<PAGE> 1
- --------------------------------------------------------------------------------
To Our Variable Annuity Contract Owners:
- --------------------------------------------------------------------------------
August 26, 1996
As an owner of a Providentmutual Life and Annuity Company of America
variable annuity contract, we are pleased to send you the Semi-Annual Report for
the Separate Account and its subaccounts for our variable annuity contracts.
Attached to the Separate Account Semi-Annual Report is the Semi-Annual
Report for the Market Street Fund, Inc. Under separate cover, you will be
receiving the Semi-Annual Reports for the other Fund groups underlying the
subaccounts to which you have chosen to allocate your premiums.
Thank you for your confidence in Providentmutual and your variable annuity
contract. Along with our parent company, Provident Mutual Life Insurance
Company, we have become a leader in the variable insurance products marketplace.
We are very pleased with this result and are glad that you are a part of our
success.
We are happy to be of service to you. If you have a question about your
annuity contract, please contact your local agent or call our Service Center
toll free at 1-800-668-5177.
Sincerely,
/s/ David N. Ingram
David N. Ingram
<PAGE> 2
THIS PAGE INTENTIONALLY LEFT BLANK.
<PAGE> 3
- --------------------------------------------------------------------------------
The Providentmutual Variable Annuity Separate Account
of Providentmutual Life and Annuity Company of America
Statements of Assets and Liabilities, June 30, 1996 (unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MONEY AGGRESSIVE
GROWTH MARKET BOND MANAGED GROWTH INTERNATIONAL
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
ASSETS
Investment in the Market Street
Fund, Inc., at market value:
Growth Portfolio................. $23,139,137
Money Market Portfolio........... $22,635,977
Bond Portfolio................... $4,319,170
Managed Portfolio................ $10,199,958
Aggressive Growth Portfolio...... $5,470,334
International Portfolio.......... $14,474,883
Dividends receivable............... 90,653
----------- ----------- ---------- ----------- ---------- -----------
NET ASSETS......................... $23,139,137 $22,726,630 $4,319,170 $10,199,958 $5,470,334 $14,474,883
=========== =========== ========== =========== ========== ===========
Held for the benefit of
contractowners................... $23,109,976 $22,667,232 $4,289,927 $10,178,886 $5,422,458 $14,451,095
Attributable to Providentmutual
Life and Annuity Company of
America.......................... 29,161 59,398 29,243 21,072 47,876 23,788
----------- ----------- ---------- ----------- ---------- -----------
$23,139,137 $22,726,630 $4,319,170 $10,199,958 $5,470,334 $14,474,883
=========== =========== ========== =========== ========== ===========
</TABLE>
See accompanying notes to financial statements
1
<PAGE> 4
- --------------------------------------------------------------------------------
The Providentmutual Variable Annuity Separate Account
of Providentmutual Life and Annuity Company of America
Statements of Assets and Liabilities, June 30, 1996 (unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FIDELITY FIDELITY FIDELITY
HIGH EQUITY- FIDELITY ASSET FIDELITY FIDELITY
INCOME INCOME GROWTH MANAGER INDEX 500 CONTRAFUND
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Investment in the Variable Insurance
Products Fund, at market value:
High Income Portfolio............. $6,903,132
Equity-Income Portfolio........... $40,370,029
Growth Portfolio.................. $36,418,815
Investment in the Variable Insurance
Products Fund II, at market value:
Asset Manager Portfolio........... $18,096,463
Index 500 Portfolio............... $14,542,128
Contrafund Portfolio.............. $10,114,932
---------- ----------- ----------- ----------- ----------- -----------
NET ASSETS.......................... $6,903,132 $40,370,029 $36,418,815 $18,096,463 $14,542,128 $10,114,932
========== =========== =========== =========== =========== ===========
Held for the benefit of
contractowners.................... $6,873,085 $40,336,345 $36,374,323 $18,051,680 $14,504,435 $10,082,783
Attributable to Providentmutual Life
and Annuity Company of America.... 30,047 33,684 44,492 44,783 37,693 32,149
---------- ----------- ----------- ----------- ----------- -----------
$6,903,132 $40,370,029 $36,418,815 $18,096,463 $14,542,128 $10,114,932
========== =========== =========== =========== =========== ===========
</TABLE>
See accompanying notes to financial statements
2
<PAGE> 5
- --------------------------------------------------------------------------------
The Providentmutual Variable Annuity Separate Account
of Providentmutual Life and Annuity Company of America
Statements of Assets and Liabilities, June 30, 1996 (unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
QUEST FOR QUEST FOR SCUDDER
QUEST FOR VALUE VALUE SCUDDER GROWTH AND SCUDDER
VALUE EQUITY SMALL CAP MANAGED BOND INCOME INTERNATIONAL
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Investment in the OCC Accumulation
Trust, at market value:
Equity Portfolio................ $7,887,888
Small Cap Portfolio............. $8,339,052
Managed Portfolio............... $28,504,700
Investment in the Scudder
Variable Life Investment Fund,
at market value:
Bond Portfolio.................. $4,843,415
Growth and Income Portfolio..... $2,479,734
International Portfolio......... $ 2,478,304
---------- ---------- ----------- ---------- ---------- -----------
NET ASSETS........................ $7,887,888 $8,339,052 $28,504,700 $4,843,415 $2,479,734 $ 2,478,304
========== ========== =========== ========== ========== ===========
Held for the benefit of
contractowners.................. $7,852,189 $8,304,172 $28,465,885 $4,820,540 $2,447,973 $ 2,450,014
Attributable to Providentmutual
Life and Annuity Company
of America...................... 35,699 34,880 38,815 22,875 31,761 28,290
---------- ---------- ----------- ---------- ---------- -----------
$7,887,888 $8,339,052 $28,504,700 $4,843,415 $2,479,734 $ 2,478,304
========== ========== =========== ========== ========== ===========
</TABLE>
See accompanying notes to financial statements
3
<PAGE> 6
- --------------------------------------------------------------------------------
The Providentmutual Variable Annuity Separate Account
of Providentmutual Life and Annuity Company of America
Statements of Assets and Liabilities, June 30, 1996 (unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DREYFUS DREYFUS DREYFUS FEDERATED U.S. FEDERATED
ZERO GROWTH SOCIALLY GOVERNMENT UTILITY
COUPON 2000 AND INCOME RESPONSIBLE BOND FUND FUND
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS
Investment in the Dreyfus Variable
Investment Fund, at market value:
Zero Coupon 2000 Portfolio................ $4,005,992
Growth and Income Portfolio............... $6,800,312
Socially Responsible Portfolio............ $ 801,597
Investment in the Insurance Management
Series, at market value:
U.S. Government Bond Fund Portfolio....... $1,307,126
Utility Fund Portfolio.................... $1,988,073
---------- ---------- --------- ---------- ----------
NET ASSETS.................................. $4,005,992 $6,800,312 $ 801,597 $1,307,126 $1,988,073
========== ========== ========= ========== ==========
Held for the benefit of contractowners...... $3,981,472 $6,762,685 $ 768,317 $1,279,808 $1,957,929
Attributable to Providentmutual Life and
Annuity Company of America................ 24,520 37,627 33,280 27,318 30,144
---------- ---------- --------- ---------- ----------
$4,005,992 $6,800,312 $ 801,597 $1,307,126 $1,988,073
========== ========== ========= ========== ==========
</TABLE>
See accompanying notes to financial statements
4
<PAGE> 7
- --------------------------------------------------------------------------------
The Providentmutual Variable Annuity Separate Account
of Providentmutual Life and Annuity Company of America
Statements of Operations for the Six Months Ended June 30, 1996 (unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MONEY AGGRESSIVE
GROWTH MARKET BOND MANAGED GROWTH INTERNATIONAL
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
Dividends................................ $ 285,916 $485,250 $ 111,653 $ 161,876 $ 44,166 $ 141,071
EXPENSES
Mortality and expense risks.............. 137,609 134,131 26,617 61,853 33,458 88,614
---------- -------- --------- --------- -------- -----------
Net investment income.................... 148,307 351,119 85,036 100,023 10,708 52,457
---------- -------- --------- --------- -------- -----------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Realized gain distributions reinvested... 874,929 355,289 445,012 571,872
Net realized gain (loss) from redemption
of investment shares................... 66,411 (11,711) 16,233 14,648 25,038
---------- -------- --------- --------- -------- -----------
Net realized gain (loss) on
investments............................ 941,340 (11,711) 371,522 459,660 596,910
---------- -------- --------- --------- -------- -----------
Net unrealized appreciation
(depreciation) of investments:
Beginning of period.................... 2,512,707 151,805 925,879 404,334 880,428
End of period.......................... 3,141,469 (5,149) 805,953 373,476 1,022,811
---------- -------- --------- --------- -------- -----------
Net unrealized appreciation
(depreciation) during the period....... 628,762 (156,954) (119,926) (30,858) 142,383
---------- -------- --------- --------- -------- -----------
Net realized and unrealized gain (loss)
on investments......................... 1,570,102 (168,665) 251,596 428,802 739,293
---------- -------- --------- --------- -------- -----------
Net increase (decrease) in net assets
resulting from operations.............. $1,718,409 $351,119 $ (83,629) $ 351,619 $439,510 $ 791,750
========== ======== ========= ========= ======== ===========
</TABLE>
See accompanying notes to financial statements
5
<PAGE> 8
- --------------------------------------------------------------------------------
The Providentmutual Variable Annuity Separate Account
of Providentmutual Life and Annuity Company of America
Statements of Operations for the Six Months Ended June 30, 1996 (unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FIDELITY FIDELITY FIDELITY
HIGH EQUITY- FIDELITY ASSET FIDELITY FIDELITY
INCOME INCOME GROWTH MANAGER INDEX 500 CONTRAFUND
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
<S> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
Dividends................................ $355,611 $ 46,007 $ 68,301 $ 602,091 $ 98,036
EXPENSES
Mortality and expense risks.............. 39,352 238,602 209,306 100,504 75,129 $ 48,770
-------- ---------- ---------- ---------- ---------- --------
Net investment income (loss)............. 316,259 (192,595) (141,005) 501,587 22,907 (48,770)
-------- ---------- ---------- ---------- ---------- --------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Realized gain distributions reinvested... 69,576 1,318,874 1,724,590 496,460 252,092 51,072
Net realized gain (loss) from redemption
of investment shares................... 10,160 54,207 (1,347) 51,121 12,329 27,799
-------- ---------- ---------- ---------- ---------- --------
Net realized gain on investments......... 79,736 1,373,081 1,723,243 547,581 264,421 78,871
-------- ---------- ---------- ---------- ---------- --------
Net unrealized appreciation
(depreciation)
of investments:
Beginning of period.................... 347,898 3,993,663 3,957,135 1,710,729 1,006,112 119,151
End of period.......................... 296,707 4,372,287 5,111,162 1,539,281 1,638,470 579,752
-------- ---------- ---------- ---------- ---------- --------
Net unrealized appreciation
(depreciation) during the period....... (51,191) 378,624 1,154,027 (171,448) 632,358 460,601
-------- ---------- ---------- ---------- ---------- --------
Net realized and unrealized gain
on investments......................... 28,545 1,751,705 2,877,270 376,133 896,779 539,472
-------- ---------- ---------- ---------- ---------- --------
Net increase in net assets resulting
from operations........................ $344,804 $1,559,110 $2,736,265 $ 877,720 $ 919,686 $490,702
======== ========== ========== ========== ========== ========
</TABLE>
See accompanying notes to financial statements
6
<PAGE> 9
- --------------------------------------------------------------------------------
The Providentmutual Variable Annuity Separate Account
of Providentmutual Life and Annuity Company of America
Statements of Operations for the Six Months Ended June 30, 1996 (unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
QUEST FOR QUEST FOR SCUDDER
QUEST FOR VALUE VALUE SCUDDER GROWTH AND SCUDDER
VALUE EQUITY SMALL CAP MANAGED BOND INCOME INTERNATIONAL
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
Dividends............................... $ 55,212 $ 85,374 $ 298,582 $ 235,399 $ 14,904 $ 24,498
EXPENSES
Mortality and expense risks............. 45,531 50,751 168,468 28,961 10,479 9,791
-------- -------- ---------- -------- ------- -------
Net investment income................... 9,681 34,623 130,114 206,438 4,425 14,707
-------- -------- ---------- -------- ------- -------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Realized gain distributions
reinvested............................ 110,624 219,490 190,422 14,591
Net realized gain (loss) from redemption
of investment shares.................. 20,785 20,902 94,683 (3,975) 1,112 230
-------- -------- ---------- -------- ------- -------
Net realized gain (loss) on
investments........................... 131,409 240,392 285,105 (3,975) 15,703 230
-------- -------- ---------- -------- ------- -------
Net unrealized appreciation
(depreciation) of investments:
Beginning of period................... 894,157 864,772 4,270,089 230,343 42,447 11,601
End of period......................... 1,334,283 1,119,629 5,615,636 (82,054) 105,475 107,803
-------- -------- ---------- -------- ------- -------
Net unrealized appreciation
(depreciation) during the period...... 440,126 254,857 1,345,547 (312,397) 63,028 96,202
-------- -------- ---------- -------- ------- -------
Net realized and unrealized gain (loss)
on investments........................ 571,535 495,249 1,630,652 (316,372) 78,731 96,432
-------- -------- ---------- -------- ------- -------
Net increase (decrease) in net assets
resulting from operations............. $ 581,216 $ 529,872 $1,760,766 $(109,934) $ 83,156 $111,139
========== ========= ========== ========= ======== ========
</TABLE>
See accompanying notes to financial statements
7
<PAGE> 10
- --------------------------------------------------------------------------------
The Providentmutual Variable Annuity Separate Account
of Providentmutual Life and Annuity Company of America
Statements of Operations for the Six Months Ended June 30, 1996 (unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DREYFUS DREYFUS DREYFUS FEDERATED U.S. FEDERATED
ZERO GROWTH SOCIALLY GOVERNMENT UTILITY
COUPON 2000 AND INCOME RESPONSIBLE BOND FUND FUND
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
Dividends........................................ $ 76,901 $ 43,716 $ 26,232 $ 21,158
EXPENSES
Mortality and expense risks...................... 23,719 31,144 $ 3,041 6,131 8,833
-------- -------- ------- ------- -------
Net investment income (loss)..................... 53,182 12,572 (3,041) 20,101 12,325
-------- -------- ------- ------- -------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Realized gain distributions reinvested........... 6,671 6,046 3,324 5,731
Net realized gain from redemption of
investment shares.............................. 4,174 60,656 1,349 165 2,208
-------- -------- ------- ------- -------
Net realized gain on investments................. 10,845 66,702 1,349 3,489 7,939
-------- -------- ------- ------- -------
Net unrealized appreciation (depreciation) of
investments:
Beginning of period............................ 145,722 77,046 4,236 8,312 28,020
End of period.................................. 16,895 640,114 25,541 (18,874) 73,901
-------- -------- ------- ------- -------
Net unrealized appreciation (depreciation)
during the period.............................. (128,827) 563,068 21,305 (27,186) 45,881
-------- -------- ------- ------- -------
Net realized and unrealized gain (loss)
on investments................................. (117,982) 629,770 22,654 (23,697) 53,820
-------- -------- ------- ------- -------
Net increase (decrease) in net assets resulting
from operations................................ $ (64,800) $642,342 $19,613 $ (3,596) $ 66,145
========= ======== ======= ======== ========
</TABLE>
See accompanying notes to financial statements
8
<PAGE> 11
- --------------------------------------------------------------------------------
The Providentmutual Variable Annuity Separate Account
of Providentmutual Life and Annuity Company of America
Statements of Changes in Net Assets for the Six Months Ended June 30, 1996
(unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MONEY AGGRESSIVE
GROWTH MARKET BOND MANAGED GROWTH INTERNATIONAL
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
FROM OPERATIONS
Net investment income.......... $ 148,307 $ 351,119 $ 85,036 $ 100,023 $ 10,708 $ 52,457
Net realized gain (loss) on
investments.................. 941,340 (11,711) 371,522 459,660 596,910
Net unrealized appreciation
(depreciation) of investments
during the period............ 628,762 (156,954) (119,926) (30,858) 142,383
----------- ------------ ---------- ------------ ----------- ------------
Net increase (decrease) in net
assets from operations....... 1,718,409 351,119 (83,629) 351,619 439,510 791,750
----------- ------------ ---------- ------------ ----------- ------------
FROM VARIABLE ANNUITY CONTRACT
TRANSACTIONS
Contractowners' net premiums... 773,793 63,506,941 153,622 451,169 390,814 530,151
Administrative charges......... (5,818) (2,165) (970) (2,493) (2,062) (5,364)
Surrenders and forfeitures..... (350,060) (313,556) (116,719) (481,157) (122,350) (165,255)
Transfers between investment
portfolios................... 2,683,063 (57,290,398) 714,456 1,184,635 639,187 1,635,077
Net repayments (withdrawals)
due to policy loans.......... (7,333) (39,534) 84 (1,023)
Withdrawals due to death
benefits..................... (27,577)
----------- ------------ ---------- ----------- ---------- ------------
Net increase in net assets
derived from contract
transactions................. 3,093,645 5,833,711 750,473 1,152,154 905,589 1,993,586
----------- ------------ ---------- ----------- ---------- ------------
Capital contribution from
Providentmutual Life and
Annuity Company of America... 10,000
----------- ------------ ---------- ----------- ---------- ------------
Total increase in net assets... 4,822,054 6,184,830 666,844 1,503,773 1,345,099 2,785,336
NET ASSETS
Beginning of period.......... 18,317,083 16,541,800 3,652,326 8,696,185 4,125,235 11,689,547
----------- ------------ ---------- ----------- ---------- ------------
End of period................ $23,139,137 $ 22,726,630 $4,319,170 $10,199,958 $5,470,334 $14,474,883
=========== ============ ========== =========== ========== ============
</TABLE>
See accompanying notes to financial statements
9
<PAGE> 12
- --------------------------------------------------------------------------------
The Providentmutual Variable Annuity Separate Account
of Providentmutual Life and Annuity Company of America
Statements of Changes in Net Assets for the Six Months Ended June 30, 1996
(unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FIDELITY FIDELITY FIDELITY
HIGH EQUITY- FIDELITY ASSET FIDELITY FIDELITY
INCOME INCOME GROWTH MANAGER INDEX 500 CONTRAFUND
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
<S> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------
FROM OPERATIONS
Net investment income (loss)..... $ 316,259 $ (192,595) $ (141,005) $ 501,587 $ 22,907 $ (48,770)
Net realized gain on
investments.................... 79,736 1,373,081 1,723,243 547,581 264,421 78,871
Net unrealized appreciation
(depreciation) of investments
during the period.............. (51,191) 378,624 1,154,027 (171,448) 632,358 460,601
---------- ----------- ----------- ----------- ----------- -----------
Net increase in net assets from
operations..................... 344,804 1,559,110 2,736,265 877,720 919,686 490,702
---------- ----------- ----------- ----------- ----------- -----------
FROM VARIABLE ANNUITY CONTRACT
TRANSACTIONS
Contractowners' net premiums..... 349,949 2,273,404 1,795,741 727,552 1,226,649 797,960
Administrative charges........... (2,458) (10,318) (10,493) (7,663) (2,391) (1,608)
Surrenders and forfeitures....... (95,092) (422,794) (533,954) (447,709) (82,799) (63,555)
Transfers between investment
portfolios..................... 2,026,433 9,682,429 9,573,155 475,330 5,234,758 4,356,934
Net repayments (withdrawals) due
to policy loans................ 40 (1,523) (2,007) 118 83
Withdrawals due to death
benefits....................... (7,311) (1,359)
---------- ----------- ----------- ----------- ----------- -----------
Net increase in net assets
derived from contract
transactions................... 2,271,561 11,519,839 10,822,442 747,628 6,376,217 5,089,814
---------- ----------- ----------- ----------- ----------- -----------
Total increase in net assets..... 2,616,365 13,078,949 13,558,707 1,625,348 7,295,903 5,580,516
NET ASSETS
Beginning of period............ 4,286,767 27,291,080 22,860,108 16,471,115 7,246,225 4,534,416
---------- ----------- ----------- ----------- ----------- -----------
End of period.................. $6,903,132 $40,370,029 $36,418,815 $18,096,463 $14,542,128 $10,114,932
========== =========== =========== =========== =========== ===========
</TABLE>
See accompanying notes to financial statements
10
<PAGE> 13
- --------------------------------------------------------------------------------
The Providentmutual Variable Annuity Separate Account
of Providentmutual Life and Annuity Company of America
Statements of Changes in Net Assets for the Six Months Ended June 30, 1996
(unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
QUEST FOR QUEST FOR SCUDDER
QUEST FOR VALUE VALUE SCUDDER GROWTH AND SCUDDER
VALUE EQUITY SMALL CAP MANAGED BOND INCOME INTERNATIONAL
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
FROM OPERATIONS
Net investment income........... $ 9,681 $ 34,623 $ 130,114 $ 206,438 $ 4,425 $ 14,707
Net realized gain (loss) on
investments................... 131,409 240,392 285,105 (3,975) 15,703 230
Net unrealized appreciation
(depreciation) of investments
during the period............. 440,126 254,857 1,345,547 (312,397) 63,028 96,202
----------- ---------- ----------- ---------- ---------- -----------
Net increase (decrease) in net
assets from operations........ 581,216 529,872 1,760,766 (109,934) 83,156 111,139
----------- ---------- ----------- ---------- ---------- -----------
FROM VARIABLE ANNUITY CONTRACT
TRANSACTIONS
Contractowners' net premiums.... 755,831 336,380 1,526,026 197,089 241,571 186,681
Administrative charges.......... (1,915) (3,373) (6,339) (1,280) (115) (127)
Surrenders and forfeitures...... (97,684) (85,583) (356,614) (89,305) (8,612) (4,649)
Transfers between investment
portfolios.................... 1,505,475 1,007,555 5,742,531 1,212,948 1,556,985 1,542,573
Net repayments (withdrawals) due
to policy loans............... (835) 27
Withdrawals due to death
benefits...................... (907) (904) (7,420)
----------- ---------- ----------- ----------- ----------- ------------
Net increase in net assets
derived from contract
transactions.................. 2,160,800 1,253,240 6,898,184 1,319,452 1,789,829 1,724,505
----------- ---------- ----------- ---------- ---------- -----------
Total increase in net assets.... 2,742,016 1,783,112 8,658,950 1,209,518 1,872,985 1,835,644
NET ASSETS
Beginning of period........... 5,145,872 6,555,940 19,845,750 3,633,897 606,749 642,660
----------- ---------- ----------- ---------- ---------- -----------
End of period................. $7,887,888 $8,339,052 $28,504,700 $4,843,415 $2,479,734 $ 2,478,304
=========== ========== =========== ========== ========== ===========
</TABLE>
See accompanying notes to financial statements
11
<PAGE> 14
- --------------------------------------------------------------------------------
The Providentmutual Variable Annuity Separate Account
of Providentmutual Life and Annuity Company of America
Statements of Changes in Net Assets for the Six Months Ended June 30, 1996
(unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DREYFUS DREYFUS DREYFUS FEDERATED U.S. FEDERATED
ZERO GROWTH SOCIALLY GOVERNMENT UTILITY
COUPON 2000 AND INCOME RESPONSIBLE BOND FUND FUND
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
FROM OPERATIONS
Net investment income (loss)............. $ 53,182 $ 12,572 $ (3,041) $ 20,101 $ 12,325
Net realized gain on investments......... 10,845 66,702 1,349 3,489 7,939
Net unrealized appreciation
(depreciation) of investments during
the period............................. (128,827) 563,068 21,305 (27,186) 45,881
---------- ---------- -------- -------- --------
Net increase (decrease) in net assets
from operations........................ (64,800) 642,342 19,613 (3,596) 66,145
---------- ---------- -------- -------- --------
FROM VARIABLE ANNUITY CONTRACT
TRANSACTIONS
Contractowners' net premiums............. 273,001 507,500 103,934 43,197 171,568
Administrative charges................... (847) (440) (21) (54) (69)
Surrenders and forfeitures............... (68,041) (25,280) (395) (1,786) (16,935)
Transfers between investment
portfolios............................. 1,036,084 3,345,312 519,577 772,132 1,125,029
Net repayments due to policy loans....... 55
Withdrawals due to death benefits........ (5,092)
---------- ---------- -------- -------- --------
Net increase in net assets derived from
contract transactions.................. 1,240,252 3,827,092 623,095 813,489 1,274,501
---------- ---------- -------- -------- --------
Total increase in net assets............. 1,175,452 4,469,434 642,708 809,893 1,340,646
NET ASSETS
Beginning of period.................... 2,830,540 2,330,878 158,889 497,233 647,427
---------- ---------- -------- -------- --------
End of period.......................... $4,005,992 $6,800,312 $ 801,597 $1,307,126 $1,988,073
========== ========== ========= ========== ==========
</TABLE>
See accompanying notes to financial statements
12
<PAGE> 15
- --------------------------------------------------------------------------------
The Providentmutual Variable Annuity Separate Account
of Providentmutual Life and Annuity Company of America
Statements of Changes in Net Assets for the Year Ended December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MONEY AGGRESSIVE
GROWTH MARKET BOND MANAGED GROWTH INTERNATIONAL
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
FROM OPERATIONS
Net investment income (loss)... $ 234,499 $ 459,605 $ 137,032 $ 238,550 $ (42,088) $ (95,386)
Net realized gain (loss) on
investments.................. 999,592 (27,838) (30,138) 146,598 451,625
Net unrealized appreciation of
investments during the
year......................... 2,400,188 390,112 1,385,311 254,293 943,151
----------- ------------ ---------- ---------- ---------- -----------
Net increase in net assets from
operations................... 3,634,279 459,605 499,306 1,593,723 358,803 1,299,390
----------- ------------ ---------- ---------- ---------- -----------
FROM VARIABLE ANNUITY CONTRACT
TRANSACTIONS
Contractowners' net premiums... 953,645 65,561,488 157,108 339,295 262,786 640,816
Administrative charges......... (10,145) (2,373) (1,700) (5,532) (2,305) (8,640)
Surrenders and forfeitures..... (1,296,295) (1,039,340) (190,643) (1,027,726) (565,323) (1,088,835)
Transfers between investment
portfolios................... 3,174,767 (57,083,385) 790,632 381,860 1,555,000 1,606,825
Net withdrawals due to
policy loans................. (769) (5,334)
Withdrawals due to death
benefits..................... (4,699) (18,292) (9,173) (30,031)
----------- ------------ ---------- ---------- ---------- -----------
Net increase (decrease) in net
assets derived from contract
transactions................. 2,817,273 7,418,098 754,628 (312,103) 1,240,985 1,114,801
----------- ------------ ---------- ---------- ---------- -----------
Total increase in net assets... 6,451,552 7,877,703 1,253,934 1,281,620 1,599,788 2,414,191
NET ASSETS
Beginning of year............ 11,865,531 8,664,097 2,398,392 7,414,565 2,525,447 9,275,356
----------- ------------ ---------- ---------- ---------- -----------
End of year.................. $18,317,083 $ 16,541,800 $3,652,326 $8,696,185 $4,125,235 $11,689,547
=========== ============ ========== ========== ========== ===========
</TABLE>
See accompanying notes to financial statements
13
<PAGE> 16
- --------------------------------------------------------------------------------
The Providentmutual Variable Annuity Separate Account
of Providentmutual Life and Annuity Company of America
Statements of Changes in Net Assets for the Year Ended December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FIDELITY FIDELITY FIDELITY
HIGH EQUITY- FIDELITY ASSET FIDELITY FIDELITY
INCOME INCOME GROWTH MANAGER INDEX 500 CONTRAFUND
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
<S> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------
FROM OPERATIONS
Net investment income (loss)..... $ 112,320 $ 179,939 $ (161,434) $ 89,291 $ (19,118) $ 736
Net realized gain (loss) on
investments.................... 6,210 487,387 51,803 (124,800) 26,128 40,239
Net unrealized appreciation of
investments during the year.... 371,183 3,911,134 3,803,446 2,265,551 998,215 119,151
---------- ----------- ----------- ----------- ---------- -----------
Net increase in net assets from
operations..................... 489,713 4,578,460 3,693,815 2,230,042 1,005,225 160,126
---------- ----------- ----------- ----------- ---------- -----------
FROM VARIABLE ANNUITY CONTRACT
TRANSACTIONS
Contractowners' net premiums..... 232,990 1,594,997 1,239,011 689,229 406,801 219,643
Administrative charges........... (2,346) (8,687) (10,417) (12,588) (1,879) (340)
Surrenders and forfeitures....... (136,512) (356,912) (386,091) (592,328) (70,510) (25,262)
Transfers between investment
portfolios..................... 1,619,408 12,881,483 8,803,899 39,546 4,067,420 4,156,007
Net withdrawals due to
policy loans................... (644) (5,335) (3,795) (3,435)
Withdrawals due to death
benefits....................... (4,628) (17,183) (758)
---------- ----------- ----------- ----------- ---------- -----------
Net increase in net assets
derived from contract
transactions................... 1,708,268 14,088,363 9,642,607 120,424 4,401,832 4,349,290
---------- ----------- ----------- ----------- ---------- -----------
Capital contribution from
Providentmutual Life and
Annuity Company of America..... 25,000
---------- ----------- ----------- ----------- ---------- -----------
Total increase in net assets..... 2,197,981 18,666,823 13,336,422 2,350,466 5,407,057 4,534,416
NET ASSETS
Beginning of year.............. 2,088,786 8,624,257 9,523,686 14,120,649 1,839,168 --
---------- ----------- ----------- ----------- ---------- -----------
End of year.................... $4,286,767 $27,291,080 $22,860,108 $16,471,115 $7,246,225 $ 4,534,416
========== =========== =========== =========== ========== ===========
</TABLE>
See accompanying notes to financial statements
14
<PAGE> 17
- --------------------------------------------------------------------------------
The Providentmutual Variable Annuity Separate Account
of Providentmutual Life and Annuity Company of America
Statements of Changes in Net Assets for the Year Ended December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
QUEST FOR QUEST FOR SCUDDER
QUEST FOR VALUE VALUE SCUDDER GROWTH AND SCUDDER
VALUE EQUITY SMALL CAP MANAGED BOND INCOME INTERNATIONAL
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
FROM OPERATIONS
Net investment income (loss).... $ (35,651) $ (62,446) $ (135,256) $ 140,856 $ 1,456 $ (1,784)
Net realized gain (loss) on
investments................... 19,183 3,784 54,199 (15,119) 798 45
Net unrealized appreciation of
investments during the year... 885,457 816,681 4,370,500 305,362 42,447 11,601
---------- ---------- ----------- ---------- -------- ---------
Net increase in net assets from
operations.................... 868,989 758,019 4,289,443 431,099 44,701 9,862
---------- ---------- ----------- ---------- -------- ---------
FROM VARIABLE ANNUITY CONTRACT
TRANSACTIONS
Contractowners' net premiums.... 328,977 439,205 1,015,081 216,251 13,972 72,957
Administrative charges.......... (1,880) (4,333) (7,330) (1,590) (61)
Surrenders and forfeitures...... (54,781) (64,224) (410,385) (144,826) (322) (245)
Transfers between investment
portfolios.................... 2,535,610 1,100,943 7,262,283 1,053,971 523,398 535,392
Net withdrawals due to
policy loans.................. (3,247) (245)
Withdrawals due to death
benefits...................... (4,781) (9,178) (22,143) (10,845)
---------- ---------- ----------- ---------- -------- ---------
Net increase in net assets
derived from contract
transactions.................. 2,803,145 1,459,166 7,837,506 1,112,961 537,048 607,798
---------- ---------- ----------- ---------- -------- ---------
Capital contribution from
Providentmutual Life and
Annuity Company of America.... 25,000 25,000
---------- ---------- ----------- ---------- -------- ---------
Total increase in net assets.... 3,672,134 2,217,185 12,126,949 1,544,060 606,749 642,660
NET ASSETS
Beginning of year............. 1,473,738 4,338,755 7,718,801 2,089,837 -- --
---------- ---------- ----------- ---------- -------- ---------
End of year................... $5,145,872 $6,555,940 $19,845,750 $3,633,897 $606,749 $ 642,660
========== ========== =========== ========== ======== =========
</TABLE>
See accompanying notes to financial statements
15
<PAGE> 18
- --------------------------------------------------------------------------------
The Providentmutual Variable Annuity Separate Account
of Providentmutual Life and Annuity Company of America
Statements of Changes in Net Assets for the Year Ended December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DREYFUS DREYFUS DREYFUS FEDERATED U.S. FEDERATED
ZERO GROWTH SOCIALLY GOVERNMENT UTILITY
COUPON 2000 AND INCOME RESPONSIBLE BOND FUND FUND
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
FROM OPERATIONS
Net investment income.................... $ 86,045 $ 5,873 $ 423 $ 7,049 $ 4,209
Net realized gain on investments......... 1,665 89,540 3,326 6 992
Net unrealized appreciation of
investments during the year............ 198,206 77,046 4,236 8,312 28,020
---------- ---------- -------- -------- --------
Net increase in net assets from
operations............................. 285,916 172,459 7,985 15,367 33,221
---------- ---------- -------- -------- --------
FROM VARIABLE ANNUITY CONTRACT
TRANSACTIONS
Contractowners' net premiums............. 170,585 163,570 7,753 20,253 33,329
Administrative charges................... (1,261) (74) (2) (1) (9)
Surrenders and forfeitures............... (66,422) (4,640) (94) (185) (4,421)
Transfers between investment
portfolios............................. 990,810 1,974,563 118,247 436,799 560,307
Net withdrawals due to policy loans...... (507)
Withdrawals due to death benefits........ (20,294)
---------- ---------- -------- -------- --------
Net increase in net assets derived from
contract transactions.................. 1,072,911 2,133,419 125,904 456,866 589,206
---------- ---------- -------- -------- --------
Capital contribution from Providentmutual
Life and Annuity Company of America.... 25,000 25,000 25,000 25,000
---------- ---------- -------- -------- --------
Total increase in net assets............. 1,358,827 2,330,878 158,889 497,233 647,427
NET ASSETS
Beginning of year...................... 1,471,713 -- -- -- --
---------- ---------- -------- -------- --------
End of year............................ $2,830,540 $2,330,878 $158,889 $497,233 $647,427
========== ========== ======== ======== ========
</TABLE>
See accompanying notes to financial statements
16
<PAGE> 19
- --------------------------------------------------------------------------------
The Providentmutual Variable Annuity Separate Account
of Providentmutual Life and Annuity Company of America
Notes to Financial Statements (unaudited)
- --------------------------------------------------------------------------------
1. ORGANIZATION
The Providentmutual Variable Annuity Separate Account (Separate Account)
was established by Providentmutual Life and Annuity Company of America
(Providentmutual) under the provisions of Pennsylvania law and commenced
operations on April 14, 1992. In December 1992, Providentmutual redomesticated
to the State of Delaware. Providentmutual is a wholly-owned subsidiary of
Provident Mutual Life Insurance Company (Provident Mutual). The Separate Account
is an investment account to which net proceeds from individual flexible premium
deferred variable annuity contracts (the Contracts) are allocated until maturity
or termination of the Contracts.
The Contracts are distributed through career agents, brokers and personal
producing general agents.
Providentmutual has structured the Separate Account as a unit investment
trust registered with the Securities and Exchange Commission under the
Investment Company Act of 1940, as amended. The Separate Account is comprised of
twenty-three Subaccounts: the Growth, Money Market, Bond, Managed, Aggressive
Growth and International Subaccounts invest in the corresponding portfolios of
the Market Street Fund, Inc.; the Fidelity High Income, Fidelity Equity-Income
and Fidelity Growth Subaccounts invest in the corresponding portfolios of the
Variable Insurance Products Fund; the Fidelity Asset Manager, Fidelity Index 500
and Fidelity Contrafund Subaccounts invest in the corresponding portfolios of
the Variable Insurance Products Fund II; the Quest for Value Equity, Quest for
Value Small Cap and Quest for Value Managed Subaccounts invest in the
corresponding portfolios of the OCC Accumulation Trust; the Scudder Bond,
Scudder Growth and Income and Scudder International Subaccounts invest in the
corresponding portfolios of the Scudder Variable Life Investment Fund; the
Dreyfus Zero Coupon 2000, Dreyfus Growth and Income and Dreyfus Socially
Responsible Subaccounts invest in the corresponding portfolios of the Dreyfus
Variable Investment Fund; and the Federated U.S. Government Bond Fund and
Federated Utility Fund Subaccounts invest in the corresponding portfolios of the
Insurance Management Series.
The Growth, Money Market, Bond, Managed, Aggressive Growth and
International Subaccounts are available to owners of a Market Street VIP
contract. All twenty-three Subaccounts are available to owners of a Market
Street VIP/2 contract.
Net premiums from the Contracts are allocated to the Subaccounts in
accordance with contractowner instructions and are recorded as variable annuity
contract transactions in the statements of changes in net assets. Such amounts
are used to provide money to pay contract values under the Contracts (Note 4).
The Separate Account's assets are the property of Providentmutual.
Transfers between investment portfolios include transfers between the
Subaccounts and the Guaranteed Account (not shown), which is part of
Providentmutual's General Account.
17
<PAGE> 20
- --------------------------------------------------------------------------------
The Providentmutual Variable Annuity Separate Account
of Providentmutual Life and Annuity Company of America
Notes to Financial Statements (unaudited) -- continued
- --------------------------------------------------------------------------------
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of the significant accounting policies followed
by the Separate Account in the financial statements.
Investment Valuation:
Investment shares are valued at the net asset values of the respective
Portfolios. Transactions are recorded on the trade date. Dividend income is
recorded on the ex-dividend date.
Realized Gains and Losses:
Realized gains and losses on sales of investment shares are determined
using the specific identification basis for financial reporting and income tax
purposes.
Federal Income Taxes:
The operation of the Separate Account is included in the Federal income tax
return of Providentmutual. Under the provisions of the Contracts,
Providentmutual has the right to charge the Separate Account for Federal income
tax attributable to the Separate Account. No charge is currently being made
against the Separate Account for such tax.
Estimates:
The preparation of the accompanying financial statements required
management to make estimates and assumptions that affect the reported values of
assets and liabilities as of June 30, 1996 and the reported amounts from
operations and contract transactions during the six months ended June 30, 1996
and the year ended December 31, 1995. Actual results could differ from those
estimates.
18
<PAGE> 21
- --------------------------------------------------------------------------------
The Providentmutual Variable Annuity Separate Account
of Providentmutual Life and Annuity Company of America
Notes to Financial Statements (unaudited) -- continued
- --------------------------------------------------------------------------------
3. INVESTMENTS
At June 30, 1996, the investments of the respective Subaccounts are as
follows:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES COST MARKET VALUE
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------
Market Street Fund, Inc.:
Growth Portfolio.................................. 1,378,150 $19,997,668 $23,139,137
Money Market Portfolio............................ 22,635,977 $22,635,977 $22,635,977
Bond Portfolio.................................... 410,568 $4,324,319 $4,319,170
Managed Portfolio................................. 730,656 $9,394,005 $10,199,958
Aggressive Growth Portfolio....................... 323,306 $5,096,858 $5,470,334
International Portfolio........................... 1,118,615 $13,452,072 $14,474,883
Variable Insurance Products Fund:
High Income Portfolio............................. 586,004 $6,606,425 $6,903,132
Equity-Income Portfolio........................... 2,072,383 $35,997,742 $40,370,029
Growth Portfolio.................................. 1,211,537 $31,307,653 $36,418,815
Variable Insurance Products Fund II:
Asset Manager Portfolio........................... 1,157,803 $16,557,182 $18,096,463
Index 500 Portfolio............................... 181,959 $12,903,658 $14,542,128
Contrafund Portfolio.............................. 684,366 $9,535,180 $10,114,932
OCC Accumulation Trust:
Equity Portfolio.................................. 292,252 $6,553,605 $7,887,888
Small Cap Portfolio............................... 403,633 $7,219,423 $8,339,052
Managed Portfolio................................. 887,720 $22,889,064 $28,504,700
Scudder Variable Life Investment Fund:
Bond Portfolio.................................... 733,851 $4,925,469 $4,843,415
Growth and Income Portfolio....................... 293,460 $2,374,259 $2,479,734
International Portfolio........................... 196,535 $2,370,501 $2,478,304
Dreyfus Variable Investment Fund:
Zero Coupon 2000 Portfolio........................ 327,555 $3,989,097 $4,005,992
Growth and Income Portfolio....................... 321,224 $6,160,198 $6,800,312
Socially Responsible Portfolio.................... 42,525 $776,056 $801,597
Insurance Management Series:
U.S. Government Bond Fund Portfolio............... 131,502 $1,326,000 $1,307,126
Utility Fund Portfolio............................ 176,092 $1,914,172 $1,988,073
</TABLE>
19
<PAGE> 22
- --------------------------------------------------------------------------------
The Providentmutual Variable Annuity Separate Account
of Providentmutual Life and Annuity Company of America
Notes to Financial Statements (unaudited) -- continued
- --------------------------------------------------------------------------------
3. INVESTMENTS, CONTINUED
During the six months ended June 30, 1996 and the year ended December 31,
1995, transactions in investment shares were as follows:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET STREET FUND, INC.
------------------------------------------------------------------------------------------------------------------
GROWTH PORTFOLIO MONEY MARKET PORTFOLIO BOND PORTFOLIO
------------------------------------------------------------------------------------------------------------------
1996 1995 1996 1995 1996 1995
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shares purchased....................... 209,709 268,419 26,123,262 29,796,814 86,854 96,758
Shares received from reinvestment of:
Dividends............................ 17,973 30,204 394,597 654,480 10,468 17,303
Capital gain distributions........... 56,193 69,274
---------- ---------- ----------- ----------- ---------- ----------
Total shares acquired.................. 283,875 367,897 26,517,859 30,451,294 97,322 114,061
Total shares redeemed.................. (25,352) (95,379) (19,610,382) (22,894,689) (18,785) (28,524)
---------- ---------- ----------- ----------- ---------- ----------
Net increase (decrease) in shares
owned................................ 258,523 272,518 6,907,477 7,556,605 78,537 85,537
Shares owned, beginning of period...... 1,119,627 847,109 15,728,500 8,171,895 332,031 246,494
---------- ---------- ----------- ----------- ---------- ----------
Shares owned, end of period............ 1,378,150 1,119,627 22,635,977 15,728,500 410,568 332,031
========== ========== =========== =========== ========== ==========
Cost of shares acquired................ $4,533,328 $5,336,808 $ 26,517,859 $ 30,451,294 $1,033,432 $1,185,517
========== ========== =========== =========== ========== ==========
Cost of shares redeemed................ $ 340,036 $1,279,444 $ 19,610,382 $ 22,894,689 $ 209,634 $ 321,695
========== ========== =========== =========== ========== ==========
</TABLE>
20
<PAGE> 23
- --------------------------------------------------------------------------------
The Providentmutual Variable Annuity Separate Account
of Providentmutual Life and Annuity Company of America
Notes to Financial Statements (unaudited) -- continued
- --------------------------------------------------------------------------------
3. INVESTMENTS, CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET STREET FUND, INC.
------------------------------------------------------------------------------------------------------------------
AGGRESSIVE
MANAGED PORTFOLIO GROWTH PORTFOLIO INTERNATIONAL PORTFOLIO
------------------------------------------------------------------------------------------------------------------
1996 1995 1996 1995 1996 1995
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shares purchased.......................... 112,950 118,219 61,258 130,740 184,684 273,588
Shares received from reinvestment of:
Dividends............................... 11,846 27,097 2,905 11,414 4,702
Capital gain distributions.............. 26,337 710 29,259 1,436 46,268 22,215
---------- ---------- ---------- ---------- ---------- ----------
Total shares acquired..................... 151,133 146,026 93,422 132,176 242,366 300,505
Total shares redeemed..................... (33,316) (154,005) (7,468) (58,283) (32,738) (189,055)
---------- ---------- ---------- ---------- ---------- ----------
Net increase (decrease) in shares owned... 117,817 (7,979) 85,954 73,893 209,628 111,450
Shares owned, beginning of period......... 612,839 620,818 237,352 163,459 908,987 797,537
---------- ---------- ---------- ---------- ---------- ----------
Shares owned, end of period............... 730,656 612,839 323,306 237,352 1,118,615 908,987
========== ========== ========== ========== ========== ==========
Cost of shares acquired................... $2,070,009 $1,922,362 $1,484,619 $2,157,899 $3,026,921 $3,568,856
========== ========== ========== ========== ========== ==========
Cost of shares redeemed................... $ 446,310 $2,024,052 $ 108,662 $ 812,404 $ 383,968 $2,097,816
========== ========== ========== ========== ========== ==========
</TABLE>
21
<PAGE> 24
- --------------------------------------------------------------------------------
The Providentmutual Variable Annuity Separate Account
of Providentmutual Life and Annuity Company of America
Notes to Financial Statements (unaudited) -- continued
- --------------------------------------------------------------------------------
3. INVESTMENTS, CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VARIABLE INSURANCE PRODUCTS FUND
------------------------------------------------------------------------------------------------------------------
HIGH INCOME PORTFOLIO EQUITY-INCOME PORTFOLIO GROWTH PORTFOLIO
------------------------------------------------------------------------------------------------------------------
1996 1995 1996 1995 1996 1995
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shares purchased....................... 205,476 187,083 596,885 823,025 366,582 359,221
Shares received from reinvestment of:
Dividends............................ 31,526 15,229 2,439 23,321 2,459 2,491
Capital gain distributions........... 6,168 69,930 30,181 62,080
---------- ---------- ----------- ----------- ----------- ----------
Total shares acquired.................. 243,170 202,312 669,254 876,527 431,121 361,712
Total shares redeemed.................. (12,923) (40,679) (13,117) (22,121) (2,464) (17,914)
---------- ---------- ----------- ----------- ----------- ----------
Net increase in shares owned........... 230,246 161,633 656,136 854,406 428,657 343,798
Shares owned, beginning of period...... 355,758 194,125 1,416,247 561,841 782,880 439,082
---------- ---------- ----------- ----------- ----------- ----------
Shares owned, end of period............ 586,004 355,758 2,072,383 1,416,247 1,211,537 782,880
========== ========== =========== =========== =========== ==========
Cost of shares acquired................ $2,808,715 $2,282,206 $12,899,951 $15,096,748 $12,479,403 $9,941,272
========== ========== =========== =========== =========== ==========
Cost of shares redeemed................ $ 141,276 $ 455,291 $ 199,626 $ 341,059 $ 74,723 $ 408,296
========== ========== =========== =========== =========== ==========
</TABLE>
22
<PAGE> 25
- --------------------------------------------------------------------------------
The Providentmutual Variable Annuity Separate Account
of Providentmutual Life and Annuity Company of America
Notes to Financial Statements (unaudited) -- continued
- --------------------------------------------------------------------------------
3. INVESTMENTS, CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VARIABLE INSURANCE PRODUCTS FUND II
------------------------------------------------------------------------------------------------------------------
ASSET MANAGER PORTFOLIO INDEX 500 PORTFOLIO CONTRAFUND PORTFOLIO
------------------------------------------------------------------------------------------------------------------
1996 1995 1996 1995 1996 1995
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shares purchased.......................... 116,038 171,595 82,229 67,760 364,581 325,895
Shares received from reinvestment of:
Dividends............................... 39,874 22,480 1,307 546 1,399
Capital gain distributions.............. 32,878 3,359 75 3,706 2,797
---------- ---------- ---------- ---------- ---------- ----------
Total shares acquired..................... 188,789 194,075 86,894 68,381 368,287 330,091
Total shares redeemed..................... (74,122) (174,916) (645) (5,385) (12,979) (1,033)
---------- ---------- ---------- ---------- ---------- ----------
Net increase in shares owned.............. 114,667 19,159 86,249 62,996 355,308 329,058
Shares owned, beginning of period......... 1,043,136 1,023,977 95,710 32,714 329,058
---------- ---------- ---------- ---------- ---------- ----------
Shares owned, end of period............... 1,157,803 1,043,136 181,959 95,710 684,366 329,058
========== ========== ========== ========== ========== ==========
Cost of shares acquired................... $2,881,524 $2,763,929 $6,701,830 $4,715,544 $5,273,210 $4,427,161
========== ========== ========== ========== ========== ==========
Cost of shares redeemed................... $1,084,728 $2,679,014 $ 38,285 $ 306,702 $ 153,295 $ 11,896
========== ========== ========== ========== ========== ==========
</TABLE>
23
<PAGE> 26
- --------------------------------------------------------------------------------
The Providentmutual Variable Annuity Separate Account
of Providentmutual Life and Annuity Company of America
Notes to Financial Statements (unaudited) -- continued
- --------------------------------------------------------------------------------
3. INVESTMENTS, CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
OCC ACCUMULATION TRUST
------------------------------------------------------------------------------------------------------------------
EQUITY PORTFOLIO SMALL CAP PORTFOLIO MANAGED PORTFOLIO
------------------------------------------------------------------------------------------------------------------
1996 1995 1996 1995 1996 1995
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shares purchased.......................... 83,143 127,805 69,979 113,031 222,598 299,655
Shares received from reinvestment of:
Dividends............................... 2,142 396 4,347 848 9,660 2,322
Capital gain distributions.............. 4,293 11,176 755 6,161
---------- ---------- ---------- ---------- ---------- ----------
Total shares acquired..................... 89,578 128,201 85,502 114,634 238,418 301,977
Total shares redeemed..................... (2,750) (4,109) (11,147) (34,996) (9,150) (14,087)
---------- ---------- ---------- ---------- ---------- ----------
Net increase in shares owned.............. 86,828 124,092 74,354 79,638 229,268 287,890
Shares owned, beginning of period......... 205,424 81,332 329,279 249,641 658,452 370,562
---------- ---------- ---------- ---------- ---------- ----------
Shares owned, end of period............... 292,252 205,424 403,633 329,279 887,720 658,452
========== ========== ========== ========== ========== ==========
Cost of shares acquired................... $2,351,218 $2,859,457 $1,727,691 $2,055,414 $7,506,403 $8,052,533
========== ========== ========== ========== ========== ==========
Cost of shares redeemed................... $ 49,328 $ 72,780 $ 199,436 $ 654,910 $ 193,000 $ 296,084
========== ========== ========== ========== ========== ==========
</TABLE>
24
<PAGE> 27
- --------------------------------------------------------------------------------
The Providentmutual Variable Annuity Separate Account
of Providentmutual Life and Annuity Company of America
Notes to Financial Statements (unaudited) -- continued
- --------------------------------------------------------------------------------
3. INVESTMENTS, CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SCUDDER VARIABLE LIFE INVESTMENT FUND
------------------------------------------------------------------------------------------------------------------
BOND PORTFOLIO GROWTH AND INCOME INTERNATIONAL
PORTFOLIO PORTFOLIO
------------------------------------------------------------------------------------------------------------------
1996 1995 1996 1995 1996 1995
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shares purchased............................. 208,813 197,271 214,640 76,730 140,391 54,443
Shares received from reinvestment of:
Dividends.................................. 34,782 26,798 1,809 483 2,055
Capital gain distributions................. 1,769
---------- ---------- ---------- -------- ---------- --------
Total shares acquired........................ 243,595 224,069 218,218 77,213 142,446 54,443
Total shares redeemed........................ (16,564) (39,303) (792) (1,179) (282) (72)
---------- ---------- ---------- -------- ---------- --------
Net increase in shares owned................. 227,031 184,766 217,426 76,034 142,164 54,371
Shares owned, beginning of period............ 506,820 322,054 76,034 54,371
---------- ---------- ---------- -------- ---------- --------
Shares owned, end of period.................. 733,851 506,820 293,460 76,034 196,535 54,371
========== ========== ========== ======== ========== ========
Cost of shares acquired...................... $1,636,778 $1,525,757 $1,815,342 $572,319 $1,742,573 $631,861
========== ========== ========== ======== ========== ========
Cost of shares redeemed...................... $ 114,863 $ 284,131 $ 5,385 $ 8,017 $ 3,131 $ 802
========== ========== ========== ======== ========== ========
</TABLE>
25
<PAGE> 28
- --------------------------------------------------------------------------------
The Providentmutual Variable Annuity Separate Account
of Providentmutual Life and Annuity Company of America
Notes to Financial Statements (unaudited) -- continued
- --------------------------------------------------------------------------------
3. INVESTMENTS, CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DREYFUS VARIABLE INVESTMENT FUND
------------------------------------------------------------------------------------------------------------------
ZERO COUPON GROWTH AND SOCIALLY RESPONSIBLE
2000 PORTFOLIO INCOME PORTFOLIO
PORTFOLIO
------------------------------------------------------------------------------------------------------------------
1996 1995 1996 1995 1996 1995
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shares purchased........................ 107,075 101,556 189,602 123,226 33,724 8,954
Shares received from reinvestment of:
Dividends............................. 6,214 9,259 2,107 729 38
Capital gain distributions............ 552 2,978 4,743 192
---------- ---------- ----------- ---------- ---------- ----------
Total shares acquired................... 113,841 110,815 194,687 128,698 33,724 9,184
Total shares redeemed................... (9,163) (17,149) (625) (1,536) (378) (5)
---------- ---------- ----------- ---------- ---------- ----------
Net increase in shares owned............ 104,678 93,666 194,062 127,162 33,346 9,179
Shares owned, beginning of period....... 222,877 129,211 127,162 9,179
---------- ---------- ----------- ---------- ---------- ----------
Shares owned, end of period............. 327,555 222,877 321,224 127,162 42,525 9,179
========== ========== =========== ========== ========== ==========
Cost of shares acquired................. $1,412,960 $1,368,738 $3,915,948 $2,276,498 $626,895 $154,729
========== ========== =========== ========== ========== ==========
Cost of shares redeemed................. $ 108,681 $ 208,117 $ 9,582 $ 22,666 $ 5,492 $ 76
========== ========== =========== ========== ========== ==========
</TABLE>
26
<PAGE> 29
- --------------------------------------------------------------------------------
The Providentmutual Variable Annuity Separate Account
of Providentmutual Life and Annuity Company of America
Notes to Financial Statements (unaudited) -- continued
- --------------------------------------------------------------------------------
3. INVESTMENTS, CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INSURANCE MANAGEMENT SERIES
------------------------------------------------------------------------------------------------------------------
UTILITY
U.S. GOVERNMENT FUND
BOND FUND PORTFOLIO
PORTFOLIO
------------------------------------------------------------------------------------------------------------------
1996 1995 1996 1995
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares purchased....................................................... 84,377 47,523 117,368 59,606
Shares received from reinvestment of:
Dividends............................................................ 2,623 852 1,918 523
Capital gain distributions........................................... 331 525
-------- -------- ---------- --------
Total shares acquired.................................................. 87,331 48,375 119,812 60,129
Total shares redeemed.................................................. (4,152) (53) (2,417) (1,432)
-------- -------- ---------- --------
Net increase in shares owned........................................... 83,180 48,322 117,395 58,697
Shares owned, beginning of period...................................... 48,322 58,697
-------- -------- ---------- --------
Shares owned, end of period............................................ 131,502 48,322 176,092 58,697
======== ======== ========== ========
Cost of shares acquired................................................ $878,595 $489,445 $1,318,632 $633,428
======== ======== ========== ========
Cost of shares redeemed................................................ $ 41,516 $ 524 $ 23,867 $ 14,021
======== ======== ========== ========
</TABLE>
27
<PAGE> 30
- --------------------------------------------------------------------------------
The Providentmutual Variable Annuity Separate Account
of Providentmutual Life and Annuity Company of America
Notes to Financial Statements (unaudited) -- concluded
- --------------------------------------------------------------------------------
4. RELATED PARTY TRANSACTIONS
Certain deductions are made from the Subaccounts and/or the premiums by
Providentmutual. The deductions may include (1) surrender charges, (2)
administration fees, (3) transfer processing fees, (4) mortality and expense
risk charges and (5) premium taxes.
There are no sales expenses deducted from premiums at the time the premiums
are paid. If a contract has not been in force for six full years, upon surrender
or for certain withdrawals, a surrender charge is deducted from the proceeds.
However, subject to certain restrictions, up to 10% of the contract account
value as of the beginning of a contract year may be surrendered or withdrawn
free of surrender charges.
An annual administrative fee of $30 is deducted from the contract account
value on each contract anniversary date beginning one year from the issue date
of the contract. In addition, to compensate for costs associated with
administration of the Market Street VIP/2 contracts, Providentmutual deducts a
daily asset-based administration charge from the assets of the Separate Account
equal to an annual rate of .15%. This daily asset-based administration charge is
reported in the mortality and expense risk charges in the statements of
operations.
During any given contract year, the first four transfers by Market Street
VIP contractowners and the first twelve transfers by Market Street VIP/2
contractowners of amounts in the Subaccounts are free of charge. A fee of $25 is
assessed for each additional transfer. No transfer fees were incurred during the
six months ended June 30, 1996 or the year ended December 31, 1995.
The Separate Account is charged a daily mortality and expense risk charge
at an annual rate of 1.20% for the Market Street VIP contracts and 1.25% for the
Market Street VIP/2 contracts. Providentmutual reserves the right to increase
this charge for the Market Street VIP contracts, but in no event will it be
greater than 1.25%.
State premium taxes, when applicable, will be deducted depending upon when
such taxes are paid to the taxing authority. The premium taxes are deducted
either from premiums as they are received or from the proceeds upon withdrawal
from or surrender of the contract or upon application of the proceeds to a
payment option.
28
<PAGE> 31
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29
<PAGE> 32
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29
<PAGE> 33
- --------------------------------------------------------------------------------
The Providentmutual Variable Annuity Separate Account
of Providentmutual Life and Annuity Company of America
Supplementary Information (unaudited)
- --------------------------------------------------------------------------------
The table below shows the net rates of return for the Subaccounts. The net
rate of return is applicable to net assets for a variable annuity contract whose
contract year commences with the beginning date of the year shown and is not
based on the average net assets in the Subaccounts during the year.
The performance for each Subaccount is shown as the net rate of return which
reflects the Subaccounts' investment income and capital gains and losses,
realized or unrealized, less charges against the Subaccounts' assets for the
period shown.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MONEY AGGRESSIVE
GROWTH MARKET BOND MANAGED GROWTH
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------
MARKET STREET VIP
For the six months ended:
June 30, 1996........... 8.71% 1.93% (2.02)% 3.91% 9.82%
For the year ended:
December 31, 1995....... 28.84% 4.35% 18.91% 22.87% 12.13%
December 31, 1994....... 1.19% 2.56% (6.74)% (2.99)% (1.19)%
December 31, 1993....... 8.90% 1.37% 9.01% 10.29% 3.95%
December 31, 1992....... (0.80)%(1) 0.79%(2) 1.92%(3) 7.19%(4) 12.42%(1)
MARKET STREET VIP/2
For the six months ended:
June 30, 1996........... 8.60% 1.83% (2.12)% 3.81% 9.71%
For the year ended:
December 31, 1995....... 28.58% 4.14% 18.67% 22.62% 11.91%
December 31, 1994....... 0.99% 2.36% (6.92)% (3.18)% (1.39)%
December 31, 1993....... 0.27%(11) 0.26%(12) (0.04)%(13) (0.25)%(14) 6.84%(15)
<CAPTION>
FIDELITY FIDELITY FIDELITY FIDELITY
INTER- HIGH EQUITY- FIDELITY ASSET INDEX
TIONAL INCOME INCOME GROWTH MANAGER 500
<S> <C><C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
MARKET STREET VIP
For the six months ended:
June 30, 1996........... 6.37% -- -- -- -- --
For the year ended:
December 31, 1995....... 12.95% -- -- -- -- --
December 31, 1994....... (0.93)% -- -- -- -- --
December 31, 1993....... 34.49% -- -- -- -- --
December 31, 1992....... (10.42)%(1) -- -- -- -- --
MARKET STREET VIP/2
For the six months ended:
June 30, 1996........... 6.26% 6.55% 5.12 % 9.96% 5.07% 9.37%
For the year ended:
December 31, 1995....... 12.72% 18.93% 33.22 % 33.49% 15.33% 35.29%
December 31, 1994....... (1.13)% (2.91)% 5.58 % (1.41)% (7.39)% (0.36)%
December 31, 1993....... 2.68%(16) 1.99%(15) 0.73 %(14) 0.31%(16) 4.06%(16) 0.63%(14)
</TABLE>
The net rate of return was calculated from the date contractowner funds were
first allocated to the Subaccount referenced above as follows: (1) July 13,
1992, (2) July 1, 1992, (3) July 21, 1992, (4) July 14, 1992, (5) May 18, 1995,
(6) June 23, 1995, (7) May 30, 1995, (8) July 10, 1995, (9) July 6, 1995, (10)
June 8, 1995, (11) November 1, 1993, (12) October 11, 1993, (13) November 3,
1993, (14) October 27, 1993, (15) November 4, 1993, (16) October 25, 1993, (17)
October 29, 1993 and (18) November 9, 1993.
30
<PAGE> 34
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
QUEST QUEST QUEST SCUDDER
FIDELITY FOR VALUE FOR VALUE FOR VALUE SCUDDER GROWTH AND SCUDDER
CONTRAFUND EQUITY SMALL CAP MANAGED BOND INCOME INTERNATIONAL
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
MARKET STREET VIP
For the six months ended:
June 30, 1996........... -- -- -- -- -- -- --
For the year ended:
December 31, 1995....... -- -- -- -- -- -- --
December 31, 1994....... -- -- -- -- -- -- --
December 31, 1993....... -- -- -- -- -- -- --
December 31, 1992....... -- -- -- -- -- -- --
MARKET STREET VIP/2
For the six months ended:
June 30, 1996........... 7.52% 9.96% 7.73% 8.12% (2.87)% 7.86% 8.49%
For the year ended:
December 31, 1995....... 17.70%(5) 36.93% 13.63% 43.54% 16.53% 12.80%(6) 5.91%(7)
December 31, 1994....... -- 2.37% (2.38)% 1.19% (6.10)% -- --
December 31, 1993....... -- 0.32%(17) 2.33%(16) 0.27%(14) 0.32%(15) -- --
<CAPTION>
DREYFUS
COUPON GROWTH AND SOCIALLY GOVERNMENT UTILITY
2000 INCOME RESPONSIBLE BOND FUND FUND
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
MARKET STREET VIP
For the six months ended:
June 30, 1996........... -- -- -- -- --
For the year ended:
December 31, 1995....... -- -- -- -- --
December 31, 1994....... -- -- -- -- --
December 31, 1993....... -- -- -- -- --
December 31, 1992....... -- -- -- -- --
MARKET STREET VIP/2
For the six months ended:
June 30, 1996........... (2.04)% 16.71% 8.14% (0.87)% 3.81%
For the year ended:
December 31, 1995....... 16.31% 25.82%(7) 10.39%(8) 5.30%(9) 12.81%(10)
December 31, 1994....... (5.24)% -- -- -- --
December 31, 1993....... 0.12%(18) -- -- -- --
</TABLE>
31
<PAGE> 35
THIS PAGE INTENTIONALLY LEFT BLANK.
<PAGE> 36
- --------------------------------------------------------------------------------
To Our Variable Life Policyowners and Variable Annuity Contractowners:
- --------------------------------------------------------------------------------
We are pleased to send you the 1996 Semi-Annual Report for Market Street Fund,
Inc., its Growth, Money Market, Bond, Managed, Aggressive Growth, International,
Common Stock and Sentinel Growth Portfolios.
Economic Overview and Investment Perspective
Writing last January in the 1995 Annual Report for the Market Street Fund, I
said in part, "What will 1996 bring? With no hint of renewed inflation on the
horizon and the Federal Reserve Board leaning more towards easing than
tightening in order to avoid pushing an already weakening economy into
recession, both bond and equity markets should enjoy modestly positive rates of
return in 1996. While budget battles and the upcoming elections could produce
short term volatility, long term patient investors should have nothing to fear
from maintaining their market exposure. As to market timers, you are on your own
as always."
First the facts. Through the first 6 months of 1996, the equity markets
responded strongly to a growing, nearly inflation free economy. Rising profits
were sufficient to offset fears of rising interest rates. Total returns were
slightly above 10% for both the S&P 500 and the Russell 2000. For the fixed
income markets, the results were not as pleasant, with the Lehman Aggregate Bond
Index turning in a -1.2% total return and the 30 year U.S. Treasury Bond rate
averaging 6.06%, 6.60%, and 7.06% for the 4th quarter of 1995 and the first 2
quarters of 1996, respectively. While the Federal Reserve did not tighten, the
combination of a growing economy, persistent inflation fears, and the failure of
the new Congress and the President to make any progress on fundamental budget
reform were sufficient to cause the back-up in rates.
The outlook for the remainder of 1996 is cautiously optimistic for both the
equity and fixed income markets. July has already seen increased volatility in
both markets as equities sold off strongly, particularly technology issues, only
to bounce right back, at least partially; while 30 year Treasuries rallied
strongly to the 6.75% level. Markets will likely stabilize until the November
election, so long as inflation fears do not force the Fed's hand. December
should be exciting.
Review of Fund Portfolio Performance
The Semi-Annual Reviews and performance charts* for each Portfolio (other than
the Money Market Portfolio) contained in this Semi-Annual Report show the growth
of $10,000 over the period shown, assuming reinvestment of all dividends. The
performance is then compared to a relevant index. As always, it is important to
recall in interpreting these results that the advisers of the equity portfolios
of Market Street Fund do not engage in market timing. That is to say that in all
but times of great market turmoil, they endeavor to keep the vast majority of
portfolio assets invested in common stocks. Thus, they attempt to add value by
stock selection utilizing the methods and in the markets specified in the Fund
Prospectus. Their performance should be judged according to how well they do
relative to market indices measuring the same type of activity.
We appreciate the opportunity to have served you in the past and look forward to
serving you during the remainder of 1996 and many years into the future.
/s/ Stanley R. Reber
Stanley R. Reber
President
The Market Street Fund, Inc.
*Past performance is not predictive of future results. Moreover, the
relationship between the performance of the Fund Portfolios and the actual
increases or decreases in a policy's cash value is not directly proportional due
to certain charges deducted from premiums and under the policies which are not
reflected in the above figures. Please see the current prospectus for an
explanation of these charges and for illustrations which take such charges into
account in calculating cash values.
1
<PAGE> 37
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Growth Portfolio
1996 Semi-Annual Review
Newbold's Asset Management, Inc.
- --------------------------------------------------------------------------------
For the first six months of the year, the Market Street Fund Growth
Portfolio was up 9.4% compared with 10.1% for the Standard & Poor's 500 Index.
Newbold's is happy to report that its conservatively postured portfolios
fared quite well amidst all of this market volatility. In fact, the heightened
volatility is reflective of more normal markets than we have experienced over
the last several years and also of markets where risk levels continue to build.
These are the markets where Newbold's tends to build its relative performance
advantage.
Stock selection was good in the second quarter led by investments in US
Healthcare, which was acquired by Aetna and by Xerox which appreciated
dramatically. Retail holdings consisting of American Stores, Limited and Reebok
International all outperformed solidly. Basic industry stocks tended to lag in
our portfolios as well as in the overall market given prospects for firming
interest rates. Conversely, we were encouraged that our utilities produced
returns in line to modestly ahead of the market despite these firming rates.
Prospectively, Newbold's continues to be committed to participating in the
appreciation the equity markets offer through specific stock selection in an
overall diversified portfolio. However, we are always mindful of preserving the
above average appreciation of recent years in client portfolios through
disciplined risk control as demonstrated by our large capitalization, low P/E,
high yield process.
Jeffrey Van Orden
MARKET STREET FUND
Growth Portfolio
<TABLE>
<CAPTION>
Measurement Period
(Fiscal Year Covered) Fund Index
<S> <C> <C>
Start 10000 10020
85 10177 10077 Growth Fund
86 11325 11941 Average Annual Total Return
87 11511 12540 Since Inception*
88 13641 14580 13.02%
89 17794 19131
90 18220 18485
91 21590 24115
92 22614 25948
93 24924 28558
94 25522 28933
95 33279 39811
95.5 36397 43832
</TABLE>
Past performance is not predictive of future performance.
+ The Index is the S&P 500 Index, an unmanaged index of 500 U.S. common stocks
that includes reinvestment of dividends.
* Inception date was December 12, 1985.
2
<PAGE> 38
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Growth Portfolio
Schedule of Investments, June 30, 1996
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENTAGE NUMBER
OF PORTFOLIO OF SHARES VALUE
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
COMMON STOCK (97.4%)
Aerospace & Defense................................................... 4.1%
Boeing Co........................................................... 44,400 $ 3,868,350
United Technologies Corp............................................ 30,500 3,507,500
-----------
7,375,850
-----------
Alcohol............................................................... 0.9%
Anheuser-Busch Companies, Inc....................................... 20,500 1,537,500
-----------
Automotive & Equipment................................................ 1.2%
Genuine Parts Co.................................................... 48,000 2,196,000
-----------
Building & Building Supplies.......................................... 2.7%
Masco Corp.......................................................... 157,600 4,767,400
-----------
Business Services, Media, Etc......................................... 2.0%
Dun & Bradstreet Corp............................................... 57,300 3,581,250
-----------
Chemicals............................................................. 3.2%
Grace (W.R.) & Co................................................... 53,800 3,813,075
Great Lakes Chemical Corp........................................... 31,100 1,935,975
-----------
5,749,050
-----------
Diversified........................................................... 1.5%
Corning, Inc........................................................ 70,000 2,686,250
-----------
Drugs & Health Care................................................... 5.2%
Baxter International, Inc........................................... 44,600 2,107,350
Bristol-Meyers Squibb............................................... 58,700 5,283,000
Mallinckrodt Group, Inc............................................. 47,100 1,831,012
Warner Lambert Co................................................... 1,900 104,500
-----------
9,325,862
-----------
Electrical & Electronic............................................... 1.5%
Cooper Industries, Inc.............................................. 66,200 2,747,300
-----------
Finance--Banks........................................................ 3.1%
Fleet Financial Group, Inc.......................................... 81,200 3,532,200
Nations Bank Corp................................................... 24,400 2,016,050
-----------
5,548,250
-----------
Finance--Insurance.................................................... 9.0%
Aetna Life & Casualty Co............................................ 87,300 6,241,950
Chubb Corp.......................................................... 15,000 748,125
</TABLE>
3
<PAGE> 39
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Growth Portfolio
Schedule of Investments, June 30, 1996 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENTAGE NUMBER
OF PORTFOLIO OF SHARES VALUE
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
COMMON STOCK (CONTINUED)
Finance-Insurance (Continued)
General Re Corp..................................................... 18,300 $ 2,786,175
ITT Hartford Group Inc.............................................. 34,500 1,837,125
Providian Corp...................................................... 19,800 848,925
St. Paul Companies, Inc............................................. 69,000 3,691,500
-----------
16,153,800
-----------
Foods................................................................. 1.5%
Archer-Daniels Midland Co........................................... 139,765 2,673,006
-----------
Natural Gas........................................................... 3.3%
Panhandle Eastern Corp.............................................. 91,900 3,021,213
TransCanada Pipelines Ltd........................................... 197,900 2,919,025
-----------
5,940,238
-----------
Non-Ferrous Metals & Mining........................................... 2.4%
Aluminum Co. of America............................................. 76,700 4,400,662
-----------
Office Equipment & Supplies........................................... 3.2%
International Business Machines Corp................................ 17,500 1,732,500
Pitney Bowes, Inc................................................... 18,200 869,050
Xerox Corp.......................................................... 60,300 3,226,050
-----------
5,827,600
-----------
Oil................................................................... 2.0%
Mobil Corp.......................................................... 31,400 3,520,725
-----------
Oil Equipment & Services.............................................. 1.6%
Schlumberger Ltd.................................................... 33,900 2,856,075
-----------
Oil & Other Energy Sources............................................ 8.6%
Amoco Corp.......................................................... 48,900 3,539,137
Atlantic Richfield Co............................................... 29,500 3,495,750
Chevron Corp........................................................ 29,700 1,752,300
Exxon Corp.......................................................... 34,100 2,962,438
USX Marathon Group.................................................. 185,300 3,729,163
-----------
15,478,788
-----------
Paper & Forest Products............................................... 4.3%
International Paper Co.............................................. 44,500 1,640,937
James River Corp.................................................... 135,300 3,568,538
Mead Corp........................................................... 49,400 2,562,625
-----------
7,772,100
-----------
</TABLE>
4
<PAGE> 40
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Growth Portfolio
Schedule of Investments, June 30, 1996 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENTAGE NUMBER
OF PORTFOLIO OF SHARES VALUE
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
COMMON STOCK (CONTINUED)
Pollution Control..................................................... 3.7%
Browning-Ferris Industries, Inc..................................... 91,700 $ 2,659,300
WMX Technologies, Inc............................................... 122,600 4,015,150
-----------
6,674,450
-----------
Retail Food Chains.................................................... 1.7%
American Stores Co.................................................. 72,100 2,974,125
-----------
Retail Stores......................................................... 0.9%
Limited, Inc........................................................ 71,142 1,529,553
-----------
Telecommunications.................................................... 5.7%
AT&T Corp........................................................... 124,600 7,725,200
Sprint Corp......................................................... 60,400 2,536,800
-----------
10,262,000
-----------
Textiles & Apparel.................................................... 1.3%
Reebok International, Ltd........................................... 68,200 2,293,225
-----------
Tobacco............................................................... 4.4%
RJR Nabisco Holdings Corp........................................... 161,840 5,017,040
UST, Inc............................................................ 82,900 2,839,325
-----------
7,856,365
-----------
Utilities-Combination................................................. 4.0%
Baltimore Gas & Electric Co......................................... 51,100 1,449,963
Edison International................................................ 98,300 1,732,537
PECO Energy Co...................................................... 152,200 3,957,200
-----------
7,139,700
-----------
Utilities-Electric.................................................... 7.9%
Entergy Corp........................................................ 139,500 3,958,312
FPL Group, Inc...................................................... 92,700 4,264,200
General Public Utilities Corp....................................... 80,200 2,827,050
Pacificorp.......................................................... 85,200 1,895,700
Southern Co......................................................... 51,500 1,268,188
-----------
14,213,450
-----------
</TABLE>
5
<PAGE> 41
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Growth Portfolio
Schedule of Investments, June 30, 1996 -- Concluded
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENTAGE NUMBER
OF PORTFOLIO OF SHARES VALUE
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
COMMON STOCK (CONTINUED)
Utilities-Telephone................................................... 6.5%
GTE Corp............................................................ 99,600 $ 4,457,100
NYNEX Corp.......................................................... 154,000 7,315,000
-----------
11,772,100
-----------
TOTAL COMMON STOCK (COST $151,525,517)............................ 174,852,674
-----------
PREFERRED STOCK (0.4%)
RJR Nabisco Holdings Corp., 1/10 Convertible Series C, Preferred
(Cost $718,513)................................................... 106,400 691,600
-----------
SHORT-TERM INVESTMENTS (2.2%)
Temporary Investment Fund, Inc. -- TempCash (Cost $4,062,930)....... 4,062,930 4,062,930
-----------
TOTAL INVESTMENTS (100.0%) (COST $156,306,960)........................ $179,607,204
===========
</TABLE>
See accompanying notes to financial statements.
* Non-Income Producing.
6
<PAGE> 42
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Money Market Portfolio
Schedule of Investments, June 30, 1996
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENTAGE PRINCIPAL
OF PORTFOLIO MATURITY AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
BANKERS' ACCEPTANCES (10.9%)
Bank of New York, 5.36%.................................. 09/18/96 $1,000,000 $ 988,238
CoreStates Bank, N.A., 5.26%............................. 08/23/96 2,000,000 1,984,512
NationsBank N.A., 5.28%.................................. 08/21/96 2,000,000 1,985,040
---------
TOTAL BANKERS' ACCEPTANCES (COST $4,957,790)........... 4,957,790
---------
COMMERCIAL PAPER (85.1%)
Agricultural Services...................................... 4.4%
Cargill, Inc., 5.30%..................................... 07/08/96 2,000,000 1,997,938
Finance.................................................... 80.7%
American Express Credit Corp., 5.28%..................... 07/01/96 1,000,000 1,000,000
American Express Credit Corp., 5.29%..................... 07/01/96 1,000,000 1,000,000
BankAmerica Corp., 5.26%................................. 07/31/96 1,000,000 995,617
BankAmerica Corp., 5.30%................................. 07/31/96 1,000,000 995,583
Bankers Trust N.Y. Corp., 5.34%.......................... 09/06/96 1,000,000 990,062
Beneficial Corp., 5.28%.................................. 07/03/96 2,000,000 1,999,413
C.I.T. Group Holdings Inc., 5.29%........................ 08/07/96 1,750,000 1,740,486
C.I.T. Group Holdings Inc., 5.33%........................ 08/07/96 250,000 248,630
Commercial Credit Corp., 5.29%........................... 07/19/96 2,000,000 1,994,710
Ford Motor Credit Co., 5.27%............................. 08/05/96 2,000,000 1,989,753
General Electric Capital Corp., 5.31%.................... 08/09/96 2,000,000 1,988,495
Household Finance Corp., 5.28%........................... 07/16/96 2,000,000 1,995,600
IBM Credit Corp., 5.27%.................................. 07/31/96 500,000 497,804
IBM Credit Corp., 5.32%.................................. 07/31/96 1,500,000 1,493,350
JC Penney Funding Corp., 5.32%........................... 07/29/96 2,000,000 1,991,724
John Deere Capital Corp., 5.36%.......................... 08/28/96 1,000,000 991,364
John Deere Capital Corp., 5.38%.......................... 09/03/96 1,000,000 990,436
Mellon Financial Co., 5.35%.............................. 09/03/96 2,000,000 1,980,978
Morgan J P & Co. Inc., 5.29%............................. 08/13/96 2,000,000 1,987,363
Norwest Corp., 5.28%..................................... 07/12/96 1,200,000 1,198,064
Norwest Financial Inc., 5.28%............................ 07/12/96 800,000 798,709
Pitney Bowes Credit Corp., 5.27%......................... 07/23/96 2,000,000 1,993,559
Prudential Funding Corp., 5.27%.......................... 07/26/96 1,900,000 1,893,047
Transamerica Financial Corp., 5.28%...................... 07/10/96 500,000 499,340
Transamerica Financial Corp., 5.30%...................... 07/10/96 1,500,000 1,498,013
Union Commercial Funding Corp., 5.34%.................... 08/16/96 1,900,000 1,887,036
---------
36,639,136
---------
TOTAL COMMERCIAL PAPER (COST $38,637,074).............. 38,637,074
---------
SHORT-TERM INVESTMENTS (4.0%)
Temporary Investment Fund, Inc.--TempCash
(Cost $1,837,176)...................................... 1,837,176 $ 1,837,176
---------
TOTAL INVESTMENTS (100.0%) (COST $45,432,040).......... $45,432,040
=========
</TABLE>
See accompanying notes to financial statements.
7
<PAGE> 43
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Bond Portfolio
1996 Semi-Annual Review
Sentinel Advisors Company
- --------------------------------------------------------------------------------
For the first half of 1996, the Market Street Bond Portfolio produced a
total return of -1.3%, compared to the Lehman Aggregate Bond index which
returned -1.2%. The Lehman Aggregate Bond Index is considered a good proxy for
the overall fixed-income market.
Six months ago, the markets were responding to a slowdown in the economy
that appeared to have the momentum to become a recession, the anticipated
loosening of credit by the Federal Reserve in response to the pending recession,
and, finally, the prospect of a balanced budget. By February, the markets
realized that the economy was rebounding, tell-tale inflationary pressures were
appearing, and there would be no balanced budget. The market reacted violently.
Interest rates rose sharply 80 to 110 basis points. Thirty-year Treasury Bonds
returned -8.00% for the half year. The fulcrum point between positive and
negative return was in the four year area. Mortgage-backed securities did
reasonably well in this environment because of their shorter average lives.
During the first half of 1996, the Portfolio shortened average maturity from
9.3 years to 7.3 years. Duration, a measure of volatility, was reduced from 5.2
years to 4.2 years. Corporate securities were sold with the proceeds redeployed
to government and agency securities. Average quality was improved from A1 to
Aa3.
Richard D. Temple
MARKET STREET FUND
Bond Portfolio
<TABLE>
<CAPTION>
Measurement Period
(Fiscal Year Covered) Bond Index
<S> <C> <C>
Start 10000 10000
85 10225 10187 Bond Fund
86 11864 11742 Average Annual Total Return
87 11583 12066 Since Inception*
88 12330 13018 7.72%
89 13633 14909
90 14683 16245
91 16728 18844
92 17724 20239
93 19553 22564
94 18454 21892
95 22228 25941
95.5 21930 25630
</TABLE>
Past performance is not predictive of future performance.
+ The Index is the Lehman Aggregate Bond Index, an unmanaged index of bonds
reflecting average prices in the bond market.
* Inception date was December 12, 1985.
8
<PAGE> 44
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Bond Portfolio
Schedule of Investments, June 30, 1996
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENTAGE PRINCIPAL
OF PORTFOLIO MATURITY AMOUNT VALUE
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. TREASURY NOTES (22.8%)
U.S Treasury Note, 5.50%.................................. 12/31/00 $ 250,000 $ 240,975
U.S Treasury Note, 6.00%.................................. 08/31/97 1,100,000 1,100,990
U.S Treasury Note, 6.375%................................. 01/15/00 500,000 500,060
U.S Treasury Note, 6.375%................................. 08/15/02 500,000 495,775
U.S Treasury Note, 7.50%.................................. 05/15/05 1,000,000 1,051,680
----------
TOTAL U.S. TREASURY NOTES (COST $3,421,691)............. 3,389,480
----------
AGENCY OBLIGATIONS (15.1%)
Collaterized Mortgage Obligation Trust, 7.95%............... 3.5% 05/01/17 502,000 510,667
----------
Federal Home Loan Bank...................................... 0.7%
Federal Home Loan Bank, 6.835%............................ 04/20/99 99,000 98,730
----------
Federal Home Loan Mortgage Corporation...................... 0.3%
Federal Home Loan Mortgage Corp., 9.00%................... 11/01/16 8,000 7,881
Federal Home Loan Mortgage Corp., 8.00%................... 03/01/17 43,000 43,332
----------
51,213
----------
Federal National Mortgage Association....................... 10.6%
Federal National Mortgage Association Principal Strip
Callable 10-10-96 @ 100, 8.04% Coupon If Not Called..... 10/10/01 925,000 908,872
Federal National Mortgage Association Principal Strip
Callable 11-01-96 @ 100, 7.99% Coupon If Not Called..... 11/01/01 680,000 664,914
----------
1,573,786
----------
TOTAL AGENCY OBLIGATIONS (COST $2,140,753).............. 2,234,396
----------
CORPORATE BONDS (59.2%)
Financial Institutions...................................... 14.1%
First Union National Bank, 6.18%.......................... 02/22/36 600,000 557,250
Lehman Brothers Holdings, 8.80%........................... 03/01/15 400,000 439,500
Midland Bank, 7.65%....................................... 05/01/25 500,000 513,750
Salomon Brothers, 6.875%.................................. 12/15/03 600,000 570,000
----------
2,080,500
----------
</TABLE>
9
<PAGE> 45
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Bond Portfolio
Schedule of Investments, June 30, 1996 -- Concluded
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT OR
PERCENTAGE NUMBER
OF PORTFOLIO MATURITY OF SHARES VALUE
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CORPORATE BONDS (CONTINUED)
Foreign.................................................... 10.5%
Banque Paribas Subordinate Notes, 6.875%................. 03/01/09 $500,000 $ 460,000
Santander Financial, 7.00%............................... 04/01/06 600,000 581,250
Swedish Export Credit Corp., 9.875%...................... 03/15/38 475,000 519,531
-----------
1,560,781
-----------
Insurance.................................................. 17.1%
Farmers Insurance Exchange, 8.50%........................ 08/01/04 600,000 606,000
Integon Corp., 9.50%..................................... 10/15/01 400,000 421,500
Liberty Mutual Insurance Co., 8.20%...................... 05/04/07 500,000 520,000
Pacific Mutual Life 144A Surplus Notes, 7.90%............ 12/30/23 500,000 493,750
Prudential Insurance Co. of America, 7.65%............... 07/01/07 500,000 495,625
-----------
2,536,875
-----------
Retail-Department Stores................................... 3.5%
May Department Stores Co., 9.125%........................ 12/01/16 500,000 525,000
-----------
Telecommunications......................................... 6.9%
Comsat Corp. Medium Term Note, 8.05%..................... 12/13/06 500,000 531,125
TCI Communications, Inc., 8.00%.......................... 08/01/05 500,000 488,125
-----------
1,019,250
-----------
Utilities--Electric........................................ 3.5%
Mississippi Power and Light Co., 8.80%................... 04/01/05 500,000 511,875
-----------
Utilities--Gas............................................. 3.6%
Consolidated Natural Gas Co., 8.625%..................... 12/01/11 500,000 526,875
-----------
TOTAL CORPORATE BONDS (COST $8,768,527)................ 8,761,156
-----------
SHORT-TERM INVESTMENTS (2.9%)
Temporary Investment Fund, Inc.--TempCash (Cost
$423,214)................................................ 423,214 423,214
-----------
TOTAL INVESTMENTS (100.0%) (COST $14,754,185).......... $14,808,246
===========
</TABLE>
See accompanying notes to financial statements.
10
<PAGE> 46
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Managed Portfolio
1996 Semi-Annual Review
Sentinel Advisors Company
- --------------------------------------------------------------------------------
The Market Street Fund Managed Portfolio achieved a total return of 4.6% for
the first half of 1996, compared to 5.0% for the median Lipper balanced
portfolio.
The stock market has meaningfully outperformed the bond market thus far in
1996, with the Standard & Poor's 500 achieving a total return of 10.1% and the
Lehman Aggregate Bond Index down 1.2%. At the end of June, the asset allocation
of the Managed Portfolio was 52% common stocks, 36% fixed income and 12% cash.
This is slightly more defensive than the 53% common stocks, 41% fixed income and
6% cash positions as of the end of 1995.
While 1995's strong stock market rally continued into the first half of
1996, the internal dynamics of the advance were quite volatile. The tenor of the
market was extremely aggressive during the first four months of the year, but
investors shifted dramatically towards quality and conservatism as the period
drew to a close. The stock segment of the Managed Portfolio modestly
outperformed the Standard & Poor's 500 during the first half.
Interest rates increased during the first half of 1996 as economic growth
picked up and investors worried that inflation might increase as well.
Volatility increased during the period; in this environment, the Portfolio took
advantage of opportunities to shorten duration in its bond segment and reduce
exposure to lower-quality corporate bonds.
At present, the stock market appears to be somewhat overvalued, and entering
a more speculative/volatile late rally phase. The bond market, on the other
hand, has backed up meaningfully, and may present a more attractive opportunity
over the short-term. The Managed Portfolio continues to hold a fairly defensive
portfolio, both in terms of asset allocation and individual security holdings.
Given our outlook for a somewhat slower second half for the economy and for
corporate earnings growth, we would not feel inclined to increase the
Portfolio's exposure to common stocks unless there were a meaningful revaluation
(correction) in the market.
Rodney A. Buck, CFA
David M. Brownles, CFA
Richard A. Pender, CFA
MARKET STREET FUND
Managed Portfolio
<TABLE>
<CAPTION>
Measurement Period
(Fiscal Year Covered) Fund LA Index* S&P Index+
<S> <C> <C> <C>
Start 10000 10000 10000
85 10299 10187 10077
86 11543 11742 11941 Managed Fund
87 11481 12066 12540 Average Annual Total Return
88 12631 13018 14580 Since Inception ++
89 14482 14909 19131 9.26%
90 13235 16245 18485
91 15947 18844 24115
92 17854 20239 25948
93 19928 22564 28558
94 19566 21892 28933
95 24346 25941 39811
95.5 25468 25630 43832
</TABLE>
Past performance is not predictive of future performance.
* The Index is the Lehman Aggregate Bond Index, an unmanaged index of bonds
reflecting average prices in the bond market.
+ The Index is the S&P 500 Index, an unmanaged index of 500 U.S. common stocks
that includes reinvestment of dividends.
++ Inception date was December 12, 1985.
11
<PAGE> 47
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Managed Portfolio
Schedule of Investments, June 30, 1996
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENTAGE NUMBER
OF PORTFOLIO OF SHARES VALUE
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
COMMON STOCK (52.4%)
Automobiles & Auto Parts............................................... 1.6%
Echlin, Inc. ........................................................ 9,000 $ 340,875
Ford Motor Co. ...................................................... 9,000 291,375
----------
632,250
----------
Banks.................................................................. 4.5%
Banc One Corp. ...................................................... 5,007 170,238
Bank of New York Co., Inc. .......................................... 7,200 369,000
Bank America ........................................................ 3,000 227,250
Chase Manhattan Corp. ............................................... 3,640 257,075
Citicorp ............................................................ 3,500 289,188
First Union Corp. ................................................... 4,600 280,025
Morgan (J.P.) & Co., Inc. ........................................... 2,500 211,563
----------
1,804,339
----------
Beverages.............................................................. 0.6%
Coca-Cola Company ................................................... 5,000 244,375
----------
Building & Materials................................................... 0.9%
Sherwin Williams Co. ................................................ 8,000 372,000
----------
Chemicals.............................................................. 1.5%
Grace (W.R.) & Co. .................................................. 4,000 283,500
PPG Industries, Inc. ................................................ 6,500 316,875
----------
600,375
----------
Consumer & Business Services........................................... 1.2%
Omnicom Group, Inc. ................................................. 10,000 465,000
----------
Containers, Packagings................................................. 0.9%
Crown Cork & Seal Co., Inc. ......................................... 8,000 360,000
----------
Drugs.................................................................. 2.2%
American Homes Products Corp. ....................................... 8,000 481,000
Pfizer, Inc. ........................................................ 6,000 428,250
----------
909,250
----------
Electrical Equipment................................................... 3.4%
Emerson Electric Co. ................................................ 5,000 451,875
General Electric Co. ................................................ 6,000 519,000
Grainger (W.W.), Inc. ............................................... 5,000 387,500
----------
1,358,375
----------
</TABLE>
12
<PAGE> 48
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Managed Portfolio
Schedule of Investments, June 30, 1996 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENTAGE NUMBER
OF PORTFOLIO OF SHARES VALUE
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
COMMON STOCK (CONTINUED)
Electronics............................................................ 1.7%
AMP, Inc. ........................................................... 6,600 $ 264,825
Electronic Data Systems Corp. ....................................... 7,535 405,006
----------
669,831
----------
Energy................................................................. 5.8%
Amoco Corp. ......................................................... 5,700 412,537
Atlantic Richfield Co. .............................................. 3,100 367,350
Chevron Corp. ....................................................... 4,500 265,500
Exxon Corp. ......................................................... 5,000 434,375
Mobil Corp. ......................................................... 3,500 392,438
Royal Dutch Petroleum Co. ........................................... 3,000 461,250
----------
2,333,450
----------
Financial.............................................................. 0.9%
American Express Co. ................................................ 8,400 374,850
----------
Foods.................................................................. 2.6%
CPC International, Inc. ............................................. 6,000 432,000
Hannaford Bros. Co. ................................................. 7,000 228,375
Sara Lee Corp. ...................................................... 12,000 388,500
----------
1,048,875
----------
Healthcare Providers................................................... 1.1%
Columbia/HCA Healthcare Corp. ....................................... 8,500 453,687
----------
Industrial Diversified................................................. 2.7%
Dover Corp. ......................................................... 5,000 230,625
Parker-Hannifin Corp. ............................................... 6,200 262,725
Rockwell International Corp. ........................................ 7,000 400,750
Tenneco, Inc. ....................................................... 3,900 199,388
----------
1,093,488
----------
Insurance.............................................................. 3.8%
Allstate Corp. ...................................................... 10,562 481,891
American General Corp. .............................................. 7,700 280,087
American International Group, Inc. .................................. 4,200 414,225
Equitable of Iowa ................................................... 10,000 355,000
----------
1,531,203
----------
Medical Equipment & Supplies........................................... 1.1%
Johnson & Johnson ................................................... 9,000 445,500
----------
</TABLE>
13
<PAGE> 49
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Managed Portfolio
Schedule of Investments, June 30, 1996 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENTAGE NUMBER
OF PORTFOLIO OF SHARES VALUE
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
COMMON STOCK (CONTINUED)
Oil Field Equipment & Services......................................... 1.8%
Halliburton Co. ..................................................... 5,300 $ 294,150
Schlumberger Ltd. ................................................... 5,000 421,250
----------
715,400
----------
Paper & Forest Products................................................ 0.8%
Kimberly-Clark Corp. ................................................ 4,000 309,000
----------
Publishing............................................................. 1.6%
Gannett, Inc. ....................................................... 3,900 275,925
McGraw Hill, Inc. ................................................... 8,000 366,000
----------
641,925
----------
Railroads.............................................................. 1.8%
Canadian Pacific Ltd. ............................................... 3,200 70,400
Illinois Central Corp. Common Series A .............................. 11,250 319,219
Union Pacific Corp. ................................................. 5,000 349,375
----------
738,994
----------
Recreation............................................................. 0.5%
*Coleman Co., Inc. .................................................. 5,000 211,875
----------
Retail................................................................. 2.6%
May Department Stores Co............................................. 6,700 293,125
Nordstrom, Inc....................................................... 5,500 244,750
*Payless Shoesource.................................................. 800 25,400
Sears, Roebuck and Co................................................ 10,000 486,250
----------
1,049,525
----------
Telecommunications..................................................... 1.5%
AT&T Corp............................................................ 7,000 434,000
*U.S. West Media Group............................................... 10,000 182,500
----------
616,500
----------
Tobacco................................................................ 1.6%
American Brands, Inc................................................. 6,000 272,250
Philip Morris Company, Inc........................................... 3,500 364,000
----------
636,250
----------
Utilities -- Electric.................................................. 0.8%
FPL Group, Inc....................................................... 7,000 322,000
----------
</TABLE>
14
<PAGE> 50
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Managed Portfolio
Schedule of Investments, June 30, 1996 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENTAGE NUMBER
OF PORTFOLIO MATURITY OF SHARES VALUE
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
COMMON STOCK (CONTINUED)
Utilities -- Gas.......................................... 1.7%
Enron Corp.............................................. 8,000 $ 327,000
Sonat, Inc.............................................. 7,500 337,500
----------
664,500
----------
Utilities -- Telephone.................................... 1.2%
GTE, Corp............................................... 8,500 380,375
U.S. West Communications Group.......................... 3,300 105,187
----------
485,562
----------
TOTAL COMMON STOCK (COST $15,867,127)................. 21,088,379
----------
CORPORATE BONDS (14.4%)
Financial Institutions.................................... 5.1%
First Union National, 6.18%............................. 02/22/36 600,000 557,250
Lehman Brothers Holdings, 8.80%......................... 03/01/15 400,000 439,500
Midland Bank, 7.65%..................................... 05/01/25 550,000 565,125
Salomon Brothers, 6.875%................................ 12/15/03 500,000 475,000
----------
2,036,875
----------
Foreign Financial Institutions............................ 1.2%
Santander Financial, 7.00%.............................. 04/01/06 500,000 484,375
----------
Insurance................................................. 4.3%
Farmers Insurance Exchange, 8.50%....................... 08/01/04 700,000 707,000
Liberty Mutual, 8.20%................................... 05/04/07 500,000 520,000
Pacific Mutual Life, 7.90%.............................. 12/30/23 500,000 493,750
----------
1,720,750
----------
Retail.................................................... 1.3%
May Department Stores, 9.125%........................... 12/01/16 500,000 525,000
----------
Telecommunications........................................ 2.5%
Comsat Medium Term Note, 8.05%.......................... 12/13/06 500,000 531,125
TCI Communications, Inc., 8.00%......................... 08/01/05 500,000 488,125
----------
1,019,250
----------
TOTAL CORPORATE BONDS (COST $5,896,559)............... 5,786,250
----------
</TABLE>
15
<PAGE> 51
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Managed Portfolio
Schedule of Investments, June 30, 1996 -- Concluded
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT OR
PERCENTAGE NUMBER
OF PORTFOLIO MATURITY OF SHARES VALUE
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. TREASURY NOTES (16.0%)
U.S. Treasury Note, 6.00%................................ 08/31/97 $1,500,000 $ 1,501,350
U.S. Treasury Note, 6.375%............................... 01/15/00 500,000 500,060
U.S. Treasury Note, 6.25%................................ 08/31/00 2,500,000 2,481,950
U.S. Treasury Note, 5.50%................................ 12/31/00 550,000 530,145
U.S. Treasury Note, 7.50%................................ 02/15/05 500,000 525,840
U.S. Treasury Note, 5.625%............................... 02/15/06 1,000,000 927,280
-----------
TOTAL U.S. TREASURY NOTES (COST $6,531,741)............ 6,466,625
-----------
AGENCY OBLIGATIONS (5.3%)
Collateralized Mortgage Obligation Trust................... 1.3%
Collateralized Mortgage Obligation Trust, 7.95%.......... 05/01/17 502,000 510,667
-----------
Federal Home Loan Mortgage Corporation..................... 2.4%
Federal Home Loan Mortgage Corporation, 6.50%............ 01/01/11 993,000 960,269
-----------
Federal National Mortgage Association...................... 1.6%
Federal National Mortgage Association Principal Strip
Callable 10/10/96 @ 100, 8.04% Coupon If Not Called.... 10/10/01 380,000 373,374
Federal National Mortgage Association Principal Strip
Callable 11/01/96 @ 100, 7.99% Coupon If Not Called.... 11/01/01 280,000 273,788
-----------
647,162
-----------
TOTAL AGENCY OBLIGATIONS (COST $2,119,056)............. 2,118,098
-----------
SHORT-TERM INVESTMENTS (11.9%)
Beneficial Corp., 5.37%.................................. 07/09/96 1,200,000 1,198,571
IBM Credit Corp., 5.32%.................................. 07/02/96 1,200,000 1,199,823
Norwest Corp., 5.27%..................................... 07/15/96 950,000 947,964
Prudential Funding Corp., 5.36%.......................... 07/12/96 1,000,000 998,365
Temporary Investment Fund, Inc. -- TempCash.............. 462,985 462,985
-----------
TOTAL SHORT-TERM INVESTMENTS (COST $4,807,708)......... 4,807,708
-----------
TOTAL INVESTMENTS (100.0%) (COST $35,222,280)............ $40,267,060
===========
</TABLE>
* Non-Income Producing.
See accompanying notes to financial statements.
16
<PAGE> 52
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Aggressive Growth Portfolio
1996 Semi-Annual Review
Sentinel Advisors Company
- --------------------------------------------------------------------------------
The Market Street Fund Aggressive Growth Portfolio achieved a total return
of 10.6% for the first half of 1996, compared to 12.9% for the median Lipper
Small Company Growth fund and 10.5% for the Russell 2000 index.
While the Portfolio produced returns well ahead of the Russell 2000 during
the first quarter, the below-average returns for the second quarter brought our
six-month results in line with the index. The Portfolio's lower relative
performance for the first half can be partially attributed to its relative low
risk profile, a function of its market-like P/E ratio, only market-like
weighting in the fast paced technology group, and still above average cash
position. Many of the recently top-performing small company funds have P/E
ratios and technology weightings significantly higher than those for the
Aggressive Growth Portfolio. While the Portfolio's lower risk profile can be
expected to cause it to lag its peer group during exceptionally strong momentum
driven markets for small cap stocks, it can also be expected to outperform its
peer group during flat and down markets. Not surprisingly, the Portfolio's
performance in the last half of June, a difficult period for small company
funds, was relatively good.
The Portfolio's 17.6% cash position as of June 30, 1996 is lower than the
24.7% as of year-end, 1995. We continue to strive to be "fully invested".
However, we believe our somewhat cautious pursuit of this goal is warranted,
given the current extended valuations of many high-quality small cap stocks.
Our outlook has changed little since the beginning of the year. We continue
to forecast weaker overall consumer spending and corporate profits. Rising food,
energy, and labor costs are beginning to materialize. Indeed, growing fears of
inflation and Fed tightening, as evidenced by rising short and long-term
interest rates, threaten to undermine the stock market's current valuation.
Accordingly, we continue to believe that our relatively low risk investment
approach that emphasizes owning a diverse group of promising, reasonably valued,
and financially strong small and mid-cap companies will serve our shareholders
well over the course of a full market cycle.
Keniston P. Merrill
Richard A. Pender, CFA
Scott T. Brayman, CFA
MARKET STREET FUND
Aggressive Growth Portfolio
<TABLE>
<CAPTION>
Measurement Period
(Fiscal Year Covered) Fund Index+
<S> <C> <C>
Start 10000 10000
89 10558 10340 Aggressive Growth fund
90 11695 8324 Average Annual Total Return
91 18283 12161 Since Inception*
92 18755 14399 13.47%
93 19730 17120
94 19730 16808
95 22289 21599
95.5 24752 23866
</TABLE>
Past performance is not predictive of future performance.
+ The Index is the Russell 2000 Index, an unmanaged stock index of small
capitalization companies which includes reinvestment of all income.
* Inception date was May 1, 1980.
17
<PAGE> 53
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Aggressive Growth Portfolio
Schedule of Investments, June 30, 1996
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENTAGE NUMBER
OF PORTFOLIO OF SHARES VALUE
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
COMMON STOCK (82.2%)
Auto Parts & Repair.................................................... 2.0%
Pep Boys-Manny, Moe & Jack........................................... 17,000 $ 578,000
-----------
Communications......................................................... 6.0%
*California Microwave, Inc........................................... 27,500 419,375
*Dynatech Corp....................................................... 24,500 796,250
*Verifone, Inc....................................................... 12,300 519,675
-----------
1,735,300
-----------
Cosmetics & Toiletries................................................. 0.8%
*Bush Boake Allen, Inc............................................... 11,000 239,250
-----------
Electronics............................................................ 7.4%
*Amphenol Corp....................................................... 27,000 621,000
Harman International Industries, Inc................................. 11,160 549,630
Methode Electronics, Inc. Class A.................................... 36,100 613,700
Stewart & Stevenson Services, Inc.................................... 15,000 341,250
-----------
2,125,580
-----------
Energy................................................................. 6.6%
*Calenergy Co., Inc.................................................. 36,700 935,850
*Smith International, Inc............................................ 32,000 964,000
-----------
1,899,850
-----------
Environmental Control.................................................. 6.0%
*United States Filter Corp........................................... 12,000 417,000
*USA Waste Services, Inc............................................. 22,650 671,006
*Waste Management International Plc-ADR.............................. 58,000 645,250
-----------
1,733,256
-----------
Financial.............................................................. 5.9%
Duff & Phelps Credit Rating Co....................................... 12,500 265,625
First Commerce Corp.................................................. 6,000 212,250
ROC Communities...................................................... 26,000 620,750
Wilmington Trust Corp................................................ 18,800 609,825
-----------
1,708,450
-----------
</TABLE>
18
<PAGE> 54
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Aggressive Growth Portfolio
Schedule of Investments, June 30, 1996 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENTAGE NUMBER
OF PORTFOLIO OF SHARES VALUE
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
COMMON STOCK (CONTINUED)
Food & Food Distributors............................................... 6.4%
Goodmark Foods, Inc.................................................. 25,700 $ 366,225
Hannaford Bros. Co................................................... 14,200 463,275
Smart & Final, Inc................................................... 24,700 632,937
Tootsie Roll Industries, Inc......................................... 10,655 379,584
-----------
1,842,021
-----------
Healthcare Providers................................................... 2.3%
*Advocat, Inc........................................................ 8,100 76,950
*Genesis Health Ventures............................................. 18,450 578,869
-----------
655,819
-----------
Industrial & Commercial Services....................................... 12.7%
Analysts International Corp.......................................... 8,000 336,000
Donaldson, Inc....................................................... 22,000 566,500
*Healthcare Services Group........................................... 48,500 436,500
Kelly Services, Inc.................................................. 15,600 456,300
Lawter International, Inc............................................ 51,500 643,750
*Material Sciences Corp.............................................. 38,800 669,300
Olsten Corp.......................................................... 18,950 556,656
-----------
3,665,006
-----------
Insurance.............................................................. 2.3%
American Travellers Corp............................................. 29,250 672,750
-----------
Medical--Equipment & Supplies.......................................... 10.2%
Allergan, Inc........................................................ 20,000 785,000
Hillenbrand Industries, Inc.......................................... 12,000 447,000
Minntech Corp........................................................ 26,100 283,838
*R.P. Scherer Corp................................................... 14,000 635,250
*Research Medical, Inc............................................... 23,400 517,725
*Respironics, Inc.................................................... 15,500 286,750
-----------
2,955,563
-----------
Metals................................................................. 1.4%
J & L Specialty Steel, Inc........................................... 28,000 416,500
-----------
Railroads.............................................................. 1.1%
Illinois Central Corp. Common Series A............................... 10,950 310,706
-----------
</TABLE>
19
<PAGE> 55
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Aggressive Growth Portfolio
Schedule of Investments, June 30, 1996 -- Concluded
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT OR
PERCENTAGE NUMBER
OF PORTFOLIO MATURITY OF SHARES VALUE
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
COMMON STOCK (CONTINUED)
Restaurants............................................... 1.2%
Sbarro, Inc............................................. 13,700 $ 344,213
-------
Retail.................................................... 2.9%
*Ethan Allen Industries, Inc............................ 13,200 326,700
Talbots, Inc............................................ 15,300 495,338
-------
822,038
-------
Security Services......................................... 2.7%
*ADT Ltd................................................ 40,600 766,325
-------
Software.................................................. 3.4%
*Filenet Corp........................................... 8,100 295,650
*Landmark Graphics Corp................................. 24,000 462,000
System Software Associates, Inc......................... 13,300 226,100
-------
983,750
-------
Transportation............................................ 0.9%
Frozen Food Express Industries, Inc..................... 23,700 266,625
-------
TOTAL COMMON STOCK (COST $20,314,289)................. 23,721,002
----------
PREFERRED STOCK (0.2%)
Financial Institutions Phoenix Duff & Phelps Preferred
Convertible Series A, $1.50, (Cost $71,441)............. 2,500 64,375
-------
SHORT-TERM INVESTMENTS (17.6%)
Beneficial Corp., 5.36%................................. 07/16/96 $1,000,000 997,767
Household Finance Corp., 5.38%.......................... 07/19/96 800,000 797,848
IBM Credit Corp., 5.35%................................. 07/11/96 1,000,000 998,514
National City Credit Corp., 5.30%....................... 07/08/96 1,000,000 998,969
Norwest Corp., 5.32%.................................... 07/01/96 1,000,000 1,000,000
Temporary Investment Fund, Inc.--TempCash............... 267,064 267,064
----------
TOTAL SHORT-TERM INVESTMENTS (COST $5,060,162)........ 5,060,162
----------
TOTAL INVESTMENTS (100.0%) (COST $25,445,892)......... $28,845,539
===========
</TABLE>
* Non-Income Producing.
See accompanying notes to financial statements.
20
<PAGE> 56
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The International Portfolio
1996 Semi-Annual Review
The Boston Company Asset Management, Inc.
- --------------------------------------------------------------------------------
The Market Street Fund International Portfolio had a return of 7.0% for the
first six months of 1996 compared with a 3.6% return for the EAFE index.
Since year end, the single greatest change in the portfolio has been the
shift in emphasis to Japan. Japanese stocks now account for six of the
portfolio's top ten holdings. This is in stark contrast to December 1995. At
that time Japanese stocks in the top ten numbered only two. Similarly, your
Portfolio's weighting in Japan has risen from 28% in December to 30% at the end
of the first half.
The shift in emphasis reflects an increased level of confidence that the
recovery under way in Japan is sustainable. GDF in the first quarter was
extremely strong, 12.7% on an annualized basis. This was largely due to
supplemental spending programs by the government. Strength in the consumer
sector was visible in the automobile sector, packaged goods & cosmetics, movies
& entertainment and in the broader based retailers. While few expect that GDP
will remain at double digits for the remainder of the year, we feel comfortable
that the economic environment will remain favorable in Japan for the foreseeable
future.
The first half also saw strong performance from your stocks in the
Netherlands. Some of the strong performers included ABN-Amro and ING (banking
and financial services), Stad Rotterdam (insurance), HBG (construction and
housing), and Hunter Douglas (conglomerate). We are encouraged by these actions
and feel that the market has yet to appreciate the restructuring potential at
the Company. Other movements in the portfolio included profit taking in Laird,
British Air and Boots in the United Kingdom, Renault in France and Adidas in
Germany.
Looking ahead we remain optimistic that our value oriented approach will
continue to outperform markets abroad. We consider it a privilege to be managing
funds on your behalf. We will continue to exert our best efforts to bring you a
rewarding return on your investment.
Sandor Cseh, CFA
MARKET STREET FUND
International Portfolio
<TABLE>
<CAPTION>
Measurement Period
(Fiscal Year Covered) Fund Index
<S> <C> <C>
Start 10000 10000
91 9712 10030 International Fund
92 9003 8806 Average Annual Total Return
93 12254 11677 Since Inception*
94 12286 12585 9.81%
95 14044 13994
95.5 15028 14624
</TABLE>
Past performance is not predictive of future performance.
+ The Index is the Morgan Stanley Capital International Europe, Australia, Far
East (EAFE) Index, an unmanaged index of more than 900 companies from these
regions. The EAFE Index reflects the prices of these common stocks translated
into U.S. dollars with dividends reinvested net of any foreign taxes.
* Inception date was November 1, 1991.
21
<PAGE> 57
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The International Portfolio
Schedule of Investments, June 30, 1996
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENTAGE NUMBER
OF PORTFOLIO OF SHARES VALUE
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCK (97.0%)
Austria.................................................................. 0.4%
Creditanstalt PS....................................................... 1,200 $ 166,858
-----------
Australia................................................................ 3.6%
Amcor Ltd.............................................................. 45,000 306,050
Boral Ltd.............................................................. 169,733 440,398
Goodman Fielder........................................................ 154,533 156,738
Southcorp Holdings..................................................... 110,000 272,438
Westpac Banking Corp................................................... 80,498 356,334
-----------
1,531,958
-----------
France................................................................... 6.0%
C.S.F. (Thomson-C.S.F.)................................................ 14,162 398,259
*Chargeurs............................................................. 1,450 405,791
Credit Local De........................................................ 2,700 219,862
Danone................................................................. 3,704 560,765
Guyenne Et Gascogne SA................................................. 1,000 357,788
Societe Generale....................................................... 5,748 632,274
-----------
2,574,739
-----------
Germany.................................................................. 8.3%
Bayer AG............................................................... 13,000 459,251
Deutsche Bank AG....................................................... 15,000 709,826
Henkel................................................................. 1,000 431,811
R.W.E. Deag AG Preferred............................................... 22,000 676,701
Siemens AG............................................................. 9,500 507,624
Tarkett................................................................ 15,000 316,464
Veba AG................................................................ 8,500 451,788
-----------
3,553,465
-----------
Hong Kong................................................................ 2.6%
Cheung Kong Holdings................................................... 57,000 410,589
HSBC Holdings Plc...................................................... 32,884 497,116
Yue Yuen Industrial.................................................... 750,000 213,192
-----------
1,120,897
-----------
Italy.................................................................... 1.5%
Fiat SPA............................................................... 70,000 234,017
Stet Di Risp........................................................... 160,000 419,271
-----------
653,288
-----------
</TABLE>
22
<PAGE> 58
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The International Portfolio
Schedule of Investments, June 30, 1996 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENTAGE NUMBER
OF PORTFOLIO OF SHARES VALUE
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCK (CONTINUED)
Japan.................................................................... 29.4%
Canon, Inc............................................................. 35,000 $ 727,770
Chudenko Corp.......................................................... 7,000 254,081
Credit Saison Co....................................................... 35,000 845,873
Dai-Tokyo Fire and Marine Insurance.................................... 96,000 722,298
Hitachi Koki Co........................................................ 55,000 541,724
Hitachi Ltd............................................................ 65,000 604,651
Honda Motor Co. Ltd.................................................... 25,000 647,515
Ito-Yokado Co. Ltd..................................................... 11,000 663,110
Kao Corp............................................................... 55,000 742,362
Kyushu Electric Power Co., Inc......................................... 7,600 171,199
Mabuchi Motors......................................................... 10,000 636,571
Mikuni Coca-Cola Bottling Co., Ltd..................................... 40,000 601,915
Mitsubishi Heavy Industries, Ltd....................................... 80,000 695,303
Murata Manufacturing Co., Ltd.......................................... 18,000 682,900
Nishimatsu Construction................................................ 50,000 547,196
Ono Pharmaceutical..................................................... 15,000 512,996
Sankyo Co. Ltd......................................................... 10,600 406,019
Sekisui House.......................................................... 55,000 626,995
Toshiba Corp........................................................... 85,000 604,651
Toyota Motor Corp...................................................... 22,000 549,749
Yamanouchi Pharmaceuticals............................................. 17,000 368,992
Yamato Transportation.................................................. 43,000 505,882
-----------
12,659,752
-----------
Malaysia................................................................. 1.1%
Affin Holdings......................................................... 160,000 375,075
Malaysian International Shipping....................................... 32,000 99,379
-----------
474,454
-----------
Netherlands.............................................................. 4.9%
ABN- AMRO Holding...................................................... 8,005 429,376
Hollandsche Beton...................................................... 2,050 392,534
Hunter Douglas N.V..................................................... 6,456 440,417
International Nederlanden Group........................................ 6,565 195,671
Koninklijke K.N.P...................................................... 15,000 359,245
Stad Rotterdam......................................................... 8,376 303,110
-----------
2,120,353
-----------
</TABLE>
23
<PAGE> 59
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The International Portfolio
Schedule of Investments, June 30, 1996 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENTAGE NUMBER
OF PORTFOLIO OF SHARES VALUE
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCK (CONTINUED)
New Zealand.............................................................. 1.1%
Air New Zealand........................................................ 48,000 $ 146,423
*Fletcher Energy....................................................... 150,000 331,097
-----------
477,520
-----------
Norway................................................................... 1.2%
Christiana Bank........................................................ 72,000 169,490
Orkla.................................................................. 7,500 364,643
-----------
534,133
-----------
Singapore................................................................ 2.1%
Development Bank....................................................... 30,000 374,468
Far East Levingston.................................................... 53,000 293,191
Malaysian International Shipping....................................... 78,000 229,021
-----------
896,680
-----------
Spain.................................................................... 1.5%
Gas y Electricidad SA Gesa............................................. 6,091 336,595
Iberdrola I............................................................ 30,000 307,482
-----------
644,077
-----------
Sweden................................................................... 0.8%
Marieberg.............................................................. 14,000 349,737
-----------
Switzerland.............................................................. 5.1%
Ciba-Geigy AG.......................................................... 430 523,762
Magazine Zum Globus.................................................... 100 60,703
Magazine Zum Globus Participating Certificates, Zurich................. 550 320,687
Nestle SA.............................................................. 300 342,412
Schweizerischer Bankverein............................................. 3,350 660,903
Zurich Versicherungs................................................... 1,000 272,364
-----------
2,180,831
-----------
United Kingdom........................................................... 9.9%
Abbey National Plc..................................................... 50,000 419,275
Boots Ordinary Plc..................................................... 35,046 314,520
BTR Orndinary Plc...................................................... 138,823 545,469
D.S. Smith............................................................. 70,000 296,748
Devro Plc.............................................................. 50,000 187,550
Laird Group Ordinary................................................... 65,000 470,503
</TABLE>
24
<PAGE> 60
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The International Portfolio
Schedule of Investments, June 30, 1996 -- Concluded
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENTAGE NUMBER
OF PORTFOLIO OF SHARES VALUE
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCK (CONTINUED)
United Kingdom (Continued)
National Westminster Bank.............................................. 57,338 $ 547,020
Powergen Plc........................................................... 80,903 588,124
RTZ Corp............................................................... 40,351 596,045
Scapa Group............................................................ 85,603 314,463
-----------
4,279,717
-----------
United States............................................................ 17.5%
AKZO N.V. Sponsored ADR................................................ 3,500 209,125
Alcatel Alsthom ADR.................................................... 22,092 389,371
British Airways Plc ADR................................................ 3,000 257,250
British Gas Plc ADR.................................................... 6,500 182,000
Corporacion Bancaria de Espanol ADR.................................... 29,000 638,000
Elf Aquitaine ADR...................................................... 18,751 689,099
Hanson Trust Plc ADR................................................... 33,000 470,250
Istituto Mobiliare Italiano ADR........................................ 19,000 484,500
Repsol ADR............................................................. 22,000 764,500
Rhone Poulenc S.A. Sponsored ADR....................................... 13,000 344,500
Royal Ptt Nederland N.V. ADR........................................... 8,724 329,317
Scania AB Class A...................................................... 3,000 83,250
Scania AB Class B...................................................... 3,000 82,875
*Swedish Match Co. AB-ADR.............................................. 1,000 30,875
Tele Danmark ADR....................................................... 17,500 444,063
Telecom Portugal S.A. ADR.............................................. 17,000 446,250
Telefonos De Mexico S.A.-ADR........................................... 7,500 251,250
Toyota Motor Corp. ADR................................................. 3,500 175,438
Unilever N.V........................................................... 4,000 580,500
Volvo AB-ADR........................................................... 10,000 225,000
YPF Sociedad Anonima ADR............................................... 20,000 450,000
-----------
7,527,413
-----------
TOTAL COMMON STOCK AND PREFERRED STOCK (COST $38,173,413)............ 41,745,872
-----------
SHORT-TERM INVESTMENTS (3.0%)
Temporary Investment Fund, Inc.--TempCash
(Cost $1,308,450).................................................... 1,308,450 1,308,450
-----------
TOTAL INVESTMENTS (100.0%) (COST $39,481,863)........................ $43,054,322
===========
</TABLE>
* Non-Income Producing.
See accompanying notes to financial statements.
25
<PAGE> 61
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Common Stock Portfolio
1996 Semi-Annual Review
Sentinel Advisors Company
- --------------------------------------------------------------------------------
The Market Street Fund Common Stock Portfolio commenced operations on March
18, 1996. The Portfolio achieved a total return of 3.4% for the second quarter
of 1996, the first full measurement period since the Portfolio opened, compared
to 3.4% for the median Lipper growth & income fund.
The Standard & Poor's 500 gained 4.5% during the second quarter, the sixth
consecutive quarter of positive stock market returns. Market action during the
quarter was characterized by extreme volatility, with a highly speculative phase
in April and early May, followed by a massive flight to quality during the
closing weeks of the quarter. The Common Stock Portfolio lagged modestly during
the more speculative period, but performed strongly at the end. During the
quarter, the Portfolio's consumer staple holdings (foods, beverages and
pharmaceuticals) were particularly strong contributors, as were the diversified
industrial holdings and the large stake in energy-related securities. The
interest sensitive financials lagged modestly, but remain well positioned and
inexpensive stocks. Other areas of weakness in the Portfolio were selected
economically sensitive industrial and technology groups, which continue to be
underweighted in the Portfolio.
While economic reports continue to indicate better than anticipated growth,
we still expect a more subdued economy in the latter half of 1996. The stock
market appears to have entered a more speculative phase, with major inter-day
and intra-day swings in reaction to relatively minor changes in economic data
(which are often later revised), and with major stock price adjustments in
reaction to relatively insignificant short-term earnings estimate revisions. We,
as always, remain essentially fully invested. However, in this higher risk
market environment, we are as strongly committed to a defensive focus on
quality, consistency and stability in our stock selection process.
Keniston P. Merrill
Richard A. Pender, CFA
Daniel J. Manion, CFA
MARKET STREET FUND
Common Stock
<TABLE>
<CAPTION>
Measurement Period
(Fiscal Year Covered) Fund Index
<S> <C> <C>
Start 10000 10000 Common Stock Fund
95.5 10390 10353 Average Annual Total Return
Since Inception*
3.90%
</TABLE>
* Inception date was March 18, 1996.
+ The Index is the S&P 500 Index, an unmanaged index of 500 U.S. common stocks
that includes reinvestment of dividends.
26
<PAGE> 62
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Common Stock Portfolio
Schedule of Investments, June 30, 1996
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENTAGE NUMBER
OF PORTFOLIO OF SHARES VALUE
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
COMMON STOCK (94.7%)
Automotive & Auto Parts............................................... 3.0%
Echlin, Inc......................................................... 2,500 $ 94,688
Ford Motor Co....................................................... 2,000 64,750
-----------
159,438
Banks................................................................. 10.7%
Banc One Corp....................................................... 1,000 34,000
Bank of New York Co., Inc........................................... 1,900 97,375
BankAmerica Corp.................................................... 900 68,175
Chase Manhattan Corp................................................ 1,300 91,813
Citicorp............................................................ 1,300 107,413
First Union Corp.................................................... 1,200 73,050
Morgan (J.P.) & Co., Inc............................................ 1,100 93,088
-----------
564,914
-----------
Beverages............................................................. 2.4%
Coca-Cola Co........................................................ 2,600 127,075
-----------
Building Materials.................................................... 1.6%
Sherwin Williams Co................................................. 1,800 83,700
-----------
Chemicals............................................................. 3.1%
Grace (W.R.) & Co................................................... 1,300 92,138
PPG Industries, Inc................................................. 1,500 73,125
-----------
165,263
-----------
Consumer & Business Services.......................................... 1.8%
Omnicom Group, Inc.................................................. 2,000 93,000
-----------
Containers, Packaging................................................. 1.5%
Crown Cork & Seal Co., Inc.......................................... 1,800 81,000
-----------
Cosmetics & Toiletries................................................ 2.2%
Gillette Co......................................................... 1,900 118,513
-----------
Drugs................................................................. 4.0%
American Home Products Corp......................................... 2,000 120,250
Pfizer, Inc......................................................... 1,300 92,788
-----------
213,038
-----------
Electrical Equipment.................................................. 5.9%
Emerson Electric Co................................................. 1,600 144,600
General Electric Co................................................. 1,900 164,350
-----------
308,950
-----------
</TABLE>
27
<PAGE> 63
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Common Stock Portfolio
Schedule of Investments, June 30, 1996 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENTAGE NUMBER
OF PORTFOLIO OF SHARES VALUE
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
COMMON STOCK (CONTINUED)
Electronics........................................................... 2.5%
Amp, Inc............................................................ 1,600 $ 64,200
Electronic Data Systems Corp........................................ 1,300 69,875
-----------
134,075
-----------
Energy................................................................ 10.6%
Amoco Corp.......................................................... 1,200 86,850
Atlantic Richfield Co............................................... 400 47,400
Chevron Corp........................................................ 1,100 64,900
Exxon Corp.......................................................... 1,400 121,625
Mobil Corp.......................................................... 900 100,913
Royal Dutch Petroleum Co............................................ 900 138,375
-----------
560,063
-----------
Financial............................................................. 1.8%
American Express Co................................................. 2,100 93,713
-----------
Foods................................................................. 3.3%
CPC International, Inc.............................................. 1,000 72,000
Sara Lee Corp....................................................... 3,100 100,363
-----------
172,363
-----------
Healthcare Providers.................................................. 2.1%
Columbia Healthcare Corp............................................ 2,100 112,088
-----------
Industrial-Diversified................................................ 3.5%
Parker Hannifin Corp................................................ 1,500 63,563
Rockwell International Corp......................................... 1,400 80,150
Tenneco, Inc........................................................ 800 40,900
-----------
184,613
-----------
Insurance............................................................. 4.9%
Allstate Corp....................................................... 2,200 100,375
American General Corp............................................... 2,100 76,388
American International Group, Inc................................... 800 78,900
-----------
255,663
-----------
Medical-Equipment & Supplies.......................................... 2.1%
Johnson & Johnson................................................... 2,200 108,900
-----------
</TABLE>
28
<PAGE> 64
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Common Stock Portfolio
Schedule of Investments, June 30, 1996 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENTAGE NUMBER
OF PORTFOLIO OF SHARES VALUE
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
COMMON STOCK (CONTINUED)
Oil Field Equipment & Services........................................ 3.0%
Halliburton Co...................................................... 1,200 $ 66,600
Schlumberger Ltd.................................................... 1,100 92,675
-----------
159,275
-----------
Paper & Forest Products............................................... 1.9%
Kimberly-Clark Corp................................................. 1,300 100,425
-----------
Publishing............................................................ 2.6%
Gannett, Inc........................................................ 1,000 70,750
McGraw-Hill, Inc.................................................... 1,400 64,050
-----------
134,800
-----------
Railroads............................................................. 2.1%
Canadian Pacific Ltd................................................ 800 17,600
Union Pacific Corp.................................................. 1,300 90,838
-----------
108,438
-----------
Retail................................................................ 4.4%
May Department Stores Co............................................ 1,600 70,000
Nordstrom, Inc...................................................... 1,100 48,950
*Payless Shoesource, Inc............................................ 200 6,350
Sears Roebuck & Co.................................................. 2,200 106,975
-----------
232,275
-----------
Telecommunications.................................................... 3.1%
American Telephone and Telegraph Co................................. 2,000 124,000
*U S West Media Group............................................... 2,200 40,150
-----------
164,150
-----------
Tobacco............................................................... 3.7%
American Brands, Inc................................................ 1,800 81,675
Philip Morris, Inc.................................................. 1,100 114,400
-----------
196,075
-----------
Utilities-Electric.................................................... 2.5%
Florida Progress Corp............................................... 1,600 55,600
FPL Group, Inc...................................................... 1,600 73,600
-----------
129,200
-----------
</TABLE>
29
<PAGE> 65
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Common Stock Portfolio
Schedule of Investments, June 30, 1996 -- Concluded
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENTAGE NUMBER
OF PORTFOLIO MATURITY OF SHARES VALUE
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CORPORATE BONDS (CONTINUED)
Utilities-Gas................................................ 2.9%
Enron Corp. ............................................... 1,900 $ 77,663
Sonat, Inc. ............................................... 1,700 76,500
---------
154,163
---------
Utilities-Telephone.......................................... 1.5%
GTE Corp. ................................................. 1,200 53,700
U S West Communications, Inc. ............................. 800 25,500
---------
79,200
---------
TOTAL COMMON STOCK (COST $4,818,388)..................... 4,994,370
---------
AGENCY OBLIGATIONS (4.9%)
Federal National Mortgage Discount Notes, 5.29%............ 07/02/96 260,000 259,954
---------
(Cost $259,954).......................................... 259,954
---------
SHORT-TERM INVESTMENTS (0.4%)
Temporary Investment Fund, Inc. -- TempCash
(Cost $22,640)........................................... 22,640 22,640
---------
TOTAL INVESTMENTS (100.0%) (COST $5,100,982) .............. $5,276,964
=========
</TABLE>
* Non-Income Producing.
See accompanying notes to financial statements.
30
<PAGE> 66
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Sentinel Growth Portfolio
1996 Semi-Annual Review
Sentinel Advisors Company
- --------------------------------------------------------------------------------
The Market Street Fund Sentinel Growth Portfolio commenced operations on
March 18, 1996. The Portfolio earned a total return of 2.9% during the second
quarter, the first full measurement period since the Portfolio opened, while the
median fund in the Lipper Growth universe earned a 4.2% return.
Investors' concerns about the strength of the economy caused the more
defensive sectors of the market, such as consumer staples and utilities, to
outperform, particularly in the last month of the quarter. Cyclical sectors,
such as basic materials, consumer cyclicals, and selected technology stocks,
underperformed the market.
Within the universe of growth portfolios, a renewed focus on earnings
momentum was evident during the period. Undervalued stocks without earnings
momentum underperformed the market, while some very high multiple stocks
(including most initial public offerings) continued to move higher in a very
speculative market environment.
As is the case for all of our portfolios, our strategy with the Sentinel
Growth Portfolio is to match our competitors in strong up markets and to
outperform the competition in down markets. We remain confident that our
approach, which focuses on owning stocks with above-average earnings growth
trading at modest price-earnings multiples, will produce superior long-term
results over a full market cycle.
Robert L. Lee, CFA
Kenneth I. Chodock
MARKET STREET FUND
Sentinel Growth
<TABLE>
<CAPTION>
Measurement Period
(Fiscal Year Covered) Fund Index
<S> <C> <C>
Start 10000 10000 Sentinel Growth Fund
95.5 10190 10353 Average Annual Total Return
Since Inception*
1.90%
</TABLE>
* Inception date was March 18, 1996.
+ The Index is the S&P 500 Index, an unmanaged index of 500 U.S. common stocks
that includes reinvestment of dividends.
31
<PAGE> 67
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Sentinel Growth Portfolio
Schedule of Investments, June 30, 1996
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENTAGE NUMBER
OF PORTFOLIO OF SHARES VALUE
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
COMMON STOCK (96.4%)
Automobiles & Auto Parts................................................. 4.0%
Ford Motor............................................................. 1,400 $ 45,325
General Motors Corp.................................................... 2,000 104,750
Pep Boys-Manny Moe & Jack.............................................. 1,500 51,000
----------
201,075
----------
Banks.................................................................... 3.1%
Banc One Corp.......................................................... 1,400 47,600
BankAmerica Corp....................................................... 600 45,450
First Union Corp....................................................... 1,100 66,962
----------
160,012
----------
Beverages................................................................ 1.3%
Pepsico, Inc........................................................... 1,800 63,675
----------
Building Materials....................................................... 2.2%
Sherwin Williams Co.................................................... 2,400 111,600
----------
Consumer & Business Services............................................. 5.9%
First Data Corp........................................................ 2,400 191,100
Omnicom Group, Inc..................................................... 2,300 106,950
----------
298,050
----------
Chemicals................................................................ 4.3%
Air Products & Chemicals............................................... 1,300 75,075
W.R. Grace & Co........................................................ 2,000 141,750
----------
216,825
----------
Computers................................................................ 1.3%
Hewlett Packard Co..................................................... 700 69,737
----------
Containers & Packaging................................................... 3.4%
Crown Cork & Seal Co., Inc............................................. 3,900 175,500
----------
Drugs.................................................................... 4.5%
Pfizer................................................................. 800 57,100
Pharmacia Upjohn....................................................... 1,600 71,000
Schering Plough........................................................ 1,600 100,400
----------
228,500
----------
</TABLE>
32
<PAGE> 68
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Sentinel Growth Portfolio
Schedule of Investments, June 30, 1996 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENTAGE NUMBER
OF PORTFOLIO OF SHARES VALUE
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
COMMON STOCK (CONTINUED)
Electronics.............................................................. 11.9%
AMP, Inc............................................................... 4,000 $ 160,500
Amphenol Corp.-Class A................................................. 2,300 52,900
Applied Material Inc................................................... 1,800 54,900
Electronic Data Systems Corp........................................... 2,400 129,000
Methode Electronics.................................................... 1,900 32,300
Motorola............................................................... 2,800 176,050
----------
605,650
----------
Environmental Control.................................................... 2.2%
*U.S. Filter Corp...................................................... 2,500 86,875
*Waste Management Int'l Plc............................................ 2,300 25,588
----------
112,463
----------
Energy................................................................... 2.0%
Amoco Corp............................................................. 700 50,663
Enron Corp............................................................. 1,200 49,050
----------
99,713
----------
Financial................................................................ 1.2%
Student Loan Marketing................................................. 800 59,200
----------
Food & Food Distributors................................................. 1.9%
CPC International...................................................... 800 57,600
Sysco Corp............................................................. 1,200 41,100
----------
98,700
----------
Healthcare Providers..................................................... 7.8%
*Caremark International................................................ 4,700 118,674
Columbia/HCA Healthcare................................................ 1,700 90,737
Healthcare Compare..................................................... 800 39,000
Integrated Health Services............................................. 3,900 92,625
Renal Treatment Centers................................................ 1,900 54,625
----------
395,661
----------
Insurance................................................................ 3.0%
Equitable of Iowa...................................................... 4,300 152,650
----------
Industrial-Diversified................................................... 3.5%
Donaldson Co........................................................... 4,400 113,300
Fluor Corp............................................................. 1,000 65,375
----------
178,675
----------
</TABLE>
33
<PAGE> 69
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Sentinel Growth Portfolio
Schedule of Investments, June 30, 1996 -- Concluded
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENTAGE NUMBER
OF PORTFOLIO OF SHARES VALUE
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
COMMON STOCK (CONTINUED)
Medical-Equipment & Supplies............................................. 4.7%
Dentsply International................................................. 1,900 $ 80,750
Johnson & Johnson...................................................... 3,200 158,400
-----------
239,150
-----------
Oil Field Equipment...................................................... 4.4%
Halliburton Co......................................................... 1,000 55,500
Schlumberger Ltd....................................................... 2,000 168,500
-----------
224,000
-----------
Railroads................................................................ 1.8%
Union Pacific Corp..................................................... 1,300 90,837
-----------
Retail................................................................... 9.1%
Home Depot............................................................. 1,900 102,600
Nordstrom, Inc......................................................... 2,000 89,000
Sears Roebuck.......................................................... 2,000 97,250
TJX Companies.......................................................... 5,100 172,125
-----------
460,975
-----------
Semiconductors & Software................................................ 6.5%
Intel.................................................................. 132,188
*Microsoft............................................................. 180,188
*Novell Inc............................................................ 23,588
-----------
335,964
-----------
Telecommunications....................................................... 4.0%
*Airtouch Communications............................................... 2,700 76,275
*Worldcom Inc.......................................................... 2,300 127,363
-----------
203,638
-----------
Tobacco.................................................................. 2.4%
Philip Morris.......................................................... 1,200 124,800
-----------
TOTAL COMMON STOCK (COST $4,805,160)................................. 4,907,050
-----------
SHORT-TERM INVESTMENTS (3.6%)
Temporary Investment Fund, Inc.--TempCash
(Cost $180,804)........................................................ 180,804 180,804
-----------
TOTAL INVESTMENTS (100.0%) (COST $4,985,964)......................... $5,087,854
===========
</TABLE>
* Non-Income Producing.
See accompanying notes to financial statements.
34
<PAGE> 70
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
Statements of Assets and Liabilities, June 30, 1996
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MONEY AGGRESSIVE
GROWTH MARKET BOND MANAGED GROWTH INTERNATIONAL
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Investments, at value (cost $156,306,960,
$45,432,040, $14,754,185, $35,222,280,
$25,445,892, $39,481,863, $5,100,982,
$4,985,964 respectively) (see accompanying
schedules)................................ $179,607,204 $45,432,040 $14,808,246 $40,267,060 $28,845,539 $43,054,322
Cash........................................ -- -- -- -- 1 1,338,942*
Interest receivable......................... 27,663 4,186 277,241 282,310 1,905 6,061
Dividends receivable........................ 458,611 -- -- 30,405 18,744 216,117
Foreign taxes receivable.................... -- -- -- -- -- 6,432
Receivable from affiliated insurance
company................................... -- -- -- -- -- 5,556
Prepaid expenses............................ -- -- -- -- -- 671
Receivable for investments sold............. 1,649,795 -- -- 206,535 -- --
Receivable for fund shares sold ............ 5,969 -- 14,605 18 59,181 33,957
------------ ----------- ----------- ----------- ----------- -----------
Total assets.............................. 181,749,242 45,436,226 15,100,092 40,786,328 28,925,370 44,662,058
------------ ----------- ----------- ----------- ----------- -----------
LIABILITIES
Accrued expenses............................ 203,619 36,682 16,600 42,827 27,773 39,522
Dividend payable............................ -- 183,850 -- -- -- --
Payable for investments purchased........... 1,486,029 -- -- 1,265,180 51,451 --
Payable for fund shares redeemed............ 357,398 -- -- 26,047 308 342
------------ ----------- ----------- ----------- ----------- -----------
Total liabilities......................... 2,047,046 220,532 16,600 1,334,054 79,532 39,864
------------ ----------- ----------- ----------- ----------- -----------
Net assets................................ $179,702,196 $45,215,694 $15,083,492 $39,452,274 $28,845,838 $44,622,194
============ =========== =========== =========== =========== ===========
Number of shares of $.01 par value common
stock, issued and outstanding............. 10,701,915 45,215,694 1,432,776 2,824,713 1,704,741 3,449,440
============ =========== =========== =========== =========== ===========
Net asset value, offering and redemption
price per share........................... $ 16.79 $ 1.00 $ 10.53 $ 13.97 $ 16.92 $ 12.94
============ =========== =========== =========== =========== ===========
<CAPTION>
COMMON SENTINEL
STOCK GROWTH
PORTFOLIO PORTFOLIO
- ------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Investments, at value (cost $156,306,960,
$45,432,040, $14,754,185, $35,222,280,
$25,445,892, $39,481,863, $5,100,982,
$4,985,964 respectively) (see accompanying
schedules)................................ $ 5,276,964 $ 5,087,854
Cash........................................ -- --
Interest receivable......................... 233 578
Dividends receivable........................ 7,180 4,936
Foreign taxes receivable.................... -- --
Receivable from affiliated insurance
company................................... 10,020 9,816
Prepaid expenses............................ -- --
Receivable for investments sold............. 49,501 --
Receivable for fund shares sold ............ 21,602 --
----------- -----------
Total assets.............................. 5,365,500 5,103,184
----------- -----------
LIABILITIES
Accrued expenses............................ 6,612 6,791
Dividend payable............................ -- --
Payable for investments purchased........... 106,930 --
Payable for fund shares redeemed............ -- --
----------- -----------
Total liabilities......................... 113,542 6,791
----------- -----------
Net assets................................ $ 5,251,958 $ 5,096,393
=========== ===========
Number of shares of $.01 par value common
stock, issued and outstanding............. 505,262 500,133
=========== ===========
Net asset value, offering and redemption
price per share........................... $ 10.39 $ 10.19
=========== ===========
</TABLE>
* Includes foreign currency with a cost of $1,279,346 and a value of $1,338,941.
See accompanying notes to financial statements.
35
<PAGE> 71
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
Statements of Operations For the Six Months Ended June 30, 1996
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MONEY AGGRESSIVE
GROWTH MARKET BOND MANAGED GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends.......................................... $ 2,603,652 $ -- $ -- $ 250,830 $ 90,331
Interest........................................... 301,878 1,090,644 471,950 541,034 146,400
Less: foreign taxes withheld..................... (25,573) -- -- (1,462) --
----------- ---------- --------- ---------- ---------
Total Income..................................... 2,879,957 1,090,644 471,950 790,402 236,731
----------- ---------- --------- ---------- ---------
EXPENSES:
Investment advisory fee............................ 285,237 49,845 26,462 74,933 62,966
Administration fee................................. 69,535 16,244 5,029 15,305 10,808
Directors' fee..................................... 1,945 1,091 309 636 668
Transfer agent fee................................. 3,132 1,305 953 1,273 1,118
Custodian fee...................................... 16,383 5,023 1,911 4,961 6,214
Legal fees......................................... 2,161 1,212 343 707 742
Audit fees......................................... 2,766 1,551 439 905 949
Printing........................................... 8,643 6,537 1,820 3,769 3,990
Taxes.............................................. -- -- -- -- --
Miscellaneous...................................... 6,367 2,859 1,637 2,332 2,543
----------- ---------- --------- ---------- ---------
396,169 85,667 38,903 104,821 89,998
Less: expenses reimbursed by affiliated insurance
company.......................................... -- -- -- -- --
----------- ---------- --------- ---------- ---------
Total expenses................................... 396,169 85,667 38,903 104,821 89,998
----------- ---------- --------- ---------- ---------
Net investment income (loss)..................... 2,483,788 1,004,977 433,047 685,581 146,733
----------- ---------- --------- ---------- ---------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS
Net realized gain (loss) from:
Investments:.................................... 12,265,437 -- (175,469) 221,329 159,823
Foreign currency related transactions........... (25,972) -- -- -- --
----------- ---------- --------- ---------- ---------
12,239,465 -- (175,469) 221,329 159,823
----------- ---------- --------- ---------- ---------
Net change in unrealized appreciation
(depreciation) from:
Investment:..................................... 619,910.... -- (463,624) 769,236 2,292,942
Foreign currency related translations........... -- -- -- -- --
----------- ---------- --------- ---------- ---------
619,910 -- (463,624) 769,236 2,292,942
Net gain (loss) on investments and foreign currency
transactions..................................... 12,859,375 -- (639,093) 990,565 2,452,765
----------- ---------- --------- ---------- ---------
Net increase (decrease) in net assets resulting
from operations.................................. $15,343,163 $1,004,977 $ (206,046) $1,676,146 $2,599,498
=========== ========== ========= ========== ==========
<CAPTION>
COMMON SENTINEL
INTERNATIONAL STOCK GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends.......................................... $ 576,259 $ 32,457 $ 19,210
Interest........................................... 59,230 6,942 4,812
Less: foreign taxes withheld..................... (51,664) -- --
---------- -------- --------
Total Income..................................... 583,825 39,399 24,022
---------- -------- --------
EXPENSES:
Investment advisory fee............................ 156,162 5,780 7,189
Administration fee................................. 25,959 12,819 12,755
Directors' fee..................................... 1,011 93 92
Transfer agent fee................................. 1,310 466 466
Custodian fee...................................... 17,082 1,413 1,252
Legal fees......................................... 1,124 103 102
Audit fees......................................... 1,438 132 131
Printing........................................... 6,030 246 245
Taxes.............................................. -- 3 3
Miscellaneous...................................... 2,968 557 557
---------- -------- --------
213,084 21,612 22,792
Less: expenses reimbursed by affiliated insurance
company.......................................... (5,547) (10,020) (9,816)
---------- -------- --------
Total expenses................................... 207,537 11,592 12,976
---------- -------- --------
Net investment income (loss)..................... 376,288 27,807 11,046
---------- -------- --------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS
Net realized gain (loss) from:
Investments:.................................... 1,546,680 (5,870) (17,891)
Foreign currency related transactions........... (60,861) -- --
---------- -------- --------
1,485,819 (5,870) (17,891)
---------- -------- --------
Net change in unrealized appreciation
(depreciation) from:
Investment:..................................... 897,500 175,982 101,890
Foreign currency related translations........... 1,145 -- --
---------- -------- --------
898,645 175,982 101,890
Net gain (loss) on investments and foreign currency
transactions..................................... 2,384,464 170,112 83,999
---------- -------- --------
Net increase (decrease) in net assets resulting
from operations.................................. $ 2,760,752 $197,919 $ 95,045
========== ======== ========
</TABLE>
See accompanying notes to financial statements.
36
<PAGE> 72
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
Statements of Changes in Net Assets for the Six Months Ended June 30, 1996
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MONEY AGGRESSIVE
GROWTH MARKET BOND MANAGED GROWTH INTERNATIONAL
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INCREASE IN NET ASSETS
Operations:
Net investment income (loss).............. $ 2,483,788 $ 1,004,977 $ 433,047 $ 685,581 $ 146,733 $ 376,288
Net realized gain (loss) on investments and
foreign currency related transactions..... 12,239,465 -- (175,469) 221,329 159,823 1,485,819
Net change in unrealized appreciation
(depreciation) on investments and foreign
currency translations.................... 619,910 -- (463,624) 769,236 2,292,942 898,645
Net increase (decrease) in net assets
resulting from operations................ 15,343,163 1,004,977 (206,046) 1,676,146 2,599,498 2,760,752
Distributions:
From net investment income................ (2,442,054) (1,004,977) (421,889) (660,115) (255,039) (442,343)
From net realized gains................... (7,732,422) -- -- (1,471,361) (2,569,743) (1,793,161)
Capital share transactions:
Net contributions from affiliated life
insurance companies...................... 12,634,558 10,600,542 1,309,072 3,905,238 5,248,691 7,454,864
------------ ----------- ----------- ----------- ----------- -----------
Total increase in net assets............. 17,803,245 10,600,542 681,137 3,449,908 5,023,407 7,980,112
NET ASSETS
Beginning of period......................... 161,898,951 34,615,152 14,402,355 36,002,366 23,822,431 36,642,082
------------ ----------- ----------- ----------- ----------- -----------
End of period (including undistributed net
investment income in the Growth Portfolio
of $1,279,516; Bond Portfolio $219,528;
Managed Portfolio $355,196; Aggressive
Portfolio $146,733 and International
Portfolio $315,427; Common Stock $27,807;
Sentinel Growth $11,046).................. $179,702,196 $45,215,694 $15,083,492 $39,452,274 $28,845,838 $44,622,194
============ =========== =========== =========== =========== ===========
<CAPTION>
COMMON SENTINEL
STOCK GROWTH
PORTFOLIO PORTFOLIO
- --------------------------------------------------------------------------
<S> <C> <C>
INCREASE IN NET ASSETS
Operations:
Net investment income (loss).............. $ 27,807 $ 11,046
Net realized gain (loss) on investments and
foreign currency related transactions..... (5,870) (17,891)
Net change in unrealized appreciation
(depreciation) on investments and foreign
currency translations.................... 175,982 101,890
Net increase (decrease) in net assets
resulting from operations................ 197,919 95,045
Distributions:
From net investment income................ -- --
From net realized gains................... -- --
Capital share transactions:
Net contributions from affiliated life
insurance companies...................... 5,054,039 5,001,348
----------- -----------
Total increase in net assets............. 5,251,958 5,096,393
NET ASSETS
Beginning of period......................... 0 0
----------- -----------
End of period (including undistributed net
investment income in the Growth Portfolio
of $1,279,516; Bond Portfolio $219,528;
Managed Portfolio $355,196; Aggressive
Portfolio $146,733 and International
Portfolio $315,427; Common Stock $27,807;
Sentinel Growth $11,046).................. $ 5,251,958 $ 5,096,393
=========== ===========
</TABLE>
See accompanying notes to financial statements.
37
<PAGE> 73
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
Statements of Changes in Net Assets for the Year Ended December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
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).. $ 4,474,620 $ 1,481,782 $ 776,497 $ 1,374,276 $ 255,039 $ 385,788
Net realized gain (loss) on
sale off investments........ 7,728,282 -- 503,141 1,471,361 2,569,743 1,849,716
Net change in unrealized
appreciation (depreciation)
on investments and foreign
currency translations....... 24,145,662 -- 950,760 4,221,556 (406,827) 2,023,172
------------ ----------- ----------- ----------- ----------- -----------
Net increase (decrease) in net
assets resulting from
operations.................. 36,348,564 1,481,782 2,230,398 7,067,193 2,417,955 4,258,676
Distributions:
From net investment income.... (4,157,531) (1,481,782) (736,126) (1,414,623) -- (148,141)
From net realized gains....... (8,715,516) -- -- (33,117) (131,841) (699,972)
Capital share transactions:
Net contributions from
affiliated life insurance
companies................... 23,232,447 13,575,595 2,810,449 1,019,709 6,106,674 7,019,658
------------ ----------- ----------- ----------- ----------- -----------
Total increase in net
assets.................... 46,707,964 13,575,595 4,304,721 6,639,162 8,392,788 10,430,221
NET ASSETS
Beginning of period............. 115,190,987 21,039,557 10,097,634 29,363,204 15,429,643 26,211,861
------------ ----------- ----------- ----------- ----------- -----------
End of period (including
undistributed net investment
income in the Growth Portfolio
of $963,142; Bond Portfolio
$168,000; Managed Portfolio
$370,077 and International
Portfolio $148,141)........... $161,898,951 $34,615,152 $14,402,355 $36,002,366 $23,822,431 $36,642,082
============ =========== =========== =========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
38
<PAGE> 74
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
Financial Highlights
- --------------------------------------------------------------------------------
Selected data for a share of capital stock outstanding throughout the periods:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GROWTH PORTFOLIO
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
01/01/96 01/01/95 01/01/94 01/01/93 01/01/92 01/01/91
TO TO TO TO TO TO
06/30/96 12/31/95 12/31/94 12/31/93 12/31/92 12/31/91
(UNAUDITED)
- ------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period........ $16.36 $14.00 $14.09 $13.73 $13.88 $12.08
-------- -------- -------- -------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income....................... .23 .47 .43 .38 .46 .50
Net realized and unrealized gain (loss) on
investments............................... 1.22 3.41 (.10 ) .94 .17 1.71
-------- -------- -------- -------- ------- -------
Total from investment operations........ 1.45 3.88 .33 1.32 .63 2.21
-------- -------- -------- -------- ------- -------
LESS DISTRIBUTIONS:
Dividends to shareholders from
net investment income..................... (.24) (.46 ) (.41 ) (.39 ) (.46) (.41)
Dividends to shareholders from net capital
gains..................................... (.78) (1.06 ) (.01 ) (.35 ) (.32) (.00)
Dividends to shareholders in excess of net
investment income......................... -- -- -- (.22 ) -- --
-------- -------- -------- -------- ------- -------
Total distributions..................... (1.02) (1.52 ) (.42 ) (.96 ) (.78) (.41)
-------- -------- -------- -------- ------- -------
Net asset value, end of period.............. $16.79 $16.36 $14.00 $14.09 $13.73 $13.88
======== ======== ======== ======== ======= =======
Total return................................ 9.37%(2) 30.39% 2.40% 9.43% 4.74% 18.50%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period $(000)............ 179,702 161,899 115,191 109,534 82,881 55,357
Ratios of expenses to average net assets
(annualized)(1)........................... .46% .61% .63% .76% .79% .76%
Ratios of net investment income to average
net assets (annualized)................... 2.88% 3.20% 3.10% 2.86% 3.53% 3.91%
Portfolio turnover.......................... 32% 61% 63% 51% 35% 28%
Average commission rate(3).................. $0.0600 N/A N/A N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
1 Expense ratios for the Growth Portfolio before reimbursement of expenses by
affiliated insurance company for the period ended June 30, 1996 and the years
ended December 31, 1995, 1994, 1993, 1992 and 1991 were as follows: 0.46%
(annualized), 0.61% , 0.67%, 0.76%, 0.82% and 0.98%, respectively.
2 Total returns for periods less then one year are not annualized.
3 Computed by dividing the total amount of commission paid by the total number
of shares purchased and sold during the period for which there was a
commission. This disclosure is required by the S.E.C. beginning 1996.
See accompanying notes to financial statements.
39
<PAGE> 75
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
Financial Highlights -- Continued
- --------------------------------------------------------------------------------
Selected data for a share of capital stock outstanding throughout the periods:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MONEY MARKET PORTFOLIO
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
01/01/96 01/01/95 01/01/94 01/01/93 01/01/92 01/01/91
TO TO TO TO TO TO
06/30/96 12/31/95 12/31/94 12/31/93 12/31/92 12/31/91
(UNAUDITED)
- ------------------------------------------------------------------------------------------------------------------
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 .04 .03 .03 .06
-------- -------- -------- ------- ------- -------
Total from investment
operations................... .03 .05 .04 .03 .03 .06
-------- -------- -------- ------- ------- -------
LESS DISTRIBUTIONS:
Dividends to shareholders from net
investment income................ (.03) (.05 ) (.04 ) (.03) (.03) (.06)
-------- -------- -------- ------- ------- -------
Total distributions............ (.03) (.05 ) (.04 ) (.03) (.03) (.06)
-------- -------- -------- ------- ------- -------
Net asset value, end of period..... $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
======== ======== ======== ======= ======= =======
Total return....................... 2.54%(2) 5.61% 3.81% 2.59% 3.18% 5.69%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period $(000)... 45,216 34,615 21,040 12,506 8,138 7,047
Ratios of expenses to average net
assets (annualized)(1)........... .42% .50% .55% .65% .65% .53%
Ratios of net investment income to
average net assets (annualized).. 5.03% 5.47% 3.86% 2.56% 3.12% 5.49%
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
1 Expense ratios for the Money Market Portfolio before reimbursement of expenses
by affiliated insurance company for the period ended June 30, 1996 and the
years ended December 31, 1995, 1994, 1993, 1992 and 1991 were as follows:
0.42% (annualized), 0.50%, 0.59%, 0.65%, 0.73% and 0.86%, respectively.
2 Total returns for periods less than one year are not annualized.
See accompanying notes to financial statements.
40
<PAGE> 76
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
Financial Highlights -- Continued
- --------------------------------------------------------------------------------
Selected data for a share of capital stock outstanding throughout the periods:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
BOND PORTFOLIO
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
01/01/96 01/01/95 01/01/94 01/01/93 01/01/92 01/01/91
TO TO TO TO TO TO
06/30/96 12/31/95 12/31/94 12/31/93 12/31/92 12/31/91
(UNAUDITED)
- ------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of
period........................... $11.00 $9.73 $11.21 $10.73 $10.80 $10.04
-------- -------- -------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income.............. .31 .65 .62 .60 .64 .77
Net realized and unrealized gain
(loss) on investments............ (.47) 1.27 (1.23 ) .48 (.03) .57
-------- -------- -------- ------- ------- -------
Total from investment operations... (.16) 1.92 (.61 ) 1.08 .61 1.34
-------- -------- -------- ------- ------- -------
LESS DISTRIBUTIONS:
Dividends to shareholders from net
investment income................ (.31) (.65 ) (.60 ) (.60) (.68) (.58)
Dividends to shareholders from net
capital gains.................... (.00) (.00 ) (.27 ) (.00) (.00) (.00)
-------- -------- -------- ------- ------- -------
Total distributions............ (.31) (.65 ) (.87 ) (.60) (.68) (.58)
-------- -------- -------- ------- ------- -------
Net asset value, end of period..... $10.53 $11.00 $9.73 $11.21 $10.73 $10.80
======== ======== ======== ======= ======= =======
Total return................... (1.34)%(2) 20.45% (5.62 )% 10.32% 5.95% 13.93%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period $(000)... 15,083 14,402 10,098 10,160 6,710 4,365
Ratios of expenses to average net
assets (annualized)(1)........... .53% .60% .68% .75% .75% .63%
Ratios of net investment income to
average net assets (annualized).. 5.92% 6.36% 6.14% 5.53% 6.34% 7.58%
Portfolio turnover................. 84% 206% 1% 71% 4% 32%
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
1 Expense ratios for the Bond Portfolio before reimbursement of expenses by
affiliated insurance company for the period ended June 30, 1996 and the years
ended December 31, 1995, 1994, 1993, 1992 and 1991 were as follows: 0.52%
(annualized), 0.60%, 0.70%, 0.75%, 0.81% and 0.93%, respectively.
2 Total returns for periods less than one year are not annualized.
See accompanying notes to financial statements.
41
<PAGE> 77
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
Financial Highlights -- Continued
- --------------------------------------------------------------------------------
Selected data for a share of capital stock outstanding throughout the periods:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MANAGED PORTFOLIO
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
01/01/96 01/01/95 01/01/94 01/01/93 01/01/92 01/01/91
TO TO TO TO TO TO
06/30/96 12/31/95 12/31/94 12/31/93 12/31/92 12/31/91
(UNAUDITED)
- ------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of
period........................... $14.19 $11.94 $13.27 $12.25 $11.40 $9.81
-------- -------- -------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income.............. .25 .55 .53 .40 .44 .51
Net realized and unrealized gain
(loss) on investments............ .36 2.28 (.77 ) 1.00 .88 1.47
-------- -------- -------- ------- ------- -------
Total from investment
operations................... .61 2.83 (.24 ) 1.40 1.32 1.98
-------- -------- -------- ------- ------- -------
LESS DISTRIBUTIONS:
Dividends to shareholders from net
investment income................ (.25) (.57 ) (.49 ) (.38) (.47) (.39)
Dividends to shareholders from net
capital gains.................... (.58) (.01 ) (.60 ) (.00) (.00) (.00)
-------- -------- -------- ------- ------- -------
Total distributions............ (.83) (.58 ) (1.09 ) (.38) (.47) (.39)
-------- -------- -------- ------- ------- -------
Net asset value, end of period..... $13.97 $14.19 $11.94 $13.27 $12.25 $11.40
======== ======== ======== ======= ======= =======
Total return....................... 4.61%(2) 24.43% (1.82 )% 11.62% 11.96% 20.49%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period $(000)... 39,452 36,002 29,363 28,984 15,946 12,564
Ratios of expenses to average net
assets (annualized)(1)........... .56% 6% .67% .80% .80% .68%
Ratios of net investment income to
average net assets (annualized).. 3.65% 4.22% 4.34% 3.36% 3.88% 4.74%
Portfolio turnover................. 76% 130% 75% 89% 32% 51%
Average commission rate(3)......... $0.0600 N/A N/A N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
1 Expense ratios for the Managed Portfolio before reimbursement of expenses by
affiliated insurance company for the period ended June 30, 1996 and the years
ended December 31, 1995, 1994, 1993, 1992 and 1991 were as follows: 0.55%
(annualized), 0.66% , 0.73%, 0.80%, 0.84% and 0.95%, respectively.
2 Total returns for periods less then one year are not annualized.
3 Computed by dividing the total amount of commission paid by the total number
of shares purchased and sold during the period for which there was a
commission. This disclosure is required by the S.E.C. beginning 1996.
See accompanying notes to financial statements.
42
<PAGE> 78
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
Financial Highlights -- Continued
- --------------------------------------------------------------------------------
Selected data for a share of capital stock outstanding throughout the periods:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
AGGRESSIVE GROWTH PORTFOLIO
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
01/01/96 01/01/95 01/01/94 01/01/93 01/01/92 01/01/91
TO TO TO TO TO TO
06/30/96 12/31/95 12/31/94 12/31/93 12/31/92 12/31/91
(UNAUDITED)
- ------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of
period........................... $17.38 $15.45 $15.45 $14.72 $16.68 $10.67
-------- -------- -------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income.............. .09 .20 (.01 ) (.01) .03 .08
Net realized and unrealized gain
(loss) on investments............ 1.51 1.86 .01 .77 .38 5.93
-------- -------- -------- ------- ------- -------
Total from investment
operations................... 1.60 2.06 .00 .76 .41 6.01
-------- -------- -------- ------- ------- -------
LESS DISTRIBUTIONS:
Dividends to shareholders from net
investment income................ (.19) (.00 ) (.00 ) (.03) (.07) (.00)
Dividends to shareholders from net
capital gains.................... (1.87) (.13 ) (.00 ) (.00) (2.30) (.00)
-------- -------- -------- ------- ------- -------
Total distributions............ (2.06) (.13 ) (.00 ) (.03) (2.37) (.00)
-------- -------- -------- ------- ------- -------
Net asset value, end of period..... $16.92 $17.38 $15.45 $15.45 $14.72 $16.68
======== ======== ======== ======= ======= =======
Total return....................... 10.55%(2) 13.48% 0.00 % 5.20% 2.58% 56.33%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period $(000)... 28,846 23,822 15,430 12,223 8,029 2,751
Ratios of expenses to average net
assets (annualized)(1)........... .68% .76% .86 % .90% .90% .79%
Ratios of net investment income to
average net assets (annualized).. 1.10% 1.32% (.10 )% (.07)% .37% .80%
Portfolio turnover................. 31% 89% 60 % 60% 18% 95%
Average commission rate(3)......... $0.0600 N/A N/A N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
1 Expense ratios for the Aggressive Growth Portfolio before reimbursement of
expenses by affiliated insurance company for the period ended June 30, 1996
and the years ended December 31, 1995, 1994, 1993, 1992 and 1991 were as
follows: 0.67% (annualized) , 0.76%, 0.89%, 0.90%, 1.00% and 1.32%,
respectively.
2 Total returns for periods less then one year are not annualized.
3 Computed by dividing the total amount of commission paid by the total number
of shares purchased and sold during the period for which there was a
commission.This disclosure is required by the S.E.C. beginning 1996.
See accompanying notes to financial statements.
43
<PAGE> 79
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
Financial Highlights -- Continued
- --------------------------------------------------------------------------------
Selected data for a share of capital stock outstanding throughout the periods:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INTERNATIONAL PORTFOLIO
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
01/01/96 01/01/95 01/01/94 01/01/93 01/01/92 01/01/91(2)
TO TO TO TO TO TO
06/30/96 12/31/95 12/31/94 12/31/93 12/31/92 12/31/91
(UNAUDITED)
- ------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of
period.......................... $12.86 $11.63 $11.87 $9.00 $9.74 $10.00
-------- -------- -------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income............. .09 .16 .05 .06 .08 .01
Net realized and unrealized gain
(loss) on investments........... .78 1.45 (.02 ) 3.09 (.81) (.27)
-------- -------- -------- ------- ------- -------
Total from investment
operations.................. .87 1.61 .03 3.15 (.73) (.26)
-------- -------- -------- ------- ------- -------
LESS DISTRIBUTIONS:
Dividends to shareholders from net
investment income............... (.16) (.07 ) (.03 ) (.08) (.00) (.00)
Dividends to shareholders from net
capital gains................... (.63) (.31 ) (.24 ) (.20) (.01) (.00)
-------- -------- -------- ------- ------- -------
Total distributions........... (.79) (.38 ) (.27 ) (.28) (.01) (.00)
-------- -------- -------- ------- ------- -------
Net asset value, end of period.... $12.94 $12.86 $11.63 $11.87 $9.00 $9.74
======== ======== ======== ======= ======= =======
Total return...................... 7.01%(3) 14.31% .26% 36.11% (7.30)% (2.88)%(3)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
$(000).......................... 44,622 36,642 26,212 13,682 6,727 4,979
Ratios of expenses to average net
assets (annualized)(1).......... 1.03 1.15% 1.32% 1.50% 1.50% 1.48%
Ratios of net investment income to
average net assets (annualized). 1.87% 1.21% .72% .68% 1.05% .26%
Portfolio turnover................ 18% 45% 32% 37% 35% 1%
Average commission rate(4)........ $0.0360 N/A N/A N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
1 Expense ratios for the International Portfolio before reimbursement of
expenses by affiliated insurance company for the period ended June 30, 1996
and the years ended December 31, 1995, 1994, 1993 and 1992 and the period
ended December 31, 1991 were as follows: 1.06% (annualized), 1.15%, 1.32%,
1.50%, 2.65% and 3.40%, respectively.
2 Commencement of operations.
3 Total returns for periods less than one year are not annualized.
4 Computed by dividing the total amount of commission paid by the total number
of shares purchased and sold during the period for which there was a
commission. This disclosure is required by the S.E.C. beginning 1996.
See accompanying notes to financial statements.
44
<PAGE> 80
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
Financial Highlights -- Continued
- --------------------------------------------------------------------------------
Selected data for a share of capital stock outstanding throughout the periods:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COMMON
STOCK
PORTFOLIO
<S> <C>
- ------------------------------------------------------------------------------------------------------------------
03/18/96(2)
TO
06/30/96
(UNAUDITED)
- ------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period............................................................ $10.00
--------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income........................................................................... .06
Net realized and unrealized gain (loss) on investments.......................................... .33
--------
Total from investment operations............................................................ .39
--------
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.................................................................. $10.39
========
Total return.................................................................................... 3.90%(3)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period $(000)................................................................ 5,252
Ratios of expenses to average net assets (annualized)(1)........................................ .79%
Ratios of net investment income to average net assets (annualized).............................. 1.90%
Portfolio turnover.............................................................................. 4%
Average commission rate(4)...................................................................... $0.0600
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
1 Expense ratio for the Common Stock Portfolio before reimbursement of expenses
by affiliated insurance company for the period ended June 30, 1996 was as
follows: 1.48% (annualized).
2 Commencement of operations.
3 Total returns for periods less then one year are not annualized.
4 Computed by dividing the total amount of commission paid by the total number
of shares purchased and sold during the period for which there was a
commission. This disclosure is required by the S.E.C. beginning 1996.
See accompanying notes to financial statements.
45
<PAGE> 81
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
Financial Highlights -- Concluded
- --------------------------------------------------------------------------------
Selected data for a share of capital stock outstanding throughout the periods:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SENTINEL
GROWTH
PORTFOLIO
<S> <C>
- ------------------------------------------------------------------------------------------------------------------
03/18/96(2)
TO
06/30/96
(UNAUDITED)
- ------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period............................................................ $10.00
--------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income........................................................................... .02
Net realized and unrealized gain (loss) on investments.......................................... .17
--------
Total from investment operations............................................................ .19
--------
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.................................................................. $10.19
========
Total return.................................................................................... 1.90%(3)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period $(000)................................................................ 5,096
Ratios of expenses to average net assets (annualized)(1)........................................ .89%
Ratios of net investment income to average net assets (annualized).............................. 76%
Portfolio turnover.............................................................................. 8%
Average commission rate(4)...................................................................... $0.0600
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
1 Expense ratio for the Sentinel Growth Portfolio before reimbursement of
expenses by affiliated insurance company for the period ended June 30, 1996
was as follows: 1.57% (annualized).
2 Commencement of operations.
3 Total returns for periods less than one year are not annualized.
4 Computed by dividing the total amount of commission paid by the total number
of shares purchased and sold during the period for which there was a
commission. This disclosure is required by the S.E.C. beginning 1996.
See accompanying notes to financial statements.
46
<PAGE> 82
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
Notes to Financial Statements, June 30, 1996
(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, Common Stock Portfolio and Sentinel Growth 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 by Providentmutual Life and Annuity Company of America
(PLACA) and individual flexible premium adjustable variable life insurance
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
Valuation of Investments
Bonds are carried at market value based on the last bid price on a national
securities exchange or on quoted prices from a third-party pricing service.
Investments in common and preferred stocks primarily traded on recognized U.S.
or foreign securities exchanges are valued at the last sale price on exchanges
on the last business day of the period, or, if there was no sale, at the last
bid price on that day. Short-term investments with maturities of less than 60
days and Money Market Portfolio investments are valued at amortized cost which
approximates market value.
Investments
Security transactions are accounted for on the trade date. The cost of
investment securities sold is determined by use of the specific identification
method for both financial reporting and income tax purposes. Interest income is
recorded on the accrual basis; dividend income is recorded on the ex-dividend
date.
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.
47
<PAGE> 83
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
Notes to Financial Statements, June 30, 1996 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
The Fund does not isolate that portion of the results of operations resulting
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, and
Common Stock Portfolio declare and pay dividends of investment income quarterly.
The Aggressive Growth Portfolio, International Portfolio, and Sentinel Growth
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.
Management Estimates
The preparation of financial statements requires the use of management
estimates.
3. INVESTMENT ADVISORY FEES AND RELATED PARTY TRANSACTIONS
Investment advisory agreements have been approved, whereby Newbold's Asset
Management, Inc. (NAM) is adviser for the Growth Portfolio, Sentinel Advisors
Company (SAC), a Vermont General Partnership, for the Money Market, Bond,
Managed, Aggressive Growth, Common Stock and Sentinel Growth Portfolios. With
respect to the Growth Portfolio, NAM 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 Common Stock 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 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. PIMC is the adviser for the Interna-
48
<PAGE> 84
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
Notes to Financial Statements, June 30, 1996 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
tional Portfolio and is compensated monthly at an effective annual rate of 0.75%
of the first $500 million of the average daily net assets of the portfolio and
0.60% of assets in excess of $500 million. The Boston Company Asset Management,
Inc. ("TBC") is sub-advisor to the International Portfolio.
PMLIC agrees to reimburse the Growth, Money Market, Bond, Managed, and
Aggressive Growth 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 the Common Stock and 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.
4. NET ASSETS
At June 30, 1996, the Portfolios' net assets consisted of:
<TABLE>
<CAPTION>
MONEY AGGRESSIVE
GROWTH MARKET BOND MANAGED GROWTH INTERNATIONAL
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net contribution from shareholders.............. $142,908,573 $42,215,694 $15,034,257 $33,830,969 $25,139,635 $39,129,178
Undistributed net investment income............. 1,279,516 -- 219,528 355,196 146,733 315,427
Undistributed net realized gain................. 12,213,863 -- -- 221,329 159,823 1,546,680
Accumulated loss on investment transactions..... -- -- (224,354) -- -- --
Net unrealized appreciation (depreciation) on
investments.................................... 23,300,244 -- 54,061 5,044,780 3,399,647 3,630,909
------------ ----------- ----------- ----------- ----------- -----------
$179,702,196 $42,215,694 $15,083,492 $39,452,274 $28,845,838 $44,622,194
============ =========== =========== =========== =========== ===========
<CAPTION>
COMMON SENTINEL
STOCK GROWTH
PORTFOLIO PORTFOLIO
- ------------------------------------------------------------------------
<S> <C> <C>
Net contribution from shareholders.............. $5,054,039 $5,001,348
Undistributed net investment income............. 27,807 11,046
Undistributed net realized gain................. (5,870) (17,891)
Accumulated loss on investment transactions..... -- --
Net unrealized appreciation (depreciation) on
investments.................................... 175,982 101,890
---------- ----------
$5,251,958 $5,096,393
========== ==========
</TABLE>
49
<PAGE> 85
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
Notes to Financial Statements, June 30, 1996 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
5. PURCHASES AND SALES OF INVESTMENTS (EXCLUDING SHORT-TERM SECURITIES)
Purchases and proceeds on sales of investments for the portfolios, for the six
months ended June 30, 1996, 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........................... $ -- $ -- $ 6,754,723 $15,489,404 $ -- $ --
Corporate Bonds.................................. -- -- 4,746,003 8,826,898 -- --
Common Stock..................................... 75,669,595 -- -- 2,685,662 10,122,416 11,619,768
----------- ----------- ----------- ----------- ----------- -----------
Total Purchases.................................. $75,669,595 $ -- $11,500,726 $27,001,964 $10,122,416 $11,619,768
=========== =========== =========== =========== =========== ===========
SALES
U.S. Gov't Obligations........................... $ -- $ -- $ 3,296,750 $13,499,633 $ -- $ --
Corporate Bonds.................................. -- -- 9,424,699 10,801,453 -- --
Common Stock..................................... 51,319,823 -- -- 2,401,808 6,692,748 6,923,720
----------- ----------- ----------- ----------- ----------- -----------
Total Sales...................................... $51,319,823 $ -- $12,721,449 $26,702,894 $ 6,692,748 $ 6,923,720
=========== =========== =========== =========== =========== ===========
<CAPTION>
COMMON SENTINEL
STOCK GROWTH
PORTFOLIO PORTFOLIO
- -------------------------------------------------
<S> <C> <C>
PURCHASES
U.S. Gov't Obligations........................... $ -- $ --
Corporate Bonds.................................. -- --
Common Stock..................................... 4,979,872 5,906,962
---------- ----------
Total Purchases.................................. $4,979,872 $5,906,962
========== ==========
SALES
U.S. Gov't Obligations........................... $ -- $ --
Corporate Bonds.................................. -- --
Common Stock..................................... 155,622 373,315
---------- ----------
Total Sales...................................... $ 155,622 $ 373,315
========== ==========
</TABLE>
6. TAX BASIS OF INVESTMENTS
Investment information based on the cost of the securities for Federal income
tax purposes held at June 30, 1996 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........ $ 23,469,756 $ -- $ 204,876 $ 5,318,608 $ 4,404,533 $ 4,802,731
Aggregate gross unrealized depreciation........ (221,085) -- (150,815) (273,828) (1,004,886) (1,230,272)
------------ ----------- ----------- ----------- ----------- -----------
Net unrealized appreciation (depreciation)..... $ 23,248,671 $ -- $ 54,061 $ 5,044,780 $ 3,399,647 $ 3,572,459
============ =========== =========== =========== =========== ===========
Aggregate cost of securities for federal income
tax purposes.................................. $156,255,387 $45,432,040 $14,754,185 $35,222,280 $25,445,892 $40,761,209
============ =========== =========== =========== =========== ===========
Capital loss carryover (available to offset
possible future capital gains.) The carryover
expires as follows: Bond Portfolio -- $48,885
in 2002....................................... $ -- $ -- $ (48,885) $ -- $ -- $ --
============ =========== =========== =========== =========== ===========
<CAPTION>
COMMON SENTINEL
STOCK GROWTH
PORTFOLIO PORTFOLIO
- --------------------------------------------------------------------------
<S> <C> <C>
Aggregate gross unrealized appreciation......... $ 246,555 $ 264,471
Aggregate gross unrealized depreciation......... (70,573) (162,581)
---------- ----------
Net unrealized appreciation (depreciation)...... $ 175,982 $ 101,890
========== ==========
Aggregate cost of securities for federal income
tax purposes................................... $5,100,982 $4,985,964
========== ==========
Capital loss carryover (available to offset
possible future capital gains.) The carryover
expires as follows: Bond Portfolio -- $48,885
in 2002........................................ $ -- $ --
========== ==========
</TABLE>
50
<PAGE> 86
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
Notes to Financial Statements, June 30, 1996 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
7. AUTHORIZED CAPITAL STOCK AND CAPITAL STOCK TRANSACTIONS
On June 30, 1996, there were 200 million shares of $0.01 par value capital stock
authorized for the Fund. The shares of capital stock are divided into eight
series: Growth Portfolio, Money Market Portfolio, Bond Portfolio, Managed
Portfolio, Aggressive Growth Portfolio, International Portfolio, Common Stock
Portfolio and Sentinel Growth Portfolio. The Money Market Portfolio consists of
10 million shares; each of the other series consists of 5 million shares.
Transactions in capital stock for the six months ended June 30, 1996 were as
follows:
<TABLE>
<CAPTION>
GROWTH PORTFOLIO MONEY MARKET BOND PORTFOLIO MANAGED PORTFOLIO
PORTFOLIO
- ----------------------------------------------------------------------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shares sold............ 702,183 $11,286,814 40,684,248 $40,684,248 181,124 $1,924,221 258,030 $3,548,298
Shares redeemed........ (545,522) (8,826,732) (31,060,760) (31,060,760) (97,669) (1,037,038) (128,653) (1,774,536)
Shares reinvested...... 650,255 10,174,476 977,054 977,054 39,534 421,889 157,385 2,131,476
-------- ----------- ----------- ----------- ------- ---------- -------- ----------
Net contributions from
affiliated insurance
companies............. 806,916 $12,634,558 10,600,542 $10,600,542 122,989 $1,309,072 286,762 $3,905,238
======== =========== =========== =========== ======= ========== ======== ==========
</TABLE>
<TABLE>
<CAPTION>
AGGRESSIVE GROWTH INTERNATIONAL COMMON STOCK SENTINEL GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- ----------------------------------------------------------------------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shares sold................ 209,214 $3,412,275 506,494 $6,325,645 506,144 $5,063,237 500,135 $5,001,374
Shares redeemed............ (60,789) (988,366) (88,138) (1,106,285) (882) (9,198) (2) (26)
Shares reinvested.......... 185,719 2,824,782 180,866 2,235,504 -- -- -- --
------- ---------- ------- ---------- ------- ---------- ------- ----------
Net contributions from
affiliated insurance
companies................. 334,144 $5,248,691 599,222 $7,454,864 505,262 $5,054,039 500,133 $5,001,348
======= ========== ======= ========== ======= ========== ======= ==========
</TABLE>
Transactions in capital stock for the year ended December 31, 1995 were as
follows:
<TABLE>
<CAPTION>
GROWTH PORTFOLIO MONEY MARKET BOND PORTFOLIO MANAGED
PORTFOLIO PORTFOLIO
- ---------------------------------------------------------------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Shares sold.................. 1,376,728 $20,320,117 52,460,129 $52,460,129 305,883 $3,174,938 340,442
Shares redeemed.............. (672,833) (9,960,717) (40,303,780) (40,303,780) (106,040) (1,100,615) (375,720)
Shares reinvested............ 961,190 12,873,047 1,419,246 1,419,246 72,305 736,126 114,456
--------- ------------ ----------- ------------ -------- ----------- -------
Net contributions from
affiliated insurance
companies................... 1,665,085 $23,232,447 13,575,595 $13,575,595 272,148 $2,810,449 79,178
========= ============ =========== ============ ======== =========== =======
<CAPTION>
AGGRESSIVE INTERNATIONAL
GROWTH PORTFOLIO
- ---------------------------------------------------------------------------------------------
AMOUNT SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Shares sold.................. $4,456,504 489,394 $8,017,391 861,466 $10,317,408
Shares redeemed.............. (4,884,534) (125,984) (2,042,558) (341,090) (4,145,863)
Shares reinvested............ 1,447,739 8,772 131,841 76,064 848,113
----------- ------- ----------- -------- -----------
Net contributions from
affiliated insurance
companies................... $1,019,709 372,182 $6,106,674 596,440 $ 7,019,658
=========== ======= =========== ======== ===========
</TABLE>
51
<PAGE> 87
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
Notes to Financial Statements, June 30, 1996 -- Concluded
(Unaudited)
- --------------------------------------------------------------------------------
7. AUTHORIZED CAPITAL STOCK AND CAPITAL STOCK TRANSACTIONS -- (CONTINUED)
Shares of the Fund are held by Provident Mutual Life Insurance Company's and
Providentmutual Life and Annuity Company of America's Variable Life and Variable
Annuity Separate Accounts and by National Life Insurance Company's Variable Life
Separate Account. At June 30, 1996, shares were owned by:
<TABLE>
<CAPTION>
MONEY AGGRESSIVE
GROWTH MARKET BOND MANAGED GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Growth Separate Account..................................... 9,214,903 -- -- -- --
Money Market Separate Account............................... -- 19,210,660 -- -- --
Bond Separate Account....................................... -- -- 981,045 -- --
Managed Separate Account.................................... -- -- -- 2,049,003 --
Aggressive Growth Separate Account.......................... -- -- -- -- 1,346,935
International Separate Account.............................. -- -- -- -- --
Providentmutual Variable Annuity Separate Account........... 1,378,150 22,618,179 410,568 730,656 323,306
Provident Mutual Life Variable Annuity Separate Account..... 90,457 2,484,417 32,175 40,857 17,340
Providentmutual Variable Life Separate Account.............. 18,405 310,614 8,554 3,850 16,577
National Life Insurance Company/Vermont Separate Account.... -- 591,824 434 347 583
National Life Insurance Company/Vermont Variable Life
Separate Account........................................... -- -- -- -- --
---------- ---------- --------- --------- ---------
Total.................................................... 10,701,915 45,215,694 1,432,776 2,824,713 1,704,741
========== ========== ========= ========= =========
<CAPTION>
COMMON SENTINEL
INTERNATIONAL STOCK GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Growth Separate Account..................................... -- -- --
Money Market Separate Account............................... -- -- --
Bond Separate Account....................................... -- -- --
Managed Separate Account.................................... -- -- --
Aggressive Growth Separate Account.......................... -- -- --
International Separate Account.............................. 2,201,890 -- --
Providentmutual Variable Annuity Separate Account........... 1,118,615 --
Provident Mutual Life Variable Annuity Separate Account..... 109,363 -- --
Providentmutual Variable Life Separate Account.............. 18,368 -- --
National Life Insurance Company/Vermont Separate Account.... 1,204 500,000 500,000
National Life Insurance Company/Vermont Variable Life
Separate Account........................................... -- 5,262 133
--------- ------- -------
Total.................................................... 3,449,440 505,262 500,133
========= ======= =======
</TABLE>
8. PRINCIPAL UNDERWRITER
1717 Capital Management Company serves, without compensation, as the principal
underwriter for sale of the Fund shares to the Accounts. 1717 Capital Management
Company is an indirect wholly-owned subsidiary of PMLIC.
9. SUBSEQUENT DIVIDEND
On June 28, 1996 the Board of Directors declared the following net investment
income and capital gain dividends to shareholders of record on June 28, 1996,
ex-dividend date July 2, 1996, payable on July 3, 1996 as follows:
<TABLE>
<CAPTION>
TOTAL PER SHARE
------------------------ ---------------------
NET NET
INVESTMENT CAPITAL INVESTMENT CAPITAL
PORTFOLIO INCOME GAIN INCOME GAIN
- ---------------- ---------- ---------- ---------- -------
<S> <C> <C> <C> <C>
Growth.......... $1,279,516 -- $.1196 --
Bond............ 219,528 -- .1532 --
Managed......... 355,185 -- .1257 --
Aggressive
Growth......... -- -- -- --
International... -- -- -- --
Common Stock.... 27,087 -- .0536 --
Sentinel
Growth......... -- -- -- --
</TABLE>
52
<PAGE> 88
<TABLE>
<S> <C>
[LOGO]
PROVIDENT MUTUAL LIFE AND ANNUITY
COMPANY OF AMERICA
A STOCK LIFE INSURANCE COMPANY
300 CONTINENTAL DRIVE, NEWARK, DE 19713
1-800-668-5177
Variable Annuity contracts issued by
Providentmutual are distributed by 1717 SEMI-ANNUAL REPORT
Capital Management Company, Wilmington, June 30, 1996
DE, a registered broker-dealer. -------------------------
PROVIDENTMUTUAL LIFE
This report has been prepared for AND ANNUITY COMPANY
contractowners. It is not authorized for other OF AMERICA, A STOCK LIFE
distribution unless preceded or INSURANCE COMPANY
accompanied by an effective prospectus.
PROVIDENTMUTUAL VARIABLE
PL 506 6.96
ANNUITY SEPERATE ACCOUNT
BULK RATE
U.S. POSTAGE MARKET STREET FUND, INC.
PAID --------------------------
PHILADELPHIA, PA
PERMIT NO. 1
</TABLE>
