<PAGE>
Sentinel Family of Funds
Semi-Annual Report
May 31, 1997
[PHOTO APPEARS HERE]
<PAGE>
In Memoriam
Walter J. Boyd
July 12, 1922 - January 6, 1997
[PICTURE OF WALTER J. BOYD APPEARS HERE]
This report is dedicated to the memory of
Walter J. Boyd, who served as Senior Vice President
and Treasurer of the Sentinel Funds from 1955 to
1988, and as a member of the Board of Directors
from 1988 to 1994.
His dedication, integrity, good counsel
and friendship will be missed.
<PAGE>
[ARTWORK 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
5 Financial Statements and Financial Highlights
5 Sentinel Small Company Fund
9 Sentinel Growth Fund
13 Sentinel World Fund
17 Sentinel Common Stock Fund
21 Sentinel Balanced Fund
26 Sentinel Bond Fund
30 Sentinel Tax-Free Income Fund
35 Sentinel New York Tax-Free Income Fund
39 Sentinel Government Securities Fund
43 Sentinel Short Maturity Government Fund
47 Sentinel U.S. Treasury Money Market Fund
51 SGF Notes to Financial Statements
56 Financial Statements and Financial Highlights
56 Sentinel Pennsylvania Tax-Free Trust
60 PA Notes to Financial Statements
62 Privileges, Plans and Services for Shareholders
63 Directors/Trustees and Officers
64 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.
Cover: Original charcoal by Douglas Fryer
1
<PAGE>
Message to Shareholders
[PHOTO OF KENISTON P. MERRILL APPEARS HERE]
Chairman
[PHOTO OF JOSEPH M. ROB APPEARS HERE]
Director/President
Dear Shareholder:
We are pleased to submit our semi-annual report for the six months ended
May 31, 1997.
The Economy
According to the most recent government reports, the U.S. economy grew at a
healthy rate in the first quarter of 1997. Nominal GDP increased 5.9% on a year-
over-year basis during the first quarter of 1997. This rate of growth exceeded
most pundits' expectations. Also of note, the unemployment rate now stands at
4.9%, the lowest level since 1973. Although some signs of moderating economic
growth can be found, the bulk of the evidence suggests that the economy will
produce an unprecedented seventh straight year of expansion.
While economic theorists debate whether a low unemployment rate eventually will
result in escalating wages, the anecdotal evidence of so many help-wanted signs
posted on store fronts, coupled with a healthy level of help-wanted newspaper
advertising, suggest wage pressures are likely to surface if well-above trend
economic growth continues much longer. We believe that the almost seven-year old
phenomenon of workers being too afraid of losing their jobs to demand higher
wages and better benefits is waning. And while some mature industries still face
much consolidating and downsizing, many industries have already gone through
most or all of that rationalization process.
Despite the bulk of recent evidence that suggests inflation remains dormant, the
Federal Reserve raised the target rate for Federal Funds from 5.25% to 5.50% in
late March of this year. Fed Chairman Greenspan's warnings of the Fed's desire
to launch a "preemptive policy tightening" appear to be sincere. If the Fed is
indeed intent on slowing the economy to lessen inflationary pressures, it seems
that further tightening is required. Historically, the first few rounds of Fed
tightening actually stimulate growth as consumers and business owners accelerate
purchase and investment decisions to "lock-in" current interest rates.
The Financial Markets
What's good for Main Street is not always good for Wall Street. Neither Fed
Chairman Greenspan nor the bond market's inflation vigilantes seem to believe in
the indefinite sustainability of the current near-utopian mixture of strong
economic growth, low unemployment, and very moderate inflation. At the first
sure sign of accelerating inflation, one of the above parties likely will see to
higher interest rates. Typically, higher interest rates eventually cause equity
prices to decline because of their tendency to restrain economic growth,
therefore dampening corporate profits, and because higher yielding fixed income
investments eventually become more attractive than volatile common stocks.
However, we perceive the risk of higher interest rates to be only cyclical in
nature and not the beginning of a secular trend. That is to say, the threat of
wage pressure induced inflation is nothing a mild recession would not cure.
2
<PAGE>
Of greater concern to us than the likelihood of somewhat higher interest rates
is the outlook for corporate earnings. Rising wages and benefit costs could well
begin to have a negative impact on corporations' profit margins. This is of some
real concern because, due to abundant world wide production capacity and intense
competition, very few industries exhibit much pricing power. Furthermore, as a
result of years of downsizing and productivity enhancing capital investment,
many corporations have increased the percentage of their costs that are fixed
instead of variable. That is to say, a good many corporations have replaced
human resources with machines and technological investments that cannot be laid
off. Thus, should economic growth slow significantly, corporate profits might
deteriorate to a somewhat greater degree than previous economic history would
suggest.
With respect to the stock market, when one considers valuation parameters such
as the market value of stocks relative to the size of the economy, the aggregate
revenues generated by the companies that comprise the market, or aggregate
corporate cash flow, the market's valuation seems to be rather dear. That the
market does not appear to be excessively valued on a price-to-earnings basis
might provide investors with a certain degree of comfort. However, if corporate
margins are now at peak, ultimately unsustainable levels, as we suspect, the
prospective cyclical decline in earnings might well exceed that currently
anticipated by most equity investors.
All three of our domestic equity funds have been well served so far in 1997 by
the traditional Sentinel investment approach that seeks to identify high quality
companies that exhibit above-average returns and growth prospects, a history of
relatively consistent results, and reasonable valuation. Our stock selection
efforts are focused on those reasonably valued companies that enjoy above-
average pricing power due to strong demand for their products or services and/or
significant competitive advantages or barriers to competition such as well
established brand names, a unique marketing and distribution infrastructure,
superior R&D efforts, and economies of scale
Given the dramatic new opportunities that technology offers (e.g. the Internet)
and the spread of democracy and free market economic thinking throughout the
world, the long-term future continues to look very promising for both capitalism
and investors. Thus, although our expectations for near-term equity returns are
somewhat muted when compared to the outstanding results we have experienced over
the past several years, we continue to regard stocks as an attractive asset
class still capable of providing superior long-term returns.
We appreciate your support and look forward to continuing to help you achieve
your long-term investment goals.
Sincerely,
/s/ Keniston P. Merrill /s/ Joseph M. Rob
Keniston P. Merrill Joseph M. Rob
Chairman Director/President
May 31, 1997
3
<PAGE>
- --------------------------------------------------------------------------------
Fund Performance
Performance data for each Sentinel Fund is provided in this table. Financial
data is contained in the following pages.
<TABLE>
<CAPTION>
11/30/96 -5/31/97
--------------------------------------------------------------------------------
5/31/97
Net Asset Capital
Sentinel Value Per Income Gain Total Lipper
Fund Share Dividends Distributions Return* Average**
<S> <C> <C> <C> <C> <C> <C>
Small Company "A" Shares $ 5.70 $0.01 $0.04 11.2% 5.1%
- --------------------------------------------------------------------------------------------------------------
"B" Shares 5.61 0.00 0.04 10.4 -
- --------------------------------------------------------------------------------------------------------------
Growth 16.35 0.02 2.80 11.1 8.4
- --------------------------------------------------------------------------------------------------------------
World "A" Shares 16.94 0.11 0.24 10.5 7.9
- --------------------------------------------------------------------------------------------------------------
"B" Shares 16.82 0.04 0.24 10.0 -
- --------------------------------------------------------------------------------------------------------------
Common Stock "A" Shares 40.25 0.26 3.54 9.5 10.1
- --------------------------------------------------------------------------------------------------------------
"B" Shares 40.20 0.11 3.54 9.1 -
- --------------------------------------------------------------------------------------------------------------
Balanced "A" Shares 18.86 0.26 0.45 5.8 6.1
- --------------------------------------------------------------------------------------------------------------
"B" Shares 18.89 0.19 0.45 5.4 -
- --------------------------------------------------------------------------------------------------------------
Bond "A" Shares 6.15 0.20 - 0.0 0.3
- --------------------------------------------------------------------------------------------------------------
"B" Shares 6.16 0.17 - -0.5 -
- --------------------------------------------------------------------------------------------------------------
Tax-Free Income "A" Shares 13.26 0.33 0.13 1.4 1.4
- --------------------------------------------------------------------------------------------------------------
"B" Shares 13.27 0.24 0.13 0.8 -
- --------------------------------------------------------------------------------------------------------------
NY Tax-Free Income 11.50 0.28 0.09 1.4 1.4
- --------------------------------------------------------------------------------------------------------------
Government Securities 9.78 0.28 - 0.7 0.2
- --------------------------------------------------------------------------------------------------------------
Short Maturity Government 9.72 0.28 - 2.0 1.9
- --------------------------------------------------------------------------------------------------------------
U.S. Treasury Money Market "A" Shares 1.00 0.02 - 2.3 -
- --------------------------------------------------------------------------------------------------------------
"B" Shares 1.00 0.02 - 2.3 -
- --------------------------------------------------------------------------------------------------------------
PA Tax-Free Trust 13.03 0.33 0.08 1.2 1.4
- --------------------------------------------------------------------------------------------------------------
Standard & Poor's 500/+/ - - - 13.1 -
- --------------------------------------------------------------------------------------------------------------
Lehman Aggregate Bond Index/++/ - - - 0.9 -
- --------------------------------------------------------------------------------------------------------------
Lehman Municipal Bond Index/+++/ - - - 1.7 -
- --------------------------------------------------------------------------------------------------------------
</TABLE>
* Total return is computed assuming the reinvestment of dividends and capital
gain distributions 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.
+ An unmanaged index of stocks 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.
4
<PAGE>
Sentinel Small Company Fund
Investment in Securities
at May 31, 1997 (Unaudited)
- ------------------------------------
<TABLE>
<CAPTION>
Shares Value
(Note 1)
- ----------------------------------------------------
<S> <C> <C>
Common Stocks 85.4%
Auto Parts & Repair 2.1%
Pep Boys -
Manny, Moe & Jack 74,000 $2,312,500
Beverages 1.3%
* Robert Mondavi 'A' 33,000 1,468,500
Business Services 8.0%
Analysts Int'l 53,700 1,946,625
* Healthcare Services Group 172,000 1,978,000
Kelly Services 'A' 52,100 1,530,438
Olsten Corp 62,500 1,226,562
* Sterling Commerce 63,400 2,108,050
----------
8,789,675
----------
Communications 4.4%
* Dynatech Corp 69,000 2,587,500
* Verifone Inc 43,800 2,239,275
----------
4,826,775
----------
Drugs & Drug Delivery 3.1%
* Alpha-Beta Technology 51,000 478,125
* Scherer (R P) 56,600 2,971,500
----------
3,449,625
----------
Electronics 4.9%
Harman Int'l Industries 55,100 2,300,425
Methode Electronics 'A' 180,000 3,037,500
----------
5,337,925
----------
Energy 2.5%
* CalEnergy Inc 67,000 2,763,750
Environmental Control 6.9%
Calgon Carbon 190,000 2,660,000
Donaldson Co 70,000 2,563,750
* Waste Management Int'l plc 270,000 2,328,750
----------
7,552,500
----------
Financial 5.6%
Conseco Inc 30,000 1,200,000
Duff & Phelps Credit Rating 42,700 1,238,300
First Commerce 6,000 270,750
Mercantile Bankshares 36,000 1,431,000
Wilmington Trust Corp 46,000 2,052,750
----------
6,192,800
----------
Food & Food Distributors 7.0%
GoodMark Foods 87,800 1,492,600
Hannaford Brothers 50,100 1,747,238
Smart & Final Inc 82,500 1,763,437
Tootsie Roll Industries 55,967 2,700,408
----------
7,703,683
----------
Healthcare Providers 2.0%
* Genesis Health Ventures 64,950 $2,135,231
----------
Industrial - Diversified 6.9%
* Bush Boake Allen 104,700 3,049,388
Cambrex Corp 25,000 903,125
Lawter Int'l 165,000 1,897,500
* Material Sciences 125,200 1,752,800
----------
7,602,813
----------
Medical - Equipment & Supplies 7.3%
Allergan Inc 65,400 1,937,475
Ballard Medical Products 55,000 1,058,750
Hillenbrand Industries 59,000 2,780,375
Life Technologies 42,000 1,134,000
Minntech Corp 88,400 1,105,000
----------
8,015,600
----------
Oil Field Equipment & Services 4.8%
Halliburton Co 23,000 1,779,625
* Smith International 66,100 3,461,988
----------
5,241,613
----------
Real Estate 2.2%
Chateau Properties 93,050 2,442,562
Restaurants 2.5%
Sbarro Inc 93,000 2,720,250
Retail 8.0%
Casey's General Stores 89,000 1,780,000
Ethan Allen Interiors 61,000 3,187,250
Talbots Inc 89,000 2,336,250
* Wet Seal Inc - Class A 48,000 1,410,000
----------
8,713,500
----------
Security Services 3.4%
* ADT Ltd 129,500 3,771,687
Software 2.5%
* Computational Systems 46,400 928,000
* FileNet Corp 104,000 1,729,000
----------
2,657,000
Total Common Stocks
(Cost $70,288,358) 93,697,989
----------
Preferred Stock 0.2%
Phoenix Duff & Phelps Cl A
(Cost $403,571) 10,000 257,500
----------
<CAPTION>
- --------------------------------------------------------
Principal Amount Value
(M=$1,000) (Note 1)
- --------------------------------------------------------
<S> <C> <C>
Corporate Short-Term Notes 14.3%
CIT Group Holdings 5.53%,
06/26/97 2300M $2,291,167
Commerical Credit 5.54%,
06/10/97 2500M 2,496,538
Ford Motor Credit 5.54%,
06/18/97 3500M 3,490,844
G.E. Capital Corp 5.5%,
06/05/97 500M 499,694
G.E. Capital Corp 5.53%,
06/23/97 2400M 2,391,889
Norwest Financial 5.52%,
06/13/97 2700M 2,695,032
Prudential Funding 5.51%,
06/05/97 1800M 1,798,898
------------
Total Corporate Short-Term Notes
(Cost $15,664,062) 15,664,062
------------
Total Investments
(Cost $86,355,991)** 109,619,551
Excess of Other Assets
Over Liabilities 0.1% 69,037
------------
Net Assets $109,688,588
============
</TABLE>
* Non-income producing.
** Also cost for federal income tax purposes. At May 31, 1997, net unrealized
appreciation for federal income tax purposes aggregated $23,263,560 of which
$26,572,550 related to appreciated securities and $3,308,990 related to
depreciated securities.
See Notes to Financial Statements. 5
<PAGE>
Sentinel Small Company Fund
Statement of Assets and Liabilities
at May 31, 1997 (Unaudited)
- ----------------------------------------------------------
<TABLE>
<CAPTION>
Assets
<S> <C>
Investments at value $109,619,551
Cash and cash equivalents 268,253
Receivable for fund shares sold 33,357
Receivable for dividends and interest 55,660
------------
Total Assets 109,976,821
------------
Liabilities
Payable for securities purchased 74,042
Payable for fund shares repurchased 44,316
Accrued expenses 22,921
Management fee payable 56,869
Distribution fee payable (Class A Shares) 58,608
Distribution fee payable (Class B Shares) 3,586
Fund service fee payable 27,891
------------
Total Liabilities 288,233
------------
Net Assets Applicable to Outstanding Shares $109,688,588
============
Net Asset Value and Offering Price per Share
Class A Shares
$105,232,002 / 18,471,957shares outstanding $ 5.70
Sales Charge -- 5.00% of offering price 0.30
------------
Maximum Offering Price $ 6.00
============
Class B Shares
$4,456,586 / 793,930 shares outstanding $ 5.61
============
<CAPTION>
Net Assets Represent
<S> <C>
Capital stock at par value $ 192,659
Paid-in capital 78,833,826
Accumulated undistributed net investment income 91,874
Accumulated undistributed net realized gain
on investments 7,306,669
Unrealized appreciation of investments 23,263,560
------------
Net Assets $109,688,588
============
Investments at Cost $ 86,355,991
============
<CAPTION>
Sentinel Small Company Fund
Statement of Operations
For the Six Months Ended May 31, 1997 (Unaudited)
- --------------------------------------------------------------------------------
Investment Income
<S> <C>
Income:
Dividends $ 458,993
Interest 461,846
-----------
Total Income 920,839
-----------
Expenses:
Management advisory fee 327,438
Transfer agent and custodian 186,901
Distribution expense (Class A Shares) 151,020
Distribution expense (Class B Shares) 15,535
Accounting services 19,445
Auditing fees 4,160
Legal fees 2,195
Reports and notices to shareholders 7,868
Directors' fees and expenses 4,443
Other 14,843
-----------
Total Expenses 733,848
Expense Offset (12,471)
-----------
Net Expenses 721,377
-----------
Net Investment Income 199,462
-----------
Realized and Unrealized Gain on Investments
Net realized gain on sales of investments 7,306,614
Net change in unrealized appreciation 3,484,682
-----------
Net Realized and Unrealized Gain on Investments 10,791,296
-----------
Net Increase in Net Assets from Operations $10,990,758
===========
</TABLE>
6 See Notes to Financial Statements.
<PAGE>
Sentinel Small Company Fund
Statement of Changes in Net Assets
- --------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Year
Ended Ended
5/31/97 11/30/96
(Unaudited)
-------------- --------------
<S> <C> <C>
Increase in Net Assets from Operations
Net investment income $ 199,462 $ 216,690
Net realized gain on sales of investments 7,306,614 772,415
Net change in unrealized appreciation 3,484,682 17,429,645
-------------- --------------
Net increase in net assets from operations 10,990,758 18,418,750
-------------- --------------
Distributions to Shareholders
From net investment income
Class A Shares (134,035) (438,193)
Class B Shares - -
From realized gain on investments
Class A Shares (755,382) (16,243,656)
Class B Shares (17,013) -
-------------- --------------
Total distributions to shareholders (906,430) (16,681,849)
-------------- --------------
From Capital Share Transactions
Net proceeds from sales of shares
Class A Shares 7,327,981 14,896,129
Class B Shares 2,318,436 1,943,806
Net asset value of shares in reinvestment
of dividends and distributions
Class A Shares 809,158 15,171,070
Class B Shares 16,917 -
-------------- --------------
10,472,492 32,011,005
Less: Payments for shares reacquired
Class A Shares (12,043,449) (21,663,864)
Class B Shares (160,518) (69,477)
-------------- --------------
Increase (decrease) in net assets from
capital share transactions (1,731,475) 10,277,664
-------------- --------------
Total Increase in Net Assets for period 8,352,853 12,014,565
Net Assets: Beginning of period 101,335,735 89,321,170
-------------- --------------
Net Assets: End of period $109,688,588 $101,335,735
============== ==============
Undistributed Net Investment Income
at End of Period 91,874 $ 26,447
============== ==============
</TABLE>
See Notes to Financial Statements.
7
<PAGE>
Sentinel Small Company Fund
Financial Highlights
Selected per share data and ratios
Selected data for a share of capital stock outstanding throughout each fiscal
period.
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Nine
Ended 5/31/97 Year Ended Year Ended Year Ended Months Ended
Class A Shares (Unaudited) 11/30/96 11/30/95 11/30/94 11/30/93(A)
-------------- ------------- ------------ ------------- --------------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of period $ 5.17 $ 5.20 $ 5.53 $ 6.87 $ 6.49
-------------- ------------- ------------ ------------- --------------
Income from Investment Operations
Net investment income (loss) 0.01 0.01 0.02 (0.04) (0.06)
Net realized and unrealized gain on
investments 0.57 0.95 0.56 0.18 0.44
-------------- ------------- ------------ ------------- --------------
Total from investment operations 0.58 0.96 0.58 0.14 0.38
-------------- ------------- ------------ ------------- --------------
Less Distributions
Dividends from net investment income 0.01 0.03 - - -
Distributions from realized gains on
investments 0.04 0.96 0.91 1.48 -
-------------- ------------- ------------ ------------- --------------
Total Distributions 0.05 0.99 0.91 1.48 -
-------------- ------------- ------------ ------------- --------------
Net asset value at end of period $ 5.70 $ 5.17 $ 5.20 $ 5.53 $ 6.87
============== ============= ============ ============= ==============
Total Return (%) * 11.2 ++ 22.0 12.2 2.0 5.9 ++
Ratios/Supplemental Data
Ratio of net expenses to average net
assets (%) 1.35 + 1.47 1.56 1.58 1.52 +
Ratio of expenses to average net assets
before expense reductions (%) ** 1.37 + 1.51 1.60 1.58 1.52 +
Ratio of net investment income to average
net assets (%) 0.42 + 0.23 0.26 (0.74) (1.01)+
Portfolio turnover rate (%) 15 60 79 46 61
Average commission rate paid per share $ .0600 $ .0600 N/A N/A N/A
Net assets at end of period (000 omitted) $105,232 $ 99,393 $ 89,321 $ 88,420 $105,176
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Eight Months
Ended 5/31/97 Ended
Class B Shares (Unaudited) 11/30/96(B)
-------------- -------------
<S> <C> <C>
Net asset value at beginning of period $ 5.12 $ 4.82
-------------- -------------
Income from Investment Operations
Net investment loss (0.01) (0.03)
Net realized and unrealized gain on
investments 0.54 0.33
-------------- -------------
Total from investment operations 0.53 0.30
-------------- -------------
Less Distributions
Dividends from net investment income - -
Distributions from realized gains on
investments 0.04 -
-------------- -------------
Total Distributions 0.04 -
-------------- -------------
Net asset value at end of period $ 5.61 $ 5.12
============== =============
Total Return (%) * 10.4 ++ 6.2 ++
Ratios/Supplemental Data
Ratio of net expenses to average net
assets (%) 2.52 + 2.62 +
Ratio of expenses to average net assets
before expense reductions (%) ** 2.53 + 2.64 +
Ratio of net investment income to average
net assets (%) (0.75)+ (0.91)+
Portfolio turnover rate (%) 15 60
Average commission rate paid per share $ .0600 $ .0600
Net assets at end of period (000 omitted) $ 4,457 $ 1,943
</TABLE>
(A) Commenced operations March 1, 1993.
(B) Commenced operations April 1, 1996.
+ Annualized
++ Not Annualized
* Total return is calculated assuming an initial investment made at the
net asset value at the beginning of the period, reinvestment of all
distributions at the net asset value during the period, and a
redemption on the last day of the period. Initial sales charge is not
reflected in the calculation of total return.
** Expense reductions are comprised of the voluntary expense
reimbursements and include, effective 1995, the earnings credits as
described in Notes (2) and (1) H.
N/A Not applicable to periods prior to 1996.
See Notes to Financial Statements.
8
<PAGE>
Sentinel Growth Fund
Investment in Securities
at May 31, 1997 (Unaudited)
<TABLE>
<CAPTION>
- ---------------------------------------------------------
Shares Value
(Note 1)
- ----------------------------------------------------------
<S> <C> <C>
Common Stocks 95.5%
Banks 4.4%
BankAmerica Corp 5,000 $ 584,375
Citicorp 5,500 629,063
Chase Manhattan Corp 6,700 633,150
First Union Corp 18,000 1,545,750
-----------
3,392,338
-----------
Biotechnology 9.7%
* Amgen Inc 25,000 1,671,875
* Biogen Inc 50,000 1,659,375
* Centocor Inc 44,300 1,561,575
* Chiron Corp 55,000 1,038,125
Genzyme Corp 65,000 1,551,875
-----------
7,482,825
-----------
Computers 2.7%
Hewlett Packard 40,000 2,060,000
-----------
Business Services 6.5%
Omnicom Group 48,000 2,784,000
* Sterling Commerce 67,500 2,244,375
-----------
5,028,375
-----------
Drugs & Drug Delivery 5.1%
Pfizer Inc 5,000 514,375
* Scherer (R P) 53,000 2,782,500
Schering Plough Corp 7,000 635,250
-----------
3,932,125
-----------
Electronics 6.5%
Methode Electronics 135,000 2,278,125
Motorola 35,000 2,323,125
Rockwell International 6,000 387,000
-----------
4,988,250
-----------
Environmental Control 2.6%
* US Filter Corp 65,000 2,047,500
-----------
Financial 5.3%
American Express Co 42,000 2,919,000
Conseco Inc 10,000 400,000
Student Loan Marketing 6,000 729,750
-----------
4,048,750
-----------
Hotels/Restaurants 1.9%
Marriott International 25,000 1,443,750
-----------
Healthcare Providers 9.7%
Columbia/HCA Healthcare 48,000 1,758,000
Integrated Health Services 75,000 2,700,000
United Healthcare Corp 53,000 2,994,500
-----------
7,452,500
-----------
Industrial - Diversified 5.6%
Crown Cork & Seal 24,000 $ 1,398,000
Parker-Hannifin 55,000 2,894,375
-----------
4,292,375
-----------
Insurance 3.2%
Equitable of Iowa 44,000 2,436,500
-----------
Medical - Equipment & Supplies 4.2%
Dentsply International 22,000 1,105,500
Hillenbrand Industries 36,000 1,696,500
Johnson & Johnson 8,000 479,000
-----------
3,281,000
-----------
Oil Field Equipment & Services 1.0%
Halliburton Co 5,000 386,875
Schlumberger Ltd 3,000 357,375
-----------
744,250
-----------
Restaurants 2.7%
* Outback Steakhouse 90,000 2,092,500
-----------
Retail 10.3%
CVS Corp 15,000 718,125
Ethan Allen Interiors 55,000 2,873,750
Sears Roebuck 40,000 1,965,000
* Staples Inc 110,000 2,420,000
-----------
7,976,875
-----------
Semiconductors &
Semiconductor Equipment 5.0%
* Applied Materials Inc 14,000 913,500
* KLA Instruments 18,000 856,125
* LAM Research Corp 57,000 2,073,375
-----------
3,843,000
-----------
Software 0.5%
* Microsoft Corp 3,000 372,000
-----------
Telecommunications 5.3%
* Airtouch Communications 90,000 2,508,750
Lucent Technologies 25,000 1,590,625
-----------
4,099,375
-----------
Tobacco 3.3%
Philip Morris 12,000 528,000
UST Inc 70,000 1,995,000
-----------
2,523,000
-----------
Total Common Stocks
(Cost $63,934,303) 73,537,288
-----------
<CAPTION>
------------------------------------------------------
Principal Amount Value
(M=$1,000) (Note 1)
------------------------------------------------------
<S> <C> <C>
Corporate Short-Term Notes 4.9%
CIT Group Holdings
5.53%, 06/16/97 700M $ 698,387
Merrill Lynch
5.52%, 06/06/97 750M 749,425
Norwest Financial
5.54%, 06/02/97 700M 699,892
Prudential Funding Corp
5.5%, 06/11/97 1600M 1,597,556
-----------
Total Short-Term Corporate Notes
(Cost $3,745,260) 3,745,260
-----------
Total Investments
(Cost $67,679,563)** 77,282,548
-----------
Excess of Liabilities
Over Other Assets (0.4%) (319,614)
-----------
Net Assets $76,962,934
===========
</TABLE>
* Non-income producing.
** Also cost for federal income tax purposes.
At May 31, 1997, net unrealized appreciation for federal income tax
purposes aggregrated $9,602,985 of which $11,139,866 related to appreciated
securities and $1,536,881 related to depreciated securities.
See Notes to Financial Statements.
9
<PAGE>
Sentinel Growth Fund
Statement of Assets and Liabilities
at May 31, 1997 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Assets
Investments at value $77,282,548
Cash and cash equivalents 622,410
Receivable for securities sold 892,335
Receivable for fund shares sold 19,955
Receivable for dividends 53,244
-------------
Total Assets 78,870,492
-------------
Liabilities
Payable for securities purchased 1,754,230
Accrued expenses 52,167
Management fee payable 39,829
Distribution fee payable 45,249
Fund service fee payable 16,083
-------------
Total Liabilities 1,907,558
-------------
Net Assets Applicable to Outstanding Shares $76,962,934
=============
Net Asset Value and Offering Price Per Share
$76,962,934/4,706,814 shares outstanding $ 16.35
Sales Charge -- 5.00% of Offering Price 0.86
-------------
Maximum Offering Price Per Share $ 17.21
=============
Net Assets Represent
Capital stock at par value $ 47,068
Paid-in capital 56,154,631
Distributions in excess of net investment income (114,339)
Accumulated undistributed net realized gain
on investments 11,272,589
Unrealized appreciation of investments 9,602,985
-------------
Net Assets $76,962,934
=============
Investments at Cost $67,679,563
=============
</TABLE>
Sentinel Growth Fund
Statement of Operations
For the Six Months Ended May 31, 1997 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Investment Income
Income:
Dividends $ 330,965
Interest 72,131
-------------
Total Income 403,096
-------------
Expenses:
Management advisory fee 224,952
Transfer agent and custodian 115,537
Distribution expense 107,445
Accounting services 13,325
Auditing fees 3,350
Legal fees 1,700
Reports and notices to shareholders 6,574
Directors' fees and expenses 5,600
Other 11,462
-------------
Total Expenses 489,945
Expense Offset (10,562)
-------------
Net Expenses 479,383
-------------
Net Investment Loss (76,287)
-------------
Realized and Unrealized Gain (Loss) on Investments
Net realized gain on sales of investments 11,272,649
Net change in unrealized appreciation (3,559,095)
-------------
Net Realized and Unrealized Gain on Investments 7,713,554
-------------
Net Increase in Net Assets from Operations $7,637,267
=============
</TABLE>
See Notes to Financial Statements.
10
<PAGE>
Sentinel Growth Fund
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Year
Ended Ended
5/31/97 11/30/96
(Unaudited)
-------------- --------------
<S> <C> <C>
Increase in Net Assets from Operations
Net investment income (loss) $ (76,287) $ 98,077
Net realized gain on sales of investments 11,272,649 11,151,783
Net change in unrealized appreciation (3,559,095) 1,875,022
-------------- ---------------
Net increase in net assets from operations 7,637,267 13,124,882
-------------- ---------------
Distributions to Shareholders
From net investment income (59,692) (258,814)
From net realized gain on investments (11,151,823) (9,038,321)
-------------- ---------------
Total distributions to shareholders (11,211,515) (9,297,135)
-------------- ---------------
From Capital Share Transactions
Net proceeds from sales of shares 5,082,729 6,445,280
Net asset value of shares in reinvestment
of dividends and distributions 10,331,592 8,450,217
-------------- ---------------
15,414,321 14,895,497
Less: Payments for shares reacquired (4,693,420) (9,353,332)
-------------- ---------------
Increase in net assets from capital share transactions 10,720,901 5,542,165
-------------- ---------------
Total Increase in Net Assets for period 7,146,653 9,369,912
Net Assets: Beginning of period 69,816,281 60,446,369
-------------- ---------------
Net Assets: End of period $76,962,934 $69,816,281
============== ===============
Undistributed (Distributions in Excess of)
Net Investment Income at End of Period $ (114,339) $ 21,641
============== ===============
</TABLE>
See Notes to Financial Statements.
11
<PAGE>
Sentinel Growth Fund
Financial Highlights
Selected per share data and ratios
Selected data for a share of capital stock outstanding throughout each fiscal
period.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months
Ended 5/31/97 Year Ended Year Ended Year Ended Year Ended Year Ended
(Unaudited) 11/30/96 11/30/95 11/30/94 11/30/93 11/30/92
------------ ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value at beginning of period $ 17.57 $ 16.93 $ 16.15 $ 17.51 $ 18.56 $ 15.99
------------ ----------- ----------- ----------- ----------- -----------
Income from Investment Operations
Net investment income (loss) (0.01) 0.03 0.07 0.05 0.04 0.11
Net realized and unrealized gain (loss) on investments 1.61 3.23 3.33 (0.92) (0.28) 3.07
------------ ----------- ----------- ----------- ----------- -----------
Total from investment operations 1.60 3.26 3.40 (0.87) (0.24) 3.18
------------ ----------- ----------- ----------- ----------- -----------
Less Distributions
Dividends from net investment income 0.02 0.07 0.05 0.03 0.04 0.16
Distributions from realized gains on investments 2.80 2.55 2.57 0.46 0.77 0.45
------------ ----------- ----------- ----------- ----------- -----------
Total Distributions 2.82 2.62 2.62 0.49 0.81 0.61
------------ ----------- ----------- ----------- ----------- -----------
Net asset value at end of period $ 16.35 $ 17.57 $ 16.93 $ 16.15 $ 17.51 $ 18.56
============ =========== =========== =========== =========== ===========
Total Return (%)* 11.1 ++ 22.6 24.9 (5.1) (1.3) 20.5
Ratios/Supplemental Data
Ratio of net expenses to average net assets (%) 1.34 + 1.40 1.50 1.43 1.31 1.05
Ratio of expenses to average net assets before
expense reductions (%)** 1.37 + 1.43 1.54 1.43 1.31 1.05
Ratio of net investment income to average net
assets (%) (.01)+ 0.16 0.42 0.30 0.22 0.63
Portfolio turnover rate (%) 76 98 84 58 12 28
Average commission rate paid per share $ .0600 $ .0600 N/A N/A N/A N/A
Net assets at end of period (000 omitted) $76,963 $69,816 $60,446 $50,447 $57,833 $63,664
</TABLE>
+ Annualized
++ Not Annualized
* Total return is calculated assuming an initial investment made at the net
asset value at the beginning of the period, reinvestment of all
distributions at the net asset value during the period, and a redemption on
the last day of the period. Initial sales charge is not reflected in the
calculation of total return.
** Expense reductions are comprised of the voluntary expense reimbursements and
include, effective 1995, the earning credits as described in Notes (2) and
(1) H.
N/A Not applicable to periods prior to 1996.
See Notes to Financial Statements.
12
<PAGE>
Sentinel World Fund
Investment in Securities
at May 31, 1997 (Unaudited)
<TABLE>
<CAPTION>
- -------------------------------------------------------------
Shares Value
(Note 1)
- -------------------------------------------------------------
<S> <C> <C>
Common Stocks 92.6%
Argentina 1.4%
YPF S. A. (ADR) 40,000 $ 1,200,000
-----------
Australia 4.2%
CRA Ltd. 84,625 1,387,044
National Australia 126,880 1,813,911
Westpac Bank Corp Ord. 96,008 521,104
-----------
3,722,059
-----------
Denmark 3.2%
Novo Nordisk (ADR) 25,000 1,371,875
Den Danske Bank 15,000 1,427,365
-----------
2,799,240
-----------
Finland 0.9%
Cultor 15,400 789,782
-----------
France 6.3%
Alcatel Alsthom (ADR) 40,005 910,114
Elf Aquitaine (ADR) 28,785 1,500,418
Group Danone 8,500 1,282,679
Guyenne et Gascogne 2,940 903,649
Societe Generale 8,850 985,101
-----------
5,581,961
-----------
Germany 1.9%
Bayer A.G. Ord. 25,000 977,541
Siemens A.G. 13,000 736,410
-----------
1,713,951
-----------
Hong Kong 3.2%
China Light & Power Co. 310,000 1,552,300
HSBC Holdings 40,890 1,240,130
-----------
2,792,430
-----------
Italy 2.8%
Istituto Mobiliare
Italia (ADR) 44,000 1,182,500
Stet Soc. Finanz Telefone
(ADR) 25,000 1,278,125
-----------
2,460,625
-----------
Japan 19.6%
Canon 50,000 1,269,035
Dai Nippon Printing Co 70,000 1,403,252
Dai Tokyo Fire & Marine 110,000 615,159
DeoDeo Corp. 37,000 779,919
Daiichi Pharmaceuticals 70,000 1,204,508
Fuji Photo Film 38,000 1,474,490
Hitachi Koki Co. Ord. 175,000 1,252,689
Ito-Yokado 23,000 1,313,946
Kirin Beverage 50,000 825,949
Kyocera Corp. 18,000 1,299,320
Mitsubishi Heavy Industry 200,000 1,441,968
Murata Manufacturing 33,000 1,308,870
Sankyo Co LTD 40,000 1,269,896
Sekisui House 120,000 1,176,977
Teijin 180,000 760,389
-----------
17,396,367
-----------
Malaysia 0.6%
Malaysian Int'l. Shipping 246,666 569,305
-----------
Mexico 1.4%
Telefonos de Mexico (ADR) 27,500 1,220,313
-----------
Netherlands 9.7%
ABN Amro Bank 84,876 $ 1,570,631
Akzo Nobel N.V. 10,500 1,399,526
Elsevier 60,000 1,016,472
Hollandsche Beton
Groep N.V. 3,900 898,561
ING Groep N.V. 27,290 1,207,736
Koninklijke Pt. 20,872 731,129
Unilever N V (ADR) 9,000 1,743,750
-----------
8,567,805
-----------
Norway 1.3%
Norsk Hydro (ADR) 23,000 1,167,250
-----------
Singapore 2.6%
Jardine Matheson 141,232 960,378
Singapore Int'l. Airlines 160,000 1,364,558
-----------
2,324,936
-----------
South Korea 0.5%
Pohang Iron & Steel Co. 6,740 443,033
-----------
Spain 6.4%
Banco Popular 7,500 1,594,010
Banco Santander 18,000 1,536,981
Repsol (ADR) 28,500 1,200,562
Telefonica de
Espana S.A. (ADR) 15,000 1,310,625
-----------
5,642,178
-----------
Sweden 4.2%
Aga B Free 85,000 1,120,227
Astra AB B Free 101,333 1,564,609
Volvo AB B 37,500 1,039,311
Volvo AB B - Red. Rights 37,500 10,030
-----------
3,734,177
-----------
Switzerland 4.5%
Globus PC 1,350 692,749
Nestle A.G. Registered 1,175 1,463,708
Novartis A.G. Registered 1,348 1,831,872
-----------
3,988,329
-----------
United Kingdom 17.9%
Albright & Wilson 300,000 769,839
Allied Irish Bank 192,815 1,474,881
Assoc. Brit. Food 180,000 1,674,954
Boots Co. plc 90,000 1,045,555
British Telecom plc (ADR) 18,000 1,320,750
Glaxo Hldg plc (ADR) 37,500 1,509,375
Guinness plc 160,000 1,492,783
Johnson Matthey plc 100,000 767,380
National Westminster
Bank plc 111,342 1,359,215
Severn Trent Water plc 108,669 1,386,276
Shell Transport & Trading 13,000 1,551,875
Tesco plc 250,503 1,542,365
-----------
15,895,248
-----------
Total Common Stocks
(Cost $65,922,168) 82,008,989
-----------
Preferred Stock 1.8%
Germany
RWE A.G.
(Cost $643,623) 45,660 1,601,166
-----------
<CAPTION>
- -------------------------------------------------------------
Principal Amount Value
(M=$1,000) (Note 1)
- -------------------------------------------------------------
<S> <C> <C>
Corporate Short-Term Notes 2.6%
Merrill Lynch
5.5%, 6/2/97 1000M $ 999,847
Prudential Funding
5.5%, 6/5/97 1300M 1,299,206
-----------
Total Corporate Short Term Notes
(Cost $2,299,053) 2,299,053
-----------
Total Investments
(Cost $68,864,844)* 85,909,208
Excess of Other Assets
Over Liabilities 3.0% 2,649,072
-----------
Net Assets $88,558,280
===========
<CAPTION>
- -------------------------------------------------------------
Summary of Foreign Securities
by Industry Classification
Percent of Market
Industry Net Assets Value
<S> <C> <C>
Airlines 1.5% $ 1,364,558
Air Freight 0.6% 569,305
Automobiles, Auto Parts 1.2% 1,049,341
Banks 15.2% 13,465,699
Biotechnology 1.8% 1,564,609
Broadcasting 1.4% 1,269,035
Building, Construction 1.0% 898,561
Chemicals 5.7% 5,027,522
Construction 1.3% 1,176,977
Electrical Components 0.8% 736,410
Financial Services 2.8% 2,447,866
Foods, Beverage 8.8% 7,809,897
Footware 1.2% 1,045,555
Gold/Precious Metals 2.4% 2,154,424
Healthcare Drug/Pharmacy 8.1% 7,187,526
Household Furniture &
Appliances 0.9% 779,919
Insurance 0.7% 615,159
Machinery 3.0% 2,694,657
Manufacturing & Process 2.6% 2,269,248
Petroleum 7.5% 6,620,105
Photography 1.7% 1,474,490
Printing, Publishing 2.7% 2,419,724
Retail Food 4.4% 3,909,722
Retail General 2.3% 2,006,695
Steel 0.5% 443,033
Telecommunications 7.7% 6,771,056
Textiles 1.5% 1,299,320
Utilities - Electric 5.1% 4,539,742
----- -----------
94.4% $83,610,155
===== ===========
- -------------------------------------------------------------
</TABLE>
* Also cost for federal income tax purposes.
At May 31, 1997, net unrealized appreciation for federal income tax purposes
aggregated $17,044,364 of which $18,906,644 related to appreciated securities
and $1,862,280 related to depreciated securities.
(ADR) - American Depository Receipt
See Notes to Financial Statements.
13
<PAGE>
Sentinel World Fund
Statement of Assets and Liabilities
at May 31, 1997 (Unaudited)
- --------------------------------------------------------------
<TABLE>
<S> <C>
Assets
Investments at value $85,909,208
Cash and cash equivalents 570,961
Foreign currency (cost$2,847,455) 2,831,472
Receivable for fund shares sold 156,933
Receivable for dividends and interest 533,635
-----------
Total Assets 90,002,209
-----------
Liabilities
Payable for securities purchased 1,295,158
Payable for fund shares repurchased 450
Accrued expenses 43,599
Management fee payable 46,472
Distribution fee payable (Class A Shares) 40,400
Distribution fee payable (Class B Shares) 4,828
Fund service fee payable 13,022
-----------
Total Liabilities 1,443,929
-----------
Net Assets Applicable to Outstanding Shares $88,558,280
===========
Net Asset Value and Offering Price per Share
Class A Shares
$82,711,987/4,881,659 shares outstanding $ 16.94
Sales Charge -- 5.00% of offering price 0.89
-----------
Maximum Offering Price $ 17.83
===========
Class B Shares
$5,846,293/347,577 shares outstanding $ 16.82
===========
Net Assets Represent
Capital stock at par value $ 52,292
Paid-in capital 68,747,309
Accumulated undistributed net investment income 269,320
Accumulated undistributed net realized gain
on investments 2,481,149
Unrealized appreciation of investments 17,008,210
-----------
Net Assets $88,558,280
===========
Investments at Cost $68,864,844
===========
</TABLE>
Sentinel World Fund
Statement of Operations
For the Six Months Ended May 31, 1997 (Unaudited)
- --------------------------------------------------------------
<TABLE>
<S> <C>
Investment Income
Income:
Dividends $1,013,017 *
Interest 47,674
-----------
Total Income 1,060,691
-----------
Expenses:
Management advisory fee 246,501
Transfer agent and custodian 137,084
Distribution expense (Class A Shares) 111,240
Distribution expense (Class B Shares) 21,310
Accounting services 12,100
Auditing fees 3,760
Legal fees 2,230
Reports and notices to shareholders 5,098
Directors' fees and expenses 5,025
Other 18,923
-----------
Total Expenses 563,271
Expense Offset (11,044)
-----------
Net Expenses 552,227
-----------
Net Investment Income 508,464
-----------
Realized and Unrealized Gain (Loss) on Investments
Net realized gain (loss) from:
Investments 2,512,944
Foreign currency transactions (232,762)
-----------
Net realized gain 2,280,182
-----------
Net change in unrealized appreciation during the
period:
Investments 5,481,484
Foreign currency transactions (2,737)
-----------
Net change in unrealized appreciation 5,478,747
-----------
Net Realized and Unrealized Gain on Investments 7,758,929
-----------
Net Increase in Net Assets from Operations $8,267,393
===========
</TABLE>
* Net of Foreign Tax Withholding of $120,942
14 See Notes to Financial Statements.
<PAGE>
Sentinel World Fund
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Year
Ended Ended
5/31/97 11/30/96
(Unaudited)
------------ -------------
<S> <C> <C>
Increase in Net Assets from Operations
Net investment income $ 508,464 $ 581,489
Net realized gain on sales of investments 2,280,182 1,086,639
Net change in unrealized appreciation 5,478,747 7,057,255
------------ -------------
Net increase in net assets from operations 8,267,393 8,725,383
------------ -------------
Distributions to Shareholders
From net investment income
Class A Shares (509,018) (471,463)
Class B Shares (9,446) -
From realized gain on investments
Class A Shares (1,108,320) (228,430)
Class B Shares (52,020) -
------------ -------------
Total distributions to shareholders (1,678,804) (699,893)
------------ -------------
From Capital Share Transactions
Net proceeds from sales of shares
Class A Shares 11,751,081 27,277,778
Class B Shares 2,358,886 3,168,407
Net asset value of shares in reinvestment
of dividends and distributions
Class A Shares 1,510,239 660,554
Class B Shares 58,245 -
------------ -------------
15,678,451 31,106,739
Less: Payments for shares reacquired
Class A Shares (8,151,674) (12,059,284)
Class B Shares (202,331) (129,688)
------------ -------------
Increase in net assets from capital share
transactions 7,324,446 18,917,767
------------ -------------
Total Increase in Net Assets for period 13,913,035 26,943,257
Net Assets: Beginning of period 74,645,245 47,701,988
------------ -------------
Net Assets: End of period $88,558,280 $ 74,645,245
============ =============
Undistributed Net Investment Income
at End of Period $ 269,320 $ 512,082
============ =============
</TABLE>
See Notes to Financial Statements. 15
<PAGE>
Sentinel World Fund (A)
Financial Highlights
Selected per share data and ratios
Selected data for a share of capital stock outstanding throughout each fiscal
period.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Nine
Ended 5/31/97 Year Ended Year Ended Year Ended Months Ended
Class A Shares (Unaudited) 11/30/96 11/30/95 11/30/94 11/30/93(B)
------------- ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of period $ 15.69 $ 13.78 $ 12.74 $ 11.86 $ 9.56
------------- ----------- ----------- ----------- ------------
Income from Investment Operations
Net investment income 0.05 0.12 0.14 0.08 0.02
Net realized and unrealized gain on investments 1.55 1.99 1.14 0.89 2.28
------------- ----------- ----------- ----------- ------------
Total from investment operations 1.60 2.11 1.28 0.97 2.30
------------- ----------- ----------- ----------- ------------
Less Distributions
Dividends from net investment income 0.11 0.13 0.09 0.03 -
Distributions from realized gains on investments 0.24 0.07 0.15 0.06 -
------------- ----------- ----------- ----------- ------------
Total Distributions 0.35 0.20 0.24 0.09 -
------------- ----------- ----------- ----------- ------------
Net asset value at end of period $ 16.94 $ 15.69 $ 13.78 $ 12.74 $ 11.86
============= =========== =========== =========== ============
Total Return (%) ** 10.5++ 15.5 10.2 8.2 24.1++
Ratios/Supplemental Data
Ratio of net expenses to average net assets (%) 1.35+ 1.43 1.56 1.58 2.00+
Ratio of expenses to average net assets before
expense reductions (%) *** 1.38+ 1.48 1.63 1.58 2.12+
Ratio of net investment income to
average net assets (%) 1.33+ 0.94 0.79 0.62 0.41+*
Portfolio turnover rate (%) 13 14 32 30 66
Average commission rate paid per share $ .0490 $ .0455 N/A N/A N/A
Net assets at end of period (000 omitted) $82,712 $ 71,458 $ 47,702 $41,970 $16,872
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Eight Months
Ended 5/31/97 Ended
Class B Shares (Unaudited) 11/30/96(C)
------------- ------------
<S> <C> <C>
Net asset value at beginning of period $ 15.58 $ 14.49
------------- ------------
Income from Investment Operations
Net investment income (loss) 0.02 (0.08)
Net realized and unrealized gain on investments 1.50 1.17
------------- ------------
Total from investment operations 1.52 1.09
------------- ------------
Less Distributions
Dividends from net investment income 0.04 -
Distributions from realized gains on investments 0.24 -
------------- ------------
Total Distributions 0.28 -
------------- ------------
Net asset value at end of period $ 16.82 $ 15.58
============= ============
Total Return (%) ** 10.0++ 7.5 ++
Ratios/Supplemental Data
Ratio of net expenses to average net assets (%) 2.20+ 2.56 +
Ratio of expenses to average net assets before
expense reductions (%) *** 2.22+ 2.59 +
Ratio of net investment income to average net assets (%) .49+ (0.19)+
Portfolio turnover rate (%) 13 14
Average commission rate paid per share $ .0490 $ .0455
Net assets at end of period (000 omitted) $ 5,846 $ 3,188
</TABLE>
(A) As of April 1, 1996 INVESCO Capital Management, Inc. became the sub-
advisor to the Fund.
(B) Commenced operations March 1, 1993.
(C) Commenced operations April 1, 1996.
+ Annualized
++ Not Annualized
* Ratio of net investment income to average net assets would have been
.29% in 1993, in the absence of a voluntary expense reimbursement.
** Total return is calculated assuming an initial investment made at the
net asset value at the beginning of the period, reinvestment of all
distributions at the net asset value during the period, and a
redemption on the last day of the period. Initial sales charge is not
reflected in the calculation of total return.
*** Expense reductions are comprised of the voluntary expense
reimbursements and include, effective 1995, the earning credits as
described in Notes (2) and (1) H.
N/A Not Applicable to periods prior to 1996.
See Notes to Financial Statements.
16
<PAGE>
Sentinel Common Stock Fund
Investment in Securities
at May 31, 1997 (Unaudited)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------
Shares Value
(Note 1)
- ----------------------------------------------------------------------
<S> <C> <C>
Common Stocks 93.2%
Aerospace 0.1%
Boeing Co. 17,850 $ 1,878,713
--------------
Automobiles & Auto Parts 5.7%
Chrysler Corp 700,000 22,225,000
Echlin Inc. 550,000 18,356,250
Ford Motor 800,000 30,000,000
Pep Boys -
Manny Moe & Jack 346,000 10,812,500
--------------
81,393,750
--------------
Banks 9.1%
Bank of New York 550,000 23,443,750
BankAmerica Corp. 200,000 23,375,000
Chase Manhattan Corp. 287,200 27,140,400
Citicorp 190,000 21,731,250
First Union Corp. 250,000 21,468,750
Morgan (J.P.) 135,000 14,512,500
--------------
131,671,650
--------------
Beverages 1.2%
Coca-Cola 250,000 17,062,500
--------------
Building Materials 1.7%
Sherwin - Williams 800,000 24,000,000
--------------
Computer Products 0.5%
Hewlett Packard 135,000 6,952,500
--------------
Consumer & Business Svcs 3.2%
Electronic Data Systems 550,986 20,593,102
Omnicom Group 450,000 26,100,000
--------------
46,693,102
--------------
Consumer Products 5.7%
American Brands 525,000 25,725,000
Gillette 175,000 15,553,125
Kimberly - Clark 522,000 26,165,250
Rubbermaid 525,000 14,634,375
--------------
82,077,750
--------------
Drugs 4.0%
American Home Products 450,000 34,312,500
Pfizer, Inc. 225,000 23,146,875
--------------
57,459,375
--------------
Electrical Equipment 4.1%
Emerson Electric 500,000 27,000,000
General Electric 530,000 31,998,750
--------------
58,998,750
--------------
Energy 10.1%
Amoco 259,600 23,201,750
Chevron 240,000 16,800,000
Exxon 630,800 37,374,900
Mobil 210,000 29,373,750
Royal Dutch Petroleum 197,218 38,506,815
--------------
145,257,215
--------------
Financial 2.1%
American Express 425,000 29,537,500
--------------
Foods 3.9%
CPC International 325,000 27,950,000
Sara Lee 700,000 28,612,500
--------------
56,562,500
--------------
Healthcare Providers 1.8%
Columbia/HCA Healthcare 712,500 26,095,312
--------------
Industrial-Diversified 7.2%
Crown Cork & Seal 400,000 23,300,000
PPG Industries 325,000 18,890,625
Parker-Hannifin 650,000 34,206,250
Rockwell Int'l 425,000 27,412,500
--------------
103,809,375
--------------
Insurance 6.2%
Allstate Corp. 425,000 31,290,625
American General 625,000 27,656,250
American Int'l Group 225,000 30,459,375
--------------
89,406,250
--------------
Lodging 1.1%
Marriott International 275,000 15,881,250
--------------
Medical - Equipment & Supplies 2.1%
Johnson & Johnson 500,000 29,937,500
--------------
Oil Field Equipment & Services 3.0%
Halliburton Co. 285,000 22,051,875
Schlumberger Ltd. 180,000 21,442,500
--------------
43,494,375
--------------
Publishing 2.8%
Gannett 250,000 23,125,000
McGraw-Hill 300,000 16,387,500
--------------
39,512,500
--------------
Railroads 2.8%
Canadian Pacific 750,000 19,875,000
Union Pacific Corp. 300,000 20,325,000
--------------
40,200,000
--------------
Retail 2.9%
May Department Stores 366,980 17,293,933
Sears, Roebuck 503,500 24,734,437
--------------
42,028,370
--------------
Telecommunications Equipment 1.2%
Lucent Technologies, Inc 260,000 16,542,500
--------------
Tobacco 1.2%
Philip Morris 390,000 17,160,000
--------------
Utilities - Electric 5.5%
Duke Power 300,000 13,500,000
FPL Group 450,000 20,925,000
Florida Progress 650,000 19,093,750
PacifiCorp 1,300,000 25,837,500
--------------
79,356,250
--------------
Utilities - Gas 3.0%
Enron Corp. 525,000 21,393,750
Sonat, Inc. 380,000 21,850,000
--------------
43,243,750
--------------
Utilities - Telephone 1.0%
GTE Corp. 325,000 14,340,625
--------------
Total Common Stocks
(Cost $684,642,443) 1,340,553,362
--------------
Preferred Stock 0.8%
Microsoft Corp. Series A
(Cost $11,393,363) 142,500 12,272,812
--------------
<CAPTION>
- ----------------------------------------------------------------------
Principal Amount Value
(M=$1,000) (Note 1)
- ----------------------------------------------------------------------
<S> <C> <C>
Corporate Short-Term Notes 5.7%
Commercial Credit
5.51%, 06/12/97 14,000M $ 13,976,429
5.52%, 06/26/97 6,000M 5,977,000
Beneficial Corp
5.56%, 07/10/97 9,500M 9,442,779
IBM Credit Corp
5.52%, 06/04/97 10,500M 10,495,170
John Deere Cap Corp
5.56%, 06/23/97 8,000M 7,972,818
Merrill Lynch
5.54%, 06/09/97 7,500M 7,490,766
5.53%, 07/01/97 6,000M 5,972,350
Norwest Financial
5.55%, 06/19/97 6,000M 5,983,350
5.51%, 07/07/97 4,500M 4,475,205
Prudential Funding
5.55%, 06/16/97 10,000M 9,976,875
--------------
Total Corporate Short-Term Notes
(Cost $ 81,762,742) 81,762,742
--------------
Total Investments
(Cost $ 777,798,548)* 1,434,588,916
Excess of Other Assets
Over Liabilities 0.3% 4,193,074
--------------
Net Assets $1,438,781,990
==============
</TABLE>
- ----------------------------------------------------------------------
* The aggregate cost for federal income tax purposes was $777,865,854.
At May 31, 1997, unrealized appreciation for income tax purposes
aggregated $656,723,062 of which $667,807,712 related to appreciated
securities and $11,084,650 related to depreciated securities.
See Notes to Financial Statements.
17
<PAGE>
Sentinel Common Stock Fund
Statement of Assets and Liabilities
at May 31, 1997 (Unaudited)
- ---------------------------------------------------------------------
<TABLE>
<S> <C>
Assets
Investments at value $1,434,588,916
Cash and cash equivalents 691,633
Receivable for fund shares sold 736,618
Receivable for dividends and interest 4,856,848
--------------
Total Assets 1,440,874,015
--------------
Liabilities
Payable for fund shares repurchased 38,782
Accrued expenses 477,995
Management fee payable 665,337
Distribution fee payable (Class A Shares) 729,075
Distribution fee payable (Class B Shares) 39,681
Fund service fee payable 141,155
--------------
Total Liabilities 2,092,025
--------------
Net Assets Applicable to Outstanding shares $1,438,781,990
==============
Net Asset Value and Offering Price per Share
Class A Shares
$1,390,381,211/34,546,547 shares outstanding $ 40.25
Sales Charge -- 5.00% of offering price 2.12
--------------
Maximum Offering Price $ 42.37
==============
Class B Shares
$48,400,779/1,204,005 shares outstanding $ 40.20
==============
Net Assets Represent
Capital stock at par value $ 357,506
Paid-in capital 686,050,037
Accumulated undistributed net investment income 4,076,460
Accumulated undistributed net realized gain
on investments 91,507,619
Unrealized appreciation of investments 656,790,368
--------------
Net Assets $1,438,781,990
==============
Investments at Cost $ 777,798,548
==============
</TABLE>
Sentinel Common Stock Fund
Statement of Operations
For the Six Months Ended May 31, 1997 (Unaudited)
- ----------------------------------------------------------------------
<TABLE>
<S> <C>
Investment Income
Income:
Dividends $ 14,697,713
Interest 2,063,351
--------------
Total Income 16,761,064
--------------
Expenses:
Management advisory fee 3,707,454
Transfer agent and custodian 924,583
Distribution expense (Class A Shares) 1,825,000
Distribution expense (Class B Shares) 181,645
Accounting services 252,740
Auditing fees 57,500
Legal fees 34,700
Reports and notices to shareholders 86,407
Directors' fees and expenses 80,242
Other 84,984
--------------
Total Expenses 7,235,255
Expense Offset (67,108)
--------------
Net Expenses 7,168,147
--------------
Net Investment Income 9,592,917
--------------
Realized and Unrealized Gain on Investments
Net realized gain on sales of investments 91,646,918
Net change in unrealized appreciation 23,358,507
--------------
Net Realized and Unrealized Gain on Investments 115,005,425
--------------
Net Increase in Net Assets from Operations $ 124,598,342
==============
</TABLE>
18 See Notes to Financial Statements.
<PAGE>
Sentinel Common Stock Fund
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Year
Ended Ended
5/31/97 11/30/96
(Unaudited)
--------------- ---------------
<S> <C> <C>
Increase in Net Assets from Operations
Net investment income $ 9,592,917 $ 19,052,646
Net realized gain on sales of investments 91,646,918 116,444,973
Net change in unrealized appreciation 23,358,507 148,127,314
--------------- ---------------
Net increase in net assets from operations 124,598,342 283,624,933
--------------- ---------------
Distributions to Shareholders
From net investment income
Class A Shares (8,521,982) (19,249,840)
Class B Shares (91,928) (42,698)
From net realized gain on investments
Class A Shares (113,937,213) (82,958,132)
Class B Shares (2,471,535) -
--------------- ---------------
Total distributions to shareholders (125,022,658) (102,250,670)
--------------- ---------------
From Capital Share Transactions
Net proceeds from sales of shares
Class A Shares 60,050,395 109,605,903
Class B Shares 18,775,095 24,776,151
Net asset value of shares in reinvestment
of dividends and distributions
Class A Shares 101,273,016 83,386,533
Class B Shares 2,521,320 37,935
--------------- ---------------
182,619,826 217,806,522
Less: Payments for shares reacquired
Class A Shares (76,108,445) (122,853,547)
Class B Shares (1,154,593) (421,513)
--------------- ---------------
Increase in net assets from capital
share transactions 105,356,788 94,531,462
--------------- ---------------
Total Increase in Net Assets for period 104,932,472 275,905,725
Net Assets: Beginning of period 1,333,849,518 1,057,943,793
--------------- ---------------
Net Assets: End of period $1,438,781,990 $1,333,849,518
=============== ===============
Undistributed Net Investment Income
at End of Period $ 4,076,460 $ 3,097,452
=============== ===============
</TABLE>
See Notes to Financial Statements.
19
<PAGE>
Sentinel Common Stock Fund
Financial Highlights
Selected per share data and ratios
Selected data for a share of capital stock outstanding throughout each fiscal
period.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months
Ended 5/31/97 Year Ended Year Ended Year Ended Year Ended Year Ended
Class A Shares (Unaudited) 11/30/96 11/30/95 11/30/94 11/30/93 11/30/92
--------------- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value at beginning
of period $ 40.60 $ 35.21 $ 28.25 $ 29.63 $ 29.71 $ 26.78
--------------- ------------ ------------ ------------ ------------ ------------
Income from Investment
Operations
Net investment income 0.28 0.59 0.72 0.83 0.79 0.90
Net realized and unrealized
gain (loss) on investments 3.17 8.18 8.09 (1.35) 1.66 3.44
--------------- ------------ ------------ ------------ ------------ ------------
Total from investment
operations 3.45 8.77 8.81 (0.52) 2.45 4.34
--------------- ------------ ------------ ------------ ------------ ------------
Less Distributions
Dividends from net
investment income 0.26 0.61 0.74 0.80 0.82 0.91
Distributions from realized
gains on investments 3.54 2.77 1.11 0.06 1.71 0.50
--------------- ------------ ------------ ------------ ------------ ------------
Total Distributions 3.80 3.38 1.85 0.86 2.53 1.41
--------------- ------------ ------------ ------------ ------------ ------------
Net asset value at end of
period $ 40.25 $ 40.60 $ 35.21 $ 28.25 $ 29.63 $ 29.71
=============== ============ =========== ============ ============ ============
Total Return (%) * 9.5 ++ 27.2 32.8 (1.8) 8.8 16.7
Ratios/Supplemental Data
Ratio of net expenses to
average net assets (%) 1.04 + 1.06 1.09 1.02 0.93 0.72
Ratio of expenses to average
net assets before
expense reductions (%)** 1.05 + 1.07 1.10 1.02 0.93 0.72
Ratio of net investment
income to average net
assets (%) 1.44 + 1.64 2.29 2.82 2.68 3.13
Portfolio turnover rate (%) 11 22 22 15 9 5
Average commission rate paid
per share $ .0600 $ .0600 N/A N/A N/A N/A
Net assets at end of period
(000 omitted) $1,390,381 $1,306,592 $1,057,944 $839,335 $897,836 $688,309
- ---------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Six Months Eight Months
Ended 5/31/97 Ended
Class B Shares (Unaudited) 11/30/96(A)
--------------- --------------
<S> <C> <C>
Net asset value at beginning
of period $ 40.57 $ 35.43
--------------- --------------
Income from Investment
Operations
Net investment income 0.14 0.22
Net realized and unrealized
gain on investments 3.14 5.05
--------------- --------------
Total from investment
operations 3.28 5.27
--------------- --------------
Less Distributions
Dividends from net
investment income 0.11 0.13
Distributions from realized
gains on investments 3.54 -
--------------- --------------
Total Distributions 3.65 0.13
--------------- --------------
Net asset value at end of
period $ 40.20 $ 40.57
=============== ==============
Total Return (%) * 9.1 ++ 14.9 ++
Ratios/Supplemental Data
Ratio of net expenses to
average net assets (%) 1.86 + 1.91 +
Ratio of expenses to average
net assets before
expense reductions (%)** 1.86 + 1.92 +
Ratio of net investment
income to average net
assets (%) .62 + .80 +
Portfolio turnover rate (%) 11 22
Average commission rate paid
per share $ .0600 $ .0600
Net assets at end of period
(000 omitted) $ 48,401 $ 27,257
</TABLE>
(A) Commenced operations April 1, 1996.
+ Annualized
++ Not annualized
* Total return is calculated assuming an initial investment made at the net
asset value at the beginning of the period, reinvestment of all
distributions at the net asset value during the period, and a redemption on
the last day of the period. Initial sales charge is not reflected in the
calculation of total return.
** Expense reductions are comprised of the voluntary expense reimbursements
and include, effective 1995, the earning credits as described in Notes (2)
and (1)H.
N/A Not applicable to periods prior to 1996.
See Notes to Financial Statements.
20
<PAGE>
Sentinel Balanced Fund
Investment in Securities
at May 31, 1997 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Amount Value
(M=$1,000) (Note 1)
- --------------------------------------------------------------------------------
<S> <C> <C>
U.S. Government Obligations 19.5%
U.S. Treasury Obligations 10.5%
5-Year:
Note 5.5%, '00 4250M $ 4,125,050
------------
10-Year:
Note 5.75%, '03 5000M 4,798,150
Note 7.5%, '05 6750M 7,094,588
Note 6.875%, '06 750M 759,697
Note 6.25%, '07 16500M 16,042,950
------------
28,695,385
------------
30-Year:
Note 7.25%, '16 1000M 1,029,140
------------
Total U.S. Treasury Obligations 33,849,575
------------
U.S. Government Agency Obligations 9.0%
Federal Home Loan Mortgage Corporation 1.9%
5-Year:
7%, '10 1181M 1,174,402
------------
15-Year:
8%, '07 1272M 1,305,572
6.5%, '08 1790M 1,756,505
------------
3,062,077
------------
30-Year:
8%, '08 1934M 1,993,098
------------
Total Federal Home
Loan Mortgage Corporation 6,229,577
------------
Federal National Mortgage Association 3.5%
Collateralized Mortgage Obligation
CMO Trust Series
22(Y) 7.95%, '17 2527M 2,577,124
------------
Medium Term Note:
6.29%, '00 4000M 3,977,000
------------
15-Year:
7.5%, '06 863M 878,571
7.5%, '07 1239M 1,253,710
7.5%, '07 2479M 2,506,347
------------
4,638,628
------------
Total Federal National
Mortgage Association 11,192,752
------------
Government National Mortgage Association 3.6%
15-Year:
8.5%, '02 4000M 4,136,250
8%, '08 4299M 4,428,269
------------
8,564,519
------------
30-Year:
9%, '09 43M 45,608
7.75%, '26 3061M 3,086,372
------------
3,131,980
------------
Total Government
National Mortgage Assocation 11,696,499
------------
Total U.S. Government
Agency Obligations 29,118,828
------------
Total U.S. Government Obligations
(Cost $63,533,390) 62,968,403
------------
Bonds 12.1%
Beverages 0.3%
Anheuser Busch 8.5%, '17 771M 799,912
------------
Financial Institutions 3.9%
C.S. First Boston
7.75%, '06 3000M 3,082,500
First Union Corp.
6.824%, '26 2325M 2,301,750
Lehman Brothers Holdings
8.5%, '15 2800M 2,961,000
Midland Bank 7.65%, '25 800M 828,000
Salomon Bros. 6.875%, '03 3500M 3,425,625
------------
12,598,875
------------
Foreign Financial Institutions 1.8
BCH Cayman Islands Ltd.
7.7%, '06 2500M 2,546,875
Swedish Export Credit
9.875%, '38 3000M 3,206,250
------------
5,753,125
------------
Industrial - Diversified 1.5%
Dimon Inc. 8.875%, '06 1800M 1,863,000
Petroleum Geo-Services
7.5%, '07 3000M 2,996,250
------------
4,859,250
------------
Insurance 1.7%
Farmers Insurance Exchange
8.625%, '24 3000M 3,086,250
Provident Capital Trust
8.6%, '26 2500M 2,428,125
------------
5,514,375
------------
Telecommunications 2.1%
Comsat 8.05%, '06 2000M 2,156,720
Continental Cablevision
8.3%, '06 2000M 2,112,500
News America Holdings
8%, '16 2500M 2,456,250
------------
6,725,470
------------
Utility-Electric 0.6%
New Orleans Public Service
8%, '06 2000M 2,010,000
------------
Utility-Gas 0.2%
Consolidated Natural Gas
8.625%, '11 623M 641,690
------------
Total Bonds
(Cost $39,259,048) 38,902,697
------------
<CAPTION>
- --------------------------------------------------------------------------------
Shares Value
(Note 1)
- --------------------------------------------------------------------------------
<S> <C> <C>
Common Stocks 60.8%
Aerospace 0.1%
Boeing Co 2,730 $ 287,332
------------
Automobiles & Auto Parts 3.5%
Chrysler Corp 90,000 2,857,500
Echlin Inc. 80,000 2,670,000
Ford Motor 115,000 4,312,500
Pep Boys -
Manny Moe & Jack 42,600 1,331,250
------------
11,171,250
------------
Banks 5.2%
Bank of New York 80,000 3,410,000
BankAmerica Corp. 25,000 2,921,875
Chase Manhattan Corp. 26,000 2,457,000
Citicorp 25,000 2,859,375
First Union Corp. 33,000 2,833,875
Morgan (J.P.) 20,000 2,150,000
------------
16,632,125
------------
Beverages 0.7%
Coca-Cola 33,000 2,252,250
------------
Building Materials 1.1%
Sherwin-Williams 120,000 3,600,000
------------
Computer Products 0.3%
Hewlett Packard 18,000 927,000
------------
Consumer & Business Services 2.2%
Electronic Data Systems 75,312 2,814,786
Omnicom Group 75,000 4,350,000
------------
7,164,786
------------
Consumer Products 2.8%
American Brands 70,000 3,430,000
Kimberly-Clark 70,000 3,508,750
Rubbermaid 75,000 2,090,625
------------
9,029,375
------------
Drugs 2.5%
American Home Products 60,000 4,575,000
Pfizer, Inc. 35,000 3,600,625
------------
8,175,625
------------
Electrical Equipment 3.5%
Emerson Electric 75,000 4,050,000
General Electric 70,000 4,226,250
Grainger, (W.W.) 40,000 3,210,000
------------
11,486,250
------------
Energy 6.2%
Amoco 44,000 3,932,500
Chevron 35,000 2,450,000
Exxon 76,000 4,503,000
Mobil 30,050 4,203,244
Royal Dutch Petroleum 24,000 4,686,000
------------
19,774,744
------------
Financial 1.2%
American Express 55,000 3,822,500
------------
Foods 2.4%
CPC International 45,000 3,870,000
Sara Lee 95,000 3,883,125
------------
7,753,125
------------
Healthcare Providers 1.1%
Columbia/HCA Healthcare 97,500 3,570,937
------------
</TABLE>
(continued)
21
<PAGE>
Sentinel Balanced Fund
Investment in Securities (cont'd.)
at May 31, 1997 (Unaudited)
<TABLE>
<CAPTION>
- ------------------------------------------------------------
Shares Value
(Note 1)
- ------------------------------------------------------------
<S> <C> <C>
Industrial-Diversified 5.3%
Crown Cork & Seal 55,000 $ 3,203,750
Dover 30,000 1,717,500
PPG Industries 50,000 2,906,250
Parker-Hannifin 95,000 4,999,375
Rockwell Int'l. 65,000 4,192,500
------------
17,019,375
------------
Insurance 4.5%
Allstate Corp. 55,000 4,049,375
American General 85,000 3,761,250
American Int'l. Group 30,000 4,061,250
Equitable of Iowa 45,000 2,491,875
------------
14,363,750
------------
Lodging 0.7%
Marriott International 40,000 2,310,000
------------
Medical-Equipment & Supplies 1.3%
Johnson & Johnson 72,000 4,311,000
------------
Oil Field Equipment & Services 1.8%
Halliburton Co. 37,500 2,901,563
Schlumberger Ltd. 24,000 2,859,000
------------
5,760,563
------------
Publishing 2.0%
Gannett 35,000 3,237,500
McGraw-Hill 60,000 3,277,500
------------
6,515,000
------------
Railroads 2.6%
Canadian Pacific 100,000 2,650,000
Illinois Central Corp. 82,500 2,980,313
Union Pacific Corp. 40,000 2,710,000
------------
8,340,313
------------
Retail 2.2%
May Department Stores 55,000 2,591,875
Sears, Roebuck 90,000 4,421,250
------------
7,013,125
------------
Telecommunications-Equipment 0.7%
Lucent Technologies, Inc. 35,000 2,226,875
------------
Tobacco 0.7%
Philip Morris 54,000 2,376,000
------------
Utilities-Electric 3.2%
Duke Power 40,000 1,800,000
FPL Group 60,000 2,790,000
Florida Progress 80,000 2,350,000
PacifiCorp 160,000 3,180,000
------------
10,120,000
------------
Utilities-Gas 2.0%
Enron Corp. 75,000 3,056,250
Sonat, Inc. 60,000 3,450,000
------------
6,506,250
------------
Utilities-Telephone 1.0%
GTE Corp. 70,000 3,088,750
------------
Total Common Stocks
(Cost $111,679,307) 195,598,300
------------
Preferred Stock 0.5%
Microsoft Corp. Series A
(Cost $1,575,175) 19,700 1,696,663
------------
<CAPTION>
- ---------------------------------------------------------------
Principal Amount Value
(M=$1,000) (Note 1)
- ---------------------------------------------------------------
<S> <C> <C>
Corporate Short-Term Notes 12.3%
CIT Group Holdings 5.51%
06/16/97 5000M $ 4,988,521
Merrill Lynch 5.52%
06/10/97 8000M 7,988,960
Norwest Financial Inc. 5.5%
06/16/97 6000M 5,986,250
Prudential Funding 5.55%
06/05/97 3700M 3,697,718
Prudential Funding 5.51%
06/16/97 10000M 9,977,042
Transamerica Financial Corp. 5.56%
06/02/97 7000M 6,998,919
------------
Total Corporate Short-Term Notes
(Cost $39,637,410) 39,637,410
------------
Total Investments
(Cost $255,684,330)* 338,803,473
Excess of Liabilities
Over Other Assets (5.2%) (16,919,808)
------------
Net Assets $321,883,665
============
</TABLE>
- ---------------------------------------------------------------
* Also cost for federal income tax purposes.
At May 31, 1997, net unrealized appreciation for federal income tax purposes
aggregated $83,119,143 of which $85,280,012 related to appreciated securities
and $2,160,869 related to depreciated securities.
See Notes to Financial Statements.
22
<PAGE>
Sentinel Balanced Fund
Statement of Assets and Liabilities
at May 31, 1997 (Unaudited)
- ------------------------------------------------------------------------
<TABLE>
<S> <C>
Assets
Investments at value $338,803,473
Cash and cash equivalents 1,464,314
Receivable for fund shares sold 108,170
Receivable for dividends and interest 2,443,894
------------
Total Assets 342,819,851
------------
Liabilities
Payable for securities purchased 20,459,943
Payable for fund shares repurchased 18,705
Accrued expenses 93,213
Management fee payable 169,489
Distribution fee payable (Class A Shares) 140,569
Distribution fee payable (Class B Shares) 15,392
Fund service fee payable 38,875
------------
Total Liabilities 20,936,186
------------
Net Assets Applicable to Outstanding Shares $321,883,665
============
Net Asset Value and Offering Price per Share
Class A Shares
$302,691,037 / 16,047,546 shares outstanding $ 18.86
Sales Charge -- 5.00% of offering price 0.99
------------
Maximum Offering Price $ 19.85
============
Class B Shares
$19,192,628 / 1,015,974 shares outstanding $ 18.89
============
Net Assets Represent
Capital stock at par value $ 170,635
Paid-in capital 230,129,317
Accumulated undistributed net investment income 1,390,251
Accumulated undistributed net realized gain
on investments 7,074,319
Unrealized appreciation of investments 83,119,143
------------
Net Assets $321,883,665
============
Investments at Cost $255,684,330
============
</TABLE>
Sentinel Balanced Fund
Statement of Operations
For the Six Months Ended May 31, 1997 (Unaudited)
- ------------------------------------------------------------------------
<TABLE>
<S> <C>
Investment Income
Income:
Dividends $ 2,129,338
Interest 4,240,323
------------
Total Income 6,369,661
------------
Expenses:
Management advisory fee 969,039
Transfer agent and custodian 263,606
Distribution expense (Class A Shares) 441,000
Distribution expense (Class B Shares) 72,175
Accounting services 57,860
Auditing fees 12,695
Legal fees 5,720
Reports and notices to shareholders 14,089
Directors' fees and expenses 19,000
Other 26,208
------------
Total Expenses 1,881,392
Expense Offset (24,156)
------------
Net Expenses 1,857,236
------------
Net Investment Income 4,512,425
------------
Realized and Unrealized Gain on Investments
Net realized gain on sales of investments 7,065,553
Net change in unrealized appreciation 5,931,673
------------
Net Realized and Unrealized Gain on Investments 12,997,226
------------
Net Increase in Net Assets from Operations $17,509,651
============
</TABLE>
See Notes to Financial Statements.
23
<PAGE>
Sentinel Balanced Fund
Statement of Changes in Net Assets
- --------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Year
Ended Ended
5/31/97 11/30/96
(Unaudited)
------------ ------------
<S> <C> <C>
Increase in Net Assets from Operations
Net investment income $ 4,512,425 $ 8,845,963
Net realized gain on sales of investments 7,065,553 7,530,121
Net change in unrealized appreciation 5,931,673 27,684,174
------------ ------------
Net increase in net assets from operations 17,509,651 44,060,258
------------ ------------
Distributions to Shareholders
From net investment income
Class A Shares (4,225,053) (8,766,564)
Class B Shares (144,287) (39,537)
From net realized gain on investments
Class A Shares (7,122,678) (6,598,524)
Class B Shares (285,241) -
------------ ------------
Total distributions to shareholders (11,777,259) (15,404,625)
------------ ------------
From Capital Share Transactions
Net proceeds from sales of shares
Class A Shares 17,234,790 38,066,491
Class B Shares 7,902,191 10,345,842
Net asset value of shares in reinvestment
of dividends and distributions
Class A Shares 10,416,347 13,951,023
Class B Shares 401,125 34,337
------------ ------------
35,954,453 62,397,693
Less: Payments for shares reacquired
Class A Shares (27,516,330) (49,751,264)
Class B Shares (522,662) (169,001)
------------ ------------
Increase in net assets from
capital share transactions 7,915,461 12,477,428
------------ ------------
Total Increase in Net Assets for period 13,647,853 41,133,061
Net Assets: Beginning of period 308,235,812 267,102,751
------------ ------------
Net Assets: End of period $321,883,665 $308,235,812
============ ============
Undistributed Net Investment Income
at End of Period $ 1,390,251 $ 1,259,431
============ ============
</TABLE>
See Notes to Financial Statements.
24
<PAGE>
Sentinel Balanced Fund
Financial Highlights
Selected per share data and ratios
Selected data for a share of capital stock outstanding throughout each fiscal
period.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months
Ended 5/31/97 Year Ended Year Ended Year Ended Year Ended Year Ended
Class A Shares (Unaudited) 11/30/96 11/30/95 11/30/94 11/30/93 11/30/92
------------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value at beginning of period $ 18.55 $ 16.84 $ 14.08 $ 15.27 $ 14.82 $ 13.89
------------- ---------- ---------- ---------- ---------- ----------
Income from Investment Operations
Net investment income 0.27 .54 0.58 0.58 0.59 0.70
Net realized and unrealized gain (loss)
on investments 0.75 2.13 2.78 (1.12) 0.80 0.97
------------- ---------- ---------- ---------- ---------- ----------
Total from investment operations 1.02 2.67 3.36 (0.54) 1.39 1.67
------------- ---------- ---------- ---------- ---------- ----------
Less Distributions
Dividends from net investment income 0.26 0.54 0.59 0.56 0.58 0.71
Distributions from realized gains on
investments 0.45 0.42 0.01 0.09 0.36 0.03
------------- ---------- ---------- ---------- ---------- ----------
Total Distributions 0.71 0.96 0.60 0.65 0.94 0.74
------------- ---------- ---------- ---------- ---------- ----------
Net asset value at end of period $ 18.86 $ 18.55 $ 16.84 $ 14.08 $ 15.27 $ 14.82
============= ========== ========== ========== ========== ==========
Total Return (%) * 5.8 ++ 16.6 24.4 (3.6) 9.7 12.4
Ratios/Supplemental Data
Ratio of net expenses to average net
assets (%) 1.16 + 1.20 1.27 1.21 1.14 0.81
Ratio of expenses to average net assets
before expense reductions (%) ** 1.18 + 1.22 1.29 1.21 1.14 0.81
Ratio of net investment income to average
net assets (%) 2.96 + 3.13 3.77 3.97 3.88 4.86
Portfolio turnover rate (%) 29 83 110 66 72 38
Average commission rate paid per share $ .0600 $ .0600 N/A N/A N/A N/A
Net assets at end of period (000 omitted) $302,691 $297,288 $267,103 $226,328 $229,632 $120,700
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Eight Months
Ended 5/31/97 Ended
Class B Shares (Unaudited) 11/30/96(A)
------------- ------------
<S> <C> <C>
Net asset value at beginning of period $ 18.58 $ 17.09
------------- ------------
Income from Investment Operations
Net investment income 0.20 0.26
Net realized and unrealized loss on
investments 0.75 1.37
------------- ------------
Total from investment operations 0.95 1.63
------------- ------------
Less Distributions
Dividends from net investment income 0.19 0.14
Distributions from realized gains on
investments 0.45 -
------------- ------------
Total Distributions 0.64 0.14
------------- ------------
Net asset value at end of period $ 18.89 $ 18.58
============= ============
Total Return (%) * 5.4 ++ 9.6 ++
Ratios/Supplemental Data
Ratio of net expenses to average net
assets (%) 1.98 + 2.12 +
Ratio of expenses to average net assets
before expense reductions (%)** 1.99 + 2.13 +
Ratio of net investment income to average
net assets (%) 2.14 + 2.21 +
Portfolio turnover rate (%) 29 83
Average commission rate paid per share $ .0600 $ .0600
Net assets at end of period (000 omitted) $ 19,193 $ 10,948
</TABLE>
(A) Commenced operations April 1, 1996.
+ Annualized
++ Not annualized
* Total return is calculated assuming an initial investment made at the
net asset value at the beginning of the period, reinvestment of all
distributions at the net asset value during the period, and a redemption
on the last day of the period. Initial sales charge is not reflected in
the calculation of total return.
** Expense reductions are comprised of the voluntary expense reimbursements
and include, effective 1995, the earning credits as described in Notes
(2) and (1) H.
N/A Not applicable to periods prior to 1996.
See Notes to Financial Statements.
25
<PAGE>
Sentinel Bond Fund
Investment in Securities
at May 31, 1997 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Amount Value
(M=$1,000) (Note 1)
- --------------------------------------------------------------------------------
U.S.Government Obligations 39.3%
U.S. Treasury Obligations 18.5%
<S> <C> <C>
5-Year:
Note 5.5%, '00 2250M $ 2,183,850
------------
10-Year:
Note 5.75%, '03 1000M 959,630
Note 7.5%, '05 7500M 7,882,875
Note 6.25%, '07 7000M 6,806,100
------------
15,648,605
------------
Total U.S. Treasury Obligations 17,832,455
------------
U.S. Government Agency Obligations 20.8%
Federal Home Loan Mortgage Corporation 4.9%
15-Year:
8%, '07 987M 1,012,400
6.5%, '08 1790M 1,756,506
------------
2,768,906
------------
30-Year:
8%, '08 1934M 1,993,098
------------
Total Federal Home Loan
Mortgage Corporation 4,762,004
------------
Federal National Mortgage Association 9.0%
Collateralized Mortgage Obligations:
CMO Trust Series
22(Y) 7.95%, '17 2527M 2,577,124
------------
10-Year:
7.5%, '04 949M 965,485
------------
15-Year:
7.5%, '06 1182M 1,203,287
7.5%, '07 3832M 3,873,446
------------
5,076,733
------------
Total Federal National
Mortgage Association 8,619,342
------------
Government National Mortgage Association 6.9%
15-year:
8.5%, '02 3000M 3,102,187
8%, '08 3361M 3,462,102
------------
6,564,289
------------
30-year:
13%, '11 25M 29,046
13%, '13 1M 934
------------
29,980
------------
Total Government National
Mortgage Association 6,594,269
------------
Total U.S. Government
Agency Obligations 19,975,615
------------
Total U.S. Government Obligations
(Cost $38,132,975) 37,808,070
------------
Bonds 54.1%
Beverages 1.0%
Anheuser Busch 8.5%, '17 964M 1,000,150
------------
Canadian 3.5%
Province of Nova Scotia
9.375%, '02 3000M 3,322,500
------------
Financial Institutions 15.5%
CS First Boston 7.75%, '06 3000M 3,082,500
First Union Corp.
6.824%, '26 2325M 2,301,750
Lehman Brothers Holdings
8.5%, '15 3000M 3,172,500
Midland Bank 7.65%, '25 2600M 2,691,000
Salomon Bros. 6.875%, '03 3750M 3,670,313
------------
14,918,063
------------
Foreign Financial Institutions 6.8%
BCH Cayman Islands Ltd.
7.7%, '06 2500M 2,546,875
Swedish Export Credit
9.875%, '38 3770M 4,029,188
------------
6,576,063
------------
Industrial - Diversified 7.3%
Dimon Inc. 8.875%, '06 1860M 1,925,100
General Dynamics
9.95%, '18 2000M 2,132,500
Petroleum Geo-Services
7.5%, '07 3000M 2,996,250
------------
7,053,850
------------
Insurance 5.8%
Farmers Insurance Exchange
8.625%, '24 3100M 3,189,125
Provident Capital Trust
8.6%, '26 2500M 2,428,125
------------
5,617,250
------------
Telecommunications 7.0%
Comsat 8.05%, '06 2000M 2,156,720
Continental Cablevision
8.3%, '06 2000M 2,112,500
News America Holdings
8%, '16 2500M 2,456,250
------------
6,725,470
------------
Utilities - Electric 2.6%
New Orleans Public Service
8%, '06 2500M 2,512,500
------------
Utilities - Gas 2.9%
Arkla Inc. 10%, '19 1000M 1,095,000
Consolidated Natural Gas
8.625%, '11 623M 641,690
Transco Gas Pipeline Corp.
9.125%, '17 1000M 1,043,750
------------
2,780,440
------------
Utilities - Telephone 1.7%
NYNEX Capital Funding
7.63%, '09 1500M 1,582,815
------------
Total Bonds
(Cost $52,936,726) 52,089,101
------------
Corporate Short-Term Notes 15.2%
Bank America Corp. 5.52%,
06/16/97 4000M 3,990,800
CIT Group Holdings 5.51%,
06/16/97 3000M 2,993,113
Merrill Lynch 5.57%,
06/03/97 2200M 2,199,319
Merrill Lynch 5.5%,
06/04/97 2000M 1,999,083
Norwest Financial, Inc. 5.49%,
06/09/97 3500M 3,495,730
------------
Total Corporate Short-Term Notes
(Cost $14,678,045) 14,678,045
------------
Total Investments
(Cost $105,747,746)* 104,575,216
Excess of Liabilities
Over Other Assets (8.6%) (8,295,970)
------------
Net Assets $ 96,279,246
============
</TABLE>
- --------------------------------------------------------------------------------
* Also cost for federal income tax purposes.
At May 31, 1997, unrealized depreciation for federal income tax purposes
aggregated $1,172,530 of which $251,159 related to appreciated securities and
$1,423,689 related to depreciated securities.
See Notes to Financial Statements.
26
<PAGE>
Sentinel Bond Fund
Statement of Assets and Liabilities
at May 31, 1997 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Assets
<S> <C>
Investments at value $104,575,216
Cash and cash equivalents 189,592
Receivable for securities sold 16,931
Receivable for fund shares sold 42,483
Receivable for interest 1,599,302
------------
Total Assets 106,423,524
------------
Liabilities
Payable for securities purchased 10,021,491
Accrued expenses 36,838
Management fee payable 43,544
Distribution fee payable (Class A Shares) 25,686
Distribution fee payable (Class B Shares) 5,159
Fund service fee payable 11,560
------------
Total Liabilities 10,144,278
------------
Net Assets Applicable to Outstanding Shares $ 96,279,246
============
Net Asset Value and Offering Price per Share
Class A Shares
$90,147,806 / 14,653,260 shares outstanding $ 6.15
Sales Charge -- 4.00% of offering price 0.26
------------
Maximum Offering Price $ 6.41
============
Class B Shares
$6,131,440 / 994,987 shares outstanding $ 6.16
============
Net Assets Represent
Capital stock at par value $ 156,482
Paid-in capital 101,683,134
Distributions in excess of net investment income (12,393)
Accumulated undistributed net realized loss
on investments (4,375,447)
Unrealized depreciation of investments (1,172,530)
------------
Net Assets $ 96,279,246
============
Investments at Cost $105,747,746
============
</TABLE>
Sentinel Bond Fund
Statement of Operations
For the Six Months Ended May 31, 1997 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Investment Income
<S> <C>
Income:
Interest $ 3,668,162
-----------
Expenses:
Management advisory fee 262,646
Transfer agent and custodian 78,590
Distribution expense (Class A Shares) 93,860
Distribution expense (Class B Shares) 26,645
Accounting services 18,680
Auditing fees 4,730
Legal fees 2,585
Reports and notices to shareholders 4,112
Directors' fees and expenses 5,975
Other 15,030
-----------
Total Expenses 512,853
Expense Offset (11,705)
-----------
Net Expenses 501,148
-----------
Net Investment Income 3,167,014
-----------
Realized and Unrealized Gain (Loss) on Investments
Net realized gain on sales of investments 94,687
Net change in unrealized appreciation (3,308,259)
-----------
Net Realized and Unrealized Loss on Investments (3,213,572)
-----------
Net Decrease in Net Assets from Operations $ (46,558)
===========
</TABLE>
See Notes to Financial Statements.
27
<PAGE>
Sentinel Bond Fund
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Year
Ended Ended
5/31/97 11/30/96
(Unaudited)
------------ ------------
Increase (Decrease) in Net Assets from Operations
<S> <C> <C>
Net Investment income $ 3,167,014 $ 6,740,031
Net realized gain (loss) on sales of
investments 94,687 (1,050,714)
Net change in unrealized appreciation (3,308,259) (1,254,923)
------------ ------------
Net increase (decrease) in net assets from
operations (46,558) 4,434,394
------------ ------------
Distributions to Shareholders
From net investment income
Class A Shares (2,997,244) (6,671,766)
Class B Shares (146,856) (77,872)
From net realized gain on investments
Class A Shares - -
Class B Shares - -
------------ ------------
Total distributions to shareholders (3,144,100) (6,749,638)
------------ ------------
From Capital Share Transactions
Net proceeds from sales of shares
Class A Shares 7,155,385 18,125,838
Class B Shares 1,879,390 4,597,141
Net asset value of shares in reinvestment
of dividends and distributions
Class A Shares 2,036,443 4,701,495
Class B Shares 103,660 64,317
------------ ------------
11,174,878 27,488,791
Less: Payments for shares reacquired
Class A Shares (15,418,575) (29,739,584)
Class B Shares (409,037) (65,876)
------------ ------------
Decrease in net assets from capital share
transactions (4,652,734) (2,316,669)
------------ ------------
Total Decrease in Net Assets for period (7,843,392) (4,631,913)
Net Assets: Beginning of period 104,122,638 108,754,551
------------ ------------
Net Assets: End of period $ 96,279,246 $104,122,638
============ ============
Distributions in Excess of Net Investment Income
at End of Period $ (12,393) $ (17,259)
============ ============
</TABLE>
See Notes to Financial Statements.
28
<PAGE>
Sentinel Bond Fund
Financial Highlights
Selected per share data and ratios
Selected data for a share of capital stock outstanding throughout each fiscal
period.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months
Ended 5/31/97 Year Ended Year Ended Year Ended Year Ended Year Ended
Class A Shares (Unaudited) 11/30/96 11/30/95 11/30/94 11/30/93 11/30/92
------------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value at beginning of period $ 6.35 $ 6.49 $ 5.85 $ 6.90 $ 6.56 $ 6.43
------------- ---------- ---------- ---------- ---------- ----------
Income from Investment Operations
Net investment income 0.20 0.41 0.42 0.39 0.41 0.46
Net realized and unrealized gain
(loss) on investments (0.20) (0.14) 0.64 (0.70) 0.46 0.13
------------- ---------- ---------- ---------- ---------- ----------
Total from investment operations - 0.27 1.06 (0.31) 0.87 0.59
------------- ---------- ---------- ---------- ---------- ----------
Less Distributions
Dividends from net investment income 0.20 0.41 0.42 0.39 0.41 0.46
Distributions from realized gains
on investments - - - 0.35 0.12 -
------------- ---------- ---------- ---------- ---------- ----------
Total Distributions 0.20 0.41 0.42 0.74 0.53 0.46
------------- ---------- ---------- ---------- ---------- ----------
Net asset value at end of period $ 6.15 $ 6.35 $ 6.49 $ 5.85 $ 6.90 $ 6.56
============= ========== ========== ========== ========== ==========
Total Return (%) * 0.0 ++ 4.5 18.8 (4.9) 13.7 9.5
Ratios/Supplemental Data
Ratio of net expenses to average
net assets (%) .95 + 0.98 0.99 0.98 0.92 0.78
Ratio of expenses to average net
assets before expense reductions (%) ** .98 + 1.00 1.03 0.98 0.92 0.78
Ratio of net investment income to
average net assets (%) 6.42 + 6.46 6.81 6.34 5.98 7.03
Portfolio turnover rate (%) 62 176 237 133 147 83
Net assets at end of period (000 omitted) $90,148 $99,408 $108,755 $80,487 $83,387 $58,106
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Eight Months
Ended 5/31/97 Ended
Class B Shares (Unaudited) 11/30/96(A)
------------- ------------
<S> <C> <C>
Net asset value at beginning of period $ 6.36 $ 6.30
------------- ------------
Income from Investment Operations
Net investment income 0.17 0.21
Net realized and unrealized gain
(loss) on investments (0.20) 0.06
------------- ------------
Total from investment operations (0.03) 0.27
------------- ------------
Less Distributions
Dividends from net investment income 0.17 0.21
Distributions from realized gains
on investments - -
------------- ------------
Total Distributions 0.17 0.21
------------- ------------
Net asset value at end of period $ 6.16 $ 6.36
============= ============
Total Return (%) * (0.5) ++ 4.5 ++
Ratios/Supplemental Data
Ratio of net expenses to average
net assets (%) 1.97 + 2.16 +
Ratio of expenses to average net
assets before expense reductions (%) ** 1.98 + 2.18 +
Ratio of net investment income to
average net assets (%) 5.41 + 5.28 +
Portfolio turnover rate (%) 62 176
Net assets at end of period (000 omitted) $ 6,131 $ 4,714
</TABLE>
(A) Commenced operations April 1, 1996.
+ Annualized
++ Not annualized
* Total return is calculated assuming an initial investment made at the
net asset value at the beginning of the period, reinvestment of all
distributions at the net asset value during the period, and a redemption
on the last day of the period. Initial sales charge is not reflected in
the calculation of total return.
** Expense reductions are comprised of the voluntary expense reimbursements
and include, effective 1995, the earning credits as described in Notes
(2) and (1) H.
See Notes to Financial Statements.
29
<PAGE>
Sentinel Tax-Free Income Fund
Investment in Securities
at May 31, 1997 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Amount Value
(M=$1,000) (Note 1)
- --------------------------------------------------------------------------------
<S> <C> <C>
Bonds 96.1%
California 10.0%
California General Obligation
6.250%, 04/01/08 2000M $2,208,620
Foothill/Eastern CA Toll
6.500%, 01/01/32 3500M 3,641,330
San Mateo Cnty CA
Power Rev (AMBAC)
6.500%, 07/01/15 3000M 3,362,820
----------
9,212,770
----------
Colorado 1.7%
Arapahoe County
Capital Improvements
6.950%, 08/31/20 1500M 1,612,560
----------
Delaware 0.6%
Delaware Health Facility
Auth (MBIA)
7.625%, 11/01/10 500M 539,130
----------
District of Columbia 0.6%
District of Columbia
G/O (AMBAC)
7.500%, 06/01/09 500M 537,615
----------
Florida 6.0%
Dade County FL
Water & Sewer (FGIC)
5.250%, 10/01/26 3000M 2,849,370
Orange County Healthcare A
(MBIA)
6.250%, 10/01/13 1500M 1,647,330
University Community
Hospital Inc (FSA)
7.500%, 09/01/11 1000M 1,109,010
----------
5,605,710
Hawaii 4.5%
Hawaii State G/O (FGIC)
5.125%, 02/01/09 3000M 2,993,250
Dept of Budget Financial
of HI (FSA)
7.650%, 07/01/19 1000M 1,135,530
Hawaii State Housing Finance
7.800%, 07/01/29 5M 5,224
----------
4,134,004
----------
Idaho 0.6%
Idaho Housing Agency
Series D-1
8.000%, 01/01/20 545M 582,442
----------
Illinois 5.5%
Illinois Educational
Facs Authority
6.100%, 12/15/16 560M 575,305
Illinois Housing
Development Authority
7.000%, 07/01/10 990M 1,046,915
Illinois State Sales Tax Revenue
6.500%, 06/15/13 1000M 1,107,860
Illinois State Sales Tax
6.000%, 06/15/12 2180M 2,318,059
----------
5,048,139
----------
Indiana 0.1%
Indianapolis IN Economic
Dev Revenue
7.800%, 12/01/17 55M 56,926
----------
Kansas 0.1%
Kansas City Leavenworth
Cty & City of Lenexa
Series A - Mtg Rev
8.400%, 05/01/15 145M 149,914
----------
Louisiana 0.6%
Jefferson LA Sales Tax (MBIA)
8.250%, 07/01/02 500M 538,470
----------
Massachusetts 4.7%
Massachusetts State G/O
6.875%, 07/01/10 1000M 1,104,950
Massachusetts State G/O (FGIC)
6.000%, 08/01/09 1000M 1,079,780
Mass State Health &
Educational Facs
Beth Israel Hospital Revenue
7.000%, 07/01/09 1000M 1,048,650
Mass State Health
& Educational Facs
New England Baptist
Hospital Revenue
7.300%, 07/01/11 1000M 1,069,900
----------
4,303,280
----------
Michigan 1.0%
Michigan State Building
Authority
6.250%, 10/01/20 170M 172,548
Royal Oak MI Hospital
Finance Authority
7.375%, 01/01/20 750M 800,175
----------
972,723
----------
Missouri 1.3%
Central MO State
University (MBIA)
7.000%, 07/01/14 1000M 1,111,540
Missouri Housing
Development Comm
9.375%, 04/01/16 55M 58,837
----------
1,170,377
----------
Nebraska 2.3%
Omaha Public Power District
7.625%, 02/01/12 1000M 1,018,970
Omaha Public Power District
6.150%, 02/01/12 1000M 1,090,600
----------
2,109,570
----------
New Hampshire 0.9%
New Hampshire Higher
Ed & Health (MBIA)
7.625%, 07/01/20 750M 813,007
----------
New Jersey 1.2%
University of Medicine
& Dentistry
7.200%, 12/01/19 1000M 1,085,070
----------
New Mexico 2.9%
Santa Fe County
NM Revenue (FSA)
6.000%, 02/01/27 2500M 2,658,700
----------
New York 25.8%
Monroe County NY G/O
6.000%, 03/01/14 1000M 1,063,190
Municipal Asst Corp for
NYC New York
5.750%, 07/01/03 1500M 1,577,475
New York City NY
7.100%, 02/01/09 220M 244,693
New York City NY
7.100%, 02/01/09 980M 1,067,249
NYC Municipal Water
Fin Authority
7.000%, 06/15/07 250M 274,598
NY City Univ CTFS
of Participation
5.750%, 08/15/05 2000M 2,048,340
New York NY Series G
5.750%, 02/01/20 3600M 3,501,972
NY State Dorm Authority
6.375%, 07/01/08 3000M 3,168,150
NY State Dorm Authority
6.000%, 08/15/16 2800M 2,887,025
NY State Environmental
Facs Corp
7.250%, 06/15/10 50M 55,441
NY State Environmental
Facs Corp
6.600%, 09/15/12 1450M 1,577,296
NY State Medical Care Facs
7.875%, 08/15/08 175M 195,813
NY State Medical Care Facs
7.875%, 08/15/08 75M 83,135
NY State Urban Dev Co
5.250%, 01/01/21 2250M 2,059,583
Triborough Bridge &
Tunnel Authority
8.125%, 01/01/12 500M 520,625
Triborough Bridge &
Tunnel Authority
6.000%, 01/01/12 3250M 3,475,388
----------
23,799,973
----------
North Carolina 1.1%
NC Eastern Municipal
Power Agency
6.000%, 01/01/06 1000M 1,032,380
----------
Ohio 0.7%
OH Housing Finance Authority
7.050%, 09/01/16 625M 649,450
----------
</TABLE>
(continued)
30
<PAGE>
<TABLE>
<CAPTION>
Sentinel Tax-Free Income Fund
Investment in Securities (cont'd.)
at May 31, 1997 (Unaudited)
- -----------------------------------------------------
Principal Amount Value
(M=$1,000) (Note 1)
- -----------------------------------------------------
<S> <C> <C>
Pennsylvania 5.2%
Montgomery Cty Higher Ed
& Health
8.300%, 06/01/10 500M $ 561,680
Pennsylvania State G/O
6.250%, 07/01/11 2000M 2,192,960
PA Higher Educational
Facs Auth C (MBIA)
7.200%, 07/01/19 1000M 1,076,690
PA State Educational
Facs Authority (MBIA)
5.600%, 11/15/10 1000M 1,016,990
----------
4,848,320
----------
Puerto Rico 2.9%
Puerto Rico Hwy & Transportation
5.500%, 07/01/36 2750M 2,664,090
----------
Tennessee 2.4%
Lawrenceburg TN Electrical
Revenue (MBIA)
6.625%, 07/01/18 1910M 2,173,465
----------
Texas 1.2%
North Central TX Health
6.250%, 05/15/10 1000M 1,090,110
----------
Utah 0.1%
Utah State Housing Finance
Authority
7.250%, 07/01/22 20M 20,986
----------
Vermont 1.1%
Vermont Education &
Health Building
7.050%, 10/01/16 900M 982,260
----------
Virginia 2.6%
Fairfax County Water Authority
7.250%, 01/01/27 1000M 1,087,010
VA State Housing Development
Authority
5.200%, 01/01/06 1355M 1,357,723
----------
2,444,733
----------
Washington 8.4%
King County WA G/O
5.200%, 12/01/03 1750M 1,769,180
Snohomish Cnty G/O
7.100%, 12/01/07 500M 545,485
Washington State G/O
6.200%, 03/01/11 1220M 1,341,134
Washington State Public Power
7.625%, 07/01/10 250M 279,520
Washington State Public Power
(MBIA)
7.125%, 07/01/16 3295M 3,811,294
----------
7,746,613
----------
Total Bonds
(Cost $84,318,760) 88,582,787
----------
Short-Term Investments 0.2%
Port St Helens OR
General Electric Project
4.000%, 06/01/10 (a)
(Cost $200,000) 200M 200,000
----------
Total Investments
(Cost $84,518,760)* 88,782,787
Excess of Other Assets
Over Liabilities 3.7% 3,392,325
----------
Net Assets $92,175,112
==========
</TABLE>
- --------------------------------------------------------------------------------
* Also cost for federal income tax purposes.
At May 31, 1997, net unrealized appreciation for federal income tax purposes
aggregated $4,264,027 of which $4,275,388 related to appreciated securities
and $11,361 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:
(AMBAC) - Guaranteed by AMBAC Indemnity Corp.
(FGIC) - Guaranteed by Financial Guaranty Insurance Co.
(FSA) - Guaranteed by Financial Security Assurance Inc.
(MBIA) - Guaranteed by Municipal Bond Investors Assurance Corp.
G/O - General Obligation Bond
See Notes to Financial Statements.
31
<PAGE>
Sentinel Tax-Free Income Fund
Statement of Assets and Liabilities
at May 31, 1997 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
Assets
Investments at value $88,782,787
Cash and cash equivalents 663,134
Receivable for securities sold 983,906
Receivable for fund shares sold 9,731
Receivable for interest 1,834,941
-----------
Total Assets 92,274,499
-----------
Liabilities
Accrued expenses 24,622
Management fee payable 41,430
Distribution fee payable (Class A Shares) 24,145
Distribution fee payable (Class B Shares) 732
Fund service fee payable 8,458
-----------
Total Liabilities 99,387
-----------
Net Assets Applicable to Outstanding Shares $92,175,112
===========
Net Asset Value and Offering Price per Share
Class A Shares
$91,294,699 / 6,883,443 shares outstanding $ 13.26
Sales Charge -- 4.00% of offering price 0.55
-----------
Maximum Offering Price $ 13.81
===========
Class B Shares
$880,413 / 66,343 shares outstanding $ 13.27
===========
Net Assets Represent
Capital stock at par value $ 69,497
Paid-in capital 87,153,796
Accumulated undistributed net investment income 4,821
Accumulated undistributed net realized gain
on investments 682,971
Unrealized appreciation of investments 4,264,027
-----------
Net Assets $92,175,112
===========
Investments at Cost $84,518,760
===========
<CAPTION>
Sentinel Tax-Free Income Fund
Statement of Operations
For the Six Months Ended May 31, 1997 (Unaudited)
- --------------------------------------------------------------------------------
<S> <C>
Investment Income
Income:
Interest $ 2,760,518
-----------
Expenses:
Management advisory fee 251,594
Transfer agent and custodian 63,427
Distribution expense (Class A Shares) 94,175
Distribution expense (Class B Shares) 4,400
Accounting services 17,870
Auditing fees 4,895
Legal fees 2,370
Reports and notices to shareholders 3,070
Directors' fees and expenses 6,055
Other 16,888
-----------
Total Expenses 464,744
Expense Offset (23,477)
-----------
Net Expenses 441,267
-----------
Net Investment Income 2,319,251
-----------
Realized and Unrealized Gain (Loss) on Investments
Net realized gain on sales of investments 682,999
Net change in unrealized appreciation (1,727,621)
-----------
Net Realized and Unrealized Loss on Investments (1,044,622)
-----------
Net Increase in Net Assets from Operations $ 1,274,629
===========
</TABLE>
32 See Notes to Financial Statements.
<PAGE>
Sentinel Tax-Free Income Fund
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Year
Ended Ended
5/31/97 11/30/96
(Unaudited)
----------- ------------
<S> <C> <C>
Increase in Net Assets from Operations
Net investment income $ 2,319,251 $ 5,057,766
Net realized gain on sales of investments 682,999 1,068,481
Net change in unrealized appreciation (1,727,621) (1,972,048)
------------ ------------
Net increase in net assets from operations 1,274,629 4,154,199
------------ ------------
Distributions to Shareholders
From net investment income
Class A Shares (2,310,089) (5,039,025)
Class B Shares (16,636) (9,954)
From net realized gain on investments
Class A Shares (916,286) -
Class B Shares (8,418) -
------------ ------------
Total distributions to shareholders (3,251,429) (5,048,979)
------------ ------------
From Capital Share Transactions
Net proceeds from sales of shares
Class A Shares 4,207,253 11,436,258
Class B Shares 264,088 825,932
Net asset value of shares in reinvestment
of dividends and distributions
Class A Shares 2,234,753 3,258,113
Class B Shares 19,795 8,945
------------ ------------
6,725,889 15,529,248
Less: Payments for shares reacquired
Class A Shares (13,155,077) (24,320,856)
Class B Shares (151,864) (86,393)
------------ ------------
Decrease in net assets from capital share
transactions (6,581,052) (8,878,001)
------------ ------------
Total Decrease in Net Assets for period (8,557,852) (9,772,781)
Net Assets: Beginning of period 100,732,964 110,505,745
------------ ------------
Net Assets: End of period $ 92,175,112 $100,732,964
============ ============
Undistributed Net Investment Income
at End of Period $ 4,821 $ 12,295
============ ============
</TABLE>
See Notes to Financial Statements. 33
<PAGE>
Sentinel Tax-Free Income Fund
Financial Highlights
Selected per share data and ratios
Selected data for a share of capital stock outstanding throughout each fiscal
period.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
Six Months
Ended 5/31/97 Year Ended Year Ended Year Ended Year Ended Year Ended
Class A Shares (Unaudited) 11/30/96 11/30/95 11/30/94 11/30/93 11/30/92
-------------- ------------- ----------- ----------- -------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value at beginning of
period $ 13.53 $ 13.62 $ 12.35 $13.81 $13.13 $12.68
-------------- ------------- ----------- ----------- -------------- ------------
Income from Investment Operations
Net investment income 0.33 0.65 0.67 0.68 0.73 0.76
Net realized and unrealized gain
(loss) on investments (0.14) (0.09) 1.27 (1.34) 0.79 0.47
-------------- ------------- ----------- ----------- -------------- ------------
Total from investment operations 0.19 0.56 1.94 (0.66) 1.52 1.23
-------------- ------------- ----------- ----------- -------------- ------------
Less Distributions
Dividends from net investment income 0.33 0.65 0.67 0.68 0.73 0.76
Distributions from realized gains on
investments 0.13 - - 0.12 0.11 0.02
-------------- ------------- ----------- ----------- -------------- ------------
Total Distributions 0.46 0.65 0.67 0.80 0.84 0.78
-------------- ------------- ----------- ----------- -------------- ------------
Net asset value at end of period $ 13.26 $ 13.53 $ 13.62 $12.35 $13.81 $13.13
============== ============= =========== =========== ============== ============
Total Return (%) ** 1.4 ++ 4.3 16.0 (5.1) 11.9 10.0
Ratios/Supplemental Data
Ratio of net expenses to average net
assets (%) 0.91 + 0.94 0.90 0.75 0.64 0.50
Ratio of expenses to
average net assets before
expense reductions (%) *** 0.96 + 0.97 0.99 0.94 0.90 0.72
Ratio of net investment
income to average net
assets (%) 4.88 + 4.86 5.06 * 5.11 * 5.41 * 5.93 *
Portfolio turnover rate (%) 35 112 112 92 39 48
Net assets at end of period
(000 omitted) $91,295 $ 99,967 $ 110,506 $ 9,935 $ 111,968 $55,538
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
Six Months Eight Months
Ended 5/31/97 Ended
Class B Shares (Unaudited) 11/30/96(A)
------------ ------------
<S> <C> <C>
Net asset value at beginning of
period $ 13.54 $ 13.28
------------ ------------
Income from Investment Operations
Net investment income 0.24 0.32
Net realized and unrealized gain
(loss) on investments (0.14) 0.26
------------ ------------
Total from investment operations 0.10 0.58
------------ ------------
Less Distributions
Dividends from net investment income 0.24 0.32
Distributions from realized gains on
investments 0.13 -
------------ ------------
Total Distributions 0.37 0.32
------------ ------------
Net asset value at end of period $ 13.27 $ 13.54
============ ============
Total Return (%) ** 0.8 ++ 4.5 ++
Ratios/Supplemental Data
Ratio of net expenses to average net
assets (%) 2.17 + 2.18 +
Ratio of expenses to
average net assets before
expense reductions (%)*** 2.35 + 2.48 +
Ratio of net investment income to
average net assets (%) 3.62 + 3.61 +
Portfolio turnover rate (%) 35 112
Net assets at end of period (000
omitted) $ 880 $ 766
</TABLE>
(A) Commenced operations April 1, 1996.
+ Annualized
++ Not annualized
* Ratio of net investment income to average net assets would have been
5.00% in 1995, 4.92% in 1994, 5.14% in 1993 and 5.71% in 1992, in the
absence of a voluntary expense reimbursement.
** Total return is calculated assuming an initial investment made at the
net asset value at the beginning of the period, reinvestment of all
distributions at the net asset value during the period, and a
redemption on the last day of the period. Initial sales charge is not
reflected in the calculation of total return.
*** Expense reductions are comprised of the voluntary expense
reimbursements and include, effective 1995, the earning credits as
described in Notes (2) and (1) H.
See Notes to Financial Statements.
34
<PAGE>
Sentinel New York Tax-Free Income Fund
Investment in Securities
at May 31, 1997 (Unaudited)
<TABLE>
<CAPTION>
---------------------------------------------------------------
Principal Amount Value
(M=$1,000) (Note 1)
---------------------------------------------------------------
<S> <C> <C>
Bonds 96.7%
New York 88.0%
City University NY
Certificate Participation
5.75%, 08/15/05 300M $ 307,251
Insured University Revenue
5.625%, 07/01/13 (MBIA) 250M 252,188
Metro Transportation Authority
5.75%, 07/01/13 250M 253,397
Monroe County G/O
6.00%, 03/01/14 250M 265,798
Monroe Woodbury Central
School Dist.
5.625%, 05/15/22 (MBIA) 250M 247,812
New York City Municipal
Water Fin. Auth.
6.00%, 06/15/17 100M 101,081
New York NY G/O Series G
5.75%, 02/01/20 400M 389,108
New York State Dorm.
Authority Revenue
Cornell Univ. - Ser A
7.375%, 07/01/30 50M 54,442
State Univ. Educ. Fac. - Ser A
7.20%, 05/15/06 200M 225,676
State Univ. Educ. Fac. - Ser A
6.375%, 05/15/14 250M 259,845
City University System
5.625%, 07/01/16 250M 246,395
Nursing Home-Hebrew Home
5.625%, 02/01/17 220M 222,702
Department of Health
5.50%, 07/01/20 125M 118,582
New York State Energy Resources
7.50%, 07/01/25 50M 53,209
New York State Environmental
Facilities
5.75%, 01/15/13 250M 255,765
5.75%, 03/15/13 300M 299,661
New York State Environmental
Water Revenue
7.25%, 06/15/10 60M 66,529
New York State Housing
Finance Agency
5.625%, 05/01/02 250M 253,887
New York State Local Govt.
Assistance Corp.
7.00%, 04/01/08 100M 109,730
New York State Medical
Care Facilities
7.875%, 08/15/20 20M 22,062
7.30%, 02/15/21 25M 27,556
Hospitals & Nursing Homes
6.45%, 02/15/09 225M 236,945
New York State Mortgage
Agency Revenue
7.95%, 04/01/22 100M 105,675
New York State Thwy. Auth.
Service Contract
6.25%, 04/01/14 200M 204,394
New York State Urban
Development Corp.
5.70%, 04/01/20 250M 247,458
Suffolk County NY Water
Authority (AMBAC)
5.625%, 06/01/16 170M 168,725
Triborough Bridge & Tunnel
Authority
6.00%, 01/01/12 250M 267,338
6.875%, 01/01/15 65M 69,478
United Nations Development
Corp.
6.00%, 07/01/12 250M 254,622
------------
5,587,311
------------
Puerto Rico 8.7%
Puerto Rico Commonwealth
5.40%, 07/01/25 300M 287,049
Puerto Rico Commonwealth
Aqueduct & Sewer
6.00%, 07/01/09 250M 268,220
------------
555,269
------------
Total Bonds
(Cost $5,891,030) 6,142,580
------------
Short-Term Investments 1.6%
New York City G/O
3.10%, 08/15/22 (a)
(Cost $100,000) 100M 100,000
Total Investments
(Cost $5,991,030)* 6,242,580
Excess of Other Assets
Over Liabilities 1.7% 105,728
------------
Net Assets $6,348,308
============
</TABLE>
----------------------------------------------------------------
* Also cost for federal income tax purposes.
At May 31, 1997, net unrealized appreciation for federal income tax
purposes aggregated $251,550 of which, $254,390 related to appreciated
securities and $2,840 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:
(AMBAC) - Guaranteed by AMBAC
Indemnity Corp.
(MBIA) - Guaranteed by Municipal Bond
Investors Assurance Corp.
G/O - General Obligation Bond
See Notes to Financial Statements.
35
<PAGE>
Sentinel New York Tax-Free Income Fund
Statement of Assets and Liabilities
at May 31, 1997 (Unaudited)
- -------------------------------------------------------------
<TABLE>
<S> <C>
Assets
Investments at value $6,242,580
Cash and cash equivalents 246,005
Receivable for interest 103,916
Receivable from fund administrator 11,147
----------
Total Assets 6,603,648
----------
Liabilities
Payable for securities purchased 248,516
Accrued expenses 1,820
Management fee payable 2,797
Distribution fee payable 1,790
Fund service fee payable 417
----------
Total Liabilities 255,340
----------
Net Assets Applicable to Outstanding Shares 6,348,308
==========
Net Asset Value and Offering Price Per Share
$6,348,308 / 551,904 shares outstanding $11.50
Sales Charge -- 4.00% of Offering Price 0.48
----------
Maximum Offering Price Per Share $11.98
==========
Net Assets Represent
Capital stock at par value $ 5,519
Paid-in capital 6,072,016
Accumulated undistributed net investment income 156
Accumulated undistributed net realized gain
on investments 19,067
Unrealized appreciation of investments 251,550
----------
Net Assets $6,348,308
==========
Investments at Cost $5,991,030
==========
</TABLE>
Sentinel New York Tax-Free Income Fund
Statement of Operations
For the Six Months Ended May 31, 1997 (Unaudited)
<TABLE>
<S> <C>
Investment Income
Income:
Interest $164,623
----------
Expenses:
Management advisory fee 15,491
Transfer agent and custodian 3,575
Distribution expense 5,845
Accounting services 1,090
Auditing fees 450
Legal fees 135
Reports and notices to shareholders 145
Directors' fees and expenses 598
Other 4,576
----------
Total Expenses 31,905
Expense Reimbursement (11,147)
Expense Offset (1,500)
----------
Net Expenses 19,258
----------
Net Investment Income 145,365
----------
Realized and Unrealized Gain (Loss) on Investments
Net realized gain on sales of investments 19,066
Net change in unrealized appreciation (71,290)
----------
Net Realized and Unrealized Loss on Investments (52,224)
----------
Net Increase in Net Assets from Operations $ 93,141
==========
</TABLE>
See Notes to Financial Statements.
36
<PAGE>
Sentinel New York Tax-Free Income Fund
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Year
Ended Ended
5/31/97 11/30/96
(Unaudited)
----------- ----------
<S> <C> <C>
Increase in Net Assets from Operations
Net investment income $ 145,365 $ 256,969
Net realized gain on sales of investments 19,066 96,585
Net change in unrealized appreciation (71,290) (84,924)
---------- ----------
Net increase in net assets from operations 93,141 268,630
---------- ----------
Distributions to Shareholders
From net investment income (145,590) (256,981)
From realized gain on investments (45,215) -
---------- ----------
Total distributions to shareholders (190,805) (256,981)
---------- ----------
From Capital Share Transactions
Net proceeds from sales of shares 790,424 746,749
Net asset value of shares in reinvestment
of dividends and distributions 182,663 245,239
---------- ----------
973,087 991,988
Less: Payments for shares reacquired (275,712) (587,443)
---------- ----------
Increase in net assets from capital share
transactions 697,375 404,545
---------- ----------
Total Increase in Net Assets for period 599,711 416,194
Net Assets: Beginning of period 5,748,597 5,332,403
---------- ----------
Net Assets: End of period $6,348,308 $5,748,597
========== ==========
Undistributed Net Investment Income
at End of Period $ 156 $ 381
========== ==========
</TABLE>
See Notes to Financial Statements.
37
<PAGE>
Sentinel New York Tax-Free Income Fund
Financial Highlights
Selected per share data and ratios
Selected data for a share of capital stock outstanding throughout each fiscal
period.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Eight Months
Ended 5/31/97 Year Ended Ended
(Unaudited) 11/30/96 11/30/95(A)
------------- ---------- -------------
<S> <C> <C> <C>
Net asset value at beginning of period $11.72 $11.72 $11.19
------------- ---------- -------------
Income from Investment Operations
Net investment income 0.28 0.53 0.36
Net realized and unrealized gain (loss) on investments (0.13) - 0.53
------------- ---------- -------------
Total from investment operations 0.15 0.53 0.89
------------- ---------- -------------
Less Distributions
Dividends from net investment income 0.28 0.53 0.36
Distributions from realized gains on investments 0.09 - -
------------- ---------- -------------
Total Distributions 0.37 0.53 0.36
------------- ---------- -------------
Net asset value at end of period $11.50 $11.72 $11.72
============= ========== =============
Total Return (%) ** 1.4 ++ 4.8 8.1 ++
Ratios/Supplemental Data
Ratio of net expenses to average net assets (%) .66 + 1.04 1.22 +
Ratio of expenses to average net assets before
expense reductions (%) *** 1.09 + 1.10 1.29 +
Ratio of net investment income to average net assets (%) 4.98 +* 4.65 4.60 +
Portfolio turnover rate (%) 23 48 32
Net assets at end of period (000 omitted) $6,348 $5,749 $5,332
</TABLE>
(A) Commenced operations March 27, 1995.
+ Annualized
++ Not annualized
* Ratio of net investment income to average net assets would have been
4.60% in 1997, in the absence of a voluntary expense reimbursement.
** Total return is calculated assuming an initial investment made at the
net asset value at the beginning of the period, reinvestment of all
distributions at the net asset value during the period, and a redemption
on the last day of the period. Initial sales charge is not reflected in
the calculation of total return.
*** Expense reductions are comprised of the voluntary expense reimbursements
and include, effective 1995, the earning credits as described in Note
(2) and (1) H
See Notes to Financial Statements.
38
<PAGE>
Sentinel Government Securities Fund
Investment in Securities
at May 31, 1997 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Amount Value
(M=$1,000) (Note 1)
- --------------------------------------------------------------------------------
<S> <C> <C>
U.S. Government Obligations 101.7%
U.S. Treasury Obligations 38.7%
5-Year:
Note 6.625%, '01 6000M $ 6,030,240
-----------
10-Year:
Note 5.875%, '04 4750M 4,570,212
Note 6.25%, '07 11000M 10,695,300
-----------
15,265,512
-----------
30-Year:
Note 7.25%, '16 4000M 4,116,560
Note 7.25%, '22 3000M 3,084,120
Note 6.625%, '27 3000M 2,892,270
-----------
10,092,950
-----------
Total U.S. Treasury Obligations 31,388,702
-----------
U.S. Government Agency Obligations 63.0%
Federal Home Loan Mortgage Corporation 16.9%
Agency Discount Note:
5.38%, 06/02/97 3300M 3,299,507
-----------
15-Year:
8.5%, '98 18M 18,613
9.5%, '05 973M 1,020,781
9%, '06 268M 275,642
8%, '07 1974M 2,024,801
8.5%, '07 2317M 2,401,295
6.5%, '07 1654M 1,646,149
8%, '07 1892M 1,936,752
-----------
9,324,033
-----------
30-Year:
8.25%, '04 195M 202,029
11%, '09 18M 20,457
10.5%, '13 42M 45,816
11%, '15 4M 4,422
11%, '15 52M 58,025
11%, '15 66M 74,029
11%, '15 36M 40,365
11%, '16 7M 7,761
11%, '16 13M 15,041
11%, '17 15M 16,946
11%, '17 132M 147,326
10.5%, '18 155M 171,543
10.5%, '18 247M 273,041
11%, '20 12M 13,840
-----------
1,090,641
-----------
Total Federal Home Loan
Mortgage Corporation 13,714,181
-----------
Federal National Mortgage Association 18.6%
Collateralized Mortgage Obligations:
CMO Trust Series
22(Y) 7.95%, '17 3370M 3,436,166
-----------
15-Year:
8.25%, '02 124M 127,696
9.75%, '04 443M 467,066
7.75%, '05 2255M 2,308,121
11%, '11 866M 964,528
-----------
3,867,411
-----------
30-Year:
8.75%, '09 1364M 1,431,350
9.25%, '09 388M 414,680
7.5%, '14 2258M 2,318,363
8%, '16 684M 703,918
7%,'27 3010M 2,931,949
-----------
7,800,260
-----------
Total Federal National
Mortgage Association 15,103,837
-----------
Government National
Mortgage Association 27.5%
10-Year:
7%, '03 689M 690,287
7%, '03 971M 972,537
-----------
1,662,824
-----------
15-Year:
10%, '01 35M 37,298
8.5%, '02 4000M 4,136,250
8%, '08 2032M 2,093,364
-----------
6,266,912
-----------
30-Year:
8%, '08 3469M 3,609,759
9.75%, '13 265M 284,865
11%, '14 60M 66,246
10.5%, '15 58M 64,550
10.5%, '16 109M 121,422
8%,'17 2797M 2,889,936
10.5%, '17 22M 24,092
10.5%, '17 17M 18,535
10.5%, '19 52M 57,675
10.5%, '19 34M 38,183
10.5%, '19 53M 58,436
10.5%, '19 107M 119,113
10.5%, '19 31M 34,891
10.5%, '19 12M 13,562
8.25%, '26 2011M 2,068,135
7.75%, '26 1972M 1,989,062
7.5%, '26 2958M 2,949,050
-----------
14,407,512
-----------
Total Government National
Mortgage Association 22,337,248
-----------
Total U.S. Government
Agency Obligations 51,155,266
-----------
Total U.S. Government Obligations
(Cost $82,426,474) 82,543,968
-----------
Corporate Short-Term Notes 18.5%
Bank America Corp. 5.52%,
06/16/97 4000M $ 3,990,800
Merrill Lynch 5.5%,
06/16/97 4000M 3,990,833
Prudential Funding Corp. 5.51%,
06/16/97 3000M 2,993,113
Smith Barney 5.5%,
06/03/97 4000M 3,998,778
-----------
Total Corporate Short-Term Notes
(Cost $14,973,524) 14,973,524
-----------
Total Investments
(Cost $97,399,998)* 97,517,492
Excess of Liabilities
Over Other Assets (20.2%) (16,401,062)
-----------
Net Assets $81,116,430
===========
</TABLE>
- --------------------------------------------------------------------------------
** Also cost for federal income tax purposes.
At May 31, 1997, unrealized appreciation for federal income tax purposes
aggregated $117,494 of which $561,448 related to appreciated securities and
$443,954 related to depreciated securities.
See Notes to Financial Statements.
39
<PAGE>
Sentinel Government Securities Fund
Statement of Assets and Liabilities
at May 31, 1997 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Assets
Investments at value $ 97,517,492
Cash and cash equivalents 342,044
Receivable for securities sold 2,797,624
Receivable for fund shares sold 8,636
Receivable for interest 854,986
------------
Total Assets 101,520,782
------------
Liabilities
Payable for securities purchased 20,296,167
Accrued expenses 35,466
Management fee payable 36,762
Distribution fee payable 25,580
Fund service fee payable 10,377
------------
Total Liabilities 20,404,352
------------
Net Assets Applicable to Outstanding Shares $ 81,116,430
============
Net Asset Value and Offering Price Per Share
$81,116,430/8,295,342 shares outstanding $ 9.78
Sales Charge -- 4.00% of Offering Price 0.41
------------
Maximum Offering Price Per Share $ 10.19
============
Net Assets Represent
Capital stock at par value $ 82,953
Paid-in capital 88,123,521
Distributions in excess of net investment income (577)
Accumulated undistributed net realized loss
on investments (7,206,961)
Unrealized appreciation of investments 117,494
------------
Net Assets $ 81,116,430
============
Investments at Cost $ 97,399,998
============
</TABLE>
Sentinel Government Securities Fund
Statement of Operations
For the Six Months Ended May 31, 1997 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Investment Income
Income:
Interest $ 2,961,419
-----------
Expenses:
Management advisory fee 225,265
Transfer agent and custodian 74,956
Distribution expense 85,105
Accounting services 15,970
Auditing fees 4,125
Legal fees 2,300
Reports and notices to shareholders 3,880
Directors' fees and expenses 5,250
Other 11,327
-----------
Total Expenses 428,178
Expense Offset (3,456)
-----------
Net Expenses 424,722
-----------
Net Investment Income 2,536,697
-----------
Realized and Unrealized Loss on Investments
Net realized loss on sales of investments (760,124)
Net change in unrealized appreciation (1,287,620)
-----------
Net Realized and Unrealized Loss on Investments (2,047,744)
-----------
Net Increase in Net Assets from Operations $ 488,953
===========
</TABLE>
40 See Notes to Financial Statements.
<PAGE>
Sentinel Government Securities Fund
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Year
Ended Ended
5/31/97 11/30/96
(Unaudited)
------------ ------------
<S> <C> <C>
Increase in Net Assets from Operations
Net investment income $ 2,536,697 $ 6,169,447
Net realized loss on sales of investments (760,124) (3,051,420)
Net change in unrealized appreciation (1,287,620) (475,659)
------------ ------------
Net increase in net assets from operations 488,953 2,642,368
------------ ------------
Distributions to Shareholders
From net investment income (2,445,564) (6,067,900)
From net realized gain on investments - -
------------ ------------
Total distributions to shareholders (2,445,564) (6,067,900)
------------ ------------
From Capital Share Transactions
Net proceeds from sales of shares 2,817,175 11,859,191
Net asset value of shares in reinvestment
of dividends and distributions 1,855,078 4,652,285
------------ ------------
4,672,253 16,511,476
Less: Payments for shares reacquired (13,898,233) (28,887,111)
------------ ------------
Decrease in net assets from capital share
transactions (9,225,980) (12,375,635)
------------ ------------
Total Decrease in Net Assets for period (11,182,591) (15,801,167)
Net Assets: Beginning of period 92,299,021 108,100,188
------------ ------------
Net Assets: End of period $ 81,116,430 $ 92,299,021
============ ============
Undistributed (Distributions in Excess of)
Net Investment Income at End of Period $ (577) $ 1,010
============ ============
</TABLE>
See Notes to Financial Statements. 41
<PAGE>
Sentinel Government Securities Fund
Financial Highlights
Selected per share data and ratios
Selected data for a share of capital stock outstanding throughout each fiscal
period.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months
Ended 5/31/97 Year Ended Year Ended Year Ended Year Ended Year Ended
(Unaudited) 11/30/96 11/30/95 11/30/94 11/30/93 11/30/92
------------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value at beginning of period $ 10.00 $ 10.30 $ 9.31 $ 10.45 $ 10.18 $ 10.04
------------- ---------- ---------- ---------- ---------- ----------
Income from Investment Operations
Net investment income 0.28 0.61 0.63 0.59 0.62 0.70
Net realized and unrealized gain (loss) on
investments (0.22) (0.30) 0.99 (1.04) 0.42 0.14
------------- ---------- ---------- ---------- ---------- ----------
Total from investment operations 0.06 0.31 1.62 (0.45) 1.04 0.84
------------- ---------- ---------- ---------- ---------- ----------
Less Distributions
Dividends from net investment income 0.28 0.61 0.63 0.58 0.60 0.70
Distributions from realized gains on
investments - - - 0.11 0.17 -
------------- ---------- ---------- ---------- ---------- ----------
Total Distributions 0.28 0.61 0.63 0.69 0.77 0.70
------------- ---------- ---------- ---------- ---------- ----------
Net asset value at end of period $ 9.78 $ 10.00 $ 10.30 $ 9.31 $ 10.45 $ 10.18
============= ========== ========== ========== ========== ==========
Total Return (%) * 0.7++ 3.2 17.9 (4.5) 10.6 8.6
Ratios/Supplemental Data
Ratio of net expenses to average net assets (%) .99+ 1.00 1.03 1.00 0.98 0.76
Ratio of expenses to average net assets before
expense reductions (%) ** 1.00+ 1.01 1.04 1.00 0.98 0.76
Ratio of net investment income to average net
assets (%) 5.94+ 6.18 6.50 5.95 6.06 6.90
Portfolio turnover rate (%) 111 614 367 149 97 79
Net assets at end of period (000 omitted) $ 81,116 $ 92,299 $ 108,100 $ 104,457 $ 134,749 $ 68,293
</TABLE>
+ Annualized
++ Not annualized
* Total return is calculated
assuming an initial investment
made at the net asset value at
the beginning of the period,
reinvestment of all distributions
at the net asset value during the
period, and a redemption on the
last day of the period. Initial
sales charge is not reflected in
the calculation of total return.
** Expense reductions are comprised
of the voluntary expense
reimbursements and include,
effective 1995, the earning
credits as described in Notes (2)
and (1)H.
See Notes to Financial Statements.
42
<PAGE>
Sentinel Short Maturity Government Fund
Investment in Securities
at May 31, 1997 (Unaudited)
<TABLE>
<CAPTION>
- -------------------------------------------------------
Principal Amount Value
(M=$1,000) (Note 1)
- -------------------------------------------------------
<S> <C> <C>
U.S. Government
Agency Obligations 97.8%
Federal Home Loan Mortgage Corporation 38.2%
Collateralized Mortgage Obligations:
1057(D), 8%, '00 811M $ 827,391
1317-E, 7%, '04 525M 526,807
53(A) P11, 9.5%, '20 9M 8,815
Georgia Federal Mort. Corp.,
Series A4, 10.5%, '14 1081M 1,103,808
Merril Lynch Trust
Series 5(B), 6%, '18 98M 93,225
----------
2,560,046
----------
5-Year:
8%, '00 455M 463,276
8%, '00 447M 455,266
8%, '00 492M 501,230
----------
1,419,772
----------
10-Year:
8%, '02 723M 745,519
7.5%, '02 668M 678,658
6.5%, '04 832M 830,895
----------
2,255,072
----------
15-Year:
8.5%, '01 715M 735,034
9.5%, '01 2M 1,980
9%, '01 311M 321,421
9.5%, '01 5M 4,983
9%, '01 267M 275,553
9.5%, '03 4M 4,032
9.5%, '03 2M 2,483
9.5%, '04 206M 215,947
10%, '05 129M 136,342
9%, '06 694M 723,644
8.5%, '07 59M 60,852
9%, '07 542M 564,827
5.5, '09 1024M 983,498
----------
4,030,596
----------
20-Year:
8.5%, '03 825M 858,848
7.5%, '08 773M 780,042
----------
1,638,890
----------
25-Year:
7%, '06 942M 940,574
7%, '07 503M 502,081
----------
1,442,655
----------
30-Year:
8.25%, '07 594M 613,585
8.5%, '09 1618M 1,690,786
8%, '09 337M 346,800
10.25%, '09 25M 27,426
----------
2,678,597
----------
Total Federal Home Loan
Mortgage Corporation 16,025,628
----------
Federal National Mortgage Association 43.2%
Collateralized Mortgage Obligations:
1992 - 20(PG), 7%, '05 509M 511,631
----------
10-Year:
9%, '02 1015M 1,055,203
6%, '04 1084M 1,069,414
9%, '04 1038M 1,079,059
----------
3,203,676
----------
15-Year:
7.5%, '02 288M 291,731
9%, '02 8M 8,730
10.5%, '03 61M 64,278
7%, '05 814M 818,205
8%, '05 617M 631,447
7.5%, '07 390M 394,623
7%, '07 472M 471,634
7.5%, '08 391M 395,922
8%, '09 1415M 1,450,817
7.5%, '09 844M 861,549
7.25%, '09 1510M 1,516,832
8%, '09 1314M 1,348,678
8.5%, '10 437M 452,059
11.0%, '11 1500M 1,669,836
----------
10,376,341
----------
20-Year:
8%, '04 345M 355,411
8%, '04 420M 432,014
7.5%, '06 696M 708,382
7.5%, '07 284M 288,346
7%, '07 721M 717,475
----------
2,501,628
----------
25-Year:
8.75%, '09 193M 202,166
8%, '12 1205M 1,240,402
----------
1,442,568
----------
30-Year:
8.75%, '13 67M 70,384
----------
Total Federal National
Mortgage Association 18,106,228
----------
Government National Mortgage Association 16.4%
Collateralized Mortgage Obligations:
Trust Series 27(A) 7.25%, '17 303M 300,888
MDC Asset Inv.
Trust XII 3, 8.94%, '18 1231M 1,263,564
----------
1,564,452
----------
15-Year:
11.25%, '98 0M 507
11.25%, '98 0M 167
11.25%, '98 0M 22
10.75%, '98 3M 3,546
11.25%, '98 1M 647
10.75%, '98 2M 2,314
10.75%, '98 9M 9,746
9.5%, '99 7M 7,111
10.25%, '99 9M 9,282
11.25%, '00 14M 15,257
11%, '00 7M 7,751
9.75%, '01 9M 9,271
9.75%, '01 3M 2,701
9%, '01 30M 31,205
9.5%, '04 11M 11,278
9%, '07 35M 36,849
8%, '08 485M 498,786
7.5%, '08 465M 472,328
9%, '11 455M 478,707
----------
1,597,475
----------
20-Year:
9.25%, '07 42M 44,207
9.75%, '10 147M 157,687
8%, '17 1865M 1,926,623
----------
2,128,517
----------
30-Year:
6.5%, '03 302M 301,396
8%, '03 345M 356,392
9%, '09 179M 189,009
10%, '09 10M 11,117
10%, '16 16M 17,960
9.25%, '26 687M 731,924
----------
1,607,798
----------
Total Government National
Mortgage Association 6,898,242
----------
Total U.S. Government
Agency Obligations
(Cost $40,995,845)* 41,030,098
Excess of Other Assets
Over Liabilities 2.2% 913,206
----------
Net Assets $41,943,304
==========
- -------------------------------------------------------
</TABLE>
* Also cost for federal income tax purposes.
May 31, 1997, unrealized appreciation for federal income tax purposes
aggregated $34,253 of which $195,725 related to appreciated securities and
$161,472 related to depreciated securities.
See Notes to Financial Statements.
43
<PAGE>
Sentinel Short Maturity Government Fund
Statement of Assets and Liabilities
at May 31, 1997 (Unaudited)
- -----------------------------------------------------------------
<TABLE>
<S> <C>
Assets
Investments at value $41,030,098
Receivable for securities sold 168,014
Receivable for fund shares sold 525,021
Receivable for interest 327,363
Receivable from fund administrator 36,394
-----------
Total Assets 42,086,890
-----------
Liabilities
Accrued expenses 9,923
Management fee payable 18,567
Distribution fee payable 28,283
Fund service fee payable 4,474
Payable to custodian bank 82,339
-----------
Total Liabilities 143,586
-----------
Net Assets Applicable to Outstanding Shares $41,943,304
===========
Net Asset Value and Offering Price Per Share
$41,943,304 / 4,314,118 shares outstanding $ 9.72
Sales Charge -- 1.00% of Offering Price 0.10
-----------
Maximum Offering Price Per Share $ 9.82
===========
Net Assets Represent
Capital stock at par value $ 43,141
Paid-in capital 43,152,107
Distributions in excess of net investment income (5,734)
Accumulated undistributed net realized loss
on investments (1,280,463)
Unrealized appreciation of investments 34,253
-----------
Net Assets $41,943,304
===========
Investments at Cost $40,995,845
===========
</TABLE>
Sentinel Short Maturity Government Fund
Statement of Operations
For the Six Months Ended May 31, 1997 (Unaudited)
- -----------------------------------------------------------------
<TABLE>
<S> <C>
Investment Income
Income:
Interest $1,459,203
-----------
Expenses:
Management advisory fee 104,921
Transfer agent and custodian 35,563
Distribution expense 69,390
Accounting services 7,400
Auditing fees 2,235
Legal fees 1,000
Reports and notices to shareholders 1,490
Directors' fees and expenses 2,790
Other 15,434
-----------
Total Expenses 240,223
Expense Reimbursement (36,394)
Expense Offset (6,323)
-----------
Net Expenses 197,506
-----------
Net Investment Income 1,261,697
-----------
Realized and Unrealized Loss on Investments
Net realized loss on sales of investments (203,326)
Net change in unrealized appreciation (244,850)
-----------
Net Realized and Unrealized Loss on Investments (448,176)
-----------
Net Increase in Net Assets from Operations $ 813,521
===========
</TABLE>
See Notes to Financial Statements.
44
<PAGE>
Sentinel Short Maturity Government Fund
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Year
Ended Ended
5/31/97 11/30/96
(Unaudited)
------------ ------------
<S> <C> <C>
Increase in Net Assets from Operations
Net investment income $ 1,261,697 $ 2,155,465
Net realized loss on sales of investments (203,326) (177,412)
Net change in unrealized appreciation (244,850) (73,058)
------------ ------------
Net increase in net assets from operations 813,521 1,904,995
------------ ------------
Distributions to Shareholders
From net investment income (1,172,664) (2,059,894)
From realized gain on sale of investments - -
------------ ------------
Total distributions to shareholders (1,172,664) (2,059,894)
------------ ------------
From Capital Share Transactions
Net proceeds from sales of shares 15,880,296 32,166,653
Net asset value of shares in reinvestment
of dividends and distributions 952,636 1,660,864
------------ ------------
16,832,932 33,827,517
Less: Payments for shares reacquired (11,004,179) (25,615,589)
------------ ------------
Increase in net assets from capital share
transactions 5,828,753 8,211,928
------------ ------------
Total Increase in Net Assets for period 5,469,610 8,057,029
Net Assets: Beginning of period 36,473,694 28,416,665
------------ ------------
Net Assets: End of period $ 41,943,304 $ 36,473,694
============ ============
Undistributed (Distributions in Excess of)
Net Investment Income at End of Period $ (5,734) $ 1,384
============ ============
</TABLE>
See Notes to Financial Statements.
45
<PAGE>
Sentinel Short Maturity Government Fund
Financial Highlights
Selected per share data and ratios
Selected data for a share of capital stock outstanding throughout each fiscal
period.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Eight Months
Ended 5/31/97 Year Ended Ended
(Unaudited) 11/30/96 11/30/95(A)
------------- ---------- ------------
<S> <C> <C> <C>
Net asset value at beginning of period $ 9.81 $ 9.84 $ 9.64
Income from Investment Operations
Net investment income 0.28 0.57 0.40
Net realized and unrealized gain (loss) on investments (0.09) (0.03) 0.20
------------- ---------- ------------
Total from investment operations 0.19 0.54 0.60
------------- ---------- ------------
Less Distributions
Dividends from net investment income 0.28 0.57 0.40
Distributions from realized gains on investments - - -
------------- ---------- ------------
Total Distributions 0.28 0.57 0.40
------------- ---------- ------------
Net asset value at end of period $ 9.72 $ 9.81 $ 9.84
============= ========== ============
Total Return (%) ** 2.0 ++ 5.6 6.3 ++
Ratios/Supplemental Data
Ratio of net expenses to average net assets (%) 1.00 + 1.00 1.00 +
Ratio of expenses to average net assets before
expense reductions (%) *** 1.21 + 1.20 1.38 +
Ratio of net investment income to average net assets (%) 6.36 +* 6.09 * 6.07 +*
Portfolio turnover rate (%) 30 120 58
Net assets at end of period (000 omitted) $41,943 $ 36,474 $ 28,417
</TABLE>
(A) Commenced operations March 27, 1995.
+ Annualized
++ Not annualized
* Ratio of net investment income to average net assets would have been
6.18% in 1997, 5.93% in 1996 and 5.76% in 1995, in the absence of a
voluntary expense reimbursement.
** Total return is calculated assuming an initial investment made at the
net asset value at the beginning of the period, reinvestment of all
distributions at the net asset value during the period, and a redemption
on the last day of the period. Initial sales charge is not reflected in
the calculation of total return.
*** Expense reductions are comprised of the voluntary expense reimbursements
and include, effective 1995, the earning credits as described in Notes
(2) and (1) H.
See Notes to Financial Statements.
46
<PAGE>
Sentinel U.S.Treasury Money Market Fund
Investment in Securities
at May 31, 1997 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Amount Value
(M=$1,000) (Note 1)
- --------------------------------------------------------------------------------
U.S. Treasury Obligations 97.1%
<S> <C> <C>
U S Treasury Bill
5.16%, 06/05/97 1500M $1,499,140
U S Treasury Bill
5.18%, 06/12/97 1500M 1,497,626
U S Treasury Bill
5.235%, 06/19/97 1500M 1,496,074
U S Treasury Bill
4.915%, 06/26/97 550M 548,123
U S Treasury Note
5.625%, 06/30/97 2000M 2,000,249
U S Treasury Note
5.625%, 06/30/97 500M 500,139
U S Treasury Bill
5.21%, 07/03/97 2100M 2,090,275
U S Treasury Bill
5.11%, 07/10/97 2500M 2,486,160
U S Treasury Note
8.5%, 07/15/97 2300M 2,308,823
U S Treasury Bill
4.97%, 07/24/97 1000M 992,683
U S Treasury Bill
5.195%, 07/24/97 2000M 1,984,703
U S Treasury Note
5.875%, 07/31/97 2610M 2,612,649
U S Treasury Note
5.875%, 07/31/97 405M 405,357
U S Treasury Note
5.875%, 07/31/97 3000M 3,002,390
U S Treasury Note
5.875%, 07/31/97 3000M 3,001,893
U S Treasury Note
5.875%, 07/31/97 2500M 2,501,976
U S Treasury Note
5.875%, 07/31/97 5000M 5,006,284
U S Treasury Note
5.875%, 07/31/97 2500M 2,503,057
U S Treasury Note
6.5%, 08/15/97 5000M 5,009,227
U S Treasury Note
6.5%, 08/15/97 2600M 2,605,390
U S Treasury Note
6.5%, 08/15/97 2000M 2,004,202
U S Treasury Note
8.625%, 08/15/97 5000M 5,032,080
U S Treasury Bill
5.285%, 08/21/97 1500M 1,482,163
U S Treasury Bill
5.305%, 08/21/97 4000M 3,952,255
U S Treasury Bill
4.99%, 08/28/97 2500M 2,469,506
U S Treasury Bill
5.05%, 08/28/97 1000M 987,656
U S Treasury Bill
5%, 09/04/97 2000M 1,973,611
U S Treasury Note
5.75%, 09/30/97 5000M 5,001,929
U S Treasury Note
5.75%, 09/30/97 5000M 5,004,330
U S Treasury Note
5.75%, 09/30/97 5000M 5,004,996
U S Treasury Note
5.75%, 09/30/97 5000M 5,005,188
-----------
Total Investments
(Amortized Cost $81,970,134)* 81,970,134
Excess of Other Assets
Over Liabilities 2.9% 2,478,892
-----------
Net Assets $84,449,026
===========
</TABLE>
- --------------------------------------------------------------------------------
* Also cost for federal income tax purposes.
See Notes to Financial Statements.
47
<PAGE>
Sentinel U.S. Treasury Money Market Fund
Statement of Assets and Liabilities
at May 31, 1997 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Assets
<S> <C>
Investments at value $81,970,134
Cash and cash equivalents 947,798
Receivable for fund shares sold 900,575
Receivable for interest 1,010,426
-----------
Total Assets 84,828,933
-----------
Liabilities
Payable for fund shares repurchased 294,463
Dividends payable 13,449
Accrued expenses 29,629
Management fee payable 28,783
Fund service fee payable 13,583
-----------
Total Liabilities 379,907
-----------
Net Assets Applicable to Outstanding Shares $84,449,026
===========
Net Asset Value
Class A Shares
$80,680,522 / 80,680,522 shares outstanding $ 1.00
===========
Class B Shares
$3,768,504 / 3,768,504 shares outstanding $ 1.00
===========
Net Assets Represent
Capital stock at par value $ 844,490
Paid-in capital 83,604,536
-----------
Net Assets $84,449,026
===========
Investments at Cost $81,970,134
===========
</TABLE>
Sentinel U.S. Treasury Money Market Fund
Statement of Operations
For the Six Months Ended May 31, 1997 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Investment Income
<S> <C>
Income:
Interest $2,282,627
----------
Expenses
Management advisory fee 173,441
Transfer agent and custodian 111,092
Accounting services 16,790
Auditing fees 4,330
Legal fees 2,015
Reports and notices to shareholders 4,848
Directors' fees and expenses 5,313
Other 22,747
----------
Total Expenses 340,576
Expense Offset (2,559)
----------
Net Expenses 338,017
----------
Net Investment Income and Net Increase in
Net Assets from Operations $1,944,610
==========
</TABLE>
See Notes to Financial Statements.
48
<PAGE>
Sentinel U.S. Treasury Money Market Fund
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Year
Ended Ended
5/31/97 11/30/96
(Unaudited)
-------------- -------------
<S> <C> <C>
Increase in Net Assets from Operations
Net investment income $ 1,944,610 $ 3,680,039
-------------- -------------
Distributions to Shareholders
From net investment income
Class A Shares (1,844,500) (3,581,171)
Class B Shares (100,110) (98,868)
-------------- -------------
Total Distributions to Shareholders (1,944,610) (3,680,039)
-------------- -------------
From Capital Share Transactions
Net proceeds from sales of shares
Class A Shares 100,181,094 198,865,999
Class B Shares 4,754,477 7,608,971
Net asset value of shares in reinvestment
of dividends and distributions
Class A Shares 1,671,383 3,213,012
Class B Shares 87,936 84,246
-------------- -------------
106,694,890 209,772,228
Less: Payments for shares reacquired
Class A Shares (101,976,092) (201,938,785)
Class B Shares (4,234,249) (4,532,877)
-------------- -------------
Increase in net assets from capital share
transactions 484,549 3,300,566
-------------- -------------
Total Increase in Net Assets for period 484,549 3,300,566
Net Assets: Beginning of period 83,964,477 80,663,911
-------------- -------------
Net Assets: End of period $ 84,449,026 $ 83,964,477
============== =============
</TABLE>
See Notes to Financial Statements. 49
<PAGE>
Sentinel U.S. Treasury Money Market Fund
Financial Highlights
Selected per share data and ratios
Selected data for a share of capital stock outstanding throughout each fiscal
period.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Nine
Ended 5/31/97 Year Ended Year Ended Year Ended Months Ended
Class A Shares (Unaudited) 11/30/96 11/30/95 11/30/94 11/30/93(A)
-------------- ----------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------------- ----------- ----------- ----------- -------------
Income from Investment Operations
Net investment income 0.02 0.04 0.05 0.03 0.02
Net realized and unrealized gain (loss) on
investments - - - - -
-------------- ----------- ----------- ----------- -------------
Total from investment operations 0.02 0.04 0.05 0.03 0.02
-------------- ----------- ----------- ----------- -------------
Less Distributions
Dividends from net investment income 0.02 0.04 0.05 0.03 0.02
Distributions from realized gains on
investments - - - - -
-------------- ----------- ----------- ----------- -------------
Total Distributions 0.02 0.04 0.05 0.03 0.02
-------------- ----------- ----------- ----------- -------------
Net asset value at end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
============== =========== =========== =========== =============
Total Return (%) ** 2.3++ 4.6 5.0 3.1 1.7++
Ratios/Supplemental Data
Ratio of net expenses to average
net assets (%) 0.78+ 0.78 0.81 0.81 .85+
Ratio of expenses to average net assets
before expense reductions (%) *** 0.78+ 0.78 0.82 0.81 .87+
Ratio of net investment income to average
net assets (%) 4.47+ 4.38 4.83 3.01 2.20+*
Net assets at end of period (000 omitted) $80,681 $80,804 $ 80,664 $ 75,301 $ 72,252
- --------------------------------------------------------------------------------
<CAPTION>
Six Months Eight Months
Ended 5/31/97 Ended
Class B Shares (Unaudited) 11/30/96(B)
-------------- ------------
<S> <C> <C>
Net asset value at beginning of period $ 1.00 $ 1.00
-------------- ------------
Income from Investment Operations
Net investment income 0.02 0.03
Net realized and unrealized gain (loss) on
investments - -
-------------- ------------
Total from investment operations 0.02 0.03
-------------- ------------
Less Distributions
Dividends from net investment income 0.02 0.03
Distributions from realized gains on
investments - -
-------------- ------------
0.02 0.03
-------------- ------------
Net asset value at end of period $ 1.00 $ 1.00
-------------- ------------
Total Return (%) ** 2.3++ 3.0++
Ratios/Supplemental Data
Ratio of net expenses to average
net assets (%) .77+ .76+
Ratio of expenses to average net assets
before expense reductions (%)*** .77+ .77+
Ratio of net investment income to average
net assets (%) 4.48+ 4.40+
Net assets at end of period (000 omitted) $ 3,769 $ 3,160
</TABLE>
(A) Commenced operations March 1, 1993.
(B) Commenced operations April 1, 1996.
+ Annualized
++ Not annualized
* Ratio of net investment income to average net assets would have been
2.18% in 1993, in the absence of a voluntary expense reimbursement.
** Total return is calculated assuming an initial investment made at the
net asset value at the beginning of the period, reinvestment of all
distributions at the net asset value during the period, and a
redemption on the last day of the period. Initial sales charge is not
reflected in the calculation of total return.
*** Expense reductions are comprised of the voluntary expense
reimbursements and include, effective 1995, the earning credits as
described in Notes (2) and (1) H.
See Notes to Financial Statements.
50
<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 Small Company
Fund (formerly 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 (a
non-diversified series), Sentinel Government Securities Fund, Sentinel Short
Maturity Government Fund (formerly Sentinel Short-Intermediate Government Fund)
and Sentinel U.S. Treasury Money Market Fund, each individually referred to as a
Fund. The Funds initially offered one class of shares now referred to as Class A
Shares. Effective April 1, 1996 Sentinel Small Company, Sentinel World, Sentinel
Common Stock, Sentinel Balanced, Sentinel Bond, Sentinel Tax-Free Income and
Sentinel U.S. Treasury Money Market Funds have a second class of shares called
Class B Shares. 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
principal exchange on which they are traded 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 Tax-Free Income Fund, the Sentinel New York Tax-Free Income Fund
and the Sentinel Short Maturity Government Fund amortize 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-classifications were made to
reflect these differences as of May 31, 1997 as follows:
<TABLE>
<CAPTION>
Increase (decrease) in
Increase (decrease) accumulated undistributed
in accumulated net realized gain (loss)
undistributed net on investments and foreign
Fund investment income currency transactions
- --------------------------------- ----------------------- -------------------------------
<S> <C> <C>
World............................ ($232,762) $232,762
Balanced......................... (12,264) 12,264
Bond............................. (18,048) 18,048
Government Sec................... (92,720) 92,720
Short Maturity Gov't............. (96,150) 96,150
</TABLE>
D. Dollar Rolls: Sentinel Balanced, Sentinel Bond, Sentinel Government
Securities and Sentinel Short Maturity 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.
51
<PAGE>
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.
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: Direct expenses of a Fund are charged to that Fund while common
expenses of the Company are allocated proportionately based upon the Funds'
respective average net assets or number of shareholder accounts.
Allocation of expenses not allocated to a specific Class of each Fund are
allocated on the basis of daily net assets or number of shareholder accounts,
each on a pro rata basis, of each Class.
Investment income, gains and losses (realized and unrealized) are allocated pro
rata according to daily net assets of each Class of each Fund.
Earnings credits are received from the custodian and dividend paying agent on
cash balances and are reflected in the statement of operations as an expense
offset.
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures in the financial statements. Actual
results could differ from those estimates.
(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 Small
Company, 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 Maturity 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
52
<PAGE>
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 INVESCO Capital Management, Inc. (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 "A Plans". The Sentinel
New York Tax-Free Income Fund became subject to the A Plan upon its inception on
March 27, 1995. On March 24, 1995 the Sentinel Short Maturity Government Fund
adopted a supplemental distribution plan pursuant to Rule 12b-1 applicable only
to it. On March 29, 1996 each of the Funds with Class B Shares (except Sentinel
U.S. Treasury Money Market Fund) adopted a Class B distribution plan referred to
as the "B Plans." 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,
ProvidentMutual 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 A Plans, each participating Fund pays to the Distributor a monthly fee
at the maximum annual rate of (a) .30% of average daily net assets relating to A
Shares outstanding in the case of the Sentinel Small Company, Sentinel Growth,
Sentinel World, Sentinel Common Stock and Sentinel Balanced Funds, (b) .20% of
average daily net assets relating to A Shares outstanding 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
relating to A Shares outstanding in the case of the Sentinel Short Maturity
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.
Under the B Plans, each participating Fund pays the Distributor a monthly fee at
the maximum annual rate of 1.00% of the average daily net assets relating to B
Shares outstanding. Of such amount, up to 0.25% shall be allocated to service
fees to securities dealers who have executed a selling agreement with the
Distributor, and up to 0.75% may be allocated to other expenses. Other expenses
include recovery of front-end sales commissions paid by the Distributor with
respect to sales of Class B Shares, together with the cost of financing such
payments incurred by the Distributor, except to the extent such costs are
recovered through contingent deferred sales charges collected by the
Distributor. Other expenses also include those described above for the A Plans.
The Distributor will not be reimbursed for any unreimbursed eligible expenses
from any other Fund, or in any future year from any of the Plans.
SFSC also receives a sales charge added to the net asset value received by the
Company on the sale of its Class A 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 $2,289,018 for the six months
ended May 31, 1997. The Company is advised that the total distribution charges
retained by SFSC on the sale of shares amounted to $64,033 after allowances of
$1,211,584 to Equity Services, Inc., an affiliate of National Life, $172,399 to
1717 Capital Management Company, an affiliate of Provident Mutual, $226,288 to
Hornor, Townsend & Kent, Inc. and $49,457 to Janney Montgomery Scott, Inc.,
affiliates of Penn Mutual, and $565,257 to other investment
53
<PAGE>
dealers. During this same period, SFSC received $21,413 in contingent deferred
sales charges from certain redemptions of Class A Shares and $40,978 in
contingent deferred sales charges from redemptions of Class B Shares.
Each director who is not an employee of the adviser or an affiliated company is
paid an annual fee of $16,000 plus $1,500 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, 1997 were $1,702,750.
SAC has voluntarily agreed to refund its fee to the extent necessary to prevent
the overall aggregate expense ratio of the Funds' Class A Shares 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 aggregate expense
ratio of the Funds' Class B Shares (excluding the Sentinel World Fund) would
also be reduced proportionately. The Funds and Sentinel Pennsylvania Tax-Free
Trust make up the Sentinel Family of Funds. Although SAC has no present
intention to do so, this arrangement may be terminated at any time. Expenses for
the six months ended May 31, 1997 did not exceed 1.30% of its average daily net
assets.
With respect to Class A Shares of Sentinel Short Maturity Government Fund, SASC
has agreed to reimburse the Fund for all operating expenses in excess of an
annual rate of 1.00% of the Fund's average daily net assets. With respect to
Class A Shares of Sentinel New York Tax-Free Income Fund, SASC has agreed to
reimburse the Fund for all its operating expenses effective March 31, 1997. For
the six months ended May 31, 1997, the total amount reimbursable to Sentinel
Short Maturity Government Fund was $36,394 and the amount reimbursable to
Sentinel New York Tax-Free Income Fund was $11,147. Although SASC has no present
intention to do so, this arrangement may be terminated at any time.
(3) Investment Transactions:
Purchases and sales of investment securities (excluding short-term obligations)
for the six months ended May 31, 1997 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>
Small Company.......... $ 13,308,188 -- $ 15,078,585 --
Growth................. 51,796,725 -- 54,569,273 --
World.................. 13,936,783 -- 9,424,234 --
Common Stock........... 141,479,375 -- 154,546,207 --
Balanced............... 42,150,970 $51,383,527 42,032,620 $ 41,116,367
Bond................... 22,612,491 36,126,457 27,863,069 35,943,923
Tax-Free............... 32,472,988 -- 39,168,997 --
NY Tax-Free............ 1,702,817 -- 1,292,046 --
Government............. -- 93,384,123 -- 103,705,533
Short Maturity Gov't... -- 17,040,566 -- 11,590,923
</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, 1996 as follows:
$2,140,898, $1,295,618 and $1,051,666 (expiring in 2001, 2002 and 2004,
respectively) for a total of $4,488,182 for the Sentinel Bond Fund, $3,586,497
and $2,953,064 (expiring in 2002 and 2004, respectively) for a total of
$6,539,561 for the Sentinel Government Securities Fund and $328,517, $619,379,
$142,166 and $83,225 (expiring in 2000, 2001, 2002 and 2004, respectively) for a
total of $1,173,287 for the Sentinel Short Maturity Government Fund. During the
year ended November 30, 1996, the Sentinel Balanced Fund, the Sentinel Tax-Free
Income Fund and the Sentinel New York Tax-Free Income Fund utilized $124,351,
$143,804 and $51,369 of capital loss carryforwards, respectively. 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.
54
<PAGE>
(4) Fund Shares:
At May 31, 1997, 2 billion shares of one cent par value were authorized. There
are 1.34 billion shares allocated to the various Funds as Class A Shares and 240
million shares allocated to the various Funds as Class B Shares. 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>
Net
Shares issued in increase
reinvestment of (decrease)
dividends and Shares in shares
Fund Shares sold distributions reacquired outstanding
---- ----------- ------------- ---------- -----------
<S> <C> <C> <C> <C>
Six Months Ended 5/31/97
Small Company - A........ 1,370,556 155,607 2,262,107 (735,944)
Small Company - B........ 441,886 3,285 30,545 414,626
Growth................... 326,617 710,563 304,524 732,656
World - A................ 751,713 99,489 523,915 327,287
World - B................ 151,919 3,852 12,848 142,923
Common Stock - A......... 1,573,213 2,787,610 1,995,413 2,365,410
Common Stock - B......... 493,315 69,433 30,650 532,098
Balanced - A............. 947,461 585,227 1,512,527 20,161
Balanced - B............. 433,137 22,471 28,809 426,799
Bond - A................. 1,153,081 329,327 2,486,444 (1,004,036)
Bond - B................. 303,028 16,752 66,004 253,776
Tax-Free - A............. 318,367 169,274 993,697 (506,056)
Tax-Free - B............. 19,835 1,497 11,545 9,787
N.Y. Tax-Free............ 69,177 16,000 23,946 61,231
Government............... 286,778 189,641 1,415,023 (938,604)
Short Maturity Gov't..... 1,627,659 97,985 1,130,283 595,361
U.S. Treasury - A........ 100,181,094 1,671,383 101,976,092 (123,615)
U.S. Treasury - B........ 4,754,477 87,936 4,234,249 608,164
Year Ended 11/31/96
Small Company - A........ 3,047,507 3,479,603 4,509,726 2,017,384
Small Company - B*....... 393,138 -- 13,833 379,305
Growth................... 415,150 584,386 596,369 403,167
World - A................ 1,869,007 47,048 823,799 1,092,256
World - B*............... 213,270 -- 8,616 204,654
Common Stock - A......... 3,070,782 2,509,631 3,443,788 2,136,625
Common Stock - B*........ 681,956 1,045 11,097 671,904
Balanced - A............. 2,233,529 835,736 2,906,556 162,709
Balanced - B*............ 596,790 2,002 9,616 589,176
Bond - A................. 2,863,501 748,935 4,722,972 (1,110,536)
Bond - B*................ 741,373 10,355 10,518 741,210
Tax-Free - A............. 854,288 244,470 1,824,866 (726,108)
Tax-Free - B*............ 62,396 677 6,517 56,556
NY Tax-Free.............. 65,043 21,394 50,787 35,650
Government............... 1,177,381 468,319 2,903,620 (1,257,920)
Short Maturity Gov't..... 3,287,981 170,709 2,627,496 831,194
U.S. Treasury - A........ 198,865,999 3,213,012 201,938,785 140,226
U.S. Treasury - B*....... 7,608,971 84,246 4,532,877 3,160,340
</TABLE>
*For the period April 1, 1996 to November 30, 1996.
(5) Post Retirement Benefits:
The Company provides certain health care and life insurance benefits to its
retirees. At May 31, 1997 the projected obligation for such benefits had been
accrued.
55
<PAGE>
Sentinel Pennsylvania Tax-Free Trust
Investment in Securities
at May 31, 1997 (Unaudited)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Principal Amount Value
(M=$1,000) (Note 1)
- --------------------------------------------------------------------------------
<S> <C> <C>
Bonds 97.3%
Pennsylvania 79.5%
Allegheny County Higher
Educ. Bldg
5.00%, 03/01/16 (AMBAC) 1000M $ 933,020
Allegheny County G/O
5.15%, 09/01/11 (FGIC) 1500M 1,477,485
Allegheny County Hospital
6.00%, 10/01/03 (FGIC) 1000M 1,064,150
Allegheny County
Institution G/O
7.30%, 04/01/09 (MBIA) 1000M 1,072,040
Armstrong County Hospital
Auth.
6.25%, 06/01/13 (AMBAC) 1200M 1,255,896
Beaver County Industrial
Dev. Auth.
7.75%, 09/01/24 500M 522,815
Berks County G/O
7.25%, 11/15/20 (FGIC) 1000M 1,104,700
Chester County Health
& Education
5.40%, 07/01/06 (MBIA) 1375M 1,418,711
Lehigh County Industrial
Dev. Auth.
6.15%, 08/01/29 (MBIA) 1000M 1,033,460
Montgomery County Higher
Educ. & Health
8.30%, 06/01/10 500M 561,680
Pennsylvania Higher Educ. Facs.
7.20%, 07/01/19 (MBIA) 1000M 1,076,690
6.00%, 01/01/06 1500M 1,600,260
5.625%, 12/01/27 (MBIA) 1000M 987,780
5.60%, 11/15/09 (MBIA) 1500M 1,537,815
Pennsylvania Housing
Finance Agency
8.00%, 04/01/16 1000M 1,032,900
Pennsylvania State G/O
6.25%, 07/01/11 1500M 1,644,720
Pennsylvania State Industrial
Dev. Auth.
5.80%, 07/01/09 (AMBAC) 1000M 1,051,420
Pennsylvania State
Turnpike Commn.
7.20%, 12/01/17 (FGIC) 1000M 1,123,760
Pennsylvania Trafford
School Dist.
5.90%, 05/01/11 (MBIA) 1000M 1,031,360
Philadelphia Industrial
Dev. Auth.
5.375%, 02/15/27 (MBIA) 1500M 1,432,515
Philadelphia Municipal Auth.
7.80%, 04/01/18 (FGIC) 45M 47,287
Philadelphia Regional Port. Auth.
7.15%, 08/01/20 (MBIA) 250M 269,433
7.125%, 08/01/10 (MBIA) 250M 269,252
Philadelphia Water & Waste
6.25%, 08/01/11 (MBIA) 1000M 1,089,510
6.25%, 08/01/12 (MBIA) 500M 543,020
Pittsburgh PA Water &
Sewer System Rev.
6.50%, 09/01/13 (FGIC) 1000M 1,121,330
Scranton Lackawanna Health
& Welfare
7.875%, 07/01/10 (MBIA) 500M 526,800
Westmoreland Cnty
Municipal Auth.
0.00%, 08/15/18 (FGIC) 500M 153,475
------------
26,983,284
------------
Puerto Rico 17.8%
Puerto Rico Commonwealth
Aqeuduct & Sewer
6.00%, 07/01/09
Cmwlth GTD 500M 536,440
5.00%, 07/01/19
Cmwlth GTD 1000M 919,720
Puerto Rico Commonwealth
Hwy & Transport
5.50%, 07/01/13 (FSA) 1000M 1,023,590
5.50%, 07/01/36 1000M 968,760
Puerto Rico Electric Power Auth.
6.00%, 07/01/00 (MBIA) 1500M 1,570,455
Puerto Rico Public Buildings Auth.
5.70%, 07/01/09 1000M 1,038,000
------------
6,056,965
------------
Total Investments
(Cost $31,562,610)* 33,040,249
Excess of Other Assets
Over Liabilities 2.7% 910,191
------------
Net Assets $33,950,440
============
</TABLE>
- --------------------------------------------------------------------------------
* Also cost for federal income tax purposes.
At May 31, 1997, net unrealized appreciation for federal income tax purposes
aggregated $1,477,639 of which, $1,497,937 related to appreciated securities
and $20,298 related to depreciated securities.
The following abbreviations are used in portfolio descriptions:
(AMBAC) - Guaranteed by AMBAC Indemnity Corp.
(FGIC) - Guaranteed by Financial Guaranty Insurance Co.
(FSA) - Guaranteed by Financial Security Assurance Inc.
(MBIA) - Guaranteed by Municipal Bond Investors Assurance Corp.
G/O - General Obligation Bond
See Notes to Financial Statements.
56
<PAGE>
Sentinel Pennsylvania Tax-Free Trust
Statement of Assets and Liabilities
at May 31, 1997 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Assets
Investments at value $33,040,249
Cash and cash equivalents 240,231
Receivable for interest 633,061
Receivable from fund administrator 90,734
---------------
Total Assets 34,004,275
---------------
Liabilities
Accrued expenses 18,056
Management fee payable 15,800
Distribution fee payable 9,896
Fund service fee payable 10,083
---------------
Total Liabilities 53,835
---------------
Net Assets Applicable to Outstanding Shares $33,950,440
===============
Net Asset Value and Offering Price Per Share
$33,950,440 / 2,606,368 shares outstanding $ 13.03
Sales Charge -- 4.00% of Offering Price 0.54
---------------
Maximum Offering Price Per Share $ 13.57
===============
Net Assets Represent
No par value shares of beneficial interest;
authorized - unlimited shares
Paid-in-capital $32,246,068
Accumulated undistributed net investment income 1,957
Accumulated undistributed net realized gain
on investments 224,776
Unrealized appreciation of investments 1,477,639
---------------
Net Assets $33,950,440
===============
Investments at Cost $31,562,610
===============
</TABLE>
Sentinel Pennsylvania Tax-Free Trust
Statement of Operations
For the Six Months Ended May 31, 1997 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Investment Income
Income:
Interest $ 991,937
---------------
Expenses:
Management advisory fee 93,030
Transfer agent and custodian 29,252
Distribution expense 33,910
Accounting services 42,000
Auditing fees 2,400
Legal fees 7,150
Reports and notices to shareholders 2,500
Directors' fees and expenses 16,311
Other 7,399
---------------
Total Expenses 233,952
Expense Reimbursement (90,734)
Expense Offset (7,752)
---------------
Net Expenses 135,466
---------------
Net Investment Income 856,471
---------------
Realized and Unrealized Gain (Loss) on Investments
Net realized gain on sales of investments 224,757
Net change in unrealized appreciation (700,698)
---------------
Net Realized and Unrealized Loss on Investments (475,941)
---------------
Net Increase in Net Assets from Operations $ 380,530
===============
</TABLE>
See Notes to Financial Statements.
57
<PAGE>
Sentinel Pennsylvania Tax-Free Trust
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Year
Ended Ended
5/31/97 11/30/96
(Unaudited)
-------------- ------------
<S> <C> <C>
Increase in Net Assets from Operations
Net investment income $ 856,471 $ 1,742,591
Net realized gain on sales of investments 224,757 218,984
Net change in unrealized appreciation (700,698) (282,933)
-------------- ------------
Net increase in net assets from operations 380,530 1,678,642
-------------- ------------
Distributions to Shareholders
From net investment income (854,514) (1,745,421)
From realized gain on sale of investments (218,975) (208,641)
From paid-in capital - (208)
-------------- ------------
Total distributions to shareholders (1,073,489) (1,954,270)
-------------- ------------
From Capital Share Transactions
Net proceeds from sales of shares 1,262,135 3,822,068
Net asset value of shares in reinvestment
of dividends and distributions 742,355 1,343,773
-------------- ------------
2,004,490 5,165,841
Less: Payments for shares reacquired (2,906,343) (4,320,058)
-------------- ------------
Increase (decrease) in net assets from
capital share transactions (901,853) 845,783
-------------- ------------
Total Increase (Decrease) in Net Assets for period (1,594,812) 570,155
Net Assets: Beginning of period 35,545,252 34,975,097
-------------- ------------
Net Assets: End of period $33,950,440 $35,545,252
============== ============
Undistributed Net Investment Income
at End of Period $ 1,957 $ -
============== ============
</TABLE>
See Notes to Financial Statements.
58
<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>
Six Months Eleven
Ended 5/31/97 Year Ended Year Ended Year Ended Months Ended Year Ended
(Unaudited) 11/30/96 11/30/95 11/30/94 11/30/93(A) 12/31/92
------------- ----------- ----------- ----------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value at
beginning of period $ 13.29 $ 13.40 $ 12.29 $13.57 $ 13.15 $ 12.74
------------- ----------- ----------- ----------- ------------- ----------
Income from Investment
Operations
Net investment income 0.33 0.66 0.66 0.64 0.69 0.73
Net realized and unrealized
gain (loss) on investments (0.18) (0.03) 1.11 (1.28) 0.42 0.43
------------- ----------- ----------- ----------- ------------- ----------
Total from investment
operations 0.15 0.63 1.77 (0.64) 1.11 1.16
------------- ----------- ----------- ----------- ------------- ----------
Less Distributions
Dividends from net
investment income 0.33 0.66 0.66 0.64 0.69 0.75
Distributions from realized
gains on investments 0.08 0.08 - - - -
------------- ----------- ----------- ----------- ------------- ----------
Total Distributions 0.41 0.74 0.66 0.64 0.69 0.75
------------- ----------- ----------- ----------- ------------- ----------
Net asset value at end of
period $ 13.03 $ 13.29 $ 13.40 $ 12.29 $ 13.57 $ 13.15
============= =========== =========== =========== ============= ==========
Total Return (%) ** 1.2 ++ 5.0 14.8 (4.9) 8.1 ++ 9.4
Ratios/Supplemental Data
Ratio of net expenses to
average net assets (%) .80 + 0.75 0.97 1.30 1.24 + 1.16
Ratio of expenses to
average net assets before
expense reductions (%) *** 1.38 + 1.37 1.36 1.30 1.24 + 1.16
Ratio of net investment
income to average net
assets (%) 5.05 +* 5.07 * 5.14 * 4.84 5.07 + 5.62
Portfolio turnover rate (%) 14 56 80 56 23 1
Net assets at end of period
(000 omitted) $33,950 $35,545 $34,975 $31,172 $34,448 $33,669
</TABLE>
(A) As of March 1, 1993 Sentinel Advisors Co. became the investment advisor
to the Trust.
+ Annualized
++ Not annualized
* Ratio of net investment income to average net assets would have been
4.51% in 1997, 4.48% in 1996 and 4.78% in 1995, in the absence of a
voluntary expense reimbursement.
** Total return is calculated assuming an initial investment made at the
net asset value at the beginning of the period, reinvestment of all
distributions at the net asset value during the period, and a
redemption on the last day of the period. Initial sales charge is not
reflected in the calculation of total return.
*** Expense reductions are comprised of the voluntary expense
reimbursements and include, effective 1995, the earnings credits as
described in Notes (5) and (1) D.
See Notes to Financial Statements. 59
<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. 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 and premiums are
amortized. 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.
D. Other: Earnings credits are received from the custodian and dividend paying
agent on cash balances and are reflected in the statement of operations as an
expense credit.
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures in the financial statements. Actual
results could differ from those estimates.
(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, 1996 the
Trust did not have any capital loss carryforwards for Federal income tax
purposes.
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.
(3) Trust Shares:
Transactions in Trust shares were as follows:
<TABLE>
<CAPTION>
Six Months Year
Ended Ended
5/31/97 11/30/96
-------- --------
<S> <C> <C>
Shares sold....................................... 96,875 291,419
Shares issued to stockholders in reinvestment
of dividends and distributions.................... 57,132 102,717
-------- --------
154,007 394,136
Shares redeemed................................... (222,480) (330,002)
-------- --------
Net increase (decrease)........................... (68,473) 64,134
======== ========
</TABLE>
(4) Investment Transactions:
Purchases and sales of securities other than short-term securities aggregated
$4,659,860 and $6,007,242, respectively, during the six months ended May 31,
1997.
(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"), 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,
60
<PAGE>
provides general supervision of the Trust's investments as well 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, ProvidentMutual 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 $25,959 for the six months ended May 31, 1997. The Trust is advised
that the total distribution charges retained by SFSC on the sale of shares
amounted to $116 after allowances of $2,465 to Equity Services, Inc., an
affiliate of National Life, $5,934 to 1717 Capital Management Company, an
affiliate of Provident Mutual, $3,153 to Hornor, Townsend & Kent, Inc. and
$1,009 to Janney Montgomery Scott, Inc., affiliates of Penn Mutual, and $13,282
to other investment dealers.
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, 1997 were
$60,500.
SAC has voluntarily agreed to refund its fee to the extent necessary to prevent
the overall aggregate expense ratio of the Trust and the Class A Shares of
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 SAC has no present intention to do so, this
arrangement may be terminated at any time. Expenses for the six months ended May
31, 1997 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% of the Trust's average daily
net assets. Effective May 15, 1995 thru March 30, 1997, SASC agreed to reimburse
the Trust for expenses in excess of an annual rate of .75% of the Trust's
average daily net assets. Effective March 31, 1997, SASC has agreed to reimburse
the Trust for expenses in excess of an annual rate of .90% of the Trust's
average daily net assets. For the six months ended May 31, 1997 the total amount
reimbursable was $90,734. 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 is not reimbursed for any
unreimbursed prior years expenses.
61
<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, of the same class, at net
asset value.
2. Receive both dividends and capital gains in cash.
3. Reinvest both dividends and capital gains in another Sentinel Fund, of the
same class, 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
Maturity Government, U.S. Treasury Money Market and Pennsylvania Tax-Free Fund
Check Writing Service - This special feature of the Class A Shares of Sentinel
Bond Fund, Sentinel Tax-Free Income Fund, Sentinel New York Tax-Free Income
Fund, Sentinel Government Securities Fund, Sentinel Short Maturity Government
Fund, Sentinel U.S. Treasury Money Market Fund and 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 the same class 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 Class A Shares of 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 $1,000 (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 Maturity 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
one year after the date of the redemption. Sentinel Short Maturity 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 Maturity
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).
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 Plans"), Individual Retirement Accounts
("IRAs"), SIMPLE IRAs, Simplified Employee Pension Plans ("SEP-IRAs"), 403(b)
Plans (deferred compensation arrangements for employees of public school systems
and certain non-profit organizations), Section 457 Plans 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.
62
<PAGE>
Directors/Trustees and Officers
Sentinel Group Funds, Inc. and
Sentinel Pennsylvania Tax-Free Trust
Keniston P. Merrill
Chairman and Chief Executive Officer
Chairman and Chief Executive Officer,
Sentinel Advisors Company
Joseph M. Rob
Director/Trustee and President
Chief Executive Officer,
Sentinel Management Company
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
President and Chief Operating Officer,
Pacific Enterprises
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
Deborah G. Miller
Director/Trustee
Vice President,
Digital Equipment Corporation
John Raisian
Director/Trustee
Director and Senior Fellow,
Hoover Institution,
Stanford University
Stanley R. Reber
Director/Trustee
Executive Vice President,
Provident Mutual
Life Insurance Company
Susan M. Sterne
Director/Trustee
President, Economic Analysis
Associates, Inc.
Angela E. Vallot
Director/Trustee
Of Counsel, Arent Fox Kintner
Plotkin & Kahn
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
63
<PAGE>
A Brief History
[ARTWORK APPEARS HERE]
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 ProvidentMutual 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 Small Company 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
Maturity Government Fund.
Effective April 1, 1996, six Sentinel Funds offered two classes of shares:
Sentinel Small Company, Sentinel World, Sentinel Common Stock, Sentinel
Balanced, Sentinel Bond and Sentinel Tax-Free Income funds. The new class is
called "Class B Shares" while the original class is called "Class A Shares."
Sentinel U.S. Treasury Money Market Fund also has Class B Shares which are
available only through exchanges from the other Class B Shares except in dollar-
cost averaging programs investing into Class B Shares of other Funds.
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 $2.5 billion which are managed on behalf of
approximately 103,800 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.
64
<PAGE>
[LOGO OF SENTINEL FUNDS APPEARS HERE]
Sentinel Funds
Integrity Since 1934
Sentinel Small Company 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 Maturity Government Fund
Sentinel U.S. Treasury Money Market Fund
Sentinel Pennsylvania Tax-Free Trust
This Brochure is authorized for distribution
to prospective investors only when preceded
or accompanied by an effective Prospectus.
Distributed by
Sentinel Financial Services Company
National Life Drive
Montpelier, Vermont 05604
(800) 233-4332
Member of FORUM for INVESTOR ADVICE
Investment Professionals Helping Investors
