<PAGE>
This Preliminary Prospectus Supplement and the information contained herein
are subject to completion or amendment. A registration statement relating to
these securities has been filed with the Securities and Exchange Commission.
These securities may not be sold nor may offers to buy be accepted prior to
the time the Prospectus, as supplemented, is delivered in final form. Under
no circumstances shall this Prospectus, as supplemented, constitute an offer
to sell or the solicitation of an offer to buy nor shall there be any sale of
these securities in any jurisdiction in which such offer, solicitation or
sale would be unlawful prior to registration or qualification under the
securities laws of any such jurisdiction.
SUBJECT TO COMPLETION,
PRELIMINARY PROSPECTUS SUPPLEMENT, DATED MAY 19, 1997
THE SENTINEL FUNDS
SENTINEL HIGH YIELD BOND FUND
PROSPECTUS SUPPLEMENT DATED JUNE , 1997 TO PROSPECTUS DATED MARCH 31, 1997
On June , 1997, Sentinel Group Funds, Inc. (the "Company") began offering
a new Fund named Sentinel High Yield Bond Fund (the "High Yield Fund"). This
Supplement, which is to be used in conjunction with the Prospectus for the
Sentinel Funds dated March 31, 1997 (the "Prospectus"), describes the
investment objective and policies and other features of the High Yield Fund.
THE HIGH YIELD FUND MAY INVEST WITHOUT LIMITATION IN LOWER QUALITY DEBT
SECURITIES, SOMETIMES CALLED "JUNK BONDS". INVESTORS IN THE HIGH YIELD FUND
SHOULD CONSIDER THAT THESE SECURITIES CARRY GREATER RISKS, SUCH AS THE RISK OF
DEFAULT, THAN OTHER DEBT SECURITIES. Please refer to the investment objective
and policies section below for further information.
SHAREHOLDER TRANSACTION EXPENSES (as a percentage of the offering price)
Both Class A shares and Class B shares of the High Yield Fund are offered
to investors. The Class A shares are offered with a maximum sales charge
imposed on purchases of 4.00%, and the same complete schedule of sales charges
as the Bond, Government Securities, Tax-Free Income, New York and Pennsylvania
Funds on page 31 of the Prospectus.
The Class B shares of the High Yield Fund are subject to a contingent
deferred sales charge ("CDSC") of a maximum of 4.00%. The CDSC applies on
the same terms as the Class B shares of the other Sentinel Funds, set forth
on pages 35 to 37 of the Prospectus.
There are no other shareholder transaction expenses applicable to the High
Yield Fund, except for a wire charge, which is not normally in excess of $25.00,
if a shareholder chooses to redeem by means of a wire transfer, and in the case
of a purchase of Class A shares without an initial sales charge as part of an
investment of $1,000,000 or more, a CDSC of up to 1% may be assessed on certain
redemptions. See "How to Purchase Shares - Class A Shares - Sales Charges" in
the Prospectus.
ANNUAL FUND OPERATING EXPENSES
The following table sets forth the anticipated annual operating expenses
of the Class A shares and Class B shares of the High Yield Fund for the
remainder of the fiscal year ending November 30, 1997.
CLASS A CLASS B
SHARES SHARES
------- -------
Management Fees 0.75% 0.75%
Rule 12b-1 Fees (includes service fee & distribution fee) 0.20% 0.43%
Other Expenses:
Accounting and Administrative Costs 0.04%* 0.04%*
Other 0.22%* 0.14%*
Total Other Expenses 0.26%* 0.18%*
Total Fund Operating Expenses 1.21% 1.36%
- -------------------------
*"Other Expenses" are based on estimated amounts for the current fiscal year.
The following examples illustrate the expenses that an investor would
pay on a $1,000 investment in the High Yield Fund over various time periods
assuming the operating expense ratio as set forth in the table above and a 5%
annual rate of return.
<PAGE>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
Class A shares $52 $77 $104 $181
Class B shares (assuming redemption
at the end of the period)* $54 $73 $94 $156
Class B shares (assuming no redemption
at the end of the period)* $14 $43 $74 $156
- ---------------------------------
*The above table is based on the anticipated operating expense ratios for the
first fiscal year of the High Yield Fund. However, the Advisor expects that the
operating expense ratio of the Class B shares is likely to rise in future years,
since the Class B shares' expense ratio is expected to benefit initially from a
large investment made by National Life Insurance Company, an affiliate of the
Advisor, and the favorable impact of that account on the expense ratio should
diminish over time as more smaller accounts, which are more expensive to service
per dollar of invested assets, make investments in the Fund.
These examples should not be considered a representation of past or future
expenses. Actual expenses may be greater or less than those shown, and the 5%
annual rate used in this example is a hypothetical rate of return. The purpose
of the foregoing examples is to assist the investor in understanding the various
expenses that an investor in the High Yield Fund will bear directly or
indirectly.
INVESTMENT OBJECTIVE AND POLICIES
The High Yield Fund seeks high current income and total return by investing
primarily in lower rated corporate debt securities. There can be no assurance
that the High Yield Bond Fund's objective will be achieved.
The High Yield Fund will normally invest at least 80% of its total
assets (other than cash and government securities) in lower rated debt
securities. However, when economic conditions cause a narrowing of yield
spread between these securities and higher rated securities, the High Yield
Fund may invest up to 100% of its assets in higher rated securities. The
High Yield Fund may invest in debt securities of any maturity. No more than
25% of the High Yield Fund's assets will be invested in a single industry,
and no more than 5% of assets in a single issuer.
LOWER RATED DEBT SECURITIES. Lower rated debt securities (commonly
referred to as junk bonds) are debt securities which, because of the greater
possibility that the issuers will default, are not investment grade (I.E., are
rated below BBB by Standard & Poor's Ratings Services ("S&P") or below Baa by
Moody's Investors Service, Inc. ("Moody's"), or are unrated but considered by
the High Yield Fund's subadvisor, Keystone Investment Management Company
("Keystone"), to be of comparable credit quality). Because of the increased
risk of default, these securities generally have higher nominal or effective
interest rates than higher quality securities.
The High Yield Fund may purchase bonds in the lowest rating categories
(D for S&P and C for Moody) and comparable unrated securities. However, the
High Yield Fund will only purchase securities rated lower than B- by S&P or
B3 or lower by Moody's if Keystone believes the quality of such securities is
higher than indicated by the rating.
Lower rated bonds also are generally considered significantly more
speculative and likely to default than higher quality bonds. Relative to other
debt securities, junk bond values tend to be more volatile because: (i) an
economic downturn may more significantly impact their potential for default; and
(ii) the secondary market for such securities may at times be less liquid or
respond more adversely to negative publicity or investor perceptions, making it
more difficult to value or dispose of the securities.
FOR INFORMATION AND ASSISTANCE, call your Financial Advisor or Investor
Services 1-800-282-FUND (3863)
2
<PAGE>
The likelihood that these securities will help the High Yield Fund achieve its
investment objective is more dependent on Keystone's own credit analysis than on
ratings.
The risk of loss due to default by the issuer of a junk bond is
significantly greater for the holders of junk bonds than for holders of higher
rated securities because such securities may be unsecured and may be
subordinated to other creditors of the issuer. In the event of a default, the
High Yield Fund may incur additional expenses to the extent it is required to
seek recovery or participate in the restructuring of the obligation.
Junk bonds also may have call or redemption features that permit the issuer
to repurchase the securities from the High Yield Fund. If a call is exercised
by the issuer during a period of declining interest rates, the High Yield Fund
would likely be required to replace such called securities with lower yielding
securities, thus decreasing net investment income to the High Yield Fund. See
the Appendix to this Supplement for a description of S&P's and Moody's ratings
of lower rated corporate debt securities.
COMMON STOCK. The High Yield Fund may invest up to 20% of total assets in
common stocks, usually as a result of warrants associated with debt instruments
purchased by the High Yield Fund, but also, under certain circumstances, to seek
capital appreciation. The Fund may also invest in debt securities
convertible into common stock.
DEBT SECURITIES. The High Yield Fund may invest in debt securities of any
maturity that pay interest at fixed, floating or adjustable rates. The High
Yield Fund also may invest in debt securities (i) that do not pay interest but,
instead, are issued at a significant discount to their maturity values (referred
to as zero coupon securities), (ii) that pay interest, at the issuer's option,
in additional securities instead of cash (referred to as pay-in-kind securities)
or (iii) pay interest at predetermined rates that increase over time (referred
to as step coupon bonds).
The High Yield Fund, when aggregated with the holdings of other mutual
funds advised by Keystone, will not own more than 20% of the outstanding debt
securities of any issuer.
To the extent the High Yield Fund invests in adjustable or floating rate
securities, the value of such securities is less likely to be adversely
affected by interest rate changes than fixed rate securities. However,
reductions in interest rates also may translate into lower ordinary income
distributions paid by the High Yield Fund. Additionally, although zero
coupon securities, pay-in-kind securities and step coupon bonds may not pay
interest, the High Yield Fund nevertheless must under existing tax laws
accrue and distribute the income deemed to be earned on a current basis, and
therefore may have to sell other investments to raise the cash needed to make
income distributions.
CORPORATE LOANS. The High Yield Fund may invest in corporate loans made by
banks or other financial institutions either at origination or by acquiring
participations in, or assignments of or novations of corporate loans. Certain
corporate loans may not be readily marketable and may be subject to restrictions
on resale; except as described under "Illiquid Securities" below, to the extent
corporate loans are not readily marketable or subject to such restrictions,
those loans would be subject to the High Yield Fund's limitation on illiquid
securities.
The corporate loans in which the High Yield Fund may invest typically
are originated, negotiated and structured by a syndicate of co-lenders, one
or more of whom administers the loan on behalf of the syndicate. The value
of a corporate loan will depend primarily on the creditworthiness of the
borrower. The High Yield Fund will invest in a corporate loan only if, in
Keystone's judgment, the borrower can meet the debt service on such a loan;
however, Keystone has no set minimum credit rating criteria regarding the
borrowers with respect to investments in corporate loans by the High Yield
Fund. Although Keystone will continue to monitor the creditworthiness of the
borrowers of corporate loans in which the High Yield Fund invests, there can
be no assurance that such analysis will disclose factors that will impair the
value of a corporate loan.
FOR INFORMATION AND ASSISTANCE, call your Financial Advisor or Investor
Services 1-800-282-FUND (3863)
3
<PAGE>
ILLIQUID SECURITIES. The High Yield Fund may invest up to 15% of its
net assets in illiquid securities. Illiquid securities are not readily
marketable and include securities that are restricted as to disposition under
the federal securities laws or otherwise. If registration of such securities
under the Securities Act of 1933, as amended (the "Securities Act"), is
required, such registration may not be readily accomplished, and if such
securities may be sold without registration, such resale may be permissible
only in limited quantities. In either event, the inability to sell
securities at the most opportune time may negatively affect the net asset
value of the High Yield Fund.
Notwithstanding the foregoing, the High Yield Fund may purchase certain
restricted securities ("Rule 144A Securities") for which there is a secondary
market of qualified institutional buyers as defined by Rule 144A under the
Securities Act. Rule 144A Securities that are determined to be liquid
securities, either by Keystone pursuant to guidelines approved by the Board
or by the Company's Board of Directors, will not be subject to the High Yield
Fund's limitation on illiquid securities.
See "Investment Objectives and Policies--Considerations Applicable to the
Fixed Income Funds" in the Statement of Additional Information for additional
information regarding liquidity determinations with respect to Rule 144A
Securities and corporate loans.
FOREIGN INVESTMENTS. The High Yield Fund may invest up to 25% of net
assets in the securities of foreign issuers, provided that all such
securities are denominated in U.S. dollars and are purchased and held by the
High Yield Fund in the United States. Investments in foreign securities have
special risks related to political, economic and legal conditions outside the
U.S. As a result, the prices of foreign securities may fluctuate
substantially more than the prices of securities of issuers based in the U.S.
Special risks associated with foreign securities include the existence of
less liquid markets, the unavailability of reliable information about
issuers, the existence (or potential imposition) of exchange control
regulations and political and economic instability, among others.
TEMPORARY/DEFENSIVE INVESTMENTS. Temporarily available cash may be
invested in certificates of deposit, bankers' acceptances, commercial paper,
Treasury bills, repurchase agreements and U.S. Government Securities, as
defined in the Prospectus. Some or all of the High Yield Fund's assets also
may be invested in such investments during periods of unusual market
conditions.
DERIVATIVES. The High Yield Fund does not initially expect to invest in
futures and options, or other derivatives contracts. However, if and when
derivative securities are developed which permit effective hedging of a lower
quality bond portfolio, the High Yield Fund may, for hedging purposes only,
buy or sell derivative securities contracts which in the opinion of Keystone
will hedge specified risks relating to the High Yield Fund's portfolio of
lower quality bonds. The total market value of such contracts at the time of
the transaction initiating the position will not exceed 5% of the High Yield
Fund's net assets.
"WHEN-ISSUED" SECURITIES. The High Yield Fund also may invest in "when-
issued" securities, as discussed on page 24 of the Prospectus.
FOR INFORMATION AND ASSISTANCE, call your Financial Advisor or Investor
Services 1-800-282-FUND (3863)
4
<PAGE>
MANAGEMENT OF THE HIGH YIELD FUND
INVESTMENT ADVISOR. The investment advisor to the High Yield Fund is
Sentinel Advisors Company (the "Advisor"), which also is the investment advisor
to the other Sentinel Funds. Information with respect to the Advisor is set
forth on page 26 of the Prospectus. For its services as investment advisor, the
Advisor receives from the High Yield Fund a fee based on the average daily value
of the net assets of the High Yield Fund in accordance with the following
schedule:
0.75% per annum on the first $100 million of average daily net assets
of the High Yield Fund;
0.70% per annum on the next $100 million of such assets;
0.65% per annum on the next $100 million of such assets; and
0.60% per annum on such assets in excess of $300 million.
SUBADVISOR. The Advisor has entered into a Sub-Investment Advisory
Agreement with Keystone. Pursuant to this agreement, Keystone provides the
Advisor with a continuous investment program consistent with the High Yield
Fund's stated investment objective and policies. Under this arrangement,
Keystone works in cooperation with the Advisor's investment professionals but
has full authority to manage the High Yield Fund's portfolio on a day to day
basis. The Sub-Investment Advisory Agreement provides for a fee from the
Advisor to Keystone equal to one half of the fee paid by the High Yield Fund to
the Advisor, provided that the fee paid by the Advisor to Keystone will always
be at least 0.35% per annum of the average daily net assets of the High Yield
Fund. This agreement became effective June , 1997.
Keystone is located at 200 Berkeley Street, Boston, Massachusetts 02116
and is an indirect subsidiary of First Union Corporation, the sixth largest
bank holding company in the United States. First Union is headquartered in
Charlotte, North Carolina. First Union and its subsidiaries provide a broad
range of financial services to individuals and businesses throughout the
United States.
The portfolio manager for the High Yield Fund is Prescott B. Crocker,
Senior Vice President and Group Head of Corporate Fixed Income at Keystone. Mr.
Crocker is a Chartered Financial Analyst, and has been the High Yield Fund's
portfolio manager since its inception on June , 1997. Mr. Crocker joined
Keystone in February, 1997. Prior to that he was President of Boston
Security Counselors, the investment management subsidiary of the brokerage
firm Advest Co. Inc. He had joined Boston Security Counselors in November of
1993 as Senior Vice President - Fixed Income, where he managed among others
the Advest Advantage series High Yield Trust. Upon the sale of the Advest
Advantage funds to Northstar Investment Management Co. in July of 1995, Mr.
Crocker joined that company as Fund Manager. He returned to Boston Security
Counselors in August of 1996 as President.
DISTRIBUTION PLANS
The Class A shares of the High Yield Fund participate in the Company's
Class A Distribution Plan. This Plan provides for a fee to the Distributor
of the Sentinel Funds at a maximum annual rate of 0.20% of average daily net
assets of the Class A shares of the High Yield Fund. The Class B shares
participate in the Company's Class B Distribution Plan. This Plan provides
for a fee to the Distributor of the Sentinel Funds at a maximum annual rate
of 1.00% of average daily net assets of the Class B shares of the High Yield
Fund. Additional information on these Distribution Plans is set forth on
pages 28 to 30 of the Prospectus.
Class B shares of the High Yield Fund automatically convert to Class A
shares of the High Yield Fund at the end of the applicable CDSC period in the
same way as the Class B shares of the other Sentinel Funds which offer Class B
shares convert to Class A shares of the same Fund. See page 31 of the
Prospectus.
FOR INFORMATION AND ASSISTANCE, call your Financial Advisor or Investor
Services 1-800-282-FUND (3863)
5
<PAGE>
INITIAL MARKETING INCENTIVES
The Distributor intends to provide the following arrangements for the first
90 days after the introduction of the High Yield Fund. First, the Distributor
will make a payment in addition to the normal dealer reallowance described in
the Prospectus in an amount of 0.25% of investments during the first 90 days of
the High Yield Fund's operation for which a single registered representative is
the registered representative of record, if the amount of such investments
during the first 90 days of the High Yield Fund's operation for which such
registered representative is the registered representative of record is
$1,000,000 or more. Second, all sales of High Yield Fund shares during the
first 90 days of the High Yield Fund's operation will be multiplied by 1.5 for
purposes of determining qualification for the sales contest described on page 33
of the Prospectus.
DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS
The High Yield Fund pays dividends substantially equivalent to its net
investment income on a monthly basis. Distributions of net realized capital
gains, if any, are paid annually in December. Dividends and capital gains
distributions will be reinvested automatically in shares of the same class of
the High Yield Fund unless investors elect otherwise. See "Shareholder
Services-Distribution Options" on page 44 of the Prospectus.
PERFORMANCE DATA
The High Yield Fund may include average annual total return and yield
information in advertisements or in information distributed to existing or
prospective shareholders in the same manner as the other fixed-income Sentinel
Funds, as described on page 46 of the Prospectus. The High Yield Fund may
compare its performance to the Chase Manhattan Bank Index.
ORGANIZATION OF THE HIGH YIELD FUND
The High Yield Fund is a series of Sentinel Group Funds, Inc., information
on which is presented on page 47 of the Prospectus.
TAXES
With the exception of topics relating to specific Funds, the discussion
under "Taxes" in the Prospectus generally also applies to the High Yield Fund.
OTHER MATTERS
The information presented in the Prospectus under the topics "Custodian",
"How to Purchase Shares", "How to Redeem Shares", "Tax Deferred Retirement
Plans", "Determination of Net Asset Value" and "Shareholder Services" generally
apply to the High Yield Fund in the same way that they apply to the other
Sentinel Funds. The High Yield Fund does not offer the check writing privilege
that is offered with the Class A shares of the other fixed income Sentinel
Funds.
FOR INFORMATION AND ASSISTANCE, call your Financial Advisor or Investor
Services 1-800-282-FUND (3863)
6
<PAGE>
APPENDIX
RATINGS OF HIGH YIELD DEBT SECURITIES
DESCRIPTION OF MOODY'S INVESTORS SERVICE, INC. ("MOODY'S")
CORPORATE RATINGS
Ba-Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B-Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Caa-Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
Ca-Bonds which are rated Ca represent obligations which are speculative in a
high degree. Such issues are often in default or have other marked
shortcomings.
C-Bonds which are rated C are the lowest rated class of bonds and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
NOTE: Moody's applies numerical modifiers 1, 2, and 3 in each generic rating
classification from Aa through B in its corporate bond rating system. The
modifier 1 indicates that the security ranks in the higher end of its generic
rating category; the modifier 2 indicates a mid-range ranking; and the modifier
3 indicates that the issue ranks in the lower end of its generic rating
category.
DESCRIPTION OF STANDARD & POOR'S RATINGS SERVICES ("S&P")
CORPORATE DEBT RATINGS
An S&P corporate rating is a current assessment of the creditworthiness of an
obligor with respect to a specific obligation. This assessment may take into
consideration obligors such as guarantors, insurers, or lessees.
The debt rating is not a recommendation to purchase, sell or hold a security,
inasmuch as it does not comment as to market price or suitability for a
particular investor.
The ratings are based on current information furnished by the issuer or obtained
by S&P from other sources it considers reliable. S&P does not perform an audit
in connection with any rating and may, an occasion, rely on unaudited financial
information. The ratings may be changed, suspended or withdrawn as a result of
changes in, or unavailability of, such information, or for other circumstances.
The ratings are based, in varying degrees, on the following considerations:
I. Likelihood of default capacity and willingness of the obligor as to
the timely payment of interest and repayment of principal in accordance with the
terms of the obligation;
II. Nature of and provisions of the obligation; and
FOR INFORMATION AND ASSISTANCE, call your Financial Advisor or Investor
Services 1-800-282-FUND (3863)
A-1
<PAGE>
III. Protection afforded to, and relative position of, the obligation in
the event of bankruptcy, reorganization or other arrangement under the laws of
bankruptcy and other laws affecting creditors' rights.
Debt rated BB, B, CCC, CC and C is regarded, on balance, as having predominantly
speculative characteristics with respect to capacity to pay interest and repay
principal in accordance with the terms of the obligation. BB indicates the
lowest degree of speculation and C the highest degree of speculation. While
such debt will likely have some quality and protective characteristics, these
are outweighed by large uncertainties or major risk exposures to adverse
conditions.
BB--Debt rated BB has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure
to adverse business, financial or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments. The BB
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied BBB- rating.
B--Debt rated B has a greater vulnerability to default but currently has the
capacity to meet interest payments and principal repayments. Adverse business,
financial or economic conditions would likely impair capacity or willingness to
pay interest and repay principal. The B rating category is also used for debt
subordinated to senior debt that is assigned an actual or implied BB or BB-
rating.
CCC--Debt rated CCC has a currently identifiable vulnerability to default, and
is dependent upon favorable business, financial and economic conditions to meet
timely payments of interest and repayment of principal. In the event of adverse
business, financial or economic conditions, it is not likely to have the
capacity to pay interest and repay principal. The CCC rating category is also
used for debt subordinated to senior debt that is assigned an actual or implied
B or B- rating.
CC--The rating CC is typically applied to debt subordinated to senior debt which
is assigned an actual or implied CCC rating.
C--The rating C is typically applied to debt subordinated to senior debt which
is assigned an actual or implied CCC- debt rating. The C rating may be used to
cover a situation where a bankruptcy petition has been filed but debt service
payments are continued.
CI--The rating CI is reserved for income bonds on which no interest is being
paid.
D--Debt rated D is in payment default. The D rating category is also used when
interest payments or principal payments are not made on the date due even if the
applicable grace period has not expired, unless S&P believes that such payments
will be made during such grace period. The D rating also will be used upon the
filing of a bankruptcy petition if debt service payments are jeopardized.
Plus (+) or Minus (-): The ratings from AA to CCC may be modified by the
addition of a plus or minus sign to show relative standing with the major
ratings categories.
Provisional ratings: The letter "p" indicates that the rating is provisional.
A provisional rating assumes the successful completion of the project being
financed by the debt being rated and indicates that payment of debt service
requirements is largely or entirely dependent upon the successful and timely
completion of the project. This rating, however, while addressing credit
quality subsequent to
FOR INFORMATION AND ASSISTANCE, call your Financial Advisor or Investor
Services 1-800-282-FUND (3863)
A-2
<PAGE>
completion of the project, makes no comment on the likelihood of, or risk of
default upon failure of, such completion. The investor should exercise judgment
with respect to such likelihood and risk.
L--The letter "L" indicates that the rating pertains to the principal amount of
those bonds to the extent that the underlying deposit collateral is insured by
the Federal Savings & Loan Insurance Corp. or the Federal Deposit Corp. and
interest is adequately collateralized.
*--Continuance of the rating is contingent upon S&P's receipt of an executed
copy of the escrow agreement or closing documentation confirming investments and
cash flows.
NR--Indicates that no rating has been requested, that there is insufficient
information on which to base a rating or that S&P does not rate a particular
type of obligation as a matter of policy.
Debt Obligations of Issuers outside the United States and its territories are
rated on the same basis as domestic corporate and municipal issues. The ratings
measure the creditworthiness of the obligor but do not take into account
currency exchange and related uncertainties.
Bond Investment Quality Standards: Under present commercial bank regulations
issued by the Comptroller of the Currency, Bonds rated in the top four
categories ("AAA", "AA", "A", "BBB", commonly known as "investment grade"
ratings) are generally regarded as eligible for bank investment. In addition,
the laws of various states governing legal investments may impose certain rating
or other standards for obligations eligible for investment by savings banks,
trust companies, insurance companies and fiduciaries generally.
The ratings are based on current information furnished to S&P by the issuer, and
obtained by S&P from other sources it considers reliable. The ratings may be
changed, suspended, or withdrawn as a result of changes in, or unavailability of
such information.
FOR INFORMATION AND ASSISTANCE, call your Financial Advisor or Investor
Services 1-800-282-FUND (3863)
A-3
