<PAGE>
[LOGO OF SENTINEL FAMILY
OF FUNDS APPEARS HERE]
Sentinel
Family of
Funds
Annual
Report
November 30, 1995
<PAGE>
[LOGO OF SENTINEL FAMILY
OF FUNDS APPEARS HERE]
Sentinel Group Funds, Inc. (SGF)
Sentinel Pennsylvania
Tax-Free Trust (PA)
National Life Drive,
Montpelier, Vermont 05604
(800) 282-FUND (3863)
- --------------------------------------------------------------------------------
Table of Contents
2 Message to Shareholders
4 Sentinel Emerging Growth Fund
7 Sentinel Growth Fund
10 Sentinel World Fund
13 Sentinel Common Stock Fund
16 Sentinel Balanced Fund
20 Sentinel Bond Fund
22 Sentinel Tax-Free Income Fund
25 Sentinel New York Tax-Free Income Fund
27 Sentinel Government Securities Fund
29 Sentinel Short-Intermediate Government Fund
32 Sentinel U.S. Treasury Money Market Fund
34 SGF Statement of Assets and Liabilities
36 SGF Statement of Operations
38 SGF Statement of Changes in Net Assets
41 SGF Notes to Financial Statements
46 SGF Financial Highlights
48 SGF-Report of Independent Accountants
49 Sentinel Pennsylvania Tax-Free Trust
51 PA Statement of Assets and Liabilities
51 PA Statement of Operations
52 PA Statement of Changes in Net Assets
53 PA Notes to Financial Statements
55 PA Financial Highlights
56 PA-Report of Independent Accountants
57 Federal Tax Status of Dividends and Distributions
57 Privileges, Plans and Services for Shareholders
59 Directors/Trustees and Officers
60 A Brief History
On the cover:
Fall is the season favored by many Vermonters. This country road in Waitsfield,
Vermont, not far from Sentinel's home base in Montpelier, shows why.
Photo by Dennis Curran.
1
<PAGE>
Message to Shareholders
[PHOTO OF KENISTON P. MERRILL APPEARS HERE]
Keniston P. Merrill
Chairman
[PHOTO OF JOSEPH M. ROB APPEARS HERE]
Joseph M. Rob
President
Dear Shareholder:
We are pleased to submit our annual report for the twelve months ended November
30, 1995.
The Economy
Politicians, investors, and the Federal Reserve were pleasantly surprised by the
performance of the economy and the financial markets during the last twelve
months. Economic growth was sufficient to produce relatively low unemployment
and impressive gains in corporate profits, but not strong enough to rekindle
fears of inflation. Real GDP growth was steady at about 2% in the first half of
the year before moving modestly higher to an estimated 3-4% rate of growth in
the second half of the year.
As was the case last year, spending by corporations on labor-saving capital
equipment was one of the key sources of growth. Intense worldwide competition,
together with weak consumer spending, made it difficult for companies to
implement price increases. As a result, businesses increased spending on items
such as communications equipment and more efficient machinery in a continuing
effort to improve output per man-hour.
While employment increased during the year, the rate of job creation was below
average for a growing economy. Slow job growth, together with modest wage
increases and relatively high consumer debt, combined to restrain spending.
Consumers also seemed to change their spending patterns, choosing to focus more
on electronic equipment such as personal computers and cellular telephones and
less on apparel, furniture, and automobiles.
Currently, the U.S. economy is benefitting from a rare combination of positive
events. Moderate growth, low inflation, a stronger dollar, and deficit reduction
efforts in Washington have allowed long term interest rates to decline sharply
without much intervention by the Federal Reserve. The stock market has responded
to the good news by setting a record number of new highs over the last twelve
months.
Looking forward, we expect budget negotiations in Washington to lead to a
compromise that will put the nation on a path to slower growth in government
spending and an eventual balanced budget. Consumer spending, we believe, will
continue to be constrained by slow growth in real disposable income and by an
increased focus on the need to build retirement savings. Growth in business
spending seems likely to slow from the extraordinary levels it reached over the
last two years. Together, these factors suggest that real GDP will grow at a
sluggish pace (about 2-3%) in 1996. Inflation is expected to remain low, but
could experience moderate upward pressure during the year as productivity gains
begin to wane. Corporate profits should rise over 1995 levels, although the rate
of increase is likely to slow as a result of smaller revenue gains and somewhat
lower profit margins.
The Financial Markets
The returns on financial assets during the past twelve months have been
spectacular, largely as a result of the significant decline in interest rates.
The Lehman Aggregate Bond Index, a widely-used measure of overall bond market
performance, produced a total return of 16.8% for the fiscal year ending
November 30, 1995. Bond returns soared as interest rates declined precipitously
across the maturity spectrum over the past twelve months. Yields on both shorter
and longer-term U.S. Treasury securities fell approximately 2 percentage points.
Longer maturity securities provided the best relative performance and U.S.
Treasury and corporate bonds both outperformed mortgage-backed
2
<PAGE>
securities as the non-callable sectors of the fixed income markets performed
better than callable ones.
Looking forward, we expect that short-term interest rates will continue to
decline amid mounting evidence of sluggish economic growth and abating
inflationary pressures. The inflation adjusted return on longer-term bonds is
still slightly greater than its long-term average, which suggests that bond
yields have room to decline further. In this environment, our fixed-income
investment strategy will continue to focus on generating as high a level of
current income as is consistent with preserving shareholder capital.
Common stocks produced exceptional returns during our fiscal year, with the
Standard & Poor's 500 Index achieving a total return of 36.9%. The combination
of solid revenue gains and significant improvements in productivity led to
surprisingly strong growth in corporate earnings. The decline in interest rates
also resulted in an expansion in price-earnings multiples. Our equity portfolios
benefitted from significant gains in financial sector stocks and, to a lesser
degree, from holdings in the technology sector. In June, we became concerned
about what we considered to be a "speculative mania" surrounding most technology
stocks. As value investors, we decided to limit our exposure to the sector at
that time and our portfolios maintained a below-average exposure to technology
during the second half of the year.
Although corporate profit growth will decelerate over the next twelve months, it
appears that earnings per share for the S&P 500 could reach $40 per share in
1996. Using a $40 estimate, the price-earnings multiple for the S&P 500 on 1996
earnings is now about 15 times earnings. Therefore, while the market appears to
be relatively expensive based on a number of key valuation measures, such as
price-to-book and dividend yield, it still looks reasonably valued on a price-
earnings basis and we believe it is appropriate to continue dollar cost
averaging programs. (Programs of regular investing do not assure a profit and do
not protect against loss in declining markets.)
We appreciate your support and look forward to continuing to help you achieve
your long-term investment goals.
Sincerely,
/s/ Keniston P. Merrill /s/ Joseph M. Rob
Keniston P. Merrill Joseph M. Rob
Chairman President
December 8, 1995
Performance data for each Sentinel Fund is provided in this table. Individual
fund reports and financial data are contained in the following pages.
<TABLE>
<CAPTION>
=========================================================================================
Fund Performance
11/30/94 - 11/30/95
----------------------------------------------------------------------
11/30/95 Capital
Net Asset Gain
Sentinel Value Per Income Distrib- Total Lipper**
Fund Share Dividends ution Return* Average
<S> <C> <C> <C> <C> <C>
Emerging
Growth $ 5.20 $ - $ .91 12.2% 32.4%
- -----------------------------------------------------------------------------------------
Growth 16.93 .05 2.57 24.9 31.4
- -----------------------------------------------------------------------------------------
World 13.78 .09 .15 10.2 5.1
- -----------------------------------------------------------------------------------------
Common Stock 35.21 .74 1.11 32.8 30.1
- -----------------------------------------------------------------------------------------
Balanced 16.84 .59 .01 24.4 24.6
- -----------------------------------------------------------------------------------------
Bond 6.49 .42 - 18.8 17.7
- -----------------------------------------------------------------------------------------
Government
Securities 10.30 .63 - 17.9 16.6
- -----------------------------------------------------------------------------------------
Tax-Free Income 13.62 .67 - 16.0 18.4
- -----------------------------------------------------------------------------------------
PA Tax-Free
Trust 13.40 .66 - 14.8 13.8
- -----------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
11/30/94 - 11/30/95
----------------------------------------------------------------------
11/30/95 Capital
Net Asset Gain
Sentinel Value Per Income Distrib- Total Lipper**
Fund Share Dividends ution Return* Average
<S> <C> <C> <C> <C> <C>
Short-Intermediate
Government*** $ 9.84 $.40 $ - 6.3% 16.9%
- -----------------------------------------------------------------------------------------
NY Tax-Free
Income*** 11.72 .36 - 8.1 8.0
- -----------------------------------------------------------------------------------------
U.S. Treasury
Money Market 1.00 .05 - 5.0 -
- -----------------------------------------------------------------------------------------
Standard &
Poor's 500+ - - - 36.9 -
- -----------------------------------------------------------------------------------------
Russell 2000
Index++ - - - 28.5 -
- -----------------------------------------------------------------------------------------
Lehman Aggregate
Bond Index[+] - - - 17.6 -
- -----------------------------------------------------------------------------------------
Lehman Municipal
Bond Index[++] - - - 18.9 -
- -----------------------------------------------------------------------------------------
</TABLE>
* 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 investment return.
Past performance is no guarantee of future results.
** Average performance of category of funds with similar investment objectives
as tracked by Lipper Analytical Services.
*** Performance and dividend data since opening of business 3/27/95, the funds'
inception date.
+ An unmanaged index of stocks reflecting average prices in the stock market.
++ An unmanaged index of stocks of small capitalization companies reflecting
average prices in the stock market.
[+] An unmanaged index of bonds reflecting average prices in the bond market.
[++] An unmanaged index of bonds reflecting average prices in the municipal bond
market.
3
<PAGE>
Sentinel Emerging Growth Fund seeks maximum long-term capital growth primarily
through investments in the securities of small to medium-sized companies which
management believes to have above-average appreciation potential.
Sentinel Emerging Growth Fund
Despite investors' low expectations for equities last December, the broad stock
market averages produced exceptional returns this year. The decline in long-term
interest rates was a key factor contributing to higher overall stock prices and
reminds us of how "a rising tide can lift all boats." To be sure, moderate
economic growth and above average growth of corporate profits also were
contributing factors. Investors witnessed exceptional relative strength in the
shares of technology stocks. Surging demand for PCs, software, and wireless
communication products, together with fascination over prospects for the
Internet, were some of the primary reasons for the popularity of this group.
While the Emerging Growth Fund was exposed to the above trends, our risk averse
investment approach prevented your fund from participating fully in some of the
more speculative segments of the market that provided much of the leadership for
this year's stock market rally. For the twelve months ended November 30, 1995,
the Sentinel Emerging Growth Fund produced a total return of 12.2%. This does
not compare favorably to the 32.4% gain for the comparable Lipper small company
growth fund universe or the 28.5% gain for the Russell 2000 Index.
Looking forward to 1996, we believe that investors' current high expectations
and an almost universal enthusiasm for equities could lead to a measure of
disappointment. It is unlikely that 1995's surging corporate profits and
markedly declining interest rates will be repeated in 1996. While equity
investors may not witness an overall market decline in 1996, we would not be
surprised to see some rougher seas or increased volatility. However, we continue
to believe that the shares of many smaller capitalized companies remain
relatively attractive longer-term investments. Importantly, many of these
smaller companies, including selected technology firms, are very well-positioned
to benefit from the strong capital flows and dominant commercial trends within
the U.S. and international economies.
================================================================================
Sentinel Emerging Growth Fund Performance
3/1/93 inception through 11/30/95
<TABLE>
<CAPTION>
Sentinel Russell Lipper Small
Emerging 2000 Company Growth
Growth Fund Index* Fund Average
<S> <C> <C> <C>
03/01/93 9,500 label 10,000 label 10,000 label
Mar-93 9,573 10,324 10,345
Apr-93 9,076 10,041 10,019
May-93 9,573 10,485 10,536
Jun-93 9,676 10,550 10,625
Jul-93 9,412 10,695 10,690
Aug-93 9,690 11,157 11,189
Sep-93 9,983 11,472 11,531
Oct-93 9,954 11,768 11,713
Nov-93 10,056 11,384 11,344
Dec-93 10,612 11,773 11,818
Jan-94 10,723 12,142 12,133
Feb-94 10,964 12,098 12,126
Mar-94 10,129 11,461 11,477
Apr-94 10,055 11,529 11,479
May-94 10,129 11,399 11,258
Jun-94 9,777 11,014 10,821
Jul-94 9,777 11,196 11,011
Aug-94 10,445 11,819 11,680
Sep-94 10,463 11,779 11,745
Oct-94 10,630 11,731 11,900
Nov-94 10,259 11,257 11,465
Dec-94 10,620 11,559 11,714
Jan-95 10,753 11,413 11,574
Feb-95 11,151 11,888 12,039
Mar-95 11,151 12,092 12,364
Apr-95 10,997 12,360 12,525
May-95 10,997 12,573 12,719
Jun-95 11,284 13,225 13,471
Jul-95 11,815 13,987 14,474
Aug-95 11,948 14,276 14,709
Sep-95 11,926 14,531 15,059
Oct-95 11,196 13,882 14,551
Nov-95 11,505 14,465 15,090
</TABLE>
*An unmanaged stock index of small capitalization companies which includes the
reinvestment of all income.
Ending values are based upon an initial investment of $10,000 and the subsequent
reinvestment of all dividends and distributions. When comparing the Fund's
performance with that of the Index and Average shown above, you should note that
the Fund's performance reflects the maximum 5% sales charge and includes all
expenses and management fees, while that shown for the Index and Average does
not. Past performance is not predictive of future results.
<TABLE>
<CAPTION>
- ----------------------------------------
Average Annual Total Return
Through 11/30/95
w/sales w/o sales
Period charge+ charge
<S> <C> <C>
1 Year 6.5% 12.2%
- ----------------------------------------
Since
Inception* 5.2% 7.2%
- ----------------------------------------
</TABLE>
*3/1/93
+Sales charge applicable to year of initial investment.
4
<PAGE>
Effective December 31, 1995, Louis E. Conrad II, the manager of your fund since
its inception on March 1, 1993, resigned from Sentinel Advisors. The Emerging
Growth Fund is now managed by a team of professionals including Keniston P.
Merrill, the current Chairman and Chief Executive Officer of Sentinel Advisors
Company, Richard A. Pender, CFA, and Scott T. Brayman, CFA. Combined, the team
now watching over your fund has an average of 20 years of investment experience.
We remain dedicated to our mission of maintaining a realistic balance between
opportunities for capital appreciation and capital preservation. We will
endeavor to identify and invest in the shares of well-managed and financially
strong smaller capitalized companies that are positioned for superior long-term
capital appreciation. We fully expect that your new investment team's efforts
will prove worthy of your continued confidence and investment.
/s/ Keniston P. Merrill
Keniston P. Merrill
/s/ Richard A. Pender
Richard A. Pender, CFA
/s/ Scott T. Brayman
Scott T. Brayman, CFA
5
<PAGE>
Sentinel Emerging Growth Fund
Investment in Securities
at November 30, 1995
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Shares Value
(Note 1)
- --------------------------------------------------------------------------------
<S> <C> <C>
Common Stocks 76.5%
Auto Parts & Repair 4.4%
* Monro Muffler 116,025 $ 1,704,117
Pep Boys -
Manny, Moe & Jack 84,000 2,226,000
-----------
3,930,117
===========
Communications 5.0%
* California Microwave 95,000 2,066,250
* Verifone 81,100 2,372,175
-----------
4,438,425
-----------
Cosmetics & Toiletries 1.0%
* American Safety Razor 99,600 859,050
-----------
Electrical Equipment 6.5%
* Amphenol Corp. - Class A 92,000 2,070,000
Harman Int'l. Industries 28,050 1,230,694
* Spectrian Corp. 55,500 1,290,375
Stewart & Stevenson 52,000 1,196,000
-----------
5,787,069
-----------
Energy 4.8%
* California Energy 125,000 2,406,250
* Smith International 110,100 1,857,938
-----------
4,264,188
-----------
Environmental Control 2.7%
* U.S. Filter 45,050 991,100
* Western Waste Industries 77,100 1,416,713
-----------
2,407,813
-----------
Financial 13.0%
BHC Financial 80,000 1,490,000
Cash America
International, Inc. 113,600 624,800
Duff & Phelps Credit Rating 33,333 512,495
* DVI Inc. 144,100 1,909,325
FINOVA Group 50,000 2,425,000
First Commerce 20,000 650,000
Litchfield Financial Corp. 97,460 1,340,075
Phoenix Duff & Phelps Co. 100,000 675,000
ROC Communities 89,300 1,998,088
-----------
11,624,783
-----------
Food & Food Distributors 4.1%
GoodMark Foods 70,100 1,288,087
Smart & Final 125,500 2,415,875
-----------
3,703,962
-----------
Healthcare Providers 12.3%
* Advocat Inc. 98,000 1,016,750
* Apria Healthcare 90,080 2,724,920
* Genesis Health Ventures 58,300 1,902,037
* Living Centers of America 71,500 2,243,313
* Renal Treatment 37,300 1,505,988
* Res-Care 100,100 1,651,650
-----------
11,044,658
-----------
Industrial & Commercial Services 1.7%
* Healthcare Services Group 172,000 1,505,000
-----------
Insurance 2.6%
* American Travellers 66,500 1,662,500
* Exstar Financial 76,200 128,587
* Penn Treaty American 33,400 517,700
-----------
2,308,787
-----------
Manufacturing - Housing 0.4%
Oakwood Homes 8,300 340,300
-----------
Medical - Equipment & Supplies 3.8%
Minntech 88,400 1,635,400
* Respironics 19,400 373,450
* Sunrise Medical 82,500 1,423,125
-----------
3,431,975
-----------
Metals 3.7%
J&L Specialty Steel 106,400 1,755,600
* Material Sciences 118,900 1,575,425
-----------
3,331,025
-----------
Restaurants 1.8%
* IHOP Corp. 63,400 1,640,475
-----------
Retail 2.6%
* Stein Mart 150,200 1,886,812
* Strouds 126,000 504,000
-----------
2,390,812
-----------
Software 2.1%
* FileNet Corp. 1,600 68,400
* Landmark Graphics 80,000 1,600,000
* Sterling Software 3,200 188,800
-----------
1,857,200
-----------
Technology 2.8%
* Dynatech 150,000 2,231,250
* MicroTouch Systems 16,200 243,000
-----------
2,474,250
-----------
Transportation 1.2%
Frozen Food Express 113,250 1,047,562
-----------
Total Common Stocks
(Cost $65,884,647) 68,387,451
-----------
Preferred Stock 0.3%
Phoenix Duff & Phelps Cl A
(Cost $403,571) 10,000 250,000
-----------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Principal Amount Value
(M=$1,000) (Note 1)
- --------------------------------------------------------------------------------
<S> <C> <C>
Corporate Short-Term Notes 23.9%
Beneficial Corp. 5.72%,
12/05/95 1500M $ 1,499,047
Beneficial Corp. 5.65%,
12/27/95 2000M 1,991,839
Commercial Credit Corp. 5.70%,
12/08/95 2000M 1,997,783
Ford Motor Credit Corp. 5.66%,
12/18/95 2500M 2,493,318
G.E. Capital Corp. 5.71%,
12/13/95 3000M 2,994,290
IBM Credit Corp. 5.72%,
01/05/96 3400M 3,381,092
Norwest Financial 5.70%,
12/21/95 3000M 2,990,500
Prudential Funding Corp. 5.65%,
01/02/96 2000M 1,989,956
Texaco, Inc. 5.65%,
12/05/95 2000M 1,998,744
-----------
Total Corporate Short-Term Notes
(Cost $21,336,569) 21,336,569
-----------
Total Investments
(Cost $87,624,787)** 89,974,020
Excess of Liabilities
Over Other Assets (0.7%) (652,850)
-----------
Net Assets $89,321,170
===========
- -------------------------------------------------------------------------------
</TABLE>
* Non-Income producing.
** Also cost for federal income tax purposes.
At November 30, 1995, net unrealized appreciation for federal income tax
purposes aggregated $2,349,233 of which $9,882,569 related to appreciated
securities and $7,533,336 related to depreciated securities.
See Notes to Financial Statements.
6
<PAGE>
[PHOTO APPEARS HERE]
Robert L. Lee, CFA
Manager,
Sentinel Growth Fund
Sentinel Growth Fund seeks long-term growth of capital through investments in
companies with aggressive and experienced managements believed to have more
favorable growth characteristics than the U.S. economy as a whole.
Sentinel Growth Fund
The Sentinel Growth Fund earned a total return of 24.9% during the fiscal year
ended November 30, 1995, while the S&P 500 produced a 36.9% return and the
average fund in the Lipper Growth Fund universe earned a 31.4% return. Better
than expected corporate profit growth and a significant decline in interest
rates propelled the market to a series of new highs during the year. Profits
surged as a result of corporate cost cutting efforts and increased spending by
businesses on high-tech equipment designed to improve productivity.
Technology and financial stocks led the market higher for most of the year. The
Sentinel Growth Fund benefitted from holdings in both sectors, but the Fund's
exposure to the technology sector was below that of most growth funds. Around
mid-year, we became concerned that the upward move in the prices of some
technology stocks was advancing beyond what was justified by underlying
fundamentals. As value investors, we moved to reduce our holdings in technology
and decided to maintain a below-average exposure to that sector in the second
half of the year. The Fund's relatively low representation in the technology
sector caused the portfolio to lag well behind other growth funds in the June-
September period. However, as valuations reached extreme levels and as signs of
a slowing economy began to surface in early September, investors' enthusiasm for
technology stocks began to wane. From early September through the end of the
fiscal year, the Sentinel Growth Fund's diversified holdings in the consumer
staple, financial, and health-care sectors were very strong, significantly
enhancing the Fund's relative performance.
The current outlook for growth stocks is favorable. Slow economic growth, low
interest rates, and the possibility of a capital gains tax cut are all positive
factors. Slow growth favors companies that are likely to deliver predictable
earnings growth while low interest rates limit the risk of a decline in price-
earnings ratios. As we enter the new fiscal year, we believe the Sentinel
Growth Fund is well-positioned to benefit from the favorable environment that we
see for growth stocks. The Fund has a significant weighting in companies with
predictable, above-average growth and the
================================================================================
Sentinel Growth Fund Performance
Ten years ended 11/30/95
<TABLE>
<CAPTION>
Sentinel Lipper Standard &
Growth Growth Poor's 500
Fund Fund Average Stock Index*
<S> <C> <C> <C>
Nov-85 9,500 label 10,000 label 10,000 label
Nov-86 11,632 12,157 12,768
Nov-87 10,883 11,313 12,169
Nov-88 12,157 13,732 14,996
Nov-89 15,528 17,706 19,616
Nov-90 15,317 16,534 18,937
Nov-91 17,644 21,002 22,784
Nov-92 21,255 25,248 26,984
Nov-93 20,975 27,215 29,702
Nov-94 19,897 27,155 30,021
Nov-95 24,844 35,642 41,114
</TABLE>
*An unmanaged index of stocks reflecting average prices in the stock market.
Ending values are based upon an initial investment of $10,000 and the subsequent
reinvestment of all dividends and distributions. When comparing the Fund's
performance with that of the Index and Average shown above, you should note that
the Fund's performance reflects the maximum 5% sales charge and includes all
expenses and management fees, while that shown for the Index and Average does
not. Past performance is not predictive of future results.
<TABLE>
<CAPTION>
- ----------------------------------------
Average Annual Total Return
Through 11/30/95
w/sales w/o sales
Period charge+ charge
<S> <C> <C>
1 Year 18.6% 24.9%
- ----------------------------------------
5 Years 9.0% 10.2%
- ----------------------------------------
10 Years 9.5% 10.1%
- ----------------------------------------
</TABLE>
+Sales charge applicable to year of initial investment.
7
<PAGE>
Fund's risk is limited by the diversity of its holdings and by the fact that the
portfolio's price/earnings multiple is very close to that of the market.
We appreciate your continued support and look forward to helping you achieve
your goal of long-term capital appreciation.
/s/ Robert L. Lee
Robert L. Lee, CFA
/s/ Kenneth I. Chodock
Kenneth I. Chodock
8
<PAGE>
Sentinel Growth Fund
Investment in Securities
at November 30, 1995
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Shares Value
(Note 1)
- --------------------------------------------------------------------------------
<S> <C> <C>
Common Stocks 96.4%
Automobiles & Auto Parts 4.9%
Echlin 33,000 $1,204,500
Ford Motor 18,000 508,500
General Motors 25,000 1,212,500
-----------
2,925,500
-----------
Banks 5.0%
Banc One Corp. 30,000 1,143,750
BankAmerica Corp. 15,000 954,375
First Union Corp. 17,000 928,625
-----------
3,026,750
-----------
Beverages 1.0%
Pepsico Inc. 10,900 602,225
-----------
Building Materials 3.9%
Masco Corp. 40,000 1,180,000
Sherwin-Williams 30,000 1,188,750
-----------
2,368,750
-----------
Chemicals 3.6%
Air Products & Chemicals 17,000 943,500
Grace (W.R.) 20,000 1,215,000
-----------
2,158,500
-----------
Consumer & Business Services 7.2%
Automatic Data Processing 8,000 637,000
First Data Corp. 11,000 781,000
General Motors Class E 24,000 1,212,000
Omnicom Group 9,000 600,750
Paychex, Inc. 25,500 1,150,688
-----------
4,381,438
-----------
Containers & Packaging 2.4%
* Crown Cork & Seal 35,000 1,465,625
-----------
Drugs 2.0%
Pfizer 10,300 597,400
Schering Plough 10,900 625,387
-----------
1,222,787
-----------
Electrical Equipment 2.0%
Hubbell Class B 19,887 1,215,593
-----------
Electronics 6.1%
AMP Inc. 23,000 922,875
Cabletron Systems 11,000 913,000
Motorola 13,000 796,250
* Vishay Intertechnology 30,000 1,050,000
-----------
3,682,125
-----------
Energy 4.2%
Amoco 13,000 880,750
Anadarko Petroleum 11,000 529,375
Enron Corp. 30,000 1,125,000
-----------
2,535,125
-----------
Financial 6.8%
Federal Nat'l Mtg. Assn. 18,000 1,971,000
Student Loan Marketing A 30,000 2,103,750
-----------
4,074,750
-----------
Food and Food Distributors 3.0%
CPC International 8,700 598,125
Sysco Corp. 40,000 1,225,000
-----------
1,823,125
-----------
Healthcare Providers 8.7%
Columbia/HCA Healthcare 27,000 1,393,875
Healthcare Compare 27,500 1,075,938
* Renal Treatment Centers 45,800 1,849,175
United Healthcare Corp 15,000 943,125
-----------
5,262,113
-----------
Industrial - Diversified 5.7%
Donaldson Co. 33,000 820,875
Federal Signal 45,000 1,023,750
Fluor Corp. 25,000 1,625,000
-----------
3,469,625
-----------
Insurance 5.7%
Allstate Corp 16,600 680,600
American International Group 15,000 1,346,250
Equitable of Iowa 14,500 507,500
General Re Corp. 6,000 897,750
-----------
3,432,100
-----------
Medical - Equipment & Supplies 2.6%
Dentsply International 25,000 896,875
Johnson & Johnson 7,700 667,012
-----------
1,563,887
-----------
Oil Field Equipment 2.6%
Schlumberger Ltd. 25,000 1,587,500
-----------
Publishing 1.7%
Donnelley (RR) & Sons 26,000 997,750
-----------
Recreational Products & Services 1.8%
* Coleman Co. 30,000 1,072,500
-----------
Retail 5.8%
Home Depot 40,000 1,775,000
May Department Store 23,000 1,003,375
TJX Companies 45,000 748,125
-----------
3,526,500
-----------
Semiconductors & Software 4.4%
Credence Systems 22,000 654,500
Sterling Software 34,000 2,006,000
-----------
2,660,500
-----------
Telecommunications 1.7%
* Airtouch Communications 35,000 1,019,375
-----------
Tobacco 3.6%
Philip Morris 25,000 2,193,750
-----------
Total Common Stocks
(Cost $46,980,835) 58,267,893
----------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Principal Amount Value
(M=$1,000) (Note 1)
- --------------------------------------------------------------------------------
<S> <C> <C>
Corporate Short-Term Notes 3.3%
Chevron Oil Finance 5.76%,
12/08/95 500M $ 499,440
Norwest Financial 5.77%,
12/05/95 1500M 1,499,038
-----------
Total Corporate Short-Term Notes
(Cost $1,998,478) 1,998,478
-----------
Total Investments
(Cost $48,979,313) ** 60,266,371
Excess of Other Assets
Over Liabilities 0.3% 179,998
-----------
Net Assets $60,446,369
===========
</TABLE>
*Non-Income producing.
**Also cost for federal income tax purposes. At November 30, 1995, net
unrealized appreciation for federal income tax purposes aggregated
$11,287,058 of which $11,869,765 related to appreciated securities and
$582,707 related to depreciated securities.
See Notes to Financial Statements.
9
<PAGE>
[PHOTO APPEARS HERE]
Erik B. Granade, CFA
Manager,
Sentinel World Fund
Sentinel World Fund seeks long-term growth of capital by investing principally
in a diversified portfolio of marketable equity securities of established non-
U.S. companies. Under normal circumstances, 75% of the portfolio will be
comprised of securities of foreign issuers.
Sentinel World Fund
The Sentinel World Fund provided a return of 10.2% in the fiscal year ending
November 30, 1995. This result compares favorably with the 7.9% gain of the
Europe, Australia, and Far East (EAFE) Index, and to the 5.7% return of the
average international fund in the Lipper universe. All paled in comparison to
the 36.9% rise of the S&P 500. The fund's conservative posture and its
underweighting in Japan contributed to the Fund's strong relative performance
during this difficult time for most foreign equities.
In an environment of sustained growth, falling interest rates, and low
inflation, U.S. equities led all major markets in 1995. Foreign stocks, in
contrast, were negatively impacted by the currency crisis and subsequent
economic downturn in Mexico, continued financial strains in the Japanese
economy, and renewed volatility in a number of other important currency markets.
Looking to 1996, there are reasonable grounds to expect improved relative
performance overseas, while longer-term the rationale for international
diversification remains firmly intact.
The Sentinel World Fund's country allocation remained relatively stable during
the course of 1995, with all major components of the EAFE index broadly
represented, whether by country and region or by industry sub-sector. Europe
continues to be overweighted, with prospects well supported by historically low
levels of inflation, easy monetary policies, and a preponderance of attractively
valued, high quality equities. Within the region, the fund is more heavily
exposed to the continent than the U.K. While exposure to Japanese equities
remains below the EAFE benchmark, our view is that overall risk in Tokyo is
lower than in recent prior years. This assessment is based on improving
liquidity, a more focused government policy addressing the country's real estate
problems, and the current alleviation of upward pressure on the yen. We have
maintained a neutral position in other parts of the world, with very limited
exposure in developing countries, per our investment guidelines.
Stock selection added to returns in 1995, with good performance generated by
some of the Fund's largest holdings, which have been
Sentinel World Fund Performance
3/1/93 inception through 11/30/95
- ----------------------------------------
Average Annual Total Return
Through 11/30/95
<TABLE>
<CAPTION>
w/sales w/o sales
Period charge+ charge
<S> <C> <C>
1 Year 4.7% 10.2%
- ----------------------------------------
Since
Inception* 13.2% 15.3%
- ----------------------------------------
</TABLE>
*3/1/93
+Sales charge applicable to year of
initial investment
<TABLE>
<CAPTION>
Morgan Stanley's
Lipper Sentinel Capital International
International World "EAFE" (Europe, Australia,
Fund Average Fund Far East) Index*
<S> <C> <C> <C>
02/27/93 10,000 label 9,500 label 10,000 label
Mar-93 10,572 10,245 10,875
Apr-93 11,115 10,911 11,910
May-93 11,354 11,110 12,165
Jun-93 11,110 10,752 11,978
Jul-93 11,461 11,030 12,399
Aug-93 12,182 11,805 13,072
Sep-93 12,114 11,746 12,780
Oct-93 12,649 12,183 13,176
Nov-93 12,136 11,786 12,027
Dec-93 13,278 12,636 12,898
Jan-94 14,102 13,396 13,992
Feb-94 13,794 13,066 13,955
Mar-94 13,173 12,586 13,357
Apr-94 13,507 12,956 13,927
May-94 13,467 12,806 13,850
Jun-94 13,324 12,776 14,050
Jul-94 13,689 13,066 14,188
Aug-94 14,097 13,416 14,527
Sep-94 13,745 12,986 14,072
Oct-94 14,011 13,326 14,550
Nov-94 13,321 12,746 13,837
Dec-94 13,187 12,776 13,927
Jan-95 12,540 12,266 13,395
Feb-95 12,556 12,337 13,361
Mar-95 12,968 13,123 14,197
Apr-95 13,383 13,490 14,735
May-95 13,492 13,561 14,563
Jun-95 13,489 13,561 14,311
Jul-95 14,213 14,142 15,205
Aug-95 13,950 13,704 14,629
Sep-95 14,158 13,877 14,918
Oct-95 13,862 13,857 14,522
Nov-95 14,004 14,050 14,930
</TABLE>
Ending values are based upon an initial investment of $10,000 and the subsequent
reinvestment of all dividends and distributions. When comparing the Fund's
performance with that of the Index and Average shown above, you should note that
the Fund's performance reflects the maximum 5% sales charge and includes all
expenses and management fees, while that shown for the Index and Average does
not. Past performance is not predictive of future results.
*An unmanaged index of 1,114 companies representing the stock markets of Europe,
Australia, New Zealand and the Far East.
10
<PAGE>
concentrated in financial and stable growth companies. While we do not
anticipate changing this focus, there may be emerging opportunities from a value
perspective in some of the more economically-sensitive companies that recently
have suffered severe price setbacks in many markets.
Although the risk of a correction in the U.S. market, which could eventually
have implications overseas, has increased following last year's strong advance,
we consider the World Fund to be well positioned. Our goal continues to be to
provide consistent shareholder returns through broadly diversified investments
in high quality companies that meet our strict value criteria.
/s/ Erik B. Granade
Erik B. Granade, CFA
11
<PAGE>
Sentinel World Fund
Investment in Securities
at November 30, 1995
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Shares Value
(Note 1)
- --------------------------------------------------------------------------------
<S> <C> <C>
Common Stocks 93.4%
Argentina 1.2%
YPF S. A. (ADR) 30,000 $ 585,000
Austria 1.0% -----------
EVN Energie Versorgung Niedr 3,600 491,544
Australia 3.5% -----------
CRA Ltd. 35,000 554,387
National Australia 51,902 452,274
Westpac Bank Corp Ord. 156,008 646,147
-----------
1,652,808
-----------
Denmark 1.2%
Tele Danmark (ADR) 20,000 557,500
Finland 1.3% -----------
Cultor 15,400 644,644
France 5.6% -----------
Alcatel Alsthom (ADR) 30,505 510,959
Banque Nationale de Paris 7,067 312,768
CSF Thomson 12,000 263,142
Elf Aquitaine (ADR) 19,285 674,975
Guyenne et Gascogne 1,800 450,225
Societe Generale 4,000 467,007
-----------
2,679,076
-----------
Germany 6.9%
Bayer AG Ord. 1,900 493,831
BMW AG 900 483,704
Commerzbank AG 2,460 566,600
SGL Carbon AG 7,000 492,586
Siemens AG 900 467,839
Veba AG 19,000 774,237
-----------
3,278,797
-----------
Hong Kong 3.2%
HSBC Holdings 57,363 845,444
Jardine Matheson 109,994 665,464
-----------
1,510,908
-----------
Italy 1.0%
Istituto Mobiliare
Italia (ADR) 27,500 470,938
-----------
Japan 29.0%
Canon 40,000 701,789
Dai Tokyo Fire & Marine 110,000 706,200
Daiichi Corp. 37,000 754,325
Daiichi Pharmaceuticals 34,000 459,887
Fuji Photo Film 25,000 617,496
Hitachi Koki Co. Ord. 70,000 647,684
Ito-Yokado 14,000 771,184
Kirin Beverage 40,000 525,361
Kyocera Corp. 7,000 552,316
Kyushu Electric Power 20,200 483,097
Mitsubishi Heavy Industry 120,000 953,884
Murata Manufacturing 20,000 715,511
Nishimatsu Construction 62,000 741,387
Nomura Securities 40,000 784,122
Sankyo Co. LTD 26,000 578,485
Sekisui House 52,000 606,518
TDK Corp. 13,000 657,486
Teijin 115,000 604,166
Toshiba Corp. 115,000 826,219
Toyota Motors Corp. Ord. 25,000 492,526
Toyota Motors Corp. (ADR) 3,000 118,125
Yamatake Honeywell 40,000 537,123
-----------
13,834,891
-----------
Malaysia 0.3%
Malaysian Int'l Shipping 60,000 146,613
-----------
Mexico 1.4%
Telefonos De Mexico (ADR) 20,000 660,000
-----------
Netherlands 6.6%
ABN Amro Bank 20,827 927,387
Heineken Holdings 3,125 507,581
Hollandsche Benton Groep N.V. 3,040 448,340
International Nederlanden 8,216 537,856
Royal PTT - KPN 20,872 743,771
-----------
3,164,935
-----------
Singapore 2.5%
Malaysian Int'l. Shipping 126,666 316,104
Sime Darby Berhad 144,000 369,571
Singapore Int'l. Airlines 55,000 514,711
-----------
1,200,386
-----------
South Korea 0.5%
Po Hang Iron & Steel Co. 2,990 226,971
-----------
Spain 5.5%
Banco Popular 3,000 503,527
Banco Santander 12,000 559,475
Iberdrola 35,000 295,143
Repsol (ADR) 24,000 759,000
Telefonica de
Espana S.A. (ADR) 12,000 498,000
-----------
2,615,145
-----------
Sweden 3.1%
Aga B Free 40,000 555,263
Astra AB B Free 12,000 441,160
Volvo AB B 24,000 497,906
-----------
1,494,329
-----------
Switzerland 6.9%
Ciba Geigy AG Registered 725 646,363
Globus PC 900 520,630
Nestle SA Registered 500 532,965
Sandoz AG Registered 750 640,578
Swiss Bank Corp. 1,175 467,801
Zurich Insurance Registered 1,600 491,365
-----------
3,299,702
-----------
United Kingdom 12.7%
Albright & Wilson 145,000 349,905
Allied Irish Bank 157,815 863,212
Boots Co. plc 60,000 520,318
Glaxo Hldg plc (ADR) 20,000 535,000
Guinness plc 60,000 424,712
Hanson plc (ADR) 35,000 533,750
National Westminster Bk plc 51,342 526,260
Severn Trent Water plc 57,887 595,121
Tesco plc 205,851 911,490
Unilever N V (ADR) 6,000 797,250
-----------
6,057,018
-----------
Total Common Stocks
(Cost $40,233,713) 44,571,205
-----------
Preferred Stock 1.2%
Germany
RWE AG
(Cost $432,246) 2,066 $ 588,531
-----------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Principal Amount Value
(M=$1,000) (Note 1)
- --------------------------------------------------------------------------------
<S> <C> <C>
Corporate Short-Term Notes 1.9%
Chevron Oil Financial 5.77%,
12/06/95
(Cost $899,280) 900M 899,280
-----------
Total Investments
(Cost $41,565,239)* 46,059,016
Excess of Other Assets
Over Liabilities 3.5% 1,642,972
-----------
Net Assets $47,701,988
===========
</TABLE>
________________________________________________________________________________
<TABLE>
<CAPTION>
Summary of Foreign Securities
by Industry Classification
Percent of Market
Net Assets Value
<S> <C> <C>
Industry
Aerospace 0.6% $ 263,142
Automobiles 3.3% 1,592,261
Banks 16.0% 7,608,840
Beverages 3.1% 1,457,654
Chemicals 4.0% 1,891,585
Construction & Housing 5.1% 2,443,929
Cosmetics & Toiletries 1.7% 797,250
Drugs 6.9% 3,301,473
Electrical Equipment 3.6% 1,720,473
Electronics 6.8% 3,248,769
Energy 4.2% 2,018,975
Foods 2.5% 1,177,609
Industrial Diversified 3.3% 1,568,785
Insurance 3.6% 1,735,421
Investment Companies 1.6% 784,122
Machinery 2.0% 953,884
Metals & Mining 1.6% 781,358
Photography 1.3% 617,496
Retail 8.2% 3,928,172
Telecommunications 1.6% 743,771
Textiles 1.3% 604,166
Transportation 2.0% 977,428
Utilities - Electric 5.5% 2,632,552
Utilities - Telephone 3.6% 1,715,500
Utilities - Water 1.2% 595,121
----- -----------
94.6% $45,159,736
===== ===========
</TABLE>
- --------------------------------------------------------------------------------
* Also cost for federal income tax purposes. At November 30, 1995, net
unrealized appreciation for federal income tax purposes aggregated $4,493,777
of which $6,253,437 related to appreciated securities and $1,759,660 related
to depreciated securities.
(ADR) - American Depository Receipt
12 See Notes to Financial Statements.
<PAGE>
[PHOTO APPEARS HERE]
Sentinel Common Stock Fund Management Team
Left to right: Robert L. Lee, CFA, Keniston P. Merrill and
Richard A. Pender, CFA
Sentinel Common Stock Fund seeks a combination of current income and long-term
growth of both capital and income through investments in the common stocks of
many well-established dividend paying companies.
Sentinel Common Stock Fund
The Sentinel Common Stock Fund produced a total return of 32.8% for the fiscal
year ended November 30, 1995. This figure was moderately below the 36.9%
return for the Standard & Poor's 500, but ahead of the 30.1% average return for
the universe of Lipper Growth & Income Funds.
Moderate economic growth, restrained inflation, and a broad decline in interest
rates, all combined to provide a very favorable environment for the stock
market. The strongest group by far was the financial services sector, which
rallied throughout the year as interest rates steadily declined. The Sentinel
Common Stock Fund has substantial positions in this attractively valued sector,
particularly in the banking and insurance industries, and this contributed very
positively to overall performance.
For a large part of the fiscal year, technology stocks were also quite strong,
but began to falter in the summer months. As economic indicators began to
suggest the potential for a slowdown in corporate earnings growth, investors
sold some of their economically sensitive holdings, including a number of
technology stocks, and began to move into the traditional defensive areas, such
as foods, consumer products, healthcare and energy stocks.
Sentinel Common Stock Fund Performance
Ten Years Ended 11/30/95
- ----------------------------------------
Average Annual Total Return
Through 11/30/95
<TABLE>
<CAPTION>
w/sales w/o sales
Period charge+ charge
<S> <C> <C>
1 Year 26.2% 32.8%
- --------------------------------------
5 Years 13.7% 14.9%
- --------------------------------------
10 Years 13.0% 13.6%
- --------------------------------------
</TABLE>
+Sales charge applicable to year of initial investment.
<TABLE>
<CAPTION>
Lipper
Sentinel Growth &
S&P 500 Common Income Fund
Stock index* Stock Fund Average
<S> <C> <C> <C>
Nov-85 10,000 Label 9,500 Label 10,000 Label
Nov-86 12,768 12,708 12,314
Nov-87 12,169 11,568 11,617
Nov-88 14,996 13,854 14,074
Nov-89 19,616 17,404 17,475
Nov-90 18,937 16,987 16,454
Nov-91 22,784 20,571 19,856
Nov-92 26,984 24,006 23,754
Nov-93 29,702 26,107 25,975
Nov-94 30,021 25,634 26,055
Nov-95 41,114 34,051 33,895
</TABLE>
Ending values are based upon an initial investment of $10,000 and the subsequent
reinvestment of all dividends and distributions. When comparing the Fund's
performance with that of the Index and Average shown above, you should note that
the Fund's performance reflects the maximum 5% sales charge and includes all
expenses and management fees, while that shown for the Index and Average does
not. Past performance is not predictive of future results.
*An unmanaged index of stocks reflecting average prices in the stock market.
13
<PAGE>
While the Sentinel Common Stock Fund benefited from the strength in technology
stocks earlier in the year, we began to have concerns about valuation levels and
speculative activity in late spring, and eliminated most of our technology
holdings in May and June. Your investment return was enhanced in the latter
half of the year both by the Fund's low commitment to technology stocks, and by
above-average representation in the defensive consumer and energy sectors.
Looking forward, we anticipate that 1996 will bring a continuation of the trend
of moderating economic growth and restrained inflation. We do not, however, see
the same potential for a similar dramatic decline in interest rates as was
experienced over the last twelve months. In such a moderate growth, stable
interest rate environment, we envision that the market will favor the stocks of
companies with consistent earnings records, rather than the cyclical companies
that have been among the stronger performers in recent years. The Sentinel
Common Stock Fund continues to maintain sizable commitments to the financial,
energy, consumer products and healthcare areas, all of which should benefit in
the anticipated environment.
The recently concluded fiscal year was a strong one for your fund. After a year
of extraordinary gains in the financial markets, shareholders should be cautious
about their expectations moving forward. The stock market does not produce 30%
gains year in and year out, but rather achieves exceptional returns in some
years, and more modest returns in others. We believe strongly that the Sentinel
Common Stock Fund's conservative, quality-oriented, value investment style will
continue to serve our shareholders well both in strong markets and in more
difficult periods. As always, we appreciate your continuing support and
confidence.
/s/ Keniston P. Merrill
Keniston P. Merrill
/s/ Richard A. Pender
Richard A. Pender, CFA
/s/ Robert L. Lee
Robert L. Lee, CFA
/s/ Daniel J. Manion
Daniel J. Manion, CFA
14
<PAGE>
Sentinel Common Stock Fund
Investment in Securities
at November 30, 1995
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Shares Value
(Note 1)
- --------------------------------------------------------------------------------
<S> <C> <C>
Common Stocks 94.3%
Automobiles & Auto Parts 3.1%
Echlin Inc. 550,000 $ 20,075,000
Ford Motor 440,000 12,430,000
-----------
32,505,000
-----------
Banks 8.9%
Banc One Corp. 319,970 12,198,856
BankAmerica Corp. 200,000 12,725,000
Chemical Banking 287,200 17,232,000
Citicorp 287,900 20,368,925
First Union Corp. 220,000 12,017,500
Morgan (J. P.) 254,700 19,993,950
-----------
94,536,231
-----------
Beverages 3.6%
Anheuser-Busch Cos. 240,000 15,900,000
Coca-Cola 290,000 21,967,500
-----------
37,867,500
-----------
Building Materials 1.5%
Sherwin-Williams 400,000 15,850,000
Chemicals 3.1%
Grace (W.R.) 295,000 17,921,250
PPG Industries 325,000 14,746,875
-----------
32,668,125
-----------
Consumer & Business Services 1.5%
General Motors Class E 15,750 795,375
Omnicom Group 225,000 15,018,750
-----------
15,814,125
-----------
Containers & Packaging 1.6%
* Crown Cork & Seal 400,000 16,750,000
-----------
Cosmetics & Toiletries 2.0%
Gillette 417,144 21,639,345
-----------
Drugs 5.2%
American Home Products 318,300 29,044,875
Lilly (Eli) 145,600 14,487,200
Pfizer, Inc. 200,000 11,600,000
-----------
55,132,075
-----------
Electrical Equipment 5.3%
Emerson Electric 350,000 27,300,000
General Electric 425,000 28,581,250
-----------
55,881,250
-----------
Electronics 2.7%
AMP Inc. 320,000 12,840,000
Motorola, Inc. 250,400 15,337,000
-----------
28,177,000
-----------
Energy 10.6%
Amoco 259,600 17,587,900
Atlantic Richfield 98,800 10,707,450
Chevron 240,000 11,850,000
Exxon 315,400 24,404,075
Mobil 210,000 21,918,750
Royal Dutch Petroleum 197,218 25,317,861
-----------
111,786,036
-----------
Financial 1.7%
American Express 411,700 17,497,250
-----------
Foods 2.1%
Sara Lee 700,000 22,575,000
-----------
Healthcare Providers 2.3%
Columbia/HCA Healthcare 475,000 24,521,875
-----------
Industrial-Diversified 2.7%
Rockwell Int'l. 310,600 15,219,400
Tenneco 270,000 12,960,000
-----------
28,179,400
-----------
Insurance 4.3%
Allstate Corp. 485,003 19,885,123
American General 380,000 12,872,500
American Int'l. Group 142,575 12,796,106
-----------
45,553,729
-----------
Medical-Equipment & Supplies 1.3%
Johnson & Johnson 155,000 13,426,875
-----------
Oil Field Equipment & Services 2.4%
Halliburton Co. 229,800 9,967,575
Schlumberger Ltd. 240,000 15,240,000
-----------
25,207,575
-----------
Paper & Forest Products 2.9%
Kimberly-Clark 405,000 31,134,375
-----------
Publishing & Broadcasting 2.2%
Capital Cities/ABC 7,600 939,550
Gannett 162,000 9,882,000
McGraw-Hill 150,000 12,562,500
-----------
23,384,050
-----------
Railroads 1.4%
Union Pacific 215,000 14,566,250
-----------
Retail 5.5%
May Department Stores 366,980 16,009,502
Nordstrom, Inc. 191,100 7,500,675
Penney (J.C.) 320,000 15,000,000
Sears, Roebuck 503,500 19,825,313
-----------
58,335,490
-----------
Telecommunications 2.2%
A T & T Corp. 256,930 16,957,380
* US West Media Group 370,790 6,674,220
-----------
23,631,600
-----------
Tobacco 4.5%
American Brands 399,600 16,683,300
Philip Morris 350,000 30,712,500
-----------
47,395,800
-----------
Utilities-Electric 4.9%
Central & So. West 460,000 12,362,500
FPL Group 360,000 15,615,000
Florida Progress 350,000 12,031,250
New England Electric 300,000 11,700,000
-----------
51,708,750
-----------
Utilities-Gas 2.6%
Enron Corp 420,000 15,750,000
Sonat, Inc. 380,000 12,255,000
-----------
28,005,000
-----------
Utilities-Telephone 2.2%
GTE Corp. 280,000 11,935,000
US West 370,790 11,587,188
-----------
23,522,188
-----------
Total Common Stocks
(Cost $511,947,347) 997,251,894
-----------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Principal Amount Value
(M=$1,000) (Note 1)
- --------------------------------------------------------------------------------
<S> <C> <C>
Corporate Short-Term Notes 5.6%
Beneficial Corp. 5.65%,
12/08/95 6,000M $ 5,993,408
Beneficial Corp. 5.65%,
12/27/95 9,500M 9,461,235
Commercial Credit 5.70%,
12/05/95 5,000M 4,996,833
Commercial Credit 5.72%,
12/21/95 10,000M 9,968,222
Ford Motor Credit 5.66%,
12/18/95 9,000M 8,975,945
Ford Motor Credit 5.72%,
01/05/96 5,000M 4,972,048
Prudential Funding 5.72%,
12/13/95 5,000M 4,990,467
Prudential Funding 5.65%,
01/02/96 10,000M 9,949,778
-----------
Total Corporate Short-Term Notes
(Cost $59,307,936) 59,307,936
-----------
Total Investments
(Cost $571,255,283)** 1,056,559,830
Excess of Other Assets
Over Liabilities 0.1% 1,383,963
-----------
Net Assets $1,057,943,793
=============
</TABLE>
* Non-Income producing.
** The aggregate cost for federal income tax purposes was $571,428,732. At
November 30, 1995, unrealized appreciation for income tax purposes
aggregated $485,131,098 of which $489,044,985 related to appreciated
securities and $3,913,887 related to depreciated securities.
See Notes to Financial Statements.
15
<PAGE>
[PHOTO APPEARS HERE]
Left to right:
Rodney A. Buck, CFA
Manager,
Sentinel Balanced Fund
Richard A. Pender, CFA
Manager, common
stock portfolio,
Sentinel Balanced Fund
Sentinel Balanced Fund seeks a stable combination of income and capital growth
through a conservatively managed portfolio of both stocks and bonds.
At least 25% of the Fund's net assets will always be invested in high quality
bonds.
Sentinel Balanced Fund
The Sentinel Balanced Fund recorded a total return of 24.4% for the fiscal year
ended November 30, 1995. The Balanced Fund's results just about matched the
return for the average Lipper balanced fund, and fell between the 36.9% return
for the Standard and Poor's 500 and the 17.6% return for the Lehman Aggregate
Bond Index.
The past twelve months was a very favorable period for the economy and financial
markets. Although there were fears that the economy might overheat early in the
year, resulting in higher inflation and interest rates, these fears were
overcome in the spring as economic growth tapered off to a sustainable pace and
the rate of inflation slowed significantly. Interest rates declined across the
board, resulting in a dramatic rally in the bond market. Stocks, led by a
strong performance in the financial services and technology sectors, rallied
strongly.
The Sentinel Balanced Fund began the fiscal year with an asset mix of 48%
stocks, 40% bonds, and 12% cash. During the year, we increased the Fund's
exposure to equities to 60% and reduced the cash position to 5%. The added
exposure to equities and the reduction in the Fund's cash position helped the
Balanced Fund's performance. Also boosting performance was the Fund's
substantial positions in banking and insurance and, later in the period, the
strong performance of the energy and stable consumer stocks. Limited exposure
to the faltering technology sector also positively impacted performance late in
the year. The duration or interest rate sensitivity of the fixed income portion
of the Fund was increased early in the fiscal year, which improved bond
performance as interest rates declined. Exposure to mortgage-backed securities
was reduced and the Fund's tradition of owning high-quality bonds was
maintained. At the end of the fiscal year, the Sentinel Balanced Fund's asset
allocation was 58% stocks, 35% bonds and 7% cash.
Sentinel Balanced Fund Performance
Ten Years Ended 11/30/95
- ----------------------------------------
Average Annual Total Return
Through 11/30/95
<TABLE>
<CAPTION>
w/sales w/o sales
Period charge+ charge
<S> <C> <C>
1 Year 18.2% 24.4%
- ----------------------------------------
5 Years 10.5% 11.7%
- ----------------------------------------
10 Years 10.4% 11.0%
- ----------------------------------------
</TABLE>
+Sales charge applicable to year of initial investment.
<TABLE>
<CAPTION>
Lehman Standard & Sentinel Lipper
Aggregate Poor's 500 Balanced Balanced
Bond Index+ Stock Index* Fund Fund Average
<S> <C> <C> <C> <C>
Nov-85 10,000 label 10,000 label 9,500 label 10,000 label
Nov-86 11,834 12,768 11,931 12,187
Nov-87 12,042 12,169 11,297 11,832
Nov-88 13,154 14,996 12,942 13,732
Nov-89 15,042 19,616 15,278 16,475
Nov-90 16,181 18,937 15,547 16,202
Nov-91 18,513 22,784 18,267 19,384
Nov-92 20,154 26,984 20,523 22,150
Nov-93 22,349 29,702 22,521 24,459
Nov-94 21,665 30,021 21,701 24,021
Nov-95 25,488 41,114 26,998 29,932
</TABLE>
Ending values are based upon an initial investment of $10,000 and the subsequent
reinvestment of all dividends and distributions. When comparing the Fund's
performance with that of the Indices and Average shown above, you should note
that the Fund's performance reflects the maximum 5% sales charge and includes
all expenses and management fees, while that shown for the Indices and Average
does not. Past performance is not predictive of future results.
*An unmanaged index of stocks reflecting average prices in the stock market.
+An unmanaged index of bonds reflecting average prices in the bond market.
16
<PAGE>
Looking ahead toward 1996, we expect that the economy will continue to grow at a
pace close to its long-term average, and that inflation should remain well under
control. Corporate earnings are likely to increase at a much slower rate than
in the past two years and this should give some pause to the stock market. We
anticipate that Congress and the administration will compromise on a budget
deficit reduction package, which should be a positive for financial markets.
While this past year was a very favorable one for your fund, we would caution
against expectations for a repeat in 1996 of the spectacular performance of both
the stock and bond markets. We strongly believe that the balanced, risk-averse
investment program that has been the hallmark of the Sentinel Balanced Fund for
many years should continue to serve shareholders well in the future.
/s/ Rodney A. Buck
Rodney A. Buck, CFA
/s/ Richard A. Pender
Richard A. Pender, CFA
17
<PAGE>
Sentinel Balanced Fund
Investment in Securities
at November 30, 1995
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Principal Amount Value
(M=$1,000) (Note 1)
- --------------------------------------------------------------------------------
<S> <C> <C>
U.S. Government Obligations 13.9%
U.S. Treasury Obligations 9.5%
5-Year:
Note 6.25%, '00 8100M $ 8,333,037
-----------
10-Year:
Note 6.375%, '02 2200M 2,290,222
Note 6.5%, '05 14100M 14,844,480
-----------
17,134,702
-----------
Total U.S. Treasury Obligations 25,467,739
-----------
U.S. Government Agency Obligations 4.4%
Federal Home Loan Mortgage Corp. 0.1%
5-Year:
6.835%, '99 395M 395,866
-----------
Federal National Mortgage Association 4.2%
Collateralized Mortgage Obligation:
148(B), 0%, '96 2000M 1,863,750
-----------
Medium Term Note:
6.29%, '00 4000M 4,086,360
-----------
Principal Strips:
0%, '96 3270M 3,114,675
0%, '96 2365M 2,238,425
-----------
5,353,100
-----------
Total Federal National
Mortgage Association 11,303,210
-----------
Government National Mortgage Association 0.1%
30-Year:
9%, '09 52M 55,122
-----------
Total U.S. Government
Agency Obligations 11,754,198
-----------
Total U.S. Government Obligations
(Cost $36,566,848) 37,221,937
-----------
Bonds 19.9%
Beverages 1.2%
Anheuser-Busch 8.5%, '17
J. Seagram & Sons 9.75% '00 2000M $ 2,092,500
1100M 1,124,750
-----------
3,217,250
-----------
Canadian 0.5%
Toronto-Dominion Bank
6.125%, '08 1250M 1,201,562
-----------
Finance Companies 0.7%
G.E. Capital Corp. 8.75%, '07 1500M 1,800,000
-----------
Financial Institutions 3.0%
Donaldson Lufkin & Jenrette
6.875%, '05 1000M 1,013,750
First Union Corp. 6.55%, '35 2325M 2,348,250
Lehman Brothers Holdings
8.8%, '15 1200M 1,357,500
Midland Bank 7.65%, '25 800M 877,000
Paine Webber 6.73%, '04 2500M 2,481,250
-----------
8,077,750
-----------
Foreign Financial Institutions 2.5%
Banque Paribas (Fr.)
6.875%, '09 2000M 1,972,500
St. George Bank Ltd. (Aust.)
7.15%, '05 1500M 1,535,625
Swedish Export Credit (Swed.)
9.875%, '38 3000M 3,345,000
-----------
6,853,125
-----------
Industrial - Diversified 2.7%
American Brands 9.125%, '16 2000M 2,095,000
TCI Communications
8.75%, '15 1750M 1,887,813
Time Warner Inc. 7.75%, '05 1700M 1,755,250
Tosco Corp 9.625%, '02 1300M 1,501,500
-----------
7,239,563
-----------
Insurance 4.4%
Continental Corp. 7.25%, '03 1000M 1,018,750
Integon Corp. 8%, '99 750M 755,625
Integon Corp. 9.5%, '01 1500M 1,595,625
John Hancock 7.375%, '24 2500M 2,446,875
Liberty Mutual 8.2%, '07 1000M 1,087,500
National RE Corp. 8.85%, '05 1500M 1,696,875
Prudential Ins. 7.65%, '07 2000M 2,097,500
USF & G 7.125%, '05 1000M 1,028,750
-----------
11,727,500
-----------
Retail 0.8%
May Dept. Store 9.125%, '16 2000M 2,112,500
-----------
Telecommunications 0.9%
Comsat Corp. 8.05%, '06 2000M 2,290,160
-----------
Utility-Electric 2.4%
Gulf States Utilities 8.94%, '22 2000M 2,152,500
Long Island Lighting
9.625%, '24 2000M 2,055,000
Mississippi Power & Light
8.8%, '05 2000M 2,145,000
-----------
6,352,500
-----------
Utility-Gas 0.8%
Consolidated Natural Gas
8.625%, '11 2000M 2,122,500
-----------
Total Bonds
(Cost $51,070,330) 52,994,410
-----------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Shares Value
(Note 1)
- --------------------------------------------------------------------------------
<S> <C> <C>
Common Stocks 57.1%
Automobiles & Auto Parts 1.9%
Echlin Inc. 80,000 $ 2,920,000
Ford Motor 76,000 2,147,000
-----------
5,067,000
-----------
Banks 4.5%
Banc One Corp. 60,025 2,288,453
BankAmerica Corp. 35,000 2,226,875
Chase Manhattan Corp. 25,000 1,521,875
Citicorp 30,632 2,167,214
First Union Corp. 40,000 2,185,000
Morgan (J.P.) 20,000 1,570,000
-----------
11,959,417
-----------
Beverages 1.9%
Anheuser-Busch Cos. 40,000 2,650,000
Coca-Cola 31,200 2,363,400
-----------
5,013,400
-----------
Building Materials 0.9%
Sherwin-Williams 60,000 2,377,500
-----------
Chemicals 2.2%
Grace (W.R.) 32,000 1,944,000
PPG Industries 50,000 2,268,750
Witco 55,000 1,691,250
-----------
5,904,000
-----------
Consumer & Business Services 1.1%
Omnicom Group 45,000 3,003,750
-----------
Containers & Packaging 0.9%
* Crown Cork & Seal 55,000 2,303,125
-----------
Drugs 2.1%
American Home Products 34,800 3,175,500
Pfizer, Inc. 40,000 2,320,000
-----------
5,495,500
-----------
Electrical Equipment 3.3%
Emerson Electric 37,500 2,925,000
General Electric 47,500 3,194,375
Grainger, (W.W.) 40,000 2,675,000
-----------
8,794,375
-----------
Electronics 1.7%
AMP Inc. 48,600 1,950,075
Motorola, Inc. 41,000 2,511,250
-----------
4,461,325
-----------
Energy 5.9%
Amoco 44,000 2,981,000
Atlantic Richfield 17,000 1,842,375
Chevron 35,000 1,728,125
Exxon 38,000 2,940,250
Mobil 30,050 3,136,469
Royal Dutch Petroleum 24,000 3,081,000
-----------
15,709,219
-----------
Financial 1.0%
American Express 60,000 2,550,000
-----------
Foods 2.1%
CPC International 45,000 3,093,750
Sara Lee 80,000 2,580,000
-----------
5,673,750
-----------
</TABLE>
18
<PAGE>
Sentinel Balanced Fund
Investment in Securities (cont'd.)
at November 30, 1995
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Shares Value
(Note 1)
- --------------------------------------------------------------------------------
<S> <C> <C>
Healthcare Providers 1.3%
Columbia/HCA Healthcare 65,000 $ 3,355,625
-----------
Industrial-Diversified 2.1%
Dover 30,000 1,166,250
Rockwell Int'l. 50,000 2,450,000
Tenneco 40,179 1,928,592
-----------
5,544,842
-----------
Insurance 3.6%
Allstate Corp. 96,563 3,959,083
American General 55,000 1,863,125
American Int'l. Group 25,375 2,277,406
Equitable of Iowa 45,000 1,575,000
-----------
9,674,614
-----------
Medical-Equipment & Supplies 1.7%
Abbott Laboratories 50,000 2,031,250
Johnson & Johnson 30,000 2,598,750
-----------
4,630,000
-----------
Oil Field Equipment & Services 1.5%
Halliburton Co. 37,000 1,604,875
Schlumberger Ltd. 38,000 2,413,000
-----------
4,017,875
-----------
Paper & Forest Products 1.0%
Kimberly-Clark 35,000 2,690,625
-----------
Publishing 2.6%
Donnelley (RR) & Sons 75,000 2,878,125
Gannett 27,000 1,647,000
McGraw-Hill 30,000 2,512,500
-----------
7,037,625
-----------
Railroads 1.8%
Illinois Central Corp. 55,000 2,227,500
Union Pacific 40,000 2,710,000
-----------
4,937,500
-----------
Retail 4.0%
May Department Stores 55,000 2,399,375
Nordstrom, Inc. 30,400 1,193,200
Penney (J. C.) 60,000 2,812,500
Sears, Roebuck 110,701 4,358,852
-----------
10,763,927
-----------
Recreation 0.5%
Coleman 40,000 1,430,000
-----------
Telecommunications 1.4%
A T & T Corp. 40,200 2,653,200
* US West Media Group 51,150 920,700
-----------
3,573,900
-----------
Tobacco 1.6%
American Brands 45,000 1,878,750
Philip Morris 28,000 2,457,000
-----------
4,335,750
-----------
Utilities-Electric 1.4%
Central & So.West 47,000 1,263,125
FPL Group 60,000 2,602,500
-----------
3,865,625
-----------
Utilities-Gas 1.4%
Enron Corp. 50,000 1,875,000
Sonat, Inc. 60,000 1,935,000
-----------
3,810,000
-----------
Utilities-Telephone 1.7%
GTE Corp 70,000 2,983,750
US West 51,150 1,598,438
-----------
4,582,188
-----------
Total Common Stocks
(Cost $106,388,673) 152,562,457
-----------
Preferred Stocks 1.1%
General Motors 6.5%
Conv. Pfd.
(Cost $2,119,657) 40,000 2,870,000
-----------
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Principal Amount Value
(M=$1,000) (Note 1)
- -------------------------------------------------------------------------------
<S> <C> <C>
Corporate Short-Term Notes 12.8S%
John Deere Capital 5.63%,
12/29/95 5000M $ 4,978,105
Norwest Financial, Inc. 5.75%,
12/05/95 3300M 3,297,892
Norwest Financial, Inc. 5.75%,
12/13/95 6000M 5,988,500
Prudential Funding 5.73%,
12/08/95 9000M 8,989,972
Prudential Funding 5.75%,
12/18/95 1000M 997,285
Texaco, Inc. 5.67%,
12/29/95 10000M 9,955,900
------------
Total Corporate Short-Term Notes
(Cost $34,207,654) 34,207,654
------------
Total Investments
(Cost $230,353,162)** 279,856,458
Excess of Liabilities
Over Other Assets (4.8%) (12,753,707)
------------
Net Assets $267,102,751
============
</TABLE>
* Non-Income producing.
** Also cost for federal income tax purposes. At November 30, 1995, net
unrealized appreciation for federal income tax purposes aggregated
$49,503,296 of which $50,270,636 related to appreciated securities and
$767,340 related to depreciated securities.
See Notes to Financial Statements.
19
<PAGE>
[PHOTO APPEARS HERE]
Richard D. Temple
Manager,
Sentinel Bond Fund
Sentinel Bond Fund seeks as high a level of income as is consistent with
preservation of capital through a carefully managed and well-diversified primary
portfolio of high quality corporate bonds.
Sentinel Bond Fund
For the fiscal year ended November 30, 1995, the Sentinel Bond Fund produced a
total return of 18.8%, compared to the Lehman Aggregate Bond Index which
returned 17.6%. The Lehman Aggregate Index is considered a good proxy for the
overall fixed income market. During the same period, the average Lipper A-rated
Corporate Bond Fund returned 17.7%.
At this time last year, interest rates were peaking, although the Federal
Reserve continued to tighten short-term credit well into 1995. The markets were
reacting to slower economic growth, subdued inflation and a Republican Congress
that rode into power on a balanced budget platform. Thirty-year U.S. Treasury
securities peaked at approximately 8% and closed on November 30, 1995, at
approximately 6.13%. Similarly, ten-year U.S. Treasury securities peaked at
approximately 7.90% and closed on November 30, 1995, at approximately 5.75%. As
a result of this market rally, long dated assets significantly outperformed
shorter dated assets. Mortgage-backed securities, with their short average
lives, generally underperformed most other fixed income assets. The magnitude
of the rally is best illustrated by the total return performance of the U.S.
Treasury curve. Two-year securities returned 9.3% for this period, five-year
securities returned 15.6%, ten-year securities returned 22.0% and thirty-year
securities returned a stunning 31.3%.
During the 1995 fiscal year, the Sentinel Bond Fund participated in the markets
by extending maturity from 6.6 years on November 30, 1994, to 9.5 years by March
31, 1995. Maturity was extended again in early October 1995 when the average
maturity reached 10.9 years. As of November 30, 1995, the average maturity
stood at 9.3 years. Our commitment to the U.S. Treasury market and to mortgage-
backed securities was curtailed during the year and the proceeds were committed
to the corporate market. U.S. Treasury securities declined from 30% of assets
to 19%, mortgage-backed securities declined from 15% to 2% while corporate
securities increased from 55% to 79%. The most significant contributions to
1995's performance were the extension of average maturity and the commitment to
corporates, which added incremental income.
/s/ Richard D. Temple
Richard D. Temple
Sentinel Bond Fund Performance
Ten Years Ended 11/30/95
- ----------------------------------------
Average Annual Total Return
Through 11/30/95
<TABLE>
<CAPTION>
w/sales w/o sales
Period charge+ charge
<S> <C> <C>
1 Year 12.8% 18.8%
- --------------------------------------
5 Years 9.1% 10.2%
- --------------------------------------
10 Years 9.1% 9.7%
- --------------------------------------
</TABLE>
+Sales charge applicable to year of initial investment.
Bond Fund
<TABLE>
<CAPTION>
Lipper A-Rated
Sentinel Lehman Aggregate Corporate Bond
Bond Fund Bond Index* Fund Average
<S> <C> <C> <C>
Nov-85 9,500 Label 10,000 label 10,000 label
Nov-86 11,253 11,834 11,640
Nov-87 11,219 12,042 11,704
Nov-88 12,344 13,154 12,745
Nov-89 13,937 15,042 14,377
Nov-90 14,748 16,181 15,139
Nov-91 17,048 18,513 17,335
Nov-92 18,664 20,154 18,947
Nov-93 21,227 22,349 21,312
Nov-94 20,186 21,665 20,249
Nov-95 23,977 25,488 23,783
</TABLE>
Ending values are based upon an initial investment of $10,000 and the subsequent
reinvestment of all dividends and distributions. When comparing the Fund's
performance with that of the Index and Average shown above, you should note that
the Fund's performance reflects the maximum 5% sales charge and includes all
expenses and management fees, while that shown for the Index and Average does
not. Past performance is not predictive of future results.
*An unmanaged index of bonds reflecting average prices in the bond market.
20
<PAGE>
Sentinel Bond Fund
Investment in Securities
at November 30, 1995
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Principal Amount Value
(M=$1,000) (Note 1)
- --------------------------------------------------------------------------------
<S> <C> <C>
U.S. Government
Obligations 20.6%
U.S. Treasury Obligations 16.5%
5-Year:
Note 6.25%, '00 2000M $ 2,057,540
------------
10-Year:
Note 6.375%, '02 5900M 6,141,959
Note 6.5%, '05 9300M 9,791,040
------------
15,932,999
------------
Total U.S. Treasury Obligations 17,990,539
------------
U.S. Government Agency Obligations 4.1%
Federal Home Loan Mortgage Corporation 0.3%
5-Year:
6.835%, '99 395M 395,866
------------
Federal National Mortgage Association 3.7%
Collateralized Mortgage Obligation:
148(B), 0%, '96 2000M 1,863,750
------------
Principal Strips:
0%, '96 1270M 1,209,675
0%, '96 1000M 946,480
------------
2,156,155
------------
Total Federal National
Mortgage Association 4,019,905
------------
Government National Mortgage Association 0.1%
30-year:
13%, '11 26M 29,079
13%, '13 1M 1,091
------------
Total Government National
Mortgage Association 30,170
------------
Total U.S. Government
Agency Obligations 4,445,941
------------
Total U.S. Government Obligations
(Cost $22,089,073) 22,436,480
------------
Bonds 74.3%
Beverages 3.6%
Anheuser Busch 8.5%,'17 2500M 2,615,625
J. Seagram & Sons 9.75%, '00 1265M 1,293,463
------------
3,909,088
------------
Canadian 2.2%
Toronto-Dominion Bank
6.125%, '08 2500M 2,403,125
------------
Finance Companies 2.9%
G.E. Capital Corp. 8.75%, '07 2660M 3,192,000
------------
Financial Institutions 10.1%
Bank of America Mortgage-Backed
Certificates 9.5%, '08 41M 43,227
Donaldson Lufkin & Jenrette
6.875%, '05 1000M 1,013,750
First Union Corp. 6.55%, '35 2325M 2,348,250
Lehman Brothers Holdings
8.8%, '15 2000M 2,262,500
Midland Bank 7.65%, '25 2600M 2,850,250
Paine Webber 6.73%, '04 2500M 2,481,250
------------
10,999,227
------------
Foreign Financial Institutions 10.1%
Banque-Paribas (Fr.)
6.875%, '09 2750M $ 2,712,188
St. George Bank Ltd. (Aust.)
7.15%, '05 1500M 1,535,625
Skandinaviska Enskilda Banken (Swed.)
6.875%, '09 2500M 2,484,375
Swedish Export Credit (Swed.)
9.875%, '38 3770M 4,203,550
------------
10,935,738
------------
Industrial - Diversified 13.0%
American Brands 9.125%, '16 3000M 3,142,500
General Dynamic 9.95%, '18 2000M 2,232,500
RJR Nabisco 8.75%, '05 2000M 2,032,500
TCI Communications
8.75%, '15 2750M 2,966,562
Time Warner Inc. 7.75%, '05 2300M 2,374,750
Tosco Corp 8.25%, '03 1250M 1,368,750
------------
14,117,562
------------
Insurance 16.4%
Continental Corp. 7.25%, '03 1310M 1,334,562
Integon Corp. 8%, '99 750M 755,625
Integon Corp. 9.5%, '01 1500M 1,595,625
John Hancock 7.375%, '24 2500M 2,446,875
Liberty Mutual 8.2%, '07 4500M 4,893,750
National RE Corp. 8.85%, '05 1500M 1,696,875
Prudential Insurance
7.65%, '07 2000M 2,097,500
USF & G 7.125%, '05 3000M 3,086,250
------------
17,907,062
------------
Retail 2.0%
May Dept. Store 9.125%, '16 2000M 2,112,500
------------
Telecommunications 2.1%
Comsat 8.05%, '06 2000M 2,290,160
------------
Utilities - Electric 7.9%
Gulf State Utilities 8.94%, '22 2000M 2,152,500
Long Island Lighting
9.625%, '24 2000M 2,055,000
Mississippi Power & Light
8.8%, '05 2500M 2,681,250
Niagara Mohawk 9.25%, '01 1600M 1,682,000
------------
8,570,750
------------
Utilities - Gas 4.0%
Arkla Inc. 9.875%, '18 1000M 1,065,000
Arkla Inc. 10%, '19 1000M 1,158,750
Consolidated Natural Gas
8.625%, '11 2000M 2,122,500
------------
4,346,250
------------
Total Bonds
(Cost $77,740,217) 80,783,462
------------
Corporate Short-Term Notes 12.2%
BankAmerica 5.68%
12/29/95 5000M 4,977,911
Chevron Oil Financing 5.76%
12/08/95 1700M 1,698,096
Norwest Financial 5.77%
12/05/95 1600M 1,598,974
Texaco, Inc. 5.67%
12/29/95 5000M 4,977,950
------------
Total Corporate Short-Term Notes
(Cost $13,252,931) 13,252,931
------------
Total Investments
(Cost $113,082,221)* 116,472,873
Excess of Liabilities
Over Other Assets (7.1%) (7,718,322)
------------
Net Assets $108,754,551
============
</TABLE>
* The aggregate cost for federal income tax purposes was $113,087,786. At
November 30, 1995, net unrealized appreciation for federal income tax
purposes aggregated $3,385,087 of which $3,457,459 related to appreciated
securities and $72,372 related to depreciated securities.
See Notes to Financial Statements.
21
<PAGE>
[PHOTO APPEARS HERE]
Kenneth J. Hart
Manager,
Sentinel Tax-Free Income Fund
Sentinel Tax-Free Income Fund seeks a high level of current income and
preservation of capital through a portfolio of high quality municipal bonds
which are exempt from federal income taxes.
Sentinel Tax-Free Income Fund
For the fiscal year ended November 30, 1995, the Sentinel Tax-Free Income Fund
had a total return of 16.0% compared to 18.9% for the Lehman Municipal Bond
Index. During this same period, the average Lipper General Municipal Bond Fund
returned 18.4%.
Investors in tax-exempt securities were rewarded with solid investment returns
throughout 1995. The pace of economic activity moderated while inflation
remained low, setting the stage for a powerful bond market rally. Municipal
interest rates declined 140 basis points as measured by the Bond Buyer Revenue
Bond Index. Trading activity focused on maintaining the Fund's income stream
and interest rate sensitivity in a declining interest rate environment. With
credit quality spreads very compressed, the Fund has maintained a conservative
mix of high quality, marketable securities.
We believe the fundamental outlook for the economy and interest rates remains
favorable for fixed income investors. The current level of interest rates,
combined with low inflation, provides investors a high real rate of interest,
which in the case of municipals is sheltered from federal income taxes.
Currently, municipal securities are inexpensive on a historical basis when
compared to Treasuries because of investors' concerns regarding the potential
for reforms of the federal income tax code. Many market professionals,
including ourselves, believe that a radical change to the tax code in the near
future is unlikely and, therefore, investors in municipal securities are being
fairly compensated in light of this uncertainty.
In this environment, we will continue to search out opportunities in the tax-
exempt market while positioning the Sentinel Tax-Free Income Fund to protect
capital and provide shareholders with a relatively high level of current income
exempt from federal taxation.
/s/ Kenneth J. Hart
Kenneth J. Hart
- --------------------------------------------------------------------------------
Sentinel Tax-Free Income Fund Performance
10/1/90 inception through 11/30/95
Sentinel Tax-Free Income Fund
<TABLE>
<CAPTION>
Sentinel Lehman Lipper General
Tax-Free Municipal Municipal Debt
Income Fund Bond Index* Fund Average
<S> <C> <C> <C>
10/01/90 $9,500 label 10,000 label 10,000 label
Sep-91 $10,666 11,318 11,300
Sep-92 $11,776 12,502 12,470
Sep-93 $13,407 14,095 14,129
Sep-94 $13,017 13,751 13,588
Sep-95 $14,155 15,289 14,925
Nov-95 $14,626 15,769 15,447
</TABLE>
*An unmanaged index of bonds reflecting average prices in the bond market.
Ending values are based upon an initial investment of $10,000 and the subsequent
reinvestment of all dividends and distributions. When comparing the Fund's
performance with that of the Index and Average shown above, you should note that
the Fund's performance reflects the maximum 5% sales charge and includes all
expenses and management fees, while that shown for the Index and Average does
not. Past performance is not predictive of future results.
- -------------------------------------------
Average Annual
Total Return
Through 11/30/95
<TABLE>
<CAPTION>
w/sales w/o sales
Period charge+ charge
<S> <C> <C>
1 Year 10.2% 16.0%
- -------------------------------------------
5 Years 7.2% 8.4%
- -------------------------------------------
Since
Inception* 7.6% 8.7%
- -------------------------------------------
*10/1/90
</TABLE>
+Sales charge applicable to year of initial investment.
22
<PAGE>
Sentinel Tax-Free Income Fund
Investment in Securities
at November 30, 1995
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Principal Amount Value
(M=$1,000) (Note 1)
- --------------------------------------------------------------------------------
<S> <C> <C>
Bonds 98.3%
California 11.0%
California Health Facility Children's
Hospital San Francisco (MBIA)
7.5%, 10/01/20 350M $ 393,687
California State G/O
6.25%, 04/01/08 4000M 4,382,040
Hesperia, CA.,
Water District (FGIC)
7.2%, 06/01/15 280M 318,685
Irvine Ranch, CA., Water District
7.875%, 02/15/23 250M 264,202
Long Beach, CA., Water Revenue
6.25%, 05/01/24 3000M 3,181,140
Moulton Niguel, CA.,
Water District (MBIA)
5.25%, 09/01/13 200M 194,804
San Mateo Cnty, CA.,
Power Rev. (AMBAC)
6.5%, 07/01/15 3000M 3,423,150
------------
12,157,708
------------
Colorado 4.9%
Arapahoe County, CO.,
Capital Improvements
6.95%, 08/31/20 1500M 1,618,515
7%, 08/31/26 3500M 3,775,730
------------
5,394,245
------------
Connecticut 1.3%
Connecticut State Housing
Mortgage Fin. Auth.
8.75%, 11/15/18 340M 355,470
Connecticut State
Special Tax Oblig.
6.15%, 09/01/09 1000M 1,100,630
------------
1,456,100
------------
Delaware 1.0%
University of Delaware
Hsg. & Dng. Facs.
6.625%, 11/01/10 500M 552,685
Delaware Health Facs. Auth.
Millford Memorial Hospital
7.625%, 11/01/10 500M 549,800
------------
1,102,485
------------
District of Columbia 0.5%
District of Columbia G/O (AMBAC)
7.5%, 06/01/09 500M 558,215
------------
Florida 2.7%
Orlando Utility Com.
Wtr. & Elec. Rev.
5%, 10/01/20 2000M 1,867,860
University Community
Hospital, Inc. (FSA)
7.5%, 09/01/11 1000M 1,156,800
------------
3,024,660
------------
Hawaii 1.1%
Department of Budget Finance
7.65%, 07/01/19 1000M 1,180,150
Hawaii Housing Finance
& Dev. Corp
7.8%, 07/01/29 10M 10,603
------------
1,190,753
------------
Idaho 0.7%
Idaho Housing Agency
8%, 01/01/20 665M 721,345
------------
Illinois 6.5%
Chicago Gas Supply Rev.
7.5%, 03/01/15 1000M 1,118,690
Chicago, Ill., General
Obligation (AMBAC)
6.25%, 01/01/08 500M 554,195
Chicago, Ill., Metro Water
6.85%, 01/01/10 300M 333,330
Illinois Development
Finance Auth.
7.6%, 03/01/14 750M 843,405
Illinois Housing Dev. Auth.
Multi-Family Series A
7%, 07/01/10 990M 1,060,943
Illinois State Sales Tax Rev.
6%, 06/15/12 2000M 2,162,020
6.5%, 06/15/13 1000M 1,132,180
------------
7,204,763
------------
Indiana 0.1%
Indianapolis Economic Dev. Rev.
7.8%, 12/01/17 55M 57,708
------------
Kansas 0.2%
Kansas City, Leavenworth County &
City of Lenexa Series A - Mtg. Rev.
8.4%, 05/01/15 160M 167,835
------------
Kentucky 0.3%
Kentucky State Turnpike Auth.
7.375%, 05/15/07 150M 170,337
8.5%, 07/01/04 100M 104,676
------------
275,013
------------
Louisiana 0.5%
Jefferson, La. Sales
Tax Rev. (MBIA)
8.25%, 07/01/02 500M 565,080
------------
Maine 0.3%
Maine Municipal Bond Bank
6.6%, 11/01/15 350M 379,610
------------
Massachusetts 6.4%
Massachusetts State G/O
6.875%, 07/01/10 1000M 1,139,440
6%, 08/01/09 (FGIC) 1000M 1,091,790
Massachusetts State
Health & Education Facs.
Beth Israel Hospital Revenue
7%, 07/01/09 1000M 1,070,520
Massachusetts State
Health & Education Facs.
New England Baptist Hospital Revenue
7.3%, 7/01/11 1000M 1,065,320
Massachusetts State
Water Resource Auth.
5%, 03/01/22 3000M 2,761,470
------------
7,128,540
------------
Michigan 3.3%
Michigan State Building
Auth. Rev.
6.25%, 10/01/20 170M 177,451
Michigan State Hospital
Finance Auth.
5.25%, 08/15/21 2575M 2,466,284
Michigan State Housing
Dev. Auth.
5.45%, 07/15/11 200M 197,300
Royal Oak Hospital
Finance Auth.
7.375%, 01/01/20 750M 833,430
------------
3,674,465
------------
Missouri 2.1%
Central Missouri
State Univ. (MBIA)
7%, 07/01/14 1000M 1,148,250
Missouri Housing
Development Comm.
9.375%, 04/01/16 85M 92,145
Missouri State Environ.
Improv. Energy
7.4%, 05/01/20 1000M 1,113,230
------------
2,353,625
------------
Nebraska 1.9%
Omaha Public Power Elec. Rev.
6.15%, 02/01/12 1000M 1,097,120
7.625%, 02/01/12 1000M 1,025,960
------------
2,123,080
------------
Nevada 1.0%
Clark Cnty, Nevada
McCarran Int'l. Airport
6.15%, 07/01/07 (AMBAC) 1000M 1,078,740
------------
New Hampshire 0.8%
New Hampshire Higher
Education & Health (MBIA)
7.625%, 07/01/20 750M 847,283
------------
New Jersey 3.0%
New Jersey State
Turnpike Auth.
6.5%, 01/01/16 2000M 2,251,620
University of Medicine
& Dentistry
7.2%, 12/01/19 1000M 1,108,120
------------
3,359,740
------------
New York 19.3%
Monroe County, NY (MBIA)
5.6%, 12/01/11 125M 127,832
New York City, NY
7.5%, 02/01/03 100M 111,332
7.1%, 02/01/09 1200M 1,294,908
5.75%, 08/15/13 4000M 3,883,000
New York City
Mun. Water Fin. Auth.
7%, 06/15/01 250M 284,208
7%, 06/15/09 250M 279,635
5.75%, 06/15/20 (MBIA) 100M 101,895
7.75%, 06/15/20 500M 589,985
New York Dorm. Auth.
5.3%, 07/01/02 1000M 1,004,910
5.625%, 07/01/16 3250M 3,208,888
5.5%, 07/01/20 225M 215,638
</TABLE>
23
<PAGE>
Sentinel Tax-Free Income Fund
Investment in Securities (cont'd.)
at November 30, 1995
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Principal Amount Value
(M=$1,000) (Note 1)
- --------------------------------------------------------------------------------
<S> <C> <C>
New York State Energy Res.
& Dev. Auth. (AMBAC)
5.25%, 08/15/20 125M $ 119,334
New York State Environmental Facs. Corp.
PCR - Water Revolving Fund Project
7.25%, 06/15/10 50M 56,757
6.6%, 09/15/12 1450M 1,610,558
New York State Local
Government Assistance
5.375%, 04/01/16 1000M 976,360
5.5%, 04/01/18 200M 198,458
New York State Medical Care Facs.
Mental Health Services Facs.
7.875%, 08/15/08 220M 257,721
7.875%, 08/15/08 250M 285,375
New York State Medical Care Facs.
New York Hospital Mortgage
Rev. (AMBAC)
6.8%, 08/15/24 100M 110,334
New York State Urban Dev. Corp.
5.5%, 01/01/16 200M 193,618
5.7%, 04/01/20 2000M 1,994,580
Triborough Bridge &
Tunnel Authority
6%, 01/01/12 3250M 3,512,243
6.625%, 01/01/12 500M 572,810
8.125%, 01/01/12 500M 547,500
------------
21,537,879
------------
North Carolina 0.3%
North Carolina Medical Care
Presbyterian Hospital
7.375%, 10/01/20 250M 287,800
------------
North Dakota 0.1%
Mercer Cnty PCR - Basin
Electric Power Project
7.7%, 01/01/19 50M 51,636
------------
Ohio 2.0%
Cuyahoga County Hospital Rev.
8%, 12/01/08 300M 324,297
Montgomery County, Kettering
Medical Center (MBIA)
7.375%, 04/01/02 100M 110,332
Ohio Housing Finance Auth.
7.05%, 09/01/16 700M 733,418
Ohio State Higher Educ. Facs.
6%, 10/01/14 1000M 1,082,640
------------
2,250,687
------------
Oregon 2.3%
Klamath Falls Elec. Rev.
4.4%, 05/01/23 2500M 2,509,275
------------
Pennsylvania 6.8%
Allegheny County
Sanitation Auth. (FGIC)
7.5%, 12/01/16 500M 553,025
Lehigh County Hospital Rev.
9%, 07/01/15 250M 273,630
Montgomery County Higher
Ed. & Hlth. Auth.
8.3%, 06/01/10 500M 587,315
Pennsylvania State G/O
6.25%, 07/01/10 2000M 2,225,640
6.25%, 07/01/11 2000M 2,224,440
Pennsylvania Higher
Education Facs. Auth.
7.2%, 07/01/19 (MBIA) 1000M 1,086,490
Pennsylvania State
Turnpike Commission
7.5%, 12/01/19 500M 568,485
------------
7,519,025
------------
Puerto Rico 4.7%
Puerto Rico Commonwealth Highway &
Transportation Auth. Rev.
5.5%, 07/01/19 250M 244,180
Puerto Rico Electric Power Auth.
6.125%, 07/01/08 3375M 3,706,189
Puerto Rico Public Buildings Rev.
6.25%, 07/01/14 1100M 1,232,231
------------
5,182,600
------------
South Carolina 1.0%
Piedmont Municipal Power Agency
6.25%, 01/01/09 (MBIA) 1000M 1,109,710
------------
Tennessee 0.1%
Volunteer State Student
Funding Corp. Rev.
4.85%, 06/01/99 75M 75,214
------------
Texas 3.2%
Alamo Community College
Refunding (MBIA)
5.125%, 11/01/13 100M 95,538
Austin, Texas Utility
Systems Revenue
5.75%, 11/15/16 3000M 3,039,240
Dallas-Fort Worth Int'l. Airport
7.5%, 11/01/25 100M 107,295
Harris County, Texas
Flood Control District
5.125%, 10/01/12 175M 171,986
Matagorda County, Texas
PCR Power & Light
7.875%, 12/01/16 50M 52,451
Sabine River Auth. PCR
8.25%, 10/01/20 50M 56,496
------------
3,523,006
------------
Utah 0.1%
Utah State Housing Finance Auth.
7.25%, 07/01/22 30M 31,804
------------
Vermont 1.7%
Champlain Water District
7.125%, 10/01/03 175M 197,725
7.125%, 10/01/04 145M 164,645
7.125%, 10/01/06 200M 230,820
Vermont Education &
Health Building
7.05%, 10/01/16 900M 1,002,789
7%, 10/01/22 250M 263,750
------------
1,859,729
------------
Virginia 1.0%
Fairfax County Water Auth.
7.25%, 01/01/27 1000M 1,127,900
------------
Washington 6.1%
Snohomish County G/O
7.1%, 12/01/07 500M 563,895
Washington State
Motor Vehicle Fuel
6.2%, 03/01/11 1220M 1,333,692
Washington State
Public Power Supply
System Proj. #1
8%, 07/01/19 575M 671,111
Washington State
Public Power Supply
System Proj. #2
7.625%, 07/01/10 250M 290,293
Washington State
Public Power Supply
System Proj. #3 (MBIA)
7.125%, 07/01/16 3295M 3,922,104
------------
6,781,095
------------
Total Bonds
(Cost $100,704,657) 108,668,353
------------
Short-Term Investments 0.2%
Port St. Helens, Oregon
General Electric Project
4%, 06/01/10, (a)
(Cost $200,000) 200M 200,000
------------
Total Investments
(Cost $100,904,657)* 108,868,353
Excess of Other Assets
Over Liabilities 1.5% 1,637,392
------------
Net Assets $110,505,745
============
</TABLE>
- --------------------------------------------------------------------------------
* Also cost for federal income tax purposes. At November 30, 1995, net
unrealized appreciation for federal income tax purposes aggregated
$7,963,696 of which $7,966,019 related to appreciated securities and
$2,323 related to depreciated securities.
(a) Variable rate security that may be tendered back to issuer prior to
maturity, at par.
The following abbreviations are used in portfolio
descriptions:
(AMBAC) - Guaranteed by American Municipal Bond
Association Corp.
(FGIC) - Guaranteed by Financial Guaranty Insurance
Co.
(FSA) - Guaranteed by Financial Security Assurance Inc.
(MBIA) - Guaranteed by Municipal Bond Investors Assurance Corp.
G/O - General Obligation Bond
PCR - Pollution Control Revenue Bond
See Notes to Financial Statements.
24
<PAGE>
[PHOTO APPEARS HERE]
Kenneth J. Hart
Manager,
Sentinel New York
Tax-Free Income Fund
Sentinel New York Tax-Free Income Fund seeks a high level of current income and
preservation of capital through a portfolio of high quality municipal bonds
which are exempt from New York state, City and federal income taxes.
Sentinel New York Tax-Free Income Fund
Since the inception of the Sentinel New York Tax-Free Income Fund on March 27,
1995, the Fund had a total return of 8.1% compared to 8.0% for the average fund
in the Lipper New York Municipal Debt Fund universe.
Investors in tax-exempt securities were rewarded with solid investment returns
throughout 1995. The pace of economic activity moderated while inflation
remained low, setting the stage for a powerful bond market rally. Municipal
interest rates declined 140 basis points as measured by the Bond Buyer Revenue
Bond Index. Trading activity focused on maintaining the Fund's income stream
and interest rate sensitivity in a declining interest rate environment. With
credit quality spreads very compressed, the Fund has maintained a conservative
mix of high quality, marketable securities.
We believe the fundamental outlook for the economy and interest rates remains
favorable for fixed income investors. The current level of interest rates,
combined with low inflation, provides investors a high real rate of interest,
which in the case of municipals is sheltered from federal income taxes.
Currently, municipal securities are inexpensive on a historical basis when
compared to Treasuries because of investors' concerns regarding the potential
for reforms of the federal income tax code. Many market professionals,
including ourselves, believe that a radical change to the tax code in the near
future is unlikely and, therefore, investors in municipal securities are being
fairly compensated in light of this uncertainty.
In this environment, we will continue to search out opportunities in the New
York tax-exempt market while positioning the Sentinel New York Tax-Free Income
Fund to protect capital and provide shareholders with a relatively high level of
current income exempt from New York state, City and federal taxation.
/s/ Kenneth J. Hart
Kenneth J. Hart
- --------------------------------------------------------------------------------
Sentinel NY Tax-Free Income Fund Performance
Inception as of opening of business 3/27/95 through 11/30/95
<TABLE>
<CAPTION>
Sentinel NY Lipper NY Lehman Municipal
Tax-Free Municipal Debt Bond Index*
Income Fund Fund Average
<S> <C> <C> <C>
03/24/95 9,500 label
03/31/95 9,517 10,000 label 10,000 label
04/30/95 9,508 10,010 10,012
05/31/95 9,889 10,331 10,331
06/30/95 9,688 10,195 10,241
07/31/95 9,741 10,258 10,338
08/31/95 9,862 10,374 10,469
09/30/95 9,907 10,428 10,535
10/31/95 10,100 10,597 10,688
11/30/95 10,268 10,800 10,866
</TABLE>
*An unmanaged index of bonds reflecting average prices in the bond market.
Ending values are based upon an initial investment of $10,000 and the subsequent
reinvestment of all dividends and distributions. When comparing the Fund's
performance with that of the Index and Average shown above, you should note that
the Fund's performance reflects the maximum 5% sales charge and includes all
expenses and management fees, while that shown for the Index and Average does
not. Past performance is not predictive of future results.
- -------------------------------
Average Annual
Total Return
Through 11/30/95
<TABLE>
<CAPTION>
w/sales w/o sales
Period charge+ charge
<S> <C> <C>
Since
Inception* 2.7% 8.1%
- -------------------------------
</TABLE>
*3/27/95
+Sales charge applicable to
year of initial investment.
25
<PAGE>
Sentinel New York Tax-Free Income Fund
Investment in Securities
at November 30, 1995
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Principal Amount Value
(M=$1,000) (Note 1)
- --------------------------------------------------------------------------------
<S> <C> <C>
Bonds 93.0%
New York 87.3%
Metro Transportation Authority
6%, 07/01/2019 60M $ 60,425
Monroe County Water Improvement
5.60%, 12/01/2011 (MBIA) 225M 230,099
New York City Series F
6.60%, 02/15/2010 250M 261,362
New York City Municipal Water Fin. Auth.
6.75%, 06/15/2014 (FGIC) 35M 37,212
6%, 06/15/2017 100M 101,664
New York State G/O
7.15%, 02/01/2008 80M 88,429
New York State Dorm. Authority Revenue
City Univ. System - Ser C
6%, 07/01/2016 110M 110,647
Cornell Univ. - Ser A
7.375%, 07/01/2030 50M 57,231
State Univ. Educ. Fac. - Ser A
7.20%, 05/15/2006 300M 349,371
Univ. Rochester - Strong Mem. Hosp.
5.50%, 07/01/2021 300M 293,538
Department of Health
5.50%, 07/01/2020 125M 119,799
City University System
5.625%, 07/01/2016 250M 246,837
New York State Energy Resources
7.50%, 07/01/2025 50M 54,769
New York State Environmental Facilities
5.75%, 03/15/2013 300M 298,992
New York State Environmental Water Revenue
7.25%, 06/15/2010 60M 68,110
New York State Local Govt. Assistance Corp.
7%, 04/01/2008 100M 111,891
6%, 04/01/2018 250M 255,387
New York State Medical Care Facilities
7.875%, 08/15/2020 20M 22,830
7.30%, 02/15/2021 25M 28,180
Hospitals & Nursing Homes
5.75%, 08/15/2019 170M 172,186
6.45%, 02/15/2009 235M 250,916
7.25%, 02/15/2024 50M 54,364
New York State Mortgage Agency Revenue
7.80%, 10/01/2013 150M 162,741
7.95%, 04/01/2022 100M 108,040
New York State Thwy. Auth. Service Contract
6%, 01/01/2011 60M 60,622
6.25%, 04/01/2014 200M 206,534
New York State Urban Development Corp.
6.10%, 01/01/2011 255M 262,222
Port Authority NY & NJ
5%, 07/15/2012 70M 66,950
Suffolk County NY Water Authority
5.625%, 06/01/2016
(AMBAC) 170M 171,768
Triborough Bridge & Tunnel Authority
6%, 01/01/2012 250M 270,173
6.875%, 01/01/2015 65M 71,042
----------
4,654,331
----------
Puerto Rico 5.7%
Puerto Rico Commonwealth
7.15%, 07/01/2003 50M 57,015
Puerto Rico Commonwealth
Hwy. & Trans.
5.50%, 07/01/2019 250M 244,180
----------
301,195
----------
Total Bonds
(Cost $4,547,762) 4,955,526
----------
Short-Term Investments 5.6%
New York City G/O
3.10%, 08/15/2022 (a) 100M 100,000
New York Local Assistance
3.40%, 04/01/2022 (a) 200M 200,000
----------
Total Short-Term Investments
(Cost $300,000) 300,000
----------
Total Investments
(Cost $4,847,762)* 5,255,526
Excess of Other Assets
Over Liabilities 1.4% 76,877
----------
Net Assets $5,332,403
==========
</TABLE>
- --------------------------------------------------------------------------------
* Also cost for federal income tax purposes. At November 30, 1995, net
unrealized appreciation for federal income tax purposes aggregated
$407,764 all of which related to appreciated securities.
(a) Variable rate security that may be tendered back to issuer prior to
maturity, at par.
The following abbreviations are used in portfolio descriptions:
(AMBAC) - Guaranteed by American Municipal Bond Association Corp.
(FGIC) - Guaranteed by Financial Guaranty Insurance Co.
(MBIA) - Guaranteed by Municipal Bond Investors Assurance Corp.
G/O - General Obligation Bond
See Notes to Financial Statements.
26
<PAGE>
[PHOTO APPEARS HERE]
David M. Brownlee, CFA
Manager,
Sentinel Government Securities Fund
Sentinel Government Securities Fund seeks high current returns and safety of
invested principal through securities issued by the United States government,
its agencies and instrumentalities.
Sentinel Government Securities Fund
For the fiscal year ended November 30, 1995, the Sentinel Government Securities
Fund produced a total return of 17.9%. This compares favorably to an average
return of 16.6%, as reported by Lipper Analytical Services, Inc., for U.S.
government funds with similar objectives. The Lehman Government Bond Index
returned 17.4% over the same period, while the Lehman Mortgage Index returned
16.3%
For the twelve-month period ended November 30, 1995, interest rates declined
significantly, resulting in a surge in bond prices, as U.S. economic growth
abated and inflation remained modest. Long-maturity assets outperformed both
short- and intermediate maturity assets by a wide margin. During this twelve-
month period, the yield on the thirty-year U.S. Treasury bond fell 187 basis
points to 6.13%, while the yield on the two-year note declined by 205 basis
points to 5.35%. With this interest rate decline, the two-year note recouped
approximately 68% of its price depreciation experienced in 1994, while the
thirty-year bond has recovered over 100% of its prior year loss.
In 1995's constructive environment for bonds, the Fund increased its portfolio
duration early in the year from 4.5 years to 5.7 years. In addition, the Fund
significantly reduced exposure to mortgage-backed securities (MBS). At the
beginning of the fiscal year, the Fund was positioned 31% in U.S. Treasury
securities and 69% in mortgage-backed securities. Throughout the year, the Fund
reduced MBS holdings to 16% of assets, in favor of U.S. Treasury securities,
increasing this exposure to 84% of assets. This strategic move proved to be
beneficial to the Fund's performance, as mortgage-backed securities generally
underperformed comparable duration U.S. Treasuries. In addition, the Fund
actively engaged in U.S. Treasury dollar rolls, a strategy which added
approximately 50 basis points to the Fund's return. The Fund's portfolio
duration currently stands at 5.0 years and is positioned 71% U.S. Treasury
securities, 23% MBS and 6% cash. In summary, our decision to reduce mortgage-
backed securities in favor of U.S. Treasuries, as well as the positive impact
of the dollar rolls strategy, made the largest contributions to the Fund's
performance during the period.
/s/ David M. Brownlee
David M. Brownlee, CFA
- --------------------------------------------------------------------------------
Sentinel Government Securities Fund Performance
9/2/86 inception through 11/30/95
<TABLE>
<CAPTION>
Sentinel Government Lehman Government Lipper Government Lehman Mortgage
Securities Fund Bond Index* Fund Average Index*
<S> <C> <C> <C> <C>
09/02/86 9,500 label 10,000 label 10,000 label 10,000 label
Aug-87 9,603 9,976 10,055 10,462
Aug-88 10,379 10,724 10,757 11,467
Aug-89 11,543 12,125 11,951 12,966
Aug-90 12,412 12,897 12,660 14,207
Aug-91 14,065 14,726 14,372 16,353
Aug-92 16,015 16,741 16,155 18,338
Aug-93 17,654 18,787 17,929 19,692
Aug-94 17,153 18,357 17,288 19,765
Aug-95 19,028 20,357 18,985 21,928
Nov-95 19,822 21,191 19,737 22,572
</TABLE>
*An unmanaged index of bonds reflecting average prices in the bond market.
Ending values are based upon an initial investment of $10,000 and the subsequent
reinvestment of all dividends and distributions. When comparing the Fund's
performance with that of the Indices and Average shown above, you should note
that the Fund's performance reflects the maximum 5% sales charge and includes
all expenses and management fees, while that shown for the Indices and Average
does not. Past performance is not predictive of future results.
- -----------------------------------------
Average Annual
Total Return
Through 11/30/95
<TABLE>
<CAPTION>
w/sales w/o sales
Period charge+ charge
<S> <C> <C>
1 Year 12.0% 17.9%
- -----------------------------------------
5 Years 7.9% 9.0%
- -----------------------------------------
Since
Inception* 7.7% 8.3%
- -----------------------------------------
</TABLE>
*9/2/86
+Sales charge applicable to year of initial investment.
27
<PAGE>
Sentinel Government Securities Fund
Investment in Securities
at November 30, 1995
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Principal Amount Value
(M=$1,000) (Note 1)
- -------------------------------------------------------------------------------
<S> <C> <C>
U.S. Government Obligations 134.1%
U.S. Treasury Obligations 66.3%
5-Year:
Note 6.25%, '00 5000M $ 5,143,850
Note 5.75%, '00 10000M 10,088,600
------------
15,232,450
------------
10-Year:
Note 6.5%, '05 15000M 15,788,700
Note 6.5%, '05 38600M 40,638,080
------------
56,426,780
------------
Total U.S. Treasury Obligations 71,659,230
------------
U.S. Government Agency Obligations 67.8%
Federal Farm Credit Bank 9.2%
Agency Discount Note:
5.63%, 12/15/95 10000M 9,978,106
------------
Federal Home Loan Bank 8.3%
Agency Discount Note:
5.62%, 12/22/95 9000M 8,970,495
------------
Federal Home Loan Mortgage Corporation 22.4%
Agency Discount Notes:
5.64%, 12/20/95 13500M 13,459,815
5.67%, 12/20/95 7600M 7,577,257
------------
21,037,072
------------
Collateralized Mortgage Obligation:
1779(H), 8.5%, '00 1433M 1,506,850
------------
15-Year:
8.5%, '98 86M 88,716
------------
30-Year:
8.25%, '04 293M 300,551
11%, '09 32M 34,927
10.5%, '13 47M 50,961
11%, '15 13M 14,583
11%, '15 73M 79,847
11%, '15 103M 112,552
11%, '15 55M 60,395
11%, '16 40M 44,208
11%, '16 46M 50,178
11%, '17 20M 22,095
11%, '17 222M 244,036
10.5%, '18 253M 274,857
10.5%, '18 160M 174,079
11%, '20 13M 13,751
11%, '20 6M 6,646
11%, '20 82M 90,271
------------
1,573,937
------------
Total Federal Home Loan
Mortgage Corporation 24,206,575
------------
Federal National Mortgage Association 20.8%
Agency Discount Note:
5.67%, 12/28/95 5000M 4,978,738
------------
Collateralized Mortgage Obligation:
148(B), 0%, '96 6000M 5,591,250
------------
Medium Term Note:
6.29%, '00 5500M 5,618,745
------------
15-Year:
8.25%, '02 185M 190,947
10.5%, '04 875M 923,112
7.5%, '10 5000M 5,112,500
------------
6,226,559
------------
Total Federal National
Mortgage Association 22,415,292
------------
Government National Mortgage Association 7.1%
15-Year:
10%, '01 48M 50,366
9%, '06 826M 879,776
9%, '06 815M 868,223
9%, '06 843M 897,850
9%, '06 829M 882,157
9%, '06 810M 862,847
9%, '06 1773M 1,888,377
------------
6,329,596
------------
30-Year:
9.75%, '13 327M 350,964
11%, '14 62M 68,008
10.5%, '15 121M 132,385
10.5%, '16 115M 126,698
10.5%, '17 29M 32,336
10.5%, '17 111M 121,895
10.5%, '19 54M 59,112
10.5%, '19 52M 57,513
10.5%, '19 129M 142,041
10.5%, '19 161M 176,328
10.5%, '19 37M 40,805
10.5%, '19 39M 42,730
------------
1,350,815
------------
Total Government National
Mortgage Association 7,680,411
------------
Total U.S. Government
Agency Obligations 73,250,879
------------
Total U.S. Government Obligations
(Cost $143,029,336) 144,910,109
------------
Corporate Short-Term Notes 19.5%
BankAmerica Corp. 5.68%,
12/29/95 5300M 5,276,586
Ford Financial Services, Inc. 5.66%,
12/29/95 5300M 5,276,668
G.E. Capital Corp. 5.65%,
12/29/95 5300M 5,276,709
Texaco, Inc. 5.67%,
12/29/95 5300M 5,276,627
------------
Total Corporate Short-Term Notes
(Cost $21,106,590) 21,106,590
------------
Repurchase Agreement 6.9%
Repurchase agreement with Dominion
Securities, Inc. dated 11/30/95 at
5.875% to be repurchased at $7,451,216
on 12/01/95, collateralized by a
$7,050,000 U.S. Treasury Note due
11/30/99 valued at $7,602,984.
(Cost $7,450,000) 7450M 7,450,000
------------
Total Investments
(Cost $171,585,926)* 173,466,699
Excess of Liabilities
Over Other Assets (60.5%) (65,366,511)
------------
Net Assets $108,100,188
============
</TABLE>
- ----------------------------------
* Also cost for federal income tax purposes. At November 30, 1995, unrealized
appreciation for federal income tax purposes aggregated $1,880,773 of which
$1,970,259 related to appreciated securities and $89,486 related to
depreciated securities.
See Notes to Financial Statements.
28
<PAGE>
[PHOTO APPEARS HERE]
David M. Brownlee, CFA
Manager,
Sentinel Short-Intermediate
Government Fund
Sentinel Short-Intermediate Government Fund seeks high current returns and
relatively low volatility of principal through securities issued by the United
States government, its agencies and instrumentalities.
Sentinel Short-Intermediate Government Fund
The Sentinel Short-Intermediate Government Fund commenced operations on March
27, 1995. Since inception, the Fund produced a total return of 6.3% through
November 30, 1995. This compares to an average return of 6.9% as reported by
Lipper Analytical Services, Inc. for short-intermediate U.S. government funds
with similar objectives. The Lehman 1-3 Year Government Index returned 6.5% for
the same period.
The investment goal of the Fund is to provide a high level of current income,
consistent with the preservation of capital, by investing in U.S. government
securities, including those of its agencies and instrumentalities. The Fund
will attempt to earn a competitive yield and rate of total return between that
of a money market fund and that provided by a long-term government bond fund.
At least 65% of the Fund's assets will be invested in U.S. government securities
with average maturities of 2 to 5 years. Included in this group of securities
are U.S. Treasury and agency issues, as well as mortgage-backed securities
issued by the instrumentalities of the U.S. government. The investment strategy
of the Fund is to be at least 95% invested in all market environments, with a
primary focus on yield, as the price appreciation/depreciation of short maturity
securities is fairly limited over a 12-month investment horizon. In addition,
yield and total return are highly, positively correlated for short duration
instruments over short investment horizons. The Fund's target duration is 2.0
years, managed within a range of 1.5 to 2.5 years.
Since the beginning of last year, the bond market has staged an explosive rally,
even while the Federal Reserve was increasing short-term interest rates as late
as February 1995. This change in market psychology has resulted from a growing
perception by many bond market participants that U.S. economic growth abated
dramatically in 1995, and that inflation remains well-contained. On a year-to-
date basis through November 30, 1995, yields on the 2-year U.S. Treasury Note
have fallen 205 basis points to 5.3%, while yields on the 30-year U.S. Treasury
Bond have declined 187 basis points to 6.13%. Bond prices have recovered the
majority of their losses suffered in the 1994 bear market.
Sentinel Short-Intermediate Government Fund Performance
Inception as of opening of business 3/27/95 through 11/30/95
- ----------------------------------------
Average Annual Total Return
Through 11/30/95
<TABLE>
<CAPTION>
w/sales w/o sales
Period charge+ charge
<S> <C> <C>
Since
Inception* 5.3% 6.3%
</TABLE>
*3/27/95
+Sales charge applicable to year of initial investment.
<TABLE>
<CAPTION>
Sentinel Short- Lipper Short
Intermediate U.S. Gov't. Lehman 1-3yr.
Gov't. Fund Fund Average Gov't. Bond Index
<S> <C> <C> <C>
03/24/95 9,900 label
03/31/95 9,890 10,000 label 10,000 label
04/30/95 9,984 10,090 10,089
05/31/95 10,191 10,298 10,262
06/30/95 10,221 10,349 10,317
07/31/95 10,240 10,362 10,358
08/31/95 10,301 10,438 10,420
09/30/95 10,342 10,498 10,471
10/31/95 10,421 10,591 10,558
11/30/95 10,525 10,693 $10,648
</TABLE>
Ending values are based upon an initial investment of $10,000 and the subsequent
reinvestment of all dividends and distributions. When comparing the Fund's
performance with that of the Index and Average shown above, you should note that
the Fund's performance reflects the maximum 1% sales charge and includes all
expenses and management fees, while that shown for the Index and Average does
not. Past performance is not predictive of future results.
29
<PAGE>
Given the volatility of interest rates over the last four years, the Sentinel
Short-Intermediate Government Fund is structured to experience relatively minor
price fluctuations in its net asset value, while offering a yield in excess of
those available on money market securities. As of November 30, 1995, the Fund
was positioned 69% in short mortgage-backed securities, 29% in U.S.
Treasury/Agency notes, and 2% in money market instruments. The Fund utilizes
mortgage-backed securities for their excess yield spreads available over
comparable duration U.S. Treasuries. The Fund carefully limits the type of
mortgage-backed securities it buys to those which possess limited risk should
interest rates unexpectedly rise.
/s/ David M. Brownlee
David M. Brownlee, CFA
30
<PAGE>
Sentinel Short-Intermediate Government Fund
Investment in Securities
at November 30, 1995
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Principal Amount Value
(M=$1,000) (Note 1)
- --------------------------------------------------------------------------------
<S> <C> <C>
U.S. Government Obligations 89.5%
U.S. Treasury Obligations 19.4%
5-Year:
Note 5.375%, '98 1500M $ 1,499,475
Note 6.875%, '99 2000M 2,091,800
Note 5.75%, '00 750M 756,645
-----------
4,347,920
-----------
10-Year:
Note 6.5%, '05 1100M 1,158,080
-----------
Total U.S. Treasury Obligations 5,506,000
-----------
U.S. Government Agency Obligations 70.1%
Federal Home Loan Mortgage Corporation 46.1%
Collateralized Mortgage Obligations:
1779(H), 8.5%, '00 1392M 1,463,717
1057(D), 8%, '00 1300M 1,339,000
93(F), 8.5%, '19 111M 110,698
53(A) P11, 9.5%, '20 30M 30,737
-----------
2,944,152
-----------
5-Year:
6.835%, '99 257M 257,313
8%, '00 855M 877,597
8%, '00 856M 878,841
7%, '00 1188M 1,208,055
8%, '00 819M 840,571
-----------
4,062,377
-----------
15-Year:
8.5%, '01 1214M 1,262,031
9.5%, '01 2M 2,577
9%, '01 16M 16,279
9.5%, '01 6M 6,141
8%, '02 1197M 1,235,179
7.5%, '02 952M 974,587
9.5%, '03 4M 4,637
9.5%, '03 11M 11,350
10%, '05 204M 213,982
-----------
3,726,763
-----------
30-Year:
7%, '06 1496M 1,517,584
7%, '07 816M 827,605
10.25%, '09 32M 35,007
-----------
2,380,196
-----------
Total Federal Home Loan
Mortgage Corporation 13,113,488
-----------
Federal National Mortgage Association 17.3%
Agency Discount Note:
5.59%, 12/15/95 750M 748,370
-----------
Medium Term Note:
6.29%, '00 2000M 2,043,180
-----------
15-Year:
9%, '02 13M 13,860
10.5%, '03 108M 113,609
8%, '05 929M 955,531
7.5%, '10 1007M 1,031,006
-----------
2,114,006
-----------
30-Year:
10.75%, '12 19M 21,149
-----------
Total Federal National
Mortgage Association 4,926,705
-----------
Government National Mortgage Association 6.7%
15-Year:
14.75%, '96 1M $ 859
12.75%, '97 11M 11,561
10.5%, '98 14M 15,228
11.25%, '98 3M 2,798
11.25%, '98 1M 666
11.25%, '98 1M 1,160
11.25%, '98 0M 365
10.75%, '98 10M 10,968
11.25%, '98 2M 2,426
10.75%, '98 7M 7,541
10.75%, '98 18M 19,298
9.5%, '99 23M 24,541
10.25%, '99 21M 22,775
11.25%, '00 21M 22,508
11%, '00 14M 14,765
11%, '00 10M 10,797
9.75%, '01 19M 19,964
9.75%, '01 5M 5,182
9%, '01 49M 51,849
9.5%, '04 12M 13,125
9%, '07 53M 55,407
-----------
313,783
-----------
30-Year:
9.25%, '07 44M 46,818
9%, '09 256M 267,911
10%, '09 11M 11,546
9.75%, '10 193M 206,092
10%, '16 26M 27,509
7.5%, '25 997M 1,018,917
-----------
1,578,793
-----------
Total Government National
Mortgage Association 1,892,576
-----------
Total U.S. Government
Agency Obligations 19,932,769
-----------
Total U.S. Government Obligations
(Cost $25,084,295) 25,438,769
-----------
Other Collateralized Mortgage
Obligations 8.0%
Collateralized Mortgage Obligation
Trust Series 27(A)
7.25%, '17 440M $ 448,277
Collateralized Mortgage Securities
Corp. Series 1988-16(B)
9.1%, '18 8M 7,739
Georgia Federal Mortgage Corp.
Series A 4 10.5%, '14 1583M 1,660,154
Kidder Peabody Mortgage Assets
Trust Series 18(A)
9.43%, '18 15M 15,098
Merrill Lynch Trust Series 5(B)
6%, '18 140M 137,301
Merrill Lynch Trust Series 25(B)
8.75%, '19 11M 11,134
-----------
Total Other Collateralized Mortgage
Obligations
(Cost $2,282,016) 2,279,703
-----------
Corporate Short-Term Notes 4.2%
BankAmerica Corp. 5.68%,
12/29/95
(Cost $1,194,699) 1200M 1,194,699
-----------
Total Investments
(Cost $28,561,010)* 28,913,171
Excess of Liabilities
Over Other Assets (1.7%) (496,506)
-----------
Net Assets $28,416,665
===========
</TABLE>
- -----------------------------
* Also cost for federal income tax purposes. At November 30, 1995, unrealized
appreciation for federal income tax purposes aggregated $352,161 of which
$358,772 related to appreciated securities and $6,611 related to depreciated
securities.
See Notes to Financial Statements.
31
<PAGE>
[PHOTO APPEARS HERE]
Darlene A. Coppola
Money Market Trader,
Sentinel U.S. Treasury Money Market Fund
Richard D. Temple
Manager,
Sentinel U.S. Treasury Money Market Fund
Sentinel U.S. Treasury Money Market Fund is a no-load money market fund which
seeks a high level of current income, preservation of capital, and liquidity by
investing exclusively in the short-term obligations of the United States
Treasury.
Sentinel U.S. Treasury Money Market Fund
The 12-month period ended November 30, 1995, marked a year of mixed short-term
interest rates. The prime rate rose 25 basis points to end the fiscal year at
8.75% and the discount rate increased 50 basis points to 5.25%. Conversely, the
90-day Treasury bill dropped 23 basis points to 5.48%, while yields on 90-day
bank certificates of deposit and commercial paper decreased on average 40 basis
points ending the 12-month period at 5.71% and 5.80%, respectively. The Federal
Reserve continued to tighten short-term rates during the first half of the year,
however, signs of slowing economic growth and little inflationary pressure
prompted the Federal Reserve to make its first cut in short-term interest rates
in nearly three years during the first week of July, albeit only a 25 basis
point adjustment. Continued slow growth, little inflation, and the possibility
of a balanced budget agreement has held bill rates in this current trading range
as the market anticipates continued easing by the Federal Reserve.
The Sentinel U.S. Treasury Money Market Fund ended fiscal year 1995 with a 7%
increase in its net assets to $80.4 million. During this same period, the
Fund's maturity lengthened to 66 days from 57 days; and the 7-day yield
increased 30 basis points to 4.66%.
/s/ Richard D. Temple
Richard D. Temple
/s/ Darlene A. Coppola
Darlene A. Coppola
Sentinel U.S. Treasury Money Market Fund
Investment in Securities
at November 30, 1995
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Principal Amount Value
(M=$1,000) (Note 1)
- --------------------------------------------------------------------------------
<S> <C> <C>
U.S. Treasury Obligations 96.7%
U S Treasury Bill 5.31%, 12/07/95 1000M $ 999,115
U S Treasury Bill 5.34%, 12/14/95 1500M 1,497,107
U S Treasury Bill 5.61%, 12/14/95 1000M 997,974
U S Treasury Bill 5.32%, 12/21/95 1625M 1,620,197
U S Treasury Bill 5.25%, 12/21/95 2500M 2,492,708
U S Treasury Bill 5.38%, 12/21/95 2000M 1,994,022
U S Treasury Bill 5.61%, 12/21/95 3000M 2,990,650
U S Treasury Bill 5.645%, 12/21/95 3500M 3,489,024
U S Treasury Bill 5.2%, 12/28/95 700M 697,270
U S Treasury Bill 5.285%, 01/04/96 2350M 2,338,270
U S Treasury Bill 5.31%, 01/11/96 200M 198,790
U S Treasury Bill 5.315%, 01/11/96 3100M 3,081,235
U S Treasury Bill 5.255%, 01/18/96 1000M 992,993
U S Treasury Bill 5.35%, 01/25/96 2000M 1,983,653
U S Treasury Note 4%, 01/31/96 2725M 2,718,038
U S Treasury Bill 5.34%, 02/01/96 1655M 1,639,780
U S Treasury Bill 5.26%, 02/08/96 1000M 989,918
U S Treasury Bill 5.37%, 02/08/96 2030M 2,009,106
U S Treasury Bill 5.43%, 02/08/96 1400M 1,385,430
U S Treasury Bill 5.315%, 02/08/96 1005M 994,762
U S Treasury Note 4.625%, 02/15/96 5000M 4,990,361
U S Treasury Note 4.625%, 02/15/96 2500M 2,495,355
U S Treasury Note 4.625%, 02/15/96 2500M 2,494,978
U S Treasury Note 4.625%, 02/15/96 4000M 3,992,020
U S Treasury Bill 5.37%, 02/22/96 5000M 4,938,096
U S Treasury Bill 5.36%, 02/22/96 3500M 3,456,748
U S Treasury Note 4.625%, 02/29/96 5100M 5,088,047
U S Treasury Bill 5.365%, 03/07/96 5000M 4,927,722
U S Treasury Bill 5.32%, 03/14/96 3500M 3,446,209
U S Treasury Bill 5.29%, 04/04/96 7210M 7,077,566
-----------
Total Investments
(Amortized cost $78,017,144)* 78,017,144
Excess of Other Assets
Over Liabilities 3.3% 2,646,767
-----------
Net Assets $80,663,911
===========
</TABLE>
*Also cost for federal income tax purposes.
See Notes to Financial Statements.
32
<PAGE>
This page left blank intentionally.
33
<PAGE>
Sentinel Group Funds, Inc.
Statement of Assets and Liabilities
at November 30, 1995
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
Sentinel
Emerging Sentinel Sentinel Sentinel Sentinel
Growth Growth World Common Stock Balanced
Fund Fund Fund Fund Fund
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Assets
Investments at value $89,974,020 $60,266,371 $46,059,016 $1,056,559,830 $279,856,458
Cash and cash equivalents 373,504 213,822 56,626 2,243,537 443,302
Foreign currency (cost $986,681) - - 966,388 - -
Receivable for securities sold - - 457,455 - 2,425,543
Receivable for fund shares sold 21,837 29,473 159,461 489,693 645,948
Receivable for dividends and interest 21,798 95,168 89,321 4,153,188 2,363,833
Receivable for withholding tax reclaimable - - 42,081 - -
Receivable from fund administrator - - - - -
----------- ----------- ----------- -------------- ------------
Total Assets 90,391,159 60,604,834 47,830,348 1,063,446,248 285,735,084
----------- ----------- ----------- -------------- ------------
Liabilities
Payable for securities purchased - - - 3,084,574 17,856,854
Payable for shares repurchased 881,529 33,075 40,168 986,153 368,815
Accrued expenses 59,896 58,468 27,960 467,324 117,558
Management fee payable 47,369 31,351 25,125 469,381 140,325
Distribution fee payable 52,022 18,964 22,685 359,514 109,019
Fund service fee payable 29,173 16,607 12,422 135,509 39,762
----------- ----------- ----------- -------------- ------------
Total Liabilities 1,069,989 158,465 128,360 5,502,455 18,632,333
----------- ----------- ----------- -------------- ------------
Net Assets Applicable to Outstanding Shares $89,321,170 $60,446,369 $47,701,988 $1,057,943,793 $267,102,751
=========== =========== =========== ============== ============
Shares Outstanding 17,190,516 3,570,991 3,462,116 30,044,511 15,864,676
Net Asset Value Per Share $5.20 $16.93 $13.78 $35.21 $16.84
Maximum Offering Price Per Share $5.47 $17.82 $14.51 $37.06 $17.73
Net Assets Represent
Capital stock at par value $ 171,905 $ 35,710 $ 34,621 $ 300,445 $ 158,647
Paid-in capital 70,308,390 39,902,922 42,522,769 486,218,847 209,748,415
Accumulated undistributed (distributions in excess of)
net investment income 247,950 182,378 475,738 3,337,344 1,220,591
Accumulated undistributed net realized gain (loss)
on investments and foreign currency transactions 16,243,692 9,038,301 196,654 82,782,610 6,471,802
Unrealized appreciation of investments
and foreign currency transactions 2,349,233 11,287,058 4,472,206 485,304,547 49,503,296
----------- ----------- ----------- -------------- ------------
Net Assets $89,321,170 $60,446,369 $47,701,988 $1,057,943,793 $267,102,751
=========== =========== =========== ============== ============
Investments at Cost $87,624,787 $48,979,313 $41,565,239 $571,255,283 $230,353,162
=========== =========== =========== ============== ============
</TABLE>
See Notes to Financial Statements.
34
<PAGE>
Sentinel Group Funds, Inc.
Statement of Assets and Liabilities
at November 30, 1995
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Sentinel Sentinel Sentinel Sentinel Sentinel
Sentinel Tax-Free New York Government Short-Intermediate U.S. Treasury
Bond Income Tax-Free Income Securities Government Money Market
Fund Fund Fund Fund Fund Fund
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Assets
Investments at value $116,472,873 $108,868,353 $5,255,526 $173,466,699 $28,913,171 $78,017,145
Cash and cash equivalents 158,991 2,985,263 89,899 7,862 639,539 2,485,857
Foreign currency - - - - - -
Receivable for securities
sold 2,425,543 3,084,306 154,669 5,353,202 111,846 992,960
Receivable for fund shares
sold 263,738 103,894 - 42,410 550,090 739,270
Receivable for dividends
and interest 1,986,377 1,990,910 91,497 1,323,123 240,981 286,365
Receivable for withholding
tax reclaimable - - - - - -
Receivable from fund
administrator - - - - 42,857 -
------------ ------------ ---------- ------------ ----------- -----------
Total Assets 121,307,522 117,032,726 5,591,591 180,193,296 30,498,484 82,521,597
------------ ------------ ---------- ------------ ----------- -----------
Liabilities
Payable for securities
purchased 12,243,111 6,353,409 242,170 71,920,161 1,926,010 994,762
Payable for shares
repurchased 179,573 59,603 12,000 35,503 120,906 777,913
Accrued expenses 43,080 29,087 766 47,034 4,736 45,359
Management fee payable 46,955 47,528 2,320 46,398 11,511 26,468
Distribution fee payable 27,375 26,654 1,493 30,217 15,764 -
Fund service fee payable 12,877 10,700 439 13,795 2,892 13,184
------------ ------------ ---------- ------------ ----------- -----------
Total Liabilities 12,552,971 6,526,981 259,188 72,093,108 2,081,819 1,857,686
------------ ------------ ---------- ------------ ----------- -----------
Net Assets Applicable to
Outstanding Shares $108,754,551 $110,505,745 $5,332,403 $108,100,188 $28,416,665 $80,663,911
============ ============ ========== ============ =========== ===========
Shares Outstanding 16,767,832 8,115,609 455,023 10,491,866 2,887,563 80,663,911
Net Asset Value Per Share $6.49 $13.62 $11.72 $10.30 $9.84 $1.00
Maximum Offering Price Per
Share $6.83 $14.34 $12.34 $10.84 $9.94 $1.00
Net Assets Represent
Capital stock at par value $ 167,678 $ 81,156 $ 4,550 $ 104,919 $ 28,876 $ 806,639
Paid-in capital 108,641,341 102,601,189 4,971,065 109,703,170 29,125,690 79,857,272
Accumulated undistributed
(distributions in excess
of) net investment income (8,604) 3,508 393 (2,180) - -
Accumulated undistributed
net realized gain (loss)
on investments and foreign
currency transactions (3,436,516) (143,804) (51,369) (3,586,494) (1,090,062) -
Unrealized appreciation of
investments and foreign
currency transactions 3,390,652 7,963,696 407,764 1,880,773 352,161 -
------------ ------------ ---------- ------------ ----------- -----------
Net Assets $108,754,551 $110,505,745 $5,332,403 $108,100,188 $28,416,665 $80,663,911
============ ============ ========== ============ =========== ===========
Investments at Cost $113,082,221 $100,904,657 $4,847,762 $171,585,926 $28,561,010 $78,017,145
============ ============ ========== ============ =========== ===========
</TABLE>
See Notes to Financial Statements.
35
<PAGE>
Sentinel Group Funds, Inc.
Statement of Operations
For the Year Ended November 30, 1995
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
Sentinel
Emerging Sentinel Sentinel Sentinel Sentinel
Growth Growth World Common Stock Balanced
Fund Fund Fund Fund Fund
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Investment Income
Income:
Dividends $ 533,941 $ 881,157 $1,000,863 + $ 29,106,658 $ 4,180,753
Interest 1,173,559 162,895 37,096 3,119,081 8,274,153
----------- ----------- ---------- ------------ -----------
Total Income 1,707,500 1,044,052 1,037,959 32,225,739 12,454,906
----------- ----------- ---------- ------------ -----------
Expenses:
Management advisory fee 611,863 355,614 288,808 5,243,009 1,611,633
Transfer agent and custodian 483,229 256,602 229,721 1,731,282 553,382
Distribution expense 281,355 145,000 132,778 2,545,000 741,076
Accounting services 41,875 24,385 20,000 427,786 110,825
Professional fees 29,832 18,008 14,180 275,578 75,946
Reports and notices to shareholders 27,832 16,576 8,948 111,711 36,411
Directors' fees and expenses 10,378 5,962 4,860 104,436 27,102
Other 15,465 15,555 20,642 58,620 38,282
----------- ----------- ---------- ------------ -----------
Total Expenses 1,501,829 837,702 719,937 10,497,422 3,194,657
Expense Reimbursement - - - - -
Expense Offset (42,279) (22,577) (31,046) (94,522) (49,732)
----------- ----------- ---------- ------------ -----------
Net Expenses 1,459,550 815,125 688,891 10,402,900 3,144,925
----------- ----------- ---------- ------------ -----------
Net Investment Income 247,950 228,927 349,068 21,822,839 9,309,981
----------- ----------- ---------- ------------ -----------
Realized and Unrealized Gain (Loss) on
Investments
and Foreign Currency
Net realized gain (loss) from:
Investments 16,243,662 9,038,335 228,428 83,681,019 6,896,018
Foreign currency transactions - - 126,670 - -
----------- ----------- ---------- ------------ -----------
Net realized gain (loss) 16,243,662 9,038,335 355,098 83,681,019 6,896,018
----------- ----------- ---------- ------------ -----------
Net change in unrealized appreciation
(depreciation) during the period:
Investments (5,901,668) 2,732,693 3,583,376 164,928,158 37,588,953
Foreign currency transactions - - (20,202) - -
----------- ----------- ---------- ------------ -----------
Net change in unrealized
appreciation (depreciation) (5,901,668) 2,732,693 3,563,174 164,928,158 37,588,953
----------- ----------- ---------- ------------ -----------
Net Realized and Unrealized Gain
from Investments and Foreign Currency 10,341,994 11,771,028 3,918,272 248,609,177 44,484,971
----------- ----------- ---------- ------------ -----------
Net Increase in Net Assets
from Operations $10,589,944 $11,999,955 $4,267,340 $270,432,016 $53,794,952
=========== =========== ========== ============ ===========
</TABLE>
+ Net of foreign tax withholding of $140,360.
See Notes to Financial Statements.
36
<PAGE>
Sentinel Group Funds, Inc.
Statement of Operations
For the Year Ended November 30, 1995*
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Sentinel Sentinel
Sentinel New York Sentinel Short- Sentinel
Sentinel Tax-Free Tax-Free Government Intermediate U.S. Treasury
Bond Income Income Securities Government Money Market
Fund Fund Fund Fund Fund Fund
----------- ----------- -------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Investment Income
Income:
Dividends $ 49,156 - - - - -
Interest 7,616,677 $ 6,294,664 $200,673 $ 7,931,818 $ 975,350 $4,416,970
----------- ----------- -------- ----------- ---------- ----------
Total Income 7,665,833 6,294,664 200,673 7,931,818 975,350 4,416,970
----------- ----------- -------- ----------- ---------- ----------
Expenses:
Management advisory fee 522,173 560,292 18,231 558,652 72,960 313,262
Transfer agent and custodian 172,570 147,187 5,097 203,262 30,242 224,160
Distribution expense 196,750 211,125 6,666 210,478 48,200 -
Accounting services 44,650 47,240 1,532 46,980 6,075 34,985
Professional fees 30,160 30,339 685 30,742 3,125 23,007
Reports and notices to shareholders 9,614 8,537 3,150 9,333 1,350 12,055
Directors' fees and expenses 10,847 11,633 360 11,515 1,497 8,548
Other 26,463 32,828 8,537 23,775 26,720 22,228
----------- ----------- -------- ----------- ---------- ----------
Total Expenses 1,013,227 1,049,181 44,258 1,094,737 190,169 638,245
Expense Reimbursement - (66,467) - - (42,857) -
Expense Offset (36,845) (32,339) (2,117) (6,212) (9,722) (4,600)
----------- ----------- -------- ----------- ---------- ----------
Net Expenses 976,382 950,375 42,141 1,088,525 137,590 633,645
----------- ----------- -------- ----------- ---------- ----------
Net Investment Income 6,689,451 5,344,289 158,532 6,843,293 837,760 3,783,325
----------- ----------- -------- ----------- ---------- ----------
Realized and Unrealized Gain (Loss) on Investments
and Foreign Currency
Net realized gain (loss) from:
Investments 1,989,093 1,604,746 (47,300) 3,976,086 45,919 -
Foreign currency transactions - - - - - -
----------- ----------- -------- ----------- ---------- ----------
Net realized gain (loss) 1,989,093 1,604,746 (47,300) 3,976,086 45,919 -
----------- ----------- -------- ----------- ---------- ----------
Net change in unrealized appreciation
(depreciation) during the period:
Investments 8,007,845 8,580,337 289,172 6,533,082 315,484 -
Foreign currency transactions - - - - - -
----------- ----------- -------- ----------- ---------- ----------
Net change in unrealized
appreciation (depreciation) 8,007,845 8,580,337 289,172 6,533,082 315,484 -
----------- ----------- -------- ----------- ---------- ----------
Net Realized and Unrealized Gain
from Investments and Foreign
Currency 9,996,938 10,185,083 241,872 10,509,168 361,403 -
----------- ----------- -------- ----------- ---------- ----------
Net Increase in Net Assets
from Operations $16,686,389 $15,529,372 $400,404 $17,352,461 $1,199,163 $3,783,325
=========== =========== ======== =========== ========== ==========
</TABLE>
* Except for Sentinel New York Tax-Free Income Fund and Sentinel Short-
Intermediate Government Fund which are for for the period March 27, 1995
(commencement of operations) to November 30, 1995.
See Notes to Financial Statements.
37
<PAGE>
Sentinel Group Funds, Inc.
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
Sentinel
Emerging Sentinel
Growth Growth
Fund Fund
Year Ended Year Ended Year Ended Year Ended
11/30/95 11/30/94 11/30/95 11/30/94
------------ ------------ ----------- ------------
<S> <C> <C> <C> <C>
Increase (Decrease) in Net Assets from Operations
Net investment income (loss) $ 247,950 $ (719,098) $ 228,927 $ 160,032
Net realized gain (loss) from
investments and foreign currency 16,243,662 15,280,815 9,038,335 7,982,077
Net change in unrealized
appreciation (depreciation) (5,901,668) (12,522,902) 2,732,693 (10,816,883)
------------ ------------ ----------- ------------
Net increase (decrease)
in net assets
from operations 10,589,944 2,038,815 11,999,955 (2,674,774)
------------ ------------ ----------- ------------
Distributions to Shareholders
From net investment income - - (139,887) (101,423)
From net realized gain on
investments and foreign currency (14,411,597) (22,586,510) (7,982,066) (1,520,979)
------------ ------------ ----------- ------------
Total distributions to
shareholders (14,411,597) (22,586,510) (8,121,953) (1,622,402)
------------ ------------ ----------- ------------
From Capital Share Transactions
Net proceeds from
sales of shares 13,979,568 12,404,093 5,940,101 6,029,195
Net asset value of shares
issued in reinvestment of
dividends and distributions 13,135,828 20,325,227 7,247,471 1,441,691
Net asset value of shares
issued in exchange for
net assets of another
investment company - - - -
------------ ------------ ----------- ------------
27,115,396 32,729,320 13,187,572 7,470,886
Less: Payments for
shares reacquired (22,392,181) (28,938,237) (7,065,780) (10,560,224)
------------ ------------ ----------- ------------
Increase (decrease) in net assets
from capital share transactions 4,723,215 3,791,083 6,121,792 (3,089,338)
------------ ------------ ----------- ------------
Total Increase (Decrease) in Net Assets
for Period 901,562 (16,756,612) 9,999,794 (7,386,514)
Net Assets:
Beginning of period 88,419,608 105,176,220 50,446,575 57,833,089
------------ ------------ ----------- ------------
End of period $ 89,321,170 $ 88,419,608 $60,446,369 $ 50,446,575
------------ ------------ ----------- ------------
Undistributed Net
Investment Income (Loss)
at End of Period $ 247,950 $ - $ 182,378 $ 93,338
============ ============ =========== ============
<CAPTION>
- -------------------------------------------------------------------------------------------------------
Sentinel Sentinel
World Common Stock
Fund Fund
Year Ended Year Ended Year Ended Year Ended
11/30/95 11/30/94 11/30/95 11/30/94
------------ ------------ -------------- -------------
<S> <C> <C> <C> <C>
Increase (Decrease) in Net Assets from Operations
Net investment income (loss) $ 349,068 $ 198,080 $ 21,822,839 $ 24,680,626
Net realized gain (loss) from
investments and foreign currency 355,098 588,512 83,681,019 33,250,854
Net change in unrealized
appreciation (depreciation) 3,563,174 216,981 164,928,158 (73,078,201)
------------ ------------ -------------- -------------
Net increase (decrease)
in net assets
from operations 4,267,340 1,003,573 270,432,016 (15,146,721)
------------ ------------ -------------- -------------
Distributions to Shareholders
From net investment income (286,485) (37,977) (22,427,518) (23,891,097)
From net realized gain on
investments and foreign currency (505,083) (93,788) (32,779,992) (1,815,853)
------------ ------------ -------------- -------------
Total distributions to
shareholders (791,568) (131,765) (55,207,510) (25,706,950)
------------ ------------ -------------- -------------
From Capital Share Transactions
Net proceeds from
sales of shares 15,888,398 32,943,316 70,030,323 63,969,978
Net asset value of shares
issued in reinvestment of
dividends and distributions 761,890 127,165 43,543,555 19,053,275
Net asset value of shares
issued in exchange for
net assets of another
investment company - - 51,894,735 -
------------ ------------ -------------- -------------
16,650,288 33,070,481 165,468,613 83,023,253
Less: Payments for
shares reacquired (14,394,477) (8,844,358) (162,084,590) (100,670,743)
------------ ------------ -------------- -------------
Increase (decrease) in net assets
from capital share transactions 2,255,811 24,226,123 3,384,023 (17,647,490)
------------ ------------ -------------- -------------
Total Increase (Decrease) in Net Assets
for Period 5,731,583 25,097,931 218,608,529 (58,501,161)
Net Assets:
Beginning of period 41,970,405 16,872,474 839,335,264 897,836,425
------------ ------------ -------------- -------------
End of period $ 47,701,988 $ 41,970,405 $1,057,943,793 $ 839,335,264
------------ ------------ -------------- -------------
Undistributed Net
Investment Income (Loss)
at End of Period $ 475,738 $ 254,707 $ 3,337,344 $ 3,942,023
============ ============ =========== =============
</TABLE>
See Notes to Financial Statements.
38
<PAGE>
Sentinel Group Funds, Inc.
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Sentinel Sentinel
Sentinel Sentinel Tax-Free New York
Balanced Bond Income Tax-Free Income
Fund Fund Fund Fund*
Eight Months
Year Ended Year Ended Year Ended Year Ended Year Ended Year Ended Ended
11/30/95 11/30/94 11/30/95 11/30/94 11/30/95 11/30/94 11/30/95
- ------------- ------------ ------------ ----------- ------------ ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
$ 9,309,981 $ 9,179,764 $ 6,689,451 $ 5,238,003 $ 5,344,289 $ 5,584,088 $ 158,532
6,896,018 438,528 1,989,093 (3,187,095) 1,604,746 (1,730,483) (47,300)
37,588,953 (18,176,405) 8,007,845 (6,229,746) 8,580,337 (9,435,964) 289,172
- ------------- ------------ ------------ ----------- ------------ ------------ ----------
53,794,952 (8,558,113) 16,686,389 (4,178,838) 15,529,372 (5,582,359) 400,404
- ------------- ------------ ------------ ----------- ------------ ------------ ----------
(9,440,483) (8,792,962) (6,677,766) (5,205,964) (5,344,668) (5,581,800) (158,139)
(143,043) (1,393,903) - (4,248,336) - (950,281) -
- ------------- ------------ ------------ ----------- ------------ ------------ ----------
(9,583,526) (10,186,865) (6,677,766) (9,454,300) (5,344,668) (6,532,081) (158,139)
- ------------- ------------ ------------ ----------- ------------ ------------ ----------
35,919,601 61,618,124 19,152,787 27,558,388 19,708,036 24,483,545 984,046
8,552,193 9,121,698 4,951,462 7,718,442 3,604,212 4,782,522 147,544
4,084,150 - 31,075,198 - 4,493,940 - 5,759,369
- ------------- ------------ ------------ ----------- ------------ ------------ ----------
48,555,944 70,739,822 55,179,447 35,276,830 27,806,188 29,266,067 6,890,959
(51,993,073) (55,298,764) (36,920,567) (24,544,098) (27,420,131) (29,184,921) (1,800,821)
- ------------- ------------ ------------ ----------- ------------ ------------ ----------
(3,437,129) 15,441,058 18,258,880 10,732,732 386,057 81,146 5,090,138
- ------------- ------------ ------------ ----------- ------------ ------------ ----------
40,774,297 (3,303,920) 28,267,503 (2,900,406) 10,570,761 (12,033,294) 5,332,403
226,328,454 229,632,374 80,487,048 83,387,454 99,934,984 111,968,278 -
- ------------- ------------ ------------ ----------- ------------ ------------ ----------
$ 267,102,751 $226,328,454 $108,754,551 $80,487,048 $110,505,745 $ 99,934,984 $5,332,403
============= ============ ============ =========== ============ ============ ==========
$ 1,220,591 $ 1,378,850 $ (8,604) $ (22,172) $ 3,508 $ 3,887 $ 393
============= ============ ============ =========== ============ ============ ==========
</TABLE>
*Commenced operations March 27, 1995.
See Notes to Financial Statements.
39
<PAGE>
Sentinel Group Funds, Inc.
Statement of Changes in Net Assets (cont'd.)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Sentinel Sentinel Sentinel
Government Short-Intermediate U.S. Treasury
Securities Government Money Market
Fund Fund* Fund
Eight Months
Year Ended Year Ended Ended Year Ended Year Ended
11/30/95 11/30/94 11/30/95 11/30/95 11/30/94
---------------------------- ------------- - ----------------------------
<S> <C> <C> <C> <C> <C>
Increase (Decrease) in Net Assets from Operations
Net investment income (loss) $ 6,843,293 $ 7,214,095 $ 837,760 $ 3,783,325 $ 2,289,586
Net realized gain (loss) from
investments and foreign currency 3,976,086 (5,760,781) 45,919 - -
Net change in unrealized
appreciation (depreciation) 6,533,082 (7,201,190) 315,484 - -
------------ ------------ ------------- ------------- -------------
Net increase (decrease)
in net assets
from operations 17,352,461 (5,747,876) 1,199,163 3,783,325 2,289,586
------------ ------------ ------------- ------------- -------------
Distributions to Shareholders
From net investment income (6,684,083) (7,046,062) (823,999) (3,783,325) (2,289,586)
From net realized gain on
investments and foreign currency - (1,485,970) - - -
------------ ------------ ------------- ------------- -------------
Total distributions to
shareholders (6,684,083) (8,532,032) (823,999) (3,783,325) (2,289,586)
------------ ------------ ------------- ------------- -------------
From Capital Share Transactions
Net proceeds from
sales of shares 12,011,122 22,078,781 21,848,488 150,294,331 159,102,352
Net asset value of shares
issued in reinvestment of
dividends and distributions 5,223,850 6,851,054 683,298 3,499,173 2,031,457
Net asset value of shares
issued in exchange for
net assets of another
investment company - - 15,218,556 - -
------------ ------------ ------------- ------------- -------------
17,234,972 28,929,835 37,750,342 153,793,504 161,133,809
------------ ------------ ------------- ------------- -------------
Less: Payments for
shares reacquired (24,260,467) (44,941,238) (9,708,841) (148,430,713) (158,084,971)
------------ ------------ ------------- ------------- -------------
Increase (decrease) in net assets
from capital share transactions (7,025,495) (16,011,403) 28,041,501 5,362,791 3,048,838
------------ ------------ ------------- ------------- -------------
Total Increase (Decrease) in Net Assets
for Period 3,642,883 (30,291,311) 28,416,665 5,362,791 3,048,838
Net Assets:
Beginning of period 104,457,305 134,748,616 - 75,301,120 72,252,282
------------ ------------ ------------- ------------- -------------
End of period $108,100,188 $104,457,305 $ 28,416,665 $ 80,663,911 $ 75,301,120
============ ============ ============= ============= =============
Undistributed Net
Investment Income (Loss)
at End of Period $ (2,180) $ (7,216) $ - $ - $ -
============ ============ ============= ============= =============
</TABLE>
*Commenced operations March 27, 1995.
See Notes to Financial Statements.
40
<PAGE>
Notes to Financial Statements
(1) Significant Accounting Policies:
Sentinel Group Funds, Inc. (the "Company") is registered under the Investment
Company Act of 1940, as amended, as a diversified open-end management investment
company. The Company consists of eleven separate series - Sentinel Emerging
Growth Fund (formerly Sentinel Aggressive Growth Fund), Sentinel Growth Fund,
Sentinel World Fund, Sentinel Common Stock Fund, Sentinel Balanced Fund,
Sentinel Bond Fund, Sentinel Tax-Free Income Fund, Sentinel New York Tax-Free
Income Fund (a non-diversified series), Sentinel Government Securities Fund,
Sentinel Short-Intermediate Government Fund and Sentinel U.S. Treasury Money
Market Fund, each individually referred to as a Fund. As a result of the Company
merger with seven of the Independence Capital Group of Funds, as further
described in Note (6), Sentinel New York Tax-Free Income Fund and Sentinel
Short-Intermediate Government Fund commenced operations on March 27, 1995. The
following is a summary of significant accounting policies followed by the
Company.
A. Security Valuation: Equity securities which are traded on a national or
foreign securities exchange and over-the-counter securities listed in the NASDAQ
National Market System are valued at the last reported sales price on the date
of determination. Securities for which no sale was reported on that date are
valued at the mean between the last reported bid and asked prices. Over-the-
counter securities not listed on the NASDAQ National Market System are valued at
the mean of the current bid and asked prices. Fixed income securities are valued
on the basis of valuations provided by independent pricing services. Short-term
securities maturing in 60 days or less are stated at cost plus accrued interest
earned which approximates market value. Portfolio securities of the Sentinel
U.S. Treasury Money Market Fund are valued at amortized cost, which approximates
market value, in accordance with the terms of a rule adopted by the Securities
and Exchange Commission. The amortized cost method values a security at cost on
the date of purchase and thereafter assumes a constant amortization to maturity
of any discount or premium.
B. Securities Transactions and Related Investment Income: Securities
transactions are accounted for on the date the securities are purchased or sold
(trade date). Interest income is recorded on the accrual basis. Cost is
determined, and realized gains and losses are computed, using the identified
cost method. Market discount and original issue discount are accreted to income.
The Sentinel Tax-Free Income Fund, the Sentinel New York Tax-Free Income Fund
and the Sentinel Short-Intermediate Government Fund amortize premium. Sentinel
New York Tax-Free Income Fund invests in debt instruments of municipal issuers
whose ability to meet their obligations may be affected by economic developments
in the State of New York.
C. Dividends and Distributions: Dividend income and distributions to
shareholders are recorded on the ex-dividend date. Income distributions and
capital gain distributions are determined in accordance with federal income tax
regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments for mortgage-backed
securities and foreign currency transactions. Re-classifications were made to
reflect these differences as of November 30, 1995 as follows:
<TABLE>
<CAPTION>
Increase
(decrease) in
accumulated
Increase undistributed
Increase (decrease) in net realized
(decrease) accumulated gain (loss) on
in undistributed investments and
paid-in net investment foreign currency
Fund capital income transactions
- ------------------------------ ---------- --------------- ----------------
<S> <C> <C> <C>
World......................... -- $ 158,448 $(158,448)
Balanced...................... -- (27,757) 27,757
Bond.......................... $(1,916) 1,883 33
Government Sec................ (2,965) (154,174) 157,139
Short-Intermediate Gov't...... (1,816) (13,760) 15,576
</TABLE>
D. Dollar Rolls: Sentinel Balanced, Sentinel Bond, Sentinel Government
Securities and Sentinel Short-Intermediate Government Funds enter into dollar
rolls in which the Funds sell securities for delivery in the current month, and
simultaneously contract to repurchase similar (same type, coupon and maturity)
securities on a specified future date. During the roll period the Funds forgo
principal and interest paid on the securities. The Funds are compensated by the
interest earned on the cash proceeds of the initial sale and by the lower
repurchase price at the future date. The difference between the sale proceeds
and the lower repurchase price is taken into income. The Funds maintain
segregated accounts, the dollar value of which is equal to its obligations, in
respect of dollar rolls.
E. Federal Income Taxes: Each Fund intends to continue to meet the requirements
of the Internal Revenue Code applicable to regulated investment companies. The
Company intends to distribute all of its taxable income to its shareholders,
relieving each Fund of any federal excise tax or income tax liability.
41
<PAGE>
F. Foreign Currency Translations: The books and records of the Sentinel World
Fund are maintained in U.S. dollars. Foreign currency amounts are translated
into U.S. dollars at the mean between the buying and selling rates on the
following basis:
(1) market value of investment securities, assets and liabilities at the
closing daily rate of exchange; and
(2) purchases and sales of investment securities, income and expenses at the
rate of exchange prevailing on the respective dates of such transactions.
The Sentinel World Fund does not isolate that portion of gains and losses on
investments in securities which is due to changes in the foreign exchange rates
from that which is due to changes in market prices of such securities. However,
pursuant to United States federal income tax regulations, gains and losses from
certain foreign currency transactions are treated as ordinary income for federal
income tax purposes.
G. Repurchase Agreements: Each Fund may enter into repurchase agreements as a
means of making short-term investments, of seven days or less, and in aggregate
amounts of not more than 25% of the net assets of a Fund. Each Fund, through its
custodian, takes possession of the securities collateralizing repurchase
agreements. All repurchase agreements entered into by the Funds provide that the
market value of the collateral underlying the repurchase agreement at the time
of purchase, and each subsequent business day, will always be at least equal to
102% of the repurchase agreement amount including accrued interest. If the
seller defaults and the value of the collateral declines or if bankruptcy
proceedings are commenced with respect to the seller of the security,
realization of the collateral by the Fund may be delayed or limited.
H. Other: Joint expenses of the Company are allocated proportionately based upon
the Funds' respective average net assets.
Earnings credits are received from the custodian and dividend paying agent on
cash balances and are reflected in the statement of operations as an expense
offset.
(2) Management Advisory Fee and Other Transactions with Affiliates:
Pursuant to the Investment Advisory Agreement (the "Agreement"), Sentinel
Advisors, Co., ("SAC"), a Vermont general partnership whose general partners are
Sentinel Advisors, Inc., an indirect wholly-owned subsidiary of National Life
Insurance Company ("National Life"), ProvidentMutual Management Co., Inc., an
affiliate of Provident Mutual Life Insurance Company of Philadelphia ("Provident
Mutual"), HTK of Delaware, Inc. ("HTK") an affiliate of The Penn Mutual Life
Insurance Company ("Penn Mutual") and Sentinel Management Company ("SMC"), a
Vermont general partnership whose general partners are affiliates of National
Life, Provident Mutual and Penn Mutual, provides general supervision of the
Funds' investments as well as certain administrative and related services. As
compensation in full for services rendered under its Agreement, the Funds pay
SAC a monthly fee determined as follows: (1) With respect to Sentinel Emerging
Growth, Sentinel Growth, Sentinel World and Sentinel Balanced Funds: 0.70% per
annum on the first $200 million of aggregate average daily net assets of such
Funds; 0.65% per annum on the next $100 million of such assets; 0.60% per annum
on the next $100 million of such assets; and 0.55% per annum on such assets in
excess of $400 million. (2) With respect to Sentinel Common Stock Fund: 0.55%
per annum on the average daily net assets of the Fund. (3) With respect to
Sentinel Bond, Sentinel Tax-Free Income, Sentinel New York Tax-Free Income,
Sentinel Government Securities and Sentinel Short-Intermediate Government Funds:
0.55% per annum on the first $200 million of aggregate average daily net assets
of such Funds; 0.50% per annum on the next $200 million of such assets; and
0.45% per annum on such assets in excess of $400 million. (4) With respect to
Sentinel U.S. Treasury Money Market Fund: 0.40% per annum on the first $300
million of average daily net assets; and 0.35% per annum on such assets in
excess of $300 million. The Agreement provides that if certain expenses incurred
by the Company in any fiscal year exceed the expense limitations imposed by any
state's securities regulations, SAC will reimburse the Company for any such
excess. No reimbursement was required for the year.
With respect to Sentinel World Fund only, SAC has entered into a sub-advisory
agreement with Cashman, Farrell and Associates (the "Sub-Advisor"). Pursuant to
such agreement, the Sub-Advisor provides SAC with a continuous investment
program consistent with Sentinel World Fund's investment objectives and
policies. The sub-advisory agreement provides for a fee to be paid by SAC to the
Sub-Advisor of the greater of (a) a monthly fee equal to 0.375% per annum of the
average daily net assets of Sentinel World Fund up to $500 million and 0.30% per
annum of such average net assets in excess of $500 million, or (b) $20,000 per
annum.
42
<PAGE>
On March 1, 1993, each of the Funds (except Sentinel U.S. Treasury Money Market
Fund) adopted a distribution plan pursuant to Rule 12b-1 under the 1940 Act.
These distribution plans are herein referred to as the "Plans". The Sentinel New
York Tax-Free Income Fund became subject to the Plan upon its inception on March
27, 1995. On March 24, 1995 the Sentinel Short-Intermediate Government Fund
adopted a supplemental distribution plan pursuant to Rule 12b-1 applicable only
to it. None of the fees paid by the other Funds pursuant to the Plans will be
used to reimburse Sentinel Financial Services Company ("SFSC"), a Vermont
general partnership whose general partners are National Life Investment
Management Company, Inc., a wholly-owned subsidiary of National Life,
ProvidentMutual Financial Services, Inc., an affiliate of Provident Mutual, HTK
and SMC, the principal underwriter ("Distributor") of the Company's shares, for
expenses incurred in connection with the distribution of the Sentinel U.S.
Treasury Money Market Fund shares.
Under the Plans, each participating Fund pays to the Distributor a monthly fee
at the maximum annual rate of (a) .30% of average daily net assets in the case
of the Sentinel Emerging Growth, Sentinel Growth, Sentinel World, Sentinel
Common Stock and Sentinel Balanced Funds, (b) .20% of average daily net assets
in the case of the Sentinel Bond, Sentinel Tax-Free Income, Sentinel New York
Tax-Free Income and Sentinel Government Securities Funds or (c) .35% of average
daily net assets in the case of the Sentinel Short-Intermediate Government Fund.
Such fees will be used to reimburse the Distributor for expenses incurred in
connection with distribution and promotion of the shares of each participating
Fund, including salaries and expenses of the Distributor's wholesale sales
force, home office management and marketing personnel, expenses incurred by the
Distributor for the occupancy of its office space in Montpelier, Vermont,
expenses incurred by the Distributor with respect to equipment and supplies,
expenses incurred for the preparation, printing and distribution of sales
literature used in connection with the offering of such shares to the public,
expenses incurred in advertising, promotion and selling shares of such Fund to
the public, expenses incurred for the preparation, printing and distribution of
the Prospectus and Statement of Additional Information, any supplement thereto
used in connection with the offering of such Fund's shares to the public, or any
reports and other communications for the distribution to existing shareholders,
and service fees (deferred commissions) paid to securities dealers who have
executed a selling agreement with the Distributor. The Distributor will not be
reimbursed for any unreimbursed eligible expenses from any other Fund, or in any
future year.
SFSC also receives a sales charge added to the net asset value received by the
Company on the sale of its shares. This compensation is not an expense of the
Company and does not affect its operating results. SFSC has advised the Company
that it received sales charges aggregating $4,628,638 for the year ended
November 30, 1995. The Company is advised that the total distribution charges
retained by SFSC on the sale of shares amounted to $126,256 after allowances of
$2,325,653 to Equity Services, Inc., an affiliate of National Life, $745,777 to
PML Securities Company, an affiliate of Provident Mutual, and $1,140,476 to
other investment dealers. Allowances of $154,789 went to Hornor, Townsend &
Kent, Inc. and $135,687 to Janney Montgomery Scott, Inc., affiliates of Penn
Mutual, for the eight months ended November 30, 1995.
Each director who is not an employee of the adviser or an affiliated company is
paid an annual fee of $12,500 ($16,000 effective September 1, 1995) plus $1,000
($1,500 effective September 1, 1995) for each meeting of the Board of Directors
attended. Such directors are reimbursed for travel and other out-of-pocket
expenses incurred in attending such meetings.
Pursuant to the Fund Services Agreement with Sentinel Administrative Service
Company ("SASC"), a Vermont general partnership whose general partners are
Sentinel Administrative Service Corporation ("SAS Corp."), an indirect wholly-
owned subsidiary of National Life, SIGMA American Corp., an affiliate of
Provident Mutual, HTK and SMC, the Company receives fund accounting and
financial administrative services, transfer agent services and investor
services, all of which are coordinated with other services which the Company has
contracted for with outside providers. Total fees for the year ended November
30, 1995 were $3,349,333.
SASC has voluntarily agreed to refund its fee to the extent necessary to prevent
the overall aggregate expense ratio of the Funds and Sentinel Pennsylvania Tax-
Free Trust (excluding the Sentinel World Fund) from exceeding 1.30% of average
daily net assets in any fiscal year. The Funds and Sentinel Pennsylvania Tax-
Free Trust make up the Sentinel Family of Funds. Although SASC has no present
intention to do so, this arrangement may be terminated at any time. The Company
expenses for the year ended November 30, 1995 did not exceed 1.30% of its
average daily net assets.
With respect to Sentinel U.S. Treasury Money Market Fund, Sentinel Short-
Intermediate Government Fund and Sentinel World Fund, SASC has agreed to
reimburse the Funds for all operating expenses of the Funds in excess of an
annual rate of .85%, 1.00% and 2.00%, respectively, of the Funds' average daily
net assets. For the eight months ended November 30, 1995, the total amount
reimbursable to Sentinel Short-Intermediate Government Fund was $42,857. No
amounts
43
<PAGE>
were required to be reimbursed to Sentinel U.S. Treasury Money Market Fund or
Sentinel World Fund for the year ended November 30, 1995. Although SASC has no
present intention to do so, this arrangement may be terminated at any time.
SASC had previously agreed to reimburse Sentinel Tax-Free Income Fund for all
operating expenses in excess of an annual rate of .75%. This voluntary
reimbursement policy was terminated as of March 27, 1995. For the four months
ended March 26, 1995, the total amount reimbursable was $66,467.
(3) Investment Transactions:
Purchases and sales of investment securities (excluding short-term obligations)
for the year ended November 30, 1995 (except for Sentinel New York Tax-Free
Income Fund and Sentinel Short-Intermediate Government Fund which is for the
period March 27, 1995 to November 30, 1995) were as follows:
<TABLE>
<CAPTION>
Purchases of Sales of
other than Purchases of other than
U.S. U.S. U.S. Sales of U.S.
government government government government
direct and direct and direct and direct and
agency agency agency agency
Fund obligations obligations` obligations obligations
- ------------------- ------------- -------------- ------------- -------------
<S> <C> <C> <C> <C>
Emerg. Growth...... $ 57,849,186 ---- $ 76,264,398 ----
Growth............. 43,486,521 ---- 45,068,868 ----
World.............. 16,327,481 ---- 13,358,139 ----
Common Stock....... 193,334,132 ---- 294,622,804 ----
Balanced........... 131,102,756 $117,222,202 108,531,755 $140,942,446
Bond............... 134,143,937 84,899,581 107,545,765 111,965,844
Tax-Free........... 116,306,625 ---- 119,427,248 ----
N.Y. Tax-Free...... 1,442,219 ---- 2,029,714 ----
Government......... ---- 374,438,744 ---- 385,045,079
Short Int. Gov't. . ---- 30,509,903 ---- 11,258,591
</TABLE>
(The Sentinel U.S. Treasury Money Market Fund invests only in short-term
obligations.)
For Federal income tax purposes, the Company has capital loss carryforwards at
November 30, 1995 as follows:
$109,718 and $14,633 (expiring in 2001 and 2002, respectively) for a total of
$124,351 for the Sentinel Balanced Fund, $2,140,898 and $1,295,618 (expiring in
2001 and 2002, respectively) for a total of $3,436,516 for the Sentinel Bond
Fund, $143,804 expiring in 2002 for the Sentinel Tax-Free Income Fund, $4,069
and $47,300 (expiring in 2002 and 2003, respectively) for a total of $51,369 for
the Sentinel New York Tax-Free Income Fund, $3,586,497 expiring in 2002 for the
Sentinel Government Securities Fund and $328,517, $619,379 and $142,166
(expiring in 2000, 2001 and 2002, respectively) for a total of $1,090,062 for
the Sentinel Short-Intermediate Government Fund. During the year ended November
30, 1995, the Sentinel Common Stock Fund, the Sentinel Balanced Fund, the
Sentinel Bond Fund, the Sentinel Tax-Free Income Fund, the Sentinel Government
Securities Fund and the Sentinel Short-Intermediate Government Fund utilized
$671,131, $325,133, $1,983,401, $1,604,746, $4,133,225 and $61,495 of capital
loss carryforwards, respectively. It is unlikely that a capital gains
distribution will be paid to shareholders of these Funds until net gains have
been realized in excess of such capital loss carryforwards or the carryforwards
expire.
(4) Fund Shares:
At November 30, 1995, 2 billion shares of one cent par value were authorized,
with 1.34 billion shares allocated to the various Funds. Proceeds from sales and
payments for redemptions on Fund shares as shown in the statement of changes in
net assets are represented by the following number of shares.
<TABLE>
<CAPTION>
Shares Shares
issued in issued in ex- Net
reinvestment change for increase
of dividends Shares net assets of (decrease)
Shares and dis- reac- other invest- in shares
Fund sold tributions quired ment cos. outstanding
- -------------- ------- ---------- ------ --------- -----------
<S> <C> <C> <C> <C> <C>
Year Ended 11/30/95
Emerg. Growth....... 2,765,224 2,794,856 4,369,276 ---- 1,190,804
Growth.............. 381,710 530,174 464,496 ---- 447,388
World............... 1,216,644 61,344 1,110,080 ---- 167,908
Common Stock........ 2,253,613 1,533,936 5,212,198 1,761,838 337,189
Balanced............ 2,333,343 564,931 3,386,737 273,807 (214,656)
Bond................ 3,095,605 800,012 6,008,278 5,126,048 3,013,387
Tax-Free............ 1,503,210 275,430 2,099,049 343,701 23,292
N.Y. Tax-Free*...... 86,231 12,949 158,731 514,574 455,023
Government.......... 1,215,813 533,270 2,479,497 ---- (730,414)
Short-Int. Gov't.*.. 2,233,440 70,060 994,380 1,578,443 2,887,563
U.S. Treas.......... 150,294,330 3,499,174 148,430,713 ---- 5,362,791
Year Ended 11/30/94
Emerg. Growth....... 2,179,858 3,683,106 5,176,506 ---- 686,458
Growth.............. 361,258 82,856 623,016 ---- (178,902)
World............... 2,545,798 9,966 684,762 ---- 1,871,002
Common Stock........ 2,190,571 655,621 3,441,746 ---- (595,554)
Balanced............ 4,172,036 617,335 3,745,672 ---- 1,043,699
Bond................ 4,410,146 1,213,307 3,945,643 ---- 1,677,810
Tax-Free............ 1,840,783 360,663 2,219,247 ---- (17,801)
Government.......... 2,211,868 693,121 4,579,345 ---- (1,674,356)
U.S. Treas.......... 159,102,352 2,031,457 158,084,971 ---- 3,048,838
</TABLE>
*For the period March 27, 1995 to November 30, 1995.
(5) Post Retirement Benefits:
The Company provides certain health care and life insurance benefits to its
retirees. At November 30, 1995 the projected obligation for such benefits had
been accrued.
44
<PAGE>
(6) Business Combinations:
On March 27, 1995 the following Funds acquired seven funds of The Independence
Capital Group of Funds ("ICG") pursuant to a Plan of Reorganization approved by
ICG shareholders on March 10, 1995. The acquisition was accomplished by a tax-
free exchange, based on respective net asset values, as follows:
<TABLE>
<CAPTION>
Sentinel
ICG Sentinel Value of ICG ICG
Sentinel Merged Shares Shares Shares ICG Unrealized
Fund Fund Issued Issued Exchanged Value Appreciation
- -------------- ---------------- ---------- ----------- ----------- -------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Common Stock........ Tot. Ret. Growth 871,123 $ 25,653,997 2,289,320 $25,653,997 $ 3,547,083
Common Stock........ Opportunities 890,715 26,240,738 2,491,973 26,240,738 2,064,874
-----------
Common Stock Fund Total 51,894,735
-----------
Balanced............ Balanced 273,807 4,084,150 426,145 4,084,150 218,379
Bond................ Tot. Ret. Bond 5,126,048 31,075,198 3,219,052 31,075,198 532,802
Tax-Free Income..... Muncipal Bond 343,701 4,493,940 415,491 4,493,940 99,091
NY Tax-Free Inc..... NY Municipal Bond 514,574 5,759,369 514,574 5,759,369 118,593
Short-Inter. Gov't.. Short-Inter. Gov't. 1,578,443 15,218,556 1,578,443 15,218,556 36,677
</TABLE>
<TABLE>
<CAPTION>
ICG Sentinel
Accumulated Value
Sentinel Realized before Combined
Fund Loss Combination Value
- -------------- ----------- ------------- ----------
<S> <C> <C> <C>
Common Stock........ $0 - -
Common Stock........ (671,131) - -
------------ ------------
Common Stock Fund Total $898,684,833 $950,579,568
------------ ------------
Balanced............ (314,647) 239,745,703 243,829,853
Bond................ (2,264,261) 84,932,093 116,007,291
Tax-Free Income..... (18,067) 103,103,137 107,597,077
NY Tax-Free Inc..... (4,069) 0 5,759,369
Short-Inter. Gov't.. (1,151,557) 0 15,218,556
</TABLE>
45
<PAGE>
Sentinel Group Funds, Inc.
Financial Highlights
Selected per share data and ratios.
Selected data for a share of capital stock outstanding throughout each fiscal
period.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
Income from Investment Operations
- --------------------- ----------- --------------------------------------
Net Net realized
asset value Net and Total
at investment unrealized from
Fiscal beginning income gain(loss) on investment
Fund period of period (loss) investments operations
- --------------------- ----------- --------------------------------------
<S> <C> <C> <C> <C>
Sentinel Emerging Growth
9 Mo. to 11/30/93 (A) $ 6.49 $(0.06) $ 0.44 $ 0.38
Year Ended 11/30/94 6.87 (0.04) 0.18 0.14
11/30/95 5.53 0.02 0.56 0.58
- --------------------- ----------- --------------------------------------
Sentinel Growth
Year Ended 11/30/91 $ 14.06 $ 0.20 $ 1.93 $ 2.13
11/30/92 15.99 0.11 3.07 3.18
11/30/93 18.56 0.04 (0.28) (0.24)
11/30/94 17.51 0.05 (0.92) (0.87)
11/30/95 16.15 0.07 3.33 3.40
- --------------------- ----------- --------------------------------------
Sentinel World
9 Mo. to 11/30/93 (A) $ 9.56 $ 0.02 $ 2.28 $ 2.30
Year Ended 11/30/94 11.86 0.08 0.89 0.97
11/30/95 12.74 0.14 1.14 1.28
- --------------------- ----------- --------------------------------------
Sentinel Common Stock
Year Ended 11/30/91 $ 23.61 $ 0.90 $ 3.90 $ 4.80
11/30/92 26.78 0.90 3.44 4.34
11/30/93 29.71 0.79 1.66 2.45
11/31/94 29.63 0.83 (1.35) (0.52)
11/30/95 28.25 0.72 8.09 8.81
- --------------------- ----------- --------------------------------------
Sentinel Balanced
Year Ended 11/30/91 $ 12.58 $ 0.77 $ 1.37 $ 2.14
11/30/92 13.89 0.70 0.97 1.67
11/30/93 14.82 0.59 0.80 1.39
11/30/94 15.27 0.58 (1.12) (0.54)
11/30/95 14.08 0.58 2.78 3.36
- --------------------- ----------- --------------------------------------
Sentinel Bond
Year Ended 11/30/91 $ 6.03 $ 0.50 $ 0.40 $ 0.90
11/30/92 6.43 0.46 0.13 0.59
11/30/93 6.56 0.41 0.46 0.87
11/30/94 6.90 0.39 (0.70) (0.31)
11/30/95 5.85 0.42 0.64 1.06
- --------------------- ----------- --------------------------------------
Sentinel Tax-Free Income
Year Ended 11/30/91 $ 12.26 $ 0.79 $ 0.42 $ 1.21
11/30/92 12.68 0.76 0.47 1.23
11/30/93 13.13 0.73 0.79 1.52
11/30/94 13.81 0.68 (1.34) (0.66)
11/30/95 12.35 0.67 1.27 1.94
- --------------------- ----------- --------------------------------------
Sentinel New York Tax-Free Income
8 Mo. to 11/30/95 (B) $ 11.19 $ 0.36 $ 0.53 $ 0.89
- --------------------- ----------- --------------------------------------
Sentinel Government Securities
Year Ended 11/30/91 $ 9.54 $ 0.74 $ 0.50 $ 1.24
11/30/92 10.04 0.70 0.14 0.84
11/30/93 10.18 0.62 0.42 1.04
11/30/94 10.45 0.59 (1.04) (0.45)
11/30/95 9.31 0.63 0.99 1.62
- --------------------- ----------- --------------------------------------
Sentinel Short-Intermediate Government
8 Mo. to 11/30/95 (B) $ 9.64 $ 0.40 $ 0.20 $ 0.60
- --------------------- ----------- --------------------------------------
Sentinel U.S. Treasury Money Market
9 Mo. to 11/30/93 (A) $ 1.00 $ 0.02 $ 0.00 $ 0.02
Year Ended 11/30/94 1.00 0.03 0.00 0.03
11/30/95 1.00 0.05 0.00 0.05
- --------------------- ----------- --------------------------------------
<CAPTION>
Less Distributions
- --------------------- ----------------------------------------- ------------------------
Distributions Net
Dividends from asset value
from net realized at Total
Fiscal investment gains on Total end of return(C)
Fund period income investments distributions period (%)
- --------------------- ----------------------------------------- ------------------------
<S> <C> <C> <C> <C> <C>
Sentinel Emerging Growth
9 Mo. to 11/30/93 (A) - - - $ 6.87 5.9++
Year Ended 11/30/94 - $1.48 $1.48 5.53 2.0
11/30/95 - 0.91 0.91 5.20 12.2
- --------------------- ----------------------------------------- ------------------------
Sentinel Growth
Year Ended 11/30/91 $0.20 - $0.20 $15.99 15.2
11/30/92 0.16 $0.45 0.61 18.56 20.5
11/30/93 0.04 0.77 0.81 17.51 (1.3)
11/30/94 0.03 0.46 0.49 16.15 (5.1)
11/30/95 0.05 2.57 2.62 16.93 24.9
- --------------------- ----------------------------------------- ------------------------
Sentinel World
9 Mo. to 11/30/93 (A) - - - $11.86 24.1++
Year Ended 11/30/94 $0.03 $0.06 $0.09 12.74 8.2
11/30/95 0.09 0.15 0.24 13.78 10.2
- --------------------- ----------------------------------------- ------------------------
Sentinel Common Stock
Year Ended 11/30/91 $0.93 $0.70 $1.63 $26.78 21.1
11/30/92 0.91 0.50 1.41 29.71 16.7
11/30/93 0.82 1.71 2.53 29.63 8.8
11/31/94 0.80 0.06 0.86 28.25 (1.8)
11/30/95 0.74 1.11 1.85 35.21 32.8
- --------------------- ----------------------------------------- ------------------------
Sentinel Balanced
Year Ended 11/30/91 $0.78 $0.05 $0.83 $13.89 17.5
11/30/92 0.71 0.03 0.74 14.82 12.4
11/30/93 0.58 0.36 0.94 15.27 9.7
11/30/94 0.56 0.09 0.65 14.08 (3.6)
11/30/95 0.59 0.01 0.60 16.84 24.4
- --------------------- ----------------------------------------- ------------------------
Sentinel Bond
Year Ended 11/30/91 $0.50 - $0.50 $ 6.43 15.6
11/30/92 0.46 - 0.46 6.56 9.5
11/30/93 0.41 $0.12 0.53 6.90 13.7
11/30/94 0.39 0.35 0.74 5.85 (4.9)
11/30/95 0.42 - 0.42 6.49 18.8
- --------------------- ----------------------------------------- ------------------------
Sentinel Tax-Free Income
Year Ended 11/30/91 $0.79 - $0.79 $12.68 10.2
11/30/92 0.76 $0.02 0.78 13.13 10.0
11/30/93 0.73 0.11 0.84 13.81 11.9
11/30/94 0.68 0.12 0.80 12.35 (5.1)
11/30/95 0.67 - 0.67 13.62 16.0
- --------------------- ----------------------------------------- ------------------------
Sentinel New York Tax-Free Income
8 Mo. to 11/30/95 (B) $0.36 - $0.36 $11.72 8.1++
- --------------------- ----------------------------------------- ------------------------
Sentinel Government Securities
Year Ended 11/30/91 $0.74 - $0.74 $10.04 13.5
11/30/92 0.70 - 0.70 10.18 8.6
11/30/93 0.60 $0.17 0.77 10.45 10.6
11/30/94 0.58 0.11 0.69 9.31 (4.5)
11/30/95 0.63 - 0.63 10.30 17.9
- --------------------- ----------------------------------------- ------------------------
Sentinel Short-Intermediate Government
8 Mo. to 11/30/95 (B) $0.40 - $0.40 $ 9.84 6.3++
- --------------------- ----------------------------------------- ------------------------
Sentinel U.S. Treasury Money Market
9 Mo. to 11/30/93 (A) $0.02 - $0.02 $ 1.00 1.7++
Year Ended 11/30/94 0.03 - 0.03 1.00 3.1
11/30/95 0.05 - 0.05 1.00 5.0
- --------------------- ----------------------------------------- ------------------------
</TABLE>
See Notes to Financial Statements.
46
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
Ratios/Supplemental Data
- ------------------------------------------------------------------------- ----------
Ratio of net Ratio of expenses to Ratio of net Net assets
expenses average net assets investment at end
to average before expense income to Portfolio of period
net assets reductions (D) avg. net turnover (000
(%) (%) assets (%) rate (%) omitted)
- ------------------------------------------------------------------------- ----------
<S> <C> <C> <C> <C>
1.52+ 1.52+ (1.01)+ 61 $ 105,176
1.58 1.58 (0.74) 46 88,420
1.56 1.60 0.26 79 89,321
- ------------------------------------------------------------------------- ----------
1.08 1.08 1.22 25 $ 55,598
1.05 1.05 0.63 28 63,664
1.31 1.31 0.22 12 57,833
1.43 1.43 0.30 58 50,447
1.50 1.54 0.42 84 60,446
- ------------------------------------------------------------------------- ----------
2.00+ 2.12+ 0.41+* 66 $ 16,872
1.58 1.58 0.62 30 41,970
1.56 1.63 0.79 32 47,702
- ------------------------------------------------------------------------- ----------
0.74 0.74 3.41 9 $ 620,179
0.72 0.72 3.13 5 688,309
0.93 0.93 2.68 9 897,836
1.02 1.02 2.82 15 839,335
1.09 1.10 2.29 22 1,057,944
- ------------------------------------------------------------------------- ----------
0.85 0.85 5.70 32 $ 90,580
0.81 0.81 4.86 38 120,700
1.14 1.14 3.88 72 229,632
1.21 1.21 3.97 66 226,328
1.27 1.29 3.77 110 267,103
- ------------------------------------------------------------------------- ----------
0.81 0.81 8.06 77 $ 43,447
0.78 0.78 7.03 83 58,106
0.92 0.92 5.98 147 83,387
0.98 0.98 6.34 133 80,487
0.99 1.03 6.81 237 108,755
- ------------------------------------------------------------------------- ----------
0.38 0.73 6.37** 29 $ 35,277
0.50 0.72 5.93** 48 55,538
0.64 0.90 5.41** 39 111,968
0.75 0.94 5.11** 92 99,935
0.90 0.99 5.06** 112 110,506
- ------------------------------------------------------------------------- ----------
1.22+ 1.29+ 4.60+ 32 $ 5,332
- ------------------------------------------------------------------------- ----------
0.77 0.77 7.52 14 $ 45,734
0.76 0.76 6.90 79 68,293
0.98 0.98 6.06 97 134,749
1.00 1.00 5.95 149 104,457
1.03 1.04 6.50 367 108,100
- ------------------------------------------------------------------------- ----------
1.00+ 1.38+ 6.07+*** 58 $ 28,417
- ------------------------------------------------------------------------- ----------
0.85+ 0.87+ 2.20+**** - $ 72,252
0.81 0.81 3.01 - 75,301
0.81 0.82 4.83 - 80,664
- ------------------------------------------------------------------------- ----------
</TABLE>
(A) Commenced operations March 1, 1993.
(B) Commenced operations March 27, 1995.
(C) 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 investment return.
(D) Expense reductions are comprised of the voluntary expense reimbursements
and include in 1995 the earnings credits as described in Notes (2) and
(1) H.
+ Annualized
++ Not annualized
* Ratio of net investment income to average net assets would have been .29%
in 1993, in the absence of a voluntary expense reimbursement.
** Ratio of net investment income to average net assets would have been 5.00%
in 1995, 4.92% in 1994, 5.14% in 1993, 5.71% in 1992, and 6.02% in 1991, in
the absence of a voluntary expense reimbursement.
*** Ratio of net investment income to average net assets would have been 5.76%
in 1995, in the absence of a voluntary expense reimbursement.
**** Ratio of net investment income to average net assets would have been 2.18%
in 1993, in the absence of a voluntary expense reimbursement.
47
<PAGE>
Report of Independent Accountants
To the Shareholders and Board of Directors
of Sentinel Group Funds, Inc.
In our opinion, the accompanying statements of assets and liabilities, including
the schedules of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Sentinel Emerging Growth Fund,
Sentinel Growth Fund, Sentinel World Fund, Sentinel Common Stock Fund, Sentinel
Balanced Fund, Sentinel Bond Fund, Sentinel Tax-Free Income Fund, Sentinel New
York Tax-Free Income Fund, Sentinel Government Securities Fund, Sentinel Short-
Intermediate Government Fund and Sentinel U.S. Treasury Money Market Fund
(constituting Sentinel Group Funds, Inc., hereafter referred to as the "Fund")
at November 30, 1995, the results of each of their operations, the changes in
each of their net assets, and the financial highlights for each of the periods
presented, in conformity with generally accepted accounting principles. These
financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at
November 30, 1995 by correspondence with the custodian and brokers and the
application of alternative auditing procedures where confirmations from brokers
were not received, provide a reasonable basis for the opinion expressed above.
Price Waterhouse LLP
1177 Avenue of the Americas
New York, New York
December 20, 1995
48
<PAGE>
[PHOTO OF KENNETH J. HART APPEARS HERE]
Kenneth J. Hart
Manager,
Sentinel Pennsylvania Tax-Free Trust
Sentinel Pennsylvania Tax-Free Trust seeks a high level of current income and
stability of principal through investments in obligations issued by the
Commonwealth of Pennsylvania and its agencies and authorities, which are exempt
from federal and Pennsylvania state income taxes.
Sentinel Pennsylvania Tax-Free Trust
For the fiscal year ended November 30, 1995, the Sentinel Pennsylvania Tax-Free
Trust had a total return of 14.8% compared to 18.9% for the Lehman Municipal
Bond Index. During this same period, the average Lipper Intermediate Municipal
Debt Fund returned 13.8%.
Investors in tax-exempt securities were rewarded with solid investment returns
throughout 1995. The pace of economic activity moderated while inflation
remained low, setting the stage for a powerful bond market rally. Municipal
interest rates declined 140 basis points as measured by the Bond Buyer Revenue
Bond Index. Trading activity focused on maintaining the Trust's income stream
and interest rate sensitivity in a declining interest rate environment. A
dramatic decrease in the cost of municipal bond insurance has significantly
increased its use on new debt issued by Pennsylvania authorities. The Trust's
quality profile reflects this trend as over 50% of the portfolio is covered by
bond insurance which is rated Aaa/AAA. The high quality of the Trust provides
shareholders with safety of principal and good liquidity in changing interest
rate environments.
We believe the fundamental outlook for the economy and interest rates remains
favorable for fixed income investors. The current level of interest rates,
combined with low inflation, provides investors a high real rate of interest,
which in the case of municipals is sheltered from federal income taxes.
Currently, municipal securities are inexpensive on a historical basis when
compared to Treasuries because of investors' concerns regarding the potential
for reforms of the federal income tax code. Many market professionals,
including ourselves, believe that a radical change to the tax code in the near
future is unlikely and, therefore, investors in municipal securities are being
fairly compensated in light of this uncertainty.
In this environment, we will continue to search out opportunities in the
Pennsylvania tax-exempt market. The Sentinel Pennsylvania Tax-Free Trust will
be positioned to protect capital and provide shareholders with a relatively high
level of current income exempt from Pennsylvania state and federal income
taxation.
/s/ Kenneth J. Hart
Kenneth J. Hart
- --------------------------------------------------------------------------------
Sentinel Pennsylvania Tax-Free Trust Performance
10/14/86 inception through 11/30/95
<TABLE>
<CAPTION>
Lipper Intermediate Sentinel
Municipal Lehman Municipal Pennsylvania
Fund Average Bond Index* Tax-Free Trust
<S> <C> <C> <C>
10/14/86 $ 9,500
Oct-86 $10,000 label $10,000 label $ 9,568
Oct-87 $11,236 $ 9,917 $ 9,061
Oct-88 $12,468 $11,361 $10,679
Oct-89 $13,258 $12,292 $11,464
Oct-90 $14,129 $13,194 $12,032
Oct-91 $15,578 $14,799 $13,370
Oct-92 $16,733 $16,041 $14,496
Oct-93 $18,735 $18,300 $16,207
Oct-94 $18,252 $17,502 $15,536
Oct-95 $20,041 $20,100 $17,240
Nov-95 $20,451 $20,434 $17,563
</TABLE>
*An unmanaged index of bonds reflecting average prices in the bond market.
Ending values are based upon an initial investment of $10,000 and the subsequent
reinvestment of all dividends and distributions. When comparing the Fund's
performance with that of the Index and Average shown above, you should note that
the Fund's performance reflects the maximum 5% sales charge and includes all
expenses and management fees, while that shown for the Index and Average does
not. Past performance is not predictive of future results.
- -------------------------------------------
Average Annual
Total Return
Through 11/30/95
<TABLE>
<CAPTION>
w/sales w/o sales
Period charge+ charge
<S> <C> <C>
1 Year 9.0% 14.8%
- -------------------------------------------
5 Years 6.3% 7.4%
- -------------------------------------------
Since
Inception* 6.4% 7.0%
- -------------------------------------------
</TABLE>
*10/14/86
+Sales charge applicable to year of initial investment.
49
<PAGE>
Sentinel Pennsylvania Tax-Free Trust
Investment in Securities
at November 30, 1995
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------
Principal Amount Value
(M=$1,000) (Note 1)
- ------------------------------------------------------------------------
<S> <C> <C>
BONDS 99.9%
PENNSYLVANIA 90.9%
Allegheny County Hospital
6.00%, 10/01/03 (FGIC) 1000M $ 1,089,650
Allegheny County G/O
5.375%, 06/01/13 (FGIC) 1175M 1,180,617
Allegheny County Institution G/O
7.30%, 04/01/09 (MBIA) 1000M 1,107,540
Armstrong County Hospital Auth.
6.25%, 06/01/13 (AMBAC) 1200M 1,265,364
Beaver County Industrial Dev. Auth.
7.75%, 09/01/24 500M 538,605
Berks County G/O
7.25%, 11/15/20 (FGIC) 1000M 1,146,310
Chester County Health & Welfare
5.50%, 05/15/15 1000M 976,630
Delaware County Coll Rev. Auth.
7.375%, 11/15/20 (MBIA) 500M 575,910
Erie Higher Educ. Building Auth.
7.85%, 09/15/19 500M 562,160
Lancaster County, Pa Hospital Auth.
5.50%, 11/15/14 (AMBAC) 1600M 1,588,768
Lehigh County G/O
5.125%, 11/15/11 (FGIC) 1500M 1,453,095
Lehigh County General Purpose
7.25%, 01/01/10 (FGIC) 1000M 1,082,390
9.00%, 07/01/15 500M 546,855
Lehigh County Industrial Dev. Auth.
6.40%, 11/01/21 (MBIA) 1000M 1,068,440
Lycoming County Hospital Auth.
5.25%, 11/15/15 (CLIC) 2000M 1,893,500
Montgomery County Higher Educ. & Health
8.30%, 06/01/10 500M 587,315
Pennsylvania Higher Educ. Facs.
7.20%, 07/01/19 (MBIA) 1000M 1,086,490
Pennsylvania Housing Finance Agency
8.00%, 04/01/16 1000M 1,040,410
Pennsylvania Intergovernmental CO-OP Auth.
5.75%, 06/15/15 (MBIA) 1000M 1,009,090
Pennsylvania State G/O
6.25%, 07/01/11 1500M 1,668,330
Pennsylvania State Industrial Dev. Auth.
5.80%, 07/01/09 (AMBAC) 1000M 1,063,870
Pennsylvania State Turnpike Commn.
7.20%, 12/01/17 (FGIC) 1000M 1,161,410
Pennsylvania Trafford School Dist.
5.90%, 05/01/11 (MBIA) 1000M 1,045,040
Philadephia Municipal Auth.
7.80%, 04/01/18 (FGIC) 45M 49,520
Philadephia Regional Port. Auth.
7.125%, 08/01/10 (MBIA) 250M 279,490
7.15%, 08/01/20 (MBIA) 250M 279,752
Philadelphia School District
5.50%, 09/01/25 (AMBAC) 1500M 1,480,380
Philadelphia Water & Waste
7.50%, 08/01/10 500M 583,265
6.25%, 08/01/11 (MBIA) 1000M 1,110,300
6.25%, 08/01/12 (MBIA) 500M 552,660
5.00%, 06/15/19 (MBIA) 1000M 926,970
5.25%, 06/15/23 (MBIA) 1000M 956,540
Scranton Lackawanna Health & Welfare
7.875%, 07/01/10 (MBIA) 500M 546,250
Westmoreland Cnty Municipal Auth.
0.00%, 08/15/18 (FGIC) 1000M 276,220
-----------
31,779,136
-----------
PUERTO RICO 9.0%
Puerto Rico Buildings Auth.
5.70%, 07/01/09 1000M 1,034,390
Puerto Rico Commonwealth
Hwy & Transport
5.50%, 07/01/13 (FSA) 1000M 1,027,260
Puerto Rico Electric Power Auth.
6.125%, 07/01/09 1000M 1,093,300
-----------
3,154,950
-----------
TOTAL BONDS
(Cost $32,472,816) 34,934,086
-----------
SHORT-TERM INVESTMENTS 3.4%
PNC PA Municipal Money Market Fund
(Cost $1,200,000) 1200M 1,200,000
-----------
TOTAL INVESTMENTS
(Cost $33,672,816)* 36,134,086
EXCESS OF LIABILITIES
OVER OTHER ASSETS (3.3%) (1,158,989)
-----------
NET ASSETS $34,975,097
===========
</TABLE>
- -------------------------------
* Also cost for federal income tax purposes. At November 30, 1995, net
unrealized appreciation for federal income tax purposes aggregated $2,461,270
all of which is related to appreciated securities.
The following abbreviations are used in portfolio descriptions:
(AMBAC) - Guaranteed by American Municipal Bond Association Corp.
(CLIC) - Guaranteed by Connie Lee Insurance Co.
(FGIC) - Guaranteed by Financial Guaranty Insurance Co.
(FSA) - Guaranteed by Financial Security Assurance Inc.
(MBIA) - Guaranteed by Municipal Bond Investors Assurance Corp.
G/O - General Obligation Bond
See Notes to Financial Statements.
50
<PAGE>
<TABLE>
<CAPTION>
SENTINEL PENNSYLVANIA TAX-FREE TRUST
STATEMENT OF ASSETS AND LIABILITIES
at November 30, 1995
- -----------------------------------------------------------------
<S> <C>
ASSETS
Investments at value $36,134,086
Cash and cash equivalents 48,019
Receivable for securities sold 997,645
Receivable for fund shares sold 66,882
Receivable for interest 588,469
Receivable from fund administrator 116,978
-----------
Total Assets 37,952,079
-----------
LIABILITIES
Payable for securities purchased 2,932,562
Accrued expenses 9,245
Management fee payable 15,654
Distribution fee payable 9,438
Fund service fee payable 10,083
-----------
Total Liabilities 2,976,982
-----------
Net Assets Applicable to Outstanding Shares $34,975,097
===========
Shares Outstanding 2,610,707
Net Asset Value Per Share $13.40
Maximum Offering Price Per Share $14.11
NET ASSETS REPRESENT
No par value shares of beneficial
interest; authorized - unlimited shares
Paid-in-capital $32,302,347
Accumulated undistributed net investment income 2,830
Accumulated net realized gain on investments 208,650
Unrealized appreciation of investments 2,461,270
-----------
NET ASSETS $34,975,097
===========
INVESTMENTS AT COST $33,672,816
===========
</TABLE>
<TABLE>
<CAPTION>
SENTINEL PENNSYLVANIA TAX-FREE TRUST
STATEMENT OF OPERATIONS
For the Year Ended November 30, 1995
- -----------------------------------------------------------------
<S> <C>
INVESTMENT INCOME
Income:
Interest $2,021,122
----------
Expenses:
Management advisory fee 182,103
Transfer agent and custodian 57,678
Distribution expense 66,219
Accounting services 84,000
Professional fees 20,250
Reports and notices to shareholders 3,239
Trustees' fees and expenses 27,430
Other 8,759
----------
Total Expenses 449,678
Expense Reimbursement (116,978)
Expense Offset (12,678)
----------
Net Expenses 320,022
----------
NET INVESTMENT INCOME 1,701,100
----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Realized gain on sales of investments: 722,772
Net change in unrealized appreciation 2,109,486
----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS 2,832,258
----------
NET INCREASE IN NET ASSETS FROM OPERATIONS $4,533,358
==========
</TABLE>
See Notes to Financial Statements.
51
<PAGE>
SENTINEL PENNSYLVANIA TAX-FREE TRUST
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended Year Ended
11/30/95 11/30/94
----------- -----------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income $ 1,701,100 $ 1,602,490
Net realized gain (loss) on sales of investments 722,772 (115,394)
Net change in unrealized appreciation (depreciation) 2,109,486 (3,128,199)
----------- -----------
Net increase (decrease) in net assets from operations 4,533,358 (1,641,103)
----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS
From net investment income (1,698,270) (1,602,490)
From paid-in capital - (7,662)
----------- -----------
(1,698,270) (1,610,152)
----------- -----------
FROM CAPITAL SHARE TRANSACTIONS
Net proceeds from sales of shares 3,128,263 2,754,234
Net asset value of shares issued in reinvestment
of dividends and distributions 1,157,477 1,077,466
----------- -----------
4,285,740 3,831,700
Less: Payments for shares reacquired (3,317,531) (3,856,155)
----------- -----------
Increase (decrease) in net assets from capital
share transactions 968,209 (24,455)
----------- -----------
TOTAL INCREASE (DECREASE) IN NET ASSETS FOR PERIOD 3,803,297 (3,275,710)
Net Assets: Beginning of period 31,171,800 34,447,510
----------- -----------
Net Assets: End of period $34,975,097 $31,171,800
=========== ===========
Undistributed Net Investment Income
at end of Period $ 2,830 $ -
=========== ===========
</TABLE>
See Notes to Financial Statements.
52
<PAGE>
Notes to Financial Statements
(1) Significant Accounting Policies:
Sentinel Pennsylvania Tax-Free Trust (the "Trust") is registered under the
Investment Company Act of 1940, as amended, as a non-diversified, open-end
management investment company. The following is a summary of significant
accounting policies followed by the Trust.
A. Security Valuation: Investments in securities are valued on the basis of
valuations provided by an independent pricing organization. The independent
pricing organization values the investments, taking into consideration
characteristics of the securities, values of similar securities that trade on a
regular basis, and other relevant market data. Short-term tax-free notes are
stated at cost, which approximates market value.
B. Securities Transactions and Related Investment Income: Securities
transactions are accounted for on the date the securities are purchased or sold
(trade date). Interest income is recorded on the accrual basis and premiums are
amortized. Cost of investments sold is determined on the basis of identified
cost for both financial reporting and income tax purposes. The Trust invests in
debt instruments of municipal issuers whose ability to meet their obligations
may be affected by economic developments in the State of Pennsylvania.
C. Federal Income Taxes: It is the Trust's policy to continue to meet the
requirements of the Internal Revenue Code applicable to regulated investment
companies. The Trust intends to distribute all of its taxable income to its
shareholders; therefore, no federal excise tax or income tax provision is
required.
D. Other: Earnings credits are received from the custodian and dividend paying
agent on cash balances and are reflected in the statement of operations as an
expense offset.
(2) Distributions:
Realized gains from securities transactions, if any, will be distributed to
shareholders prior to the end of each calendar year. At November 30, 1995 the
Trust did not have any capital loss carryforwards for Federal income tax
purposes. During the year ended November 30, 1995, the Trust utilized $514,122
of capital loss carryforwards.
Dividends from net investment income are declared and paid monthly and recorded
on the ex-dividend date. Income distributions and capital gain distributions are
determined in accordance with federal income tax regulations.
(3) Trust Shares:
Transactions in Trust shares were as follows:
<TABLE>
<CAPTION>
Year Year
Ended Ended
11/30/95 11/30/94
-------- --------
<S> <C> <C>
Shares sold..................................... 241,675 211,024
Shares issued to stockholders in reinvestment
of net investment income........................ 89,664 82,835
-------- --------
331,339 293,859
Shares redeemed................................. (257,613) (295,562)
-------- --------
Net increase (decrease)......................... 73,726 (1,703)
======== ========
</TABLE>
(4) Investment Transactions:
Purchases and sales of securities other than short-term securities aggregated
$29,444,442 and $26,057,235, respectively, during the year ended November 30,
1995.
(5) Management Advisory Fee and Other Transactions with Affiliates:
Pursuant to the Investment Advisory Agreement (the "Agreement"), Sentinel
Advisors, Co., ("SAC"), a Vermont general partnership whose general partners are
Sentinel Advisors, Inc., an indirect wholly-owned subsidiary of National Life
Insurance Company ("National Life"), ProvidentMutual Management Co., Inc., an
affiliate of Provident Mutual Life Insurance Company of Philadelphia ("Provident
Mutual"), HTK of Delaware, Inc. ("HTK") an affiliate of The Penn Mutual Life
Insurance Company ("Penn Mutual") and Sentinel Management Company ("SMC"), a
Vermont general partnership whose general partners are affiliates of National
Life, Provident Mutual and Penn Mutual, provides general supervision of the
Trust's investments as well as certain administrative and related services. As
compensation in full for services rendered under its Agreement, the Trust pays
SAC a monthly fee determined as follows: 0.55% per annum on the first $50
million of average daily net assets; 0.50% per annum on the next $50 million of
such assets; and 0.45% per annum on such assets in excess of $100 million. The
Agreement provides that if certain expenses
53
<PAGE>
incurred by the Trust in any fiscal year exceed the expense limitations imposed
by any state's securities regulations, SAC will reimburse the Company for any
such excess. No reimbursement was required for the year.
Sentinel Financial Services Company ("SFSC"), a Vermont general partnership
whose general partners are National Life Investment Management Company, Inc., a
wholly-owned subsidiary of National Life, ProvidentMutual Financial Services,
Inc., an affiliate of Provident Mutual, HTK and SMC, is the principal
underwriter ("Distributor") of the Trust's shares. SFSC receives a sales charge
added to the net asset value received by the Trust on the sale of its shares.
This compensation is not an expense of the Trust and does not affect its
operating results. SFSC has advised the Trust that it received sales charges
aggregating $118,310 for the year ended November 30, 1995. The Trust is advised
that the total distribution charges retained by SFSC on the sale of shares
amounted to $1,558 after allowances of $7,160 to Equity Services, Inc., an
affiliate of National Life, $54,077 to PML Securities Company, an affiliate of
Provident Mutual, and $41,645 to other investment dealers. Allowances of $1,536
went to Hornor, Townsend & Kent, Inc. and $12,334 to Janney Montgomery Scott,
Inc., affiliates of Penn Mutual, for the eight months ended November 30, 1995.
Each trustee who is not an employee of the adviser or an affiliated company is
paid an annual fee of $2,500 plus $200 for each meeting of the Board of Trustees
attended. Such trustees are reimbursed for travel and other out-of-pocket
expenses incurred in attending such meetings.
Pursuant to the Fund Services Agreement with Sentinel Administrative Service
Company ("SASC"), a Vermont general partnership whose general partners are
Sentinel Administrative Service Corporation ("SAS Corp."), an indirect wholly-
owned subsidiary of National Life, SIGMA American Corp., an affiliate of
Provident Mutual, HTK and SMC, the Trust receives trust accounting and financial
administrative services, transfer agent services and investor services, all of
which are coordinated with other services which the Trust has contracted for
with outside providers. Total fees for the year ended November 30, 1995 were
$121,000.
Effective March 1, 1993 SASC has voluntarily agreed to refund its fee to the
extent necessary to prevent the overall aggregate expense ratio of the Trust and
Sentinel Group Funds, Inc. (excluding the Sentinel World Fund) from exceeding
1.30% of average daily net assets in any fiscal year. Sentinel Group Funds, Inc.
is a series fund with eleven portfolios and together with the Trust make up the
Sentinel Family of Funds. Although SASC has no present intention to do so, this
arrangement may be terminated at any time. Expenses for the year ended November
30, 1995 did not exceed 1.30% of its average daily net assets.
Effective March 27, 1995 thru May 14, 1995, SASC agreed to reimburse the Trust
for expenses in excess of an annual rate of 1.00%. Effective May 15, 1995, SASC
has agreed to reimburse the Trust for expenses in excess of an annual rate of
.75%. For the eight months ended November 30, 1995 the total amount reimbursable
was $116,978. This arrangement may be terminated at any time.
(6) Distribution Expenses:
On March 1, 1993, the Trust adopted a new distribution plan ("Plan") pursuant to
Rule 12b-1 under the 1940 Act. Under the Plan the Trust pays to the Distributor
a monthly fee at the maximum annual rate of .20% of average daily net assets.
Such fees will be used to reimburse the Distributor for expenses incurred in
connection with distribution and promotion of the shares of the Trust, including
salaries and expenses of the Distributor's wholesale sales force, home office
management and marketing personnel, expenses incurred by the Distributor for the
occupancy of its office space in Montpelier, Vermont, expenses incurred by the
Distributor with respect to equipment and supplies, expenses incurred for the
preparation, printing and distribution of sales literature used in connection
with the offering of such shares to the public, expenses incurred in
advertising, promotion and selling shares of such Trust to the public, expenses
incurred for the preparation, printing and distribution of the Prospectus and
Statement of Additional Information, any supplement thereto used in connection
with the offering of such Trust's shares to the public, or any reports and other
communications for the distribution to existing shareholders, and service fees
(deferred commissions) paid to securities dealers who have executed a selling
agreement with the Distributor. The Distributor will not be reimbursed for any
unreimbursed eligible expenses in any future year.
54
<PAGE>
SENTINEL PENNSYLVANIA TAX-FREE TRUST
FINANCIAL HIGHLIGHTS
Selected per share data and ratios
Selected data for a share of capital stock outstanding throughout each fiscal
period.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Year Eleven Year Ended
Ended Ended Months Ended -----------------------
11/30/95 11/30/94 11/30/93* 12/31/92 12/31/91
--------- --------- ------------ --------- ---------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning
of period $ 12.29 $ 13.57 $ 13.15 $ 12.74 $ 12.25
--------- --------- --------- --------- ---------
Income from Investment Operations
Net investment income 0.66 0.64 0.69 0.73 0.71
Net realized and unrealized
gain (loss) on investments 1.11 (1.28) 0.42 0.43 0.52
--------- --------- --------- --------- ---------
Total from investment operations 1.77 (0.64) 1.11 1.16 1.23
--------- --------- --------- --------- ---------
Less Distributions
Dividends from net investment income 0.66 0.64 0.69 0.75 0.74
--------- --------- --------- --------- ---------
Net asset value at end of period $ 13.40 $ 12.29 $ 13.57 $ 13.15 $ 12.74
========= ========= ========= ========= =========
Total Return (%)** 14.8 (4.9) 8.1++ 9.4 10.3
Ratios/Supplemental Data
Ratio of net expenses to average
net assets (%) 0.97 1.30 1.24+ 1.16 1.27
Ratio of expenses to average net assets
before expense reductions (%)*** 1.36 1.30 1.24+ 1.16 1.27
Ratio of net investment income to average
net assets (%) 5.14+++ 4.84 5.07+ 5.62 5.71
Portfolio turnover (%) 80 56 23 1 8
Net assets at end of period (000 omitted) $ 34,975 $ 31,172 $ 34,448 $ 33,669 $ 32,667
</TABLE>
* As of March 1, 1993 Sentinel Advisors Co. became the investment advisor to
the Trust.
** 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 investment return.
*** Expense reductions are comprised of the voluntary expense reimbursements and
include in 1995 the earnings credits as described in Notes (5) and (1) D.
+ Annualized
++ Not annualized
+++ Ratio of net investment income to average net assets would have been 4.78%
in 1995, in the absence of a voluntary expense reimbursement.
See Notes to Financial Statements.
55
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE SHAREHOLDERS AND BOARD OF TRUSTEES OF
SENTINEL PENNSYLVANIA TAX-FREE TRUST
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Sentinel Pennsylvania Tax-Free
Trust (the "Trust") at November 30, 1995, the results of its operations for the
year then ended, the changes in its net assets for the two years then ended, and
the financial highlights for each of the two years then ended and the eleven
months ended November 30, 1993, in conformity with generally accepted accounting
principles. These financial statements and financial highlights (hereafter
referred to as "financial statements") are the responsibility of the Trust's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these financial
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at November 30, 1995 by correspondence with the
custodian and brokers and the application of alternative auditing procedures
where confirmations from brokers were not received, provide a reasonable basis
for the opinion expressed above.
The financial highlights of the Trust for the years ended December 31, 1992 and
December 31, 1991 were audited by other independent accountants whose report
dated February 3, 1993 expressed an unqualified opinion on those financial
highlights.
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York
December 20, 1995
56
<PAGE>
Federal Tax Status of Dividends and Distributions
During the fiscal year ended November 30, 1995, the Sentinel Funds paid the
following dividends and distributions:
<TABLE>
<CAPTION>
Net Short-term Long-term
Investment Capital Capital
Income Gain Gain
- -------------------------- ---------- ---------- ---------
<S> <C> <C> <C>
Emerging Growth........... - - $ .90538
Growth.................... $.045 - 2.56774
World..................... .086 $.09350 .05814
Common Stock.............. .737 .00106 1.10579
Balanced.................. .591 - .00892
Bond...................... .423 - -
Tax-Free Income........... .666 - -
N.Y. Tax-Free Income...... .359 - -
Government Sec............ .626 - -
Short-Inter. Government... .398 - -
U.S. Treas. MM............ .048 - -
PA Tax-Free............... .663 - -
</TABLE>
Each of the long-term capital gain distributions has been designated as a
"capital gain dividend" under the Federal Internal Revenue Code. The December
1994, long-term capital gain was included on Form 1099-DIV for the 1994 calendar
year.
For corporate shareholders, the percentage of the total dividends from net
investment income from the fiscal year ended November 30, 1995 qualifying for
the 70% dividend received deduction available to corporations are as follows:
Sentinel Emerging Growth Fund 20%
Sentinel Growth Fund 96%
Sentinel Common Stock Fund 93%
Sentinel Balanced Fund 28%
In January 1996 you will be sent 1995 Form 1099-DIV from the Sentinel Funds. The
form will indicate the Federal income tax status of the dividends and capital
gains distributions paid to you by check or credited to your account in
additional shares during the calendar year 1995. The Internal Revenue Service
requires us to file this information, and it must be reported by you on your
Federal Income Tax Return for 1995. All of the dividends paid by the Sentinel
Tax-Free Income Fund, the Sentinel New York Tax-Free Income Fund and the
Sentinel Pennsylvania Tax-Free Trust from its net investment income is tax-
exempt for Federal income tax purposes.
Privileges, Plans and Services for Shareholders
Open Account - Unless another distribution option is elected, an Open Account is
automatically established for each new investor. In an Open Account, all income
dividends and any capital gains distributions are reinvested in additional
shares at net asset value and without charge.
Other Distribution Options - Upon written notice to Sentinel Administrative
Service Company, you may elect one of the following options:
1. Receive dividends in cash and reinvest any capital gains distributions in
additional shares of any of the Sentinel Funds at net asset value.
2. Receive both dividends and capital gains in cash.
3. Reinvest both dividends and capital gains in another Sentinel Fund at net
asset value.
Automatic Investment Plan - This service, provided without charge, enables you
to make regular investments of $50 or more by means of an automatic checking
account debiting service via the ACH (Automated Clearing House) network.
Information and the application necessary to establish this plan are included in
the prospectus. A separate folder and application are also available from
Sentinel Administrative Service Company, or from your investment dealer.
Systematic Withdrawal Plan - This plan enables you to receive a check once per
month, during any months of the year you specify, for a dollar amount that you
specify. Note that this plan is available only to those who own, or are
purchasing, at least $5,000 worth of shares of one or more of the Sentinel
Funds, except Sentinel U.S. Treasury Money Market Fund, as determined by the
current offering price. Payments may be made to you, your bank, or other payee
as requested on the application. Under the Systematic Withdrawal Plan, all
dividends and distributions are automatically reinvested at net asset value and
payments are made from the proceeds of redeemed shares.
Bond, Tax-Free Income, New York Tax-Free Income, Government Securities, Short-
Intermediate Government, U.S. Treasury Money Market and Pennsylvania Tax-Free
Fund Check Writing Service - This special feature of the Sentinel Bond Fund, the
Sentinel Tax-Free Income Fund, the Sentinel New York Tax-Free Income Fund, the
Sentinel Government Securities Fund, the Sentinel Short-Intermediate Government
Fund, the Sentinel U.S. Treasury Money Market Fund and the Sentinel Pennsylvania
Tax-Free Trust enables you to draw checks (minimum amount $500 except for the
57
<PAGE>
U.S. Treasury Money Market Fund which is $250) on your account through Investors
Fiduciary Trust Co. There is currently no fee for this service. Please note that
this service is not available to IRA, Keogh, 403(b) or other fiduciary accounts.
Information and applications are available by contacting Sentinel Funds Investor
Services at (800) 282-FUND (3863).
Exchange Privilege - The Exchange Privilege is designed to add flexibility to
your investment program by enabling you to exchange all or part of your shares
in one Sentinel Fund for shares of another Fund in the family without payment of
any additional sales charge. The exception to no additional sales charge is when
shares are exchanged from the U.S. Treasury Money Market Fund to another
Sentinel Fund, a sales charge will be imposed unless the assets in the U.S.
Treasury Money Market Fund were in another Sentinel Fund and were previously
subject to a sales charge. Shares being exchanged into another Fund must have a
value of at least $500 (the minimum investment required to open a new account)
unless you already have an account in that Fund. Shares being exchanged must
have been in the account a minimum of 15 calendar days (90 days in the case of
funds initially invested in the Sentinel Short-Intermediate Government Fund or
exchanged into such Fund from funds initially invested in the Sentinel U.S.
Treasury Money Market Fund). Account registrations must be identical. Exchanges
may be made by calling toll-free, (800) 282-FUND (3863), or by writing Sentinel
Funds, P. O. Box 1499, Montpelier, Vermont 05601-1499. Note that an exchange is
a taxable transaction for federal income tax purposes.
Reinstatement Privilege - A shareholder who redeems all or part of an account
may reinvest all or part of the redemption proceeds at the then current net
asset value if a written request to the Fund is received or postmarked within 90
days after the date of the redemption. Sentinel Short-Intermediate Government
Fund shareholders who have held their shares for 90 days or less, however, may
only use this reinstatement privilege to reinvest in the Short-Intermediate
Government Fund. In general, this privilege may be exercised only once by a
shareholder.
Telephone Redemption - Up to $1,000,000 in funds may be redeemed by telephone
upon completion of the appropriate section of the Application, or subsequent
submission of such, with proper signature guarantee. Under this service,
proceeds may either be sent to the address of record or a pre-designated bank. A
signature guarantee is required on any change in redemption instructions as well
as a 30 day waiting period for changes to become effective. To redeem shares by
telephone, you may call (800) 282-FUND (3863).
Tax-Deferred Retirement Plans - Shares of Sentinel Group Funds may be purchased
by all types of tax-deferred retirement plans, including self-employed
individuals and partnerships ("Keogh"), Individual Retirement Accounts ("IRA"),
Simplified Employee Pension Plans ("SEP-IRA"), 403(b) Plans (deferred
compensation arrangements for employees of public school systems and certain
non-profit organizations) and other corporate pension and profit-sharing plans.
Consult your tax advisor for details.
Please refer to the prospectus for complete details regarding these privileges,
plans and services.
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DIRECTORS/TRUSTEES AND OFFICERS
SENTINEL GROUP FUNDS, INC. AND
SENTINEL PENNSYLVANIA TAX-FREE TRUST
KENISTON P. MERRILL
Chairman and Chief Executive Officer
Executive Vice President,
National Life Insurance Company
JOSEPH M. ROB
President
Chairman and Chief Executive Officer,
Equity Services, Inc.
RICHARD J. BORDA
Director/Trustee
Former Vice Chairman,
National Life Insurance Company
DR. KALMAN J. COHEN
Director/Trustee
Distinguished Bank Research
Professor, Emeritus
The Fuqua School of Business,
Duke University
RICHARD D. FARMAN
Director/Trustee
President and Chief Operating Officer,
Pacific Enterprises
JOHN D. FEERICK
Director/Trustee
Dean, Fordham University
School of Law
RICHARD I. JOHANNESEN, JR.
Director/Trustee
Former Vice President and Manager -
Bond Market Research Department,
Salomon Brothers Inc.
ROBERT B. MATHIAS
Director/Trustee
Sports Consultant;
former U.S. Congressman
DEBORAH G. MILLER
Director
Vice President,
Digital Equipment Corporation
STANLEY R. REBER
Director/Trustee
Executive Vice President,
Provident Mutual
Life Insurance Company
SUSAN M. STERNE
Director/Trustee
President, Economic Analysis
Associates, Inc.
JOHN M. GRAB, JR.
Vice President
MARVIN ABER
Vice President and Treasurer
THOMAS P. MALONE
Assistant Treasurer
D. RUSSELL MORGAN
Secretary
INVESTMENT ADVISER
Sentinel Advisors Company
PRINCIPAL UNDERWRITER
Sentinel Financial Services Company
Counsel
Brown & Wood
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
CUSTODIAN AND DIVIDEND PAYING AGENT
Investors Fiduciary Trust Company
TRANSFER AGENT, SHAREHOLDER SERVICING AGENT AND ADMINISTRATOR
Sentinel Administrative Service Company
This report is authorized for distribution to prospective investors only when
preceded or accompanied by an effective prospectus.
59
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A BRIEF HISTORY
The Sentinel Family of Funds is one of America's oldest fund families. Its
largest member, Sentinel Group Funds, Inc., was originally incorporated as Group
Securities, Inc. in the state of Delaware on December 3, 1933. Designed as a
series type of investment company, its main objectives were to offer
shareholders the benefits of "group security investing" along with the ability
to invest in individual industries or industrial groups readily and
conveniently, each in the form of a single stock.
Shares of 17 individual classes of stock were first offered to the public at
$1.10 per share on January 12, 1934 - virtually at the bottom of the Great
Depression.
Following several additions and deletions, 21 classes of stock were maintained
for an extended period of time. Subsequent consolidations, mergers and name
changes combined the classes of stock into what are today the two original
remaining funds in Sentinel Group Funds, Inc., Sentinel Common Stock Fund and
Sentinel Balanced Fund. Sentinel Growth Fund and Sentinel Bond Fund were
organized by National Life Insurance Company in 1969 and merged into the
Sentinel Group in 1978. Two more additions, Sentinel Government Securities Fund
and Sentinel Tax-Free Income Fund, were introduced on September 2, 1986 and
October 1, 1990, respectively.
In May, 1981, Sentinel Cash Management Fund, Inc. was organized as a no-load
money market fund. The "Cash Fund" was also organized as a series fund, and was
designed to operate independently of Sentinel Group Funds, Inc., while at the
same time sharing the Group's management, distribution, transfer agent and other
servicing and administrative arrangements.
On March 1, 1993, National Life Insurance Company and Provident Mutual Life
Insurance Company of Philadelphia entered into a joint venture arrangement which
resulted in the merging of the nine ProvidentMutual Funds into the Sentinel
Family of Funds. With the merger, three new classes of stock were added to
Sentinel Group Funds, Inc., and a fourth new member of the broader Sentinel
Family of Funds was added. The three new members of Sentinel Group Funds, Inc.
are Sentinel Emerging Growth Fund, Sentinel World Fund and Sentinel U.S.
Treasury Money Market Fund. The fourth new member of the Sentinel Family of
Funds is Sentinel Pennsylvania Tax-Free Trust (the "Trust"). The Trust operates
as a separate investment company with respect to Sentinel Group Funds, Inc., but
shares management, distribution, fund accounting, transfer agent and other
arrangements with the Sentinel Group.
Also on March 1, 1993, Sentinel Cash Management Fund, Inc. was merged into the
Sentinel U.S. Treasury Money Market Fund.
On March 27, 1995, Penn Mutual Life Insurance Company joined National Life
Insurance Company and Provident Mutual Life Insurance Company in their mutual
fund operation. This resulted in the merging of seven funds of The Independence
Capital Group of Funds into Sentinel Group Funds, Inc., and the creation of two
new classes of stock - Sentinel New York Tax-Free Income Fund and Sentinel
Short-Intermediate Government Fund.
The twelve funds in the Sentinel Family of Funds, which includes the eleven
funds in Sentinel Group Funds, Inc., and the Sentinel Pennsylvania Tax-Free
Trust, now represent net assets of $2.0 billion which are managed on behalf of
approximately 99,500 individual, corporate and institutional shareholders
located across the country and around the world. Shares are distributed by
registered representatives and independent broker/dealers through Sentinel
Financial Services Company, an affiliate of the partnership between National
Life, Provident Mutual and Penn Mutual. Sentinel Advisors Company and Sentinel
Administrative Service Company, which are also affiliates of the partnership,
provide respective investment management and shareholder services to the funds.
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[LOGO OF SENTINEL FAMILY OF FUNDS APPEARS HERE]
SENTINEL FAMILY
OF FUNDS
Integrity Since 1934
Sentinel Emerging Growth Fund
Sentinel Growth Fund
Sentinel World Fund
Sentinel Common Stock Fund
Sentinel Balanced Fund
Sentinel Bond Fund
Sentinel Tax-Free Income Fund
Sentinel New York Tax-Free Income Fund
Sentinel Government Securities Fund
Sentinel Short-Intermediate Government Fund
Sentinel U.S. Treasury Money Market Fund
Sentinel Pennsylvania Tax-Free Trust
Distributed by
Sentinel Financial Services Company
National Life Drive
Montpelier, Vermont 05604
