<PAGE>
================================================================================
-----------------------------------
[LOGO OF SENTINEL APPEARS HERE]
Sentinel
Family of
Funds
-----------------
Semi-Annual
Report
May 31, 1995
-----------------------------------
<PAGE>
================================================================================
[LOGO OF SENTINEL Sentinel Group Funds, Inc. (SGF)
APPEARS HERE]
Sentinel Pennsylvania
Tax-Free Trust (PA)
National Life Drive,
Montpelier, Vermont 05604
(800) 282-FUND (3863)
--------------------------------------------
Table of Contents
2 Message to Shareholders
4 Sentinel New York Tax-Free Income Fund
Manager's Report
5 Sentinel Short-Intermediate Government Fund
Manager's Report
6 Sentinel Emerging Growth Fund
7 Sentinel Growth Fund
8 Sentinel World Fund
9 Sentinel Common Stock Fund
11 Sentinel Balanced Fund
13 Sentinel Bond Fund
14 Sentinel Tax-Free Income Fund
16 Sentinel New York Tax-Free Income Fund
17 Sentinel Government Securities Fund
18 Sentinel Short-Intermediate Government Fund
19 Sentinel U.S. Treasury Money Market Fund
20 SGF Statement of Assets and Liabilities
22 SGF Statement of Operations
24 SGF Statement of Changes in Net Assets
27 SGF Notes to Financial Statements
32 SGF Financial Highlights
34 Sentinel Pennsylvania Tax-Free Trust
35 PA Statement of Assets and Liabilities
35 PA Statement of Operations
36 PA Statement of Changes in Net Assets
37 PA Notes to Financial Statements
39 PA Financial Highlights
40 Privileges, Plans and Services for Shareholders
42 Directors/Trustees and Officers
43 A Brief History
The financial statements included herein have been
taken from the records of the Funds/Trust without
audit by the independent accountants and accordingly
they do not express an opinion thereon.
1
<PAGE>
================================================================================
Message to Shareholders
------------------- -------------------
[PHOTO OF [PHOTO OF
KENISTON P. MERRILL JOSEPH M. ROB
APPEARS HERE] APPEARS HERE]
------------------- -------------------
Keniston P. Merrill Joseph M. Rob
Chairman President
Dear Shareholder:
We are pleased to submit our semi-annual report for the six months ended
May 31, 1995. You will note that it includes information for the new Sentinel
Short-Intermediate Government Fund and Sentinel New York Tax-Free Income Fund,
both of which began operations on March 27, 1995. Portfolio managers' reports
for these two funds are included on the pages following this Message to
Shareholders. Financial and other portfolio information are included elsewhere
as appropriate.
The Economy
The economic slowdown that we forecast in our letter to you six months ago has
occurred sooner and has been more pronounced than expected. Real GDP growth fell
from 5.1% in the fourth quarter of 1994 to 2.7% in 1995's first quarter. Recent
reports on durable goods orders, industrial production, and retail sales
indicate that the June quarter could slow to less than a 2% growth rate.
The primary reasons for the stalling of growth appear to be a slowdown in
employment growth coupled with high consumer debt levels. Employment growth
has slowed in the manufacturing sector as producers have attempted to reduce
over-sized inventories of big-ticket items such as automobiles. Consumer debt,
already at an historically high level, has become even more burdensome as a
result of the increase in short-term interest rates engineered by the Fed since
February, 1994. Adjustable rate mortgages and some auto finance loan rates are
still higher than they were a year ago. Slower processing of income tax refunds
by the IRS and an increase in taxes paid by upper income consumers may also have
contributed to the softness in consumer spending.
The slowdown in economic growth, together with apparent progress in reducing
the federal budget deficit, have led to a decline in long-term interest rates.
Long-term bond prices started rising soon after the Republican victories last
November and investors have been encouraged by the fact that both the Senate and
the House have passed budget resolutions calling for significant spending cuts.
By most measures, inflation has remained reasonably well-controlled but there
are some reasons for concern. The most recent CPI report showed a 0.4% monthly
increase, which, while still fairly low, is the largest advance since early
1993. In addition, the core inflation rate for intermediate goods at the
producer level is up 7.8% over the last twelve months. Finally, productivity
gains, which have helped to keep unit labor costs down over the last twelve
months, slowed in the first quarter of 1995 to 1.4%, or about one-half the level
of a year earlier. All of these factors suggest that inflation at the consumer
level could move moderately higher over coming months.
The surprising weakness of the U.S. dollar against the yen and the mark over the
past few months has been viewed with some alarm. However, the net longer-term
result of these currency moves is likely to be an improvement in the U.S.
balance of trade as American exports are now priced more competitively overseas
while imported goods cost more in this country.
The Financial Markets
Returns on financial assets were strong over the last six months as a result of
the decline in long-term interest rates and strong growth in corporate profits.
Interest rates declined significantly over
2
<PAGE>
================================================================================
the past six months. Intermediate and longer-maturity issues declined the most,
which resulted in a flatter treasury yield curve. Five year U.S. Treasury notes
began the year yielding 7.79% and over the six month period the yield on this
security declined almost one and three-quarters percentage points to 6.05%. The
strong fixed income market rally resulted in double digit returns for all
sectors of the market. The Lehman Aggregate Bond Index, a widely-used measure of
overall bond market performance, produced a total return of 11.4% for the six
months ending May 31, 1995. Longer-maturity issues outperformed shorter maturity
issues and corporate bonds were the best performing bond sector.
Common stocks produced very strong returns during the six-month period, but the
largest gains were concentrated in a relatively narrow group of stocks. Large
capitalization stocks with multi-national exposure, technology, and financial
stocks showed impressive gains. These groups accounted for the bulk of the 19.2%
total return achieved by the Standard & Poor's 500 Index during the period.
Smaller capitalization stocks, as measured by the Russell 2000 Index, were up
only 10.8% during the same time frame. One explanation for the more pronounced
move in large-cap stocks is that they are more likely to benefit from a weak
dollar. Another possible reason that large cap stocks performed better than
small-cap stocks is that institutional investors may have focused their buying
on the largest, most liquid stocks as they increased their exposure to the
equity market.
Measured on a price-earnings basis, stocks are not significantly over-valued or
undervalued compared to their history over the last 30 years. Dividend yields
are at historically low levels, but that is largely due to decisions by company
managements to use funds to repurchase their companies' common stock. Corporate
profit growth exceeded most expectations during the first quarter, and although
year-over-year gains are likely to slow during the rest of the year, we expect
profits to be up in both 1995 and 1996. In sum, while this may not be the most
opportune time to increase exposure to equities, we believe it is appropriate to
continue well-conceived dollar cost averaging programs.
We appreciate your continued support and look forward to helping you achieve
your long-term investment goals.
Sincerely,
/s/ Keniston P. Merrill /s/ Joseph M. Rob
Keniston P. Merrill Joseph M. Rob
Chairman President
June 9, 1995
--------------------------------------------------------------------------------
Fund Performance
Performance data for each Sentinel Fund is provided in this table. Financial
data is contained in the following pages.
<TABLE>
<CAPTION>
11/30/94 - 5/31/95 11/30/94 - 5/31/95
------------------------------------------------- -------------------------------------------------
5/31/95 Capital 5/31/95 Capital
Net Asset Gain Net Asset Gain
Sentinel Value Per Income Distrib- Total Lipper** Sentinel Value Per Income Distrib- Total Lipper**
Fund Share Dividends ution Return* Average Fund Share Dividends ution Return* Average
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Emerging Short-Intermediate
Growth $ 4.97 $ - $ .91 7.2% 11.0% Government/+/ $ 9.81 $.11 $ - 2.9% - %
---------------------------------------------------------------- ----------------------------------------------------------------
Growth 15.56 .05 2.57 14.8 13.8 PA Tax-Free
---------------------------------------------------------------- Trust 13.15 .32 - 9.7 9.4
World 13.30 .09 .15 6.4 1.2 ----------------------------------------------------------------
---------------------------------------------------------------- U.S. Treasury
Common Stock 31.67 .39 1.11 18.2 15.3 Money Market 1.00 .02 - 2.5 -
---------------------------------------------------------------- ----------------------------------------------------------------
Balanced 15.74 .30 .01 14.2 12.6 Standard &
---------------------------------------------------------------- Poor's 500+ - - - 19.2 -
Bond 6.33 .21 - 12.0 11.4 ----------------------------------------------------------------
---------------------------------------------------------------- Russell 2000
Tax-Free Income 13.38 .34 - 11.2 13.0 Index++ - - - 11.7 -
---------------------------------------------------------------- ----------------------------------------------------------------
NY Tax-Free Lehman Aggregate
Income/+/ 11.54 .11 - 4.1 - Bond Index+++ - - - 11.4 -
---------------------------------------------------------------- ----------------------------------------------------------------
Government Lehman Municipal
Securities 10.02 .31 - 11.1 10.6 Bond Index++++ - - - 13.1 -
---------------------------------------------------------------- ----------------------------------------------------------------
</TABLE>
* Total return is computed assuming the reinvestment of dividends and capital
gain distribution using net asset values. Past performance is no guarantee
of future results.
** Average performance of category of funds with similar investment
objectives as tracked by Lipper Analytical Services.
/+/ Data is shown for the period 3/27/95 - 5/31/95.
+ An unmanaged index of stocks reflecting average prices in the stock
market.
++ An unmanaged index of stocks of small capitalization companies reflecting
average prices in the stock market.
+++ An unmanaged index of bonds reflecting average prices in the bond market.
++++ An unmanaged index of bonds reflecting average prices in the municipal
bond market.
3
<PAGE>
================================================================================
Sentinel New York Tax-Free Income Fund seeks a high level of current income
and preservation of capital through a portfolio of high quality
municipal bonds which are exempt from federal income taxes.
Sentinel New York Tax-Free Income Fund
-------------------
[PHOTO OF
KENNETH J. HART
APPEARS HERE]
-------------------
Kenneth J. Hart
Manager,
Sentinel New York
Tax-Free Income Fund
A new addition to the Sentinel Family of Funds commenced operation on March 27,
1995, the Sentinel New York Tax-Free Income Fund. The investment objective of
the Fund will be to provide a high level of current interest income which is
exempt from federal income taxes and New York State and New York City personal
income taxes as is consistent with liquidity and capital preservation. The Fund
will maintain a conservative asset allocation to protect and enhance the income
stream and shareholder capital in all market environments.
In stark contrast to the difficult environment for fixed-income securities in
1994, the first six months of 1995 saw the bond market stage an impressive
rally. Municipal interest rates as measured by the Bond Buyer Revenue Bond Index
dropped 92 basis points as of May 31, 1995. The sharp decline in interest rates
combined with a shortage of new-issue municipal securities has rewarded
investors with both tax-free income and a significant appreciation of invested
capital.
Looking ahead, we anticipate that interest rates will trade within a relatively
narrow band over the next few months. As new-issue supply continues to decline,
the bonds of high-tax states (such as New York) should perform well in relation
to the tax-exempt market as a whole.
/s/ Kenneth J. Hart
Kenneth J. Hart
4
<PAGE>
================================================================================
Sentinel Short-Intermediate Government Fund seeks generous returns with a
high degree of safety to invested principal through securities issued
by the United States government, its agencies and instrumentalities.
Sentinel Short-Intermediate Government Fund
-------------------
[PHOTO OF
DAVID M. BROWNLEE,
APPEARS HERE]
-------------------
David M. Brownlee, CFA
Manager,
Sentinel Short-Intermediate
Government Fund
The Sentinel Short-Intermediate Government Fund, formerly the Independence
Capital Short-Intermediate Government Fund, commenced operations effective
March 27, 1995. The investment goal of the Fund is to provide a high level of
current income, consistent with the preservation of capital, by investing
in U.S. Government Securities, including its agencies and instrumentalities.
The Fund will earn a competitive yield between that of a money market fund
and that provided by a long-term government bond fund. At least 65% of the
Fund's assets will be invested in U.S. Government Securities with average
maturities of from 2 to 5 years. Included in this group of securities are U.S.
Treasury and agency issues, as well as mortgage-back securities issued by
instrumentalities of the U.S. Government. The investment strategy of the Fund is
to be at least 95% invested in all markets, with a primary focus on yield, as
the price appreciation/depreciation on short maturity securities is fairly
limited over a 12-month investment horizon. In addition, yield and total return
are highly, positively correlated for short duration instruments over short
investment horizons. The Fund's target duration is 2.0 years with a range of 1.5
to 2.5 years.
Since the beginning of the year, the bond market has staged an explosive rally,
even while the Federal Reserve was increasing short-term interest rates as
late as February 1995. This change in market psychology has resulted from a
growing perception, by many bond market participants, that U.S. economic growth
has abated dramatically during the second quarter of 1995 and that inflation
is well-contained. On a year-to-date basis, yields on the 2-year U.S. Treasury
Note have declined 183 basis points to 5.86%, while yields on the 30-year
U.S. Treasury Bond have fallen 122 basis points to 6.65%. In fact, as of May 31,
1995, bond prices have recovered 65% of the loss suffered in the 1994 bear
market.
Given the volatility of interest rates over the last four years, the Sentinel
Short-Intermediate Government Fund is structured to experience relatively minor
price fluctuations in its NAV while offering yields in excess of Certificates of
Deposit (CDs) and money market funds. As of May 31, 1995, the Fund was
positioned 73% in short mortgage-backed securities, 13% in U.S. Treasuries, 10%
in U.S. Agencies, and 4% in money market instruments. The Fund relies on
mortgage-backed securities for their excess yield spreads available over
comparable duration U.S. Treasuries. The Fund carefully limits the type of
mortgage-backed securities it buys to those which possess limited extension risk
should interest rates rise.
/s/ David M. Brownlee
David M. Brownlee, CFA
5
<PAGE>
================================================================================
Sentinel Emerging Growth Fund
Investment in Securities
at May 31, 1995 (Unaudited)
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
Shares Value
(Note 1)
--------------------------------------------------------------------------------
<S> <C> <C>
Common Stocks 77.1%
Auto Parts & Repair 4.2%
*Monro Muffler 110,500 $ 1,961,375
Pep Boys -
Manny, Moe & Jack 73,000 2,034,875
-----------
3,996,250
-----------
Communications 7.5%
*California Microwave 77,000 2,425,500
*Norand 81,500 2,689,500
*Verifone 90,000 1,946,250
-----------
7,061,250
-----------
Cosmetics & Toiletries 1.4%
*American Safety Razor 112,000 1,316,000
-----------
Electrical Equipment 5.7%
*American Power Conversion 130,000 2,372,500
*Harman Int'l. Industries 64,500 2,330,062
*Spectrian Corp. 25,100 683,975
-----------
5,386,537
-----------
Electronics 1.6%
*Kent Electronics 48,450 1,489,837
-----------
Energy 2.1%
*California Energy 121,000 1,936,000
-----------
Environmental Control 3.4%
*U.S. Filter 137,850 2,360,681
*Western Waste Industries 41,600 800,800
-----------
3,161,481
-----------
Financial 5.6%
*DVI Inc. 59,600 715,200
Duff & Phelps 100,000 1,075,000
Duff & Phelps Credit Rating 33,333 429,167
*Litchfield Financial Corp. 25,200 311,850
The Money Store 21,100 651,462
*World Acceptance 67,900 2,070,950
-----------
5,253,629
-----------
Food & Food Distributors 3.3%
GoodMark Foods 68,000 1,062,500
Smart & Final 125,500 2,070,750
-----------
3,133,250
-----------
Healthcare Providers 9.0%
*Abbey Healthcare 48,700 1,747,113
*Genesis Health Ventures 55,000 1,629,375
*Living Centers of America 44,100 1,367,100
*Rehability Corp. 89,500 1,012,469
*Renal Treatment 80,900 1,749,462
*Res-Care 56,500 974,625
-----------
8,480,144
-----------
<CAPTION>
--------------------------------------------------------------------------------
Shares Value
(Note 1)
--------------------------------------------------------------------------------
<S> <C> <C>
Industrial & Commercial Services 6.5%
Analysts International 93,950 $2,513,163
*Healthcare Services Group 172,000 1,978,000
Olsten Corp. 52,500 1,581,563
6,072,726
-----------
Insurance .4%
*Exstar Financial 135,000 388,125
-----------
Manufacturing - Housing 2.2%
Oakwood Homes 80,700 2,027,588
-----------
Medical & Bio Technology 1.6%
*Research Industries 86,000 1,526,500
-----------
Medical - Equipment & Supplies 4.8%
Minntech 20,100 266,325
*Sullivan Dental Products 141,400 1,732,150
*Sunrise Medical 75,200 2,519,200
-----------
4,517,675
-----------
Metals 2.1%
J&L Specialty Steel 106,400 1,995,000
-----------
Oil and Gas Exploration 2.4%
McDermott (J.Ray) 84,500 2,218,125
-----------
Paper 1.6%
Wausau Paper 70,840 1,514,205
-----------
Restaurants 1.7%
*Au Bon Pain 132,500 1,573,437
-----------
Retail 4.1%
*Staples Inc. 29,800 841,850
*Stein Mart 150,200 1,764,850
*Strouds 155,100 1,202,025
-----------
3,808,725
-----------
Savings & Loan Associations .6%
*First Republic Bancorp 40,800 535,500
-----------
Software 4.1%
*Cerner 4,900 279,300
*FileNet Corp. 22,600 714,725
*Landmark Graphics 41,600 982,800
*Maxis, Inc. 2,500 48,750
*Network General 75,000 1,800,000
-----------
3,825,575
-----------
Transportation 1.2%
Frozen Food Express 109,050 1,117,763
-----------
Total Common Stocks
(Cost $63,351,595) 72,335,322
-----------
<CAPTION>
--------------------------------------------------------------------------------
Principal Amount Value
(M=$1,000) (Note 1)
--------------------------------------------------------------------------------
<S> <C> <C>
Agency Discount Notes 3.5%
Federal Farm Credit 5.91%,
06/02/95 1000M $ 999,836
Federal National Mortgage
Association 5.89%, 06/23/95 2300M 2,291,721
-----------
Total Agency Discount Notes
(Cost $3,291,557) 3,291,557
-----------
Corporate Short-Term Notes 20.4%
Beneficial Corp. 5.96%,
06/12/95 1600M 1,597,086
Chevron Oil Financing 5.92%,
06/28/95 2500M 2,488,900
G.E. Capital Corp. 5.95%,
06/23/95 1000M 996,364
John Deere Capital Corp. 5.92%,
07/07/95 2000M 1,988,160
National City Bank 5.93%,
06/16/95 2000M 1,995,058
Norwest Financial 5.9%,
07/05/95 3000M 2,983,283
Norwest Financial 5.93%,
07/12/95 1500M 1,489,870
Prudential Funding Corp. 5.93%,
06/21/95 1800M 1,794,070
Prudential Funding Corp. 5.95%,
06/05/95 2000M 1,998,678
Texaco, Inc. 5.93%,
06/08/95 1800M 1,797,924
-----------
Total Corporate Short-Term Notes
(Cost $19,129,393) 19,129,393
-----------
Total Investments
(Cost $85,772,545)** 94,756,272
Excess of Liabilities
Over Other Assets (1.0%) (935,688)
-----------
Net Assets $93,820,584
===========
</TABLE>
--------------------------------------------------------------------------------
* Non-income producing.
** Also cost for federal income tax purposes. At May 31, 1995, net unrealized
appreciation for federal income tax purposes aggregated $8,983,727 of which
$15,080,863 related to appreciated securities and $6,097,136 related to
depreciated securities.
See Notes to Financial Statements.
6
<PAGE>
===============================================================================
Sentinel Growth Fund
Investment in Securities
at May 31, 1995 (Unaudited)
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------
Shares Value
(Note 1)
-------------------------------------------------------------------------------
<S> <C> <C>
Common Stocks 94.6%
Auto Parts 1.3%
Echlin 20,600 $ 741,600
-----------------
Banks 1.9%
Banc One Corp. 30,000 1,042,500
-----------------
Building Materials 3.8%
Masco Corp. 35,000 1,010,625
Sherwin-Williams 30,000 1,102,500
-----------------
2,113,125
-----------------
Chemicals 5.8%
Air Products & Chemicals 13,000 690,625
Ferro Corp. 18,000 495,000
Grace (W.R.) 9,000 578,250
RPM, Inc. 35,000 697,812
Sigma Aldrich Corp. 18,000 792,000
-----------------
3,253,687
-----------------
Computers & Semiconductors 4.7%
Intel Corp. 5,000 561,250
Int'l. Business Machines 22,000 2,051,500
-----------------
2,612,750
-----------------
Consumer & Business Services 4.1%
Automatic Data Processing 8,000 498,000
General Motors Class E 24,000 1,020,000
Paychex, Inc. 25,500 752,250
-----------------
2,270,250
-----------------
Containers & Packaging 3.3%
*Crown Cork & Seal 28,000 1,316,000
Sonoco Products 22,000 544,500
-----------------
1,860,500
-----------------
Cosmetics & Toiletries 1.4%
*American Safety Razor Co. 65,000 763,750
-----------------
Electrical Equipment 3.1%
General Electric 10,000 580,000
Hubbell Class B 19,887 1,131,073
-----------------
1,711,073
-----------------
Electronics 6.9%
AMP Inc. 40,000 1,705,000
*Cherry Corp. Class A 25,000 375,000
Motorola, Inc. 13,000 778,375
*Vishay Intertechnology 15,000 991,875
-----------------
3,850,250
-----------------
Energy 4.7%
Amoco 21,000 1,435,875
Mobil 12,000 1,204,500
-----------------
2,640,375
-----------------
Financial 2.6%
Student Loan Marketing A 30,000 1,425,000
-----------------
Food - Distributors 1.0%
Sysco Corp. 20,000 542,500
-----------------
Healthcare Providers 3.6%
Columbia/HCA Healthcare 27,000 1,103,625
*Renal Treatment Centers 40,800 882,300
-----------------
1,985,925
-----------------
Industrial - Diversified 8.6%
Federal Signal 45,000 950,625
Fluor Corp. 20,000 990,000
Rockwell International C 20,000 912,500
Tenneco, Inc. 23,000 1,104,000
TriMas Corp. 36,000 819,000
-----------------
4,776,125
-----------------
Insurance 4.4%
American International Group 10,000 1,137,500
Equitable of Iowa 14,500 483,938
General Re Corp. 6,000 812,250
-----------------
2,433,688
-----------------
Lodging 1.2%
*Circus Circus Enterprises 20,000 667,500
-----------------
Medical - Equipment & Supplies 3.2%
Abbott Laboratories 45,000 1,800,000
-----------------
Metals 2.9%
Englehard Corp. 20,000 832,500
J & L Specialty Steel 40,400 757,500
-----------------
1,590,000
-----------------
Oil Field Equipment 5.1%
Baker Hughes Inc. 55,000 1,237,500
Schlumberger Ltd. 25,000 1,625,000
-----------------
2,862,500
-----------------
Photography 1.0%
Eastman Kodak 9,000 543,375
-----------------
Publishing 1.7%
Donnelley (RR) & Sons 26,000 949,000
-----------------
Recreational Products & Services 1.9%
*Coleman Co. 30,000 1,076,250
-----------------
Retail 4.1%
Home Depot 16,500 686,813
*Lechters Inc. 70,000 1,032,500
*Staples Inc. 20,000 565,000
-----------------
2,284,313
-----------------
Software 2.1%
*Novell 60,000 1,158,750
-----------------
Telecommunications 1.2%
*Airtouch Communications 25,000 681,250
-----------------
Tobacco 4.9%
Philip Morris 25,000 1,821,875
UST Inc. 30,000 896,250
-----------------
2,718,125
-----------------
Transportation 2.1%
Ryder System 45,000 1,141,875
-----------------
Utilities - Gas 2.0%
Enron Corp. 30,000 1,095,000
-----------------
Total Common Stocks
(Cost $43,218,930) 52,591,036
-----------------
<CAPTION>
-------------------------------------------------------------------------------
Principal Amount Value
(M=$1,000) (Note 1)
-------------------------------------------------------------------------------
<S> <C> <C>
Corporate Short-Term Notes 5.3%
Norwest Financial 5.96%
06/06/95 970M $ 969,197
Texaco, Inc. 5.91%
07/10/95 2000M 1,987,195
-----------------
Total Corporate Short-Term Notes
(Cost $2,956,392) 2,956,392
-----------------
Total Investments
(Cost $46,175,322)** 55,547,428
Excess of Other Assets
Over Liabilities 0.1% 39,138
-----------------
Net Assets $55,586,566
=================
</TABLE>
-------------------------------------------------------------------------------
* Non-income producing.
** Also cost for federal income tax purposes. At May 31, 1995, net unrealized
appreciation for federal income tax purposes aggregated $9,372,106 of which
$10,482,960 related to appreciated securities and $1,110,854 related to
depreciated securities.
See Notes to Financial Statements.
7
<PAGE>
===============================================================================
Sentinel World Fund
Investment in Securities
at May 31, 1995 (Unaudited)
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------
Shares Value
(Note 1)
-------------------------------------------------------------------------------
<S> <C> <C>
Common Stocks 92.9%
Argentina 0.9%
YPF S. A. (ADR) 20,000 $ 405,000
-----------------
Austria 0.8%
EVN Energie Versorgung Niedr 2,600 366,400
-----------------
Australia 4.0%
Boral Limited Ord. 155,000 386,884
CRA Ltd. 35,000 466,428
National Australia 51,902 441,509
Westpac Bank Corp Ord. 120,008 439,847
-----------------
1,734,668
-----------------
Denmark 1.3%
Tele Danmark (ADR) 20,000 570,000
-----------------
Finland 1.0%
Cultor 13,200 447,922
-----------------
France 6.4%
Alcatel Alsthom (ADR) 30,505 556,716
Banque Nationale de Paris 7,067 348,757
CSF Thomson 12,000 329,350
Elf Aquitaine (ADR) 14,285 560,686
Guyenne et Gascogne 1,800 536,464
Soceite Generale 4,000 469,925
-----------------
2,801,898
-----------------
Germany 6.0%
Bayer A.G. Ord. 1,900 458,964
BMW 900 482,837
Commerzbank A.G. 2,460 579,786
Karstadt 1,000 407,672
Veba A.G. 1,900 722,132
-----------------
2,651,391
-----------------
Hong Kong 2.7%
HSBC Holdings 48,000 623,635
Jardine Matheson 70,000 549,500
-----------------
1,173,135
-----------------
Italy 2.1%
Istituto Mobiliare
Italia (ADR) 22,500 424,688
Rinascente 90,000 509,304
-----------------
933,992
-----------------
Japan 27.8%
Canon 40,000 625,037
Dai Tokyo Fire & Marine 90,000 633,915
Daiichi Pharmaceuticals 34,000 523,232
Daiwa House Industry 35,000 546,907
Fuji Photo Film 25,000 600,769
Hitachi Koki Co. Ord. 70,000 670,376
Ito-Yokado 14,000 742,469
Kirin Beverage 25,000 408,405
Kyushu Electric Power 20,000 568,216
Mitsubishi Heavy Industry 100,000 687,778
Murata Manufacturing 12,000 458,834
Nishimatsu Construction 50,000 579,462
Nomura Securities 23,000 413,850
Sankyo Co LTD 26,400 612,536
Sekisui House 52,000 658,656
Sumitomo Corp. 40,000 363,658
TDK Corp 13,000 587,866
Teijin 78,000 396,117
Tokuyama Corp 100,000 514,945
Toshiba Corp. 95,000 599,408
Toyota Motors Corp Ord. 17,000 330,038
Toyota Motors Corp (ADR) 3,000 116,625
Yamatake Honeywell 40,000 568,215
-----------------
12,207,314
-----------------
Malaysia 0.4%
Malaysian Int'l. Shipping 60,000 192,269
-----------------
Mexico 1.0%
Telefonos De Mexico (ADR) 16,000 450,000
-----------------
Netherlands 7.4%
ABN Amro Bank 16,954 641,396
Heineken Holdings 3,125 405,279
Hollandsche Benton Groep N.V. 3,040 505,801
International Nederlanden 8,045 436,172
Royal PTT 14,000 506,612
Unilever N V (ADR) 6,000 763,500
-----------------
3,258,760
-----------------
Singapore 3.0%
Malaysian Int'l. Shipping 126,666 400,525
Sime Darby Berhad 144,000 411,872
Singapore Int'l. Airlines 55,000 525,692
-----------------
1,338,089
-----------------
Spain 5.5%
Banco Popular 3,000 449,479
Banco Santander 12,000 453,644
Iberdrola 35,000 245,193
Repsol (ADR) 24,000 783,000
Telefonica de
Espana S.A. (ADR) 12,000 480,000
-----------------
2,411,316
-----------------
Sweden 3.4%
Aga B Free 40,000 469,307
Astra AB B Free 12,000 344,614
Pharmacia B Free 13,000 257,164
Volvo AB B 24,000 422,377
-----------------
1,493,462
-----------------
Switzerland 6.6%
Ciba Geigy Registered 550 390,566
Globus PC 900 590,480
Nestle A.G. Registered 500 505,146
Sandoz Registered 500 335,334
Swiss Bank P.T.G. 1,500 536,450
Zurich Insurance P.T.G. 450 526,415
-----------------
2,884,391
-----------------
United Kingdom 12.6%
Albright & Wilson plc 145,000 430,722
Allied Irish Bank plc 125,153 592,441
Boots Co. plc 60,000 493,706
Glaxo Hldg plc (ADR) 20,000 465,000
Guinness plc 60,000 456,058
Hanson plc (ADR) 35,000 665,000
National Power plc (ADR) 23,000 293,250
National Westminster Bk plc 50,619 432,999
Powergen plc (ADR) 18,000 244,125
Severn Trent Water plc 56,203 512,458
Tesco plc 201,511 944,295
-----------------
5,530,054
-----------------
Total Common Stocks
(Cost $37,430,263) 40,850,061
-----------------
Preferred Stock 1.8%
Germany 1.8%
RWE AG 2,066 $ 551,996
WMF 1,250 232,677
-----------------
Total Preferred Stocks
(Cost $657,211) 784,673
-----------------
<CAPTION>
-------------------------------------------------------------------------------
Principal Amount Value
(M=$1,000) (Note 1)
-------------------------------------------------------------------------------
<S> <C> <C>
Corporate Short-Term Notes 0.9%
Chevron Oil Financial
5.95%, 06/07/95
(Cost $399,603) 400M 399,603
-----------------
Total Investments
(Cost $38,487,077)* 42,034,337
Excess of Other Assets
Over Liabilities 4.4% 1,951,853
-----------------
Net Assets $43,986,190
=================
<CAPTION>
-------------------------------------------------------------------------------
Summary of Foreign Securities
by Industry Classification
Percent of Market
Industry Net Assets Value
<S> <C> <C>
Aerospace 0.7% $ 329,350
Automobiles 3.1 1,351,877
Banks 14.6 6,434,556
Beverages 2.9 1,269,742
Chemicals 4.3 1,873,938
Construction & Housing 7.6 3,348,086
Cosmetics & Toiletries 1.7 763,500
Drugs 6.7 2,928,446
Electrical Equipment 2.3 1,027,049
Electronics 5.4 2,369,027
Energy 4.0 1,748,686
Foods 2.2 953,068
Household Products 0.5 232,677
Industrial Diversified 4.5 1,990,030
Insurance 3.6 1,596,502
Investment Companies 0.9 413,850
Machinery 1.6 687,778
Metals & Mining 1.1 466,428
Photography 1.4 600,769
Retail 9.6 4,224,390
Telecommunications 1.2 506,612
Textiles 0.9 396,117
Transportation 2.5 1,118,486
Utilities - Electric 6.8 2,991,312
Utilities - Telephone 3.4 1,500,000
Utilities - Water 1.2 512,458
----- -----------
94.7% $41,634,734
===== ===========
</TABLE>
-------------------------------------------------------------------------------
* Also cost for federal income tax purposes. At May 31, 1995, net unrealized
appreciation for federal income tax purposes aggregated $3,547,260 of which
$4,776,252 related to appreciated securities and $1,228,992 related to
depreciated securities.
(ADR) - American Depositary Receipt
See Notes to Financial Statements.
8
<PAGE>
===============================================================================
Sentinel Common Stock Fund
Investment in Securities
at May 31, 1995 (Unaudited)
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------
Shares Value
(Note 1)
-------------------------------------------------------------------------------
<S> <C> <C>
Common Stocks 93.9%
Automobile & Auto Parts 3.0%
Echlin Inc. 475,000 $ 17,100,000
Ford Motor 440,000 12,870,000
-----------------
29,970,000
-----------------
Banks 8.7%
Banc One Corp. 319,970 11,118,958
Bankamerica Corp. 200,000 10,450,000
Chemical Banking 287,200 13,247,100
Citicorp 370,000 19,795,000
First Union Corp. 220,000 10,780,000
Morgan (J. P.) 294,700 20,886,863
-----------------
86,277,921
-----------------
Beverages 3.6%
Anheuser-Busch 240,000 14,190,000
Coca-Cola 350,000 21,656,250
-----------------
35,846,250
-----------------
Building Materials 0.1%
Sherwin - Williams 26,300 966,525
-----------------
Chemicals 3.3%
Grace (W. R.) 295,000 18,953,750
PPG Industries Inc. 325,000 13,528,125
-----------------
32,481,875
-----------------
Computers & Semiconductors 2.8%
Int'l. Business Machines 195,100 18,193,075
Intel Corp. 85,000 9,541,250
-----------------
27,734,325
-----------------
Consumer & Business Services 1.5%
General Motors CL E 15,750 669,375
Omnicom Group 225,000 12,965,625
Paychex, Inc. 13,350 393,825
First Financial Management 11,100 788,100
-----------------
14,816,925
-----------------
Containers, Packaging 0.4%
*Crown Cork & Seal 76,800 3,609,600
-----------------
Cosmetics & Toiletries 2.3%
Gillette 268,572 22,660,762
-----------------
Drugs 5.0%
American Home Products 318,300 23,434,838
Cardinal Health Inc. 17,125 781,328
Lilly (Eli) 145,600 10,865,400
Pfizer, Inc. 4,600 405,375
Warner-Lambert 165,000 13,674,375
-----------------
49,161,316
-----------------
Electrical Equipment 5.4%
Emerson Electric 350,000 24,062,500
General Electric 509,100 29,527,800
-----------------
53,590,300
-----------------
Electronics 3.1%
AMP Inc. 320,000 13,640,000
Motorola, Inc. 250,400 14,992,700
*Vishay Intertechnology 24,853 1,643,405
30,276,105
-----------------
Energy 11.1%
Amoco 259,600 17,750,150
Atlantic Richfield 98,800 11,473,150
Chevron 240,000 11,790,000
Exxon 315,400 22,511,675
Mobil 210,000 21,078,750
Royal Dutch Petroleum 197,218 24,997,381
-----------------
109,601,106
-----------------
Financial 1.6%
American Express 411,700 14,666,812
First Data Corp 27,900 1,611,225
-----------------
16,278,037
-----------------
Foods 2.0%
Sara Lee 700,000 19,512,500
-----------------
Healthcare Providers 2.0%
Columbia/HCA Healthcare 475,000 19,415,625
*Genesis Health Ventures 19,200 568,800
-----------------
19,984,425
-----------------
Industrial-Diversified 3.7%
Minnesota Mining
& Manufacturing 155,000 9,280,625
Rockwell Int'l. 310,600 14,171,125
Tenneco, Inc. 270,000 12,960,000
-----------------
36,411,750
-----------------
Insurance 3.8%
American General 380,000 13,110,000
American Int'l. Group 95,050 10,811,937
Marsh & McLennan 91,800 7,309,575
St. Paul Companies 130,000 6,613,750
-----------------
37,845,262
-----------------
Medical - Equipment & Supplies 1.0%
Johnson & Johnson 155,000 10,268,750
-----------------
Oil Field Equipment 1.6%
Schlumberger Ltd. 240,000 15,600,000
-----------------
Paper & Forest Products 2.5%
Kimberly-Clark 405,000 24,300,000
-----------------
Photography 1.5%
Eastman Kodak 240,000 14,490,000
-----------------
Publishing & Broadcasting 2.1%
Capital Cities/ABC 7,600 733,400
Gannett 162,000 8,667,000
McGraw-Hill 150,000 11,100,000
-----------------
20,500,400
-----------------
Railroads 1.7%
Norfolk Southern 67,600 4,630,600
Union Pacific 215,000 11,905,625
-----------------
16,536,225
-----------------
Restaurants 0.0%
McDonalds Corp. 11,600 439,350
-----------------
Retail 4.4%
Albertson's Inc. 18,700 523,600
Fastenal Co. 17,400 495,900
May Department Stores 333,980 13,108,715
Penney (J.C.) 320,000 15,080,000
Pep Boys -
Manny, Moe & Jack 17,100 476,662
Sears, Roebuck 253,500 14,291,063
-----------------
43,975,940
-----------------
Software 0.1%
*Microsoft 16,100 1,363,469
-----------------
Telecommunications 1.3%
A T & T Corp. 256,930 13,039,197
*Airtouch Communications 9,100 247,975
-----------------
13,287,172
-----------------
Tobacco 4.2%
American Brands 399,600 16,133,850
Philip Morris 350,000 25,506,250
-----------------
41,640,100
-----------------
Utilities-Electric 4.8%
Central & So. West 460,000 11,845,000
FPL Group 360,000 14,130,000
Florida Progress 350,000 11,156,250
New England Electric 300,000 10,350,000
-----------------
47,481,250
-----------------
Utilities-Gas 2.8%
Enron Corp 420,000 15,330,000
Sonat, Inc. 380,000 12,492,500
-----------------
27,822,500
-----------------
Utilities-Telephone 2.5%
GTE Corp. 280,000 9,345,000
US West 370,790 15,295,088
-----------------
24,640,088
-----------------
Total Common Stocks
(Cost $501,863,579) 929,370,228
-----------------
</TABLE>
(continued)
9
<PAGE>
===============================================================================
Sentinel Common Stock Fund
Investment in Securities (cont'd.)
at May 31, 1995 (Unaudited)
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------
Principal Amount Value
(M=$1,000) (Note 1)
-------------------------------------------------------------------------------
<S> <C> <C>
Corporate Short-Term Notes 4.6%
Beneficial Corp. 5.93%,
06/28/95 7000M $ 6,968,868
Chevron Oil Finance 6.00%,
06/09/95 6450M 6,441,400
Commercial Credit 6.00%,
06/19/95 6000M 5,982,000
G.E. Capital Corp. 6.00%,
06/14/95 6000M 5,987,000
Norwest Financial 5.98%,
06/21/95 3500M 3,488,372
Prudential Funding 5.98%,
06/01/95 7000M 7,000,000
Prudential Funding 5.93%,
06/23/95 2000M 1,992,752
Prudential Funding 5.93%,
07/07/95 4000M 3,976,280
Texaco Inc. 5.91%,
07/05/95 3500M 3,480,464
------------
Total Corporate Short-Term Notes
(Cost $45,317,136) 45,317,136
------------
Government Short-Term Notes 0.6%
Fed. Home Loan Mtg. 5.94%,
06/06/95 5775M
(Cost $5,770,236) 5,770,236
------------
Total Investments
(Cost $552,950,951)** 980,457,600
Excess of Other Assets
Over Liabilities 0.9% 8,973,504
------------
Net Assets $989,431,104
============
</TABLE>
--------------------------------------------------------------------------------
* Non-income producing.
** The aggregate cost for federal income tax purposes was $553,177,514. At May
31, 1995, unrealized appreciation for income tax purposes aggregated
$427,280,086 of which $431,927,197 related to appreciated securities and
$4,647,111 related to depreciated securities.
See Notes to Financial Statements.
10
<PAGE>
===============================================================================
Sentinel Balanced Fund
Investment in Securities
at May 31, 1995 (Unaudited)
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------
Principal Amount Value
(M=$1,000) (Note 1)
-------------------------------------------------------------------------------
<S> <C> <C>
U.S. Government Obligations 29.7%
U.S. Treasury Obligations 15.0%
Note 6%, '97 15300M $ 15,334,884
Note 7.875%, '98 4700M 4,937,632
Note 7.5%, '01 3000M 3,212,970
Note 7.5%, '05 13100M 14,206,688
-----------------
Total U.S. Treasury Obligations 37,692,174
-----------------
U.S. Government Agencies Obligations 14.7%
Federal Farm Credit Bank 5.8%
Agency Discount Note
5.86%, 06/05/95 14500M 14,490,559
-----------------
Federal Home Loan Mortgage Corp. 1.5%
Agency Discount Note
5.88%, 06/20/95 4000M 3,987,587
-----------------
Federal National Mortgage Association 7.3%
Agency Discount Note
5.9%, 06/02/95 3000M 2,999,508
Agency Discount Note
5.89%, 06/23/95 1500M 1,494,601
15-Year 8.5%, '07 2407M 2,518,357
Medium Term Note
5.62%, '98 140M 137,255
Agency Note
8.625%, '04 4000M 4,339,720
Principal Strip 0.0%, '96 3270M 3,003,364
Principal Strip 0.0%, '96 2365M 2,152,387
Collateralized Mortgage Obligation:
REMIC Series 1993 - 148(B)
0.0%, '96 2000M 1,775,000
-----------------
18,420,192
-----------------
Government National Mortgage Association 0.1
30-Year 9%, '09 56M 58,227
-----------------
Total U.S. Government
Agency Obligations 36,956,565
-----------------
Total U.S. Government Obligations
(Cost $72,942,802) 74,648,739
-----------------
Bonds 17.5%
Beverages 1.3%
Anheuser Busch 8.5%, '17 2000M 2,097,500
J. Seagram & Sons 9.75% '00 1100M 1,141,250
-----------------
3,238,750
-----------------
Canadian 1.3%
Hydro-Quebec 8.05%, '06 3000M 3,255,000
-----------------
Finance Companies 1.7%
Ford Motor Credit Corp.
7.5%, '03 1250M 1,298,438
G.E. Capital Corp. 8.75%, '07 1500M 1,745,625
GMAC 6.4%, '97 34M 34,085
GMAC 7%, '02 1225M 1,238,781
-----------------
4,316,929
-----------------
Financial Institutions 2.8%
Chase Manhattan 6.75%, '08 1200M 1,150,500
Chemical Bank 7.875%, '06 1750M 1,863,750
Paine Webber 9.25%, '01 2200M 2,403,500
Wells Fargo & Co.
8.375%, '02 1500M 1,633,125
-----------------
7,050,875
-----------------
Foreign Financial Institutions 2.4%
ABN Amro Bank (Neth.)
7.25%, '05 800M 816,000
Banque Paribas (Fr.)
6.875%, '09 2000M 1,887,500
Swedish Export Credit
9.875%, '38 3000M 3,360,000
-----------------
6,063,500
-----------------
Industrial - Diversified 0.8%
American Brands 9.125%, '16 2000M 2,092,500
-----------------
Insurance 3.7%
Continental Corp. 7.25%, '03 1000M 977,500
Integon Corp.9.5%, '01 1500M 1,590,000
Liberty Mutual 8.20%, '07 1000M 1,056,250
National RE Corp. 8.85%, '05 1500M 1,644,375
Prudential Ins. 6.875%, '03 2000M 1,932,500
USF & G 8.375%, '01 2000M 2,100,000
-----------------
9,300,625
-----------------
Retail 0.8%
May Dept. Store 9.125%, '16 2000M 2,110,000
-----------------
Telecommunications 0.9%
Comsat Corp. 8.05%, '06 2000M 2,207,500
-----------------
Utility-Electric 0.9%
Mississippi Power & Light
8.80%, '05 2000M 2,130,000
-----------------
Utility-Gas 0.9%
Consolidated Natural Gas
8.625%, '11 2000M 2,122,500
-----------------
Total Bonds
(Cost $42,055,921) 43,888,179
-----------------
Corporate Convertible Bonds 0.7%
RPM Inc. Zero Coupon, '12
(Cost $1,629,263) 4000M 1,680,000
-----------------
Municipal Bonds 0.6%
Los Angeles County 8.42% '03
(Cost $1,464,295) 1500M 1,590,000
-----------------
<CAPTION>
-------------------------------------------------------------------------------
Shares Value
(Note 1)
-------------------------------------------------------------------------------
<S> <C> <C>
Common Stocks 51.5%
Automobiles & Auto Parts 1.8%
Echlin 65,000 $ 2,340,000
Ford Motor 71,400 2,088,450
-----------------
4,428,450
-----------------
Banks 3.7%
Banc One Corp. 50,025 1,738,369
BankAmerica 26,000 1,358,500
Citicorp 51,000 2,728,500
First Union Corp. 30,000 1,470,000
Morgan (J. P.) 29,000 2,055,375
-----------------
9,350,744
-----------------
Beverages 1.7%
Anheuser Busch 40,000 2,365,000
Coca-Cola 31,200 1,930,500
-----------------
4,295,500
-----------------
Building Materials 0.0%
Sherwin-Williams 4,000 147,000
-----------------
Chemicals 2.1%
Grace (W. R.) 32,000 2,056,000
PPG Industries 45,000 1,873,125
Witco 49,000 1,347,500
-----------------
5,276,625
-----------------
Computers & Semiconductors 1.3%
Intel 12,000 1,347,000
Int'l. Business Machines 20,000 1,865,000
-----------------
3,212,000
-----------------
Consumer & Business Services 0.7%
General Motors Cl E 1,700 72,250
Omnicom Group 30,000 1,728,750
-----------------
1,801,000
-----------------
Containers, Packaging 0.2%
*Crown Cork & Seal 8,500 399,500
-----------------
Drugs 2.2%
American Home Products 34,800 2,562,150
Marion Merrell Dow 1,800 45,450
Pfizer, Inc. 20,000 1,762,500
Warner-Lambert 15,000 1,243,125
-----------------
5,613,225
-----------------
Electrical Equipment 3.1%
Emerson Electric 38,000 2,612,500
General Electric 46,000 2,668,000
Grainger, (W.W.) 40,000 2,395,000
-----------------
7,675,500
-----------------
Electronics 1.8%
AMP Inc. 48,600 2,071,575
Motorola, Inc. 41,000 2,454,875
-----------------
4,526,450
-----------------
Energy 6.0%
Amoco 36,000 2,461,500
Atlantic Richfield 15,500 1,799,937
Chevron 52,000 2,554,500
Exxon 36,000 2,569,500
Mobil 26,350 2,644,881
Royal Dutch Petroleum 24,000 3,042,000
-----------------
15,072,318
-----------------
Financial 0.7%
American Express 52,000 1,852,500
-----------------
</TABLE>
(continued)
11
<PAGE>
===============================================================================
Sentinel Balanced Fund
Investment in Securities (cont'd.)
at May 31, 1995 (Unaudited)
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------
Shares Value
(Note 1)
-------------------------------------------------------------------------------
<S> <C> <C>
Foods 1.9%
CPC International 40,000 $ 2,430,000
Sara Lee 80,000 2,230,000
-----------------
4,660,000
-----------------
Healthcare Providers 1.1%
Columbia Healthcare 65,000 2,656,875
-----------------
Industrial-Diversified 2.7%
Dover 15,000 984,375
Minnesota Mining
& Manufacturing 40,000 2,395,000
Rockwell Int'l. 47,000 2,144,375
Tenneco 28,679 1,376,592
-----------------
6,900,342
-----------------
Insurance 2.6%
American General 55,000 1,897,500
American Int'l. Group 16,250 1,848,438
Marsh & McLennan 15,300 1,218,262
St. Paul Companies 29,000 1,475,375
-----------------
6,439,575
-----------------
Medical-Equipment & Supplies 1.5%
Abbott Laboratories 50,000 2,000,000
Johnson & Johnson 26,000 1,722,500
-----------------
3,722,500
-----------------
Oil Field Equipment 0.9%
Schlumberger Ltd. 35,000 2,275,000
-----------------
Paper & Forest Products 0.7%
Kimberly-Clark 28,000 1,680,000
-----------------
Photography 0.6%
Eastman Kodak 27,000 1,630,125
-----------------
Publishing 2.3%
Donnelley (RR) & Sons 70,000 2,555,000
Gannett 27,000 1,444,500
McGraw-Hill 25,000 1,850,000
-----------------
5,849,500
-----------------
Railroads 1.6%
Illinois Central Corp. 50,500 1,786,437
Union Pacific 40,000 2,215,000
-----------------
4,001,437
-----------------
Retail 2.8%
May Department Stores 30,200 1,185,350
Penney (J. C.) 55,000 2,591,875
Sears, Roebuck 56,701 3,196,519
-----------------
6,973,744
-----------------
Software 0.0%
*Microsoft 1,200 101,625
-----------------
Telecommunications 1.3%
A T & T Corp. 40,200 2,040,150
British Telecom 17,900 1,129,938
-----------------
3,170,088
-----------------
Tobacco 1.5%
American Brands 45,000 1,816,875
Philip Morris 28,000 2,040,500
-----------------
3,857,375
-----------------
Utilities-Electric 1.4%
Central & SouthWest 47,000 1,210,250
FPL Group 60,000 2,355,000
-----------------
3,565,250
-----------------
Utilities-Gas 1.5%
Enron Corp. 50,000 1,825,000
Sonat, Inc. 60,000 1,972,500
-----------------
3,797,500
-----------------
Utilities-Telephone 1.8%
GTE Corp 70,000 2,336,250
US West 51,150 2,109,938
-----------------
4,446,188
-----------------
Total Common Stocks
(Cost $94,755,650) 129,377,936
-----------------
Preferred Stocks 1.0%
Citicorp Pfd. $1.217 2,300 46,288
Cleveland Electric
Illuminating Pfd. $9.125 293 28,860
General Motors 6.5%
Conv. Pfd. 40,000 2,480,000
-----------------
Total Preferred Stocks
(Cost $2,195,430) 2,555,148
-----------------
<CAPTION>
-------------------------------------------------------------------------------
Principal Amount Value
(M=$1,000) (Note 1)
-------------------------------------------------------------------------------
<S> <C> <C>
Corporate Short-Term Notes 5.3%
Cargill, Inc. 5.93%,
06/13/95 3500M $ 3,493,082
Norwest Financial, Inc. 5.97%,
06/09/95 5000M 4,993,366
Prudential Funding 5.93%,
06/06/95 1800M 1,798,517
Prudential Funding 5.94%,
06/16/95 3000M 2,992,575
------------
Total Corporate Short-Term Notes
(Cost $13,277,540) 13,277,540
------------
Total Investments
(Cost $228,320,901)** 267,017,542
Excess of Liabilities
Over Other Assets (6.3%) (15,817,827)
------------
Net Assets $251,199,715
============
</TABLE>
--------------------------------------------------------------------------------
* Non-income producing.
** Also cost for federal income tax purposes. At May 31, 1995, net unrealized
appreciation for federal income tax purposes aggregated $38,696,641 of which
$39,894,537 related to appreciated securities and $1,197,896 related to
depreciated securities.
See Notes to Financial Statements.
12
<PAGE>
================================================================================
Sentinel Bond Fund
Investment in Securities
at May 31, 1995 (Unaudited)
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
Principal Amount Value
(M=$1,000) (Note 1)
--------------------------------------------------------------------------------
<S> <C> <C>
U.S.Government Obligations 39.8%
U.S. Treasury Obligations 26.1%
Note 6.00%, '97 8900M $ 8,920,292
Note 5.125%, '98 1000M 978,420
Note 7.875%, '98 7150M 7,511,504
Note 8.875%, '98 1000M 1,088,790
Note 7.5%, '05 8300M 9,001,184
------------
Total U.S. Treasury Obligations 27,500,190
------------
U.S. Government Agency Obligations 13.7%
Federal Farm Credit Bank 4.9%
Agency Discount Notes:
5.86%, 6/5/95 4200M 4,197,265
5.88%, 6/6/95 1000M 999,183
------------
5,196,448
------------
Federal Home Loan Mortgage Corp. 1.7%
Agency Discount Note
5.9%, 6/2/95 1810M 1,809,703
------------
Federal National Mortgage Association 7.0%
Agency Discount Note
5.89%, 6/23/95 2000M 1,992,801
Medium Term Note
5.62%, '98 1590M 1,558,820
Principal Strip 0.0%, '96 1270M 1,166,444
Principal Strip 0.0%, '96 1000M 910,100
Collateralized Mortgage Obligation:
REMIC Series 1993 - 148(B)
0.0%, '96 2000M 1,775,000
------------
7,403,165
------------
Government National Mortgage Association 0.1%
30-year:
13%, '11 26M 29,322
13%, '13 1M 1,243
------------
30,565
------------
Total U.S. Government
Agency Obligations 14,439,881
------------
Total U.S. Government Obligations
(Cost $40,886,868) 41,940,071
------------
<CAPTION>
--------------------------------------------------------------------------------
Principal Amount Value
(M=$1,000) (Note 1)
--------------------------------------------------------------------------------
<S> <C> <C>
Bonds 59.8%
Beverages 3.7%
Anheuser Busch 8.5%, '17 2500M $ 2,621,875
J. Seagram & Sons 9.75%, '00 1265M 1,312,438
------------
3,934,313
------------
Canadian Government 3.0%
Hydro Quebec 8.05%, '06 2935M 3,184,475
------------
Finance Companies 7.8%
Ford Motor Credit Corp.
7.5%, '03 2800M 2,908,500
G.E. Capital Corp. 8.75%, '07 2160M 2,513,700
GMAC 6.4%, '97 1266M 1,269,165
GMAC 7.0%, '02 1500M 1,516,875
8,208,240
------------
Financial Institutions 11.1%
Bank of America Mortgage-Backed
Certificates 9.5%, '08 46M 47,693
Bankers Trust 6%, '08 2500M 2,187,500
Chase Manhattan Corp.
6.75%, '08 2300M 2,205,125
Chemical Bank 7.875%, 06 1750M 1,863,750
Paine Webber 9.25%, '01 2200M 2,403,500
Wells Fargo & Co.
8.375%, '02 2795M 3,043,056
------------
11,750,624
------------
Foreign Financial Institutions 8.2%
ABN Amro Bank (Neth.)
7.25%, '05 2600M 2,652,000
Banque-Paribus (Fr.)
6.875%, '09 2750M 2,595,313
Swedish Export Credit
9.875%, '38 3000M 3,360,000
------------
8,607,313
------------
Industrial - Diversified 4.0%
American Brands 9.125%, '16 2000M 2,092,500
RJR Nabisco 9.25%, '13 2000M 2,077,500
------------
4,170,000
------------
Insurance 12.3%
Continental Corp. 7.25%, '03 1000M 977,500
Integon Corp. 9.5%, '01 1500M 1,590,000
Liberty Mutual 8.2%, '07 4500M 4,753,125
National RE Corp. 8.85%, '05 1500M 1,644,375
Prudential Insurance
6.875%, '03 2000M 1,932,500
USF & G 8.375%, '01 2000M 2,100,000
------------
12,997,500
------------
<CAPTION>
--------------------------------------------------------------------------------
Principal Amount Value
(M=$1,000) (Note 1)
--------------------------------------------------------------------------------
<S> <C> <C>
Retail 2.0%
May Dept. Store 9.125%, '16 2000M $ 2,110,000
------------
Telecommunications 2.1%
Comsat 8.05% '06 2000M 2,207,500
------------
Utilities - Electric 2.5%
Mississippi Power & Light
8.8%, '05 2500M 2,662,500
------------
Utilities - Gas 3.1%
Arkla Inc. 10%, '19 1000M 1,127,500
Consolidated Natural Gas
8.625%, '11 2000M 2,122,500
------------
3,250,000
------------
Total Bonds
(Cost $60,404,788) 63,082,465
------------
Municipal Bonds 1.5%
Los Angeles County 8.42%, '03
(Cost $1,464,295) 1500M 1,590,000
------------
<CAPTION>
--------------------------------------------------------------------------------
Shares Value
(Note 1)
--------------------------------------------------------------------------------
<S> <C> <C>
Preferred Stock 1.0%
Cleveland Electric
Illuminating Pfd. $9.125
(Cost $1,103,564) 10,774 1,061,239
------------
<CAPTION>
--------------------------------------------------------------------------------
Principal Amount Value
(M=$1,000) (Note 1)
--------------------------------------------------------------------------------
<S> <C> <C>
Corporate Short-Term Notes 8.5%
Beneficial Corp. 5.95%,
06/05/95 5000M 4,996,695
Prudential Funding Corp. 5.92%,
06/12/95 4000M 3,992,764
------------
Total Corporate Short-Term Notes
(Cost $8,989,459) 8,989,459
------------
Total Investments
(Cost $112,848,974)* 116,663,234
Excess of Liabilities
Over Other Assets (10.6%) (11,159,547)
------------
Net Assets $105,503,687
============
</TABLE>
--------------------------------------------------------------------------------
* The aggregate cost for federal income tax purposes was $112,854,539. At
May 31, 1995, net unrealized appreciation for federal income tax purposes
aggregated $3,808,695 of which $4,091,845 related to appreciated securities
and $283,150 related to depreciated securities.
See Notes to Financial Statements.
13
<PAGE>
================================================================================
Sentinel Tax-Free Income Fund
Investment in Securities
at May 31, 1995 (Unaudited)
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
Principal Amount Value
(M=$1,000) (Note 1)
--------------------------------------------------------------------------------
<S> <C> <C>
Bonds 97.9%
California 12.2%
California Health Facility Children's
Hospital San Francisco (MBIA)
7.5%, 10/01/20 350M $ 394,107
California State G/O
6.25%, 04/01/08 4000M 4,265,600
California State Rev. Antic.
5.75%, 04/25/96 4000M 4,068,200
Hesperia, Ca., Water
District (FGIC)
7.2%, 06/01/15 280M 318,536
Irvine Ranch, Ca., Water District
7.875%, 02/15/23 250M 266,905
Moulton Niguel, Ca.,
Water District (MBIA)
5.25%, 09/01/13 200M 189,636
San Mateo Cnty, Ca., Power
Rev. (AMBAC)
6.5%, 07/01/15 3000M 3,350,070
University of California
Rev. (AMBAC)
4.75%, 09/01/16 425M 375,109
------------
13,228,163
------------
Connecticut 1.3%
Connecticut State Housing
Mortgage Fin. Auth.
8.75%, 11/15/18 340M 355,909
Connecticut State Special
Tax Oblig.
6.15%, 09/01/09 1000M 1,064,550
------------
1,420,459
------------
Delaware 1.0%
University of Delaware Hsg.
& Dng. Facs.
6.625%, 11/01/10 500M 550,530
Delaware Health Facs. Auth.
Millford Memorial Hospital
7.625%, 11/01/10 500M 542,305
------------
1,092,835
------------
District of Columbia 0.5%
District of Columbia G/O (AMBAC)
7.5%, 06/01/09 500M 563,310
------------
Florida 1.1%
University Community
Hospital, Inc. (FSA)
7.5%, 09/01/11 1000M 1,155,130
------------
Hawaii 1.1%
Department of Budget Finance
7.65%, 07/01/19 1000M 1,172,440
Hawaii Housing Finance
& Dev. Corp
7.8%, 07/01/29 10M 10,526
------------
1,182,966
------------
Idaho 0.7%
Idaho Housing Agency
8%, 01/01/20 705M 784,404
------------
Illinois 6.5%
Chicago Gas Supply Rev.
7.5%, 03/01/15 1000M $ 1,090,910
Chicago, Ill., General Obligation (AMBAC)
6.25%, 01/01/08 500M 533,700
Chicago, Ill., Metro Water
6.85%, 01/01/10 300M 332,991
Illinois Development Finance Auth.
7.6%, 03/01/14 750M 834,885
Illinois Housing Dev. Auth.
Multi-Family Series A
7%, 07/01/10 990M 1,054,914
Illinois State Sales Tax Rev.
6%, 06/15/12 2000M 2,075,880
6.5%, 06/15/13 1000M 1,118,360
------------
7,041,640
------------
Indiana 0.1%
Indianapolis Economic Dev. Rev.
7.8%, 12/01/17 55M 58,256
------------
Kansas 0.2%
Kansas City, Leavenworth County &
City of Lenexa Series A - Mtg. Rev.
8.4%, 05/01/15 160M 173,486
------------
Kentucky 0.3%
Kentucky State Turnpike Auth.
7.375%, 05/15/07 150M 170,263
8.5%, 07/01/04 100M 106,281
------------
276,544
------------
Louisiana 0.5%
Jefferson, La. Sales Tax Rev. (MBIA)
8.25%, 07/01/02 500M 570,000
------------
Maine 0.3%
Maine Municipal Bond Bank
6.6%, 11/01/15 350M 370,857
------------
Massachusetts 7.9%
Massachusetts Municipal
Wholesale Elec. Co. (MBIA)
5%, 07/01/13 180M 167,324
Massachusetts State G/O
6.875%, 07/01/10 1000M 1,132,930
6%, 08/01/09 (FGIC) 1000M 1,048,660
Massachusetts State Health
& Education Facs.
Beth Israel Hospital Revenue
7%, 07/01/09 1000M 1,061,470
Massachusetts State Health
& Education Facs.
New England Baptist
Hospital Revenue
7.3%, 7/01/11 1000M 1,033,120
Massachusetts State Water
Resource Auth.
6.5%, 12/01/19 1000M 1,118,790
5.75%, 12/01/21 3050M 3,005,135
------------
8,567,429
------------
Michigan 3.9%
Michigan Public Power Belle
River Rev.
5.5%, 01/01/13 3000M $ 2,993,130
Michigan State Building Auth. Rev.
6.25%, 10/01/20 170M 172,627
Michigan State Housing Dev.
Auth. (MBIA)
5.45%, 07/15/11 200M 191,506
Royal Oak Hospital Finance Auth.
7.375%, 01/01/20 750M 834,165
------------
4,191,428
------------
Missouri 2.1%
Central Missouri State Univ. (MBIA)
7%, 07/01/14 1000M 1,138,910
Missouri Housing Development Comm.
9.375%, 04/01/16 95M 103,229
Missouri State Environ. Improv. Energy
7.4%, 05/01/20 1000M 1,071,080
------------
2,313,219
------------
Nebraska 2.0%
Omaha Public Power Elec. Rev.
6.15%, 02/01/12 1000M 1,056,210
7.625%, 02/01/12 1000M 1,094,000
------------
2,150,210
------------
Nevada 1.0%
Clark Cnty, Nevada McCarran
Int'l. Airport
6.15%, 07/01/07 (AMBAC) 1000M 1,069,540
------------
New Hampshire 0.8%
New Hampshire Higher
Education & Health (MBIA)
7.625%, 07/01/20 750M 849,908
------------
New Jersey 3.0%
New Jersey State Turnpike Auth.
6.5%, 01/01/16 2000M 2,200,000
University of Medicine & Dentistry
7.2%, 12/01/19 1000M 1,102,410
------------
3,302,410
------------
New York 17.9%
Monroe County, NY (MBIA)
5.6%, 12/01/11 125M 125,822
Nassau County, NY (FGIC)
6.5%, 05/01/07 4000M 4,457,360
New York City, NY
7.5%, 02/01/03 100M 110,039
7.1%, 02/01/09 1200M 1,276,848
New York City Mun. Water Fin. Auth.
7%, 06/15/09 500M 545,040
5.75%, 06/15/20 (MBIA) 100M 100,240
7.75%, 06/15/20 500M 590,230
New York Dorm. Auth.
5.5%, 07/01/20 225M 209,392
New York State Energy Res.
& Dev. Auth. (AMBAC)
5.25%, 08/15/20 125M 118,311
</TABLE>
14
<PAGE>
================================================================================
Sentinel Tax-Free Income Fund
Investment in Securities (cont'd.)
at May 31, 1995 (Unaudited)
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
Principal Amount Value
(M=$1,000) (Note 1)
--------------------------------------------------------------------------------
<S> <C> <C>
New York State Environmental Facs. Corp.
PCR - Water Revolving Fund Project
7.25%, 06/15/10 50M $ 55,627
6.6%, 09/15/12 1450M 1,557,010
New York State Local Government Assistance
5.375%, 04/01/16 1000M 952,380
5.5%, 04/01/18 200M 193,422
5%, 04/01/21 1000M 903,370
5.5%, 04/01/22 3000M 2,881,950
New York State Medical Care Facs.
Mental Health Services Facs.
7.875%, 08/15/08 470M 535,232
New York State Medical Care Facs.
New York Hospital Mortgage
Rev. (AMBAC)
6.8%, 08/15/24 100M 111,166
New York State Urban Dev. Corp.
5.5%, 01/01/16 200M 187,360
Triborough Bridge &
Tunnel Authority
6%, 01/01/12 3250M 3,410,615
6.625%, 01/01/12 500M 559,485
8.125%, 01/01/12 500M 557,440
------------
19,438,339
------------
North Carolina 0.3%
North Carolina Medical Care
Presbyterian Hospital
7.375%, 10/01/20 250M 287,280
------------
North Dakota 0.0%
Mercer Cnty PCR - Basin
Electric Power Project
7.7%, 01/01/19 50M 52,331
------------
Ohio 2.1%
Cuyahoga County Hospital Rev.
8%, 12/01/08 300M 325,767
Montgomery County, Kettering
Medical Center (MBIA)
7.375%, 04/01/02 100M 110,058
Ohio Housing Finance Auth.
7.05%, 09/01/16 710M 758,337
Ohio State Higher Educ. Facs.
6%, 10/01/14 1000M 1,065,140
------------
2,259,302
------------
Oregon 3.9%
Klamath Falls Elec. Rev.
3.75%, 05/01/23 2500M 2,505,200
Oregon State Transportation Dept.
7%, 06/01/04 (MBIA) 1500M 1,728,210
------------
4,233,410
------------
Pennsylvania 9.9%
Allegheny County Sanitation Auth. (FGIC)
7.5%, 12/01/16 500M 555,315
Delaware County, Villanova
Univ. Rev. (MBIA)
5.5%, 08/01/23 2500M 2,447,225
Lehigh County Hospital Rev.
9%, 07/01/15 250M 277,523
Montgomery County Higher
Ed. & Hlth. Auth.
8.3%, 06/01/10 500M 588,535
Pennsylvania State G/O
6.25%, 07/01/10 2000M 2,139,540
6.25%, 07/01/11 2000M 2,134,320
Pennsylvania Higher Education
Facs. Auth.
7.2%, 07/01/19 (MBIA) 1000M 1,103,670
Pennsylvania State Turnpike Commission
7.5%, 12/01/19 500M 569,335
5.5%, 12/01/17 (FGIC) 1000M 983,520
------------
10,798,983
------------
Puerto Rico 5.9%
Puerto Rico Commonwealth Highway &
Transportation Auth. Rev.
5.5%, 07/01/19 250M 239,380
Puerto Rico Electric Power Auth. (FSA)
6.125%, 07/01/08 3375M 3,521,644
6%, 07/01/04 2500M 2,704,300
------------
6,465,324
------------
South Carolina 1.0%
Piedmont Municipal Power Agency
6.25%, 01/01/09 (MBIA) 1000M 1,083,020
------------
South Dakota 1.0%
Heartland Consumer Power District
7.875%, 01/01/06 1000M 1,074,230
------------
Tennessee 0.1%
Volunteer State Student Funding
Corp. Rev.
4.85%, 06/01/99 75M 75,080
------------
Texas 0.4%
Alamo Community College
Refunding (MBIA)
5.125%, 11/01/13 100M 95,131
Dallas-Fort Worth Int'l. Airport
7.5%, 11/01/25 100M 104,429
Harris County, Texas Flood
Control District
5.125%, 10/01/12 175M 165,377
Matagorda County, Texas PCR
Power & Light
7.875%, 12/01/16 50M 52,653
Sabine River Auth. PCR
8.25%, 10/01/20 50M 54,808
------------
472,398
------------
Utah 0.0%
Utah State Housing Finance Auth.
7.25%, 07/01/22 30M 31,607
------------
Vermont 1.7%
Champlain Water District
7.125%, 10/01/03 175M 198,310
7.125%, 10/01/04 145M 164,929
7.125%, 10/01/06 200M 228,210
Vermont Education &
Health Building
7.05%, 10/01/16 900M 976,473
7%, 10/01/22 250M 248,760
------------
1,816,682
------------
Virginia 1.0%
Fairfax County Water Auth.
7.25%, 01/01/27 1000M 1,125,900
------------
Washington 6.2%
Snohomish County G/O
7.1%, 12/01/07 500M 562,660
Washington State Motor
Vehicle Fuel
6.2%, 03/01/11 1220M 1,302,423
Washington State Public
Power Supply System Proj. #1
8%, 07/01/19 575M 672,670
Washington State Public
Power Supply System Proj. #2
7.625%, 07/01/10 250M 290,057
Washington State Public Power
Supply System Proj. #3 (MBIA)
7.125%, 07/01/16 3295M 3,884,706
------------
6,712,516
------------
Total Bonds
(Cost $99,272,162) 106,288,596
------------
Short-Term Investments 0.2%
Port St. Helens, Oregon
General Electric Project
4%, 06/01/10, (a)
(Cost $200,000) 200M 200,000
------------
Total Investments
(Cost $99,472,162)* 106,488,596
Excess of Other Assets
Over Liabilities 1.9% 2,122,914
------------
Net Assets $108,611,510
============
</TABLE>
--------------------------------------------------------------------------------
* Also cost for federal income tax purposes. At May 31, 1995, net unrealized
appreciation for federal income tax purposes aggregated $7,016,434 of which
$7,046,771 related to appreciated securities and $30,337 related to
depreciated securities.
(a) Variable rate security that may be tendered back to issuer prior to
maturity, at par.
The following abbreviations are used in portfolio descriptions:
(MBIA) - Guaranteed by Municipal Bond Investors Assurance Corp.
(AMBAC) - Guaranteed by American Municipal Bond Association Corp.
(FGIC) - Guaranteed by Financial Guaranty Insurance Co.
(FSA) - Guaranteed by Financial Security Assurance Inc.
G/O - General Obligation Bond
PCR - Pollution Control Revenue Bond
See Notes to Financial Statements.
15
<PAGE>
================================================================================
Sentinel New York Tax-Free Income Fund
Investment in Securities
at May 31, 1995 (Unaudited)
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
Principal Amount Value
(M=$1,000) (Note 1)
--------------------------------------------------------------------------------
<S> <C> <C>
Bonds 92.0%
New York 86.1%
Metro Transportation Authority
6.00%, 07/01/19 60M $ 59,618
Monroe County Water Improvement
5.60%, 12/01/11 (MBIA) 225M 226,481
New York City Series F
6.60%, 02/15/10 250M 259,683
New York City Municipal
Water Fin. Auth.
6.75%, 06/15/14 (FGIC) 35M 37,064
6.00%, 06/15/17 100M 100,411
New York State G/O
7.15%, 02/01/08 80M 85,714
5.70%, 08/15/10 150M 151,961
New York State Dorm. Authority Revenue
City Univ. System - Ser C
6.00%, 07/01/16 110M 108,698
Cornell Univ. - Ser A
7.375%, 07/01/30 50M 55,856
State Univ. Educ. Fac. - Ser A
7.20%, 05/15/06 300M 328,683
Univ. Rochester - Strong Mem. Hosp.
5.50%, 07/01/21 300M 278,469
Department of Health
5.50%, 07/01/20 125M 116,329
New York State Energy Resources
7.50%, 07/01/25 50M 53,688
New York State Environmental Facilities
5.75%, 03/15/13 300M 291,198
New York State Environmental
Water Revenue
7.25%, 06/15/10 60M 66,753
New York State Local Govt.
Assistance Corp.
7.00%, 04/01/08 100M 111,517
5.50%, 04/01/22 590M 566,783
New York State Medical Care Facilities
7.875%, 08/15/20 20M 22,212
7.30%, 02/15/21 25M 27,142
Hospitals & Nursing Homes
5.75%, 08/15/19 170M 169,541
6.45%, 02/15/09 235M 254,876
7.25%, 02/15/24 50M 53,954
New York State Mortgage
Agency Revenue
7.80%, 10/01/13 150M 160,923
7.95%, 04/01/22 100M 106,510
New York State Thwy. Auth.
Service Contract
6.00%, 01/01/11 60M 60,052
Port Authority NY & NJ
5.00%, 07/15/12 70M 65,776
Suffolk County NY Water Authority
5.625%, 06/01/16 (AMBAC) 170M 169,687
Triborough Bridge &
Tunnel Authority
6.00%, 01/01/12 250M 262,355
6.875%, 01/01/15 65M 70,858
----------
4,322,792
----------
Puerto Rico 5.9%
Puerto Rico Commonwealth
7.15%, 07/01/03 50M 56,756
Puerto Rico Commonwealth
Hwy. & Trans.
5.50%, 07/01/19 250M 239,380
----------
296,136
----------
Total Bonds
(Cost $4,252,108 ) 4,618,928
----------
Short-Term Investments 2.0%
New York City G/O
3.10%, 08/15/22, (a)
(Cost $100,000) 100M 100,000
----------
Total Investments
(Cost $4,352,108)* 4,718,928
Excess of Other Assets
Over Liabilities 6.0% 300,339
----------
Net Assets $5,019,267
==========
</TABLE>
--------------------------------------------------------------------------------
* Also cost for federal income tax purposes. At May 31, 1995, net unrealized
appreciation for federal income tax purposes aggregated $366,820 all of
which related to appreciated securities.
(a) Variable rate security that may be tendered back to issuer prior to
maturity, at par.
The following abbreviations are used in portfolio descriptions:
(MBIA) - Guaranteed by Municipal Bond Investors Assurance Corp.
(AMBAC) - Guaranteed by American Municipal Bond Association Corp.
(FGIC) - Guaranteed by Financial Guaranty Insurance Co.
G/O - General Obligation Bond
See Notes to Financial Statements.
16
<PAGE>
================================================================================
Sentinel Government Securities Fund
Investment in Securities
at May 31, 1995 (Unaudited)
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
Principal Amount Value
(M=$1,000) (Note 1)
--------------------------------------------------------------------------------
<S> <C> <C>
U.S. Government Obligations 106.0%
U.S. Treasury Obligations 35.5%
10-Year:
Note 7.5%, '05 27500M $ 29,823,200
Note 6.5%, '05 7600M 7,721,980
------------
Total U.S. Treasury Obligations 37,545,180
------------
U.S. Government Agency Obligations 70.5%
Federal Home Loan Mortgage Corporation 18.3%
Agency Discount Notes:
5.88%, 06/12/95 5000M 4,991,017
5.83%, 08/10/95 2200M 2,175,061
------------
7,166,078
------------
Collateralized Mortgage Obligations:
1779(H), 8.5%, '00 1577M 1,647,651
------------
15-Year:
8.5%, '98 120M 123,930
9.5%, '05 3536M 3,690,811
------------
3,814,741
------------
30-Year:
8%, '00 4899M 5,039,430
8.25%, '04 324M 331,333
11%, '09 33M 36,392
10.5%, '13 49M 52,257
11%, '15 13M 14,638
11%, '15 81M 88,249
11%, '15 113M 122,813
11%, '15 62M 67,396
11%, '16 42M 45,517
11%, '16 56M 61,454
11%, '17 21M 23,152
11%, '17 238M 260,113
10.5%, '18 254M 273,690
10.5%, '18 162M 174,293
11%, '20 13M 13,699
11%, '20 6M 6,619
11%, '20 129M 140,817
------------
6,751,862
------------
Total Federal Home
Loan Mortgage Corporation 19,380,332
------------
Federal National Mortgage Association 37.8%
Agency Discount Notes:
5.89%, 06/12/95 1250M 1,247,751
------------
Collateralized Mortgage Obligations:
148(B), 0%, '96 6000M 5,325,000
------------
15-Year:
8.25%, '02 197M 203,353
10.5%, '04 1029M 1,088,506
8.625%, '04 3000M 3,254,790
8.5%, '07 8023M 8,394,525
5.5%, '09 6428M 6,128,005
------------
19,069,179
------------
30-Year:
8%, '25 7000M 7,142,170
8.5%, '25 7000M 7,229,670
------------
14,371,840
------------
Total Federal National
Mortgage Association 40,013,770
------------
Government National Mortgage Association 14.4%
15-Year:
10%, '01 53M $ 55,516
7%, '03 849M 861,884
7%, '03 1196M 1,214,298
9%, '06 900M 952,476
9%, '06 900M 951,452
9%, '06 925M 978,873
9%, '06 912M 964,121
9%, '06 897M 948,386
9%, '06 1882M 1,991,630
7.5%, '09 1859M 1,900,414
------------
10,819,050
------------
30-Year:
9.75%, '13 344M 367,190
11%, '14 63M 68,177
10.5%, '15 121M 132,423
10.5%, '16 117M 127,744
10.5%, '17 34M 37,281
10.5%, '17 112M 121,674
10.5%, '19 53M 57,363
10.5%, '19 174M 189,304
10.5%, '19 162M 176,423
10.5%, '19 58M 62,802
10.5%, '19 54M 59,358
10.5%, '19 39M 42,616
7.5%, '23 2951M 2,974,949
------------
4,417,304
------------
Total Government National
Mortgage Association 15,236,354
------------
Total U.S. Government
Agency Obligations 74,630,456
------------
Total U.S. Government Obligations
(Cost $109,375,090) 112,175,636
------------
Corporate Short-Term Notes 19.0%
Beneficial Corp. 5.93%,
06/15/95 4350M 4,339,968
Beneficial Corp. 5.92%,
08/15/95 600M 592,600
Cargill, Inc. 5.93%,
06/13/95 4750M 4,740,611
G.E. Capital Corp. 6%,
06/15/95 3400M 3,392,067
Norwest Financial, Inc. 5.98%,
06/15/95 2050M 2,045,233
Prudential Funding Corp. 5.92%,
08/15/95 5000M 4,938,333
------------
Total Corporate Short-Term Notes
(Cost $20,048,812) 20,048,812
------------
Repurchase Agreement 22.2%
Repurchase agreement with Dominion
Securities, Inc. dated 05/31/95 at
6% to be repurchased at $23,519,583
on 06/05/95, collateralized by a
$8,070,000 U.S. Treasury Note due 11/30/99
valued at $8,594,550 and a $14,500,000
U.S. Treasury Note due 10/31/99 valued
at $15,384,578.
(Cost $23,500,000) 23500M 23,500,000
------------
Total Investments
(Cost $152,923,902)* 155,724,448
Excess of Liabilities
Over Other Assets (47.2%) (49,909,951)
------------
Net Assets $105,814,497
============
</TABLE>
--------------------------------------------------------------------------------
* Also cost for federal income tax purposes. At May 31, 1995, unrealized
appreciation for federal income tax purposes aggregated $2,800,546 of which
$3,041,797 related to appreciated securities and $241,251 related to
depreciated securities.
See Notes to Financial Statements.
17
<PAGE>
================================================================================
Sentinel Short-Intermediate Government Fund
Investment in Securities
at May 31, 1995 (Unaudited)
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
Principal Amount Value
(M=$1,000) (Note 1)
--------------------------------------------------------------------------------
<S> <C> <C>
U.S. Government Obligations 89.4%
U.S. Treasury Obligations 12.7%
2-Year:
Note 7.5%, '97 1000M $ 1,025,880
------------
3-Year:
Note 7.375%, '97 1000M 1,033,210
------------
Total U.S. Treasury Obligations 2,059,090
------------
U.S. Government Agency Obligations 76.7%
Federal Home Loan Mortgage Corporation 60.2%
Collateralized Mortgage Obligations:
1779(H), 8.5%, '00 1532M 1,600,487
1057(D), 8%, '00 1300M 1,332,500
93(F), 8.5%, '19 254M 255,155
53(A) P11, 9.5%, '20 51M 51,834
------------
3,239,976
------------
5-Year:
8%, '00 980M 1,007,886
8%, '00 980M 1,007,804
------------
2,015,690
------------
15-Year:
8.5%, '01 1431M 1,499,770
9.5%, '01 3M 2,767
9%, '01 18M 18,880
9.5%, '01 6M 6,517
9.5%, '03 6M 6,338
9.5%, '03 13M 13,993
10%, '05 224M 234,806
------------
1,783,071
------------
30-Year:
7%, '06 1698M 1,727,833
7%, '07 942M 958,945
10.25%, '09 37M 39,105
------------
2,725,883
------------
Total Federal Home Loan
Mortgage Corporation 9,764,620
------------
Federal National Mortgage Association 10.4%
Medium Term Notes:
7.26%, '97 1500M 1,515,360
------------
15-Year:
9%, '02 14M 14,652
10.5%, '03 127M 134,246
------------
148,898
------------
30-Year:
10.75%, '12 19M 21,245
------------
Total Federal National
Mortgage Association 1,685,503
------------
<CAPTION>
--------------------------------------------------------------------------------
Principal Amount Value
(M=$1,000) (Note 1)
--------------------------------------------------------------------------------
<S> <C> <C>
Government National Mortgage Association 6.1%
15-Year:
11.25%, '95 0M $ 135
14.75%, '96 2M 1,907
12.75%, '97 17M 19,017
10.5%, '98 17M 18,145
11.25%, '98 3M 3,645
11.25%, '98 1M 869
11.25%, '98 2M 1,652
11.25%, '98 0M 431
10.75%, '98 12M 12,852
11.25%, '98 3M 3,239
10.75%, '98 0M 170
10.75%, '98 9M 10,026
10.75%, '98 23M 24,393
9.5%, '99 34M 36,250
10.25%, '99 25M 27,129
11.25%, '00 22M 24,379
11%, '00 15M 16,249
11%, '00 11M 12,078
9.75%, '01 25M 26,324
9.75%, '01 6M 6,053
9%, '01 65M 67,776
9.5%, '04 15M 15,745
9%, '07 54M 56,684
------------
385,148
------------
30-Year:
9.25%, '07 48M 50,562
9%, '09 263M 273,789
10%, '09 11M 11,642
9.75%, '10 221M 234,822
10%, '16 29M 31,363
------------
602,178
------------
Total Government National
Mortgage Association 987,326
------------
Total U.S. Government
Agency Obligations 12,437,449
------------
Total U.S. Government Obligations
(Cost $14,198,403) 14,496,539
------------
<CAPTION>
--------------------------------------------------------------------------------
Principal Amount Value
(M=$1,000) (Note 1)
--------------------------------------------------------------------------------
<S> <C> <C>
Other Collateralized Mortgage Obligations 4.3%
Collateralized Mortgage Obligation
Trust Series 27(A)
7.25%, '17 489M $ 493,826
Collateralized Mortgage Securities
Corp. Series 1988-16(B)
9.1%, '18 16M 15,864
Kidder Peabody Mortgage Assets
Trust Series 18(A)
9.43%, '18 27M 27,821
Merrill Lynch Trust Series 5(B)
6%, '18 151M 146,811
Merrill Lynch Trust Series 25(B)
8.75%, '19 14M 14,072
------------
Total Other Collateralized Mortgage Obligations
(Cost $710,021) 698,394
------------
Total Investments
(Cost $14,908,424)* 15,194,933
Excess of Other Assets
Over Liabilities 6.3% 1,018,875
------------
Net Assets $16,213,808
============
</TABLE>
--------------------------------------------------------------------------------
* Also cost for federal income tax purposes. At May 31, 1995, unrealized
appreciation for federal income tax purposes aggregated $286,509 of which
$309,500 related to appreciated securities and $22,991 related to depreciated
securities.
See Notes to Financial Statements.
18
<PAGE>
================================================================================
Sentinel U.S.Treasury Money Market Fund
Investment in Securities
at May 31, 1995 (Unaudited)
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
Principal Amount Value
(M=$1,000) (Note 1)
--------------------------------------------------------------------------------
<S> <C> <C>
U.S. Treasury Obligations 106.1%
U S Treasury Bill
5.77%, 06/01/95 6000M $ 6,000,000
U S Treasury Bill
5.72%, 06/01/95 2500M 2,500,000
U S Treasury Bill
5.785%, 06/08/95 1500M 1,498,313
U S Treasury Bill
5.74%, 06/08/95 100M 99,888
U S Treasury Bill
5.755%, 06/15/95 3000M 2,993,286
U S Treasury Bill
5.675%, 06/22/95 4000M 3,986,758
U S Treasury Bill
5.69%, 06/22/95 1500M 1,495,021
U S Treasury Bill
5.63%, 06/22/95 3000M 2,990,148
U S Treasury Bill
5.64%, 06/22/95 6000M 5,980,260
U S Treasury Bill
5.58%, 06/22/95 1360M 1,355,573
U S Treasury Bill
5.62%, 06/22/95 10000M 9,967,217
U S Treasury Bill
5.625%, 06/29/95 1000M 995,625
U S Treasury Bill
5.7%, 07/06/95 3000M 2,983,375
U S Treasury Bill
5.7%, 07/13/95 1000M 993,350
U S Treasury Bill
5.595%, 07/13/95 1800M 1,788,250
U S Treasury Bill
5.6%, 07/13/95 4100M 4,073,213
U S Treasury Bill
5.62%, 07/20/95 1500M 1,488,526
U S Treasury Bill
5.62%, 07/27/95 6000M 5,947,547
U S Treasury Bill
5.7%, 08/03/95 2300M 2,277,057
U S Treasury Bill
5.69%, 08/03/95 3000M 2,970,128
<CAPTION>
--------------------------------------------------------------------------------
Principal Amount Value
(M=$1,000) (Note 1)
--------------------------------------------------------------------------------
<S> <C> <C>
U S Treasury Bill
5.67%, 08/03/95 5000M $ 4,950,388
U S Treasury Bill
5.62%, 08/10/95 2000M 1,978,144
U S Treasury Bill
5.67%, 08/17/95 1200M 1,185,447
U S Treasury Bill
5.68%, 08/17/95 1000M 987,851
U S Treasury Bill
5.63%, 08/24/95 5000M 4,934,317
U S Treasury Note
3.875%, 08/31/95 3000M 2,985,146
U S Treasury Note
3.875%, 08/31/95 1105M 1,099,549
------------
Total Investments
(Amortized Cost $80,504,377)* 80,504,377
Excess of Liabilities
Over Other Assets (6.1%) (4,619,135)
------------
Net Assets $75,885,242
============
</TABLE>
--------------------------------------------------------------------------------
* Also cost for federal income tax purposes.
See Notes to Financial Statements.
19
<PAGE>
================================================================================
Sentinel Group Funds, Inc.
Statement of Assets and Liabilities
at May 31, 1995 (Unaudited)
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------------
Sentinel
Emerging Sentinel Sentinel Sentinel Sentinel
Growth Growth World Common Stock Balanced
Fund Fund Fund Fund Fund
--------------------------------------------------- ----------- ----------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Assets
Investments at value $94,756,272 $55,547,428 $42,034,337 $980,457,600 $267,017,542
Cash and cash equivalents 436,352 1,660,243 447,550 1,092,703 231,641
Foreign currency (cost $1,310,993) - - 1,334,371 - -
Receivable for securities sold 122,850 782,562 - 10,772,531 5,225,390
Receivable for fund shares sold 3,375 19,021 18,011 106,360 73,863
Receivable for dividends and interest 17,872 106,588 249,568 4,853,585 2,167,869
Receivable from fund administrator - - - - -
Prepaid Expense - - - - -
----------- ----------- ----------- ------------ ------------
Total Assets 95,336,721 58,115,842 44,083,837 997,282,779 274,716,305
----------- ----------- ----------- ------------ ------------
Liabilities
Payable for securities purchased 1,313,200 2,400,416 15,039 6,482,736 23,118,384
Payable for shares repurchased 4,965 - - 135,490 36,031
Accrued expenses 63,241 63,479 29,260 458,888 95,685
Management fee payable 52,028 30,490 24,343 452,665 137,058
Distribution fee payable 49,712 18,644 20,344 186,831 90,468
Fund service fee payable 32,991 16,247 8,661 135,065 38,964
Payable to Custodian Bank - - - - -
----------- ----------- ----------- ------------ ------------
Total Liabilities 1,516,137 2,529,276 97,647 7,851,675 23,516,590
----------- ----------- ----------- ------------ ------------
Net Assets Applicable to Outstanding Shares $93,820,584 $55,586,566 $43,986,190 $989,431,104 $251,199,715
=========== =========== =========== ============ ============
Shares Outstanding 18,858,614 3,571,268 3,306,297 31,239,137 15,960,302
Net Asset Value Per Share $4.97 $15.56 $13.30 $31.67 $15.74
Maximum Offering Price Per Share $5.23 $16.38 $14.00 $33.34 $16.57
Net Assets Represent
Capital stock at par value $ 188,586 $ 35,713 $ 33,063 $ 312,391 $ 159,603
Paid-in capital 78,978,010 39,904,404 40,440,142 525,740,309 211,336,996
Accumulated undistributed net investment income (loss) (191,171) 42,303 465,031 3,921,518 1,324,104
Accumulated undistributed net realized gain (loss)
on investments and foreign currency transactions 5,861,432 6,232,040 (527,953) 31,950,237 (317,629)
Unrealized appreciation (depreciation) of investments
and foreign currency transactions 8,983,727 9,372,106 3,575,907 427,506,649 38,696,641
----------- ----------- ----------- ------------ ------------
Net Assets $93,820,584 $55,586,566 $43,986,190 $989,431,104 $251,199,715
=========== =========== =========== ============ ============
Investments at Cost $85,772,545 $46,175,322 $38,487,077 $552,950,951 $228,320,901
=========== =========== =========== ============ ============
</TABLE>
See Notes to Financial Statements.
20
<PAGE>
================================================================================
Sentinel Group Funds, Inc.
Statement of Assets and Liabilities
at May 31, 1994 (Unaudited)
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------------
Sentinel Sentinel Sentinel Sentinel Sentinel
Sentinel Tax-Free New York Government Short-Intermediate U.S. Treasury
Bond Income Tax-Free Income Securities Government Money Market
Fund Fund Fund Fund Fund Fund
------------------------------------ ------------ ------------ --------------- ------------ ------------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Assets
Investments at value $116,663,234 $106,488,596 $4,718,928 $155,724,448 $15,194,933 $80,504,377
Cash and cash equivalents 2,511,855 - 188,800 895,238 764,933 328,486
Foreign currency - - - - - -
Receivable for securities sold 3,110,114 563,140 - 1,947,217 99,543 -
Receivable for fund shares sold 70,406 6,176 28,494 1,919 - -
Receivable for dividends and interest 1,640,278 2,317,392 84,495 1,101,282 148,954 47,008
Receivable from fund administrator - - - - 8,694 -
Prepaid Expense - - 2,334 - 15,153 -
------------ ------------ ---------- ------------ ----------- -----------
Total Assets 123,995,887 109,375,304 5,023,051 159,670,104 16,232,210 80,879,871
------------ ------------ ---------- ------------ ----------- -----------
Liabilities
Payable for securities purchased 18,359,000 - - 53,716,901 - 4,934,317
Payable for shares repurchased 6 2,541 - - - -
Accrued expenses 51,258 27,163 406 48,751 2,444 21,515
Management fee payable 46,942 48,415 2,201 47,140 7,120 26,129
Distribution fee payable 22,521 25,221 797 28,904 6,916 -
Fund service fee payable 12,473 10,735 380 13,911 1,922 12,668
Payable to Custodian Bank - 649,719 - - - -
------------ ------------ ---------- ------------ ----------- -----------
Total Liabilities 18,492,200 763,794 3,784 53,855,607 18,402 4,994,629
------------ ------------ ---------- ------------ ----------- -----------
Net Assets Applicable to
Outstanding Shares $105,503,687 $108,611,510 $5,019,267 $105,814,497 $16,213,808 $75,885,242
============ ============ ========== ============ =========== ===========
Shares Outstanding 16,664,216 8,117,299 435,016 10,565,477 1,653,204 75,885,242
Net Asset Value Per Share $6.33 $13.38 $11.54 $10.02 $9.81 $1.00
Maximum Offering Price Per Share $6.66 $14.08 $12.15 $10.55 $9.91 $1.00
Net Assets Represent
Capital stock at par value $ 166,642 $ 81,173 $ 4,350 $ 105,655 $ 16,532 $ 758,852
Paid-in capital 108,019,681 102,635,146 4,747,865 110,452,681 17,046,360 75,126,390
Accumulated undistributed net
investment income (loss) (16,979) 2,813 36 12,053 760 -
Accumulated undistributed net
realized gain (loss) on
investments and foreign
currency transactions (6,479,917) (1,124,056) (99,804) (7,556,438) (1,136,353) -
Unrealized appreciation (depreciation)
of investments and foreign currency
transactions 3,814,260 7,016,434 366,820 2,800,546 286,509 -
------------ ------------ ---------- ------------ ----------- -----------
Net Assets $105,503,687 $108,611,510 $5,019,267 $105,814,497 $16,213,808 $75,885,242
============ ============ ========== ============ =========== ===========
Investments at Cost $112,848,974 $ 99,472,162 $4,352,108 $152,923,902 $14,908,424 $80,504,377
============ ============ ========== ============ =========== ===========
</TABLE>
See Notes to Financial Statements.
21
<PAGE>
================================================================================
Sentinel Group Funds, Inc.
Statement of Operations
For the Six Months Ended May 31, 1995 (Unaudited)
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------
Sentinel
Emerging Sentinel Sentinel Sentinel Sentinel
Growth Growth World Common Stock Balanced
Fund Fund Fund Fund Fund
------------------------------------------- ---------- ---------- ---------- ------------ -----------
<S> <C> <C> <C> <C> <C>
Investment Income
Income:
Dividends $ 179,810 $ 430,910 $ 557,524+ $ 15,148,847 $ 2,048,048
Interest 377,769 67,742 23,354 1,447,343 4,255,689
---------- ---------- ---------- ------------ -----------
Total Income 557,579 498,652 580,878 16,596,190 6,303,737
---------- ---------- ---------- ------------ -----------
Expenses:
Management advisory fee 304,843 168,935 137,672 2,453,575 773,686
Transfer agent and custodian 234,800 122,475 96,550 783,390 245,100
Distribution expense 137,700 72,250 63,000 1,095,000 347,101
Accounting services 20,450 11,325 10,000 197,705 51,900
Professional fees 19,350 12,200 7,900 164,000 41,200
Reports and notices to shareholders 11,432 6,326 3,448 26,711 8,411
Directors' fees and expenses 5,452 2,964 2,421 51,723 13,591
Other 14,723 13,325 18,546 38,196 23,008
---------- ---------- ---------- ------------ -----------
Total Expenses 748,750 409,800 339,537 4,810,300 1,503,997
Expense Reimbursement - - - - -
---------- ---------- ---------- ------------ -----------
Net Investment Income (Loss) (191,171) 88,852 241,341 11,785,890 4,799,740
---------- ---------- ---------- ------------ -----------
Realized and Unrealized Gain (Loss) on
Investments and Foreign Currency
Net Realized gain (loss) from:
Investments 5,861,355 6,232,075 (400,223) 32,848,647 124,104
Foreign Currency transactions - - 127,735 - -
---------- ---------- ---------- ------------ -----------
Net realized gain (loss) 5,861,355 6,232,075 (272,488) 32,848,647 124,104
---------- ---------- ---------- ------------ -----------
Net Change in Unrealized appreciation
(depreciation) during the period:
Investments 732,826 817,741 2,636,859 107,130,260 26,782,298
Foreign Currency Transactions - - 30,016 - -
---------- ---------- ---------- ------------ -----------
Net change in unrealized
appreciation (depreciation) 732,826 817,741 2,666,875 107,130,260 26,782,298
---------- ---------- ---------- ------------ -----------
Net Realized and Unrealized Gain
from Investments and Foreign Currency 6,594,181 7,049,816 2,394,387 139,978,907 26,906,402
---------- ---------- ---------- ------------ -----------
Net Increase in Net Assets
from Operations $6,403,010 $7,138,668 $2,635,728 $151,764,797 $31,706,142
========== ========== ========== ============ ===========
</TABLE>
+ Net of foreign tax withholding of $71,303.
See Notes to Financial Statements.
22
<PAGE>
================================================================================
Sentinel Group Funds, Inc.
Statement of Operations
For the Six Months Ended May 31, 1995* (Unaudited)
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------------
Sentinel Sentinel Sentinel Sentinel Sentinel
Sentinel Tax-Free New York Government Short-Intermediate U.S. Treasury
Bond Income Tax-Free Income Securities Government Money Market
Fund Fund Fund Fund Fund Fund
-------------------------------------- ----------- ----------- --------------- ----------- ------------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Investment Income
Income:
Dividends $ 24,578 - - - - -
Interest 3,491,733 $ 3,134,662 $ 54,157 $ 3,917,838 $202,111 $2,132,089
----------- ----------- -------- ----------- -------- ----------
Total Income 3,516,311 3,134,662 54,157 3,917,838 202,111 2,132,089
----------- ----------- -------- ----------- -------- ----------
Expenses:
Management advisory fee 239,104 275,331 4,654 276,273 14,546 149,439
Transfer agent and custodian 73,550 53,300 870 98,750 5,725 103,260
Distribution expense 89,457 103,611 1,329 103,434 8,390 -
Accounting services 20,130 22,675 375 22,680 1,250 16,585
Professional fees 18,000 17,700 100 18,650 350 12,000
Reports and notices to shareholders 3,064 1,787 50 2,833 50 3,055
Directors' fees and expenses 5,214 5,959 87 5,939 289 4,297
Other 15,974 16,380 1,997 13,601 5,500 11,805
----------- ----------- -------- ----------- -------- ----------
Total Expenses 464,493 496,743 9,462 542,160 36,100 300,441
Expense Reimbursement - (66,467) - - (8,694) -
----------- ----------- -------- ----------- -------- ----------
Net Investment Income (Loss) 3,051,818 2,704,386 44,695 3,375,678 174,705 1,831,648
----------- ----------- -------- ----------- -------- ----------
Realized and Unrealized Gain (Loss)
on Investments and Foreign Currency
Net Realized gain (loss) from:
Investments (1,054,572) 624,494 (95,735) 107,407 15,058 -
Foreign Currency transactions - - - - - -
----------- ----------- -------- ----------- -------- ----------
Net realized gain (loss) (1,054,572) 624,494 (95,735) 107,407 15,058 -
----------- ----------- -------- ----------- -------- ----------
Net Change in Unrealized appreciation
(depreciation) during the period:
Investments 8,431,453 7,633,075 248,227 7,452,855 249,832 -
Foreign Currency Transactions - - - - - -
----------- ----------- -------- ----------- -------- ----------
Net change in unrealized
appreciation (depreciation) 8,431,453 7,633,075 248,227 7,452,855 249,832 -
----------- ----------- -------- ----------- -------- ----------
Net Realized and Unrealized Gain
from Investments and Foreign Currency 7,376,881 8,257,569 152,492 7,560,262 264,890 -
----------- ----------- -------- ----------- -------- ----------
Net Increase in Net Assets
from Operations $10,428,699 $10,961,955 $197,187 $10,935,940 $439,595 $1,831,648
=========== =========== ======== =========== ======== ==========
</TABLE>
* Except for Sentinel New York Tax-Free Income Fund and Sentinel Short-
Intermediate Government Fund which are for for the period March 27, 1995
(commencement of operations) to May 31, 1995.
See Notes to Financial Statements.
23
<PAGE>
================================================================================
Sentinel Group Funds, Inc.
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------
Sentinel
Emerging Sentinel Sentinel
Growth Growth World
Fund Fund Fund
Six Months Year Ended Six Months Year Ended Six Months Year Ended
Ended 5/31/95 11/30/94 Ended 5/31/95 11/30/94 Ended 5/31/95 11/30/94
(Unaudited) (Unaudited) (Unaudited)
--------------------------- --------------------------- --------------------------
<S> <C> <C> <C> <C> <C> <C>
Increase (Decrease) in
Net Assets from Operations
Net investment income (loss) $ (191,171) $ (719,098) $ 88,852 $ 160,032 $ 241,341 $ 198,080
Net realized gain (loss)
on sales of investments 5,861,355 15,280,815 6,232,075 7,982,077 (272,488) 588,512
Net change in unrealized
appreciation (depreciation) 732,826 (12,522,902) 817,741 (10,816,883) 2,666,875 216,981
----------- ----------- ----------- ----------- ----------- -----------
Net increase (decrease)
in net assets
from operations 6,403,010 2,038,815 7,138,668 (2,674,774) 2,635,728 1,003,573
----------- ----------- ----------- ----------- ----------- -----------
Distributions to Shareholders
From net investment income - - (139,887) (101,423) (286,485) (37,977)
From net realized gain
on investments (14,411,551) (22,586,510) (7,982,066) (1,520,979) (505,083) (93,788)
----------- ----------- ----------- ----------- ----------- -----------
Total distributions to
shareholders (14,411,551) (22,586,510) (8,121,953) (1,622,402) (791,568) (131,765)
----------- ----------- ----------- ----------- ----------- -----------
From Capital Share Transactions
Net proceeds from
sales of shares 9,808,876 12,404,093 2,965,184 6,029,195 7,649,982 32,943,316
Net asset value of shares
issued in reinvestment of
dividends and distributions 13,135,828 20,325,227 7,247,471 1,441,691 763,219 127,165
Net asset value of shares
issued in exchange for
net assets of another
investment company - - - - - -
----------- ----------- ----------- ----------- ----------- -----------
22,944,704 32,729,320 10,212,655 7,470,886 8,413,201 33,070,481
Less: Payments for
shares reacquired (9,535,187) (28,938,237) (4,089,379) (10,560,224) (8,241,576) (8,844,358)
----------- ----------- ----------- ----------- ----------- -----------
Increase (decrease) in net
assets from capital share
transactions 13,409,517 3,791,083 6,123,276 (3,089,338) 171,625 24,226,123
----------- ----------- ----------- ----------- ----------- -----------
Total Increase (Decrease) in
Net Assets for Period 5,400,976 (16,756,612) 5,139,991 (7,386,514) 2,015,785 25,097,931
Net Assets:
Beginning of period 88,419,608 105,176,220 50,446,575 57,833,089 41,970,405 16,872,474
----------- ----------- ----------- ----------- ----------- -----------
End of period $93,820,584 $88,419,608 $55,586,566 $50,446,575 $43,986,190 $41,970,405
=========== =========== =========== =========== =========== ===========
Undistributed Net
Investment Income (Loss)
at End of Period $ (191,171) - $ 42,303 $ 93,338 $ 465,031 $ 254,707
=========== =========== =========== =========== =========== ===========
<CAPTION>
-----------------------------------------------------------------
Sentinel
Common Stock
Fund
Six Months Year Ended
Ended 5/31/95 11/30/94
(Unaudited)
------------------------------
<S> <C> <C>
Increase (Decrease) in
Net Assets from Operations
Net investment income (loss) $ 11,785,890 $ 24,680,626
Net realized gain (loss)
on sales of investments 32,848,647 33,250,854
Net change in unrealized
appreciation (depreciation) 107,130,260 (73,078,201)
------------ ------------
Net increase (decrease)
in net assets
from operations 151,764,797 (15,146,721)
------------ ------------
Distributions to Shareholders
From net investment income (11,806,395) (23,891,097)
From net realized gain
on investments (32,779,992) (1,815,853)
------------ ------------
Total distributions to
shareholders (44,586,387) (25,706,950)
------------ ------------
From Capital Share Transactions
Net proceeds from
sales of shares 34,083,432 63,969,978
Net asset value of shares
issued in reinvestment of
dividends and distributions 35,798,650 19,053,275
Net asset value of shares
issued in exchange for
net assets of another
investment company 51,894,735 -
------------ ------------
121,776,817 83,023,253
Less: Payments for
shares reacquired (78,859,387) (100,670,743)
------------ ------------
Increase (decrease) in net
assets from capital share
transactions 42,917,430 (17,647,490)
------------ ------------
Total Increase (Decrease) in
Net Assets for Period 150,095,840 (58,501,161)
Net Assets:
Beginning of period 839,335,264 897,836,425
------------ ------------
End of period $989,431,104 $839,335,264
============ ============
Undistributed Net
Investment Income (Loss)
at End of Period $ 3,921,518 $ 3,942,023
============ ============
</TABLE>
See Notes to Financial Statements.
24
<PAGE>
================================================================================
Sentinel Group Funds, Inc.
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------
Sentinel Sentinel
Balanced Bond
Fund Fund
Six Months Year Ended Six Months Year Ended
Ended 5/31/95 11/30/94 Ended 5/31/95 11/30/94
(Unaudited) (Unaudited)
------------------------------ -------------------------------
<S> <C> <C> <C> <C>
Increase (Decrease) in
Net Assets from Operations
Net investment income (loss) $ 4,799,740 $ 9,179,764 $ 3,051,818 $ 5,238,003
Net realized gain (loss)
on sales of investments 124,104 438,528 (1,054,572) (3,187,095)
Net change in unrealized
appreciation (depreciation) 26,782,298 (18,176,405) 8,431,453 (6,229,746)
------------- ------------ ------------ -----------
Net increase (decrease)
in net assets
from operations 31,706,142 (8,558,113) 10,428,699 (4,178,838)
------------- ------------ ------------ -----------
Distributions to Shareholders
From net investment income (4,844,246) (8,792,962) (3,046,327) (5,205,964)
From net realized gain
on investments (143,043) (1,393,903) - (4,248,336)
------------- ------------ ------------ -----------
Total distributions to
shareholders (4,987,289) (10,186,865) (3,046,327) (9,454,300)
------------- ------------ ------------ -----------
From Capital Share Transactions
Net proceeds from
sales of shares 17,476,726 61,618,124 9,478,212 27,558,388
Net asset value of shares
issued in reinvestment of
dividends and distributions 4,454,500 9,121,698 2,284,689 7,718,442
Net asset value of shares
issued in exchange for
net assets of another
investment company 4,084,150 - 31,075,198 -
------------- ------------ ------------ -----------
26,015,376 70,739,822 42,838,099 35,276,830
Less: Payments for
shares reacquired (27,862,968) (55,298,764) (25,203,832) (24,544,098)
------------- ------------ ------------ -----------
Increase (decrease) in net
assets from capital share
transactions (1,847,592) 15,441,058 17,634,267 10,732,732
------------- ------------ ------------ -----------
Total Increase (Decrease) in
Net Assets for Period 24,871,261 (3,303,920) 25,016,639 (2,900,406)
Net Assets:
Beginning of period 226,328,454 229,632,374 80,487,048 83,387,454
------------- ------------ ------------ -----------
End of period $251,199,715 $226,328,454 $105,503,687 $80,487,048
============= ============ ============ ===========
Undistributed Net
Investment Income (Loss)
at End of Period $ 1,324,104 $ 1,378,850 $ (16,979) $ (22,172)
============= ============ ============ ===========
<CAPTION>
---------------------------------------------------------------------------------
Sentinel Sentinel
Tax-Free New York
Income Tax-Free Income
Fund Fund*
Six Months Year Ended Two Months
Ended 5/31/95 11/30/94 Ended 5/31/95
(Unaudited) (Unaudited)
----------------------------- ---------------
<S> <C> <C> <C>
Increase (Decrease) in
Net Assets from Operations
Net investment income (loss) $ 2,704,386 $ 5,584,088 $ 44,695
Net realized gain (loss)
on sales of investments 624,494 (1,730,483) (95,735)
Net change in unrealized
appreciation (depreciation) 7,633,075 (9,435,964) 248,227
------------- ----------- ------------
Net increase (decrease)
in net assets
from operations 10,961,955 (5,582,359) 197,187
------------- ----------- ------------
Distributions to Shareholders
From net investment income (2,705,460) (5,581,800) (44,658)
From net realized gain
on investments - (950,281) -
------------- ----------- ------------
Total distributions to
shareholders (2,705,460) (6,532,081) (44,658)
------------- ----------- ------------
From Capital Share Transactions
Net proceeds from
sales of shares 9,252,042 24,483,545 220,141
Net asset value of shares
issued in reinvestment of
dividends and distributions 1,837,633 4,782,522 40,747
Net asset value of shares
issued in exchange for
net assets of another
investment company 4,493,940 - 5,759,369
------------- ----------- ------------
15,583,615 29,266,067 6,020,257
Less: Payments for
shares reacquired (15,163,584) (29,184,921) (1,153,519)
------------- ----------- ------------
Increase (decrease) in net
assets from capital share
transactions 420,031 81,146 4,866,738
------------- ----------- ------------
Total Increase (Decrease) in
Net Assets for Period 8,676,526 (12,033,294) 5,019,267
Net Assets:
Beginning of period 99,934,984 111,968,278 -
------------- ----------- ------------
End of period $108,611,510 $99,934,984 $5,019,267
============ =========== ============
Undistributed Net
Investment Income (Loss)
at End of Period $ 2,813 $ 3,887 $ 36
============ =========== ============
</TABLE>
*Commenced operations March 27, 1995.
See Notes to Financial Statements.
(continued)
25
<PAGE>
================================================================================
Sentinel Group Funds, Inc.
Statement of Changes in Net Assets (cont'd.)
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------------
Sentinel Sentinel Sentinel
Government Short-Intermediate U.S. Treasury
Securities Government Money Market
Fund Fund* Fund
Six Months Year Ended Two Months Six Months Year Ended
Ended 5/31/95 11/30/94 Ended 5/31/95 Ended 5/31/95 11/30/94
(Unaudited) (Unaudited) (Unaudited)
----------------------------- ------------ ---------------------------
<S> <C> <C> <C> <C> <C>
Increase (Decrease) in Net Assets from Operations
Net investment income (loss) $ 3,375,678 $ 7,214,095 $ 174,705 $ 1,831,648 $ 2,289,586
Net realized gain (loss)
on sales of investments 107,407 (5,760,781) 15,058 - -
Net change in unrealized
appreciation (depreciation) 7,452,855 (7,201,190) 249,832 - -
------------ ------------ ------------ ------------ -----------
Net increase (decrease)
in net assets
from operations 10,935,940 (5,747,876) 439,595 1,831,648 2,289,586
------------ ------------ ------------ ------------ -----------
Distributions to Shareholders
From net investment income (3,300,535) (7,046,062) (173,800) (1,831,648) (2,289,586)
From net realized gain
on investments - (1,485,970) - - -
------------ ------------ ------------ ------------ -----------
Total distributions to
shareholders (3,300,535) (8,532,032) (173,800) (1,831,648) (2,289,586)
------------ ------------ ------------ ------------ -----------
From Capital Share Transactions
Net proceeds from
sales of shares 4,743,748 22,078,781 2,735,608 72,540,193 159,102,352
Net asset value of shares
issued in reinvestment of
dividends and distributions 2,593,022 6,851,054 149,113 1,700,935 2,031,457
Net asset value of shares
issued in exchange for
net assets of another
investment company - - 15,218,556 - -
------------ ------------ ------------ ------------ -----------
7,336,770 28,929,835 18,103,277 74,241,128 161,133,809
Less: Payments for
shares reacquired (13,614,983) (44,941,238) (2,155,264) (73,657,006) (158,084,971)
------------ ------------ ------------ ------------ -----------
Increase (decrease) in net assets
from capital share transactions (6,278,213) (16,011,403) 15,948,013 584,122 3,048,838
------------ ------------ ------------ ------------ -----------
Total Increase (Decrease) in Net Assets
for Period 1,357,192 (30,291,311) 16,213,808 584,122 3,048,838
Net Assets:
Beginning of period 104,457,305 134,291,311 - 75,301,120 72,252,282
------------ ------------ ------------ ------------ -----------
End of period $105,814,497 $104,457,305 $16,213,808 $75,885,242 $75,301,120
------------ ------------ ------------ ------------ -----------
Undistributed Net
Investment Income (Loss)
at End of Period $ 12,053 $ (7,216) $ 760 $ - $ -
============ ============ ============ ============ ===========
</TABLE>
*Commenced operations March 27, 1995.
See Notes to Financial Statements.
26
<PAGE>
================================================================================
Notes to Financial Statements
(1) Significant Accounting Policies:
Sentinel Group Funds, Inc. (the "Company") is registered under the Investment
Company Act of 1940, as amended, as a diversified open-end management investment
company. The Company consists of eleven separate series - Sentinel Emerging
Growth Fund (formerly Sentinel Aggressive Growth Fund), Sentinel Growth Fund,
Sentinel World Fund, Sentinel Common Stock Fund, Sentinel Balanced Fund,
Sentinel Bond Fund, Sentinel Tax-Free Income Fund, Sentinel New York Tax-Free
Income Fund (a non-diversified series), Sentinel Government Securities Fund,
Sentinel Short-Intermediate Government Fund and Sentinel U.S. Treasury Money
Market Fund, each individually referred to as a Fund. As a result of the Company
merger with seven of the Independence Capital Group of Funds, as further
described in Note (6), Sentinel New York Tax-Free Income Fund and Sentinel
Short-Intermediate Government Fund commenced operations on March 27, 1995. The
following is a summary of significant accounting policies followed by the
Company.
A. Security Valuation: Equity securities which are traded on a national or
foreign securities exchange and over-the-counter securities listed in the NASDAQ
National Market System are valued at the last reported sales price on the date
of determination. Securities for which no sale was reported on that date are
valued at the mean between the last reported bid and asked prices. Over-the-
counter securities not listed on the NASDAQ National Market System are valued at
the mean of the current bid and asked prices. Fixed income securities are valued
on the basis of valuations provided by independent pricing services. Short-term
securities maturing in 60 days or less are stated at cost plus accrued interest
earned which approximates market value. Portfolio securities of the Sentinel
U.S. Treasury Money Market Fund are valued at amortized cost, which approximates
market value, in accordance with the terms of a rule adopted by the Securities
and Exchange Commission. The amortized cost method values a security at cost on
the date of purchase and thereafter assumes a constant amortization to maturity
of any discount or premium.
B. Securities Transactions and Related Investment Income: Securities
transactions are accounted for on the date the securities are purchased or sold
(trade date). Interest income is recorded on the accrual basis. Cost is
determined, and realized gains and losses are computed, using the identified
cost method. Market discount and original issue discount are accreted to income.
The Sentinel Short-Intermediate Government Fund amortizes premium. Sentinel New
York Tax-Free Income Fund invests in debt instruments of municipal issuers whose
ability to meet their obligations may be affected by economic developments in
the State of New York.
C. Dividends and Distributions: Dividend income and distributions to
shareholders are recorded on the ex-dividend date. Income distributions and
capital gain distributions are determined in accordance with federal income tax
regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments for mortgage-backed
securities and foreign currency transactions. Re-classification of distributions
to shareholders was made as of May 31, 1995 to reflect an increase (decrease) as
follows:
<TABLE>
<CAPTION>
Accumulated
undistributed
net realized
Accumulated gain (loss) on
undistributed investments and
net investment foreign currency
Fund income transactions
------------------------------------ -------------- ----------------
<S> <C> <C>
World................................ $127,324 ($127,324)
Balanced............................. (10,240) 10,240
Bond................................. (298) 298
Government Sec. ..................... (55,874) 55,874
Short-Intermediate Gov't. ........... (146) 146
</TABLE>
D. Dollar Rolls: Sentinel Balanced, Sentinel Bond, Sentinel Government
Securities and Sentinel Short-Intermediate Government Funds enter into dollar
rolls in which the Funds sell securities for delivery in the current month, and
simultaneously contract to repurchase similar (same type, coupon and maturity)
securities on a specified future date. During the roll period the Funds forgo
principal and interest paid on the securities. The Funds are compensated by the
interest earned on the cash proceeds of the initial sale and by the lower
repurchase price at the future date. The difference between the sale proceeds
and the lower repurchase price is taken into income. The Funds maintain
segregated accounts, the dollar value of which is equal to its obligations, in
respect of dollar rolls.
E. Federal Income Taxes: Each Fund intends to continue to meet the requirements
of the Internal Revenue Code applicable to regulated investment companies. The
Company intends to distribute all of its taxable income to its shareholders,
relieving each Fund of any federal excise tax or income tax liability.
27
<PAGE>
================================================================================
F. Foreign Currency Translations: The books and records of the Sentinel World
Fund are maintained in U.S. dollars. Foreign currency amounts are translated
into U.S. dollars at the mean between the buying and selling rates on the
following basis:
(1) market value of investment securities, assets and liabilities at the closing
daily rate of exchange; and
(2) purchases and sales of investment securities, income and expenses at the
rate of exchange prevailing on the respective dates of such transactions.
The Sentinel World Fund does not isolate that portion of gains and losses on
investments in securities which is due to changes in the foreign exchange rates
from that which is due to changes in market prices of such securities. However,
pursuant to United States federal income tax regulations, gains and losses from
certain foreign currency transactions are treated as ordinary income for federal
income tax purposes.
G. Repurchase Agreements: Each Fund may enter into repurchase agreements as a
means of making short-term investments, of seven days or less, and in aggregate
amounts of not more than 25% of the net assets of a Fund. Each Fund, through its
custodian, takes possession of the securities collateralizing repurchase
agreements. All repurchase agreements entered into by the Funds provide that the
market value of the collateral underlying the repurchase agreement at the time
of purchase, and each subsequent business day, will always be at least equal to
102% of the repurchase agreement amount including accrued interest. If the
seller defaults and the value of the collateral declines or if bankruptcy
proceedings are commenced with respect to the seller of the security,
realization of the collateral by the Fund may be delayed or limited.
H. Other: Joint expenses of the Company are allocated proportionately based upon
the Funds' respective average net assets.
(2) Management Advisory Fee and Other Transactions with Affiliates:
Pursuant to the Investment Advisory Agreement (the "Agreement"), Sentinel
Advisors, Co. ("SAC"), a Vermont general partnership whose general partners are
Sentinel Advisors, Inc., an indirect wholly-owned subsidiary of National Life
Insurance Company ("National Life"), ProvidentMutual Management Co., Inc., an
affiliate of Provident Mutual Life Insurance Company of Philadelphia ("Provident
Mutual"), HTK of Delaware, Inc. ("HTK") an affiliate of The Penn Mutual Life
Insurance Company ("Penn Mutual") and Sentinel Management Company ("SMC"), a
Vermont general partnership whose general partners are affiliates of National
Life, Provident Mutual and Penn Mutual, provides general supervision of the
Funds' investments as well as certain administrative and related services. As
compensation in full for services rendered under its Agreement, the Funds pay
SAC a monthly fee determined as follows: (1) With respect to Sentinel Emerging
Growth, Sentinel Growth, Sentinel World and Sentinel Balanced Funds: 0.70% per
annum on the first $200 million of aggregate average daily net assets of such
Funds; 0.65% per annum on the next $100 million of such assets; 0.60% per annum
on the next $100 million of such assets; and 0.55% per annum on such assets in
excess of $400 million. (2) With respect to Sentinel Common Stock Fund: 0.55%
per annum on the average daily net assets of the Fund. (3) With respect to
Sentinel Bond, Sentinel Tax-Free Income, Sentinel New York Tax-Free Income,
Sentinel Government Securities and Sentinel Short-Intermediate Government Funds:
0.55% per annum on the first $200 million of aggregate average daily net assets
of such Funds; 0.50% per annum on the next $200 million of such assets; and
0.45% per annum on such assets in excess of $400 million. (4) With respect to
Sentinel U.S. Treasury Money Market Fund: 0.40% per annum on the first $300
million of average daily net assets; and 0.35% per annum on such assets in
excess of $300 million. The Agreement provides that if certain expenses incurred
by the Company in any fiscal year exceed the expense limitations imposed by any
state's securities regulations, SAC will reimburse the Company for any such
excess. No reimbursement was required for the period.
With respect to Sentinel World Fund only, SAC has entered into a sub-advisory
agreement with Cashman, Farrell and Associates (the "Sub-Advisor"). Pursuant to
such agreement, the Sub-Advisor provides SAC with a continuous investment
program consistent with Sentinel World Fund's investment objectives and
policies. The sub-advisory agreement provides for a fee to be paid by SAC to the
Sub-Advisor of the greater of (a) a monthly fee equal to 0.375% per annum of the
average daily net assets of Sentinel World Fund up to $500 million and 0.30% per
annum of such average net assets in excess of $500 million, or (b) $20,000 per
annum.
On March 1, 1993, each of the Funds (except Sentinel U.S. Treasury Money Market
Fund) adopted a distribution plan pursuant to Rule 12b-1 under the 1940 Act.
These distribution plans are herein referred to as the "Plans". The Sentinel New
York Tax-Free Income Fund became subject to the Plan upon its inception on March
27, 1995. On March 24, 1995 the Sentinel Short-Intermediate Government Fund
adopted a
28
<PAGE>
================================================================================
supplemental distribution plan pursuant to Rule 12b-1 applicable only to it.
None of the fees paid by the other Funds pursuant to the Plans will be used to
reimburse Sentinel Financial Services Company ("SFSC"), a Vermont general
partnership whose general partners are National Life Investment Management
Company, Inc., a wholly-owned subsidiary of National Life, Provident Mutual
Financial Services, Inc., an affiliate of Provident Mutual, HTK and SMC, the
principal underwriter ("Distributor") of the Company's shares, for expenses
incurred in connection with the distribution of the Sentinel U.S. Treasury Money
Market Fund shares.
Under the Plans, each participating Fund pays to the Distributor a monthly fee
at the maximum annual rate of (a) .30% of average daily net assets in the case
of the Sentinel Emerging Growth, Sentinel Growth, Sentinel World, Sentinel
Common Stock and Sentinel Balanced Funds, (b) .20% of average daily net assets
in the case of the Sentinel Bond, Sentinel Tax-Free Income, Sentinel New York
Tax-Free Income and Sentinel Government Securities Funds or (c) .35% of average
daily net assets in the case of the Sentinel Short-Intermediate Government Fund.
Such fees will be used to reimburse the Distributor for expenses incurred in
connection with distribution and promotion of the shares of each participating
Fund, including salaries and expenses of the Distributor's wholesale sales
force, home office management and marketing personnel, expenses incurred by the
Distributor for the occupancy of its office space in Montpelier, Vermont,
expenses incurred by the Distributor with respect to equipment and supplies,
expenses incurred for the preparation, printing and distribution of sales
literature used in connection with the offering of such shares to the public,
expenses incurred in advertising, promotion and selling shares of such Fund to
the public, expenses incurred for the preparation, printing and distribution of
the Prospectus and Statement of Additional Information, any supplement thereto
used in connection with the offering of such Fund's shares to the public, or any
reports and other communications for the distribution to existing shareholders,
and service fees (deferred commissions) paid to securities dealers who have
executed a selling agreement with the Distributor. The Distributor will not be
reimbursed for any unreimbursed eligible expenses from any other Fund, or in any
future year.
SFSC also receives a sales charge added to the net asset value received by the
Company on the sale of its shares. This compensation is not an expense of the
Company and does not affect its operating results. SFSC has advised the Company
that it received sales charges aggregating $2,144,988 for the six months ended
May 31, 1995. The Company is advised that the total distribution charges
retained by SFSC on the sale of shares amounted to $61,083 after allowances of
$1,136,165 to Equity Services, Inc., an affiliate of National Life, $367,845 to
PML Securities Company, an affiliate of Provident Mutual, and $546,901 to other
investment dealers. Allowances of $28,429 went to Hornor, Townsend & Kent, Inc.
and $4,565 to Janney Montgomery Scott, Inc., affiliates of Penn Mutual, for the
two months ended May 31, 1995.
Each director who is not an employee of the adviser or an affiliated company is
paid an annual fee of $12,500 plus $1,000 for each meeting of the Board of
Directors attended. Such directors are reimbursed for travel and other out-of-
pocket expenses incurred in attending such meetings.
Pursuant to the Fund Services Agreement with Sentinel Administrative Service
Company ("SASC"), a Vermont general partnership whose general partners are
Sentinel Administrative Service Corporation ("SAS Corp."), an indirect wholly-
owned subsidiary of National Life, SIGMA American Corp., an affiliate of
Provident Mutual, HTK and SMC, the Company receives fund accounting and
financial administrative services, transfer agent services and investor
services, all of which are coordinated with other services which the Company has
contracted for with outside providers. Total fees for the six months ended
May 31, 1995 were $1,646,575.
SASC has voluntarily agreed to refund its fee to the extent necessary to prevent
the overall aggregate expense ratio of the Funds and Sentinel Pennsylvania Tax-
Free Trust (excluding the Sentinel World Fund) from exceeding 1.30% of average
daily net assets in any fiscal year. The Funds and Sentinel Pennsylvania Tax-
Free Trust make up the Sentinel Family of Funds. Although SASC has no present
intention to do so, this arrangement may be terminated at any time. The Company
expenses for the six months ended May 31, 1995 did not exceed 1.30% of its
average daily net assets.
With respect to Sentinel U.S. Treasury Money Market Fund, Sentinel Short-
Intermediate Government Fund and Sentinel World Fund, SASC has agreed to
reimburse the Funds for all operating expenses of the Funds in excess of an
annual rate of .85%, 1.00% and 2.00%, respectively, of the Funds' average daily
net assets. For the two months ended May 31, 1995, the total amount reimbursable
to Sentinel Short-Intermediate Government Fund was $8,694. No amounts were
required to be reimbursed to Sentinel U.S. Treasury Money Market Fund
29
<PAGE>
================================================================================
or Sentinel World Fund for the six months ended May 31, 1995. Although SASC has
no present intention to do so, this arrangement may be terminated at any time.
SASC had previously agreed to reimburse Sentinel Tax-Free Income Fund for all
operating expenses in excess of an annual rate of .75%. This voluntary
reimbursement policy was terminated as of March 27, 1995. For the four months
ended March 26, 1995, the total amount reimbursable was $66,467.
(3) Investment Transactions:
Purchases and sales of investment securities (excluding short term obligations)
for the six months ended May 31, 1995 (except for Sentinel New York Tax-Free
Income Fund and Sentinel Short-Intermediate Government Fund which is for the
period March 27, 1995 to May 31, 1995) were as follows:
<TABLE>
<CAPTION>
Purchases of Sales of
other than Purchases of other than
U.S. U.S. U.S. Sales of U.S.
government government government government
direct and direct and direct and direct and
agency agency agency agency
Fund obligations obligations obligations obligations
------------------------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Emerg. Growth.............. $21,861,512 -- $32,831,040 --
Growth..................... 19,438,130 -- 21,976,122 --
World...................... 9,146,981 -- 8,127,473 --
Common Stock............... 116,924,802 -- 177,464,870 --
Balanced................... 64,878,659 $65,301,968 55,564,871 $72,772,906
Bond....................... 70,884,075 51,754,226 59,186,391 65,635,855
Tax-Free................... 63,040,891 -- 66,661,734 --
NY Tax-Free................ 502,388 -- 1,334,738 --
Government................. -- 176,960,084 -- 180,636,218
Short-Int. Gov't........... -- 9,335,030 -- 1,785,063
</TABLE>
(The Sentinel U.S. Treasury Money Market Fund invests only in short-term
obligations.)
For Federal income tax purposes, the Company has capital loss carryforwards at
November 30, 1994 as follows:
$134,837 expiring in 1995 for the Sentinel Balanced Fund, $3,155,656 expiring in
2002 for the Sentinel Bond Fund, $1,730,483 expiring in 2002 for the Sentinel
Tax-Free Income Fund and $438,093, $1,451,011, $129,245, $115,393 and $5,585,980
(expiring in 1996, 1997, 1999, 2000 and 2002, respectively) for a total of
$7,719,722 for the Sentinel Government Securities Fund. During the year ended
November 30, 1994, the Sentinel Balanced Fund utilized $366,710 of capital loss
carryforwards. It is unlikely that a capital gains distribution will be paid to
shareholders of these Funds until net gains have been realized in excess of such
capital loss carryforwards or the carryforwards expire.
(4) Fund Shares:
At May 31, 1995, 2 billion shares of one cent par value were authorized, with
1.34 billion shares allocated to the various Funds. Proceeds from sales and
payments for redemptions on Fund shares as shown in the statement of changes in
net assets are represented by the following number of shares.
<TABLE>
<CAPTION>
Shares Shares
issued in issued in ex- Net
reinvestment change for increase
of dividends Shares net assets of (decrease)
Shares and dis- reac- other invest- in shares
Fund sold tributions quired ment cos. outstanding
--------------- ------ ---------- ------ --------- -----------
<S> <C> <C> <C> <C> <C>
Six Months Ended 5/31/95
Emerg. Growth.............. 1,962,794 2,794,856 1,898,748 -- 2,858,902
Growth..................... 196,675 530,174 279,184 -- 447,665
World...................... 607,000 61,447 656,358 -- 12,089
Common Stock............... 1,167,334 1,296,844 2,694,201 1,761,838 1,531,815
Balanced................... 1,187,273 309,006 1,889,116 273,807 (119,030)
Bond....................... 1,573,786 379,681 4,169,744 5,126,048 2,909,771
Tax-Free................... 716,472 142,296 1,177,487 343,701 24,982
NY Tax-Free*............... 19,566 3,579 102,703 514,574 435,016
Government................. 495,378 271,634 1,423,815 -- (656,803)
Short-Int. Gov't*.......... 282,006 15,345 222,590 1,578,443 1,653,204
U.S. Treas................. 72,540,193 1,700,935 73,657,006 -- 584,122
Year Ended 11/30/94
Emerg. Growth.............. 2,179,858 3,683,106 5,176,506 -- 686,458
Growth..................... 361,258 82,856 623,016 -- (178,902)
World...................... 2,545,798 9,966 684,762 -- 1,871,002
Common Stock............... 2,190,571 655,621 3,441,746 -- (595,554)
Balanced................... 4,172,036 617,335 3,745,672 -- 1,043,699
Bond....................... 4,410,146 1,213,307 3,945,643 -- 1,677,810
Tax-Free................... 1,840,783 360,663 2,219,247 -- (17,801)
Government................. 2,211,868 693,121 4,579,345 -- (1,674,356)
U.S. Treas................. 159,102,352 2,031,457 158,084,971 -- 3,048,838
</TABLE>
*For the period March 27, 1995 to May 31, 1995.
(5) Post Retirement Benefits:
The Company provides certain health care and life insurance benefits to its
retirees. At May 31, 1995 the projected obligation for such benefits had been
accrued.
(6) Business Combinations:
On March 27, 1995 the following Funds acquired seven funds of The Independence
Capital Group of Funds ("ICG") pursuant to a Plan of Reorganization approved by
ICG shareholders on March 10, 1995. The acquisition was accomplished by a tax-
free exchange as follows:
<TABLE>
<CAPTION>
ICG Sentinel
Sentinel Merged Shares ICG Exchange
Fund Fund Exchanged Shares Ratio
------------------------------ ------------ ----------- -------- ---------
<S> <C> <C> <C> <C>
Common Stock..................... Tot. Ret. Growth 871,123 2,289,320 0.3805160
Common Stock..................... Opportunities 890,715 2,491,973 0.3574338
Balanced......................... Balanced 273,807 426,145 0.6425218
Bond............................. Tot. Ret. Bond 5,126,048 3,219,052 1.5924092
Tax-Free Income.................. Municipal Bond 343,701 415,491 0.8272171
NY Tax-Free Inc.................. NY Municipal Bond 514,574 514,574 1.0000000
Short-Inter. Gov't............... Short-Inter. Gov't. 1,578,443 1,578,443 1.0000000
<CAPTION>
ICG ICG
Unrealized Accumulated
Sentinel ICG Appreciation Realized Combined
Fund Value (Depreciation) Loss Value
------------------------------ ----------- -------------- ----------- ------------
<S> <C> <C> <C> <C>
Common Stock..................... $25,653,997 $3,547,083 $0 $950,579,568
Common Stock..................... 26,240,738 2,064,874 (671,131) 950,579,568
Balanced......................... 4,084,150 218,379 (314,722) 243,829,853
Bond............................. 31,075,198 532,802 (2,269,987) 116,007,291
Tax-Free Income.................. 4,493,940 99,091 (18,067) 107,597,077
NY Tax-Free Inc.................. 5,759,369 118,593 (4,069) 5,759,369
Short-Inter. Gov't............... 15,218,556 36,677 (1,151,557) 15,218,556
</TABLE>
30
<PAGE>
================================================================================
This page left blank intentionally.
31
<PAGE>
================================================================================
Sentinel Group Funds, Inc.
Financial Highlights
Selected per share data and ratios.
Selected data for a share of capital stock outstanding throughout each
fiscal period.
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------------
Income from Investment Operations Less Distributions
------------------------ ----------- -------------------------------------- ---------------------------------------
Net Net realized Distributions
asset value Net and Total Dividends from
at investment unrealized from from net realized
Fiscal beginning income gain(loss) on investment investment gains on Total
Fund period of period (loss) investments operations income investments distributions
------------------------ ----------- -------------------------------------- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Sentinel Emerging Growth
9 Mo. to 11/30/93 (A) $ 6.49 $(0.06) $ 0.44 $ 0.38 - - -
Year Ended 11/30/94 6.87 (0.04) 0.18 0.14 - $1.48 $1.48
6 Mo. to 5/31/95 5.53 (0.01) 0.36 0.35 - 0.91 0.91
------------------------ ----------- -------------------------------------- ---------------------------------------
Sentinel Growth
Year Ended 11/30/90 $14.42 $ 0.18 $(0.37) $(0.19) $0.17 - $0.17
11/30/91 14.06 0.20 1.93 2.13 0.20 - 0.20
11/30/92 15.99 0.11 3.07 3.18 0.16 $0.45 0.61
11/30/93 18.56 0.04 (0.28) (0.24) 0.04 0.77 0.81
11/30/94 17.51 0.05 (0.92) (0.87) 0.03 0.46 0.49
6 Mo. to 5/31/95 16.15 0.03 2.00 2.03 0.05 2.57 2.62
------------------------ ----------- -------------------------------------- ---------------------------------------
Sentinel World
9 Mo. to 11/30/93 (A) $ 9.56 $ 0.02 $ 2.28 $ 2.30 - - -
Year Ended 11/30/94 11.86 0.08 0.89 0.97 $0.03 $0.06 $0.09
6 Mo. to 5/31/95 12.74 0.15 0.65 0.80 0.09 0.15 0.24
------------------------ ----------- -------------------------------------- ---------------------------------------
Sentinel Common Stock
Year Ended 11/30/90 $26.45 $ 0.93 $(1.50) $(0.57) $1.00 $1.27 $2.27
11/30/91 23.61 0.90 3.90 4.80 0.93 0.70 1.63
11/30/92 26.78 0.90 3.44 4.34 0.91 0.50 1.41
11/30/93 29.71 0.79 1.66 2.45 0.82 1.71 2.53
11/31/94 29.63 0.83 (1.35) (0.52) 0.80 0.06 0.86
6 Mo. to 5/31/95 28.25 0.39 4.53 4.92 0.39 1.11 1.50
------------------------ ----------- -------------------------------------- ---------------------------------------
Sentinel Balanced
Year Ended 11/30/90 $13.53 $ 0.79 $(0.56) $ 0.23 $0.83 $0.35 $1.18
11/30/91 12.58 0.77 1.37 2.14 0.78 0.05 0.83
11/30/92 13.89 0.70 0.97 1.67 0.71 0.03 0.74
11/30/93 14.82 0.59 0.81 1.40 0.59 0.36 0.95
11/30/94 15.27 0.58 (1.12) (0.54) 0.56 0.09 0.65
6 Mo. to 5/31/95 14.08 0.29 1.68 1.97 0.30 0.01 0.31
------------------------ ----------- -------------------------------------- ---------------------------------------
Sentinel Bond
Year Ended 11/30/90 $ 6.21 $ 0.52 $(0.18) $ 0.34 $0.52 - $0.52
11/30/91 6.03 0.50 0.40 0.90 0.50 - 0.50
11/30/92 6.43 0.46 0.13 0.59 0.46 - 0.46
11/30/93 6.56 0.41 0.46 0.87 0.41 $0.12 0.53
11/30/94 6.90 0.39 (0.70) (0.31) 0.39 0.35 0.74
6 Mo. to 5/31/95 5.85 0.21 0.48 0.69 0.21 - 0.21
------------------------ ----------- -------------------------------------- ---------------------------------------
Sentinel Tax-Free Income
2 Mo. to 11/30/90 (B) $12.00 $ 0.10 $ 0.26 $ 0.36 $0.10 - $0.10
Year Ended 11/30/91 12.26 0.79 0.42 1.21 0.79 - 0.79
11/30/92 12.68 0.76 0.47 1.23 0.76 $0.02 0.78
11/30/93 13.13 0.73 0.79 1.52 0.73 0.11 0.84
11/30/94 13.81 0.68 (1.34) (0.66) 0.68 0.12 0.80
6 Mo. to 5/31/95 12.35 0.34 1.03 1.37 0.34 - 0.34
------------------------ ----------- -------------------------------------- ---------------------------------------
Sentinel New York Tax-Free Income
2 Mo. to 5/31/95 (C) $11.19 $ 0.11 $ 0.35 $ 0.46 $0.11 - $0.11
------------------------ ----------- -------------------------------------- ---------------------------------------
Sentinel Government Securities
Year Ended 11/30/90 $ 9.57 $ 0.78 $(0.03) 0.75 $0.78 - $0.78
11/30/91 9.54 0.74 0.50 1.24 0.74 - 0.74
11/30/92 10.04 0.70 0.14 0.84 0.70 - 0.70
11/30/93 10.18 0.62 0.42 1.04 0.60 $0.17 0.77
11/30/94 10.45 0.59 (1.04) (0.45) 0.58 0.11 0.69
6 Mo. to 5/31/95 9.31 0.31 0.71 1.02 0.31 - 0.31
------------------------ ----------- -------------------------------------- ---------------------------------------
Sentinel Short-Intermediate Government
2 Mo. to 5/31/95 (C) $ 9.64 $ 0.11 $ 0.17 $ 0.28 $0.11 - $0.11
------------------------ ----------- -------------------------------------- ---------------------------------------
Sentinel U.S. Treasury Money Market
9 Mo. to 11/30/93 (A) $ 1.00 $ 0.02 $ 0.00 $ 0.02 $0.02 - $0.02
Year Ended 11/30/94 1.00 0.03 0.00 0.03 0.03 - 0.03
6 Mo. to 5/31/95 1.00 0.02 0.00 0.02 0.02 - 0.02
------------------------ ----------- -------------------------------------- ---------------------------------------
</TABLE>
See Notes to Financial Statements.
32
<PAGE>
================================================================================
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
------------------------ ---------------------------------------------------------------------------- ----------
Net Ratio of Ratio of net Net assets
asset value expenses investment at end
at Total to average income to Portfolio of period
Fiscal end of return(D) net assets avg. net turnover (000
Fund period period (%) (%) assets (%) rate (%) omitted)
------------------------ ---------------------------------------------------------------------------- ----------
<S> <C> <C> <C> <C> <C> <C>
Sentinel Emerging Growth
9 Mo. to 11/30/93 (A) $ 6.87 5.9++ 1.52+ (1.01)+ 61 $105,176
Year Ended 11/30/94 5.53 2.0 1.58 (0.74) 46 88,420
6 Mo. to 5/31/95 4.97 7.2++ 1.60+ (0.41)+ 27 93,821
------------------------ ---------------------------------------------------------------------------- ----------
Sentinel Growth
Year Ended 11/30/90 14.06 (1.4) 1.20 1.22 15 $ 49,580
11/30/91 15.99 15.2 1.08 1.22 25 55,598
11/30/92 18.56 20.5 1.05 0.63 28 63,664
11/30/93 17.51 (1.3) 1.31 0.22 12 57,833
11/30/94 16.15 (5.1) 1.43 0.30 58 50,447
6 Mo. to 5/31/95 15.56 14.8++ 1.58+ 0.34+ 40 55,587
------------------------ ---------------------------------------------------------------------------- ----------
Sentinel World
9 Mo. to 11/30/93 (A) $11.86 24.1++ 2.00+* 0.41+* 66 $ 16,872
Year Ended 11/30/94 12.74 8.2 1.58 0.62 30 41,970
6 Mo. to 5/31/95 13.30 6.4++ 1.61+ 1.14+ 21 43,986
------------------------ ---------------------------------------------------------------------------- ----------
Sentinel Common Stock
Year Ended 11/30/90 23.61 (2.4) 0.76 3.82 6 $543,047
11/30/91 26.78 21.1 0.74 3.41 9 620,179
11/30/92 29.71 16.7 0.72 3.13 5 688,309
11/30/93 29.63 8.8 0.93 2.68 9 897,836
11/31/94 28.25 (1.8) 1.02 2.82 15 839,335
6 Mo. to 5/31/95 31.67 18.2++ 1.07+ 2.62+ 14 989,431
------------------------ ---------------------------------------------------------------------------- ----------
Sentinel Balanced
Year Ended 11/30/90 12.58 1.8 0.91 6.17 40 $ 74,808
11/30/91 13.89 17.5 0.85 5.70 32 90,580
11/30/92 14.82 12.4 0.81 4.86 38 120,700
11/30/93 15.27 9.7 1.14 3.88 72 229,632
11/30/94 14.08 (3.6) 1.21 3.97 66 226,328
6 Mo. to 5/31/95 15.74 14.2++ 1.27+ 4.05+ 60 251,200
------------------------ ---------------------------------------------------------------------------- ----------
Sentinel Bond
Year Ended 11/30/90 6.03 5.8 0.83 8.55 108 $ 35,389
11/30/91 6.43 15.6 0.81 8.06 77 43,447
11/30/92 6.56 9.5 0.78 7.03 83 58,106
11/30/93 6.90 13.7 0.92 5.98 147 83,387
11/30/94 5.85 (4.9) 0.98 6.34 133 80,487
6 Mo. to 5/31/95 6.33 12.0++ 1.02+ 6.73+ 146 105,504
------------------------ ---------------------------------------------------------------------------- ----------
Sentinel Tax-Free Income
2 Mo. to 11/30/90 (B) $12.26 3.0++ 0.00** 4.98+** - $ 13,824
Year Ended 11/30/91 12.68 10.2 0.38** 6.37** 29 35,277
11/30/92 13.13 10.0 0.50** 5.93** 48 55,538
11/30/93 13.81 11.9 0.64** 5.41** 39 111,968
11/30/94 12.35 (5.1) 0.75** 5.11** 92 99,935
6 Mo. to 5/31/95 13.38 11.2++ 0.83+** 5.22+** 62 108,612
------------------------ ---------------------------------------------------------------------------- ----------
Sentinel New York Tax-Free Income
2 Mo. to 5/31/95 (C) $11.54 4.1++ 1.08+ 4.90+ 11 $ 5,019
------------------------ ---------------------------------------------------------------------------- ----------
Sentinel Government Securities
Year Ended 11/30/90 9.54 8.3 0.78 8.25 22 $ 41,134
11/30/91 10.04 13.5 0.77 7.52 14 45,734
11/30/92 10.18 8.6 0.76 6.90 79 68,293
11/30/93 10.45 10.6 0.98 6.06 97 134,749
11/30/94 9.31 (4.5) 1.00 5.95 149 104,457
6 Mo. to 5/31/95 10.02 11.1++ 1.04+ 6.49+ 175 105,814
------------------------ ---------------------------------------------------------------------------- ----------
Sentinel Short-Intermediate Government
2 Mo. to 5/31/95 (C) $ 9.81 2.9++ 1.00+*** 6.40+*** 12 $ 16,214
------------------------ ---------------------------------------------------------------------------- ----------
Sentinel U.S. Treasury Money Market
9 Mo. to 11/30/93 (A) $ 1.00 1.7++ 0.85+**** 2.20+**** - $ 72,252
Year Ended 11/30/94 1.00 3.1 0.81 3.01 - 75,301
6 Mo. to 5/31/95 1.00 2.5++ 0.80+ 4.89+ - 75,885
------------------------ ---------------------------------------------------------------------------- ----------
</TABLE>
--------------------------------------------------------------------------------
(A) Commenced operations March 1, 1993.
(B) Commenced operations October 1, 1990.
(C) Commenced operations March 27, 1995.
(D) Total return is computed using net asset values.
+ Annualized
++ Not annualized
* Ratios of expenses and net investment income to average net assets would
have been 2.12% and .29%, respectively in 1993, in the absence of a
voluntary expense reimbursement.
** Ratios of expenses and net investment income to average net assets would
have been .96% and 5.09%, respectively in 1995, .94% and 4.92% in 1994,
.90% and 5.14% in 1993, .72% and 5.71% in 1992, .73% and 6.02% in 1991
and .52% and 4.46% in 1990, in the absence of a voluntary expense
reimbursement.
*** Ratios of expenses and net investment income to average net assets would
have been 1.32% and 6.09%, respectively in 1995, in the absence of a
voluntary expense reimbursement.
**** Ratios of expenses and net investment income to average net assets would
have been .87% and 2.18%, respectively in 1993, in the absence of a
voluntary expense reimbursement.
33
<PAGE>
================================================================================
Sentinel Pennsylvania Tax-Free Trust
Investment in Securities
at May 31, 1995 (Unaudited)
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
Principal Amount Value
(M=$1,000) (Note 1)
--------------------------------------------------------------------------------
<S> <C> <C>
Bonds 98.1%
Pennsylvania 85.7%
Allegheny Cnty Hospital
6.00%, 10/01/03 (FGIC) 1000M $ 1,066,690
Allegheny Cnty Institution G/O
7.30%, 04/01/09 (MBIA) 1000M 1,101,180
Armstrong Cnty Hospital Auth
6.25%, 06/01/13 (AMBAC) 1200M 1,248,528
Beaver Cnty Industrial Dev. Auth
7.75%, 09/01/24 500M 524,035
Berks Cnty G/O
7.25%, 11/15/20 (FGIC) 1000M 1,143,720
Chester Cnty Health & Welfare
5.50%, 05/15/15 1000M 926,910
Chester Cnty G/O
5.65%, 12/15/11 1000M 1,008,720
Delaware Cnty Coll Rev Auth
7.375%, 11/15/20 (MBIA) 500M 574,845
Erie Higher Educ. Building Auth
7.85%, 09/15/19 500M 565,245
Lancaster Cnty, Pa Hospital Auth
5.50%, 11/15/14 (AMBAC) 1600M 1,571,840
Lehigh Cnty General Purpose
7.25%, 01/01/10 (FGIC) 1000M 1,088,490
9.00%, 07/01/15 500M 548,510
Lehigh Cnty G/O
5.125%, 11/15/11 (FGIC) 1500M 1,439,565
Montgomery Cnty Higher Educ
& Health
8.30%, 06/01/10 500M 588,535
Pennsylvania Higher Educ. Facs.
7.20%, 07/01/19 (MBIA) 1000M 1,103,670
Pennsylvania Housing Finance Agency
8.00%, 04/01/16 1000M 1,066,550
Pennsylvania Intergovernmental
CO-OP Auth
7.00%, 06/15/05 (FGIC) 1000M 1,141,040
5.75%, 06/15/15 (MBIA) 1000M 1,002,520
Pennsylvania State G/O
6.25%, 07/01/11 1500M 1,600,740
Pennsylvania State Indl. Dev. Auth
5.80%, 07/01/09 (AMBAC) 1000M 1,036,040
Pennsylvania State Turnpike
Commn.
5.50%, 12/01/17 (FGIC) 1500M 1,475,280
7.20%, 12/01/17 (FGIC) 1000M 1,157,080
Pennsylvania Trafford School Dist.
5.90%, 05/01/11 (MBIA) 1000M 1,027,130
Philadelphia G/O
4.75%, 06/15/95 1000M 1,000,020
Philadelphia Municipal Auth
7.80%, 04/01/18 (FGIC) 45M 49,914
Philadelphia Regional Port Auth
7.125%, 08/01/10 (MBIA) 250M 279,078
7.15%, 08/01/20 (MBIA) 250M 279,362
Philadelphia Water & Sewer
7.50%, 08/01/10 500M 546,685
6.25%, 08/01/12 (MBIA) 500M 544,770
Scranton Lackawanna Health
& Welfare
7.875%, 07/01/10 (MBIA) 500M 555,080
York Cnty Solid Waste Ref. Auth
8.20%, 12/01/14, Ser B 1250M 1,371,388
------------
28,633,160
------------
Puerto Rico 12.4%
Puerto Rico Buildings Auth
5.70%, 07/01/09 1000M 1,012,510
Puerto Rico Electric Power Auth
6.00%, 07/12/04 (FSA) 1000M 1,081,720
6.125%, 07/01/09 1000M 1,045,650
Puerto Rico Highway &
Trans. Auth
5.50%, 07/01/13 (FSA) 1000M 992,030
------------
4,131,910
------------
Total Bonds/Investments
(Cost $30,572,404)* 32,765,070
------------
Excess of Other Assets
Over Liabilities 1.9% 626,244
------------
Net Assets $33,391,314
============
</TABLE>
--------------------------------------------------------------------------------
*Also cost for federal income tax purposes. At May 31, 1995, net unrealized
appreciation for federal income tax purposes aggregated $2,192,666 of which
$2,192,985 related to appreciated securities and $319 related to depreciated
securities.
The following abbreviations are used in portfolio descriptions:
(MBIA) - Guaranteed by Municipal Bond Investors Assurance Corp.
(AMBAC) - Guaranteed by American Municipal Bond Association Corp.
(FGIC) - Guaranteed by Financial Guaranty Insurance Co.
(FSA) - Guaranteed by Financial Security Assurance Inc.
G/O - General Obligation Bond
See Notes to Financial Statements.
34
<PAGE>
================================================================================
Sentinel Pennsylvania Tax-Free Trust
Statement of Assets and Liabilities
at May 31, 1995 (Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<S> <C>
Assets
Investments at value $32,765,070
Receivable for securities sold 997,661
Receivable for interest 704,063
Receivable from fund administrator 18,717
-----------
Total Assets 34,485,511
-----------
Liabilities
Payable for securities purchased 1,009,229
Accrued expenses 13,049
Management fee payable 15,454
Distribution fee payable 8,885
Fund Service fee payable 10,083
Payable to Custodian Bank 37,497
-----------
Total Liabilities 1,094,197
-----------
Net Assets Applicable to Outstanding Shares $33,391,314
===========
Shares Outstanding 2,539,253
Net Asset Value Per Share $13.15
Maximum Offering Price Per Share $13.84
Net Assets Represent
No par value shares of beneficial
interest; authorized - unlimited shares
Paid-in-capital $31,370,400
Accumulated net realized loss on investments (171,752)
Unrealized appreciation of investments 2,192,666
-----------
Net Assets $33,391,314
===========
Investments at Cost $30,572,404
===========
</TABLE>
See Notes to Financial Statements.
Sentinel Pennsylvania Tax-Free Trust
Statement of Operations
For the Six Months Ended May 31, 1995 (Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<S> <C>
Investment Income
Income:
Interest $ 1,009,030
-----------
Expenses:
Management advisory fee 88,404
Transfer agent and custodian 23,000
Distribution Expense 32,090
Accounting services 42,000
Professional fees 6,775
Reports and notices to shareholders 787
Trustees' fees and expenses 14,373
Other 3,571
-----------
Total Expenses 211,000
Expense Reimbursement (18,717)
-----------
Net Investment Income 816,747
-----------
Realized and Unrealized Gain on Investments
Realized gain on sales of investments: 342,370
Net change in unrealized appreciation 1,840,882
-----------
Net Realized and Unrealized Gain on Investments 2,183,252
-----------
Net Increase in Net Assets from Operations $ 2,999,999
===========
</TABLE>
See Notes to Financial Statements.
35
<PAGE>
================================================================================
Sentinel Pennsylvania Tax-Free Trust
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------
Six Months Year
Ended Ended
5/31/95 11/30/94
(Unaudited)
-------------- -------------
<S> <C> <C>
Increase (Decrease) in Net Assets from Operations
Net investment income $ 816,747 $ 1,602,490
Net realized gain on sales of investments 342,370 (115,394)
Net change in unrealized appreciation 1,840,882 (3,128,199)
-------------- -------------
Net increase (decrease) in net assets from operations 2,999,999 (1,641,103)
-------------- -------------
Distributions to Shareholders
From net investment income (816,747) (1,602,490)
From paid-in capital (2) (7,662)
-------------- -------------
(816,749) (1,610,152)
-------------- -------------
From Capital Share Transactions
Net proceeds from sales of shares 1,472,116 2,754,234
Net asset value of shares issued in reinvestment
of dividends and distributions 552,196 1,077,466
-------------- -------------
2,024,312 3,831,700
Less: Payments for shares reacquired (1,988,048) (3,856,155)
-------------- -------------
Increase (decrease) in net assets from capital
share transactions 36,264 (24,455)
-------------- -------------
Total Increase (Decrease) in Net Assets for Period 2,219,514 (3,275,710)
Net Assets: Beginning of period 31,171,800 34,447,510
-------------- -------------
Net Assets: End of period $33,391,314 $31,171,800
============== =============
Undistributed Net Investment Income at end of Period - -
============== =============
</TABLE>
See Notes to Financial Statements.
36
<PAGE>
================================================================================
Notes to Financial Statements
(1) Significant Accounting Policies:
Sentinel Pennsylvania Tax-Free Trust (the "Trust") is registered under the
Investment Company Act of 1940, as amended, as a non-diversified, open-end
management investment company. The following is a summary of significant
accounting policies followed by the Trust.
A. Security Valuation: Investments in securities are valued on the basis of
valuations provided by an independent pricing organization. The independent
pricing organization values the investments, taking into consideration
characteristics of the securities, values of similar securities that trade on a
regular basis, and other relevant market data, and does not rely on quoted
market prices for a substantial portion of the portfolio. Short-term tax-free
notes are stated at cost, which approximates market value.
B. Securities Transactions and Related Investment Income: Securities
transactions are accounted for on the date the securities are purchased or sold
(trade date). Interest income is recorded on the accrual basis. Cost of
investments sold is determined on the basis of identified cost for both
financial reporting and income tax purposes. The Trust invests in debt
instruments of municipal issuers whose ability to meet their obligations may be
affected by economic developments in the State of Pennsylvania.
C. Federal Income Taxes: It is the Trust's policy to continue to meet the
requirements of the Internal Revenue Code applicable to regulated investment
companies. The Trust intends to distribute all of its taxable income to its
shareholders; therefore, no federal excise tax or income tax provision is
required.
(2) Distributions:
Realized gains from securities transactions, if any, will be distributed to
shareholders prior to the end of each calendar year. At November 30, 1994 the
Trust had a capital loss carryover for Federal income tax purposes of $514,122,
of which $14,409 will expire in 1995, $311,995 in 1996, $72,324 in 1998 and the
remaining $115,394 in 2002. The Trust's management anticipates that no capital
gain distribution will be paid to shareholders until such time as the net
realized gain on sales of investments exceeds the carryforward amount or the
carryforwards expire.
Dividends from net investment income are declared and paid monthly and recorded
on the ex-dividend date. Income distributions and capital gain distributions are
determined in accordance with federal income tax regulations which may differ
from generally accepted accounting principles. These differences are primarily
due to differing treatments for expiring capital loss carryforwards and deferral
of wash sales losses.
(3) Trust Shares:
Transactions in Trust shares were as follows:
<TABLE>
<CAPTION>
Six Months Year
Ended Ended
5/31/95 11/30/94
--------- --------
<S> <C> <C>
Shares sold....................................... 115,138 211,024
Shares issued to stockholders in reinvestment
of net investment income.......................... 43,295 82,835
--------- --------
158,433 293,859
Shares redeemed................................... (156,161) (295,562)
--------- --------
Net increase (decrease)........................... 2,272 (1,703)
========= ========
</TABLE>
(4) Investment Transactions:
Purchases and sales of securities other than short-term securities aggregated
$19,412,742 and $17,537,940, respectively, during the six months ended May 31,
1995. The net unrealized appreciation of investments of $2,192,666 based on cost
of $30,572,404 for federal income tax purposes represents $2,192,985 of
aggregate gross unrealized appreciation and $319 of aggregate gross unrealized
depreciation.
(5) Management Advisory Fee and Other Transactions with Affiliates:
Pursuant to the Investment Advisory Agreement (the "Agreement"), Sentinel
Advisors, Co. ("SAC"), a Vermont general partnership whose general partners are
Sentinel Advisors, Inc., an indirect wholly-owned subsidiary of National Life
Insurance Company ("National Life"), Provident Mutual Management Co., Inc., an
affiliate of Provident Mutual Life Insurance Company of Philadelphia ("Provident
Mutual"), HTK of Delaware, Inc. ("HTK") an affiliate of The Penn Mutual Life
Insurance Company ("Penn Mutual") and Sentinel Management Company ("SMC"), a
Vermont general partnership whose general partners are affiliates of National
Life, Provident Mutual and Penn Mutual, provides general supervision of the
Trust's investments as well
37
<PAGE>
================================================================================
as certain administrative and related services. As compensation in full for
services rendered under its Agreement, the Trust pays SAC a monthly fee
determined as follows: 0.55% per annum on the first $50 million of average daily
net assets; 0.50% per annum on the next $50 million of such assets; and 0.45%
per annum on such assets in excess of $100 million. The Agreement provides that
if certain expenses incurred by the Trust in any fiscal year exceed the expense
limitations imposed by any state's securities regulations, SAC will reimburse
the Company for any such excess. No reimbursement was required for the period.
Sentinel Financial Services Company ("SFSC"), a Vermont general partnership
whose general partners are National Life Investment Management Company, Inc., a
wholly-owned subsidiary of National Life, Provident Mutual Financial Services,
Inc., an affiliate of Provident Mutual, HTK and SMC, is the principal
underwriter ("Distributor") of the Trust's shares. SFSC receives a sales charge
added to the net asset value received by the Trust on the sale of its shares.
This compensation is not an expense of the Trust and does not affect its
operating results. SFSC has advised the Trust that it received sales charges
aggregating $51,631 for the six months ended May 31, 1995. The Trust is advised
that the total distribution charges retained by SFSC on the sale of shares
amounted to $961 after allowances of $932 to Equity Services, Inc., an affiliate
of National Life, $26,187 to PML Securities Company, an affiliate of Provident
Mutual, and $22,601 to other investment dealers. Allowances of $750 went to
Hornor, Townsend & Kent, Inc. and $200 to Janney Montgomery Scott, Inc.,
affiliates of Penn Mutual, for the two months ended May 31, 1995.
Each trustee who is not an employee of the adviser or an affiliated company is
paid an annual fee of $2,500 plus $200 for each meeting of the Board of Trustees
attended. Such trustees are reimbursed for travel and other out-of-pocket
expenses incurred in attending such meetings.
Pursuant to the Fund Services Agreement with Sentinel Administrative Service
Company ("SASC"), a Vermont general partnership whose general partners are
Sentinel Administrative Service Corporation ("SAS Corp."), an indirect wholly-
owned subsidiary of National Life, SIGMA American Corp., an affiliate of
Provident Mutual, HTK and SMC, the Trust receives trust accounting and financial
administrative services, transfer agent services and investor services, all of
which are coordinated with other services which the Trust has contracted for
with outside providers. Total fees for the six months ended May 31, 1995 were
$60,500.
Effective March 1, 1993 SASC has voluntarily agreed to refund its fee to the
extent necessary to prevent the overall aggregate expense ratio of the Trust and
Sentinel Group Funds, Inc. (excluding the Sentinel World Fund) from exceeding
1.30% of average daily net assets in any fiscal year. Sentinel Group Funds, Inc.
is a series fund with eleven portfolios and together with the Trust make up the
Sentinel Family of Funds. Although SASC has no present intention to do so, this
arrangement may be terminated at any time. Expenses for the six months ended May
31, 1995 did not exceed 1.30% of its average daily net assets.
Effective March 27, 1995 thru May 14, 1995, SASC agreed to reimburse the Trust
for expenses in excess of an annual rate of 1.00%. Effective May 15, 1995, SASC
has agreed to reimburse the Trust for expenses in excess of an annual rate of
.75%. For the two months ended May 31, 1995 the total amount reimbursable was
$18,717. This arrangement may be terminated at any time.
(6) Distribution Expenses:
On March 1, 1993, the Trust adopted a new distribution plan ("Plan") pursuant to
Rule 12b-1 under the 1940 Act. Under the Plan the Trust pays to the Distributor
a monthly fee at the maximum annual rate of .20% of average daily net assets.
Such fees will be used to reimburse the Distributor for expenses incurred in
connection with distribution and promotion of the shares of the Trust, including
salaries and expenses of the Distributor's wholesale sales force, home office
management and marketing personnel, expenses incurred by the Distributor for the
occupancy of its office space in Montpelier, Vermont, expenses incurred by the
Distributor with respect to equipment and supplies, expenses incurred for the
preparation, printing and distribution of sales literature used in connection
with the offering of such shares to the public, expenses incurred in
advertising, promotion and selling shares of such Trust to the public, expenses
incurred for the preparation, printing and distribution of the Prospectus and
Statement of Additional Information, any supplement thereto used in connection
with the offering of such Trust's shares to the public, or any reports and other
communications for the distribution to existing shareholders, and service fees
(deferred commissions) paid to securities dealers who have executed a selling
agreement with the Distributor. The Distributor will not be reimbursed for any
unreimbursed eligible expenses in any future year.
38
<PAGE>
================================================================================
Sentinel Pennsylvania Tax-Free Trust
Financial Highlights
Selected per share data and ratios
Selected data for a share of capital stock outstanding throughout each
fiscal period.
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Eleven
Six Year Months Ended Year Ended
Months Ended Ended -----------------------------------------------------
5/31/95 11/30/94 11/30/93* 12/31/92 12/31/91 12/31/90
(Unaudited)
------------- ----------- ------------ ------------ --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value at beginning
of period $ 12.29 $ 13.57 $ 13.15 $ 12.74 $ 12.25 $ 12.34
------------- ----------- ------------ ------------ --------- ----------
Income from Investment Operations
Net investment income 0.32 0.64 0.69 0.73 0.71 0.72
Net realized and unrealized
gain (loss) on investments 0.86 (1.28) 0.42 0.43 0.52 (0.03)
------------- ----------- ------------ ------------ --------- ----------
Total from investment operations 1.18 (0.64) 1.11 1.16 1.23 0.69
------------- ----------- ------------ ------------ --------- ----------
Less Distributions
Dividends from net investment income 0.32 0.64 0.69 0.75 0.74 0.78
------------- ----------- ------------ ------------ --------- ----------
Net asset value at end of period $ 13.15 $ 12.29 $ 13.57 $ 13.15 $ 12.74 $ 12.25
============= =========== ============ ============ ========= ==========
Total Return (%)** 9.7++ (4.9) 8.1++ 9.4 10.3 5.9
Ratios/Supplemental Data
Ratio of expenses to average net assets (%) 1.20+*** 1.30 1.24+ 1.16 1.27 1.34
Ratio of net investment income to average
net assets (%) 5.07+*** 4.84 5.07+ 5.62 5.71 5.90
Portfolio turnover (%) 56 56 23 1 8 27
Net assets at end of period (000 omitted) $33,391 $31,172 $34,448 $33,669 $32,667 $30,536
</TABLE>
* As of March 1, 1993 Sentinel Advisors Co. became the investment advisor
to the Trust.
** Total return is computed using net asset values.
*** Ratios of expenses and net investment income to average net assets would
have been 1.31% and 4.95%, respectively in 1995, in the absence of a
voluntary expense reimbursement.
+ Annualized
++ Not annualized
See Notes to Financial Statements.
39
<PAGE>
================================================================================
Privileges, Plans and Services for Shareholders
Open Account - Unless another distribution option is elected, an Open Account is
automatically established for each new investor. In an Open Account, all income
dividends and any capital gains distributions are reinvested in additional
shares at net asset value and without charge.
Other Distribution Options - Upon written notice to Sentinel Administrative
Service Company, you may elect one of the following options:
1. Receive dividends in cash and reinvest any capital gains distributions in
additional shares of any of the Sentinel Funds at net asset value.
2. Receive both dividends and capital gains in cash.
3. Reinvest both dividends and capital gains in another Sentinel Fund at net
asset value.
Automatic Investment Plan - This service, provided without charge, enables you
to make regular investments of $50 or more by means of an automatic checking
account debiting service via the ACH (Automated Clearing House) network.
Information and the application necessary to establish this plan are included in
the prospectus. A separate folder and application are also available from
Sentinel Administrative Service Company, or from your investment dealer.
Systematic Withdrawal Plan - This plan enables you to receive a check once per
month, during any months of the year you specify, for a dollar amount that you
specify. Note that this plan is available only to those who own, or are
purchasing, at least $5,000 worth of shares of one or more of the Sentinel
Funds, except Sentinel U.S. Treasury Money Market Fund, as determined by the
current offering price. Payments may be made to you, your bank, or other payee
as requested on the application. Under the Systematic Withdrawal Plan, all
dividends and distributions are automatically reinvested at net asset value and
payments are made from the proceeds of redeemed shares.
Bond, Tax-Free Income, New York Tax-Free Income, Government Securities, Short-
Intermediate Government, U.S. Treasury Money Market and Pennsylvania Tax-Free
Fund Check Writing Service - This special feature of the Sentinel Bond Fund, the
Sentinel Tax-Free Income Fund, the Sentinel New York Tax-Free Income Fund, the
Sentinel Government Securities Fund, the Sentinel Short-Intermediate Government
Fund, the Sentinel U.S. Treasury Money Market Fund and the Sentinel Pennsylvania
Tax-Free Trust enables you to draw checks (minimum amount $500 except for the
U.S. Treasury Money Market Fund which is $250) on your account through Investors
Fiduciary Trust Co. There is currently no fee for this service. Please note that
this service is not available to IRA, Keogh, 403(b) or other fiduciary accounts.
Information and applications are available by contacting Sentinel Funds Investor
Services at (800) 282-FUND (3863).
Exchange Privilege - The Exchange Privilege is designed to add flexibility to
your investment program by enabling you to exchange all or part of your shares
in one Sentinel Fund for shares of another Fund in the family without payment of
any additional sales charge. The exception to no additional sales charge is when
shares are exchanged from the U.S. Treasury Money Market Fund to another
Sentinel Fund, a sales charge will be imposed unless the assets in the U.S.
Treasury Money Market Fund were in another Sentinel Fund and were previously
subject to a sales charge. Shares being exchanged into another Fund must have a
value of at least $500 (the minimum investment required to open a new account)
unless you already have an account in that Fund. Shares being exchanged must
have been in the account a minimum of 15 calendar days (90 days in the case of
funds initially invested in the Sentinel Short-Intermediate Government Fund or
exchanged into such Fund from funds initially invested in the Sentinel U.S.
Treasury Money Market Fund). Account registrations must be identical. Exchanges
may be made by calling toll-free, (800) 282-FUND (3863), or by writing Sentinel
Funds, P. O. Box 1499, Montpelier, Vermont 05601-1499. Note that an exchange is
a taxable transaction for federal income tax purposes.
Reinstatement Privilege - A shareholder who redeems all or part of an account
may reinvest all or part of the redemption proceeds at the then current net
asset value if a written request to the Fund is received or postmarked within 90
days after the date of the redemption. Sentinel Short-Intermediate Government
Fund shareholders who have held their shares for 90 days or less, however, may
only use this reinstatement privilege to reinvest in the Short-Intermediate
Government Fund. In general, this privilege may be exercised only once by a
shareholder.
Telephone Redemption - Up to $1,000,000 in funds may be redeemed by telephone
upon completion of the appropriate section of the Application, or subsequent
submission of such, with proper signature guarantee. Under this service,
proceeds may either be sent to the address of record or a pre-designated bank. A
signature guarantee is required on any change in redemption instructions as well
as a 30 day waiting period for changes to become effective. To redeem shares by
telephone, you may call (800) 282-FUND (3863).
40
<PAGE>
================================================================================
Tax-Deferred Retirement Plans - Shares of Sentinel Group Funds may be purchased
by all types of tax-deferred retirement plans, including self-employed
individuals and partnerships ("Keogh"), Individual Retirement Accounts ("IRA"),
Simplified Employee Pension Plans ("SEP-IRA"), 403(b) Plans (deferred
compensation arrangements for employees of public school systems and certain
non-profit organizations) and other corporate pension and profit-sharing plans.
Consult your tax advisor for details.
Please refer to the prospectus for complete details regarding these
privileges, plans and services.
41
<PAGE>
================================================================================
Directors/Trustees and Officers
Sentinel Group Funds, Inc. and
Sentinel Pennsylvania Tax-Free Trust
Keniston P. Merrill
Chairman and Chief Executive Officer
Executive Vice President,
National Life Insurance Company
Joseph M. Rob
President
Chairman and Chief Executive Officer,
Equity Services, Inc.
Richard J. Borda
Director/Trustee
Former Vice Chairman,
National Life Insurance Company
Dr. Kalman J. Cohen
Director/Trustee
Distinguished Bank Research
Professor Emeritus,
The Fuqua School of Business,
Duke University
Richard D. Farman
Director/Trustee
Chief Executive Officer,
Southern California Gas Company
John D. Feerick
Director/Trustee
Dean, Fordham University School of Law
Richard I. Johannesen, Jr.
Director/Trustee
Former Vice President and Manager -
Bond Market Research Department,
Salomon Brothers Inc.
Robert B. Mathias
Director/Trustee
Sports Consultant;
former U.S. Congressman
Stanley R. Reber
Director/Trustee
Executive Vice President
Provident Mutual
Life Insurance Company
Susan M. Sterne
Director/Trustee
President, Economic Analysis Associates, Inc.
John M. Grab, Jr.
Vice President
Marvin Aber
Vice President and Treasurer
Thomas P. Malone
Assistant Treasurer
D. Russell Morgan
Secretary
Investment Adviser
Sentinel Advisors Company
Principal Underwriter
Sentinel Financial Services Company
Counsel
Brown & Wood
Independent Accountants
Price Waterhouse LLP
Custodian and Dividend Paying Agent
Investors Fiduciary Trust Company
Transfer Agent, Shareholder Servicing Agent and Administrator
Sentinel Administrative Service Company
This report is authorized for distribution to prospective investors only when
preceded or accompanied by an effective prospectus.
42
<PAGE>
================================================================================
A Brief History
The Sentinel Family of Funds is one of America's oldest fund families. Its
largest member, Sentinel Group Funds, Inc., was originally incorporated as Group
Securities, Inc. in the state of Delaware on December 3, 1933. Designed as a
series type of investment company, its main objectives were to offer
shareholders the benefits of "group security investing" along with the ability
to invest in individual industries or industrial groups readily and
conveniently, each in the form of a single stock.
Shares of 17 individual classes of stock were first offered to the public at
$1.10 per share on January 12, 1934 - virtually at the bottom of the Great
Depression.
Following several additions and deletions, 21 classes of stock were maintained
for an extended period of time. Subsequent consolidations, mergers and name
changes combined the classes of stock into what are today the two original
remaining funds in Sentinel Group Funds, Inc., Sentinel Common Stock Fund and
Sentinel Balanced Fund. Sentinel Growth Fund and Sentinel Bond Fund were
organized by National Life Insurance Company in 1969 and merged into the
Sentinel Group in 1978. Two more additions, Sentinel Government Securities Fund
and Sentinel Tax-Free Income Fund, were introduced on September 2, 1986 and
October 1, 1990, respectively.
In May, 1981, Sentinel Cash Management Fund, Inc. was organized as a no-load
money market fund. The "Cash Fund" was also organized as a series fund, and was
designed to operate independently of Sentinel Group Funds, Inc., while at the
same time sharing the Group's management, distribution, transfer agent and other
servicing and administrative arrangements.
On March 1, 1993, National Life Insurance Company and Provident Mutual Life
Insurance Company of Philadelphia entered into a joint venture arrangement which
resulted in the merging of the nine Provident Mutual Funds into the Sentinel
Family of Funds. With the merger, three new classes of stock were added to
Sentinel Group Funds, Inc., and a fourth new member of the broader Sentinel
Family of Funds was added. The three new members of Sentinel Group Funds, Inc.
are Sentinel Emerging Growth Fund, Sentinel World Fund and Sentinel U.S.
Treasury Money Market Fund. The fourth new member of the Sentinel Family of
Funds is Sentinel Pennsylvania Tax-Free Trust (the "Trust"). The Trust operates
as a separate investment company with respect to Sentinel Group Funds, Inc., but
shares management, distribution, fund accounting, transfer agent and other
arrangements with the Sentinel Group.
Also on March 1, 1993, Sentinel Cash Management Fund, Inc. was merged into the
Sentinel U.S. Treasury Money Market Fund.
On March 27, 1995, Penn Mutual Life Insurance Company joined National Life
Insurance Company and Provident Mutual Life Insurance Company in their mutual
fund operation. This resulted in the merging of seven funds of The Independence
Capital Group of Funds into Sentinel Group Funds, Inc., and the creation of two
new classes of stock - Sentinel New York Tax-Free Income Fund and Sentinel
Short-Intermediate Government Fund.
The twelve funds in the Sentinel Family of Funds, which includes the eleven
funds in Sentinel Group Funds, Inc., and the Sentinel Pennsylvania Tax-Free
Trust, now represent net assets of $1.9 billion which are managed on behalf of
approximately 101,000 individual, corporate and institutional shareholders
located across the country and around the world. Shares are distributed by
registered representatives and independent broker/dealers through Sentinel
Financial Services Company, an affiliate of the partnership between National
Life, Provident Mutual and Penn Mutual. Sentinel Advisors Company and Sentinel
Administrative Service Company, which are also affiliates of the partnership,
provide respective investment management and shareholder services to the funds.
43
<PAGE>
================================================================================
[LOGO OF SENTINEL FAMILY Sentinel Family
OF FUNDS APPEARS HERE] of Funds
Integrity Since 1934
Sentinel Emerging Growth Fund
Sentinel Growth Fund
Sentinel World Fund
Sentinel Common Stock Fund
Sentinel Balanced Fund
Sentinel Bond Fund
Sentinel Tax-Free Income Fund
Sentinel New York Tax-Free Income Fund
Sentinel Government Securities Fund
Sentinel Short-Intermediate Government Fund
Sentinel U.S. Treasury Money Market Fund
Sentinel Pennsylvania Tax-Free Trust
Distributed by
Sentinel Financial Services Company
National Life Drive
Montpelier, Vermont 05604
SF0105(0595) Cat. No. 43604
