<PAGE>
Sentinel Family of Funds
Semi-Annual Report
May 31, 1998
[ART WORK APPEARS HERE]
<PAGE>
[LOGO OF SENTINEL Sentinel Group Funds, Inc. (SGF)
APPEARS HERE]
Sentinel Pennsylvania
Tax-Free Trust (PA)
National Life Drive,
Montpelier, Vermont 05604
(800) 282-FUND(3863)
------------------------------------------------
Table of Contents
2 Message to Shareholders
4 Fund Performance
5 Sentinel Common Stock Fund
10 Sentinel Balanced Fund
16 Sentinel Growth Fund
20 Sentinel Small Company Fund
24 Sentinel World Fund
29 Sentinel High Yield Bond Fund
35 Sentinel Bond Fund
39 Sentinel Government Securities Fund
43 Sentinel Short Maturity Government Fund
47 Sentinel U.S. Treasury Money Market Fund
51 Sentinel Tax-Free Income Fund
56 Sentinel New York Tax-Free Income Fund
60 Notes to Financial Statements (SGF)
66 Sentinel Pennsylvania Tax-Free Trust
70 Notes to Financial Statements (PA)
72 Privileges, Plans and Services for Shareholders
74 Directors/Trustees and Officers
75 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 oil by Douglas Fryer
1
<PAGE>
Message to Shareholders
[PHOTO OF PATRICK
E. WELCH APPEARS [PHOTO OF JOSEPH M.
HERE] ROB APPEARS HERE]
Patrick E. Welch Joseph M. Rob
Chairman Director and President
Dear Shareholder:
We are pleased to submit our semi-annual report for the six months ended May
31, 1998.
The Economy
To the surprise of most observers, U.S. economic activity accelerated during the
last six months. After growing 3.7% in the last quarter of 1997, real GDP
increased by 4.8% in the first quarter of the new year. Growth was driven
primarily by strong increases in employment, real disposable income, and
consumer spending. Inflation remained well under control, helped by falling
prices for commodities and imported goods, especially oil. The strong U.S.
dollar, which benefited from a "flight to quality" by overseas investors, also
put downward pressure on import prices.
The growth in corporate profits slowed during the most recent quarter, hurt by
weak demand in Asia and by lower profit margins worldwide. While economic
activity did improve in Europe, Japan's economy remains in a recession and the
outlook for the rest of Asia is still highly uncertain. Corporations worldwide
are suffering from a lack of pricing power, a situation that will probably
worsen as the Asian economies attempt to ramp up their exports to the U.S. and
Europe.
The Federal Reserve recently decided to make no change in monetary policy and
appears to be "boxed-in" by current economic conditions. Some Fed Governors
would like to raise rates in order to slow down U.S. economic growth and to curb
speculation in the stock market. Raising rates, however, would make the
situation even more difficult for those Asian countries that are already
struggling to meet their debt obligations, and could ignite a worldwide
recession. We agree with the consensus view that the Fed will probably not raise
rates unless it becomes clear that the economy is not slowing and inflation is
accelerating.
The Financial Markets
In spite of the slowdown in corporate profits, the stock market was up sharply
during the first six months of the fiscal year. The market moved higher largely
as a result of strong inflows into mutual funds and a flight to quality by Asian
investors seeking a safe haven. Domestic investors responded positively to the
introduction of Roth IRA's by increasing their commitments to mutual funds.
Portfolio managers reacted to the huge influx of funds by investing heavily in
highly liquid, large capitalization stocks. Foreign investors also focused their
buying on the largest and most familiar names in the U.S. market, adding further
to the demand for large capitalization stocks.
Returns on stocks for the first six months of the year clearly reflected this
"two-tiered" market, as large capitalization stocks performed strongly while mid
and small capitalization stocks lagged
2
<PAGE>
well behind. Furthermore, the slowdown in corporate profits caused investors to
focus on companies with dependable earnings growth, regardless of valuation. As
a result, the best performing stocks during the period were large capitalization
growth stocks with above average price-earnings ratios.
We remain cautious in our outlook for the stock market. Valuation levels remain
at or near all-time highs and earnings growth has slowed in recent months. For
the bull market to continue from these levels, the stock market will need either
a further drop in interest rates or a re-acceleration in the growth of corporate
profits.
In the U.S. bond market, interest rates continued to grind lower against a
backdrop of strong economic growth and low inflation. Also, the turmoil in Asia
forced many foreign investors to seek refuge in U.S. dollar-denominated assets,
sending the U.S. Treasury's 30-year bond to a record low yield of 5.67% in
January 1998. Over the six-month period ended May 31, 1998, long maturity
fixed-income securities outperformed short and intermediate ones by a wide
margin. Corporate bonds outperformed both U.S. Treasuries and mortgage-backed
securities as investors sought yield and call-protection in a declining interest
rate environment. Recent declines in commodity prices as well as a slowdown in
global economic growth should keep inflation in the U.S. economy low and
continue to provide a constructive environment for the U.S. debt markets.
As always, we will continue to emphasize investment quality, relative valuation
and portfolio diversification in our efforts to meet our shareholders' long-term
investment objectives.
We appreciate your support and look forward to continuing to help you achieve
your long-term investment goals.
Sincerely,
/s/ Patrick E. Welch /s/ Joseph M. Rob
Patrick E. Welch Joseph M. Rob
Chairman Director & President
May 31, 1998
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>
11/30/97 - 05/31/98
--------------------------------------------------------------
5/31/98
Net Asset Capital
Sentinel Value Per Income Gain Total Lipper
Fund Share Dividends Distributions Return* Average**
<S> <C> <C> <C> <C> <C> <C>
Common Stock "A" Shares $44.16 $.24 $4.69 12.7% 13.1%
- ------------------------------------------------------------------------------------------------------------------
"B" Shares 44.08 .09 4.69 12.3 -
- ------------------------------------------------------------------------------------------------------------------
"C" Shares**** 44.15 - - -2.4 -
- ------------------------------------------------------------------------------------------------------------------
Balanced "A" Shares 20.63 .27 1.16 9.3 8.9
- ------------------------------------------------------------------------------------------------------------------
"B" Shares 20.65 .21 1.16 8.9 -
- ------------------------------------------------------------------------------------------------------------------
"C" Shares**** 20.63 - - -1.2 -
- ------------------------------------------------------------------------------------------------------------------
Growth "A" Shares 14.52 - 5.13 7.4 12.8
- ------------------------------------------------------------------------------------------------------------------
"B" Shares*** 14.48 - - 10.7 -
- ------------------------------------------------------------------------------------------------------------------
Small Company "A" Shares 6.01 .02 .75 8.8 4.0
- ------------------------------------------------------------------------------------------------------------------
"B" Shares 5.87 - .75 8.3 -
- ------------------------------------------------------------------------------------------------------------------
World "A" Shares 18.94 .12 .64 14.9 15.4
- ------------------------------------------------------------------------------------------------------------------
"B" Shares 18.75 - .64 14.3 -
- ------------------------------------------------------------------------------------------------------------------
"C" Shares**** 18.89 - - -3.5 -
- ------------------------------------------------------------------------------------------------------------------
High Yield Bond "A" Shares 10.63 .44 .09 7.3 5.5
- ------------------------------------------------------------------------------------------------------------------
"B" Shares 10.62 .43 .09 7.2 -
- ------------------------------------------------------------------------------------------------------------------
"C" Shares**** 10.63 .06 - -0.1 -
- ------------------------------------------------------------------------------------------------------------------
Bond "A" Shares 6.42 .20 - 4.1 3.9
- ------------------------------------------------------------------------------------------------------------------
"B" Shares 6.43 .17 - 3.5 -
- ------------------------------------------------------------------------------------------------------------------
Government Securities 10.18 .31 - 4.0 3.8
- ------------------------------------------------------------------------------------------------------------------
Short Maturity Government 9.89 .28 - 3.6 2.7
- ------------------------------------------------------------------------------------------------------------------
U.S. Treasury Money Market "A" Shares 1.00 .02 - 2.3 2.4
- ------------------------------------------------------------------------------------------------------------------
"B" Shares 1.00 .02 - 2.3 2.4
- ------------------------------------------------------------------------------------------------------------------
Tax-Free Income 13.61 .33 .19 3.6 3.5
- ------------------------------------------------------------------------------------------------------------------
New York Tax-Free Income 12.02 .32 .03 4.1 3.6
- ------------------------------------------------------------------------------------------------------------------
Pennsylvania Tax-Free Trust 13.36 .31 .12 3.4 3.5
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
Standard & Poor's 500+ - - - 15.0 -
- ------------------------------------------------------------------------------------------------------------------
Lehman Aggregate Bond Index++ - - - 4.1 -
- ------------------------------------------------------------------------------------------------------------------
Lehman Municipal Bond Index+++ - - - 3.8 -
- ------------------------------------------------------------------------------------------------------------------
</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.
*** 1/12/98 Inception.
**** 5/4/98 Inception.
+ 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 Common Stock Fund
Investment in Securities
at May 31, 1998 (Unaudited)
- -----------------------------------------------------------------------------
Shares Value
(Note 1)
- -----------------------------------------------------------------------------
Common Stocks 95.0%
Aerospace 2.2%
Goodrich (B.F.) 750,000 $ 38,437,500
------------
Automobiles & Auto Parts 2.0%
Ford Motor 688,300 35,705,563
------------
Banks 7.9%
BankAmerica Corp. 325,000 26,873,437
Bank of New York 550,000 33,618,750
Chase Manhattan Corp. 225,000 30,585,938
Citicorp 135,000 20,131,875
First Union Corp. 490,000 27,103,125
------------
138,313,125
------------
Building Materials 1.9%
Sherwin - Williams 1,000,000 33,250,000
------------
Computer Products & Services 5.1%
Hewlett Packard 550,000 34,168,750
Intel Corp. 220,000 15,716,250
International Business
Machines 350,000 41,081,250
------------
90,966,250
------------
Consumer & Business Services 4.4%
Automatic Data Processing 275,000 17,496,875
First Data Corp. 725,000 24,106,250
Omnicom Group 775,000 36,279,687
------------
77,882,812
------------
Consumer Products 4.4%
Fortune Brands 875,000 33,632,813
Kimberly - Clark 900,000 44,606,250
------------
78,239,063
------------
Containers & Packaging 1.9%
Bemis Co. 375,000 15,820,313
Crown Cork & Seal 325,000 16,859,375
------------
32,679,688
------------
Drugs 4.5%
American Home Products 900,000 43,481,250
Pfizer, Inc. 240,000 25,155,000
Schering Plough Corp. 125,000 10,460,937
------------
79,097,187
------------
Electrical Equipment 2.8%
Emerson Electric 500,000 30,375,000
General Electric 215,000 17,925,625
------------
48,300,625
------------
Energy 6.3%
Amoco 519,200 21,709,050
Chevron 240,000 19,170,000
Exxon 275,000 19,387,500
Mobil 420,000 32,760,000
Royal Dutch Petroleum 325,000 18,220,313
------------
111,246,863
------------
Financial 4.6%
American Express 375,000 38,484,375
Associated First Capital 180,393 13,495,651
Travelers Group 475,000 28,975,000
------------
80,955,026
------------
Foods 5.7%
Bestfoods 650,000 36,684,375
Hershey Foods Corp. 62,400 4,321,200
McCormick & Co. 550,000 18,425,000
Sara Lee 700,000 41,212,500
------------
100,643,075
------------
Industrial-Diversified 3.9%
Parker-Hannifin 760,900 $ 31,244,456
Praxair Inc. 700,000 34,518,750
-------------
65,763,206
-------------
Insurance 6.5%
Allstate Corp. 350,000 32,943,750
American General 545,000 36,583,125
American Int'l. Group 200,000 24,762,500
Jefferson-Pilot 337,500 19,321,875
-------------
113,611,250
-------------
Lodging 1.8%
Marriott International -
Class A 825,000 28,668,750
* Sodexho Marriott Services 68,750 1,955,078
30,623,828
-------------
Medical - Equipment & Supplies 4.8%
Abbott Laboratories 345,000 25,594,687
Becton, Dickinson & Co. 250,000 17,687,500
Johnson & Johnson 600,000 41,437,500
-------------
84,719,687
-------------
Oil Field Equipment & Services 2.6%
Halliburton Co. 570,000 27,003,750
Schlumberger Ltd. 240,000 18,735,000
-------------
45,738,750
-------------
Publishing 3.2%
Gannett 500,000 32,968,750
McGraw-Hill 300,000 23,456,250
-------------
56,425,000
-------------
Railroads 3.7%
Canadian Pacific 1,450,000 42,140,625
Union Pacific Corp. 481,100 23,273,212
-------------
65,413,837
-------------
Retail 5.5%
* Costco Cos. 136,000 7,871,000
Gap Inc. 375,000 20,250,000
May Department Stores 366,980 23,601,401
Sears, Roebuck 725,000 44,814,063
-------------
96,536,464
-------------
Tobacco 0.8%
Philip Morris 390,000 14,576,250
-------------
Utilities - Electric 4.0%
Duke Energy 310,000 17,863,750
Florida Progress 450,000 18,562,500
FPL Group 275,000 16,895,312
Pacificorp 700,000 16,143,750
-------------
69,465,312
-------------
Utilities - Gas 2.4%
Enron Corp. 525,000 26,315,625
Sonar, Inc. 380,000 14,891,250
-------------
41,206,875
-------------
Utilities - Telephone 2.1%
GTE Corp. 625,000 36,445,313
-------------
Total Common Stocks
(Cost $909,511,853) 1,666,242,549
-------------
Preferred Stocks 0.8%
Microsoft Corp. Series A
(Cost $11,393,363) 142,500 13,305,938
-------------
Principal Amount Value
(M=$1,000) (Note 1)
Corporate Short-Term Notes 4.1%
Avnet Inc.
5.51%, 06/01/98 5000M $ 5,000,000
Beneficial Corp.
5.53%,06/22/98 9000M 8,970,968
CIT Group Holdings
5.51%, 06/01/98 11000M 11,000,000
Merrill Lynch
5.52%, 06/04/98 9000M 8,995,860
Merrill Lynch
5.53%, 06/12/98 6600M 6,588,848
Norwest Financial
5.50%,06/09/98 7000M 6,991,444
Norwest Financial
5.50%, 06/12/98 10000M 9,983,194
Prudential Funding
5.50%, 06/17/98 7000M 6,982,889
Texaco, Inc.
5.50%, 06/09/98 8000M 7,990,222
-------------
Total Corporate Short-Term Notes
(Cost $ 72,503,425) 72,503,425
-------------
Total Investments
(Cost $ 993,408,641) ** 1,752,051,912
Excess of Other Assets
Over Liabilities 0.1% 1,856,484
-------------
Net Assets $1,753,908,396
=============
* Non-income producing.
** Also cost for federal income tax purposes. At May 31, 1998, unrealized
appreciation for federal income tax purposes aggregated $758,643,271 of which
$766,340,145 related to appreciated securities and $7,696,874 related to
depreciated securities.
See Notes to Financial Statements
5
<PAGE>
Sentinel Common Stock Fund
Statement of Assets and Liabilities
at May 31, 1998 (Unaudited)
- -------------------------------------------------------------------------------
Assets
Investments at value $1,752,051,912
Cash and cash equivalents 1,301,119
Receivable for fund shares sold 540,733
Receivable for dividends and interest 4,332,587
--------------
Total Assets 1,758,226,351
--------------
Liabilities
Payable for securities purchased 1,080,000
Payable for fund shares repurchased 358,714
Accrued expenses 564,389
Management fee payable 832,625
Distribution fee payable (Class A Shares) 1,229,101
Distribution fee payable (Class B Shares) 105,967
Distribution fee payable (Class C Shares) 201
Fund service fee payable 146,958
--------------
Total Liabilities 4,317,955
--------------
Net Assets Applicable to Outstanding shares $1,753,908,396
==============
Net Asset Value and Offering Price per Share
Class A Shares
$1,640,492,682 / 37,145,920 shares outstanding $ 44.16
Sales Charge-- 5.00% of offering price 2.32
--------------
Maximum Offering Price $ 46.48
==============
Class B Shares
$112,733,127 / 2,557,552 shares outstanding $ 44.08
==============
Class C Shares
$682,587 / 15,461 shares outstanding $ 44.15
==============
Net Assets Represent
Capital stock at par value $ 397,189
Paid-in capital 842,564,923
Accumulated undistributed net investment income 2,689,909
Accumulated undistributed net realized gain
on investments 149,613,104
Unrealized appreciation of investments 758,643,271
--------------
Net Assets $1,753,908,396
==============
Investments at Cost $ 993,408,641
==============
Sentinel Common Stock Fund
Statement of Operations
For the Six Months Ended May 31, 1998 (Unaudited)
- --------------------------------------------------------------------------------
Investment Income
Income:
Dividends $ 15,113,220
Interest 1,713,900
--------------
Total Income 16,827,120
--------------
Expenses:
Management advisory fee 4,643,111
Transfer agent and custodian 921,000
Distribution expense (Class A Shares) 2,350,000
Distribution expense (Class B Shares) 480,760
Distribution expense (Class C Shares) 201
Accounting services 259,895
Auditing fees 59,500
Legal fees 37,250
Reports and notices to shareholders 79,000
Directors' fees and expenses 89,134
Other 112,263
--------------
Total Expenses 9,032,114
Expense Offset (62,954)
--------------
Net Expenses 8,969,160
--------------
Net Investment Income 7,857,960
--------------
Realized and Unrealized Gain on Investments
Net realized gain on sales of investments 149,611,289
Net change in unrealized appreciation 41,012,521
--------------
Net Realized and Unrealized Gain on Investments 190,623,810
--------------
Net Increase in Net Assets from Operations $ 198,481,770
==============
See Notes to Financial Statements.
6
<PAGE>
Sentinel Common Stock Fund
Statement of Changes in Net Assets
Six Months Year
Ended Ended
5/31/98 11/30/97
(Unaudited)
------------- -------------
Increase in Net Assets from Operations
Net investment income $ 7,857,960 $ 20,032,196
Net realized gain on sales of investments 149,611,289 169,148,488
Net change in unrealized appreciation 41,012,521 84,198,889
_____________ _____________
Net increase in net assets from operations 198,481,770 273,379,573
_____________ -------------
Distributions to Shareholders
From net investment income
Class A Shares (8,543,975) (19,255,324)
Class B Shares (184,658) (313,742)
Class C Shares -- --
From net realized gain on investments
Class A Shares (160,459,928) (113,937,213)
Class B Shares (8,547,448) (2,471,535)
Class C Shares -- --
------------- -------------
Total distributions to shareholders (177,736,009) (135,977,814)
------------- -------------
From Capital Share Transactions
Net proceeds from sales of shares
Class A Shares 54,740,691 108,947,565
Class B Shares 29,531,239 44,336,849
Class C Shares 691,925 --
Net asset value of shares in reinvestment
of dividends and distributions
Class A Shares 140,611,930 109,313,469
Class B Shares 8,579,598 2,719,384
Class C Shares -- --
------------ -----------
234,155,383 265,317,267
Less: Payments for shares reacquired
Class A Shares (83,856,398) (146,100,510)
Class B Shares (4,434,092) (3,169,265)
Class C Shares (1,027) --
------------ -----------
Increase in net assets from capital share
transactions 145,863,866 116,047,492
------------ -----------
Total Increase in Net Assets for period 166,609,627 253,449,251
Net Assets: Beginning of period 1,587,298,769 1,333,849,518
------------- -------------
Net Assets: End of period $ 1,753,908,396 $ 1,587,298,769
--------------- ---------------
--------------- ---------------
Undistributed Net Investment Income
at End of Period $ 2,689,909 $ 3,560,582
--------------- ---------------
--------------- ---------------
See Notes to Financial Statements
7
<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 5/31/98 Year Ended Year Ended Year Ended Year Ended Year Ended
Class A Shares (Unaudited) 11/30/97 11/30/96 11/30/95 11/30/94 11/30/93
------------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value at beginning of period $ 44.09 $ 40.60 $ 35.21 $ 28.25 $ 29.63 $ 29.71
------------- ---------- ---------- ---------- ---------- ----------
Income from Investment Operations
Net investment income 0.21 0.57 0.59 0.72 0.83 0.79
Net realized and unrealized gain (loss)
on investments 4.79 7.03 8.18 8.09 (1.35) 1.66
------------- ---------- ---------- ---------- ---------- ----------
Total from investment operations 5.00 7.60 8.77 8.81 (0.52) 2.45
------------- ---------- ---------- ---------- ---------- ----------
Less Distributions
Dividends from net investment income 0.24 0.57 0.61 0.74 0.80 0.82
Distributions from realized gains on investments 4.69 3.54 2.77 1.11 0.06 1.71
------------- ---------- ---------- ---------- ---------- ----------
Total Distributions 4.93 4.11 3.38 1.85 0.86 2.53
------------- ---------- ---------- ---------- ---------- ----------
Net asset value at end of period $ 44.16 $ 44.09 $ 40.60 $ 35.21 $ 28.25 $ 29.63
============= ========== ========== ========== ========== ==========
Total Return (%) (*) 12.7++ 20.9 27.2 32.8 (1.8) 8.8
Ratios/Supplemental Data
Ratio of net expenses to average net assets (%) 1.02+ 1.04 1.06 1.09 1.02 0.93
Ratio of expenses to average net assets before
expense reductions (%)(**) 1.03+ 1.05 1.07 1.10 1.02 0.93
Ratio of net investment income to average
net assets (%) 0.97+ 1.41 1.64 2.29 2.82 2.68
Portfolio turnover rate (%) 17 24 22 22 15 9
Average commission rate paid per share $ 0.0600 $ 0.0600 $ 0.0600 N/A N/A N/A
Net assets at end of period (000 omitted) $1,640,493 $1,509,999 $1,306,592 $1,057,944 $ 839,335 $ 897,836
</TABLE>
See Notes to Financial Statements
8
<PAGE>
Sentinel Common Stock Fund
Financial Highlights (cont'd.)
Selected per share data and ratios
Selected data for a share of capital stock outstanding throughout each fiscal
period.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Six Months Eight Months Period
Ended 5/31/98 Year Ended Ended May 4 thru
Class B Shares (A) (Unaudited) 11/30/97 11/30/96 Class C Shares(B) May 31, 1998
------------- ---------- ------------ ------------
Net asset value at beginning of period $ 44.03 $ 40.57 $ 35.43 $ 45.23
------------- ---------- ------------ ------------
Income from Investment Operations
Net investment income 0.03 0.27 0.22 0.07
Net realized and unrealized gain on investments 4.80 6.99 5.05 (1.15)
------------- ---------- ------------ ------------
Total from investment operations 4.83 7.26 5.27 (1.08)
------------- ---------- ------------ ------------
Less Distributions
Dividends from net investment income 0.09 0.26 0.13 --
Distributions from realized gains on investments 4.69 3.54 -- --
------------- ---------- ------------ ------------
Total Distributions 4.78 3.80 0.13 --
------------- ---------- ------------ ------------
Net asset value at end of period $ 44.08 $ 44.03 $ 40.57 $ 44.15
============= ========== ============ ============
Total Return (%) (*) 12.3++ 19.9 14.9++ (2.4)++
Ratios/Supplemental Data
Ratio of net expenses to average net assets (%) 1.80+ 1.79 1.91+ 1.80+
Ratio of expenses to average net assets before
expense reductions (%)(**) 1.81+ 1.80 1.92+ 1.80+
Ratio of net investment income to average net assets (%) 0.19+ 0.66 0.80+ 0.19+
Portfolio turnover rate (%) 17 24 22 17
Average commission rate paid per share $ 0.0600 $ 0.0600 $ 0.0600 $ 0.0600
Net assets at end of period (000 omitted) $ 112,733 $ 77,299 $ 27,257 $ 683
</TABLE>
(A) Commenced operations April 1, 1996.
(B) Commenced operations May 4, 1998.
+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
N/A Not applicable to periods prior to 1996.
See Notes to Financial Statements.
9
<PAGE>
Sentinel Balanced Fund
Investment in Securities
at May 31, 1998 (Unaudited)
- --------------------------------------------------------------------------------
Principal Amount Value
(M=$1,000) (Note 1)
- --------------------------------------------------------------------------------
U.S. Government Obligations 17.1%
U.S. Treasury Obligations 9.7%
5-Year:
Note 5.5%, '03 3000M $ 2,989,830
Note 5.5%, '03 3000M 2,494,600
------------
5,484,430
------------
10-Year:
Note 5.75%, '03 5000M 5,039,650
Note 7.25%, '04 500M 542,680
Note 7.5%, '05 1750M 1,931,475
Note 6.875%, '06 750M 807,690
Note 7%, '06 2500M 2,715,500
Note 5.5%, '08 16500M 16,400,340
------------
27,437,335
------------
30-Year:
Note 7.25%, '16 1000M 1,153,060
Note 6%, '26 2000M 2,032,400
------------
3,185,460
------------
Total U.S. Treasury Obligations 36,107,225
------------
U.S. Government Agency Obligations 7.4%
Federal Home Loan Mortgage Corporation 2.2%
Collateralized Mortgage Obligations:
FHLMC 1998 PB 6.5%, '20 2500M 2,503,900
------------
15-Year:
7%, '10 975M 998,973
7.5%, '10 1522M 1,574,471
7.5%, '10 1308M 1,353,466
------------
3,926,910
------------
30-Year:
8%, '08 1445M 1,528,327
------------
Total Federal Home
Loan Mortgage Corporation 7,959,137
------------
Federal National Mortgage Association 2.9%
Collateralized Mortgage Obligations:
CMO Trust Series
22(Y) 7.95%, '17 1930M 1,992,771
FNMA 97-52(VC) 7.5%, '10 2000M 2,082,420
------------
4,075,191
------------
15-Year:
7.5%, '07 1077M 1,113,329
7.5%, '12 4383M 4,519,197
------------
5,632,526
------------
30-Year:
6%, '28 1236M 1,199,508
------------
Total Federal National
Mortgage Association 10,907,225
------------
Government National Mortgage Association 2.3%
15-Year:
7%, '13 2523M 2,584,177
------------
30-Year:
9%, '09 28M 30,487
7%, '23 3693M 3,772,526
7.5%, '28 1997M 2,059,277
------------
5,862,290
------------
Total Government
National Mortgage Association 8,446,467
------------
Total U.S. Government
Agency Obligations 27,312,829
------------
Total U.S. Government Obligations
(Cost $62,608,615) 63,420,054
------------
- ------------------------------------------------------------------------------
Principal Amount Value
(M=$1,000) (Note 1)
- ------------------------------------------------------------------------------
Bonds 18.2%
Beverages 0.1%
Anheuser Busch 8.5%, '17 403M $ 417,105
------------
Financial Institutions 5.3%
Bankers Trust 7.25%, '11 3875M 4,122,031
Contifinancial 7.5%, '02 1000M 1,000,000
Fairfax Financial Holdings
7.375%, '18 3600M 3,658,500
First Union Corp.
6.824%, '26 2325M 2,470,313
Lehman Brothers Holdings
8.5%, '15 2800M 3,286,500
Providian National Bank
6.7%, '03 1500M 1,507,500
Salomon Brothers
6.875%, '03 3500M 3,591,875
------------
19,636,719
------------
Foreign Financial Institutions 5.3%
Bank Austria 7.25%, '17 3000M 3,217,500
Banque National de Paris
7.738%, '49 4000M 4,090,000
BCH Cayman Islands Ltd.
7.7%, '06 2500M 2,687,500
Credit Suisse 7.9%, '07 3000M 3,206,250
Midland Bank 7.65%, '25 2250M 2,480,625
Societe Generale 7.85%, '49 2700M 2,872,125
Sumitomo Bank 9.4%, '49 1250M 1,187,500
------------
19,741,500
------------
Industrial - Diversified 2.2%
Dimon Inc. 8.875%, '06 1800M 1,876,500
Fred Meyer 7.45%, '08 1700M 1,706,375
Mirage Resorts 6.625%, '05 1500M 1,486,875
Owens Corning 7.5%, '05 3000M 3,026,250
------------
8,096,000
------------
Insurance 1.7%
Farmers Insurance Exchange
8.625%, '24 3000M 3,558,750
Lumbermens Mutual Casualty
8.3%, '37 2500M 2,762,500
------------
6,321,250
------------
Sovereign Credit 0.2%
Korea Development Bank
6.75%, '05 1000M 810,000
------------
Telecommunications 2.0%
Comsat 8.05%, '06 2000M 2,290,460
Continental Cablevision
8.3%, '06 2625M 2,903,906
News America Holdings
6.625%, '08 2000M 1,997,500
------------
7,191,866
------------
Utility-Electric 1.3%
New Orleans Public Service
8%, '06 2000M 2,075,000
Niagara Mohawk Power
8.5%, ' 23 2500M 2,721,875
------------
4,796,875
------------
Utility-Gas 0.1%
Consolidated Natural Gas
8.625%, '11 309M 323,678
------------
Total Bonds
(Cost $65,405,502) 67,334,993
------------
- ------------------------------------------------------------------------------
Shares Value
(Note 1)
- ------------------------------------------------------------------------------
Common Stocks 60.2%
Aerospace 1.3%
Goodrich (B. F.) 95,000 $ 4,868,750
-------------
Automobiles & Auto Parts 1.3%
Ford Motor 90,000 4,668,750
-------------
Banks 4.7%
BankAmerica Corp. 45,000 3,720,937
Bank of New York 70,000 4,278,750
Chase Manhattan Corp. 26,000 3,534,375
Citicorp 16,500 2,460,563
First Union Corp. 65,000 3,595,312
-------------
17,589,937
-------------
Building Materials 1.1%
Sherwin-Williams 122,500 4,073,125
-------------
Computer Products 3.1%
Hewlett Packard 67,500 4,193,438
Intel Corp. 27,500 1,964,531
International Business
Machines 44,000 5,164,500
-------------
11,322,469
-------------
Consumer & Business Services 1.9%
First Data Corp. 80,000 2,660,000
Omnicom Group 97,500 4,564,219
-------------
7,224,219
-------------
Consumer Products 2.6%
Fortune Brands 115,000 4,420,313
Kimberly-Clark 105,000 5,204,062
-------------
9,624,375
-------------
Containers & Packaging 1.7%
Automatic Data Processing 33,000 2,099,625
Bemis Co. 45,000 1,898,437
Crown Cork & Seal 42,500 2,204,688
-------------
6,202,750
-------------
Drugs 2.9%
American Home Products 120,000 5,797,500
Pfizer, Inc. 36,000 3,773,250
Schering Plough Corp. 15,000 1,255,313
-------------
10,826,063
-------------
Electrical Equipment 3.0%
Emerson Electric 75,000 4,556,250
General Electric 28,000 2,334,500
Grainger, (W.W.) 40,000 4,222,500
-------------
11,113,250
-------------
Energy 4.2%
Amoco 84,000 3,512,250
Chevron 32,500 2,595,938
Exxon 35,000 2,467,500
Mobil 60,100 4,687,800
Royal Dutch Petroleum 40,000 2,242,500
-------------
15,505,988
-------------
Financial 2.7%
American Express 40,000 4,105,000
Associated First Capital 23,587 1,764,602
Travelers Group 67,500 4,117,500
-------------
9,987,102
-------------
(continued)
10
<PAGE>
Sentinel Balanced Fund
Investment in Securities (cont'd.)
at May 31, 1998 (Unaudited)
- -------------------------------------------------------------------------------
Shares Value
(Note 1)
- -------------------------------------------------------------------------------
Foods 3.5%
Bestfoods 90,000 $ 5,079,375
Hershey Foods Corp. 8,100 560,925
McCormick & Co. 72,500 2,428,750
Sara Lee 85,000 5,004,375
------------
13,073,425
------------
Industrial-Diversified 2.8%
Dover 60,000 2,250,000
Parker-Hannifin 91,100 3,740,794
Praxair Inc. 90,000 4,438,125
------------
10,428,919
------------
Insurance 3.8%
Allstate Corp. 40,000 3,765,000
American General 65,000 4,363,125
American Int'l. Group 25,000 3,095,312
Jefferson-Pilot 48,750 2,790,937
------------
14,014,374
------------
Lodging 1.0%
Marriott International -
Class A 100,000 3,475,000
(*)Sodexho Marriott Services 10,000 284,375
------------
3,759,375
------------
Medical-Equipment & Supplies 3.0%
Abbott Laboratories 45,000 3,338,438
Becton, Dickinson & Co. 33,800 2,391,350
Johnson & Johnson 77,000 5,317,813
------------
11,047,601
------------
Oil Field Equipment & Services 1.6%
Halliburton Co. 75,000 3,553,125
Schlumberger Ltd. 31,500 2,458,969
------------
6,012,094
------------
Publishing 2.5%
Gannett 66,500 4,384,844
McGraw-Hill 60,000 4,691,250
------------
9,076,094
------------
Railroads 2.3%
Canadian Pacific 190,000 5,521,875
Union Pacific Corp. 60,000 2,902,500
------------
8,424,375
------------
Retail 3.4%
(*)Costco Cos. 16,500 954,938
Gap Inc. 50,000 2,700,000
May Department Stores 55,000 3,537,187
Sears, Roebuck 89,700 5,544,581
------------
12,736,706
------------
Tobacco 0.5%
Philip Morris 54,000 2,018,250
------------
Utilities-Electric 2.4%
Duke Energy 41,000 2,362,625
Florida Progress 55,000 2,268,750
FPL Group 36,000 2,211,750
Pacificorp 90,000 2,075,625
------------
8,918,750
------------
- ------------------------------------------------------------------------------
Shares Value
(Note 1)
- ------------------------------------------------------------------------------
Utilities-Gas 1.7%
Enron Corp. 75,000 $ 3,759,375
Sonat, Inc. 60,000 2,351,250
-------------
6,110,625
-------------
Utilities-Telephone 1.2%
GTE Corp. 76,000 4,431,750
-------------
Total Common Stocks
(Cost $125,491,284) 223,059,116
-------------
Preferred Stocks 0.5%
Microsoft Corp. Series A
(Cost $1,575,175) 19,700 1,839,487
-------------
- ------------------------------------------------------------------------------
Principal Amount Value
(M=$1,000) (Note 1)
- ------------------------------------------------------------------------------
Corporate Short-Term Notes 8.4%
CIT Group Holdings
5.51%, 06/01/98 3000M $ 3,000,000
Commercial Credit
5.5%, 06/15/98 15500M 15,466,847
Merrill Lynch
5.58%, 06/05/98 6000M 5,996,280
Merrill Lynch
5.55%, 06/11/98 4000M 3,993,834
Texaco Inc.
5.5%, 06/02/98 2500M 2,499,618
-------------
Total Corporate Short-Term Notes
(Cost $30,956,579) 30,956,579
-------------
Total Investments
(Cost $286,037,155)(**) 386,610,229
Excess of Liabilities
Over Other Assets (4.4%) (16,217,521)
-------------
Net Assets $ 370,392,708
=============
(*) Non-income producing.
(**) Also cost for federal income tax purposes. At May 31, 1998 net unrealized
appreciation for federal income tax purposes aggregated $100,573,074 of which
$101,687,116 related to appreciated securities and $1,114,042 related to
depreciated securities.
See Notes to Financial Statements.
11
<PAGE>
Sentinel Balanced Fund
Statement of Assets and Liabilities
at May 31, 1998 (Unaudited)
- -------------------------------------------------------------------------------
Assets
Investments at value $386,610,229
Cash and cash equivalents 589,530
Receivable for securities sold 5,121,196
Receivable for fund shares sold 37,381
Receivable for dividends and interest 2,719,073
-------------
Total Assets 395,077,409
-------------
Liabilities
Payable for securities purchased 24,127,853
Payable for fund shares repurchased 12,594
Accrued expenses 117,260
Management fee payable 193,405
Distribution fee payable (Class A Shares) 160,968
Distribution fee payable (Class B Shares) 34,963
Distribution fee payable (Class C Shares) 22
Fund service fee payable 37,636
------------
Total Liabilities 24,684,701
------------
Net Assets Applicable to Outstanding Shares $370,392,708
============
Net Asset Value and Offering Price per Share
Class A Shares
$333,818,587 / 16,183,152 shares outstanding $ 20.63
Sales Charge--5.00% of offering price 1.09
------------
Maximum Offering Price $ 21.72
============
Class B Shares
$36,504,114 / 1,767,884 shares outstanding $ 20.65
============
Class C Shares
$70,007 / 3,393 shares outstanding $ 20.63
============
Net Assets Represent
Capital stock at par value $ 179,544
Paid-in capital 246,881,561
Accumulated undistributed net investment income 1,387,686
Accumulated undistributed net realized gain
on investments 21,370,843
Unrealized appreciation of investments 100,573,074
------------
Net Assets $370,392,708
============
Investments at Cost $286,037,155
============
Sentinel Balanced Fund
Statement of Operations
For the Six Months Ended May 31, 1998 (Unaudited)
- ------------------------------------------------------------------------------
Investment Income
Income:
Dividends $ 2,056,265
Interest 4,742,513
------------
Total Income 6,798,778
------------
Expenses:
Management advisory fee 1,102,119
Transfer agent and custodian 252,942
Distribution expense (Class A Shares) 490,760
Distribution expense (Class B Shares) 157,920
Distribution expense (Class C Shares) 22
Accounting services 55,301
Auditing fees 15,750
Legal fees 6,000
Reports and notices to shareholders 17,500
Directors' fees and expenses 19,037
Other 40,280
-----------
Total Expenses 2,157,631
Expense Offset (26,765)
-----------
Net Expenses 2,130,866
-----------
Net Investment Income 4,667,912
-----------
Realized and Unrealized Gain on Investments
Net realized gain on sales of investments 21,350,598
Net change in unrealized appreciation 5,514,382
-----------
Net Realized and Unrealized Gain on Investments 26,864,980
-----------
Net Increase in Net Assets from Operations $31,532,892
===========
See Notes to Financial Statements
12
<PAGE>
Sentinel Balanced Fund
Statement of Changes in Net Assets
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Year
Ended Ended
5/31/98 11/30/97
(Unaudited)
------------ ------------
<S> <C> <C>
Increase in Net Assets from Operations
Net investment income $ 4,667,912 $ 9,300,414
Net realized gain on sales of investments 21,350,598 19,528,942
Net change in unrealized appreciation 5,514,382 17,871,222
------------ ------------
Net increase in net assets from operations 31,532,892 46,700,578
------------ ------------
Distributions to Shareholders
From net investment income
Class A Shares (4,329,043) (8,713,721)
Class B Shares (302,838) (386,612)
Class C Shares -- --
From net realized gain on investments
Class A Shares (18,036,497) (7,122,678)
Class B Shares (1,576,559) (285,241)
Class C Shares -- --
------------ ------------
Total distributions to shareholders (24,244,937) (16,508,252)
------------ ------------
From Capital Share Transactions
Net proceeds from sales of shares
Class A Shares 18,600,612 34,678,474
Class B Shares 8,829,144 14,295,999
Class C Shares 70,365 --
Net asset value of shares in reinvestment
of dividends and distributions
Class A Shares 20,960,869 14,292,974
Class B Shares 1,772,640 615,243
Class C Shares -- --
------------ ------------
50,233,630 63,882,690
Less: Payments for shares reacquired
Class A Shares (27,280,428) (59,461,675)
Class B Shares (1,388,930) (1,308,672)
Class C Shares -- --
------------ ------------
Increase in net assets from capital share transactions 21,564,272 3,112,343
------------ ------------
Total Increase in Net Assets for period 28,852,227 33,304,669
Net Assets: Beginning of period 341,540,481 308,235,812
------------ ------------
Net Assets: End of period $370,392,708 $341,540,481
============ ============
Undistributed Net Investment Income
at End of Period $ 1,387,686 $ 1,371,840
============ ============
</TABLE>
See Notes to Financial Statements.
13
<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 5/31/98 Year Ended Year Ended Year Ended Year Ended Year Ended
Class A Shares (Unaudited) 11/30/97 11/30/96 11/30/95 11/30/94 11/30/93
----------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value at beginning of period $ 20.29 $ 18.55 $ 16.84 $ 14.08 $ 15.27 $ 14.82
-------- -------- -------- -------- -------- --------
Income from Investment Operations
Net investment income 0.27 0.56 0.54 0.58 0.58 0.59
Net realized and unrealized gain (loss) on
investments 1.50 2.18 2.13 2.78 (1.12) 0.80
-------- -------- -------- -------- -------- --------
Total from investment operations 1.77 2.74 2.67 3.36 (0.54) 1.39
======== ======== ======== ======== ======== ========
Less Distributions
Dividends from net investment income 0.27 0.55 0.54 0.59 0.56 0.58
Distributions from realized gains on investments 1.16 0.45 0.42 0.01 0.09 0.36
-------- -------- -------- -------- -------- --------
Total Distributions 1.43 1.00 0.96 0.60 0.65 0.94
-------- -------- -------- -------- -------- --------
Net asset value at end of period $ 20.63 $ 20.29 $ 18.55 $ 16.84 $ 14.08 $ 15.27
======== ======== ======== ======== ======== ========
Total Return (%) 9.3++ 15.4 16.6 24.4 (3.6) 9.7
Ratios/Supplemental Data
Ratio of net expenses to average net assets (%) 1.12+ 1.16 1.20 1.27 1.21 1.14
Ratio of expenses to average net assets before
expense reductions (%) (**) 1.14+ 1.17 1.22 1.29 1.21 1.14
Ratio of net investment income to average net
assets (%) 2.67+ 2.93 3.13 3.77 3.97 3.88
Portfolio turnover rate (%) 38 63 83 110 66 72
Average commission rate paid per share $ 0.0600 $ 0.0600 $ 0.0600 N/A N/A N/A
Net assets at end of period (000 omitted) $333,819 $314,948 $297,288 $267,103 $226,328 $229,632
</TABLE>
See Notes to Financial Statements.
14
<PAGE>
Sentinel Balanced Fund
Financial Highlights (cont'd.)
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 Period
Ended 5/31/98 Year Ended Ended May 4 thru
Class B Shares(A) (Unaudited) 11/30/97 11/30/96 Class C Shares(B) May 31, 1998
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of period $ 20.32 $ 18.58 $ 17.09 $ 20.87
-------------- ----------- ------------- -------------
Income from Investment Operations
Net investment income 0.18 0.42 0.26 0.05
Net realized and unrealized gain (loss)
on investments 1.52 2.18 1.37 (0.29)
-------------- ----------- ------------- -------------
Total from investment operations 1.70 2.60 1.63 (0.24)
-------------- ----------- ------------- -------------
Less Distributions
Dividends from net investment income 0.21 0.41 0.14 -
Distributions from realized gains on investments 1.16 0.45 - -
-------------- ----------- ------------- -------------
Total Distributions 1.37 0.86 0.14 -
-------------- ----------- ------------- -------------
Net asset value at end of period $ 20.65 $ 20.32 $ 18.58 $ 20.63
============== =========== ============= =============
Total Return (%) * 8.9++ 14.6 9.6++ (1.2)++
Ratios/Supplemental Data
Ratio of net expenses to average net assets (%) 1.90+ 1.88 2.12+ 1.89+
Ratio of expenses to average net assets before
expense reductions (%) ** 1.91+ 1.89 2.13+ 1.89+
Ratio of net investment income to average net
assets (%) 1.89+ 2.21 2.21+ 1.90+
Portfolio turnover rate (%) 38 63 83 38
Average commission rate paid per share $0.0600 $0.0600 $0.0600 $0.0600
Net assets at end of period (000 omitted) $36,504 $26,593 $10,948 $ 70
</TABLE>
(A) Commenced operations April 1, 1996.
(B) Commenced operations May 4, 1998.
+ 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.
15
<PAGE>
Sentinel Growth Fund
Investment in Securities
at May 31, 1998 (Unaudited)
- --------------------------------------------------------------------------------
Shares Value
(Note 1)
- --------------------------------------------------------------------------------
Common Stocks 94.1%
Aerospace 3.8%
Goodrich (B. F.) 75,000 $ 3,843,750
-------------
Banks 3.2%
BankAmerica Corp. 10,000 826,875
Cullen Frost Bankers, Inc. 17,800 964,537
Mercantile Bankshares 40,000 1,425,000
-------------
3,216,412
-------------
Chemicals 1.1%
Cambrex Corp. 19,400 1,085,187
-------------
Computer Products & Services 3.5%
Hewlett Packard 20,000 1,242,500
Intel Corp. 32,400 2,314,575
-------------
3,557,075
-------------
Consumer & Business Services 10.0%
*Affiliated Computer Services 100,000 3,331,250
Electronic Data Services 40,400 1,469,550
*Filenet Corp. 20,000 1,100,625
Omnicom Group 46,600 2,181,463
*Sterling Commerce 50,000 1,984,375
-------------
10,067,263
-------------
Consumer Products 0.8%
Kimberly-Clark 16,100 797,956
-------------
Drugs & Drug Delivery 3.6%
American Home Products 15,000 724,688
*Scherer (R. P.) 22,000 1,816,375
Schering Plough Corp. 13,000 1,087,937
-------------
3,629,000
-------------
Energy 1.1%
*Calenergy 36,200 1,095,050
-------------
Financial 0.9%
SLM Holdings Corp. 22,000 878,625
-------------
Foods 0.9%
McCormick & Co. 28,000 938,000
-------------
Healthcare Providers 8.4%
Becton Dickinson & Co. 33,000 2,334,750
Columbia/HCA Healthcare 125,000 4,085,938
*Genesis Health Ventures 80,000 2,025,000
-------------
8,445,688
-------------
Industrial - Diversified 6.7%
Belden Inc. 42,200 1,674,812
*Bush Boake Allen 29,600 873,200
Parker-Hannifin 23,000 944,438
Praxair Inc. 20,000 986,250
Tyco International Ltd. 40,000 2,215,000
-------------
6,693,700
-------------
Insurance 6.9%
Allstate Corp. 12,000 1,129,500
Enhance Financial Services 17,600 1,146,200
Executive Risk, Inc. 13,900 874,831
Jefferson - Pilot 46,500 2,662,125
Life Reassurance Corp. 15,000 1,104,375
-------------
6,917,031
-------------
Lodging 1.9%
Marriott International - Class A 50,000 $ 1,737,500
*Sodexho Marriott Services 6,250 177,734
-------------
1,915,234
-------------
Marketing Services 0.9%
*Catalina Marketing Corp. 20,000 905,000
-------------
Medical - Equipment & Supplies 2.5%
Hillenbrand Industries 40,000 2,470,000
-------------
Oil Field Equipment & Services 1.4%
Schlumberger Ltd. 18,200 1,420,737
-------------
Restaurants 6.7%
*Outback Steakhouse 45,000 1,659,375
Ruby Tuesday, Inc. 170,000 2,730,625
*Sbarro, Inc. 80,000 2,340,000
-------------
6,730,000
-------------
Retail 8.4%
Ethan Allen Interiors 31,200 1,569,750
*Gymboree 32,000 506,000
*Lands' End Inc. 28,200 911,212
TJX Companies 61,600 2,879,800
Wal Mart Stores Inc. 20,000 1,103,750
*Wet Seal Inc. 49,900 1,497,000
-------------
8,467,512
-------------
Semiconductors & Semiconductor Equipment 7.5%
*Applied Materials Inc. 61,600 1,971,200
*Dallas Semiconductor Corp. 39,000 1,313,813
*KLA Instruments 51,500 1,744,562
*Novellus Systems 50,000 1,890,625
*Photronics Inc. 22,200 585,525
-------------
7,505,725
-------------
Software 2.1%
*Microsoft Corp. 12,000 1,017,750
*Novell Inc. 100,000 1,050,000
-------------
2,067,750
-------------
Telecommunications 8.1%
*Airtouch Communications 43,500 2,071,688
*Cox Communications 22,000 961,125
GTE Corp. 40,000 2,332,500
Lucent Technologies 12,000 851,250
Motorola 35,000 1,852,813
-------------
8,069,376
-------------
Tobacco 3.7%
Philip Morris 67,500 2,522,813
UST, Inc. 44,000 1,171,500
-------------
3,694,313
-------------
Total Common Stocks
(Cost $86,639,869) 94,410,384
-------------
- --------------------------------------------------------------------------------
Principal Amount Value
(M=$1,000) (Note 1)
- --------------------------------------------------------------------------------
Corporate Short-Term Notes 6.1%
G. E. Capital Corp.
5.55%, 06/08/98 3500M $ 3,496,223
Merrill Lynch
5.52%, 06/03/98 2600M 2,599,203
------------
Total Short-Term Corporate Notes
(Cost $6,095,426) 6,095,426
------------
Total Investments
(Cost $92,735,295)** 100,505,810
Excess of Liabilities
Over Other Assets (0.2%) (192,569)
------------
Net Assets $100,313,241
============
* Non-income producing.
** Also cost for federal income tax purposes. At May 31, 1998 net unrealized
appreciation for federal income tax purposes aggregrated $7,770,515 of which
$12,418,623 related to appreciated securities and $4,648,108 related to
depreciated securities.
See Notes to Financial Statements.
16
<PAGE>
Sentinel Growth Fund
Statement of Assets and Liabilities
at May 31, 1998 (Unaudited)
- --------------------------------------------------------------------------------
Assets
Investments at value $ 100,505,810
Cash and cash equivalents 1,133,853
Receivable for fund shares sold 44,023
Receivable for dividends 68,788
--------------
Total Assets 101,752,474
--------------
Liabilities
Payable for securities purchased 1,236,928
Accrued expenses 65,144
Management fee payable 53,157
Distribution fee payable (Class A Shares) 65,896
Distribution fee payable (Class B Shares) 1,579
Fund service fee payable 16,529
--------------
Total Liabilities 1,439,233
--------------
Net Assets Applicable to Outstanding Shares $ 100,313,241
==============
Class A Shares
$98,168,263 / 6,760,373 shares outstanding $ 14.52
Sales Charge--5.00% of offering price 0.76
--------------
Maximum Offering Price $ 15.28
==============
Class B Shares
$2,144,978 / 148,139 shares outstanding $ 14.48
==============
Net Assets Represent
Capital stock at par value $ 69,085
Paid-in capital 86,186,527
Accumulated distributions in excess of
net investment income (117,821)
Accumulated undistributed net realized gain
on investments 6,404,935
Unrealized appreciation of investments 7,770,515
--------------
Net Assets $ 100,313,241
==============
Investments at Cost $ 92,735,295
==============
See Notes to Financial Statements.
Sentinel Growth Fund
Statement of Operations
For the Six Months Ended May 31, 1998 (Unaudited)
- --------------------------------------------------------------------------------
Investment Income
Income:
Dividends $ 443,943
Interest 88,401
--------------
Total Income 532,344
--------------
Expenses:
Management advisory fee 293,593
Transfer agent and custodian 130,548
Distribution expense (Class A Shares) 142,150
Distribution expense (Class B Shares) 3,866
Accounting services 13,980
Auditing fees 5,250
Legal fees 2,725
Reports and notices to shareholders 10,010
Directors' fees and expenses 5,041
Other 27,914
--------------
Total Expenses 635,077
Expense Offset (12,773)
--------------
Net Expenses 622,304
--------------
Net Investment Loss (89,960)
--------------
Realized and Unrealized Gain (Loss) on Investments
Net realized gain on sales of investments 6,465,142
Net change in unrealized appreciation (depreciation) (14,414)
--------------
Net Realized and Unrealized Gain on Investments 6,450,728
--------------
Net Increase in Net Assets from Operations $ 6,360,768
==============
See Notes to Financial Statements.
17
<PAGE>
Sentinel Growth Fund
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Year
Ended Ended
5/31/98 11/30/97
(Unaudited)
------------- -------------
<S> <C> <C>
Increase in Net Assets from Operations
Net investment loss $ (89,960) $ (114,399)
Net realized gain on sales of investments 6,465,142 24,318,310
Net change in unrealized appreciation (depreciation) (14,414) (5,377,151)
------------ ------------
Net increase in net assets from operations 6,360,768 18,826,760
------------ ------------
Distributions to Shareholders
From net investment income
Class A Shares -- (59,692)
Class B Shares -- --
From net realized gain on investments
Class A Shares (24,253,869) (11,151,823)
Class B Shares -- --
------------ ------------
Total distributions to shareholders (24,253,869) (11,211,515)
------------ ------------
From Capital Share Transactions
Net proceeds from sales of shares
Class A Shares 10,379,008 10,603,174
Class B Shares 2,202,648 --
Net asset value of shares in reinvestment
of dividends and distributions
Class A Shares 22,564,015 10,331,592
Class B Shares -- --
------------ ------------
35,145,671 20,934,766
Less: Payments for shares reacquired
Class A Shares (5,091,864) (10,181,809)
Class B Shares (31,948) --
------------ ------------
Increase in net assets from capital share transactions 30,021,859 10,752,957
------------ ------------
Total Increase in Net Assets for period 12,128,758 18,368,202
Net Assets: Beginning of period 88,184,483 69,816,281
------------ ------------
Net Assets: End of period $100,313,241 $ 88,184,483
------------ ------------
Accumulated undistributed Net Investment
Income (Loss) at End of Period $ (117,821) $ (27,862)
============ ============
</TABLE>
See Notes to Financial Statements.
18
<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 5/31/98 Year Ended Year Ended Year Ended Year Ended Year Ended
Class A Shares (Unaudited) 11/30/97 11/30/96 11/30/95 11/30/94 11/30/93
-------------- ----------- ---------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value at beginning of period $ 18.73 $ 17.57 $ 16.93 $ 16.15 $ 17.51 $ 18.56
-------------- ----------- ---------- ---------- ----------- -----------
Income from Investment Operations
Net investment income (loss) (0.01) (0.02) 0.03 0.07 0.05 0.04
Net realized and unrealized gain (loss)
on investments 0.93 4.00 3.23 3.33 (0.92) (0.28)
-------------- ----------- ---------- ---------- ----------- -----------
Total from investment operations 0.92 3.98 3.26 3.40 (0.87) (0.24)
-------------- ----------- ---------- ---------- ----------- -----------
Less Distributions
Dividends from net investment income - 0.02 0.07 0.05 0.03 0.04
Distributions from realized gains on
investments 5.13 2.80 2.55 2.57 0.46 0.77
-------------- ----------- ---------- ---------- ----------- -----------
Total Distributions 5.13 2.82 2.62 2.62 0.49 0.81
-------------- ----------- ---------- ---------- ----------- -----------
Net asset value at end of period $ 14.52 $ 18.73 $ 17.57 $ 16.93 $ 16.15 $ 17.51
============== =========== ========== ========== =========== ===========
Total Return (%) * 7.4++ 27.3 22.6 24.9 (5.1) (1.3)
Ratios/Supplemental Data
Ratio of net expenses to average net assets (%) 1.30+ 1.29 1.40 1.50 1.43 1.31
Ratio of expenses to average net assets before
expense reductions (%) ** 1.32+ 1.32 1.43 1.54 1.43 1.31
Ratio of net investment income to average
net assets (%) (0.19)+ (0.15) 0.16 0.42 0.30 0.22
Portfolio turnover rate (%) 50 161 98 84 58 12
Average commission rate paid per share $0.0600 $0.0600 $0.0600 N/A N/A N/A
Net assets at end of period (000 omitted) $98,168 $88,184 $69,816 $60,446 $50,447 $57,833
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Five Months
Ended 5/31/98
Class B Shares(A) (Unaudited)
--------------
<S> <C>
Net asset value at beginning of period $ 13.08
--------------
Income from Investment Operations
Net investment income (loss) (0.08)
Net realized and unrealized gain on investments 1.48
--------------
Total from investment operations 1.40
--------------
Less Distributions
Dividends from net investment income -
Distributions from realized gains on investments -
--------------
Total Distributions -
--------------
Net asset value at end of period $ 14.48
==============
Total Return (%) * 10.7++
Ratios/Supplemental Data
Ratio of net expenses to average net assets (%) 2.10+
Ratio of expenses to average net assets before
expense reductions (%)** 2.11+
Ratio of net investment income to average net
assets (%) (0.99)+
Portfolio turnover rate (%) 50
Average commission rate paid per share $0.0600
Net assets at end of period (000 omitted) $ 2,145
</TABLE>
(A) Commenced operations January 12, 1998.
+ 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.
19
<PAGE>
Sentinel Small Company Fund
Investment in Securities
at May 31, 1998 (Unaudited)
- -------------------------------------------------------------------------------
Shares Value
(Note 1)
- -------------------------------------------------------------------------------
Common Stocks 90.1%
Banks 4.1%
Cullen Frost Bankers Inc. 35,000 $ 1,896,562
Mercantile Bankshares 45,000 1,603,125
Wilmington Trust Corp 32,000 1,940,000
-----------
5,439,687
-----------
Beverages 0.7%
* Robert Mondavi `A' 27,000 961,875
-----------
Chemicals 3.0%
Cambrex Corp 73,000 4,083,438
-----------
Clothing and Apparel - Retail & Industrial 5.8%
* Gymboree 46,000 727,375
* Lands' End 40,000 1,292,500
Unifirst Corporation 90,000 2,317,500
* Wet Seal Inc - Class A 110,100 3,303,000
-----------
7,640,375
-----------
Communications 0.1%
* Dynatech Corp 17,500 70,000
-----------
Consumer & Business Services 10.5%
* Affiliated Computer Services 135,000 4,497,188
Analysts Int'l 95,000 2,778,750
* CACI Int'l 95,000 1,876,250
* Healthcare Services Group 120,000 1,680,000
* Sterling Commerce 75,000 2,976,563
-----------
13,808,751
-----------
Cosmetics and Toiletries 2.3%
Alberto-Culver Co. Class A 110,800 2,991,600
-----------
Drugs & Drug Delivery 3.5%
* Scherer (R P) 56,600 4,673,038
-----------
Electronics 5.0%
Dallas Semiconductor Corp 55,000 1,852,812
Harman International
Industries 53,000 2,255,813
Methode Electronics `A' 180,000 2,295,000
-----------
6,403,625
-----------
Energy 1.5%
* CalEnergy Inc 66,000 1,996,500
-----------
Environmental Control 3.5%
Donaldson Co 94,500 2,061,281
* TETRA Technologies 118,700 2,589,144
-----------
4,650,425
-----------
Financial 2.2%
Duff & Phelps Credit Rating 50,000 2,875,000
-----------
Food & Food Distributors 4.1%
GoodMark Foods 57,900 1,324,462
Smart & Final Inc 55,000 1,031,250
Tootsie Roll Industries 40,000 3,052,500
-----------
5,408,212
-----------
Healthcare Providers 3.6%
* Genesis Health Ventures 113,500 2,872,969
Healthplan Services 84,000 1,863,750
-----------
4,736,719
-----------
- -------------------------------------------------------------------------------
Shares Value
(Note 1)
- -------------------------------------------------------------------------------
Industrial - Diversified 5.8%
Aptargroup 50,000 $ 3,240,625
* Bush Boake Allen 112,900 3,330,550
Lawter Int'l 102,500 986,562
-----------
7,557,737
-----------
Insurance 3.8%
Enhance Financial
Service Group 25,000 1,628,125
Executive Risk Inc. 19,000 1,195,813
Life Reassurance Corp. 30,000 2,208,750
-----------
5,032,688
-----------
Manufacturing - Diversified 2.1%
Tyco International Ltd. 49,000 2,713,375
-----------
Marketing Services 1.7%
* Catalina Marketing Corp 50,000 2,262,500
-----------
Medical - Equipment & Supplies 7.7%
Ballard Medical Products 72,600 1,624,425
Hillenbrand Industries 71,000 4,384,250
Life Technologies 84,000 2,871,750
Minntech Corp 88,400 1,215,500
-----------
10,095,925
-----------
Oil Field Equipment & Services 1.9%
* Smith International 50,000 2,453,125
-----------
Real Estate 2.5%
Chateau Communities Inc. 112,000 3,318,000
-----------
Restaurants 5.4%
Applebee's Int'l 42,000 1,023,750
Ruby Tuesday Inc. 210,000 3,373,125
Sbarro Inc 93,000 2,720,250
-----------
7,117,125
-----------
Retail 4.0%
Casey's General Stores 95,000 1,347,812
Ethan Allen Interiors 42,000 2,113,125
* Petco Animal Supplies 90,000 1,743,750
-----------
5,204,687
-----------
Semiconductors &
Semiconductor Equipment 2.4%
* Novellus Systems 40,000 1,512,500
* Phorronics 62,400 1,645,800
-----------
3,158,300
-----------
Software 2.5%
* FileNet Corp 60,000 3,301,875
-----------
Transportation 0.4%
* Railtex Inc. 30,000 459,375
-----------
Total Common Stocks
(Cost $90,645,674) 118,413,957
-----------
- -------------------------------------------------------------------------------
Principal Amount Value
(M=$1,000) (Note 1)
- -------------------------------------------------------------------------------
Corporate Convertible Bonds 0.2%
Phoenix Investment Partners 6%, '15
(Cost $403,571) 250M $ 307,500
------------
Corporate Short-Term Notes 10.2%
Beneficial Corp. 5.52%,
6/1/98 4000M 4,000,000
Merrill Lynch 5.53%,
6/4/98 2800M 2,798,710
Merrill Lynch 5.52%,
6/16/98 3500M 3,491,950
Norwest Financial 5.5%,
6/9/98 1300M 1,298,411
Prudential Funding 5.51%,
6/12/98 1800M 1,796,969
------------
Total Corporate Short-Term Notes
(Cost $13,386,040) 13,386,040
------------
Total Investments
(Cost $104,435,285)** 132,107,497
Excess of Liabilities
Over Other Assets (0.5%) (673,504)
------------
Net Assets $131,433,993
============
- -------------------------------------------------------------------------------
* Non-income producing.
** Also cost for federal income tax purposes. At May 31, 1998 net unrealized
appreciation for federal income tax purposes aggregated $27,672,212 of
which $30,940,581 related to appreciated securities and $3,268,369 related
to depreciated securities.
<PAGE>
Sentinel Small Company Fund
Statement of Assets and Liabilities
at May 31, 1998 (Unaudited)
- --------------------------------------------------------------------------------
Assets
Investments at value $ 132,107,497
Cash and cash equivalents 178,597
Receivable for securities sold 143,192
Receivable for fund shares sold 69,774
Receivable for dividends and interest 39,647
--------------
Total Assets 132,538,707
--------------
Liabilities
Payable for securities purchased 388,475
Payable for fund shares repurchased 478,698
Accrued expenses 59,753
Management fee payable 70,045
Distribution fee payable (Class A Shares) 68,615
Distribution fee payable (Class B Shares) 11,579
Fund service fee payable 27,549
--------------
Total Liabilities 1,104,714
--------------
Net Assets Applicable to Outstanding Shares $ 131,433,993
==============
Net Asset Value and Offering Price per Share
Class A Shares
$120,428,726 / 20,034,869 shares outstanding $ 6.01
Sales Charge--5.00% of offering price 0.32
--------------
Maximum Offering Price $ 6.33
==============
Class B Shares
$11,005,267 / 1,874,544 shares outstanding $ 5.87
==============
Net Assets Represent
Capital stock at par value $ 219,094
Paid-in capital 93,286,933
Accumulated distributions in excess of
net investment income (213,681)
Accumulated undistributed net realized gain
on investments 10,469,435
Unrealized appreciation of investments 27,672,212
--------------
Net Assets $ 131,433,993
==============
Investments at Cost $ 104,435,285
==============
See Notes to Financial Statements.
Sentinel Small Company Fund
Statement of Operations
For the Six Months Ended May 31, 1998 (Unaudited)
- --------------------------------------------------------------------------------
Investment Income
Income:
Dividends $ 428,652
Interest 346,630
--------------
Total Income 775,282
--------------
Expenses:
Management advisory fee 398,388
Transfer agent and custodian 217,795
Distribution expense (Class A Shares) 180,500
Distribution expense (Class B Shares) 46,620
Accounting services 20,055
Auditing fees 5,300
Legal fees 2,225
Reports and notices to shareholders 24,248
Directors' fees and expenses 6,871
Other 25,209
--------------
Total Expenses 927,211
Expense Offset (14,445)
--------------
Net Expenses 912,766
--------------
Net Investment Loss (137,484)
--------------
Realized and Unrealized Gain on Investments
Net realized gain on sales of investments 10,469,285
Net change in unrealized appreciation 327,700
--------------
Net Realized and Unrealized Gain on Investments 10,796,985
--------------
Net Increase in Net Assets from Operations $ 10,659,501
==============
See Notes to Financial Statements.
21
<PAGE>
Sentinel Small Company Fund
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Year
Ended Ended
5/31/98 11/30/97
(Unaudited)
--------------- -------------
<S> <C> <C>
Increase in Net Assets from Operations
Net investment income (loss) $ (137,484) $ 379,668
Net realized gain on sales of investments 10,469,285 14,644,582
Net change in unrealized appreciation 327,700 7,565,634
--------------- -------------
Net increase in net assets from operations 10,659,501 22,589,884
--------------- -------------
Distributions to Shareholders
From net investment income
Class A Shares (348,277) (134,035)
Class B Shares -- --
From realized gain on investments
Class A Shares (13,692,058) (755,382)
Class B Shares (952,430) (17,013)
--------------- --------------
Total distributions to shareholders (14,992,765) (906,430)
--------------- --------------
From Capital Share Transactions
Net proceeds from sales of shares
Class A Shares 5,625,682 13,878,046
Class B Shares 3,045,396 5,225,981
Net asset value of shares in reinvestment
of dividends and distributions
Class A Shares 12,740,406 809,158
Class B Shares 950,322 16,917
--------------- --------------
22,361,806 19,930,102
Less: Payments for shares reacquired
Class A Shares (9,428,774) (19,403,606)
Class B Shares (353,304) (358,156)
--------------- ---------------
Increase in net assets from capital share transactions 12,579,728 168,340
--------------- ---------------
Total Increase in Net Assets for period 8,246,464 21,851,794
Net Assets: Beginning of period 123,187,529 101,335,735
--------------- ---------------
Net Assets: End of period $ 131,433,993 $ 123,187,529
=============== ===============
Accumulated undistributed Net Investment
Income (Loss) at End of Period $ (213,681) $ 272,080
============== ===============
</TABLE>
See Notes to Financial Statements.
22
<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 5/31/98 Year Ended Year Ended Year Ended Year Ended Months Ended
Class A Shares (Unaudited) 11/30/97 11/30/96 11/30/95 11/30/94 11/30/93(A)
-------------- ----------- ----------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value at beginning of period $ 6.30 $ 5.17 $ 5.20 $ 5.53 $ 6.87 $ 6.49
-------------- ----------- ----------- ----------- ----------- -------------
Income from Investment Operations
Net investment income (loss) - 0.02 0.01 0.02 (0.04) (0.06)
Net realized and unrealized gain
on investments 0.48 1.16 0.95 0.56 0.18 0.44
-------------- ----------- ----------- ----------- ----------- -------------
Total from investment operations 0.48 1.18 0.96 0.58 0.14 0.38
-------------- ----------- ----------- ----------- ----------- -------------
Less Distributions
Dividends from net investment income 0.02 0.01 0.03 - - -
Distributions from realized gains
on investments 0.75 0.04 0.96 0.91 1.48 -
-------------- ----------- ----------- ----------- ----------- -------------
Total Distributions 0.77 0.05 0.99 0.91 1.48 -
-------------- ----------- ----------- ----------- ----------- -------------
Net asset value at end of period $ 6.01 $ 6.30 $ 5.17 $ 5.20 $ 5.53 $ 6.87
============== =========== =========== =========== =========== =============
Total Return (%) * 8.8++ 23.0 22.0 12.2 2.0 5.9++
Ratios/Supplemental Data
Ratio of net expenses to average net assets (%) 1.35+ 1.34 1.47 1.56 1.58 1.52+
Ratio of expenses to average net assets before
expense reductions (%) ** 1.37+ 1.36 1.51 1.60 1.58 1.52+
Ratio of net investment income to average
net assets (%) (0.15)+ 0.38 0.23 0.26 (0.74) (1.01)+
Portfolio turnover rate (%) 21 45 60 79 46 61
Average commission rate paid per share $ 0.0600 $ 0.0600 $0.0600 N/A N/A N/A
Net assets at end of period (000 omitted) $120,429 $115,532 $99,393 $89,321 $88,420 $105,176
- ---------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Six Months Year Eight Months
Ended 5/31/98 Ended Ended
Class B Shares (B) (Unaudited) 11/30/97 11/30/96
-------------- --------- -------------
<S> <C> <C> <C>
Net asset value at beginning of period $ 6.18 $ 5.12 $ 4.82
-------------- --------- -------------
Income from Investment Operations
Net investment loss (0.01) (0.03) (0.03)
Net realized and unrealized gain on investments 0.45 1.13 0.33
-------------- --------- -------------
Total from investment operations 0.44 1.10 0.30
-------------- --------- -------------
Less Distributions
Dividends from net investment income - - -
Distributions from realized gains on investments 0.75 0.04 -
-------------- --------- -------------
Total Distributions 0.75 0.04 -
-------------- --------- -------------
Net asset value at end of period $ 5.87 $ 6.18 $ 5.12
============== ========= =============
Total Return (%) * 8.3++ 21.6 6.2++
Ratios/Supplemental Data
Ratio of net expenses to average net assets (%) 2.22+ 2.35 2.62+
Ratio of expenses to average net assets before
expense reductions (%) ** 2.24+ 2.36 2.64+
Ratio of net investment income to average net
assets (%) (1.03)+ (0.62) (0.91)+
Portfolio turnover rate (%) 21 45 60
Average commission rate paid per share $0.0600 $0.0600 $0.0600
Net assets at end of period (000 omitted) $11,005 $ 7,656 $ 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.
23
<PAGE>
Sentinel World Fund
Investment in Securities
at May 31, 1998 (Unaudited)
- --------------------------------------------------------------------------------
Shares Value
(Note 1)
- --------------------------------------------------------------------------------
Common Stocks 94.2%
Argentina 1.5%
YPF S.A. (ADR) 60,000 $ 1,863,750
------------
Australia 5.8%
National Australia 190,000 2,620,975
News Corporation 350,000 2,147,620
Rio Tinto Limited 149,625 1,793,712
Westpac Bank Corp Ord. 96,008 630,976
------------
7,193,283
------------
Denmark 3.0%
Den Danske Bank 20,000 2,483,213
Novo Nordisk (ADR) 15,000 1,177,500
------------
3,660,713
------------
Finland 0.6%
Cultor 46,200 795,510
------------
France 7.9%
Alcatel Alsthom (ADR) 40,005 1,730,216
Elf Aquitaine (ADR) 28,785 1,973,572
Group Danone 10,500 2,822,778
Guyenne et Gascogne 2,940 1,098,974
Societe Generale 10,850 2,145,557
------------
9,771,097
------------
Germany 5.8%
BASF A.G 30,000 1,393,826
Bayer A.G. Ord. 60,000 2,858,182
Deutsche Bank 25,000 2,145,316
Siemens A.G. 13,000 851,409
------------
7,248,733
------------
Hong Kong 3.0%
Cheung Kong 250,000 1,351,735
CLP Holdings 310,000 1,336,121
HSBC Holdings 40,890 992,002
------------
3,679,858
------------
Italy 3.2%
Istituto Mobiliare Italia (ADR) 40,000 2,045,000
Telecom Italia (ADR) 25,000 1,875,000
------------
3,920,000
------------
Japan 12.5%
Canon 80,000 1,900,648
Daiichi Pharmaceuticals 110,000 1,473,794
Dai Nippon Printing Co. 70,000 1,149,028
Fuji Photo Film 38,000 1,283,081
Ito-Yokado 23,000 1,142,549
Kirin Beverage 50,000 935,925
Kyocera Corp. 30,000 1,460,043
Mitsubishi Heavy Industry 400,000 1,388,049
Murata Manufacturing 70,000 2,030,958
Nintendo Co. 20,000 1,864,651
Sankyo Co. LTD 40,000 961,843
------------
15,590,569
------------
Mexico 1.0%
Telefonos de Mexico (ADR) 27,500 1,304,531
------------
Netherlands 8.8%
ABN Amro Bank 84,876 2,052,925
Akzo Nobel N.V. 10,500 2,191,313
Hollandsche Beton Groep N.V. 60,000 1,269,463
ING Groep N.V. 27,290 1,871,787
Unilever N.V. (ADR) 45,000 3,552,188
------------
10,937,676
------------
Norway 1.6%
Norsk Hydro (ADR) 45,000 2,022,188
------------
Portugal 1.9%
Portugal Telecom (ADR) 45,000 2,373,750
------------
Singapore 1.5%
Development Bank of Singapore 82,500 497,018
Jardine Matheson 141,232 429,345
Singapore Int'l. Airlines 160,000 887,563
------------
1,813,926
------------
South Korea 0.2%
Pohang Iron & Steel Co. 6,740 231,770
------------
Spain 7.8%
Banco Popular 30,000 2,377,530
Banco Santander 24,000 1,207,358
Endesa (ADR) 105,000 2,520,000
Repsol (ADR) 40,000 2,190,000
Telefonica de Espana S.A. (ADR) 10,000 1,345,000
------------
9,639,888
------------
Sweden 4.5%
Aga B Free 85,000 1,358,813
Astra AB B Free 121,333 2,356,926
Volvo AB B 60,625 1,934,446
------------
5,650,185
------------
Switzerland 4.5%
Nestle A.G. Registered 1,575 3,369,842
Novartis A.G. Registered 1,348 2,279,692
------------
5,649,534
------------
United Kingdom 19.1%
Albright & Wilson 450,000 1,365,565
Assoc. Brit. Food 250,000 2,298,376
British Steel (ADR) 75,000 1,907,813
British Telecom plc (ADR) 25,000 2,609,375
Carlton Communications 150,000 1,216,283
Diageo plc 138,240 1,588,919
Glaxo Hldg plc (ADR) 25,000 1,348,438
Johnson Matthey plc 100,000 1,008,267
National Westminster Bank plc 111,342 2,034,530
Powergen plc 175,000 2,205,584
Severn Trent Water plc 103,235 1,655,646
Shell Transport & Trading (ADR) 50,000 2,218,750
Tesco plc 250,503 2,219,217
------------
23,676,763
------------
Total Common Stocks
(Cost $86,810,511) 117,023,724
------------
- --------------------------------------------------------------------------------
Shares/Principal Amount Value
(M=$1,000) (Note 1)
- --------------------------------------------------------------------------------
Preferred Stocks 1.5%
Germany
RWE A.G.
(Cost $1,239,670) 45,660 $ 1,853,032
------------
Corporate Short-Term Notes 2.4%
Merrill Lynch 5.58%,
06/03/98
(Cost $2,999,070) 3000M 2,999,070
------------
Total Investments
(Cost $91,049,251)* 121,875,826
Excess of Other Assets
Over Liabilities 1.9% 2,329,447
------------
Net Assets $124,205,273
============
- --------------------------------------------------------------------------------
Summary of Foreign Securities
by Industry Classification
Percent of Market
Industry Net Assets Value
Airlines 0.7% $ 887,563
Automobiles, Auto Parts 1.5% 1,934,446
Banks 16.3% 20,240,398
Biotechnology 1.9% 2,356,926
Broadcasting 1.7% 2,147,620
Building Materials, Construction 1.0% 1,269,463
Chemicals 6.3% 7,773,873
Distributors, Food & Health 4.1% 5,121,154
Electrical Components 1.9% 2,311,452
Entertainment 2.5% 3,080,934
Financial Services 3.4% 4,215,524
Foods, Beverage 2.7% 3,320,354
Foods, Grocery 2.9% 3,552,188
Gold, Precious Metals 2.3% 2,801,979
Healthcare - Diversioed 0.8% 961,843
Healthcare - Drug/Pharmacy 5.1% 6,279,424
Machinery 1.1% 1,388,049
Manufacturing & Process 3.1% 3,854,129
Office Equipment & Supply 1.5% 1,900,648
Oil 8.3% 10,268,260
Photography 1.0% 1,283,081
Printing, Publishing 0.9% 1,149,028
Retail - Drug & Food 5.4% 6,688,033
Retail - General 0.9% 1,142,549
Steel 1.7% 2,139,583
Telecommunications 9.0% 11,237,872
Utilities - Electric 7.7% 9,570,383
---- ------------
95.7% $118,876,756
==== ============
- --------------------------------------------------------------------------------
* Also cost for federal income tax purposes. At May 31, 1998 net unrealized
appreciation for federal income tax purposes aggregated $30,826,575 of which
$35,715,062 related to appreciated securities and $4,888,487 related to
depreciated securities.
(ADR) - American Depository Receipt
See Notes to Financial Statements.
24
<PAGE>
Sentinel World Fund
Statement of Assets and Liabilities
at May 31, 1998 (Unaudited)
- --------------------------------------------------------------------------------
Assets
Investments at value $121,875,826
Cash and cash equivalents 103,905
Foreign currency (cost $1,269,612) 1,242,824
Receivable for securities sold 403,769
Receivable for fund shares sold 191,041
Receivable for dividends and interest 590,988
--------------
Total Assets 124,408,353
--------------
Liabilities
Payable for fund shares repurchased 8,018
Accrued expenses 44,256
Management fee payable 65,259
Distribution fee payable (Class A Shares) 54,436
Distribution fee payable (Class B Shares) 15,500
Distribution fee payable (Class C Shares) 39
Fund service fee payable 15,572
--------------
Total Liabilities 203,080
--------------
Net Assets Applicable to Outstanding Shares $124,205,273
==============
Net Asset Value and Offering Price per Share
Class A Shares
$108,377,849 / 5,723,267 shares outstanding $ 18.94
Sales Charge -- 5.00% of offering price 1.00
--------------
Maximum Offering Price $ 19.94
==============
Class B Shares
$15,717,865 / 838,081 shares outstanding $ 18.75
==============
Class C Shares
$109,559 / 5,800 shares outstanding $ 18.89
==============
Net Assets Represent
Capital stock at par value $ 65,671
Paid-in capital 92,560,460
Accumulated undistributed net investment income 562,384
Accumulated undistributed net realized gain
on investments 232,149
Unrealized appreciation of investments 30,784,609
--------------
Net Assets $124,205,273
==============
Investments at Cost $ 91,049,251
==============
Sentinel World Fund
Statement of Operations
For the Six Months Ended May 31, 1998 (Unaudited)
- --------------------------------------------------------------------------------
Investment Income
Income:
Dividends $ 1,410,225*
Interest 99,664
--------------
Total Income 1,509,889
--------------
Expenses:
Management advisory fee 347,502
Transfer agent and custodian 160,767
Distribution expense (Class A Shares) 150,350
Distribution expense (Class B Shares) 64,490
Distribution expense (Class C Shares) 39
Accounting services 11,947
Auditing fees 5,500
Legal fees 3,850
Reports and notices to shareholders 10,575
Directors' fees and expenses 5,950
Other 29,577
--------------
Total Expenses 790,547
Expense Offset (14,192)
--------------
Net Expenses 776,355
--------------
Net Investment Income 733,534
--------------
Realized and Unrealized Gain (Loss) on Investments
Net realized gain (loss) from:
Investments 236,400
Foreign currency transactions (150,495)
--------------
Net realized gain 85,905
--------------
Net change in unrealized appreciation (depreciation)
during the period:
Investments 14,244,637
Foreign currency transactions (66,759)
--------------
Net change in unrealized appreciation 14,177,878
--------------
Net Realized and Unrealized Gain (Loss)
on Investments 14,263,783
--------------
Net Increase in Net Assets from Operations $14,997,317
==============
* Net of Foreign Tax Withholding of $155,851
See Notes to Financial Statements.
25
<PAGE>
Sentinel World Fund
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Year
Ended Ended
5/31/98 11/30/97
(Unaudited)
--------------- --------------
<S> <C> <C>
Increase in Net Assets from Operations
Net investment income $ 733,534 $ 941,301
Net realized gain on sales of investments 85,905 3,434,462
Net change in unrealized appreciation 14,177,878 5,077,269
--------------- --------------
Net increase in net assets from operations 14,997,317 9,453,032
--------------- --------------
Distributions to Shareholders
From net investment income
Class A Shares (615,675) (509,018)
Class B Shares -- (9,446)
Class C Shares -- --
From realized gain on investments
Class A Shares (3,354,309) (1,108,321)
Class B Shares (392,508) (52,020)
Class C Shares -- --
--------------- --------------
Total distributions to shareholders (4,362,492) (1,678,805)
--------------- --------------
From Capital Share Transactions
Net proceeds from sales of shares
Class A Shares 13,178,508 24,615,024
Class B Shares 4,421,819 6,914,575
Class C Shares 110,875 --
Net asset value of shares in reinvestment
of dividends and distributions
Class A Shares 3,762,833 1,510,239
Class B Shares 388,693 58,245
Class C Shares -- --
-------------- --------------
21,862,728 33,098,083
Less: Payments for shares reacquired
Class A Shares (7,747,341) (15,247,343)
Class B Shares (406,033) (409,118)
Class C Shares -- --
-------------- --------------
Increase in net assets from capital share transactions 13,709,354 17,441,622
-------------- --------------
Total Increase in Net Assets for period 24,344,179 25,215,849
Net Assets: Beginning of period 99,861,094 74,645,245
-------------- --------------
Net Assets: End of period $ 124,205,273 $ 99,861,094
============== ==============
Undistributed Net Investment Income
at End of Period $ 562,384 $ 595,020
============== ==============
</TABLE>
See Notes to Financial Statements.
26
<PAGE>
Sentinel World Fund (A)
Financial Highlights
Selected per share data and ratios
Selected data for a share of capital stock outstanding throughout each fical
period.
<TABLE>
<CAPTION>
Six Months Nine
Ended 5/31/98 Year Ended Year Ended Year Ended Year Ended Months Ended
Class A Shares (Unaudited) 11/30/97 11/30/96 11/30/95 11/30/94 11/30/93(B)
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value at beginning of period $ 17.25 $ 15.69 $ 13.78 $ 12.74 $ 11.86 $ 9.56
----------- ----------- ----------- ----------- ----------- -----------
Income from Investment Operations
Net investment income 0.10 0.11 0.12 0.14 0.08 0.02
Net realized and unrealized gain on investments 2.35 1.80 1.99 1.14 0.89 2.28
----------- ----------- ----------- ----------- ----------- -----------
Total from investment operations 2.45 1.91 2.11 1.28 0.97 2.30
----------- ----------- ----------- ----------- ----------- -----------
Less Distributions
Dividends from net investment income 0.12 0.11 0.13 0.09 0.03 -
Distributions from realized gains on investments 0.64 0.24 0.07 0.15 0.06 -
----------- ----------- ----------- ----------- ----------- -----------
Total Distributions 0.76 0.35 0.20 0.24 0.09 -
----------- ----------- ----------- ----------- ----------- -----------
Net asset value at end of period $ 18.94 $ 17.25 $ 15.69 $ 13.78 $ 12.74 $ 11.86
=========== =========== =========== =========== =========== ===========
Total Return (%) ** 14.9++ 12.5 15.5 10.2 8.2 24.1++
Ratios/Supplemental Data
Ratio of net expenses to average net assets (%) 1.27+ 1.29 1.43 1.56 1.58 2.00+
Ratio of expenses to average net assets before
expense reductions (%) *** 1.30+ 1.32 1.48 1.63 1.58 2.12+
Ratio of net investment income to average net
assets (%) 1.39+ 1.14 0.94 0.79 0.62 0.41+*
Portfolio turnover rate (%) 5 21 14 32 30 66
Average commission rate paid per share $ 0.0392 $ 0.0411 $ 0.0455 N/A N/A N/A
Net assets at end of period (000 omitted) $ 108,378 $ 89,740 $ 71,458 $ 47,702 $ 41,970 $ 16,872
</TABLE>
See Notes to Financial Statements.
27
<PAGE>
Sentinel World Fund (A)
Financial Highlights (cont'd.)
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 5/31/98 Year Ended Ended
Class B Shares(C) (Unaudited) 11/30/97 11/30/96
---------------- --------------- ---------------
<S> <C> <C> <C>
Net asset value at beginning of period $ 17.05 $ 15.58 $ 14.49
---------------- --------------- ---------------
Income from Investment Operations
Net investment income (loss) 0.06 0.01 (0.08)
Net realized and unrealized gain on investments 2.28 1.74 1.17
---------------- --------------- ---------------
Total from investment operations 2.34 1.75 1.09
---------------- --------------- ---------------
Less Distributions
Dividends from net investment income - 0.04 -
Distributions from realized gains on investments 0.64 0.24 -
---------------- --------------- ---------------
Total Distributions 0.64 0.28 -
---------------- --------------- ---------------
Net asset value at end of period $ 18.75 $ 17.05 $ 15.58
================ =============== ===============
Total Return (%) (**) 14.3 ++ 11.5 7.5 ++
Ratios/Supplemental Data
Ratio of net expenses to average net assets (%) 2.17 + 2.16 2.56 +
Ratio of expenses to average net assets before
expense reductions (%) (***) 2.20 + 2.18 2.59 +
Ratio of net investment income (loss)
to average net assets (%) 0.49 + 0.23 (0.19)+
Portfolio turnover rate (%) 5 21 14
Average commission rate paid per share $0.0392 $0.0411 $0.0455
Net assets at end of period (000 omitted) $15,718 $10,121 $ 3,188
<CAPTION>
Period
May 4 thru
Class B Shares(C) Class C Shares(D) May 31, 1998
---------------
<S> <C> <C>
Net asset value at beginning of period $ 19.57
---------------
Income from Investment Operations
Net investment income (loss) 0.02
Net realized and unrealized gain on investments (0.70)
---------------
Total from investment operations (0.68)
---------------
Less Distributions
Dividends from net investment income -
Distributions from realized gains on investments -
---------------
Total Distributions -
---------------
Net asset value at end of period $ 18.89
===============
Total Return (%) (**) (3.5)++
Ratios/Supplemental Data
Ratio of net expenses to average net assets (%) 2.18 +
Ratio of expenses to average net assets before
expense reductions (%) (***) 2.18 +
Ratio of net investment income (loss)
to average net assets (%) 0.49 +
Portfolio turnover rate (%) 5
Average commission rate paid per share $0.0392
Net assets at end of period (000 omitted) $ 110
</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.
(D) Commenced operations May 4,1998.
+ Annualized
++ Not Annualized
* Ratio of net investment income to average net assets would have been 0.29%
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.
28
<PAGE>
Sentinel High Yield Bond Fund
Investment in Securities
at May 31, 1998 (Unaudited)
- --------------------------------------------------------------------------------
Principal Amount Value
(M=$1,000) (Note 1)
- --------------------------------------------------------------------------------
U.S.Government Agency
Obligations 4.3%
Federal Home Loan Bank 4.3%
Agency Discount Note:
5.36%, 06/01/98
(Cost $3,256,000) 3256M $3,256,000
------------
Bonds85.0%
Automotive 2.4%
Eagle-Picher 9.375%, '08 750M 765,938
Walbro Corp. 10.125%, '07 1000M 1,000,000
------------
1,765,938
------------
Broadcasting 3.7%
ACME Television
0%/10.875%, '04 1000M 817,500
Azteca Holdings 11%, '02 500M 515,625
Capstar Broadcasting
0%/12.75%, '09 750M 565,312
Grupo Televisa
0%/13.25%, '08 800M 633,000
TV Azteca SA 10.5%, '07 250M 257,500
------------
2,788,937
------------
Building Materials 0.7%
Morris Materials 9.5%, '08 250M 245,000
Nortek Inc. 9.125%, '07 250M 256,250
------------
501,250
------------
Cable/Other Video Distribution 5.1%
Charter Communications
11.25%, '06 500M 552,500
Echostar Communications
0%/13.125%, '04 750M 690,000
Frontiervision
0%/11.875%, '07 1250M 967,188
Fundy Cable Ltd. 11%, '05 500M 553,750
Metrocall Inc. 10.375%, '07 1000M 1,035,000
------------
3,798,438
------------
Chemicals 1.7%
Polymer Group 9%, '07 500M 516,250
Polymer Group 8.75%, '08 750M 759,375
------------
1,275,625
------------
Consumer Products 7.0%
Advance Stores 10.25%, '08 1000M 1,035,000
Dell Webb 9.375%, '09 1000M 992,500
Drypers Corp. 10.25%, '07 1000M 1,035,000
French Fragrances
10.375%, '07 1000M 1,072,500
MTS Inc. 9.375%, '05 500M 500,000
Revlon Worldwide 0%, '01 800M 622,000
------------
5,257,000
------------
Diversified Media 1.0%
Big Flower Press 8.875%, '07 750M 774,375
------------
Energy 4.1%
Anker Coal Group 9.75%, '07 750M 729,375
Cross Timber 8.75%, '09 250M 252,500
HS Resources 9.25%, '06 1000M 1,022,500
Petsec Energy 9.5%, '07 1000M 1,015,000
------------
3,019,375
------------
- --------------------------------------------------------------------------------
Principal Amount Value
(M=$1,000) (Note 1)
- --------------------------------------------------------------------------------
Food/Restaurants 3.2%
Aurora Foods 9.875%, '07 500M $ 536,250
FRD Acquisitions 12.5%, '04 500M 551,875
Perkins Family Restaurant
10.125%, '07 750M 795,000
Sun World International
11.25%, '04 500M 541,250
------------
2,424,375
------------
Entertainment/Gaming 4.8%
Boyd Gaming 9.5%, '07 1000M 1,055,000
Horseshoe Gaming
9.375%, '07 500M 532,500
Premier Cruise, Ltd., 11%, '08 1000M 1,002,500
Premier Parks 9.25%, '06 1000M 1,018,750
------------
3,608,750
------------
Healthcare/Medical Technology 3.5%
Breed Technologies 9.25%, '08 750M 759,375
Prime Medical 8.75%, '08 500M 497,500
Talton Holdings 11%, '07 1250M 1,353,125
------------
2,610,000
------------
Industrial 5.9%
Apcoa Inc. 9.25%, '08 1000M 1,005,000
Giant Industries 9%, '07 940M 965,850
Great Central 8.875%, '08 750M 747,188
Motors & Gears Inc.
10.75%, '06 500M 540,000
WHX Corp. 10.5%, '05 1100M 1,138,500
------------
4,396,538
------------
Information Technology 1.8%
Unisys Corp. 11.75%, '04 500M 578,750
Unisys Corp. 9.75%, '16 750M 781,875
------------
1,360,625
------------
Manufacturing 2.1%
Delta Mills 9.625%, '07 750M 763,125
International Knife & Saw
11.375%, '06 750M 820,312
------------
1,583,437
------------
Metals/Minerals 7.1%
Acme Metals 10.875%, '07 1000M 987,500
Algoma Steel 12.375%, '05 500M 583,750
Bayou Steel 9.5%, '08 1000M 996,250
Glencore Nickel 9%, '14 1000M 992,500
Kaiser Aluminum 12.75%, '03 750M 798,750
NSM Steel Ltd. 12%, '06 1000M 910,000
------------
5,268,750
------------
Oil & Gas 5.4%
Benton Oil & Gas
9.375%, '07 1000M 987,500
Chiles Offshore 10.%, '08 500M 491,250
Energy Corp. 9.5%, '07 500M 496,250
Houston Exploration
8.625%, '08 1000M 1,002,500
Rutherford-Moran Oil
10.75%, '04 1000M 1,075,000
------------
4,052,500
------------
- --------------------------------------------------------------------------------
Principal Amount Value
(M=$1,000) (Note 1)
- --------------------------------------------------------------------------------
Paper 4.3%
Applied Int'l. Finance 6%, '99 500M $ 432,500
Applied Int'l. Finance
11.75%, '05 750M 656,250
Domtar Inc. 9.5%, '16 1000M 1,071,250
Riverwood Int'l. 10.25%, '06 1000M 1,035,000
------------
3,195,000
------------
Service 2.9%
AFC Enterprises 10.25%, '07 500M 531,250
American Lawyer 9.75%, '07 750M 781,875
Hvide Marine 8.375%, '08 900M 882,000
------------
2,195,125
------------
Telecommunications 8.4%
Galaxy Telecom 12.375%, '05 750M 838,125
Hyperion Telecom
12.25%, '04 500M 550,000
Iridium LLC/Capital Corp.
11.25%, '05 500M 506,875
Iridium LLC/Capital Corp.
14%, '05 500M 561,250
MJD Communications
9.5%, '08 500M 509,375
Nextel International
0%,12.125%, '08 2000M 1,177,500
Pegasus Communications
9.625%, '05 500M 518,750
Satelites Mexicanos
10.125%, '04 425M 423,406
Winstar Communications
0%,14%, '05 1500M 1,222,500
------------
6,307,781
------------
Transportation 4.5%
Ermis Maritime 12.5%, '06 175M 173,151
Pegasus Shipping
11.875%, '04 750M 757,500
Stena AB 8.75%, '07 650M 671,937
Stena Line AB 10.625%, '08 1000M 1,000,000
Trans World Airlines
11.5%, '04 750M 796,875
3,399,463
Wireless Communications 5.4%
Nextel Communications
0%/9.75%, '04 850M 821,313
Nextel Communications
0%/9.95%, '08 2000M 1,275,000
Rural Cellular 9.625%, '08 1000M 997,500
SFX Entertainment
9.125%, '08 1000M 980,000
------------
4,073,813
------------
Total Bonds
(Cost $62,970,813) 63,657,095
------------
Corporate Convertible Bonds 0.8%
Exide Corp. 2.9%, '05
(Cost $621,290) 1000M 617,500
------------
(continued)
29
<PAGE>
Sentinel High Yield Bond Fund
Investment in Securities (cont'd.)
at May 31, 1998 (Unaudited)
- ----------------------------------------------------------------
Shares Value
(Note 1)
- ----------------------------------------------------------------
Preferred Stocks 6.5%
Cable/Other Video Distribution 3.1%
Adelphia Communications
13% 6,500 $ 770,250
CSC Holdings
11.125% 8,069 929,952
Echostar Communications
12.125% 531 599,542
------------
2,299,744
------------
Telecommunications 2.7%
Benedek Communications
11.5% 1,000 1,010,000
Rural Cellular Corp.
11.375% 1,000 1,007,500
------------
2,017,500
------------
Transportation 0.7%
Trans World Airlines
$4.625 7,200 533,700
------------
Total Preferred Stocks
(Cost $4,551,055) 4,850,944
------------
Total Investments
(Cost $71,399,158)(*) 72,381,539
Excess of Other Assets
Over Liabilities 3.4% 2,572,039
------------
Net Assets $74,953,578
============
- ----------------------------------------------------------------
(*) Also cost for federal income tax purposes. At May 31, 1998 unrealized
appreciation for federal income tax purposes aggregated $982,381 of which
$1,442,163 related to appreciated securities and $459,782 related to
depreciated securities.
See Notes to Financial Statements
30
<PAGE>
Sentinel High Yield Bond Fund
Statement of Assets and Liabilities
at May 31, 1998 (Unaudited)
- -------------------------------------------------------------------------------
Assets
Investments at value $72,381,539
Cash and cash equivalents 725,223
Receivable for securities sold 2,018,160
Receivable for fund shares sold 391,234
Receivable for interest 1,340,377
-----------
Total Assets 76,856,533
-----------
Liabilities
Payable for securities purchased 1,775,591
Payable for fund shares repurchased 31,563
Accrued expenses 15,834
Management fee payable 46,512
Distribution fee payable (Class A Shares) 6,782
Distribution fee payable (Class B Shares) 21,879
Distribution fee payable (Class C Shares) 72
Fund service fee payable 4,722
-----------
Total Liabilities 1,902,955
-----------
Net Assets Applicable to Outstanding Shares $74,953,578
===========
Net Asset Value and Offering Price per Share
Class A Shares
$26,707,678/2,511,966 shares outstanding $ 10.63
Sales Charge--4.00% of offering price 0.44
-----------
Maximum Offering Price $ 11.07
===========
Class B Shares
$48,115,018/4,529,809 shares outstanding $ 10.62
===========
Class C Shares
$130,882/12,311 shares outstanding $ 10.63
===========
Net Assets Represent
Capital stock at par value $ 70,541
Paid-in capital 72,920,573
Accumulated distributions in excess of
net investment income (9,403)
Accumulated undistributed net realized gain
on investments 989,486
Unrealized appreciation of investments 982,381
-----------
Net Assets $74,953,578
===========
Investments at Cost $71,399,158
===========
Sentinel High Yield Bond Fund
Statement of Operations
For the Six Months Ended May 31, 1998 (Unaudited)
- -------------------------------------------------------------------------------
Investment Income
Income:
Dividends $ 117,777
Interest 2,726,834
-----------
Total Income 2,844,611
-----------
Expenses:
Management advisory fee 225,312
Transfer agent and custodian 28,781
Distribution expense (Class A Shares) 19,370
Distribution expense (Class B Shares) 97,831
Distribution expense (Class C Shares) 72
Accounting services 9,123
Auditing fees 2,200
Legal fees 1,350
Reports and notices to shareholders 4,300
Directors' fees and expenses 3,114
Other 26,293
-----------
Total Expenses 417,746
Expense Offset (11,431)
-----------
Net Expenses 406,315
-----------
Net Investment Income 2,438,296
-----------
Realized and Unrealized Gain on Investments
Net realized gain on sales of investments 989,459
Net change in unrealized appreciation 355,807
-----------
Net Realized and Unrealized Gain on Investments 1,345,266
-----------
Net Increase in Net Assets from Operations $ 3,783,562
===========
See Notes to Financial Statements. 31
<PAGE>
Sentinel High Yield Bond Fund
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Period
Ended 6/23/97 to
5/31/98 11/30/97
(Unaudited)
------------ ------------
<S> <C> <C>
Increase in Net Assets from Operations
Net investment income $ 2,438,296 $ 1,083,710
Net realized gain on sales of investments 989,459 398,650
Net change in unrealized appreciation 355,807 626,574
------------ ------------
Net increase in net assets from operations 3,783,562 2,108,934
------------ ------------
Distributions to Shareholders
From net investment income
Class A Shares (798,444) (211,310)
Class B Shares (1,652,191) (868,621)
Class C Shares (843) -
From net realized gain on investments
Class A Shares (106,907) -
Class B Shares (291,716) -
Class C Shares - -
------------ ------------
Total distributions to shareholders (2,850,101) (1,079,931)
------------ ------------
From Capital Share Transactions
Net proceeds from sales of shares
Class A Shares 15,844,440 11,052,160
Class B Shares 14,884,992 33,231,276
Class C Shares 130,894 -
Net asset value of shares in reinvestment
of dividends and distributions
Class A Shares 652,958 142,566
Class B Shares 537,548 127,228
Class C Shares 724 -
------------ ------------
32,051,556 44,553,230
Less: Payments for shares reacquired
Class A Shares (1,116,772) (241,707)
Class B Shares (1,806,553) (448,640)
Class C Shares - -
Increase in net assets from capital share transactions 29,128,231 43,862,883
------------ ------------
Total Increase in Net Assets for period 30,061,692 44,891,886
Net Assets: Beginning of period 44,891,886 -
------------ ------------
Net Assets: End of period $74,953,578 $44,891,886
============ ============
Accumulated undistributed Net Investment
Income (Loss) at End of Period $ (9,403) $ 3,779
============ ============
</TABLE>
See Notes to Financial Statements.
32
<PAGE>
Sentinel High Yield 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 5/31/98 Year Ended
Class A Shares (A) (Unaudited) 11/30/97
------------- ------------
<S> <C> <C>
Net asset value at beginning of period $ 10.41 $ 10.00
------------- ------------
Income from Investment Operations
Net investment income 0.44 0.32
Net realized and unrealized gain on investments 0.31 0.41
------------- ------------
Total from investment operations 0.75 0.73
------------- ------------
Less Distributions
Dividends from net investment income 0.44 0.32
Distributions from realized gains on investments 0.09 -
------------- ------------
Total Distributions 0.53 0.32
------------- ------------
Net asset value at end of period $ 10.63 $ 10.41
============= ============
Total Return (%) * 7.3++ 7.3++
Ratios/Supplemental Data
Ratio of net expenses to average net assets (%) 1.24+ 1.20+
Ratio of expenses to average net assets before
expense reductions (%) ** 1.28+ 1.26+
Ratio of net investment income to average net assets (%) 8.22+ 7.80+
Portfolio turnover rate (%) 83 133
Net assets at end of period (000 omitted) $26,708 $11,084
</TABLE>
See Notes to Financial Statements. 33
<PAGE>
Sentinel High Yield Bond Fund
Financial Highlights (cont'd.)
Selected per share data and ratios
Selected data for a share of capital stock outstanding throughout each fiscal
period.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Period
Ended 5/31/98 Period Ended May 4 thru
Class B Shares (A) (Unaudited) 11/30/97 Class C Shares(B) May 31, 1998
------------- ------------ ------------
<S> <C> <C> <C> <C>
Net asset value at beginning of period $ 10.40 $ 10.00 $10.70
------------- ------------ ------------
Income from Investment Operations
Net investment income 0.43 0.32 0.03
Net realized and unrealized gain (loss)
on investments 0.31 0.39 (0.04)
------------- ------------ ------------
Total from investment operations 0.74 0.71 (0.01)
------------- ------------ ------------
Less Distributions
Dividends from net investment income 0.43 0.31 0.06
Distributions from realized gains on investments 0.09 - -
------------- ------------ ------------
Total Distributions 0.52 0.31 0.06
------------- ------------ ------------
Net asset value at end of period $ 10.62 $ 10.40 $10.63
============= ============ ============
Total Return (%) (*) 7.2++ 7.2++ (0.1)++
Ratios/Supplemental Data
Ratio of net expenses to average net assets (%) 1.41+ 1.30+ 2.06+
Ratio of expenses to average net assets before
expense reductions (%) ** 1.45+ 1.34+ 2.06+
Ratio of net investment income to average net assets (%) 8.05+ 7.70+ 7.40+
Portfolio turnover rate (%) 83 133 83
Net assets at end of period (000 omitted) $48,115 $33,808 $ 131
</TABLE>
(A) Commenced operations June 23, 1997.
(B) Commenced operations May 4, 1998.
+ 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.
See Notes to Financial Statements.
34
<PAGE>
Sentinel Bond Fund
Investment in Securities
at May 31, 1998 (Unaudited)
- --------------------------------------------------------------------------------
Principal Amount Value
(M=$1,000) (Note 1)
- --------------------------------------------------------------------------------
U.S.Government Obligations 28.8%
U.S. Treasury Obligations 14.3%
10-Year:
Note 7.5%, '05 2000M $ 2,207,400
Note 7%, '06 2500M 2,715,500
Note 5.5%, '08 7000M 6,957,720
------------
11,880,620
------------
30-Year:
Note 6%, '26 2300M 2,337,260
------------
Total U.S. Treasury Obligations 14,217,880
------------
U.S. Government Agency Obligations 14.5%
Federal Home Loan Mortgage Corporation 3.6%
Collateralized Mortgage Obligations:
FHLMC 1998 PB 6.5%, '20 2000M 2,003,120
------------
30-Year:
8%, '08 1445M 1,528,328
------------
Total Federal Home Loan Mortgage Corporation 3,531,448
------------
Federal National Mortgage Association 6.0%
Collateralized Mortgage Obligations:
CMO Trust Series 22(Y) 7.95%, '17 1930M 1,992,771
FNMA 97-52(VC) 7.5%, '10 2000M 2,082,420
------------
4,075,191
------------
10-Year:
7.5%, '04 674M 688,010
------------
30-Year:
6%, '28 1193M 1,158,370
------------
Total Federal National Mortgage Association 5,921,571
------------
Government National Mortgage Association 4.9%
15-year:
7%, '13 1020M 1,044,319
------------
30-year:
13%, '11 7M 8,889
13%, '13 1M 843
7%, '23 2770M 2,829,394
7.5%, '28 998M 1,029,639
------------
3,868,765
------------
Total Government National Mortgage Association 4,913,084
------------
Total U.S. Government Agency Obligations 14,366,103
------------
Total U.S. Government Obligations
(Cost $28,219,490) 28,583,983
------------
- --------------------------------------------------------------------------------
Principal Amount Value
(M=$1,000) (Note 1)
- --------------------------------------------------------------------------------
Bonds 68.9%
Beverages 0.5%
Anheuser Busch 8.5%, '17 503M $ 520,605
------------
Financial Institutions 17.8%
Bankers Trust 7.25%, '11 1875M 1,994,531
Contifinancial 7.5%, '02 1000M 1,000,000
Fairfax Financial Holdings 7.375%, '18 3250M 3,302,813
First Union Corp. 6.824%, '26 2325M 2,470,312
Lehman Brothers Holdings 8.5%, '15 3000M 3,521,250
Providian National Bank 6.7%, '03 1500M 1,507,500
Salomon Brothers 6.875%, '03 3750M 3,848,438
------------
17,644,844
------------
Foreign Financial Institutions 18.4%
Bank Austria 7.25%, '17 2000M 2,145,000
Banque National De Paris 7.738%, '49 3000M 3,067,500
BCH Cayman Islands LTD 7.7%, '06 2500M 2,687,500
Credit Suisse 7.9%, '07 3000M 3,206,250
Midland Bank 7.65%, '25 2600M 2,866,500
Societe Generale 7.85%, '49 2300M 2,446,625
Sumitomo Bank 9.4%, '49 2000M 1,900,000
------------
18,319,375
------------
Healthcare 1.3%
Tenet Healthcare 7.625%, '08 1250M 1,257,813
------------
Industrial - Diversified 7.3%
Dimon Inc. 8.875%, '06 1860M 1,939,050
Fred Meyer 7.45%, '08 1600M 1,606,000
Mirage Resorts 6.625%, '05 1500M 1,486,875
Owens Corning 7.5%, '05 2200M 2,219,250
------------
7,251,175
------------
Insurance 6.5%
Farmers Insurance Exchange 8.625%, '24 3100M 3,677,375
Lumbermens Mutual Casualty 8.3%, '37 2500M 2,762,500
------------
6,439,875
------------
Sovereign Credit 2.5%
Export-Import Bank Korea 6.5%, '06 2000M 1,677,500
Korea Development Bank 6.75%, '05 1000M 810,000
------------
2,487,500
------------
Telecommunications 7.2%
Comsat 8.05%, '06 2000M 2,290,460
Continental Cablevision 8.3%, '06 2625M 2,903,906
News America Holdings 6.625%, '08 2000M 1,997,500
------------
7,191,866
------------
- --------------------------------------------------------------------------------
Principal Amount Value
(M=$1,000) (Note 1)
- --------------------------------------------------------------------------------
Utilities - Electric 5.3%
New Orleans Public Service 8%, '06 2500M $ 2,593,750
Niagara Mohawk Power 8.5%, '23 2500M 2,721,875
------------
5,315,625
------------
Utilities - Gas 0.3%
Consolidated Natural Gas 8.625%, '11 309M 323,677
------------
Utilities - Telephone 1.8%
NYNEX Capital Funding 7.63%, '09 1500M 1,746,630
------------
Total Bonds
(Cost $66,744,099) 68,498,985
------------
Corporate Short-Term Notes 7.4%
Beneficial Corp. 5.5%, 06/02/98 3200M 3,199,507
CIT Group Holdings 5.5% 06/15/98 2400M 2,394,866
Norwest Financial 5.5% 06/15/98 1800M 1,796,150
------------
Total Corporate Short-Term Notes
(Cost $7,390,523) 7,390,523
------------
Total Investments
(Cost $102,354,112)(*) 104,473,491
Excess of Liabilities Over Other Assets (5.1%) (5,090,470)
------------
Net Assets $ 99,383,021
============
- --------------------------------------------------------------------------------
(*) Also cost for federal income tax purposes. At May 31, 1998 unrealized
appreciation for federal income tax purposes aggregated $2,119,379 of which
$2,589,315 related to appreciated securities and $469,936 related to
depreciated securities.
See Notes to Financial Statements.
35
<PAGE>
Sentinel Bond Fund
Statement of Assets and Liabilities
at May 31, 1998 (Unaudited)
- --------------------------------------------------------------------------------
Assets
Investments at value $ 104,473,491
Cash and cash equivalents 127,346
Receivable for securities sold 97,572
Receivable for fund shares sold 74,762
Receivable for interest 1,703,094
Receivable from fund administrator 39,493
-------------
Total Assets 106,515,758
-------------
Liabilities
Payable for securities purchased 6,996,862
Accrued expenses 46,767
Management fee payable 44,480
Distribution fee payable (Class A Shares) 24,654
Distribution fee payable (Class B Shares) 9,921
Fund service fee payable 10,053
-------------
Total Liabilities 7,132,737
-------------
Net Assets Applicable to Outstanding Shares $ 99,383,021
=============
Net Asset Value and Offering Price per Share
Class A Shares
$88,767,158 / 13,831,587 shares outstanding $ 6.42
Sales Charge -- 4.00% of offering price 0.27
-------------
Maximum Offering Price $ 6.69
=============
Class B Shares
$10,615,863 / 1,650,643 shares outstanding $ 6.43
=============
Net Assets Represent
Capital stock at par value $ 154,822
Paid-in capital 100,657,873
Accumulated distributions in excess of
net investment income (12,948)
Accumulated undistributed net realized loss
on investments (3,536,105)
Unrealized appreciation of investments 2,119,379
-------------
Net Assets $ 99,383,021
=============
Investments at Cost $ 102,354,112
=============
See Notes to Financial Statements.
Sentinel Bond Fund
Statement of Operations
For the Six Months Ended May 31, 1998 (Unaudited)
- --------------------------------------------------------------------------------
Investment Income
Income:
Interest $ 3,481,094
-------------
Expenses:
Management advisory fee 261,058
Transfer agent and custodian 72,304
Distribution expense (Class A Shares) 88,950
Distribution expense (Class B Shares) 46,850
Accounting services 15,235
Auditing fees 4,400
Legal fees 1,700
Reports and notices to shareholders 5,500
Directors' fees and expenses 5,258
Other 14,673
-------------
Total Expenses 515,928
Expense Reimbursement (39,493)
Expense Offset (11,629)
-------------
Net Expenses 464,806
-------------
Net Investment Income 3,016,288
-------------
Realized and Unrealized Gain (Loss) on Investments
Net realized gain on sales of investments 803,424
Net change in unrealized appreciation (depreciation) (18,836)
-------------
Net Realized and Unrealized Gain (Loss) on Investments 784,588
-------------
Net Increase in Net Assets from Operations $ 3,800,876
=============
See Notes to Financial Statements.
36
<PAGE>
Sentinel Bond Fund
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Year
Ended Ended
5/31/98 11/30/97
(Unaudited)
------------- -------------
<S> <C> <C>
Increase in Net Assets from Operations
Net Investment income $ 3,016,288 $ 6,196,358
Net realized gain on sales of investments 803,424 40,248
Net change in unrealized appreciation (depreciation) (18,836) 2,486
------------- -------------
Net increase in net assets from operations 3,800,876 6,239,092
------------- -------------
Distributions to Shareholders
From net investment income
Class A Shares (2,747,014) (5,792,899)
Class B Shares (249,191) (339,384)
From net realized gain on investments
Class A Shares -- --
Class B Shares -- --
------------- -------------
Total distributions to shareholders (2,996,205) (6,132,283)
------------- -------------
From Capital Share Transactions
Net proceeds from sales of shares
Class A Shares 7,370,264 11,715,128
Class B Shares 3,344,852 4,004,623
Net asset value of shares in reinvestment
of dividends and distributions
Class A Shares 1,857,344 3,914,792
Class B Shares 153,891 231,042
------------- -------------
12,726,351 19,865,585
Less: Payments for shares reacquired
Class A Shares (9,951,733) (26,313,113)
Class B Shares (1,067,334) (910,853)
------------- -------------
Increase (Decrease) in net assets from
capital share transactions 1,707,284 (7,358,381)
------------- -------------
Total Increase (Decrease) in Net Assets for period 2,511,955 (7,251,572)
Net Assets: Beginning of period 96,871,066 104,122,638
------------- -------------
Net Assets: End of period $ 99,383,021 $ 96,871,066
============= =============
Distributions in Excess of Net Investment Income
at End of Period $ (12,948) $ (14,366)
============= =============
</TABLE>
See Notes to Financial Statements.
37
<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 5/31/98 Year Ended Year Ended Year Ended Year Ended Year Ended
Class A Shares (Unaudited) 11/30/97 11/30/96 11/30/95 11/30/94 11/30/93
------------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of period $6.36 $6.35 $6.49 $5.85 $6.90 $6.56
------------- ---------- ---------- ---------- ---------- ----------
Income from Investment Operations
Net investment income 0.20 0.40 0.41 0.42 0.39 0.41
Net realized and unrealized gain (loss) on investments 0.06 0.01 (0.14) 0.64 (0.70) 0.46
------------- ---------- ---------- ---------- ---------- ----------
Total from investment operations 0.26 0.41 0.27 1.06 (0.31) 0.87
------------- ---------- ---------- ---------- ---------- ----------
Less Distributions
Dividends from net investment income 0.20 0.40 0.41 0.42 0.39 0.41
Distributions from realized gains on investments -- -- -- -- 0.35 0.12
------------- ---------- ---------- ---------- ---------- ----------
Total Distributions 0.20 0.40 0.41 0.42 0.74 0.53
------------- ---------- ---------- ---------- ---------- ----------
Net asset value at end of period $6.42 $6.36 $6.35 $6.49 $5.85 $6.90
============= ========== ========== ========== ========== ==========
Total Return (%) (*) 4.1++ 6.7 4.5 18.8 (4.9) 13.7
Ratios/Supplemental Data
Ratio of net expenses to average net assets (%) 0.87+ 0.97 0.98 0.99 0.98 0.92
Ratio of expenses to average net assets before
expense reductions (%) (**) 0.97+ 0.99 1.00 1.03 0.98 0.92
Ratio of net investment income to average net assets (%) 6.21+ 6.37 6.46 6.81 6.34 5.98
Ratio of net investment income to average net assets before
voluntary expense reimbursements (%) 6.13+ 6.37 6.46 6.81 6.34 5.98
Portfolio turnover rate (%) 74 130 176 237 133 147
Net assets at end of period (000 omitted) $88,767 $88,756 $99,408 $108,755 $80,487 $83,387
<CAPTION>
Six Months Year Eight Months
Ended 5/31/98 Ended Ended
Class B Shares (A) (Unaudited) 11/30/97 11/30/96
------------- ---------- ------------
<S> <C> <C> <C>
Net asset value at beginning of period $6.38 $ 6.36 $ 6.30
------------- ---------- ------------
Income from Investment Operations
Net investment income 0.17 0.34 0.21
Net realized and unrealized gain on investments 0.05 0.02 0.06
------------- ---------- ------------
Total from investment operations 0.22 0.36 0.27
------------- ---------- ------------
Less Distributions
Dividends from net investment income 0.17 0.34 0.21
Distributions from realized gains on investments -- -- --
------------- ---------- ------------
Total Distributions 0.17 0.34 0.21
------------- ---------- ------------
Net asset value at end of period $6.43 $ 6.38 $ 6.36
============= ========== ============
Total Return (%) (*) 3.5++ 5.9 4.5++
Ratios/Supplemental Data
Ratio of net expenses to average net assets (%) 1.72+ 1.87 2.16+
Ratio of expenses to average net assets before
expense reductions (%) (**) 1.86+ 1.90 2.18+
Ratio of net investment income to average net assets (%) 5.35+ 5.46 5.28+
Ratio of net investment income to average net assets before
voluntary expense reimbursements (%) 5.23+ 5.46 5.28+
Portfolio turnover rate (%) 74 130 176
Net assets at end of period (000 omitted) $10,616 $ 8,115 $ 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 earnings credits as described in Notes (2)
and (1) H.
See Notes to Financial Statements.
38
<PAGE>
Sentinel Government Securities Fund
Investment in Securities
at May 31, 1998 (Unaudited)
- --------------------------------------------------------------------------------
Principal Amount Value
(M=$1,000) (Note 1)
- --------------------------------------------------------------------------------
U.S. Government Obligations 125.1%
U.S. Treasury Obligations 48.4%
5-Year:
Note 5.5%, '03 6000M $ 5,987,040
-----------
10-Year:
Note 5.5%, '08 12500M 12,424,500
Note 5.625%, '08 2000M 2,011,280
-----------
14,435,780
-----------
30-Year:
Note 6.125%, '27 14000M 14,638,120
-----------
Total U.S. Treasury Obligations 35,060,940
-----------
U.S. Government Agency Obligations 76.7%
Federal Home Loan Mortgage Corporation 14.9%
Agency Discount Notes:
5.43%, 06/08/98 5000M 4,994,720
-----------
15-Year:
9.5%, '05 701M 736,232
9%, '06 122M 125,884
6.5%, '07 1376M 1,412,240
-----------
2,274,356
-----------
30-Year:
8.25%, '05 138M 146,552
11%, '09 15M 17,155
11%, '15 30M 33,205
11%, '15 39M 43,533
11%, '15 4M 4,256
11%, '15 41M 45,379
11%, '16 6M 6,187
11%, '16 7M 8,746
11%, '17 11M 12,110
11%, '17 109M 120,665
7.5%, '23 3019M 3,119,028
-----------
3,556,816
-----------
Total Federal Home Loan
Mortgage Corporation 10,825,892
-----------
Federal National Mortgage Association 48.2%
Agency Discount Notes:
5.41%, 06/15/98 8350M 8,332,433
5.43%, 06/22/98 5000M 4,984,163
-----------
13,316,596
-----------
Collateralized Mortgage Obligations:
CMO Trust Series 22(Y)
7.95%, '17 2830M 2,922,730
FNMA 97-52(VC) 7.5%, '10 4000M 4,164,840
FNMA 97-25(VB) 7%, '12 3000M 3,162,000
-----------
10,249,570
-----------
- --------------------------------------------------------------------------------
Principal Amount Value
(M=$1,000) (Note 1)
- --------------------------------------------------------------------------------
15-Year:
8.25%, '02 84M $ 87,187
9.75%, '04 340M 359,628
7.75%, '05 1468M 1,517,654
-----------
1,964,469
-----------
30-Year:
9.25%, '09 335M 358,416
8%, '16 554M 580,771
8%, '22 940M 976,850
7.5%, '24 3145M 3,246,087
6%, '25 1170M 1,143,449
6%, '28 3243M 3,148,543
-----------
9,454,116
-----------
Total Federal National
Mortgage Association 34,984,751
-----------
Government National
Mortgage Association 13.6%
10-Year:
7%, '03 600M 616,914
7%, '03 846M 869,163
-----------
1,486,077
-----------
15-Year:
10%, '01 23M 24,925
-----------
30-Year:
11%, '14 58M 64,893
8.25%, '26 1929M 2,025,737
7%, '27 6121M 6,242,869
-----------
8,333,499
-----------
Total Government National
Mortgage Association 9,844,501
-----------
Total U.S. Government
Agency Obligations 55,655,144
-----------
Total U.S. Government Obligations
(Cost $90,225,539) 90,716,084
-----------
- --------------------------------------------------------------------------------
Principal Amount Value
(M=$1,000) (Note 1)
- --------------------------------------------------------------------------------
Corporate Short-Term Notes 17.9%
Chevron Oil Finance
5.52%, 06/01/98 3000M $ 3,000,000
G.E. Capital Corp.
5.51%, 06/15/98 3500M 3,492,500
Merrill Lynch
5.52%, 06/15/98 3500M 3,492,487
Norwest Financial
5.47%, 06/01/98 3000M 3,000,000
-----------
Total Corporate Short-Term Notes
(Cost $12,984,987) 12,984,987
-----------
Repurchase Agreements 3.9%
Repurchase agreement with Prudential Securities
dated 05/29/98 at 5.55% to be repurchased at
$2,801,295 on 06/01/98, collateralized by a
$2,928,000 FHLMC Pool # 557 due 10/01/27
valued at $2,875,386.
(Cost $2,800,000) 2800M 2,800,000
-----------
Total Investments
(Cost $106,010,526) * 106,501,071
Excess of Liabilities
Over Other Assets (46.9%) (33,985,540)
-----------
Net Assets $72,515,531
===========
- --------------------------------------------------------------------------------
* Also cost for federal income tax purposes. At May 31, 1998 unrealized
appreciation for federal income tax purposes aggregated $490,545 of which
$596,616 related to appreciated securities and $106,071 related to
depreciated securities.
See Notes to Financial Statements.
39
<PAGE>
Sentinel Government Securities Fund
Statement of Assets and Liabilities
at May 31, 1998 (Unaudited)
- --------------------------------------------------------------------------------
Assets
Investments at value $ 106,501,071
Cash and cash equivalents 82,569
Receivable for securities sold 12,090,868
Receivable for fund shares sold 175,759
Receivable for interest 641,369
Receivable fund administrator 18,842
-------------
Total Assets 119,510,478
-------------
Liabilities
Payable for securities purchased 46,908,931
Accrued expenses 23,190
Management fee payable 32,589
Distribution fee payable 22,109
Fund service fee payable 8,128
-------------
Total Liabilities 46,994,947
-------------
Net Assets Applicable to Outstanding Shares $ 72,515,531
=============
Net Asset Value and Offering Price Per Share
$72,515,531/7,120,194 shares outstanding $ 10.18
Sales Charge -- 4.00% of Offering Price 0.42
-------------
Maximum Offering Price Per Share $ 10.60
=============
Net Assets Represent
Capital stock at par value $ 71,202
Paid-in capital 76,317,453
Accumulated distributions in excess of
net investment income (19,477)
Accumulated undistributed net realized loss
on investments (4,344,192)
Unrealized appreciation of investments 490,545
-------------
Net Assets $ 72,515,531
=============
Investments at Cost $ 106,010,526
=============
Sentinel Government Securities Fund
Statement of Operations
For the Six Months Ended May 31, 1998 (Unaudited)
- --------------------------------------------------------------------------------
Investment Income
Income:
Interest $ 2,633,507
-------------
Expenses:
Management advisory fee 196,877
Transfer agent and custodian 65,133
Distribution expense 74,135
Accounting services 11,525
Auditing fees 1,800
Legal fees 1,000
Reports and notices to shareholders 3,500
Directors' fees and expenses 3,995
Other 13,368
-------------
Total Expenses 371,333
Expense Reimbursement (18,842)
Expense Offset (3,333)
-------------
Net Expenses 349,158
-------------
Net Investment Income 2,284,349
-------------
Realized and Unrealized Gain (Loss) on Investments
Net realized gain on sales of investments 1,532,929
Net change in unrealized appreciation (depreciation) (848,649)
-------------
Net Realized and Unrealized Gain (Loss) on Investments 684,280
-------------
Net Increase in Net Assets from Operations $ 2,968,629
=============
See Notes to Financial Statements.
40
<PAGE>
Sentinel Government Securities Fund
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Year
Ended Ended
5/31/98 11/30/97
(Unaudited)
------------ ------------
<S> <C> <C>
Increase in Net Assets from Operations
Net investment income $ 2,284,349 $ 5,009,119
Net realized gain on sales of investments 1,532,929 370,658
Net change in unrealized appreciation (depreciation) (848,649) (65,921)
------------ ------------
Net increase in net assets from operations 2,968,629 5,313,856
------------ ------------
Distributions to Shareholders
From net investment income (2,257,771) (4,829,535)
From net realized gain on investments -- --
------------ ------------
Total distributions to shareholders (2,257,771) (4,829,535)
------------ ------------
From Capital Share Transactions
Net proceeds from sales of shares 4,168,634 6,651,510
Net asset value of shares in reinvestment
of dividends and distributions 1,747,180 3,691,450
------------ ------------
5,915,814 10,342,960
Less: Payments for shares reacquired (9,920,691) (27,316,752)
------------ ------------
Decrease in net assets from capital share transactions (4,004,877) (16,973,792)
------------ ------------
Total Decrease in Net Assets for period (3,294,019) (16,489,471)
Net Assets: Beginning of period 75,809,550 92,299,021
------------ ------------
Net Assets: End of period $ 72,515,531 $ 75,809,550
============ ============
Distributions in Excess of Net Investment Income
at End of Period $ (19,477) $ (16,276)
============ ============
</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 5/31/98 Year Ended Year Ended Year Ended Year Ended Year Ended
(Unaudited) 11/30/97 11/30/96 11/30/95 11/30/94 11/30/93
------------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value at beginning of period $ 10.09 $ 10.00 $ 10.30 $ 9.31 $ 10.45 $ 10.18
-------- -------- -------- -------- -------- --------
Income from Investment Operations
Net investment income 0.31 0.59 0.61 0.63 0.59 0.62
Net realized and unrealized gain (loss) on investments 0.09 0.09 (0.30) 0.99 (1.04) 0.42
-------- -------- -------- -------- -------- --------
Total from investment operations 0.40 0.68 0.31 1.62 (0.45) 1.04
-------- -------- -------- -------- -------- --------
Less Distributions
Dividends from net investment income 0.31 0.59 0.61 0.63 0.58 0.60
Distributions from realized gains on investments -- -- -- -- 0.11 0.17
-------- -------- -------- -------- -------- --------
Total Distributions 0.31 0.59 0.61 0.63 0.69 0.77
-------- -------- -------- -------- -------- --------
Net asset value at end of period $ 10.18 $ 10.09 $ 10.00 $ 10.30 $ 9.31 $ 10.45
======== ======== ======== ======== ======== ========
Total Return (%) * 4.0++ 7.2 3.2 17.9 (4.5) 10.6
Ratios/Supplemental Data
Ratio of net expenses to average net assets (%) 0.94+ 0.98 1.00 1.03 1.00 0.98
Ratio of expenses to average net assets before
expense reductions (%) ** 1.00+ 0.99 1.01 1.04 1.00 0.98
Ratio of net investment income to average net assets (%) 6.15+ 6.15 6.18 6.50 5.95 6.06
Ratio of net investment income to average net assets
before voluntary expense reimbursements (%) 6.10+ 6.15 6.18 6.50 5.95 6.06
Portfolio turnover rate (%) 159 249 614 367 149 97
Net assets at end of period (000 omitted) $ 72,516 $ 75,810 $ 92,299 $108,100 $104,457 $134,749
</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, 1998 (Unaudited)
- --------------------------------------------------------------------------------
Principal Amount Value
(M=$1,000) (Note 1)
- --------------------------------------------------------------------------------
U.S. Government Obligations 94.7%
U.S. Treasury Obligations5.0%
5-Year:
5.5%, '03 3000M $ 2,993,520
-----------
U.S. Government Agency Obligations 89.7%
Federal Home Loan Mortgage Corporation 47.4%
Collateralized Mortgage Obligations:
FHLMC 1057(D), 8%, '00 525M 536,048
FHLMC 1834G, 7%, '05 2919M 2,994,836
FHLMC 1998 PB 6.5%, '20 3500M 3,505,460
FHLMC 53(A) P11, 9.5%, '20 3M 2,737
FSPC T-2A, 7%, '21 378M 378,519
Merrill Lynch Trust Series 5(B), 6%, '18 78M 76,091
-----------
7,493,691
-----------
10-Year:
6.5%, '04 616M 633,380
-----------
15-Year:
8.5%, '01 459M 476,037
9%, '01 201M 209,161
9%, '01 196M 203,708
9.5%, '01 1M 1,507
9.5%, '01 3M 2,953
7.5%, '02 338M 350,191
8%, '02 502M 520,535
9%, '02 474M 491,900
9.5%, '03 3M 3,537
9.5%, '03 256M 270,575
9.5%, '04 132M 138,410
10%, '05 115M 121,396
9%, '06 562M 588,909
8.5%, '07 46M 48,061
9%, '07 394M 413,246
8%, '08 224M 231,154
5.5%, '09 854M 850,077
8%, '11 1064M 1,098,784
7.5%, '11 1488M 1,538,122
8%, '12 398M 412,311
8%, '12 1138M 1,174,677
6.5%, '13 986M 993,283
-----------
10,138,534
-----------
30-Year:
8.5%, '03 648M 686,468
7%, '06 688M 703,585
6.5%, '07 672M 697,484
7%, '07 345M 353,069
8%, '07 490M 518,564
8.25%, '07 500M 527,232
7.5%, '08 875M 916,907
7.5%, '08 607M 636,294
7.5%, '09 554M 580,708
7.75%, '09 609M 640,030
8%, '09 257M 271,513
8%, '09 226M 238,615
8.5%, '09 1309M 1,393,421
10.25%, '09 20M 21,497
9.25%. '11 1352M 1,454,198
8%, '23 757M 793,588
-----------
10,433,173
-----------
Total Federal Home Loan Mortgage Corporation 28,698,778
-----------
Federal National Mortgage Association 36.1%
Agency Debenture:
5.75%, 03 3000M 2,997,210
-----------
Collateralized Mortgage Obligations:
FNMA 1992 - 20(PG) 7%, '05 42M 42,011
FNMA 97-52(VC) 7.5%, '10 2877M 2,995,561
FNMA G96-2C 7.5%, '11 500M 507,800
FNMA 97-25(VB) 7%, '12 3150M 3,320,100
-----------
6,865,472
-----------
7-Year Balloon:
7%, '04 803M 815,062
-----------
15-Year:
9%, '02 5M 4,935
9%, 02 672M 702,689
10.5%, '03 33M 35,556
6%, '04 826M 839,382
7%, '05 529M 536,283
8%, '05 437M 456,271
7%, '07 394M 402,897
7.5%, '07 204M 213,635
7.25%, '09 1153M 1,185,265
8.5%, '10 324M 337,329
-----------
4,714,242
-----------
30-Year:
8%, '04 274M 287,245
8%, '04 194M 203,866
9%, '04 681M 712,072
7.75%, '06 491M 512,175
7%, '07 586M 607,020
8%, '08 547M 574,005
8.25%, '09 230M 241,633
8.75%, '09 183M 194,388
8.5%, '11 201M 212,565
8%, '12 966M 1,014,125
8.75%, '13 64M 67,968
12.5%, '14 239M 274,034
8.25%, '17 427M 449,492
8%, '22 940M 976,850
8.25%, '22 141M 149,070
-----------
6,476,508
-----------
Total Federal National Mortgage Association 21,868,494
-----------
Government National Mortgage Association 6.2%
Collateralized Mortgage Obligations:
CMO Trust 27(A) 7.25%, '17 221M 223,273
MDC Asset Inv
Trust XII 3, 8.94%, '18 717M 731,760
-----------
955,033
-----------
15-Year:
10.75%, '98 3M 2,802
10.75%, '98 0M 308
11.25%, '98 0M 55
9.5%, '99 2M 2,646
10.25%, '99 4M 4,790
11%, '00 4M 4,585
11.25%, '00 10M 11,284
9%, '01 17M 18,271
9.75%, '01 5M 5,261
9.75%, '01 2M 1,761
9.5%, '04 7M 7,260
9%, '07 25M 26,398
7.5%, '08 380M 394,216
8%, '08 403M 417,918
9%, '11 383M 403,245
-----------
1,300,800
-----------
20-Year:
9.25%, '07 34M 36,185
9.75%, '10 97M 104,091
-----------
140,276
-----------
30-Year:
6.5%, '03 237M 238,250
8%, '03 271M 285,488
7.75%, 05 305M 320,128
9%, '09 146M 156,810
10%, '09 10M 10,628
10%, '16 13M 13,746
9.25%, '26 288M 310,715
-----------
1,335,765
-----------
Total Government National Mortgage Association 3,731,874
-----------
Total U.S. Government Agency Obligations 54,299,146
-----------
Total U.S. Government Obligations
(Cost $56,555,673) 57,292,666
-----------
Corporate Short-Term Notes 7.6%
Merrill Lynch 5.51%,
6/01/98 1200M 1,200,000
Prudential Securities 5.55%,
6/01/98 3400M 3,400,000
-----------
(Cost $4,600,000) 4,600,000
-----------
Total Investments
(Cost $61,155,673) 61,892,666
Excess of Liabilities Over Other Assets (2.3%) (1,358,220)
-----------
Net Assets $60,534,446
===========
- --------------------------------------------------------------------------------
* Also cost for federal income tax purposes. At May 31, 1998 unrealized
appreciation for federal income tax purposes aggregated $736,993 of which
$799,377 related to appreciated securities and $62,384 related to depreciated
securities.
See Notes to Financial Statements.
43
<PAGE>
Sentinel Short Maturity Government Fund
Statement of Assets and Liabilities
at May 31, 1998 (Unaudited)
- --------------------------------------------------------------------------------
Assets
Investments at value $ 61,892,666
Cash and cash equivalents 57,457
Receivable for securities sold 7,223,384
Receivable for interest 414,124
Receivable from fund administrator 36,142
------------
Total Assets 69,623,773
------------
Liabilities
Payable for securities purchased 9,006,775
Payable for fund shares repurchased 3,014
Accrued expenses 10,965
Management fee payable 26,870
Distribution fee payable 36,928
Fund service fee payable 4,775
------------
Total Liabilities 9,089,327
------------
Net Assets Applicable to Outstanding Shares $ 60,534,446
============
Net Asset Value and Offering Price Per Share
$60,534,446/6,121,669 shares outstanding $ 9.89
Sales Charge -- 1.00% of Offering Price 0.10
------------
Maximum Offering Price Per Share $ 9.99
============
Net Assets Represent
Capital stock at par value $ 61,217
Paid-in capital 60,965,174
Accumulated undistributed net investment income 11,098
Accumulated undistributed net realized loss
on investments (1,240,036)
Unrealized appreciation of investments 736,993
------------
Net Assets $ 60,534,446
============
Investments at Cost $ 61,155,673
============
Sentinel Short Maturity Government Fund
Statement of Operations
For the Six Months Ended May 31, 1998 (Unaudited)
- --------------------------------------------------------------------------------
Investment Income
Income:
Interest $ 1,770,357
------------
Expenses:
Management advisory fee 136,480
Transfer agent and custodian 32,430
Distribution expense 89,980
Accounting services 7,800
Auditing fees 2,750
Legal fees 1,200
Reports and notices to shareholders 1,750
Directors' fees and expenses 2,666
Other 19,174
------------
Total Expenses 294,230
Expense Reimbursement (58,323)
Expense Offset (3,630)
------------
Net Expenses 232,277
------------
Net Investment Income 1,538,080
------------
Realized and Unrealized Gain on Investments
Net realized gain on sales of investments 34,325
Net change in unrealized appreciation 246,153
------------
Net Realized and Unrealized Gain on Investments 280,478
------------
Net Increase in Net Assets from Operations $ 1,818,558
============
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
5/31/98 11/30/97
(Unaudited)
------------ ------------
<S> <C> <C>
Increase in Net Assets from Operations
Net investment income $ 1,538,080 $ 2,621,254
Net realized gain (loss) on sales of investments 34,325 (370,535)
Net change in unrealized appreciation 246,153 211,738
------------ ------------
Net increase in net assets from operations 1,818,558 2,462,457
------------ ------------
Distributions to Shareholders
From net investment income (1,468,647) (2,412,181)
From realized gain on sale of investments -- --
------------ ------------
Total distributions to shareholders (1,468,647) (2,412,181)
------------ ------------
From Capital Share Transactions
Net proceeds from sales of shares 31,016,050 34,463,483
Net asset value of shares in reinvestment
of dividends and distributions 1,190,929 1,991,335
------------ ------------
32,206,979 36,454,818
Less: Payments for shares reacquired (17,066,702) (27,934,530)
------------ ------------
Increase in net assets from capital share transactions 15,140,277 8,520,288
------------ ------------
Total Increase in Net Assets for period 15,490,188 8,570,564
Net Assets: Beginning of period 45,044,258 36,473,694
------------ ------------
Net Assets: End of period $ 60,534,446 $ 45,044,258
============ ============
Undistributed Net Investment Income
at End of Period $ 11,098 $ 7,429
============ ============
</TABLE>
See Notes to Financial Statements.
45
<PAGE>
Sentinel Short Maturity 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 Year Year Eight Months
Ended 5/31/98 Ended Ended Ended
(Unaudited) 11/30/97 11/30/96 11/30/95(A)
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net asset value at beginning of period $ 9.82 $ 9.81 $ 9.84 $ 9.64
---------- ---------- ---------- ----------
Income from Investment Operations
Net investment income 0.28 0.56 0.57 0.40
Net realized and unrealized gain (loss) on investments 0.07 0.01 (0.03) 0.20
---------- ---------- ---------- ----------
Total from investment operations 0.35 0.57 0.54 0.60
---------- ---------- ---------- ----------
Less Distributions
Dividends from net investment income 0.28 0.56 0.57 0.40
Distributions from realized gains on investments -- -- -- --
---------- ---------- ---------- ----------
Total Distributions 0.28 0.56 0.57 0.40
---------- ---------- ---------- ----------
Net asset value at end of period $ 9.89 $ 9.82 $ 9.81 $ 9.84
========== ========== ========== ==========
Total Return (%) * 3.6++ 6.0 5.6 6.3++
Ratios/Supplemental Data
Ratio of net expenses to average net assets (%) 0.90+ 1.00 1.00 1.00+
Ratio of expenses to average net assets before
expense reductions (%) ** 1.14+ 1.18 1.20 1.38+
Ratio of net investment income to average net assets (%) 5.96+ 6.20 6.09 6.07+
Ratio of net investment income to average net assets before
voluntary expense reimbursements (%) 5.74+ 6.14 5.93 5.76
Portfolio turnover rate (%) 85 61 120 58
Net assets at end of period (000 omitted) $ 60,534 $ 45,044 $ 36,474 $ 28,417
</TABLE>
(A) Commenced operations March 27, 1995.
+ 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.
46
<PAGE>
Sentinel U.S.Treasury Money Market Fund
Investment in Securities
at May 31, 1998 (Unaudited)
- --------------------------------------------------------------------------------
Principal Amount Value
(M=$1,000) (Note 1)
- --------------------------------------------------------------------------------
U.S. Treasury Obligations 99.4%
U S Treasury Bill
5.14%, 06/04/98 2000M $ 1,999,143
U S Treasury Bill
4.98%, 06/11/98 2500M 2,496,542
U S Treasury Bill
5%, 06/18/98 1500M 1,496,458
U S Treasury Bill
5.02%, 06/18/98 1250M 1,247,037
U S Treasury Bill
4.97%, 06/25/98 1300M 1,295,693
U S Treasury Note
6.25%, 06/30/98 1500M 1,500,971
U S Treasury Bill
4.9%, 07/09/98 2000M 1,989,655
U S Treasury Note
8.25%, 07/15/98 5000M 5,018,016
U S Treasury Bill
4.85%, 07/23/98 1000M 992,994
U S Treasury Bill
4.855%, 07/23/98 1000M 992,987
U S Treasury Bill
4.92%, 07/23/98 3000M 2,978,680
U S Treasury Note
6.25%, 07/31/98 3500M 3,504,774
U S Treasury Bill
4.925%, 08/06/98 2000M 1,981,942
U S Treasury Bill
5.015%, 08/06/98 3525M 3,492,591
U S Treasury Bill
4.995%, 08/13/98 5000M 4,949,356
U S Treasury Bill
5.045%, 08/20/98 5000M 4,943,944
U S Treasury Bill
5.06%, 08/20/98 2300M 2,274,138
U S Treasury Bill
5.065%, 08/20/98 1500M 1,483,117
U S Treasury Note
4.75%, 08/31/98 5050M 5,041,671
U S Treasury Note
6.125%, 08/31/98 5000M 5,008,516
U S Treasury Note
6.125%, 08/31/98 4925M 4,933,579
U S Treasury Bill
5.065%, 09/10/98 2000M 1,971,580
U S Treasury Bill
5.085%, 09/10/98 3100M 3,055,775
U S Treasury Bill
5.04%, 09/17/98 2000M 1,969,760
U S Treasury Bill
5.045%, 09/17/98 7000M 6,894,055
U S Treasury Bill
5.085%, 09/17/98 1300M 1,280,169
U S Treasury Bill
5.01%, 09/24/98 3000M 2,951,988
U S Treasury Note
4.75%, 09/30/98 1535M 1,532,078
U S Treasury Note
6%, 09/30/98 2000M 2,003,803
U S Treasury Note
6%, 09/30/98 2000M 2,004,078
U S Treasury Note
6%, 09/30/98 5000M 5,009,761
U S Treasury Note
6%, 09/30/98 3000M 3,006,077
-----------
Total Investments
(Amortized Cost $91,300,928)* 91,300,928
Excess of Other Assets
Over Liabilities 0.6% 518,377
-----------
Net Assets $91,819,305
===========
- --------------------------------------------------------------------------------
* 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, 1998 (Unaudited)
- --------------------------------------------------------------------------------
Assets
Investments at value $91,300,928
Cash and cash equivalents 906,387
Receivable for fund shares sold 610,019
Receivable for interest 617,410
-----------
Total Assets 93,434,744
-----------
Liabilities
Payable for fund shares repurchased 1,202,839
Dividends payable 338,573
Accrued expenses 32,475
Management fee payable 29,954
Fund service fee payable 11,598
-----------
Total Liabilities 1,615,439
-----------
Net Assets Applicable to Outstanding Shares $91,819,305
===========
Net Asset Value
Class A Shares
$87,924,654/87,924,654 shares outstanding $ 1.00
===========
Class B Shares
$3,894,651/3,894,651 shares outstanding $ 1.00
===========
Net Assets Represent
Capital stock at par value $ 918,193
Paid-in capital 90,901,112
-----------
Net Assets $91,819,305
===========
Investments at Cost $91,300,928
===========
Sentinel U.S. Treasury Money Market Fund
Statement of Operations
For the Six Months Ended May 31, 1998 (Unaudited)
- --------------------------------------------------------------------------------
Investment Income
Income:
Interest $ 2,237,754
-----------
Expenses
Management advisory fee 170,998
Transfer agent and custodian 97,436
Accounting services 13,095
Auditing fees 3,675
Legal fees 2,075
Reports and notices to shareholders 4,425
Directors' fees and expenses 4,514
Other 19,884
-----------
Total Expenses 316,102
Expense Offset (1,636)
-----------
Net Expenses 314,466
-----------
Net Investment Income and Net Increase in
Net Assets from Operations $ 1,923,288
===========
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
5/31/98 11/30/97
(Unaudited)
------------- -------------
<S> <C> <C>
Increase in Net Assets from Operations
Net investment income $ 1,923,288 $ 3,906,356
------------- -------------
Distributions to Shareholders
From net investment income
Class A Shares (1,836,917) (3,725,989)
Class B Shares (86,371) (180,367)
------------- -------------
Total Distributions to Shareholders (1,923,288) (3,906,356)
------------- -------------
From Capital Share Transactions
Net proceeds from sales of shares
Class A Shares 87,174,641 198,798,449
Class B Shares 3,560,724 7,962,012
Net asset value of shares in reinvestment
of dividends and distributions
Class A Shares 1,628,179 3,338,706
Class B Shares 76,010 150,530
------------- -------------
92,439,554 210,249,697
Less: Payments for shares reacquired
Class A Shares (86,789,661) (197,029,796)
Class B Shares (3,175,690) (7,839,276)
------------- -------------
Increase in net assets from capital share transactions 2,474,203 5,380,625
------------- -------------
Total Increase in Net Assets for period 2,474,203 5,380,625
Net Assets: Beginning of period 89,345,102 83,964,477
------------- -------------
Net Assets: End of period $ 91,819,305 $ 89,345,102
============= =============
</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 5/31/98 Year Ended Year Ended Year Ended Year Ended Months Ended
Class A Shares (Unaudited) 11/30/97 11/30/96 11/30/95 11/30/94 11/30/93(A)
------------- ---------- ---------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value at beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- -------- --------
Income from Investment Operations
Net investment income 0.02 0.04 0.04 0.05 0.03 0.02
Net realized and unrealized gain (loss) on investments -- -- -- -- -- --
-------- -------- -------- -------- -------- --------
Total from investment operations 0.02 0.04 0.04 0.05 0.03 0.02
-------- -------- -------- -------- -------- --------
Less Distributions
Dividends from net investment income 0.02 0.04 0.04 0.05 0.03 0.02
Distributions from realized gains on investments -- -- -- -- -- --
-------- -------- -------- -------- -------- --------
Total Distributions 0.02 0.04 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 $ 1.00
======== ======== ======== ======== ======== ========
Total Return (%) ** 2.3++ 4.6 4.6 5.0 3.1 1.7++
Ratios/Supplemental Data
Ratio of net expenses to average net assets (%) 0.74+ 0.76 0.78 0.81 0.81 .85+
Ratio of expenses to average net assets before
expense reductions (%) *** 0.74+ 0.77 0.78 0.82 0.81 .87+
Ratio of net investment income to average net assets (%) 4.49+ 4.46 4.38 4.83 3.01 2.20+*
Net assets at end of period (000 omitted) $ 87,925 $ 85,911 $ 80,804 $ 80,664 $ 75,301 $ 72,252
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Six Months Eight Months
Ended 5/31/98 Year Ended Ended
Class B Shares (Unaudited) 11/30/97 11/30/96(B)
------------- ---------- ------------
<S> <C> <C> <C>
Net asset value at beginning of period $ 1.00 $ 1.00 $ 1.00
-------- -------- --------
Income from Investment Operations
Net investment income 0.02 0.05 0.03
Net realized and unrealized gain (loss) on investments -- -- --
-------- -------- --------
Total from investment operations 0.02 0.05 0.03
-------- -------- --------
Less Distributions
Dividends from net investment income 0.02 0.05 0.03
Distributions from realized gains on investments -- -- --
-------- -------- --------
Total Distributions 0.02 0.05 0.03
-------- -------- --------
Net asset value at end of period $ 1.00 $ 1.00 $ 1.00
======== ======== ========
Total Return (%) ** 2.3++ 4.6 3.0++
Ratios/Supplemental Data
Ratio of net expenses to average net assets (%) 0.73+ 0.73 .76+
Ratio of expenses to average net assets before
expense reductions (%) *** 0.74+ 0.73 .77+
Ratio of net investment income to average net assets (%) 4.49+ 4.50 4.40+
Net assets at end of period (000 omitted) $ 3,895 $ 3,434 $ 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.
*** 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>
Sentinel Tax-Free Income Fund
Investment in Securities
at May 31, 1998 (Unaudited)
- --------------------------------------------------------------------------------
Principal Amount Value
(M=$1,000) (Note 1)
- --------------------------------------------------------------------------------
Bonds 97.9%
California 10.8%
California General Obligation
6.250%, 04/01/08 2000M $2,282,200
Foothill/Eastern CA Toll
6.500%, 01/01/32 3500M 3,827,145
San Mateo Cnty CA Power Rev (AMBAC)
6.500%, 07/01/15 3000M 3,558,600
----------
9,667,945
----------
Colorado 2.0%
Arapahoe County Capital Improvements
6.950%, 08/31/20 1500M 1,783,305
----------
Delaware 0.6%
Delaware Health Facility Auth
7.625%, 11/01/10 500M 548,780
----------
District of Columbia 0.6%
District of Columbia G/O (AMBAC)
7.500%, 06/01/09 500M 526,910
----------
Florida 3.1%
Orange County Healthcare A (MBIA)
6.250%, 10/01/13 1500M 1,719,855
University Community Hospital Income (FSA)
7.500%, 09/01/11 1000M 1,094,210
----------
2,814,065
----------
Hawaii 1.2%
Dept of Budget Financial of HI (FSA)
7.650%, 07/01/19 1000M 1,123,920
Hawaii State Housing Finance
7.800%, 07/01/29 5M 5,195
----------
1,129,115
----------
Idaho 0.6%
Idaho Housing Agency Series D-1
8.000%, 01/01/20 470M 530,414
----------
Illinois 5.9%
Illinois Educational
Facs Authority
6.100%, 12/15/16 560M 602,285
Illinois Housing Development Authority
7.000%, 07/01/10 990M 1,065,794
Illinois State Sales Tax
6.000%, 06/15/12 2180M 2,437,720
Illinois State Sales Tax Revenue
6.500%, 06/15/13 1000M 1,179,370
----------
5,285,169
----------
Indiana 0.1%
Indianapolis IN Economic Dev Revenue
7.800%, 12/01/17 55M 57,559
----------
Kansas 0.2%
Kansas City Leavenworth Cty &
City of Lenexa Series
A - Mtg Rev
8.400%, 05/01/15 130M 134,512
----------
Louisiana 0.6%
Jefferson LA Sales Tax (MBIA)
8.250%, 07/01/02 500M 522,875
----------
Massachusetts 6.4%
Massachusetts State G/O (FGIC)
6.000%, 08/01/09 1000M 1,134,170
Massachusetts State G/O
6.875%, 07/01/10 1000M 1,098,610
Mass State Health & Educational Facs
New England Baptist Hospital Revenue
7.300%, 07/01/11 1000M 1,110,790
Mass State Tpk Auth Hwy Sys (MBIA)
5.000%, 01/01/37 2500M 2,421,050
----------
5,764,620
----------
Michigan 1.0%
Michigan State Building Authority
6.250%, 10/01/20 170M 180,280
Redford MI Union School (AMBAC)
5.000%, 05/01/22 750M 747,885
----------
928,165
----------
Missouri 1.3%
Central Missouri St University (MBIA)
7.000%, 07/01/14 1000M 1,105,260
Missouri Housing Development Comm
9.375%, 04/01/16 40M 43,098
----------
1,148,358
----------
Nebraska 2.4%
Omaha Public Power District
6.150%, 02/01/12 1000M 1,132,430
Omaha Public Power District
7.625%, 02/01/12 1000M 1,005,290
----------
2,137,720
----------
New Hampshire 0.9%
New Hampshire Higher Ed & Health (MBIA)
7.625%, 07/01/20 750M 794,212
----------
New Mexico 3.2%
Sante Fe County Revenue (FSA)
6.000%, 02/01/27 2500M 2,895,275
----------
New York 26.7%
Long Island NY Power Electric
5.250%, 12/01/26 300M 296,499
Monroe County NY G/O
6.000%, 03/01/14 1000M 1,126,700
Municipal Asst Corp for NYC New York
5.750%, 07/01/03 1500M 1,605,975
New York City NY (Prerefunded)
7.100%, 02/01/09 1055M 1,173,234
New York City NY
7.100%, 02/01/09 145M 159,636
New York City University CTFS of Par
5.750%, 08/15/05 2000M 2,135,660
New York City NY G/O
6.250%, 02/15/07 1500M 1,654,065
NYC Municipal Water Fin Authority
7.000%, 06/15/07 250M 273,060
New York NY Series G
5.750%, 02/01/20 1600M 1,668,496
NY State Dorm Authority
6.375%, 07/01/08 1275M 1,378,556
NY State Dorm Authority Revenue
5.750%, 07/01/15 750M 823,148
NY State Dorm Authority
6.000%, 08/15/16 2800M 3,110,408
New York State Environment Facs
6.600%, 09/15/12 1450M 1,603,845
NY State Environ Facs Corp (Prerefunded)
7.250%, 06/15/10 40M 44,387
NY State Environmental Facs Corp
7.250%, 06/15/10 10M 11,091
NY State Medical Care Facs (Prerefunded)
7.875%, 08/15/08 175M 192,610
NY State Medical Care Facs
7.875%, 08/15/08 75M 82,179
New York State Need Care
6.800%, 08/15/24 2500M 2,905,825
Triborough Bridge & Tunnel Authority
6.000%, 01/01/12 3250M 3,639,090
----------
23,884,464
----------
North Carolina 1.2%
NC Eastern Municipal Power Agency
6.000%, 01/01/06 1000M 1,076,090
----------
(continued)
51
<PAGE>
Sentinel Tax-Free Income Fund
Investment in Securities (cont'd.)
at May 31, 1998 (Unaudited)
- --------------------------------------------------------------------------------
Principal Amount Value
(M=$1,000) (Note 1)
- --------------------------------------------------------------------------------
Ohio 0.6%
OH Housing Finance Authority
7.050%, 09/01/16 530M $ 560,984
-----------
Pennsylvania 4.4%
Montgomery Cty Higher Ed & Health
8.300%, 06/01/10 500M 549,755
PA State Educational Facs Authority (MBIA)
5.600%, 11/15/10 1000M 1,081,120
Pennsylvania State G/O
6.250%, 07/01/11 2000M 2,298,100
-----------
3,928,975
-----------
Puerto Rico 3.2%
Puerto Rico Hwy & Transportation
5.500%, 07/01/36 2750M 2,872,128
-----------
Tennessee 2.6%
Lawrenceburg TN Electrical Revenue (MBIA)
6.625%, 07/01/18 1910M 2,305,809
-----------
Texas 1.3%
North Central TX Health 6.250%, 05/15/10 1000M 1,120,980
-----------
Utah 0.2%
Utah State Housing Finance Authority
7.250%, 07/01/22 15M 15,943
-----------
Vermont 4.9%
Vermont Education & Health Building
7.050%, 10/01/16 900M 992,862
Vermont Education & Health Finance Agency
6.000%, 09/01/13 1070M 1,122,334
Vermont Education & Health Norwich
5.500%, 07/01/18 2295M 2,304,937
-----------
4,420,133
-----------
Virginia 2.8%
Fairfax County Water Authority
7.250%, 01/01/27 1000M 1,069,550
VA State Housing Development Authority
5.200%, 01/01/06 1355M 1,414,390
-----------
2,483,940
-----------
Washington 9.1%
King County WA General Obligation
5.200%, 12/01/03 1750M 1,835,067
Snohomish County Washington School Dist
7.100%, 12/01/07 500M 541,860
Washington State G/O
6.200%, 03/01/11 1220M 1,397,644
Washington State Public Power
7.625%, 07/01/10 250M 276,165
Washington State Public Power (MBIA)
7.125%, 07/01/16 3295M 4,099,112
-----------
8,149,848
-----------
Total Bonds
(Cost $80,437,251) 87,488,293
-----------
Short-Term Investments 0.2%
Port St Helens OR
General Electric Project (a)
4.000%, 06/01/10
(Cost $200,000) 200M 200,000
-----------
Total Investments
(Cost $80,637,251)* 87,688,293
Excess of Other Assets
Over Liabilities 1.9% 1,709,448
-----------
Net Assets $89,397,741
-----------
* Also cost for federal income tax purposes. At May 31, 1998, net unrealized
appreciation for federal income tax purposes aggregated $7,051,042 of which
$7,056,910 related to appreciated securities and $5,868 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.
52
<PAGE>
Sentinel Tax-Free Income Fund
Statement of Assets and Liabilities
at May 31, 1998 (Unaudited)
- --------------------------------------------------------------------------------
Assets
Investments at value $87,688,293
Cash and cash equivalents 51,155
Receivable for interest 1,715,842
Receivable from fund administrator 30,619
-----------
Total Assets 89,485,909
-----------
Liabilities
Accrued expenses 18,177
Management fee payable 40,085
Distribution fee payable 22,979
Fund service fee payable 6,927
-----------
Total Liabilities 88,168
-----------
Net Assets Applicable to Outstanding Shares $89,397,741
===========
Net Asset Value and Offering Price per Share
$89,397,741 / 6,567,511 shares outstanding $ 13.61
Sales Charge-- 4.00% of offering price 0.57
-----------
Maximum Offering Price $ 14.18
-----------
Net Assets Represent
Capital stock at par value $ 65,675
Paid-in capital 82,004,714
Accumulated undistributed net investment income 1,128
Accumulated undistributed net realized gain
on investments 275,182
Unrealized appreciation of investments 7,051,042
-----------
Net Assets $89,397,741
===========
Investments at Cost $80,637,251
===========
Sentinel Tax-Free Income Fund
Statement of Operations
For the Six Months Ended May 31, 1998 (Unaudited)
- --------------------------------------------------------------------------------
Investment Income
Income:
Interest $ 2,477,813
-----------
Expenses:
Management advisory fee 236,266
Transfer agent and custodian 43,113
Distribution expense 88,875
Accounting services 13,800
Auditing fees 3,700
Legal fees 1,500
Reports and notices to shareholders 3,200
Directors' fees and expenses 4,770
Other 13,989
-----------
Total Expenses 409,213
Expense Reimbursement (69,535)
Expense Offset (4,713)
-----------
Net Expenses 334,965
-----------
Net Investment Income 2,142,848
-----------
Realized and Unrealized Gain on Investments
Net realized gain on sales of investments 275,147
Net change in unrealized appreciation 779,796
-----------
Net Realized and Unrealized Gain on Investments 1,054,943
-----------
Net Increase in Net Assets from Operations $ 3,197,791
===========
See Notes to Financial Statements.
53
<PAGE>
Sentinel Tax-Free Income Fund
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Year
Ended Ended
5/31/98 11/30/97
(Unaudited)
------------- -------------
<S> <C> <C>
Increase in Net Assets from Operations
Net investment income $ 2,142,848 $ 4,483,929
Net realized gain on sales of investments 275,147 1,229,122
Net change in unrealized appreciation 779,796 279,598
------------- -------------
Net increase in net assets from operations 3,197,791 5,992,649
------------- -------------
Distributions to Shareholders
From net investment income
Class A Shares (2,141,786) (4,463,971)
Class B Shares -- (32,187)
From net realized gain on investments
Class A Shares (1,229,059) (916,286)
Class B Shares -- (8,418)
------------- -------------
Total distributions to shareholders (3,370,845) (5,420,862)
------------- -------------
From Capital Share Transactions
Net proceeds from sales of shares
Class A Shares 7,180,352 7,209,749
Class A Shares issued upon conversion from Class B -- 1,168,657
Class B Shares -- 519,027
Net asset value of shares in reinvestment
of dividends and distributions
Class A Shares 2,443,364 3,629,221
Class B Shares -- 30,609
------------- -------------
9,623,716 12,557,263
Less: Payments for shares reacquired
Class A Shares (7,988,386) (24,604,903)
Class B Shares -- (152,989)
Class B Shares reacquired upon conversion
into Class A shares -- (1,168,657)
------------- -------------
Increase (decrease) in net assets from
capital share transactions 1,635,330 (13,369,286)
------------- -------------
Total Increase (Decrease) in Net Assets for period 1,462,276 (12,797,499)
Net Assets: Beginning of period 87,935,465 100,732,964
------------- -------------
Net Assets: End of period $ 89,397,741 $ 87,935,465
============= =============
Undistributed Net Investment Income
at End of Period $ 1,128 $ 66
============= =============
</TABLE>
See Notes to Financial Statements.
54
<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 5/31/98 Year Ended Year Ended Year Ended Year Ended Year Ended
Class A Shares (Unaudited) 11/30/97 11/30/96 11/30/95 11/30/94 11/30/93
------------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value at beginning of period $ 13.64 $ 13.53 $ 13.62 $ 12.35 $ 13.81 $ 13.13
---------- ---------- ---------- ---------- ---------- ----------
Income from Investment Operations
Net investment income 0.33 0.65 0.65 0.67 0.68 0.73
Net realized and unrealized gain (loss) on investments 0.16 0.24 (0.09) 1.27 (1.34) 0.79
---------- ---------- ---------- ---------- ---------- ----------
Total from investment operations 0.49 0.89 0.56 1.94 (0.66) 1.52
---------- ---------- ---------- ---------- ---------- ----------
Less Distributions
Dividends from net investment income 0.33 0.65 0.65 0.67 0.68 0.73
Distributions from realized gains on investments 0.19 0.13 -- -- 0.12 0.11
---------- ---------- ---------- ---------- ---------- ----------
Total Distributions 0.52 0.78 0.65 0.67 0.80 0.84
---------- ---------- ---------- ---------- ---------- ----------
Net asset value at end of period $ 13.61 $ 13.64 $ 13.53 $ 13.62 $ 12.35 $ 13.81
========== ========== ========== ========== ========== ==========
Total Return (%) * 3.6++ 6.9 4.3 16.0 (5.1) 11.9
Ratios/Supplemental Data
Ratio of net expenses to average net assets (%) 0.75+ 0.91 0.94 0.90 0.75 0.64
Ratio of expenses to average net assets before
expense reductions (%) ** 0.92+ 0.95 0.97 0.99 0.94 0.90
Ratio of net investment income to average net assets (%) 4.81+ 4.84 4.86 5.06 5.11 5.41
Ratio of net investment income to average net assets before
voluntary expense reimbursement (%) 4.65+ 4.84 4.86 5.00 4.92 5.14
Portfolio turnover rate (%) 11 47 112 112 92 39
Net assets at end of period (000 omitted) $ 89,398 $ 87,935 $ 99,967 $110,506 $ 99,935 $111,968
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Eleven Eight
Months Ended Months Ended
Class B Shares 10/31/97(B) 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 0.43 0.32
Net realized and unrealized gain on investments 0.22 0.26
---------- ----------
Total from investment operations 0.65 0.58
---------- ----------
Less Distributions
Dividends from net investment income 0.44 0.32
Distributions from realized gains on investments 0.13 --
---------- ----------
Total Distributions 0.57 0.32
---------- ----------
Net asset value at end of period $ 13.62 $ 13.54
---------- ----------
Total Return (%) * 5.0++ 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 (%) ** 2.34+ 2.48+
Ratio of net investment income to average net assets (%) 3.58+ 3.61+
Portfolio turnover rate (%) 45 112
Net assets at end of period (000 omitted) $ -- $ 766
</TABLE>
(A) Commenced operations April 1, 1996.
(B) All Class B shares were converted to Class A shares as of October 31, 1997.
+ 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.
** 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.
55
<PAGE>
Sentinel New York Tax-Free Income Fund
Investment in Securities
at May 31, 1998 (Unaudited)
- --------------------------------------------------------------------------------
Principal Amount Value
(M=$1,000) (Note 1)
- --------------------------------------------------------------------------------
Bonds 95.2%
New York 85.0%
City University NY Certificate of Participation
5.75%, 08/15/05 300M $ 320,349
Insured University Revenue
5.625%, 07/01/13 (MBIA) 250M 262,580
Long Island NY Electric Power Revenue
5.25%, 12/01/26 200M 197,666
Metro Transportation Authority
5.75%, 07/01/13 250M 269,952
Monroe County G/O
6.00%, 03/01/14 250M 281,675
Monroe Woodbury Central School Dist
5.625%, 05/15/22 (MBIA) 250M 260,530
New York City Municipal Water Fin. Auth
6.00%, 06/15/17 100M 104,913
5.75%, 06/15/20 (MBIA) 220M 231,889
New York NY G/O Series G
5.75%, 02/01/20 400M 417,124
New York State Dorm Authority Revenue
Cornell Univ. - Ser A
7.375%, 07/01/30 50M 54,094
State Univ. Educ. Fac. - Ser A
7.20%, 05/15/06 200M 225,408
5.00%, 05/15/10 250M 253,785
State Univ. Educ. Fac. - Ser A
6.375%, 05/15/14 250M 278,137
New York University - Ser A
5.75%, 07/01/15 (MBIA) 250M 274,382
City University System
5.625%, 07/01/16 250M 265,673
Nursing Home-Hebrew Home
5.625%, 02/01/17 220M 233,858
Department of Health
5.50%, 07/01/20 125M 126,291
Wyckoff Hights Medical Ctr
5.3%, 08/15/21 250M 246,693
New York State Energy Resources
7.50%, 07/01/25 50M 52,261
New York State Environmental Facilities
5.75%, 01/15/13 250M 269,705
5.75%, 03/15/13 300M 310,089
New York State Environmental Water Revenue
7.25%, 06/15/10 60M 66,545
New York State Housing Finance Agency
5.625%, 05/01/02 250M 260,700
New York State Local Govt Assistance Corp.
7.00%, 04/01/08 100M 111,881
5.375%, 04/01/16 (AMBAC) 300M 308,283
New York State Medical Care Facilities
7.875%, 08/15/20 10M 10,953
7.875%,08/15/20 (Prerefunded) 10M 11,006
7.30%, 02/15/21 10M 11,087
7.30%, 02/15/21 (Prerefunded) 15M 16,736
Hospitals & Nursing Homes
6.45%, 02/15/09 225M 241,472
New York State Mortgage Agency Revenue
7.95%, 04/01/22 100M 105,856
New York State Thwy. Auth Service Contract
6.25%, 04/01/14 200M 217,756
New York State Urban Development Corp.
5.70%, 04/01/20 250M 266,518
Suffolk County NY Water Authority
5.625%, 06/01/16 (AMBAC) 170M 177,679
Triborough Bridge & Tunnel Authority
6.00%, 01/01/12 250M 279,930
6.875%, 01/01/15 65M 70,039
United Nations Development Corp
6.00%, 07/01/12 250M 275,028
----------
7,368,523
----------
Puerto Rico 10.2%
Puerto Rico Commonwealth
5.40%, 07/01/25 300M 304,176
Puerto Rico Commonwealth Aqueduct & Sewer
6.00%, 07/01/09 250M 280,795
Puerto Rico Indl. Tourist Edl
Med. & Envir. Ctl. Facs
5.00%, 10/01/22 (MBIA) 300M 297,474
----------
882,445
----------
Total Bonds
(Cost $7,667,931) 8,250,968
----------
Short-Term Investments 1.1%
New York City G/O
3.10%, 08/15/22
(Cost $100,000) 100M 100,000
----------
Total Investments
(Cost $7,767,931)* 8,350,968
Excess of Other Assets
Over Liabilities 3.7% 321,203
----------
Net Assets $8,672,171
==========
- --------------------------------------------------------------------------------
* Also cost for federal income tax purposes. At May 31, 1998, net unrealized
appreciation for federal income tax purposes aggregated $583,037 of which,
$583,706 related to appreciated securities and $669 related to depreciated
securities.
The following abbreviations are used in portfolio descriptions:
(AMBAC) - Guaranteed by American Municipal Bond Association Corp.
(MBIA) - Guaranteed by Municipal Bond Investors Assurance Corp.
G/O - General Obligation Bond
See Notes to Financial Statements.
56
<PAGE>
Sentinel New York Tax-Free Income Fund
Statement of Assets and Liabilities
at May 31, 1998 (Unaudited)
- --------------------------------------------------------------------------------
Assets
Investments at value $ 8,350,968
Cash and cash equivalents 117,129
Receivable for fund share purchased 72,209
Receivable for interest 127,612
Receivable from fund administrator 14,300
-----------
Total Assets 8,682,218
-----------
Liabilities
Accrued expenses 3,240
Management fee payable 3,823
Distribution fee payable 2,499
Fund service fee payable 485
-----------
Total Liabilities 10,047
-----------
Net Assets Applicable to Outstanding Shares $ 8,672,171
===========
Net Asset Value and Offering Price Per Share
$8,672,171 / 721,533 shares outstanding $ 12.02
Sales Charge -- 4.00% of Offering Price 0.50
-----------
Maximum Offering Price Per Share $ 12.52
===========
Net Assets Represent
Capital stock at par value $ 7,215
Paid-in capital 8,082,111
Accumulated undistributed net investment income 177
Accumulated undistributed net realized loss
on investments (369)
Unrealized appreciation of investments 583,037
-----------
Net Assets $ 8,672,171
===========
Investments at Cost $ 7,767,931
===========
Sentinel New York Tax-Free Income Fund
Statement of Operations
For the Six Months Ended May 31, 1998 (Unaudited)
- --------------------------------------------------------------------------------
Investment Income
Income:
Interest $ 215,765
-----------
Expenses:
Management advisory fee 21,626
Transfer agent and custodian 4,305
Distribution expense 8,140
Accounting services 1,250
Auditing fees 750
Legal fees 175
Reports and notices to shareholders 350
Directors' fees and expenses 432
Other 4,697
-----------
Total Expenses 41,725
Expense Reimbursement (40,300)
Expense Offset (1,425)
-----------
Net Expenses --
-----------
Net Investment Income 215,765
-----------
Realized and Unrealized Gain (Loss) on Investments
Net realized loss on sales of investments (372)
Net change in unrealized appreciation 109,917
-----------
Net Realized and Unrealized Gain (Loss)
on Investments 109,545
-----------
Net Increase in Net Assets from Operations $ 325,310
===========
See Notes to Financial Statements.
57
<PAGE>
Sentinel New York Tax-Free Income Fund
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Year
Ended Ended
5/31/98 11/30/97
(Unaudited)
----------- -----------
<S> <C> <C>
Increase in Net Assets from Operations
Net investment income $ 215,765 $ 341,190
Net realized gain (loss) on sales of investments (372) 19,066
Net change in unrealized appreciation 109,917 150,280
----------- -----------
Net increase in net assets from operations 325,310 510,536
----------- -----------
Distributions to Shareholders
From net investment income (216,001) (341,158)
From realized gain on investments (19,064) (45,214)
----------- -----------
Total distributions to shareholders (235,065) (386,372)
----------- -----------
From Capital Share Transactions
Net proceeds from sales of shares 1,026,817 2,421,008
Net asset value of shares in reinvestment
of dividends and distributions 220,821 363,889
----------- -----------
1,247,638 2,784,897
Less: Payments for shares reacquired (370,160) (953,210)
----------- -----------
Increase in net assets from capital share transactions 877,478 1,831,687
----------- -----------
Total Increase in Net Assets for period 967,723 1,955,851
Net Assets: Beginning of period 7,704,448 5,748,597
----------- -----------
Net Assets: End of period $ 8,672,171 $ 7,704,448
=========== ===========
Undistributed Net Investment Income
at End of Period $ 177 $ 413
=========== ===========
</TABLE>
See Notes to Financial Statements.
58
<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 5/31/98 Year Ended Year Ended Ended
(Unaudited) 11/30/97 11/30/96 11/30/95(A)
------------- ---------- ---------- ------------
<S> <C> <C> <C> <C>
Net asset value at beginning of period $ 11.88 $ 11.72 $ 11.72 $ 11.19
------------- ---------- ---------- ------------
Income from Investment Operations
Net investment income 0.32 0.60 0.53 0.36
Net realized and unrealized gain on investments 0.17 0.25 -- 0.53
------------- ---------- ---------- ------------
Total from investment operations 0.49 0.85 0.53 0.89
------------- ---------- ---------- ------------
Less Distributions
Dividends from net investment income 0.32 0.60 0.53 0.36
Distributions from realized gains on investments 0.03 0.09 -- --
------------- ---------- ---------- ------------
Total Distributions 0.35 0.69 0.53 0.36
------------- ---------- ---------- ------------
Net asset value at end of period $ 12.02 $ 11.88 $ 11.72 $ 11.72
============= ========== ========== ============
Total Return (%) (*) 4.1++ 7.7 4.8 8.1++
Ratios/Supplemental Data
Ratio of net expenses to average net assets (%) -- 0.30 1.04 1.22+
Ratio of expenses to average net assets before
expense reductions (%) (**) 1.02+ 1.09 1.10 1.29+
Ratio of net investment income to average net assets (%) 5.28+ 5.31 4.65 4.60+
Ratio of net investment income to average net assets before
voluntary expense reimbursements (%) 4.29+ 4.57 4.65 4.60+
Portfolio turnover rate (%) 3 21 48 32
Net assets at end of period (000 omitted) $ 8,672 $ 7,704 $ 5,749 $ 5,332
</TABLE>
(A) Commenced operations March 27, 1995.
+ 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 Note (2) and
(1) H
See Notes to Financial Statements
59
<PAGE>
Notes to Financial Statements
(1) Signifcant 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 twelve 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 High
Yield Bond Fund (commenced operations on June 23, 1997), 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. All Funds offer one class of shares now referred to as Class A shares. In
addition, Sentinel Small Company, Sentinel World, Sentinel Common Stock,
Sentinel Balanced, Sentinel High Yield Bond, Sentinel Bond and Sentinel U.S.
Treasury Money Market Funds have a second class of shares called Class B shares.
In regard to Sentinel Tax-Free Income Fund, all Class B shares were converted to
Class A shares as of October 31, 1997. On December 11, 1997 the board of
directors approved Class B shares on the Sentinel Growth Fund to commence
January 12, 1998. The board also approved the issuance of a third class of
shares, Class C. These shares were available for Sentinel Common Stock, Sentinel
Balanced, Sentinel World and Sentinel High Yield Bond Fund on May 4, 1998. 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. Reclassifcations were made to
reflect these differences as of May 31, 1998 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 ............................. ($150,495) $ 150,495
Balanced .......................... (20,184) 20,184
Bond .............................. (18,664) 18,664
Government Sec .................... (29,778) 29,778
Short Maturity Gov't .............. (65,764) 65,764
</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,
60
<PAGE>
coupon and maturity) securities on a specified future date. During the roll
period the Funds forgo principal and interest paid on the securities. The Funds
are compensated by the interest earned on the cash proceeds of the initial sale
and by the lower repurchase price at the future date. The difference between the
sale proceeds and the lower repurchase price is taken into income. The Funds
maintain segregated accounts, the dollar value of which is equal to its
obligations, in respect of dollar rolls.
E. Federal Income Taxes: Each Fund intends to continue to meet the requirements
of the Internal Revenue Code applicable to regulated investment companies. The
Company intends to distribute all of its taxable income to its shareholders,
relieving each Fund of any federal excise tax or income tax liability.
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
61
<PAGE>
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 High Yield Bond Fund: 0.75% per annum
on the first $100 million of average daily net assets; 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.(4)
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. (5) With
respect to Sentinel U.S. Treasury Money Market Fund: 0.40% per annum on the
first $300 million of average daily net assets; and 0.35% per annum on such
assets in excess of $300 million.
With respect to Sentinel World Fund, SAC has entered into a sub-advisory
agreement with INVESCO Capital Management, Inc. ("INVESCO"). Pursuant to such
agreement, INVESCO 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 INVESCO 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.
With respect to Sentinel High Yield Bond Fund, SAC has entered into a
sub-advisory agreement with Keystone Investment Management Company ("Keystone").
Pursuant to such agreement, Keystone provides SAC with a continuous investment
program consistent with Sentinel High Yield Bond Fund's investment objectives
and policies. The sub-advisory agreement provides for a fee from SAC to Keystone
equal to one half of the fee paid by Sentinel High Yield Bond Fund to SAC,
provided that the fee paid by SAC to Keystone will always be at least 0.35% per
annum of the average daily net assets.
All Funds (except Sentinel U.S. Treasury Money Market Fund) have 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
and Sentinel High Yield Bond Fund became subject to it on its inception on June
23, 1997. 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". The Sentinel High Yield Bond Fund became subject to the B Plan on
June 23, 1997. On May 4, 1998 each of the Funds with Class C shares adopted a
Class C distribution plan referred to as the "C 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) 0.30% 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) 0.20% of
average daily net assets relating to A shares outstanding in the case of the
Sentinel High Yield Bond, Sentinel Bond, Sentinel Tax-Free Income, Sentinel New
York Tax-Free Income and Sentinel Government Securities Funds or (c) 0.35% 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
62
<PAGE>
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 Plan applicable to the Class B shares, the Class B shares of each of
the Common Stock, Balanced, Growth, Small Company, World, High Yield and Bond
Funds will pay to the Distributor a monthly fee at an annual rate of up to a
total of 1.00% of average daily net assets, of which up to 0.25% shall be for
service fees to broker-dealers, and the remaining 0.75% shall be for the
recovery of the initial sales commissions paid by the Distributor at the time of
sales of Class B shares, together with the cost of fnancing such payments, and
for the other types of distribution, sales and marketing expenditures detailed
in the preceding paragraph for the Plans applicable to the Class A shares. The
High Yield Fund Class B shares are not assessed a distribution fee in respect of
the seed money shares owned by National Life, which will result in an overall
Rule 12b-1 fee to the Class B shares of the High Yield Fund of less than 1.00%
for so long as National Life maintains its investment.
Under the Plan applicable to the Class C shares, the Class C shares of each of
the Common Stock, Balanced, World and High Yield Funds will pay to the
Distributor a monthly fee at an annual rate of up to a total of 1.00% of average
daily net assets. In the first year after the purchase this fee will be applied
to recover the initial sales commission of 1.00% paid by the Distributor to the
selling dealer. In subsequent years, the entire 1.00% will be paid to the
selling dealer as additional commission and/or service fees.
These asset-based fees, excepting the service fee component, are subject to
aggregate limits imposed by the National Association of Securities Dealers, Inc.
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 $2,685,190 for the six months
ended May 31, 1998. The Company is advised that the total distribution charges
retained by SFSC on the sale of shares amounted to $84,279 after allowances of
$1,260,091 to Equity Services, Inc., an affiliate of National Life, $215,699 to
1717 Capital Management Company, an affiliate of Provident Mutual, $360,361 to
Hornor, Townsend & Kent, Inc. and $107,474 to Janney Montgomery Scott, Inc.
("JMS"), affiliates of Penn Mutual, and $657,286 to other investment dealers.
During this same period, SFSC received $2,754 in contingent deferred sales
charges from certain redemptions of Class A shares and $141,967 in contingent
deferred sales charges from redemptions of Class B shares. There were no
contingent deferred sales charges from redemptions of Class C shares.
During the period the Company transacted purchases and sales of portfolio
securities through, among others, JMS for which it received $16,944 in brokerage
commissions. In addition JMS acted as dealer on certain purchases of shares of
the Company for which it received dealer's concessions noted above.
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, 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, 1998 were
$1,719,073.
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
63
<PAGE>
May 31, 1998 did not exceed 1.30% of its average daily net assets.
For the period December 1, 1997 through March 29, 1998 SASC has agreed to
reimburse the Sentinel Short Maturity Government Fund Class A for all operating
expenses in excess of an annual rate of 1.00% of the Fund's average daily
expenses. 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.
Effective March 30, 1998 Sentinel Advisors has voluntarily agreed to reimburse
the following Funds for advisory fees or other expenses necessary to limit these
Fund's overall expense ratios, after expense offset, (i.e. net of certain
credits against Fund expenses) to the amounts shown below:
Bond Fund Class A shares 0.68%
Government Securities Fund Class A shares 0.87%
Short Maturity Government Fund Class A shares 0.75%
Tax-Free Income Fund Class A shares 0.72%
In case of the Bond Fund, the reimbursement of advisory fees will also benefit
the Class B shares of the Bond Fund, which will experience the same reduced
effective advisory fee rate as the Class A shares.
For the six months ended May 31, 1998 the total amount reimbursable to Sentinel
Bond Fund Class A was $33,765, Sentinel Bond Fund Class B $5,728, Sentinel
Government Securities Fund Class A $18,842, Sentinel Short Maturity Government
Fund Class A $58,323, Sentinel Tax-Free Income Fund Class A $69,535 and Sentinel
New York Tax-Free Income Fund $40,300.
Although SASC has no present intention to do so, these arrangements may be
changed or terminated at any time after November 30, 1998.
(3) Investment Transactions:
Purchases and sales of investment securities (excluding short-term obligations)
for the six months ended May 31, 1998 were as follows:
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
- -------------- ------------ ------------ ------------ -------------
Small Company ...... $ 25,593,375 -- $ 29,488,098 --
Growth ............. 50,761,528 -- 45,674,521 --
World .............. 15,412,064 -- 5,752,008 --
Common Stock ....... 273,898,586 -- 315,018,142 --
Balanced ........... 81,788,412 $ 50,921,839 75,736,785 $ 60,919,843
High Yield Bond .... 70,999,830 -- 46,741,853 --
Bond ............... 47,137,885 25,523,908 34,243,279 35,566,250
Tax-Free ........... 9,758,610 -- 9,137,179 --
N.Y. Tax-Free ...... 1,004,255 -- 239,578 --
Government ......... -- 117,406,742 -- 121,316,976
Short Maturity Gov't -- 56,915,938 -- 42,595,381
(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, 1997 as follows:
$2,140,898, $1,165,629 and $1,051,666 (expiring in 2001, 2002 and 2004,
respectively) for a total of $4,358,193 for the Sentinel Bond Fund, $2,953,839
and $2,953,064 (expiring in 2002 and 2004, respectively) for a total of
$5,906,903 for the Sentinel Government Securities Fund and $328,517, $619,379,
$142,166, $83,225 and $166,838 (expiring in 2000, 2001, 2002, 2004 and 2005,
respectively) for a total of $1,340,125 for the Sentinel Short Maturity
Government Fund. During the year ended November 30, 1997, the Sentinel Bond Fund
and the Sentinel Government Securities Fund utilized $129,989 and $632,658 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.
64
<PAGE>
(4) Fund Shares:
At May 31, 1998, 2 billion shares of one cent par value were authorized. There
are 1.36 billion shares allocated to the various Funds as Class A shares and 260
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>
Shares issued Net
Shares issued in (reacquired) increase
reinvestment of upon conversion (decrease)
dividends and Shares from/(into) in shares
Fund Shares sold distributions reacquired Class B/A outstanding
- ---- ----------- ------------- ---------- --------- -----------
<S> <C> <C> <C> <C> <C>
Six Months Ended 5/31/98
Small Company - A ...... 940,883 2,341,987 1,578,365 -- 1,704,505
Small Company - B ...... 518,157 178,297 60,858 -- 635,596
Growth - A ............. 698,230 1,695,268 341,102 -- 2,052,396
Growth - B* ............ 150,311 -- 2,172 -- 148,139
World - A .............. 717,816 229,155 426,049 -- 520,922
World - B .............. 242,812 23,804 22,285 -- 244,331
World - C** ............ 5,800 -- -- -- 5,800
Common Stock - A ....... 1,271,626 3,568,366 1,940,504 -- 2,899,488
Common Stock - B ....... 687,023 218,093 102,973 -- 802,143
Common Stock - C** ..... 15,484 -- 23 -- 15,461
Balanced - A ........... 923,629 1,093,536 1,353,023 -- 664,142
Balanced - B ........... 435,075 92,320 68,068 -- 459,327
Balanced - C** ......... 3,393 -- -- -- 3,393
High Yield Bond - A .... 1,490,650 61,625 105,192 -- 1,447,083
High Yield Bond - B .... 1,397,626 50,787 169,155 -- 1,279,258
High Yield Bond - C** .. 12,243 68 -- -- 12,311
Bond - A ............... 1,150,473 290,536 1,554,005 -- (112,996)
Bond - B ............... 520,335 24,022 166,348 -- 378,009
Tax-Free ............... 527,464 179,656 587,388 -- 119,732
N.Y. Tax-Free .......... 85,532 18,405 30,831 -- 73,106
Government ............. 409,689 172,129 975,229 -- (393,411)
Short Maturity Gov't ... 3,142,222 120,831 1,729,272 -- 1,533,781
U.S. Treasury - A ...... 87,174,641 1,628,179 86,789,662 -- 2,013,158
U.S. Treasury - B ...... 3,560,725 76,010 3,175,690 -- 461,045
Year Ended 11/30/97
Small Company - A ...... 2,422,659 155,607 3,455,802 -- (877,536)
Small Company - B ...... 919,683 3,285 63,324 -- 859,644
Growth ................. 626,402 710,563 603,146 -- 733,819
World - A .............. 1,472,913 99,489 924,429 -- 647,973
World - B .............. 409,903 3,852 24,658 -- 389,097
Common Stock - A ....... 2,705,403 2,975,446 3,615,554 -- 2,065,295
Common Stock - B ....... 1,086,877 74,040 77,413 -- 1,083,504
Balanced - A ........... 1,826,520 782,123 3,117,018 -- (508,375)
Balanced - B ........... 754,261 33,293 68,172 -- 719,382
High Yield Bond - A*** . 1,074,262 13,753 23,133 -- 1,064,882
High Yield Bond - B*** . 3,282,060 12,285 43,795 -- 3,250,550
Bond - A ............... 1,877,830 628,012 4,218,555 -- (1,712,713)
Bond - B ............... 640,073 36,953 145,602 -- 531,424
Tax-Free - A (a) ....... 539,782 272,246 1,839,547 85,799 (941,720)
Tax-Free - B (a) ....... 38,576 2,296 11,628 (85,799) (56,555)
N.Y. Tax-Free .......... 207,637 31,400 81,284 -- 157,753
Government ............. 670,673 373,702 2,764,716 -- (1,720,341)
Short Maturity Gov't ... 3,520,498 203,920 2,855,286 -- 869,132
U.S. Treasury - A ...... 198,798,449 3,338,706 197,029,796 -- 5,107,359
U.S. Treasury - B ...... 7,962,012 150,530 7,839,276 -- 273,266
</TABLE>
* For the period January 12, 1998 to May 31, 1998.
** For the period May 4, 1998 to May 31, 1998.
*** For the period June 23, 1997 to November 30, 1997.
(a) On October 31, 1997 all outstanding Class B shares were converted to Class A
shares.
(5) Post Retirement Benefits:
The Company provides certain health care and life insurance benefits to its
retirees. At May 31, 1998 the projected obligation for such benefits had been
accrued.
65
<PAGE>
Sentinel Pennsylvania Tax-Free Trust
Investment in Securities
at May 31, 1998 (Unaudited)
- -------------------------------------------------------------------------------
Principal Amount Value
(M=$1,000) (Note 1)
- -------------------------------------------------------------------------------
Bonds 97.6%
Pennsylvania 81.2%
Allegheny County G/O
5.15%, 09/01/11 (FGIC) 1500M $1,538,685
Allegheny County Hospital
6.00%, 10/01/03 (FGIC) 1000M 1,078,130
Allegheny County
Institution G/O
7.30%, 04/01/09 (MBIA) 1000M 1,054,810
Armstrong County Hospital
Auth.
6.25%, 06/01/13 (AMBAC) 1200M 1,291,044
Beaver County Industrial
Dev. Auth.
7.75%, 09/01/24 500M 527,980
Berks County G/O
7.25%, 11/15/20 (FGIC) 1000M 1,093,250
Chester County Health
& Education
5.40%, 07/01/06 (MBIA) 1375M 1,454,159
5.375%, 05/15/27 1500M 1,503,225
Erie PA Higher Education
Building Auth.
5.75%, 03/15/20 (MBIA) 1500M 1,532,850
Grove City PA Hospital Auth.
5.25%, 07/01/12 1500M 1,494,015
Hazelton PA Area
School District
0.00%, 03/01/25 (FGIC) 1255M 312,219
Jim Thorpe PA Area
School District
5.30%, 03/15/16 (MBIA) 1500M 1,581,540
Lehigh County Industrial
Dev. Auth.
6.15%, 08/01/29 (MBIA) 1000M 1,091,970
Montgomery County Higher
Educ. & Health
8.30%, 06/01/10 500M 549,755
Pennsylvania Higher Educ. Facs.
5.625%, 12/01/27 (MBIA) 1000M 1,044,620
5.60%, 11/15/09 (MBIA) 1500M 1,625,355
Pennsylvania Housing
Finance Agency 1000M 1,030,050
5.80%, 10/01/29
Pennsylvania State G/O
6.25%, 07/01/11 1500M 1,723,575
Pennsylvania State
Turnpike Commn.
7.20%, 12/01/17 (FGIC) 1000M 1,119,060
Pennsylvania Trafford
School Dist.
5.90%, 05/01/11 (MBIA) 1000M 1,085,400
Philadelphia Authority for
Industrial Dev.
5.50%, 11/15/16 1590M 1,649,736
Philadelphia Regional Port. Auth.
7.15%, 08/01/20 (MBIA) 250M 266,235
7.125%, 08/01/10 (MBIA) 250M 266,108
Philadelphia Water & Waste
6.25%, 08/01/11 (MBIA) 1000M 1,155,030
6.25%, 08/01/12 (MBIA) 500M 576,075
Pittsburgh PA Water &
Sewer System Rev.
6.50%, 09/01/13 (FGIC) 1000M 1,181,010
Punxsutawney PA Area
School Dist
5.00%, 04/15/19 (FGIC) 1000M 985,920
Scranton Lackawanna
Health & Welfare
7.875%, 07/01/10 (MBIA) 500M 511,575
6.20%, 07/01/17 1000M 1,066,850
Westmoreland County
Municipal Auth.
0.00%, 08/15/18 (FGIC) 500M 181,500
York County Solid Waste
5.50%, 12/01/14 (FGIC) 1000M 1,066,170
------------
32,637,901
------------
Puerto Rico 16.4%
Puerto Rico Commonwealth
Hwy & Transport
5.50%, 07/01/36 1000M 1,044,410
------------
Total Investments
(Cost $31,700,443)(*) 33,682,311
Excess of Other Assets
Over Liabilities 2.4% 792,385
------------
Net Assets $34,474,696
===========
- -------------------------------------------------------------------------------
* Also cost for federal income tax purposes. At May 31, 1998, net unrealized
appreciation for federal income tax purposes aggregated $1,981,868 of which
$1,999,751 related to appreciated securities and $17,883 related to
depreciated securities.
The following abbreviations are used in
portfolio descriptions:
(AMBAC) - Guaranteed by American
Municipal Bond Association Corp.
(FGIC) - Guaranteed by Financial Guaranty
Insurance Co.
(MBIA) - Guaranteed by Municipal Bond Investors
Assurance Corp.
G/O - General Obligation Bond
See Notes To Financial Statements
66
<PAGE>
Sentinel Pennsylvania Tax-Free Trust
Statement of Assets and Liabilities
at May 31, 1998 (Unaudited)
- -------------------------------------------------------------------------------
Assets
Investments at value $33,682,311
Cash and cash equivalents 276,287
Receivable for fund shares sold 24,131
Receivable for interest 503,812
Receivable from fund administrator 36,131
-----------
Total Assets 34,522,672
-----------
Liabilities
Accrued expenses 11,710
Management fee payable 15,988
Distribution fee payable 10,195
Fund service fee payable 10,083
-----------
Total Liabilities 47,976
-----------
Net Assets Applicable to Outstanding Shares $34,474,696
===========
Net Asset Value and Offering Price Per Share
$34,474,696 / 2,581,038 shares outstanding $ 13.36
Sales Charge-- 4.00% of Offering Price 0.56
-----------
Maximum Offering Price Per Share $ 13.92
===========
Net Assets Represent
No par value shares of benefcial interest;
authorized - unlimited shares
Paid-in-capital $31,897,203
Accumulated undistributed net investment income 1,633
Accumulated undistributed net realized gain
on investments 593,992
Unrealized appreciation of investments 1,981,868
-----------
Net Assets $34,474,696
===========
Investments at Cost $31,700,443
===========
Sentinel Pennsylvania Tax-Free Trust
Statement of Operations
For the Six Months Ended May 31, 1998 (Unaudited)
Investment Income
Income:
Interest $ 947,389
---------
Expenses:
Management advisory fee 95,288
Transfer agent and custodian 27,718
Distribution expense 34,640
Accounting services 42,000
Auditing fees 3,750
Legal fees 1,750
Reports and notices to shareholders 1,750
Directors' fees and expenses 16,830
Other 5,592
----------
Total Expenses 229,318
Expense Reimbursement (79,519)
Expense Offset (5,718)
----------
Net Expenses 144,081
----------
Net Investment Income 803,308
----------
Realized and Unrealized Gain (Loss) on Investments
Net realized gain on sales of investments 593,962
Net change in unrealized appreciation (depreciation) (236,769)
----------
Net Realized and Unrealized Gain on Investments 357,193
----------
Net Increase in Net Assets from Operations $1,160,501
==========
See Notes to Financial Statements
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<PAGE>
Sentinel Pennsylvania Tax-Free Trust
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Year
Ended Ended
5/31/98 11/30/97
(Unaudited)
------------- ------------
<S> <C> <C>
Increase in Net Assets from Operations
Net investment income $ 803,308 $ 1,668,097
Net realized gain on sales of investments 593,962 324,179
Net change in unrealized appreciation (depreciation) (236,769) 40,300
------------- ------------
Net increase in net assets from operations 1,160,501 2,032,576
------------- ------------
Distributions to Shareholders
From net investment income (802,019) (1,667,753)
From realized gain on sale of investments (324,168) (218,975)
------------- ------------
Total distributions to shareholders (1,126,187) (1,886,728)
------------- ------------
From Capital Share Transactions
Net proceeds from sales of shares 1,107,966 3,118,082
Net asset value of shares in reinvestment
of dividends and distributions 791,288 1,283,959
------------- ------------
1,899,254 4,402,041
Less: Payments for shares reacquired (2,302,522) (5,249,491)
------------- ------------
Decrease in net assets from capital share transactions (403,268) (847,450)
------------- ------------
Total Decrease in Net Assets for period (368,954) (701,602)
Net Assets: Beginning of period 34,843,650 35,545,252
------------- ------------
Net Assets: End of period $ 34,474,696 $ 34,843,650
============= =============
Undistributed Net Investment Income
at End of Period $ 1,633 $ 344
============= =============
</TABLE>
See Notes to Financial Statements.
68
<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
Ended 5/31/98 Year Ended Year Ended
(Unaudited) 11/30/97 11/30/96
----------- ---------- ----------
<S> <C> <C> <C>
Net asset value at beginning of period $ 13.34 $ 13.29 $ 13.40
----------- ---------- ----------
Income from Investment Operations
Net investment income 0.31 0.64 0.66
Net realized and unrealized gain (loss) on investments 0.14 0.13 (0.03)
----------- ---------- ----------
Total from investment operations 0.45 0.77 0.63
----------- ---------- ----------
Less Distributions
Dividends from net investment income 0.31 0.64 0.66
Distributions from realized gains on investments 0.12 0.08 0.08
----------- ---------- ----------
Total Distributions 0.43 0.72 0.74
----------- ---------- ----------
Net asset value at end of period $ 13.36 $ 13.34 $ 13.29
=========== ========== ==========
Total Return (%) (*) 3.4++ 6.1 5.0
Ratios/Supplemental Data
Ratio of net expenses to average net assets (%) 0.83+ 0.85 0.75
Ratio of expenses to average net assets before
expense reductions (%) (**) 1.32+ 1.34 1.37
Ratio of net investment income to average net assets (%) 4.62+ 4.86 5.07
Ratio of net investment income to average net assets before
voluntary expense reimbursements (%) 4.16+ 4.41 4.48
Portfolio turnover rate (%) 28 28 56
Net assets at end of period (000 omitted) $ 34,475 $ 34,844 $ 35,545
Eleven
Year ended Year ended Months Ended
11/30/95 11/30/94 11/30/93(A)
---------- ---------- -------------
<S> <C> <C> <C>
Net asset value at beginning of period $ 12.29 $ 13.57 $ 13.15
---------- ---------- -------------
Income from Investment Operations
Net investment income 0.66 0.64 0.69
Net realized and unrealized gain (loss) on investments 1.11 (1.28) 0.42
---------- ---------- -------------
Total from investment operations 1.77 (0.64) 1.11
---------- ---------- -------------
Less Distributions
Dividends from net investment income 0.66 0.64 0.69
Distributions from realized gains on investments -- -- --
---------- ---------- -------------
Total Distributions 0.66 0.64 0.69
---------- ---------- -------------
Net asset value at end of period $ 13.40 $ 12.29 $ 13.57
========== ========== ============
Total Return (%) (*) 14.8 (4.9)+ 8.1++
Ratios/Supplemental Data
Ratio of net expenses to average net assets (%) 0.97 1.30 1.24*
Ratio of expenses to average net assets before
expense reductions (%) (**) 1.36 1.30 1.24*
Ratio of net investment income to average net assets (%) 5.14 4.84 5.07+
Ratio of net investment income to average net assets
before voluntary expense reimbursements (%) 4.78 4.84 5.07*
Portfolio turnover rate (%) 80 56 23
Net assets at end of period (000 omitted) $ 34,975 $ 31,172 $ 34,448
</TABLE>
(A) As of March 1, 1993 Sentinel Advisors Co. became the investment advisor to
the Trust.
+ 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 (5) and
(1) D.
See Notes To Financial Statements.
69
<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-diversifed, 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 refected 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) Distributions:
Realized gains from securities transactions, if any, will be distributed to
shareholders prior to the end of each calendar year. At November 30, 1997 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:
Six Months Year
Ended Ended
5/31/98 11/30/97
-------- ---------
Shares sold .................................. 82,720 236,999
Shares issued to stockholders in reinvestment
of dividends and distributions ............... 59,141 97,949
-------- ---------
141,861 334,948
Shares redeemed .............................. (171,921) (398,691)
-------- ---------
Net decrease ................................. (30,060) (63,743)
======== =========
(4) Investment Transactions:
Purchases and sales of securities other than short-term securities aggregated
$9,509,834 and $10,205,770, respectively, during the six months ended May 31,
1998.
(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, 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.
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,
70
<PAGE>
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 $38,429 for the six months ended May 31,
1998. The Trust is advised that the total distribution charges retained by SFSC
on the sale of shares amounted to $75 after allowances of $1,002 to Equity
Services, Inc., an affiliate of National Life, $2,501 to 1717 Capital Management
Company, an affiliate of Provident Mutual, $6,985 to Hornor, Townsend & Kent,
Inc. and $3,145 to Janney Montgomery Scott, Inc., affiliates of Penn Mutual, and
$24,721 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, 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, 1998 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 twelve 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, 1998 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 0.75% 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 0.90% of the Trust's
average daily net assets. Effective March 30, 1998, SASC has agreed to reimburse
the Trust for expenses in excess of an annual rate of 0.70% of the Trust's
average daily net assets. For the six months ended May 31, 1998 the total amount
reimbursable was $79,519. This arrangement may be terminated at any time after
November 30, 1998.
(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 0.20% 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.
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<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 (excluding dividends earned on assets initially
invested in Sentinel U.S. Treasury Money Market Fund).
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.
High Yield Bond, 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 High Yield Bond 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 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
72
<PAGE>
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.
73
<PAGE>
Directors/Trustees and Officers
Sentinel Group Funds, Inc. and
Sentinel Pennsylvania Tax-Free Trust
Patrick E. Welch
Chairman and Chief Executive Officer
Chairman and Chief Executive Officer,
National Life Insurance 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
Keniston P. Merrill
Director/Trustee
Former Chairman and
Chief Executive Officer,
Sentinel Advisors Company
Deborah G. Miller
Director/Trustee
Vice President
Digital Equipment Corporation
John Raisian
Director/Trustee
Director and Senior Fellow,
Hoover Institution,
Stanford University
Susan M. Sterne
Director/Trustee
President, Economic Analysis
Associates, Inc.
Angela E. Vallot
Director/Trustee
Counsel, Texaco, Inc.
John M. Grab, Jr.
Vice President
Thomas P. Malone
Vice President and Treasurer
Scott G. Wheeler
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
74
<PAGE>
[LOGO APPEARS HERE]
A Brief History
The Sentinel Family of Funds is one of America's oldest fund families. Its
largest member, Sentinel Group Funds, Inc., was originally incorporated as Group
Securities, Inc. in the state of Delaware on December 3, 1933. Designed as a
series type of investment company, its main objectives were to offer
shareholders the benefits of "group security investing" along with the ability
to invest in individual industries or industrial groups readily and
conveniently, each in the form of a single stock.
Shares of 17 individual classes of stock were first offered to the public at
$1.10 per share on January 12, 1934 - virtually at the bottom of the Great
Depression.
Following several additions and deletions, 21 classes of stock were maintained
for an extended period of time. Subsequent consolidations, mergers and name
changes combined the classes of stock into what are today the two original
remaining funds in Sentinel Group Funds, Inc., Sentinel Common Stock Fund and
Sentinel Balanced Fund. Sentinel Growth Fund and Sentinel Bond Fund were
organized by National Life Insurance Company in 1969 and merged into the
Sentinel Group in 1978. Three more additions, Sentinel Government Securities
Fund, Sentinel Tax-Free Income Fund and Sentinel High Yield Bond Fund (Class A
and Class B shares) were introduced on September 2, 1986, October 1, 1990 and
June 23, 1997, 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, five Sentinel Funds offered two classes of shares:
Sentinel Small Company, Sentinel World, Sentinel Common Stock, Sentinel Balanced
and Sentinel Bond 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 primarily available through exchanges
from the other Class B shares. Effective January 12, 1998 Sentinel Growth Fund
also offered Class B shares. Effective May 4, 1998 a third class of shares,
Class C shares were offered on the following Funds, Sentinel Common Stock,
Sentinel Balanced, Sentinel World and Sentinel High Yield Bond Funds.
The thirteen funds in the Sentinel Family of Funds, which includes the twelve
funds in Sentinel Group Funds, Inc., and the Sentinel Pennsylvania Tax-Free
Trust, now represent net assets of $3.0 billion which are managed on behalf of
approximately 112,600 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.
75
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76
<PAGE>
[LOGO OF SENTINEL FAMILY Sentinel Family
OF FUNDS APPEARS HERE] of Funds
Integrity Since 1934
Sentinel Common Stock Fund
Sentinel Balanced Fund
Sentinel Growth Fund
Sentinel Small Company Fund
Sentinel World Fund
Sentinel High Yield Bond Fund
Sentinel Bond Fund
Sentinel Government Securities Fund
Sentinel Short Maturity Government Fund
Sentinel U.S. Treasury Money Market Fund
Sentinel Tax-Free Income Fund
Sentinel New York Tax-Free Income Fund
Sentinel Pennsylvania Tax-Free Trust
Member of
FORUM for INVESTOR ADVICE
Investment Professionals Helping Investors
This report 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
