bona fide hedging purposes or for purposes of seeking to
increase total returns to the extent permitted by regulations of the Commodity
Futures Trading Commission ("CFTC").
FUTURES CONTRACTS. A futures contract may generally be described as an agreement
between two parties to buy and sell particular financial instruments for an
agreed price during a designated month (or to deliver the final cash settlement
price, in the case of a contract relating to an index or otherwise not calling
for physical delivery at the end of trading in the contract). When the prices of
securities comprising the index are falling, a Portfolio can seek through the
sale of futures contracts to offset a decline in the value of its current
portfolio securities. Conversely, when such equity securities' prices are
rising, the Portfolio, through the purchase of futures contracts, can attempt to
secure better prices than might later be available in the market when it effects
anticipated purchases.
Positions taken in the futures markets are not normally held to maturity but
instead are liquidated through offsetting transactions that may result in a
profit or a loss. While contracts on the S&P 500 Index almost always are
liquidated in this manner, the Equity 500 Index Portfolio may instead make or
take delivery of the underlying securities if it appears economically
advantageous for the Portfolio to do so. A clearing corporation associated with
the exchange on
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<PAGE> 77
which the contracts are traded guarantees that, if still open, the sale or
purchase will be performed on the settlement date.
RISKS. The use of futures contracts as a hedging device involves several risks.
No assurance can be given that a correlation will exist between price movements
in the S&P 500 Index and price movements in the securities that are the subject
of the hedge. Positions in futures contracts may be closed out only on the
exchange or board of trade on which they were entered, and no assurance can be
given that an active market will exist for a particular contract at any
particular time. Losses incurred in hedging transactions and the costs of these
transactions will affect the Equity 500 Index Portfolio's performance.
In connection with Equity 500 Index Portfolio, PMLIC, and its affiliates and
subsidiaries have licensed trademarks for use by the Portfolio. The Product is
not sponsored, endorsed, sold or promoted by Standard & Poor's, a division of
the McGraw-Hill Companies, Inc. ("S&P"). S&P makes no representation or
warranty, express or implied, to the owners of the Product or any member of the
public regarding the advisability of investing in securities generally or in the
Product particularly or the ability of the S&P 500 Index to track general stock
market performance. S&P's only relationship to the Licensee is the licensing of
certain trademarks and trade names of S&P and of the S&P 500 Index, which is
determined composed and calculated by S&P without regard to the Licensee or the
Product. S&P has no obligation to take the needs of the Licensee or the owners
of the Product into consideration in determining, composing or calculating the
S&P 500 Index. S&P is not responsible for and has not participated in the
determination of the prices and amount of the Product or the timing of the
issuance or sale of the Product or in the determination or calculation of the
equation by which the Product is to be converted into cash. S&P has no
obligation or liability in connection with the administration, marketing or
trading of the Product.
S&P does not guarantee the accuracy and/or the completeness of the S&P 500 Index
or any data included therein and S&P shall have no liability for any errors,
omissions, or interruptions therein. S&P makes no warranty, express or implied,
as to results to be obtained by Licensee, owners of the Product, or any other
person or entity from the use of the S&P 500 Index or any data included therein.
S&P makes no express or implied warranties, and expressly disclaims all
warranties of merchantability or fitness for a particular purpose or use with
respect to the S&P 500 Index or any data included therein. Without limiting any
of the foregoing, in no event shall S&P have any liability for any special,
punitive, indirect, or consequential damages (including lost profits), even if
notified of the possibility of such damages.
MORTGAGE-BACKED SECURITIES
Balanced and Bond Portfolios may invest in mortgage-backed securities, which
represent direct or indirect participation in, or are collateralized by and
payable from, mortgage loans secured by real property or instruments derived
from such loans. Mortgage-backed securities include various types of mortgage-
related securities such as government stripped mortgage-related securities,
adjustable rate mortgage-related securities and collateralized mortgage
obligations, which are described below. These assets are securitized through the
use of trusts and special purpose corporations. Payments or distributions of
principal and interest may be guaranteed up to certain amounts and for certain
time periods by letters of credit or pool insurance policies
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issued by a financial institution unaffiliated with the trust or corporation.
Other credit enhancements also may exist.
Mortgage-related securities represent pools of mortgage loans assembled for sale
to investors by various governmental agencies, such as the Government National
Mortgage Association ("GNMA"), by government-related organizations, such as the
Federal National Mortgage Association ("FNMA") and the Federal Home Loan
Mortgage Corporation ("FHLMC"), as well as by private issuers, such as
commercial banks, savings and loan institutions, mortgage bankers and private
mortgage insurance companies.
The average maturity of pass-through pools of mortgage-related securities in
which certain of the Portfolios may invest varies with the maturities of the
underlying mortgage instruments. In addition, a pool's stated maturity may be
shortened by unscheduled payments on the underlying mortgages. Factors affecting
mortgage prepayments include the level of interest rates, general economic and
social conditions, the location of the mortgaged property and age of the
mortgage. Because prepayment rates of individual mortgage pools vary widely, the
average life of a particular pool cannot be predicted accurately.
Mortgage-related securities may be classified as private, governmental or
government-related, depending on the issuer or guarantor. Private
mortgage-related securities represent pass-through pools consisting principally
of conventional residential mortgage loans created by non-governmental issuers,
such as commercial banks, savings and loan associations and private mortgage
insurance companies. Governmental mortgage-related securities are backed by the
full faith and credit of the United States. GNMA, the principal U.S. guarantor
of these securities, is a wholly owned U.S. government corporation within the
Department of Housing and Urban Development. Government-related mortgage-related
securities are not backed by the full faith and credit of the United States.
Issuers include FNMA and FHLMC. FNMA is a government-sponsored enterprise owned
entirely by private stockholders and is subject to general regulation by the
Secretary of Housing and Urban Development. FNMA guarantees the timely payment
of principal and interest of pass-through securities that FNMA has issued. FHLMC
is a corporate instrumentality of the United States, the stock of which is owned
by the Federal Home Loan Banks. Participation certificates representing
interests in mortgages from FHLMC's national portfolio are guaranteed as to the
timely payment of interest and ultimate collection of principal by FHLMC.
Private, governmental or government-related entities may create mortgage loan
pools offering pass-through investments in addition to those described above.
The mortgages underlying these securities may be alternative mortgage
instruments, that is, mortgage instruments whose principal or interest payments
may vary or whose terms to maturity may be shorter than previously customary.
The adviser assesses new types of mortgage related securities as they are
developed and offered to determine their appropriateness for investment by the
relevant Portfolio.
Mortgage-backed securities are often subject to more rapid repayment than their
stated maturity date would indicate as a result of the pass-through of
prepayments of principal on the underlying loans. Prepayments of principal by
mortgagors or mortgage foreclosures shorten the term of the mortgage pool
underlying the mortgage security. The occurrence of mortgage prepayments is a
12
<PAGE> 79
function of several factors including the level of interest rates, general
economic conditions, the location and age of the mortgage and other social and
demographic conditions. A Portfolio's ability to maintain positions in such
securities is affected by the reductions in the principal amount of such
securities resulting from prepayments, and the Portfolio ability to reinvest
prepayments of principal at comparable yield is subject to generally prevailing
interest rates at that time. The values of mortgage-backed securities varies
with changes in market interest rates generally and the differentials in yields
among various kinds of U.S. Government securities and other mortgage-backed
securities. In periods of rising interest rates, the rate of prepayment tends to
decrease, thereby lengthening the average life of a pool of mortgages supporting
a mortgage-backed security. Conversely, in periods of falling interest rates,
the rate of prepayment tends to increase thereby shortening the average life of
such a pool. Because principal prepayments generally occur when interest rates
are declining, an investor, such as a Portfolio, generally has to reinvest the
proceeds of these prepayments at lower interest rates than those at which its
assets were previously invested. Therefore, mortgage-backed securities have less
potential for capital appreciation in periods of falling interest rates than
other income-bearing securities of comparable maturity, although such other
income-bearing securities may have a comparable risk of capital depreciation
during periods of rising interest rates.
GOVERNMENT STRIPPED MORTGAGE-RELATED SECURITIES. Balanced and Bond Portfolios
may invest in government stripped mortgage-related securities. These securities
represent beneficial ownership interests in either period principal
distributions ("principal-only") or interest distributions ("interest-only") on
mortgage-backed certificates issued by GNMA, FHLMC, or FNMA. The certificates
underlying the government stripped mortgage-related securities represent all or
part of the beneficial interest in pools of mortgage loans.
Investing in government stripped mortgage-related securities involves all of the
risks of investing in mortgage-backed securities and U.S. Government securities
generally. In addition, the yields on these instruments are extremely sensitive
to the prepayment experience of the mortgage loans making up the pool underlying
the certificates. If a decline in the level of prevailing current interest rates
results in a rate of principal prepayments that is higher than anticipated when
the certificate was created, then distributions of principal will accelerate
thereby reducing the yield to maturity of interest-only securities from that
certificate and increasing the yield to maturity of principal-only securities
from that certificate. Sufficiently high prepayment rates could result in a
Portfolio not recovering its investment in interest-only securities. Where a
certificate represents only a part of the beneficial interest in a pool, the
sensitivity of that certificate to interest rate fluctuations may be greater
than of other interest-only securities derived from other certificates supported
by the same underlying pool because of the particular character of the principal
portion of the pool that the certificate represents.
Government stripped mortgage-related securities are currently traded over the
counter in a market maintained by several investment banking firms. There is no
certainty that a Portfolio will be able to purchase or sell a government
stripped mortgage-related security at any time in the future. The Portfolios
only purchase such securities if a secondary market exists for the securities at
the time of purchase. Except for certain government stripped mortgage-related
securities derived from fixed rate FHLMC and FNMA certificates meeting certain
liquidity requirements established by the Company's Board, the Portfolios treat
government stripped mortgage-related securities as illiquid investments.
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<PAGE> 80
ADJUSTABLE RATE MORTGAGE-RELATED SECURITIES. Balanced and Bond Portfolios may
invest in adjustable rate mortgage-related securities. Adjustable rate
mortgage-related securities ("ARMs") have interest rates that reset at periodic
intervals. Acquiring ARMs permits a Portfolio to participate in increases in
prevailing current interest rates through periodic adjustments in the coupons of
mortgages underlying the pool on which the certificates are based. These
certificates generally have higher current yield and lower price fluctuation
than is the case with more traditional fixed-income debt securities of
comparable rating and maturity. In addition, when prepayments of principal are
made on the underlying mortgages during periods of rising interest rates, a
Portfolio can reinvest the proceeds of such prepayments at rates higher than
that at which they were previously invested. Mortgages underlying most ARMs,
however, have limits on the allowable annual or lifetime increases that can be
made in the interest rate that the mortgagor pays. Therefore, if current
interest rates rise above such limits over the period of the limitation, a
Portfolio holding an ARM does not benefit from further increases in interest
rates. Moreover, when interest rates are in excess of coupon rates (i.e., the
rates being paid by mortgagors) of the mortgages, ARMs behave more like
fixed-income securities and less like adjustable rate securities. In addition,
during periods of rising interest rates, increases in the coupon rate of
adjustable rate mortgages generally lags current market interest rates slightly,
thereby creating the potential for capital depreciation on such securities.
COLLATERALIZED MORTGAGE OBLIGATIONS. Balanced and Bond Portfolios may invest in
collateralized mortgage obligations ("CMOs"). CMOs are obligations fully
collateralized by a portfolio of mortgages or mortgage-backed securities.
Payments of principal and interest on the mortgages are passed through to the
holders of the CMOs on the same schedule as they are received, although certain
classes of CMOs have priority over other classes with respect to the receipt of
prepayments on the mortgages. Therefore, depending upon the type of CMO in which
a Portfolio invests, the investment is subject to a greater or lesser risk of
prepayment than other types of mortgage-backed securities.
GNMA CERTIFICATES. GNMA Certificates are securities representing part ownership
of a pool of mortgage loans. These loans, which are issued by lenders such as
mortgage bankers, commercial banks and savings and loan associations, are
insured either by the Federal Housing Administration or by the Veterans
Administration. Each pool of mortgage loans is assembled and, after being
approved by GNMA, is sold to investors through broker-dealers in the form of
certificates representing participations in the pool. GNMA guarantees the timely
payment of principal and interest of each mortgage in the pool, and its
guarantee is backed by the full faith and credit of the U.S. Government. GNMA
Certificates differ from bonds in that a borrower pays the principal over the
term of the loan rather than in a lump sum at maturity. GNMA Certificates are
called "pass-through" certificates because both principal and interest payments
on the mortgages (including prepayments) are passed through to the holder of the
certificate.
The average life of GNMA Certificates varies with the maturities of the
underlying mortgages. Prepayments of any mortgages in the pool usually results
in the return of the greatest part of principal invested well before the
maturity of the mortgages in the pool. The volume of such prepayments of
principal in a given pool of mortgages influences the actual yield of the GNMA
Certificate.
14
<PAGE> 81
MORTGAGE DOLLAR ROLLS
Balanced and Bond Portfolios may enter into mortgage "dollar rolls" in which a
Portfolio sells securities for delivery in the current month and simultaneously
contracts with the same counterparty to repurchase substantially similar (same
type, coupon and maturity) but not identical securities on a specified future
date. During the roll period, a Portfolio loses the right to receive principal
and interest paid on the securities sold. However, the Portfolio benefits to the
extent of any difference between the price received for the securities sold and
the lower forward price for the future purchase or fee income plus the interest
earned on the cash proceeds of the securities sold until the settlement date for
the forward purchase. Unless the benefits exceed the income, capital
appreciation and gain or loss due to mortgage prepayments that would have been
realized on the securities sold as part of the mortgage dollar roll, the use of
this technique diminishes the investment performance of the Portfolio.
Successful use of mortgage dollar rolls depends upon the adviser's ability to
predict correctly interest rates and mortgage prepayments. There is no assurance
that mortgage dollar rolls can be successfully employed. A Portfolio will hold
and maintain in a segregated account until the settlement date cash or liquid
assets in an amount equal to the forward purchase price. For financial reporting
and tax purposes, a Portfolio treats mortgage dollar rolls as two separate
transactions; one involving the purchase of a security and a separate
transaction involving a sale. Neither Portfolio currently intends to enter into
mortgage dollar rolls that are accounted for as a financing.
SPDRS
All of the Portfolios, except Bond and Money Market Portfolios, may invest in
S&P's Depositary Receipts or "SPDRs." SPDRs are securities that represent
ownership in a long-term unit investment trust that holds a portfolio of common
stocks designed to track the performance of an S&P Index. A Portfolio investing
in a SPDR would be entitled to receive proportionate quarterly cash
distributions corresponding to the dividends that accrue to the stocks in the
S&P Index's underlying investment portfolio, less trust expenses.
FOREIGN SECURITIES
Each Portfolio except International and Money Market Portfolios may invest up to
25% of the Portfolio's assets in foreign securities, which includes ADRs, EDRs,
and GDRs as well as emerging market securities. International Portfolio may
invest up to 100% of the Portfolios assets in these foreign securities. Money
Market Portfolio investments in U.S. dollar-denominated securities, as defined
in rule 2a-7 of the 1940 Act, subject to the Portfolio's credit, maturity and
diversification policies.
FOREIGN SECURITIES GENERALLY. Investments in the securities of foreign issuers
or investments in non-U.S. dollar securities may offer potential benefits not
available from investments solely in securities of domestic issuers or U.S.
dollar-denominated securities. Such benefits may include the opportunity to
invest in foreign issuers that appear to offer better opportunity for long-term
capital appreciation or current earnings than investments in domestic issuers,
the opportunity to invest in foreign countries with economic policies or
business cycles different from those of the United States, and the opportunity
to reduce fluctuations in portfolio value by taking advantage of foreign
securities markets that do not necessarily move in a manner parallel to U.S.
markets.
15
<PAGE> 82
Investing in non-U.S. dollar securities or in the securities of foreign issuers
involves significant risks that are not typically associated with investing in
U.S. dollar-denominated securities or in securities of domestic issuers. Such
investments may be affected by changes in currency rates, changes in foreign or
U.S. laws, or restrictions applicable to such investments and in exchange
control regulations. For example, a decline in the currency exchange rate would
reduce the value of certain portfolio investments. In addition, if the exchange
rate for the currency in which a Portfolio receives interest payments declines
against the U.S. dollar before such interest is paid as dividends to
shareholders, the Portfolio may have to sell portfolio securities to obtain
sufficient cash to pay such dividends. A Portfolio may purchase or sell foreign
currency and forward foreign currency exchange contracts to hedge its foreign
currency exposure; however, these techniques also entail certain risks. Some
foreign stock markets may have substantially less volume than, for example, the
New York Stock Exchange, and securities of some foreign issuers may be less
liquid than securities of comparable domestic issuers. Commissions and dealer
mark-ups on transactions in foreign investments may be higher than for similar
transactions in the United States. In addition, clearance and settlement
procedures may be different in foreign countries, and, in certain markets and on
certain occasions, such procedures have been unable to keep pace with the volume
of securities transactions, thus making it difficult to conduct such
transactions. For example, delays in settlement could result in temporary
periods when a portion of a Portfolio's assets are uninvested and no return is
earned thereon. The inability of a Portfolio to make intended investments due to
settlement problems could cause it to miss attractive investment opportunities.
Inability to dispose of portfolio securities or other investments due to
settlement problems could result either in losses to a Portfolio due to
subsequent declines in value of the portfolio investment or, if the Portfolio
has entered into a contract to sell the investment, could result in possible
liability to the purchaser.
Foreign issuers are not generally subject to uniform accounting, auditing and
financial reporting standards comparable to those applicable to domestic
companies. There may be less publicly available information about a foreign
issuer than about a domestic one. In addition, there is generally less
government regulation of stock exchanges, brokers, and listed and unlisted
issuers in foreign countries than in the United States. Furthermore, with
respect to certain foreign countries, there is a possibility of expropriation or
confiscatory taxation, imposition of withholding taxes on dividend or interest
payments, limitations on the removal of funds or other assets of a Portfolio, or
political or social instability or diplomatic developments that could affect
investments in those countries. Individual foreign economies also may differ
favorably or unfavorably from the United States economy in such respects as
growth of gross national product, rate of inflation, capital reinvestment,
resource self-sufficiency and balance of payments position.
INVESTMENTS IN ADRs, EDRs AND GDRs. Many securities of foreign issuers are
represented by ADRs, EDRs and GDRs. The Portfolios, except Money Market
Portfolio as described above, may invest in ADRs, EDRs and GDRs. ADRs represent
the right to receive securities of foreign issuers deposited in a domestic bank
or a foreign correspondent bank. Prices of ADRs are quoted in U.S. dollars, and
ADRs are traded in the United States on exchanges or over-the-counter and are
sponsored and issued by domestic banks. ADRs do not eliminate all the risk
inherent in investing in the securities of foreign issuers. To the extent that a
Portfolio acquires ADRs through banks that have no contractual relationship with
the foreign issuer of the security
16
<PAGE> 83
underlying the ADR to issue and service these ADRs, there may be an increased
possibility that the Portfolio would not become aware of and be able to respond
to corporate actions such as stock splits or rights offerings involving the
foreign issuer in a timely manner. In addition, the lack of information may
result in inefficiencies in the valuation of such instruments. However, by
investing in ADRs rather than directly in the stock of foreign issuers, a
Portfolio will avoid currency risks during the settlement period for either
purchases or sales. In general, there is a large, liquid market in the United
States for ADRs quoted on a national securities exchange or the National
Association of Securities Dealers national market system. The information
available for ADRs is subject to the accounting, auditing and financial
reporting standards of the domestic market or exchange on which they are traded,
which standards are more uniform and more exacting than those to which many
foreign issuers may be subject.
EDRs and GDRs are receipts evidencing an arrangement with a non-U.S. bank
similar to that for ADRs and are designed for use in non-U.S. securities
markets. EDRs and GDRs are not necessarily quoted in the same currency as the
underlying security.
INVESTMENTS IN EMERGING MARKETS. All Portfolios, except Money Market Portfolio,
may invest in securities of issuers located in countries with emerging economies
and or securities markets. These countries are located in the Asia-Pacific
region, Eastern Europe, Central and South America and Africa. Political and
economic structures in many of these countries may be undergoing significant
evolution and rapid development, and such countries may lack the social,
political and economic stability characteristic of more developed countries.
Certain of these countries may have in the past failed to recognize private
property rights and have at times nationalized or expropriated the assets of
private companies. As a result, the risks of foreign investment, generally
including the risks of nationalization or expropriation of assets, may be
heightened. In addition, unanticipated political or social developments may
affect the values of a Portfolio's investments in those countries and the
availability to the Portfolio of additional investments in those countries.
The small size and inexperience of the securities markets in certain of these
countries and the limited volume of trading in securities in those countries may
also make a Portfolio's investments in such countries illiquid and more volatile
than investments in Japan or most Western European countries. In that event, the
Portfolio may be required to establish special custody or other arrangements
before making certain investments in those countries. There may be little
financial or accounting information available with respect to issuers located in
certain of such countries, and it may be difficult as a result to assess the
value or prospects of an investment in such issuers. The laws of some foreign
countries may limit the ability of International or Mid Cap Growth Portfolio to
invest in securities of certain issuers located in those countries.
FOREIGN CURRENCY TRANSACTIONS
To the extent that a Portfolio invests in foreign securities, the value of its
assets as measured in United States dollars may be affected favorably or
unfavorably by changes in foreign currency exchange rates and exchange control
regulations, and the Portfolio may incur costs in connection with conversions
between various currencies.
17
<PAGE> 84
A Portfolio will conduct foreign currency exchange transactions either on a spot
(i.e., cash) basis at the spot rate prevailing in the foreign currency exchange
market or through the use of forward contracts to purchase or sell foreign
currencies. A forward foreign currency exchange contract involves an obligation
by a Portfolio to purchase or sell a specific amount of currency at a future
date, which may be any fixed number of days, from the date of the contract
agreed upon by the parties, at a price set at the time of the contract. These
contracts are transferable in the interbank market conducted directly between
currency traders (usually large commercial banks) and their customers. A forward
contract generally has no deposit requirements, and no commissions are charged
at any stage for trades. Neither type of foreign currency transaction will
eliminate fluctuations in the prices of a Portfolio's securities or prevent loss
if the prices of such securities should decline.
A Portfolio may enter into forward foreign currency exchange contracts only
under two circumstances. First, when a Portfolio enters into a contract for the
purchase or sale of a security denominated in a foreign currency, it may desire
to "lock in" the U.S. dollar price of the security. A Portfolio will then enter
into a forward contract for the purchase or sale, for a fixed amount of dollars,
of the amount of foreign currency involved in the underlying securities
transactions. In this manner a Portfolio will be better able to protect itself
against a possible loss resulting from an adverse change in the relationship
between the U.S. dollar and the subject foreign currency during the period
between the date the securities are purchased or sold and the date on which
payment is made or received.
Second, when the adviser believes that the currency of a particular foreign
country may suffer a substantial decline against the U.S. dollar, it may enter
into a forward contract to sell, for a fixed amount of dollars, the amount of
foreign currency approximating the value of some or all of a Portfolio's
securities denominated in such foreign currency. The precise matching of the
forward contract amounts and the value of the securities involved is not
generally possible since the future value of such securities in foreign
currencies changes as a consequence of market movements in the value of those
securities between the date the forward contract is entered into and the date it
matures. The projection of short-term currency market movement is extremely
difficult, and the successful execution of a short-term hedging strategy is
highly uncertain. No Portfolio intends to enter into such forward contracts
under this second circumstance on a regular or continuous basis. No Portfolio
will enter into such forward contracts or maintain a net exposure to such
contracts when the consummation of the contracts would obligate a Portfolio to
deliver an amount of foreign currency in excess of the value of the Portfolio's
securities or other assets denominated in that currency. The adviser and
subadvisers believe that it is important to have the flexibility to enter into
these forward contracts when the adviser or a subadviser determines that to do
so is in the best interests of the respective Portfolio. The Fund's custodian
bank segregates cash or equity or debt securities in an amount not less than the
value of each Portfolio's total assets committed to forward foreign currency
exchange contracts entered into under this second type of transaction. If the
value of the securities segregated declines, additional cash or securities are
added so that the segregated amount is not less than the amount of the
respective Portfolio's commitments with respect to such contracts. Under normal
circumstances, a Portfolio's adviser or subadviser expects that any appreciation
(depreciation) on such forward exchange contracts will be approximately offset
by the (depreciation) appreciation in translation of the underlying foreign
investment arising from fluctuations in foreign currency exchange rates.
18
<PAGE> 85
A Portfolio recognizes the unrealized appreciation or depreciation from the
fluctuation in a foreign currency forward contract as an increase or decrease in
the Portfolio's net assets on a daily basis, thereby providing an appropriate
measure of the Portfolio's financial position and changes in financial position.
REAL ESTATE INVESTMENT TRUSTS
The Portfolios may invest in shares of real estate investment trusts ("REITs").
REITs are pooled investment vehicles that invest primarily in income producing
real estate or real estate related loans or interests. REITs generally are
classified as equity REITs, mortgage REITs or a combination of equity and
mortgage REITs. Equity REITs invest the majority of their assets directly in
real property and derive income primarily from the collection of rents. Equity
REITs can also realize capital gains by selling properties that have appreciated
in value. Mortgage REITs invest the majority of their assets in real estate
mortgages and derive income from the collection of interest payments. REITs are
not taxed on income distributed to shareholders provided they comply with
several requirements of the Code. A Portfolio will indirectly bear its
proportionate share of any expenses paid by REITs in which it invests in
addition to the expenses paid by the Portfolio.
Investing in REITs involves certain unique risks. Equity REITs may be affected
by changes in the value of the underlying property owned by such REITs, while
mortgage REITs may be affected by the quality of any credit extended. REITs are
dependent upon management skills, are not diversified (except to the extent the
Code requires), and are subject to the risks of financing projects. REITs are
subject to heavy cash flow dependency, default by borrowers, self-liquidation,
and the possibilities of failing to qualify for the exemption from tax for
distributed income under the Code and failing to maintain their exemptions from
the 1940 Act. REITs (especially mortgage REITs) are also subject to interest
rate risk.
WHEN-ISSUED SECURITIES AND DELAYED DELIVERY SECURITIES
Each Portfolio may purchase securities on a when-issued or delayed delivery
basis in an amount up to 10% of the Portfolio's net assets. When-issued
securities transactions arise when securities are purchased by a Portfolio with
payment and delivery taking place on a future date determined at the time of
entering into the transaction (transaction date) in order to secure what is
considered to be an advantageous price and yield to the Portfolio on the
transaction date. Once a Portfolio commits to purchase securities on a
when-issued or delayed delivery basis, it records the transaction and thereafter
reflects the daily value of such securities in determining its net asset value.
Although a Portfolio generally purchases when-issued securities with the
intention of acquiring those securities for the investment portfolio, the
Portfolio may dispose of a when-issued security prior to settlement if the
adviser or subadviser deems it advantageous to do so. For all when-issued
securities transactions, the Fund's custodian will hold and maintain in a
segregated account until the settlement date, cash or fully liquid securities of
the Portfolio with a market value, determined daily, equal to or greater than
such commitments. If a Portfolio elects to dispose of the right to acquire a
when-issued security prior to its acquisition, it could experience a gain or
loss on the security due to market fluctuation.
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<PAGE> 86
PORTFOLIO TURNOVER
Each Portfolio has a different expected annual rate of portfolio turnover, which
is calculated by dividing the lesser of purchases or sales of Portfolio
securities during the fiscal year by the monthly average of the value of the
Portfolio's securities (excluding from the computation all securities, including
options, with maturities at the time of acquisition of one year or less).
Turnover rates may vary greatly from year to year as well as within a particular
year and may also be affected by cash requirements for redemptions of each
Portfolio's shares and by requirements which enable the Fund to receive certain
favorable tax treatments. Portfolio turnover rates generally, of course, depend
in large part on the level of purchases and redemptions of shares of each
Portfolio. If a Portfolio's portfolio turnover rate exceeds 100%, the result may
be correspondingly increased brokerage expenses and other acquisition costs to
that Portfolio (see "Portfolio Transactions and Brokerage Allocation."). Any
time a Portfolio's subadviser changes, the Portfolio may expect to have up to
100% portfolio turnover in the next several weeks as the new subadviser
restructures some or all of the investment portfolio in accordance with the
subadviser's investment style and strategies. However, because portfolio
turnover rate is not a limiting factor, particular holdings may be sold at any
time, if investment judgment or portfolio operations make a sale advisable.
No portfolio turnover rate is calculated for the Money Market Portfolio due to
the short maturities of the instruments the Portfolio purchases. Portfolio
turnover does not affect the income or net asset value of the Money Market
Portfolio because brokerage commissions are rarely if ever charged on the
purchase or sale of money market instruments.
The annual portfolio turnover rates for 1999, 1998, and 1997 (as applicable) for
each Portfolio (except Money Market Portfolio) is set forth below. There are no
portfolio turnover data for certain years for the All Pro Portfolios (except All
Pro Broad Equity Portfolio) and Equity 500 Index Portfolio because these All Pro
Portfolios commenced operations in 1998 and Equity 500 Index commenced
operations in 1999.
<TABLE>
<CAPTION>
NAME OF PORTFOLIO 1999 1998 1997
----------------- ---- ---- ----
<S> <C> <C> <C>
All Pro Broad Equity (formerly, Growth) ..... 46% 30% 108%
All Pro Large Cap Growth Portfolio* ......... 83% 64% N/A
All Pro Large Cap Value Portfolio* .......... 64% 39% N/A
All Pro Small Cap Growth Portfolio* ......... 114% 82% N/A
All Pro Small Cap Value Portfolio* .......... 114% 38% N/A
International Portfolio ..................... 41% 37% 37%
Equity 500 Index Portfolio** ................ N/A N/A N/A
Aggressive Growth Portfolio ................. 46% 41% 37%
Managed (now )Balanced Portfolio ............ 156% 203% 99%
Bond Portfolio .............................. 202% 163% 105%
</TABLE>
------------
* These All Pro Portfolios commenced operations on May 4, 1998.
** The Equity 500 Index Portfolio commenced operations on February 7, 2000.
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<PAGE> 87
MANAGEMENT OF THE FUND
BOARD AND OFFICERS
The Fund's Board (board of trustees) is responsible for the overall
administration of the Fund's affairs including deciding matters of general
policy and reviewing certain actions of the adviser and subadvisers, custodian,
administration, and accounting and administrative services providers.
The Fund's trustees and officers, their principal occupations for the last five
years, and compensation that each trustee and officer received from the Fund in
1999 are set forth below. Unless otherwise noted, the address of each trustee
and officer is 103 Bellevue Parkway, Wilmington, DE 19809.
<TABLE>
<CAPTION>
NAME, AGE, AND ADDRESSES OF AGGREGATE
TRUSTEES AND OFFICERS POSITION HELD PRINCIPAL OCCUPATION COMPENSATION
OF THE FUND WITH THE FUND DURING PAST 5 YEARS FROM THE FUND
---------------------------- ----------------- ------------------- -------------
<S> <C> <C> <C>
Mr. Robert W. Kloss*..... Trustee and Director since April 22, 1998; $0
Age 51 Chairman of the President and Chief Executive Officer
1000 Chesterbrook Boulevard Board ("CEO") of PMLIC since November 1,
Berwyn, Pennsylvania 19312 1994; 1984-1994, President and CEO of
Covenant Life Insurance Company
Dr. Alan Gart............ Trustee Director since March 21, 1985; $15,000
Age 60 1982-Present, President of Alan Gart,
978 Warfield Lane Inc. (a consulting firm);
Huntingdon Valley, PA 19006 2000-Present, Professor of Finance,
Indiana University of Pennsylvania;
1992-1999, Professor, Nova
Southeastern University; 1989-1992,
Professor, Southeastern Massachusetts
University; 1985-1989, Professor of
Finance, Lehman College of the City
University of New York
Dr. A. Gilbert Heebner... Trustee Director since May 12, 1989; $15,000
Age 73 1999-Present, Professor Emeritus of
2 Etienne, Arbordeau Economics, Eastern College;
Devon, PA 19333 1987-1998, Distinguished Professor of
Economics, Eastern College;
1952-1987, Executive Vice
President and Chief Economist
of CoreStates Financial Corp.
Mr. Leo Slack............ Trustee Director since February 11, 1998; $15,000
Age 66 Retired since 1996; 1964-1996 Vice
4700 White Tail Lane President, Combustion Engineers
Sarasota, FL 34238 Corporation
Mr. Edward S. Stouch..... Trustee Director since December 12, 1985; $15,000
Age 83 Retired since 1983; 1969-1983, Vice
216 Grandview Rd. President and Head of Personal Trust
Investment Department, Trust Division
of Provident National Bank
Ms. Rosanne Gatta........ President 1993-Present, Vice President and $0
Age 45 Treasurer of PMLIC
Ms. Sarah C. Lange....... Vice President March 2000-Present, Chief Investment $0
Age 44 Officer and Senior Vice President of
PMLIC; 1983-February 2000, Vice
President Investments of PMLIC
Mr. James D. Kestner..... Vice President 1994-Present, Vice President $0
Age 52 Investments of PMLIC; 1975- 1994,
Vice President, Investments of
Covenant Life Insurance Company
</TABLE>
21
<PAGE> 88
<TABLE>
<CAPTION>
NAME, AGE, AND ADDRESSES OF AGGREGATE
TRUSTEES AND OFFICERS POSITION HELD PRINCIPAL OCCUPATION COMPENSATION
OF THE FUND WITH THE FUND DURING PAST 5 YEARS FROM THE FUND
----------- ------------- ------------------- -------------
<S> <C> <C> <C>
Financial Officer December 1990-Present, Accountant, $0
Mr. Todd R. Miller PMLIC
Age 43
Mr. Anthony T. Giampietro Treasurer 1990-Present, Assistant Treasurer of $0
Age 41 PMLIC
James Bernstein, Esq..... Compliance October 1999-Present, Assistant $0
Age 38 Officer and General Counsel, PMLIC; 1996-May
1000 Chesterbrook Boulevard Secretary 1999, Partner, Jorden Burt; May
Berwyn, Pennsylvania 1992-1995, Associate, Jorden Burt
19312-1181
</TABLE>
------------
* "interested person" of the Fund for 1940 Act purposes.
As of the date of this SAI, certain Fund officers and trustees own either
variable annuity contracts or variable life insurance policies that are
supported by separate accounts of PMLIC and, in that sense, have an interest in
shares of the Fund. The officers and trustees as a group own less than 1% of the
outstanding shares of the Fund collectively and of each Portfolio individually.
Trustees who are not officers or employees of PMLIC or the adviser or a
subadviser are paid a fee plus actual out-of-pocket expenses by the Fund for
each Board meeting attended. Total fees incurred for 1999 were $60,000. Fund
Trustees and officers receive no benefits from the Fund upon retirement, and the
Fund accrues no expenses for pension or retirement benefits.
INVESTMENT ADVISORY AND OTHER SERVICES
GENERAL INFORMATION AND HISTORY
The Fund's investment adviser is Market Street Investment Management Company
("MSIM". Prior to January 1, 2001, Sentinel Advisors Company ("SAC") served as
the investment adviser for All Pro Broad Equity (formerly, "Growth"), Mid Cap
Growth (formerly, "Aggressive Growth"), Balanced (formerly, "Managed"), Bond,
and Money Market Portfolios. Prior to May 1, 1997, the investment adviser for
the All Pro Broad Equity Portfolio was Newbold's Asset Management, Inc. ("NAM").
On behalf of each Portfolio set forth below, MSIM has engaged one or more
respective investment advisers to serve as a subadviser to the Portfolio. Each
subadviser's name is set forth below opposite the relevant Portfolio.
<TABLE>
<CAPTION>
NAME OF PORTFOLIO NAME OF SUBADVISER
----------------- ------------------
<S> <C>
All Pro Broad Equity Portfolio ........ Alliance Capital Management Co. ("Alliance Capital")
Sanford C. Bernstein & Co., LLC ("Bernstein"),
Husic Capital Management ("Husic")
Reams Asset Management Company, LLC ("Reams")
All Pro Large Cap Growth Portfolio .... Alliance Capital
Geewax, Terker & Co. ("Geewax")
All Pro Large Cap Value Portfolio ..... Bernstein
Mellon Equity Associates ("Mellon Equity")
All Pro Small Cap Growth Portfolio .... Lee Munder Investments, Ltd. ("Lee Munder")
Husic
All Pro Small Cap Value Portfolio ..... Reams
Sterling Capital Management Company ("Sterling")
Mid -Cap Growth ....................... T. Rowe Price Associates, Inc. ("T. Rowe Price")
International Portfolio ............... The Boston Company Asset Management, LLC. ("TBC")
</TABLE>
22
<PAGE> 89
<TABLE>
<CAPTION>
NAME OF PORTFOLIO NAME OF SUBADVISER
----------------- ------------------
<S> <C>
Equity 500 Index Portfolio ............ State Street Global Advisors ("SSgA")
Balanced .............................. Fred Alger Management Company ("Fred Alger")
Bond .................................. Western Asset Management Company ("Western Asset")
Money Market .......................... None
</TABLE>
MSIM has retained Wilshire Associates Incorporated as an investment management
consultant to assist MSIM in identifying and evaluating the performance of
potential subadvisers for each of the All Pro Portfolios.
MSIM is responsible for providing investment advice to the Fund's Portfolios,
pursuant to the Fund's investment advisory agreements. Subject at all times to
the supervision and approval of the Fund's Board , MSIM or a subadviser renders
investment advisory services with respect to the Portfolios in a manner
consistent with the Portfolio's stated investment policies, objectives and
restrictions. As part of those responsibilities and duties, MSIM or a subadviser
advises the Fund as to what investments should be purchased and sold and place
orders for all such purchases and sales on behalf of the Portfolios.
MSIM is a registered investment adviser and is also an indirect wholly owned
subsidiary of PMLIC. Its address is 1000 Chesterbrook Boulevard, Berwyn,
Pennsylvania 19312.
<TABLE>
<CAPTION>
SUBADVISER OWNERSHIP AND ADDRESS
----------------------------------------------------------------------------------------------
<S> <C>
Alliance Capital............................ Alliance Capital is a Delaware liability
company, which is a wholly owned subsidiary
of Alliance Capital Management Corporation, a
publicly held holding company, and is located
at 1345 Avenue of the Americas, New York, New
York 10105.
----------------------------------------------------------------------------------------------
Bernstein................................... Bernstein is a Delaware limited liability
company, which is a wholly owned subsidiary
of Alliance Capital Management Corporation, a
publicly held holding company, and is located
at 767 Fifth Avenue, New York, New York 10153
Fred Alger.................................. Fred Alger is a New York corporation, which
is a wholly owned subsidiary of Fred Alger &
Company, Inc., a New York corporation, and is
located at 1 World Trade Center, Suite 9399,
New York, New York 10048.
----------------------------------------------------------------------------------------------
Geewax...................................... Geewax is a Pennsylvania partnership and is
located at 99 Starr Street, Phoenixville, PA
19460.
----------------------------------------------------------------------------------------------
</TABLE>
23
<PAGE> 90
<TABLE>
<CAPTION>
SUBADVISER OWNERSHIP AND ADDRESS
----------------------------------------------------------------------------------------------
<S> <C>
Husic....................................... Husic is a California limited partnership, which
is a wholly owned subsidiary of Husic Capital
Corporation, and is located at 555 California
Street, San Francisco, CA 94104.
----------------------------------------------------------------------------------------------
Lee Munder.................................. Lee Munder is a Florida limited partnership,
[which is a wholly owned subsidiary of
_____,] and is located at 200 Clarendon
Street, Boston, MA 02117.
----------------------------------------------------------------------------------------------
Mellon Equity............................... Mellon Equity is a Pennsylvania limited
liability partnership, which is a wholly
owned subsidiary of the Mellon Bank
Corporation, and is located at 500 Grant
Street, Suite 400, Pittsburgh, PA 15258.
----------------------------------------------------------------------------------------------
Reams....................................... Reams is an Indiana limited liability
company, and is located at 227 Washington
Street, Columbus, IN 47202.
----------------------------------------------------------------------------------------------
SSgA........................................ SSgA is a wholly owned subsidiary of State
Street Corporation, a publicly held bank
holding company and is located at One
International Place, Boston, MA 02110.
----------------------------------------------------------------------------------------------
Sterling.................................... Sterling is a North Carolina corporation,
which is an indirect wholly owned subsidiary
of Old Mutual plc, and is located at One
First Union Center, 301 S. College Street,
Suite 3200, Charlotte, NC 28202.
----------------------------------------------------------------------------------------------
TBC ........................................ TBC is a Massachusetts limited liability
company, which is a wholly owned subsidiary
of the Mellon Bank Corporation, and is
located at One Boston Place, Boston, MA
02108.
----------------------------------------------------------------------------------------------
T. Rowe Price............................... T. Rowe Price is a Maryland corporation,
which is a wholly owned subsidiary of T. Rowe
Price Inc., and is located at 100 E. Pratt
Street, Baltimore, MD 21202.
----------------------------------------------------------------------------------------------
Western Asset............................... Western Asset is a California corporation,
which is a wholly owned subsidiary of _Legg
Mason, Inc., and is located at 117 East
Colorado Blvd., Pasadena, CA 91105.
----------------------------------------------------------------------------------------------
</TABLE>
24
<PAGE> 91
SUBADVISORY AGREEMENTS
Investment subadvisory agreements for the Portfolios with their respective
subadvisers, as indicated below, were approved by the Fund's Board of Trustees,
including a majority of the "non-interested" trustees, on the dates specified
below, and also were approved by the initial shareholders of each Portfolio
(PMLIC and PLACA for all Portfolios other than Managed and Bond Portfolios, and
PMLIC, PLACA, and National Life Insurance Company for Managed and Bond
Portfolios):
<TABLE>
<CAPTION>
PORTFOLIO SUBADVISER DATE
-----------------------------------------------------------------------------------------------
<S> <C> <C>
All Pro Broad Equity Portfolio Alliance Capital November 3, 2000
Bernstein November 3, 2000
Husic November 3, 2000
Reams November 3, 2000
All Pro Large Cap Growth Portfolio Alliance Capital November 3, 2000
Geewax November 3, 2000
-----------------------------------------------------------------------------------------------
All Pro Large Cap Value Portfolio Bernstein November 3, 2000
Mellon Equity November 3, 2000
-----------------------------------------------------------------------------------------------
All Pro Small Cap Growth Portfolio Lee Munder November 3, 2000
Husic November 3, 2000
-----------------------------------------------------------------------------------------------
All Pro Small Cap Value Portfolio Reams November 3, 2000
Sterling November 3, 2000
-----------------------------------------------------------------------------------------------
Mid Cap Growth Portfolio T. Rowe Price November 3, 2000
-----------------------------------------------------------------------------------------------
International Portfolio TBC November 3, 2000
-----------------------------------------------------------------------------------------------
Equity 500 Index Portfolio SSgA November 3, 2000
-----------------------------------------------------------------------------------------------
Balanced Portfolio Fred Alger November 3, 2000
-----------------------------------------------------------------------------------------------
Bond Portfolio Western Asset November 3, 2000
-----------------------------------------------------------------------------------------------
</TABLE>
In voting to approve each of the foregoing investment advisory agreements,
PMLIC, PLACA, and/or NLIC, as the case may be, voted their Fund shares for or
against such approvals, or withheld their votes, in the same proportion as
Policyholders having an interest in the respective Portfolios, voted for,
against or withheld their votes with respect to the agreement for that
Portfolio.
With the exception of Lee Munder's agreement, each of a Portfolio's agreements
terminates automatically in the event of its assignment or upon 60 days' notice
given by the Fund's Board, by the Adviser or by majority vote (as defined in the
1940 Act and the rules thereunder) of the Portfolio's shares. Otherwise, these
investment advisory agreements will continue in force with respect to any
Portfolio for more than two years after the their respective effective date only
so long as their continuance is approved at least annually by a majority of the
"non-interested" members of the Fund's Board, and by: (1) a 1940 Act vote of the
Portfolio's shareholders, or (2) a majority vote of the Fund's Board. Lee
Munder's agreement has been approved by the Board to continue for successive
30-day periods, up to a maximum of two years, and may be terminated by the Board
upon 10 days' written notice to the subadviser.
25
<PAGE> 92
MSIM is responsible for managing the investment operations of the Fund and the
composition of each Portfolio, including the purchase, retention and disposition
of the investments, securities and cash contained in each Portfolio, in
accordance with the Portfolio's investment objective and policies as stated in
the Fund's Declaration of Trust, Bylaws, Prospectus and SAI, as from time to
time in effect. In connection with these responsibilities and duties, the
Adviser is responsible for providing investment research and supervision of each
Portfolio's investments and conducting a continuous program of investment
evaluation and, if appropriate, sales and reinvestment of the Fund's assets.
MSIM also is responsible for furnishing the Fund with statistical information,
in respect of the investments that a Portfolio may hold or contemplates
purchasing, as the Fund may reasonably request. On MSIM's own initiatives, MSIM
apprises the Fund of important developments materially affecting each Portfolio
and furnishes the Fund from time to time such information as MSIM may believe
appropriate for this purpose. MSIM also has responsibilities for implementing
all purchases and sales of investments for each Portfolio in a manner consistent
with its policies.
Under the advisory agreement, the Fund is obligated to pay investment advisory
fees to MSIM with respect to the Portfolios quarterly, in arrears, as a
percentage of the Portfolio's average daily net assets at the following annual
rates. The table below also presents certain expense limitations that MSIM has
placed into effect with respect to the Portfolios, which are more fully
explained below:
<TABLE>
<CAPTION>
PORTFOLIO ADVISORY FEE* EXPENSE CAP*
-----------------------------------------------------------------------------------------------
<S> <C> <C>
All Pro Broad Equity Portfolio - 0.75% on the first $200 0.16%
million, and 0.70% on assets
in excess of $200 million
-----------------------------------------------------------------------------------------------
All Pro Large Cap Growth Portfolio - 0.70% on the first $200 0.40%
million, and 0.65% on assets
in excess of $200 million
-----------------------------------------------------------------------------------------------
All Pro Large Cap Value Portfolio - 0.70% on the first $200 0.40%
million, and 0.65% on assets
in excess of $200 million
-----------------------------------------------------------------------------------------------
All Pro Small Cap Growth Portfolio - 0.90% on the first $200 0.40%
million, and 0.85% on assets
in excess of $200 million
-----------------------------------------------------------------------------------------------
All Pro Small Cap Value Portfolio - 0.90% on the first $200 0.40%
million, and 0.85% on assets
in excess of $200 million
-----------------------------------------------------------------------------------------------
Mid Cap Growth Portfolio - 0.75% on the first $200 0.20%
million, and 0.70% on assets
excess of $200 million
International Portfolio - 0.75% on the first $500 0.75%
million, and 0.70% on assets
in excess of $500 million
Equity 500 Index Portfolio - 0.24% on all assets 0.04%
-----------------------------------------------------------------------------------------------
Balanced Portfolio - 0.55% on all assets 0.40%
-----------------------------------------------------------------------------------------------
Bond Portfolio - 0.40% on all assets 0.28%
-----------------------------------------------------------------------------------------------
</TABLE>
26
<PAGE> 93
<TABLE>
<CAPTION>
PORTFOLIO ADVISORY FEE* EXPENSE CAP*
-----------------------------------------------------------------------------------------------
<S> <C> <C>
-----------------------------------------------------------------------------------------------
Money Market Portfolio - 0.25% on all assets 0.25%
-----------------------------------------------------------------------------------------------
</TABLE>
* As a percentage of average daily net assets; based on ordinary operating
expenses but excluding advisory fees, as described more fully below.
The investment advisory fee incurred for MSIM during 1999 was $174,315,
$145,234, $180,903, $85,907 and $568,324 for the All Pro Large Cap Growth, All
Pro Large Cap Value, All Pro Small Cap Growth, All Pro Small Cap Value, and
International Portfolios, respectively. The investment advisory fee incurred for
Sentinel Advisors Company ("SAC") adviser during 1999 was $1,003,377, $225,914,
$296,660, $126,876, $74,269 and $261,012 for the Growth, Aggressive Growth,
Balanced, Bond, Sentinel Growth, and Money Market Portfolios, respectively.
The investment advisory fee incurred for MSIM during 1998 was $55,054, $56,126,
$33,737, $31,846 and $518,379 for the All Pro Large Cap Growth, All Pro Large
Cap Value, All Pro Small Cap Growth, All Pro Small Cap Value, and International
Portfolios, respectively. The investment advisory fee incurred for SAC during
1998 was $928,340, $216,651, $248,484, $100,348, $50,621 and $197,450 for the
Growth, Aggressive Growth, Balanced, Bond, Sentinel Growth, and Money Market
Portfolios, respectively.
The investment advisory fee incurred for NAM during 1997 with respect to the
Growth Portfolio was $223,312. The total investment advisory fee incurred for
MSIM during 1997 with respect to the International Portfolio was $440,914. The
total investment advisory fee incurred for SAC during 1997 was $1,121,203,
allocated $516,971, $185,551, $199,166, $67,663 and $151,852 for the All Pro
Broad Equity, Mid Cap Growth, Balanced, Bond, and Money Market Portfolios,
respectively.
EXPENSES
Generally, the Portfolios directly assume their expenses and a pro-rata portion
of the expenses borne by the Fund, including the fees payable to MSIM, which are
accrued daily. Expenses that the Portfolios bear directly include redemption
expenses, expenses of portfolio transactions that do not reduce the cost basis
of a security, shareholding servicing costs, expenses of registering the Fund's
shares under federal and state securities laws, interest, certain taxes, charges
of the Custodian and Transfer Agent and other expenses attributable to a
particular Portfolio. Fund expenses that are allocated to a Portfolio on the
basis of size of the respective Portfolios include directors' fees, legal
expenses, state franchise taxes, auditing services, costs of printing proxies,
stock certificates, Securities and Exchange Commission fees, accounting costs,
pricing costs (including the daily calculation of net asset value), and other
expenses that the Board determines to be properly payable by the Fund and
allocable either on the basis of size of the respective Portfolios or to a
Particular Portfolio or Portfolios. Depending upon the nature of a proxy
statement or a lawsuit or certain other expenses, these costs may be directly
applicable to one or more of the Portfolios or allocated on the basis of the
size of the respective Portfolios.
27
<PAGE> 94
For the calendar year ended December 31, 1999, each Portfolio bore total
expenses, computed as a percentage of the average daily net assets of that
Portfolio, as follows: All Pro Large Cap Growth Portfolio -- 0.89%; All Pro
Large Cap Value Portfolio -- 0.91%; All Pro Small Cap Growth Portfolio -- 1.11%;
All Pro Small Cap Value Portfolio -- 1.20%; International Portfolio -- 0.98%;
Growth Portfolio -- 0.48%; Mid Cap Growth Portfolio -- 0.57%; Balanced Portfolio
-- 0.57%; Bond Portfolio -- 0.52%; and Money Market Portfolio -- 0.40%.
EXPENSE LIMITS. Effective December 1, 2000, PMLIC has voluntarily agreed to
reimburse the Fund's Portfolios for certain ordinary operating expenses,
excluding the expenses of advisory fees and any extraordinary costs and
expenses, such as attorneys' fees, court judgments, decrees or awards, or any
other litigation costs in legal actions involving the Fund generally or one or
more Portfolios specifically, or costs relating to indemnification of trustees,
officers or employees of the Fund where these costs are not covered by trustee
and officer liability insurance, if those ordinary operating expenses for the
Portfolio are in excess of the above-specified percentages of the Portfolio's
average daily net assets.
During 1999, PMLIC reimbursed the Fund $564 in expenses for the Small Cap Value
Portfolio. During 1998, PMLIC reimbursed the Fund $2,423 in expenses for the
Small Cap Value Portfolio. During 1997, there were no reimbursements for the
International, All Pro Broad Equity, Mid Cap Growth, Balanced, Bond, and Money
Market Portfolios.
PROPOSED FEES. Effective January 1, 2001 and subject to shareholder approval,
the Fund proposes to pay advisory fees of 0.75% on the first $200 million, 0.70%
on assets in excess of $200 million, with an expense cap of 0.16% for All Pro
Broad Equity Fund Portfolio; 0.55% on all assets, with an expense cap of 0.40%
for Balanced Portfolio; 0.75% on the first $200 million, 0.70% on assets in
excess of $200 million, with an expense cap of 0.20% for Mid Cap Growth
Portfolio; 0.40% on all assets for Bond Portfolio; 0.25% on all assets, with an
expense cap of 0.25% for Money Market Portfolio; 0.75% on the first $500
million, 0.70% on assets in excess of $500 million, with an expense cap of 0.75%
for International Portfolio; 0.90% on the first $200 million, 0.85% on assets in
excess of $200 million, with an expense cap of 0.40% for All Pro Small Cap
Growth Portfolio; 0.90% on the first $200 million, 0.70% on assets in excess of
$200 million, with an expense cap of 0.40% for All Pro Small Cap Value
Portfolio; 0.70% on the first $200 million and 0.65% on assets in excess of $200
million, with an expense cap of .40% for All Pro Large Cap Growth Portfolio,
0.70% on the first $200 million, 0.65% on assets in excess of $200 million, with
an expense cap of 0.40% for All Pro Large Cap Value Portfolio; and 0.24% on all
assets, with an expense cap of 0.04% for Equity 500 Index Portfolio.
INVESTMENT SUBADVISORY AGREEMENTS
MSIM has retained Wilshire Associates Incorporated ("Wilshire") as an investment
management consultant to assist it in identifying and evaluating the performance
of potential subadvisers for each All Pro Portfolio. Wilshire does not
participate in the selection of portfolio securities for any Portfolio or in any
way participate in the day-to-day management of an All Pro Portfolio or the
Fund. Wilshire assists MSIM in gathering data and performing the quantitative
analysis necessary to identify the styles and past performance of potential
subadvisers. Wilshire also assists MSIM in performing similar ongoing
quantitative analysis of the performance of each All Pro Portfolio's subadvisers
and in determining whether changes in a subadviser would be
28
<PAGE> 95
desirable for a Portfolio. As compensation for such services, MSIM pays Wilshire
a subadvisory fee equal to .05% of the average daily net assets of the All Pro
Portfolios.
On behalf of the All Pro Portfolios, and after consultation with Wilshire, MSIM
has selected and has entered into investment subadvisory agreements with the
subadvisers listed above under "Investment Advisory and Other Services." The
table below indicates the rate of compensation MSIM is required to pay each
subadviser under the applicable subadvisory agreement and the compensation MSIM
actually paid each subadviser in 1999.
<TABLE>
<CAPTION>
COMPENSATION
NAME OF PORTFOLIO SUBADVISER RATE OF COMPENSATION(1) PAID IN 1999(1)
------------------------------- ---------- -------------------------- ---------------
<S> <C> <C> <C>
All Pro Large Cap Growth
Portfolio.................... CKM* .35% .35%
Geewax .30% .30%
All Pro Large Cap Value
Portfolio.................... Equinox .25% of the first $50 million in assets .29%(2)
.23% of assets above $50 million
Bernstein 0.60% of the first $10,000,000 N/A(3)
0.50% of the next $15,000,000
0.40% of the next $25,000,000
0.30% of the next $50,000,000
0.25% of the next $50,000,000
0.225% of the next $50,000,000
0.20% of the next $50,000,000
0.175% of the next $50,000,000
0.15% of amounts in excess of
$300,000,000
Mellon Equity .20% .24%(2)
All Pro Small Cap Growth
Portfolio.................... SAW** .50% .50%
Husic .50% .50%
All Pro Small Cap Value
Portfolio.................... Reams .50% .50%
Sterling .70% N/A(3)
</TABLE>
------------
(1) As a percentage of average daily net assets.
(2) Each of Equinox and Mellon Equity reduced its highest rate to .25% and
.20%, respectively, as of March 1, 1999.
(3) Sterling and Bernstein each began managing the relevant segment of the
Portfolio's assets in February 2000 and April, 2000, respectively, and,
accordingly, did not receive compensation in 1999.
* Cohen Klingenstein & Marks served as a subadviser for the period [date].
** Standish Ayer & Wood served as a subadviser for the period [date].
As stated in the Prospectus, MSIM has entered into an investment subadvisory
agreements with each of the above-named subadvisers with respect to the
designated Portfolio or Portfolios, under which MSIM receives recommendations,
research and other investment services upon which it may base its investment
recommendation to the Fund. All of the investment subadvisory agreements were
approved by a majority of the Fund's Board, including a majority of its
"non-interested" trustees, on November 3, 2000 to became effective as of January
1, 2001, with initial terms of two years. Thereafter, each agreement shall
continue from year to year as long as the continuance is approved at least
annually by a majority of the Fund's "non-interested" trustees
29
<PAGE> 96
and by (1) a 1940 Act vote of the Portfolio's shareholders, or (2) a majority of
the Fund's Board. Except for Lee Munder's investment subadvisory agreement, an
investment subadvisory agreement may be terminated with respect to a Portfolio
without penalty on 60-days' prior written notice by the Fund's Board, or by MSIM
or the subadviser, as the case may be, and terminates automatically in the event
of its assignment
As stated in the Prospectus, MSIM has entered into an investment subadvisory
agreement with TBC. For its services to MSIM, MSIM is obligated to pay TBC
compensation equal to the greater of: (i) a monthly fee at an effective annual
rate of 0.375% of the first $500 million of the average daily net assets of the
Portfolio and 0.30% of the average daily net assets in excess of $500 million;
or (ii) $20,000 per year.
Under a similar subadvisory agreement prior to the reorganization, for 1999,
1998, and 1997 MSIM paid TBC $284,162, $259,189, and $220,457, respectively, for
investment advisory services in connection with the International Portfolio.
As stated in the Prospectus, MSIM has entered into an investment subadvisory
agreement with SSgA. For its services to MSIM, MSIM is obligated to pay SSgA
compensation equal to a monthly fee at an effective annual rate of 0.025% of the
first $200 million of the average daily net assets of the Portfolio, 0.020% of
the next $500 million of the average daily net assets, and 0.015% of the average
daily net assets over $700 million.
As stated in the Prospectus, MSIM has entered into an investment subadvisory
agreement with T. Rowe Price. For the services provided to MSIM, MSIM is
obligated to pay T. Rowe Price compensation quarterly, in arrears, at the annual
rates of: 0.60% of the first $20 million of the average daily net assets of the
Portfolio; 0.50% on the next $30 million of the average daily net assets; and,
if aggregate assets equal or exceed $50 million, 050% on all aggregate assets. .
As stated in the Prospectus, MSIM has entered into an investment subadvisory
agreement with Fred Alger. For the services provided to MSIM, MSIM is obligated
to pay Fred Alger compensation quarterly, in arrears, at the annual rate of
0.35% of the average daily net assets of the Portfolio.
As stated in the Prospectus, MSIM has entered into an investment subadvisory
agreement with Western Asset. For the services provided to MSIM, MSIM obligated
to pay Western Asset compensation quarterly, in arrears, at the annual rate of
0.20% of the average daily net assets of the Portfolio.
30
<PAGE> 97
ADDITIONAL INFORMATION ABOUT MSIM
The principal officers of MSIM are:
<TABLE>
<CAPTION>
POSITION WITH POSITION WITH
NAME MSIM THE FUND
---- ------------- -------------
<S> <C> <C>
Sarah Lange President none
James Benson Financial Officer none
Scott V. Carney Vice President none
Rosanne Gatta Vice President President
Timothy Henry Vice President none
James Kestner Vice President none
Dean Miller Vice President none
William Rapp Vice President none
Richard J. Simon Vice President none
Steven Schweitzer Vice President none
Dina M. Welch Vice President none
Anthony T. Giampietro Treasurer Treasurer and Comptroller
</TABLE>
ADMINISTRATOR
PMLIC serves as the Fund's administrator. As the administrator, PMLIC is
responsible for providing services related to the general business management of
the Fund and the Portfolios as well as providing general oversight and
supervision of the Fund's other service providers, excluding investment advisory
services, but including fund accounting, legal and audit, custody and transfer
and dividend disbursing agency services that are provided to the Fund. PMLIC is
generally responsible for oversight and supervision of teach of the Fund's
service providers except for MSIM and the subadvisers (for which MSIM generally
oversees and supervises). Specific services provided by PMLIC include: (i)
providing oversight of the activities of the Fund's counsel and auditors; (ii)
providing oversight of the accounting and administrative activities of the
administrative service provider included in the Accounting and Administrative
Services Agreement; (iii) coordinating contractual relationships and
communications between the Fund and its service providers; (iv) monitoring state
and federal laws as these laws may apply to the Fund or the Portfolios; (v)
providing general business management services to the Fund (including reviewing
bills and authorizing payment); (vi) providing clerical, secretarial, and
bookkeeping services, office supplies, office space, and related services
(including telephone and other utility services); (vii) providing administrative
support to the Fund's employees who are providing legal and other services to
the Fund; (viii) providing comptroller services; (ix) scheduling and planning
agendas for, preparing or assisting in the preparation of Board materials, and
conducting meetings of the Fund's Board of Trustees and the Fund's shareholders;
and (x) preparing and distributing, or assisting in the preparation and
distribution of all required reports, proxy materials, and other communications
with the Fund's shareholders. For providing these services, the Fund is
obligated to pay PMLIC quarterly, in arrears, a fee per Portfolio at the annual
rate of 0.10% of the each Portfolio's average daily net assets.
FUND ACCOUNTING AND ADMINISTRATIVE SERVICES
PFPC Inc. ("PFPC") provides fund accounting and certain administrative services
to the Fund pursuant to a fund accounting and administrative services agreement
between PFPC and the Fund. Such services include maintaining the Portfolios'
books and records, preparing certain governmental filings, statements, returns,
and stockholder reports, and computing net asset value
31
<PAGE> 98
and daily dividends. For such services, The Fund is obligated to pay PFPC a fee
at the annual rates of 0.10% on the first $175 million, 0.075% on the next $175
million, 0.05% on the next $175 million, and 0.03% in excess of $525 million, of
each Portfolios' net assets, computed daily and paid monthly, with a minimum
aggregate annual fee with respect to all Market Street Portfolios totaling
$580,000. PFPC is a wholly owned subsidiary of PNC Bank Corporation.
PORTFOLIO TRANSACTIONS AND BROKERAGE ALLOCATION
MSIM or a subadviser, other than Wilshire, places all portfolio orders on behalf
of each Portfolio and attempt, in all cases, to obtain the most favorable prices
and executions. MSIM or a subadviser may place orders with brokers that are
affiliated persons of the Fund pursuant to procedures established by the Board.
However, in no event will persons affiliated with the Fund deal with the Fund as
principal in the purchase and sale of the Fund's portfolio securities.
Equity securities are customarily traded on the stock exchange, but may also be
traded over-the-counter. Bonds and debentures are customarily traded
over-the-counter but may be traded on the bond exchange. Money market
instruments are traded primarily in the over-the-counter market. Purchases and
sales on the stock exchanges are affected by brokers and normally involve the
payment of brokerage commissions. Over-the-counter securities are purchased
directly from the issuer or dealers who are usually acting as principals for
their own accounts. These securities are generally traded on a net basis and do
not involve either brokerage commissions or transfer taxes. Consequently, the
cost of executing such transactions consists primarily of mark-ups on the value
of the securities or dealer spreads and underwriting commissions.
MSIM or a subadviser determines the brokers to be used for purchases and sales
of each Portfolio's securities. There are no arrangements whatsoever, written or
oral, relating to the allocation to specific brokers of orders for portfolio
transactions. Consideration is given to those firms providing statistical and
research services to the investment adviser, MSIM,, but it is generally not the
policy of the Fund or any Portfolio, except the All Pro Portfolios, to pay
higher brokerage commissions to a firm solely because it has provided such
services. The subadvisers to the All Pro Portfolios are authorized to consider,
in the selection of brokers and dealers to execute portfolio transactions, not
only the available prices and rates of brokerage commissions but also other
relevant factors which may include, without limitation, the execution
capabilities of such brokers and dealers, research, custody and other services
provided by such brokers and dealers that the subadviser believes will enhance
its general portfolio management capabilities, the size of the transaction, the
difficulty of execution, the operational facilities of such brokers and dealers,
the risk to such a broker or dealer of positioning a block of securities, and
the overall quality of brokerage and research services provided by such brokers
and dealers. In connection with the foregoing, a subadviser to an All Pro
Portfolio is specifically authorized to pay those brokers and dealers who
provide brokerage and research services to it, a higher commission than that
charged by other brokers and dealers if the subadviser determines in good faith
that the amount of such commission is reasonable in relation to the value of
such services in terms of either the particular transaction or in terms of the
subadviser's overall responsibilities with respect to the relevant Portfolio
segment and to any other client accounts or portfolios that the subadviser
advises. The execution of such transactions shall not be considered to represent
an unlawful breach of any duty created by a subadvisory agreement or otherwise.
Statistical and
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research services furnished by brokers typically include: analysts' reports on
companies and industries, market forecasts, economic analyses and the like. Such
services may tend to reduce the expenses of the Adviser and this has been
considered in setting the advisory fees paid by the Fund.
During the period from January 1, 1999 to December 31, 1999, the Fund paid
aggregate brokerage fees of $509,685, of which $370,690 was paid by All Pro
Broad Equity Portfolio (formerly, "Growth" Portfolio), $33,225 was paid by All
Pro Large Cap Growth Portfolio, $35,256 was paid by All Pro Large Cap Value
Portfolio, $29,265 was paid by All Pro Small Cap Growth Portfolio, $43,457 was
paid by All Pro Small Cap Value Portfolio, $151,919 was paid by International
Portfolio, $61,346 was paid by Mid Cap Growth Portfolio (formerly, "Aggressive
Growth" Portfolio), and $55,610 was paid by the Balanced Portfolio (formerly,
"Managed" Portfolio). None of the other Portfolios paid any brokerage
commissions for the period.
During the period from January 1, 1998 to December 31, 1998 the Fund paid
aggregate brokerage fees of $522,878, of which $214,842 was paid by All Pro
Broad Equity Portfolio (formerly, "Growth" Portfolio), $11,433 was paid by All
Pro Large Cap Growth Portfolio, $23,232 was paid by All Pro Large Cap Value
Portfolio, $11,485 was paid by All Pro Small Cap Growth Portfolio, $20,411 was
paid by All Pro Small Cap Value Portfolio, $128,845 was paid by International
Portfolio, $59,955 was paid by Mid Cap Growth Portfolio (formerly, "Aggressive
Growth" Portfolio), and $33,237 was paid by the Balanced Portfolio (formerly
"Managed" Portfolio). For that period, none of the other Portfolios paid any
brokerage commissions.
During the period from January 1, 1997 to December 31, 1997, the Fund paid
aggregate brokerage fees of $813,965, of which $585,281 was paid by All Pro
Broad Equity Portfolio (formerly, "Growth" Portfolio), $131,781 was paid by the
International Portfolio, $54, 894 was paid by Mid Cap Growth Portfolio
(formerly, "Aggressive Growth" Portfolio), and $22,837 was paid by the Balanced
Portfolio (formerly, "Managed" Portfolio). For that period, none of the other
Portfolios paid any brokerage commissions.
DETERMINATION OF NET ASSET VALUE
As stated in the Prospectus, the Fund will offer and sell shares at each
Portfolio's per share net asset value. The net asset value of the shares of each
Portfolio (except Money Market Portfolio) of the Fund is determined as of the
close of regular trading on the New York Stock Exchange on each day when the New
York Stock Exchange is open for business for the day prior to the day on which a
transaction is to be effected. Money Market Portfolio's net asset value is
determined once daily on each day the New York Stock Exchange and the Federal
Reserve Bank both are open for business.
The New York Stock Exchange currently is open each day, Monday through Friday,
except the following holidays: New Year's Day, Dr. Martin Luther King, Jr. Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day, and Christmas Day, and on the preceding Friday or subsequent
Monday when one of these holidays falls on a Saturday or Sunday, respectively.
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The Federal Reserve Bank is open each day, Monday through Friday, except the
following holidays: New Year's Day, Dr. Martin Luther King, Jr. Day, Presidents'
Day, Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans' Day,
Thanksgiving Day, and Christmas Day, and the preceding Friday or subsequent
Monday when one of these days follow on a Saturday or Sunday, respectively.
The Fund's Board has specifically approved the use of a pricing service for debt
securities with maturities generally exceeding one year. Prices provided by the
pricing service may be determined without exclusive reliance on quoted prices
and may take into account appropriate factors such as institution size, trading
in similar groups of securities, yield, quality, coupon rate, maturity, type of
issue, trading characteristics, and other market data.
Equity investments (including common stocks, preferred stocks, convertible
securities, and warrants) and call options written on all portfolio investments
listed or traded on a national exchange are valued at their last sale price on
that exchange prior to the time when such assets are valued. For days having no
exchange sales and for unlisted securities, such securities and call options
written on portfolio securities are valued at the last sale price on the NASDAQ
(National Association of Securities Dealers Automated Quotations) National
Market System. If no National Market System sales occur on that day, equity
securities are valued at the last reported "bid" price, and call options written
on all portfolio securities for which other over-the-counter market quotations
are readily available are valued at the last reported "asked" price. Debt
securities with maturities exceeding one year are valued on the basis of
valuations furnished by a pricing service when such prices are believed to
reflect such securities' fair value.
The value of a foreign security held by the International Portfolio is
determined based upon its sale price on the foreign exchange or market on which
it is traded and in the currency of that market, as of the close of the
appropriate exchange or, if there have been no sales during the day, at the mean
of the closing bid and asked prices. Trading in securities on exchanges and
over-the-counter markets in Europe and the Far East is normally completed at
various times prior to the current closing time of the New York Stock Exchange.
Trading on foreign exchanges may not take place on every day the New York Stock
Exchange is open. Conversely, trading in various foreign markets may take place
on days when the New York Stock Exchange is not open. Consequently, the net
asset value calculation for the Portfolio may not occur contemporaneously with
the determination of the most current market prices of the securities included
in such calculation. In addition, the value of the net assets held by the
Portfolio may be significantly affected on days when shares are not available
for purchase or redemption.
Any assets that are denominated in a foreign currency are converted into U.S.
dollar equivalents at the prevailing market rates as quoted by generally
recognized reliable sources.
Money market instruments with a remaining maturity of 60 days or less held by
any Portfolio, and all instruments held by Money Market Portfolio (including
master demand notes) are valued on an amortized cost basis. Under this method of
valuation, the instrument is initially valued at cost (or in the case of
instruments purchased with more than 60 days remaining to maturity, the market
value on the 61st day prior to maturity); thereafter, the Fund assumes a
constant proportionate amortization in value until maturity of any discount or
premium, regardless of the impact of fluctuating interest rates on the market
value of the instrument. For purposes of this
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method of valuation, the maturity of a variable rate certificate of deposit is
deemed to be the next coupon date on which the interest rate is to be adjusted.
While this method provides certainty in valuation, it may result in periods
during which value, as determined by amortized cost, is higher or lower than the
price that would be received upon sale of the instrument. During period of
declining interest rates, the daily yield on shares of Money Market Portfolio
may tend to be higher than a like computation made by a fund with identical
investments utilizing a method of valuation based upon market prices and
estimates of market prices for all of its portfolio instruments. Thus, if the
use of amortized cost resulted in a lower aggregate portfolio value on a
particular day, a prospective investor would be able to obtain a somewhat higher
yield than would result from investment in a fund utilizing solely market
values, and existing investors would receive less investment income. The
converse would apply in a period of rising interest rates.
Use of the amortized-cost valuation method by Money Market Portfolio requires
the Portfolio to maintain a dollar-weighted average maturity of 90 days or less
and to only purchase obligations having remaining maturities of 397 days (13
months) or less, subject to certain maturity shortening provisions of rule 2a-7.
In addition, the Portfolio can invest only in obligations determined by the
Board to present minimal credit risks. When an eligible security (described in
the Prospectus) goes into default or has its rating downgraded thereby causing
it to no longer be an eligible security, the Board must promptly reassess
whether such security presents a minimal credit risk and whether continuing to
hold the security is in the Portfolio's best interest. In addition, as to
certain types of investments, the Portfolio may only invest in obligations
meeting the quality requirements spelled out in the Prospectus. Furthermore,
investments in the securities of any one issuer may not exceed 5% of the
Portfolio's total assets at the time of such purchase, nor may investments in
"second-tier securities" (eligible securities which are not rated in the highest
short term rating category by at least two nationally recognized statistical
rating organizations (Rating Agencies) or one Rating Agency if it is the only
Rating Agency rating that security or comparable unrated securities), exceed 5%
of the Portfolio's total assets nor may investments in any one issuer exceed the
greater of 1% of the Portfolio's total assets or $1 million. The Board has
established procedures designed to stabilize, to the extent reasonably possible,
the Money Market Portfolio's price per share as computed for the purpose of
sales and redemptions at $1.00. Such procedures include review of that
Portfolio's investment holdings by the Board, at such intervals as they may deem
appropriate, to determine whether the net asset value calculated by using
available market quotations or equivalents deviates from $1.00 per share. If
such deviation exceeds 1/2 of 1%, the Board will promptly consider what action,
if any, will be initiated. In the event the Board determine that a deviation
exists which may result in material dilution or other unfair results to new or
existing investors, the Board will take such corrective action as they regard as
necessary and appropriate, including: the sale of Portfolio instruments prior to
maturity; the withholding of dividends or payment of distributions from capital
or capital gains; redemptions of shares in kind or the establishment of a net
asset value per share based upon available market quotations.
REDEMPTION OF SHARES
The Fund is required to redeem all full and fractional shares for cash at the
net asset value per share next calculated after the Fund receives the redemption
order. The Fund generally makes
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payment for shares redeemed within seven days after receipt of a proper notice
of redemption. The right to redeem shares or to receive payment with respect to
any redemption may only be suspended for any period during which (1) trading on
the New York Stock Exchange is restricted or such exchange is closed for other
than weekends and holidays; (2) an emergency exists, as determined by the
Securities and Exchange Commission, as a result of which disposal of Portfolio
securities or determination of the net asset value of a Portfolio is not
reasonably practicable; and (3) the Securities and Exchange Commission by order
permits postponement for the protection of shareholders.
TAXES
Each Portfolio of the Fund is treated as a separate entity for federal income
tax purposes. Each Portfolio intends to elect and to qualify as a "regulated
investment company" under the provisions of Subchapter M of the Internal Revenue
Code of 1986, as amended (the "Code"). As a regulated investment company, each
Portfolio is required to distribute to its shareholders for each taxable year at
least 90% of its investment company taxable income (consisting generally of net
investment income, net short-term capital gain, and net gains from certain
foreign currency transactions). To qualify for treatment as a regulated
investment company, a Portfolio must, among other things, derive in each taxable
year at least 90% of its gross income from dividends, interest, payments with
respect to securities loans and gains from the sale or other disposition of
stock or securities or foreign currencies (subject to the authority of the
Secretary of the Treasury to exclude foreign currency gains which are ancillary
to the Fund's principal business of investing in stock or securities or options
and futures with respect to such stock or securities), other income (including,
but not limited to, gains from options, futures, or forward contracts) derived
with respect to its investing in such stock, securities or currencies. Moreover,
at the close of each quarter of each Portfolio's taxable year, at least 50% of
the value of its total assets must be represented by cash and cash items, U.S.
Government securities, securities of other regulated investment companies, and
other securities that, with respect to any one issuer, do not exceed 5% of the
value of the Portfolio's total assets and that do not represent more than 10% of
the outstanding securities of the issuer. In addition, at the close of each
quarter of each Portfolio's taxable year, not more than 25% of the value of its
total assets may be invested in securities (other than U.S. Government
securities or the securities of other regulated investment companies) of any one
issuer. If each Portfolio qualifies as a "regulated investment company" and
complies with the relevant provisions of the Code, each Portfolio will be
relieved of federal income tax on the part of its net ordinary income and
realized net capital gain which it distributes to the separate accounts. If a
Portfolio fails to qualify as a regulated investment company, the Portfolio will
be subject to federal, and possibly state, corporate taxes on its taxable income
and gains and distributions to its shareholders will constitute ordinary
dividend income to the extent of such Portfolio's available earnings and
profits, and policyholders could be subject to current tax on distributions
received with respect to Portfolio shares.
Each Portfolio that supports variable life insurance and variable annuity
contracts (a "Dedicated Portfolio") must, and intends to, comply with the
diversification requirements imposed by section 817(h) of the Code and the
regulations thereunder. These requirements, which are in addition to the
diversification requirements mentioned above, place certain limitations on the
proportion of each Dedicated Portfolio's assets that may be represented by any
single investment
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(which includes all securities of the same issuer). For these purposes, each
U.S. Government agency or instrumentality is treated as a separate issuer, while
a particular foreign government and its agencies, instrumentalities, and
political subdivisions are all considered the same issuer. For information
concerning the consequences of failure to meet the requirements of section
817(h), see the respective prospectuses for the policies or the contracts.
Generally, a regulated investment company must distribute substantially all of
its ordinary income and capital gains in accordance with a calendar year
distribution requirement in order to avoid a nondeductible 4% federal excise
tax. However, the excise tax does not apply to a Portfolio whose only
shareholders are certain tax-exempt trusts or segregated asset accounts of life
insurance companies held in connection with variable contracts. In order to
avoid this excise tax, the Portfolios intend to qualify for this exemption or to
make distributions in accordance with the calendar year distribution
requirements.
FOREIGN TAXES. Investment income received from sources within foreign countries
may be subject to foreign income taxes. In this regard, withholding tax rates in
countries with which the United States does not have a tax treaty are often as
high as 30% or more. The United States has entered into tax treaties with many
foreign countries that entitle certain investors (such as the International
Portfolio) to a reduced rate of tax (generally 10-15%) or to certain exemptions
from tax. A Portfolio will operate so as to qualify for such reduced tax rates
or tax exemptions whenever possible. While policyholder will bear the cost of
any foreign tax withholding, they will not be able to claim a foreign tax credit
or deduction for taxes paid by the Portfolio.
The International Portfolio or any other Portfolio that may invest in foreign
securities, may invest in securities of "passive foreign investment companies"
("PFICs"). A PFIC is a foreign corporation that, in general, meets either of the
following tests: (1) at least 75% of its gross income is passive; or (2) an
average of at least 50% of its assets produce, or are held for the production
of, passive income. A Portfolio investing in securities of PFICs may be subject
to U.S. federal income taxes and interest charges, which would reduce the
investment return of a Portfolio making such investments. The owners of variable
annuities and life insurance products investing in such Portfolio would
effectively bear the cost of these taxes and interest charges. In certain cases,
a Portfolio may be eligible to make certain elections with respect to securities
of PFICs that could reduce taxes and interest charges payable by the Portfolio.
However, a Portfolio's intention to qualify annually as a regulated investment
company may limit a Portfolio's elections with respect to PFIC securities, and
no assurance can be given that such elections can or will be made.
The discussion of "Dividends, Distributions and Taxes" in the Prospectus, in
conjunction with the foregoing, is a general and abbreviated summary of the
applicable provisions of the Code and Treasury Regulations currently in effect
as interpreted by the Courts and the Internal Revenue Service. For further
information, consult the prospectuses and/or statements of additional
information for the respective policies and contracts, as well as your own tax
advisor.
CAPITAL STOCK
The Fund was incorporated in Maryland on March 21, 1985 and, as of January 1,
2001, reorganized and redomesticated as a Delaware business trust. The Fund is
authorized to issue an
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unlimited number of shares, which currently are divided into eleven series --All
Pro Broad Equity (formerly, "Growth"), All Pro Large Cap Growth, All Pro Large
Cap Value, All Pro Small Cap Growth, All Pro Small Cap Value, International,
Equity 500 Index, Mid Cap Growth (formerly, "Aggressive Growth"), Balanced
(formerly, "Managed"), Bond, and Money Market Portfolios. The Fund may establish
additional portfolios and may create one or more classes in any existing or new
portfolio that has the descriptions, powers, and rights, and the qualifications,
limitations as to dividends, and restrictions as the Board may determine at that
time. Each issued and outstanding share is entitled to participate equally in
dividends and distributions declared by the respective Portfolio and, upon
liquidation or dissolution, in the net assets of such Portfolio remaining after
satisfaction of outstanding liabilities.
VOTING RIGHTS
As an investment company organized as a Delaware business trust, the Fund is not
required to hold annual shareholders' meetings. The Board will call a
shareholders' meeting whenever one or more of the following is required to be
acted on by shareholders pursuant to the 1940 Act: (1) election of trustees; (2)
approval of an investment advisory agreement in cases where the Fund does not
have exemptive relief from the Securities and Exchange Commission pursuant to
section 15 of the Act; (3) ratification of selection of independent accountants;
or (4) approval of an underwriting agreement.
All shares of beneficial interest have equal voting rights (regardless of the
net value per share) except that on matters affecting only one Portfolio, only
shares of the respective Portfolio are entitled to vote. Shares do not have
cumulative voting rights. Accordingly, the holders of more than 50% of the
shares of the Fund voting for the election of trustees can elect all of the
trustees of the Fund if they choose to do so, and in such event the holders of
the remaining shares would not be able to elect any trustees.
Matters in which the interests of all the Portfolios are substantially identical
(such as the election of trustees or the approval of independent public
accountants) are voted on by all shareholders without regard to the separate
Portfolios. Matters that affect all the Portfolios but where the interests of
the Portfolios are not substantially identical (such as approval of an
investment advisory agreement) are voted on separately by each Portfolio.
Matters affecting only one Portfolio, such as a change in its fundamental
policies, are voted on separately by that Portfolio.
Matters requiring separate shareholder voting by a Portfolio shall have been
effectively acted upon with respect to any Portfolio if a majority of the
outstanding voting securities of that Portfolio votes for approval of the
matter, notwithstanding that: (1) the matter has not been approved by a majority
of the outstanding voting securities of any other Portfolios; or (2) the matter
has not been approved by a 1940 Act majority of the outstanding voting
securities of the Fund.
CODE OF ETHICS
The Fund's Board has adopted a Code of Ethics under Rule 17j-1 of the 1940 Act
(the "Code of Ethics"). The Code of Ethics covers the conduct (including the
personal securities transactions)
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of each of the Fund's officer and trustees, as well as of any employees of the
Fund, including those employees who participate in the selection of a Portfolio
securities or who have access to information regarding the Fund's pending
purchases and sales of Portfolio securities (collectively referred to as
"Advisory Persons"). The Fund's Code of Ethics also was adopted by the
applicable board of directors of MSIM and 1717, and, accordingly, covers the
conduct and personal securities transactions of any officer, director, and
employee of MSIM or 1717 Capital Management Company ("1717"), the principal
underwriter of the Fund, including MSIM's or 1717's Advisory Persons.
In general, the Code of Ethics restricts purchases or sales of securities being
purchased or sold or being considered for purchase or sale by the Fund by any
Advisory Persons (except employees who do not participate in the selection of a
Portfolio's securities or have access to information regarding the Fund's
pending purchases and sales of Portfolio securities) of any of the Fund, MSIM,
or 1717. Advisory Persons are also prohibited from purchasing securities in an
initial public offering and are also restricted in their purchases of private
offerings of securities. The Code of Ethics also describes certain "blackout
periods" during which: (1) no Advisory Person, director, officer, or employee of
the Fund may acquire ownership of a security on a day during which the Fund has
a pending order to purchase or sell that same security; and (2) no person
responsible for day-to-day portfolio management of any Portfolio shall purchase
or sell any security within seven days before or after the Fund trades in such
security. Certain specified transactions are exempt from the provisions of the
Code of Ethics. Each of the subadvisers has adopted, and the Fund's Board has
approved, a substantially similar code of ethics that the subadviser has
represented contains provisions reasonably necessary to prevent its "access
persons" (as defined in rule 17j-1 under the 1940 Act) from engaging in the
deceptive, manipulative or fraudulent conduct prohibited by that rule. As
required by rule 17j-1, each subadviser also has certified that the subadviser
has adopted procedures reasonably necessary to prevent the subadviser's access
persons from violating the subadviser's code.
OTHER SERVICES
CUSTODIAN, TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
Pursuant to a custody agreement with the Fund, PFPC Trust Company, located at
200 Stevens Drive, Lester, Pennsylvania 19113, serves as custodian of the Fund's
assets. Pursuant to a transfer agency agreement with the Fund, PFPC, which is
located at 103 Bellevue Parkway, Wilmington, Delaware 19809, serves as the
Fund's transfer agent and dividend disbursing agent.
CUSTODIAN FOR INTERNATIONAL PORTFOLIO
The custodian for all foreign securities and assets of the International
Portfolio is Citibank, N.A., located at 111 Wall Street, New York, NY 10043.
Securities purchased for the Portfolio outside of the U.S. are maintained in the
custody of foreign banks and trust companies that are members of Citibank's
Global Custody Network and foreign depositories (foreign subcustodians).
Citibank and each of the foreign custodial institutions holding securities of
the Portfolio has been approved by the Board in accordance with regulations
under the 1940 Act.
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The Board reviews, at least annually, whether it is in the best interest of the
Portfolio and its shareholders to maintain Portfolio assets in each custodial
institution. However, with respect to foreign subcustodians, there can be no
assurance that the Portfolio and the value of its shares will not be adversely
affected by acts of foreign governments, financial or operational difficulties
of the foreign subcustodians, difficulties and costs of obtaining jurisdiction
over, or enforcing judgments against, the foreign subcustodians, or application
of foreign law to the Portfolio's foreign subcustodian arrangements.
Accordingly, an investor should recognize that the noninvestment risks involved
in holding assets abroad may be greater than those associated with investing in
the U.S.
INDEPENDENT ACCOUNTANTS
The firm of PricewaterhouseCoopers LLP, Two Commerce Square, Suite 1700,
Philadelphia, PA 19103, has been selected to serve as the Fund's independent
accountants.
The audited financial statements for the calendar year ended December 31, 1999
of the All Pro Portfolios and International, Mid Cap Growth, Balanced, Bond, ,
and Money Market Portfolios attached to this SAI and the financial highlights
included in the Prospectuses were audited by PricewaterhouseCoopers LLP,
independent accountants, and are included in reliance upon the report of such
firm given on their authority as experts in accounting and auditing. The
semi-annual financial statements for the six months ended June 30, 2000 have not
been audited.
LEGAL MATTERS
Sutherland Asbill & Brennan LLP of Washington, D.C. has provided advice on
certain legal matters pertaining to federal securities laws applicable to the
Fund.
UNDERWRITERS
1717 Capital Management Company ("1717") serves, without compensation from the
Fund, as its principal underwriter, pursuant to an agreement with the Fund.
Under the terms of the agreement, 1717 is not obligated to sell any specific
number of shares. 1717 has authority, pursuant to the agreement to enter into
similar contracts with other insurance companies and with other entities
registered as broker-dealers under the Securities Exchange Act of 1934.
ADDITIONAL INFORMATION
This Statement of Additional Information and the Prospectus do not contain all
the information set forth in the registration statement and exhibits relating
thereto, which the Fund has filed with the Securities and Exchange Commission,
Washington, D.C., under the Securities Act of 1933 and the 1940 Act, to which
reference is hereby made.
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APPENDIX TO THE STATEMENT OF ADDITIONAL INFORMATION FOR MARKET STREET FUND, INC.
DATED JANUARY 1, 2001
DESCRIPTION OF MONEY MARKET INSTRUMENTS AND
COMMERCIAL PAPER AND BOND RATINGS
PERMITTED INVESTMENTS OF THE MONEY MARKET PORTFOLIO
U.S. GOVERNMENT SECURITIES: These are obligations issued by or guaranteed as to
interest and principal by the government of the United States or any agency or
instrumentality thereof. They may include instruments that are supported by the
full faith and credit of the United States, such as Treasury Bills, Notes and
Bonds; instruments that are supported by the right of the issuer to borrow from
the Treasury, such as Home Loan Bank securities; and securities that are
supported only by the credit of the instrumentality, such as Federal National
Mortgage Association bonds.
BANK OBLIGATIONS: These are obligations (including certificates of deposit, time
deposits, and bankers' acceptances) of: (1) domestic banks (including savings
banks) and foreign branches of domestic banks that are members of the Federal
Reserve System or the Federal Deposit Insurance Corporation ("FDIC") and have
total assets of at least $1 billion; (2) domestic banks and foreign branches
thereof and savings and loan associations that have less than $1 billion of
total assets where the principal amount of the obligation is insured in full by
the FDIC. No more than 10% of the Portfolio's assets may be invested in
obligations of institutions in category (2).
Certificates of Deposit generally are certificates issued against funds
deposited in a bank, are for a definite period of time, earn a specified rate of
return, and are normally negotiable. Variable rate certificates of deposit are
certificates of deposit on which the interest rate is periodically adjusted
prior to their stated maturity, usually at 30, 90 or 180 day intervals ("coupon
dates") based upon a specified market rate. As a result of these adjustments,
the interest rate on these obligations may be increased or decreased
periodically. Typically, dealers selling variable rate certificates of deposit
agree to repurchase such instruments, at the purchaser's option, at par on the
coupon dates. The dealers' obligations to repurchase these instruments are
subject to conditions imposed by the various dealers. Such conditions typically
are the continued credit standing of the issuer and the existence of reasonably
orderly market conditions. Variable rate certificates of deposit may be sold in
the secondary market. Variable rate certificates of deposit normally carry a
higher interest rate at the time of issue than comparable fixed rate
certificates of deposit.
Bankers' Acceptances are short-term credit instruments issued by corporations to
finance the import, export, transfer or storage of goods. They are termed
"accepted" when a bank guarantees their payment at maturity. These instruments
reflect the obligation of both the bank and drawer to pay the face amount of the
instrument at maturity.
REPURCHASE AGREEMENTS: Repurchase agreements with (1) banks or (2) government
securities dealers recognized as primary dealers by the Federal Reserve System,
provided that:
(a) at the time the repurchase agreement is entered into, and throughout
the duration of the repurchase agreement, the collateral has a market value
at least equal to the value of the
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repurchase agreement;
(b) the collateral consists of government securities or instruments rated
in the highest rating category by at least two nationally recognized
statistical rating organizations; and
(c) the maturity of the repurchase agreement does not exceed 30 days.
COMMERCIAL PAPER: Commercial paper consists of unsecured promissory notes issued
by corporations to finance short-term credit needs.
OTHER CORPORATE DEBT OBLIGATIONS: These are outstanding nonconvertible corporate
debt obligations that were not issued as short-term obligations but have
thirteen months or less remaining until maturity and which, at the date of
investment, are rated AA or better by S&P or Aa or better by Moody's.
The Money Market Portfolio will only invest in instruments denominated in U.S.
dollars that the Adviser, under the supervision of the board of directors of the
Fund, determines present minimal credit risks and are, at the time of
acquisition, either:
(1) rated in the two highest rating categories by at least two Rating
Agencies, or by only one Rating Agency if only one Rating Agency has issued a
rating with respect to the instrument; or
(2) in the case of an unrated instrument, determined by the Adviser under
the supervision of the board of directors to be of comparable quality to the
above; or
(3) issued by an issuer that has received a rating of the type described
in (1) above on other securities that are comparable in priority and security
to the instrument.
All of the Money Market Portfolio's money market instruments mature in 397 days
(13 months) or less. The average maturity of the Portfolio's portfolio
securities based on their dollar value will not exceed 90 days at the time of
each investment. If the disposition of a portfolio security results in a
dollar-weighted average portfolio maturity in excess of 90 days, the Portfolio
will invest its available cash in such a manner as to reduce its dollar-weighted
average portfolio maturity to 90 days or less as soon as reasonably practicable.
COMMERCIAL PAPER RATINGS
MOODY'S INVESTORS SERVICE, INC. ("MOODY'S"). Commercial paper rated "Prime" by
Moody's is based upon Moody's evaluation of many factors including: (1) the
management of the issuer; (2) the issuer's industry or industries and the
speculative-type risks that may be inherent in certain areas; (3) the issuer's
products in relation to competition and customer acceptance; (4) liquidity; (5)
amount and quality of long-term debt; (6) trend of earnings a period of ten
years; (7) financial strength of a parent company and the relationships that
exist with the issue; and (8) recognition by the management of obligations that
may be present or may arise as a result of public interest questions and
preparations to meet such obligations. Relative differences in these
42
<PAGE> 109
factors determine whether the issuer's commercial paper is rated "Prime-1,"
"Prime-2," or"Prime-3" by Moody's.
"Prime-1" indicates a superior capacity for repayment of short-term
promissory obligations. Prime-1 repayment capacity normally will be evidenced by
the following characteristics: (1) leading market positions in well-established
industries; (2) high rates of return on funds employed; (3) conservative
capitalization structures with moderate reliance on debt and ample asset
protection; (4) broad margins in earnings coverage of fixed financial charges
and high internal cash generation; and (5) well-established access to a range of
financial markets and assured sources of alternative liquidity.
"Prime-2" indicates a strong capacity for repayment of short-term
promissory obligations. This repayment capacity normally will be evidenced by
many of the characteristics cited above but to a lesser degree. Earnings trends
and coverage ratios, while sound, will be more subject to variation.
Capitalization characteristics, while still appropriate, may be more affected by
external conditions. Ample alternative liquidity is maintained.
STANDARD & POOR'S RATING GROUP ("S&P"). Commercial paper rated by S&P has the
following characteristics: (1) liquidity ratios adequate to meet cash
requirements; (2) long-term senior debt is rated "A" or better; (3) the issuer
has access to at least two additional channels of borrowing; (4) basic earnings
and cash flow have an upward trend with allowance made for unusual
circumstances; (5) typically, the issuer's industry is well-established and the
issuer has a strong position within the industry; and (6) the reliability and
quality of management are unquestioned. The relative strength or weakness of the
above factors determine whether the issuer's commercial paper is rated "A-1,"
"A-2," or "A-3."
A-1 - This designation rating indicates that the degree of safety
regarding timely payment is either overwhelming or very strong. Those issues
determined to possess overwhelming safety characteristics are denoted with a
plus (+) sign designation.
A-2 - The capacity for timely payment on issues with this designation
rating is strong; however, the relative degree of safety is not as high as for
issues designated "A-1."
FITCH INVESTORS SERVICE. INC. ("FITCH"). Commercial paper rated by Fitch
reflects Fitch's current appraisal of the degree of assurance of timely payment
of such debt. An appraisal results in the rating of an issuer's paper as "F-1,"
"F-2," "F-3," or "F-4."
F-1 - This designation rating indicates that the commercial paper is
regarded as having the strongest degree of assurance for timely payment.
F-2 -- Commercial paper issues assigned this designation rating reflect
an assurance of timely payment only slightly less in degree than those issues
rated "F-1."
DUFF AND PHELPS CREDIT RATING CO. ("DUFF"). Short-term ratings by Duff are
consistent with the rating criteria utilized by money market participants. The
ratings apply to all obligations with maturities of under one year, including
commercial paper, the uninsured portion of certificates of deposit, unsecured
bank loans, master notes, bankers acceptances, irrevocable
43
<PAGE> 110
letters of credit, and current maturities of long-term debt. Asset-backed
commercial paper is also rated according to this scale.
An emphasis of Duff's short-term ratings is placed on "liquidity," which
is defined as not only cash from operations but also access to alternative
sources of funds including trade credit, bank lines, and the capital markets. An
important consideration is the level of an obligor's reliance on short-term
funds on an ongoing basis.
The distinguishing feature of Duff's short-term ratings is the
refinement of the traditional "1" category. The majority of short-term debt
issuers carry the highest rating, yet quality differences exist within that
tier. As a consequence, Duff has incorporated gradations of"1+" (one plus) and
"1-" (one minus) to assist investors in recognizing those differences.
Duff 1+ - This designation rating indicates the highest certainty of
timely payment. Short-term liquidity, including internal operating factors
and/or access to alternative sources of funds, is outstanding, and safety is
just below risk-free U.S. Treasury short-term obligations.
Duff 1 - This designation rating indicates a very high certainty of
timely payment. Liquidity factors are excellent and supported by good
fundamental protection factors. Risk factors are minor.
Duff 1- - This designation rating indicates a high certainty of timely
payment. Liquidity factors are strong and supported by good fundamental
protection factors. Risk factors are very small.
Good Grade
Duff 2 - This designation rating indicates a good certainty of timely
payment. Liquidity factors and company fundamental are sound. Although ongoing
funding needs may enlarge total financing requirements, access capital markets
is good. Risk factors are small.
IBCA. INC. ("IBCA"). In addition to conducting a careful review of an
institution's reports and published figures, IBCA's analysts regularly visit the
companies for discussions with senior management. These meetings are fundamental
to the preparation of individual reports and ratings. To keep abreast of any
changes that may affect assessments, analysts maintain contact throughout the
year with the management of the companies that the analysts cover.
IBCA's analysts speak the languages of the countries that the analysts
cover, which is essential to maximize the value of their meetings with
management and to analyze properly a company's written materials. IBCA's
analysts also have a thorough knowledge of the laws and accounting practices
that govern the operations and reporting of companies within the various
countries.
Often, in order to ensure a full understanding of their position,
companies entrust IBCA with confidential data. While these data cannot be
disclosed in reports, these data are taken into account by IBCA when assigning
IBCA's ratings. Before dispatch to subscribers, a draft of the
44
<PAGE> 111
report is submitted to each company to permit the correction of any factual
errors and to enable the clarification of issues raised.
IBCA's Rating Committees meet at regular intervals to review all ratings
and to ensure that individual ratings are assigned consistently for institutions
in all the countries covered. Following these committee meetings, IBCA ratings
are issued directly to subscribers. At the same time, the company is informed of
the ratings as a matter of courtesy, but not for discussion.
A1+ - This designation rating indicates obligations supported by the
highest capacity for timely repayment.
A1 - This designation rating indicates obligations supported by a very
strong capacity for timely repayment.
A2 -- This designation rating indicates obligations supported by a
strong capacity for timely repayment, although such capacity may be susceptible
to adverse changes in business, economic, or financial conditions.
CORPORATE BOND RATINGS
Moody's describes its three highest ratings for corporate bonds as follows:
Aaa--Bonds that are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as `gilt
edge'. Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective elements are likely
to change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa--Bonds that are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high-grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large as in Aaa securities or fluctuation of protective elements
may be of greater amplitude or there may be other elements present which make
the long-term risks appear somewhat larger than in Aaa securities.
A--Bonds that are rated A possess many favorable investment attributes and are
to be considered as upper medium-grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment some time in the future.
Moody's applies numerical modifiers, 1, 2 and 3 in each generic rating
classification from Aa through B in its corporate bond rating system. The
modifier 1 indicates that the security ranks in the higher end of its generic
rating category; the modifier 2 indicates a midrange ranking; and the modifier 3
indicates that the issue ranks in the lower end of its generic rating category.
S&P describes its ratings for corporate bonds as follows:
45
<PAGE> 112
AAA--This is the highest rating assigned by S&P to a debt obligation and
indicates an extremely strong capacity to pay principal and interest.
AA--Bonds rated AA also qualify as high-quality debt obligations. Capacity to
pay principal and interest is very strong, and in the majority of instances they
differ from AAA issues only in small degree.
A--Bonds rated A have a strong capacity to pay principal and interest, although
they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions.
S&P applies plus (+) or minus (--) modifiers to provide more detailed
indications of credit quality. Ratings from AA to A may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.
46
<PAGE> 113
AUDITED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Accountants ......................................... F-2
Statement of Net Assets as of December 31, 1999 ........................... F-3
Statements of Operations for the Year Ended December 31, 1999 ............. F-55
Statements of Changes in Net Assets for the Year Ended December 31, 1999 .. F-57
Notes to Financial Statements, December 31, 1999 .......................... F-59
</TABLE>
<PAGE> 114
--------------------------------------------------------------------------------
Market Street Fund, Inc.
Report of Independent Accountants
--------------------------------------------------------------------------------
To the Shareholders and Board of Directors of
Market Street Fund, Inc.:
In our opinion, the accompanying statements of assets and liabilities, including
the schedules of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Market Street Fund, Inc.,
comprising of the Growth, Money Market, Bond, Managed, Aggressive Growth,
International, Sentinel Growth, All Pro Large Cap Growth, All Pro Large Cap
Value, All Pro Small Cap Growth and All Pro Small Cap Value Portfolios (the
"Fund") at December 31, 1999, and the results of each of their operations for
the year then ended, the changes in each of their net assets for each of the two
years in the period then ended and the financial highlights for each of the five
years in the period then ended, in conformity with accounting principles
generally accepted in the United States. These financial statements and
financial highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with auditing standards
generally accepted in the United States, which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits, which included confirmation of securities at December
31, 1999 by correspondence with the custodian and brokers, provide a reasonable
basis for the opinion expressed above.
PRICEWATERHOUSECOOPERS LLP
2400 Eleven Penn Center
Philadelphia, Pennsylvania
January 28, 2000
F-2
<PAGE> 115
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The Growth Portfolio
Statement of Net Assets, December 31, 1999
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
-----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK -- 97.7%
Aerospace & Defense -- 0.5%
Boeing Co. ............................................... 35,000 $ 1,454,687
------------
Automobiles -- 2.3%
Ford Motor Co. ........................................... 130,000 6,946,875
------------
Banks -- 5.0%
Bank of America Corp. .................................... 62,238 3,123,570
Bank of New York Co., Inc. ............................... 163,600 6,544,000
Chase Manhattan Corp. .................................... 50,000 3,884,375
Wells Fargo Co. .......................................... 35,000 1,415,312
------------
14,967,257
------------
Beverages -- 3.1%
Pepsico, Inc. ............................................ 264,400 9,320,100
------------
Broadcasting & Publishing -- 2.1%
McGraw-Hill, Inc. ........................................ 105,000 6,470,625
------------
Business & Consumer Services -- 5.4%
Automatic Data Processing, Inc. .......................... 115,000 6,195,625
Electronic Data Systems Corp. ............................ 65,000 4,350,937
Omnicom Group, Inc. ...................................... 57,400 5,740,000
------------
16,286,562
------------
Chemicals & Allied Products -- 3.4%
Du Pont (E.I.) de Nemours & Co. .......................... 37,855 2,493,698
Monsanto Co. ............................................. 215,000 7,659,375
------------
10,153,073
------------
Communications -- 7.3%
AT&T Corp. ............................................... 80,000 4,060,000
Comcast Corp. Special Class A Non-Voting.................. 45,000 2,261,250
*General Instrument Corp. ................................ 40,000 3,400,000
GTE Corp. ................................................ 122,000 8,608,625
Motorola, Inc. ........................................... 8,143 1,199,057
SBC Communications, Inc. ................................. 60,536 2,951,130
------------
22,480,062
------------
Computers -- 3.1%
Compaq Computer Corp. .................................... 36,500 987,781
Hewlett Packard Co. ...................................... 26,000 2,962,375
International Business Machines Corp. .................... 51,000 5,508,000
------------
9,458,156
------------
Consumer Products -- 4.9%
Fortune Brands, Inc. ..................................... 90,400 2,988,850
Kimberly-Clark Corp. ..................................... 180,000 11,745,000
------------
14,733,850
------------
Cosmetics and Toiletries -- 0.8%
Gillette Co. ............................................. 60,000 2,471,250
------------
</TABLE>
F-3
<PAGE> 116
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The Growth Portfolio
Statement of Net Assets, December 31, 1999 -- Continued
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
-----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Drugs & Health Care -- 9.2%
Aetna, Inc. .............................................. 28,000 $ 1,562,750
American Home Products Corp. ............................. 225,500 8,893,156
Baxter International, Inc. ............................... 40,000 2,512,500
Becton, Dickinson & Co. .................................. 48,300 1,292,025
Bristol-Myers Squibb Co. ................................. 22,000 1,412,125
Johnson & Johnson......................................... 58,000 5,401,250
Pharmacia & Upjohn, Inc. ................................. 100,000 4,500,000
*Tenet Healthcare Corp. .................................. 36,000 846,000
United Healthcare Corp. .................................. 14,000 743,750
*Watson Pharmaceuticals, Inc. ............................ 30,000 1,074,375
------------
28,237,931
------------
Electronics -- 2.0%
Emerson Electric Co. ..................................... 25,000 1,434,375
General Electric Co. ..................................... 29,000 4,487,750
------------
5,922,125
------------
Energy -- 3.8%
Chevron Corp. ............................................ 43,500 3,768,187
FPL Group, Inc. .......................................... 45,000 1,926,562
Royal Dutch Petroleum Co. ................................ 58,500 3,535,594
Williams Cos., Inc. ...................................... 78,000 2,383,875
------------
11,614,218
------------
Entertainment -- 0.8%
Walt Disney Co. .......................................... 86,000 2,515,500
------------
Finance -- 4.0%
American Express Co. ..................................... 30,300 5,037,375
Citigroup, Inc. .......................................... 127,500 7,084,219
------------
12,121,594
------------
Finance - Investment & Other -- 1.2%
Fannie Mae................................................ 56,400 3,521,475
------------
Food & Food Distributors -- 6.1%
Bestfoods, Inc. .......................................... 113,700 5,976,356
Kroger Co. ............................................... 286,000 5,398,250
McCormick & Co., Inc. .................................... 115,400 3,433,150
Sara Lee Corp. ........................................... 160,000 3,530,000
------------
18,337,756
------------
Industrial Diversified -- 1.9%
Parker-Hannifin Corp. .................................... 109,000 5,593,062
------------
Insurance -- 5.9%
Allstate Corp. ........................................... 115,000 2,760,000
American General Corp. ................................... 63,000 4,780,125
American International Group, Inc. ....................... 58,125 6,284,766
Jefferson-Pilot Corp. .................................... 56,700 3,869,775
------------
17,694,666
------------
Lodging -- 1.4%
Marriott International, Inc. Class A...................... 129,500 4,087,344
------------
</TABLE>
F-4
<PAGE> 117
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The Growth Portfolio
Statement of Net Assets, December 31, 1999 -- Continued
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
-----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Machinery & Heavy Equipment -- 0.5%
Dover Corp................................................ 35,000 $ 1,588,125
------------
Manufacturing -- 2.5%
Alcoa, Inc. .............................................. 70,000 5,810,000
Tyco International Ltd. .................................. 41,500 1,613,313
------------
7,423,313
------------
Medical & Medical Services -- 0.6%
*Manor Care, Inc. ........................................ 106,700 1,707,200
------------
Oil & Gas -- 6.2%
Burlington Resources, Inc. ............................... 80,000 2,645,000
Conoco, Inc. Class B...................................... 168,327 4,187,134
Exxon Mobil Corp. ........................................ 121,989 9,827,739
Santa Fe International Corp. ............................. 67,000 1,733,625
Transocean Sedco Forex, Inc. ............................. 13,552 456,533
------------
18,850,031
------------
Oil Field Equipment & Services -- 2.6%
Halliburton Co. .......................................... 97,500 3,924,375
Schlumberger Ltd. ........................................ 70,000 3,937,500
------------
7,861,875
------------
Paper & Forest Products -- 2.1%
International Paper Co. .................................. 111,000 6,264,563
------------
Railroads -- 1.0%
Union Pacific Corp., Series A............................. 66,000 2,879,250
------------
Real Estate -- 1.5%
Weyerhaeuser Co. ......................................... 62,500 4,488,281
------------
</TABLE>
F-5
<PAGE> 118
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The Growth Portfolio
Statement of Net Assets, December 31, 1999 -- Concluded
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MATURITY SHARES
DESCRIPTION AND PERCENTAGE OF PORTFOLIO DATE OR PAR VALUE
--------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCK (CONTINUED)
Semiconductors -- 0.5%
Intel Corp. ............................................................ 11,000 $ 905,438
*National Semiconductor Corp............................................ 16,100 689,281
------------
1,594,719
------------
Software -- 1.0%
*BMC Software, Inc...................................................... 17,000 1,358,938
Computer Associates International, Inc. ................................ 25,500 1,783,406
------------
3,142,344
------------
Tobacco -- 0.5%
Philip Morris Cos., Inc. ............................................... 68,000 1,576,750
------------
Utilities -- 4.5%
Duke Power Co........................................................... 125,000 6,265,625
Enron Corp.............................................................. 162,000 7,188,750
------------
13,454,375
------------
TOTAL COMMON STOCK (COST $243,579,825)................................ 295,218,994
------------
COMMERCIAL PAPER -- 2.3%
General Motors Acceptance Corp., 6.44%.................... 01/12/2000 $7,000,000 6,986,226
------------
TOTAL COMMERCIAL PAPER (COST $6,986,226)................ 6,986,226
------------
</TABLE>
<TABLE>
<S> <C> <C>
SHORT TERM INVESTMENTS -- 0.0%
Temporary Investment Fund, Inc. -- TempCash............... 100,792 100,792
------------
TOTAL SHORT TERM INVESTMENTS (COST $100,792)............ 100,792
------------
TOTAL INVESTMENTS -- 100.0% (COST $250,666,843)......... 302,306,012
LIABILITIES IN EXCESS OF OTHER ASSETS -- 0.0%............... (44,376)
------------
NET ASSETS -- 100.0%
(Equivalent to $18.94 per share based on 15,959,821 shares
of capital stock outstanding)........................... $302,261,636
============
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE
($302,261,636/15,959,821 shares outstanding).............. $ 18.94
============
</TABLE>
*Non-Income Producing.
See accompanying notes to financial statements.
F-6
<PAGE> 119
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The Money Market Portfolio
Statement of Net Assets, December 31, 1999
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MATURITY
DESCRIPTION AND PERCENTAGE OF PORTFOLIO DATE PAR VALUE
--------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
BANKERS ACCEPTANCE -- 2.1%
Finance -- 2.1%
Bank of New York, 5.55%................................... 02/18/2000 $2,500,000 $ 2,481,500
------------
TOTAL BANKERS ACCEPTANCE (COST $2,481,500).............. 2,481,500
------------
COMMERCIAL PAPER -- 92.7%
Agricultural Services -- 8.7%
Deere & Co., 5.86%........................................ 01/25/2000 5,000,000 4,980,467
Monsanto Co., 6.10%....................................... 02/18/2000 5,200,000 5,157,707
------------
10,138,174
------------
Automobiles -- 7.3%
Ford Motor Credit Co., 6.03%.............................. 01/11/2000 5,500,000 5,490,787
General Motors Acceptance Corp., 6.21%.................... 01/07/2000 3,000,000 2,996,895
------------
8,487,682
------------
Banking -- 17.3%
Bank of America, 5.80%.................................... 01/05/2000 4,000,000 3,997,422
Morgan (J.P.) & Co., Inc., 6.00%.......................... 01/18/2000 5,000,000 4,985,833
Northern Trust Co. (Chicago), 6.10%....................... 01/27/2000 5,500,000 5,500,000
Wells Fargo & Co., 6.03%.................................. 01/12/2000 5,750,000 5,739,406
------------
20,222,661
------------
Brokerage -- 4.3%
Merrill Lynch & Co., Inc., 6.00%.......................... 01/19/2000 5,000,000 4,985,000
------------
Communications -- 4.7%
Bell Atlantic Network Funding, 5.85%...................... 01/26/2000 5,500,000 5,477,656
------------
Finance -- 32.7%
American Express Co., 5.80%............................... 01/31/2000 4,500,000 4,478,250
American General Finance Corp., 5.78%..................... 01/28/2000 5,000,000 4,978,325
Caterpillar Financial Services, 6.05%..................... 02/16/2000 2,300,000 2,282,220
C.I.T. Financial Corp., 5.95%............................. 02/25/2000 2,400,000 2,378,183
Citicorp, 5.95%........................................... 01/13/2000 4,000,000 3,992,067
IBM Credit Corp., 6.03%................................... 02/01/2000 5,700,000 5,670,403
Met Life Funding Corp., 5.82%............................. 01/21/2000 5,000,000 4,983,833
Prudential Funding Corp., 5.95%........................... 01/14/2000 4,000,000 3,991,405
Transamerica Financial Corp., 6.00%....................... 01/24/2000 5,500,000 5,478,917
------------
38,233,603
------------
Oil -- 9.7%
Chevron, 6.40%............................................ 01/28/2000 5,800,000 5,772,160
Texaco, Inc., 5.96%....................................... 01/10/2000 5,600,000 5,591,656
------------
11,363,816
------------
Utilities -- 8.0%
GTE Funding, Inc., 6.12%.................................. 02/08/2000 5,500,000 5,464,470
Virginia Electric & Power, 5.85%.......................... 01/20/2000 4,000,000 3,987,650
------------
9,452,120
------------
TOTAL COMMERCIAL PAPER (COST $108,360,712).............. 108,360,712
------------
</TABLE>
F-7
<PAGE> 120
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The Money Market Portfolio
Statement of Net Assets, December 31, 1999 -- Concluded
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAR VALUE
-----------------------------------------------------------------------------------------
<S> <C> <C>
SHORT TERM INVESTMENTS -- 5.7%
Temporary Investment Fund, Inc. -- TempCash............... 6,632,340 6,632,340
------------
TOTAL SHORT TERM INVESTMENTS (COST $6,632,340).......... 6,632,340
------------
TOTAL INVESTMENTS -- 100.5% (COST $117,474,552)......... 117,474,552
LIABILITIES IN EXCESS OF OTHER ASSETS -- (0.5)%............. (587,114)
------------
NET ASSETS -- 100.0%
(Equivalent to $1.00 per share based on 116,887,504 shares
of capital stock outstanding)........................... $116,887,438
============
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE
($116,887,438/116,887,504 shares outstanding)............. $ 1.00
============
</TABLE>
See accompanying notes from financial statements.
F-8
<PAGE> 121
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The Bond Portfolio
Statement of Net Assets, December 31, 1999
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MATURITY
DESCRIPTION AND PERCENTAGE OF PORTFOLIO DATE PAR VALUE
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
U.S. TREASURY BONDS -- 11.9%
U.S. Treasury Bonds, 7.25%................................ 05/15/2016 $1,000,000 $ 1,045,293
U.S. Treasury Bonds, 6.00%................................ 02/15/2026 2,500,000 2,286,591
U.S. Treasury Bonds, 6.125%............................... 08/15/2029 1,250,000 1,190,981
-----------
TOTAL U.S. TREASURY BONDS (COST $5,037,511)............. 4,522,865
-----------
U.S. TREASURY NOTES -- 11.1%
U.S. Treasury Notes, 5.25%................................ 05/15/2004 2,000,000 1,915,103
U.S. Treasury Notes, 4.75%................................ 11/15/2008 1,000,000 882,149
U.S. Treasury Notes, 5.50%................................ 05/15/2009 1,500,000 1,397,913
-----------
TOTAL U.S. TREASURY NOTES (COST $4,366,191)............. 4,195,165
-----------
AGENCY OBLIGATIONS -- 21.9%
Federal Home Loan Mortgage Corp., 8.500%.................. 06/15/2003 1,000,000 1,029,146
Federal Home Loan Mortgage Corp., 8.00%................... 11/01/2008 227,414 231,820
Federal Home Loan Mortgage Corp., 8.00%................... 03/01/2017 15,764 16,070
Federal National Mortgage Association, 10.50%............. 11/01/2017 485,163 519,882
Federal National Mortgage Association, 8.00%.............. 03/01/2022 428,200 431,411
Federal National Mortgage Association, 7.5%............... 03/01/2026 384,203 379,881
Federal National Mortgage Association, 8.5%............... 09/01/2026 923,299 946,381
Federal National Mortgage Association, 6.00%.............. 04/01/2028 1,020,714 933,954
Federal National Mortgage Association, 8.50%.............. 04/01/2028 920,048 943,049
Federal National Mortgage Association, 7.00%.............. 09/01/2028 904,930 874,672
Federal National Mortgage Association, 7.00%.............. 11/01/2028 305,242 295,035
Government National Mortgage Association, 7.50%........... 09/15/2023 1,304,570 1,289,894
Government National Mortgage Association, 7.50%........... 10/15/2029 486,489 481,016
-----------
TOTAL AGENCY OBLIGATIONS (COST $8,592,085).............. 8,372,211
-----------
CORPORATE BONDS -- 48.1%
Aerospace & Defense -- 2.3%
Lockheed Martin, 8.50%.................................... 12/01/2029 500,000 499,375
Raytheon Co., 7.00%....................................... 11/01/2028 500,000 431,875
-----------
931,250
-----------
Airlines -- 1.8%
Delta Air Lines 144A, 8.30%............................... 12/15/2029 750,000 725,625
-----------
Automobiles -- 2.1%
Ford Motor Co. 6.375%..................................... 02/01/2029 1,000,000 840,000
-----------
Automotive & Equipment -- 0.6%
Lear Corp., 7.96%......................................... 05/15/2005 250,000 239,687
-----------
Banks -- 0.6%
Sanwa Bank Ltd, 8.35%..................................... 07/15/2009 250,000 251,562
-----------
Chemicals & Allied Products -- 0.6%
Rohm and Haas Co., 7.40%.................................. 07/15/2009 250,000 247,187
-----------
Communications -- 5.9%
Comsat Corp. Medium Term Note, 8.55%...................... 12/13/2006 500,000 521,660
Sprint Capital Corp., 6.875%.............................. 11/15/2028 1,000,000 891,250
Worldcom, Inc., 6.40%..................................... 08/15/2005 1,000,000 960,000
-----------
2,372,910
-----------
Computers -- 1.2%
Sun Microsystems, Inc., 7.00%............................. 08/15/2002 500,000 498,125
-----------
</TABLE>
F-9
<PAGE> 122
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The Bond Portfolio
Statement of Net Assets, December 31, 1999 -- Continued
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MATURITY
DESCRIPTION AND PERCENTAGE OF PORTFOLIO DATE PAR VALUE
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CORPORATE BONDS (CONTINUED)
Consumer Services -- 0.5%
Service Corp. International, 6.00%........................ 12/15/2005 $ 250,000 $ 188,750
-----------
Containers -- 1.8%
Crown Cork & Seal Co., Inc., 7.125%....................... 09/01/2002 750,000 737,812
-----------
Finance -- 10.8%
Ahold Finance USA, Inc., 6.25%............................ 05/01/2009 500,000 454,375
Aristar, Inc., 6.30%...................................... 10/01/2002 500,000 488,125
Duke Capital Corp., 7.50%................................. 10/01/2009 500,000 495,000
ERAC USA Finance Co., 6.625%.............................. 05/15/2006 750,000 703,125
Finova Capital Corp., 7.25%............................... 11/08/2004 1,000,000 988,750
Household Finance Corp., 7.20%............................ 07/15/2006 750,000 734,063
Socgen Real Estate L.L.C., 7.64%.......................... 12/29/2049 500,000 458,125
-----------
4,321,563
-----------
Foods -- 1.9%
Safeway, Inc., 7.00%...................................... 09/15/2002 750,000 743,438
-----------
Foreign Financial Institutions -- 1.2%
Banque Nationale de Paris, 7.738%......................... 12/31/2049 500,000 462,500
-----------
Industrial -- 3.6%
CMS Energy, 6.75%......................................... 01/15/2004 250,000 231,875
IMC Global, Inc., 7.40%................................... 11/01/2002 500,000 496,875
Owens Corning, 7.50%...................................... 05/01/2005 750,000 717,188
-----------
1,445,938
-----------
Manufacturing -- 1.2%
Tyco International Group, 6.875%.......................... 09/05/2002 500,000 491,875
-----------
Oil & Gas -- 2.4%
KN Energy, Inc., 6.45%.................................... 03/01/2003 500,000 484,375
Union Pacific Resources Group, 7.30%...................... 04/15/2009 500,000 476,875
-----------
961,250
-----------
Real Estate -- 1.8%
Simon Property Group LP, Inc., 6.625%..................... 06/15/2003 750,000 711,563
-----------
Retail Merchandising -- 1.2%
Penney (J.C.) & Co. Notes, 7.25%.......................... 04/01/2002 500,000 488,750
-----------
Tobacco -- 0.4%
Dimon, Inc. Senior Notes, 8.875%.......................... 06/01/2006 200,000 178,500
-----------
Transportation -- 1.4%
Laidlaw, Inc., 7.65%...................................... 05/15/2006 600,000 558,750
-----------
Utilities -- 4.8%
Calenergy Co., Inc. Senior Notes, 7.52%................... 09/15/2008 750,000 729,375
Cleveland Electric Toledo Edison, 7.67%................... 07/01/2004 250,000 246,250
US West Capital Funding, 6.25%............................ 07/15/2005 1,000,000 940,000
-----------
1,915,625
-----------
TOTAL CORPORATE BONDS (COST $20,144,024)................ 19,312,660
-----------
COMMERCIAL PAPER -- 4.5%
Chevron USA, Inc., 5.78%.................................. 02/14/2000 1,800,000 1,786,778
-----------
TOTAL COMMERCIAL PAPER (COST $1,787,284)................ 1,786,778
-----------
</TABLE>
F-10
<PAGE> 123
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The Bond Portfolio
Statement of Net Assets, December 31, 1999 -- Concluded
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAR VALUE
--------------------------------------------------------------------------------------
<S> <C> <C>
SHORT TERM INVESTMENTS -- 3.4%
Temporary Investment Fund, Inc. -- TempCash............... 1,351,514 1,351,514
-----------
TOTAL SHORT TERM INVESTMENTS (COST $1,351,514).......... 1,351,514
-----------
TOTAL INVESTMENTS -- 103.5% (COST $41,278,609).......... 39,541,193
LIABILITIES IN EXCESS OF OTHER ASSETS -- (3.5%)............. (1,358,928)
-----------
NET ASSETS -- 100.0%
(Equivalent to $10.58 per share based on 3,607,685 shares
of capital stock outstanding)........................... $38,182,265
===========
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE
($38,182,265/3,607,685 shares outstanding)................ $ 10.58
===========
</TABLE>
See accompanying notes to financial statements.
F-11
<PAGE> 124
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The Managed Portfolio
Statement of Net Assets, December 31, 1999
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
-------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK -- 55.4%
Aerospace & Defense--0.4%
Boeing Co. ............................................... 4,900 $ 203,656
-----------
Automobiles -- 1.2%
Ford Motor Co. ........................................... 16,000 855,000
-----------
Banks -- 2.9%
Bank of America Corp. .................................... 9,052 454,297
Bank of New York Co., Inc. ............................... 20,900 836,000
Chase Manhattan Corp. .................................... 7,500 582,656
Wells Fargo Co. .......................................... 6,500 262,844
-----------
2,135,797
-----------
Beverages -- 1.8%
Pepsico, Inc. ............................................ 38,500 1,357,125
-----------
Broadcasting & Publishing -- 1.2%
McGraw-Hill, Inc. ........................................ 14,200 875,075
-----------
Business & Consumer Services -- 2.9%
Automatic Data Processing, Inc. .......................... 14,200 765,025
Electronic Data Systems Corp. ............................ 9,000 602,437
Omnicom Group, Inc. ...................................... 7,900 790,000
-----------
2,157,462
-----------
Chemicals & Allied Products -- 1.9%
Du Pont (E.I.) de Nemours & Co. .......................... 7,371 485,565
Monsanto Co. ............................................. 26,600 947,625
-----------
1,433,190
-----------
Communications -- 4.5%
AT&T Corp. ............................................... 11,500 583,625
Comcast Corp. Special Class A Non-Voting.................. 9,000 452,250
*General Instrument Corp. ................................ 5,600 476,000
GTE Corp. ................................................ 16,000 1,129,000
Motorola, Inc. ........................................... 1,884 277,419
SBC Communications, Inc. ................................. 8,422 410,572
-----------
3,328,866
-----------
Computers -- 1.8%
Compaq Computer Corp. .................................... 5,100 138,019
Hewlett Packard Co. ...................................... 3,700 421,569
International Business Machines Corp. .................... 7,400 799,200
-----------
1,358,788
-----------
Consumer Products -- 2.2%
Kimberly-Clark Corp. ..................................... 25,000 1,631,250
-----------
Cosmetics and Toiletries -- 0.5%
Gillette Co. ............................................. 9,000 370,687
-----------
</TABLE>
F-12
<PAGE> 125
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The Managed Portfolio
Statement of Net Assets, December 31, 1999 -- Continued
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
-------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Drugs & Health Care -- 5.1%
Aetna, Inc. .............................................. 3,600 $ 200,925
American Home Products Corp. ............................. 32,800 1,293,550
Baxter International, Inc. ............................... 4,500 282,656
Becton, Dickinson & Co. .................................. 7,400 197,950
Bristol-Myers Squibb Co. ................................. 2,700 173,306
Johnson & Johnson......................................... 8,000 745,000
Pharmacia & Upjohn, Inc. ................................. 10,400 468,000
*Tenet Healthcare Corp. .................................. 5,000 117,500
United Healthcare Corp. .................................. 1,800 95,625
*Watson Pharmaceuticals, Inc. ............................ 5,500 196,969
-----------
3,771,481
-----------
Electronics -- 1.3%
Emerson Electric Co. ..................................... 6,500 372,937
General Electric Co. ..................................... 3,800 588,050
-----------
960,987
-----------
Energy -- 2.1%
Chevron Corp. ............................................ 5,100 441,787
FPL Group, Inc. .......................................... 5,800 248,312
Royal Dutch Petroleum Co. ................................ 8,000 483,500
Williams Cos., Inc. ...................................... 11,300 345,356
-----------
1,518,955
-----------
Entertainment -- 0.3%
Walt Disney Co. .......................................... 8,000 234,000
-----------
Finance -- 2.0%
American Express Co. ..................................... 4,000 665,000
Citigroup, Inc. .......................................... 15,000 833,437
-----------
1,498,437
-----------
Finance - Investment & Other -- 0.7%
Fannie Mae................................................ 8,200 511,987
-----------
Food & Food Distributors -- 3.7%
Bestfoods, Inc. .......................................... 14,800 777,925
Kroger Co. ............................................... 41,900 790,862
McCormick & Co., Inc. .................................... 27,400 815,150
Sara Lee Corp. ........................................... 17,000 375,063
-----------
2,759,000
-----------
Industrial Diversified -- 1.1%
Parker-Hannifin Corp. .................................... 15,300 785,081
-----------
Insurance -- 3.1%
Allstate Corp. ........................................... 15,000 360,000
American General Corp. ................................... 8,200 622,175
American International Group, Inc. ....................... 7,562 817,641
Jefferson-Pilot Corp. .................................... 7,500 511,875
-----------
2,311,691
-----------
</TABLE>
F-13
<PAGE> 126
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The Managed Portfolio
Statement of Net Assets, December 31, 1999 -- Continued
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
-------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Lodging -- 0.8%
Marriott International, Inc. Class A...................... 18,500 $ 583,906
-----------
Machinery & Heavy Equipment -- 0.3%
Dover Corp. .............................................. 4,500 204,188
-----------
Manufacturing -- 1.5%
Alcoa, Inc. .............................................. 9,400 780,200
Tyco International Ltd. .................................. 8,000 311,000
-----------
1,091,200
-----------
Medical & Medical Services -- 0.3%
*Manor Care, Inc. ........................................ 15,700 251,200
-----------
Oil & Gas -- 3.5%
Burlington Resources, Inc. ............................... 11,800 390,138
Conoco, Inc. Class B...................................... 21,595 537,176
Exxon Mobil Corp. ........................................ 16,781 1,351,919
Santa Fe International Corp. ............................. 10,100 261,338
Transocean Sedco Forex, Inc. ............................. 1,549 52,175
-----------
2,592,746
-----------
Oil Field Equipment & Services -- 1.4%
Halliburton Co. .......................................... 15,000 603,750
Schlumberger Ltd. ........................................ 8,000 450,000
-----------
1,053,750
-----------
Paper & Forest Products -- 1.1%
International Paper Co. .................................. 14,900 840,919
-----------
Railroads -- 0.6%
Union Pacific Corp., Series A............................. 10,000 436,250
-----------
Real Estate -- 1.2%
Weyerhaeuser Co. ......................................... 12,500 897,656
-----------
Semiconductors -- 0.5%
Intel Corp. .............................................. 3,000 246,938
*National Semiconductor Corp. ............................ 2,300 98,469
-----------
345,407
-----------
Software -- 0.6%
*BMC Software, Inc. ...................................... 2,300 183,856
Computer Associates International, Inc. .................. 3,600 251,775
-----------
435,631
-----------
Tobacco -- 0.3%
Philip Morris Cos., Inc. ................................. 9,000 208,688
-----------
Utilities -- 2.6%
Duke Power Co. ........................................... 18,500 927,313
Enron Corp. .............................................. 23,000 1,020,625
-----------
1,947,938
-----------
TOTAL COMMON STOCK (COST $31,760,268)................... 40,947,994
-----------
</TABLE>
F-14
<PAGE> 127
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The Managed Portfolio
Statement of Net Assets, December 31, 1999 -- Continued
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MATURITY
DESCRIPTION AND PERCENTAGE OF PORTFOLIO DATE PAR VALUE
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
U.S. TREASURY NOTES -- 5.7%
U.S. Treasury Notes, 5.50%................................ 05/15/2009 $3,000,000 $ 2,795,826
U.S. Treasury Notes, 6.00%................................ 08/15/2009 1,500,000 1,453,195
-----------
TOTAL U.S. TREASURY NOTES (COST $4,404,985)............. 4,249,021
-----------
U.S. TREASURY BONDS -- 7.2%
U.S. Treasury Bonds, 7.25%................................ 05/15/2016 1,000,000 1,045,293
U.S. Treasury Bonds, 8.875%............................... 02/15/2019 1,000,000 1,216,948
U.S. Treasury Bonds, 6.125%............................... 08/15/2029 3,250,000 3,096,552
-----------
U.S. TREASURY BONDS (COST $5,617,934)................... 5,358,793
-----------
AGENCY OBLIGATIONS -- 12.8%
Collateralized Mortgage Obligation, 6.70%................. 01/25/2026 1,000,000 939,302
Federal Home Loan Mortgage Corp., 9.00%................... 08/01/2004 563,693 581,661
Federal Home Loan Mortgage Corp., 9.00%................... 12/01/2004 505,097 521,197
Federal Home Loan Mortgage Corp., 9.50%................... 08/01/2005 522,636 548,278
Federal Home Loan Mortgage Corp., 9.50%................... 03/01/2006 94,912 99,094
Federal Home Loan Mortgage Corp., 8.00%................... 11/01/2008 227,414 231,820
Federal National Mortgage Association, 7.00%.............. 03/01/2008 235,879 233,225
Federal National Mortgage Association, 7.75%.............. 03/01/2008 127,916 127,677
Federal National Mortgage Association, 7.75%.............. 05/01/2008 83,539 83,383
Federal National Mortgage Association, 10.50%............. 03/01/2018 365,954 392,143
Federal National Mortgage Association, 8.50%.............. 09/01/2026 923,299 946,381
Federal National Mortgage Association, 8.50%.............. 10/01/2026 917,235 940,166
Federal National Mortgage Association, 8.00%.............. 10/01/2027 632,881 637,627
Federal National Mortgage Association, 8.00%.............. 01/01/2028 661,500 666,461
Federal National Mortgage Association, 7.50%.............. 05/01/2028 468,354 463,085
Federal National Mortgage Association, 8.00%.............. 11/01/2014 500,994 510,857
Federal National Mortgage Association, 8.00%.............. 12/01/2014 449,249 458,094
Government National Mortgage Association, 8.00%........... 03/15/2007 187,563 191,490
Government National Mortgage Association, 7.50%........... 11/15/2007 575,935 569,815
Government National Mortgage Association, 8.00%........... 08/15/2008 304,476 310,851
-----------
TOTAL AGENCY OBLIGATIONS (COST $9,566,842).............. 9,452,607
-----------
CORPORATE BONDS -- 16.2%
Aerospace & Defense -- 1.9%
Lockheed Martin, 8.50%.................................... 12/01/2029 1,000,000 998,750
Raytheon Co., 7.00%....................................... 11/02/2028 500,000 431,875
-----------
1,430,625
-----------
Automobiles -- 0.6%
Ford Motor Co., 6.375%.................................... 02/01/2029 500,000 420,000
-----------
Automotive & Equipment -- 1.0%
Lear Corp., 7.96%......................................... 05/15/2005 250,000 239,688
TRW, Inc., 7.125%......................................... 06/01/2009 500,000 472,500
-----------
712,188
-----------
</TABLE>
F-15
<PAGE> 128
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The Managed Portfolio
Statement of Net Assets, December 31, 1999 -- Continued
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MATURITY
DESCRIPTION AND PERCENTAGE OF PORTFOLIO DATE PAR VALUE
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CORPORATE BONDS (CONTINUED)
Communications -- 2.6%
AT&T Canada, Inc., 7.65%.................................. 09/15/2006 $ 500,000 $ 496,875
Comsat Corp. Medium Term Note, 8.55%...................... 12/13/2006 500,000 521,661
Sprint Capital Corp., 6.875%.............................. 11/15/2028 500,000 445,625
Worldcom, Inc., 6.40%..................................... 08/15/2005 500,000 480,000
-----------
1,944,161
-----------
Computers -- 0.3%
Sun Microsystems, Inc., 7.00%............................. 08/15/2002 250,000 249,063
-----------
Consumer Services -- 0.5%
Service Corp. International, 6.00%........................ 12/15/2005 500,000 377,500
-----------
Containers -- 0.7%
Crown Cork & Seal Co., Inc., 7.125%....................... 09/01/2002 500,000 491,875
-----------
Finance -- 2.1%
Duke Capital Corp., 7.50%................................. 10/01/2009 500,000 495,000
ERAC USA Finance Co., 6.625%.............................. 05/15/2006 500,000 468,750
Finova Capital Corp., 7.25%............................... 11/08/2004 500,000 494,375
-----------
1,458,125
-----------
Food & Food Distributors -- 0.6%
Archer-Daniels-Midland, 6.625%............................ 05/01/2029 500,000 428,750
-----------
Foreign Financial Institutions -- 0.3%
Banque Nationale de Paris, 7.738%......................... 12/31/2049 250,000 231,250
-----------
Industrial -- 2.0%
CMS Energy, 6.75%......................................... 01/15/2004 250,000 231,875
IMC Global, Inc., 7.40%................................... 11/01/2002 500,000 496,875
Nabors Industrial, 6.80%.................................. 04/15/2004 250,000 240,938
Owens Corning, 7.50%...................................... 05/01/2005 500,000 478,125
-----------
1,447,813
-----------
Oil & Gas -- 0.6%
Union Pacific Resources Group, 7.30%...................... 04/15/2009 500,000 476,875
-----------
Real Estate -- 0.6%
Simon Property Group LP, Inc., 6.625%..................... 06/15/2003 500,000 474,375
-----------
Retail Merchandising -- 1.3%
Penney (J.C.) & Co. Notes, 7.25%.......................... 04/01/2002 1,000,000 977,500
-----------
Tobacco -- 0.2%
Dimon, Inc. Senior Notes, 8.875%.......................... 06/01/2006 200,000 178,500
-----------
Transportation -- 0.6%
Laidlaw, Inc., 7.65%...................................... 05/15/2006 500,000 465,625
-----------
Utilities -- 0.3%
Cleveland Electric Toledo Edison, 7.67%................... 07/01/2004 250,000 246,250
-----------
TOTAL CORPORATE BONDS (COST $12,477,855)................ 12,010,475
-----------
COMMERCIAL PAPER -- 8.3%
Household Finance Corp., 5.83%............................ 02/10/2000 3,700,000 3,676,222
Northern Trust Co. (Chicago), 5.88%....................... 01/31/2000 2,500,000 2,487,270
-----------
TOTAL COMMERCIAL PAPER (COST $6,163,782)................ 6,163,492
-----------
</TABLE>
F-16
<PAGE> 129
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The Managed Portfolio
Statement of Net Assets, December 31, 1999 -- Concluded
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MATURITY SHARES
DESCRIPTION AND PERCENTAGE OF PORTFOLIO DATE OR PAR VALUE
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
SHORT TERM INVESTMENTS -- 1.9%
Temporary Investment Fund, Inc. -- TempCash............... $1,386,909 $ 1,386,909
-----------
TOTAL SHORT TERM INVESTMENTS (COST $1,386,909).......... 1,386,909
-----------
TOTAL INVESTMENTS -- 107.5% (COST $71,378,575).......... 79,569,291
LIABILITIES IN EXCESS OF OTHER ASSETS -- (7.5%)............. (5,583,459)
-----------
NET ASSETS -- 100.0%
(Equivalent to $16.79 per share based on 4,407,274 shares
of capital stock outstanding)........................... $73,985,832
===========
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE
($73,985,832/4,407,274 shares outstanding)................ $ 16.79
===========
</TABLE>
*Non-Income Producing.
See accompanying notes to financial statements.
F-17
<PAGE> 130
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The Aggressive Growth Portfolio
Statement of Net Assets, December 31, 1999
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK -- 92.5%
Aerospace & Defense -- 2.0%
AAR Corp.................................................. 38,000 $ 681,625
Goodrich (B.F.) Co........................................ 20,000 550,000
-----------
1,231,625
-----------
Banks -- 1.0%
Cullen Frost Bankers, Inc. ............................... 8,000 206,000
Mercantile Bankshares Corp................................ 6,000 191,625
Wilmington Trust Corp..................................... 5,000 241,250
-----------
638,875
-----------
Beverages -- 0.8%
*Robert Mondavi Corp., Class A............................ 15,000 521,250
-----------
Broadcasting & Publishing -- 1.9%
*IDG Books Worldwide, Inc. ............................... 18,000 208,125
Meredith Corp............................................. 24,000 1,000,500
-----------
1,208,625
-----------
Building - Maintenance & Service -- 0.5%
American Building Maintenance Industries.................. 15,000 305,625
-----------
Business & Consumer Services -- 10.5%
*Acxiom Corp.............................................. 48,000 1,152,000
*Administaff, Inc......................................... 15,000 453,750
Affiliated Computer Services, Inc......................... 36,000 1,656,000
Analysts International Corp............................... 46,000 575,000
*Caci International, Inc.................................. 23,000 520,375
*Catalina Marketing Corp.................................. 12,000 1,389,000
Healthcare Services Group................................. 41,700 291,900
Unifirst Corp. ........................................... 48,000 606,000
-----------
6,644,025
-----------
Chemicals & Allied Products -- 5.1%
*Bush Boake Allen, Inc.................................... 42,600 1,046,362
Cambrex Corp.............................................. 62,000 2,135,125
-----------
3,181,487
-----------
Communications -- 2.8%
*Dynatech Corp. .......................................... 7,000 47,250
*Tekelec, Inc............................................. 36,000 810,000
True North Communications................................. 20,000 893,750
-----------
1,751,000
-----------
Computers -- 1.6%
Ciber, Inc................................................ 36,000 990,000
-----------
Consumer Products -- 0.7%
Kimberly-Clark Corp. ..................................... 7,000 456,750
-----------
Containers -- 1.4%
Bemis Co., Inc. .......................................... 25,000 871,875
-----------
Cosmetics and Toiletries -- 1.6%
Alberto-Culver Co. Class A................................ 45,000 978,750
-----------
</TABLE>
F-18
<PAGE> 131
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The Aggressive Growth Portfolio
Statement of Net Assets, December 31, 1999 -- Continued
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Drugs & Health Care -- 5.5%
*Barr Laboratories, Inc. ................................. 18,000 $ 564,750
*Covance, Inc............................................. 68,000 735,250
Jones Pharma, Inc. ....................................... 12,000 521,250
*Medicis Pharmaceutical Corp. Class A..................... 17,000 723,562
*Monarch Dental Corp. .................................... 26,000 44,687
Shire Pharmaceuticals Group............................... 11,469 334,035
*Watson Pharmaceuticals, Inc. ............................ 14,000 501,375
-----------
3,424,909
-----------
Electronics -- 15.6%
Applied Power, Inc. Class A............................... 38,000 1,396,500
*Burr-Brown Corp. ........................................ 19,500 704,437
*C-COR Electronics, Inc. ................................. 5,000 383,125
*C-Cube Microsystems, Inc. ............................... 18,000 1,120,500
*Cable Design Technologies, Inc. ......................... 35,000 805,000
CTS Corp.................................................. 12,000 904,500
Harman International Industries, Inc. .................... 29,000 1,627,625
Methode Electronics, Inc. Class A......................... 58,000 1,863,250
*Sawtek, Inc. ............................................ 14,000 931,875
-----------
9,736,812
-----------
Energy -- 1.0%
MidAmerican Energy Holdings Co. .......................... 18,000 606,375
-----------
Environmental Control -- 2.6%
Donaldson Co., Inc........................................ 46,000 1,106,875
*Tetra Technologies, Inc. ................................ 68,000 493,000
-----------
1,599,875
-----------
Financial -- 4.2%
Duff & Phelps Credit Rating Co. .......................... 16,000 1,423,000
Waddell & Reed Financial, Inc. ........................... 30,000 813,750
Waddell & Reed Financial, Inc. Class B.................... 15,000 376,875
-----------
2,613,625
-----------
Food & Food Distributors -- 3.4%
Smart & Final, Inc. ...................................... 25,000 181,250
*Whole Foods Market, Inc. ................................ 42,000 1,947,750
-----------
2,129,000
-----------
Insurance -- 2.3%
Enhance Financial Services Group, Inc. ................... 33,000 536,250
HCC Insurance Holdings, Inc. ............................. 69,000 909,937
-----------
1,446,187
-----------
Manufacturing -- 4.1%
AptarGroup, Inc. ......................................... 43,000 1,080,375
*Gardner Denver Machinery, Inc. .......................... 16,000 267,000
*Plexus Corp. ............................................ 19,000 836,000
Robbins & Myers, Inc. .................................... 16,000 362,000
-----------
2,545,375
-----------
</TABLE>
F-19
<PAGE> 132
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The Aggressive Growth Portfolio
Statement of Net Assets, December 31, 1999 -- Continued
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Medical Equipment & Supplies -- 3.6%
Diagnostic Products Corp. ................................ 7,000 $ 171,500
Mentor Corp. ............................................. 39,900 1,029,919
Minntech Corp. ........................................... 40,000 385,000
*Orthodontic Centers of America, Inc. .................... 38,000 453,625
*STARR Surgical Co. ...................................... 24,000 234,000
-----------
2,274,044
-----------
Oil & Gas -- 1.0%
*Cal Dive International, Inc. ............................ 10,000 331,250
Santa Fe International Corp. ............................. 12,000 310,500
-----------
641,750
-----------
Oil Equipment & Services -- 1.1%
CARBO Ceramics, Inc. ..................................... 12,000 262,500
*Oceaneering International, Inc. ......................... 29,000 433,188
-----------
695,688
-----------
Personal Services -- 0.3%
Strayer Education, Inc. .................................. 8,300 163,925
-----------
Railroads -- 0.5%
*Railtex, Inc. ........................................... 18,000 321,750
-----------
Real Estate -- 2.5%
Chateau Communities, Inc. ................................ 46,000 1,193,125
Liberty Property Trust.................................... 15,000 363,750
-----------
1,556,875
-----------
Restaurants -- 3.9%
Applebee's International, Inc. ........................... 27,000 796,500
*Jack in the Box, Inc. ................................... 28,000 579,250
Ruby Tuesday, Inc. ....................................... 60,000 1,091,250
-----------
2,467,000
-----------
Retail Merchandising -- 2.9%
Casey General Stores, Inc. ............................... 46,000 480,125
Ethan Allen Interiors, Inc. .............................. 35,000 1,122,188
*Wet Seal (The), Inc., Class A............................ 16,000 196,000
-----------
1,798,313
-----------
Semiconductors -- 2.4%
Dallas Semiconductor Corp. ............................... 22,800 1,469,175
-----------
Software -- 1.8%
*Filenet Corp. ........................................... 44,000 1,122,000
-----------
1,122,000
-----------
Transportation -- 3.9%
Air Express International Corp. .......................... 27,000 872,438
*Eagle USA Airfreight, Inc. .............................. 13,500 582,188
Robinson (C.H.) Worldwide, Inc. .......................... 24,000 954,000
-----------
2,408,626
-----------
TOTAL COMMON STOCK (COST $48,257,470)................... 57,801,191
-----------
</TABLE>
F-20
<PAGE> 133
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The Aggressive Growth Portfolio
Statement of Net Assets, December 31, 1999 -- Concluded
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MATURITY SHARES
DESCRIPTION AND PERCENTAGE OF PORTFOLIO DATE OR PAR VALUE
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CORPORATE BONDS -- 0.1%
Phoenix Investment Partners Ltd., 6.00%................... 11/01/2015 $ 62,500 $ 63,516
-----------
TOTAL CORPORATE BOND (COST $65,394)..................... 63,516
-----------
COMMERCIAL PAPER -- 4.4%
Ford Motor Credit Co., 6.50%.............................. 01/04/2000 1,287,000 1,286,303
General Electric Capital Corp., 5.60%..................... 02/14/2000 1,500,000 1,489,733
-----------
TOTAL COMMERCIAL PAPER (COST $2,776,036)................ 2,776,036
-----------
SHORT TERM INVESTMENTS -- 3.4%
Temporary Investment Fund, Inc. -- TempCash........................... 2,100,072 2,100,072
-----------
TOTAL SHORT TERM INVESTMENTS (COST $2,100,072)...................... 2,100,072
-----------
TOTAL INVESTMENTS -- 100.4% (COST $53,198,972)...................... 62,740,815
LIABILITIES IN EXCESS OF OTHER ASSETS -- (0.4%)......................... (228,468)
-----------
NET ASSETS -- 100.0%
(Equivalent to $21.97 per share based on 2,845,165 shares of capital
stock outstanding).................................................. $62,512,347
===========
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE
($62,512,347/2,845,165 shares outstanding)............................ $ 21.97
===========
</TABLE>
*Non-Income Producing.
See accompanying notes to financial statements.
F-21
<PAGE> 134
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The International Portfolio
Statement of Net Assets, December 31, 1999
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON AND PREFERRED STOCK -- 95.9%
Australia -- 2.1%
Australia & New Zealand Bank Group Ltd.................... 145,924 $ 1,062,358
Boral Ltd................................................. 1 2
Goodman Fielder Ltd....................................... 385,571 344,515
Pacific Dunlop Ltd. ...................................... 301,642 427,273
-----------
1,834,148
-----------
Austria -- 0.6%
Bank Austria AG........................................... 10,150 572,464
-----------
Brazil -- 0.9%
Petroleo Brasileiro SA ADR................................ 13,500 346,248
Telecomunicacoes Brasileiras SA ADR....................... 3,611 464,013
-----------
810,261
-----------
Denmark -- 0.7%
Jyske Bank................................................ 31,450 633,575
-----------
Finland -- 0.6%
Kesko Oyj................................................. 42,600 540,598
-----------
France -- 9.5%
Alstom SA................................................. 12,315 410,541
Assurances Generales de France............................ 14,580 790,013
Banque Nationale de Paris................................. 12,600 1,162,413
Bongrain.................................................. 1,227 406,940
*Dexia Belgium............................................ 4,510 745,837
*Dexia Strips............................................. 4,510 --
L'Air Liquide............................................. 6,437 1,077,477
Michelin-(CGDE)........................................... 19,153 752,308
PSA Peugeot Citroen....................................... 1,910 433,592
Societe Generale.......................................... 2,018 469,491
Thomson CSF............................................... 24,219 799,820
Total Fina SA ADR......................................... 13,661 946,024
Usinor Sacilor............................................ 21,400 401,964
-----------
8,396,420
-----------
Germany -- 10.1%
*Aventis AG............................................... 4,351 252,414
Bayer AG.................................................. 26,300 1,244,939
Deutsche Bank AG.......................................... 12,777 1,079,012
Deutsche Lufthansa AG..................................... 36,000 837,547
Hugo Boss AG.............................................. 2,530 323,608
Merck KGAA................................................ 31,289 970,592
Metallgesellschaft AG..................................... 14,165 283,899
ProSieben Media AG........................................ 7,700 447,467
Rheinmetall AG............................................ 13,900 146,994
Siemens AG................................................ 7,600 966,744
Veba AG................................................... 21,800 1,059,372
Viag AG................................................... 16,260 298,048
Volkswagen AG............................................. 18,150 1,022,754
-----------
8,933,390
-----------
</TABLE>
F-22
<PAGE> 135
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The International Portfolio
Statement of Net Assets, December 31, 1999 -- Continued
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON AND PREFERRED STOCK (CONTINUED)
Greece -- 1.3%
Hellenic Telecommunications............................... 93,755 $ 1,119,200
-----------
Hong Kong -- 1.6%
CDL Hotels International Ltd.............................. 322,000 128,411
Henderson Investment Ltd.................................. 353,000 367,827
Hong Kong Electric........................................ 286,896 896,838
-----------
1,393,076
-----------
Italy -- 3.5%
Banca Popolare di Bergamo Credito Varesino SpA............ 21,400 494,857
*Beni Stabili SpA......................................... 23,512 8,288
ENI SpA................................................... 46,400 255,156
Ente Nazionale Idrocarburi SpA............................ 17,000 937,125
Istituto Bancario San Paolo di Torino SpA................. 34,912 474,331
Telecom Italia SpA........................................ 158,300 964,563
-----------
3,134,320
-----------
Japan -- 27.8%
77 Bank Ltd............................................... 70,000 733,777
Aiful Corp................................................ 3,000 367,035
Canon, Inc................................................ 39,000 1,549,770
Credit Saison Co.......................................... 45,500 792,698
Dai-Tokyo Fire and Marine Insurance....................... 143,000 583,645
Fuji Machine.............................................. 21,000 1,693,648
Honda Motor Co. Ltd....................................... 18,000 669,472
Mabuchi Motors............................................ 9,700 1,692,777
Marubeni Corp............................................. 270,000 1,133,699
Matsumotokiyoshi.......................................... 15,600 1,207,752
Mineba Co. Ltd............................................ 87,000 1,492,718
Mitsubishi Heavy Industries Ltd........................... 110,000 367,133
Murata Manufacturing Co. Ltd.............................. 3,000 704,708
Namco Ltd................................................. 21,500 1,393,070
Nichiei................................................... 14,100 306,372
Nippon Express Company Ltd................................ 200,000 1,106,000
Nippon Telegraph & Telephone Corp......................... 250 428,208
Nishimatsu Construction................................... 80,000 321,034
Rinnai Corp............................................... 32,000 595,087
Rohm Co. Ltd.............................................. 5,000 2,094,548
Sankyo Company Ltd. ...................................... 25,000 513,849
Sekisui Chemical Co. ..................................... 75,000 332,534
Shin-Etsu Chemical Company Limited........................ 8,000 344,524
Sony Corp................................................. 7,400 2,194,578
Toyota Motor Corp......................................... 21,000 1,017,422
Yamanouchi Pharmaceuticals................................ 29,000 1,013,311
-----------
24,649,369
-----------
Korea -- 0.8%
Korea Electric Power ADR.................................. 26,400 442,200
Pohang Iron & Steel Co. Ltd. ADR.......................... 8,000 280,000
-----------
722,200
-----------
</TABLE>
F-23
<PAGE> 136
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The International Portfolio
Statement of Net Assets, December 31, 1999 -- Continued
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON AND PREFERRED STOCK (CONTINUED)
Mexico -- 0.3%
Telefonos de Mexico SA ADR................................ 2,308 $ 259,650
-----------
Netherlands -- 6.9%
ABN Amro Holding.......................................... 43,620 1,089,512
AKZO N.V. ADR............................................. 15,500 771,125
Buhrmann N.V. ............................................ 45,085 678,841
Hollandsche Beton......................................... 37,826 361,917
Hunter Douglas N.V. ...................................... 26,319 715,694
ING Groep N.V. ........................................... 17,087 1,031,519
KPN ADS................................................... 5,383 517,441
Stork N.V. ............................................... 37,053 541,110
Vedior N.V. .............................................. 42,400 435,573
-----------
6,142,732
-----------
New Zealand -- 0.9%
Fletcher Challenge Paper.................................. 427,822 299,540
Telecom Corporation of New Zealand Ltd.................... 114,600 538,907
-----------
838,447
-----------
Norway -- 1.1%
Norsk Hydro............................................... 9,700 406,612
Orkla..................................................... 32,000 550,933
-----------
957,545
-----------
Peru -- 0.4%
Telefonica del Peru S.A. ADR.............................. 27,000 361,125
-----------
Portugal -- 1.3%
Electricidade de Portugal SA.............................. 14,500 253,082
Portugal Telecom SA....................................... 82,870 908,908
-----------
1,161,990
-----------
Singapore -- 1.9%
Creative Technology Ltd. ADR.............................. 30,700 533,413
Overseas Chinese Banking Corp............................. 44,000 404,203
United Overseas Bank Ltd.................................. 87,544 772,679
-----------
1,710,295
-----------
Spain -- 4.1%
Argentaria, Caja Postal y Banco Hipotecario de Espana
SA...................................................... 26,000 610,918
Banco Popular Espanol SA.................................. 12,500 815,163
Endesa SA................................................. 57,086 1,133,211
Repsol ADR................................................ 45,200 1,050,900
-----------
3,610,192
-----------
Sweden -- 0.8%
Autoliv, Inc. SDR......................................... 25,500 746,298
-----------
</TABLE>
F-24
<PAGE> 137
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The International Portfolio
Statement of Net Assets, December 31, 1999 -- Concluded
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON AND PREFERRED STOCK (CONTINUED)
Switzerland -- 4.0%
Barry Callebaut AG - Registered Shares................... 4,018 $ 584,166
Forbo Holding AG - Registered Shares...................... 1,330 626,452
Sulzer AG - Registered Shares............................. 830 539,503
Swisscom AG - Registered Shares........................... 1,750 707,781
United Bank of Switzerland - Registered Shares............ 4,170 1,126,107
-----------
3,584,009
-----------
United Kingdom -- 14.7%
Barclays Plc.............................................. 24,442 703,554
BOC Group Plc............................................. 31,060 667,277
British Aerospace Plc..................................... 157,830 1,045,265
British Airways Plc....................................... 64,680 422,090
Bunzl Plc................................................. 213,599 1,176,540
Laird Group Ordinary...................................... 100,000 395,749
Medeva Plc................................................ 2,248 6,391
Morgan Crucible Co. Plc................................... 202,215 948,883
Powergen UK Plc........................................... 91,000 654,116
Rexam Plc................................................. 193,300 780,594
Rio Tinto Plc............................................. 46,845 1,131,247
Royal & Sun Alliance Insurance Group...................... 132,768 1,011,180
Royal Bank of Scotland Group Plc.......................... 47,487 842,229
Safeway Plc............................................... 220,244 754,211
Scottish and Southern Energy Plc.......................... 65,500 522,927
Tomkins Plc............................................... 181,728 587,090
Unilever Plc.............................................. 65,000 478,250
Wolseley Plc.............................................. 119,200 914,102
-----------
13,041,695
-----------
TOTAL COMMON AND PREFERRED STOCK (COST $71,298,159)..... 85,152,999
-----------
SHORT TERM INVESTMENTS -- 1.6%
Temporary Investment Fund, Inc. -- TempCash............... 1,409,425 1,409,425
-----------
TOTAL SHORT TERM INVESTMENTS (COST $1,409,425).......... 1,409,425
-----------
TOTAL INVESTMENTS -- 97.5% (COST $72,707,584)........... 86,562,424
OTHER ASSETS IN EXCESS OF LIABILITIES -- 2.5%............... 2,233,140
-----------
NET ASSETS -- 100.0%
(Equivalent to $16.68 per share based on 5,324,220 shares
of capital stock outstanding)........................... $88,795,564
===========
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE
($88,795,564/5,324,220 shares outstanding)................ $ 16.68
===========
</TABLE>
*Non-Income Producing.
See accompanying notes to financial statements.
F-25
<PAGE> 138
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The Sentinel Growth Portfolio
Statement of Net Assets, December 31, 1999
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
--------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK -- 94.6%
Aerospace & Defense -- 1.1%
Goodrich (B.F.) Co........................................ 8,400 $ 231,000
-----------
Building & Building Supplies -- 0.5%
Sherwin Williams Co. ..................................... 5,000 105,000
-----------
Business & Consumer Services -- 1.8%
America Online, Inc. ..................................... 4,000 301,750
Expedia, Inc. ............................................ 2,500 87,500
-----------
389,250
-----------
Chemicals & Allied Products -- 0.9%
Cambrex Corp. ............................................ 5,800 199,737
-----------
Communications -- 15.4%
Charter Communications, Inc. ............................. 7,500 164,062
General Instrument Corp. ................................. 9,800 833,000
*Global Crossing, Ltd. ................................... 1,500 75,000
*NEXTLINK Communications, Inc. ........................... 6,300 523,294
*Qualcomm, Inc. .......................................... 800 141,000
Scientific Atlanta, Inc. ................................. 9,400 522,875
*Teligent, Inc. .......................................... 3,000 185,250
True North Communications................................. 11,200 500,500
*WinStar Communications, Inc. ............................ 4,600 344,425
-----------
3,289,406
-----------
Computers -- 2.0%
*Cisco Systems, Inc. ..................................... 2,500 267,812
*Sun Microsystems, Inc. .................................. 2,000 154,875
-----------
422,687
-----------
Consumer Products -- 0.5%
Fortune Brands, Inc. ..................................... 3,500 115,719
-----------
Containers -- 1.2%
Bemis Co., Inc. .......................................... 7,300 254,587
-----------
Drugs & Health Care -- 9.1%
*Biogen, Inc. ............................................ 3,400 287,300
*Chiron Corp. ............................................ 4,000 169,500
*Genzyme Corp. ........................................... 3,000 135,000
*Human Genome Sciences, Inc. ............................. 3,500 534,187
Jones Pharma, Inc. ....................................... 4,000 173,750
*Millennium Pharmaceuticals, Inc. ........................ 2,900 353,800
*Watson Pharmaceuticals, Inc. ............................ 8,000 286,500
-----------
1,940,037
-----------
Electronic Instruments -- 2.0%
*Analog Devices, Inc. .................................... 4,600 427,800
-----------
</TABLE>
F-26
<PAGE> 139
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The Sentinel Growth Portfolio
Statement of Net Assets, December 31, 1999 -- Continued
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
--------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Electronics -- 15.1%
Applied Power, Inc. Class A............................... 6,000 $ 220,500
*Broadcom Corp., Class A.................................. 300 81,713
*C-Cube Microsystems, Inc. ............................... 11,100 690,975
*Cable Design Technologies, Inc. ......................... 5,700 131,100
CTS Corp. ................................................ 7,400 557,775
*JDS Uniphase Corp. ...................................... 4,000 645,250
Photronics, Inc........................................... 3,200 91,600
*Sawtek, Inc. ............................................ 12,000 798,750
-----------
3,217,663
-----------
Energy -- 1.2%
MidAmerican Energy Holdings Co. .......................... 7,600 256,025
-----------
Environmental Control -- 1.1%
Donaldson Co., Inc. ...................................... 10,000 240,625
-----------
Food & Food Distributors -- 4.2%
McCormick & Co., Inc. .................................... 12,600 374,850
*Whole Foods Market, Inc. ................................ 11,000 510,125
-----------
884,975
-----------
Insurance -- 0.9%
AFLAC, Inc. .............................................. 4,000 188,750
-----------
Medical Instruments -- 2.0%
Incyte Pharmaceuticals, Inc. ............................. 7,000 420,000
-----------
Oil & Gas -- 1.3%
*Cal Dive International, Inc. ............................ 8,500 281,563
-----------
Restaurants -- 4.4%
Applebee's International, Inc. ........................... 15,700 463,150
Outback Steakhouse, Inc. ................................. 6,700 173,781
Ruby Tuesday, Inc. ....................................... 16,800 305,550
-----------
942,481
-----------
Retail - Clothing and Apparel -- 2.1%
Lands' End, Inc. ......................................... 12,800 444,800
-----------
Retail Merchandising -- 2.2%
Ethan Allen Interiors, Inc. .............................. 14,250 456,891
-----------
Semiconductors -- 8.3%
*Applied Materials, Inc. ................................. 3,300 418,069
Dallas Semiconductor Corp. ............................... 9,300 599,269
*KLA-Tencor Corp. ........................................ 2,000 222,750
*Novellus Systems, Inc. .................................. 4,300 526,884
-----------
1,766,972
-----------
</TABLE>
F-27
<PAGE> 140
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The Sentinel Growth Portfolio
Statement of Net Assets, December 31, 1999 -- Continued
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
--------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Software -- 9.9%
*Ariba, Inc. ............................................. 800 $ 141,900
Computer Associates International, Inc. .................. 5,000 349,688
*DoubleClick, Inc. ....................................... 1,000 253,062
*Inktomi Corp. ........................................... 1,200 106,500
*Lycos, Inc. ............................................. 2,000 159,125
Newbridge Networks Corp. ................................. 3,000 67,688
*Novell, Inc. ............................................ 15,500 617,094
*Oracle Corp. ............................................ 900 100,856
*Red Hat, Inc. ........................................... 1,500 316,875
-----------
2,112,788
-----------
Tobacco -- 0.5%
UST, Inc.................................................. 4,100 103,269
-----------
Transportation -- 6.8%
Air Express International Corp. .......................... 11,000 355,438
*Eagle USA Airfreight, Inc. .............................. 15,000 646,875
Robinson (C.H.) Worldwide, Inc. .......................... 11,400 453,150
-----------
1,455,463
-----------
TOTAL COMMON STOCK (COST $14,598,091)................... 20,147,488
-----------
</TABLE>
F-28
<PAGE> 141
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The Sentinel Growth Portfolio
Statement of Net Assets, December 31, 1999 -- Concluded
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MATURITY SHARES
DESCRIPTION AND PERCENTAGE OF PORTFOLIO DATE OR PAR VALUE
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
U.S. AGENCY OBLIGATIONS -- 0.8%
Federal Home Loan Mortgage Corp., 5.25%................... 01/20/2000 $ 180,000 $ 179,501
-----------
TOTAL U.S. AGENCY OBLIGATIONS (COST $179,501)........... 179,501
-----------
SHORT TERM INVESTMENTS -- 4.5%
Temporary Investment Fund.-- TempCash................................... 947,781 947,781
-----------
TOTAL SHORT TERM INVESTMENTS (COST $947,781).......................... 947,781
-----------
TOTAL INVESTMENTS -- 99.9% (COST $15,725,373)......................... 21,274,770
OTHER ASSETS IN EXCESS OF LIABILITIES -- 0.1%............................. 22,607
-----------
NET ASSETS -- 100.0%
(Equivalent to $17.79 per share based on 1,196,980 shares of capital
stock outstanding)...................................................... $21,297,377
===========
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE
($21,297,377/1,196,980 shares outstanding).............................. $ 17.79
===========
</TABLE>
*Non-Income Producing.
See accompanying notes to financial statements.
F-29
<PAGE> 142
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The All Pro Large Cap Growth Portfolio
Statement of Net Assets, December 31, 1999
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK -- 96.1%
Aerospace & Defense -- 0.2%
Honeywell International, Inc. ............................ 500 $ 28,844
*Howmet International, Inc. .............................. 220 3,974
United Technologies Corp. ................................ 800 52,000
-----------
84,818
-----------
Airlines -- 0.1%
*Midwest Express Holdings, Inc. .......................... 200 6,375
Southwest Airlines Co..................................... 2,675 43,302
-----------
49,677
-----------
Appliances -- 0.0%
Black & Decker Corp....................................... 200 10,450
-----------
Art Dealer & Auction House -- 0.0%
Sotheby's Holdings, Inc. Class A.......................... 300 9,000
-----------
Banks -- 1.5%
Fifth Third Bancorp....................................... 100 7,337
U.S. Bancorp.............................................. 22,900 545,306
Zions Bancorp............................................. 100 5,919
-----------
558,562
-----------
Beverages -- 1.7%
Coca Cola Co.............................................. 9,800 570,850
Pepsico, Inc.............................................. 2,500 88,125
-----------
658,975
-----------
Broadcasting & Publishing -- 0.2%
Central Newspapers, Inc. Class A.......................... 200 7,875
Dow Jones & Co., Inc. .................................... 300 20,400
*Infinity Broadcasting, Inc............................... 875 31,664
McGraw-Hill, Inc. ........................................ 200 12,325
Meredith Corp............................................. 150 6,253
-----------
78,517
-----------
Building & Building Supplies -- 0.2%
Centex Corp. ............................................. 200 4,937
Ecolab, Inc. ............................................. 700 27,387
Lowe's Cos., Inc.......................................... 500 29,875
-----------
62,199
-----------
</TABLE>
F-30
<PAGE> 143
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The All Pro Large Cap Growth Portfolio
Statement of Net Assets, December 31, 1999 -- Continued
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Business & Consumer Services -- 2.4%
*ACNielsen Corp. ......................................... 200 $ 4,925
*Affiliated Computer Services, Inc. ...................... 200 9,200
*America Online, Inc. .................................... 7,080 534,097
*BISYS Group, Inc. ....................................... 100 6,525
*Convergys Corp. ......................................... 300 9,225
*DST Systems.............................................. 100 7,631
Interpublic Group of Cos., Inc. .......................... 1,100 63,456
*Network Appliance, Inc. ................................. 800 66,450
Omnicom Group, Inc. ...................................... 850 85,000
*Safeguard Scientific, Inc. .............................. 125 20,258
*SEI Investments Co. ..................................... 100 11,902
*TMP Worldwide, Inc. ..................................... 100 14,200
*USWeb Corp. ............................................. 200 8,887
*VeriSign, Inc. .......................................... 325 61,994
*Whittman-Hart, Inc. ..................................... 100 5,362
-----------
909,112
-----------
Business Equipment -- 0.1%
*Lexmark International Group, Inc. Class A................ 300 27,150
-----------
Chemicals & Allied Products -- 0.0%
Valspar Corp.............................................. 100 4,187
-----------
Communications -- 9.4%
*ADC Telecommunications, Inc.............................. 700 50,794
*Adelphia Communications Corp. Class A.................... 300 19,688
*Allegiance Telecom, Inc. ................................ 330 30,442
ALLTEL Corp............................................... 600 49,612
Comcast Corp. Special Class A Non-Voting.................. 700 35,175
Corning Glass, Inc. ...................................... 1,100 141,831
General Instrument Corp. ................................. 200 17,000
*L-3 Communications Corp. ................................ 250 10,406
Lucent Technologies, Inc. ................................ 3,819 285,709
*MCI WorldCom, Inc. ...................................... 17,828 945,972
*McLeodUSA, Inc. ......................................... 600 35,325
Motorola, Inc. ........................................... 600 88,350
*Nextel Communications, Inc. Class A...................... 1,200 123,750
*Qualcomm, Inc. .......................................... 1,600 282,000
SBC Communications, Inc. ................................. 7,979 388,976
Scientific Atlanta, Inc. ................................. 100 5,562
*Sprint Corp. (PCS Group)................................. 8,775 899,437
*Tellabs, Inc. ........................................... 2,000 128,375
*Valassis Communications, Inc. ........................... 300 12,675
*Western Wireless Corp. Class A........................... 100 6,675
*WinStar Communications, Inc. ............................ 300 22,462
-----------
3,580,216
-----------
</TABLE>
F-31
<PAGE> 144
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Market Street Fund, Inc.
The All Pro Large Cap Growth Portfolio
Statement of Net Assets, December 31, 1999 -- Continued
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Computer Peripherals -- 0.8%
*Adaptec, Inc. ........................................... 400 $ 19,950
*Comverse Technology, Inc. ............................... 600 86,850
*Veritas Software Corp. .................................. 1,270 181,769
-----------
288,569
-----------
Computers -- 11.1%
*CDW Computer Centers, Inc. .............................. 100 7,862
*Cisco Systems, Inc. ..................................... 17,080 1,829,694
*Dell Computer Corp. ..................................... 7,350 374,850
*EMC Corp. ............................................... 8,650 945,012
*Gateway, Inc. ........................................... 400 28,825
*Intuit, Inc. ............................................ 300 17,981
*Seagate Technology, Inc. ................................ 15,900 740,344
*Sun Microsystems, Inc. .................................. 3,600 278,775
-----------
4,223,343
-----------
Consumer Products -- 1.2%
Estee Lauder Co. Class A.................................. 400 20,175
Procter & Gamble Co. ..................................... 4,000 438,250
-----------
458,425
-----------
Cosmetics and Toiletries -- 1.3%
Avon Products, Inc. ...................................... 14,300 471,900
-----------
Diversified -- 0.1%
*Berkshire Hathaway, Inc. Class B......................... 20 36,600
-----------
Drugs & Health Care -- 14.3%
Abbott Laboratories....................................... 17,835 647,633
American Home Products Corp. ............................. 10,900 429,869
*Andrx Corp. ............................................. 300 12,694
Allergan, Inc. ........................................... 700 34,825
Bausch & Lomb, Inc. ...................................... 100 6,844
Becton, Dickinson & Co. .................................. 22,300 596,525
*Biogen, Inc. ............................................ 600 50,700
Bristol-Myers Squibb Co. ................................. 15,710 1,008,385
Colgate-Palmolive Co. .................................... 1,300 84,500
CVS Corp. ................................................ 900 35,944
*Express Scripts, Inc., Class A........................... 300 19,200
*IVAX Corp. .............................................. 300 7,725
Johnson & Johnson......................................... 4,650 433,031
Lilly (Eli) & Co. ........................................ 900 59,850
McKesson HBOC, Inc. ...................................... 25,675 579,292
*Medimmune, Inc. ......................................... 350 58,056
Merck & Co., Inc. ........................................ 16,310 1,093,789
Schering Plough Corp. .................................... 6,400 270,000
-----------
5,428,862
-----------
Electronic Instruments -- 0.3%
*Analog Devices, Inc. .................................... 900 83,700
*Conexant Systems, Inc. .................................. 400 26,550
-----------
110,250
-----------
</TABLE>
F-32
<PAGE> 145
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The All Pro Large Cap Growth Portfolio
Statement of Net Assets, December 31, 1999 -- Continued
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Electronics -- 6.3%
*American Power Conversion Corp. ......................... 350 $ 9,231
*Electronics For Imaging, Inc. ........................... 540 31,387
General Electric Co. ..................................... 9,810 1,518,097
*Gentex Corp. ............................................ 400 11,100
*JDS Uniphase Corp. ...................................... 600 96,787
Linear Technology Corp. .................................. 600 42,937
*Solectron Corp. ......................................... 200 19,025
Tandy Corp................................................ 10,700 526,306
Texas Instruments, Inc. .................................. 400 38,750
*Xilinx, Inc. ............................................ 2,400 109,125
-----------
2,402,745
-----------
Energy -- 0.1%
*AES Corp. ............................................... 100 7,475
*Calpine Corp. ........................................... 200 12,800
-----------
20,275
-----------
Environmental Services -- 0.1%
*Forest Laboratories, Inc. ............................... 400 24,575
-----------
Finance -- 5.5%
American Express Co. ..................................... 250 41,563
Charles Schwab Corp. ..................................... 2,000 76,750
Citigroup, Inc. .......................................... 8,775 487,561
*Concord EFS, Inc. ....................................... 1,200 30,900
Franklin Resources, Inc. ................................. 13,350 428,034
H & R Block, Inc. ........................................ 100 4,375
MBNA Corp. ............................................... 19,900 542,275
Paychex, Inc. ............................................ 725 29,000
Providian Financial Corp. ................................ 5,025 457,589
*Sabre Group Holdings, Inc. .............................. 100 5,125
-----------
2,103,172
-----------
Finance - Investment & Other -- 2.5%
Federated Investors, Inc., Class B........................ 250 5,016
Freddie Mac............................................... 350 16,472
S & P 400 Mid-Cap Depositary Receipts..................... 1,000 81,125
Standard & Poor's Depositary Receipts..................... 5,650 829,844
-----------
932,457
-----------
Food & Food Distributors -- 0.4%
General Mills, Inc. ...................................... 1,200 42,900
*Keebler Foods Co. ....................................... 500 14,063
Quaker Oats Co. .......................................... 400 26,250
Sysco Corp. .............................................. 1,300 51,431
-----------
134,644
-----------
Home Furnishings/Housewares -- 0.0%
*Mohawk Industries, Inc. ................................. 200 5,275
-----------
Hotel/Restaurants -- 0.0%
*MGM Grand, Inc. ......................................... 100 5,031
-----------
</TABLE>
F-33
<PAGE> 146
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The All Pro Large Cap Growth Portfolio
Statement of Net Assets, December 31, 1999 -- Continued
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Industrial -- 0.1%
Danaher Corp. ............................................ 500 $ 24,125
-----------
Insurance -- 1.5%
Conseco, Inc. ............................................ 32,000 572,000
-----------
Leasing -- 0.0%
Hertz Corp. (The), Class A................................ 100 5,013
-----------
Leisure & Amusements -- 0.1%
Harley-Davidson, Inc. .................................... 600 38,438
Mattel, Inc. ............................................. 200 2,625
*Pixar, Inc. ............................................. 200 7,075
-----------
48,138
-----------
Machinery & Heavy Equipment -- 0.0%
*SPX Corp. ............................................... 100 8,081
-----------
Manufacturing -- 0.1%
Millipore Corp. .......................................... 550 21,244
Symbol Technologies, Inc. ................................ 200 12,713
Textron, Inc. ............................................ 100 7,669
*Waters Corp. ............................................ 200 10,600
-----------
52,226
-----------
Medical & Medical Services -- 2.6%
*Amgen Corp. ............................................. 16,700 1,003,043
-----------
Medical Instruments -- 1.9%
Beckman Coulter, Inc ..................................... 200 10,175
Biomet, Inc. ............................................. 200 8,000
*Boston Scientific Corp. ................................. 27,300 597,187
*Guidant Corp. ........................................... 900 42,300
Stryker Corp. ............................................ 550 38,294
*Sybron International Corp. .............................. 300 7,406
-----------
703,362
-----------
Office Equipment & Supplies -- 1.7%
Avery-Dennison Corp. ..................................... 100 7,288
Pitney Bowes, Inc. ....................................... 600 28,988
*Staples, Inc. ........................................... 3,800 78,850
Xerox Corp. .............................................. 23,100 524,081
-----------
639,207
-----------
Oil Equipment & Services -- 0.0%
*BJ Services Co. ......................................... 100 4,181
-----------
Oil & Gas -- 0.1%
Apache Corp. ............................................. 100 3,694
Devon Energy Corp. ....................................... 100 3,288
Dynegy, Inc. ............................................. 200 4,863
*Noble Drilling Corp. .................................... 300 9,825
USX-Marathon Group, Inc. ................................. 200 4,938
-----------
26,608
-----------
</TABLE>
F-34
<PAGE> 147
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The All Pro Large Cap Growth Portfolio
Statement of Net Assets, December 31, 1999 -- Continued
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Real Estate -- 0.0%
*Catellus Development Corp. .............................. 400 $ 5,125
St. Joe (The) Co. ........................................ 200 4,863
-----------
9,988
-----------
Restaurants -- 1.1%
McDonald's Corp. ......................................... 10,000 403,125
-----------
Retail - Clothing and Apparel -- 1.5%
*American Eagle Outfitters, Inc. ......................... 500 22,500
Gap, Inc. ................................................ 10,950 503,700
*Jones Apparel Group, Inc. ............................... 200 5,425
Limited, Inc. ............................................ 200 8,663
*Linens 'N Things, Inc. .................................. 200 5,925
Ross Stores, Inc.......................................... 400 7,175
*Too, Inc. ............................................... 28 483
-----------
553,871
-----------
Retail Merchandising -- 7.5%
*Barnes & Noble, Inc. .................................... 200 4,125
*Bed, Bath & Beyond, Inc. ................................ 18,200 632,450
*BJ's Wholesale Club, Inc. ............................... 200 7,300
Circuit City Stores, Inc. ................................ 200 9,013
*Costco Wholesale Corp. .................................. 375 34,219
Dollar General Corp. ..................................... 20,750 472,063
*Dollar Tree Stores, Inc. ................................ 500 24,219
Home Depot, Inc. ......................................... 9,450 647,916
*Kohls Corp. ............................................. 600 43,313
*Ticketmaster Online-CitySearch, Inc. .................... 400 15,375
Wal-Mart Stores, Inc. .................................... 13,600 940,100
*Williams-Sonoma, Inc. ................................... 200 9,200
-----------
2,839,293
-----------
Semiconductors -- 4.7%
*Altera Corp. ............................................ 500 24,781
*Applied Materials, Inc. ................................. 2,060 260,976
*Applied Micro Circuits Corp. ............................ 200 25,450
*Atmel Corp. ............................................. 200 5,913
Intel Corp. .............................................. 16,150 1,329,347
*KLA-Tencor Corp. ........................................ 100 11,138
*LSI Logic Corp. ......................................... 150 10,125
*Microchip Technology, Inc. .............................. 100 6,844
*Novellus Systems, Inc. .................................. 100 12,253
*PMC-Sierra, Inc. ........................................ 100 16,031
*QLogic Corp. ............................................ 250 39,969
*Sanmina Corp. ........................................... 200 19,975
*SDL, Inc. ............................................... 100 21,800
*Vitesse Semiconductors Corp. ............................ 100 5,244
-----------
1,789,846
-----------
</TABLE>
F-35
<PAGE> 148
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The All Pro Large Cap Growth Portfolio
Statement of Net Assets, December 31, 1999 -- Concluded
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Software -- 13.4%
Adobe Systems, Inc. ...................................... 400 $ 26,900
*BEA Systems, Inc. ....................................... 400 27,975
*BMC Software, Inc. ...................................... 600 47,963
*Citrix Systems, Inc. .................................... 300 36,900
Computer Associates International, Inc. .................. 7,700 538,519
*Compuware Corp. ......................................... 16,500 614,625
*Electronic Arts.......................................... 100 8,400
*Inktomi Corp. ........................................... 600 53,250
*Legato Systems, Inc. .................................... 600 41,287
*Lycos, Inc. ............................................. 500 39,781
*Macromedia, Inc. ........................................ 100 7,312
*Microsoft Corp. ......................................... 11,600 1,354,300
*Oracle Corp. ............................................ 9,600 1,075,801
*Parametric Technology Corp. ............................. 28,600 773,988
PE Corp. ................................................. 800 96,250
*Rational Software Corp. ................................. 700 34,388
*Scient Corp. ............................................ 100 8,644
*Symantec Corp. .......................................... 150 8,794
*Yahoo!, Inc. ............................................ 700 302,881
-----------
5,097,958
-----------
Transportation -- 0.0%
Expeditors International of Washington, Inc. ............. 100 4,381
-----------
Utilities -- 0.0%
Enron Corp. .............................................. 200 8,875
-----------
TOTAL COMMON STOCK (COST $29,221,996)................... 36,472,307
-----------
SHORT TERM INVESTMENTS -- 4.6%
Temporary Investment Fund, Inc. -- TempCash............... 1,760,874 1,760,874
-----------
TOTAL SHORT TERM INVESTMENTS (COST $1,760,874).......... 1,760,874
-----------
TOTAL INVESTMENTS -- 100.7% (COST $30,982,870).......... 38,233,181
LIABILITIES IN EXCESS OF OTHER ASSETS -- (0.7)%............. (272,162)
-----------
NET ASSETS -- 100.0%
(Equivalent to $14.77 per share based on 2,569,924 shares
of capital stock outstanding)........................... $37,961,019
===========
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE
($37,961,019/2,569,924 shares outstanding)................ $ 14.77
===========
</TABLE>
*Non-Income Producing.
See accompanying notes to financial statements.
F-36
<PAGE> 149
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The All Pro Large Cap Value Portfolio
Statement of Net Assets, December 31, 1999
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
--------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK -- 92.8%
Aerospace & Defense -- 2.5%
Boeing Co. ............................................... 2,400 $ 99,750
Honeywell International, Inc. ............................ 2,900 167,294
Lockheed Martin Corp. .................................... 2,900 63,437
Raytheon Co., Class B..................................... 5,500 146,094
United Technologies Corp. ................................ 2,023 131,495
-----------
608,070
-----------
Airlines -- 0.5%
*Alaska Air Group, Inc. .................................. 900 31,612
Delta Air Lines, Inc. .................................... 3,800 189,287
-----------
220,899
-----------
Apparel -- 0.3%
Nike, Inc. Class B........................................ 1,600 79,300
-----------
Appliances -- 0.4%
Black & Decker Corp. ..................................... 1,700 88,825
-----------
Automobiles -- 2.5%
Ford Motor Co. ........................................... 8,200 438,187
General Motors Corp. ..................................... 2,300 167,181
-----------
605,368
-----------
Banks -- 8.1%
Banc One Corp. ........................................... 8,230 263,875
Bank of America Corp. .................................... 9,723 487,973
Chase Manhattan Corp. .................................... 6,900 536,044
Firstar Corp. ............................................ 2,700 57,037
Morgan (J.P.) & Co., Inc. ................................ 2,000 253,250
PNC Bank Corp. ........................................... 5,700 253,650
Southtrust Corp. ......................................... 2,800 105,875
-----------
1,957,704
-----------
Beverages -- 0.5%
Pepsico, Inc. ............................................ 2,900 102,225
-----------
Broadcasting & Publishing -- 4.2%
*Fox Entertainment Group, Inc. ........................... 4,800 119,700
Gannett, Inc. ............................................ 1,400 114,187
*Infinity Broadcasting, Inc. ............................. 1,300 47,044
Knight-Ridder, Inc. ...................................... 1,400 83,300
McGraw-Hill, Inc. ........................................ 2,300 141,737
*MediaOne Group, Inc. .................................... 2,600 199,712
Tribune Co. .............................................. 5,200 286,324
-----------
992,004
-----------
Building & Building Supplies -- 0.7%
Lafarge Corp. ............................................ 1,400 38,675
Lowe's Cos., Inc. ........................................ 800 47,800
Masco Corp. .............................................. 3,200 81,200
-----------
167,675
-----------
</TABLE>
F-37
<PAGE> 150
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The All Pro Large Cap Value Portfolio
Statement of Net Assets, December 31, 1999 -- Continued
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
--------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Business & Consumer Services -- 2.1%
Dun & Bradstreet Corp. ................................... 3,300 $ 97,350
Electronic Data Systems................................... 4,700 314,606
XL Capital Ltd. .......................................... 1,900 98,562
-----------
510,518
-----------
Business Data Processing -- 0.2%
Reynolds & Reynolds Co. Class A........................... 2,100 47,250
-----------
Business Equipment -- 0.4%
*Lexmark International Group, Inc. Class A................ 1,000 90,500
-----------
Chemicals & Allied Products -- 2.8%
Dow Chemical Co. ......................................... 3,000 400,875
Du Pont (E.I.) de Nemours & Co. .......................... 3,751 247,097
Union Carbide Corp. ...................................... 500 33,375
-----------
681,347
-----------
Communications -- 11.6%
ALLTEL Corp. ............................................. 2,500 206,719
AT&T Corp. ............................................... 13,650 692,737
Bell Atlantic Corp. ...................................... 6,200 381,688
BellSouth Corp. .......................................... 4,700 220,019
GTE Corp. ................................................ 2,300 162,294
Lucent Technologies, Inc. ................................ 1,100 82,294
*MCI WorldCom, Inc. ...................................... 11,250 596,953
Motorola, Inc. ........................................... 1,000 147,250
SBC Communications, Inc. ................................. 5,566 271,343
Telephone and Data Systems, Inc. ......................... 500 63,000
-----------
2,824,297
-----------
Computers -- 2.3%
International Business Machines Corp. .................... 2,800 302,400
*Unisys Corp. ............................................ 8,000 255,500
-----------
557,900
-----------
Consumer Products -- 0.5%
Fortune Brands, Inc. ..................................... 3,400 112,412
-----------
Drugs & Health Care -- 3.1%
Abbott Laboratories....................................... 1,200 43,575
Allergan, Inc. ........................................... 600 29,850
Bausch & Lomb, Inc. ...................................... 1,800 123,187
Baxter International, Inc. ............................... 3,100 194,719
Bristol-Myers Squibb Co. ................................. 2,800 179,725
Schering Plough Corp. .................................... 2,500 105,469
United Healthcare Corp. .................................. 1,300 69,063
-----------
745,588
-----------
</TABLE>
F-38
<PAGE> 151
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The All Pro Large Cap Value Portfolio
Statement of Net Assets, December 31, 1999 -- Continued
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
--------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Energy -- 2.3%
Chevron Corp. ............................................ 1,900 $ 164,587
Consolidated Edison, Inc. ................................ 1,500 51,750
FPL Group, Inc. .......................................... 1,600 68,500
Royal Dutch Petroleum Co. ................................ 3,000 181,313
Southern Co. ............................................. 4,400 103,400
-----------
569,550
-----------
Finance -- 8.5%
Citigroup, Inc. .......................................... 12,800 711,200
Comerica, Inc. ........................................... 2,800 130,725
Financial Security Assurance Holdings Ltd. ............... 900 46,912
First Data Corp. ......................................... 1,800 88,762
Fleet Boston Financial Corp. ............................. 9,300 323,756
GreenPoint Financial Corp. ............................... 2,000 47,625
Hartford Financial Services, Inc. ........................ 5,000 236,875
Household International, Inc. ............................ 1,500 55,875
H & R Block, Inc. ........................................ 1,900 83,125
MBNA Corp. ............................................... 3,900 106,275
Providian Financial Corp. ................................ 800 72,850
SLM Holding Corp. ........................................ 1,700 71,825
Washington Mutual, Inc. .................................. 3,850 100,100
-----------
2,075,905
-----------
Finance - Investment & Other -- 4.2%
Edwards (A.G.), Inc. ..................................... 2,900 92,981
Fannie Mae................................................ 5,600 349,650
Morgan Stanley Dean Witter & Co. ......................... 4,100 585,275
-----------
1,027,906
-----------
Food & Food Distributors -- 2.4%
General Mills, Inc. ...................................... 1,500 53,625
Heinz (H.J.) Co. ......................................... 1,800 71,663
IBP, Inc. ................................................ 900 16,200
Nabisco Holdings Corp., Class A........................... 2,300 72,738
Quaker Oats Co. .......................................... 800 52,500
Ralston Purina Group...................................... 4,300 119,863
*Safeway, Inc. ........................................... 4,400 156,475
Sara Lee Corp. ........................................... 1,800 39,712
-----------
582,776
-----------
Healthcare Services -- 1.5%
Columbia/HCA Healthcare Corp. ............................ 12,800 375,200
-----------
Hotel/Restaurants -- 0.3%
Host Marriott Corp. ...................................... 8,187 67,543
-----------
</TABLE>
F-39
<PAGE> 152
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The All Pro Large Cap Value Portfolio
Statement of Net Assets, December 31, 1999 -- Continued
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
--------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Insurance -- 5.5%
Allstate Corp. ........................................... 7,700 $ 184,800
Ambac Financial Group, Inc. .............................. 1,400 73,062
American General Corp. ................................... 2,900 220,038
American International Group, Inc. ....................... 2,400 259,500
Cigna Corp. .............................................. 1,400 112,787
ConAgra, Inc. ............................................ 2,000 45,125
Conseco, Inc. ............................................ 12,400 221,650
Marsh & McLennan Cos., Inc. .............................. 600 57,412
Old Republic International Corp. ......................... 2,300 31,337
Partner Re Ltd. .......................................... 2,400 77,850
St. Paul Companies, Inc. ................................. 1,500 50,531
-----------
1,334,092
-----------
Leisure & Amusements -- 0.4%
Mattel, Inc. ............................................. 7,400 97,125
-----------
Machinery & Heavy Equipment -- 1.7%
Caterpillar, Inc. ........................................ 2,200 103,538
Deere & Co. .............................................. 5,800 251,575
Dover Corp. .............................................. 1,500 68,062
-----------
423,175
-----------
Manufacturing -- 2.9%
Alcoa, Inc. .............................................. 2,400 199,200
Cummins Engine Co., Inc. ................................. 1,100 53,144
Eaton Corp. .............................................. 700 50,838
PPG Industries, Inc. ..................................... 2,400 150,150
Textron, Inc. ............................................ 2,300 176,381
Tyco International Ltd. .................................. 1,100 42,762
U.S. Industries, Inc. .................................... 2,100 29,400
-----------
701,875
-----------
Manufacturing Equipment -- 1.0%
Illinois Tool Works, Inc. ................................ 1,188 80,264
Ingersoll Rand Co. ....................................... 2,900 159,681
-----------
239,945
-----------
Medical Equipment & Supplies -- 0.2%
Cooper Industries, Inc. .................................. 1,200 48,525
-----------
Metals - Iron & Steel -- 0.2%
AK Steel Holding Corp. ................................... 2,100 39,638
-----------
Natural Gas -- 0.3%
Phillips Petroleum Co. ................................... 1,600 75,200
-----------
</TABLE>
F-40
<PAGE> 153
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The All Pro Large Cap Value Portfolio
Statement of Net Assets, December 31, 1999 -- Continued
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
--------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Oil & Gas -- 7.3%
Amerada Hess Corp. ....................................... 3,400 $ 192,950
BP Amoco Plc ADR.......................................... 1,600 94,900
Coastal Corp. ............................................ 5,400 191,362
Ensco International, Inc. ................................ 1,300 29,738
Exxon Mobil Corp. ........................................ 10,828 872,331
Texaco, Inc. ............................................. 2,000 108,625
Unocal Corp. ............................................. 5,700 191,306
USX-Marathon Group, Inc. ................................. 3,700 91,344
-----------
1,772,556
-----------
Oil Equipment & Services -- 0.7%
Diamond Offshore Drilling, Inc. .......................... 1,500 45,844
Kerr-McGee Corp. ......................................... 600 37,200
National Fuel Gas Co. .................................... 900 41,850
Tidewater, Inc. .......................................... 1,000 36,000
-----------
160,894
-----------
Paper & Forest Products -- 2.5%
Champion International Corp. ............................. 1,300 80,519
Fort James Corp. ......................................... 3,000 82,125
International Paper Co. .................................. 6,400 361,201
Temple Inland, Inc. ...................................... 1,200 79,125
-----------
602,970
-----------
Photography Equipment & Supplies -- 0.7%
Eastman Kodak Co. ........................................ 2,600 172,250
-----------
Railroads -- 0.9%
Union Pacific Corp., Series A............................. 5,200 226,850
-----------
Real Estate -- 0.3%
*Catellus Development Corp. .............................. 5,700 73,031
-----------
Restaurants -- 0.1%
Darden Restaurants, Inc. ................................. 1,200 21,750
-----------
Retail - Clothing and Apparel -- 0.4%
Limited, Inc. ............................................ 2,300 99,619
-----------
Retail Merchandising -- 0.8%
May Department Stores Co. ................................ 1,300 41,925
Sears, Roebuck & Co. ..................................... 2,900 88,269
TJX Companies, Inc. ...................................... 3,000 61,313
-----------
191,507
-----------
Semiconductors -- 1.8%
Cypress Semiconductor Corp. .............................. 1,300 42,088
Intel Corp. .............................................. 3,164 260,437
*KLA-Tencor Corp. ........................................ 600 66,825
*Micron Technology, Inc. ................................. 800 62,200
-----------
431,550
-----------
</TABLE>
F-41
<PAGE> 154
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The All Pro Large Cap Value Portfolio
Statement of Net Assets, December 31, 1999 -- Concluded
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
--------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Software -- 1.2%
*BMC Software, Inc. ...................................... 2,900 $ 231,819
*Compuware Corp. ......................................... 1,400 52,150
-----------
283,969
-----------
Tobacco -- 0.3%
Philip Morris Cos., Inc. ................................. 3,000 69,563
-----------
Utilities -- 1.7%
Baltimore Gas & Electric Co. ............................. 2,900 84,100
DTE Energy Co. ........................................... 2,400 75,300
El Paso Energy Corp. ..................................... 1,000 38,813
Pinnacle West Capital Corp. .............................. 1,400 42,788
Public Service Enterprise Group, Inc. .................... 2,200 76,588
Texas Utilities Co. ...................................... 2,900 103,131
-----------
420,720
-----------
TOTAL COMMON STOCK (COST $22,482,529)................... 22,577,566
-----------
SHORT TERM INVESTMENTS -- 3.8%
Temporary Investment Fund, Inc. -- TempCash............... 916,007 916,007
-----------
TOTAL SHORT TERM INVESTMENTS (COST $916,007)............ 916,007
-----------
TOTAL INVESTMENTS -- 96.6% (COST $23,398,536)........... 23,493,573
OTHER ASSETS IN EXCESS OF LIABILITIES -- 3.4%............... 825,038
-----------
NET ASSETS -- 100.0%
(Equivalent to $9.98 per share based on 2,435,689 shares
of capital stock outstanding)........................... $24,318,611
===========
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE
($24,318,611/2,435,689 shares outstanding)................ $ 9.98
===========
</TABLE>
*Non-Income Producing.
See accompanying notes to financial statements.
F-42
<PAGE> 155
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The All Pro Small Cap Growth Portfolio
Statement of Net Assets, December 31, 1999
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK -- 99.2%
Airlines -- 1.4%
*Atlantic Coast Airlines, Inc............................. 7,700 $ 182,875
*Mesa Airlines, Inc....................................... 4,700 22,324
*Ryanair Holdings Plc..................................... 6,400 352,800
SkyWest, Inc.............................................. 3,200 89,600
-----------
647,599
-----------
Automotive & Equipment -- 0.5%
Exide Corp................................................ 25,100 208,644
-----------
Banks -- 0.8%
*First Republic Bank, Inc................................. 10,600 249,100
Westamerica Bancorporation................................ 3,800 106,162
-----------
355,262
-----------
Broadcasting & Publishing -- 3.0%
*Ascent Entertainment Group............................... 19,400 246,137
*Citadel Communications Corp.............................. 5,100 330,862
*Emmis Broadcasting Corp. Class A......................... 3,300 411,314
*Scandinavian Broadcasting S.A............................ 7,800 379,762
-----------
1,368,075
-----------
Building & Building Supplies -- 0.4%
*Dycom Industries, Inc.................................... 4,400 193,875
-----------
Business & Consumer Services -- 7.7%
*CBT Group Plc ADR........................................ 7,900 264,650
*Corporate Executive Board Co............................. 2,300 128,512
*Ebenx, Inc............................................... 13,400 606,350
*Getty Images, Inc........................................ 4,000 195,500
*IT Group, Inc............................................ 34,500 316,969
*Liberty Digital, Inc. Class A............................ 15,200 1,128,600
*Sportsline USA, Inc...................................... 3,900 195,487
*TMP Worldwide, Inc....................................... 4,600 653,200
-----------
3,489,268
-----------
Chemicals & Allied Products -- 0.7%
Geon Co................................................... 10,200 331,500
-----------
</TABLE>
F-43
<PAGE> 156
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The All Pro Small Cap Growth Portfolio
Statement of Net Assets, December 31, 1999 -- Continued
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Communications -- 15.9%
*Acme Communications, Inc................................. 13,800 $ 458,850
*Adaptive Broadband Corp.................................. 5,400 398,587
*Adelphia Communications Corp. Class A.................... 8,600 564,375
*Harmonic Lightwaves, Inc................................. 3,100 294,306
*ICG Communications, Inc.................................. 25,100 470,625
*Insight Communications Co., Inc.......................... 9,400 278,475
*Leap Wireless International, Inc......................... 8,900 698,650
*Netoptix Corp............................................ 1,900 126,825
*Ortel Corp............................................... 3,000 360,000
*Osicom Technologies, Inc................................. 13,400 608,025
*Pinnacle Holdings, Inc................................... 7,000 296,625
*Voicestream Wireless Corp................................ 8,000 1,138,500
*Western Wireless Corp. Class A........................... 7,200 480,600
*Westwood One, Inc........................................ 3,300 250,800
*Wink Communications, Inc................................. 12,700 762,794
-----------
7,188,037
-----------
Computers -- 10.7%
*Applied Micro Circuits Corp.............................. 2,400 305,400
*Bottomline Technologies, Inc............................. 3,800 136,800
*Clarus Corp.............................................. 3,500 231,000
*Cybex Computer Products Corp............................. 4,300 174,150
*Data Return Corp......................................... 6,300 337,050
*Emulex Corp.............................................. 2,800 315,000
*Gadzoox Networks, Inc.................................... 2,900 126,331
*GetThere.Com, Inc........................................ 4,500 181,125
*Infospace.Com, Inc....................................... 1,000 214,000
*Media Metrix, Inc........................................ 7,100 253,825
*NBC Internet, Inc........................................ 8,300 641,175
*NetScout Systems, Inc.................................... 7,500 232,500
*SciQuest.Com, Inc........................................ 1,900 151,050
*Siebel Systems, Inc...................................... 5,400 453,600
*SmartDisk Corp........................................... 5,300 173,575
*VerticalNet, Inc......................................... 4,100 672,400
*Visual Networks, Inc..................................... 3,000 237,750
-----------
4,836,731
-----------
Drugs & Health Care -- 5.6%
*Alkermes, Inc............................................ 3,700 181,763
Bindley Western Industries, Inc........................... 13,200 198,825
*Cephalon, Inc............................................ 8,700 300,694
*COR Therapeutics, Inc.................................... 7,300 196,187
*Inhale Therapeutic Systems............................... 4,600 195,788
*Novoste Corp............................................. 6,000 99,000
*Pharmacyclics, Inc....................................... 3,100 127,875
*Priority Healthcare Corp. Class B........................ 16,774 485,398
*Progenics Pharmaceuticals, Inc........................... 3,500 171,062
*Protein Design Labs, Inc................................. 4,700 329,000
*Vical, Inc............................................... 8,800 263,450
-----------
2,549,042
-----------
</TABLE>
F-44
<PAGE> 157
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The All Pro Small Cap Growth Portfolio
Statement of Net Assets, December 31, 1999 -- Continued
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Electrical Equipment -- 1.0%
*Micrel, Inc.............................................. 6,700 $ 381,481
*Quanta Services, Inc..................................... 1,700 48,025
-----------
429,506
-----------
Electronic Instruments -- 1.1%
*ATMI, Inc................................................ 7,700 254,581
*Veeco Instruments, Inc................................... 5,300 248,106
-----------
502,687
-----------
Electronics -- 18.9%
*Burr-Brown Corp.......................................... 9,300 335,963
*Credence Systems Corp.................................... 4,400 380,600
*Cree Research, Inc....................................... 12,700 1,084,263
*Intertan, Inc............................................ 17,400 454,575
*LAM Research Corp........................................ 6,800 758,625
*Netsilicon, Inc.......................................... 31,000 621,937
*PLX Technology, Inc...................................... 15,300 289,744
*Photronics, Inc.......................................... 5,800 166,025
*Quicklogic Corp.......................................... 9,400 155,100
*SDL, Inc................................................. 4,500 981,000
*Semtech Corp............................................. 8,800 458,700
*Triquint Semiconductor, Inc.............................. 8,200 912,250
*Varian Semiconductor Equipment Associates, Inc........... 36,600 1,244,400
*Zoran Corp............................................... 12,200 680,150
-----------
8,523,332
-----------
Finance -- 0.9%
*Golden State Bancorp, Inc................................ 7,600 131,100
Jefferies Group, Inc...................................... 3,400 74,800
*Nextcard, Inc............................................ 7,300 210,787
-----------
416,687
-----------
Finance - Investment & Other -- 0.2%
*NCO Group, Inc........................................... 3,000 90,375
-----------
Hotel/Restaurants -- 1.0%
*Mandalay Resort Group.................................... 21,500 432,688
-----------
Leisure & Amusements -- 1.8%
*Bally Total Fitness Holding Corp......................... 14,200 378,963
*Cinar Films, Inc......................................... 12,500 306,250
*Tweeter Home Entertainment Group, Inc.................... 3,400 120,700
-----------
805,913
-----------
Manufacturing -- 1.1%
Kennametal, Inc........................................... 15,200 511,100
-----------
Metals - Iron & Steel -- 0.1%
*Mueller Industries, Inc.................................. 1,300 47,125
-----------
Oil & Gas -- 0.6%
*Cal Dive International, Inc.............................. 2,300 76,188
*Core Laboratories N.V.................................... 8,700 174,544
-----------
250,732
-----------
</TABLE>
F-45
<PAGE> 158
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The All Pro Small Cap Growth Portfolio
Statement of Net Assets, December 31, 1999 -- Continued
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Oil Equipment & Services -- 5.6%
*BJ Services Co........................................... 14,100 $ 589,556
*Marine Drilling.......................................... 30,800 691,075
*Oceaneering International, Inc........................... 9,900 147,881
*Rowan Cos., Inc.......................................... 28,200 611,588
*Smith International, Inc................................. 9,500 472,031
-----------
2,512,131
-----------
Real Estate -- 1.0%
*Costar Group............................................. 12,300 441,263
-----------
Retail Merchandising -- 0.7%
*1-800-Flowers.Com, Inc................................... 13,100 140,006
*RoweCom, Inc............................................. 4,300 195,113
-----------
335,119
-----------
Semiconductors -- 3.3%
*Exar Corp................................................ 3,000 176,625
*Globespan, Inc........................................... 2,200 143,275
*Integrated Device Technology, Inc........................ 25,000 725,000
*QLogic Corp.............................................. 2,800 447,650
-----------
1,492,550
-----------
Software -- 13.7%
*Bluestone Software, Inc.................................. 1,800 207,000
*Broadbase Software, Inc.................................. 13,100 1,473,750
*C-Bridge Internet Solutions.............................. 1,400 68,075
*Diamond Technology Partners, Inc......................... 1,450 124,609
*Digex, Inc............................................... 5,100 350,625
*Digimarc Corp............................................ 3,400 170,000
*Digital Island, Inc...................................... 8,600 818,075
*Digital River, Inc....................................... 3,500 116,594
*HNC Software, Inc........................................ 2,300 243,225
*Interwoven, Inc.......................................... 5,400 656,775
*InterVU, Inc............................................. 2,500 262,500
*Manugistics Group, Inc................................... 6,300 203,569
*Mercury Interactive Corp................................. 1,700 183,494
*Ondisplay, Inc........................................... 3,800 345,325
*Preview Systems, Inc..................................... 2,900 188,138
*TSI International Software Ltd........................... 5,200 294,450
*Viador, Inc.............................................. 3,000 127,125
*WorldGate Communications, Inc............................ 6,100 290,131
*Xcelera.Com, Inc......................................... 400 55,800
-----------
6,179,260
-----------
Transportation -- 1.3%
*Atlas Air, Inc........................................... 4,200 115,238
*Eagle USA Airfreight, Inc................................ 7,000 301,875
*Forward Air Corp......................................... 4,300 186,513
-----------
603,626
-----------
</TABLE>
F-46
<PAGE> 159
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The All Pro Small Cap Growth Portfolio
Statement of Net Assets, December 31, 1999 -- Concluded
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Waste Management -- 0.2%
*Waste Connections, Inc................................... 6,800 $ 98,175
-----------
TOTAL COMMON STOCK (COST $27,953,339)................... 44,840,302
-----------
SHORT TERM INVESTMENTS -- 6.8%
Temporary Investment Fund, Inc. -- TempCash............... 3,075,488 3,075,488
-----------
TOTAL SHORT TERM INVESTMENTS (COST $3,075,488).......... 3,075,488
-----------
TOTAL INVESTMENTS -- 106.0% (COST $31,028,827).......... 47,915,790
LIABILITIES IN EXCESS OF OTHER ASSETS -- (6.0%)............. (2,715,308)
-----------
NET ASSETS -- 0.0%
(Equivalent to $18.83 per share based on 2,400,329 shares
of capital stock outstanding)........................... $45,200,482
===========
NET ASSET VALUE, OFFERING, AND REDEMPTION PRICE PER SHARE
(45,200,482/2,400,329 shares outstanding.................. $ 18.83
===========
</TABLE>
*Non-Income Producing.
See accompanying notes to financial statements.
F-47
<PAGE> 160
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The All Pro Small Cap Value Portfolio
Statement of Net Assets, December 31, 1999
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
--------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK -- 92.7%
Aerospace & Defense -- 1.7%
AAR Corp. ................................................ 7,900 $ 141,706
*Kellstrom Industries, Inc. .............................. 3,100 28,287
Primex Technologies, Inc. ................................ 1,000 20,750
-----------
190,743
-----------
Airlines -- 0.3%
*America West Airlines, Inc. ............................. 1,600 33,200
-----------
Apparel -- 0.5%
*Unifi, Inc. ............................................. 4,700 57,869
-----------
Automobiles -- 0.5%
Winnebago Industries, Inc. ............................... 2,800 56,175
-----------
Automotive Equipment -- 1.6%
Arvin Industries, Inc. ................................... 1,000 28,375
*Dura Automotive Systems, Inc. ........................... 1,600 27,900
*Tower Automotive, Inc. .................................. 3,600 55,575
*Transportation Technologies Industries................... 2,200 39,737
*Wabash National Corp. ................................... 2,300 34,500
-----------
186,087
-----------
Banks -- 5.5%
Amcore Financial.......................................... 2,900 69,600
Andover Bancorp, Inc. .................................... 700 19,600
Bank United Corp., Class A................................ 1,300 35,425
Chittenden Corp. ......................................... 1,207 35,757
Colonial BancGroup, Inc. ................................. 4,600 47,725
Commercial Federal Corp. ................................. 6,000 106,875
Dime Community Bancorp, Inc. ............................. 550 10,175
East West Bancorp, Inc. .................................. 2,900 33,169
First Bell Bancorp, Inc. ................................. 3,800 57,950
Hudson United Bancorp..................................... 2,884 73,722
*Local Financial Corp. ................................... 3,500 36,312
Seacoast Financial Services Corp. ........................ 6,400 65,200
Sovereign Bancorp, Inc. .................................. 3,900 29,067
-----------
620,577
-----------
Beverages -- 0.9%
*Canandaigua Brands, Inc., Class A........................ 1,200 61,200
Coors Adolph Co. Class B.................................. 700 36,750
-----------
97,950
-----------
Building & Building Supplies -- 3.4%
BMC West Corp. ........................................... 2,720 27,880
Florida Rock Industries, Inc. ............................ 500 17,219
*Jacobs Engineering Group, Inc. .......................... 3,100 100,750
Lafarge Corp. ............................................ 1,900 52,487
M.D.C. Holdings, Inc. .................................... 2,300 36,081
*Morrison Knudsen Corp. .................................. 6,100 47,656
Texas Industries, Inc. ................................... 1,400 59,587
*Toll Brothers, Inc. ..................................... 2,350 43,769
-----------
385,429
-----------
</TABLE>
F-48
<PAGE> 161
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The All Pro Small Cap Value Portfolio
Statement of Net Assets, December 31, 1999 -- Continued
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
--------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Business & Consumer Services -- 4.7%
*Interep National Radio Sales, Inc. ...................... 3,800 $ 50,825
*Interim Services, Inc. .................................. 6,200 153,450
*Personnel Group of America, Inc. ........................ 5,800 58,725
*Seitel, Inc. ............................................ 3,700 24,975
*Sterling Software, Inc. ................................. 6,400 201,600
*Zomax Optical Media, Inc. ............................... 900 40,725
-----------
530,300
-----------
Chemicals & Allied Products -- 0.8%
*Ferro Corp. ............................................. 3,800 83,600
*International Speciality................................. 1,100 10,106
-----------
93,706
-----------
Communications -- 0.8%
*CommScope, Inc. ......................................... 1,400 56,437
Teltrend, Inc. ........................................... 1,000 30,250
-----------
86,687
-----------
Computers -- 2.0%
*In Focus Systems, Inc. .................................. 2,600 60,287
*InterVoice-Brite, Inc. .................................. 4,300 101,722
*Metamor Worldwide, Inc. ................................. 1,200 34,950
*Pomeroy Computer Resources, Inc. ........................ 2,200 29,150
-----------
226,109
-----------
Consumer Staples -- 0.5%
Church and Dwight, Inc. .................................. 2,100 56,044
-----------
Containers -- 0.3%
Ivex Packaging Corp. ..................................... 2,540 25,400
*US Can Corp. ............................................ 350 6,956
-----------
32,356
-----------
Drugs & Health Care -- 0.9%
Bindley Western Industries, Inc. ......................... 4,533 68,278
*Medicis Pharmaceutical Corp. Class A..................... 800 34,050
-----------
102,328
-----------
Electrical Equipment -- 1.0%
*UCAR International, Inc. ................................ 6,640 118,275
-----------
Electronics -- 7.3%
Applied Power, Inc. Class A............................... 1,300 47,775
*Ardent Software, Inc. ................................... 3,400 132,600
*Arrow Electronics, Inc. ................................. 4,700 119,262
*Benchmark Electronics, Inc. ............................. 2,100 48,169
Burr-Brown Corp. ......................................... 1,740 62,857
*Cable Design Technologies, Inc. ......................... 2,200 50,600
Harman International Industries, Inc. .................... 2,400 134,700
*International Rectifier Corp. ........................... 5,500 143,000
*Stoneridge, Inc. ........................................ 1,200 18,525
*Telcom Semiconductor, Inc. .............................. 3,300 69,300
-----------
826,788
-----------
</TABLE>
F-49
<PAGE> 162
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The All Pro Small Cap Value Portfolio
Statement of Net Assets, December 31, 1999 -- Continued
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
--------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Energy -- 1.0%
*NSTAR.................................................... 1,450 $ 58,725
RGS Energy Corp. ......................................... 2,400 49,350
-----------
108,075
-----------
Engineering -- 0.3%
*URS Corp. ............................................... 1,600 34,700
-----------
Finance -- 3.0%
Astoria Financial Corp. .................................. 2,200 66,962
Dain Rauscher Corp. ...................................... 1,100 51,150
Downey Financial Corp. ................................... 3,100 62,581
Golden State Bancorp, Inc. ............................... 4,500 77,625
Heller Financial, Inc. ................................... 3,300 66,206
MAF Bancorp, Inc. ........................................ 800 16,750
-----------
341,274
-----------
Finance - Investment & Other -- 0.2%
Advest Group, Inc. ....................................... 1,100 20,212
-----------
Foods -- 2.3%
*International Home Foods, Inc. .......................... 6,900 119,887
*Suiza Foods Corp. ....................................... 3,600 142,650
-----------
262,537
-----------
Food & Food Distributors -- 1.2%
*Ben & Jerry's Homemade, Inc. Class A..................... 1,100 27,362
Earthgrains Co. .......................................... 3,900 62,887
*Smithfield Foods, Inc. .................................. 1,800 43,200
-----------
133,449
-----------
Healthcare Services -- 1.4%
*Trigon Healthcare, Inc. ................................. 5,270 155,465
-----------
Home Furnishings -- 0.4%
*LADD Furniture, Inc. .................................... 2,100 41,475
-----------
Home Furnishings/Housewares -- 1.8%
Bush Industries, Inc. Class A............................. 3,600 61,875
*Furniture Brands International, Inc. .................... 4,430 97,460
*Mohawk Industries, Inc. ................................. 2,000 52,750
-----------
212,085
-----------
Hotel/Restaurants -- 0.7%
Mandalay Resort Group..................................... 3,800 76,475
-----------
</TABLE>
F-50
<PAGE> 163
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The All Pro Small Cap Value Portfolio
Statement of Net Assets, December 31, 1999 -- Continued
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
--------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Insurance -- 3.3%
Chicago Title Corp. ...................................... 1,100 $ 50,875
*Delphi Financial Group, Inc. Class A..................... 1,364 40,920
Enhance Financial Services Group, Inc. ................... 1,500 24,375
FBL Financial Group, Inc. ................................ 1,900 38,000
MONY Group Inc. .......................................... 1,000 29,187
PMI Group, Inc. .......................................... 1,300 63,456
Radian Group, Inc. ....................................... 1,000 47,750
Reinsurance Group, Inc. .................................. 2,900 80,475
-----------
375,038
-----------
Leasing -- 2.3%
Avis Rent A Car, Inc. .................................... 5,000 127,813
*Dollar Thrifty Automotive Group, Inc. ................... 2,200 52,663
*Rent Way, Inc. .......................................... 3,100 57,931
Rollins Truck Leasing..................................... 2,850 34,022
-----------
272,429
-----------
Machinery & Heavy Equipment -- 1.2%
Manitowoc Co., Inc. ...................................... 1,400 47,600
Oshkosh Truck Corp. ...................................... 1,300 38,106
*Terex Corp. ............................................. 1,900 52,725
-----------
138,431
-----------
Machinery & Instrumentation -- 0.6%
Regal-Beloit Corp. ....................................... 3,200 66,000
-----------
Manufacturing -- 6.6%
Belden, Inc. ............................................. 6,700 140,700
*Clarcor, Inc. ........................................... 2,300 41,400
*Griffon Corp. ........................................... 12,600 98,437
Hon Industries, Inc. ..................................... 5,300 116,269
Monaco Coach Corp. ....................................... 3,225 82,439
*Moog, Inc. Class A....................................... 700 18,900
*Northwest Pipe Co. ...................................... 4,000 56,000
Quanex Corp. ............................................. 4,050 103,275
Smith (A.O.) Corp. ....................................... 1,200 26,250
Standex International Corp. .............................. 2,600 54,437
Velcro Industries N.V. ................................... 1,010 12,183
-----------
750,290
-----------
Manufacturing Equipment -- 0.3%
*Lawson Products, Inc. ................................... 1,400 32,375
-----------
Medical Equipment & Supplies -- 1.3%
*Haemonetics Corp. ....................................... 4,400 104,775
Varian Medical Systems, Inc. ............................. 1,700 50,681
-----------
155,456
-----------
Medical Instruments -- 0.7%
Dentsply International, Inc. ............................. 3,300 77,963
-----------
</TABLE>
F-51
<PAGE> 164
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The All Pro Small Cap Value Portfolio
Statement of Net Assets, December 31, 1999 -- Continued
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
--------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Medical & Medical Services -- 1.9%
*Bard (C.R.), Inc. ....................................... 800 $ 42,400
*CONMED Corp. ............................................ 1,600 41,400
*Dura Pharmaceuticals, Inc. .............................. 5,000 69,688
*Medco Research, Inc. .................................... 1,000 30,063
*Polymedica Corp. ........................................ 1,600 37,000
-----------
220,551
-----------
Metals - Iron & Steel -- 0.6%
AK Steel Holding Corp. ................................... 1,000 18,875
*Ryerson Tull, Inc. ...................................... 2,400 46,650
-----------
65,525
-----------
Office Equipment & Supplies -- 0.5%
*United Stationers, Inc. ................................. 1,850 52,841
-----------
Oil -- 2.1%
Noble Affiliates, Inc. ................................... 3,400 72,888
*Ocean Energy, Inc. ...................................... 5,100 39,525
*Santa Fe Snyder Corp. ................................... 15,700 125,600
-----------
238,013
-----------
Oil & Gas -- 1.3%
*Louis Dreyfus Natural Gas Co. ........................... 3,000 54,375
Pennzoil-Quaker State Co. ................................ 2,600 26,488
*Tesoro Petroleum Corp. .................................. 5,400 62,438
-----------
143,301
-----------
Oil Equipment & Services -- 0.4%
SEACOR SMIT, Inc. ........................................ 600 31,050
-----------
Paper & Forest Products -- 0.9%
Boise Cascade Corp. ...................................... 2,500 101,250
-----------
Printing & Publishing -- 1.6%
*Banta Corp. ............................................. 3,600 81,225
*Mail-Well, Inc. ......................................... 7,000 94,500
-----------
175,725
-----------
</TABLE>
F-52
<PAGE> 165
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The All Pro Small Cap Value Portfolio
Statement of Net Assets, December 31, 1999 -- Continued
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
--------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Real Estate -- 6.1%
Amli Residential.......................................... 1,700 $ 34,319
Annaly Mortgage Management, Inc. ......................... 1,800 15,750
Bradley Real Estate, Inc. ................................ 1,200 20,925
Brandywine Realty Trust................................... 4,260 69,758
Chelsea GCA Realty, Inc. ................................. 1,370 40,758
Eastgroup Properties...................................... 3,200 59,200
Essex Property Trust, Inc. ............................... 1,600 54,400
Federal Realty Investment Trust........................... 1,400 26,338
First Industrial Realty Trust, Inc. ...................... 1,100 30,181
Great Lakes REIT, Inc. ................................... 2,800 40,250
Liberty Property Trust.................................... 3,000 72,750
Mack-Cali Realty Corp. ................................... 1,500 39,094
Mills Corp. .............................................. 1,500 26,813
Parkway Properties, Inc. ................................. 1,500 43,219
Prentiss Properties Trust................................. 4,600 96,600
Storage USA, Inc. ........................................ 1,000 30,250
-----------
700,605
-----------
Restaurants -- 0.7%
O'Charleys, Inc. ......................................... 1,280 16,800
*RARE Hospitality International, Inc. .................... 2,700 58,430
-----------
75,230
-----------
Retail - Clothing and Apparel -- 0.7%
Cato Corp. Class A........................................ 6,700 84,588
-----------
Retail Merchandising -- 4.5%
Haverty Furniture Companies, Inc. ........................ 2,700 34,088
Regis Corp. .............................................. 4,200 79,275
*Rex Stores Corp. ........................................ 2,500 87,500
*ShopKo Stores, Inc. ..................................... 4,100 94,300
*Zale Corp. .............................................. 4,300 208,013
-----------
503,176
-----------
Semiconductors -- 2.4%
Dallas Semiconductor Corp. ............................... 1,300 83,769
*Exar Corp. .............................................. 1,100 64,763
*Integrated Device Technology, Inc. ...................... 3,400 98,600
Pioneer-Standard Electronics, Inc. ....................... 1,800 25,988
-----------
273,120
-----------
Software -- 3.2%
*Best Software, Inc. ..................................... 3,400 100,300
*Midway Games, Inc. ...................................... 2,800 67,025
*Progress Software Corp. ................................. 1,400 79,450
*Symantec Corp. .......................................... 1,900 111,387
-----------
358,162
-----------
</TABLE>
F-53
<PAGE> 166
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The All Pro Small Cap Value Portfolio
Statement of Net Assets, December 31, 1999 -- Concluded
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
--------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Transportation -- 2.5%
*American Freightways Corp. .............................. 400 $ 6,475
*Arkansas Best Corp. ..................................... 3,900 46,800
Arnold Industries, Inc. .................................. 8,300 116,719
Roadway Express, Inc. .................................... 1,800 38,925
Stolt-Nielsen............................................. 2,600 37,050
USFreightways Corp. ...................................... 1,000 47,875
-----------
293,844
-----------
Utilities -- 1.4%
CH Energy Group, Inc. .................................... 1,200 39,600
Cleco Corp. .............................................. 2,300 73,744
United Illuminating Co. .................................. 800 41,100
-----------
154,444
-----------
Waste Management -- 0.6%
Safety-Kleen Corp......................................... 4,675 52,886
-----------
TOTAL COMMON STOCK (COST $10,276,986)................... 10,478,663
-----------
SHORT TERM INVESTMENTS -- 8.1%
Temporary Investment Fund, Inc. -- TempCash............... 920,392 920,392
-----------
TOTAL SHORT TERM INVESTMENTS (COST $920,392)............ 920,392
-----------
TOTAL INVESTMENTS -- 100.8% (COST $11,197,378).......... 11,399,055
LIABILITIES IN EXCESS OF OTHER ASSETS -- (0.8)%............. (98,749)
-----------
NET ASSETS -- 100.0%
(Equivalent to $7.57 per share based on 1,492,104 shares
of capital stock outstanding)........................... $11,300,306
===========
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE
($11,300,306/1,492,104 shares outstanding)................ $ 7.57
===========
</TABLE>
*Non-Income Producing.
See accompanying notes to financial statements.
F-54
<PAGE> 167
--------------------------------------------------------------------------------
Market Street Fund, Inc.
Statement of Operations for the Year Ended December 31, 1999
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MONEY
GROWTH MARKET BOND
PORTFOLIO PORTFOLIO PORTFOLIO
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends................................................. $ 5,051,008 $ -- $ --
Interest.................................................. 716,096 5,447,990 2,432,364
Less: foreign taxes withheld............................ (13,960) -- --
------------ ---------- -----------
Total Investment Income................................. 5,753,144 5,447,990 2,432,364
------------ ---------- -----------
EXPENSES:
Investment advisory fee................................... 1,003,377 261,012 126,876
Administration fee........................................ 236,297 79,064 27,385
Directors' fee............................................ 25,266 7,953 2,803
Transfer agent fee........................................ 8,560 4,022 2,463
Custodian fee............................................. 34,295 13,018 6,203
Legal fees................................................ 66,322 20,534 7,533
Audit fees................................................ 38,475 11,253 3,913
Printing.................................................. 83,213 21,599 7,514
Insurance................................................. 9,660 2,718 1,054
Miscellaneous............................................. 5,267 1,557 1,214
------------ ---------- -----------
1,510,732 422,730 186,958
Less: expenses waived by Administrator and/or reimbursed
by affiliated insurance company......................... -- -- --
------------ ---------- -----------
Total expenses.......................................... 1,510,732 422,730 186,958
------------ ---------- -----------
Net investment income (loss)............................ 4,242,412 5,025,260 2,245,406
------------ ---------- -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND
FOREIGN CURRENCY TRANSACTIONS
Net realized gain (loss) from:
Investments............................................. 18,946,927 (8) (916,673)
Foreign Currency related transactions................... -- -- --
------------ ---------- -----------
18,946,927 (8) (916,673)
------------ ---------- -----------
Net change in unrealized appreciation (depreciation) from:
Investments............................................. (13,385,176) -- (2,503,249)
Foreign currency related transactions................... -- -- --
------------ ---------- -----------
(13,385,176) -- (2,503,249)
------------ ---------- -----------
Net gain (loss) on investments and foreign currency
transactions.......................................... 5,561,751 (8) (3,419,922)
------------ ---------- -----------
Net increase (decrease) in net assets resulting from
operations............................................ $ 9,804,163 $5,025,252 $(1,174,516)
============ ========== ===========
</TABLE>
See accompanying notes to financial statements.
F-55
<PAGE> 168
--------------------------------------------------------------------------------
Market Street Fund, Inc.
Statement of Operations for the Year Ended December 31, 1999 -- (Concluded)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
AGGRESSIVE SENTINEL ALL PRO ALL PRO ALL PRO ALL PRO
MANAGED GROWTH INTERNATIONAL GROWTH LARGE CAP LARGE CAP SMALL CAP SMALL CAP
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO GROWTH VALUE GROWTH VALUE
---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 703,795 $ 421,805 $ 1,830,290 $ 81,385 $ 154,426 $ 366,112 $ 16,839 $ 117,780
2,075,832 218,321 69,258 34,289 44,223 46,676 93,332 34,157
(1,708) -- (128,268) -- -- (340) -- --
----------- ---------- ----------- ---------- ---------- --------- ----------- -----------
2,777,919 640,126 1,771,280 115,674 198,649 412,448 110,171 151,937
----------- ---------- ----------- ---------- ---------- --------- ----------- -----------
296,660 225,914 568,324 74,269 174,315 145,234 180,903 85,907
54,798 41,725 74,538 11,300 19,074 15,686 15,662 7,219
5,767 3,595 5,989 1,092 1,539 1,274 1,281 592
3,274 2,886 3,368 1,993 2,246 2,126 2,155 1,870
10,034 9,434 46,974 4,871 9,881 13,387 12,809 13,692
15,086 11,704 15,818 3,136 4,202 3,353 3,699 1,577
8,608 5,146 9,275 1,607 2,577 2,199 1,953 1,002
15,050 11,449 15,673 5,364 5,103 4,274 4,095 1,968
2,065 1,792 2,253 378 688 697 311 301
1,437 976 2,120 825 1,226 1,210 1,210 1,169
----------- ---------- ----------- ---------- ---------- --------- ----------- -----------
412,779 314,621 744,332 104,835 220,851 189,440 224,078 115,297
-- -- -- -- -- -- -- (564)
----------- ---------- ----------- ---------- ---------- --------- ----------- -----------
412,779 314,621 744,332 104,835 220,851 189,440 224,078 114,733
----------- ---------- ----------- ---------- ---------- --------- ----------- -----------
2,365,140 325,505 1,026,948 10,839 (22,202) 223,008 (113,907) 37,204
----------- ---------- ----------- ---------- ---------- --------- ----------- -----------
3,592,195 5,142,814 10,153,870 1,716,433 1,617,492 349,009 2,250,696 (1,022,439)
-- -- (25,013) -- -- -- -- --
----------- ---------- ----------- ---------- ---------- --------- ----------- -----------
3,592,195 5,142,814 10,128,857 1,716,433 1,617,492 349,009 2,250,696 (1,022,439)
----------- ---------- ----------- ---------- ---------- --------- ----------- -----------
(5,655,271) 3,132,350 8,880,224 3,864,968 4,532,937 (614,959) 15,609,185 316,627
-- -- (10,680) -- -- -- -- --
----------- ---------- ----------- ---------- ---------- --------- ----------- -----------
(5,655,271) 3,132,350 8,869,544 3,864,968 4,532,937 (614,959) 15,609,185 316,627
----------- ---------- ----------- ---------- ---------- --------- ----------- -----------
(2,063,076) 8,275,164 18,998,401 5,581,401 6,150,429 (265,950) 17,859,881 (705,812)
----------- ---------- ----------- ---------- ---------- --------- ----------- -----------
$ 302,064 $8,600,669 $20,025,349 $5,592,240 $6,128,227 $ (42,942) $17,745,974 $ (668,608)
=========== ========== =========== ========== ========== ========= =========== ===========
</TABLE>
F-56
<PAGE> 169
--------------------------------------------------------------------------------
Market Street Fund, Inc.
Statements of Changes in Net Assets
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1999
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)........... $ 4,242,412 $ 5,025,260 $ 2,245,406 $ 2,365,140 $ 325,505 $ 1,026,948
Net realized gain (loss) on investments
and foreign currency related
transactions.......................... 18,946,927 (8) (916,673) 3,592,195 5,142,814 10,128,857
Net change in unrealized appreciation
(depreciation) on investments and
foreign currency translations......... (13,385,176) -- (2,503,249) (5,655,271) 3,132,350 8,869,544
------------ ------------ ----------- ----------- ----------- -----------
Net increase (decrease) in net assets
resulting from operations............. 9,804,163 5,025,252 (1,174,516) 302,064 8,600,669 20,025,349
Distributions:
From net investment income............. (1,058,688) (5,025,260) (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................... (15,597,856) 25,434,525 3,416,178 9,784,991 4,994,083 2,393,275
------------ ------------ ----------- ----------- ----------- -----------
Total increase in net assets.......... (13,036,885) 25,434,517 1,336,343 6,180,521 6,017,032 17,432,355
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............................ $302,261,636 $116,887,438 $38,182,265 $73,985,832 $62,512,347 $88,795,564
============ ============ =========== =========== =========== ===========
</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 $ 1,035,342
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) 1,085,410
------------ ----------- ----------- ----------- ----------- -----------
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.
F-57
<PAGE> 170
--------------------------------------------------------------------------------
Market Street Fund, Inc.
Statements of Changes in Net Assets -- (Concluded)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1999
SENTINEL ALL PRO ALL PRO ALL PRO ALL PRO
GROWTH LARGE CAP LARGE CAP SMALL CAP SMALL CAP
PORTFOLIO GROWTH VALUE GROWTH VALUE
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INCREASE IN NET ASSETS
Operations:
Net investment income (loss)............................. $ 10,839 $ (22,202) $ 223,008 $ (113,907) $ 37,204
Net realized gain (loss) on investments and foreign
currency related transactions........................... 1,716,433 1,617,492 349,009 2,250,696 (1,022,439)
Net change in unrealized appreciation (depreciation) on
investments and foreign currency translations........... 3,864,968 4,532,937 (614,959) 15,609,185 316,627
----------- ----------- ----------- ----------- -----------
Net increase (decrease) in net assets resulting from
operations.............................................. 5,592,240 6,128,227 (42,942) 17,745,974 (668,608)
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............................................... 4,099,126 17,529,239 8,850,732 17,769,243 3,912,710
----------- ----------- ----------- ----------- -----------
Total increase in net assets............................ 9,130,398 23,654,364 8,702,710 35,515,217 3,227,047
NET ASSETS
Beginning of period........................................ 12,166,979 14,306,655 15,615,901 9,685,265 8,073,259
----------- ----------- ----------- ----------- -----------
End of Period.............................................. $21,297,377 $37,961,019 $24,318,611 $45,200,482 $11,300,306
=========== =========== =========== =========== ===========
</TABLE>
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE YEAR OR PERIOD ENDED DECEMBER 31, 1998
SENTINEL ALL PRO ALL PRO ALL PRO ALL PRO
GROWTH LARGE CAP LARGE CAP SMALL CAP SMALL 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.
F-58
<PAGE> 171
--------------------------------------------------------------------------------
Market Street Fund, Inc.
Notes to Financial Statements, December 31, 1999
--------------------------------------------------------------------------------
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, All Pro Large Cap Growth Portfolio, All
Pro Large Cap Value Portfolio, All Pro Small Cap Growth Portfolio, and All Pro
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 close of regular trading on
the New York Stock Exchange, currently 4:00 p.m. New York time 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 90 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 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 December 31, 1999 was
$2,466,633 in the Bond Portfolio and $6,207,211 in the Managed Portfolio.
F-59
<PAGE> 172
--------------------------------------------------------------------------------
Market Street Fund, Inc.
Notes to Financial Statements, December 31, 1999 -- Continued
--------------------------------------------------------------------------------
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,
All Pro Large Cap Growth Portfolio, All Pro Large Cap Value Portfolio, All Pro
Small Cap Growth Portfolio, and All Pro Small Cap Value Portfolio declare and
pay dividends of investment income annually. For all Portfolios, distributions
of capital gains are declared and paid annually.
Federal Income Taxes
No provision is made for Federal taxes as it is the Fund's intention to have
each Portfolio continue to qualify as a regulated investment company and to make
the requisite distributions to its shareholders which will be sufficient to
relieve it from Federal income taxes.
3. INVESTMENT ADVISORY FEES AND RELATED PARTY TRANSACTIONS
Investment advisory agreements have been approved, whereby Sentinel Advisors
Company (SAC), a Vermont General Partnership, is adviser for the Growth, Money
Market, Bond, Managed, Aggressive Growth and Sentinel Growth Portfolios. With
respect to the Growth Portfolio, SAC is compensated monthly at an effective
annual rate of 0.50% of the first $20 million of the average daily net assets of
the portfolio, 0.40% of the next $20 million and 0.30% of net assets in excess
of $40 million. SAC is compensated monthly at an effective annual rate of 0.25%
of the average daily net assets of the Money Market Portfolio. With respect to
the Bond Portfolio, SAC is compensated monthly at the effective annual rate of
0.35% of the first $100 million of the average daily net assets of the portfolio
and 0.30% of net assets in excess of $100 million. With respect to the Managed
Portfolio, SAC is compensated monthly at the effective annual rate of 0.40% of
the first $100 million of the average daily net assets of the portfolio and
0.35% of net assets in excess of $100 million. With respect to the Aggressive
Growth Portfolio, SAC is compensated monthly at the effective annual rate of
0.50% of the first $20 million of the average daily net assets of the portfolio,
0.40% of the next $20 million and 0.30% of net assets in excess of $40 million.
With respect to the Sentinel Growth Portfolio, SAC is compensated monthly at an
effective annual rate of 0.50% of the first $20 million of the average daily net
assets of the portfolio, 0.40% of the next $20
F-60
<PAGE> 173
--------------------------------------------------------------------------------
Market Street Fund, Inc.
Notes to Financial Statements, December 31, 1999 -- Continued
--------------------------------------------------------------------------------
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, All Pro
Large Cap Growth, All Pro Large Cap Value, All Pro Small Cap Growth, and All Pro
Small Cap Value Portfolios. With respect to the All Pro Large Cap Growth
Portfolio and the All Pro 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 All Pro Small Cap Growth Portfolio and the All Pro 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, All Pro Large Cap Growth, All Pro Large Cap Value, All Pro Small Cap
Growth, and All Pro 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.
F-61
<PAGE> 174
--------------------------------------------------------------------------------
Market Street Fund, Inc.
Notes to Financial Statements, December 31, 1999 -- Continued
--------------------------------------------------------------------------------
4. NET ASSETS
At December 31, 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.......................... $299,605,298 $116,887,504 $38,590,948 $59,837,780
Undistributed net investment income......................... 4,242,412 -- 2,245,406 2,365,140
Undistributed net realized gain............................. 18,946,927 -- -- 3,592,195
Accumulated loss on investment transactions................. -- (66) (916,673) --
Net unrealized appreciation (depreciation) on investments
and foreign currency....................................... 49,466,999 -- (1,737,416) 8,190,717
------------ ------------ ----------- -----------
$302,261,636 $116,887,438 $38,182,265 $73,985,832
============ ============ =========== ===========
</TABLE>
<TABLE>
<CAPTION>
AGGRESSIVE SENTINEL
GROWTH INTERNATIONAL GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net contribution from shareholders.......................... $47,502,186 $63,852,808 $14,020,708
Undistributed net investment income......................... 325,505 1,001,935 10,839
Undistributed net realized gain............................. 5,142,814 10,082,880 1,716,433
Accumulated loss on investment transactions................. -- -- --
Net unrealized appreciation (depreciation) on investments
and foreign currency....................................... 9,541,842 13,857,942 5,549,397
----------- ----------- -----------
$62,512,347 $88,795,565 $21,297,377
=========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
ALL PRO ALL PRO ALL PRO ALL PRO
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.......................... $29,424,473 $24,266,104 $26,846,798 $12,733,634
Undistributed net investment Income (loss).................. -- 223,008 -- 37,204
Undistributed net realized gain............................. 1,286,235 -- 1,466,720 --
Accumulated loss on investment transactions................. -- (265,538) -- (1,672,209)
Net unrealized appreciation (depreciation) on investments
and foreign currency....................................... 7,250,311 95,037 16,886,964 201,677
----------- ----------- ----------- -----------
$37,961,019 $24,318,611 $45,200,482 $11,300,306
=========== =========== =========== ===========
</TABLE>
F-62
<PAGE> 175
--------------------------------------------------------------------------------
Market Street Fund, Inc.
Notes to Financial Statements, December 31, 1999 -- Continued
--------------------------------------------------------------------------------
5. PURCHASES AND SALES OF INVESTMENTS (EXCLUDING SHORT-TERM SECURITIES)
Purchases and proceeds on sales of investments for the portfolios, for the
period ended December 31, 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.................... $ -- $ -- $49,329,499 $ 84,109,351 $ -- $ --
Corporate Bonds........................... -- -- 27,501,167 14,596,760 -- --
Common and Preferred Stock................ 136,505,295 -- -- 21,292,779 23,373,119 30,409,286
------------ ----------- ----------- ------------ ----------- -----------
Total Purchases........................... $136,505,295 -- $76,830,666 $119,998,890 $23,373,119 $30,409,286
============ =========== =========== ============ =========== ===========
SALES
U.S. Gov't Obligations.................... $ -- $ -- $47,032,265 $ 77,359,553 $ -- $ --
Corporate Bonds........................... -- -- 22,199,250 9,646,767 -- --
Common and Preferred Stock................ 147,378,141 -- -- 22,301,421 23,787,060 32,582,338
------------ ----------- ----------- ------------ ----------- -----------
Total Sales............................... $147,378,141 -- $69,231,515 $109,307,741 $23,787,060 $32,582,338
============ =========== =========== ============ =========== ===========
</TABLE>
<TABLE>
<CAPTION>
ALL PRO ALL PRO ALL PRO ALL PRO
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.................................. 18,687,142 35,842,297 20,630,400 39,576,345 13,968,264
----------- ----------- ----------- ----------- -----------
Total Purchases............................................. $18,687,142 $35,842,297 $20,630,400 $39,576,345 $13,968,264
=========== =========== =========== =========== ===========
SALES
U.S. Gov't Obligations...................................... $ -- $ -- $ -- $ -- $ --
Corporate Bonds............................................. -- -- -- -- --
Common and Preferred Stock.................................. 15,678,708 19,895,483 12,731,386 21,825,763 10,237,676
----------- ----------- ----------- ----------- -----------
Total Sales................................................. $15,678,708 $19,895,483 $12,731,386 $21,825,763 $10,237,676
=========== =========== =========== =========== ===========
</TABLE>
F-63
<PAGE> 176
--------------------------------------------------------------------------------
Market Street Fund, Inc.
Notes to Financial Statements, December 31, 1999 -- Continued
--------------------------------------------------------------------------------
6. TAX BASIS OF INVESTMENTS
Investment information based on the cost of the securities for Federal income
tax purposes held at December 31, 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... $ 63,039,699 $ -- $ 9,850 $10,467,676 $14,975,545 $20,859,383
Aggregate gross unrealized depreciation... (11,401,069) -- (1,747,266) (2,276,960) (5,433,702) (7,075,533)
------------ ------------ ----------- ----------- ----------- -----------
Net unrealized appreciation
(depreciation)........................... $ 51,638,630 $ -- $(1,737,416) $ 8,190,716 $ 9,541,843 $13,783,850
============ ============ =========== =========== =========== ===========
Aggregate cost of securities for federal
income tax purposes...................... $250,666,843 $117,474,552 $41,278,609 $71,378,575 $53,198,972 $72,778,574
============ ============ =========== =========== =========== ===========
Capital loss carryover (available to
offset possible future gains.) The
carryover expires as follows Money Market
Portfolio -- $57 in 2005, $9 in 2007;
Bond Portfolio -- $916,674 in 2007....... $ -- $ 66 $ 916,674 $ -- $ -- $ --
============ ============ =========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
ALL PRO ALL PRO ALL PRO ALL PRO
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...... $ 5,881,600 $ 9,004,635 $ 1,934,244 $17,819,715 $ 962,428
Aggregate gross unrealized depreciation...... (332,203) (1,946,348) (1,889,442) (974,333) (807,751)
----------- ----------- ----------- ----------- -----------
Net unrealized appreciation (depreciation)... $ 5,549,397 $ 7,250,287 $ 44,802 $16,845,382 $ 154,677
=========== =========== =========== =========== ===========
Aggregate cost of securities for federal
income tax purposes......................... $15,725,373 $31,174,894 $23,448,771 $31,070,408 $11,244,378
=========== =========== =========== =========== ===========
Capital loss carryover (available to offset
possible future gains.) The carryover
expires as follows: Large Cap
Value -- $215,505 in 2006; Small Cap Value--
$630,374 in 2006, $994,835 in 2007.......... $ -- $ -- $ 215,505 $ -- $ 1,625,209
=========== =========== =========== =========== ===========
</TABLE>
7. AUTHORIZED CAPITAL STOCK AND CAPITAL STOCK TRANSACTIONS
On December 31, 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;
for the All Pro Large Cap Growth, All Pro Large Cap Value, All Pro Small Cap
Growth and All Pro Small Cap Value Portfolios consist of 50 million shares and
each of the other series consists of 5 million shares.
On December 31, 1999, Provident Mutual Life Insurance Company owned 976,130
shares of All Pro Large Cap Value, 244,088 shares of All Pro Small Cap Growth
and 400,853 shares of All Pro Small Cap Value.
F-64
<PAGE> 177
--------------------------------------------------------------------------------
Market Street Fund, Inc.
Notes to Financial Statements, December 31, 1999 -- Continued
--------------------------------------------------------------------------------
Transactions in capital stock for the period ended December 31, 1999 were as
follows:
<TABLE>
<CAPTION>
MONEY MARKET
GROWTH PORTFOLIO PORTFOLIO BOND PORTFOLIO
------------------------------------------------------------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold......................... 1,329,197 $ 25,247,128 212,282,834 $ 212,282,834 1,037,876 $11,071,232
Shares redeemed..................... (2,509,410) (48,088,176) (191,715,270) (191,715,270) (798,215) (8,560,373)
Shares reinvested................... 390,679 7,243,192 4,866,961 4,866,961 83,209 905,319
---------- ------------ ------------ ------------- --------- -----------
Net contributions from affiliated
insurance companies................ (789,534) $(15,597,856) 25,434,525 $ 25,434,525 322,870 $ 3,416,178
========== ============ ============ ============= ========= ===========
<CAPTION>
MANAGED PORTFOLIO
------------------------------------ ------------------------
SHARES AMOUNT
------------------------------------ ------------------------
<S> <C> <C>
Shares sold......................... 1,048,895 $ 17,883,810
Shares redeemed..................... (709,970) (12,005,353)
Shares reinvested................... 233,644 3,906,534
--------- ------------
Net contributions from affiliated
insurance companies................ 572,569 $ 9,784,991
========= ============
</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.......................................... 623,914 $ 12,068,240 656,302 $ 9,459,577 269,528 $3,849,774
Shares redeemed...................................... (760,128) (14,651,877) (864,123) (12,052,571) (21,904) (311,615)
Shares reinvested.................................... 403,285 7,577,720 380,631 4,986,269 43,352 560,968
---------- ------------ -------- ------------ ------- ----------
Net contributions from affiliated insurance
companies........................................... 267,071 $ 4,994,083 172,810 $ 2,393,275 290,976 $4,099,127
========== ============ ======== ============ ======= ==========
</TABLE>
<TABLE>
<CAPTION>
ALL PRO LARGE CAP ALL PRO LARGE CAP ALL PRO SMALL CAP
GROWTH PORTFOLIO VALUE PORTFOLIO GROWTH PORTFOLIO
-------------------------------------------------------------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold............................... 2,444,764 $ 31,491,954 1,197,996 $12,240,796 1,770,700 $22,608,975
Shares redeemed........................... (1,090,487) (13,965,817) (349,648) (3,495,144) (358,525) (4,839,732)
Shares reinvested......................... 258 3,102 10,603 105,080 0 0
---------- ------------ --------- ----------- --------- -----------
Net contributions from affiliated
insurance companies...................... 1,354,535 $ 17,529,239 858,951 $ 8,850,732 1,412,175 $17,769,243
========== ============ ========= =========== ========= ===========
<CAPTION>
ALL PRO SMALL CAP
VALUE PORTFOLIO
------------------------------------------ -----------------------
SHARES AMOUNT
------------------------------------------ -----------------------
<S> <C> <C>
Shares sold............................... 1,054,394 $ 7,986,704
Shares redeemed........................... (543,349) (4,091,049)
Shares reinvested......................... 2,087 17,055
--------- -----------
Net contributions from affiliated
insurance companies...................... 513,132 $ 3,912,710
========= ===========
</TABLE>
Transactions in capital stock for the year ended December 31, 1998 were as
follows:
<TABLE>
<CAPTION>
MONEY MARKET
GROWTH PORTFOLIO PORTFOLIO BOND PORTFOLIO
---------------------------------------------------------------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold............................ 1,837,947 $ 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>
F-65
<PAGE> 178
--------------------------------------------------------------------------------
Market Street Fund, Inc.
Notes to Financial Statements, December 31, 1999 -- Concluded
--------------------------------------------------------------------------------
<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 4,181,983 378,012 4,819,514 148,986 1,693,967
-------- ----------- -------- ----------- ------- ----------
Net contributions from affiliated insurance companies.... 389,298 $ 8,041,798 558,760 $ 7,369,655 332,909 $3,936,595
======== =========== ======== =========== ======= ==========
</TABLE>
<TABLE>
<CAPTION>
ALL PRO LARGE CAP ALL PRO LARGE CAP ALL PRO SMALL CAP ALL PRO 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 $16,459,223 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.
9. SUBSEQUENT DIVIDEND
On December 29, 1999, the Board of Directors declared the following net
investment income and capital gain dividends to shareholders of record on
December 31, 1999, ex-dividend date January 10, 2000, payable on January 11,
2000 as follows:
<TABLE>
<CAPTION>
TOTAL PER SHARE
------------------------ --------------------
NET NET
INVESTMENT CAPITAL INVESTMENT CAPITAL
PORTFOLIO INCOME GAIN INCOME GAIN
--------- ---------- ----------- ---------- -------
<S> <C> <C> <C> <C>
Growth.................... $4,242,412 $18,946,927 $ .2658 $1.1872
Bond...................... 2,245,406 -- .6224 --
Managed................... 2,365,140 3,592,195 .5366 .8151
Aggressive Growth......... 1,768,905 3,699,413 .6217 1.3002
International............. 2,245,981 8,909,824 .4218 1.6735
Sentinel Growth........... 1,235,191 492,082 1.0319 .4111
All Pro Large Cap
Growth................... 819,069 636,988 .3187 .2479
All Pro Large Cap Value... 223,008 -- .0916 --
All Pro Small Cap
Growth................... 1,190,602 203,793 .4960 .0849
All Pro Small Cap Value... 37,204 -- .0249 --
</TABLE>
F-66
<PAGE> 179
UNAUDITED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Statement of Net Assets as of June 30, 2000......................... F-68
Statements of Operations for the Six Months Ended June 30, 2000..... F-163
Statements of Changes in Net Assets for the Six Months Ended
June 30, 2000.................................................... F-165
Notes to Financial Statements, June 30, 2000........................ F-177
</TABLE>
F-67
<PAGE> 180
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The Growth Portfolio
Statement of Net Assets, June 30, 2000
(Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
-----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK -- 95.7%
Aerospace & Defense -- 1.1%
Boeing Co. ............................................... 70,000 $ 2,926,875
------------
Automobiles -- 2.0%
Ford Motor Co. ........................................... 130,000 5,590,000
------------
Automotive & Equipment -- 0.1%
*Visteon Corp............................................. 17,021 206,384
------------
Banks -- 4.9%
Bank of America Corp. .................................... 60,438 2,598,834
Bank of New York Co., Inc. ............................... 145,500 6,765,750
Wells Fargo Co. .......................................... 112,000 4,340,000
------------
13,704,584
------------
Beverages -- 3.4%
Pepsico, Inc. ............................................ 210,000 9,331,875
------------
Broadcasting & Publishing -- 2.1%
Harcourt General, Inc. ................................... 3,200 174,000
McGraw-Hill, Inc. ........................................ 105,000 5,670,000
------------
5,844,000
------------
Building Materials -- 0.0%
Vulcan Materials Co. ..................................... 2,400 102,450
------------
Business & Consumer Services -- 3.7%
Automatic Data Processing, Inc. .......................... 59,800 3,203,037
*Convergys Corp. ......................................... 51,700 2,681,937
Electronic Data Systems Corp. ............................ 33,300 1,373,625
Omnicom Group, Inc. ...................................... 32,000 2,850,000
------------
10,108,599
------------
Chemicals & Allied Products -- 2.8%
Du Pont (E.I.) de Nemours & Co. .......................... 26,000 1,137,500
Pharmacia Corp. .......................................... 108,000 5,582,250
Praxair, Inc. ............................................ 27,700 1,037,019
------------
7,756,769
------------
</TABLE>
F-68
<PAGE> 181
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The Growth Portfolio
Statement of Net Assets, June 30, 2000 -- Continued
(Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
-----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Communications -- 6.6%
ALLTEL Corp. ............................................. 42,800 $ 2,650,925
AT&T Corp. ............................................... 80,000 2,530,000
GTE Corp. ................................................ 115,800 7,208,550
Lucent Technologies, Inc. ................................ 43,300 2,565,525
*Nortel Networks Corp. ................................... 2,200 150,150
SBC Communications, Inc. ................................. 60,536 2,618,182
*Tellabs, Inc. ........................................... 10,600 725,438
------------
18,448,770
------------
Computers -- 4.1%
Compaq Computer Corp. .................................... 38,400 981,600
Hewlett Packard Co. ...................................... 24,000 2,997,000
International Business Machines Corp. .................... 60,000 6,573,750
*Sun Microsystems, Inc. .................................. 9,400 854,812
------------
11,407,162
------------
Consumer Products -- 2.4%
Kimberly-Clark Corp. ..................................... 115,000 6,598,125
------------
Drugs & Health Care -- 12.9%
Abbott Laboratories....................................... 42,000 1,871,625
Aetna, Inc. .............................................. 20,500 1,315,844
American Home Products Corp. ............................. 153,200 9,000,500
*Baxter International, Inc. .............................. 59,400 4,176,562
Becton, Dickinson & Co. .................................. 92,100 2,642,119
Bristol-Myers Squibb Co. ................................. 26,900 1,566,925
*Edwards Lifesciences Corp. .............................. 11,880 227,205
*Elan Corp. Plc ADR....................................... 45,000 2,179,687
Eli Lilly & Co. .......................................... 20,200 2,017,475
HCA - The Healthcare Co. ................................. 53,300 1,618,987
Johnson & Johnson......................................... 46,300 4,716,812
Tenet Healthcare Corp. ................................... 43,900 1,185,300
UnitedHealth Group, Inc. ................................. 11,000 943,250
*Watson Pharmaceuticals, Inc. ............................ 43,000 2,311,250
------------
35,773,541
------------
</TABLE>
F-69
<PAGE> 182
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The Growth Portfolio
Statement of Net Assets, June 30, 2000 -- Continued
(Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
-----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Electronics -- 5.6%
*Agilent Technologies, Inc. .............................. 9,153 $ 675,034
General Electric Co. ..................................... 87,000 4,437,000
Koninklijke (Royal) Philips Electronics N.V. ADR.......... 68,000 3,230,000
Motorola, Inc. ........................................... 165,000 4,795,312
*Solectron Corp. ......................................... 18,600 778,875
*Texas Instruments, Inc. ................................. 25,000 1,717,187
------------
15,633,408
------------
Energy -- 3.7%
Chevron Corp. ............................................ 41,600 3,528,200
Royal Dutch Petroleum Co. ................................ 58,500 3,601,406
Williams Cos., Inc. ...................................... 78,000 3,251,625
------------
10,381,231
------------
Entertainment -- 1.2%
*Walt Disney Co. ......................................... 86,000 3,337,875
------------
Finance -- 4.5%
American Express Co. ..................................... 80,100 4,175,212
Citigroup, Inc. .......................................... 103,300 6,223,825
First Data Corp. ......................................... 43,400 2,153,725
------------
12,552,762
------------
Food & Food Distributors -- 3.8%
*Kroger Co. .............................................. 209,000 4,611,062
McCormick & Co., Inc. .................................... 88,900 2,889,250
Sara Lee Corp. ........................................... 155,000 2,993,437
------------
10,493,749
------------
Hotel/Restaurants -- 0.9%
Marriott International, Inc. Class A...................... 70,200 2,531,588
------------
Industrial Diversified -- 0.8%
Martin Marietta Materials, Inc. .......................... 800 32,350
Parker-Hannifin Corp. .................................... 60,000 2,055,000
------------
2,087,350
------------
Insurance -- 4.6%
American General Corp. ................................... 63,000 3,843,000
American International Group, Inc. ....................... 58,125 6,829,688
Jefferson-Pilot Corp. .................................... 35,000 1,975,313
------------
12,648,001
------------
Machinery & Heavy Equipment -- 0.8%
Dover Corp. .............................................. 54,400 2,206,600
------------
</TABLE>
F-70
<PAGE> 183
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The Growth Portfolio
Statement of Net Assets, June 30, 2000 -- Continued
(Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
-----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Manufacturing -- 1.6%
Alcoa, Inc. .............................................. 51,600 $ 1,496,400
Minnesota Mining & Manufacturing Co. ..................... 15,800 1,303,500
Tyco International Ltd. .................................. 36,300 1,719,713
------------
4,519,613
------------
Medical & Medical Services -- 0.6%
*Genzyme Corp. ........................................... 26,000 1,545,375
------------
Medical Instruments -- 0.5%
*Boston Scientific Corp. ................................. 64,000 1,404,000
------------
Oil & Gas -- 8.6%
Burlington Resources, Inc. ............................... 102,600 3,924,450
Conoco, Inc. Class B...................................... 164,027 4,028,913
Exxon Mobil Corp. ........................................ 121,989 9,583,761
*Global Marine, Inc. ..................................... 57,300 1,615,144
*Ocean Energy, Inc. ...................................... 70,000 993,125
Santa Fe International Corp. ............................. 67,000 2,340,813
Transocean Sedco Forex, Inc. ............................. 22,452 1,199,779
------------
23,685,985
------------
Oil Field Equipment & Services -- 2.8%
Halliburton Co. .......................................... 98,700 4,657,406
Schlumberger Ltd. ........................................ 43,200 3,223,800
------------
7,881,206
------------
Paper & Forest Products -- 1.1%
International Paper Co. .................................. 102,800 3,064,725
------------
Railroads -- 0.7%
Union Pacific Corp., Series A............................. 55,000 2,045,313
------------
Real Estate -- 0.7%
Weyerhaeuser Co. ......................................... 42,500 1,827,500
------------
Semiconductors -- 0.7%
Intel Corp. .............................................. 10,000 1,336,875
*National Semiconductor Corp. ............................ 10,000 567,500
------------
1,904,375
------------
Software -- 0.8%
*BMC Software, Inc. ...................................... 29,200 1,065,344
Network Associates, Inc. ................................. 52,300 1,065,613
------------
2,130,957
------------
Tobacco -- 0.7%
Philip Morris Cos., Inc. ................................. 68,000 1,806,250
------------
</TABLE>
F-71
<PAGE> 184
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The Growth Portfolio
Statement of Net Assets, June 30, 2000 -- Concluded
(Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MATURITY SHARES
DESCRIPTION AND PERCENTAGE OF PORTFOLIO DATE OR PAR VALUE
--------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCK (CONTINUED)
Utilities -- 4.9%
Duke Power Co. ........................................... 125,000 $ 7,046,875
Enron Corp. .............................................. 99,400 6,411,300
------------
13,458,175
------------
TOTAL COMMON STOCK (COST $220,731,601).................. 264,945,172
------------
COMMERCIAL PAPER -- 3.3%
American Express Credit Corp., 6.77%...................... 07/07/2000 $4,000,000 3,995,487
Merrill Lynch & Co., Inc., 6.55%.......................... 07/05/2000 5,000,000 4,996,361
------------
TOTAL COMMERCIAL PAPER (COST $8,991,848)................ 8,991,848
------------
SHORT TERM INVESTMENTS -- 0.7%
Provident Institutional Funds -- TempCash................. 2,008,349 2,008,349
------------
TOTAL SHORT TERM INVESTMENTS (COST $2,008,349).......... 2,008,349
------------
TOTAL INVESTMENTS -- 99.7% (COST $231,731,798).......... 275,945,369
OTHER ASSETS IN EXCESS OF LIABILITIES -- 0.3%............... 953,188
------------
NET ASSETS -- 100.0%
(Equivalent to $17.63 per share based on 15,702,330 shares
of capital stock outstanding)........................... $276,898,557
============
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE
($276,898,557/15,702,330 shares outstanding).............. $ 17.63
============
</TABLE>
*Non-Income producing.
See accompanying notes to financial statements.
F-72
<PAGE> 185
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The Money Market Portfolio
Statement of Net Assets, June 30, 2000
(Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MATURITY
DESCRIPTION AND PERCENTAGE OF PORTFOLIO DATE PAR VALUE
--------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMERCIAL PAPER -- 94.9%
Automobiles -- 9.8%
DaimlerChrysler, 6.54%.................................... 07/26/2000 $4,900,000 $ 4,877,746
General Motors Acceptance Corp., 6.57%.................... 07/27/2000 5,000,000 4,976,275
------------
9,854,021
------------
Banking -- 8.7%
Bank of America, 6.50%.................................... 07/07/2000 5,200,000 5,194,367
National City Credit Corp., 6.56%......................... 07/31/2000 3,500,000 3,480,867
------------
8,675,234
------------
Communications -- 5.4%
Bell Atlantic Network Funding, 6.54%...................... 07/11/2000 5,400,000 5,390,190
------------
Finance -- 24.6%
C.I.T. Financial Corp., 6.68%............................. 07/12/2000 5,000,000 4,989,794
Household Finance Corp., 6.53%............................ 07/24/2000 5,200,000 5,178,306
Northern Trust Co. (Chicago), 6.80%....................... 07/05/2000 2,600,000 2,598,036
Norwest Financial Corp., 6.20%............................ 07/06/2000 5,000,000 4,995,694
Prudential Funding (Private), 6.70%....................... 07/05/2000 2,900,000 2,897,841
Transamerica Finance Corp., 6.55%......................... 07/19/2000 4,000,000 3,986,900
------------
24,646,571
------------
Financial Services -- 3.0%
Merrill Lynch & Co., Inc., 6.53%.......................... 07/17/2000 3,000,000 2,991,293
------------
Foods -- 4.7%
Heinz (H.J.) Co., 6.50%................................... 07/28/2000 4,700,000 4,677,087
------------
Leasing -- 5.2%
International Lease Finance Corp., 6.55%.................. 07/19/2000 5,200,000 5,182,970
------------
Oil Equipment & Services -- 2.3%
Chevron, 6.75%............................................ 07/05/2000 2,300,000 2,298,275
------------
Utilities - Electric -- 28.2%
Ameren, 6.52%............................................. 07/13/2000 4,900,000 4,889,351
Duke Power Co., 6.53%..................................... 07/10/2000 5,200,000 5,191,511
Florida Power Corp., 6.57%................................ 07/11/2000 4,500,000 4,491,788
Kansas Power & Light Corp., 6.57%......................... 08/03/2000 5,150,000 5,118,984
Southwest Public, 6.525%.................................. 07/14/2000 3,292,000 3,284,243
Southwest Public, 6.63%................................... 07/14/2000 1,700,000 1,695,930
Union Electric Co., 6.50%................................. 07/14/2000 3,500,000 3,491,785
------------
28,163,592
------------
</TABLE>
F-73
<PAGE> 186
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The Money Market Portfolio
Statement of Net Assets, June 30, 2000 -- Concluded
(Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MATURITY SHARES OR
DESCRIPTION AND PERCENTAGE OF PORTFOLIO DATE PAR VALUE
--------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMERCIAL PAPER (CONTINUED)
Utilities -- Telephone -- 3.0%
GTE Finance Corp., 6.55%.................................. 07/13/2000 $3,000,000 $ 2,993,450
------------
TOTAL COMMERCIAL PAPER (COST $94,872,683)............... 94,872,683
------------
SHORT TERM INVESTMENTS -- 5.7%
Provident Institutional Funds -- TempCash................. 5,719,962 5,719,962
------------
TOTAL SHORT TERM INVESTMENTS (COST $5,719,962).......... 5,719,962
------------
TOTAL INVESTMENTS -- 100.6% (COST $100,592,645)......... 100,592,645
LIABILITIES IN EXCESS OF OTHER ASSETS -- (0.6%)............. (574,085)
------------
NET ASSETS -- 100.0%
(Equivalent to $1.00 per share based on 100,018,625 shares
of capital stock outstanding)........................... $100,018,560
============
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE
($100,018,560/100,018,625 shares outstanding)............. $ 1.00
============
</TABLE>
See accompanying notes to financial statements.
F-74
<PAGE> 187
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The Bond Portfolio
2000 Semi-Annual Review
Sentinel Advisors Company
--------------------------------------------------------------------------------
The Market Street Fund Bond Portfolio's total return for the first half of 2000
was 2.95%. The Lehman Corporate Bond Index returned 2.68%, while the Lehman
Aggregate Bond Index returned 3.99% for the same period.
U.S. economic growth remained brisk during the first half of the year, fueled by
strong consumer spending, as the growth rate exceeded 5%. Inflation, as measured
by the year-over-year change in the Consumer Price Index, increased to 3.1%
versus 2.1% a year ago as oil prices surged higher. In an effort to slow the
economy and to keep inflation in check, the Federal Reserve tightened monetary
policy three times for a total of 100 basis points.
Against this backdrop, the six-month period ended June 30, 2000 can once again
be categorized as one of high volatility with respect to the direction of
interest rates, the shape of the U.S. Treasury yield curve, and the relative
spreads of corporate bonds and mortgage-backed securities (MBS). After initially
rising 25 to 35 basis points early in the year, U.S. Treasury securities staged
a powerful rally as the U.S. Treasury Department commenced their debt repurchase
or "buyback" program. Yields on long-maturity U.S. Treasuries plunged 75 to 90
basis points; intermediate yields fell 35 basis points; while short-maturity
yields were essentially unchanged. This led to a dramatic inversion of the U.S.
Treasury yield curve. As measured by the 2-year Note to 30-year Bond spread, the
yield curve inverted from a +24 basis point slope at year-end 1999 to -65 basis
points at June 30, 2000; a shift of 89 basis points. This extreme movement in
U.S. Treasury yields wreaked havoc on the "spread" sectors of the fixed-income
market. These sectors did recover strongly in the month of June, but have still
lagged the performance of U.S. Treasuries on a year-to-date basis.
Over the first half of the year, the effective duration of the Portfolio held
steady at 5.8 years. Exposure to corporate bonds was cut from 53% of assets as
of December 31st, 1999 to a current positioning of 41%. In addition, exposure to
the MBS sector was reduced to 18% of asset from an initial level of 22%. We
increased the Portfolio's weighting of U.S. Treasuries from 24% to a current
level of 38%. This reallocation of the Portfolio's holdings allowed it to
capture the majority of the U.S. Treasury rally. However, relative performance
was negatively impacted by a credit deterioration in an industrial holding,
Laidlaw, Inc., which fell well below non-investment grade status. That position
was liquidated in the second quarter.
Going forward, there is growing evidence that the Federal Reserve's action taken
this year to slow the economy is working and that core inflation will be modest.
With risk premiums on spread product at high levels, we look to reduce our U.S.
Treasury weighting opportunistically in favor of both corporate bonds and
mortgage-backed securities.
David M. Brownlee, CFA
F-75
<PAGE> 188
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The Bond Portfolio
Statement of Net Assets, June 30, 2000
(Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MATURITY
DESCRIPTION AND PERCENTAGE OF PORTFOLIO DATE PAR VALUE
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
U.S. TREASURY BONDS -- 17.0%
U.S. Treasury Bonds, 7.25%................................ 05/15/2016 $1,000,000 $ 1,100,313
U.S. Treasury Bonds, 6.00%................................ 02/15/2026 2,500,000 2,443,750
U.S. Treasury Bonds, 5.25%................................ 02/15/2029 3,000,000 2,661,564
-----------
TOTAL U.S. TREASURY BONDS (COST $6,412,755)............. 6,205,627
-----------
U.S. TREASURY NOTES -- 20.8%
U.S. Treasury Notes, 5.875%............................... 11/15/2004 2,500,000 2,460,985
U.S. Treasury Notes, 4.75%................................ 11/15/2008 1,000,000 908,125
U.S. Treasury Notes, 5.50%................................ 05/15/2009 2,000,000 1,912,500
U.S. Treasury Notes, 6.50%................................ 02/15/2010 2,250,000 2,323,062
-----------
TOTAL U.S. TREASURY NOTES (COST $7,571,673)............. 7,604,672
-----------
AGENCY OBLIGATIONS -- 17.5%
Federal Home Loan Mortgage Corp., 5.00%................... 01/15/2004 1,000,000 936,927
Federal Home Loan Mortgage Corp., 8.00%................... 11/01/2008 197,653 200,679
Federal Home Loan Mortgage Corp., 8.00%................... 03/01/2017 14,269 14,488
Federal National Mortgage Association, 10.50%............. 11/01/2017 393,119 417,566
Federal National Mortgage Association, 8.00%.............. 03/01/2022 399,947 401,572
Federal National Mortgage Association, 7.50%.............. 03/01/2026 341,317 336,304
Federal National Mortgage Association, 6.00%.............. 04/01/2028 975,689 892,450
Federal National Mortgage Association, 8.50%.............. 04/01/2028 852,856 868,314
Federal National Mortgage Association, 7.00%.............. 09/01/2028 815,503 786,961
Federal National Mortgage Association, 7.00%.............. 11/01/2028 294,094 283,801
Federal National Mortgage Association, 7.00%.............. 12/01/2029 992,406 957,672
Government National Mortgage Association, 7.50%........... 09/15/2023 1,238,258 1,229,358
-----------
TOTAL AGENCY OBLIGATIONS (COST $7,474,114).............. 7,326,092
-----------
CORPORATE BONDS -- 41.1%
Automobiles -- 2.8%
DaimlerChrysler NA Holdings, 7.75%........................ 06/15/2005 1,000,000 1,008,597
-----------
Banks -- 1.4%
Bank of America Corp., 7.80%.............................. 02/15/2010 500,000 497,355
-----------
Broker -- 1.4%
Goldman Sachs, 7.80%...................................... 01/28/2010 500,000 495,442
-----------
Communications -- 9.6%
Comsat Corp. Medium Term Note, 8.55%...................... 12/13/2006 500,000 527,390
Deutsche Telekom International Finance, 8.25%............. 06/15/2030 1,000,000 1,016,250
MCI WorldCom, Inc., 6.40%................................. 08/15/2005 1,000,000 947,875
US West Communications, 7.625%............................ 06/09/2003 1,000,000 998,124
-----------
3,489,639
-----------
</TABLE>
F-76
<PAGE> 189
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The Bond Portfolio
Statement of Net Assets, June 30, 2000 -- Continued
(Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MATURITY
DESCRIPTION AND PERCENTAGE OF PORTFOLIO DATE PAR VALUE
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CORPORATE BONDS (CONTINUED)
Computers -- 1.4%
Sun Microsystems, Inc., 7.00%............................. 08/15/2002 $ 500,000 $ 497,257
-----------
Consumer Products -- 2.0%
Fortune Brands, 7.125%.................................... 11/01/2004 750,000 738,466
-----------
Consumer Services -- 0.6%
Service Corp. Int'l, 6.75%................................ 06/01/2001 250,000 215,000
-----------
Containers -- 1.9%
Crown Cork & Seal Co., Inc., 7.125%....................... 09/01/2002 750,000 716,107
-----------
Energy -- 1.4%
Emerson Electric, 7.875%.................................. 06/01/2005 500,000 514,043
-----------
Food & Food Distributors -- 4.7%
Anheuser Busch, 7.50%..................................... 03/15/2012 1,000,000 1,002,141
Safeway, Inc., 7.00%...................................... 09/15/2002 750,000 743,927
-----------
1,746,068
-----------
Industrial -- 1.3%
IMC Global, Inc., 7.40%................................... 11/01/2002 500,000 493,799
-----------
Insurance -- 1.4%
GE Global Insurance, 7.75%................................ 06/15/2030 500,000 494,740
-----------
Manufacturing -- 2.7%
FMC Corp., 7.125%......................................... 11/25/2002 1,000,000 982,489
-----------
Oil & Gas -- 1.3%
KN Energy, Inc., 6.45%.................................... 03/01/2003 500,000 484,780
-----------
Real Estate -- 2.0%
Simon Property Group LP, Inc., 6.625%..................... 06/15/2003 750,000 717,355
-----------
Retail Merchandising -- 1.3%
Penny (J.C.) & Co. Notes, 7.25%........................... 04/01/2002 500,000 486,239
-----------
Utilities -- 1.3%
Calenergy Co., Inc. Senior Notes, 7.52%................... 09/15/2008 500,000 483,802
-----------
TOTAL CORPORATE BONDS (COST $14,170,003)................ 14,061,178
-----------
COMMERCIAL PAPER -- 6.3%
American General Finance Corp., 6.55%..................... 08/15/2000 500,000 495,906
Merrill Lynch & Co., Inc., 6.54%.......................... 08/15/2000 1,800,000 1,785,285
-----------
TOTAL COMMERCIAL PAPER (COST $2,281,191)................ 2,281,191
-----------
</TABLE>
F-77
<PAGE> 190
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The Bond Portfolio
Statement of Net Assets, June 30, 2000 -- Concluded
(Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
SHORT TERM INVESTMENTS -- 5.1%
Provident Institutional Funds -- TempCash.............................. 1,877,333 $ 1,877,333
-----------
TOTAL SHORT TERM INVESTMENTS (COST $1,877,333)....................... 1,877,333
-----------
TOTAL INVESTMENTS -- 107.8% (COST $39,787,069)....................... 39,356,093
LIABILITIES IN EXCESS OF OTHER ASSETS -- (7.8%).......................... (2,863,145)
-----------
NET ASSETS -- 100.0%
(Equivalent to $10.25 per share based on 3,560,237 shares of capital
stock outstanding)................................................... $36,492,948
===========
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE
($36,492,948/3,560,237 shares outstanding)............................. $ 10.25
===========
</TABLE>
See accompanying notes to financial statements.
F-78
<PAGE> 191
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The Managed Portfolio
2000 Semi-Annual Review
Sentinel Advisors Company
--------------------------------------------------------------------------------
The Market Street Fund Managed Portfolio achieved a total return of 2.4% for the
first half of 2000, compared to 1.3% for the average Lipper Balanced Fund. The
S&P 500 had a -0.4% return during the first half, versus the 3.99% return of the
Lehman Aggregate Bond Index. Absolute returns for most equity market benchmarks
were quite modest for the first half of the year, and a more conservative
allocation to equities was a positive for the Portfolio. At the end of June, the
asset allocation of the Portfolio was 54% common stocks, 44% fixed income and 2%
cash. This is little changed from the 56% common stocks, 42% fixed income and 2%
cash positions as of the end of 1999.
First half performance was strong for a number of holdings in the healthcare,
energy, and utility areas, sectors where the Portfolio has broad representation.
Relative returns were negatively impacted by more economically sensitive sectors
like basic materials and consumer cyclicals. Exposure to these sectors was
reduced during the first half, as signs of a slowdown in the rate of U.S.
economic growth became more apparent. During the first half of 2000, the
Portfolio also reduced its exposure to consumer staples and the financial
sector, while increasing its exposure to technology and healthcare.
In the fixed-income market, the first half of the year can once again be
categorized as one of high volatility with respect to the direction of interest
rates, the shape of the U.S. Treasury yield curve, and the relative spreads of
corporate bonds and mortgage-backed securities. After initially rising 25 to 35
basis points early in the year, U.S. Treasury securities staged a powerful rally
as the U.S. Treasury Department commenced their "buyback" program. This sharp
movement in U.S. Treasuries wreaked havoc on the "spread" sectors of the
fixed-income market. The Portfolio over-weighted U.S. Treasuries early in the
year, capturing the majority of the rally in its performance. The duration of
the bond component of the Portfolio currently stands at 6.1 years, unchanged
from year-end 1999.
We are reasonably confident that U.S. economic growth will continue over the
balance of the year, although the rate of growth will be much slower than in the
first two quarters. While the outlook for overall corporate profits is still
positive, 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 fixed-income, we are currently emphasizing government
bonds. As always, we believe that a conservative balanced approach that
emphasizes investment quality, valuation and income should serve our
shareholders well in both strong markets and more turbulent ones.
David M. Brownlee, CFA
Van Harissis, CFA
F-79
<PAGE> 192
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The Managed Portfolio
Statement of Net Assets, June 30, 2000
(Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
------------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK -- 53.5%
Aerospace & Defense -- 0.3%
Boeing Co. ............................................... 4,900 $ 204,881
------------
Automobiles -- 1.0%
Ford Motor Co. ........................................... 16,000 688,000
------------
Automotive & Equipment -- 0.0%
*Visteon Corp. ........................................... 2,095 25,401
------------
Banks -- 2.5%
Bank of America Corp. .................................... 6,852 294,636
Bank of New York Co, Inc. ................................ 19,100 888,150
Wells Fargo Co. .......................................... 14,000 542,500
------------
1,725,286
------------
Beverages -- 2.0%
Pepsico, Inc. ............................................ 30,300 1,346,456
------------
Broadcasting & Publishing -- 1.2%
*Harcourt General, Inc. .................................. 800 43,500
McGraw-Hill, Inc. ........................................ 14,200 766,800
------------
810,300
------------
Building Materials -- 0.0%
Vulcan Materials Co. ..................................... 360 15,367
------------
Business & Consumer Services -- 2.3%
Automatic Data Processing, Inc. .......................... 8,500 455,281
*Convergys Corp. ......................................... 9,700 503,187
Electronic Data Systems Corp. ............................ 4,800 198,000
Omnicom Group, Inc. ...................................... 4,500 400,781
------------
1,557,249
------------
Chemicals & Allied Products -- 1.4%
Pharmacia Corp. .......................................... 15,600 806,325
Praxair, Inc. ............................................ 4,000 149,750
------------
956,075
------------
</TABLE>
F-80
<PAGE> 193
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The Managed Portfolio
Statement of Net Assets, June 30, 2000 -- Continued
(Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
------------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Communications -- 4.0%
ALLTEL Corp. ............................................. 6,200 $ 384,012
AT&T Corp. ............................................... 11,500 363,687
GTE Corp. ................................................ 16,000 996,000
Lucent Technologies, Inc. ................................ 7,500 444,375
Nortel Networks Corp. .................................... 600 40,950
SBC Communications, Inc. ................................. 8,422 364,251
*Tellabs, Inc. ........................................... 2,900 198,469
------------
2,791,744
------------
Computers -- 2.7%
Compaq Computer Corp. .................................... 5,400 138,037
Hewlett Packard Co. ...................................... 3,400 424,575
International Business Machines Corp. .................... 9,500 1,040,844
*Sun Microsystems, Inc. .................................. 2,600 236,437
------------
1,839,893
------------
Consumer Products -- 1.3%
Kimberly-Clark Corp. ..................................... 15,900 912,262
------------
Drugs & Health Care -- 8.0%
Abbott Laboratories....................................... 6,100 271,831
Aetna, Inc. .............................................. 2,900 186,144
American Home Products Corp. ............................. 22,600 1,327,750
*Baxter International, Inc. .............................. 9,000 632,812
Becton, Dickinson & Co. .................................. 15,700 450,394
Bristol-Myers Squibb Co. ................................. 4,000 233,000
*Edwards Lifesciences Corp. .............................. 1,800 34,425
*Elan Corp. Plc ADR....................................... 9,500 460,156
Eli Lilly & Co. .......................................... 2,900 289,637
HCA -- The Healthcare Co. ................................ 9,000 273,375
Johnson & Johnson......................................... 6,500 662,187
Tenet Healthcare Corp. ................................... 6,500 175,500
UnitedHealth Group, Inc. ................................. 1,800 154,350
*Watson Pharmaceuticals, Inc. ............................ 7,000 376,250
------------
5,527,811
------------
</TABLE>
F-81
<PAGE> 194
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The Managed Portfolio
Statement of Net Assets, June 30, 2000 -- Continued
(Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
------------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Electronics -- 3.7%
*Agilent Technologies, Inc. .............................. 1,296 $ 95,580
General Electric Co. ..................................... 11,400 581,400
Koninklijke (Royal) Philips Electronics NV ADR............ 11,500 546,250
Motorola, Inc. ........................................... 27,000 784,687
*Solectron Corp. ......................................... 4,400 184,250
*Texas Instruments, Inc. ................................. 5,500 377,781
------------
2,569,948
------------
Energy -- 2.0%
Chevron Corp. ............................................ 5,100 432,544
Royal Dutch Petroleum Co. ................................ 8,000 492,500
Williams Cos., Inc. ...................................... 11,300 471,069
------------
1,396,113
------------
Entertainment -- 0.6%
*Walt Disney Co. ......................................... 10,800 419,175
------------
Finance -- 2.5%
American Express Co. ..................................... 11,100 578,587
Citigroup, Inc. .......................................... 13,500 813,375
First Data Corp. ......................................... 7,000 347,375
------------
1,739,337
------------
Food & Food Distributors -- 1.5%
*Kroger Co. .............................................. 30,400 670,700
McCormick & Co, Inc. ..................................... 11,000 357,500
------------
1,028,200
------------
Hotel/Restaurants -- 0.4%
Marriott International, Inc. Class A...................... 8,500 306,531
------------
Industrial Diversified -- 0.4%
Parker-Hannifin Corp. .................................... 7,400 253,450
------------
Insurance -- 2.0%
American General Corp. ................................... 8,200 500,200
American International Group, Inc. ....................... 7,562 888,535
------------
1,388,735
------------
Machinery & Heavy Equipment -- 0.5%
Dover Corp. .............................................. 9,175 372,161
------------
</TABLE>
F-82
<PAGE> 195
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The Managed Portfolio
Statement of Net Assets, June 30, 2000 -- Continued
(Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
------------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Manufacturing -- 0.5%
Minnesota Mining & Manufacturing Co. ..................... 1,400 $ 115,500
Tyco International Ltd. .................................. 5,300 251,088
------------
366,588
------------
Medical & Medical Services -- 0.4%
*Genzyme Corp. ........................................... 4,100 243,694
------------
Medical Instruments -- 0.4%
*Boston Scientific Corp. ................................. 14,000 307,125
------------
Oil & Gas -- 4.5%
Burlington Resources, Inc. ............................... 14,800 566,100
Conoco, Inc. Class B...................................... 18,495 454,283
Exxon Mobil Corp. ........................................ 15,081 1,184,801
*Global Marine, Inc. ..................................... 8,200 231,138
*Ocean Energy, Inc. ...................................... 10,000 141,875
Santa Fe International Corp. ............................. 10,100 352,869
Transocean Sedco Forex, Inc. ............................. 3,248 173,565
------------
3,104,631
------------
Oil Field Equipment & Services -- 1.6%
Halliburton Co. .......................................... 13,900 655,906
Schlumberger Ltd. ........................................ 5,900 440,288
------------
1,096,194
------------
Paper & Forest Products -- 0.6%
International Paper Co. .................................. 14,200 423,338
------------
Railroads -- 0.4%
Union Pacific Corp., Series A............................. 7,800 290,063
------------
Real Estate -- 0.5%
Weyerhaeuser Co. ......................................... 8,000 344,000
------------
Semiconductors -- 0.7%
Intel Corp. .............................................. 2,500 334,219
National Semiconductor Corp. ............................. 2,500 141,875
------------
476,094
------------
Software -- 0.7%
*BMC Software, Inc. ...................................... 6,100 222,555
*Network Associates, Inc. ................................ 10,200 207,825
------------
430,380
------------
</TABLE>
F-83
<PAGE> 196
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The Managed Portfolio
Statement of Net Assets, June 30, 2000 -- Continued
(Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MATURITY SHARES OR
DESCRIPTION AND PERCENTAGE OF PORTFOLIO DATE PAR VALUE
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCK (CONTINUED)
Utilities -- 2.9%
Duke Power Co. ........................................... 18,500 $ 1,042,938
Enron Corp. .............................................. 14,000 903,000
-----------
1,945,938
-----------
TOTAL COMMON STOCK (COST $29,649,339)................... 36,902,420
-----------
U.S. TREASURY NOTES -- 10.4%
U.S. Treasury Notes, 5.875%............................... 11/15/2004 $1,500,000 1,476,591
U.S. Treasury Notes, 6.50%................................ 02/15/2010 5,500,000 5,678,597
-----------
TOTAL U.S. TREASURY NOTES (COST $7,006,843)............. 7,155,188
-----------
U.S. TREASURY BONDS -- 6.8%
U.S. Treasury Bonds, 7.25%................................ 05/15/2016 1,000,000 1,100,313
U.S. Treasury Bonds, 5.25%................................ 02/15/2029 2,000,000 1,774,376
U.S. Treasury Bonds, 6.25%................................ 05/15/2030 1,750,000 1,836,954
-----------
TOTAL U.S. TREASURY BONDS (COST $4,648,614)............. 4,711,643
-----------
AGENCY OBLIGATIONS -- 12.1%
Federal Home Loan Mortgage Corp., 9.00%................... 08/01/2004 448,973 462,021
Federal Home Loan Mortgage Corp., 9.00%................... 12/01/2004 437,123 449,827
Federal Home Loan Mortgage Corp., 9.50%................... 08/01/2005 409,877 428,706
Federal Home Loan Mortgage Corp., 9.50%................... 03/01/2006 73,487 76,495
Federal Home Loan Mortgage Corp., 8.00%................... 11/01/2008 197,653 200,679
Federal National Mortgage Association, 7.00%.............. 12/01/2029 992,406 957,672
Federal National Mortgage Association, 7.00%.............. 03/01/2008 204,655 200,754
Federal National Mortgage Association, 7.75%.............. 03/01/2008 113,045 112,444
Federal National Mortgage Association, 7.75%.............. 05/01/2008 74,493 74,097
Federal National Mortgage Association, 10.50%............. 03/01/2018 311,017 330,358
Federal National Mortgage Association, 8.50%.............. 10/01/2026 717,868 730,879
Federal National Mortgage Association, 8.00%.............. 10/01/2027 506,256 508,313
Federal National Mortgage Association, 8.00%.............. 01/01/2028 565,239 567,536
Federal National Mortgage Association, 7.50%.............. 05/01/2028 400,009 394,134
Federal National Mortgage Association, 7.00%.............. 01/01/2030 995,806 960,953
Federal National Mortgage Association, 7.125%............. 01/15/2030 1,000,000 1,002,472
Government National Mortgage Association, 8.00%........... 03/15/2007 177,514 180,288
Government National Mortgage Association, 7.50%........... 11/15/2007 506,732 503,407
Government National Mortgage Association, 8.00%........... 08/15/2008 272,377 276,633
-----------
TOTAL AGENCY OBLIGATIONS (COST $8,462,348).............. 8,417,668
-----------
</TABLE>
F-84
<PAGE> 197
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The Managed Portfolio
Statement of Net Assets, June 30, 2000 -- Continued
(Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MATURITY
DESCRIPTION AND PERCENTAGE OF PORTFOLIO DATE PAR VALUE
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CORPORATE BONDS -- 14.6%
Automobiles -- 1.5%
DaimlerChrysler NA Holdings, 7.75%........................ 06/15/2005 $1,000,000 $ 1,008,597
-----------
Broker -- 0.7%
Goldman Sachs, 7.80%...................................... 01/28/2010 500,000 495,442
-----------
Communications -- 2.9%
Comsat Corp. Medium Term Note, 8.55%...................... 12/13/2006 500,000 527,390
Deutsche Telekom International Finance, 8.25%............. 06/15/2030 500,000 508,125
MCI WorldCom, Inc., 6.40%................................. 08/15/2005 500,000 473,938
US West Communications, 7.625%............................ 06/09/2003 500,000 499,062
-----------
2,008,515
-----------
Computers -- 0.4%
Sun Microsystems, Inc., 7.00%............................. 08/15/2002 250,000 248,629
-----------
Consumer Products -- 0.7%
Fortune Brands, Inc., 7.125%.............................. 11/01/2004 500,000 492,311
-----------
Consumer Services -- 0.6%
Service Corp. International, 6.75%........................ 06/01/2001 500,000 430,000
-----------
Containers -- 0.7%
Crown Cork & Seal Co., Inc., 7.125%....................... 09/01/2002 500,000 477,405
-----------
Food & Food Distributors -- 1.5%
Anheuser Busch, 7.50%..................................... 03/15/2012 1,000,000 1,002,141
-----------
Industrial -- 0.7%
IMC Global, Inc., 7.40%................................... 11/01/2002 500,000 493,799
-----------
Insurance -- 1.4%
GE Global Insurance, 7.75%................................ 06/15/2030 1,000,000 989,479
-----------
Manufacturing -- 1.4%
FMC Corp., 7.125%......................................... 11/25/2002 1,000,000 982,489
-----------
Real Estate -- 0.7%
Simon Property Group LP, Inc., 6.625%..................... 06/15/2003 500,000 478,237
-----------
Retail Merchandising -- 1.4%
Penney (J.C.) & Co. Notes, 7.25%.......................... 04/01/2002 1,000,000 972,477
-----------
TOTAL CORPORATE BONDS (COST $10,072,823)................ 10,079,521
-----------
COMMERCIAL PAPER -- 12.9%
American General Corp., 6.70%............................. 07/07/2000 2,000,000 1,997,767
Merrill Lynch & Co., Inc., 6.53%.......................... 08/15/2000 3,500,000 3,471,431
Northern Trust Co., 6.50%................................. 07/03/2000 3,400,000 3,398,772
-----------
TOTAL COMMERCIAL PAPER (COST $8,867,970)................ 8,867,970
-----------
</TABLE>
F-85
<PAGE> 198
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The Managed Portfolio
Statement of Net Assets, June 30, 2000 -- Concluded
(Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
-------------------------------------------------------------------------------------------------------
<S> <C> <C>
SHORT TERM INVESTMENTS -- 0.2%
Provident Institutional Funds -- TempCash............................... 106,486 $ 106,486
-----------
TOTAL SHORT TERM INVESTMENTS (COST $106,486).......................... 106,486
-----------
TOTAL INVESTMENTS -- 110.5% (COST $68,814,423)........................ 76,240,896
LIABILITIES IN EXCESS OF OTHER ASSETS -- (10.5%).......................... (7,243,918)
-----------
NET ASSETS -- 100.0%
(Equivalent to $15.81 per share based on 4,364,838 shares of capital
stock outstanding).................................................... $68,996,978
===========
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE
($68,996,978/4,364,838 shares outstanding).............................. $ 15.81
===========
</TABLE>
*Non-Income Producing.
See accompanying notes to financial statements.
F-86
<PAGE> 199
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The Aggressive Growth Portfolio
2000 Semi-annual Review
Sentinel Advisors Company
--------------------------------------------------------------------------------
The Market Street Fund Aggressive Growth Portfolio achieved a return of 20.8%
for the six-month period ending June 30, 2000. This performance far outpaced the
3.1% returned by the Russell 2000 index and the 8.3% returned by the average
fund in the Morningstar Small Blend category for the same six-month period.
The Portfolio's modest exposure to some of the leading genomics companies
coupled with very strong stock selection, especially in the technology sector,
are two key factors explaining the strong results. Taking profits on the
Portfolio's big winners and becoming somewhat more defensive in early to mid
March also was a contributing factor.
Although the Portfolio was modestly under-weighted in technology at the end of
the second quarter, it continues to be exposed to companies that will benefit
from some of the strongest technology trends (e.g. wireless communications and
the robust demand for analog semiconductors). The overweight in health care
should help the Portfolio outperform if the U.S. economy moderates in the second
half of this year.
Scott T. Brayman, CFA
F-87
<PAGE> 200
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The Aggressive Growth Portfolio
Statement of Net Assets, June 30, 2000
(Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
-----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK -- 88.6%
Aerospace & Defense -- 0.7%
AAR Corp. ................................................ 48,000 $ 576,000
-----------
Air Transport -- 0.6%
*EGL, Inc. ............................................... 15,000 461,250
-----------
Banks -- 1.0%
Cullen Frost Bankers, Inc. ............................... 15,000 394,687
Wilmington Trust Corp. ................................... 9,000 384,750
-----------
779,437
-----------
Beverages -- 0.6%
*Robert Mondavi Corp., Class A............................ 15,000 460,312
-----------
Broadcasting & Publishing -- 1.0%
*IDG Books Worldwide, Inc. ............................... 18,000 163,125
Meredith Corp. ........................................... 18,000 607,500
-----------
770,625
-----------
Building Materials -- 0.3%
Vulcan Materials Co. ..................................... 5,500 234,781
-----------
Building - Maintenance & Service -- 0.4%
American Building Maintenance Industries.................. 15,000 345,000
-----------
Business & Consumer Services -- 9.0%
*Acxiom Corp. ............................................ 39,000 1,062,750
*Administaff, Inc. ....................................... 19,000 1,206,500
*Affiliated Computer Services, Inc. ...................... 58,000 1,917,625
*American Management Systems, Inc. ....................... 20,000 656,562
*Caci International, Inc. ................................ 22,000 429,000
*Catalina Marketing Corp. ................................ 10,000 1,020,000
*Healthcare Services Group................................ 41,700 187,650
Unifirst Corp. ........................................... 62,000 488,250
-----------
6,968,337
-----------
Chemicals & Allied Products -- 4.2%
*Bush Boake Allen, Inc. .................................. 25,000 1,093,750
Cambrex Corp. ............................................ 48,000 2,160,000
-----------
3,253,750
-----------
</TABLE>
F-88
<PAGE> 201
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The Aggressive Growth Portfolio
Statement of Net Assets, June 30, 2000 -- Continued
(Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
-----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Communications -- 2.0%
Dynatech Corp. ........................................... 12,000 $ 217,500
*Tekelec, Inc. ........................................... 14,000 674,625
True North Communications................................. 15,000 638,437
-----------
1,530,562
-----------
Computers -- 5.6%
*Actel Corporation........................................ 15,000 684,375
*BISYS Group, Inc. ....................................... 9,000 553,500
*Black Box Corp. ......................................... 8,000 633,375
*Ciber, Inc. ............................................. 36,000 477,000
*Extreme Networks, Inc. .................................. 8,000 844,000
*Kronos, Inc. ............................................ 20,000 520,000
*Silicon Storage Technology, Inc. ........................ 7,000 618,187
*Storage Networks......................................... 100 9,025
-----------
4,339,462
-----------
Cosmetics and Toiletries -- 0.8%
Alberto-Culver Co. Class A................................ 25,000 656,250
-----------
Drugs & Health Care -- 7.9%
Barr Laboratories, Inc. .................................. 37,500 1,680,469
*ChiRex, Inc. ............................................ 38,000 760,000
*Medicis Pharmaceutical Corp., Class A.................... 15,000 855,000
*Millennium Pharmaceuticals, Inc. ........................ 5,000 559,375
*Myriad Genetics, Inc. ................................... 3,800 562,697
*Shire Pharmaceuticals Group.............................. 7,000 363,125
*Watson Pharmaceuticals, Inc. ............................ 25,000 1,343,750
-----------
6,124,416
-----------
Electronics -- 10.1%
*Aeroflex, Inc. .......................................... 12,000 596,250
Applied Power, Inc. Class A............................... 58,000 1,943,000
*Cable Design Technologies, Inc. ......................... 38,000 1,273,000
CTS Corp. ................................................ 37,000 1,665,000
Harman International Industries, Inc. .................... 29,000 1,769,000
Methode Electronics, Inc. Class A......................... 14,000 540,750
-----------
7,787,000
-----------
Environmental Control -- 2.3%
Donaldson Co., Inc........................................ 40,000 790,000
*Tetra Technologies, Inc. ................................ 68,000 964,750
-----------
1,754,750
-----------
</TABLE>
F-89
<PAGE> 202
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The Aggressive Growth Portfolio
Statement of Net Assets, June 30, 2000 -- Continued
(Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
-----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Finance - Investment & Other -- 2.7%
Waddell & Reed Financial, Inc. ........................... 45,000 $ 1,476,562
Waddell & Reed Financial, Inc. Class B.................... 22,500 653,906
-----------
2,130,468
-----------
Food & Food Distributors -- 3.5%
McCormick & Co., Inc. .................................... 10,000 325,000
*Smart & Final, Inc. ..................................... 47,000 361,313
Tootsie Roll Industries, Inc. ............................ 15,000 525,000
Universal Foods Corp. .................................... 25,000 462,500
*Whole Foods Market, Inc. ................................ 25,000 1,032,813
-----------
2,706,626
-----------
Hotel/Restaurants -- 0.6%
*Hotel Reservations Network, Inc. Class A................. 15,000 446,250
-----------
Industrial & Commercial Services -- 1.1%
*Plexus Corp. ............................................ 7,500 847,500
-----------
Insurance -- 3.1%
Enhance Financial Services Group, Inc. ................... 24,000 339,000
HCC Insurance Holdings, Inc. ............................. 70,000 1,281,875
HSB Group, Inc. .......................................... 24,000 747,000
-----------
2,367,875
-----------
Manufacturing -- 2.9%
AptarGroup, Inc. ......................................... 50,000 1,350,000
*Gardner Denver Machinery, Inc. .......................... 26,000 464,750
Robbins & Myers, Inc. .................................... 20,000 456,250
-----------
2,271,000
-----------
Medical & Medical Services -- 3.4%
*Cell Therapeutics, Inc. ................................. 19,000 581,875
*Colorado Medtech, Inc. .................................. 48,000 303,000
*Covance, Inc. ........................................... 48,000 423,000
*CuraGen Corp. ........................................... 5,000 190,313
*Diversa Corp. ........................................... 5,000 165,625
*Invitrogen Corp. ........................................ 5,000 376,016
Regeneron Pharmaceuticals, Inc. .......................... 14,000 417,375
*Sequenom, Inc. .......................................... 4,000 181,500
-----------
2,638,704
-----------
</TABLE>
F-90
<PAGE> 203
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The Aggressive Growth Portfolio
Statement of Net Assets, June 30, 2000 -- Continued
(Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
-----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Medical Equipment & Supplies -- 3.5%
Diagnostic Products Corp. ................................ 8,000 $ 256,000
Mentor Corp. ............................................. 24,000 652,500
*Minntech Corp. .......................................... 40,000 270,000
*Orthodontic Centers of America, Inc. .................... 48,000 1,086,000
*STARR Surgical Co. ...................................... 40,000 447,500
-----------
2,712,000
-----------
Oil & Gas -- 2.5%
*Cal Dive International, Inc. ............................ 14,000 758,625
Helmerich & Payne, Inc. .................................. 14,000 497,000
Santa Fe International Corp. ............................. 20,000 698,750
-----------
1,954,375
-----------
Oil Equipment & Services -- 2.1%
CARBO Ceramics, Inc. ..................................... 25,000 878,125
*Oceaneering International, Inc. ......................... 40,000 760,000
-----------
1,638,125
-----------
Real Estate -- 2.6%
Chateau Communities, Inc. ................................ 48,000 1,356,000
Liberty Property Trust.................................... 24,000 622,500
-----------
1,978,500
-----------
Restaurants -- 3.7%
*Applebee's International, Inc. .......................... 25,000 757,813
*Jack in the Box, Inc. ................................... 48,000 1,188,000
Ruby Tuesday, Inc. ....................................... 75,000 942,188
-----------
2,888,001
-----------
Retail Merchandising -- 2.1%
Casey General Stores, Inc. ............................... 63,000 653,625
Claire's Stores, Inc. .................................... 25,000 481,250
Ethan Allen Interiors, Inc. .............................. 10,000 240,000
*ShopKo Stores, Inc. ..................................... 15,000 230,625
-----------
1,605,500
-----------
</TABLE>
F-91
<PAGE> 204
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The Aggressive Growth Portfolio
Statement of Net Assets, June 30, 2000 -- Continued
(Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MATURITY SHARES
DESCRIPTION AND PERCENTAGE OF PORTFOLIO DATE OR PAR VALUE
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCK (CONTINUED)
Semiconductors -- 4.2%
*Alpha Industries, Inc. .................................. 10,000 $ 440,625
*C-Cube Microsystems, Inc. ............................... 15,000 294,375
Dallas Semiconductor Corp. ............................... 47,000 1,915,250
*Marvell Technology Group Ltd. ........................... 100 5,700
*PLX Technology, Inc. .................................... 14,000 581,000
-----------
3,236,950
-----------
Software -- 1.7%
*Filenet Corp. ........................................... 24,000 441,000
*Wind River Systems, Inc. ................................ 24,000 909,000
-----------
1,350,000
-----------
Transportation -- 2.4%
Expeditors International of Washington, Inc. ............. 9,000 427,500
*RailAmerica, Inc. ....................................... 14,999 95,619
Robinson (C.H.) Worldwide, Inc. .......................... 19,000 940,500
USFreightways Corp. ...................................... 15,000 368,438
-----------
1,832,057
-----------
TOTAL COMMON STOCK (COST $58,351,740)................... 68,645,863
-----------
CORPORATE BONDS -- 0.1%
Phoenix Investment Partners Ltd., 6.00%................... 11/01/2015 $ 62,500 81,406
-----------
TOTAL CORPORATE BONDS (COST $63,666).................... 81,406
-----------
COMMERCIAL PAPER -- 11.1%
American General Finance Corp., 6.52%..................... 07/05/2000 2,000,000 1,998,551
Chrysler Financial Corp., 6.70%........................... 07/13/2000 1,400,000 1,396,873
Ford Motor Credit Co., 6.53%.............................. 07/05/2000 1,700,000 1,698,767
Household Finance Corp., 6.54%............................ 07/10/2000 2,200,000 2,196,403
Transamerica Finance Corp., 6.75%......................... 07/14/2000 1,300,000 1,296,831
-----------
TOTAL COMMERCIAL PAPER (COST $8,587,425)................ 8,587,425
-----------
SHORT TERM INVESTMENTS -- 0.3%
Provident Institutional Funds -- TempCash................. 221,101 221,101
-----------
TOTAL SHORT TERM INVESTMENTS (COST $221,101)............ 221,101
-----------
TOTAL INVESTMENTS -- 100.1% (COST $67,223,932).......... 77,535,795
LIABILITIES IN EXCESS OF OTHER ASSETS -- (0.1)%............. (71,472)
-----------
</TABLE>
F-92
<PAGE> 205
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The Aggressive Growth Portfolio
Statement of Net Assets, June 30, 2000 -- Concluded
(Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO VALUE
-------------------------------------------------------------------------------------------------------
<S> <C>
NET ASSETS -- 100.0%
(Equivalent to $24.21 per share based on 3,199,873 shares of capital stock
outstanding)........................................................................ $77,464,323
===========
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE
($77,464,323/3,199,873 shares outstanding)............................................ $ 24.21
===========
</TABLE>
* Non-Income Producing.
See accompanying notes to financial statements.
F-93
<PAGE> 206
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The International Portfolio
2000 Semi-Annual Review
The Boston Company Asset Management, Inc.
--------------------------------------------------------------------------------
The Market Street Fund International Portfolio's total return for the six months
ended June 30, 2000 was -0.4% compared to the -4.1% return for the MSCI EAFE
Index.
The first half of 2000 has provided investors all around the world with little
cause for jubilation. While technology and telecom paused to reassess
valuations, even the consumer decided to reduce spending on discretionary items.
These sectors posted declines ranging from -5.2% to -16.4%. Positive performance
was evident in consumer staples, energy and health care as investors looked
elsewhere for growth. We did see, by the end of the period, a return to value
investing. The impact of our stock selection accounted for virtually the entire
performance premium delivered in the first half.
Telecom and technology weightings in the indices have increased dramatically in
the last five years. From October 1999 to the end of March 2000, we maintained a
half weight, relative to the index, but stock selection more than made up the
difference. Specifically, our 5% weighting in technology returned 113% versus
the index return of 80%. In telecom, our 6.9% weighting's return of 47% nearly
matched the index return of 56%. In the second quarter of this year, we
lightened our weightings further and because of our value discipline, stock
performance was measurably better than the sectors' return. In technology, our
4.8% weighting returned 2.9% versus the sector return, which was down -7.5%.
Similarly, in telecom our 6.4% weighting was only down -13.3% versus the index
which was down -21.5%.
Elsewhere, Japanese stocks performed in line with other major markets as
investors' fret over the possibility of slipping into another recession.
Japanese Prime Minister Yoshiro Mori and his Liberal Democratic Party barely
held on, in recent elections, and seemed unable to offer effective fiscal
solutions. Japanese banks continue to be hamstrung by non-performing loans from
companies that over-expanded during the bubble years and do not appear to be
competitive today. Banks have been asked to forgive some loans and the
government is poised to intervene with public assistance. However, some leading
industry figures are appalled at the notion of debt waivers. The current tension
in Japan has provided excellent opportunities to purchase inexpensive stocks,
which we believe will provide excellent returns.
The Portfolio benefited on a relative basis by being about half-weighted in the
under-performing services sector. Furthermore, this benefit was multiplied by
our stock picking within this arena. This effect is even more dramatic in
financials, which is the largest portion of the portfolio at about 21%. Although
our weighting was about neutral to the benchmark, our holdings provided
out-performance.
We have always believed that a disciplined approach to global value investing
leads to out-performance with less volatility. In such an environment, a
disciplined value approach provides an advantage through careful stock picking.
We look forward to the next six months and the opportunity to continue to
provide you with our disciplined value investment process.
Sandor Cseh, CFA
F-94
<PAGE> 207
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The International Portfolio
Statement of Net Assets, June 30, 2000
(Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON AND PREFERRED STOCK -- 97.8%
Australia -- 1.6%
*Australia & New Zealand Bank Group Ltd. ................. 149,566 $ 1,150,368
Goodman Fielder Ltd. ..................................... 386,174 287,515
-----------
1,437,883
-----------
Austria -- 0.8%
Bank Austria AG........................................... 14,950 731,163
-----------
Belgium -- 1.0%
*Dexia Belgium............................................ 5,910 875,283
-----------
Brazil -- 0.9%
Petroleo Brasileiro SA ADR................................ 13,500 407,855
Tele Norte Leste Participacoes SA ADR..................... 422 9,970
Telecomunicacoes Brasileiras SA ADR....................... 3,611 350,718
-----------
768,543
-----------
Denmark -- 0.4%
Jyske Bank................................................ 20,950 393,040
-----------
Finland -- 0.5%
Kesko Oyj................................................. 41,000 418,568
-----------
France -- 9.2%
*Alstom SA................................................ 12,315 334,200
Assurances Generales de France............................ 16,198 859,432
Banque Nationale de Paris................................. 13,400 1,294,785
Bongrain.................................................. 1,227 323,217
*Compagnie De Saint Gobain................................ 3,700 502,224
*Dexia Strips............................................. 4,510 --
L'Air Liquide............................................. 7,961 1,042,398
Michelin-(CGDE)........................................... 22,353 720,173
Societe Generale.......................................... 8,072 487,477
Suez Lyonnaise des Eaux................................... 2,400 422,163
*Thomson CSF.............................................. 2,555 101,054
Total Fina SA ADR......................................... 19,261 1,483,097
*Usinor Sacilor........................................... 40,500 496,156
-----------
8,066,376
-----------
</TABLE>
F-95
<PAGE> 208
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The International Portfolio
Statement of Net Assets, June 30, 2000 -- Continued
(Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON AND PREFERRED STOCK (CONTINUED)
Germany -- 7.5%
Bayer AG.................................................. 29,690 $ 1,161,189
Deutsche Bank AG.......................................... 13,877 1,149,322
Deutsche Lufthansa AG..................................... 30,500 716,306
Merck KGAA................................................ 31,289 968,783
Metallgesellschaft AG..................................... 27,665 383,205
Veba AG................................................... 28,304 1,394,580
Volkswagen AG............................................. 22,450 858,661
-----------
6,632,046
-----------
Greece -- 1.2%
Hellenic Telecommunications............................... 83,755 1,020,764
-----------
Hong Kong -- 1.3%
*Hong Kong Electric....................................... 356,733 1,148,680
-----------
India -- 0.3%
Videsh Sanchar Nigam Ltd. ................................ 15,000 234,375
-----------
Ireland -- 0.8%
*Bank of Ireland.......................................... 107,835 677,587
-----------
Italy -- 5.6%
Banca Popolare di Bergamo Credito Varesino SpA............ 30,800 572,186
Beni Stabili SpA.......................................... 23,512 12,667
ENI SpA................................................... 268,400 1,556,576
*Finmeccanica SpA......................................... 595,000 821,319
Istituto Bancario San Paolo di Torino SpA................. 34,912 622,138
*Telecom Italia SpA....................................... 198,800 1,324,444
-----------
4,909,330
-----------
</TABLE>
F-96
<PAGE> 209
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The International Portfolio
Statement of Net Assets, June 30, 2000 -- Continued
(Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON AND PREFERRED STOCK (CONTINUED)
Japan -- 26.0%
77 Bank Ltd. ............................................. 95,000 $ 761,426
Aiful Corp. .............................................. 4,500 415,968
Canon, Inc. .............................................. 35,000 1,746,667
Credit Saison Co. ........................................ 65,500 1,522,946
Dai-Tokyo Fire and Marine Insurance....................... 143,000 509,548
Fuji Machine.............................................. 21,000 1,105,561
Honda Motor Co. Ltd. ..................................... 18,000 614,169
*Katokichi................................................ 14,000 355,288
Mabuchi Motors............................................ 9,700 1,256,031
*Marubeni Corp. .......................................... 341,000 1,176,401
Matsumotokiyoshi.......................................... 15,600 1,639,599
Mineba Co. Ltd. .......................................... 90,000 1,131,364
Mitsubishi Heavy Industries Ltd. ......................... 110,000 488,651
Namco Ltd. ............................................... 19,500 704,054
Nichiei................................................... 14,100 231,221
Nippon Express Co. Ltd. .................................. 215,000 1,322,902
Nippon Telegraph & Telephone Corp. ....................... 250 333,171
Nishimatsu Construction................................... 92,000 363,473
Rinnai Corp. ............................................. 36,000 804,714
Rohm Co. Ltd. ............................................ 3,600 1,058,208
Sankyo Company Ltd. ...................................... 25,000 565,918
Sekisui Chemical Co. ..................................... 75,000 289,221
Shin-Etsu Chemical Co. Ltd. .............................. 20,000 1,016,999
*Shohkoh Fund & Co. Ltd. ................................. 1,250 282,368
Sony Corp. ............................................... 6,400 598,857
TDK Corp. ................................................ 8,000 1,152,346
Yamanouchi Pharmaceuticals................................ 25,000 1,368,128
-----------
22,815,199
-----------
Korea -- 0.9%
*Korea Electric Power ADR................................. 26,400 486,750
Pohang Iron & Steel Co. Ltd. ADR.......................... 13,200 316,800
-----------
803,550
-----------
Mexico -- 0.4%
Telefonos de Mexico SA ADR................................ 5,416 309,389
-----------
</TABLE>
F-97
<PAGE> 210
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The International Portfolio
Statement of Net Assets, June 30, 2000 -- Continued
(Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON AND PREFERRED STOCK (CONTINUED)
Netherlands -- 7.4%
*ABN Amro Holding......................................... 57,540 $ 1,415,334
*Akzo Nobel N.V. ......................................... 18,700 797,690
*Buhrmann N.V. ........................................... 15,943 457,724
*Fortis N.V. ............................................. 40,600 1,186,631
*Hunter Douglas N.V. ..................................... 27,331 742,747
*ING Groep N.V. .......................................... 313 21,243
*Stork N.V. .............................................. 41,069 559,030
*Vedior N.V. ............................................. 43,283 537,303
*Wolters Klumer........................................... 30,301 810,389
-----------
6,528,091
-----------
New Zealand -- 1.1%
Fletcher Challenge Paper.................................. 427,822 491,409
Telecom Corporation of New Zealand Ltd. .................. 134,882 473,043
-----------
964,452
-----------
Norway -- 1.3%
Norsk Hydro............................................... 13,000 547,531
Orkla..................................................... 32,000 610,240
-----------
1,157,771
-----------
Portugal -- 1.1%
Portugal Telecom SA....................................... 82,870 934,194
-----------
Singapore -- 2.2%
Natsteel Electronics Co. ................................. 112,000 343,324
Overseas Chinese Banking Corp. ........................... 151,000 1,039,283
United Overseas Bank Ltd. ................................ 87,544 572,157
-----------
1,954,764
-----------
Spain -- 4.0%
Banco Bilbao Vizcaya SA................................... 43,333 650,078
Banco Popular Espanol SA.................................. 21,900 680,176
Endesa SA................................................. 63,786 1,240,623
Repsol ADR................................................ 48,700 964,869
-----------
3,535,746
-----------
Sweden -- 1.7%
Autoliv, Inc. SDR......................................... 35,200 866,884
Investor AB - B Shares.................................... 46,500 638,859
-----------
1,505,743
-----------
</TABLE>
F-98
<PAGE> 211
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The International Portfolio
Statement of Net Assets, June 30, 2000 -- Continued
(Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON AND PREFERRED STOCK (CONTINUED)
Switzerland -- 5.4%
*Barry Callebaut AG - Registered Shares................... 4,018 $ 575,740
Forbo Holding AG - Registered Shares...................... 860 359,640
Novartis AG - Registered Shares........................... 915 1,454,033
*Sulzer AG - Registered Shares............................ 830 553,820
Swisscom AG - Registered Shares........................... 1,750 608,061
United Bank of Switzerland - Registered Shares............ 8,340 1,225,814
-----------
4,777,108
-----------
United Kingdom -- 15.2%
*Barclays Plc............................................. 25,911 644,494
*BOC Group Plc............................................ 45,060 648,055
British Aerospace Plc..................................... 175,830 1,096,699
Bunzl Plc................................................. 213,599 1,144,721
*Enterprise Oil Plc....................................... 21,400 178,510
Laird Group Ordinary...................................... 100,000 367,121
Morgan Crucible Co. Plc................................... 206,657 680,466
*Powergen UK Plc.......................................... 113,245 968,645
Rexam Plc................................................. 209,300 814,328
*Rio Tinto Plc............................................ 53,899 881,255
*Royal & Sun Alliance Insurance Group..................... 194,465 1,262,978
*Royal Bank of Scotland Group Plc......................... 53,777 900,428
Safeway Plc............................................... 169,844 660,816
*Scottish and Southern Energy Plc......................... 65,500 600,912
*Tomkins Plc.............................................. 185,930 604,477
Unilever Plc.............................................. 196,500 1,189,925
Wolseley Plc.............................................. 130,200 699,740
-----------
13,343,570
-----------
TOTAL COMMON AND PREFERRED STOCK (COST $78,553,195)..... 85,943,215
-----------
SHORT TERM INVESTMENTS -- 0.5%
Provident Institutional Funds -- TempCash................. 418,548 418,548
-----------
TOTAL SHORT TERM INVESTMENTS (COST $418,548)............ 418,548
-----------
TOTAL INVESTMENTS -- 98.3% (COST $78,971,743)........... 86,361,763
-----------
OTHER ASSETS IN EXCESS OF LIABILITIES -- 1.7%............... 1,459,467
-----------
</TABLE>
F-99
<PAGE> 212
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The International Portfolio
Statement of Net Assets, June 30, 2000 -- Concluded
(Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO VALUE
----------------------------------------------------------------------------------------
<S> <C>
NET ASSETS -- 100.0%
(Equivalent to $14.48 per share based on 6,066,220 shares of capital
stock outstanding)................................................... $87,821,230
===========
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE
($87,821,230/6,066,220 shares outstanding)............................. $ 14.48
===========
</TABLE>
* Non-Income producing.
See accompanying notes to financial statements.
F-100
<PAGE> 213
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The Sentinel Growth Portfolio
2000 Semi-Annual Review
Sentinel Advisors Company
--------------------------------------------------------------------------------
The Market Street Fund Sentinel Growth Portfolio earned a total return of 23.8%
for the six months ended June 30, 2000. Over the same period, the S&P 500 Index
produced a -0.4%.
The strong results for the Portfolio during the latest six-month period were due
to the timely shifts in sector weightings and excellent stock selection. The
Portfolio started the year with an overweighted position in technology and
biotechnology stocks. Those two sectors led the market higher during the first
two months of the year. We reduced our exposure to high multiple stocks in
March, and, as a result, the Portfolio performed well in spite of a sharp
sell-off in technology stocks. We increased our weightings in technology and
biotech stocks in late May, which allowed the portfolio to participate in the
market rally that began in May.
Our strategy continues to emphasize market-dominant companies with defensible
"franchises" in growth industries. These companies usually possess proprietary
technology, dominant brand names, and superior products. Typically, our largest
sector weightings are in the fastest growing areas of the market, such as
technology, healthcare and consumer growth stocks.
Robert L. Lee, CFA
F-101
<PAGE> 214
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The Sentinel Growth Portfolio
Statement of Net Assets, June 30, 2000
(Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
--------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK -- 97.5%
Banks -- 0.9%
Bank of New York Co., Inc. ............................... 4,100 $ 190,650
-----------
Business & Consumer Services -- 3.4%
*Administaff, Inc. ....................................... 6,900 438,150
*Convergys Corp. ......................................... 5,500 285,312
-----------
723,462
-----------
Chemicals & Allied Products -- 1.2%
Cambrex Corp. ............................................ 5,700 256,500
-----------
Communications -- 8.5%
*Nextlink Communications, Inc. ........................... 9,300 352,819
Nortel Networks Corp. .................................... 6,000 409,500
Scientific-Atlanta, Inc. ................................. 3,300 245,850
*Sonus Networks, Inc. .................................... 2,900 457,838
*Tekelec, Inc. ........................................... 4,700 226,481
*WinStar Communications, Inc. ............................ 2,500 84,687
-----------
1,777,175
-----------
Computer Peripherals -- 0.3%
*Storage Networks......................................... 600 54,150
-----------
Computers -- 17.0%
*Black Box Corp. ......................................... 4,100 324,605
*Brocade Communications Systems, Inc. .................... 2,000 366,969
*Cisco Systems, Inc. ..................................... 6,300 400,444
*EMC Corp. ............................................... 4,600 353,912
*Extreme Networks, Inc. .................................. 2,700 284,850
*Juniper Networks, Inc. .................................. 3,800 553,137
*Siebel Systems, Inc. .................................... 1,600 261,700
*Silicon Storage Technology, Inc. ........................ 4,100 362,081
*Sun Microsystems, Inc. .................................. 3,500 318,281
*Veritas Software Corp. .................................. 3,000 339,047
-----------
3,565,026
-----------
</TABLE>
F-102
<PAGE> 215
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The Sentinel Growth Portfolio
Statement of Net Assets, June 30, 2000 -- Continued
(Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
--------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Drugs & Health Care -- 18.6%
*Barr Laboratories, Inc. ................................. 7,500 $ 336,094
*Chiron Corp. ............................................ 4,100 194,750
*Elan Corp. Plc ADR....................................... 3,000 145,312
*Forest Laboratories, Inc. ............................... 2,700 272,700
*Human Genome Sciences, Inc. ............................. 3,800 506,825
*Incyte Pharmaceuticals, Inc. ............................ 3,200 263,000
*Medicis Pharmaceutical Corp., Class A.................... 5,500 313,500
*Millennium Pharmaceuticals, Inc. ........................ 5,500 615,312
*Myriad Genetics, Inc. ................................... 5,100 755,198
Pfizer, Inc. ............................................. 4,200 201,600
*Watson Pharmaceuticals, Inc. ............................ 5,500 295,625
-----------
3,899,916
-----------
Electronic Instruments -- 2.8%
*Analog Devices, Inc. .................................... 4,300 326,800
*Micrel, Inc. ............................................ 6,000 260,625
-----------
587,425
-----------
Electronics -- 5.0%
*Cable Design Technologies, Inc. ......................... 3,900 130,650
*Cree Research, Inc. ..................................... 1,300 173,550
*JDS Uniphase Corp. ...................................... 3,700 443,537
Linear Technology Corp. .................................. 4,700 300,506
-----------
1,048,243
-----------
Entertainment -- 0.4%
*Walt Disney Co. ......................................... 2,100 81,506
-----------
Finance -- 0.5%
Citigroup, Inc. .......................................... 1,900 114,475
-----------
Finance - Investment & Other -- 0.9%
Waddell & Reed Financial, Inc. Class B.................... 6,850 199,078
-----------
Food & Food Distributors -- 1.0%
*Starbucks Corp. ......................................... 5,900 225,306
-----------
Industrial & Commercial Services -- 2.7%
*Plexus Corp. ............................................ 5,000 565,000
-----------
</TABLE>
F-103
<PAGE> 216
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The Sentinel Growth Portfolio
Statement of Net Assets, June 30, 2000 -- Continued
(Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
--------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Insurance -- 3.4%
American International Group, Inc. ....................... 1,700 $ 199,750
HSB Group, Inc. .......................................... 4,600 143,175
Marsh & McLennan Cos., Inc. .............................. 3,500 365,531
-----------
708,456
-----------
Medical & Medical Services -- 1.7%
*Genzyme Corp. ........................................... 6,100 362,569
-----------
Oil & Gas -- 5.8%
Burlington Resources, Inc. ............................... 3,400 130,050
*Cal Dive International, Inc. ............................ 7,700 417,244
EOG Resources, Inc. ...................................... 7,900 264,650
*Global Marine, Inc. ..................................... 3,400 95,838
*Ocean Energy, Inc. ...................................... 10,300 146,131
Santa Fe International Corp. ............................. 4,400 153,725
-----------
1,207,638
-----------
Oil Equipment & Services -- 0.8%
*Smith International, Inc. ............................... 2,200 160,188
-----------
Retail Merchandising -- 1.4%
*Bed, Bath & Beyond, Inc. ................................ 3,300 119,625
*Best Buy Co., Inc. ...................................... 1,900 120,175
Wal-Mart Stores, Inc. .................................... 1,000 57,625
-----------
297,425
-----------
Semiconductors -- 13.8%
*Alpha Industries, Inc. .................................. 5,200 229,125
*Applied Materials, Inc. ................................. 3,600 326,250
*Broadcom Corp., Class A.................................. 2,000 437,875
*C-Cube Microsystems, Inc. ............................... 9,200 180,550
Dallas Semiconductor Corp. ............................... 8,300 338,225
Intel Corp. .............................................. 2,300 307,481
*KLA-Tencor Corp. ........................................ 2,300 134,694
*Marvell Technology Group Ltd. ........................... 600 34,200
*Micron Technology, Inc. ................................. 3,400 299,413
*Novellus Systems, Inc. .................................. 4,200 237,563
*Vitesse Semiconductors Corp. ............................ 5,100 375,169
-----------
2,900,545
-----------
</TABLE>
F-104
<PAGE> 217
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The Sentinel Growth Portfolio
Statement of Net Assets, June 30, 2000 -- Concluded
(Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
--------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Software -- 6.1%
*Ariba, Inc. ............................................. 1,900 $ 186,289
*DoubleClick, Inc. ....................................... 1,300 49,563
*Inktomi Corp. ........................................... 2,900 342,925
*Oracle Corp. ............................................ 4,600 386,688
*Wind River Systems, Inc. ................................ 8,200 310,575
-----------
1,276,040
-----------
Transportation -- 1.3%
Robinson (C.H.) Worldwide, Inc. .......................... 5,500 272,250
-----------
TOTAL COMMON STOCK (COST $16,493,381)................... 20,473,023
-----------
SHORT TERM INVESTMENTS -- 3.8%
Provident Institutional Funds -- TempCash................. 788,042 788,042
-----------
TOTAL SHORT TERM INVESTMENTS (COST $788,042)............ 788,042
-----------
TOTAL INVESTMENTS -- 101.3% (COST $17,281,423).......... 21,261,065
LIABILITIES IN EXCESS OF OTHER ASSETS -- (1.3%)............. (268,435)
-----------
NET ASSETS -- 100.0%
(Equivalent to $20.29 per share based on 1,034,857 shares
of capital stock outstanding)........................... $20,992,630
===========
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE
($20,992,630/1,034,857 shares outstanding)................ $ 20.29
===========
</TABLE>
*Non-Income Producing.
See accompanying notes to financial statements.
F-105
<PAGE> 218
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The Equity 500 Index Portfolio
2000 Semi-Annual Review
Market Street Investment Management Company
--------------------------------------------------------------------------------
State Street Global Advisors began to manage the portfolio as a sub-adviser on
February 7, 2000. The performance of this large and important portfolio has
matched expectations. After fees, the portfolio returned 2.40% (from inception
through June 30) versus 2.62% over the same period for the S&P 500 Index.
Clearly the equity markets for the first half of 2000 were disappointing after
five calendar years of annual returns in excess of 20% for the S&P 500 Index.
For the six months ended June 30 the S&P 500 Index declined 0.40%. First half
returns for the Wilshire 5000, a measure of the broad market, was also modestly
negative.
During the first two and a half months of this year, the market continued its
strong run from the end of 1999. The market environment was more favorable to
the large cap growth investment style and both the S&P 500 Index and the
portfolio returned 5.4% from the February inception date through March 31. The
second quarter witnessed a reversal in performance. Stocks began to decline in
mid March through May as investors focused on the tightening monetary actions of
the Federal Reserve. The more defensive value indices moved higher in April and
May as investors fled the higher price/earnings large cap stocks that comprise
the S&P 500 Index. Late in June, however, large cap growth stocks rebounded,
with the market focused on earnings and not the Federal Reserve. This rebound
could not offset the price declines experienced in April and May.
The largest sector holdings of the portfolio include:
<TABLE>
<CAPTION>
SECTOR %
------ -----
<S> <C>
Computers................................................... 11.6%
Communications.............................................. 11.5%
Drugs and Health Care....................................... 10.0%
Electronics................................................. 6.9%
Software.................................................... 5.8%
Semiconductors.............................................. 5.3%
Finance..................................................... 5.3%
</TABLE>
The portfolio exhibits the same general index characteristics as the overall S&P
500 Index e.g. same price/earnings multiple, price/book multiple, yield,
weighted average capitalization, and the five year historic and projected return
on equity growth rates. During the second half of 2000 we expect the portfolio
will continue to demonstrate performance similar to its benchmark. As we enter
the third quarter, there appears to be a growing consensus that we are near the
end of Federal Reserve actions. Volatility, however, will continue to be part of
this market.
We look forward to your continued support.
Sarah C. Lange, CFA
President
F-106
<PAGE> 219
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The Equity 500 Index Portfolio
Statement of Net Assets, June 30, 2000
(Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
-----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK -- 98.0%
Aerospace & Defense -- 0.8%
Boeing Co. ............................................... 27,200 $ 1,137,300
General Dynamics Corp. ................................... 6,300 329,175
Goodrich (B.F.) Co. ...................................... 3,000 102,187
Lockheed Martin Corp. .................................... 12,100 300,231
Northrop Grumman Holdings Corp. .......................... 2,200 145,750
Raytheon Co., Class B..................................... 10,500 202,125
United Technologies Corp. ................................ 14,600 859,575
------------
3,076,343
------------
Airlines -- 0.2%
*AMR Corp. ................................................ 4,600 121,612
Delta Air Lines, Inc. .................................... 3,800 192,137
Southwest Airlines Co. ................................... 14,800 280,275
*US Airways Group, Inc. ................................... 2,100 81,900
------------
675,924
------------
Apparel -- 0.1%
Liz Claiborne, Inc. ...................................... 1,400 49,350
Nike, Inc. Class B........................................ 8,200 326,462
*Reebok International Ltd. ................................ 1,700 27,094
Russell Corp. ............................................ 1,100 22,000
Springs Industries, Inc. Class A.......................... 600 19,312
VF Corp. ................................................. 3,600 86,175
------------
530,393
------------
Appliances -- 0.0%
Black & Decker Corp. ..................................... 2,700 106,144
------------
Automobiles -- 0.6%
Ford Motor Co. ........................................... 37,600 1,616,800
General Motors Corp. ..................................... 16,352 949,431
------------
2,566,231
------------
</TABLE>
F-107
<PAGE> 220
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The Equity 500 Index Portfolio
Statement of Net Assets, June 30, 2000 -- Continued
(Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
-----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Automotive & Equipment -- 0.3%
*Autozone, Inc. ........................................... 4,300 $ 94,600
Cooper Tire & Rubber Co. ................................. 2,500 27,812
Dana Corp. ............................................... 4,200 88,987
Delphi Automotive Systems Corp. .......................... 16,800 246,750
*General Motors Corp., Class H............................. 264 23,177
Genuine Parts Co. ........................................ 5,400 108,000
Goodyear Tire & Rubber Co. ............................... 4,800 96,000
Harley-Davidson, Inc. .................................... 9,400 361,900
*Navistar International Corp. ............................. 2,000 62,125
T.R.W., Inc. ............................................. 3,800 164,825
*Visteon Corp. ............................................ 4,923 59,692
------------
1,333,868
------------
Banks -- 3.7%
AmSouth Bancorp. ......................................... 12,200 192,150
Bank of America Corp. .................................... 51,600 2,218,800
Bank of New York Co., Inc. ............................... 23,000 1,069,500
Bank One Corp. ........................................... 35,700 948,281
BB&T Corp. ............................................... 10,900 260,237
Chase Manhattan Corp. .................................... 38,500 1,773,406
Comerica, Inc. ........................................... 4,900 219,887
Fifth Third Bancorp....................................... 9,600 607,200
First Union Corp. ........................................ 30,500 756,781
Firstar Corp. ............................................ 30,300 638,194
Huntington Bancshares, Inc. .............................. 7,100 112,269
Keycorp. ................................................. 12,900 227,362
Mellon Financial Corp. ................................... 15,300 557,494
Morgan (J.P.) & Co., Inc. ................................ 5,000 550,625
National City Corp. ...................................... 18,900 322,481
Northern Trust Corp. ..................................... 6,900 448,931
Old Kent Financial Corp. ................................. 4,305 115,159
PNC Financial Services Group.............................. 8,800 412,500
Regions Financial Corp. .................................. 6,900 137,137
Southtrust Corp. ......................................... 5,300 119,912
Summit Bancorp. .......................................... 5,600 137,900
Suntrust Banks, Inc. ..................................... 9,400 429,462
U.S. Bancorp.............................................. 23,400 450,450
Union Planters Corp. ..................................... 3,800 106,162
Wells Fargo Co. .......................................... 50,100 1,941,375
------------
14,753,655
------------
</TABLE>
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The Equity 500 Index Portfolio
Statement of Net Assets, June 30, 2000 -- Continued
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<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
-----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Beverages -- 2.2%
Anheuser-Busch Companies, Inc. ........................... 14,100 $ 1,053,094
Brown-Forman Corp. Class B................................ 2,100 112,875
Coca-Cola Co. ............................................ 76,900 4,416,944
Coca-Cola Enterprises, Inc. .............................. 13,300 216,956
Coors Adolph Co. Class B.................................. 1,100 66,550
Pepsico, Inc. ............................................ 44,800 1,990,800
Seagram Co. Ltd. ......................................... 13,600 788,800
------------
8,646,019
------------
Broadcasting & Publishing -- 2.6%
American Greetings Corp. Class A.......................... 2,000 38,000
*Clear Channel Communications, Inc. ....................... 10,600 795,000
Donnelley (R.R.) & Sons Co. .............................. 4,000 90,250
Dow Jones & Co., Inc. .................................... 2,800 205,100
Gannett, Inc. ............................................ 8,300 496,444
Harcourt General, Inc. ................................... 2,200 119,625
Knight-Ridder, Inc. ...................................... 2,400 127,650
McGraw-Hill, Inc. ........................................ 6,100 329,400
*MediaOne Group, Inc. ..................................... 19,000 1,259,961
Meredith Corp. ........................................... 1,600 54,000
New York Times Co. ....................................... 5,200 205,400
Time Warner, Inc. ........................................ 40,900 3,108,400
Times Mirror Co. ......................................... 1,900 172,187
Tribune Co. .............................................. 7,400 259,000
*Viacom, Inc. - Class B.................................... 47,489 3,238,156
------------
10,498,573
------------
Building & Building Supplies -- 0.3%
Centex Corp. ............................................. 1,800 42,300
Ecolab, Inc. ............................................. 4,100 160,156
Lowe's Cos., Inc. ........................................ 12,000 492,750
Masco Corp. .............................................. 13,900 251,069
Pulte Corp. .............................................. 1,200 25,950
Owens Corning, Inc. ...................................... 1,700 15,725
Vulcan Materials Co. ..................................... 3,100 132,331
------------
1,120,281
------------
</TABLE>
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The Equity 500 Index Portfolio
Statement of Net Assets, June 30, 2000 -- Continued
(Unaudited)
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<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
-----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Business & Consumer Services -- 2.3%
*America Online, Inc. ..................................... 71,000 $ 3,745,250
Automatic Data Processing, Inc. .......................... 19,300 1,033,756
*Cendant Corp. ............................................ 22,200 310,800
*Convergys Corp. .......................................... 4,800 249,000
Deluxe Corp. ............................................. 2,400 56,550
Dun & Bradstreet Corp. ................................... 5,000 143,125
Electronic Data Systems Corp. ............................ 14,600 602,250
Interpublic Group of Cos., Inc. .......................... 8,800 378,400
Omnicom Group, Inc. ...................................... 5,500 489,844
Shared Medical Systems Corp. ............................. 800 58,350
*Yahoo!, Inc. ............................................. 16,900 2,093,487
------------
9,160,812
------------
Business Equipment -- 0.1%
*Lexmark International Group, Inc. Class A................. 4,000 269,000
------------
Chemicals & Allied Products -- 1.4%
Air Products & Chemicals, Inc. ........................... 7,200 221,850
Ashland, Inc. ............................................ 2,200 77,137
Dow Chemical Co. ......................................... 20,400 615,825
Du Pont (E.I.) de Nemours & Co. .......................... 32,500 1,421,875
Eastman Chemical Co. ..................................... 2,400 114,600
Engelhard Corp. .......................................... 3,900 66,544
*F.M.C. Corp. ............................................. 1,000 58,000
*Grace (W.R.) & Co. ....................................... 2,200 26,675
Great Lakes Chemical Corp. ............................... 1,800 56,700
Hercules, Inc. ........................................... 3,200 45,000
Pharmacia Corp. .......................................... 38,878 2,009,507
Praxair, Inc. ............................................ 4,900 183,444
Rohm & Haas Co. .......................................... 6,800 234,600
Sigma Aldrich Corp. ...................................... 2,700 78,975
Union Carbide Corp. ...................................... 4,200 207,900
------------
5,418,632
------------
</TABLE>
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Market Street Fund, Inc.
The Equity 500 Index Portfolio
Statement of Net Assets, June 30, 2000 -- Continued
(Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
-----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Communications -- 11.5%
*ADC Telecommunications, Inc. ............................. 10,500 $ 880,687
ALLTEL Corp. ............................................. 9,800 606,987
*Andrew Corp. ............................................. 2,600 87,262
AT&T Corp. ............................................... 99,500 3,146,687
Bell Atlantic Corp. ...................................... 48,100 2,444,081
BellSouth Corp. .......................................... 58,600 2,497,825
CenturyTel, Inc. ......................................... 4,300 123,625
*Comcast Corp. Special Class............................... 27,900 1,129,950
*Comverse Technology, Inc. ................................ 4,800 446,400
Corning Glass, Inc. ...................................... 8,600 2,320,925
*Global Crossing Ltd. ..................................... 25,900 681,494
GTE Corp. ................................................ 30,000 1,867,500
Lucent Technologies, Inc. ................................ 101,300 6,002,025
*Nextel Communications, Inc. Class A....................... 23,600 1,444,025
Nortel Networks Corp. .................................... 92,600 6,319,950
*Qualcomm, Inc. ........................................... 23,000 1,380,000
SBC Communications, Inc. ................................. 105,800 4,575,850
Scientific-Atlanta, Inc. ................................. 4,900 365,050
Sprint Corp. ............................................. 27,100 1,382,100
*Sprint Corp. (PCS Group).................................. 28,500 1,695,750
*Tellabs, Inc. ............................................ 12,600 862,312
US West, Inc. ............................................ 15,800 1,354,850
*Worldcom, Inc. ........................................... 88,400 4,055,350
Young & Rubicam, Inc. .................................... 2,200 125,812
------------
45,796,497
------------
</TABLE>
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Market Street Fund, Inc.
The Equity 500 Index Portfolio
Statement of Net Assets, June 30, 2000 -- Continued
(Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
-----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Computers -- 11.6%
*3Com Corp. ............................................... 10,800 $ 622,350
*Adaptec, Inc. ............................................ 3,200 72,800
*Apple Computer, Inc. ..................................... 10,000 523,750
*Cabletron Systems, Inc. .................................. 5,700 143,925
*Ceridian Corp. ........................................... 4,500 108,281
*Cisco Systems, Inc. ...................................... 216,400 13,754,925
Compaq Computer Corp. .................................... 52,900 1,352,256
*Computer Sciences Corp. .................................. 5,200 388,375
*Dell Computer Corp. ...................................... 80,000 3,945,000
*EMC Corp. ................................................ 67,500 5,193,281
*Gateway, Inc. ............................................ 9,900 561,825
Hewlett Packard Co. ...................................... 31,100 3,883,612
International Business Machines Corp. .................... 55,200 6,047,850
*Maxim Integrated Products, Inc. .......................... 8,600 584,262
*NCR Corp. ................................................ 2,700 105,131
*Network Appliance, Inc. .................................. 9,500 764,750
Pitney Bowes, Inc. ....................................... 7,700 308,000
*Sapient Corp. ............................................ 1,800 192,487
*Seagate Technology, Inc. ................................. 7,100 390,500
*Siebel Systems, Inc. ..................................... 6,000 981,375
*Sun Microsystems, Inc. ................................... 49,200 4,474,125
*Unisys Corp. ............................................. 9,600 139,800
*Veritas Software Corp. ................................... 12,100 1,367,489
------------
45,906,149
------------
Conglomerates -- 0.0%
Armstrong Holdings, Inc. ................................. 1,200 18,375
Kaufman & Broad Home Corp. ............................... 1,500 29,719
------------
48,094
------------
</TABLE>
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Market Street Fund, Inc.
The Equity 500 Index Portfolio
Statement of Net Assets, June 30, 2000 -- Continued
(Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
-----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Consumer Products -- 1.2%
Briggs & Stratton Corp. .................................. 700 $ 23,975
Clorox Co. ............................................... 7,300 327,131
Fortune Brands, Inc. ..................................... 5,100 117,619
Grainger (W.W.), Inc. .................................... 2,900 89,356
Ingersoll Rand Co. ....................................... 5,100 205,275
Kimberly-Clark Corp. ..................................... 17,300 992,587
Maytag Corp. ............................................. 2,100 77,437
Newell Rubbermaid, Inc. .................................. 8,300 213,725
Paccar, Inc. ............................................. 2,500 99,219
Pall Corp. ............................................... 3,700 69,837
Procter & Gamble Co. ..................................... 40,700 2,330,075
Stanley Works, Inc. ...................................... 2,700 64,125
Timken Co. ............................................... 1,900 35,387
Tupperware Corp. ......................................... 1,700 37,400
Whirlpool Corp. .......................................... 2,300 107,237
------------
4,790,385
------------
Containers -- 0.1%
Ball Corp. ............................................... 900 28,969
Bemis Co., Inc. .......................................... 1,600 53,800
Crown Cork & Seal Co., Inc. .............................. 4,000 60,000
*Owens-Illinois, Inc. ..................................... 4,500 52,594
*Pactiv Corp. ............................................. 5,400 42,525
*Sealed Air Corp. ......................................... 2,600 136,175
------------
374,063
------------
Cosmetics and Toiletries -- 0.4%
Alberto-Culver Co. Class B................................ 1,700 51,956
Avon Products, Inc. ...................................... 7,100 315,950
Gillette Co. ............................................. 32,500 1,135,469
International Flavors & Fragrances, Inc. ................. 3,300 99,619
------------
1,602,994
------------
</TABLE>
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Market Street Fund, Inc.
The Equity 500 Index Portfolio
Statement of Net Assets, June 30, 2000 -- Continued
(Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
-----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Drugs & Health Care -- 10.0%
Abbott Laboratories....................................... 47,900 $ 2,134,544
Aetna, Inc. .............................................. 4,200 269,587
Allergan, Inc. ........................................... 4,100 305,450
*Alza Corp. ............................................... 3,200 189,200
American Home Products Corp. ............................. 40,600 2,385,250
Bausch & Lomb, Inc. ...................................... 1,600 123,800
*Baxter International, Inc. ............................... 9,100 639,844
Becton, Dickinson & Co. .................................. 7,800 223,762
Bristol-Myers Squibb Co. ................................. 61,400 3,576,550
Cardinal Health, Inc. .................................... 8,400 621,600
Colgate-Palmolive Co. .................................... 17,800 1,065,775
CVS Corp. ................................................ 11,800 472,000
Eli Lilly & Co. .......................................... 35,100 3,505,612
HCA - The Healthcare Co. ................................ 17,500 531,562
*Healthsouth Corp. ........................................ 12,200 87,687
*Humana, Inc. ............................................. 5,000 26,562
IMS Health, Inc. ......................................... 8,600 154,800
Johnson & Johnson......................................... 43,300 4,411,187
McKesson HBOC, Inc. ...................................... 8,800 184,250
*Medimmune, Inc. .......................................... 6,300 466,200
Merck & Co., Inc. ........................................ 71,500 5,478,687
Pfizer, Inc. ............................................. 195,725 9,394,800
*Quintiles Transnational Corp. ............................ 3,600 50,850
Schering Plough Corp. .................................... 45,700 2,307,850
Tenet Healthcare Corp. ................................... 9,700 261,900
Unitedhealth Group, Inc. ................................. 5,100 437,325
*Watson Pharmaceuticals, Inc. ............................. 3,000 161,250
*Wellpoint Health Networks, Inc. .......................... 2,000 144,875
------------
39,612,759
------------
Electronic Instruments -- 0.3%
*Analog Devices, Inc. ..................................... 10,900 828,400
*Conexant Systems, Inc. ................................... 6,700 325,787
------------
1,154,187
------------
</TABLE>
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Market Street Fund, Inc.
The Equity 500 Index Portfolio
Statement of Net Assets, June 30, 2000 -- Continued
(Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
-----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Electronics -- 6.9%
*Advanced Micro Devices, Inc. ............................. 4,600 $ 355,350
*Agilent Technologies, Inc. ............................... 14,037 1,035,229
Emerson Electric Co. ..................................... 13,300 802,987
General Electric Co. ..................................... 307,800 15,697,800
Johnson Controls, Inc. ................................... 2,700 138,544
Linear Technology Corp. .................................. 9,700 620,194
Molex, Inc. .............................................. 6,125 294,766
Motorola, Inc. ........................................... 66,300 1,926,844
PerkinElmer, Inc. ........................................ 1,500 99,187
Radioshack Corp. ......................................... 5,500 260,562
Rockwell International Corp. ............................. 5,900 185,850
*Sanmina Corp. ............................................ 4,100 350,550
*Solectron Corp. .......................................... 18,400 770,500
*Tektronix, Inc. .......................................... 1,400 101,850
*Teradyne, Inc. ........................................... 5,300 389,550
Texas Instruments, Inc. .................................. 50,600 3,475,587
Thomas & Betts Corp. ..................................... 1,700 32,512
*Xilinx, Inc. ............................................. 10,000 825,625
------------
27,363,487
------------
Energy -- 2.1%
*AES Corp. ................................................ 13,300 606,812
*American Power Conversion Corp. .......................... 6,000 244,875
Baker Hughes, Inc. ....................................... 10,200 326,400
Chevron Corp. ............................................ 20,300 1,721,694
DTE Energy Co. ........................................... 4,500 137,531
Eastern Enterprises....................................... 900 56,700
FPL Group, Inc. .......................................... 5,500 272,250
New Century Energies, Inc. ............................... 3,600 110,475
Royal Dutch Petroleum Co. ................................ 66,800 4,112,375
Williams Cos., Inc. ...................................... 13,600 566,950
------------
8,156,062
------------
Entertainment -- 0.6%
*Walt Disney Co. .......................................... 64,400 2,499,525
------------
</TABLE>
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Market Street Fund, Inc.
The Equity 500 Index Portfolio
Statement of Net Assets, June 30, 2000 -- Continued
(Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
-----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Finance -- 5.3%
American Express Co. ..................................... 41,600 $ 2,168,400
Associates First Capital Corp. Class A.................... 22,800 508,725
Bear Stearns Companies, Inc. ............................. 3,500 145,687
Capital One Financial Corp. .............................. 6,200 276,675
Citigroup, Inc. .......................................... 105,000 6,326,250
Countrywide Credit Industries, Inc. ...................... 3,500 106,094
Equifax, Inc. ............................................ 4,300 113,144
First Data Corp. ......................................... 12,800 635,200
FleetBoston Financial Corp. .............................. 28,000 952,000
Franklin Resources, Inc. ................................. 7,200 218,700
Golden West Financial Corp. .............................. 4,600 187,737
H & R Block, Inc. ........................................ 3,200 103,600
Hartford Financial Services, Inc. ........................ 6,700 374,781
Household International, Inc. ............................ 14,600 606,812
Lehman Brothers Holdings, Inc. ........................... 3,800 359,337
MBNA Corp. ............................................... 24,500 664,562
Merrill Lynch & Co., Inc. ................................ 12,100 1,391,500
Morgan Stanley Dean Witter & Co. ......................... 35,200 2,930,400
PaineWebber Group, Inc. .................................. 4,500 204,750
Paychex, Inc. ............................................ 11,550 485,100
Price (T. Rowe) Associates, Inc. ......................... 3,800 161,500
Providian Financial Corp. ................................ 4,400 396,000
SLM Holding Corp. ........................................ 4,900 183,444
State Street Corp. ....................................... 5,000 530,312
Synovus Financial Corp. .................................. 8,700 153,337
Wachovia Corp. ........................................... 6,300 341,775
Washington Mutual, Inc. .................................. 17,000 490,875
------------
21,016,697
------------
Finance - Investment & Other -- 1.0%
Charles Schwab Corp. ..................................... 41,250 1,387,031
*Charter One Financial, Inc. .............................. 6,700 154,100
Fannie Mae................................................ 31,300 1,633,469
Freddie Mac............................................... 21,400 866,700
------------
4,041,300
------------
</TABLE>
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Market Street Fund, Inc.
The Equity 500 Index Portfolio
Statement of Net Assets, June 30, 2000 -- Continued
(Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
-----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Food & Food Distributors -- 1.8%
Archer-Daniels Midland Co. ............................... 18,900 $ 185,456
Bestfoods, Inc. .......................................... 8,500 588,625
Campbell Soup Co. ........................................ 13,300 387,362
ConAgra, Inc. ............................................ 15,400 293,563
General Mills, Inc. ...................................... 9,100 348,075
Heinz (H.J.) Co. ......................................... 10,900 476,875
Hershey Foods Corp. ...................................... 4,300 209,356
Kellogg Co. .............................................. 12,700 377,825
*Kroger Co. ............................................... 26,200 578,038
Nabisco Group Holdings Corp. ............................. 10,200 264,563
Quaker Oats Co. .......................................... 3,900 292,988
Ralston Purina Group...................................... 9,500 189,406
*Safeway, Inc. ............................................ 15,400 694,925
Sara Lee Corp. ........................................... 27,100 523,369
Supervalu, Inc. .......................................... 3,500 66,719
*Starbucks Corp. .......................................... 5,800 221,488
Sysco Corp. .............................................. 10,400 438,100
Unilever N.V. ............................................ 17,700 761,100
Wrigley (Wm.) Jr., Co. ................................... 3,600 288,675
------------
7,186,508
------------
Home Furnishings/Housewares -- 0.0%
Leggett & Platt, Inc. .................................... 6,100 100,650
------------
Hotel/Restaurants -- 0.1%
Hilton Hotels Corp. ...................................... 11,600 108,750
Marriott International, Inc. Class A...................... 7,500 270,469
------------
379,219
------------
Industrial Diversified -- 0.1%
Fluor Corp. .............................................. 2,300 72,738
Parker-Hannifin Corp. .................................... 3,500 119,875
Sherwin Williams Co. ..................................... 5,200 110,175
------------
302,788
------------
</TABLE>
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Market Street Fund, Inc.
The Equity 500 Index Portfolio
Statement of Net Assets, June 30, 2000 -- Continued
(Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
-----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Insurance -- 2.7%
AFLAC, Inc. .............................................. 8,000 $ 367,500
Allstate Corp. ........................................... 23,200 516,200
American General Corp. ................................... 7,700 469,700
American International Group, Inc. ....................... 48,000 5,640,000
Aon Corp. ................................................ 8,000 248,500
Chubb Corp. .............................................. 5,400 332,100
Cigna Corp. .............................................. 5,100 476,850
Cincinnati Financial Corp. ............................... 5,100 160,331
Conseco, Inc. ............................................ 9,900 96,525
Jefferson-Pilot Corp. .................................... 3,000 169,313
Lincoln National Corp. ................................... 6,100 220,363
Loews Corp. .............................................. 3,100 186,000
Marsh & McLennan Cos., Inc. .............................. 8,300 866,831
MBIA, Inc. ............................................... 3,100 149,381
MGIC Investment Corp. .................................... 3,300 150,150
Progressive Corp. ........................................ 2,300 170,344
Safeco Corp. ............................................. 4,000 79,500
St. Paul Companies, Inc. ................................. 6,600 225,225
Torchmark Corp. .......................................... 4,000 98,750
UnumProvident Corp. ...................................... 7,500 150,469
------------
10,774,032
------------
Leisure & Amusements -- 0.2%
Brunswick Corp. .......................................... 2,800 46,375
Carnival Corp., Class A................................... 18,300 356,850
*Harrah's Entertainment, Inc. ............................. 4,000 83,750
Mattel, Inc. ............................................. 13,200 174,075
------------
661,050
------------
Machinery & Heavy Equipment -- 0.2%
Caterpillar, Inc. ........................................ 10,500 355,688
Deere & Co. .............................................. 7,300 270,100
Dover Corp. .............................................. 6,400 259,600
McDermott International, Inc. ............................ 1,700 14,981
------------
900,369
------------
Machinery & Instrumentation -- 0.0%
Snap-On, Inc. ............................................ 1,900 53,675
------------
</TABLE>
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Market Street Fund, Inc.
The Equity 500 Index Portfolio
Statement of Net Assets, June 30, 2000 -- Continued
(Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
-----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Manufacturing -- 1.6%
Alcan Aluminium Ltd. ..................................... 6,900 $ 213,900
Alcoa, Inc. .............................................. 26,840 778,360
Allegheny Technologies, Inc. ............................. 2,800 50,400
Cooper Industries, Inc. .................................. 2,900 94,431
Crane Co. ................................................ 1,400 34,038
Cummins Engine Co., Inc. ................................. 1,300 35,425
Danaher Corp. ............................................ 4,400 217,525
Eaton Corp. .............................................. 2,300 154,100
Honeywell International, Inc. ............................ 24,700 832,081
Millipore Corp. .......................................... 1,400 105,525
Minnesota Mining & Manufacturing Co. ..................... 12,200 1,006,500
National Service Industries, Inc. ........................ 1,400 27,300
PPG Industries, Inc. ..................................... 5,400 239,288
Textron, Inc. ............................................ 4,300 233,544
Tyco International Ltd. .................................. 52,500 2,487,188
------------
6,509,605
------------
Manufacturing Equipment -- 0.2%
Illinois Tool Works, Inc. ................................ 9,400 535,800
ITT Industries, Inc. ..................................... 2,700 82,013
*Thermo Electron Corp. .................................... 4,900 103,513
------------
721,326
------------
Medical & Medical Services -- 0.6%
*Amgen Corp. .............................................. 31,800 2,233,950
*Biogen, Inc. ............................................. 4,700 303,150
*Manor Care, Inc. ......................................... 3,200 22,400
------------
2,559,500
------------
Medical Equipment & Supplies -- 0.7%
Bard (C.R.), Inc. ........................................ 1,600 77,000
*Guidant Corp. ............................................ 9,600 475,200
Mallinckrodt, Inc. ....................................... 2,100 91,219
Medtronic, Inc. .......................................... 37,100 1,848,044
PE Corp. - PE Biosystems Group............................ 6,500 428,188
------------
2,919,651
------------
</TABLE>
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Market Street Fund, Inc.
The Equity 500 Index Portfolio
Statement of Net Assets, June 30, 2000 -- Continued
(Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
-----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Medical Instruments -- 0.1%
Biomet, Inc. ............................................. 3,600 $ 138,375
*Boston Scientific Corp. .................................. 12,200 267,638
*St. Jude Medical, Inc. ................................... 2,600 119,275
------------
525,288
------------
Metals & Mining -- 0.2%
Barrick Gold Corp. ....................................... 12,300 223,706
*Freeport-McMoran Copper & Gold, Inc. ..................... 5,100 47,175
*Homestake Mining Co. ..................................... 8,100 55,688
*Inco Ltd. ................................................ 4,900 75,338
Newmont Mining Corp. ..................................... 5,400 116,775
Phelps Dodge Corp. ....................................... 2,500 92,969
Placer Dome, Inc. ........................................ 10,700 102,319
Worthington Industries, Inc. ............................. 2,700 28,350
------------
742,320
------------
Office Equipment & Supplies -- 0.2%
Avery-Dennison Corp. ..................................... 3,500 234,938
*Staples, Inc. ............................................ 14,600 224,475
Xerox Corp. .............................................. 20,800 416,000
------------
875,413
------------
Oil & Gas -- 3.3%
Amerada Hess Corp. ....................................... 2,600 160,550
Anadarko Petroleum Corp. ................................. 4,000 197,250
Apache Corp. ............................................. 3,600 211,725
Burlington Resources, Inc. ............................... 6,800 260,100
Coastal Corp. ............................................ 6,700 407,863
Conoco, Inc. Class B...................................... 19,400 476,513
Exxon Mobil Corp. ........................................ 108,300 8,508,319
Occidental Petroleum Corp. ............................... 11,500 242,219
Phillips Petroleum Co. ................................... 7,900 400,431
Sunoco, Inc. ............................................. 2,900 85,369
Texaco, Inc. ............................................. 17,000 905,250
Tosco Corp. .............................................. 4,500 128,813
Transocean Sedco Forex, Inc. ............................. 6,500 347,344
Union Pacific Resources Group, Inc. ...................... 7,800 171,600
Unocal Corp. ............................................. 7,500 248,438
USX-Marathon Group, Inc. ................................. 9,700 243,106
------------
12,994,890
------------
</TABLE>
F-120
<PAGE> 233
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The Equity 500 Index Portfolio
Statement of Net Assets, June 30, 2000 -- Continued
(Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
-----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Oil Equipment & Services -- 0.6%
Halliburton Co. .......................................... 13,800 $ 651,188
Kerr-McGee Corp. ......................................... 3,000 176,813
*Rowan Cos., Inc. ......................................... 2,900 88,088
Schlumberger Ltd. ........................................ 17,200 1,283,550
------------
2,199,639
------------
Paper & Forest Products -- 0.3%
Boise Cascade Corp. ...................................... 1,700 43,988
Fort James Corp. ......................................... 6,400 148,000
Georgia Pacific Corp. .................................... 5,300 139,125
International Paper Co. .................................. 15,921 474,645
Louisiana-Pacific Corp. .................................. 3,700 40,238
Mead Corp. ............................................... 3,100 78,275
Potlatch Corp. ........................................... 900 29,813
Temple Inland, Inc. ...................................... 1,700 71,400
Westvaco Corp. ........................................... 3,100 76,919
Willamette Industries, Inc. .............................. 3,500 95,375
------------
1,197,778
------------
Photography Equipment & Supplies -- 0.2%
Eastman Kodak Co. ........................................ 9,400 559,300
Polaroid Corp. ........................................... 1,500 27,094
------------
586,394
------------
Railroads -- 0.3%
Burlington Northern Santa Fe Corp. ....................... 13,300 305,069
CSX Corp. ................................................ 6,700 141,956
*Kansas City Southern Industries, Inc. .................... 3,500 310,406
Norfolk Southern Corp. ................................... 11,900 177,013
Union Pacific Corp., Series A............................. 7,700 286,344
------------
1,220,788
------------
Real Estate -- 0.1%
Weyerhaeuser Co. ......................................... 7,300 313,900
------------
Restaurants -- 0.4%
Darden Restaurants, Inc. ................................. 4,100 66,625
*McDonald's Corp. ......................................... 41,600 1,370,200
*Tricon Global Restaurants, Inc. .......................... 4,200 118,650
Wendy's International, Inc. .............................. 3,700 65,906
------------
1,621,381
------------
</TABLE>
F-121
<PAGE> 234
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The Equity 500 Index Portfolio
Statement of Net Assets, June 30, 2000 -- Continued
(Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
-----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Retail - Clothing and Apparel -- 0.3%
Gap, Inc. ................................................ 26,500 $ 828,125
Limited, Inc. ............................................ 13,600 294,100
*Tiffany & Co., Inc. ...................................... 2,300 155,250
------------
1,277,475
------------
Retail Merchandising -- 4.5%
Albertson's, Inc. ........................................ 13,300 442,225
*Bed, Bath & Beyond, Inc. ................................. 4,400 159,500
*Best Buy Co., Inc. ....................................... 6,300 398,475
Circuit City Stores, Inc. ................................ 6,300 209,081
*Consolidated Stores Corp. ................................ 3,200 41,400
*Costco Wholesale Corp. ................................... 13,800 455,400
Dillard's, Inc. Class A................................... 3,100 37,975
Dollar General Corp. ..................................... 10,375 202,313
*Federated Department Stores, Inc. ........................ 6,600 222,750
Hasbro, Inc. ............................................. 5,400 81,338
Home Depot, Inc. ......................................... 71,700 3,580,519
*K Mart Corp. ............................................. 15,200 103,550
*Kohls Corp. .............................................. 10,200 567,375
Longs Drug Stores, Inc. .................................. 1,200 26,100
May Department Stores Co. ................................ 10,400 249,600
Nordstrom, Inc. .......................................... 4,200 101,325
*Office Depot, Inc. ....................................... 10,400 65,000
Penney (J.C.) Co., Inc. .................................. 8,100 149,344
*Rite Aid Corp. ........................................... 8,100 53,156
Sears, Roebuck & Co. ..................................... 11,000 358,875
Target Corp. ............................................. 13,600 788,800
The Great Atlantic & Pacific Tea Co., Inc. ............... 1,100 18,288
TJX Companies, Inc. ...................................... 9,500 178,125
*Toys "R" Us, Inc. ........................................ 6,700 97,569
Wal-Mart Stores, Inc. .................................... 138,600 7,986,825
Walgreen Co. ............................................. 31,500 1,013,906
Winn-Dixie Stores, Inc. .................................. 4,600 65,838
------------
17,654,652
------------
</TABLE>
F-122
<PAGE> 235
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The Equity 500 Index Portfolio
Statement of Net Assets, June 30, 2000 -- Continued
(Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
-----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Semiconductors -- 5.3%
*Altera Corp. ............................................. 6,200 $ 632,013
*Applied Materials, Inc. .................................. 25,100 2,274,688
*Broadcom Corp., Class A................................... 6,800 1,488,775
Intel Corp. .............................................. 104,000 13,903,500
*KLA-Tencor Corp. ......................................... 5,700 333,806
*LSI Logic Corp. .......................................... 9,300 503,363
*Micron Technology, Inc. .................................. 16,800 1,479,450
*National Semiconductor Corp. ............................. 5,300 300,775
*Novellus Systems, Inc. ................................... 4,000 226,250
------------
21,142,620
------------
Software -- 5.8%
Adobe Systems, Inc. ...................................... 3,700 481,000
Autodesk, Inc. ........................................... 1,900 65,906
*BMC Software, Inc. ....................................... 7,600 277,281
*Citrix Systems, Inc. ..................................... 5,600 106,050
Computer Associates International, Inc. .................. 18,300 936,731
*Compuware Corp. .......................................... 11,200 116,200
*Mercury Interactive Corp. ................................ 2,500 241,875
*Microsoft Corp. .......................................... 163,700 13,096,000
*Novell, Inc. ............................................. 10,200 94,350
*Oracle Corp. ............................................. 87,800 7,380,688
*Parametric Technology Corp. .............................. 8,400 92,400
*PeopleSoft, Inc. ......................................... 8,400 140,700
------------
23,029,181
------------
Steel -- 0.0%
*Bethlehem Steel Corp. .................................... 3,500 12,469
Nucor Corp. .............................................. 2,700 89,606
USX-U.S. Steel Group, Inc. ............................... 2,900 53,831
------------
155,906
------------
Tobacco -- 0.5%
Philip Morris Cos., Inc. ................................. 71,100 1,888,594
UST, Inc. ................................................ 4,300 63,156
------------
1,951,750
------------
Travel -- 0.0%
*Sabre Holdings Corp. ..................................... 4,068 115,938
------------
</TABLE>
F-123
<PAGE> 236
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The Equity 500 Index Portfolio
Statement of Net Assets, June 30, 2000 -- Continued
(Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
-----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Trucking -- 0.1%
FDX Corp. ................................................ 9,100 $ 345,800
Ryder System, Inc. ....................................... 2,000 37,875
------------
383,675
------------
Utilities -- 1.9%
Ameren Corp. ............................................. 4,300 145,125
American Electric Power Co. .............................. 9,960 295,065
Cinergy Corp. ............................................ 5,000 127,188
CMS Energy Corp. ......................................... 3,500 77,438
Columbia Energy Group..................................... 2,500 164,063
Consolidated Edison, Inc. ................................ 6,200 183,675
Constellation Energy Group................................ 4,700 153,044
CP&L Energy, Inc. ........................................ 5,000 159,688
Dominion Resources, Inc. (VA)............................. 7,300 312,988
Duke Power Co. ........................................... 11,300 637,038
Edison International...................................... 10,300 211,150
El Paso Energy Corp. ..................................... 7,200 366,750
Enron Corp. .............................................. 22,400 1,444,800
Entergy Corp. ............................................ 7,200 195,750
FirstEnergy Corp. ........................................ 7,300 170,638
Florida Progress Corp. ................................... 3,000 140,625
GPU, Inc. ................................................ 3,900 105,544
*Niagara Mohawk Holdings, Inc. ............................ 5,500 76,656
Nicor, Inc. .............................................. 1,300 42,413
Northern States Power Co. ................................ 4,800 96,900
Oneok, Inc. .............................................. 900 23,344
PECO Energy Co. .......................................... 5,300 213,656
Peoples Energy Corp. ..................................... 1,100 35,613
PG&E Corp. ............................................... 12,000 295,500
Pinnacle West Capital Corp. .............................. 2,700 91,463
PP&L Resources, Inc. ..................................... 4,500 98,719
Public Service Enterprise Group, Inc. .................... 6,800 235,450
Reliant Energy, Inc. ..................................... 9,200 271,975
Sempra Energy............................................. 6,207 105,519
Southern Co. ............................................. 20,200 470,913
TXU Corp. ................................................ 8,200 241,900
Unicom Corp. ............................................. 5,500 212,781
------------
7,403,371
------------
</TABLE>
F-124
<PAGE> 237
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The Equity 500 Index Portfolio
Statement of Net Assets, June 30, 2000 -- Concluded
(Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
-----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Waste Management -- 0.1%
*Allied Waste Industries, Inc. ............................ 5,900 $ 59,000
*Waste Management, Inc. ................................... 19,000 361,000
------------
420,000
------------
TOTAL COMMON STOCK (COST $382,108,484).................. 389,398,806
------------
SHORT TERM INVESTMENTS -- 2.1%
Provident Institutional Funds -- TempCash................. 8,180,647 8,180,647
------------
TOTAL SHORT TERM INVESTMENTS (COST $8,180,647).......... 8,180,647
------------
TOTAL INVESTMENTS -- 100.1% (COST $390,289,131)......... 397,579,453
LIABILITIES IN EXCESS OF OTHER ASSETS -- (0.1%)............. (527,122)
------------
NET ASSETS -- 100.0%
(Equivalent to $10.24 per share based on 38,771,436 shares
of capital stock outstanding)........................... $397,052,331
============
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE
($397,052,331/38,771,436 shares outstanding).............. $ 10.24
============
</TABLE>
* Non-income producing
See accompanying notes to financial statements.
F-125
<PAGE> 238
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The All Pro Large Cap Growth Portfolio
2000 Semi-Annual Review
Market Street Investment Management Company
--------------------------------------------------------------------------------
The total return for the Market Street Fund All Pro Large Cap Growth Portfolio
for the first half of 2000 was -0.26%. This performance slightly lagged the
2.50% return of the Wilshire Large Growth Index, the style 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 large cap growth orientation.
<TABLE>
<CAPTION>
APPROXIMATE
MANAGER PORTFOLIO %
------- -----------
<S> <C>
Geewax Terker & Co...................................... 50%
Cohen, Klingenstein & Marks............................. 50%
Total Portfolio......................................... 100%
</TABLE>
Clearly the first half of 2000 was a disappointing period for the stock market
in general. First half returns for the S&P 500 and the Wilshire 5000, two
measures of the broad market, were modestly negative.
In the first quarter 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. During the first two and a half
months, the market continued its strong run from the end of 1999. Price
momentum, high earnings growth and high price/earnings stocks, i.e. technology
stocks significantly outperformed the broad market. Then such stocks began to
reverse course in mid March. The Portfolio's positive first quarter performance
was erased during the second quarter. The biggest losers in this decline were in
many cases the big winners of the prior six months. The value indices moved
higher in April and May as investors fled technology stocks and moved into value
stocks such as consumer staples and deep value pharmaceuticals. This rotation
coincided with the markets focus on the tightening monetary policy of the
Federal Reserve. Late in June, however, large cap growth stocks rebounded with
the market focused on earnings and not the Fed; but this rebound could not
offset the price declines experienced in April and May.
The largest sector holdings of the Portfolio include:
<TABLE>
<CAPTION>
SECTOR %
------ -----
<S> <C>
Drugs and Health Care....................................... 14.4%
Software.................................................... 10.3%
Computers................................................... 9.4%
Communications.............................................. 8.9%
Electronics................................................. 7.2%
Retail Merchandising........................................ 7.0%
Semiconductors.............................................. 6.9%
</TABLE>
F-126
<PAGE> 239
During the second half of 2000 we will continue to invest in technology stocks
due to their growth potential. As we enter the third quarter there appears to be
a growing consensus that we are near the end of Federal reserve action.
Volatility will continue to be part of this market until some of the issues
overhanging the capital markets are resolved. We will continue to stick with our
investment discipline and our long-term investment horizon.
We look forward to your continued support.
Sarah C. Lange, CFA
President
F-127
<PAGE> 240
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The All Pro Large Cap Growth Portfolio
Statement of Net Assets, June 30, 2000
(Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK -- 96.5%
Automotive & Equipment -- 0.1%
Harley-Davidson, Inc. .................................... 1,800 $ 69,300
-----------
Banks -- 1.4%
U.S. Bancorp.............................................. 35,900 691,075
-----------
Beverages -- 1.9%
Coca-Cola Co. ............................................ 13,800 792,637
Pepsico, Inc. ............................................ 3,900 173,306
-----------
965,943
-----------
Broadcasting & Publishing -- 0.9%
*AT&T Corp. - Liberty Media-A............................. 2,500 60,624
Dow Jones & Co., Inc. .................................... 300 21,975
Time Warner, Inc. ........................................ 3,090 234,840
*Viacom, Inc. - Class B................................... 1,720 117,283
-----------
434,722
-----------
Building & Building Supplies -- 0.1%
Lowe's Cos., Inc. ........................................ 700 28,744
-----------
Business & Consumer Services -- 2.7%
*America Online, Inc. .................................... 10,180 536,995
*CMGI Information......................................... 1,400 64,137
*Convergys Corp. ......................................... 300 15,562
*InfoSpace.com, Inc. ..................................... 700 38,675
Interpublic Group of Cos., Inc. .......................... 1,400 60,200
Omnicom Group, Inc. ...................................... 1,150 102,422
*Safeguard Scientific, Inc. .............................. 675 21,641
SEI Investments Co. ...................................... 300 11,944
*TMP Worldwide, Inc. ..................................... 200 14,762
*VeriSign, Inc. .......................................... 875 154,437
*Yahoo!, Inc. ............................................ 2,700 334,462
-----------
1,355,237
-----------
Chemicals & Allied Products -- 1.5%
Pharmacia Corp. .......................................... 14,989 774,744
-----------
</TABLE>
F-128
<PAGE> 241
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The All Pro Large Cap Growth Portfolio
Statement of Net Assets, June 30, 2000 -- Continued
(Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Communications -- 8.9%
*ADC Telecommunications, Inc. ............................ 1,800 $ 150,975
*Advanced Fibre Communications, Inc. ..................... 700 31,719
*Allegiance Telecom, Inc. ................................ 795 50,880
ALLTEL Corp. ............................................. 9,925 614,730
*AT&T Wireless Group...................................... 90 2,509
*Comcast Corp. Special Class A Non-Voting................. 650 26,325
*Comverse Technology, Inc................................. 1,050 97,650
Corning Glass, Inc. ...................................... 1,400 377,825
*Ditech Communications Corp. ............................. 110 10,402
*Kana Communication, Inc. ................................ 40 2,475
*Level 3 Communications, Inc. ............................ 1,250 110,000
*McLeodUSA, Inc. ......................................... 2,500 51,719
*Metromedia Fiber Network, Inc. .......................... 2,700 107,156
*Nextel Communications, Inc. Class A...................... 3,700 226,394
Nortel Networks Corp. .................................... 4,200 286,650
*Qualcomm, Inc. .......................................... 2,800 168,000
*Redback Networks, Inc. .................................. 200 35,600
*RF Micro Devices, Inc. .................................. 500 43,812
SBC Communications, Inc. ................................. 1,609 69,589
Scientific-Atlanta, Inc. ................................. 500 37,250
*Sycamore Networks, Inc. ................................. 110 12,141
*Tellabs, Inc. ........................................... 10,925 747,680
*Valassis Communications, Inc. ........................... 600 22,875
*VerticalNet, Inc. ....................................... 600 22,162
*VoiceStream Wireless Corp. .............................. 690 80,244
*Western Wireless Corp. Class A........................... 200 10,900
*Williams Communications Group, Inc. ..................... 70 2,323
*WinStar Communications, Inc. ............................ 750 25,406
*Worldcom, Inc. .......................................... 22,617 1,037,555
-----------
4,462,946
-----------
Computer Peripherals -- 0.0%
*Internap Network Services Corp. ......................... 170 7,058
-----------
</TABLE>
F-129
<PAGE> 242
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The All Pro Large Cap Growth Portfolio
Statement of Net Assets, June 30, 2000 -- Continued
(Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Computers -- 9.4%
*Adaptec, Inc. ........................................... 100 $ 2,275
*Aether Systems, Inc. .................................... 20 4,100
*Agile Software Corp. .................................... 170 12,017
*Akamai Technologies, Inc. ............................... 220 26,122
Art Technology Group, Inc. ............................... 200 20,187
*Avanex Corp. ............................................ 50 4,775
*Brocade Communications Systems, Inc. .................... 300 55,045
*CDW Computer Centers, Inc. .............................. 200 12,500
*Cisco Systems, Inc. ..................................... 21,160 1,344,982
*Dell Computer Corp. ..................................... 8,250 406,828
*Digital Lightwave, Inc. ................................. 60 6,030
*EMC Corp. ............................................... 17,300 1,331,019
*Finisar Corp. ........................................... 420 10,999
*Foundry Networks, Inc. .................................. 200 22,100
*Globespan, Inc. ......................................... 120 14,649
Hewlett Packard Co. ...................................... 1,760 219,780
*Intuit, Inc. ............................................ 300 12,412
*Juniper Networks, Inc. .................................. 1,060 154,296
*Marchfirst, Inc. ........................................ 273 4,982
*Maxim Integrated Products, Inc. ......................... 1,800 122,287
*Medarex, Inc. ........................................... 150 12,675
*Network Appliance, Inc. ................................. 2,300 185,150
*Phone.com, Inc. ......................................... 390 25,399
*Quest Software, Inc. .................................... 110 6,091
*Silicon Storage Technology, Inc. ........................ 110 9,714
*Sun Microsystems, Inc. .................................. 4,300 391,031
*Turnstone System, Inc. .................................. 100 16,567
*Veritas Software Corp. .................................. 2,605 294,406
*Vitria Technology, Inc. ................................. 300 18,337
-----------
4,746,755
-----------
Cosmetics and Toiletries -- 2.1%
Avon Products, Inc. ...................................... 23,600 1,050,200
-----------
</TABLE>
F-130
<PAGE> 243
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The All Pro Large Cap Growth Portfolio
Statement of Net Assets, June 30, 2000 -- Continued
(Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Drugs & Health Care -- 14.4%
Abbott Laboratories....................................... 18,875 $ 841,117
Allergan, Inc. ........................................... 1,000 74,500
American Home Products Corp. ............................. 14,400 846,000
*Andrx Corp. ............................................. 700 44,745
Becton, Dickinson & Co. .................................. 28,300 811,856
Bristol-Myers Squibb Co. ................................. 16,610 967,532
CVS Corp. ................................................ 1,100 44,000
*Forest Laboratories, Inc. ............................... 400 40,400
*Human Genome Sciences, Inc. ............................. 400 53,350
*IVAX Corp. .............................................. 650 26,975
Johnson & Johnson......................................... 2,150 219,031
McKesson HBOC, Inc. ...................................... 34,675 726,008
Merck & Co., Inc. ........................................ 17,710 1,357,028
*Millennium Pharmaceuticals, Inc. ........................ 500 55,937
Pfizer, Inc. ............................................. 23,837 1,144,176
-----------
7,252,655
-----------
Electronic Instruments -- 0.4%
*Analog Devices, Inc. .................................... 2,500 190,000
-----------
Electronics -- 7.2%
*Agilent Technologies, Inc. .............................. 1,508 111,215
General Electric Co. ..................................... 29,430 1,500,930
*JDS Uniphase Corp. ...................................... 4,370 523,854
Linear Technology Corp. .................................. 1,800 115,087
Radioshack Corp. ......................................... 15,900 753,262
Texas Instruments, Inc. .................................. 5,300 364,044
*Xilinx, Inc. ............................................ 3,000 247,687
-----------
3,616,079
-----------
Entertainment -- 0.1%
*Walt Disney Co. ......................................... 1,000 38,812
-----------
</TABLE>
F-131
<PAGE> 244
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The All Pro Large Cap Growth Portfolio
Statement of Net Assets, June 30, 2000 -- Continued
(Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Finance -- 6.5%
American Express Co. ..................................... 750 $ 39,094
Citigroup, Inc. .......................................... 9,575 576,894
*Concord EFS, Inc. ....................................... 1,600 41,600
Franklin Resources, Inc. ................................. 24,350 739,631
MBNA Corp. ............................................... 32,900 892,413
Paychex, Inc. ............................................ 1,487 62,454
Providian Financial Corp. ................................ 10,525 947,250
-----------
3,299,336
-----------
Finance - Investment & Other -- 3.9%
Charles Schwab Corp. ..................................... 3,000 100,875
Fannie Mae................................................ 13,150 686,266
Federated Investors, Inc., Class B........................ 250 8,766
S & P 400 Mid-Cap Depositary Receipts..................... 1,000 88,750
Standard & Poor's Depositary Receipts..................... 7,550 1,096,873
-----------
1,981,530
-----------
Food & Food Distributors -- 0.2%
Keebler Foods Co. ........................................ 700 25,988
Sysco Corp. .............................................. 1,900 80,038
-----------
106,026
-----------
Insurance -- 1.9%
Conseco, Inc. ............................................ 99,000 965,250
-----------
Manufacturing -- 0.2%
Millipore Corp. .......................................... 750 56,531
Symbol Technologies, Inc. ................................ 300 16,706
*Waters Corp. ............................................ 300 37,444
-----------
110,681
-----------
Medical & Medical Services -- 2.2%
*Affymetrix, Inc. ........................................ 100 16,513
*Amgen Corp. ............................................. 15,200 1,067,800
*Celgene Corp. ........................................... 100 5,888
-----------
1,090,201
-----------
Medical Equipment & Supplies -- 0.4%
Medtronic, Inc. .......................................... 1,200 59,775
PE Corp. - PE Biosystems Group............................ 2,000 131,750
-----------
191,525
-----------
</TABLE>
F-132
<PAGE> 245
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The All Pro Large Cap Growth Portfolio
Statement of Net Assets, June 30, 2000 -- Continued
(Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Medical Instruments -- 1.7%
Biomet, Inc. ............................................. 300 $ 11,531
*Boston Scientific Corp. ................................. 37,300 818,269
*Sybron International Corp. .............................. 300 5,944
-----------
835,744
-----------
Office Equipment & Supplies -- 1.4%
*Staples, Inc. ........................................... 1,300 19,988
Xerox Corp. .............................................. 33,100 662,000
-----------
681,988
-----------
Oil & Gas -- 0.0%
Devon Energy Corp. ....................................... 100 5,619
Dynegy, Inc. ............................................. 138 9,427
-----------
15,046
-----------
Oil Equipment & Services -- 0.0%
*BJ Services Co. ......................................... 200 12,500
-----------
Restaurants -- 1.2%
*McDonald's Corp. ........................................ 18,600 612,637
-----------
Retail - Clothing and Apparel -- 1.5%
Gap, Inc. ................................................ 24,950 779,687
-----------
Retail Merchandising -- 7.0%
*Bed, Bath & Beyond, Inc. ................................ 24,800 899,000
*BJ's Wholesale Club, Inc. ............................... 400 13,200
Circuit City Stores, Inc. ................................ 200 6,638
*Costco Wholesale Corp. .................................. 680 22,440
Dollar General Corp. ..................................... 41,187 803,146
*Dollar Tree Stores, Inc. ................................ 1,000 39,563
Home Depot, Inc. ......................................... 11,750 586,766
*Kohls Corp. ............................................. 1,400 77,875
Wal-Mart Stores, Inc. .................................... 18,900 1,089,113
-----------
3,537,741
-----------
</TABLE>
F-133
<PAGE> 246
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The All Pro Large Cap Growth Portfolio
Statement of Net Assets, June 30, 2000 -- Continued
(Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Semiconductors -- 6.9%
*Altera Corp. ............................................ 900 $ 91,744
*Applied Materials, Inc. ................................. 5,120 464,000
*Applied Micro Circuits Corp. ............................ 500 49,375
*Atmel Corp. ............................................. 300 11,063
*Broadcom Corp., Class A.................................. 950 207,991
*Fairchild Semiconductor Corp., Class A................... 60 2,430
Intel Corp. .............................................. 16,150 2,159,054
*KLA-Tencor Corp. ........................................ 400 23,425
*LSI Logic Corp. ......................................... 400 21,650
*Microchip Technology, Inc. .............................. 350 20,393
*Novellus Systems, Inc. .................................. 400 22,625
*PMC-Sierra, Inc. ........................................ 875 155,477
*QLogic Corp. ............................................ 900 59,456
*SDL, Inc. ............................................... 400 114,075
*Vitesse Semiconductors Corp. ............................ 1,000 73,563
-----------
3,476,321
-----------
</TABLE>
F-134
<PAGE> 247
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The All Pro Large Cap Growth Portfolio
Statement of Net Assets, June 30, 2000 -- Continued
(Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Software -- 10.3%
Adobe Systems, Inc. ...................................... 600 $ 78,000
*BEA Systems, Inc. ....................................... 1,300 64,269
*BMC Software, Inc. ...................................... 12,700 463,352
*BroadVision, Inc. ....................................... 1,450 73,678
Computer Associates International, Inc. .................. 12,900 660,319
*Compuware Corp. ......................................... 63,500 658,813
*Epiphany, Inc. .......................................... 20 2,144
*Exodus Communications, Inc. ............................. 2,100 96,731
*I2 Technologies, Inc. ................................... 900 93,839
*Inktomi Corp. ........................................... 900 106,425
*Lycos, Inc. ............................................. 600 32,400
*Mercury Interactive Corp. ............................... 700 67,725
*Micromuse, Inc. ......................................... 350 57,920
*Microsoft Corp. ......................................... 13,100 1,048,000
*Oracle Corp. ............................................ 11,050 928,891
*Parametric Technology Corp. ............................. 53,600 589,600
*Rational Software Corp. ................................. 900 83,644
*Scient Corp. ............................................ 100 4,413
*Symantec Corp. .......................................... 250 13,484
*TIBCO Software, Inc. .................................... 90 9,651
*Vignette Corp. .......................................... 800 41,613
-----------
5,174,911
-----------
Transportation -- 0.0%
Expeditors International of Washington, Inc. ............. 200 9,500
United Parcel Service..................................... 200 11,800
-----------
21,300
-----------
Utilities -- 0.1%
Enron Corp. .............................................. 700 45,150
-----------
TOTAL COMMON STOCK (COST $43,177,139)................... 48,621,844
-----------
</TABLE>
F-135
<PAGE> 248
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The All Pro Large Cap Growth Portfolio
Schedule of Net Assets, June 30, 2000 -- Concluded
(Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
----------------------------------------------------------------------------------------
<S> <C> <C>
SHORT TERM INVESTMENTS -- 2.3%
Provident Institutional Funds -- TempCash................. 1,158,275 $ 1,158,275
-----------
TOTAL SHORT TERM INVESTMENTS (COST $1,158,275).......... 1,158,275
-----------
TOTAL INVESTMENTS -- 98.8% (COST $44,335,414)........... 49,780,119
OTHER ASSETS IN EXCESS OF LIABILITIES -- 1.2%............... 608,304
-----------
NET ASSETS -- 100.0%
(Equivalent to $14.16 per share based on 3,558,456 shares
of capital stock outstanding)........................... $50,388,423
===========
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE
($50,388,423/3,558,456 shares outstanding)................ $ 14.16
===========
</TABLE>
* Non-Income Producing.
See accompanying notes to financial statements.
F-136
<PAGE> 249
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The All Pro Large Cap Value Portfolio
2000 Semi-Annual Review
Market Street Investment Management Company
--------------------------------------------------------------------------------
The total return for the Market Street Fund All Pro Large Cap Value Portfolio
for the first half of 2000 was -6.74%. This performance slightly lagged the
-5.70% return of the Wilshire Large Value Index, the style 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.................................. 40%
Equinox Capital......................................... 35%
Sanford C. Bernstein.................................... 25%
---
Total Portfolio......................................... 100%
</TABLE>
Effective April 4th, Sanford C. Bernstein "Bernstein" a well known value
manager, replaced Harris Associates as a sub-adviser to this Portfolio. In
addition, the portfolio allocation to Bernstein was increased to 25%.
With growth stocks continuing to drive this market, the growth indices
outperformed the value indices in the first six months. The first quarter proved
to be difficult for value investors as large cap growth names dominated
performance until mid March. The value indices moved higher in April and May as
investors fled high priced technology stocks and moved into value stocks such as
consumer staples and deep value pharmaceuticals. This rotation coincided with
the market's focus on the tightening monetary policy of the Federal Reserve.
Value stocks that are sensitive to rising interest rates such as banks, housing,
and consumer durables did not perform well and declined significantly over the
first half of the year. Late in June large cap growth stocks rebounded with the
market refocused less on the Fed and more on earnings. The resurgence in
interest rate sensitive value stocks proved to be short lived, similar to the
bounce experienced by value stocks in the second quarter of last year.
The largest sector holdings of the portfolio include:
<TABLE>
<CAPTION>
SECTOR %
------ -----
<S> <C>
Finance..................................................... 10.4%
Communications.............................................. 10.2%
Drugs & Health Care......................................... 8.3%
Oil & Gas................................................... 7.9%
Insurance................................................... 7.5%
Banks....................................................... 6.0%
</TABLE>
F-137
<PAGE> 250
The second quarter taught us that the market does pay attention to high
valuation levels. In May and June there were signs that valuation and earnings
prospects of some value stocks were beginning to capture investor attention. The
fundamentals of many portfolio companies are very strong. We believe that our
disciplined focus on under-valued investments with sustainable earnings momentum
will be rewarded over the long term. 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
President
F-138
<PAGE> 251
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The All Pro Large Cap Value Portfolio
Statement of Net Assets, June 30, 2000
(Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK -- 95.8%
Aerospace & Defense -- 1.0%
Boeing Co. ............................................... 2,600 $ 108,712
*Litton Industries, Inc. ................................. 350 14,700
Lockheed Martin Corp. .................................... 700 17,369
Northrop Grumman Holdings Corp. .......................... 550 36,437
United Technologies Corp. ................................ 1,023 60,229
-----------
237,447
-----------
Airlines -- 0.7%
*AMR Corp. ............................................... 1,000 26,437
Delta Air Lines, Inc. .................................... 1,900 141,575
-----------
168,012
-----------
Apparel -- 0.1%
VF Corp. ................................................. 900 21,544
-----------
Appliances -- 0.0%
Black & Decker Corp. ..................................... 300 11,794
-----------
Automobiles -- 1.5%
Ford Motor Co. ........................................... 4,600 197,800
General Motors Corp. ..................................... 2,800 162,574
-----------
360,374
-----------
Automotive & Equipment -- 0.5%
Cooper Tire & Rubber Co. ................................. 250 2,781
Dana Corp. ............................................... 1,200 25,425
Delphi Automotive Systems Corp. .......................... 2,000 29,375
Genuine Parts Co. ........................................ 1,300 26,000
Goodyear Tire & Rubber Co. ............................... 1,100 22,000
*Visteon Corp. ........................................... 601 7,302
-----------
112,883
-----------
</TABLE>
F-139
<PAGE> 252
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The All Pro Large Cap Value Portfolio
Statement of Net Assets, June 30, 2000 -- Continued
(Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Banks -- 6.0%
Bank of America Corp. .................................... 8,773 $ 377,239
Bank One Corp. ........................................... 1,600 42,500
Chase Manhattan Corp. .................................... 2,350 108,247
Comerica, Inc. ........................................... 1,100 49,362
Firstar Corp. ............................................ 4,600 96,887
First Union Corp. ........................................ 1,300 32,256
Keycorp................................................... 1,900 33,487
Morgan (J.P.) & Co., Inc. ................................ 2,900 319,361
National City Corp. ...................................... 1,700 29,006
PNC Financial Services Group.............................. 4,800 224,999
Regions Financial Corp. .................................. 1,500 29,812
Southtrust Corp. ......................................... 1,200 27,150
Summit Bancorp............................................ 1,300 32,012
Union Planters Corp. ..................................... 2,600 72,637
-----------
1,474,955
-----------
Beverages -- 1.0%
Anheuser-Busch Companies, Inc. ........................... 400 29,875
Coca-Cola Co. ............................................ 500 28,719
Coca-Cola Enterprises, Inc. .............................. 1,300 21,206
Pepsi Bottling Group, Inc. ............................... 1,200 35,025
Pepsico, Inc. ............................................ 2,800 124,425
-----------
239,250
-----------
Broadcasting & Publishing -- 4.1%
American Greetings Corp., Class A......................... 500 9,500
AT&T Corp. -- Liberty Media-A............................. 11,287 273,710
*Fox Entertainment Group, Inc. ........................... 2,000 60,750
Gannett, Inc. ............................................ 1,300 77,756
*Infinity Broadcasting, Inc. ............................. 1,200 43,725
McGraw-Hill, Inc. ........................................ 1,300 70,200
*MediaOne Group, Inc. .................................... 1,300 86,531
New York Times Co. ....................................... 1,200 47,400
Time Warner, Inc. ........................................ 750 57,000
Tribune Co. .............................................. 3,400 119,000
*Viacom, Inc., Class B.................................... 2,200 150,012
-----------
995,584
-----------
</TABLE>
F-140
<PAGE> 253
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The All Pro Large Cap Value Portfolio
Statement of Net Assets, June 30, 2000 -- Continued
(Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Building & Building Supplies -- 0.3%
Centex Corp. ............................................. 450 $ 10,575
Lafarge Corp. ............................................ 1,800 37,800
Lowe's Cos., Inc. ........................................ 800 32,850
Owens Corning, Inc. ...................................... 200 1,850
-----------
83,075
-----------
Business & Consumer Services -- 0.2%
*America Online, Inc. .................................... 600 31,650
Yahoo!, Inc. ............................................. 50 6,194
-----------
37,844
-----------
Chemicals & Allied Products -- 2.0%
Air Products & Chemicals, Inc. ........................... 1,100 33,894
Ashland, Inc. ............................................ 550 19,284
Cabot Corp. .............................................. 500 13,625
Dow Chemical Co. ......................................... 6,150 185,653
Du Pont (E.I.) de Nemours & Co. .......................... 1,000 43,750
Eastman Chemical Co. ..................................... 1,400 66,850
*F.M.C. Corp. ............................................ 250 14,500
Great Lakes Chemical Corp. ............................... 450 14,175
Hercules, Inc. ........................................... 800 11,250
Lubrizol Corp. ........................................... 450 9,450
Praxair, Inc. ............................................ 800 29,950
Union Carbide............................................. 750 37,125
-----------
479,506
-----------
</TABLE>
F-141
<PAGE> 254
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The All Pro Large Cap Value Portfolio
Statement of Net Assets, June 30, 2000 -- Continued
(Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Communications -- 10.2%
ALLTEL Corp. ............................................. 1,300 $ 80,519
*Andrew Corp. ............................................ 400 13,425
*AT&T Wireless Group...................................... 3,600 100,350
*AT&T Corp. .............................................. 11,550 365,268
Bell Atlantic Corp. ...................................... 1,650 83,840
BellSouth Corp. .......................................... 6,900 294,111
*Copper Mountain Networks, Inc. .......................... 300 26,438
GTE Corp. ................................................ 3,700 230,325
Lucent Technologies, Inc. ................................ 3,200 189,600
Nortel Networks Corp. .................................... 800 54,600
*Qualcomm, Inc. .......................................... 125 7,500
SBC Communications, Inc. ................................. 10,866 469,955
Sprint Corp. ............................................. 2,200 112,200
Telephone and Data Systems, Inc. ......................... 400 40,100
US West, Inc. ............................................ 2,000 171,500
*Worldcom, Inc. .......................................... 5,250 240,844
-----------
2,480,575
-----------
Computers -- 5.3%
*Adaptec, Inc. ........................................... 800 18,200
*Apple Computer, Inc. .................................... 1,800 94,275
*Brocade Communications Systems, Inc. .................... 400 73,394
*Cisco Systems, Inc. ..................................... 2,900 184,331
Compaq Computer Corp. .................................... 7,600 194,275
*Dell Computer Corp. ..................................... 700 34,519
*DST Systems.............................................. 400 30,450
*EMC Corp. ............................................... 550 42,316
Hewlett Packard Co. ...................................... 1,775 221,653
International Business Machines Corp. .................... 2,100 230,081
*NCR Corp. ............................................... 1,600 62,300
*SunGard Data Systems, Inc. .............................. 1,200 37,200
*Sun Microsystems, Inc. .................................. 500 45,469
*Vishay Intertechnology, Inc. ............................ 600 22,763
-----------
1,291,226
-----------
</TABLE>
F-142
<PAGE> 255
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The All Pro Large Cap Value Portfolio
Statement of Net Assets, June 30, 2000 -- Continued
(Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Consumer Products -- 1.1%
Briggs & Stratton Corp. .................................. 75 $ 2,569
*Energizer Holdings, Inc. ................................ 966 17,629
Fortune Brands, Inc. ..................................... 2,700 62,269
Maytag Corp. ............................................. 175 6,453
Newell Rubbermaid, Inc. .................................. 1,300 33,475
Procter & Gamble Co. ..................................... 1,625 93,032
Whirlpool Corp. .......................................... 1,150 53,619
-----------
269,046
-----------
Containers -- 0.2%
Ball Corp. ............................................... 250 8,047
*Owens-Illinois, Inc. .................................... 1,200 14,025
Sonoco Products Co. ...................................... 800 16,450
-----------
38,522
-----------
Cosmetics and Toiletries -- 0.3%
Avon Products, Inc. ...................................... 1,800 80,100
-----------
Drugs & Health Care -- 8.3%
Abbott Laboratories....................................... 2,700 120,319
Aetna, Inc. .............................................. 600 38,512
Allergan, Inc. ........................................... 600 44,700
Bausch & Lomb, Inc. ...................................... 600 46,425
Baxter International, Inc. ............................... 2,700 189,844
Becton, Dickinson & Co. .................................. 1,100 31,556
Bristol-Myers Squibb Co. ................................. 5,350 311,637
Eli Lilly & Co. .......................................... 550 54,931
HCA - The Healthcare Co. ................................. 5,350 162,506
Johnson & Johnson......................................... 4,750 483,907
Merck & Co., Inc. ........................................ 3,700 283,512
Pfizer, Inc. ............................................. 1,925 92,400
Schering Plough Corp. .................................... 900 45,450
UnitedHealth Group, Inc. ................................. 1,300 111,475
-----------
2,017,174
-----------
</TABLE>
F-143
<PAGE> 256
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The All Pro Large Cap Value Portfolio
Statement of Net Assets, June 30, 2000 -- Continued
(Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Electronics -- 2.7%
*Arrow Electronics, Inc. ................................. 700 $ 21,700
Avnet, Inc. .............................................. 350 20,737
Emerson Electric Co. ..................................... 800 48,300
General Electric Co. ..................................... 7,800 397,800
Johnson Controls, Inc. ................................... 600 30,787
Motorola, Inc. ........................................... 1,275 37,054
*Teradyne, Inc. .......................................... 900 66,150
Texas Instruments, Inc. .................................. 400 27,475
Thomas & Betts Corp. ..................................... 450 8,606
-----------
658,609
-----------
Energy -- 1.5%
Chevron Corp. ............................................ 2,400 203,550
DTE Energy Co. ........................................... 1,100 33,619
KeySpan Corp. ............................................ 1,300 39,975
New Century Energies, Inc. ............................... 600 18,412
Royal Dutch Petroleum Co. ................................ 500 30,781
Valero Energy Corp. ...................................... 1,600 50,800
-----------
377,137
-----------
Entertainment -- 1.1%
*Walt Disney Co. ......................................... 7,225 280,421
-----------
Finance -- 10.4%
American Express Co. ..................................... 2,000 104,250
Bear Stearns Companies, Inc. ............................. 300 12,487
Citigroup, Inc. .......................................... 14,200 855,550
FleetBoston Financial Corp. .............................. 12,700 431,800
GreenPoint Financial Corp. ............................... 2,300 43,125
Hartford Financial Services, Inc. ........................ 4,600 257,312
Lehman Brothers Holdings, Inc. ........................... 375 35,461
MBNA Corp. ............................................... 3,600 97,650
Merrill Lynch & Co., Inc. ................................ 1,000 115,000
Morgan Stanley Dean Witter & Co. ......................... 6,600 549,450
Washington Mutual, Inc. .................................. 950 27,431
-----------
2,529,516
-----------
</TABLE>
F-144
<PAGE> 257
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The All Pro Large Cap Value Portfolio
Statement of Net Assets, June 30, 2000 -- Continued
(Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Food & Food Distributors -- 3.1%
Archer-Daniels Midland Co. ............................... 3,000 $ 29,437
ConAgra, Inc. ............................................ 3,600 68,625
General Mills, Inc. ...................................... 3,600 137,700
*Heinz (H.J.) Co. ........................................ 4,100 179,375
Hormel Foods Corp. ....................................... 1,100 18,494
Quaker Oats Co. .......................................... 1,900 142,738
*Safeway, Inc. ........................................... 1,100 49,638
Sara Lee Corp. ........................................... 2,200 42,487
Supervalu, Inc. .......................................... 3,400 64,813
Tyson Foods, Inc. ........................................ 1,600 14,000
-----------
747,307
-----------
Home Furnishings/Housewares -- 0.1%
Leggett & Platt, Inc. .................................... 1,500 24,750
-----------
Hotel/Restaurants -- 0.4%
Hilton Hotels Corp. ...................................... 2,800 26,250
Starwood Hotels & Resorts Worldwide, Inc. ................ 2,500 80,781
-----------
107,031
-----------
Industrial Diversified -- 0.2%
Fluor Corp. .............................................. 550 17,394
Sherwin Williams Co. ..................................... 1,300 27,544
-----------
44,938
-----------
Insurance -- 7.5%
Ambac Financial Group, Inc. .............................. 1,800 98,662
American General Corp. ................................... 2,700 164,700
American International Group, Inc. ....................... 4,850 569,875
Aon Corp. ................................................ 1,200 37,275
Chubb Corp. .............................................. 1,950 119,925
Cigna Corp. .............................................. 3,400 317,900
Conseco, Inc. ............................................ 9,000 87,750
Lincoln National Corp. ................................... 1,100 39,737
Marsh & McLennan Cos., Inc. .............................. 900 93,994
MBIA, Inc. ............................................... 500 24,094
MGIC Investment Corp. .................................... 700 31,850
Radian Group, Inc. ....................................... 1,300 67,275
St. Paul Companies, Inc. ................................. 4,700 160,387
Torchmark Corp. .......................................... 1,000 24,687
-----------
1,838,111
-----------
</TABLE>
F-145
<PAGE> 258
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The All Pro Large Cap Value Portfolio
Statement of Net Assets, June 30, 2000 -- Continued
(Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Leisure & Amusements -- 0.1%
Brunswick Corp. .......................................... 700 $ 11,594
Carnival Corp., Class A................................... 600 11,700
-----------
23,294
-----------
Machinery & Heavy Equipment -- 0.9%
Deere & Co. .............................................. 4,500 166,500
Dover Corp. .............................................. 1,300 52,731
-----------
219,231
-----------
Manufacturing -- 2.7%
Alcan Aluminium Ltd. ..................................... 1,000 31,000
Alcoa, Inc. .............................................. 3,000 87,000
Cooper Industries, Inc. .................................. 1,800 58,613
Cummins Engine Co., Inc. ................................. 300 8,175
Eaton Corp. .............................................. 300 20,100
Honeywell International, Inc. ............................ 2,500 84,219
Minnesota Mining & Manufacturing Co. ..................... 1,000 82,500
PPG Industries, Inc. ..................................... 1,000 44,313
PPG Industries, Inc. ..................................... 700 31,019
*Smurfit-Stone Container Corp. ........................... 1,700 21,888
Textron, Inc. ............................................ 2,500 135,781
Tyco International Ltd. .................................. 1,400 66,326
-----------
670,934
-----------
Manufacturing Equipment -- 0.2%
Illinois Tool Works, Inc. ................................ 788 44,916
-----------
Medical & Medical Services -- 0.0%
Bergen Brunswig Corp. .................................... 500 2,750
*Foundation Health Systems, Inc. Class A.................. 400 5,200
-----------
7,950
-----------
Medical Instruments -- 0.3%
*St. Jude Medical, Inc. .................................. 1,600 73,400
-----------
</TABLE>
F-146
<PAGE> 259
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The All Pro Large Cap Value Portfolio
Statement of Net Assets, June 30, 2000 -- Continued
(Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Oil & Gas -- 7.9%
Amerada Hess Corp. ....................................... 3,750 $ 231,563
Conoco, Inc. Class B...................................... 1,400 34,388
Exxon Mobil Corp. ........................................ 10,628 834,962
Occidental Petroleum Corp. ............................... 1,600 33,700
Phillips Petroleum Co. ................................... 3,000 152,062
Sunoco, Inc. ............................................. 700 20,606
Texaco, Inc. ............................................. 5,202 277,007
Tosco Corp. .............................................. 1,100 31,488
Unocal Corp. ............................................. 6,300 208,688
USX-Marathon Group, Inc. ................................. 3,800 95,238
-----------
1,919,702
-----------
Oil & Equipment & Services -- 0.4%
*BJ Services Co. ......................................... 900 56,250
National Fuel Gas Co. .................................... 600 29,250
-----------
85,500
-----------
Paper & Forest Products -- 0.9%
Boise Cascade Corp. ...................................... 500 12,938
Fort James Corp. ......................................... 1,100 25,438
International Paper Co. .................................. 2,860 85,264
Mead Corp. ............................................... 800 20,200
Temple Inland, Inc. ...................................... 400 16,800
Westvaco Corp. ........................................... 2,100 52,106
-----------
212,746
-----------
Photography Equipment & Services -- 0.1%
Eastman Kodak Co. ........................................ 500 29,750
-----------
Railroads -- 1.3%
Burlington Northern Santa Fe Corp. ....................... 1,500 34,406
CSX Corp. ................................................ 1,500 31,781
Norfolk Southern Corp. ................................... 2,000 29,750
Union Pacific Corp., Series A............................. 5,700 211,969
-----------
307,906
-----------
Restaurants -- 0.2%
Darden Restaurants, Inc. ................................. 2,400 39,000
-----------
</TABLE>
F-147
<PAGE> 260
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The All Pro Large Cap Value Portfolio
Statement of Net Assets, June 30, 2000 -- Continued
(Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Retail Merchandising -- 2.2%
*Federated Department Stores, Inc. ....................... 3,600 $ 121,500
Hasbro, Inc. ............................................. 1,400 21,088
Home Depot, Inc. ......................................... 600 29,963
Limited, Inc. ............................................ 2,200 47,575
May Department Stores Co. ................................ 1,200 28,800
*Office Depot, Inc. ...................................... 2,400 15,000
Sears, Roebuck & Co. ..................................... 4,100 133,763
TJX Companies, Inc. ...................................... 2,800 52,500
Wal-Mart Stores, Inc. .................................... 1,600 92,200
-----------
542,389
-----------
Semiconductors -- 2.1%
*Applied Materials, Inc. ................................. 550 49,844
*KLA-Tencor Corp. ........................................ 600 35,138
Intel Corp. .............................................. 2,364 316,038
*LSI Logic Corp. ......................................... 1,100 59,538
*SDL, Inc. ............................................... 200 57,038
-----------
517,596
-----------
Software -- 1.7%
Computer Associates International, Inc. .................. 2,400 122,850
*Microsoft Corp. ......................................... 2,100 168,000
*Oracle Corp. ............................................ 1,400 117,688
-----------
408,538
-----------
Steel -- 0.1%
Nucor Corp. .............................................. 600 19,913
-----------
Technology -- 0.1%
*Ingram Micro, Inc. Class A............................... 1,100 19,181
*Tech Data Corp. ......................................... 400 17,425
-----------
36,606
-----------
Tobacco -- 0.9%
Philip Morris Cos., Inc. ................................. 7,900 209,844
-----------
Transportation -- 0.2%
United Parcel Service..................................... 700 41,300
-----------
</TABLE>
F-148
<PAGE> 261
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The All Pro Large Cap Value Portfolio
Statement of Net Assets, June 30, 2000 -- Concluded
(Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Utilities -- 3.9%
Allegheny Energy, Inc. ................................... 900 $ 24,638
Ameren Corp. ............................................. 1,000 33,750
American Electric Power Co. .............................. 1,140 33,773
Cinergy Corp. ............................................ 1,200 30,525
Consolidated Edison, Inc. ................................ 1,000 29,625
Constellation Energy Group................................ 2,700 87,919
Enron Corp. .............................................. 1,800 116,100
FirstEnergy Corp. ........................................ 1,500 35,063
Northern States Power Co. ................................ 800 16,150
PG&E Corp. ............................................... 4,700 115,738
Pinnacle West Capital Corp. .............................. 1,200 40,650
PP&L Resources, Inc. ..................................... 1,100 24,131
Public Service Enterprise Group, Inc. .................... 2,100 72,713
Puget Sound Energy, Inc. ................................. 700 14,919
Reliant Energy, Inc. ..................................... 2,900 85,731
Southern Co. ............................................. 3,200 74,600
TXU Corp. ................................................ 3,500 103,250
Wisconsin Energy Corp. ................................... 900 17,831
-----------
957,106
-----------
TOTAL COMMON STOCK (COST $24,166,546)............... 23,374,352
-----------
SHORT TERM INVESTMENTS -- 5.2%
Provident Institutional Funds -- TempCash................. 1,266,628 1,266,628
-----------
TOTAL SHORT TERM INVESTMENTS (COST $1,266,628).......... 1,266,628
-----------
TOTAL INVESTMENTS -- 101.0% (COST $25,433,174).......... 24,640,980
LIABILITIES IN EXCESS OF OTHER ASSETS -- (1.0%)............. (234,604)
-----------
NET ASSETS -- 100.0%
(Equivalent to $9.22 per share based on 2,646,772 shares
of capital stock outstanding)............................. $24,406,376
===========
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE
($24,406,376/2,646,772 shares outstanding)................ $ 9.22
===========
</TABLE>
* Non-Income producing.
See accompanying notes to financial statements.
F-149
<PAGE> 262
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The All Pro Small Cap Growth Portfolio
2000 Semi-Annual Review
Market Street Investment Management Company
--------------------------------------------------------------------------------
The total return for the Small Cap Growth Portfolio for the first half of 2000
was 9.28%. This return exceeded the 8.50% return of the Wilshire Small Growth
Index, the style 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>
During the first two and a half months, the small cap growth market continued
its powerful surge that began last year and carried through mid March. High
earnings growth and high price/earnings stocks, i.e. technology stocks
significantly outperformed the broad market. The strong bull market earlier this
year was fueled by IPO fever, a major increase in retail participation including
the "day trader phenomenon", strong mutual fund cash flows, and enthusiasm for
new economy internet and genomics companies. Technology and other growth stocks
drove the NASDAQ up 22% through March 10th. Then such stocks reversed course and
the NASDAQ declined over 37% between March 10th and May 23; the collapse of the
NASDAQ from the 5000 level to a low of 3043; a "tech wreck". The biggest losers
in this decline were in many cases the biggest winners of the prior 6 months.
Also, the non-earnings story stocks finally got crushed in the second quarter as
investors' patience had begun to wear out. In April and May investors fled the
tech wreck and moved into value stocks. Despite many forecasts of further
significant declines, the NASDAQ rallied sharply in June to roughly the 4000
level and maintained that level through the end of the quarter. In June alone,
the NASDAQ was up over 16%, leading many investors to wonder if the worst was
behind them. Year to date the NASDAQ is down 2.5%. Overall first half returns
for small cap growth stocks were strong relative to the broad market averages
that witnessed declines.
The largest sector holdings of the Portfolio include:
<TABLE>
<CAPTION>
SECTOR %
------ -----
<S> <C>
Electronics................................................. 21.7%
Communications.............................................. 15.2%
Semiconductors.............................................. 9.6%
Drugs & Health Care......................................... 7.5%
Oil Equipment & Services.................................... 6.1%
Computers................................................... 6.0%
</TABLE>
F-150
<PAGE> 263
The investment process used for the Portfolio positions it in dynamic growth
sectors of the economy with investments in innovative, aggressive companies. An
emphasis on technology-related sectors will continue. We expect small U.S.
companies, in particular, to continue to be the beneficiaries of robust growth
in the future.
We look forward to your continued support.
Sarah C. Lange, CFA
President
F-151
<PAGE> 264
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The All Pro Small Cap Growth Portfolio
Statement of Net Assets, June 30, 2000
(Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK -- 95.0%
Air Transport -- 1.7%
*EGL, Inc. ............................................... 26,000 $ 799,500
*Forward Air Corp. ....................................... 14,950 598,000
-----------
1,397,500
-----------
Airlines -- 1.9%
*Atlantic Coast Airlines, Inc. ........................... 19,700 625,475
*Ryanair Holdings Plc..................................... 17,900 653,350
SkyWest, Inc. ............................................ 8,100 300,206
-----------
1,579,031
-----------
Banks -- 1.5%
*Golden State Bancorp, Inc. .............................. 72,600 1,306,800
-----------
Broadcasting & Publishing -- 2.0%
*Citadel Communications Corp. ............................ 14,100 492,619
*Emmis Broadcasting Corp., Class A........................ 13,000 537,875
Scandinavian Broadcasting S.A. ........................... 12,600 686,700
-----------
1,717,194
-----------
Building & Building Supplies -- 0.5%
*Dycom Industries, Inc. .................................. 9,000 414,000
-----------
Business & Consumer Services -- 2.7%
*Corporate Executive Board Co. ........................... 11,000 658,625
*Liberty Digital, Inc. Class A............................ 15,200 456,000
*SmartForce Plc - ADR..................................... 9,500 456,000
*Sportsline USA, Inc. .................................... 18,400 313,950
TMP Worldwide, Inc. ...................................... 5,900 435,494
-----------
2,320,069
-----------
</TABLE>
F-152
<PAGE> 265
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The All Pro Small Cap Growth Portfolio
Statement of Net Assets, June 30, 2000 -- Continued
(Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Communications -- 15.2%
*Acme Communications, Inc. ............................... 26,500 $ 483,625
*Aware, Inc. ............................................. 31,800 1,625,775
*Com21, Inc. ............................................. 35,200 880,000
*Entercom Communications Corp. ........................... 9,100 443,625
*GT Group Telecom, Inc. .................................. 74,600 1,179,612
*ICG Communications, Inc. ................................ 40,400 891,325
*Insight Communications Co., Inc. ........................ 18,800 293,750
*Leap Wireless International, Inc. ....................... 20,700 972,900
*NBC Internet, Inc. ...................................... 41,000 512,500
*Pegasus Communications Corp. ............................ 25,200 1,236,375
*Pinnacle Holdings, Inc. ................................. 8,700 469,800
*Regent Communications, Inc. ............................. 13,900 119,453
*SBA Communications Corp. ................................ 9,500 493,406
*Terayon Communication Systems, Inc. ..................... 13,700 880,011
*Tut Systems, Inc. ....................................... 23,000 1,319,625
*Western Wireless Corp. Class A........................... 7,200 392,400
Westwood One, Inc. ....................................... 19,600 668,850
-----------
12,863,032
-----------
Computers -- 6.0%
*Allaire Corp. ........................................... 8,000 294,000
*Alteon Websystems, Inc. ................................. 5,000 500,312
*Bottomline Technologies, Inc. ........................... 8,400 287,175
*Breakaway Solutions, Inc. ............................... 5,400 145,800
*Crossroads Systems, Inc. ................................ 8,400 212,100
Cybex Computer Products Corp. ............................ 10,750 462,250
*Data Return Corp. ....................................... 11,400 330,600
*Emulex Corp. ............................................ 6,400 420,400
*Gadzoox Networks, Inc. .................................. 12,700 173,831
*Media Metrix, Inc. ...................................... 10,500 267,094
*NetScout Systems, Inc. .................................. 26,000 334,750
Silicon Storage Technology, Inc. ......................... 15,900 1,404,169
*Visual Networks, Inc. ................................... 7,200 205,200
-----------
5,037,681
-----------
</TABLE>
F-153
<PAGE> 266
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The All Pro Small Cap Growth Portfolio
Statement of Net Assets, June 30, 2000 -- Continued
(Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Drugs & Health Care -- 7.5%
*Alexion Pharmaceuticals, Inc. ........................... 6,000 $ 429,000
*Alkermes, Inc. .......................................... 8,100 381,712
Bindley Western Industries, Inc. ......................... 57,200 1,512,225
Cephalon, Inc. ........................................... 6,500 389,187
*COR Therapeutics, Inc. .................................. 3,500 298,594
*Inhale Therapeutic Systems............................... 5,600 568,225
*Medicis Pharmaceutical Corp., Class A.................... 8,600 490,200
*Priority Healthcare Corp. Class B........................ 28,274 2,101,112
*Vical, Inc. ............................................. 6,300 121,275
-----------
6,291,530
-----------
Electrical Equipment -- 0.5%
*Quanta Services, Inc. ................................... 7,450 409,750
-----------
Electronics -- 21.7%
*ATMI, Inc. .............................................. 15,300 711,450
*Burr-Brown Corp. ........................................ 4,800 416,100
*Credence Systems Corp. .................................. 8,400 463,575
*Cree Research, Inc. ..................................... 14,300 1,909,050
*Integrated Silicon Solution, Inc. ....................... 30,900 1,174,200
*International Rectifier Corp. ........................... 14,500 812,000
*LAM Research Corp. ...................................... 29,900 1,121,250
*LTX Corp. ............................................... 35,200 1,229,800
*Micrel, Inc. ............................................ 13,400 582,062
*Netsilicon, Inc. ........................................ 80,700 2,642,925
*Photronics, Inc. ........................................ 16,300 462,513
*Pixelworks, Inc. ........................................ 12,700 288,925
*Quicklogic Corp. ........................................ 21,000 467,250
*Semtech Corp. ........................................... 11,400 871,922
Triquint Semiconductor, Inc. ............................. 13,200 1,263,075
Varian Semiconductor Equipment Associates, Inc. .......... 27,800 1,746,187
*Veeco Instruments, Inc. ................................. 8,000 586,000
*Virata Corp. ............................................ 26,900 1,603,912
-----------
18,352,196
-----------
Finance - Investment & Other -- 1.4%
*NCO Group, Inc. ......................................... 13,600 314,500
S & P 400 Mid-Cap Depositary Receipts..................... 9,400 834,250
-----------
1,148,750
-----------
</TABLE>
F-154
<PAGE> 267
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The All Pro Small Cap Growth Portfolio
Statement of Net Assets, June 30, 2000 -- Continued
(Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Leisure & Amusements -- 0.9%
*Bally Total Fitness Holding Corp. ....................... 14,200 $ 360,325
*Cinar Films, Inc. ....................................... 5,400 27,000
Tweeter Home Entertainment Group, Inc. ................... 11,600 352,350
-----------
739,675
-----------
Medical Equipment & Supplies -- 1.1%
*Angiotech Pharmaceuticals, Inc. ......................... 5,600 233,800
*Gasonics International Corp. ............................ 11,600 457,475
*PolyMedica Corp. ........................................ 5,900 255,175
-----------
946,450
-----------
Oil & Gas -- 5.3%
*Cal Dive International, Inc. ............................ 9,600 520,200
*Core Laboratories N.V. .................................. 18,200 527,800
*Global Industries Ltd. .................................. 97,400 1,838,426
*Hanover Compressor Co. .................................. 12,800 486,400
*Stone Energy Corp. ...................................... 5,900 352,525
*Syntroleum Corp. ........................................ 43,500 744,937
-----------
4,470,288
-----------
Oil Equipment & Services -- 6.1%
*BJ Services Co. ......................................... 14,100 881,250
*Marine Drilling Co., Inc. ............................... 55,900 1,491,831
*National-Oilwell, Inc. .................................. 7,900 259,713
*Oceaneering International, Inc. ......................... 32,900 625,100
*Rowan Cos., Inc. ........................................ 38,200 1,160,325
*Smith International, Inc. ............................... 9,500 691,719
-----------
5,109,938
-----------
Real Estate -- 0.5%
*CoStar Group, Inc. ...................................... 18,100 453,631
-----------
Semiconductors -- 9.6%
*Exar Corp. .............................................. 9,000 784,688
*Integrated Device Technology, Inc. ...................... 40,800 2,442,900
*Pericom Semiconductor Corp. ............................. 14,200 965,600
*PLX Technology, Inc. .................................... 41,300 1,713,950
*QLogic Corp. ............................................ 13,500 891,844
*Viasystems Group, Inc. .................................. 80,600 1,304,713
-----------
8,103,695
-----------
</TABLE>
F-155
<PAGE> 268
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The All Pro Small Cap Growth Portfolio
Statement of Net Assets, June 30, 2000 -- Concluded
(Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Software -- 6.9%
*Aspen Technology, Inc. .................................. 14,300 $ 550,550
*Broadbase Software, Inc. ................................ 34,400 1,053,500
*C-Bridge Internet Solutions.............................. 7,800 135,525
*Cysive, Inc. ............................................ 9,000 214,875
Digital Island, Inc. ..................................... 33,200 1,614,350
*Digital River, Inc. ..................................... 35,100 269,831
*Level 8 Systems, Inc. ................................... 20,600 433,888
*Manugistics Group, Inc. ................................. 14,800 691,900
*Mercator Software, Inc. ................................. 7,800 536,250
*Mercury Interactive Corp. ............................... 3,400 328,950
-----------
5,829,619
-----------
Steel -- 1.7%
*Grant Prideco, Inc. ..................................... 57,600 1,440,000
-----------
Waste Management -- 0.3%
*Waste Connections, Inc. ................................. 13,100 258,725
-----------
TOTAL COMMON STOCK (COST $67,921,126)................... 80,189,554
-----------
SHORT TERM INVESTMENTS -- 5.0%
Provident Institutional Funds -- TempCash................. 4,191,885 4,191,885
-----------
TOTAL SHORT TERM INVESTMENTS (COST $4,191,885).......... 4,191,885
-----------
TOTAL INVESTMENTS -- 100.0% (COST $72,113,011).......... 84,381,439
OTHER ASSETS IN EXCESS OF LIABILITIES -- 0.0%............... 34,850
-----------
NET ASSETS -- 100.0%
(Equivalent to $19.92 per share based on 4,236,806 shares
of capital stock outstanding)........................... $84,416,289
===========
NET ASSET VALUE, OFFERING, AND REDEMPTION PRICE PER SHARE
($84,416,289/4,236,806 shares outstanding)................ $ 19.92
===========
</TABLE>
* Non-Income producing.
See accompanying notes to financial statements.
F-156
<PAGE> 269
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The All Pro Small Cap Value Portfolio
2000 Semi-Annual Review
Market Street Investment Management Company
--------------------------------------------------------------------------------
The total return for the Market Street Fund All Pro Small Cap Value Portfolio
for the first half of 2000 was 1.80%. This return lagged the 3.50% return of the
Wilshire Small Value Index, the style benchmark we use to assess the performance
of the portfolio.
The following two sub-advisers to perform the day-to-day management of the
Portfolio. The two firms possess a proven small cap value orientation and
discipline.
<TABLE>
<CAPTION>
APPROXIMATE
MANAGER PORTFOLIO %
------- -----------
<S> <C>
Sterling Capital Management............................. 50%
Reams Asset Management.................................. 50%
Total Portfolio......................................... 100%
</TABLE>
Sterling Capital Management was added as a sub-adviser in the first quarter of
this year and Reams Asset Management assumed management in the last week of
December. Both firms worked quickly to reposition the Portfolio. The
sub-advisers decreased the Portfolio's exposure to retail merchandising,
increased exposure to manufacturing stocks, and increased banks given the
improved interest rate outlook for the U.S. The performance of the Portfolio in
the second quarter was strong and exceeded the Wilshire index by almost 200
basis points. However, the strong second quarter performance could not overcome
the relatively weak first quarter.
The largest sector holdings of the Portfolio include:
<TABLE>
<CAPTION>
SECTOR %
------ -----
<S> <C>
Manufacturing............................................... 16.3%
Banks....................................................... 9.3%
Medical Equipment & Supplies................................ 8.5%
Insurance................................................... 6.7%
Real Estate................................................. 6.4%
</TABLE>
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 portfolio's stocks trade at
significant discounts to their intrinsic worth. As investors pay more attention
to fundamentals, i.e. earnings, financial strength, and valuations, the small
cap value asset class should experience a long overdue rebound. We look forward
to your continued support and to our long-term goal of capital appreciation.
Sarah C. Lange, CFA
President
F-157
<PAGE> 270
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The All Pro Small Cap Value Portfolio
Statement of Net Assets, June 30, 2000
(Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
-----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK -- 95.7%
Banks -- 9.3%
Bank United Corp., Class A................................ 3,900 $ 137,231
Colonial BancGroup, Inc. ................................. 11,600 111,650
Commercial Federal Corp. ................................. 12,800 199,200
Dime Bancorp, Inc. ....................................... 7,800 122,850
First Bell Bancorp, Inc. ................................. 4,800 73,200
*Golden State Bancorp, Inc. .............................. 11,100 199,800
Local Financial Corp. .................................... 13,600 113,475
OceanFirst Financial Corp. ............................... 7,400 136,437
Seacoast Financial Services Corp. ........................ 20,500 194,750
Sovereign Bancorp, Inc. .................................. 14,500 101,953
-----------
1,390,546
-----------
Broadcasting & Publishing -- 2.0%
Banta Corp. .............................................. 7,600 143,925
Hollinger International, Inc. ............................ 11,775 160,434
-----------
304,359
-----------
Building & Building Services -- 2.3%
*Jacobs Engineering Group, Inc. .......................... 5,400 176,512
*Toll Brothers, Inc. ..................................... 8,050 165,025
-----------
341,537
-----------
Building Materials -- 1.5%
Texas Industries, Inc. ................................... 3,125 90,234
York International Corp. ................................. 5,500 143,687
-----------
233,921
-----------
Business & Consumer Services -- 1.3%
Interim Services, Inc. ................................... 10,700 189,925
-----------
Chemicals & Allied Products -- 6.0%
Crompton Corp. ........................................... 18,700 229,075
*Cytec Industries, Inc. .................................. 12,000 296,250
Ferro Corp. .............................................. 7,800 163,800
*International Speciality................................. 9,200 52,325
Millennium Chemicals...................................... 8,500 156,719
-----------
898,169
-----------
Communications -- 1.0%
*Clearnet Communications, Inc., Class A................... 5,200 144,381
-----------
Computers -- 0.9%
*Bell & Howell Co. ....................................... 5,350 129,737
-----------
</TABLE>
F-158
<PAGE> 271
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The All Pro Small Cap Value Portfolio
Statement of Net Assets, June 30, 2000 -- Continued
(Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
-----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Diversified -- 1.4%
Peoples Energy Corp. ..................................... 2,750 $ 89,031
Wallace Computer Services, Inc. .......................... 12,375 122,203
-----------
211,234
-----------
Drugs & Healthcare -- 0.5%
*Perrigo Co. .............................................. 11,200 70,700
-----------
Electronics -- 2.5%
Applied Power, Inc. Class A............................... 5,300 177,550
Harman International Industries, Inc. .................... 3,300 201,300
-----------
378,850
-----------
Entertainment -- 2.4%
Gaylord Entertainment Co. Class A......................... 9,125 192,195
True North Communications................................. 3,975 169,186
-----------
361,381
-----------
Finance -- 2.4%
Dain Rauscher Corp. ...................................... 3,375 222,750
Finova Group, Inc. ....................................... 5,500 71,500
John Nuveen Co. (The), Class A............................ 1,625 68,148
-----------
362,398
-----------
Finance - Investment & Other -- 2.0%
Waddell & Reed Financial, Inc. ........................... 9,391 308,126
-----------
Food & Food Distributors -- 5.2%
International Home Foods, Inc. ........................... 11,900 249,156
*Ralcorp Holdings, Inc. ................................... 11,100 135,975
*Suiza Foods Corp. ........................................ 6,100 298,137
Universal Foods Corp. .................................... 6,500 120,250
-----------
803,518
-----------
Home Furnishings/Housewares -- 2.8%
Bush Industries, Inc. Class A............................. 8,400 134,400
*Furniture Brands International, Inc. ..................... 9,430 142,629
*Mohawk Industries, Inc. .................................. 6,700 145,725
-----------
422,754
-----------
</TABLE>
F-159
<PAGE> 272
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The All Pro Small Cap Value Portfolio
Statement of Net Assets, June 30, 2000 -- Continued
(Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
-----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Insurance -- 6.7%
Fidelity National Financial, Inc. ........................ 10,200 $ 186,788
Hilb, Rogal & Hamilton Co. ............................... 6,050 209,859
Horace Mann Educators Corp. .............................. 9,775 146,625
*Insurance Auto Auctions, Inc. ........................... 6,050 127,806
Stewart Information Services Corp. ....................... 5,725 83,728
White Mountains Insurance Group Ltd. ..................... 1,550 248,000
-----------
1,002,806
-----------
Machinery & Instrumentation -- 2.3%
Regal-Beloit Corp. ....................................... 7,800 124,313
Snap-On, Inc. ............................................ 7,600 214,700
-----------
339,013
-----------
Manufacturing -- 16.3%
Belden, Inc. ............................................. 8,300 212,688
Brady Corp. .............................................. 6,900 224,250
Clarcor, Inc. ............................................ 24,575 488,428
Crane Co. ................................................ 8,925 216,989
Griffon Corp. ............................................ 18,300 101,794
Hon Industries, Inc. ..................................... 9,200 216,200
Matthews International Corp. Class A...................... 2,300 66,700
*National R.V. Holdings, Inc. ............................ 4,500 47,250
National Service Industries, Inc. ........................ 3,500 68,250
*Nautica Enterprises, Inc. ............................... 9,950 106,341
*Northwest Pipe Co. ...................................... 5,200 61,750
Pittston Brink's Group.................................... 16,100 220,369
Quanex Corp. ............................................. 4,950 73,631
Rayonier, Inc. ........................................... 2,675 95,966
*SPS Technologies, Inc. .................................. 4,200 172,463
Standex International Corp. .............................. 4,700 75,200
-----------
2,448,269
-----------
Manufacturing Equipment -- 0.6%
Lawson Products, Inc. .................................... 3,800 93,575
-----------
</TABLE>
F-160
<PAGE> 273
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The All Pro Small Cap Value Portfolio
Statement of Net Assets, June 30, 2000 -- Continued
(Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
-----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
Medical Equipment & Supplies -- 8.5%
*Acuson Corp. ............................................ 12,450 $ 168,075
Arrow International, Inc. ................................ 3,075 103,013
Dentsply International, Inc. ............................. 7,400 228,013
*Haemonetics Corp. ....................................... 17,000 357,000
Mentor Corp. ............................................. 7,850 213,422
Owens & Minor, Inc. Holding Co. .......................... 11,900 204,531
-----------
1,274,054
-----------
Oil & Gas -- 4.7%
Noble Affiliates, Inc. ................................... 4,800 178,800
Piedmont Natural Gas Co., Inc. ........................... 4,550 120,859
Santa Fe Snyder Corp. .................................... 23,500 267,313
*Varco International, Inc. ............................... 5,740 133,455
-----------
700,427
-----------
Oil Equipment & Services -- 1.6%
Coflexip SA ADR........................................... 3,925 237,463
-----------
Real Estate -- 6.4%
Amli Residential.......................................... 3,000 70,688
*Avatar Holding, Inc. .................................... 10,400 239,200
BRE Properties, Inc. Class A.............................. 5,825 168,197
Federal Realty Investment Trust........................... 2,400 48,000
First Industrial Realty Trust, Inc. ...................... 7,542 222,489
Great Lakes REIT, Inc. ................................... 5,000 85,000
Prentiss Properties Trust................................. 3,100 74,400
Storage USA, Inc. ........................................ 1,900 56,050
-----------
964,024
-----------
Retail Stores -- 1.9%
*Payless ShoeSource, Inc. ................................ 3,450 180,047
Regis Corp. .............................................. 8,200 102,500
-----------
282,547
-----------
Semiconductors -- 1.2%
Pioneer-Standard Electronics, Inc. ....................... 11,900 175,525
-----------
Transportation -- 2.0%
Arnold Industries, Inc. .................................. 24,300 293,119
-----------
TOTAL COMMON STOCK (COST $13,712,078)................... 14,362,358
-----------
</TABLE>
F-161
<PAGE> 274
--------------------------------------------------------------------------------
Market Street Fund, Inc.
The All Pro Small Cap Value Portfolio
Statement of Net Assets, June 30, 2000 -- Concluded
(Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION AND PERCENTAGE OF PORTFOLIO SHARES VALUE
-----------------------------------------------------------------------------------------
<S> <C> <C>
SHORT TERM INVESTMENTS -- 5.9%
Provident Institutional Funds -- TempCash................. 892,367 $ 892,367
-----------
TOTAL SHORT TERM INVESTMENTS (COST $892,367)............ 892,367
-----------
TOTAL INVESTMENTS -- 101.6% (COST $14,604,445).......... 15,254,725
LIABILITIES IN EXCESS OF OTHER ASSETS -- (1.6%)............. (242,352)
-----------
NET ASSETS -- 100.0%
(Equivalent to $7.68 per share based on 1,955,923 shares
of capital stock outstanding)........................... $15,012,373
===========
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE
($15,012,373/1,955,923 shares outstanding)................ $ 7.68
===========
</TABLE>
* Non-income producing
See accompanying notes to financial statements.
F-162
<PAGE> 275
--------------------------------------------------------------------------------
Market Street Fund, Inc.
Statement of Operations for the Six Months Ended June 30, 2000
(Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MONEY
GROWTH MARKET BOND
PORTFOLIO PORTFOLIO PORTFOLIO
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends................................................. $ 2,202,777 $ -- $ --
Interest.................................................. 347,147 3,296,759 1,326,246
Less: foreign taxes withheld............................ -- -- --
----------- ---------- -----------
Total Investment Income................................. 2,549,924 3,296,759 1,326,246
----------- ---------- -----------
EXPENSES:
Investment advisory fee................................... 454,404 133,927 63,950
Administration fee........................................ 125,182 47,398 16,163
Directors' fee............................................ 6,444 2,442 831
Transfer agent fee........................................ 3,210 1,865 1,324
Custodian fee............................................. 15,371 6,584 2,543
Legal fees................................................ 16,756 6,348 2,878
Audit fees................................................ 9,022 3,419 1,164
Printing.................................................. 19,978 7,570 2,577
Insurance................................................. 7,637 2,068 743
Miscellaneous............................................. 887 646 549
----------- ---------- -----------
658,891 212,267 92,722
Less: expenses waived by Advisor and/or reimbursed by
affiliated insurance company............................ -- -- --
----------- ---------- -----------
Total expenses.......................................... 658,891 212,267 92,722
----------- ---------- -----------
Net investment income (loss)............................ 1,891,033 3,084,492 1,233,524
----------- ---------- -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND
FOREIGN CURRENCY TRANSACTIONS
Net realized gain (loss) from:
Investments............................................. 7,363,216 -- (1,475,910)
Foreign Currency related transactions................... -- -- --
----------- ---------- -----------
7,363,216 0 (1,475,910)
----------- ---------- -----------
Net change in unrealized appreciation (depreciation) from:
Investments............................................. (7,425,598) -- 1,306,440
Foreign currency related transactions................... -- -- --
----------- ---------- -----------
(7,425,598) -- 1,306,440
----------- ---------- -----------
Net gain (loss) on investments and foreign currency
transactions.......................................... (62,382) -- (169,470)
----------- ---------- -----------
Net increase (decrease) in net assets resulting from
operations............................................ $ 1,828,651 $3,084,492 $ 1,064,054
=========== ========== ===========
</TABLE>
* Commencement of operations was February 7, 2000.
See accompanying notes to financial statements.
F-163
<PAGE> 276
--------------------------------------------------------------------------------
Market Street Fund, Inc.
Statement of Operations for the Six Months Ended June 30, 2000 -- (Concluded)
(Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ALL PRO ALL PRO ALL PRO ALL PRO
EQUITY LARGE LARGE SMALL SMALL
AGGRESSIVE SENTINEL 500 CAP CAP CAP CAP
MANAGED GROWTH INTERNATIONAL GROWTH INDEX* GROWTH VALUE GROWTH VALUE
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 281,220 $ 217,386 $ 1,310,357 $ 22,391 $1,869,787 $ 149,878 $ 222,026 $ 10,108 $ 98,334
1,212,471 172,315 48,983 28,939 158,511 55,695 29,005 177,479 28,561
-- -- (75,421) -- -- -- (180) -- --
---------- ----------- ----------- ----------- ---------- ----------- ----------- ----------- ---------
1,493,691 389,701 1,283,919 51,330 2,028,298 205,573 250,851 187,587 126,895
---------- ----------- ----------- ----------- ---------- ----------- ----------- ----------- ---------
139,816 132,776 313,824 58,279 365,791 151,444 82,017 315,786 57,085
30,918 30,334 37,010 10,696 134,196 19,120 10,361 25,330 5,606
1,591 1,544 1,902 545 6,259 969 531 1,521 284
1,579 1,564 1,684 1,228 2,929 1,370 1,223 1,556 1,140
5,416 6,505 22,377 5,164 18,045 5,013 8,348 8,887 7,298
4,137 4,014 4,944 1,418 16,272 2,519 1,381 3,954 739
2,228 2,161 2,662 763 8,762 1,357 744 2,129 398
4,932 4,786 5,895 1,691 19,401 3,003 1,647 4,715 882
1,612 1,381 1,833 266 107 308 311 138 135
596 592 614 532 775 558 532 591 515
---------- ----------- ----------- ----------- ---------- ----------- ----------- ----------- ---------
192,825 185,657 392,745 80,582 572,537 185,661 107,095 364,607 74,082
-- -- -- (4,523) (145,780) (385) (1,884) -- (2,443)
---------- ----------- ----------- ----------- ---------- ----------- ----------- ----------- ---------
192,825 185,657 392,745 76,059 426,757 185,276 105,211 364,607 71,639
---------- ----------- ----------- ----------- ---------- ----------- ----------- ----------- ---------
1,300,866 204,044 891,174 (24,729) 1,601,541 20,297 145,640 (177,020) 55,256
---------- ----------- ----------- ----------- ---------- ----------- ----------- ----------- ---------
1,084,480 12,056,500 5,275,481 5,883,260 470,873 1,929,169 (965,191) 6,668,496 (181,738)
-- -- (124,900) -- -- -- -- -- --
---------- ----------- ----------- ----------- ---------- ----------- ----------- ----------- ---------
1,084,480 12,056,500 5,150,581 5,883,260 470,873 1,929,169 (965,191) 6,668,496 (181,738)
---------- ----------- ----------- ----------- ---------- ----------- ----------- ----------- ---------
(764,243) 770,022 (6,459,957) (1,569,754) 7,143,422 (1,805,606) (887,231) (4,618,534) 448,602
-- -- -- -- -- -- -- -- --
---------- ----------- ----------- ----------- ---------- ----------- ----------- ----------- ---------
(764,243) 770,022 (6,459,957) (1,569,754) 7,143,422 (1,805,606) (887,231) (4,618,534) 448,602
---------- ----------- ----------- ----------- ---------- ----------- ----------- ----------- ---------
320,237 12,826,522 (1,309,376) 4,313,506 7,614,295 123,563 (1,852,422) 2,049,962 266,864
---------- ----------- ----------- ----------- ---------- ----------- ----------- ----------- ---------
$1,621,103 $13,030,566 $ (418,202) $ 4,288,777 $9,215,836 $ 143,860 $(1,706,782) $ 1,872,942 $ 322,120
========== =========== =========== =========== ========== =========== =========== =========== =========
</TABLE>
F-164
<PAGE> 277
--------------------------------------------------------------------------------
Market Street Fund, Inc.
Statements of Changes in Net Assets
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED JUNE 30, 2000
(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)........... $ 1,891,033 $ 3,084,492 $ 1,233,524 $ 1,300,866 $ 204,044 $ 766,274
Net realized gain (loss) on investments
and foreign currency related
transactions.......................... 7,363,216 -- (1,475,910) 1,084,480 12,056,500 5,275,481
Net change in unrealized appreciation
(depreciation) on investments and
foreign currency translations......... (7,425,598) -- 1,306,440 (764,243) 770,022 (6,459,957)
------------ ------------ ----------- ----------- ----------- -----------
Net increase (decrease) in net assets
resulting from operations............. 1,828,651 3,084,492 1,064,054 1,621,103 13,030,566 (418,202)
Distributions:
From net investment income............. (4,242,412) (3,084,492) (2,245,406) (2,365,140) (325,505) (1,001,935)
From net realized gains................ (18,946,927) -- -- (3,592,195) (5,142,813) (10,153,869)
Capital share transactions:
Net contributions from affiliated life
insurance companies................... (4,002,391) (16,868,878) (507,965) (652,622) 7,389,729 10,599,671
------------ ------------ ----------- ----------- ----------- -----------
Total increase in net assets.......... (25,363,079) (16,868,878) (1,689,317) (4,988,854) 14,951,977 (974,335)
NET ASSETS
Beginning of period...................... 302,261,636 116,887,438 38,182,265 73,985,832 62,512,346 88,795,565
------------ ------------ ----------- ----------- ----------- -----------
End of Period............................ $276,898,557 $100,018,560 $36,492,948 $68,996,978 $77,464,323 $87,821,230
============ ============ =========== =========== =========== ===========
</TABLE>
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1999
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)........... $ 4,242,412 $ 5,025,260 $ 2,245,406 $ 2,365,140 $ 325,505 $ 1,026,948
Net realized gain (loss) on investments
and foreign currency related
transactions.......................... 18,946,927 (8) (916,673) 3,592,195 5,142,814 10,128,857
Net change in unrealized appreciation
(depreciation) on investments and
foreign currency translations......... (13,385,176) -- (2,503,249) (5,655,271) 3,132,350 8,869,544
------------ ------------ ----------- ----------- ----------- -----------
Net increase (decrease) in net assets
resulting from operations............. 9,804,163 5,025,252 (1,174,516) 302,064 8,600,669 20,025,349
Distributions:
From net investment income............. (1,058,688) (5,025,260) (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................... (15,597,856) 25,434,525 3,416,178 9,784,991 4,994,083 2,393,275
------------ ------------ ----------- ----------- ----------- -----------
Total increase in net assets.......... (13,036,885) 25,434,517 1,336,343 6,180,521 6,017,032 17,432,355
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............................ $302,261,636 $116,887,438 $38,182,265 $73,985,832 $62,512,347 $88,795,564
============ ============ =========== =========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
F-165
<PAGE> 278
--------------------------------------------------------------------------------
Market Street Fund, Inc.
Statements of Changes in Net Assets -- (Concluded)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE SIX MONTHS OR PERIOD ENDED JUNE 30, 2000
(UNAUDITED)
EQUITY ALL PRO ALL PRO ALL PRO ALL PRO
SENTINEL 500 LARGE CAP LARGE CAP SMALL CAP SMALL CAP
GROWTH INDEX(1) GROWTH VALUE GROWTH VALUE
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INCREASE IN NET ASSETS
Operations:
Net investment income (loss).............. $ (24,729) $ 1,601,541 $ 20,297 $ 145,640 $ (177,020) $ 55,256
Net realized gain (loss) on investments
and foreign currency related
transactions............................. 5,883,260 470,873 1,929,169 (965,191) 6,668,496 (181,738)
Net change in unrealized appreciation
(depreciation) on investments and foreign
currency translations.................... (1,569,753) 7,143,422 (1,805,606) (887,231) (4,618,534) 448,602
----------- ------------ ----------- ----------- ----------- -----------
Net increase (decrease) in net assets
resulting from operations................ 4,288,778 9,215,836 143,860 (1,706,782) 1,872,942 322,120
Distributions:
From net investment income................ (1,235,191) -- (819,068) (223,008) (1,190,602) (37,204)
From net realized gains................... (492,081) -- (636,988) -- (203,792) --
Capital share transactions:
Net contributions from affiliated life
insurance companies...................... (2,866,251) 387,836,495 13,739,600 2,017,555 38,737,260 3,427,151
----------- ------------ ----------- ----------- ----------- -----------
Total increase (decrease) in net
assets................................. (304,745) 397,052,331 12,427,404 87,765 39,215,808 3,712,067
NET ASSETS
Beginning of period......................... 21,297,375 -- 37,961,019 24,318,611 45,200,481 11,300,306
----------- ------------ ----------- ----------- ----------- -----------
End of Period............................... $20,992,630 $397,052,331 $50,388,423 $24,406,376 $84,416,289 $15,012,373
=========== ============ =========== =========== =========== ===========
</TABLE>
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1999
---------------------------------------------------------------------------------
EQUITY ALL PRO ALL PRO ALL PRO ALL PRO
SENTINEL 500 LARGE CAP LARGE CAP SMALL CAP SMALL CAP
GROWTH INDEX GROWTH VALUE GROWTH VALUE
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INCREASE IN NET ASSETS
Operations:
Net investment income (loss)............... $ 10,839 -- $ (22,202) $ 223,008 $ (113,907) $ 37,204
Net realized gain (loss) on investments and
foreign currency related transactions..... 1,716,433 -- 1,617,492 349,009 2,250,696 (1,022,439)
Net change in unrealized appreciation
(depreciation) on investments and foreign
currency translations..................... 3,864,968 -- 4,532,937 (614,959) 15,609,185 316,627
----------- ----------- ----------- ----------- ----------- -----------
Net increase (decrease) in net assets
resulting from operations................. 5,592,240 -- 6,128,227 (42,942) 17,745,974 (668,608)
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....................... 4,099,126 -- 17,529,239 8,850,732 17,769,243 3,912,710
----------- ----------- ----------- ----------- ----------- -----------
Total increase in net assets.............. 9,130,398 -- 23,654,364 8,702,710 35,515,217 3,227,047
NET ASSETS
Beginning of period.......................... 12,166,979 -- 14,306,655 15,615,901 9,685,265 8,073,259
----------- ----------- ----------- ----------- ----------- -----------
End of Period................................ $21,297,377 -- $37,961,019 $24,318,611 $45,200,482 $11,300,306
=========== =========== =========== =========== =========== ===========
</TABLE>
(1) Commencement of operations was February 7, 2000.
See accompanying notes to financial statements.
F-166
<PAGE> 279
--------------------------------------------------------------------------------
Market Street Funds, Inc.
Financial Highlights
--------------------------------------------------------------------------------
Selected data for a share of capital stock outstanding throughout the periods:
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GROWTH PORTFOLIO
------------------------------------------------------------------------------------------------------------------
01/01/00
TO 01/01/99 01/01/98 01/01/97 01/01/96 01/01/95
06/30/00 TO TO TO TO TO
(UNAUDITED) 12/31/99 12/31/98 12/31/97 12/31/96 12/31/95
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.......... $18.94 $18.82 $19.46 $18.10 $16.36 $14.00
------- ------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income......................... .12 .27 .27 .35 .46 .47
Net realized and unrealized gain (loss) on
investments.................................. .02 .28 1.97 3.49 2.54 3.41
------- ------- ------- ------- ------- -------
Total from investment operations........... .14 .55 2.24 3.84 3.00 3.88
------- ------- ------- ------- ------- -------
LESS DISTRIBUTIONS:
Dividends to shareholders from net investment
income....................................... (.26) (.06) (.29) (.38) (.48) (.46)
Dividends to shareholders from net capital
gains........................................ (1.19) (.37) (2.59) (2.10) (.78) (1.06)
------- ------- ------- ------- ------- -------
Total distributions........................ (1.45) (.43) (2.88) (2.48) (1.26) (1.52)
------- ------- ------- ------- ------- -------
Net asset value, end of period................ $17.63 $18.94 $18.82 $19.46 $18.10 $16.36
======= ======= ======= ======= ======= =======
Total return............................... .78%(2) 2.98% 13.70% 24.32% 19.58% 30.39%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period $(000).............. 276,899 302,262 315,299 267,389 198,948 161,899
Ratios of expenses to average net assets(1)
(annualized)................................. .47% .48% .46% .43% .50% .61%
Ratios of net investment income to average net
assets (annualized).......................... 1.34% 1.35% 1.53% 2.01% 2.80% 3.20%
Portfolio turnover............................ 22% 46% 30% 108% 72% 61%
------------------------------------------------------------------------------------------------------------------
</TABLE>
(1.) Expense ratios for the Growth Portfolio before reimbursement of expense by
affiliated insurance company for the period ended June 30, 2000, and the
years ended December 31, 1999, 1998, 1997, 1996 and 1995 were as follows:
0.47% (annualized), 0.48%, 0.47%, 0.43%, 0.50% and 0.61% respectively.
(2.) Total returns for periods less than one year are not annualized.
See accompanying notes to financial statements.
F-167
<PAGE> 280
--------------------------------------------------------------------------------
Market Street Funds, Inc.
Financial Highlights -- Continued
--------------------------------------------------------------------------------
Selected data for a share of capital stock outstanding throughout the periods:
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MONEY MARKET PORTFOLIO
------------------------------------------------------------------------------------------------------------------
01/01/00
TO 01/01/99 01/01/98 01/01/97 01/01/96 01/01/95
06/30/00 TO TO TO TO TO
(UNAUDITED) 12/31/99 12/31/98 12/31/97 12/31/96 12/31/95
------------------------------------------------------------------------------------------------------------------
<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......................... .03 .05 .05 .05 .05 .05
------ ------ ------ ------ ------ ------
Total from investment operations.......... .03 .05 .05 .05 .05 .05
------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends to shareholders from net investment
income...................................... (.03) (.05) (.05) (.05) (.05) (.05)
------ ------ ------ ------ ------ ------
Total distributions....................... (.03) (.05) (.05) (.05) (.05) (.05)
------ ------ ------ ------ ------ ------
Net asset value, end of period................ $1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
====== ====== ====== ====== ====== ======
Total return.............................. 2.90%(2) 4.91% 5.29% 5.33% 5.15% 5.61%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period $(000).............. 100,019 116,887 91,453 64,339 54,197 34,165
Ratios of expenses to average net assets(1)
(annualized)................................ .40% .40% .40% .39% .44% .50%
Ratios of net investment income to average net
assets (annualized)......................... 5.76% 4.81% 5.15% 5.21% 5.03% 5.47%
------------------------------------------------------------------------------------------------------------------
</TABLE>
(1.) Expense ratios for the Money Market Portfolio before reimbursement of
expense by affiliated insurance company for period ended June 30, 2000, and
the years ended December 31, 1999, 1998, 1997, 1996 and 1995 were as
follows: 0.40% (annualized), 0.40%, 0.42%, 0.39%, 0.44% and 0.50%
respectively.
(2.) Total returns for periods less than one year are not annualized.
See accompanying notes to financial statements.
F-168
<PAGE> 281
--------------------------------------------------------------------------------
Market Street Funds, Inc.
Financial Highlights -- Continued
--------------------------------------------------------------------------------
Selected data for a share of capital stock outstanding throughout the periods:
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
BOND PORTFOLIO
----------------------------------------------------------------------------------------------------------------------
01/01/00
TO 01/01/99 01/01/98 01/01/97 01/01/96 01/01/95
06/30/00 TO TO TO TO TO
(UNAUDITED) 12/31/99 12/31/98 12/31/97 12/31/96 12/31/95
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.............. $10.58 $11.22 $10.98 $10.67 $11.00 $ 9.73
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income............................. .35 .62 .63 .64 .63 .65
Net realized and unrealized gain (loss) on
investments...................................... (.06) (.99) .25 .33 (.34) 1.27
------ ------ ------ ------ ------ ------
Total from investment operations............... .29 (.37) .88 .97 .29 1.92
------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends to shareholders from net investment
income........................................... (.62) (.15) (.64) (.66) (.62) (.65)
Dividends to shareholders from net capital
gains............................................ (.00) (.12) (.00) (.00) (.00) (.00)
------ ------ ------ ------ ------ ------
Total distributions............................ (.62) (.27) (.64) (.66) (.62) (.65)
------ ------ ------ ------ ------ ------
Net asset value, end of period.................... $10.25 $10.58 $11.22 $10.98 $10.67 $11.00
====== ====== ====== ====== ====== ======
Total return................................... 2.95%(2) (3.31)% (8.22)% 9.50% 2.86% 20.45%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period $(000).................. 36,493 38,182 36,846 23,350 17,087 14,402
Ratios of expenses to average net assets(1)
(annualized)..................................... .51% .52% .53% .57% .56% .60%
Ratios of net investment income to average net
assets (annualized).............................. 6.75% 6.19% 6.03% 6.24% 6.08% 6.36%
Portfolio turnover................................ 107% 202% 163% 105% 133% 206%
----------------------------------------------------------------------------------------------------------------------
</TABLE>
(1.) Expense ratios for the Bond Portfolio before reimbursement of expense by
affiliated insurance company for the period ended June 30, 2000, and the
years ended December 31, 1999, 1998, 1997, 1996 and 1995 were as follows:
0.51% (annualized), 0.52%, 0.55%, 0.57%, 0.56% and 0.60% respectively.
(2.) Total returns for periods less than one year are not annualized.
See accompanying financial statements.
F-169
<PAGE> 282
--------------------------------------------------------------------------------
Market Street Funds, Inc.
Financial Highlights -- Continued
--------------------------------------------------------------------------------
Selected data for a share of capital stock outstanding throughout the periods:
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MANAGED PORTFOLIO
----------------------------------------------------------------------------------------------------------------------
01/01/00
TO 01/01/99 01/01/98 01/01/97 01/01/96 01/01/95
06/30/00 TO TO TO TO TO
(UNAUDITED) 12/31/99 12/31/98 12/31/97 12/31/96 12/31/95
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.............. $16.79 $17.68 $17.06 $14.68 $14.19 $11.94
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income............................. .30 .54 .54 .54 .51 .55
Net realized and unrealized gain (loss) on
investments...................................... .07 (.41) 1.45 2.49 1.07 2.28
------ ------ ------ ------ ------ ------
Total from investment operations............... .37 .13 1.99 3.03 1.58 2.83
------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends to shareholders from net investment
income........................................... (.54) (.13) (.55) (.53) (.51) (.57)
Dividends to shareholders from net capital
gains............................................ (.81) (.89) (.82) (.12) (.58) (.01)
------ ------ ------ ------ ------ ------
Total distributions............................ (1.35) (1.02) (1.37) (.65) (1.09) (.58)
------ ------ ------ ------ ------ ------
Net asset value, end of period.................... $15.81 $16.79 $17.68 $17.06 $14.68 $14.19
====== ====== ====== ====== ====== ======
Total return................................... 2.41%(2) .75% 12.54% 21.23% 11.88% 24.43%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period $(000).................. 68,997 73,986 67,805 56,068 43,431 36,002
Ratios of expenses to average net assets(1)
(annualized)..................................... .55% .57% .57% .58% .60% .66%
Ratios of net investment income to average net
assets (annualized).............................. 3.72% 3.25% 3.22% 3.47% 3.68% 4.22%
Portfolio turnover................................ 93% 156% 203% 99% 106% 130%
----------------------------------------------------------------------------------------------------------------------
</TABLE>
(1.) Expense ratios for the Managed Portfolio before reimbursement of expense by
affiliated insurance company for the period ended June 30, 2000, and the
years ended December 31, 1999, 1998, 1997, 1996 and 1995 were as follows:
0.55% (annualized), 0.57%, 0.58%, 0.58%, 0.60% and 0.66%, respectively.
(2.) Total returns for periods less than one year are not annualized.
See accompanying financial statements.
F-170
<PAGE> 283
--------------------------------------------------------------------------------
Market Street Fund, Inc.
Financial Highlights -- Continued
--------------------------------------------------------------------------------
Selected data for a share of capital stock outstanding throughout the periods:
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
AGGRESSIVE GROWTH PORTFOLIO
----------------------------------------------------------------------------------------------------------------------
01/01/00
TO 01/01/99 01/01/98 01/01/97 01/01/96 01/01/95
06/30/00 TO TO TO TO TO
(UNAUDITED) 12/31/99 12/31/98 12/31/97 12/31/96 12/31/95
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.............. $21.97 $21.91 $22.19 $18.52 $17.38 $15.45
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income............................. .06 .11 .11 .17 .17 .20
Net realized and unrealized gain on investments... 4.10 2.89 1.50 3.72 3.03 1.86
------ ------ ------ ------ ------ ------
Total from investment operations............... 4.16 3.00 1.61 3.89 3.20 2.06
------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends to shareholders from net investment
income........................................... (.11) (.11) (.18) (.18) (.19) (.00)
Dividends to shareholders from net capital
gains............................................ (1.81) (2.83) (1.71) (.04) (1.87) (.13)
------ ------ ------ ------ ------ ------
Total distributions............................ (1.92) (2.94) (1.89) (.22) (2.06) (.13)
------ ------ ------ ------ ------ ------
Net asset value, end of period.................... $24.21 $21.97 $21.91 $22.19 $18.52 $17.38
====== ====== ====== ====== ====== ======
Total return................................... 20.78%(2) 15.96% 7.99% 21.21% 21.00% 13.48%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period $(000).................. 77,464 62,513 56,495 48,574 34,098 23,822
Ratios of expenses to average net assets(1)
(annualized)..................................... .54% .57% .61% .63% .68% .76%
Ratios of net investment income to average net
assets (annualized).............................. .59% .59% .56% .95% 1.14% 1.32%
Portfolio turnover................................ 43% 46% 41% 37% 47% 89%
----------------------------------------------------------------------------------------------------------------------
</TABLE>
(1.) Expense ratios for the Aggressive Growth Portfolio before reimbursement of
expense by affiliated insurance company for the period ended June 30, 2000,
and the years ended December 31, 1999, 1998, 1997, 1996 and 1995 were as
follows: 0.54% (annualized), 0.57%, 0.62%, 0.63%, 0.68% and 0.76%
respectively.
(2.) Total returns for periods less than one year are not annualized.
See accompanying notes to financial statements.
F-171
<PAGE> 284
--------------------------------------------------------------------------------
Market Street Funds, Inc.
Financial Highlights -- Continued
--------------------------------------------------------------------------------
Selected data for a share of capital stock outstanding throughout the periods:
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INTERNATIONAL PORTFOLIO
----------------------------------------------------------------------------------------------------------------------
01/01/00
TO 01/01/99 01/01/98 01/01/97 01/01/96 01/01/95
06/30/00 TO TO TO TO TO
(UNAUDITED) 12/31/99 12/31/98 12/31/97 12/31/96 12/31/95
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.............. $16.68 $13.85 $13.61 $13.41 $12.86 $11.63
INCOME FROM INVESTMENT OPERATIONS:
Net investment income............................. .13 .19 .15 .11 .11 .16
Net realized and unrealized gain (loss) on
investments...................................... (.23) 3.61 1.14 1.08 1.23 1.45
------ ------ ------ ------ ------ ------
Total from investment operations............... (.10) 3.80 1.29 1.19 1.34 1.61
------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends to shareholders from net investment
income........................................... (.19) (.16) (.10) (.11) (.16) (.07)
Dividends to shareholders from net capital
gains............................................ (1.91) (.81) (.95) (.88) (.63) (.31)
------ ------ ------ ------ ------ ------
Total distributions............................ (2.10) (.97) (1.05) (.99) (.79) (.38)
------ ------ ------ ------ ------ ------
Net asset value, end of period.................... $14.48 $16.68 $13.85 $13.61 $13.41 $12.86
====== ====== ====== ====== ====== ======
Total return................................... (.41)%(2) 29.33% 10.13% 9.66% 10.89% 14.31%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period $(000).................. 87,821 88,796 71,363 62,513 50,955 36,642
Ratios of expenses to average net assets(1)
(annualized)..................................... .94% .98% 1.00% 1.02% 1.05% 1.15%
Ratios of net investment income to average net
assets (annualized).............................. 1.83% 1.32% 1.18% 1.13% 1.08% 1.21%
Portfolio turnover................................ 20% 41% 37% 37% 35% 45%
----------------------------------------------------------------------------------------------------------------------
</TABLE>
(1.) Expense ratios for the International Portfolio before reimbursement of
expense by affiliated insurance company for period ended June 30, 2000, and
the years ended December 31, 1999, 1998, 1997, 1996 and 1995 were as
follows: 0.94% (annualized), 0.98%, 1.00%, 1.02%, 1.05% and 1.15%,
respectively.
(2.) Total returns for periods less than one year are not annualized.
See accompanying notes to financial statements.
F-172
<PAGE> 285
--------------------------------------------------------------------------------
Market Street Funds, Inc.
Financial Highlights -- Continued
--------------------------------------------------------------------------------
Selected data for a share of capital stock outstanding throughout the periods:
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SENTINEL GROWTH PORTFOLIO
---------------------------------------------------------------------------------------------------------------------
01/01/00
TO 01/01/99 01/01/98 01/01/97 03/18/96(2)
06/30/00 TO TO TO TO
(UNAUDITED) 12/31/99 12/31/98 12/31/97 12/31/96
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period........................ $17.79 $13.43 $14.59 $11.14 $10.00
------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income....................................... (.02) .01 .03 .04 .05
Net realized and unrealized gain (loss) on investments...... 3.96 4.97 1.76 3.47 1.09
------ ------ ------ ------ ------
Total from investment operations......................... 3.94 4.98 1.79 3.51 1.14
------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends to shareholders from net investment income........ (.01) (.03) (.04) (.05) (.00)
Dividends to shareholders from net capital gains............ (1.43) (.59) (2.91) (.01) (.00)
------ ------ ------ ------ ------
Total distributions...................................... (1.44) (.62) (2.95) (.06) (.00)
------ ------ ------ ------ ------
Net asset value, end of period.............................. $20.29 $17.79 $13.43 $14.59 $11.14
====== ====== ====== ====== ======
Total return............................................. 23.80%(3) 38.80% 15.98% 31.58% 11.40%(3)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period $(000)............................ 20,993 21,297 12,167 8,362 5,664
Ratios of expenses to average net assets(1) (annualized).... .63% .71% .82% .90% .90%
Ratios of net investment income to average net assets
(annualized)............................................... (.20)% 07% .23% .36% .57%
Portfolio turnover.......................................... 139% 110% 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, 2000,
the years ended December 31, 1999, 1998 and 1997 and the period ended
December 31, 1996 were as follows: 0.67% (annualized), 0.71%, 0.83%, 1.35%
and 1.51% (annualized), respectively.
(2.) Commencement of operations.
(3.) Total returns for periods less than one year are not annualized.
See accompanying notes to financial statements.
F-173
<PAGE> 286
--------------------------------------------------------------------------------
Market Street Funds, Inc.
Financial Highlights -- Continued
--------------------------------------------------------------------------------
Selected data for a share of capital stock outstanding throughout the periods:
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
EQUITY 500 INDEX PORTFOLIO
----------------------------------------------------------------------------------------
02/07/00(2)
TO
06/30/00
(UNAUDITED)
----------------------------------------------------------------------------------------
<S> <C>
Net asset value, beginning of period........................ $10.00
-------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income....................................... .04
Net realized and unrealized gain (loss) on investments...... .20
-------
Total from investment operations......................... .24
-------
LESS DISTRIBUTIONS:
Dividends to shareholders from net investment income........ (.00)
Dividends to shareholders from net capital gains............ (.00)
-------
Total distributions...................................... (.00)
-------
Net asset value, end of period.............................. $ 10.24
=======
Total return............................................. 2.40%(3)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period $(000)............................ 397,052
Ratios of expenses to average net assets(1) (annualized).... .28%
Ratios of net investment income to average net assets
(annualized)............................................... 1.05%
Portfolio turnover.......................................... 3%
----------------------------------------------------------------------------------------
</TABLE>
(1.) Expense ratios for the Equity 500 Index Portfolio before reimbursement of
expense by affiliated insurance company for the period ended June 30, 2000
was as follows: 0.38% (annualized).
(2.) Commencement of operations.
(3.) Total returns for periods less than one year are not annualized.
See accompanying notes to financial statements.
F-174
<PAGE> 287
--------------------------------------------------------------------------------
Market Street Funds, Inc.
Financial Highlights -- Continued
--------------------------------------------------------------------------------
Selected data for a share of capital stock outstanding throughout the periods:
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ALL PRO ALL PRO
LARGE CAP LARGE CAP
GROWTH VALUE
PORTFOLIO PORTFOLIO
----------------------------------------------------------------------------------------------------------------------
01/01/00 01/01/00
TO 01/01/99 05/04/98(2) TO 01/01/99 05/04/98(2)
06/30/00 TO TO 06/30/00 TO TO
(UNAUDITED) 12/31/99 12/31/98 (UNAUDITED) 12/31/99 12/31/98
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period........... $14.77 $11.77 $10.00 $ 9.98 $ 9.90 $10.00
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)................... .01 (.01) .00 .05 .09 .07
Net realized and unrealized gain (loss) on
investments................................... (.04) 3.01 1.77 (.72) .06 (.17)
------ ------ ------ ------ ------ ------
Total from investment operations............ (.03) 3.00 1.77 (.67) .15 (.10)
------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends to shareholders from net investment
income........................................ (.00) (.00) (.00) (.09) (.07) (.00)
Dividends to shareholders from net capital
gains......................................... (.58) (.00) (.00) (.00) (.00) (.00)
------ ------ ------ ------ ------ ------
Total distributions......................... (.58) (.00) (.00) (.09) (.07) (.00)
------ ------ ------ ------ ------ ------
Net asset value, end of period................. $14.16 $14.77 $11.77 $ 9.22 $ 9.98 $ 9.90
====== ====== ====== ====== ====== ======
Total return................................ (.26)%(3) 25.52% 17.70%(3) (6.74)% 1.49% (1.00)%(3)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period $(000)............... 50,388 37,961 14,307 24,406 24,319 15,616
Ratios of expenses to average net assets(1)
(annualized).................................. .86% .89% .90% .90% .91% .95%
Ratios of net investment income to average net
assets (annualized)........................... .09% (.09)% .04% 1.24% 1.07% 1.31%
Portfolio turnover............................. 28% 83% 64% 63% 64% 39%
----------------------------------------------------------------------------------------------------------------------
</TABLE>
(1.) Expense ratios for the All Pro Large Cap Growth Portfolio before
reimbursement of expense by affiliated insurance company for the period
ended June 30, 2000, the year ended December 31, 1999 and the period ended
December 31, 1998 were as follows: 0.86% (annualized), 0.89%, and 0.92%
(annualized), respectively. Expense ratios for the All Pro Large Cap Value
Portfolio before reimbursement of expense by affiliated insurance company
for the period ended June 30, 2000, the year ended December 31, 1999, and
the period ended December 31, 1998 were as follows: 0.91% (annualized),
0.91% and 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.
F-175
<PAGE> 288
--------------------------------------------------------------------------------
Market Street Funds, Inc.
Financial Highlights -- Continued
--------------------------------------------------------------------------------
Selected data for a share of capital stock outstanding throughout the periods:
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ALL PRO ALL PRO
SMALL CAP SMALL CAP
GROWTH VALUE
PORTFOLIO PORTFOLIO
----------------------------------------------------------------------------------------------------------------------
01/01/00 01/01/00
TO 01/01/99 05/04/98(2) TO 01/01/99 05/04/98(2)
06/30/00 TO TO 06/30/00 TO TO
(UNAUDITED) 12/31/99 12/31/98 (UNAUDITED) 12/31/99 12/31/98
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period........... $18.83 $ 9.80 $10.00 $ 7.57 $ 8.25 $10.00
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)................... (.04) (.04) (.01) .03 .02 .02
Net realized and unrealized gain (loss) on
investments................................... 1.76 9.07 (.19) .10 (.68) (1.77)
------ ------ ------ ------ ------ ------
Total from investment operations............ 1.72 9.03 (.20) .13 (.66) (1.75)
------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends to shareholders from net investment
income........................................ (.00) (.00) (.00) (.02) (.02) (.00)
Dividends to shareholders from net capital
gains......................................... (.63) (.00) (.00) (.00) (.00) (.00)
------ ------ ------ ------ ------ ------
Total distributions......................... (.63) (.00) (.00) (.02) (.02) (.00)
------ ------ ------ ------ ------ ------
Net asset value, end of period................. $19.92 $18.83 $ 9.80 $ 7.68 $ 7.57 $ 8.25
====== ====== ====== ====== ====== ======
Total return................................ 9.28%(3) 92.14% (2.00)%(3) 1.80%(3) (8.05)% (17.50)%(3)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period $(000)............... 84,416 45,200 9,685 15,012 11,300 8,073
Ratios of expenses to average net assets(1)
(annualized).................................. 1.06% 1.11% 1.24% 1.13% 1.20% 1.28%
Ratios of net investment income to average net
assets (annualized)........................... (.51)% (.57)% (.14)% .87% .39% .48%
Portfolio turnover............................. 52% 114% 82% 93% 114% 38%
</TABLE>
(1.) Expense ratios for the All Pro Small Cap Growth Portfolio before
reimbursement of expense by affiliated insurance company for the period
ended June 30, 2000, the year ended December 31, 1999 and the period ended
December 31, 1998 were as follows: 1.06% (annualized), 1.11%, and 1.25%
(annualized), respectively. Expense ratios for the All Pro Small Cap Value
Portfolio before reimbursement of expense by affiliated insurance company
for the period ended June 30, 2000, the year ended December 31, 1999, and
the period ended December 31, 1998 were as follows: 1.17% (annualized),
1.21% 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.
F-176
<PAGE> 289
--------------------------------------------------------------------------------
Market Street Fund, Inc.
Notes to Financial Statements, June 30, 2000
(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, Equity 500 Index Portfolio, All Pro Large
Cap Growth Portfolio, All Pro Large Cap Value Portfolio, All Pro Small Cap
Growth Portfolio, and All Pro Small Cap Value Portfolio. The Equity 500 Index
portfolio commenced operations on February 7, 2000. 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
Provident Mutual 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 close of regular trading on
the New York Stock Exchange, currently 4:00 p.m. New York time 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 90 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 in-
F-177
<PAGE> 290
--------------------------------------------------------------------------------
Market Street Fund, Inc.
Notes to Financial Statements, June 30, 2000 -- Continued
(Unaudited)
--------------------------------------------------------------------------------
vestments) 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 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,
2000 was $2,258,438 in the Bond Portfolio and $7,323,125 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,
Equity 500 Index, 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,
F-178
<PAGE> 291
--------------------------------------------------------------------------------
Market Street Fund, Inc.
Notes to Financial Statements, June 30, 2000 -- Continued
(Unaudited)
--------------------------------------------------------------------------------
Aggressive Growth and Sentinel Growth Portfolios. With respect to the Growth
Portfolio, SAC is compensated monthly at an effective annual rate of 0.50% of
the first $20 million of the average daily net assets of the portfolio, 0.40% of
the next $20 million and 0.30% of net assets in excess of $40 million. SAC is
compensated monthly at an effective annual rate of 0.25% of the average daily
net assets of the Money Market Portfolio. With respect to the Bond Portfolio,
SAC is compensated monthly at the effective annual rate of 0.35% of the first
$100 million of the average daily net assets of the portfolio and 0.30% of net
assets in excess of $100 million. With respect to the Managed Portfolio, SAC is
compensated monthly at the effective annual rate of 0.40% of the first $100
million of the average daily net assets of the portfolio and 0.35% of net assets
in excess of $100 million. With respect to the Aggressive Growth Portfolio, SAC
is compensated monthly at the effective annual rate of 0.50% of the first $20
million of the average daily net assets of the portfolio, 0.40% of the next $20
million and 0.30% of net assets in excess of $40 million. With respect to the
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. Market Street Investment Management Co. (MSIM) is the adviser
for the International, Equity 500 Index, All Pro Large Cap Growth, All Pro Large
Cap Value, All Pro Small Cap Growth, and All Pro Small Cap Value. With respect
to the All Pro Large Cap Growth Portfolio and the All Pro Large Cap Value
Portfolio, MSIM is compensated monthly at an effective annual rate of 0.70% of
the average daily net assets. With respect to the All Pro Small Cap Growth
Portfolio and the All Pro Small Cap Value Portfolio, MSIM is compensated monthly
at an effective annual rate of 0.90% of the average daily net assets. With
respect to the International Portfolio, MSIM 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. With
respect to the Equity 500 Index Portfolio, MSIM is compensated monthly at an
effective annual rate of 0.24% of the average daily net assets of the portfolio.
PMLIC agrees to reimburse the Growth, Money Market, Bond, Managed, Aggressive
Growth, All Pro Large Cap Growth, All Pro Large Cap Value, All Pro Small Cap
Growth, and All Pro 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. The
Equity 500 Index portfolio is reimbursed for such expenses in excess of an
annual rate of 0.04% 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.
F-179
<PAGE> 292
--------------------------------------------------------------------------------
Market Street Fund, Inc.
Notes to Financial Statements, June 30, 2000 -- Continued
(Unaudited)
--------------------------------------------------------------------------------
4. NET ASSETS
At June 30, 2000, 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........... $225,602,908 $100,018,626 $38,082,984 $ 59,185,159
Undistributed net investment income.......... 1,891,033 -- 1,233,524 1,300,866
Undistributed net realized gain.............. 7,363,216 -- -- 1,084,480
Accumulated loss on investment
transactions................................ -- (66) (2,392,584) --
Net unrealized appreciation (depreciation) on
investments and foreign currency............ 42,041,400 -- (430,976) 7,426,473
------------ ------------ ----------- ------------
$276,898,557 $100,018,560 $36,492,948 $ 68,996,978
============ ============ =========== ============
</TABLE>
<TABLE>
<CAPTION>
AGGRESSIVE SENTINEL EQUITY
GROWTH INTERNATIONAL GROWTH 500 INDEX
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net contribution from shareholders........... $ 54,891,916 $ 74,452,481 $11,154,457 $387,836,496
Undistributed net investment income (loss)... 204,044 766,274 (24,729) 1,601,541
Undistributed net realized gain.............. 12,056,500 5,204,491 5,883,260 470,873
Accumulated loss on investment
transactions................................ -- -- -- --
Net unrealized appreciation (depreciation) on
investments and foreign currency............ 10,311,863 7,397,984 3,979,642 7,143,421
------------ ------------ ----------- ------------
$ 77,464,323 $ 87,821,230 $20,992,630 $397,052,331
============ ============ =========== ============
</TABLE>
<TABLE>
<CAPTION>
ALL PRO ALL PRO ALL PRO ALL PRO
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........... $ 43,186,276 $ 26,283,660 $65,697,966 $ 16,160,785
Undistributed net investment income (loss)... 20,297 145,640 (177,020) 55,256
Undistributed net realized gain.............. 1,737,146 -- 6,626,915 --
Accumulated loss on investment
transactions................................ -- (1,230,730) -- (1,853,948)
Net unrealized appreciation (depreciation) on
investments and foreign currency............ 5,444,704 (792,194) 12,268,428 650,280
------------ ------------ ----------- ------------
$ 50,388,423 $ 24,406,376 $84,416,289 $ 15,012,373
============ ============ =========== ============
</TABLE>
F-180
<PAGE> 293
--------------------------------------------------------------------------------
Market Street Fund, Inc.
Notes to Financial Statements, June 30, 2000 -- 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, 2000, 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..................... $ -- $ -- $28,698,432 $44,053,885 $ -- $ --
Corporate Bonds............................ -- -- 8,580,113 6,926,305 -- --
Common and Preferred Stock................. 60,769,326 -- -- 11,773,503 33,056,067 18,223,337
----------- ------------ ----------- ----------- ----------- -----------
Total Purchases............................ $60,769,326 $ -- $37,278,545 $62,753,693 $33,056,067 $18,223,337
=========== ============ =========== =========== =========== ===========
SALES
U.S. Gov't Obligations..................... $ -- $ -- $24,464,843 $42,017,420 $ -- $ --
Corporate Bonds............................ -- -- 13,406,136 8,541,932 -- --
Common and Preferred Stock................. 88,975,857 -- -- 16,218,405 31,626,457 16,601,374
----------- ------------ ----------- ----------- ----------- -----------
Total Sales................................ $88,975,857 $ -- $37,870,979 $66,777,757 $31,626,457 $16,601,374
=========== ============ =========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
ALL PRO ALL PRO ALL PRO ALL PRO
SENTINEL EQUITY LARGE CAP LARGE CAP SMALL CAP SMALL CAP
GROWTH 500 INDEX GROWTH VALUE GROWTH VALUE
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PURCHASES
U.S. Gov't Obligations..................... $ -- $ -- $ -- $ -- $ -- $ --
Corporate Bonds............................ -- -- -- -- -- --
Common and Preferred Stock................. 34,529,424 390,316,285 23,678,576 17,042,223 66,878,031 14,741,508
----------- ------------ ----------- ----------- ----------- -----------
Total Purchases............................ $34,529,424 $390,316,285 $23,678,576 $17,042,223 $66,878,031 $14,741,508
=========== ============ =========== =========== =========== ===========
SALES
U.S. Gov't Obligations..................... $ -- $ -- $ -- $ -- $ -- $ --
Corporate Bonds............................ -- -- -- -- -- --
Common and Preferred Stock................. 38,251,014 9,636,199 11,652,602 14,318,007 33,693,019 11,124,690
----------- ------------ ----------- ----------- ----------- -----------
Total Sales................................ $38,251,014 $ 9,636,199 $11,652,602 $14,318,007 $33,693,019 $11,124,690
=========== ============ =========== =========== =========== ===========
</TABLE>
F-181
<PAGE> 294
--------------------------------------------------------------------------------
Market Street Fund, Inc.
Notes to Financial Statements, June 30, 2000 -- 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, 2000 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... $ 57,451,212 $ -- $ 295,729 $ 9,314,355 $15,447,377 $15,282,159
Aggregate gross unrealized depreciation... (13,237,641) -- (726,705) (1,887,882) (5,135,514) (7,950,504)
------------ ------------ ----------- ----------- ----------- -----------
Net unrealized appreciation
(depreciation)........................... $ 44,213,571 $ -- $ (430,976) $ 7,426,473 $10,311,863 $ 7,331,655
============ ============ =========== =========== =========== ===========
Aggregate cost of securities for federal
income tax purposes...................... $231,731,798 $100,592,645 $39,787,069 $68,814,423 $67,223,932 $81,005,097
============ ============ =========== =========== =========== ===========
Capital loss carryover (available to
offset possible future gains.) The
carryover expires as follows Money Market
Portfolio -- $57 in 2005, $9 in 2007;
Bond Portfolio -- $916,674 in 2007....... $ -- $ 66 $ 916,674 $ -- $ -- $ --
============ ============ =========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
ALL PRO ALL PRO ALL PRO ALL PRO
SENTINEL EQUITY LARGE CAP LARGE CAP SMALL CAP SMALL CAP
GROWTH 500 INDEX GROWTH VALUE GROWTH VALUE
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Aggregate gross unrealized appreciation... $ 4,298,893 $ 36,868,773 $ 8,892,556 $ 1,432,285 $19,332,042 $ 1,318,853
Aggregate gross unrealized depreciation... (319,251) (29,725,352) (3,639,874) (2,274,713) (7,063,614) (715,573)
------------ ------------ ----------- ----------- ----------- -----------
Net unrealized appreciation
(depreciation)........................... $ 3,979,642 $ 7,143,421 $ 5,252,682 $ (842,428) $12,268,428 $ 603,280
============ ============ =========== =========== =========== ===========
Aggregate cost of securities for federal
income tax purposes...................... $ 17,281,423 $390,289,131 $44,527,437 $25,483,408 $72,113,011 $14,651,445
============ ============ =========== =========== =========== ===========
Capital loss carryover (available to
offset possible future gains.)
The carryover expires as follows:
Large Cap Value -- $215,505 in 2006;
Small Cap Value -- $630,374 in 2006,
$994,835 in 2007....................... $ -- $ -- $ -- $ 215,505 $ -- $ 1,625,209
============ ============ =========== =========== =========== ===========
</TABLE>
F-182
<PAGE> 295
--------------------------------------------------------------------------------
Market Street Fund, Inc.
Notes to Financial Statements, June 30, 2000 -- Continued
(Unaudited)
--------------------------------------------------------------------------------
7. AUTHORIZED CAPITAL STOCK AND CAPITAL STOCK TRANSACTIONS
On June 30, 2000, 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 twelve
series: Growth Portfolio, Money Market Portfolio, Bond Portfolio, Managed
Portfolio, Aggressive Growth Portfolio, International Portfolio, Sentinel Growth
Portfolio, Equity 500 Index Portfolio, All Pro Large Cap Growth Portfolio, All
Pro Large Cap Value Portfolio, All Pro Small Cap Growth Portfolio and All Pro
Small Cap Value Portfolio. The Growth Portfolio consists of 50 million shares,
the Money Market Portfolio consists of 150 million shares, the International
Portfolio consists of 10 million shares, the Equity 500 Index Portfolio consists
of 75 million shares; each of the four All Pro Series Portfolios consists of 50
million shares, and each of the other series consists of 5 million shares.
On June 30, 2000, Provident Mutual Life Insurance Company owned 976,130 shares
of All Pro Large Cap Value, 244,088 shares of All Pro Small Cap Growth and
400,853 shares of All Pro Small Cap Value.
Transactions in capital stock for the period ended June 30, 2000 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............ 408,747 $ 7,101,697 103,590,603 $ 103,590,603 241,592 $ 2,436,053
Shares redeemed........ (1,986,815) (34,293,427) (123,547,261) (123,547,261) (515,163) (5,189,424)
Shares reinvested...... 1,320,577 23,189,339 3,087,780 3,087,780 226,123 2,245,406
---------- ------------ ------------ ------------- --------- ------------
Net contributions from
affiliated insurance
companies............. (257,491) $ (4,002,391) (16,868,878) $ (16,868,878) (47,448) $ (507,965)
========== ============ ============ ============= ========= ============
<CAPTION>
MANAGED PORTFOLIO
----------------------- -------------------------
SHARES AMOUNT
----------------------- -------------------------
<S> <C> <C>
Shares sold............ 200,134 $ 3,123,333
Shares redeemed........ (628,408) (9,733,290)
Shares reinvested...... 385,838 5,957,335
---------- ------------
Net contributions from
affiliated insurance
companies............. (42,436) $ (652,622)
========== ============
</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............ 394,100 $ 8,874,569 395,255 $ 5,451,574 310,217 $ 5,825,322
Shares redeemed........ (312,671) (6,953,158) (437,219) (6,007,707) (574,667) (10,418,845)
Shares reinvested...... 273,279 5,468,318 783,964 11,155,804 102,327 1,727,272
---------- ------------ ------------ ------------- --------- ------------
Net contributions from
affiliated insurance
companies............. 354,708 $ 7,389,729 742,000 $ 10,599,671 (162,123) $ (2,866,251)
========== ============ ============ ============= ========= ============
<CAPTION>
EQUITY 500 INDEX
PORTFOLIO
----------------------- -------------------------
SHARES AMOUNT
----------------------- -------------------------
<S> <C> <C>
Shares sold............ 40,285,042 $402,984,317
Shares redeemed........ (1,513,605) (15,147,822)
Shares reinvested...... -- --
---------- ------------
Net contributions from
affiliated insurance
companies............. 38,771,437 $387,836,495
========== ============
</TABLE>
<TABLE>
<CAPTION>
ALL PRO ALL PRO ALL PRO
LARGE CAP LARGE CAP SMALL CAP
GROWTH PORTFOLIO VALUE PORTFOLIO GROWTH PORTFOLIO
------------------------------------------------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold............ 1,063,566 $ 14,767,689 440,710 $ 4,121,413 2,042,166 $ 42,757,478
Shares redeemed........ (178,742) (2,484,145) (252,594) (2,326,866) (283,632) (5,414,612)
Shares reinvested...... 103,708 1,456,056 22,967 223,008 77,943 1,394,394
---------- ------------ ------------ ------------- --------- ------------
Net contributions from
affiliated insurance
companies............. 988,532 $ 13,739,600 211,083 $ 2,017,555 1,836,477 $ 38,737,260
========== ============ ============ ============= ========= ============
<CAPTION>
ALL PRO
SMALL CAP
VALUE PORTFOLIO
----------------------- -------------------------
SHARES AMOUNT
----------------------- -------------------------
<S> <C> <C>
Shares sold............ 590,163 $ 4,348,172
Shares redeemed........ (131,406) (958,225)
Shares reinvested...... 5,062 37,204
---------- ------------
Net contributions from
affiliated insurance
companies............. 463,819 $ 3,427,151
========== ============
</TABLE>
F-183
<PAGE> 296
--------------------------------------------------------------------------------
Market Street Fund, Inc.
Notes to Financial Statements, June 30, 1999 -- Concluded
(Unaudited)
--------------------------------------------------------------------------------
Transactions in capital stock for the year ended December 31, 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............. 1,329,197 $ 25,247,128 212,282,834 $ 212,282,834 1,037,876 $ 11,071,232
Shares redeemed......... (2,509,410) (48,088,176) (191,715,270) (191,715,270) (798,215) (8,560,373)
Shares reinvested....... 390,679 7,243,192 4,866,961 4,866,961 83,209 905,319
---------- ------------ ------------ ------------- --------- ------------
Net contributions from
affiliated insurance
companies.............. (789,534) $(15,597,856) 25,434,525 $ 25,434,525 322,870 $ 3,416,178
========== ============ ============ ============= ========= ============
<CAPTION>
MANAGED PORTFOLIO
------------------------ ------------------------
SHARES AMOUNT
------------------------ ------------------------
<S> <C> <C>
Shares sold............. 1,048,895 $ 17,883,810
Shares redeemed......... (709,970) (12,005,353)
Shares reinvested....... 233,644 3,906,534
--------- ------------
Net contributions from
affiliated insurance
companies.............. 572,569 $ 9,784,991
========= ============
</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.................................. 623,914 $ 12,068,240 656,302 $ 9,459,577 269,528 $ 3,849,774
Shares redeemed.............................. (760,128) (14,651,877) (864,123) (12,052,571) (21,904) (311,615)
Shares reinvested............................ 403,285 7,577,720 380,631 4,986,269 43,352 560,968
------------ ------------- --------- ------------ --------- ------------
Net contributions from affiliated insurance
companies................................... 267,071 $ 4,994,083 172,810 $ 2,393,275 290,976 $ 4,099,127
============ ============= ========= ============ ========= ============
</TABLE>
<TABLE>
<CAPTION>
ALL PRO ALL PRO ALL PRO
LARGE CAP LARGE CAP SMALL CAP
GROWTH PORTFOLIO VALUE PORTFOLIO GROWTH PORTFOLIO
-------------------------------------------------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
-------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold............. 2,444,764 $ 31,491,954 1,197,996 $ 12,240,796 1,770,700 $ 22,608,975
Shares redeemed......... (1,090,487) (13,965,817) (349,648) (3,495,144) (358,525) (4,839,732)
Shares reinvested....... 258 3,102 10,603 105,080 -- --
---------- ------------ ------------ ------------- --------- ------------
Net contributions from
affiliated insurance
companies.............. 1,354,535 $ 17,529,239 858,951 $ 8,850,732 1,412,175 $ 17,769,243
========== ============ ============ ============= ========= ============
<CAPTION>
ALL PRO
SMALL CAP
VALUE PORTFOLIO
------------------------ ------------------------
SHARES AMOUNT
------------------------ ------------------------
<S> <C> <C>
Shares sold............. 1,054,394 $ 7,986,704
Shares redeemed......... (543,349) (4,091,049)
Shares reinvested....... 2,087 17,055
--------- ------------
Net contributions from
affiliated insurance
companies.............. 513,132 $ 3,912,710
========= ============
</TABLE>
8. PRINCIPAL UNDERWRITER
1717 Capital Management Company serves, without compensation, as the principal
under-writer for sale of the Fund shares to the Accounts. 1717 Capital
Management Company is an indirect wholly-owned subsidiary of PMLIC.
F-184
<PAGE> 297
PART C. OTHER INFORMATION
ITEM 23. Exhibits
The following exhibits are filed with this post-effective amendment or are
incorporated by reference to a prior filing, as noted in the exhibit:
<TABLE>
<S> <C>
(a) Declaration of Trust of Market Street Fund (the "Fund"), filed
herewith
(b) Bylaws of the Fund, filed herewith
(c) Inapplicable
(d)(1) Form of Investment Advisory Agreement between the Fund and Market
Street Investment Management Company respecting all Portfolios
("MSIM", formerly "Providentmutual Investment Management
Company") filed herewith
(d)(2) Investment Management Consulting Agreement between MSIM and
Wilshire Associates Incorporated respecting the All Pro
Portfolios and Bond Portfolio [to be filed by amendment]
(d)(3) Investment Subadvisory Agreement between MSIM and Alliance
Capital Management L.P. respecting All Pro Broad Equity Portfolio
and All Pro Large Cap Portfolio [to be filed by amendment]
(d)(4) Investment Subadvisory Agreement between MSIM and The Boston
Company Asset Management, LLC respecting International Portfolio
[to be filed by amendment]
(d)(5) Investment Subadvisory Agreement between MSIM and Fred Alger
Management Inc. respecting Balanced Portfolio [to be filed by
amendment]
(d)(6) Investment Subadvisory Agreement between MSIM and Geewax, Terker
& Co. respecting All Pro Large Cap Growth [to be filed by
amendment]
(d)(7) Investment Subadvisory Agreement between MSIM and Husic Capital
Management respecting All Pro Broad Equity Portfolio and All Pro
Small Cap Portfolio [to be filed by amendment]
(d)(8) Investment Subadvisory Agreement between MSIM and Lee Munder
Investments, LTD. respecting All Pro Small Cap Growth [to be
filed by amendment]
(d)(9) Investment Subadvisory Agreement between MSIM and Mellon Equity
Associates, L.L.P. respecting All Pro Large Cap Value Portfolio
[to be filed by amendment]
(d)(10) Investment Subadvisory Agreement between MSIM and Reams Asset
Management Company, LLC respecting All Pro Broad Equity Portfolio
and All Pro Small Cap Portfolio [to be filed by amendment]
(d)(11) Investment Subadvisory Agreement between MSIM and Sanford C.
Bernstein & Co., LLC respecting All Pro Broad Equity Portfolio
[to be filed by amendment]
(d)(12) Investment Subadvisory Agreement between MSIM and State Street
Global Advisors respecting Equity 500 Index Portfolio [to be
filed by amendment]
(d)(13) Investment Subadvisory Agreement between MSIM and Sterling
Capital Management Company respecting All Pro Small Cap Value
Portfolio [to be filed by amendment]
(d)(14) Investment Subadvisory Agreement between MSIM and T. Rowe Price
Associates, Inc. respecting Mid Cap Growth Portfolio [to be filed
by amendment]
(d)(15) Investment Subadvisory Agreement between MSIM and Western Asset
Management Company respecting Bond Portfolio [to be filed by
amendment]
(e)(1) Form of Underwriting Agreement between the Fund and 1717 Capital
Management Company, filed herewith
(f) Inapplicable
(g)(1) Custody Agreement between the Fund and Provident National Bank
[to be added by amendment]
(g)(2) Custodial Services Agreement between the Fund and Citibank,
N.A.(1)
(h)(1) Administration Agreement between the Fund and Provident Mutual
Life Insurance Company [to be
</TABLE>
<PAGE> 298
<TABLE>
<S> <C>
added by amendment]
(h)(2) Reimbursement Agreement between Provident Mutual Life Insurance
Company and the Fund [to be added by amendment]
(h)(3) Form of Participation Agreement among the Fund, Provident Mutual
Life Insurance Company and 1717 Capital Management Company, filed
herewith
(h)(4) Form of Participation Agreement among the Fund, Providentmutual
Life and Annuity Company of America and 1717 Capital Management
Company, filed herewith
(h)(5) Form of Participation Agreement among the Fund, National Life
Insurance Company and 1717 Capital Management Company [to be
added by amendment]
(i)(1) Opinion and Consent of Adam Scaramella, Esq.(1)
(i)(2) Opinion of James G. Potter, Jr., Esq.(5)
(j)(1) Consent of Sutherland Asbill & Brennan LLP, filed herewith.
(j)(2) Consent of PricewaterhouseCoopers LLP, filed herewith.
(k) Inapplicable
(l)(1) Investment Letter from National Life Insurance Company(3)
(m) Inapplicable
(n) Inapplicable
(o) Powers of Attorney(6)
(p)(1) Code of Ethics for Market Street Investment Management Company, filed herewith
(p)(2) Code of Ethics for Alliance Capital Management L.P., filed herewith
(p)(3) Code of Ethics for The Boston Company Asset Management, LLC, filed herewith
(p)(4) Code of Ethics for Fred Alger Management, Inc., filed herewith
(p)(5) Code of Ethics for Geewax, Terker & Co., filed herewith
(p)(6) Code of Ethics for Husic Capital Management, filed herewith
(p)(7) Code of Ethics for Lee Munder Investments, Ltd., filed herewith
(p)(8) Code of Ethics for Mellon Equity Associates, L.L.P., filed herewith
(p)(9) Code of Ethics for Reams Asset Management Company, LLC, filed herewith
(p)(10) Code of Ethics for Sanford C. Bernstein & Co., LLC, filed herewith
(p)(11) Code of Ethics for State Street Global Advisors, filed herewith
(p)(12) Code of Ethics for Sterling Capital Management Company
(p)(13) Code of Ethics for T. Rowe Price Associates, Inc. is incorporated by reference to a post-effective
amendment filed for T. Rowe Price Short-Term Bond Fund, Inc. on September 28, 2000,
Accession Number: 0000731890-00-000028.
(p)(14) Code of Ethics for Western Asset Management Company, filed herewith
(p)(15) Code of Ethics for Wilshire Associates, Inc., filed herewith
</TABLE>
----------
(1) Incorporated herein by reference to Post-Effective Amendment No. 19 filed
with the Securities and Exchange Commission on April 24, 1998, File No. 2-98755.
(2) Incorporated herein by reference to Post-Effective Amendment No. 13 filed
with Securities and Exchange Commission on February 28, 1996, File No. 2-98755.
(3) Incorporated herein by reference to Post-Effective Amendment No. 14 filed
with Securities and Exchange Commission on March 19, 1996, File No. 2-98755.
(4) Incorporated herein by reference to Post-Effective Amendment No. 16, filed
with Securities and Exchange Commission on February 21, 1997, File No. 2-98755.
(5) Incorporated herein by reference to Post-Effective Amendment No. 22 filed
with Securities and Exchange Commission on August 3, 1999, File No. 2-98755.
(6) Incorporated herein by reference to Post-Effective Amendment No. 21 filed
with Securities and Exchange Commission on April 22, 1999, File No. 2-98755.
ITEM 24. Persons Controlled by or Under Common Control with Registrant
Currently, shares of the Fund are sold to separate accounts of Provident Mutual
Life Insurance Company ("Provident Mutual"), and Providentmutual Life and
Annuity Company of America ("PLACA") ,and may be sold to separate accounts of
other insurance companies, to fund the benefits under variable life insurance
policies and variable annuity contracts issued or assumed by Provident Mutual or
PLACA.
No person has the direct or indirect power to control Provident Mutual except
insofar as he or she may have such power by virtue of his or her capacity as a
director or executive officer thereof. As a mutual life insurance company,
Provident Mutual has no stockholders. Its Board of Directors is elected by the
Policyholders. PLACA is a wholly owned subsidiary of Provident Mutual.
Persons controlled by or under common control with the registrant follow:
<PAGE> 299
<TABLE>
<CAPTION>
PERCENT OF VOTING
NAME JURISDICTION SECURITIES OWNED PRINCIPAL BUSINESS
---- ------------ ---------------- ------------------
<S> <C> <C> <C>
Provident Mutual Pennsylvania Mutual Company Life & Health Insurance
Life Insurance Company*
(Provident Mutual)
Providentmutual Life and Delaware Ownership of all Life & Health Insurance
Annuity Company voting securities
of America* by Provident Mutual
Provident Mutual Delaware Ownership of all voting Life & Health Insurance
International securities by
Life Insurance Company Provident Mutual
Providentmutual Pennsylvania Ownership of all Holding Company
Holding Company (PHC)* voting securities
by Provident Mutual
1717 Capital Management Pennsylvania Ownership of all voting Broker/Dealer
Company* securities by PHC
1717 Brokerage Services Pennsylvania Ownership of all voting Insurance Agency
Inc. securities by PHC
Market Street** Pennsylvania Ownership of all voting Investment Adviser
Investment securities by PHC
Management Company*
Washington Square Pennsylvania Ownership of all voting Administrative Services
Administrative securities by PHC
Services, Inc.*
Institutional Concepts, New York Ownership of all voting Insurance Agency
Inc.* securities by PHC
Provestco, Inc.* Delaware Ownership of all voting Real Estate Investment
securities by PHC
PNAM, Inc.* Delaware Ownership of all voting Holding Company
securities by PHC
Sigma American Delaware Ownership of 80.2% Investment Management
Corporation* voting securities by and Advisory Services
PHC and 19.8% by
Provident Mutual
Provident Mutual Delaware Ownership of all voting Investment Management
Management Co., Inc.* securities by Sigma and Advisory Services
American Corporation
Software Development Pennsylvania Ownership of all Development and
Corporation* voting securities Marketing of Computer
by PHC Software
</TABLE>
----------
* File Consolidated Financial Statements.
** Formerly Providentmutual Investment Management Company.
ITEM 25. Indemnification
ITEM 25. Indemnification
Under the Fund's Declaration of Trust and the Bylaws (Exhibits 23 (a) and (b) of
this post-effective amendment to the Registration Statement) and as permitted
under Delaware law, with
<PAGE> 300
respect to any proceedings against a present or former trustee, officer, agent
or employee ("trust representative") of the registrant, except a proceeding
brought by or on behalf of the registrant, the registrant may indemnify the
trust representative against expenses, including attorneys' fees and judgments,
fines, and amounts paid in settlement actually and reasonably incurred by the
trust representative in connection with the proceeding, if: (i) he or she acted
in good faith and in a manner the representative reasonably believed to be in
good faith and in a manner reasonably believed to be in or not opposed to the
best interests of the registrant; and (ii) with respect to any criminal
proceeding, he or she had no reasonable cause to believe the conduct was
unlawful. The registrant is also authorized under the Declaration of Trust to
indemnify a trust representative under certain circumstances against expenses
incurred in connection with the defense of a suit or action by or in the right
of the registrant.
The Declaration of Trust and Bylaws of the Fund (Exhibits 23 (a) and (b) of this
post-effective amendment to the Registration Statement) preclude indemnification
for "disabling conduct" (willful misfeasance, bad faith, gross negligence, or
reckless disregard of the duties involved in the conduct of office) and sets
forth reasonable and fair means for determining whether indemnification shall be
made.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to trustees, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a trustee, officer or controlling person of the registrant in the
successful defense of any such action, suit or proceeding) is asserted by such
trustee, officer, or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question of whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
ITEM 26. Business and Other Connections of Investment Adviser
The directors and officers of Providentmutual Investment Management Company
(PIMC) also serve as officers of Provident Mutual. This information for each
ITEM 27. Principal Underwriters
a. 1717 Capital Management Company is the principal underwriter for the Fund.
b. Set forth below is certain information regarding the directors and officers
of 1717, the principal underwriter to the Fund. Unless otherwise stated, the
business address of the persons whose names appear below is 300 Continental
Drive, Newark, Delaware 19713.
<TABLE>
<CAPTION>
(2) (3)
(1) POSITIONS AND OFFICES WITH POSITIONS AND OFFICES
NAME PRINCIPAL UNDERWRITER WITH REGISTRANT
---- --------------------- ---------------
<S> <C> <C>
</TABLE>
<PAGE> 301
<TABLE>
<S> <C> <C>
Mary Lynn Finelli*........ Director None
Alan F. Hinkle*........... Director None
Robert W. Kloss*.......... Director None
James G. Potter, Jr.*..... Director Vice President
Joan C. Tucker............ Director None
Lance A. Reihl............ President None
Rosanne Gatta*............ Treasurer President
Linda M. Springer*........ Financial Reporting None
Officer
</TABLE>
----------
* 1000 Chesterbrook Boulevard, Berwyn, PA 19312
ITEM 28. Location of Accounts and Records
The records required to be maintained by Section 31(a) of the Investment Company
Act of 1940 and Rules 31a-1 to 31a-3 promulgated thereunder, are maintained by
the Fund and Market Street Investment Management Company at 400 Bellevue
Parkway, Wilmington, DE 19809 and 1000 Chesterbrook Boulevard, Berwyn, PA 19312,
by Newbold's Asset Management, Inc. at 937 Haverford Road, Bryn Mawr,
Pennsylvania 19010, by Sentinel Advisors Company at National Life Drive,
Montpelier, Vermont 05604, by PFPC Trust Company, 200 Stevens Drive, Lester,
Pennsylvania 19113, or by PFPC at 103 Bellevue Parkway, Wilmington, Delaware
19809, or for the International Portfolio by Citibank, N.A. 111 Wall Street, New
York, New York 10043.
ITEM 29. Management Services
Inapplicable.
ITEM 30. Undertakings
Inapplicable.
<PAGE> 302
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant has duly caused this post-effective
amendment to the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Berwyn, Commonwealth of
Pennsylvania on this 1st day of November, 2000.
MARKET STREET FUND
By: /s/ ROSANNE GATTA
By: Rosanne Gatta
President
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the capacities as of the
dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Rosanne Gatta President (Principal November 1, 2000
Executive Officer)
By: ROSANNE GATTA
/s/ Anthony T. Giampietro Treasurer (Principal November 1, 2000
Financial and
By: ANTHONY T. GIAMPIETRO Accounting Officer)
/s/ Robert W. Kloss Trustee November 1, 2000
By: ROBERT W. KLOSS
/s/ Alan Gart* Trustee November 1, 2000
ALAN GART
/s/ A. Gilbert Heebner* Trustee November 1, 2000
A. GILBERT HEEBNER
/s/ Leo Slack* Trustee November 1, 2000
LEO SLACK
/s/ Edward S. Stouch* Trustee November 1, 2000
EDWARD S. STOUCH
* By: /s/ James Potter
JAMES POTTER
Attorney-in-Fact,
Pursuant to Power of Attorney
</TABLE>
<PAGE> 303
Index to Exhibits
Item 23.
<TABLE>
<S> <C>
(a) Declaration of Trust of Market Street Fund (the "Fund")
(b) Bylaws of the Fund
(d)(1) Form of Investment Advisory Agreement between the Fund and
Market Street Investment Management ("MSIM", formerly
"Providentmutual Investment Management Company")
(e) Form of Underwriting Agreement between the Fund and 1717
Capital Management Company
(h)(3) Form of Participation Agreement among the Fund, Provident
Mutual Life Insurance Company, and 1717 Capital Management
Company
(h)(4) Form of Participation Agreement among the Fund,
Providentmutual Life and Annuity Company of America, and 1717
Capital Management Company
(j)(1) Consent of Sutherland Asbill & Brennan LLP
(j)(2) Consent of PricewaterhouseCoopers LLP
(p)(1) Code of Ethics for Market Street Investment Management Company
(p)(2) Code of Ethics for Alliance Capital Management L.P.
(p)(3) Code of Ethics for The Boston Company Asset Management, LLC
(p)(4) Code of Ethics for Fred Alger Management Inc.
(p)(5) Code of Ethics for Geewax, Terker & Co.
(p)(6) Code of Ethics for Husic Capital Management
(p)(7) Code of Ethics for Lee Munder Investments, LTD.
(p)(8) Code of Ethics for Mellon Equity Associates, L.L.P.
(p)(9) Code of Ethics for Reams Asset Management Company, LLC
(p)(10) Code of Ethics for Sanford C. Bernstein & Co., LLC
(p)(11) Code of Ethics for State Street Global Advisors
(p)(12) Code of Ethics for Sterling Capital Management Company
(p)(14) Code of Ethics for Western Asset Management Company
(p)(15) Code of Ethics for Wilshire Associates, Inc.
</TABLE>
