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[GRAPHIC]
Sentinel Funds
PROSPECTUS
Dated March 31, 1999, as amended on January 10, 2000
Sentinel Common Stock Fund
Sentinel Balanced Fund
Sentinel Growth Index Fund
Sentinel Mid Cap 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
This prospectus contains information you should know before investing,
including information about risks. Please read it before you invest and keep it
for future reference.
The Securities and Exchange Commission has not approved or disapproved these
securities or determined if this prospectus is accurate or complete. Any
representation to the contrary is a criminal offense.
Sentinel Funds . National Life Drive . Montpelier, VT 05604
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Table of Contents
Key Facts About the Sentinel Funds ............................................3
Details About the Funds' Investment Objectives, Principal Investment Strategies
and Related Risks ............................................................14
Purchase Options .............................................................28
How to Buy, Sell, Exchange and Transfer Shares ...............................37
How the Funds are Priced .....................................................41
Dividends, Capital Gains and Taxes ...........................................41
Management of the Funds ......................................................43
Financial Highlights .........................................................46
[GRAPHIC]
2 For information and assistance call your Financial Advisor or Investor
Services at 1-800-282-FUND (3863)
Prospectus
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Key Facts about the Sentinel Funds
What are the main goals and investment strategies of each of the Sentinel Funds?
This prospectus contains information about the fourteen mutual funds that
comprise the Sentinel Family of Funds.
In this prospectus, each Sentinel Fund is referred to individually as a "Fund".
Sentinel Advisors Company is the investment advisor for each Fund. We cannot
guarantee that any Fund will achieve its goals. A brief description of each Fund
follows:
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Sentinel Common Stock Fund seeks a combination of growth of capital, current
income, growth of income and relatively low risk as compared with the stock
market as a whole, by investing in a diverse group of common stocks of well-
established companies.
[PIE CHART]
Sentinel Balanced Fund seeks a combination of growth of capital and current
income, with relatively low risk and relatively low fluctuations in value, by
investing in both common stocks and bonds.
[PIE CHART]
Sentinel Growth Index Fund seeks to match, as closely as possible before
expenses, the performance of the S&P 500/BARRA Growth Index, by investing in
common stocks of the companies comprising the Index in approximately the same
weightings as the Index.
[PIE CHART]
Sentinel Mid Cap Growth Fund seeks growth of capital, by focusing its
investments on common stocks of mid-sized growing companies. Income is not a
factor in selecting stocks.
[PIE CHART]
Sentinel Small Company Fund seeks growth of capital, by investing mainly in
common stocks of small and medium-sized companies that Sentinel Advisors
believes have attractive growth potential and are attractively valued. Income is
not a factor in selecting stocks.
[PIE CHART]
Sentinel World Fund seeks growth of capital, by investing in common stocks of
established non-U.S. companies, or in U.S. companies that conduct their business
mainly outside the United States.
[PIE CHART]
Sentinel High Yield Bond Fund seeks high current income and total return by
investing mainly in lower rated corporate bonds, sometimes called "junk bonds",
that have higher effective interest rates than investment grade bonds. These
lower rated bonds are more speculative and more likely to default than
investment grade bonds.
[PIE CHART]
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Prospectus
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Sentinel Bond Fund seeks high current income while seeking to control risk by
investing mainly in investment grade bonds.
[PIE CHART]
Sentinel Government Securities Fund seeks high current income while seeking to
control risk by investing mainly in U.S. government bonds.
[PIE CHART]
Sentinel Short Maturity Government Fund seeks high current income and limited
fluctuations in principal value by investing mainly in a portfolio of U.S.
government bonds with a weighted average maturity of three years or less.
[PIE CHART]
Sentinel U.S. Treasury Money Market Fund seeks as high a level of current income
as is consistent with stable principal values by investing primarily in short-
term direct obligations of the U.S. Treasury.
[PIE CHART]
Sentinel Tax-Free Income Fund seeks high current income exempt from federal
income taxes while seeking to control risk by investing mainly in investment
grade municipal bonds.
[PIE CHART]
Sentinel New York Tax-Free Income Fund seeks high current income exempt from
federal income tax and New York State and City personal income taxes, while
seeking to control risk, by investing in investment grade municipal bonds of New
York issuers.
[PIE CHART]
Sentinel Pennsylvania Tax-Free Trust seeks high current income exempt from
federal and Pennsylvania income taxes, while seeking to control risk, by
investing in investment grade municipal bonds of Pennsylvania issuers.
[PIE CHART]
4 For information and assistance call your Financial Advisor or Investor
Services at 1-800-282-FUND (3863)
Prospectus
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What are the main risks of investing in the Funds?
Investment in each Fund is subject to certain risks. Some of the risk factors
described below affect more than one Fund; others are specific to certain Funds.
More information on each Fund's risk factors is described under "Details About
the Funds' Investment Objectives, Principal Investment Strategies, and Related
Risks". We cannot guarantee that any of the Funds will achieve its goals.
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Equity Fund Risks
The value of all equity funds, including the Common Stock Fund, the Balanced
Fund, the Growth Index Fund, the Mid Cap Growth Fund, the Small Company Fund and
the World Fund, may go up or down as the prices of the stocks held by the Funds
go up or down. Changes in value may occur because the U.S. or other stock
markets are rising or falling or due to business developments or other factors
that affect the value of particular companies. Stock markets tend to move in
cycles, with periods of rising prices and periods of falling prices. Stocks
could decline generally or underperform other types of investment assets. If the
value of the stocks held in these Funds goes down, you may lose money. The
stocks of smaller companies may be subject to greater changes in value than
stocks of larger, more established companies, because they generally have more
limited financial resources, narrower product lines, and may have less seasoned
managers. In addition, small company stocks may trade less frequently and in
lower share volumes, which could contribute to wider price fluctuations.
The Growth Index Fund is also subject to investment style risk, which is
the chance that returns from large capitalization growth stocks will trail
returns from other asset classes or the overall stock market. Growth stocks tend
to go through cycles of doing better, or worse, than the stock market in
general. These periods have, in the past, lasted for as long as several years.
There is also a risk that the Growth Index Fund will not track closely the
performance of the S&P 500/BARRA Growth Index for a number of reasons, including
the Fund's costs of buying and selling securities and the flow of money into and
out of the Fund.
Because the World Fund invests mainly in foreign countries, it is subject
to additional risks. The World Fund's foreign stock investments may go up or
down in value depending on foreign stock markets which may be rising or falling,
fluctuations in foreign exchange rates, foreign political and economic
developments and U.S. and foreign laws relating to foreign investment. Non-U.S.
securities also may be less liquid, more volatile and harder to value than U.S.
securities. If the value of the stocks held by the World Fund go down, you may
lose money.
Fixed Income Fund Risks
The High Yield, Bond, Government Securities, Short Maturity Government, Tax-Free
Income, New York and Pennsylvania Funds, and the bond portion of the Balanced
Fund, primarily invest in bonds. Bonds are subject to several types of risk. A
bond's issuer may default on payments of interest or repayments of principal.
The market also may judge that the odds that an issuer of bonds could default in
the future have increased. Interest rates available in the market may increase,
which would reduce the present value of the fixed payments to be received from
outstanding bonds. Any of these factors could cause the value of bonds held by
these Funds to fall. If the value of the portfolio investments falls, you could
lose money.
U.S. government bonds are very unlikely to default or to decline in credit
quality. However, the value of U.S. government bonds generally will rise if
interest rates fall, and fall if interest rates rise. The longer the remaining
term of a bond, the more its value will tend to fluctuate as interest rates
change. As a result, the Short Maturity Government Fund is subject to the least
risk of the fixed-income Funds, since it invests mainly in U.S. government
securities with relatively shorter maturities. However, the value of the shares
of the Short Maturity Government Fund will fluctuate, and you can lose money in
this Fund. The Government Securities Fund also faces very little credit quality
risk, but since it invests in longer term securities, it faces more interest
rate risk than the Short Maturity Government Fund. Both of these Funds, as well
as the Bond Fund and the bond portion of the Balanced Fund, also invest in
mortgage-backed securities, which have varying rates of principal repayments.
When interest rates fall, mortgage prepayments generally increase, which
Visit us online at www.sentinelfunds.com 5
Prospectus
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may cause mortgage-backed securities to lose value. To the extent these Funds
invest in mortgage-backed securities, they also are subject to extension risk.
Extension risk is the possibility that when interest rates rise, prepayments
occur at a slower than expected rate. In that event, a security that was
considered short or intermediate-term at the time of purchase may effectively
become a long-term security. Long-term securities generally tend to fluctuate
more widely in response to changes in interest rates than shorter-term
securities.
Corporate and municipal bonds, in which the High Yield, Bond, Tax-Free
Income, New York and Pennsylvania Funds, and the bond portion of the Balanced
Fund invest, are subject to default risk, or credit quality risk, as well as
interest rate risk. Generally, the degree of default risk is reflected in the
ratings of the securities. Investment grade rated securities generally are less
subject to default risk than, for example, the lower rated securities in which
the High Yield Fund invests. While any corporate or municipal security is
subject to the risk of default, the lower the rating of a bond the more
speculative it is and the more likely it is that the issuer may default or the
security may be downgraded.
The High Yield Fund involves significantly more risk than the other
fixed-income Funds, since it primarily invests in lower rated bonds while the
other Funds primarily invest in higher quality bonds. In addition to greater
default risk, lower rated bond values may experience greater fluctuations in
value for several other reasons. An economic downturn is more likely to affect
the ability of issuers who are less financially strong to make their bond
payments. There may be less active trading in lower rated bond issues, and lower
rated bond prices are more responsive to negative publicity or changes in
investor perceptions. The risk of loss if a lower rated bond defaults also may
be greater than for investment grade bonds because lower rated bonds are more
likely to be unsecured and may be subordinated to other creditors.
Because the New York and Pennsylvania Funds invest only in bonds of issuers in a
single state, these Funds are more susceptible to the risk factors affecting
municipal issuers in those states than funds which are more diversified
geographically. These Funds are more sensitive to changes in the economic
condition and governmental policies of their single states. For example, the
economic condition of a single significant industry within one of these states
may impact municipal issuers in that state or that state's revenues.
Money Market Fund
The Money Market Fund invests primarily in short-term securities issued directly
by the U.S. Treasury. It may also invest up to 25% of its total assets in
repurchase agreements with respect to U.S. Treasury securities, and up to 10% of
its total assets in shares of institutional money market funds which invest
primarily in U.S. government securities. Repurchase agreements may subject the
Fund to risk of loss if the other party to the repurchase agreement defaults on
its obligation, and the proceeds from the sale of the U.S. Treasury securities
held as collateral turn out to be less than the repurchase price stated in the
agreement. The Fund is designed to maintain a stable net asset value and declare
daily dividends. An investment in the Money Market Fund is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency. Although the Fund seeks to preserve the value of your investment at
$1.00 per share, it is possible to lose money by investing in the Money Market
Fund.
6 For information and assistance call your Financial Advisor or Investor
Services at 1-800-282-FUND (3863)
Prospectus
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Risk/Return Bar Charts
The bar charts below and tables shown on page 10 provide indications of the
risks of investing in each Fund. The bar charts show changes in each Fund's
performance for Class A shares for each calendar year over a ten year period, or
for a shorter period for those Funds that have been in existence for less than
ten years. No bar chart is provided for the Growth Index Fund because it began
operations on September 10, 1999.
Sales charges are not reflected in the bar charts. If sales charges were
reflected, returns would be less than those shown. The tables on page 10 compare
the average annual total returns for each class of each Fund's shares for one,
five and ten years with those of an appropriate broad-based securities market
index. How each Fund performed in the past is not necessarily an indication of
how that Fund will perform in the future.
Sentinel Common Stock
Inception: 1934
[BAR CHART]
Year Total Return (%)
1989 27.6
1990 -2.7
1991 30.4
1992 5.8
1993 9.3
1994 -1.2
1995 34.4
1996 20.8
1997 27.9
1998 14.0
During the 10 year period shown in the above bar chart, the highest return for a
quarter for the Common Stock Fund was 16.5% (quarter ended December, 1998) and
the lowest return for a quarter was (11.7)% (quarter ended September, 1998).
Sentinel Balanced
Inception: 1938
[BAR CHART]
Year Total Return (%)
1989 19.4
1990 1.9
1991 23.3
1992 6.2
1993 9.6
1994 -3.6
1995 25.2
1996 12.1
1997 20.6
1998 11.9
During the 10 year period shown in the above bar chart, the highest return for a
quarter for the Balanced Fund was 9.9% (quarter ended December, 1998) and the
lowest return for a quarter was (6.5)% (quarter ended September, 1990).
Sentinel Mid Cap Growth*
Inception: 1969
[BAR CHART]
Year Total Return (%)
1989 26.9
1990 0.1
1991 26.2
1992 6.0
1993 3.3
1994 -7.5
1995 26.0
1996 18.2
1997 32.1
1998 15.7
During the 10 year period shown in the above bar chart, the highest return for a
quarter for the Mid Cap Growth Fund was 25.2% (quarter ended December, 1998) and
the lowest return for a quarter was (14.7)% (quarter ended September, 1990).
*Known as Sentinel Growth Fund prior to March 31, 1999.
Sentinel Small Company
Inception: 1993
[BAR CHART]
Year Total Return (%)
1994 0.1
1995 12.5
1996 21.3
1997 21.2
1998 7.2
During the 5 year period shown in the above bar chart, the highest return for a
quarter for the Small Company Fund was 18.3% (quarter ended December, 1998) and
the lowest return for a quarter was (15.3)% (quarter ended September, 1998).
Visit us online at www.sentinelfunds.com 7
Prospectus
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Sentinel World
Inception: 1993
[BAR CHART]
Year Total Return (%)
1994 1.1
1995 14.0
1996 11.9
1997 14.2
1998 10.3
During the 5 year period shown in the above bar chart, the highest return for a
quarter for the World Fund was 14.1% (quarter ended March, 1998) and the lowest
return for a quarter was (14.9)% (quarter ended September, 1998).
Sentinel High Yield Bond
Inception: 1997
[BAR CHART]
Year Total Return (%)
1998 1.1
During the 1 year period shown in the above bar chart, the highest return for a
quarter for the High Yield Fund was 5.1% (quarter ended March, 1998) and the
lowest return for a quarter was (6.6)% (quarter ended September, 1998).
Sentinel U.S. Treasury Money Market
Inception: 1993
[BAR CHART]
Year Total Return (%)
1994 3.3
1995 5.0
1996 4.5
1997 4.6
1998 4.5
During the 5 year period shown in the above bar chart, the highest return for a
quarter for the US Treasury Money Market Fund was 1.3% (quarter ended December,
1995) and the lowest return for a quarter was 0.6% (quarter ended March, 1994).
Sentinel Tax-Free Income
Inception: 1990
Year Total Return (%)
1991 12.1
1992 9.0
1993 12.7
1994 -5.3
1995 15.3
1996 2.6
1997 9.3
1998 5.8
During the 8 year period shown in the above bar chart, the highest return for a
quarter for the Tax-Free Income Fund was 6.2% (quarter ended September, 1995)
and the lowest return for a quarter was (4.9)% (quarter ended March, 1994).
8 For information and assistance call your Financial Advisor or Investor
Services at 1-800-282-FUND (3863)
Prospectus
<PAGE>
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Sentinel Bond
Inception: 1969
[BAR CHART]
Year Total Return (%)
1989 12.5
1990 7.2
1991 18.0
1992 7.7
1993 12.4
1994 -4.9
1995 19.9
1996 1.9
1997 8.6
1998 7.6
During the 10 year period shown in the above bar chart, the highest return for a
quarter for the Bond Fund was 7.3% (quarter ended June, 1989) and the lowest
return for a quarter was (3.8)% (quarter ended March, 1994).
Sentinel Government Securities
Inception: 1986
[BAR CHART]
Year Total Return (%)
1989 12.6
1990 9.2
1991 15.2
1992 7.4
1993 9.3
1994 -4.4
1995 19.0
1996 0.8
1997 9.3
1998 9.1
During the 10 year period shown in the above bar chart, the highest return for a
quarter for the Government Securities Fund was 5.7% (quarter ended June, 1995)
and the lowest return for a quarter was (3.6)% (quarter ended March, 1994).
Sentinel Short Maturity Government
Inception: 1986
[BAR CHART]
Year Total Return (%)
1996 4.6
1997 6.8
1998 6.3
During the 3 year period shown in the above bar chart, the highest return for a
quarter for the Short Maturity Government Fund was 2.5% (quarter ended June,
1997) and the lowest return for a quarter was (0.01)% (quarter ended March,
1996)
Sentinel New York Tax-Free
Inception: 1995
[BAR CHART]
Year Total Return (%)
1996 3.0
1997 10.4
1998 6.8
During the 3 year period shown in the above bar chart, the highest return for a
quarter for the New York Tax-Free Income Fund was 4.1% (quarter ended June,
1997) and the lowest return for a quarter was (2.2)% (quarter ended March,
1996).
Sentinel Pennsylvania Tax-Free
Inception: 1986
[BAR CHART]
Year Total Return (%)
1989 8.5
1990 5.9
1991 10.3
1992 9.4
1993 9.7
1994 -4.9
1995 14.2
1996 3.4
1997 8.6
1998 5.0
During the 10 year period shown in the above bar chart, the highest return for a
quarter for the Pennsylvania Tax-Free Trust was 5.7% (quarter ended June, 1989)
and the lowest return for a quarter was (4.3)% (quarter ended March, 1994).
Visit us online at www.sentinelfunds.com 9
Prospectus
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Average Annual Total Return Tables
The tables below show the average annual total returns that were achieved by
each class of shares of each Fund for the year ended December 31, 1998, the 5
years ended December 31, 1998, and the 10 years ended December 31, 1998, unless
the Fund or class of shares did not exist for a full time period (in that case,
average annual total returns since inception are shown). All returns include
the effect of the maximum sales charge, including any contingent deferred sales
charge that would apply to a redemption at the end of the period, in the case of
the Class B and Class C shares. An appropriate broad-based securities market
index is also included for each Fund. No information is provided for the Growth
Index Fund because it began operations on September 10, 1999.
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Past 10Years
Past Past /Since
One Year 5 Years Inception
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Common Stock Fund Class A 8.30 17.31 15.35
S&P 500 Index 28.72 24.09 19.22
Common Stock Fund Class B 9.11 17.82 1
S&P 500 Index 28.72 28.72
Common Stock Fund Class C*
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Balanced Fund Class A 6.29 11.65 11.72
Lehman Aggregate Bond Index 8.69 7.27 9.27
S&P 500 Index 28.72 24.09 19.22
Balanced Fund Class B 7.04 12.60 1
Lehman Aggregate Bond Index 8.69 8.69
S&P 500 Index 28.72 28.72
Balanced Fund Class C*
Balanced Fund Class D**
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Mid Cap Growth Fund Class A 9.93 14.87 13.43
S&P 500 Index 28.72 24.09 19.22
Mid Cap Growth Fund Class B*
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Small Company Fund Class A 1.81 11.00 11.45 2
Russell 2000 Index (2.24) 11.90 13.24
Small Company Fund Class B 2.22 11.69 1
Russell 2000 Index (2.24) 10.79
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World Fund Class A 4.80 9.08 13.13 2
Morgan Stanley 20.33 9.50 12.90
International "EAFE" (Europe, Australia, Far East) Index
World Fund Class B 5.23 9.83 1
Morgan Stanley 20.33 9.04
International "EAFE" (Europe, Australia, Far East) Index
World Fund Class C*
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High Yield Bond Fund Class A (2.99) 3.76 3
Lehman High Yield Index 1.87 5.54
High Yield Bond Fund Class B (3.24) 2.11 3
Lehman High Yield Index 1.87 5.54
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* No information is provided for the Class C shares of the Common Stock,
Balanced, World and High Yield Funds and the Class B shares of the Mid Cap
Growth Fund because those classes began operations less than one year prior
to December 31, 1998.
** No information is provided for the Class D shares of the Balanced Fund
because that class began operations on January 4, 1999.
Past 10Years
Past Past /Since
One Year 5 Years Inception
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Bond Fund Class A 3.30 5.41 8.41
Lehman Aggregate Bond Index 8.69 7.27 9.29
Bond Fund Class B 2.45 11.69 1
Lehman Aggregate Bond Index 8.69 8.69
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Government Securities Fund
Class A 4.75 5.59 8.11
Lehman Government Bond Index 9.85 7.18 9.17
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Short Maturity Government Fund
Class A 5.20 6.34 4
Lehman 1-3 Yr. Gov't Bond Index 6.96 6.91
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U.S. Treasury Money Market Fund
Class A 4.50 4.40 4.00 2
U.S. Treasury Money Market Fund
Class B 4.50 4.60 1
Lipper US Treasury Money Market Funds
4.77 5.13 5.40
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Tax-Free Income Fund Class A 1.60 4.46 7.18 5
Lehman Municipal Bond Index 6.48 6.22 8.32
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New York Fund Class A 2.52 6.57 6
Lehman Municipal Bond Index 6.48 7.91
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Pennsylvania Fund Class A 0.79 4.20 6.45
Lehman Municipal Bond Index 6.48 6.22 8.22
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1 From inception on April 1, 1996
2 From inception on March 1, 1993
3 From inception on June 23, 1997
4 From inception on March 24, 1995
5 From inception on October 1, 1990
6 From inception on March 27, 1995
10 For information and assistance call your Financial Advisor or Investor
Services at 1-800-282-FUND (3863)
Prospectus
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Fees and Expenses
These tables describe the fees and expenses that you pay if you buy and hold
shares of the Funds:
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Shareholder Fees (fees paid directly from your investment):
Class A Shares (available for all Funds):
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering
price) --
Common Stock, Balanced, Mid Cap Growth,
Small Company and World Funds....................................5.00% maximum
High Yield, Bond, Government Securities, Tax-Free Income,
New York and Pennsylvania Funds..................................4.00% maximum
Growth Index Fund.......................................................2.50%1
Short Maturity Government Fund..........................................1.00%
Money Market Fund.......................................................None
Maximum Deferred Sales Charge (Load)....................................None 2
Maximum Sales Charge (Load) Imposed
on Reinvested Dividends.................................................None
Redemption Fees.........................................................None 2
Exchange Fees...........................................................None 3
1 The sales charge is reduced to 2.0% for purchase amounts of $500,000 to
$999,999, and to zero for purchase amounts of $1,000,000 or more. If you do
not pay a sales charge because your purchase amount is $1,000,000 or more,
then you may pay a deferred sales charge of up to 1% if you redeem your
shares within two years of your purchase.
2 If you redeem by wire transfer, we assess a wire charge of $25.00. In
addition, you pay a deferred sales charge of up to 1% on certain redemptions
of Class A shares made within two years of purchase if you bought them
without an initial sales charge as part of an investment of $1,000,000 or
more.
3 If you exchange Class A shares of the Money Market Fund for Class A shares
of another Fund, and you did not acquire the Money Market Fund shares in an
exchange from another Fund's Class A shares, then you pay a sales charge
equal to the sales charge imposed on new purchases of the new Fund.
Class B Shares
(available for the Common Stock, Balanced, Growth Index, Mid Cap Growth, Small
Company, World, High Yield, Bond and Money Market Funds):
Maximum Sales Charge (Load) Imposed on Purchases............................None
Maximum Deferred Sales Charge (Load) (as a percentage of
the lower of the purchase price or net asset value of
shares being redeemed) All except Growth Index Fund...............4.00% maximum4
Growth Index Fund.................................................2.50% maximum5
Maximum Sales Charge (Load) Imposed
on Reinvested Dividends.....................................................None
Exchange Fees...............................................................None
4 The maximum deferred sales charge is imposed on shares redeemed in the first
year after purchase. For shares held longer than one year, the deferred
sales charge declines.
5 The maximum deferred sales charge is imposed on shares redeemed in the first
two years after purchase. For shares held longer than two years, the
deferred sales charge declines.
Class C Shares
(available for the Common Stock, Balanced, World and High Yield Funds):
Maximum Sales Charge (Load)
Imposed on Purchases........................................................None
Maximum Deferred Sales Charge (Load) (as a percentage of
the lower of the purchase price or net asset value of
shares being redeemed).........................1.00% for one year after purchase
Maximum Sales Charge (Load) Imposed
on Reinvested Dividends.....................................................None
Exchange Fees...............................................................None
Class D Shares
(available for the Balanced Fund only)
Maximum Sales Charge (Load)
Imposed on Purchases........................................................None
Maximum Deferred Sales Charge (Load) (as a percentage of
the lower of the purchase price or net asset value of
shares being redeemed)............................................6.00% maximum4
Maximum Sales Charge (Load) Imposed
on Reinvested Dividends.....................................................None
Exchange Fees...............................................................None
4 The maximum deferred sales charge is imposed on shares redeemed in the first
two years after purchase. For shares held longer than two years, the deferred
sales charge declines.
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Prospectus
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Annual Fund Operating Expenses
(as a percentage of average net assets)
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<TABLE>
<CAPTION>
Class A:
Common Growth Mid Cap Small High Yield Government
Stock Balanced Index Growth Company World Bond Bond Securities
------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Management Fees 0.55% 0.61% 0.30% 0.61% 0.61% 0.61% 0.75% 0.53% 0.53%
Rule 12b-1 Fees
(includes service fee and 0.30 0.30 0.20 0.30 0.30 0.30 0.20 0.20 0.20
distribution fee)
Other Expenses:
Accounting and Administrative Costs 0.03 0.03 0.03 0.03 0.03 0.03 0.03 0.03 0.03
Other 0.14 0.19 0.17 0.35 0.39 0.32 0.30 0.19 0.23
Total Other Expenses 0.17 0.22 0.20 0.38 0.42 0.35 0.33 0.22 0.26
------ ------ ------ ------ ------ ------ ------ ------ ------
Total Fund Operating Expense 1.02% 1.13% 0.70%(a) 1.29% 1.33% 1.26% 1.28% 0.95%(a) 0.99%(a)
====== ====== ====== ====== ====== ====== ====== ====== ======
</TABLE>
<TABLE>
Short Maturity Money Tax-Free New York Penna.
Government Market Income Tax-Free Tax-Free
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Management Fees 0.53% 0.40% 0.53% 0.53% 0.55%
Rule 12b-1 Fees
(includes service fee and 0.35 None 0.20 0.20 0.20
distribution fee)
Other Expenses:
Accounting and Administrative Costs 0.03 0.03 0.03 0.03 0.24
Other 0.21 0.30 0.16 0.25 0.32
Total Other Expenses 0.24 0.33 0.19 0.28 0.56
------ ------ ------ ------ ------
Total Fund Operating Expense 1.12%(a) 0.73% 0.92%(a) 1.01%(a) 1.31%(a)
====== ====== ====== ====== ======
</TABLE>
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<TABLE>
<CAPTION>
Class B:
Common Growth Mid Cap Small High Yield Money
Stock Balanced Index Growth Company World Bond Bond Market
------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Management Fees 0.55% 0.61% 0.30% 0.61% 0.61% 0.61% 0.75% 0.53% 0.40%
Rule 12b-1 Fees
(includes service fee and 1.00 1.00 0.75 1.00 1.00 1.00 0.56 1.00 None
distribution fee)
Other Expenses:
Accounting and Administrative Costs 0.03 0.03 0.03 0.03 0.03 0.03 0.03 0.03 0.03
Other 0.23 0.26 0.17 0.65 0.61 0.61 0.18 0.28 0.35
Total Other Expenses 0.26 0.29 0.20 0.68 0.64 0.64 0.21 0.31 0.38
------ ------ ------ ------ ------ ------ ------ ------ ------
Total Fund Operating Expense 1.81% 1.90% 1.25%(a) 2.29% 2.25% 2.25% 1.52% 1.84%(a) 0.78%
====== ====== ====== ====== ====== ====== ====== ====== ======
</TABLE>
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<TABLE>
<CAPTION>
Class C:
Class D:
Common High Yield
Stock Balanced World Bond Balanced
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Management Fees 0.55% 0.61% 0.61% 0.75% 0.61%
Rule 12b-1 Fees
(includes service fee and 1.00 1.00 1.00 1.00 0.75
distribution fee)
Other Expenses:
Accounting and Administrative Costs 0.03 0.03 0.03 0.03 0.03
Other 0.34 0.54 0.57 0.28 0.27
Total Other Expenses 0.37 0.57 0.60 0.31 0.30
Total Fund Operating Expense 1.92% 2.18% 2.21% 2.06% 1.66%
====== ====== ====== ====== ======
</TABLE>
(a) Current Expense Ratios
The above expense ratios do not reflect waivers or reimbursements of
expenses by Sentinel Advisors.
Currently Sentinel Advisors voluntarily waives or reimburses expenses of the
Funds shown below to the extent necessary to cap expense ratios at the
amounts shown. These waivers or reimbursements will continue at least until
March 31, 2000. (November 30, 2000 in the case of the Growth Index Fund.)
Growth Index Fund Class A shares.......................................0.65%
Bond Fund Class A shares...............................................0.76%
Government Securities Fund Class A shares..............................0.83%
Short Maturity Government Fund Class A shares..........................0.77%
Tax-Free Income Fund Class A shares....................................0.73%
Pennsylvania Fund Class A share........................................0.69%
New York Fund Class A shares...........................................0.00%
Because the Growth Index and Bond Funds also have Class B shares, the waiver
of advisory fees of the Growth Index and Bond Funds also benefits the Class
B shares of the Growth Index and Bond Funds. The Class B shares of the
Growth Index and Bond Funds will experience the same reduced effective
advisory fee rate as the Class A shares of the Growth Index and Bond Funds.
In the case of the Growth Index Fund, Sentinel Advisors currently intends to
continue this arrangement indefinitely. In the case of the other Funds,
Sentinel Advisors intends to reset these expense caps annually to amounts
approximately equal to 90% of the average expense ratios of the Class A
shares of the Funds' peer groups (except that in the case of the Short
Maturity Government Fund, the expense cap is to be increased by
approximately 0.15% to take that Fund's higher Rule 12b-1 fee into account).
However, these arrangements may be changed or terminated at any time after
March 31, 2000.
12 For information and assistance call your Financial Advisor or Investor
Services at 1-800-282-FUND (3863)
Prospectus
<PAGE>
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Examples:
These examples are intended to help you compare the cost of investing in the
Funds with the cost of investing in other mutual funds.
These examples assume that you invest $10,000 in each Fund for the time periods
indicated, that you pay the maximum sales charge that applies to a particular
class, that the Fund's operating expenses remain the same, and that your
investment has a 5% return each year. This assumption is not meant to indicate
that you will receive a 5% annual rate of return. Your annual return may be more
or less than the 5% used in these examples. Although your actual costs may be
higher or lower, based on these assumptions your costs would be as shown below.
Note that the amounts shown do not reflect any of the waivers or reimbursements
that limit expense ratios to the levels shown in footnote (a) on page 12.
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Class A:
1 year 3 years 5 years 10 years
Common Stock $ 599 $ 808 $ 1035 $ 1685
Balanced 609 841 1091 1806
Growth Index 320 468 -- --
Mid Cap Growth 625 889 1172 1979
Small Company 629 900 1192 2021
World 622 880 1157 1946
High Yield 525 790 1074 1883
Bond 493 691 904 1520
Government Securities 497 703 925 1564
Short Maturity Government 213 452 711 1450
Money Market 75 233 406 906
Tax-Free Income 490 682 889 1486
New York Tax-Free 499 709 936 1587
Pennsylvania Tax-Free 528 799 1089 1916
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Class B (if you redeem at the end of the period):
1 year 3 years 5 years 10 years
Common Stock $ 584 $ 869 $ 1180 $ 1728
Balanced 593 897 1226 1838
Growth Index 377 597 -- --
Mid Cap Growth 632 1015 1425 2143
Small Company 628 1003 1405 2140
World 628 1003 1405 2105
High Yield 555 780 1029 1689
Bond 587 879 1195 1710
Money Market 480 549 633 939
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Class B (if you do not redeem):
1 year 3 years 5 years 10 years
Common Stock $ 184 $ 569 $ 980 $ 1728
Balanced 193 597 1026 1838
Growth Index 127 397 -- --
Mid Cap Growth 232 715 1225 2143
Small Company 228 703 1205 2140
World 228 703 1205 2105
High Yield 155 480 829 1689
Bond 187 579 995 1710
Money Market 80 249 433 939
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Class C: (if you redeem at the end of the period):
1 year 3 years 5 years 10 years
Common Stock $ 295 $ 603 $ 1037 $ 2243
Balanced 321 682 1169 2513
World 324 691 1185 2544
High Yield 309 646 1108 2390
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Class C (if you do not redeem):
1 year 3 years 5 years 10 years
Common Stock $ 195 $ 603 $ 1037 $ 2243
Balanced 221 682 1169 2513
World 224 691 1185 2544
High Yield 209 646 1108 2390
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Class D: (if you redeem at the end of the period):
1 year 3 years 5 years 10 years
Balanced $ 769 $ 1023 $ 1302 $ 1696
- --------------------------------------------------------------------------------
Class D: (if you do not redeem):
1 year 3 years 5 years 10 years
Balanced $ 169 $ 523 $ 902 $ 1696
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Prospectus
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Details About the Funds' Investment Objectives, Principal Investment Strategies,
and Related Risks
Each Fund has distinct investment objectives and policies. Investment objectives
are fundamental policies of each Fund that may only be changed by a majority
vote of the outstanding shares of that Fund. We cannot guarantee that these
objectives will be achieved.
Each Fund's investment objectives and policies are described in this section. A
general discussion of the Funds' investment policies and associated risks
follows.
The Common Stock Fund invests in common stocks of well-established companies
The Common Stock Fund seeks a combination of growth of capital, current income,
growth of income, and relatively low risk as compared with the stock market as a
whole. It seeks this goal by investing mainly in a diverse group of common
stocks of well-established companies, most of which pay regular dividends.
Sentinel Advisors tries to select stocks of leading companies that are
financially strong and are selling at attractive prices in relation to their
values. When appropriate, the Fund also may invest in preferred stocks or
debentures convertible into common stocks.
The Balanced Fund invests in a combination of stocks and bonds
The Balanced Fund seeks a combination of growth of capital and current income,
with relatively low risk and relatively low fluctuations in value. It seeks this
goal by investing in common stocks similar to those in the Common Stock Fund and
in investment grade bonds similar to those in the Bond Fund, with at least 25%
of its assets in bonds. When determining this percentage, convertible bonds
and/or preferred stocks are considered common stocks, unless these securities
are held primarily for income. Sentinel Advisors will divide the Fund's assets
among stocks and bonds based on whether it believes stocks or bonds offer a
better value at the time. More bonds normally enhance price stability, and more
stocks usually enhance growth potential.
14 For information and assistance call your Financial Advisor or Investor
Services at 1-800-282-FUND (3863)
Prospectus
<PAGE>
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The Growth Index Fund invests in stocks comprising the S&P500/BARRA Growth Index
The Growth Index Fund seeks to match, as closely as possible before expenses,
the performance of the S&P 500/BARRA Growth Index. The S&P 500/BARRA Growth
Index includes those stocks of the S&P 500 Index with higher than average price
to book value ratios. The S&P 500 is an unmanaged index and typically includes
companies that are the largest and most dominant in their industries. There can
be no assurance that the Fund will achieve its objective.
The Fund will invest at all times at least 80% of its total assets in the
common stocks of the companies that comprise the S&P 500/BARRA Growth Index. It
intends normally to invest substantially all its total assets in these common
stocks, in approximately the same weightings as the S&P 500/BARRA Growth Index.
The Fund also may hold up to 20% of its assets in money market instruments and
stock index options and futures. Futures and options are considered
"derivatives" because they "derive" their value from a traditional security
(like a stock or bond) or index. The Fund intends to buy index options or
futures, if at all, only in anticipation of buying stocks.
The Growth Index Fund is not "actively managed," which would involve the
investment advisor buying and selling securities based on research and analysis.
Rather, the Growth Index Fund tries to match, as closely as possible, before
expenses, the performance of its target index, the S&P 500/BARRA Growth Index.
It does this by holding, under normal circumstances, all of the common stocks
included in the target index, in approximately the same weightings as in the
index.
The Growth Index Fund by itself is not a balanced investment program. The
Growth Index Fund will generally hold exclusively the stocks of companies among
the 500 largest U.S. publicly owned corporations. Of these stocks, the stocks
included in the S&P 500/BARRA Growth Index have been valued in the stock market
at levels which indicate that the market expects their issuers to have better
than average prospects for growth of revenue and earnings. These stocks are
sometimes referred to as "large capitalization growth stocks". The Growth Index
Fund will not invest in other types of stocks, including the stocks of small
companies, or so-called "value stocks", from which the market does not expect as
much growth in revenue and earnings, but which can be purchased at lower
valuations. Diversifying your investments beyond "large capitalization growth
stocks" may lower the volatility of your overall investment portfolio, and could
improve your long-term investment return.
It is anticipated that the Growth Index Fund will have relatively small
portfolio turnover. However, it may have to sell securities from time to time to
meet redemption requests, and adjustments will be made in the portfolio from
time to time because of changes in the composition of the S&P/BARRA Growth
Index.
Visit us online at www.sentinelfunds.com 15
Prospectus
<PAGE>
................................................................................
The Mid Cap Growth Fund invests in stocks of mid-sized companies
The Mid Cap Growth Fund seeks growth of capital by focusing its investments on
common stocks of mid-sized growing companies. Sentinel Advisors tries to invest
in companies with favorable growth potential with attractive pricing in relation
to this growth potential, and experienced and capable managements. The Fund will
invest at least 65% of its assets in stocks whose market capitalizations are
within the range of the stocks comprising the Standard & Poor's 400 Midcap
index. Income is not a factor in selecting investments.
Sentinel Advisors emphasizes stocks it believes to have superior potential
for growth, rather than wide diversification. The Fund may invest up to 25% of
its assets in stocks of companies within a single industry. The Fund is actively
managed. It is possible that the Fund's turnover rate may exceed 100% annually.
High turnover would cause the Fund to incur higher trading costs, including more
brokerage commissions. It may also cause the Fund to recognize capital gains and
capital losses for tax purposes earlier than it would if its turnover rate was
lower.
The Small Company Fund invests in stocks of small and medium-sized companies.
The Small Company Fund seeks growth of capital, by investing mainly in common
stocks of small and medium-sized companies that Sentinel Advisors believes have
attractive growth potential and are attractively valued. Income is not a factor
in selecting stocks. The Fund invests at least 65% of its assets in stocks of
companies with market capitalizations of less than $2 billion, and the median
market capitalization of the Fund's holdings is less than $1 billion. Market
capitalization is the total value of all the outstanding shares of common stock
of a company. Up to 25% of the Fund's assets may be invested in securities
within a single industry.
The Small Company Fund's policy is to avoid short-term trading. However,
the Fund may sell a security without regard to its holding period if Sentinel
Advisors believes it is in the Fund's best interest to do so. The Fund's
turnover rate is not expected to exceed 100% annually. The Fund is intended for
long-term investors willing to accept more risk in order to seek above-average
gains.
The World Fund invests in stocks of non-U.S. companies.
The World Fund seeks growth of capital by investing mainly in common stocks of
established non-U.S. companies, or in U.S. companies that conduct their business
mainly outside the United States. INVESCO Capital Management, Inc. manages the
World Fund under a sub-advisory arrangement. The World Fund will normally spread
its assets over many different countries, and will normally not concentrate its
investments in any one country. The Fund generally will not invest more than 25%
of its assets in any one country, but the Fund may invest up to 40% of its
assets in any one country if INVESCO feels that economic and business conditions
make it appropriate to do so.
The Fund focuses its investments on developed foreign countries, but may
invest up to 5% of its assets in emerging markets. It normally will have
substantial investments in European countries. See page 22 for a discussion of
the European Economic and Monetary Union.
Normally, at least 75% of the Fund's total assets are invested in
securities of non-U.S. issuers selected by INVESCO mainly for their long-term
capital growth prospects. The remaining 25%
16 For information and assistance call your Financial Advisor or Investor
Services at 1-800-282-FUND (3863)
Prospectus
<PAGE>
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may be invested in companies organized in the United States that have at least
50% of their assets and/or revenues outside the United States. The Fund also may
invest in convertible or debt securities rated Baa or higher by Moody's
Investors Service, Inc. or BBB or higher by Standard & Poor's.
The majority of the Fund's trading of stocks occur on established stock
exchanges or in the over-the-counter markets in the countries in which
investments are being made. The Fund also expects to purchase American
Depositary Receipts and European Depositary Receipts in bearer form, which are
designed for use in European securities markets. ADRs trade on U.S. exchanges or
in the U.S. over-the-counter markets, and represent foreign stocks. To expedite
settlement of portfolio transactions and minimize currency value fluctuations,
the Fund may purchase foreign currencies and/or engage in forward foreign
currency transactions. Normally, however, the Fund does not hedge its foreign
currency exposure.
You should note that investing in foreign stocks involves some risks which
normally are not associated with investing in U.S. securities, including those
described on page 22.
The High Yield Bond Fund invests in lower rated corporate bonds
The High Yield Bond Fund seeks high current income and total return by investing
mainly in lower rated corporate bonds, sometimes called "junk bonds". The High
Yield Fund is managed by a sub-advisor, Evergreen Investment Management Company.
The High Yield Fund normally invests at least 80% of its total assets in lower
rated bonds. These bonds, because of the greater possibility that the issuers
will default, are not investment grade--that is, they are rated below BBB by
Standard & Poor's or below Baa by Moody's, or are unrated but considered by
Evergreen to be of comparable credit quality. The High Yield Fund may invest in
debt securities of any maturity. No more than 25% of the High Yield Fund's
assets are invested in a single industry and no more than 5% of its assets in a
single issuer. Lower rated debt securities and their associated risks are
described in more detail on page 25.
The High Yield Fund also may invest up to 20% of its total assets in common
stocks, usually as a result of warrants associated with its bond holdings but
also, under certain circumstances, to seek capital appreciation. The Fund also
may invest in bonds convertible into common stock.
The High Yield Fund, when aggregated with the holdings of other mutual
funds advised by Evergreen, will not own more than 20% of the outstanding debt
securities of any issuer.
The High Yield Fund may invest up to 15% of its net assets in illiquid
securities. The Fund will not be able to readily resell illiquid securities and
resale of some of these securities may be restricted by law or contractual
provisions. The inability to sell these securities at the most opportune time
may cause the net asset value of the Fund to go down.
The High Yield Fund may invest in corporate loans made by banks or other
financial institutions. The Fund may not be readily able to resell some of these
corporate loans and they may be subject to restrictions on resale. If so, they
would be subject to the Fund's limitation on illiquid securities. The value of a
corporate loan will depend mainly on the borrower's ability to repay its debts.
The High Yield Fund will invest in a corporate loan only if, in Evergreen's
judgment, the borrower is capable of repaying the loan. However, Evergreen does
not have any set minimum credit rating criteria regarding these borrowers.
Evergreen will monitor the creditworthiness of the borrowers of corporate loans
in which the High Yield Fund invests, but there can be no assurance that
Evergreen will recognize factors that might ultimately impair the value of a
corporate loan in time to protect the High Yield Fund from loss.
The High Yield Fund may invest up to 25% of net assets in the securities of
foreign issuers, if they are denominated in U.S. dollars and are purchased and
held by the High Yield Fund in the United States. You should note that
Visit us online at www.sentinelfunds.com 17
Prospectus
<PAGE>
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investing in foreign securities involves certain special risk considerations
which normally are not associated with investing in U.S. securities, including
those described on page 22 and 23.
The High Yield Fund does not expect to invest in futures and options, or
other derivatives contracts during the coming year. However, if derivative
securities are developed which permit effective hedging of a lower quality bond
portfolio, the High Yield Fund may, for hedging purposes only, buy or sell
derivative securities contracts. The total market value of any of these
derivatives contracts at the time a position is taken will not exceed 5% of the
High Yield Fund's net assets.
The Bond Fund invests in investment grade bonds
The Bond Fund seeks high current income while seeking to control risk by
investing mainly in investment grade bonds. The Fund will invest exclusively in
fixed-income securities. At least 80% of the Fund's assets will normally be
invested in the following types of bonds:
1. Corporate bonds which at the time of purchase are rated within the four
highest rating categories of Moody's, Standard & Poor's or any other
nationally recognized statistical rating organization;
2. Debt securities issued or guaranteed by the U.S. government, its agencies
or instrumentalities, including the mortgage-backed securities described in
the section on the Government Securities Fund on page 19;
3. Debt securities (payable in U.S. dollars) issued or guaranteed by Canadian
governmental entities; and
4. Debt obligations of domestic banks or bank holding companies, even though
not rated by Moody's or Standard & Poor's, that Sentinel Advisors believes
have investment qualities comparable to investment grade corporate
securities.
The remainder of the Fund's assets may be invested in other fixed income
securities, such as straight or convertible debt securities and straight or
convertible preferred stocks.
The Fund will invest no more than 20% of its total assets in lower quality
bonds. These bonds are described in more detail in the discussion of the High
Yield Fund. The risks inherent in these lower rated bonds are discussed on page
25.
The Bond Fund may not invest more than 25% of its total assets in any one
industry, except for U.S. Government Securities. In applying this limitation,
Sentinel Advisors classifies utility companies according to their services, and
financial services companies according to the end users of their services. For
example, natural gas, electric, and telephone will each be considered a separate
industry, as will auto finance, bank finance, and diversified finance.
18 For information and assistance call your Financial Advisor or Investor
Services at 1-800-282-FUND (3863)
Prospectus
<PAGE>
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The Government Securities Fund invests in U.S. government bonds
The Government Securities Fund seeks high current income while seeking to
control risk by investing mainly in U.S. government bonds. These bonds include
direct obligations of the U.S. Treasury, obligations guaranteed by the U.S.
government, and obligations of U.S. government agencies and instrumentalities.
The Fund is not required to invest set amounts in any of the various types
of U.S. government securities. Sentinel Advisors will choose the types of U.S.
government securities that it believes will provide the best return with the
least risk in light of its analysis of current market conditions and its outlook
for interest rates and the economy.
The Fund may make unlimited investments in mortgage-backed U.S. government
securities, including pass-through certificates guaranteed by the Government
National Mortgage Association. Each GNMA certificate is backed by a pool of
mortgage loans insured by the Federal Housing Administration and/or the Veterans
Administration, and provides for the payment of fixed monthly installments of
principal and interest. Timely repayment of principal and payment of interest is
guaranteed by the full faith and credit of the U.S. government. The Fund may
invest in mortgage-backed securities guaranteed by the Federal National Mortgage
Association and by the Federal Home Loan Mortgage Corporation. In all of these
mortgage-backed securities, the actual maturity of and realized yield will vary
based on the prepayment experience of the underlying pool of mortgages.
Securities guaranteed by FNMA and FHLMC are not backed by the full faith and
credit of the United States.
While the maximum life of a mortgage-backed security is typically 30 years,
its average life is likely to be substantially less than the original maturity
of the underlying mortgages, because the mortgages in these pools may be
prepaid, refinanced, or foreclosed. Prepayments are passed through to the
mortgage-backed securityholder along with regularly scheduled repayments of
principal and payments of interest.
If prevailing interest rates are below the rates on the mortgages, the
mortgage borrowers are more likely to refinance their mortgages than if
interest rates are at or above the interest rates on the mortgages. Faster
prepayments will reduce the potential of the mortgage-backed securities to rise
in value during periods of falling interest rates, while the risk of falling
value during periods of rising interest rates may be comparable to other bonds
of similar maturities.
The Fund may engage in the "dollar roll" transactions described on page 26.
The Fund also may use repurchase agreements as a means of making short-term
investments. It will invest only in repurchase agreements with durations of
seven days or less, only where the collateral securities are U.S. government
securities, and only in aggregate amounts of not more than 25% of the Fund's net
assets. The Fund might incur time delays or losses if the other party to the
agreement defaults on the repurchase of the securities.
In addition, the Fund may invest up to 20% of its net assets in high
quality money market instruments which are not issued or guaranteed by the U.S.
government or its agencies or instrumentalities. These include bank money market
instruments, commercial paper or other short-term corporate obligations listed
in the highest rating categories by nationally recognized statistical rating
organizations. These money market instruments may be used as a means of making
short-term investments.
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Prospectus
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The Short Maturity Government Fund invests in U.S. government bonds with limited
maturities
The Short Maturity Government Fund seeks high current income and limited
fluctuations in principal value by investing mainly in U.S. government bonds
that have average maturities from two to five years. Under normal circumstances,
the dollar weighted average maturity of the portfolio will be three years or
less. This Fund invests at least 65% of its assets in U.S. Government Securities
with average maturities of from two to five years. The remainder of the Fund's
assets may be invested in U.S. government securities with other maturities. The
U.S. government securities in which the Fund invests include the same types of
securities in which the Government Securities Fund will invest.
The Fund is not required to invest set amounts in any type of U.S.
government securities. Sentinel Advisors chooses the types of U.S. government
securities that it believes will provide the best return with the least risk in
light of its analysis of current market conditions and its outlook for interest
rates and the economy. Like the Government Securities Fund, the Short maturity
Government Fund may make unlimited investments in mortgage-backed U.S.
government securities.
The Fund may engage in the "dollar roll" transactions described on page 26.
In addition, like the Government Securities Fund, the Short Maturity
Government Fund may invest up to 20% of its net assets in high quality money
market instruments which are not issued or guaranteed by the U.S. government or
its agencies or instrumentalities. The Fund may also use repurchase agreements
as a means of making short-term investments, in the same way as described for
the Government Securities Fund above.
The Fund is not guaranteed or insured by the U.S. Government, and the value
of the Fund's shares will fluctuate.
The Money Market Fund invests primarily in short-term U.S. Treasury securities
The U.S. Treasury Money Market Fund seeks as high a level of current income as
is consistent with stable principal values by investing primarily in short-term
direct obligations of the U.S. Treasury. These obligations include U.S. Treasury
bills, notes and bonds with remaining maturities of 397 days or less. The Fund
may also invest up to 25% of its total assets in repurchase agreements with
respect to U.S. Treasury securities, and up to 10% of its total assets in shares
of institutional money market funds which invest primarily in securities of the
U.S. Treasury, U.S. government agencies and instrumentalities and repurchase
agreements with respect to such securities.The Fund may earn less income than
funds owning longer term securities or lower quality securities that have less
liquidity, greater market risk and greater market value fluctuations.
The Fund seeks to maintain a net asset value of $1.00 per share, by using
the amortized cost method of valuing its securities. The Fund is required to
maintain a dollar-weighted average portfolio maturity of 90 days or less.
In many states, the Fund's income dividends may be largely exempt from
state and local income taxes, but subject to federal income taxes. For more
information on state and local tax exemption, see "Taxes" herein.
20 For information and assistance call your Financial Advisor or Investor
Services at 1-800-282-FUND (3863)
Prospectus
<PAGE>
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The Tax-Free Income Fund invests in investment grade municipal bonds
The Tax-Free Income Fund seeks high current income exempt from federal income
taxes while seeking to control risk by investing mainly in investment grade
municipal bonds. The interest earned from these municipal bonds, in the opinion
of the issuer's bond counsel, are exempt from federal income tax. These
investments may include municipal bonds issued by states, territories and
possessions of the United States and their political subdivisions, agencies,
authorities and instrumentalities. The Fund seeks to spread its holdings out
broadly among municipal bonds of different states and regions, and among
different types of issuing authorities.
Normally at least 80% of the total assets of the Tax-Free Income Fund will
be invested in municipal bonds rated within the four highest rating categories
of either Moody's or Standard & Poor's. The Fund also may invest in unrated
municipal bonds if Sentinel Advisors believes the credit characteristics are at
least equivalent to those of municipal bonds ranked in the fourth highest rating
category of either Moody's or Standard & Poor's. Although this is not a
fundamental policy, no more than 5% of the Fund's total assets may be invested
in lower rated municipal bonds.
The New York Fund invests in investment grade municipal bonds of New York
issuers
The New York Tax-Free Fund seeks high current interest income exempt from
federal and New York State and City personal income taxes, while seeking to
control risk, by investing in investment grade municipal bonds of New York
issuers. The interest on these municipal bonds will be, in the opinion of the
issuer's bond counsel, exempt from federal income tax and New York State and
City personal income tax. Normally these bonds will have remaining maturities of
more than one year at the time of investment.
The Fund may, however, invest up to 20% of its net assets in short-term New
York municipal bonds. Normally, at least 80% of the total assets of the New York
Fund will be invested in municipal bonds rated within the four highest rating
categories of either Moody's or Standard & Poor's. The New York Fund also may
invest in unrated municipal bonds if Sentinel Advisors believes the credit
characteristics are at least equivalent to those of municipal bonds ranked in
the fourth highest rating category of either Moody's or Standard & Poor's.
Although this is not a fundamental policy, no more than 5% of the New York
Fund's total assets may be invested in lower rated New York municipal bonds.
The Pennsylvania Fund invests in investment grade municipal bonds of
Pennsylvania issuers
The Pennsylvania Tax-Free Trust seeks high current interest income exempt from
federal and Pennsylvania personal income taxes, while seeking to control risk,
by investing in investment grade municipal bonds of Pennsylvania issuers. The
interest on these municipal bonds is, in the opinion of the issuer's bond
counsel, exempt from federal income tax and Pennsylvania personal income tax.
The Pennsylvania Fund normally will invest substantially all of its net
assets in Pennsylvania municipal bonds with maturities of more than one year.
The Fund may, however, invest up to 20% of its net assets in short-term
Pennsylvania municipal bonds. All of the Pennsylvania municipal bonds in which
the Pennsylvania Fund invests will be rated in the top four rating categories by
Moody's or Standard & Poor's or, if unrated, will have equivalent investment
characteristics, as determined by Sentinel Advisors.
At least 75% of the Pennsylvania Fund's assets will always be invested in
municipal obligations rated "A" or higher by Moody's or by Standard & Poor's or,
if not rated, bonds that, in the opinion of Sentinel Advisors, have equivalent
investment characteristics, or highly rated municipal notes or tax-exempt
commercial paper. The Pennsylvania Fund cannot invest in "junk" municipal
obligations.
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General Information Relevant to the Investment Practices of the Funds, and
Associated Risks
We cannot guarantee that any Fund's investment objective will be achieved.
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Risks you face by investing in the Equity Funds
Information Relevant to the Equity Funds
Stock Market and Selection Risk. The Common Stock, Balanced, Growth Index, Mid
Cap Growth, Small Company and World Funds are subject to stock market and
selection risk. Stock market risk is the risk that the stock market will go down
in value, including the possibility that the market will go down sharply and
unpredictably. Selection risk is the risk that that the investments that
Sentinel Advisors or INVESCO select will underperform that stock market or other
funds with similar investment objectives and investment strategies.
Risks of Stocks of Smaller Companies. The stocks of small and medium-sized
companies typically involve more risk than the stocks of larger companies. These
smaller companies may have more limited financial resources, narrower product
lines, and may have less seasoned managers. In addition, these stocks may trade
less frequently and in lower share volumes, making them subject to wider price
fluctuations.
Investment Style Risk. The S&P 500/BARRA Growth Index is comprised of larger
companies which in general are perceived by the stock market to have higher
growth potential. The Growth Index Fund thus focuses on so-called "large
capitalization growth stocks". The Common Stock Fund has more of a focus on
"large capitalization value stocks", although it may also invest in growth
stocks. The Mid Cap Growth Fund focuses on "mid capitalization growth stocks",
while the Small Company Fund focuses on the stocks of smaller companies. Changes
in investment style may cause any of these groups to underperform the stock
market in general, or other asset classes.
Tracking Error Risk. There are several reasons why the Fund's performance may
not match the S&P 500/BARRA Growth Index. First, the Fund incurs administrative
expenses and transaction costs in trading stocks. Second, the composition of the
S&P 500/BARRA Growth Index and the stocks held in the Fund may diverge, due to
cash flows into or out of the Fund and changes in the composition of the index.
Third, the timing and magnitude of cash flows into and out of the Fund may
result in temporarily uninvested cash, or may lead to weightings of stocks held
by the Fund which are not precisely the same as in the S&P 500/BARRA Growth
Index.
Futures and Options. If the Fund invests in stock index futures or options
contracts, the Fund will be subject to the risks that:
. the future or option will not fully offset the underlying positions,
. the Fund cannot sell the future or option because of an illiquid secondary
market, and
. the intended risk management purpose of the future or option may not be
achieved, and may produce losses or missed opportunities.
Risks applicable most directly to the World Fund
Risks of Investing in Foreign Securities
The Common Stock, Balanced, Growth Index, Mid Cap Growth, Small Company, High
Yield and Bond Funds may invest in securities of foreign issuers, although only
where they are trading in the United States (or in the case of the High Yield
and Bond Funds, on the Eurodollar market), and only where trading is
denominated in U.S. dollars. The World Fund invests in securities traded in
foreign markets and denominated in foreign currencies.
Investing in foreign securities involves certain special risks in addition
to those associated with U.S. securities. For example, the Funds may be affected
favorably or unfavorably by changes in currency rates or exchange control
regulations. Foreign markets may have less active trading volume than those in
the United States, and values may fluctuate more as a result. If the Funds, most
particularly the World Fund, had to sell securities to meet unanticipated
22 For information and assistance call your Financial Advisor or Investor
Services at 1-800-282-FUND (3863)
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cash requirements, it may be forced to accept lower prices. There may be less
supervision and regulation of foreign exchanges. Foreign companies generally
release less financial information than comparable U.S. companies. Furthermore,
foreign companies generally are not subject to uniform accounting, auditing and
financial reporting requirements. Other possible risks include seizing of assets
by foreign governments, high and changing taxes, difficulty enforcing judgments
against foreign issuers, withholding taxes imposed by foreign governments on
dividend and/or interest payments, political or social instability, or
diplomatic developments that could affect U.S. investments in those countries.
European Economic and Monetary Union ("EMU"). Certain European countries have
agreed to enter the EMU in an effort to, among other things, reduce barriers
between countries, increase competition among companies, reduce government
subsidies in certain industries, and reduce or eliminate currency fluctuations
among these countries. Among other things, EMU establishes a single common
European currency (the "euro") that was introduced on January 1, 1999 and is
expected to replace the existing national currencies of all EMU participants by
July 1, 2002. Upon introduction of the euro, certain securities (beginning with
government and corporate bonds) will be redenominated in the euro and,
thereafter, will be listed, trade, and make dividend and other payments only in
euros. Although EMU is generally expected to have a beneficial effect, it could
negatively affect the World Fund in a number of situations, including as
follows:
. If the euro, or EMU as a whole, does not take effect as planned, the World
Fund's investments could be adversely affected. For example, sharp currency
fluctuations, exchange rate volatility and other disruptions of the markets
could occur.
. Withdrawal from EMU by a participating country could also have a negative
effect on the World Fund's investments, for example, if securities
redenominated in euros are transferred back into that country's national
currency.
. Computer, accounting and trading systems must be capable of recognizing the
euro as a distinct currency. Like other investment companies and business
organizations, the World Fund could be adversely affected if the systems
used by Sentinel Advisors, INVESCO, the Fund's other service providers, or
entities with which the Fund or its service providers do business have not
properly addressed this issue. These issues may negatively affect the
operations of the companies the Funds invest in as well.
Risks of Holding Fund Assets Outside the United States. The World Fund generally
holds its foreign securities outside the United States in foreign banks and
securities depositories. Some foreign banks and securities depositories may be
recently organized or new to the foreign custody business. In addition, there
may be limited or no regulatory oversight over their operations. Also, the laws
of certain countries may put limits on the World Fund's ability to recover its
assets if a foreign bank, depository or issuer of a security, or any of their
agents, goes bankrupt. Also, brokerage commissions, and other costs of buying,
selling or holding securities in foreign markets are often higher than in the
United States. This can reduce amounts the World Fund can earn on its
investments. Foreign settlement and clearance procedures and trade regulations
also may involve certain risks (such as delays in payment for or delivery of
securities) not typically involved with the settlement of U.S. investments.
Communications between the United States and emerging market countries may be
unreliable, increasing the risk of delayed settlements or losses of security
certificates. Settlements in certain foreign countries at times have not kept
pace with the number of securities transactions. These problems may make it
difficult for the World Fund to carry out transactions.
Emerging Markets Risk. The World Fund may invest up to 5% of its assets in
emerging markets. The risks of foreign investments are usually much greater for
emerging markets. Investments in emerging markets may be considered speculative.
Emerging markets include those in countries
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Prospectus
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defined as emerging or developing by the World Bank, the International Finance
Corporation or the United Nations. Emerging markets are riskier because they
develop unevenly and may never fully develop. They are more likely to experience
hyperinflation and currency devaluations, which adversely affects returns to
U.S. investors. In addition, the securities markets in many of these countries
have far lower trading volumes and less liquidity than developed markets. Since
these markets are so small, investments in them may be more likely to suffer
sharp and frequent price changes or long term price depression because of
adverse publicity, investor perceptions or the actions of a few large investors.
In addition, traditional measures of investment values used in the United
States, such as price to earnings ratios, may not apply to certain small
markets.
Many emerging markets have histories of political instability and abrupt
changes in policies. As a result, their governments are more likely to take
actions that are hostile or detrimental to private enterprise or foreign
investment than those of more developed countries. Certain emerging markets may
also face other significant internal or external risks, including the risk of
war, and ethnic, religious and racial conflicts. In addition, governments in
many emerging market countries participate to a significant degree in their
economies and securities markets, which may impair investment and economic
growth.
Information Regarding the S&P 500/BARRA Growth Index
The Growth Index Fund is not sponsored, endorsed, sold or promoted by Standard &
Poor's, a division of The McGraw-Hill Companies, Inc. ("S&P"). S&P makes no
representation or warranty, express or implied, to the owners of the Growth
Index Fund or any member of the public regarding the advisability of investing
in securities generally or in the Growth Index Fund particularly or the ability
of the S&P 500/BARRA Growth Index to track general stock market performance.
S&P's only relationship to the Sentinel Funds is the licensing of certain
trademarks and trade names of S&P and the S&P 500/BARRA Growth Index, which is
determined, composed, and calculated without regard to the Growth Index Fund.
S&P has no obligation to take the needs of the Sentinel Funds or the owners of
the Growth Index Fund into consideration in determining, composing or
calculating the S&P 500/BARRA Growth Index. S&P is not responsible for and has
not participated in the determination of the prices at which the Growth Index
Fund shares are sold, the timing of the offering of Growth Index Fund shares, or
the determination of the prices at which Growth Index Fund shares may be
redeemed. S&P has no obligation or liability in connection with the
administration or marketing of the Growth Index Fund.
S&P DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE S&P 500/BARRA
GROWTH INDEX OR ANY DATA INCLUDED THEREIN AND S&P SHALL HAVE NO LIABILITY FOR
ANY ERRORS, OMISSIONS, OR INTERRUPTIONS THEREIN. S&P MAKES NO WARRANTY, EXPRESS
OR IMPLIED, AS TO THE RESULTS TO BE OBTAINED BY THE GROWTH INDEX FUND, OWNERS OF
THE GROWTH INDEX FUND, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE S&P
500/BARRA GROWTH INDEX OR ANY DATA INCLUDED THEREIN. S&P MAKES NO EXPRESS OR
IMPLIED WARRANTIES AND HEREBY EXPRESSLY DISCLAIMS ALL WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE WITH RESPECT TO THE
S&P 500/BARRA GROWTH INDEX OR ANY DATA INCLUDED THEREIN. WITHOUT LIMITING ANY OF
THE FOREGOING, IN NO EVENT SHALL S&P HAVE ANY LIABILITY FOR ANY SPECIAL,
PUNITIVE, INDIRECT, OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS), EVEN IF
NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES.
Information Relevant to the Fixed-Income Funds
The market prices of bonds, including those issued by the U.S. government, go up
as interest rates fall, and go down as interest rates rise. As a result, the net
asset value of the shares of Funds holding bonds will fluctuate with conditions
in the bond markets. Bonds with longer maturities and longer durations (a
measure of a bond's sensitivity to changes in interest rates) generally have
higher yields and are subject to greater price fluctuation due to interest rate
changes than bonds with shorter maturities or shorter effective durations.
The Bond, New York and Tax-Free Income Funds, and the bond portion of the
Balanced Fund, may invest without limitation in bonds in the fourth highest
rating category of Moody's and Standard & Poor's. The Pennsylvania Fund may
invest up to 25% of its assets in these bonds. While considered investment-
grade, these bonds may have more speculative characteristics and may be more
likely to be
24 For information and assistance call your Financial Advisor or Investor
Services at 1-800-282-FUND (3863)
Prospectus
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downgraded than bonds rated in the three highest rating categories.
If a bond is downgraded below investment-grade, Sentinel Advisors will determine
whether selling it is in the shareholders' best interest. To arrive at this
decision, Sentinel Advisors will consider, among other things, the market price,
credit risk, and general market conditions.
Lower quality bonds are more risky than highly rated bonds
Risks of Lower Quality Bonds. The High Yield Fund may invest without limitation,
and the Bond Fund and the bond portion of the Balanced Fund may invest up to 20%
of total assets in lower rated bonds. The Tax-Free Income and New York Funds may
invest up to 5% of total assets in lower quality bonds. Because of the increased
risk of default, these bonds generally have higher nominal or effective interest
rates than higher quality bonds. The Funds may purchase bonds in the lowest
rating categories (D for S&P and C for Moody's) and comparable unrated
securities. However, the Funds will only purchase securities rated lower than B-
by S&P or B3 or lower by Moody's if Sentinel Advisors or Evergreen believes the
quality of the bonds is higher than indicated by the rating.
Lower quality bonds may pay interest at fixed, floating or adjustable
rates. The value of floating or adjustable rate bonds is less likely to be
adversely affected by interest rate changes than fixed rate bonds. However, if
interest rates fall, the Funds may earn less income if they hold floating or
adjustable rate bonds.
Lower rated bonds are more speculative and likely to default than higher
quality bonds. Lower rated bond values also tend to fluctuate more widely in
value, for several reasons. An economic downturn may have a greater impact on
the ability of issuers with less financial strength to make their bond payments.
These bonds may not be traded as actively. Their prices may respond more
adversely to negative publicity and investor perceptions. If trading in lower
rated bonds becomes less active, the Funds may have more difficulty in valuing
these bonds. Success in investing in junk bonds depends heavily on Sentinel
Advisors' or Evergreen's credit analysis. Lower rated bonds are also more
sensitive than other debt securities to adverse business developments affecting
specific issuers. The risk of loss due to default by the issuer of a lower
quality bond may be significantly greater than the risk for higher rated bonds
because lower quality bonds are more likely to be unsecured and may be
subordinated to other creditors. If a bond defaults, the Funds may incur
additional expenses in seeking a recovery or participating in a restructuring.
Lower quality bonds also may have call features that permit the issuer to
repurchase the securities from the Funds before their maturity. If a call is
exercised during a period of declining interest rates, the affected Fund would
probably have to replace the called bonds with lower yielding bonds, and the
Fund's investment income would go down.
Zero Coupon and Similar Bonds. The High Yield and Bond Funds, and the bond
portion of the Balanced Fund, also may invest in bonds that do not pay interest,
but instead are issued at a significant discount to their maturity values
(referred to as zero coupon securities), that pay interest in additional
securities instead of cash (referred to as pay-in-kind securities) or that pay
interest at predetermined rates that increase over time (referred to as step
coupon bonds). Even though the Funds may not get cash interest payments on these
bonds, under existing tax law the Funds nevertheless must accrue and distribute
the income deemed to be earned on a current basis. This may cause a Fund to have
to sell other investments to raise the cash needed to make income distributions.
Restricted Bonds. The High Yield and Bond Funds and the bond portion of the
Balanced Fund may purchase certain restricted bonds, often called Rule 144A
bonds, for which trading is limited to qualified institutional buyers. Sentinel
Advisors or Evergreen may determine that Rule 144A bonds are liquid securities
under guidelines approved by the Funds' Board of Directors, and these Rule 144A
bonds will not be subject to the High Yield Fund's limitation on illiquid
securities, or the prohibition on illiquid securities for the Bond Fund and bond
portion of the Balanced Fund. These liquid Rule 144A Securities may become
illiquid if qualified institutional buyers are unavailable.
Portfolio Turnover. In the fiscal year ended November 30, 1998, the fixed income
Funds shown below had the following rates of portfolio turnover:
Government Securities Fund................................................355%
Bond Fund.................................................................147%
High Yield Fund...........................................................139%
Short Maturity Government Fund............................................229%
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In addition, the Balanced Fund had portfolio turnover of 31% for the equity
portion, and 153% for the bond portion. These Funds are actively managed, and
their portfolios are constantly monitored and adjusted to try to increase
income, protect the income stream or improve the quality of the holdings. This
investment policy results in higher portfolio turnover, but this need not
adversely affect performance because these Funds generally do not pay
commissions. They deal directly with dealers acting as principals when buying or
selling. The trading price may include a profit to the dealer, but the Funds
will only make these trades when Sentinel Advisors or Evergreen believes it will
help the Funds to achieve their investment objectives. This higher portfolio
turnover may cause the Funds to recognize capital gains or capital losses for
tax purposes earlier than they otherwise would.
Dollar Rolls. The Bond, Government Securities, Short Maturity Government and
Balanced Funds may also enter into "dollar rolls". In a dollar roll, a Fund
sells mortgage-backed or U.S. Treasury securities for delivery in the current
month, and simultaneously contracts to buy back securities of the same type,
coupon and maturity on a predetermined future date. During the roll period, a
Fund foregoes principal and interest paid on the mortgage-backed or U.S.
Treasury securities. In return, a Fund receives the difference between the
current sales price and the lower forward price for the future purchase (often
referred to as the "drop"), and interest earned on the cash proceeds of the
initial sale. A "covered roll" is a specific type of dollar roll in which the
proceeds of a dollar roll are held in a separate account and invested only in
high grade money market instruments. The Funds may only invest in covered rolls.
The use of dollar rolls tends to increase the portfolio turnover of the Funds,
and increases portfolio income without increasing the risk levels of the Funds.
Information Relevant to the Tax-Exempt Funds
Alternative Minimum Tax. Interest income on certain "private activity" bonds is
a preference item for shareholders subject to the alternative minimum tax.
Municipal bonds whose interest is a preference item for alternative minimum tax
purposes will comprise less than 20% of each of the Tax-Free Income and New York
Funds' total assets.
Possible Taxability of Temporary Defensive Investments. If Sentinel Advisors
anticipates a rise in interest rates, the Tax-Free Income, New York and
Pennsylvania Funds may invest temporarily in short-term debt obligations,
including taxable investments, to help protect shareholder capital. These
investments may include notes of municipal issuers, U.S. government securities,
and money market instruments. Under these conditions, the Pennsylvania Fund will
limit its investments in securities other than Pennsylvania municipal bonds to
20% of its assets and will invest in non-governmental issuers only where the
bonds are rated in one of the two highest categories of either Standard & Poor's
or Moody's.
The interest on municipal bonds issued by states other than your state of
residence is exempt only from federal income tax. Interest on certain types of
U.S. government securities is exempt only from state personal income tax.
Interest on money market instruments is generally fully subject to both federal
and any applicable state income taxes.
Use of Financial Futures Contracts and Related Options. The New York,
Pennsylvania and Tax-Free Income Funds may purchase and sell certain exchange-
traded financial futures contracts and related options only to hedge against
adverse changes in interest rates, to protect against declines in the value of
municipal bonds held by the Funds, or to hedge against increases in the cost of
municipal bonds to be purchased for the Funds in the future.
None of the New York, Pennsylvania or Tax-Free Income Funds will purchase and
sell financial futures contracts or related options if, immediately after
purchase, the sum of the initial margin on existing futures positions plus the
premiums paid for outstanding options exceeds 5% of the Fund's total assets.
Risks Associated with Options and Futures Transactions. Options and futures
transactions involve certain risks. However, Sentinel Advisors believes that
since the New York, Pennsylvania and Tax-Free Income Funds would use these
investments for hedging purposes only, their use would not subject these Funds
to the risks frequently associated with the speculative use of options and
futures. However, there are certain risks related to
26 For information and assistance call your Financial Advisor or Investor
Services at 1-800-282-FUND (3863)
Prospectus
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futures transactions used for hedging purposes that you should understand. One
is that the hedge would be ineffective if Sentinel Advisors' forecasts of
interest rates prove to be incorrect. Another is that the secondary market for a
financial futures contract may become illiquid. This may happen, for example, if
the particular market exceeds its daily price fluctuation limit. If this
happens, the Funds may not be able to close out futures positions. The change in
the market value of a Fund's municipal bonds also may not be perfectly
correlated with the prices paid for futures contracts, which may cause the hedge
to be ineffective. From their inceptions through March 31, 1999, none of the New
York, Pennsylvania or Tax-Free Income Funds engaged in any hedging transactions
involving financial futures and related options.
Information Relevant to the New York and Pennsylvania Funds
Since each of the New York and Pennsylvania Funds concentrates in state
municipal bonds, these Funds are more susceptible to factors adversely affecting
New York or Pennsylvania governmental entities than a municipal bond fund that
is diversified nationally. Each of these Funds' net asset value is particularly
sensitive to changes in the economic condition and governmental policies of the
state in which it invests. For example, if the economic condition of a single
significant industry within New York or Pennsylvania deteriorates, specific
governmental issuers within the state or the anticipated revenues to the state
may be weakened, and the net asset value of the Fund's shares may fall as a
result. Adverse changes in employment rates, federal revenue sharing or laws on
tax-exempt financing may also cause the value of the Funds' shares to fall.
Sentinel Advisors does not believe that the current economic conditions in New
York State, New York City or Pennsylvania will have a significant adverse effect
on the Funds' ability to invest in high quality New York or Pennsylvania
municipal bonds. Since these Funds focus on investment grade bonds, the Funds
expect to be less subject to market and credit risks than a fund that invests
mainly in lower quality New York or Pennsylvania municipal bonds.
Information Relevant to All Funds
Periodically the Funds may be less than fully invested
Temporary Defensive Positions. Each of the Funds, other than the U.S. Treasury
Money Market Fund, the Government Securities Fund and the Short Maturity
Government Fund, may be less than fully invested in securities called for by its
principal investment strategies at any time. If the investment advisor feels
that it is necessary under adverse market conditions to take a temporary
defensive position, these Funds may depart significantly or completely from
their principal investment strategies. If the investment advisor's judgment in
taking a temporary defensive position proves to be incorrect, the Funds may not
achieve their investment objective.
Repurchase Agreements. All of the Funds may invest in repurchase agreements,
provided the counterparty maintains the value of the underlying securities at a
value not less than the repurchase price stated in the agreement. Under a
repurchase agreement, a Fund purchases bonds and simultaneously agrees to resell
these bonds to a counterparty at a prearranged time and specific price. If the
counterparty defaults on its repurchase obligation, the Fund would have the
bonds and be able to sell them to another party, but it could suffer a loss if
the proceeds from a sale of the bonds turns out to be less than the repurchase
price stated in the agreement. If the counterparty becomes insolvent or goes
bankrupt, a Fund may be delayed in being able to sell bonds that were subject to
the repurchase agreement. For more information about repurchase agreements,
please refer to the Statement of Additional Information.
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Purchase Options
The Balanced Fund offers Class A, Class B, Class C and Class D shares.
The Common Stock, World and High Yield Funds offer Class A, Class B and Class C
shares.
The Growth Index, Mid Cap Growth, Small Company and Bond Funds offer Class A
shares and Class B shares.
The Government Securities, Short Maturity, Tax-Free Income, New York and
Pennsylvania Funds offer only Class A shares.
This prospectus frequently uses the term CDSC, which stands for Contingent
Deferred Sales Charge. This type of charge is assessed when you redeem shares
subject to a CDSC, if none of the waivers listed on page 35 apply. If you do not
redeem shares during the time periods in which an investment is subject to a
CDSC, you will not pay this charge.
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You can compare the differences among the four classes of shares using the table
below.
<TABLE>
<CAPTION>
Total 12b-1 Fee,
Class Sales Charge Service Fee Including Service Fee Conversion Feature
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
A Maximum Maximum Maximum of 0.30% No
5.00% initial of 0.20% (Maximum 0.20% for
sales charge (Maximum of fixed income funds
(Maximum 0.10% for and the Growth
4% for fixed fixed income Index Fund)
income funds, funds)
and 2.5% for
the Growth
Index Fund)
- ------------------------------------------------------------------------------------------
B CDSC of up to 0.25% 1.00% Class B Shares convert
4.00% (2.50% (0.75% for the to Class A Shares
for the Growth Growth Index Fund) automatically after the
Index Fund) for applicable CDSC period
a maximum of
six years
- ------------------------------------------------------------------------------------------
C CDSC of 0.25% 1.00% No
1.00% for the
first year only
- ------------------------------------------------------------------------------------------
D CDSC of None 0.75% Class D Shares convert
up to 6% for to Class A Shares
seven years automatically at the end
of the end of the tenth
year after purchase
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</TABLE>
The Short Maturity Government Fund currently only offers Class A Shares as
described below.
<TABLE>
<CAPTION>
Total 12b-1 Fee,
Class Sales Charge Service Fee Including Service Fee Conversion Feature
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
A Maximum Maximum Maximum of 0.35% None
1.00% initial of 0.25%
sales charge
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</TABLE>
The U.S. Treasury Money Market Fund offers Class A and Class B Shares. Initial
purchases of Class A Shares of the Money Market Fund are not subject to any
initial sales charge, CDSC or Rule 12b-1 fees. Class B shares of the Money
Market Fund are not offered for direct purchase, except where the investment is
to be exchanged into Class B shares of other Funds within 90 days, or in dollar-
cost averaging programs into Class B shares of other Funds where you invest a
minimum of $10,000, each dollar-cost averaging transaction is at least $1,000,
and the program is completed within 24 months. They may also be acquired in
exchange for the Class B shares of another Fund.
More detailed information about each class of shares is included in the
descriptions of each class below.
If you who hold your shares for an extended period of time, you may pay more in
Rule 12b-1 distribution fees than the economic equivalent of the maximum front-
end sales charges permitted under the Conduct Rules of the National Association
of Securities Dealers, Inc.
28 For information and assistance call your Financial Advisor or Investor
Services at 1-800-282-FUND (3863)
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Things to Think About When Choosing Which Share Class to Buy
The Funds' purchase options are designed to enable you to choose the method of
purchasing Fund shares that is most beneficial to you.
- --------------------------------------------------------------------------------
Factors you should consider include:
. the amount of the investment,
. the intended length of the investment,
. the type of Fund you want,
. whether you are eligible for a waiver or reduction of an initial sales charge
or CDSC, and
. whether you intend to utilize the exchange privilege.
Class A shares have the advantage of lower ongoing distribution expenses. The
disadvantage of the Class A shares is that you pay an initial sales charge. If
in your circumstances the lower ongoing expenses outweigh the impact of the
initial sales charge, Class A shares may be appropriate for you.
Class B shares have the advantage that you pay no initial sales charge. The
disadvantages are that you pay higher ongoing distribution fees for a fixed
period of time, and during this time you may pay a CDSC if you redeem. Class B
shares ultimately convert to Class A shares, so long term investors eventually
also obtain the benefit of the Class A shares' lower ongoing expenses. Class B
shares are appropriate for those for whom the benefit of avoiding an initial
sales charge outweighs the higher ongoing expenses and possible CDSCs incurred
prior to the conversion to Class A shares.
Class C shares have the advantages of no initial sales charge and a relatively
small CDSC that applies only in the first year. You pay higher ongoing
distribution fees for the entire period of your investment, however. This class
may be appropriate for you if the benefits of avoiding both an initial sales
charge and a significant CSDC outweigh the continuing higher distribution fees.
Over long periods, however, the other share classes may out perform Class C
shares.
The Class D shares, available for the Balanced Fund only, are similar to the
Class B shares, except that you are subject to a higher CDSC, that applies for
seven years instead of six, and conversion to Class A shares does not occur
until the tenth year. The benefit to you is that the ongoing distribution fees
are lower than for Class B shares. Class D shares may appeal to Balanced Fund
investors who want to avoid paying an initial sales charge, are willing to pay
ongoing distribution fees higher than those on Class A shares until they
convert, but want to benefit from lower ongoing distribution fees than those on
Class B or C shares.
There is no size limit on purchases of Class A shares. The maximum purchase of
Class B shares or Class C shares accepted is $1,000,000. The maximum purchase of
Class D shares of the Balanced Fund is $250,000.
You should also consider that exchange privileges into other Funds are more
limited for classes other than Class A shares. Class B shares may only be
exchanged among the other funds offering Class B shares - the Common Stock,
Balanced, Growth Index, Mid Cap Growth, Small Company, World, Bond, High Yield
and Money Market Funds. For Class C shareholders, only the Class C shares of the
Common Stock, Balanced, World and High Yield Funds, and the Class A shares of
the Money Market Fund, are available for exchanges. In the case of the Class D
shares of the Balanced Fund, the only possible exchange is into the Class A
shares of the Money Market Fund, and back into the Class D shares of the
Balanced Fund.
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Class A Shares
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Class A shares are generally subject to a front-end sales charge
For all purchases of Class A shares, you pay the public offering price, which
includes the front-end sales charge, next computed after we receive your order.
The sales charge ranges from 5.0% of the offering price (5.3% of the net amount
invested) to zero. Your sales charge will depend on the size of your purchase.
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Sales Charges
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Common Stock, Balanced, Mid Cap Growth, Small Company and World Funds:
Sales charge as
a percentage of:
---------- ----------
offering net amount Dealer
Sale Size price invested Reallowance
- -------------------- ---------- ---------- ----------
$0 to $99,999 5.00% 5.26% 4.50%
- -------------------- ---------- ---------- ----------
$100,000 to $249,999 4.00% 4.17% 3.75%
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$250,000 to $499,999 2.50% 2.56% 2.25%
- -------------------- ---------- ---------- ----------
$500,000 to $999,999 2.00% 2.04% 1.75%
- -------------------- ---------- ---------- ----------
$1,000,000 or more -0- -0- -0-
- -------------------- ---------- ---------- ----------
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High Yield, Bond, Government Securities, Tax-Free Income, New York and
Pennsylvania Funds:
Sales charge as
a percentage of:
---------- ----------
offering net amount Dealer
Sale Size price invested Reallowance
- -------------------- ---------- ---------- ----------
$0 to $99,999 4.00% 4.17% 4.00%
- -------------------- ---------- ---------- ----------
$100,000 to $249,999 3.50% 3.63% 3.25%
- -------------------- ---------- ---------- ----------
$250,000 to $499,999 2.50% 2.56% 2.25%
- -------------------- ---------- ---------- ----------
$500,000 to $999,999 2.00% 2.04% 1.75%
- -------------------- ---------- ---------- ----------
$1,000,000 or more -0- -0- -0-
- -------------------- ---------- ---------- ----------
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Growth Index Fund
Sales charge as
a percentage of:
-----------------------
offering net amount Dealer
Sale Size price invested Reallowance
- -------------------- ---------- ---------- ----------
$0 to $499,999 2.50% 2.56% 2.25%
- -------------------- ---------- ---------- ----------
$500,000 to $999,999 2.00% 2.04% 1.75%
- -------------------- ---------- ---------- ----------
$1,000,000 or more -0- -0- -0-
- -------------------- ---------- ---------- ----------
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For the Short Maturity Government Fund, the sales charge for sales of up to
$999,999 is 1.00% of the offering price (1.01% of the net amount invested), with
a dealer reallowance of 0.75% of the offering price. For sales of $1,000,000 and
over, there is no initial sales charge.
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There is no sales charge on purchases of shares of the Money Market Fund.
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In cases in which there is no sales charge because your purchase was $1,000,000
or more, the Funds' distributor, Sentinel Financial Services Company, will pay
dealers compensation of 1.00% for sales of up to $14,999,999 (for the Common
Stock, Balanced, Mid Cap Growth and Small Company Funds) and for sales of up to
$4,999,999 for sales of the other Funds. In these cases, if you redeem the
shares in the first one year after the purchase, a 1.0% CDSC will be imposed,
and if you redeem in the second year, a 0.5% CDSC will be imposed. For sales in
excess of these amounts, Sentinel Financial will individually negotiate dealer
compensation and CDSCs. After the second year, there will be no CDSC. Any CDSC
is imposed on the lower of the cost or the current net asset value of the shares
redeemed. If you redeem part of your shares, your redemption request will be
increased by the amount of any CDSC due. If you redeem your entire account, we
will deduct any CDSC due from the redemption proceeds. Sentinel Financial
receives the entire amount of any CDSC paid. The CDSC is waived in the
circumstances described on page 35. In determining whether a CDSC is payable, we
will first redeem shares not subject to any charge.
Reduced Sales Charges
You can receive a reduced sales charge for a number of reasons
Sales charges on Class A shares may be reduced or eliminated in certain
situations. Please note that, to take advantage of any reduced or eliminated
sales charge, you must advise Sentinel Financial or your representative of your
eligibility at the time of purchase, and provide any necessary information about
the accounts involved.
Right of Accumulation. Quantity discounts begin with investments in Class A
shares of $100,000 ($500,000 in the case of the Growth Index Fund). You may
qualify for quantity discounts based on the total of all classes of shares
purchased, on purchases made at different times, and on purchases made by you,
your spouse and minor children, or a fiduciary for these persons. Contact
Sentinel Service for help in combining accounts for purposes of obtaining
quantity discounts by combining accounts or purchases.
Letter of Intent. You may use a letter of intent to obtain a reduced sales
charge if you plan to make investments of $100,000 ($500,000 in the case of the
Growth Index Fund)
30 For information and assistance call your Financial Advisor or Investor
Services at 1-800-282-FUND (3863)
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or more in Class A shares or of $250,000 or more in Class B shares over a 13
month period (30 months in the case of corporate qualified plans). The letter of
intent is not a binding commitment by you to complete the intended purchases.
All your purchases made under the letter of intent during the period covered
will be made at the reduced sales charge for your intended total purchase.
Dividends and distributions will be reinvested without a sales charge and will
not count as purchases under the letter of intent. We will hold in escrow 2% of
the shares you purchase under the letter of intent, and release these shares
when you have completed the intended purchases. If by the end of the period
covered by the letter of intent you have not made the intended purchases, an
additional sales charge may be due. The additional amount will be equal to what
the initial sales charge would have been on the amount actually invested, minus
the sales charges already paid. We will notify you if an additional sales
charges is due. You may pay this additional sales charge within 20 days after
our notification is sent, or we may redeem shares held in escrow to the extent
necessary to pay this charge. Then we will release any remaining escrow shares.
The redemption of shares for this purpose will be a taxable event to you.
Group Investments. Any group of investors which notifies Sentinel Financial that
it will act as a group in purchasing Fund shares, in order to reduce selling
expenses, will be treated as a single entity for purposes of the reduced sales
charges for quantity purchases, including the right of accumulation and letter
of intent.
AG&T Advantage Program. Employers establishing either SIMPLE IRA plans under the
Small Business Protection Act of 1996 or Section 403(b) plans, for which
American Guaranty & Trust Company is the custodian, may group participating
employee accounts together in such a way as to result in reduced sales charges
for quantity purchases. Quantity discounts under this program are based upon
amounts previously invested in the Funds.
Net Asset Value Purchases. You may purchase Class A shares of the Funds at net
asset value if you are included in the following list.
. current and former Directors of the Funds and predecessors to the Funds;
. current and retired employees of the general partners of Sentinel Advisors and
their affiliates;
. directors, employees and clients of the Funds' sub-advisors;
. directors and employees of Beneficial Life Insurance Company, and other
strategic partners of Sentinel Advisors and/or Sentinel Financial;
. registered representatives of securities dealers that have entered into a
sales agreement with Sentinel Financial;
. members of the immediate families of, or survivors of, all of these
individuals;
. non-profit organizations with which any of these persons are actively
involved;
. investment advisors, financial planners, bank trust departments or broker-
dealers who place trades for their own accounts or the accounts of their
clients, and who charge a management, consulting or other fee for their
services, and clients of these investment advisors, financial planners, bank
trust departments or broker dealers who place trades for their own accounts,
if the accounts are linked to the master account of the investment advisor,
financial planner or broker-dealer;
. purchasers who are investing section 403(b) loan principal repayments;
. purchasers who are buying with the redemption proceeds from other mutual fund
shares for which a sales charge or CDSC has been paid;
. investments being transferred from individually managed trust accounts at
American Guaranty & Trust Company; and
. qualified pension, profit-sharing or other employee benefit plans, if the
total amount invested in the plan is at least $1,000,000, the sponsor signs a
$1,000,000 letter of intent, or the shares are purchased by an employer-
sponsored plan with at least 100 eligible employees, and all of the plan's
transactions are executed through a single financial institution or service
organization who has entered into an agreement with Sentinel Financial to use
the Funds in connection with the accounts.
Sentinel Financial may pay dealers for share purchases of the Funds (other
than the Money Market Fund) sold at net asset value to an employee benefit plan
in accordance
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with the last item on the list above, as follows: 1% of the first $2 million of
these purchases, plus 0.80% of the next $1 million of these purchases, plus
0.50% of the next $17 million of these purchases, plus 0.25% of amounts in
excess of $20 million of these purchases.
American Guaranty and Trust Company may also invest short-term balances of
trust accounts in the Short Maturity Government Fund at net asset value. If more
than one person owns an account, all owners must qualify for the lower sales
charge. Please also note you may be charged a transaction fee by a broker or
agent if you effect transactions in Fund shares through a broker or agent.
Reinstatement. If you sell shares or receive dividends or capital gains
distributions in cash and subsequently want to reinvest your proceeds, you may
do so within 365 days at net asset value, without paying any additional sales
charge.
Distribution Plans
The Class A shares of each Fund, other than the Money Market Fund, have adopted
plans under Rule 12b-1 that allow the Funds to pay distribution fees for the
sale and distribution of their shares, and for services provided to
shareholders. The Class A shares of the Funds will pay to Sentinel Financial a
monthly fee at the maximum annual rate of (a) .30% of average daily net assets
in the case of the Small Company, Mid Cap Growth, World, Common Stock and
Balanced Funds, (b) .20% of average daily net assets in the case of the Growth
Index, High Yield, Bond, New York, Pennsylvania, Tax-Free Income and Government
Securities Funds, or (c) .35% of average daily net assets in the case of the
Short Maturity Government Fund.
Sentinel Financial uses a portion of these fees to pay service fees to
dealers. For the Class A shares of the Small Company, Mid Cap Growth, World,
Growth Index, Common Stock and Balanced Funds, annual service fees are 0.20% of
the average net assets owned by the dealer's clients. For the Class A shares of
the High Yield Bond, Bond, New York, Pennsylvania, Tax-Free Income and
Government Securities Funds, annual service fees are 0.10% per annum of the
average net assets owned by the dealer's clients. For the Short Maturity
Government Fund, annual service fees are 0.25% of the average net assets owned
by the dealer's clients. No service fee is paid with respect to Fund accounts
opened prior to March 1, 1993.
Class B Shares
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There is no initial sales charge on Class B shares, but they are subject to a
CDSC
For all purchases of Class B shares, you pay the current net asset value. There
is no initial sales charge. A CDSC will be imposed on Class B shares (including
Class B shares of the Money Market Fund) if you redeem shares during the CDSC
period, unless you can use one of the CDSC waivers listed on page 35.
CDSC. Whether you pay a CDSC upon a redemption of Class B shares and how much it
is depends on the amount of your purchases and the number of years since you
made the purchase. The CDSC schedules for Class B shares are shown below:
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CDSC schedule - Class B shares
Common Stock, Balanced, Mid Cap Growth, Small Company, World, High Yield and
Bond Funds
CDSC Percentage
-----------------------------------------------------
Year Since Purchase Payment Was Made
Purchase amount 1st 2nd 3rd 4th 5th 6th
- -------------------- -----------------------------------------------------
up to $249,999 4% 4% 3% 2% 2% 1%
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$250,000 to $499,999 3.5% 3% 2% 1% 1%
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$500,000 to $999,999 3% 2% 1% 1%
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Growth Index Fund
up to $500,000 2.5% 2.5% 2% 1.5% 1.25% 0.50%
- -------------------- -----------------------------------------------------
$500,000 to $999,999 2% 2% 1% 1% - -
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In determining whether a CDSC is payable, we will take redemptions first from
shares acquired through reinvestment of distributions, or any other shares as to
which a CDSC is waived. We will next take redemptions from the earliest purchase
payment from which a redemption or exchange has not already been taken. The
amount of the CDSC will be equal to the CDSC percentage from the schedules
above, multiplied by the lower of the purchase price or the net asset value of
the shares being redeemed. If you redeem part of your shares, you may choose
whether any CDSC due is deducted from the redemption proceeds or your redemption
request is increased by the amount of any CDSC due. Sentinel Financial receives
any CDSC imposed on a redemption of Class B shares.
Because the CDSC may be lower and the conversion to Class A shares may be
faster for purchases of over $250,000, you should consider whether you would
benefit from the right of accumulation or a letter of intent in connection with
the purchase of Class B shares. These
32 For information and assistance call your Financial Advisor or Investor
Services at 1-800-282-FUND (3863)
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privileges operate in the same way as the similar privileges which permit
reduced sales charges on Class A shares.
Distribution Plan. The Class B shares of the Common Stock, Balanced, Growth
Index, Mid Cap Growth, Small Company, World, High Yield and Bond Funds, have
adopted a plan under Rule 12b-1 that allows these Funds to pay distribution fees
for the sale and distribution of their shares, and services provided to
shareholders. The Class B shares of each Fund will pay to Sentinel Financial a
fee of up to a total of 1.00% annually of average daily net assets, (0.75% for
the Growth Index Fund) of which up to 0.25% shall be for service fees to broker-
dealers. The Growth Index and High Yield Fund Class B shares are not assessed a
distribution fee on the seed money shares owned by National Life Insurance
Company or Penn Mutual Life Insurance Company, which will result in an overall
distribution fee to the Class B shares of the Growth Index and High Yield Funds
of less than 0.75% or 1.00%, for so long as National Life or Penn Mutual
maintains its investment.
Sentinel Financial pays to dealers a service fee which varies based on the
average daily assets in Class B shares of the Funds (other than the Money Market
Fund) for which each registered representative of the dealer is the registered
representative of record at the time service fees are paid, as follows:
Average Daily Assets in Class B Shares of Annual
the Funds for which a Particular Individual Broker-Dealer
is the Registered Representative of Record Service Fee
$0 - $99,999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -0-
$100,000 - $199,999 . . . . . . . . . . . . . . . . . . . . . . . . . . 0.10%
$200,000 - $999,999 . . . . . . . . . . . . . . . . . . . . . . . . . . 0.25%
$1,000,000 and over . . . . . . . . . . . . . . . . . . . . . . . . . . 0.50%
A selling dealer may elect a service fee of 0.25% per annum, instead of the
above arrangement. Class B shares will not pay service fees which total more
than 0.25% per year. If the above schedule requires a payment from Sentinel
Financial which exceeds 0.25% of average daily assets of the Class B shares of
any Fund, then Sentinel Financial will not be able to recover the excess from
the Funds. Sentinel Financial may change the amounts of assets needed to qualify
for the 0.10%, 0.25% and 0.50% service fee rates from time to time. Sentinel
Financial intends to manage these asset levels with the goal of producing an
average service fee on Class B shares of 0.25%. The Class B share service fee
for the first year after a purchase will be used to recover a portion of the
cost of the dealer concession paid by SFSC to the selling dealer, which portion
of the dealer concession is considered the service fee for the first year. No
service fee is paid on Class B shares in house accounts, accounts in nominee
name, or accounts in dealer street name.
Conversion to Class A Shares. The Class B shares automatically convert to Class
A shares after a fixed period of time, which depends upon the size of your
purchase. For purchases up to $250,000 ($500,000 for the Growth Index Fund), the
automatic conversion occurs at the end of the sixth year; for purchases from
$250,001 to $500,000 (except for the Growth Index Fund), the automatic
conversion occurs at the end of the fifth year; and for purchases from $500,001
to $999,999, the automatic conversion occurs at the end of the fourth year. The
holding period for Class B shares will include the holding period of Class B
shares of another Fund from which they were exchanged.
Payments to Dealers. Sentinel Financial pays selling broker-dealers, at the time
you purchase Class B shares, the percentages of the aggregate purchase amount
shown below (including purchases of Class A, Class C and Class D shares under a
right of accumulation or letter of intent):
Amount of Purchase Payment Broker-Dealer Payment
All Funds Growth
other than Index Fund
Growth Index Fund
Up to $249,999 . . . . . . . . . . 4.0%. . . . . . . . . . . . . 2.5%
$250,000 to $499,999 . . . . . . . 2.5%. . . . . . . . . . . . . 2.5%
$500,000 to $999,999 . . . . . . . 2.0%. . . . . . . . . . . . . 2.0%
Class B Shares of the U.S. Treasury Money Market Fund. The Class B shares of the
Money Market Fund do not bear the higher ongoing distribution expenses normally
associated with the Class B shares. However, time during which assets are in the
Class B shares of the Money Market Fund will not count either toward the time
that must elapse before Class B shares are automatically converted to Class A
shares of the same Fund, or toward the time that results in a declining CDSC.
Therefore, if the Class B shares of the Money Market Fund are ultimately
redeemed, you will pay a CDSC in the same amount as would have been due on the
date the assets were exchanged into the Class B shares of the Money Market Fund,
regardless of how long you hold the Class B shares of the Money Market Fund.
Also, if you exchange the Money Market Fund Class B shares back into Class B
shares of another Fund, and then later redeem
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those shares, your CDSC, if any, will not reflect the time you held the Money
Market Fund Class B shares. The automatic conversion into Class A shares will
occur only after you hold Class B shares of Funds other than the Money Market
Fund for the six, five or four year period.
Class C Shares
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There is no initial sales charge on Class C shares, but they remain subject to
higher ongoing fees for the entire investment period
For all purchases of Class C shares, you pay the current net asset value. There
is no initial sales charge. A CDSC in the amount of 1.00% of the purchase price
will be imposed on Class C shares if you redeem shares during the first year
after their purchase, unless you can use one of the CDSC waivers listed on page
35.
Similar to the Class B shares, Class C shares are subject to higher distribution
fees than Class A shares. However, since Class C shares never convert to Class A
shares, investments in Class C shares remain subject to these higher
distribution fees for the entire holding period of the investment.
CDSC. You will pay a CDSC if you redeem Class C shares in the first year after
purchase, in the amount of 1.00% of the lower of the purchase price or the net
asset value of the shares redeemed unless a waiver applies. We apply the same
rules in determining a CDSC as we do for Class B shares. Sentinel Financial
receives the entire amount of any CDSC paid.
Distribution Plan. The Class C shares of the Common Stock, Balanced, World, and
High Yield Funds have adopted a plan under Rule 12b-1 that allows these Funds to
pay distribution fees for the sale and distribution of their shares, and
services provided to shareholders. These Funds pay to Sentinel Financial 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 Sentinel Financial keeps this fee
to recover the initial sales commission of 1.00% that it pays to the selling
dealer. In subsequent years, the entire 1.00% will be paid to the selling
dealer.
Exchanges. If you purchase Class C shares, you will have the ability to exchange
at net asset value only for the Class C shares of other Funds, except that you
may also exchange into Class A shares of the Money Market Fund. However, if you
exchange Class C shares into Money Market Fund Class A shares within one year of
your purchase of the Class C shares, and then subsequently redeem the Money
Market Fund shares, you may pay a CDSC. If you exchange Class C shares into
Money Market Fund Class A shares, you may exchange back into Class C shares at
any time, but may not exchange at net asset value into Class A shares or Class B
shares of any Fund.
Payments to Dealers. For all sales of Class C shares, Sentinel Financial intends
to make payments to selling broker-dealers, at the time you purchase Class C
shares, of amounts equal to 1% of the aggregate purchase amount.
Class D Shares (Balanced Fund only)
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There is no initial sales charge on Class D shares, but they are subject to a
CDSC
For all purchases of Class D shares of the Balanced Fund, you pay the current
net asset value. There is no initial sales charge. A CDSC will be imposed on
Class D shares (including Class A shares of the Money Market Fund, if you
exchange Class D shares into the Money Market Fund), if you redeem shares during
the seven years after their purchase, unless you can use one of the CDSC waivers
listed on page 35.
CDSC. Whether you pay a CDSC upon a redemption of Class D shares and how much it
is depends on the number of years since you made the purchase. The CDSC schedule
for Class D shares is shown below:
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CDSC schedule - Class D shares
CDSC Percentage
---------------------------------------
Purchase Year Since Purchase Payment Was Made
amount 1st 2nd 3rd 4th 5th 6th 7th
- ----------- ---------------------------------------
Any amount 6% 6% 5% 4% 4% 3% 2%
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The above schedule is higher than the schedules of CDSCs for Class B shares,
which start at maximums of 4% and extend for a maximum of six years. The CDSC
waivers, which are listed on page 35, are the same as those available for Class
B shares, except that the annual CDSC-free percentage redemption amount is 8%
instead of 10%. We apply the same rules in determining a CDSC as we do for Class
B shares. Sentinel Financial receives the entire amount of any CDSC paid.
Distribution Plan. The Class D shares of the Balanced Fund have adopted a plan
under Rule 12b-1 that allows it to pay distribution fees for the sale and
distribution of their shares. The Fund pays a fee to Sentinel Financial at a
34 For information and assistance call your Financial Advisor or Investor
Services at 1-800-282-FUND (3863)
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maximum annual rate of 0.75% of average daily net assets of the Class D shares
of the Balanced Fund. The Class D Distribution Plan is similar in its operation
to the Class B Distribution Plan, except that there is no service fee of up to
0.25%, and no asset-based service fee payable to dealers. These distribution
fees are lower than those that apply to Class B shares, but they are higher than
those that apply to Class A shares.
Conversion to Class A Shares. The Class D shares automatically convert to Class
A shares after 10 years.
Exchanges into Class A Shares of the Money Market Fund. You may exchange Class D
shares of the Balanced Fund into Class A shares of the Money Market Fund.
However, if you do so within seven years of the purchase of the Class D shares,
and subsequently redeem the Money Market Fund shares, you may pay a CDSC. You
may exchange back into Class D shares of the Balanced Fund at any time, but in
this case the time your investment was in the Money Market Fund will not count
toward the time for conversion to Class A shares of the Balanced Fund, or for
reduction or elimination of the CDSC.
Payments to Dealers. For sales of Class D shares of the Balanced Fund, Sentinel
Financial intends to make payments to selling broker-dealers, at the time you
purchase Class D shares, of amounts equal to 6% of the aggregate purchase
amount. If a selling broker-dealer has entered into agreements required by
Sentinel Financial, Sentinel Financial may pay annualized commissions in advance
with respect to Class D accounts which are set up to make, and are expected to
make monthly automated additional purchases.
Waiver or Reduction of a CDSC
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A CDSC will be waived in the following situations if you notify us at the time
of redemption that a waiver applies:
1. Redemptions of shares you acquire from the reinvestment of income
distributions and/or capital gains distributions;
2. Redemptions from your account (including when you own the shares as joint
tenant with your spouse) following your death, or from the account of a trust
whose primary income beneficiary has died, if the redemption occurs within
one year of your death or the beneficiary's death;
3. Redemptions from qualified retirement accounts taken in equal or
substantially equal periodic payments not to exceed life, or joint life
expectancy and not otherwise subject to the 10% penalty tax for early
withdrawal of Code section 72(t);
4. Redemptions that occur as a result of a loan taken from an account
established as a retirement plan account for an employee of a tax-exempt
organization under section 403(b)(7) of the Code;
5. The CDSC will be waived on redemption of shares acquired prior to September
13, 1999 in amounts up to 10% annually of the account's then current net
asset value. Note that in the case of Class D shares this amount is up to 8%
annually instead of up to 10% annually. The CDSC will be waived on
redemptions made under Systematic Withdrawal Plans for shares acquired on or
after September 13, 1999 in amounts up to 10% annually of the account's then
net asset value. Again in the case of Class D shares this amount is up to 8%
annually instead of up to 10% annually. We have also enhanced our systematic
withdrawal plan administration to permit Systematic Withdrawal Plans to be
either a fixed dollar amount or a percentage of the account's value, rather
than only a percentage of the account's value; and
6. For Class B share 401(k) plans administered by BYSIS, redemptions resulting
from the termination of a participant's participation in the plan.
The waivers described above may be useful in a wide variety of situations.
These may include, but are not limited to, funding of expenses for persons
fulfilling certain religious missionary obligations, educational expenses and
the purchase of a new home.
Sentinel Financial may require documentation to show a waiver applies, such
as certifications by plan administrators, applicable tax forms, or death
certificates. The waiver provisions will not apply to Class B shares initially
invested in the Money Market Fund as part of the program described on page 28.
No CDSC will apply to Class B, Class C or Class D share accounts owned by
affiliates of Sentinel Advisors if Sentinel Financial has not paid an initial
commission to a selling dealer.
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Other Matters Relating to Distribution of Fund Shares
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Equity Services, Inc., 1717 Capital Management Company, Janney Montgomery Scott,
Inc., and Hornor, Townsend & Kent, Inc., which are wholly-owned subsidiaries of
the partners of Sentinel Advisors, receive a dealer reallowance equal to the
entire sales charge on their sales of Fund shares. As a result, they may be
considered underwriters of the Funds' shares.
Sentinel Financial will reimburse all broker-dealers who agree with Sentinel
Financial to undertake activities designed to specifically promote the Funds,
for costs incurred by these broker-dealers in the course of these activities.
Sentinel Advisors may consider sales of shares of the Funds in the selection of
broker-dealers to execute portfolio transactions for the Funds, as long as
commissions paid are no higher than would otherwise be paid and the prices are,
in Sentinel Advisors' judgment, the best then available.
High Yield Fund Class B Shares - Promotion
As a special promotion during the period May 1, 1999 to March 31, 2000, Sentinel
Financial Services Company will pay to dealers who agree to participate in the
promotion, on sales of Class B shares of Sentinel High Yield Bond Fund, the
following amounts (stated as percentages of the aggregate purchase amount):
Amount of Purchase Payment Broker-Dealer Payment
Up to $249,999 5.0%
$250,000 to $499,999 3.5%
$500,000 to $999,999 3.0%
These amounts are 1.0% greater than the payments normally made on such sales.
36 For information and assistance call your Financial Advisor or Investor
Services at 1-800-282-FUND (3863)
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How to Buy, Sell, Exchange and Transfer Shares
Buying Shares
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There are several convenient ways to buy shares
The minimum initial investment for all Funds except the Growth Index Fund and
certain retirement plan accounts is $1,000. The minimum subsequent investment
for all Funds except the Growth Index Fund is $50. You may also invest in any of
these same funds with as little as $50 using the Automatic Investment Plan. The
minimum initial and subsequent investments for the Growth Index Fund are $5,000
and $100, respectively. You can also invest in the Growth Index Fund with as
little as $100 using the Automatic Investment Plan. For all Funds, the minimum
investment for IRA and other qualified retirement plan accounts is $1,000.
Purchasing Shares by Check
To purchase shares by check, make your check payable to "Sentinel Administrative
Service Company" and mail it to: Sentinel Administrative Service Company
P. O. Box 1499
Montpelier, VT 05601-1499
To make your initial purchase by check, please also fill out an application
(one is attached to this prospectus) and return the application with your check.
All checks must be drawn in U.S. dollars on a U.S. bank. The Funds reserve the
right to withhold the proceeds of a redemption of shares purchased by check
until the check has cleared, which may take up to 15 days after the purchase
date.
Your purchase will be effected on the day when federal funds are made
available to a Fund, usually within one business day after Sentinel Service
receives the check. We may charge a fee of $25 for each check returned unpaid
due to insufficient funds.
Purchasing Shares by Wire
You may purchase shares by wiring federal funds directly to Sentinel Service
when the New York Stock Exchange and Federal Reserve banks are open for
business.
To make your initial purchase by wire, call our toll-free number noted below
and obtain an account number. Complete the application and return it promptly to
Sentinel Service.
Your bank may charge you a fee to wire funds. Payments made by wire and
received by Sentinel Service on any business day are available to the Fund on
the next business day.
Dealer Wire Purchase Orders
As a convenience to shareholders, Sentinel Financial will, acting for the Funds
without charge, ordinarily accept orders from dealers who have sales agreements
with the Funds for the purchase of shares at the applicable offering price.
Purchasing Shares Online
If you already have an account you may purchase shares of the Funds over the
Internet by accessing the Funds' website at www.sentinelfunds.com.
Automatic Investment Plan
This feature affords you the opportunity to dollar-cost average using periodic
electronic funds transfer from your bank account to the Fund(s) of your choice.
Telephone Investment Service
This feature enables you to purchase Fund shares via electronic funds transfers
from your bank account simply by phoning Sentinel Service.
Government Direct Deposit Privilege
You may purchase Fund shares (minimum of $50.00 per transaction) by having
local, state or Federal salary, Social Security, or certain veterans', military
or other payments from the Federal government automatically deposited into your
account. You may deposit as much of the payments as you elect. To enroll in
Government Direct Deposit, please contact Sentinel Service.
Payroll Savings Plan
You may purchase Fund shares (minimum of $50.00 per transaction) automatically
on a regular basis by having money withheld from your paycheck, if your employer
permits this. You may have part or all of your paycheck transferred to your
existing Sentinel account electronically each pay period. To establish a
Sentinel Payroll Savings Plan account, please contact Sentinel Service.
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Selling Shares
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You may sell your shares in a number of convenient ways
You may sell your shares back to the Funds at net asset value, less any
applicable CDSC, as of the close of business on the day your instructions are
received, in good order, prior to 4:00 p.m. on a day that the NYSE is open for
business.
If your shares are held by Sentinel Service, you can sell your shares in the
following ways.
By Mail
You may sell your shares by providing Sentinel Service with the appropriate
instructions by mail. Your instructions must be signed by the registered
owner(s) exactly as the shares are registered. If the proceeds of the redemption
exceed $50,000, if the check is not made payable to the registered owner(s) and
mailed to the record address, or if the record address has been changed within
the past 30 days, the signatures of the registered owner(s) must be guaranteed
by an eligible financial institution that meets Sentinel Service's requirements.
Dealer Wire Redemption Orders
For the convenience of shareholders, Sentinel Financial, acting for the Funds
without charge, ordinarily accepts orders from dealers who have sales agreements
with the Funds for the repurchase of shares based on net asset value, less any
applicable CDSC. Brokers are not prohibited from charging for their service on
these redemptions.
Telephone Redemption
You may redeem up to $1,000,000 from your account each business day by providing
instructions to do so over the telephone, by calling Sentinel Service at 1-800-
282-FUND(3863). You may request that a check made payable to the registered
owners be sent their address of record, or you may request that the proceeds be
sent directly to a predesignated commercial bank account. If proceeds are wired
to your bank, we will deduct a fee of $25 from the proceeds. In addition, it is
possible that your bank may charge a fee for receiving wire transfers. You may
request a redemption on the Funds' automated voice response system.
Neither the Funds, Sentinel Advisors nor Sentinel Service is responsible for
the authenticity of exchange or redemption instructions received by telephone,
and they are not liable in the event of an unauthorized telephone exchange or
redemption, provided that, in the case of the Funds, the Funds have followed
procedures reasonably designed to prevent losses that take into account the cost
of these procedures and the potential risk of loss. In processing telephone
exchange or redemption requests, the Funds will use reasonable procedures to
confirm that telephone instructions are genuine, and if these procedures are not
employed, the Funds may be liable for any resulting losses. These procedures
include receiving all calls for telephone redemptions and exchanges on a
recorded telephone line, and screening callers through a series of questions
regarding specific account information.
You may indicate on your purchase application that you do not wish to have
telephone transaction privileges.
Online Redemption
You may also request a redemption over the Internet by accessing the Funds'
website at www.sentinelfunds.com.
By Checkwriting
If you own Class A shares of the High Yield, Bond, New York, Pennsylvania, Tax-
Free Income, Government Securities, Short Maturity Government and Money Market
Funds, you may sell shares by writing a check against your account. This check
writing privilege is free. If you write a check to redeem shares, we normally
will not honor the redemption check if those shares have been purchased less
than 15 days prior to the date the check is presented to Sentinel Service.
Redemptions by checkwriting are taxable transactions.
By Systematic Withdrawals
You may arrange to receive automatic regular withdrawals from your account. Each
withdrawal will be a taxable event. You must reinvest dividends and capital
gains distributions to use systematic withdrawals. No interest will accrue on
amounts represented by uncashed checks sent under a systematic withdrawal plan.
If You Hold Share Certificates
If you are the shareholder of record and have a certificate representing
ownership in a Fund, you can redeem your shares by mailing the certificate to
Sentinel Administrative Service Company, P. O. Box 1499, Montpelier, VT 05601-
38 For information and assistance call your Financial Advisor or Investor
Services at 1-800-282-FUND (3863)
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1499, with appropriate instructions to redeem. Your instructions should be
signed by the registered owner(s) exactly as the shares are registered. The
signatures of the registered owner(s) must be guaranteed by an eligible finan-
cial institution which meets Sentinel Service's requirements if the proceeds of
the redemption exceed $50,000, if the check is not made payable to the
registered owner(s) and mailed to the record address, or if the record address
has been changed within the past 30 days. We suggest sending certificates by
certified mail. You may also redeem share certificates by presenting them in
person to Sentinel Service at its office at National Life Drive, Montpelier,
Vermont.
Other Information on Redeeming Shares
Normally, Sentinel Service will mail you a check in payment for your shares
within seven days after it receives all documents required to process the
redemption. We may delay payment during any period in which the right of
redemption is suspended or date of payment is postponed because the NYSE is
closed, trading on the NYSE is restricted, or the Securities and Exchange
Commission deems an emergency to exist. No interest will accrue on amounts
represented by uncashed redemption checks.
We may require additional documentation to redeem shares that are registered
in the name of a corporation, trust, company retirement plan, agent or
fiduciary, or if a shareholder is deceased. We will not honor redemption
requests if you have bought the shares by check within 15 days of the redemption
request, unless we have confirmed that your check has been cleared for payment.
Distributions from retirement plans may be subject to withholding by the
Internal Revenue Service under the Code.
Certain Account Fees
Due to the expense of maintaining accounts with small balances, we reserve the
right to liquidate, and/or to charge an annual maintenance fee of up to $25 to
any account that has a current value less than $1,000 and that has been open for
at least 24 months.
Pension, 401(k) and profit-sharing plans which elect to have individually
registered accounts for the benefit of plan participants will be assessed an
annual service fee for each participant account, in the amounts shown below.
Fee Per
Average Account Value Participating Account
$0 - $1000 . . . . . . . . . . . $20.00
$1000 - $2999. . . . . . . . . . $10.00
$3000 and over . . . . . . . . . No fee
This fee will be deducted automatically from each participant account in June of
each year unless it is prepaid.
Miscellaneous Fees
AG&T Custodial Accounts
Annual Custodial Fee per Social Security Number. . . . $15.00
Closeout Fee per Account . . . . . . . . . . . . . . . $15.00
Transfer of Assets Fee per Transaction . . . . . . . . $25.00
Service Fees
Express Mail Deliveries. . . . . . . . . . . . . . . . $15.00
Federal Funds Wire . . . . . . . . . . . . . . . . . . $15.00
Exchanges from One Fund to Another
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You may exchange shares of one Fund for shares of the same class of another
Fund, without charge, by phoning Sentinel Service or by providing appropriate
instructions in writing to Sentinel Service. Initial purchases of less than $1
million of the Growth Index Fund and the Short Maturity Government Fund must
remain in the account for 90 days before they are eligible for an exchange.
Shares of other Sentinel Funds also may not be exchanged into shares of the same
class of the Growth Index Fund within the first 90 days after the initial
purchase of those other Sentinel Fund Shares.
Because Class B shares in the Tax-Free Income, New York, Pennsylvania,
Government Securities and Short Maturity Government Funds are not currently
offered, holders of Class B shares may not exchange into these Funds. Similarly,
because Class C shares of the Growth Index, Mid Cap Growth, Small Company, Bond,
Tax-Free Income, New York, Pennsylvania, Government Securities and Short
Maturity Government Funds are not currently offered, holders of Class C shares
may not exchange into these Funds. Class C shares may be exchanged for Class A
shares of the Money Market Fund (but if the Class C shares had not been held for
a year before the exchange into the Money Market Fund, a 1.00% CDSC may apply if
the
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Money Market Fund shares are then redeemed). The Money Market Fund shares may be
exchanged back into Class C shares at any time.
Holders of Class D shares of the Balanced Fund may not make exchanges into
other Funds, except that Class D shares may be exchanged for Class A shares of
the Money Market Fund. The Money Market Fund shares may be exchanged back into
Class D shares of the Balanced Fund at any time. If these Money Market Fund
shares are subsequently redeemed, however, we will assess a CDSC in the amount
which would have applied to the Class D shares of the Balanced Fund on the date
of the exchange into the Money Market Fund.
Funds are only available for exchange for residents of states in which these
Funds are registered. If you initially buy Class A shares in the Money Market
Fund, you may not exchange into other Funds without being treated as an initial
purchaser of the other Fund's shares. Holding periods for shares which have been
exchanged for the currently held shares will be included in the holding period
of the current shares, except that time in the Money Market Fund will not count
toward the holding period necessary to reduce or eliminate any applicable CDSC,
or to be converted into Class A shares. The normal minimum account sizes apply
to new accounts opened by exchange.
New purchases must remain in an account for 15 days before they can be
exchanged to another Fund. The Funds disclaim liability for unauthorized
telephone instructions under the same policy that applies to telephone
redemption instructions, discussed on page 38. We currently do not limit the
number of times you may exercise the exchange privilege. We may modify or
terminate the exchange privilege in accordance with the rules of the Securities
and Exchange Commission (the current rules require 60 days advance notice to
shareholders prior to the modification or termination of the exchange
privilege).
You may also set up your account to exchange automatically a specified number
or dollar-value of shares in one of the Funds into shares of the same class in
another Fund at regular intervals.
Transfers of Ownership of Shares
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When you need to change ownership of your shares or change the name on an
account, a Sentinel Service representative will assist you.
40 For information and assistance call your Financial Advisor or Investor
Services at 1-800-282-FUND (3863)
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How the Funds Are Priced
How the value of Fund shares is determined
Net asset value for each Fund is calculated once each business day at 4:00 p.m.,
Eastern Time, and becomes effective immediately upon its determination. The net
asset value per share is computed by dividing the total value of the assets of
each Fund, less its liabilities, by the total number of each Fund's outstanding
shares. The Funds' investments are valued as shown below:
. Equity securities are valued at the latest transaction prices on the
principal stock exchanges on which they are traded.
. Unlisted and listed securities for which there were no sales during the day
are valued at the mean between the latest available bid and asked prices.
. Fixed-income securities are valued daily on the basis of valuations furnished
by an independent pricing service.
. Financial futures are valued at the settlement price established each day by
the board of trade or exchange on which they are traded.
. Exchange-traded options are valued at the last sale price unless there is no
timely sale price, in which event current prices provided by market makers
are used.
The Money Market Fund's assets are valued on the basis of amortized cost,
which involves valuing a portfolio instrument at its cost initially and
thereafter assuming a constant amortization to maturity of any discount or
premium, regardless of the impact of fluctuating interest rates on the market
value of the instrument.
The per share net asset value of Class A shares generally will be higher than
the per share net asset value of Class B, Class C or Class D shares, reflecting
the higher daily expense accruals of Class B, Class C and Class D shares. It is
expected, however, that the per share net asset value of the classes will tend
to converge (although not necessarily meet) immediately after the payment of
dividends or distributions. Dividends and distributions will differ by the
appropriate amount of the expense accrual differences between the classes.
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Dividends, Capital Gains and Taxes
When the Funds pay dividends
The Funds distribute their net investment income as follows:
Fund Dividends Paid
Growth Index Fund. . . . . . . . . . . . . . . . . . . . Annually
Mid Cap Growth Fund. . . . . . . . . . . . . . . . . . . Annually
Small Company Fund . . . . . . . . . . . . . . . . . . . Annually
World Fund . . . . . . . . . . . . . . . . . . . . . . . Annually
Common Stock Fund. . . . . . . . . . . . . . . . . . . . Quarterly
Balanced Fund. . . . . . . . . . . . . . . . . . . . . . Quarterly
High Yield Fund. . . . . . . . . . . . . . . . . . . . . Monthly
Bond Fund. . . . . . . . . . . . . . . . . . . . . . . . Monthly
Government Securities Fund . . . . . . . . . . . . . . . Monthly
Short Maturity Government Fund . . . . . . . . . . . . . Monthly
Tax-Free Income Fund . . . . . . . . . . . . . . . . . . Monthly
New York Tax-Free Income Fund . . . . . . . . . . . . . .Monthly
Pennsylvania Tax-Free Income Trust . . . . . . . . . . . Monthly
The Money Market Fund's net income is determined as of the close of business,
4:00 p.m. Eastern Time, on each day the NYSE is open. The Fund declares
dividends of all of its daily net income to shareholders of record as of the
close of business the preceding business day. Dividends are declared and accrued
each day the NYSE is open and are payable monthly. The amount of the dividend
may fluctuate daily and dividends will not be paid on days when net realized
losses on securities in the portfolio or expenses exceed the Fund's income.
Distributions of any net realized capital gains for a fiscal year are paid in
December, following the November 30th fiscal year-end.
You may elect to receive all or any part of your
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dividends and/or capital gains distributions in cash, shares of your Fund, or
shares of another Fund of the same class. Unless you elect otherwise, your
dividends will be reinvested in shares of the same Fund. Any dividend or
distribution of less than $10.00 must be reinvested. If you elect to receive
dividends and/or capital gain distributions in cash and the postal or other
delivery service is unable to deliver checks to your address of record, your
distribution option will automatically be converted to having all dividend and
other distributions reinvested in additional shares. No interest will accrue on
amounts represented by uncashed dividend or other distribution checks.
You will pay tax on dividends and capital gains distributions from the Funds
whether you receive them in cash or additional shares. If you redeem Fund shares
or exchange them for shares of another Fund, any gain or the transaction may be
subject to tax. Except for the Tax-Free Income, New York and Pennsylvania Funds,
the Funds intend to make distributions that will be taxed either as ordinary
income or capital gains.
If you are neither a lawful permanent resident nor a citizen of the U.S. or
if you are a foreign entity, the Funds' ordinary income dividends (which include
distributions of net short-term capital gains) will generally be subject to a
30% U.S. withholding tax, unless a lower treaty rate applies.
Dividends and interest received by the World Fund may give rise to
withholding and other taxes imposed by foreign countries. Tax conventions
between certain countries and the United States may reduce or eliminate these
taxes. You may be able to claim a credit or deduction with respect to such taxes
if certain requirements are met.
By law, the Funds must withhold 31% of your distributions and proceeds if you
have not provided a taxpayer identification number or social security number.
New York, Pennsylvania and Tax-Free Income Funds
Each of the New York, Pennsylvania and Tax-Free Income Funds intends to invest a
sufficient portion of its assets in municipal bonds and notes to qualify to pay
"exempt-interest dividends" to shareholders. These exempt-interest dividends are
generally not subject to federal income tax. However, these Funds may invest
portions of their assets in investments which generate income that is not exempt
for federal income tax. Most of the income from the Tax-Free Income Fund will be
subject to any state income tax to which you are subject. Any capital gains
distributed by the these Funds will normally be taxable as capital gains. In
addition, gain from the sale of municipal bonds purchased at a market discount
will be treated as ordinary income for federal income tax purposes rather than
capital gain. This rule may increase the amount of ordinary income dividends you
receive.
Distributions from the New York Fund which are attributable to interest
income received from New York municipal bonds also will be exempt from New York
State and New York City personal income tax. Distributions from the Pennsylvania
Fund which are attributable to interest income received from Pennsylvania
municipal bonds also will be exempt from Pennsylvania personal income tax.
Distributions from the Pennsylvania Fund will be exempt from the Philadelphia
School District investment income tax for individual residents of the City of
Philadelphia if they are attributable to interest received from Pennsylvania
municipal bonds or from qualifying U.S. government obligations, or if they are
capital gain dividends for federal income tax purposes. Shares of the
Pennsylvania Fund will be exempt from Pennsylvania county personal property tax
to the extent Pennsylvania Fund holds Pennsylvania municipal bonds and
qualifying U.S. government obligations on the annual assessment date.
If the New York and Pennsylvania Funds invest in investments other than New
York municipal bonds and Pennsylvania municipal bonds, respectively, a portion
of their income distributions may be subject to state and local taxes, and
possibly federal income tax. The Funds will inform shareholders annually as to
the portions of their distributions which are exempt-interest dividends and
which are exempt from state and local income taxes.
This section summarizes some of the consequences under current federal tax
law and relevant state and local tax laws of investments in the Funds. It is not
a substitute for personal tax advice. Consult your personal tax advisor about
the potential tax consequences of investments in the Funds under all applicable
tax laws.
42 For information and assistance call your Financial Advisor or Investor
Services at 1-800-282-FUND (3863)
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Management of the Funds
INVESCO acts as subadvisor to the World Fund
Sentinel Advisors Company manages the Funds' investments and their business
operations under the overall supervision of the Board of Directors of Sentinel
Group Funds, Inc. (for all Funds except the Pennsylvania Fund) and the Board of
Trustees of Sentinel Pennsylvania Tax-Free Trust. Sentinel Advisors has the
responsibility for making all investment decisions for the Funds, except where
it has retained a subadvisor to make the investment decisions for a Fund.
Sentinel Advisors has retained INVESCO Global Asset Management (N.A.), Inc. as
the subadvisor to manage the investments of the World Fund, and Evergreen
Investment Management Company as the subadvisor to manage the investments of the
High Yield Fund. Sentinel Advisors is a partnership of affiliates of three major
insurance companies, National Life Insurance Company, Provident Life Insurance
Company, and Penn Mutual Life Insurance Company Its principal business address
is National Life Drive, Montpelier, Vermont 05604. INVESCO is located at 1315
Peachtree Street, Atlanta, Georgia 30309. Evergreen is located at 200 Berkeley
Street, Boston, Massachusetts 02116.
Evergreen acts as subadvisor to the High Yield Fund
The Funds' investment advisory contracts call for the Funds to pay Sentinel
Advisors fees, which were, for the fiscal year ended November 30, 1998, equal to
the following percentages of the Funds' average daily net assets:
Common Stock Fund . . . . . . . . . . . . . . . . . . . . . . . 0.55%
Balanced Fund . . . . . . . . . . . . . . . . . . . . . . . . . 0.61%
Mid Cap Growth Fund . . . . . . . . . . . . . . . . . . . . . . 0.61%
Small Company Fund. . . . . . . . . . . . . . . . . . . . . . . 0.61%
World Fund. . . . . . . . . . . . . . . . . . . . . . . . . . . 0.61%
High Yield Bond Fund. . . . . . . . . . . . . . . . . . . . . . 0.75%
Bond Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.53%
Government Securities Fund. . . . . . . . . . . . . . . . . . . 0.53%
Short Maturity Government Fund. . . . . . . . . . . . . . . . . 0.53%
U.S. Treasury Money Market Fund . . . . . . . . . . . . . . . . 0.40%
Tax-Free Income Fund. . . . . . . . . . . . . . . . . . . . . . 0.53%
New York Tax-Free Income Fund . . . . . . . . . . . . . . . . . 0.53%
Pennsylvania Tax-Free Trust . . . . . . . . . . . . . . . . . . 0.55%
Sentinel Advisors currently waives all or a portion of its advisory fees for
some of the Funds. The effective advisory fee rates (as a percentage of each
Fund's average daily net assets) that these Funds paid in the fiscal year ended
November 30, 1998, after taking these waivers into account, were as follows:
Bond Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.35%
Government Securities Fund. . . . . . . . . . . . . . . . . . . 0.45%
Short Maturity Government Fund. . . . . . . . . . . . . . . . . 0.23%
Tax-Free Income Fund. . . . . . . . . . . . . . . . . . . . . . 0.35%
New York Tax-Free Income Fund . . . . . . . . . . . . . . . . . 0%
Pennsylvania Tax-Free Trust . . . . . . . . . . . . . . . . . . 0.01%
The investment advisory contract for the Growth Index Fund requires the Fund
to pay Sentinel Advisors fees equal to 0.30% of the Fund's average daily net
assets. Sentinel Advisors currently waives a portion of this fee, so that the
Fund's effective fee rate after taking the waiver into account is 0.25%.
Portfolio Managers
Sentinel Advisors employs a team approach in managing the Funds. The management
teams are comprised of a lead portfolio manager, other portfolio managers and
research analysts. Each team includes members with one or more areas of
expertise and shares the responsibility for providing ideas, information and
knowledge in managing the Funds. Rodney A. Buck, the Chief Executive Officer of
Sentinel Advisors, is also Chairman and Chief Executive Officer of National Life
Investment Management Company, Inc., and Senior Vice President and Chief
Investment Officer of National Life. Mr. Buck has been employed by Sentinel
Advisors or its affiliates since 1972. There are three investment management
teams: an Equity Value Team, headed by Van Harissis, Senior Vice President of
Sentinel Advisors; an Equity Growth Team, headed by Robert L. Lee, Senior Vice
President of Sentinel Advisors; and a Fixed Income Team, headed by David M.
Brownlee, Senior Vice President of Sentinel Advisors.
Each of Messrs. Buck, Lee, Brownlee and Harissis is a Chartered Financial
Analyst. Mr. Lee and Mr. Brownlee have
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each been associated with Sentinel Advisors since 1993. Mr. Harissis joined
Sentinel Advisors in June 1999.
The Common Stock Fund is managed by the Equity Value Team, led by Mr.
Harissis. Mr. Harissis was a managing director and portfolio manager at Phoenix
Investment Partners from 1995 to 1999, and previously was a portfolio manager at
Howe & Rusling. Mr. Lee has been the portfolio manager for the Mid Cap Growth
Fund since November, 1993 and for the Growth Index Fund since its inception in
September, 1999. The Small Company Fund is managed by Scott T. Brayman, Vice
President of Sentinel Advisors, and Mr. Lee. Mr. Brayman is a Chartered
Financial Analyst, and has been with Sentinel Advisors since 1995. He has been
involved with the Small Company Fund since he joined Sentinel Advisors. Prior to
joining Sentinel Advisors, he was associated with Argyle Capital Management,
Inc.
The Balanced Fund is managed by a team consisting of Mr. Buck, Mr. Harissis
and William C. Kane, Vice President of Sentinel Advisors. Mr. Buck has been the
Fund's lead portfolio manager since 1982. Mr. Kane is a Chartered Financial
Analyst, and has been employed by Sentinel Advisors or its affiliates since
1992.
The portfolio manager for the Bond Fund is Mr. Kane. The portfolio manager of
the Government Securities and Short Maturity Government Funds is Mr. Brownlee.
The portfolio manager of the Tax-Free Income, New York and Pennsylvania Funds is
Kenneth J. Hart, Vice President of Sentinel Advisors. Mr. Hart has been with
Sentinel Advisors or its affiliates since 1990. The portfolio managers of the
Money Market Fund are Mr. Temple and Darlene Coppola, Money Market Trader of
Sentinel Advisors. Ms. Coppola has been employed by Sentinel Advisors or its
affiliates since 1974.
Erik B. Granade, International Equity Portfolio Manager of INVESCO, has been
the lead manager of the World Fund since June 1994. Michele T. Garren has been
the fund's co-manager since September, 1997. Mr. Granade is a Chartered
Financial Analyst. He was associated with Cashman Farrell and Associates from
June, 1994 to March 31, 1996, when he moved to INVESCO. Prior to June, 1994 he
was an International Portfolio Manager with Provident Capital Management, Inc.
Ms. Garren is a Chartered Financial Analyst. She was associated with AIG Global
Investment Corp. from August, 1993 to July, 1996.
The portfolio manager for the High Yield Fund is Prescott B. Crocker, Senior
Vice President and Group Head of Corporate Fixed Income at Evergreen. Mr.
Crocker is a Chartered Financial Analyst, and has been the High Yield Fund's
portfolio manager since its inception on June 20, 1997. Mr. Crocker joined
Evergreen in February, 1997. Prior to that he was President of Boston Security
Counselors, the investment management subsidiary of the brokerage firm Advest
Co. Inc. He had joined Boston Security Counselors in November of 1993 as Senior
Vice President- Fixed Income, where he managed among others the Advest Advantage
series High Yield Trust. Upon the sale of the Advest Advantage funds to
Northstar Investment Management Co. in July of 1995, Mr. Crocker joined that
company as Fund Manager. He returned to Boston Security Counselors in August of
1996 as President.
Performance Data
The Funds may from time to time include average annual total return figures in
advertisements or other material the Funds send to existing or prospective
shareholders. The Funds calculate these figures by determining the average
annual compounded rates of return that would produce the redeemable value of the
Fund being shown at the end of each period for a given initial investment. All
recurring and nonrecurring expenses are included in the calculation. It is
assumed that all dividends and distributions are reinvested. In addition, to
better illustrate the performance of money already invested in the Funds, the
Funds may also periodically advertise total return without subtracting sales
charges.
The fixed income Funds also may quote yields in advertisements. Yields are
computed by dividing net investment income for a recent 30-day (or one month)
period by the product of the average daily number of shares outstanding during
that period and the maximum offering price per share on the last day of the
period. The result is then annualized. These Funds may also show comparable
yields to those shareholders already invested in the Funds by using the net
asset value per share instead of maximum offering price in the above
calculations. This has the effect of raising
44 For information and assistance call your Financial Advisor or Investor
Services at 1-800-282-FUND (3863)
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the quoted yields. The Tax-Free Income, New York and Pennsylvania Funds may also
include tax-equivalent yields in advertisements. Tax-equivalent yields increase
the yield as calculated above to make it comparable on an after-tax basis to an
investment which produces taxable income.
The Funds also may compare their performance to relevant indices in
advertisements. The equity Funds may compare their performance to stock indices,
including the Dow Jones Industrial Average, the S&P 500 Index, the S&P 500/BARRA
Growth Index, and the Russell 2000 Index. The World Fund may compare its
performance to the "EAFE" (Europe, Australia, Far East) Index. The High Yield
Fund may compare its performance to the Chase Manhattan Bank Index. The fixed
income Funds may compare their performance to bond or money market indices,
including the Lehman Aggregate Bond Index, Municipal Bond Index, or Government
Bond Index, and Donoghue's Money Fund Report.
The Funds also may refer to rankings and ratings published by independent
tracking services and publications of general interest including Lipper
Analytical Services, Inc., CDA/Wiesenberger, Morningstar, Donoghue's; magazines
such as Money, Forbes, Kiplinger's Personal Finance Magazine, Financial World,
Consumer Reports, Business Week, Time, Newsweek, U.S. News and World Report; and
other publications such as the Wall Street Journal, Barron's, Investor's Daily,
and Standard & Poor's Outlook. These ranking services and publications may rank
the performance of the Funds against all other mutual funds or against funds in
specified categories. The rankings may or may not include the effects of sales
or other charges.
Year 2000 Issues.
Many computer systems were designed using only two digits to designate years.
These systems may not be able to distinguish the year 2000 from the year 1900
(commonly known as the "Year 2000 Problem"). Like other investment companies and
financial and business organizations, the Funds could be adversely affected if
the computer systems used by Sentinel Advisors and Sentinel Service do not
properly address this problem prior to January 1, 2000. Sentinel Service and its
parent companies are currently analyzing these issues and are in the process of
implementing the systems modifications necessary to prepare for the year 2000.
Currently neither Sentinel Service nor Sentinel Advisors expects that the
transition to the 21st century will have any material impact on its ability to
continue to service the Funds at current levels. In addition, Sentinel Service
and Sentinel Advisors have sought assurances from the Funds' other service
providers that they are taking all necessary steps to ensure that their computer
systems will accurately reflect the year 2000, and Sentinel Service and Sentinel
Advisors will continue to monitor the situation. At this time, however, no
assurance can be given that the Funds' other service providers have anticipated
every step necessary to avoid any adverse effect on the Funds attributable to
the Year 2000 Problem. The Year 2000 Problem could also have a negative impact
on the companies in which the Funds invest, and this could hurt the Funds'
investment returns.
Visit us online at www.sentinelfunds.com 45
Prospectus
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights
The financial highlights table is intended to help you understand each Fund's
financial performance for the past five years, or for the period of the Fund's
operations, in the case of the High Yield, Short Maturity Government, and New
York Funds. Certain information reflects financial results for a single Fund
share. The total returns in the table represent the rate that an investor would
have earned on an investment in each Fund, assuming reinvestment of all
dividends and distributions. No information is included for the Growth Index
Fund, since it did not begin operations until Sepember 13, 1999.
This information has been audited by PricewaterhouseCoopers LLP, whose report,
along with the financial statements of the Funds, are included in the Funds'
Annual Report to Shareholders, which is available upon request.
<TABLE>
<CAPTION>
Income From Investment Operations Less
-------------------------------------------------------------------- ------------
Net gains or
Losses on
Fiscal Net asset Net Securities Dividends
year value, investment (both Realized Total From (from net
(period beginning income and Investment investment
Fund ended) of period (loss) Unrealized) Operations income)
- ------------ ---------- ----------- ------------ --------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Common 11/30/94 $29.63 $ 0.83 $(1.35) $(0.52) $ 0.80
Stock 11/30/95 28.25 0.72 8.09 8.81 0.74
A 11/30/96 35.21 0.59 8.18 8.77 0.61
11/30/97 40.60 0.57 7.03 7.60 0.57
11/30/98 44.09 0.42 5.19 5.61 0.45
- ------------ ---------- ----------- ------------ --------------- ------------ ------------
Balanced 11/30/94 $15.27 $ 0.58 $(1.12) $(0.54) $ 0.56
A 11/30/95 14.08 0.58 2.78 3.36 0.59
11/30/96 16.84 0.54 2.13 2.67 0.54
11/30/97 18.55 0.56 2.18 2.74 0.55
11/30/98 20.29 0.54 1.76 2.30 0.55
- ------------ ---------- ----------- ------------ --------------- ------------ ------------
Mid Cap 11/30/94 $17.51 $ 0.05 $(0.92) $(0.87) $ 0.03
Growth 11/30/95 16.15 0.07 3.33 3.40 0.05
A 11/30/96 16.93 0.03 3.23 3.26 0.07
11/30/97 17.57 (0.02) 4.00 3.98 0.02
11/30/98 18.73 (0.03) 1.08 1.05 -.-
- ------------ ---------- ----------- ------------ --------------- ------------ ------------
Small 11/30/94 $ 6.87 $(0.04) $ 0.18 $ 0.14 $ -.-
Company 11/30/95 5.53 0.02 0.56 0.58 -.-
A 11/30/96 5.20 0.01 0.95 0.96 0.03
11/30/97 5.17 0.02 1.16 1.18 0.01
11/30/98 6.30 -.- 0.14 0.14 0.02
- ------------ ---------- ----------- ------------ --------------- ------------ ------------
World 11/30/94 $11.86 $ 0.08 $ 0.89 $ 0.97 $ 0.03
A 11/30/95 12.74 0.14 1.14 1.28 0.09
11/30/96 13.78 0.12 1.99 2.11 0.13
11/30/97 15.69 0.11 1.80 1.91 0.11
11/30/98 17.25 0.18 1.52 1.70 0.12
- ------------ ---------- ----------- ------------ --------------- ------------ ------------
High Yield 5 Mo. To
A 11/30/97(C) $10.00 $ 0.32 $ 0.41 $ 0.73 $ 0.32
11/30/98 10.41 0.87 (0.58) 0.29 0.86
- ------------ ---------- ----------- ------------ --------------- ------------ ------------
Bond 11/30/94 $ 6.90 $ 0.39 (0.70) (0.31) $ 0.39
A 11/30/95 5.85 0.42 0.64 1.06 0.42
11/30/96 6.49 0.41 (0.14) 0.27 0.41
11/30/97 6.35 0.40 0.01 0.41 0.40
11/30/98 6.36 0.40 0.09 0.49 0.40
- ------------ ---------- ----------- ------------ --------------- ------------ ------------
Government 11/30/94 $10.45 $ 0.59 $(1.04) $(0.45) $ 0.58
Securities 11/30/95 9.31 0.63 0.99 1.62 0.63
A 11/30/96 10.30 0.61 (0.30) 0.31 0.61
11/30/97 10.00 0.59 0.09 0.68 0.59
11/30/98 10.09 0.61 0.37 0.98 0.61
- ------------ ---------- ----------- ------------ --------------- ------------ ------------
Short Maturity 8 Mo. to
Gov't. 11/30/95(A) $ 9.64 $ 0.40 $ 0.20 $ 0.60 $ 0.40
A 11/30/96 9.84 0.57 (0.03) 0.54 0.57
11/30/97 9.81 0.56 0.01 0.57 0.56
11/30/98 9.82 0.57 0.06 0.63 0.57
- ------------ ---------- ----------- ------------ --------------- ------------ ------------
Money 11/30/94 $ 1.00 $ 0.03 $ -.- $ 0.03 $ 0.03
Market 11/30/95 1.00 0.05 -.- 0.05 0.05
A 11/30/96 1.00 0.04 -.- 0.04 0.04
11/30/97 1.00 0.04 -.- 0.04 0.04
11/30/98 1.00 0.04 -.- 0.04 0.04
- ------------ ---------- ----------- ------------ --------------- ------------ ------------
Tax-Free 11/30/94 $13.81 $ 0.68 $(1.34) $(0.66) $ 0.68
A 11/30/95 12.35 0.67 1.27 1.94 0.67
11/30/96 13.62 0.65 (0.09) 0.56 0.65
11/30/97 13.53 0.65 0.24 0.89 0.65
11/30/98 13.64 0.65 0.33 0.98 0.65
- ------------ ---------- ----------- ------------ --------------- ------------ ------------
New York 8 Mo. to
Tax-Free 11/30/95(A) $11.19 $ 0.36 $ 0.53 $ 0.89 $ 0.36
A 11/30/96 11.72 0.53 -.- 0.53 0.53
11/30/97 11.72 0.60 0.25 0.85 0.60
11/30/98 11.88 0.62 0.34 0.96 0.62
- ------------ ---------- ----------- ------------ --------------- ------------ ------------
Pennsylvania 11/30/94 $13.57 $ 0.64 $(1.28) $(0.64) $ 0.64
Tax-Free 11/30/95 12.29 0.66 1.11 1.77 0.66
A 11/30/96 13.40 0.66 (0.03) 0.63 0.66
11/30/97 13.29 0.64 0.13 0.77 0.64
11/30/98 13.34 0.63 0.26 0.89 0.63
- ------------ ---------- ----------- ------------ --------------- ------------ ------------
</TABLE>
46 For information and assistance call your Financial Advisor or Investor
Services at 1-800-282-FUND (3863)
Prospectus
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Distributions Ratios/Supplemental Data
Ratio of Ratio of
Expenses to Ratio Net Investment
Net asset Net assets Ratio of Average net of Net Income to Avg.
Distributions value, Total at end of Expenses to Assets before Income to net assets before
(from capital Total end of return* period average net Expense Avg. net voluntary expense -
gains) Distributions period (%) (000 omitted) assets (%) Reduction**(%) assets (%) reimbursements
- -------------- -------------- ---------- --------- -------------- ------------ --------------- ----------- -------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$0.06 $0.86 $28.25 (1.8) $ 839,335 1.02 1.02 2.82 -.-
1.11 1.85 35.21 32.8 1,057,944 1.09 1.10 2.29 -.-
2.77 3.38 40.60 27.2 1,306,592 1.06 1.07 1.64 -.-
3.54 4.11 44.09 20.9 1,509,999 1.04 1.05 1.41 -.-
4.69 5.14 44.56 14.3 1,610,630 1.01 1.02 0.98 -.-
- -------------- -------------- ---------- --------- -------------- ------------ --------------- ----------- -------------------
$0.09 $0.65 $14.08 (3.6) $ 226,328 1.21 1.21 3.97 -.-
0.01 0.60 16.84 24.4 267,103 1.27 1.29 3.77 -.-
0.42 0.96 18.55 16.6 297,288 1.20 1.22 3.13 -.-
0.45 1.00 20.29 15.4 314,948 1.16 1.17 2.93 -.-
1.16 1.71 20.88 12.2 330,067 1.12 1.13 2.69 -.-
- -------------- -------------- ---------- --------- -------------- ------------ --------------- ----------- -------------------
$0.46 $0.49 $16.15 (5.1) $ 50,447 1.43 1.43 0.30 -.-
2.57 2.62 16.93 24.9 60,446 1.50 1.54 0.42 -.-
2.55 2.62 17.57 22.6 69,816 1.40 1.43 0.16 -.-
2.80 2.82 18.73 27.3 88,184 1.29 1.32 (0.15) -.-
5.13 5.13 14.65 8.3 97,895 1.26 1.29 (0.23) -.-
- -------------- -------------- ---------- --------- -------------- ------------ --------------- ----------- -------------------
$1.48 $1.48 $ 5.53 2.0 $ 88,420 1.58 1.58 (0.74) -.-
0.91 0.91 5.20 12.2 89,321 1.56 1.60 0.26 -.-
0.96 0.99 5.17 22.0 99,393 1.47 1.51 0.23 -.-
0.04 0.05 6.30 23.0 115,532 1.34 1.36 0.38 -.-
0.75 0.77 5.67 2.7 109,598 1.31 1.33 (0.07) -.-
- -------------- -------------- ---------- --------- -------------- ------------ --------------- ----------- -------------------
$0.06 $0.09 $12.74 8.2 $ 41,970 1.58 1.58 0.62 -.-
0.15 0.24 13.78 10.2 47,702 1.56 1.63 0.79 -.-
0.07 0.20 15.69 15.5 71,458 1.43 1.48 0.94 -.-
0.24 0.35 17.25 12.5 89,740 1.29 1.32 1.14 -.-
0.64 0.76 18.19 10.3 100,790 1.24 1.26 1.18 -.-
- -------------- -------------- ---------- --------- -------------- ------------ --------------- ----------- -------------------
$ -.- $0.32 $10.41 7.3# $ 11,084 1.20+ 1.26+ 7.80+ -.-
0.09 0.95 9.75 2.7 31,120 1.26 1.28 8.42 -.-
- -------------- -------------- ---------- --------- -------------- ------------ --------------- ----------- -------------------
$0.35 $0.74 $ 5.85 (4.9) $ 80,487 0.98 0.98 6.34 6.34
-.- 0.42 6.49 18.8 108,755 0.99 1.03 6.81 6.81
-.- 0.41 6.35 4.5 99,408 0.98 1.00 6.46 6.46
-.- 0.40 6.36 6.7 88,756 0.97 0.99 6.37 6.37
-.- 0.40 6.45 8.0 91,297 0.77 0.95 6.26 6.11
- -------------- -------------- ---------- --------- -------------- ------------ --------------- ----------- -------------------
$0.11 $0.69 $ 9.31 (4.5) $ 104,457 1.00 1.00 5.95 5.95
-.- 0.63 10.30 17.9 108,100 1.03 1.04 6.50 6.50
-.- 0.61 10.00 3.2 92,299 1.00 1.01 6.18 6.18
-.- 0.59 10.09 7.2 75,810 0.98 0.99 6.15 6.15
-.- 0.61 10.46 10.0 76,498 0.91 0.99 6.02 5.94
- -------------- -------------- ---------- --------- -------------- ------------ --------------- ----------- -------------------
$ -.- $0.40 $ 9.84 6.3# $ 28,417 1.00+ 1.38+ 6.07+ 5.76
-.- 0.57 9.81 5.6 36,474 1.00 1.20 6.09 5.93
-.- 0.56 9.82 6.0 45,044 1.00 1.18 6.20 6.14
-.- 0.57 9.88 6.6 68,346 0.82 1.12 6.04 5.76
- -------------- -------------- ---------- --------- -------------- ------------ --------------- ----------- -------------------
$ -.- $0.03 $ 1.00 3.1 $ 75,301 0.81 0.81 3.01 -.-
-.- 0.05 1.00 5.0 80,664 0.81 0.82 4.83 -.-
-.- 0.04 1.00 4.6 80,804 0.78 0.78 4.38 -.-
-.- 0.04 1.00 4.6 85,911 0.76 0.77 4.46 -.-
-.- 0.04 1.00 4.6 98,115 0.72 0.73 4.47 -.-
- -------------- -------------- ---------- --------- -------------- ------------ --------------- ----------- -------------------
$0.12 $0.80 $12.35 (5.1) $ 99,935 0.75 0.94 5.11 4.92
-.- 0.67 13.62 16.0 110,506 0.90 0.99 5.06 5.00
- - 0.65 13.53 4.3 99,967 0.94 0.97 4.86 4.86
0.13 0.78 13.64 6.9 87,935 0.91 0.95 4.84 4.84
0.19 0.84 13.78 7.4 88,683 0.74 0.92 4.77 4.59
- -------------- -------------- ---------- --------- -------------- ------------ --------------- ----------- -------------------
$ -.- $0.36 $11.72 8.1# $ 5,332 1.22+ 1.29+ 4.60+ 4.60+
- - 0.53 11.72 4.8 5,749 1.04 1.10 4.65 4.65
0.09 0.69 11.88 7.7 7,704 0.30 1.09 5.31 4.57
0.03 0.65 12.19 8.3 11,978 -.- 1.01 5.17 4.19
- -------------- -------------- ---------- --------- -------------- ------------ --------------- ----------- -------------------
$ -.- $0.64 $12.29 (4.9) $ 31,172 1.30 1.30 4.84 4.84
- - 0.66 13.40 14.8 34,975 0.97 1.36 5.14 4.78
0.08 0.74 13.29 5.0 35,545 0.75 1.37 5.07 4.48
0.08 0.72 13.34 6.1 34,844 0.85 1.34 4.86 4.41
0.12 0.75 13.48 6.9 34,720 0.77 1.31 4.65 4.14
- -------------- -------------- ---------- --------- -------------- ------------ --------------- ----------- -------------------
Portfolio
turnover
Rate (%)
- --------------
<C>
15
22
22
24
28
- --------------
66
110
83
63
81
- --------------
58
84
98
161
97
- --------------
46
79
60
45
45
- --------------
30
32
14
21
12
- --------------
133
139
- --------------
133
237
176
130
147
- --------------
149
367
614
249
355
- --------------
58
120
61
229
- --------------
- -.
- -.
- -.
- -.
- -.
- --------------
92
112
112
47
37
- --------------
32
48
21
6
- --------------
56
80
56
28
50
- --------------
</TABLE>
Visit us online at www.sentinelfunds.com 47
Prospectus
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Income From Investment Operations Less
------------------------------------------------------------------ -----------
Net gains or
Losses on
Fiscal Net asset Net Securities Dividends
year value, investment (both Realized Total From (from net
(period beginning income and Investment investment
Fund ended) of period (loss) Unrealized) Operations income)
- ------------- ---------- ------------ ----------- --------------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Common 8 Mo. To
Stock 11/30/96(B) $35.43 $ 0.22 $ 5.05 $ 5.27 $0.13
B 11/30/97 40.57 0.27 6.99 7.26 0.26
11/30/98 44.03 0.07 5.19 5.26 0.13
- ------------- ---------- ------------ ----------- --------------- ----------- -----------
Balanced 8 Mo. To
B 11/30/96(B) $17.09 $ 0.26 $ 1.37 $ 1.63 $0.14
11/30/97 18.58 0.42 2.18 2.60 0.41
11/30/98 20.32 0.38 1.77 2.15 0.40
- ------------- ---------- ------------ ----------- --------------- ----------- -----------
Mid Cap
Growth 11 Mo. to
B 11/30/98(E) $13.08 $(0.17) $ 1.61 $ 1.44 $ -.-
- ------------- ---------- ------------ ----------- --------------- ----------- -----------
Small 8 Mo. To
Company 11/30/96(B) $ 4.82 $(0.03) $ 0.33 $ 0.30 $ -.-
B 11/30/97 5.12 (0.03) 1.13 1.10 -.-
11/30/98 6.18 (0.03) 0.11 0.08 -.-
- ------------- ---------- ------------ ----------- --------------- ----------- -----------
World 8 Mo. To
B 11/30/96(B) $14.49 $(0.08) $ 1.17 $ 1.09 $ -.-
11/30/97 15.58 0.01 1.74 1.75 0.04
11/30/98 17.05 0.04 1.47 1.51 -.-
- ------------- ---------- ------------ ----------- --------------- ----------- -----------
High Yield 5 Mo. To
B 11/30/97(C) $10.00 $ 0.32 $ 0.39 $ 0.71 $0.31
11/30/98 10.40 0.84 (0.57) 0.27 0.84
- ------------- ---------- ------------ ----------- --------------- ----------- -----------
Bond 8 Mo. To
B 11/30/96(B) $ 6.30 $ 0.21 $ 0.06 $ 0.27 $0.21
11/30/97 6.36 0.34 0.02 0.36 0.34
11/30/98 6.38 0.34 0.08 0.42 0.34
- ------------- ---------- ------------ ----------- --------------- ----------- -----------
Money 8 Mo. To
Market 11/30/96(B) $ 1.00 $ 0.03 $ -.- $ 0.03 $0.03
B 11/30/97 1.00 0.05 -.- 0.05 0.05
11/30/98 1.00 0.04 -.- 0.04 0.04
- ------------- ---------- ------------ ----------- --------------- ----------- -----------
Common Stock
C 7 mo. to
11/30/98(D) $45.23 $ 0.06 $ (0.71) $(0.65) $0.03
- ------------- ---------- ------------ ----------- --------------- ----------- -----------
Balanced 7 mo. to
C 11/30/98(D) $20.87 $ 0.20 $ (0.01) $ 0.19 $0.16
- ------------- ---------- ------------ ----------- --------------- ----------- -----------
World 7 mo. to
C 11/30/98(D) $19.57 $(0.02) $ (1.50) $(1.52) $ -.-
- ------------- ---------- ------------ ----------- --------------- ----------- -----------
High Yield 7 mo. to
C 11/30/98(D) $10.70 $ 0.41 $ (0.91) $(0.50) $0.45
- ------------- ---------- ------------ ----------- --------------- ----------- -----------
</TABLE>
(A) Commenced operations March 27, 1995.
(B) Commenced operations April 1, 1996.
(C) Commenced operations June 23, 1997.
(D) Commenced operations May 4, 1998.
(E) 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 earnings credits that are received from the
custodian and dividend paying agent on cash balances.
48 For information and assistance call your Financial Advisor or Investor
Services at 1-800-282-FUND (3863)
Prospectus
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Distributions Ratios/Supplemental Data
- ------------------------ ----------------------------------------------------------------------------------------------------------
Ratio of
Ratio of Net Investment
Expenses to Ratio Income to
Net asset Net assets Ratio of Average net of Net Avg. net assets
Distributions Total value, Total at end of Expenses to Assets before Income to before voluntary Portfolio
(from capital Distri- end of return* period average net Expense Avg. net expense- turnover
gains) butions period (%) (000 omitted) assets (%) Reduction**(%) assets (%) reimbursements Rate (%)
- -------------- -------- ---------- -------- -------------- ------------ --------------- ----------- ----------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ -.- $ 0.13 $40.57 14.9# $ 27,257 1.91+ 1.92+ 0.80+ -.- 22
3.54 3.80 44.03 19.9 77,299 1.79 1.80 0.66 -.- 24
4.69 4.82 44.47 13.4 129,966 1.81 1.81 0.19 -.- 28
- -------------- -------- ---------- -------- -------------- ------------ --------------- ----------- ----------------- -----------
$ -.- $ 0.14 $18.58 9.6# $ 10,948 2.12+ 2.13+ 2.21+ -.- 83
0.45 0.86 20.32 14.6 26,593 1.88 1.89 2.21 -.- 63
1.16 1.56 20.91 11.3 46,946 1.89 1.90 1.91 -.- 81
- -------------- -------- ---------- -------- -------------- ------------ --------------- ----------- ----------------- -----------
$ -.- $ -.- $14.52 11.0# 3,841 2.27+ 2.29+ (1.24)+ -.- 97
- -------------- -------- ---------- -------- -------------- ------------ --------------- ----------- ----------------- -----------
$ -.- $ -.- $ 5.12 6.2# $ 1,943 2.62+ 2.64+ (0.91)+ -.- 60
0.04 0.04 6.18 21.6 7,656 2.35 2.36 (0.62) -.- 45
0.75 0.75 5.51 1.7 12,103 2.24 2.25 (1.00) -.- 45
- -------------- -------- ---------- -------- -------------- ------------ --------------- ----------- ----------------- -----------
$ -.- $ -.- $15.58 7.5# $ 3,188 2.56+ 2.59+ (0.19)+ -.- 14
0.24 0.28 17.05 11.5 10,121 2.16 2.18 0.23 -.- 21
0.64 0.64 17.92 9.2 18,163 2.23 2.25 0.19 -.- 12
- -------------- -------- ---------- -------- -------------- ------------ --------------- ----------- ----------------- -----------
$ -.- $ 0.31 $10.40 7.2# $ 33,808 1.30+ 1.34+ 7.70+ -.- 133
0.09 0.93 9.74 2.4 55,911 1.49 1.52 8.19 -.- 139
- -------------- -------- ---------- -------- -------------- ------------ --------------- ----------- ----------------- -----------
$ -.- $ 0.21 $ 6.36 4.5# $ 4,714 2.16+ 2.18+ 5.28+ 5.28+ 176
-.- 0.34 6.38 5.9 8,115 1.87 1.90 5.46 5.46 130
-.- 0.34 6.46 6.8 16,601 1.64 1.84 5.40 5.22 147
- -------------- -------- ---------- -------- -------------- ------------ --------------- ----------- ----------------- -----------
$ -.- $ 0.03 $ 1.00 3.0# $ 3,160 0.76+ 0.77+ 4.40+ -.- -.-
-.- 0.05 1.00 4.7 3,434 0.73 0.73 4.50 -.- -.-
-.- 0.04 1.00 4.5 4,422 0.77 0.78 4.42 -.- -.-
- -------------- -------- ---------- -------- -------------- ------------ --------------- ----------- ----------------- -----------
$ -.- $ 0.03 $44.55 (1.4)# $ 5,358 1.92+ 1.92+ 0.08+ -.- 28
- -------------- -------- ---------- -------- -------------- ------------ --------------- ----------- ----------------- -----------
$ -.- $ 0.16 $20.90 0.9# $ 1,523 2.17+ 2.18+ 1.63+ -.- 81
- -------------- -------- ---------- -------- -------------- ------------ --------------- ----------- ----------------- -----------
$ -.- $ -.- $18.05 (7.8)# $ 1,013 2.20+ 2.21+ 0.23+ -.- 12
- -------------- -------- ---------- -------- -------------- ------------ --------------- ----------- ----------------- -----------
$ -.- $ 0.45 $ 9.75 (4.7)# $ 1,956 2.05+ 2.06+ 7.63+ -.- 139
- -------------- -------- ---------- -------- -------------- ------------ --------------- ----------- ----------------- -----------
</TABLE>
Visit us online at www.sentinelfunds.com 49
Prospectus
<PAGE>
- --------------------------------------------------------------------------------
The Sentinel Funds
- --------------------------------------------------------------------------------
Shareholder Reports
Additional information about the Funds' investments is available in the Funds'
annual and semi-annual reports to shareholders. In the Funds' annual report you
will find a discussion of the market conditions and investment strategies that
significantly affected investment performance of each of the Funds during its
last fiscal year. You may obtain copies of these reports at no cost by calling
1-800-282-FUND (3863).
The Funds will send you one copy of each shareholder report and certain other
mailings, regardless of the number of Fund accounts you have. To receive
separate shareholder reports for each account at no cost, call Sentinel Service
at 1-800-282-FUND (3863).
Statement of Additional Information
The Funds' Statement of Additional Information contains further information
about the Funds and is incorporated by reference (legally considered to be part
of this Prospectus). You may request a free copy by writing the Funds at the
address shown below or by calling 1-800-282-FUND (3863). Please contact your
registered representative or the Funds if you have any questions.
The Funds' Statement of Additional Information is also available at the Funds'
website at www.sentinelfunds.com. Information about the Funds (including the
Statement of Additional Information) can also be reviewed and copied at the
SEC's Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for
information on the operation of the public reference room. This information is
also available on the SEC's Internet site at http://www.sec.gov and copies may
be obtained upon payment of a duplicating fee by writing the Public Reference
Section of the SEC, Washington, D.C. 20549-6009.
You should rely only on the information contained in this prospectus. No one is
authorized to provide you with information that is different.
The Sentinel Funds
National Life Drive
Montpelier, VT 05604
Investment Advisor Counsel
Sentinel Advisors Company Brown & Wood LLP
National Life Drive One World Trade Center
Montpelier, VT 05604 New York, NY 10048
Principal Independent
Underwriter Accountants
Sentinel Financial PricewaterhouseCoopers LLP
Services Company 1177 Avenue of the Americas
National Life Drive New York, NY 10036
Montpelier, VT 05604
Transfer Agent, Custodian
Shareholder Servicing and Dividend
and Administrator Agent Paying Agent
Sentinel Administrative Investors Fiduciary Trust*
Service Company Company
National Life Drive* 801 Pennsylvania Avenue
Montpelier, VT 05604 Kansas City, MO 64105
800-282-FUND Kansas City, MO(3863)
- --------------------------------------------------------------------------------
*All mail and correspondence
should be sent to:
Sentinel Administrative Service Company
P. O. Box 1499
Montpelier, VT 05601-1499
Investment Company Act files #811-214, and #811-4781.
50 For information and assistance call your Financial Advisor or Investor
Services at 1-800-282-FUND (3863)
Prospectus
