<PAGE> 1
1933 Act File No. 2-34038
1940 Act File No. 811-1861
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ x ]
Pre-Effective Amendment No. [ ]
------
Post-Effective Amendment No. 35 [ x ]
------
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ x ]
Amendment No. 35
---
SENTRY FUND, INC.
- --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
1800 North Point Drive, Stevens Point, Wisconsin 54481
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices and Zip Code)
Telephone (715)346-6000
- --------------------------------------------------------------------------------
(Registrant's Telephone Number, Including Area Code)
John A. Stenger
Sentry Fund, Inc.
1800 North Point Drive
Stevens Point, Wisconsin 54481
- --------------------------------------------------------------------------------
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate box)
[ ] immediately upon filing pursuant to paragraph (b)
[X] on March 1, 1998, pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] on (date) pursuant to paragraph (a)(1)
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] on (date) pursuant to paragraph (a)(2) of Rule 485
If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective date
for a previously-filed post-effective amendment.
<PAGE> 2
SENTRY FUND, INC. CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
REGISTRATION STATEMENT PROSPECTUS REGISTRATION STATEMENT STATEMENT OF
Item No. Page Item No. ADDITIONAL
INFORMATION
- ---------------------- ----------- ---------------------- ------------
PAGE
----
PART A
------
<S> <C> <C> <C> <C>
1. Cover Page 1 20. Tax Status B-11, B-12
2. Synopsis 2 21. Underwriters B-9, B-10
3. Condensed Financial 22. Calculation of B-11
Information 3 Performance Data
4. General Description 23. Financial Statements B-13 - B-18
of Registrant 4
5. Management of the Fund 5
6. Capital Stock and Other
Securities 10
7. Purchase of Securities
Being Offered 6-8
8. Redemption or Repurchase 8-9
9. Legal Proceedings N
<CAPTION>
STATEMENT OF
ADDITIONAL
PART B INFORMATION PAGE
------ ----------------
<S> <C>
10. Cover Page B-1
11. Table of Contents B-2
12. General Information N
and History
13. Investment Objectives B-3, B-4, B-5, B-6
and Policies
14. Management of the B-6, B-7
Registrant
15. Control Persons and B-7
Principal Holders of
Securities
16. Investment Advisory B-7, B-8
and Other Services
17. Brokerage Allocation B-8, B-9
18. Capital Stock and B-12
Other Securities
19. Purchase, Redemption B-10, B-11
and Pricing of Secur-
ities Being Offered
</TABLE>
N signifies omitted either because answer was in the negative or item
inapplicable.
<PAGE> 3
PART A
<PAGE> 4
INVESTMENT ADVISER
Sentry Investment Management, Inc.
1800 North Point Drive
Stevens Point, Wisconsin 54481
UNDERWRITER
Sentry Equity Services, Inc.
1800 North Point Drive
Stevens Point, Wisconsin 54481
CUSTODIAN
Citibank, N.A.
399 Park Avenue
New York, New York 10022
LEGAL COUNSEL
Godfrey & Kahn, S.C.
780 North Water Street
Milwaukee, Wisconsin 53202
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P.
203 North LaSalle Street
Chicago, Illinois 60601
SENTRY FUND, INC.
[PHOTO]
No sales charges
No redemption fees
No 12b-1 fees
PROSPECTUS
AND APPLICATION
MARCH 1, 1998
[SENTRY FUND, INC. LOGO]
30-43 2-98
<PAGE> 5
SENTRY FUND, INC.
1800 North Point Drive o Stevens Point, Wisconsin 54481
Telephone: (800) 533-7827
PROSPECTUS
MARCH 1, 1998
Sentry Fund, Inc. (the "Fund") is a diversified, open-end management investment
company with the primary investment objective of long-term capital growth. The
Fund is designed for investors who have an investment objective compatible with
that of the Fund. Portfolio assets will usually be invested in selected common
stocks or securities having the principal characteristics of, or are convertible
into, common stocks.
Shares of the Fund are offered to the public without a sales charge on a
continuous basis through representatives of the Fund's underwriter, Sentry
Equity Services, Inc.
This Prospectus concisely sets forth information about the Fund that a
prospective investor should know before investing. Please keep this Prospectus
for future reference.
A Statement of Additional Information dated March 1, 1998, incorporated herein
by reference and containing further information about the Fund, has been filed
with the Securities and Exchange Commission. A copy may be obtained at no charge
by calling or writing Sentry Equity Services, Inc., 1800 North Point Drive,
Stevens Point, WI 54481, (800) 533-7827.
This Prospectus does not constitute an offer to sell, or a solicitation of an
offer to buy, shares of the Fund in any jurisdiction in which such may not
lawfully be made.
---------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
1
<PAGE> 6
SUMMARY OF EXPENSES
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases.................... None
Maximum Sales Load Imposed on Reinvested Dividends......... None
Deferred Sales Load........................................ None
Redemption Fees............................................ None
Exchange Fees.............................................. None
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
Management Fees............................................ .75%
12b-1 Fees................................................. None
Other Operating Expenses................................... .08%
----
Total Fund Operating Expenses.............................. .83%
EXAMPLE
The following example illustrates the expenses an investor would pay on a $1,000
investment assuming (1) 5% annual return and (2) redemption at the end of each
time period. As noted in the table above, the Fund does not charge a redemption
fee.
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
$9 $27 $47 $105
The purpose of the preceding table is to assist the investor in understanding
the various costs and expenses that an investor in the Fund will bear directly
or indirectly. The example contained in the table should not be considered a
representation of past or future expenses, and actual expenses may be greater or
less than those shown. The example assumes a 5% annual rate of return pursuant
to the requirements of the Securities and Exchange Commission and is not
intended to be representative of past or future performance of the Fund.
The expenses reflected in the table are based upon expenses incurred during the
fiscal year ended October 31, 1997. For more information concerning expenses,
see "Management of the Fund."
2
<PAGE> 7
FINANCIAL HIGHLIGHTS
The following annual financial highlights for the Fund have been audited by
Coopers & Lybrand L.L.P., independent accountant. The auditor's report is
contained in the Fund's Statement of Additional Information, a copy of which is
available by writing to or calling Sentry Equity Services, Inc., 1800 North
Point Drive, Stevens Point, Wisconsin, 54481, (800) 533-7827. The financial
highlights should be read in conjunction with the Fund's financial statements
and related notes included in the Fund's Annual Report. Additional information
about the Fund's performance is contained in the Fund's Annual Report, which may
be obtained without charge by calling or writing Sentry Equity Services, Inc.,
at the above address or toll-free number. The following table presents
information relating to a share of common stock of the Fund outstanding for the
entire period.
<TABLE>
<CAPTION>
Year Ended October 31
---------------------------------------------------------------
1997 1996 1995 1994 1993
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $ 18.19 $ 16.29 $ 15.39 $ 15.93 $ 15.17
-------- -------- -------- -------- --------
Income From Investment Operations
- ---------------------------------
Net Investment Income 0.13 0.17 0.18 0.18 0.23
Net Realized and Unrealized Gains
(Losses) on Investments 6.70 3.01 1.65 0.53 1.12
-------- -------- -------- -------- --------
Total from Investment Operations 6.83 3.18 1.83 0.71 1.35
Less Distributions
- ------------------
Dividends From Net
Investment Income (0.16) (0.17) (0.17) (0.22) (0.23)
Distributions From Net
Realized Gains (.91) (1.11) (0.76) (1.03) (0.36)
-------- -------- -------- -------- --------
Total Distributions (1.07) (1.28) (0.93) (1.25) (0.59)
Net Asset Value, End of Period $ 23.95 $ 18.19 $ 16.29 $ 15.39 $ 15.93
======== ======== ======== ======== ========
Total Return 39.23% 20.60% 12.97% 4.86% 9.17%
Ratios/Supplemental Data
- ------------------------
Net Assets, End of Period
(in Thousands) $118,278 $ 97,154 $ 84,374 79,622 $ 76,315
Ratio of Expenses to
Average Net Assets 0.83% 0.84% 0.86% 0.86% 0.87%
Ratio of Net Investment Income
to Average Net Assets 0.61% 0.95% 1.17% 1.19% 1.48%
Portfolio Turnover Rate 40.75% 28.28% 26.54% 16.31% 22.34%
Average Commission Rate* $ .04 $ .03
<CAPTION>
Year Ended October 31
---------------------------------------------------------------
1992 1991 1990 1989 1988
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $ 15.34 $ 12.04 $ 13.72 $ 11.78 $ 11.97
-------- -------- -------- -------- --------
Income From Investment Operations
- ---------------------------------
Net Investment Income 0.29 0.36 0.36 0.37 0.22
Net Realized and Unrealized Gains
(Losses) on Investments 1.03 3.95 (0.92) 2.13 1.29
-------- -------- -------- -------- --------
Total from Investment Operations 1.32 4.31 (0.56) 2.50 1.51
Less Distributions
- ------------------
Dividends From Net
Investment Income (0.35) (0.36) (0.39) (0.26) (0.23)
Distributions From Net
Realized Gains (1.14) (0.65) (0.73) (0.30) (1.47)
-------- -------- -------- -------- --------
Total Distributions (1.49) (1.01) (1.12) (0.56) (1.70)
Net Asset Value, End of Period $ 15.17 $ 15.34 $ 12.04 $ 13.72 $ 11.78
======== ======== ======== ======== ========
Total Return 9.09% 37.59% - 4.59% 22.18% 16.09%
Ratios/Supplemental Data
- ------------------------
Net Assets, End of Period
(in Thousands) $ 69,454 $ 60,931 $ 43,866 $ 46,277 $ 41,758
Ratio of Expenses to
Average Net Assets 0.88% 0.84% 0.69% 0.65% 0.66%
Ratio of Net Investment Income
to Average Net Assets 1.95% 2.56% 2.84% 2.90% 1.85%
Portfolio Turnover Rate 12.58% 2.53% 29.85% 14.56% 19.41%
Average Commission Rate*
</TABLE>
*Disclosure required, effective for periods beginning after September 1, 1995.
3
<PAGE> 8
THE FUND
Sentry Fund, Inc. (the "Fund") is a corporation organized under the laws of
Maryland on May 9, 1969. It is a no-load, diversified, open-end management
investment company, commonly called a "mutual fund." It combines amounts
invested by its shareholders who have similar investment goals, and in turn
invests those amounts by purchasing securities of companies selected by its
investment adviser from a number of different industries.
THE FUND'S INVESTMENT POLICY
Investment Objectives
The primary investment objective of the Fund is to seek long-term capital
growth. Income considerations are secondary to the objective of capital
appreciation in the selection of portfolio investments. The Fund's investment
objective may be changed by vote of the Board of Directors; however, the Fund
expects that the objective would not be changed without the affirmative vote of
a majority of the outstanding voting securities of the Fund. The Fund intends to
diversify its investments among a number of different industries rather than
concentrate in a particular industry or group of industries. However, the Fund's
emphasis is on a continuing, careful selection of industries and securities of
companies within those industries which are thought by the Fund's investment
adviser to have good potential for growth rather than upon wide diversification.
Diversification does not eliminate the risks inherent in any equity investment.
The Fund invests primarily, and under normal market conditions expects to invest
most of its assets, in common stocks and securities convertible into common
stock (or securities with attached rights or warrants to purchase common stock),
which the Fund's investment adviser believes to offer favorable long-term growth
prospects. The Fund may also, from time to time, invest in bonds or preferred
stocks when the Fund's investment adviser believes it consistent with the Fund's
investment objective. If the Fund's investment adviser believes that economic or
market conditions warrant a defensive portfolio, the Fund may also invest all or
a substantial portion of its assets in cash and bonds, preferred stocks or other
fixed income obligations and short-term obligations. Fixed income securities
purchased by the Fund will primarily be rated investment-grade or determined to
be comparable by the Fund's investment adviser.
Restrictions
The Fund may borrow money but only from banks as a temporary measure for
extraordinary or emergency purposes and then not in excess of the lesser of 5%
of the current value of the Fund's total assets or 10% of the Fund's gross
assets taken at cost. The Fund will not borrow to increase income (leveraging)
and, therefore, will not make any subsequent investments while loans greater
than 5% of the Fund's assets are outstanding.
The Fund will not invest more than 25% of the current value of its total assets
in a particular industry or group of industries.
The Fund will not invest more than 5% of the current value of its total assets
in the securities of any one issuer (other than United States government
securities) or purchase more than 10% of the outstanding voting securities of
any one class of any one issuer.
The Fund has adopted certain other investment restrictions which are presented
in the Statement of Additional Information and which together with the
investment restrictions outlined above cannot be changed without approval by the
holders of a majority of its outstanding voting shares.
The Fund has also adopted the following restriction which may be changed by the
Board of Directors of the Fund without shareholder approval. The Fund will not
invest in securities which are not readily saleable by the Fund, including
securities with legal or contractual restrictions on resale if, as a result
thereof, more than 10% of the Fund's total assets (taken at market value at time
of purchase) would be invested in such securities.
The Fund permits investment in securities issued by broker-dealers that execute
the Fund's portfolio
4
<PAGE> 9
brokerage transactions. The Fund will not invest more than 5% of the value of
its total assets in the securities of any one such issuer nor will the Fund own
more than 5% of a class of such an issuer's equity securities nor more than 10%
of the outstanding principal amount of such issuer's debt securities.
Risk
The Fund's investments are subject to market fluctuations and risks inherent in
all securities, and there can be no assurance that the Fund's investment
objective will be realized. The Fund may invest from time to time in small
companies or companies with little operating experience, and these investments
may be subject to greater-than-average risks. For more information, please see
the Statement of Additional Information.
MANAGEMENT OF THE FUND
The business and affairs of the Fund are managed under the direction of its
Board of Directors in accordance with the laws of the State of Maryland. Sentry
Investment Management, Inc. (the "Adviser"), the Fund's investment adviser,
manages and directs, subject to the review of the Fund's Board of Directors, the
investment and reinvestment of the Fund's assets including determining an
investment program for the Fund and placing orders for the purchase and sale of
securities for the Fund's portfolio. The Adviser is located at 1800 North Point
Drive, Stevens Point, Wisconsin, and is a wholly-owned subsidiary of Sentry
Insurance a Mutual Company ("Sentry Insurance"). The Adviser, which has been in
the business of rendering investment advice for over 22 years, also provides
investment management services to Sentry Insurance and other affiliated
companies.
Keith E. Ringberg, Senior Portfolio Manager, is primarily responsible for the
day-to-day management of the Fund's portfolio and has been employed by the
Adviser for the past 22 years. Mr. Ringberg has managed the Fund's portfolio for
the past 14 years.
During the fiscal year ended October 31, 1997, the Fund's expenses were .83% of
the Fund's average net assets. If the total expenses of the Fund (excluding
taxes, portfolio brokerage commissions and interest, but including the
investment advisory fee) exceed the sum of 11/2% of the first $30,000,000 and 1%
of the balance of the average daily net asset value of the Fund in any one
fiscal year, the Adviser will reimburse the Fund for such excess. This expense
limitation is taken into consideration with each payment of the management fee.
For the fiscal year ended October 31, 1997, the fee paid by the Fund to the
Adviser was .75% of the Fund's average net assets.
THE FUND'S UNDERWRITER AND
TRANSFER AGENT
Sentry Equity Services, Inc. ("Sentry Equity"), 1800 North Point Drive, Stevens
Point, Wisconsin, a wholly-owned subsidiary of Sentry Insurance, and therefore
affiliated with the Adviser and the Fund, acts as underwriter for the Fund
pursuant to an Underwriter Agreement (the "Agreement"). Sentry Equity, a member
of the National Association of Securities Dealers, Inc., is registered with the
Securities and Exchange Commission as a broker-dealer and is licensed as a
broker-dealer by various state authorities.
5
<PAGE> 10
The Agreement provides that Sentry Equity is to use its best efforts to offer to
the public on a continuous basis shares of the Fund through its sales agents.
Most sales agents also serve as insurance representatives of the Sentry
Insurance companies. Sales representatives receive a commission from Sentry
Equity of 1% on all sales of Fund shares.
Sentry Equity also serves the Fund under a separate Agency Agreement as Transfer
Agent, Dividend Disbursing Agent and Plan Agent, which includes the maintenance
of shareholder records. For these services, Sentry Equity is paid an annual fee
of $8.50 per account.
NET ASSET VALUE
Shares of the Fund are sold at the net asset value per share next determined
after receipt of the order by Sentry Fund, Inc. in Stevens Point, Wisconsin.
However, orders received by dealers or other financial services firms prior to
the close of trading on the New York Stock Exchange and received by the Fund
prior to the close of its business day will be confirmed at a price based on the
net asset value effective as of the close of the Exchange on that day.
The net asset value per share is computed as of the close of trading (generally,
4:00 p.m. eastern time) on the New York Stock Exchange each day on which the
Exchange is open for trading or on any other day on which there is a sufficient
degree of trading in the underlying assets of the Fund such that the Fund's net
asset value may be materially affected. The net asset value of the Fund's shares
is determined by dividing the value of its total assets, less its liabilities,
by the total number of shares outstanding. Securities for which market
quotations are not readily available, and other assets of the Fund, are valued
at fair value as determined in good faith by the Fund's Board of Directors.
Portfolio securities which are traded or listed on a national securities
exchange are valued at the last sales price thereof at the time of computation
or, if there has been no sale on that day, at the last bid price. Securities
traded on the over-the-counter market are valued at the mean between the last
quoted bid and asked prices at the time of computation, or in the case of
National Market Issues, the last sales price.
HOW TO PURCHASE SHARES
An investor may purchase shares of the Fund through any Sentry Equity
representative, affiliated dealer or directly from Sentry Equity's office at
1800 North Point Drive, Stevens Point, Wisconsin. The Fund has the right to
reject any application for Fund shares.
THE MINIMUM INITIAL INVESTMENT IS $500 ($200 IF THE PLANNED AUTOMATIC INVESTMENT
DRAFT PLAN OR PAYROLL DEDUCTION PLAN IS SELECTED) AND SHOULD ACCOMPANY THE
APPLICATION. SUBSEQUENT INVESTMENTS MAY BE MADE AT ANY TIME AND MUST BE AT LEAST
$50 ("Open Purchase Plan"). However, if shares are purchased as part of a
Periodic Purchase Plan and a regular schedule of payments totaling at least $240
per year is adopted, the minimum for subsequent purchases is $20. See the
Application in the center of this Prospectus.
Orders for less than $1,000 worth of shares and orders for a fixed dollar amount
of shares must be accompanied by payment. If full payment does not accompany any
other order, such payment must be received by Sentry Equity within seven days
following acceptance of the order by the Fund.
Orders which would result in the purchaser owning beneficially or of record more
than 4.9% of the Fund's shares will not be accepted unless the purchaser enters
into an agreement with the Fund designed to take into account the interests of
all shareholders. The Fund will redeem shares held in excess of 4.9% of the
outstanding shares of the Fund of shareholders, other than corporate affiliates
of Sentry Insurance, who do not enter into such agreements.
6
<PAGE> 11
FUND STOCK CERTIFICATES WILL NOT BE ISSUED UNLESS REQUESTED. Sentry Equity will
maintain an account for each shareholder that will record holdings of Fund
shares to three decimal places. Certificates representing full shares are
available without cost upon written request to Sentry Equity.
All distributions of investment income or net realized capital gains will be
paid in shares of the Fund which are added to each shareholder account at net
asset value. See "Distributions to Shareholders and Taxation." However,
participants in the Open Purchase Plan may elect on their Application or by
subsequent written notice to Sentry Equity to receive in cash either all of
their distributions or only those distributions representing investment income.
A written confirmation will be mailed to each shareholder each time a
transaction occurs which changes the number of shares owned. The confirmation
will give details of the transaction and state the number of shares owned before
and after such transaction. The charges for establishing and maintaining
shareholder accounts are paid by the Fund.
SPECIAL SERVICES FOR SHAREHOLDERS
The Fund offers the following privileges and services to shareholders.
Additional information about such services is available by contacting Sentry
Equity at (800) 533-7827. These services are subject to termination or
modification by the Fund.
Participation in any of the Fund's investment programs is entirely voluntary and
may be discontinued or converted to another plan by the shareholder at any time
without penalty.
Payroll Deduction
Employer-sponsored Payroll Deduction Plans are designed for investors who wish
to make purchases of Fund shares at regular intervals. A purchaser may enroll
under this plan by making an initial purchase of $200 or more and completing the
Fund Application.
For payments made under an employer-sponsored payroll deduction plan, the
minimum purchase is $10 per pay period. Purchases are entirely voluntary.
Planned Automatic Investment Draft Plan
Planned Automatic Investment Draft ("PAID") Plan is offered by Sentry Equity to
facilitate the purchase of Fund shares at regular intervals. Based on a
shareholder's authorization, a draft is drawn by Sentry Equity on the
shareholder's bank account each month and Fund shares are purchased
automatically. This assures that the purchase schedule selected by the
shareholder is maintained. There is no extra charge for this service. Contact
Sentry Equity for a Paid Plan Application.
Systematic Withdrawal Plan
The owner of $5,000 or more of the Fund's shares (which may not be in
certificate form) may provide for the payment from the owner's account of any
requested dollar amount ($50 minimum) to the owner or the owner's designated
payee quarterly. Monthly payments can be made only for those accounts of $10,000
or more. Ordinarily, sufficient shares will be redeemed from the shareholder's
account for the designated payment on the 20th day of the month. The check will
be mailed to the owner or the owner's designee within three business days
thereafter.
To establish a Systematic Withdrawal Plan, complete the appropriate section of
the Application.
Individual Retirement Accounts
The Fund offers three types of individual retirement accounts: the Traditional
(deductible) IRA, the Roth IRA, and the Education IRA.
Under a Traditional (deductible) IRA, earnings accumulate on a tax-deferred
basis on annual IRA contributions equal to the lesser of 100% of compensation
received during the year or $2,000 ($4,000 in the case of a spousal IRA provided
certain income requirements are met). The $2,000 deductible
7
<PAGE> 12
contribution limit is available only to (1) taxpayers who are not active
participants in certain qualified retirement plans, and (2) taxpayers who are
active participants in certain qualified plans but have adjusted gross income
below a specified level. Generally, a taxpayer is deemed an active participant
in a qualified retirement plan if, for any part of the plan's taxable year that
ends in the taxpayer's taxable year, such taxpayer or taxpayer's spouse is an
active participant in a qualified pension plan, a qualified profit sharing or
money purchase plan, a 403(b) annuity program, a simplified employee pension
plan or a government plan (other than plan maintained for state and local
employees under Section 457 of the Internal Revenue Code). A married taxpayer
filing a joint return who is an active participant in a qualified retirement
plan may make a deductible IRA contribution of up to $2,000 ($4,000 in the case
of a spouse IRA provided certain income requirements are met).
Under a Roth IRA, annual non-deductible contributions of $2,000 can be made (in
combination with a Traditional IRA, whether deductible or not), or, if lower,
100% of earned income. Spousal contributions can be made up to $2,000 annually
subject to certain income limitations. Distributions from a Roth IRA are
tax-free after age 591/2 if it has been held for more than five years.
Distributions before age 591/2 are tax- free if it has been held more than five
years and the owner dies, becomes disabled, or uses the proceeds for certain
purposes. Eligibility for a Roth IRA is subject to certain income limitations.
Under an Education IRA, parents who meet certain income eligibility requirements
can set up savings accounts for their children's post-secondary education.
Depending on the parents' income, the parents may be able to contribute up to
$500 annually for each child until the child turns 18. Although parents'
contributions to Education IRA accounts are after-tax contributions, all
earnings used to pay for the child's post-secondary education expenses are
tax-free. Earnings not used to pay for the child's post-secondary education
expenses are subject to income tax and an additional 10% penalty. Any money
remaining in an Education IRA when the child reaches age 30 must be distributed
or rolled over to an eligible family member to avoid certain taxes. Eligibility
for an Education IRA is subject to certain income limitations.
There are penalties for withdrawals from Traditional and Roth IRA accounts
before age 591/2. An investor considering any IRA should consult his or her tax
adviser with respect to applicable plan requirements, contribution limitations,
income limits for eligibility and tax aspects pertaining to him or her.
HOW SHARES MAY BE REDEEMED
Fund shares will be redeemed at the net asset value per share, subject to any
applicable income tax withholding requirements, next determined after receipt of
a properly executed redemption request. Written redemption requests received via
facsimile transmission will be processed, but funds will not be released to the
shareholder until the originally signed redemption request has been received by
Sentry Equity at its office in Stevens Point, Wisconsin. The redemption price of
shares may be more or less than the shareholder's cost, depending on the market
value of the securities owned by the Fund at the time of redemption. If shares
are not represented by stock certificates, a redemption request form available
through Sentry Equity, or a letter, may be used for the request. IF SHARES ARE
REPRESENTED BY STOCK CERTIFICATES, THE FORM ON THE BACK OF EACH CERTIFICATE MUST
BE USED.
Each redemption request and stock certificate must be signed exactly as the
account is registered. If the redemption request is from a qualified plan,
proper withholding and request for redemption forms must be completed. If the
account is owned jointly, both owners must sign. EACH SIGNATURE MUST BE
GUARANTEED BY A REGISTERED REPRESENTATIVE OF SENTRY EQUITY, A COMMERCIAL BANK,
TRUST COMPANY, MEMBER OF A STOCK EXCHANGE, SAVINGS AND LOAN ASSOCIATION OR
8
<PAGE> 13
SAVINGS BANK OR OTHER ELIGIBLE FINANCIAL INSTITUTION. The guarantee may be
waived by Sentry Equity on redemptions of $5,000 or less.
Under certain circumstances (such as corporate or fiduciary registrations)
Sentry Equity may require additional documents (such as inheritance tax waivers,
death certificates or corporate resolutions, etc.) before the proceeds of a
redemption can be paid.
Payment for shares redeemed and a confirmation will be mailed promptly, but not
later than three business days, after the above requirements have been met,
except that the Fund may suspend the right of redemption and the determination
of net asset value of its shares under the following unusual circumstances: when
the New York Stock Exchange is closed (other than weekends and holidays) or
trading is restricted; when an emergency exists, as determined by the Securities
and Exchange Commission, making disposal of portfolio securities or the
valuation of net assets not reasonably practicable; or during any period when
the Securities and Exchange Commission has by order permitted a suspension of
redemption for the protection of shareholders. In such event, redemption shall
be effected at the net asset value next determined after the suspension has been
terminated unless the shareholder has withdrawn the redemption request. In
addition, if the aggregate value of shares of a shareholder who has been a
shareholder for at least five years does not exceed $200, the Fund reserves the
right to close the account. Before taking such action, the Fund will provide at
least six months' written notice. The Fund also has the right to redeem Fund
shares in whole or in part with portfolio securities. For more information,
please consult the Statement of Additional Information.
DISTRIBUTIONS TO SHAREHOLDERS
AND TAXATION
It is the policy of the Fund to distribute substantially all of its net
investment income, if any, and all of its net realized capital gains, if any, at
least annually. Income may be minimal because of the Fund's primary investment
objective of long-term capital growth.
All such dividends or distributions will be reinvested in shares of the Fund on
the payable date at net asset value or, at the written request of a shareholder
participating in the Open Purchase Plan, will be paid to the shareholder in
cash. The Fund intends to declare dividends from net investment income payable
in June and December and to distribute annually any net realized capital gains
with the December dividend.
Any dividends that are declared in October, November or December to shareholders
of record as of a date in one of those months and paid during the following
January are "deemed" to have been received on December 31 of the calendar year
declared.
The Fund intends to continue to qualify as a regulated investment company under
the Internal Revenue Code. If so qualified, the Fund will not be subject to
federal income tax to the extent that its net investment income and net realized
capital gains are distributed to shareholders.
Distributions from the Fund representing net investment income or net short-term
capital gains of the Fund, whether received in shares or cash, will be taxable
to shareholders as ordinary income. Distributions from the Fund representing net
long-term capital gains of the Fund will be taxable to shareholders as a
long-term capital gain whether received in shares or cash and regardless of the
period the shareholder has held the shares. The maximum federal tax rate on
long-term capital gain dividends received by individual shareholders is 28%.
Long-term capital gain dividends received by corporate shareholders are taxed at
the same rate as ordinary income. A portion of the ordinary income dividends
received by corporate shareholders may be eligible for the dividends received
deduction. If a shareholder is exempt from Federal income tax, the shareholder
will not generally be taxed on amounts distributed by the Fund.
9
<PAGE> 14
A distribution received shortly after the purchase of shares reduces the net
asset value of the shares by the amount of the distribution and, although in
effect a return of capital, will be taxable to the shareholder.
The Fund is required by law to withhold 31% of taxable dividends and redemption
proceeds paid to certain shareholders who do not furnish a correct taxpayer
identification number (in the case of individuals, a social security number) and
in certain other circumstances.
The source and federal income tax status of all distributions will be reported
to shareholders annually. See the Statement of Additional Information.
CAPITALIZATION OF THE FUND AND
VOTING RIGHTS
Sentry Fund, Inc. has authorized capital of 10,000,000 shares of capital stock,
par value of $1 each. Each share is of the same class and has equal,
non-cumulative rights as to voting (with each full share entitled to one vote),
redemption, dividends and liquidation. Fund shares are fully-paid and
nonassessable upon their issuance and have no preemptive, conversion or exchange
rights, nor is there any liability of shareholders to further calls or
assessment.
Shareholder inquiries should be directed to the Fund at the telephone number or
address shown on page 1 of this Prospectus.
SENTRY INSURANCE
Sentry Insurance a Mutual Company ("Sentry Insurance") is a mutual insurance
company incorporated under the laws of the State of Wisconsin with headquarters
at 1800 North Point Drive, Stevens Point, Wisconsin. It owns a group of
insurance and related companies collectively known as the Sentry Group. These
companies include Sentry Life Insurance Company and Sentry Life Insurance
Company of New York. Sentry Insurance also owns Sentry Investment Management,
Inc., the Fund's investment adviser, and Sentry Equity Services, Inc., the
Fund's underwriter and transfer agent.
As of February 1, 1998, Sentry Insurance and its subsidiary, Sentry Life
Insurance Company, together owned approximately 21% of the Fund's outstanding
shares. Additionally, as of the same date, Bank One Wisconsin Trust Company,
N.A., as trustee of the Sentry 401(k) Plan, held and had the power to vote
approximately 37% of the Fund's outstanding shares on behalf of those employees
in the Sentry Group who are participants in the Sentry 401(k) Plan.
PERFORMANCE INFORMATION
From time to time, the Fund may quote average annual total return and total
return figures for the Fund's performance in advertisements and other materials
furnished to present and prospective shareholders. Each of these figures is
based on historical results and is not necessarily representative of the future
performance of the Fund. Average annual total return and total return figures
measure both the net income generated by, and the effect of any realized or
unrealized appreciation or depreciation of, the underlying investments in the
Fund for the period in question, assuming the reinvestment of all dividends
during the period. Thus, these figures reflect the change in the value of an
investment in the Fund during a specified period. Average annual total return
will be quoted for at least one, five, and ten-year periods ending on a recent
calendar quarter. Average annual total return figures are annualized and,
therefore, represent the average annual percentage change over the period in
question. Total return figures are not annualized and represent the aggregate
percentage or dollar value change in the value of a specified dollar amount
invested in the Fund's shares over the period in question. THE AVERAGE ANNUAL
TOTAL RETURN FIGURES FOR THE FUND FOR THE ONE, FIVE, AND TEN-YEAR PERIODS ENDED
OCTOBER 31, 1997, ARE 27.8%, 16.8% AND 16.0%, RESPECTIVELY. These figures, based
upon a $1,000 investment, do not reflect the 8% sales load which was imposed
prior to March 1, 1991.
10
<PAGE> 15
[CHART - WE DO NOT SEEM TO HAVE TEXT OR PLOT POINTS FOR IT]
<TABLE>
<CAPTION>
FISCAL PERIOD OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
ENDED 1970 1975 1980 1985 1990 1995 1997
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Value of Shares
Initially Acquired $ 11,677 $ 11,463 $ 23,037 $ 24,192 $ 24,622 $ 33,313 $ 48,978
- -------------------------------------------------------------------------------------------------------------------------
Value of Reinvested
Dividends 0 1,045 5,677 11,654 19,925 39,021 62,035
- -------------------------------------------------------------------------------------------------------------------------
Value of Reinvested
Capital Gains 0 1,121 3,272 14,407 38,074 88,051 158,312
- -------------------------------------------------------------------------------------------------------------------------
TOTAL VALUE 11,677 13,629 31,986 50,253 82,621 100,385 269,325
- -------------------------------------------------------------------------------------------------------------------------
TOTAL Cash Div. ReInv n/a 1,078 2,284 5,196 8,277 10,583 3,440
for the period
- -------------------------------------------------------------------------------------------------------------------------
TOTAL Cash C.G. ReInv
for the period n/a 1,487 716 9,890 21,999 31,679 20,670
- -------------------------------------------------------------------------------------------------------------------------
TOTAL INCOME DIVIDENDS $30,858
==========================================
TOTAL CAPITAL GAINS DIVIDENDS $86,441
==========================================
</TABLE>
11
<PAGE> 16
INSTITUTIONAL ACCOUNTS ONLY
Please execute the applicable section below (all blanks should be completed with
the requested information and inappropriate alternatives should be deleted or
marked out).
Corporation/Association
I, ________________________________________ Secretary of ______________________,
a (corporation) (unincorporated association) organized under the laws of _______
________________________________________________________________________________
(the "Organization"), certify that the following resolutions have been adopted
by the (board of directors) (trustees) (managing body) of said Organization and
are now in full force and effect:
"RESOLVED, that the Organization establish an account in Sentry Fund, Inc. (the
"Fund") and purchase shares in the Fund from time to time and the authorized
signers of this Organization may execute the Application for such account and
select the redemption privileges related to such account in accordance with the
Fund's prospectus, as amended from time to time;
RESOLVED, that any of the authorized signers, as indicated on the Application,
may act for the Organization in connection with the account and the Fund, Sentry
Equity Services, Inc., and their representatives are authorized to honor as
genuine and authorized all redemptions signed by said signers as certified to
the Fund by the Secretary of this Organization without inquiry; and
FURTHER RESOLVED, that these appointments and authorizations shall remain in
effect, and the Fund, Sentry Equity Services, Inc. and their representatives may
act thereon, until a written revocation or modification certified by the
Secretary of this Organization shall be delivered to Sentry Equity Services,
Inc."
I further certify that the signers listed on the Form are authorized to sign
redemptions and are now acting in the capacity listed and that the signatures of
said persons are genuine and authorized.
IN WITNESS WHEREOF, I have set my hand and the seal of this Organization
this ________day of ______________ , 19______.
(SEAL)
____________________
Secretary
13
<PAGE> 17
Partnership/Trust/Fiduciary/Non-Profit Organization
In connection with the establishment of an account in Sentry Fund, Inc. (the
"Fund") under the name ________________________________________________ , the
undersigned certify that they are all of the (partners)(trustees)(fiduciaries)
(representatives) under the (partnership agreement) (trust)(will)(court
order)(instrument) described as follows ________________________________________
________________________________________________________________________________
[give detailed description and dates] and certify that they have full power and
authority to establish an account with the Fund, to purchase shares and to
select the expedited redemption privileges in accordance with the Application.
The undersigned agree to be bound by the terms and conditions contained on the
Application and the Fund's prospectus, as amended from time to time. The
undersigned agree that any of the aforesaid persons are authorized to act for
the owner of the account. This certification shall remain in effect, and the
Fund, Sentry Equity Services, Inc. and their representatives may act in reliance
thereon until a revocation or modification thereof certified by the undersigned
or their successors is delivered to Sentry Equity Services, Inc. All
certifications and agreements herein are made jointly and severally.
Dated:_____________________________ By _______________________________
By ________________________________ By _______________________________
14
<PAGE> 18
PART B
<PAGE> 19
STATEMENT OF ADDITIONAL INFORMATION
SENTRY FUND, INC.
1800 North Point Drive
Stevens Point, WI 54481
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT THE FUND'S PROSPECTUS BUT
PROVIDES ADDITIONAL INFORMATION THAT SHOULD BE READ IN CONJUNCTION WITH THE
PROSPECTUS OF THE FUND DATED MARCH 1, 1998, WHICH IS INCORPORATED HEREIN BY
REFERENCE.
THE PROSPECTUS SETS FORTH CONCISELY INFORMATION THAT A PROSPECTIVE INVESTOR
OUGHT TO KNOW BEFORE INVESTING. FOR A COPY OF THE PROSPECTUS, CALL OR WRITE
SENTRY EQUITY SERVICES, INC., 1800 NORTH POINT DRIVE, STEVENS POINT, WI 54481,
(800) 533-7827.
Date: March 1, 1998
<PAGE> 20
TABLE OF CONTENTS
Page Page in
Herein Prospectus
------ ----------
General Information and History . . . . . . . . . . . . B-3 4
Investment Objectives and Policies . . . . . . . . . . B-3 4
Directors and Executive Officers . . . . . . . . . . . B-6 --
Principal Shareholders . . . . . . . . . . . . . . B-7 --
Investment Adviser and Other Services . . . . . . . . . B-7 5
Brokerage Practices . . . . . . . . . . . . . . B-8 --
The Fund's Underwriter and Transfer Agent . . . . . . . B-9 5
Computation of Net Asset Value . . . . . . . . . . . . B-10 6
Share Redemption . . . . . . . . . . . . . . B-10 8
Performance Information . . . . . . . . . . . . . . B-11 10
Tax Status and Taxation . . . . . . . . . . . . . . B-11 9
Capitalization of the Fund . . . . . . . . . . . . . . B-12 10
Custodian . . . . . . . . . . . . . . B-12 --
Independent Accountant . . . . . . . . . . . . . . B-12 --
Portfolio of Securities and Financial Statements . . . B-14 --
Independent Accountant's Report . . . . . . . . . . . . B-19 --
B-2
<PAGE> 21
GENERAL INFORMATION AND HISTORY
Sentry Fund, Inc. is a no-load, diversified, open-end, management investment
company, organized under the laws of Maryland on May 9, 1969.
INVESTMENT OBJECTIVES AND POLICIES
The following information supplements the discussion of the Fund's investment
objectives and policies found in the Prospectus.
Investment Restrictions
It is the Fund's policy not to:
- -- Borrow money except from banks as a temporary measure for
extraordinary or emergency purposes and then not in excess of the
lesser of 5% of the current value of the Fund's total assets or 10%
of the Fund's gross assets taken at cost;
- -- Pledge or mortgage assets of the Fund with a current value in excess
of 15% of the value of the Fund's net assets taken at cost;
- -- Invest more than 25% of the current value of its total assets in a
particular industry or group of industries;
- -- Underwrite securities of other issuers;
- -- Buy and sell commodities or commodity contracts;
- -- Buy and sell puts, calls, straddles, spreads or options;
- -- Buy and sell real estate or other interests in real estate which are
not readily convertible into cash;
- -- Make loans to other persons except through the purchase of a portion
of a publicly distributed issue of bonds or other marketable
obligations;
- -- Invest more than 5% of the current value of its total assets in the
securities of any one issuer (other than United States government
securities) or purchase more than 10% of the outstanding voting
securities of any one class of any one issuer;
- -- Invest in companies for the purpose of exercising control or
influencing management;
- -- Buy securities of any company with a record of less than three years'
continuous operation (including that of predecessors) if such
purchase would cause the current value of the Fund's investments in
all such companies to exceed 5% of the current value of the Fund's
total assets;
- -- Buy or retain securities issued by any other investment company,
except that securities of closed-end investment companies may be
purchased as part of a plan of merger or through a broker who is paid
no more than the usual or customary brokerage commissions;
- -- Buy or retain securities of any issuer if those officers and directors
of the Fund or its investment adviser, who own individually more than
1/2% of the securities of such issuer, together own beneficially more
than 5% of such securities;
- -- Buy securities on margin or sell securities short;
- -- Participate on a joint or a joint and several basis in any trading
account in securities;
- -- Buy securities if a registration statement would have to be filed
under the Securities Act of 1933 in order to sell the securities to
the public at the time of purchase (such securities are frequently
called "letter" or "restricted" stock); and
- -- Invest more than 10% of the value of the Fund's total assets in
securities of foreign issuers.
B-3
<PAGE> 22
Changes in any of the above restrictions require the approval of the holders of
the lesser of (1) 67% or more of the voting securities present at a meeting if
the holders of more than 50% of the outstanding voting securities of the Fund
are present or represented by proxy, or (2) more than 50% of the outstanding
voting securities of the Fund.
In addition, the Fund maintains the following investment restrictions which may
be changed by the Board of Directors without shareholder approval:
- -- No investment company shall invest more than 5% of its total assets in
securities of unseasoned issuers, including their predecessors, which
have been in operation for less than three years, and equity
securities of issuers which are not readily marketable.
- -- No investment company shall invest any part of its total assets in
oil, gas or other mineral exploration, development or lease programs.
- -- No investment company shall pledge, mortgage or hypothecate its assets
in excess of 2% of its net assets taken at market value at the time of
any sale of its shares.
- -- No investment company shall invest in warrants exceeding 5% of the
value of its net assets, no more than 2% of which may be warrants not
listed on the New York or American Stock Exchange.
Investment Policies and Techniques
The following information supplements the discussion of the Fund's investment
objectives, policies and techniques that are described in the Prospectus under
the caption "The Fund's Investment Policy."
Short-Term Obligations
In times when Sentry Investment Management, Inc. (the "Adviser") believes that
adverse economic or market conditions justify such action, the Fund may invest
all or a substantial portion of its assets temporarily in short-term
fixed-income securities, including without limitation: U.S. government
securities, including bills, notes and bonds, differing as to maturity and rate
of interest, which are either issued or guaranteed by the U.S. Treasury or by
U.S. governmental agencies or instrumentalities; certificates of deposit issued
against funds deposited in a U.S. bank or savings and loan association; bank
time deposits, which are monies kept on deposit with U.S. banks or savings and
loan associations for a stated period of time at a fixed rate of interest;
bankers' acceptances which are short-term credit instruments used to finance
commercial transactions; repurchase agreements entered into only with respect
to obligations of the U.S. government, its agencies or instrumentalities; or
commercial paper and commercial paper master notes (which are demand
instruments without a fixed maturity bearing interest at rates which are fixed
to known lending rates and automatically adjusted when such lending rates
change) rated investment grade or better.
Fixed Income Obligations
Fixed income obligations in which the Fund may invest for temporary, defensive
purposes will be primarily investment-grade debt obligations or determined to
be comparable by the Adviser. The market value of all debt obligations is
affected by changes in the prevailing interest rates. The market value of such
instruments generally reacts inversely to interest rate changes. If the
prevailing interest rates decline, the market value of debt obligations
generally increases. If the prevailing interest rates increase, the market
value of debt obligations generally decreases. In general, the longer the
maturity of a debt obligation, the greater its sensitivity to changes in
interest rates.
Convertible Securities
The Fund may invest in convertible securities, which are bonds, debentures,
notes, preferred stocks, or other securities that may be converted into or
exchanged for a specified amount of common stock of the same or a different
issuer within a particular period of time at a specified price or formula. A
convertible security entitles the holder to receive interest normally paid or
accrued on debt or the dividend paid on preferred stock until the convertible
security matures
B-4
<PAGE> 23
or is redeemed, converted, or exchanged. Convertible securities have unique
investment characteristics in that they generally (1) have higher yields than
common stocks, but lower yields than comparable non-convertible securities, (2)
are less subject to fluctuation in value than the underlying stock since they
have fixed income characteristics, and (3) provide the potential for capital
appreciation if the market price of the underlying common stock increases.
The value of a convertible security is a function of its "investment value"
(determined by its yield in comparison with the yields of other securities of
comparable maturity and quality that do not have a conversion privilege) and
its "conversion value" (the security's worth, at market value, if converted
into the underlying common stock). The investment value of a convertible
security is influenced by changes in interest rates with investment value
declining as interest rates increase and increasing as interest rates decline.
The credit standing of the issuers and other factors also may have an effect on
the convertible security's investment value. The conversion value of a
convertible security is determined by the market price of the underlying common
stock. If the conversion value is low relative to the investment value, the
price of the convertible security is governed principally by its investment
value. Generally, the conversion value decreases as the convertible security
approaches maturity. To the extent the market price of the underlying common
stock approaches or exceeds the conversion price, the price of the convertible
security will be increasingly influenced by its conversion value. A convertible
security generally will sell at a premium over its conversion value by the
extent to which investors place value on the right to acquire the underlying
common stock while holding a fixed income security.
A convertible security might be subject to redemption at the option of the
issuer at a price established in the convertible security's governing
instrument. If a convertible security held by the Fund is called for
redemption, the Fund will be required to permit the issuer to redeem the
security, convert it into the underlying common stock or sell it to a third
party.
Warrants
The Fund may invest in warrants if after giving effect thereto, not more than
5% of its net assets will be invested in warrants other than warrants acquired
in units or attached to other securities. Of such 5% not more than 2% of the
Fund's net assets at the time of purchase may be invested in warrants that are
not listed on the New York Stock Exchange or the American Stock Exchange.
Investment in warrants is pure speculation in that they have no voting rights,
pay no dividends, and have no rights with respect to the assets of the
corporation issuing them. Warrants basically are options to purchase equity
securities at a specific price for a specific period of time. They do not
represent ownership of the securities but only the right to buy them. The
prices of warrants do not necessarily move parallel to the prices of the
underlying securities.
Small Companies
The Fund may, from time to time, invest a portion of its assets in small
companies. While smaller companies generally have the potential for rapid
growth, investments in smaller companies often involve greater risks than
investments in larger, more established companies because smaller companies may
lack the management experience, financial resources, product diversification,
and competitive strengths of larger companies. In addition, in many instances
the securities of smaller companies are traded only over-the-counter or on a
regional securities exchange, and the frequency and volume of their trading is
substantially less than is typical of larger companies. Therefore, the
securities of smaller companies may be subject to greater and more abrupt
price fluctuations. When making large sales, the Fund may have to sell
portfolio holdings at discounts from quoted prices or may have to make a series
of small sales over an extended period of time due to the trading volume of
smaller company securities. Investors should be aware that, based on the
foregoing factors, an investment in the Fund may be subject to greater price
fluctuations than an investment in a fund that limits its investments to
larger, more established companies. The Adviser's research efforts may also
play a greater role in selecting securities for the Fund than in a fund that
invests in larger, more established companies.
Portfolio Turnover
Portfolio turnover rate is a measure of the purchase and sales activity of the
securities in the Fund's portfolio during a one-year period. Since the Fund's
primary objective is to purchase securities for long-term appreciation,
securities
B-5
<PAGE> 24
are not purchased with a view to rapid turnover. Therefore, the Fund does not
intend to engage in short-term trading, although purchases and sales of
securities are made whenever the Adviser considers it advisable to do so,
regardless of the period held, if the Adviser believes the possibilities for
long-term appreciation of a security have diminished significantly or the risk
of decline in the market price is too great. For the fiscal years ended
October 31, 1997 and 1996, the Fund's portfolio turnover rates were
approximately 40.7% and 28.3%, respectively.
DIRECTORS AND EXECUTIVE OFFICERS
The directors and executive officers of the Fund and their principal
occupations for at least the last five years are listed below. The address of
each director and executive officer is Sentry Insurance a Mutual Company
("Sentry Insurance") 1800 North Point Drive, Stevens Point, Wisconsin, except
as noted below.
*STEVEN R. BOEHLKE, Age 54, President
Vice President - Investments of Sentry Insurance since November 1991. Mr.
Boehlke also serves as President of the Adviser. Mr. Boehlke has been President
of the Fund since December 1995.
THOMAS R. COPPS, Age 58, Director
2828 WAYNE STREET, STEVENS POINT, WI 54481
Vice President, Public Relations, of the Copps Corporation, a retail and
wholesale distributor of food products, since May 1979. Mr. Copps has been a
Director of the Fund since 1983.
DAVID W. GRAEBEL, Age 68, Director
401 SOUTH AIRPORT BLVD., AURORA, CO 80017-2122
Chairman of the Board of Graebel Companies, Inc., a moving and storage company,
and its subsidiaries since 1950. Mr. Graebel has been a Director of the Fund
since 1969.
WILLIAM J. LOHR, Age 48, Director and Treasurer
Vice President and Treasurer of Sentry Insurance since April 1997. Served as
Vice President and Treasurer of Citizens Insurance Company of America from 1981
to 1997. Mr. Lohr also serves as Treasurer of the Adviser and Sentry Equity
Services, Inc.
*WILLIAM M. O'REILLY, Age 43, Secretary
Vice President, General Counsel and Corporate Secretary of Sentry Insurance
since January 1994. Mr. O'Reilly served as Corporate Secretary and Associate
General Counsel from November 1992 to December 1993 and as Associate Counsel
from January 1986 to October 1992 of Sentry Insurance. Mr. O'Reilly also
serves as a Director of the Adviser and has been Secretary of the Fund since
1992.
*DALE R. SCHUH, Age 49, Chairman of the Board
Chief Executive Officer and President of Sentry Insurance since January 1998.
Mr. Schuh served as President and Chief Operating Officer from November 1996 to
December, 1997, as Executive Vice President and Chief Operating Officer from
November 1995 to November 1996, and as Sr. Vice President from 1992 to 1995,
all with Sentry Insurance. Mr. Schuh also serves as a Director of the Adviser
and has been Chairman of the Board of the Fund since 1993.
*JOHN A. STENGER, Age 62, Vice President
President of Sentry Equity Services, Inc. since August 1994. Mr. Stenger served
as Vice President of Sentry Equity Services, Inc. from May 1982 to July 1994.
Mr. Stenger has been Vice President of the Fund since 1982.
*"Interested person" of the Fund as defined in the Investment Company Act of
1940, as amended.
B-6
<PAGE> 25
STEVEN J. UMLAND, Age 42, Director
11925 WEST LAKE PARK DRIVE, MILWAUKEE, WI 53224
Vice President - Finance of Ministry HealthCare, Inc., a hospital management
service corporation, since 1991. Mr. Umland served in various management
positions with Deloitte & Touche, a public accounting firm, from 1978 to 1991.
Mr. Umland has been a Director of the Fund since 1995.
As of February 1, 1998, the directors and officers as a group owned less than
1% of the outstanding shares of the Fund.
The Fund pays each director who is not an "interested person" of the Fund $250
quarterly as a retainer fee for his services as a director. These directors
received an aggregate of $3,000 in fees during the fiscal year ended October
31, 1997. Officers and directors who are "interested persons of the Fund
receive no compensation from the Fund for their services as such.
Maryland law permits registered investment companies, such as the Fund, to
operate without an annual meeting of shareholders under specified circumstances
if an annual meeting is not required by the Investment Company Act of 1940 (the
"1940 Act"). The Fund has recently adopted the appropriate provisions in its
Bylaws, and may, at its discretion, not hold an annual meeting in any year in
which the election of directors is not required to be acted on by shareholders
under the 1940 Act. The Fund anticipates that it will generally not hold an
annual meeting unless required by the 1940 Act. In connection with this change
in policy, the Bylaws of the Fund have also been amended to provide for the
election of all directors at each annual meeting held for the purpose of
electing directors and for such directors to hold office until the next annual
meeting.
PRINCIPAL SHAREHOLDERS
As of February 1, 1998, the following persons owned of record or are known by
the Fund to own of record or beneficially 5% or more of the Fund's outstanding
shares:
<TABLE>
<CAPTION>
Name and Address Number of Shares Percentage
---------------- ---------------- ------------
<S> <C> <C>
Sentry Insurance a Mutual Company 1,033,110 18%
1800 North Point Drive
Stevens Point,WI 54481
Bank One Wisconsin Trust Company, N.A. 1,938,392 35%
as Trustee of Sentry 401(k) Plan
601 Main Street
Stevens Point,WI 54481
</TABLE>
As of February 1, 1998, Bank One Wisconsin Trust Company, as Trustee of the
Sentry 401(k) Plan, owned a controlling interest in the Fund. Sentry Insurance
a Mutual Company, also owned a controlling interest in the Fund as of February
1, 1998.
INVESTMENT ADVISER
AND OTHER SERVICES
Sentry Investment Management, Inc. (the "Adviser") is the Fund's investment
adviser pursuant to an Investment Advisory Agreement (the "Agreement"). The
Adviser is a wholly-owned subsidiary of Sentry Insurance (see "Sentry
Insurance" in the Prospectus). The Fund's principal underwriter, Sentry Equity
Services, Inc., is also a wholly-owned subsidiary of Sentry Insurance and is
therefore affiliated with the Adviser and the Fund.
The directors of the Adviser are Larry C. Ballard, Dale R. Schuh, Steven R.
Boehlke and William M. O'Reilly. Mr. Ballard is also Chairman of the Board of
the Adviser, Chairman of the Board of Sentry Insurance and serves as a director
of many of its subsidiaries. Mr. Schuh is also Chief Executive Officer and
President of Sentry Insurance and serves as an officer or a director of many of
its subsidiaries. Mr. Boehlke is also President of the Adviser and Vice
President of Sentry Insurance and serves as a director of many of its
subsidiaries. Mr. O'Reilly is also Secretary of the Adviser, Vice President,
General Counsel and Corporate Secretary of Sentry Insurance, and serves as an
officer or a director of many of its subsidiaries.
B-7
<PAGE> 26
The Agreement provides that the Adviser will furnish the Fund with office
space, facilities and services; manage the Fund's investments; provide
bookkeeping services; and permit any of the Adviser's officers and employees to
serve without compensation by the Fund as officers and directors of the Fund if
elected to such positions. The Fund has agreed to pay the Adviser a fee for its
services at the following rates:
<TABLE>
<CAPTION>
Net Asset Value Annual Rate
----------------- -----------
<S> <C> <C>
First $150,000,000 0.75%
Next $150,000,000 0.60%
Next $200,000,000 0.525%
Amount over $500,000,000 0.45%
</TABLE>
The fee is computed and paid quarterly. During the fiscal years ended October
31, 1997, 1996 and 1995, the Adviser's fees for services to the Fund were
$810,738, $689,374 and $609,977, respectively.
If the costs of the underwriter, Sentry Equity Services, Inc., in fulfilling
its obligations to the Fund under the Underwriter Agreement exceed its ability
to operate profitably, the Adviser may reimburse the Underwriter for a portion
of its expenses. See "The Fund's Underwriter and Transfer Agent."
Certain expenses of the Fund, such as taxes, portfolio brokerage commissions,
the cost of state and federal securities registrations, printing stock
certificates and checks, preparation of and postage for shareholders' reports,
costs of preparing and typesetting prospectuses, fees for maintaining
shareholders' records, custodial fees, transfer agent fees, auditors' fees,
general legal fees and unaffiliated directors' fees are paid by the Fund.
If the total expenses of the Fund (excluding taxes, portfolio brokerage
commissions and interest, but including the investment advisory fee) exceed the
sum of 11/2% of the first $30,000,000 and 1% of the balance of the average
daily net asset value of the Fund in any one fiscal year, the Adviser will
reimburse the Fund for such excess. This expense limitation is taken into
consideration with each payment of the management fee.
The Agreement will continue from year to year so long as such continuance is
specifically approved at least annually by (1) the vote of a majority of the
directors of the Fund who are not "interested persons" of the Fund or the
Adviser, cast in person at a meeting called for the purpose of voting on such
approval, and (2) the vote of the Board of Directors of the Fund or the vote of
a majority of the outstanding voting securities of the Fund. The Agreement
terminates automatically if assigned. In addition, the Agreement may be
terminated at any time, without the payment of any penalty, by the Board of
Directors of the Fund or by the vote of a majority of the outstanding voting
securities of the Fund, upon at least 60 days' written notice to the Adviser.
The Adviser may terminate the Agreement by giving at least 60 days' written
notice to the Fund. The Agreement may be amended only with the approval of a
majority of the outstanding voting securities of the Fund.
The Agreement provides that the Adviser shall not be liable to the Fund or its
shareholders or any other person for any error of judgment or for any loss
arising out of any investment or for any other act or omission in the
performance by the Adviser of its duties under the Agreement except for a loss
resulting from the Adviser's willful misfeasance, bad faith or gross negligence
in the performance of its duty or reckless disregard of its obligations and
duties under the Agreement.
The name "Sentry" and the minuteman service mark have been adopted with the
permission of Sentry Insurance which has registered these service marks. Their
use is subject to the right of Sentry Insurance to withdraw this permission at
any time. If the investment adviser for the Fund shall cease to be Sentry
Investment Management, Inc. or a corporation controlled by or under common
control with Sentry Insurance, the Fund has agreed to stop using the name
"Sentry" and the minuteman design.
BROKERAGE PRACTICES
In placing purchase and sale orders of portfolio securities for the Fund, it is
the policy of the Adviser to seek the best execution of orders at the most
favorable price taking into account research services which in effect are
provided
B-8
<PAGE> 27
with brokerage commissions, as described in this and the following paragraph.
The determination of what is expected to result in the best execution at the
most favorable price involves a number of largely judgmental considerations.
Among these are the Adviser's evaluation of the broker's efficiency in
executing and clearing transactions, the broker's financial strength and
stability, and the Adviser's previous experience in dealing with the broker.
The most favorable price to the Fund means the best net price without regard to
the mix between purchase or sale price and commission, if any. Primary market
makers are used for transactions in the over-the-counter market except in those
instances where the Adviser believes better execution or a more favorable price
is obtainable elsewhere. The Adviser may also purchase securities listed on
stock exchanges from non-exchange members in transactions off the exchange.
In allocating brokerage business for the Fund, the Adviser takes into
consideration the research, analytical, statistical and other information and
services provided by the broker. Selection of brokers or dealers is not made
pursuant to an agreement or understanding with any of the brokers or dealers.
Even though the Adviser negotiates commissions, the Fund may absorb higher
brokerage commissions than might be available from other brokers if the amount
is believed by the Adviser to be reasonable in relation to the value of the
overall quality of the brokerage and research services provided. Other advisory
clients may indirectly benefit from the availability of these services to the
Adviser, and the Fund may indirectly benefit from services available to the
Adviser as a result of transactions for other clients.
During the fiscal years ended October 31, 1995 and 1996, the Fund paid
brokerage commissions totaling $73,559 and $48,941, respectively, in
connection with portfolio transactions. During the fiscal year ended October
31, 1997, the Fund paid brokerage commissions of $112,885 on transactions of
$99,171,000. All of these commissions were paid to brokers providing research
services. Neither the Adviser nor any company affiliated with it receives any
brokerage commissions from the Fund.
At times the Adviser may consider purchases or sales of the same securities for
the Fund and for one or more of the other companies advised by it. In such
cases, it will be the practice of the Adviser to allocate purchase and sale
transactions among its clients in such manner as it deems equitable.
THE FUND'S UNDERWRITER
AND TRANSFER AGENT
Sentry Equity Services, Inc. ("Sentry Equity"), 1800 North Point Drive, Stevens
Point, Wisconsin, a wholly-owned subsidiary of Sentry Insurance, acts as
underwriter for the Fund pursuant to an Underwriter Agreement (the
"Agreement"). Sentry Equity, a member of the National Association of Securities
Dealers, Inc., is registered with the Securities and Exchange Commission as a
broker-dealer in securities and is licensed as a securities broker-dealer by
various state authorities.
The Agreement provides that Sentry Equity will use its best efforts to offer to
the public on a continuous basis shares of the Fund through its sales agents.
Most sales agents also serve as insurance representatives of the Sentry
Insurance companies. Sales representatives receive a commission from Sentry
Equity of 1% on all sales of Fund shares. However, since the Fund is a "no
load" fund, no sales commissions are charged on the purchase of Fund shares
and, therefore, Sentry Equity receives no commission or other remuneration from
the Fund for its services as underwriter.
Under the Agreement, Sentry Equity has agreed to furnish clerical and
administrative personnel and services to the Fund, and provide office space,
facilities and equipment required by such personnel other than such services as
may be furnished by the Adviser.
The Agreement will continue from year to year so long as such continuance is
specifically approved at least annually by (1) the vote of a majority of the
directors of the Fund who are not "interested persons" of the Fund or Sentry
Equity, cast in person at a meeting called for the purpose of voting on such
approval, and (2) the vote of the Fund's Board of Directors or the vote of a
majority of the outstanding voting securities of the Fund. The Agreement
B-9
<PAGE> 28
terminates automatically if assigned. In addition, the Agreement may be
terminated at any time, without the payment of any penalty, by the Fund's Board
of Directors or by the vote of a majority of the outstanding voting securities
of the Fund, upon at least 60 days' written notice to Sentry Equity. Sentry
Equity may terminate the Agreement by giving at least 60 days' written notice
to the Fund.
Sentry Equity also serves the Fund under a separate Agency Agreement as
Transfer Agent, Dividend Disbursing Agent and Plan Agent (including the
maintenance of shareholder records). For these services, Sentry Equity is paid
an annual fee of $8.50 per account. During the fiscal year ended October 31,
1997, $25,236 was paid pursuant to the Agency Agreement. To handle these
functions, Sentry Equity has contracted with Sentry Insurance for the use of
its extensive data processing staff and equipment. The Fund believes the
payments by the Fund to Sentry Equity for the services described in this
paragraph are comparable to the charges of other companies performing similar
services.
COMPUTATION OF NET ASSET VALUE
The net asset value per share is computed as of the close of trading
(generally, 4:00 p.m. eastern time) on the New York Stock Exchange each day on
which the Exchange is open for trading or on any other day on which there is a
sufficient degree of trading in the underlying assets of the Fund such that the
Fund's net asset value may be materially affected. The net asset value of the
Fund's shares is determined by dividing the value of its total assets, less its
liabilities, by the total number of shares outstanding. Portfolio securities
which are traded or listed on a national securities exchange are valued at the
last sales price thereof at the time of computation or, if there has been no
sale on that day, at the last bid price. Securities traded on the
over-the-counter market are valued at the mean between the last quoted bid and
asked prices at the time of computation, or in the case of National Market
Issues, the last sales price. Securities for which market quotations are not
readily available, and other assets of the Fund, are valued at fair value as
determined in good faith by the Fund's Board of Directors.
SHARE REDEMPTION
The Fund reserves the right in extraordinary circumstances to pay the
redemption price in whole or in part in portfolio securities if deemed
advisable by the Board of Directors or any executive officer of the Fund.
However, this option to redeem in portfolio securities is limited with respect
to each shareholder during any 90-day period to an amount not in excess of the
lesser of $250,000 or 1% of the net asset value of the Fund at the beginning of
such period. If redemption is made in portfolio securities, the shareholder
would incur brokerage expense if he or she sold the securities received. An
officer of the Fund would only make such a decision in cases of extreme urgency
where there was not sufficient time for the Board of Directors to act, and such
action would be subsequently reviewed by the Board of Directors.
The Board of Directors may by resolution, as provided by the Fund's Articles of
Incorporation, establish a redemption fee of not more than 1% of net asset
value for redemption of shares which have been outstanding less than one year.
If such a fee is established, shareholders will be given at least 30 days'
advance notice thereof.
The Fund may, by resolution of the Board of Directors, after giving at least
six months' written notice to the shareholder, redeem pursuant to the Fund's
Articles of Incorporation, all shares owned by any shareholder who (1) has been
a shareholder of record for more than five consecutive years; and (2) does not
own shares the original cost (purchase price) of which exceed $200 in the
aggregate at the time of redemption. For purposes of the foregoing where
multiple purchases and redemptions of shares have occurred and the Fund is
unable to specifically determine the original cost of the shares held by the
shareholder, the Fund shall deem those shares held at the time of such
redemption to be those acquired at the lowest original cost. The Directors have
taken no action on this matter but may consider it from time to time.
Shareholders will be notified if the Board of Directors adopts such a
resolution.
The Fund intends to exercise at all times the right provided in its Articles of
Incorporation to redeem at net asset value any portion of the shares owned
beneficially or of record by any shareholder, except Sentry Insurance or
B-10
<PAGE> 29
other shareholders who have entered into agreements with the Fund designed to
take into account the interests of all shareholders, in excess of 4.9% of the
outstanding shares of the Fund. This right will not be exercised if a
shareholder's percentage of ownership exceeds 4.9% of the outstanding shares as
a result of redemptions by other shareholders or the reinvestment of any
dividends or capital gains distributions.
PERFORMANCE INFORMATION
As described in the Prospectus, the Fund's historical performance may be shown
in the form of "average annual total return" and "total return" figures, both
of which measure the income generated by, and the effect of any realized or
unrealized appreciation or depreciation of, the underlying investments of the
Fund.
The Fund's average annual total return quotation is computed in accordance with
a standardized method prescribed by rules of the Securities and Exchange
Commission. The average annual total return for a specific period is found by
first taking a hypothetical $1,000 investment ("initial investment") in the
Fund's shares on the first day of the period and computing the ending
redeemable value ("redeemable value") of that investment at the end of the
period. The redeemable value is then divided by the initial investment, and
this quotient is taken to the Nth root (N representing the number of years in
the period) and 1 is subtracted from the result, which is then expressed as a
percentage. The calculation assumes that all income and capital gain dividends
by the Fund have been reinvested at net asset value on the reinvestment dates
during the period.
The calculation of the Fund's total return is not subject to a standardized
formula. Total return performance for a specific period is calculated by first
taking an investment (assumed in the Prospectus to be an initial investment of
$10,000) in the Fund's shares on the first day of the period and computing the
ending redeemable value ("redeemable value") of that investment at the end of
the period. The total return percentage is then determined by subtracting the
initial investment from the redeemable value and dividing the difference by the
initial investment and expressing the result as a percentage. The calculation
assumes that all income and capital gains dividends by the Fund have been
reinvested at net asset value on the reinvestment dates during the period.
Total return may also be shown as the increased dollar value of the
hypothetical investment over the period.
The Fund's performance quotations are based upon the historical earnings and
are not necessarily representative of future performance. Returns and net asset
value of the shares will fluctuate. Some of the factors affecting the Fund's
performance are general market conditions, operating expenses and investment
management. Shares of the Fund are redeemable at net asset value, which may be
more or less than original cost.
The average annual total return figures for the Fund for the one, five, and
ten-year periods ended October 31, 1997, are 39.2%, 16.8% and 16.0%,
respectively. The total return figures for the same periods ended October 31,
1997, are 39.2%, 117.2% and 341.2%, respectively. These figures do not reflect
the applicable sales load imposed prior to March 1, 1991.
TAX STATUS AND TAXATION
The Fund intends to continue to qualify as a "regulated investment company"
under Subchapter M of the Internal Revenue Code. Accordingly, if all taxable
net investment income and net capital gains are distributed to the
shareholders, the Fund will not be subject to federal income tax.
A 4% excise tax is imposed on the excess of the required distribution for a
calendar year over the distributed amount for such calendar year. The required
distribution generally is the sum of 98% of the Fund's net ordinary income for
the calendar year plus 98% of its net capital gain income for the one year
period ending October 31. The Fund intends to declare or distribute dividends
during the calendar year of an amount sufficient to prevent imposition of the
4% excise tax.
A portion of the ordinary income dividends paid by the Fund may be eligible for
the dividends received deduction available to corporate shareholders. The
aggregate amount eligible for the dividends received deduction may not exceed
the aggregate qualifying dividends received by the Fund for the fiscal year.
B-11
<PAGE> 30
At the time an investor purchases shares of the Fund, a portion of the per
share net asset value may be represented by realized or unrealized appreciation
in the Fund's portfolio or undistributed income of the Fund. Subsequent
distributions (or portions thereof) on such shares may in reality represent a
return of capital but will be taxable to the shareholder even if the net asset
value of the shareholder's Fund shares is, as a result of the distributions,
reduced below the shareholder's cost for such shares. For federal tax purposes,
however, the shareholder's original cost continues as the tax basis of the
shares and, on redemption, capital gain or loss will generally be recognized on
the difference between original cost and the redemption price. This discussion
and the discussion in the Prospectus under "Distributions to Shareholders and
Taxation" relate solely to federal income taxation. Distributions may also be
subject to state taxes.
Any loss recognized on the redemption of Fund shares held six months or less
will be a long-term capital loss to the extent of any long-term capital gain
dividends received on such shares. All or a portion of any loss realized on the
redemption of Fund shares may be suspended for federal income tax purposes if
the shareholder reinvests in shares of the Fund within 30 days before or after
the redemption.
The Fund is required to withhold federal income tax at the rate of 31%
(commonly called "backup withholding") on dividend distributions to certain
types of shareholders and from redemptions from their accounts with the Fund if
(1) the shareholder fails to furnish the Fund with the shareholder's taxpayer
identification number, (2) the Internal Revenue Service ("IRS") notifies the
Fund that the number furnished by the shareholder is incorrect, (3) the IRS
notifies the Fund that the shareholder has failed to report properly certain
income on his or her return, or (4) the shareholder fails to certify that he or
she is not subject to backup withholding when required to do so.
The Fund is also required by law to withhold 20% of the taxable portion of
certain distributions from qualified retirement plans and 403(b) annuities.
This withholding requirement applies to any distribution from a qualified
retirement plan or 403(b) annuity that is eligible to be "rolled over." The 20%
withholding requirement does not apply to distributions from IRA's or to any
part of a distribution that is transferred directly from the Fund to another
qualified retirement plan, 403(a) annuity plan or IRA.
Shareholders should consult their tax advisers regarding this 20% withholding
requirement. Shareholders who are non-resident aliens are subject to U.S.
withholding tax on ordinary income dividends (whether received in cash or
shares) at a rate of 30% or such lower rate as prescribed in an applicable tax
treaty.
CAPITALIZATION OF THE FUND
Sentry Fund, Inc. has an authorized capital of 10,000,000 shares of capital
stock of a par value of $1 each. Each share is of the same class and has equal,
non-cumulative rights as to voting (with each full share entitled to one vote),
redemption, dividends and liquidation. Fund shares are fully-paid and
nonassessable upon their issuance and have no preemptive, conversion or
exchange rights, nor is there any liability of shareholders to further calls or
to assessment.
CUSTODIAN
Citibank, N.A., 399 Park Avenue, New York, New York, is custodian of the Fund's
securities and cash and handles receipts and disbursements for the Fund
pursuant to a Custodian Agreement. The custodian performs no management or
policymaking functions for the Fund. Its compensation is based on the number of
shares in the Fund's portfolio and the number of portfolio transactions.
INDEPENDENT ACCOUNTANT
The Fund's independent accountant, Coopers & Lybrand L.L.P., 203 North LaSalle
Street, Chicago, Illinois, audit and report on the Fund's annual financial
statements, review certain regulatory reports and the Fund's income tax
statements, and perform other professional accounting, auditing, tax and
advisory services when engaged to do so by the Fund.
B-12
<PAGE> 31
SENTRY FUND, INC.
PORTFOLIO OF SECURITIES AND FINANCIAL STATEMENTS
October 31, 1997 and 1996
B-13
<PAGE> 32
PORTFOLIO OF INVESTMENT SECURITIES -- October 31, 1997 SENTRY FUND, INC.
<TABLE>
<CAPTION>
Value
Shares (Note 1)
- ------ COMMON STOCKS (96.7%) ----------
---------------------
BUSINESS & CONSUMER SERVICES (13.5%)
<S> <C> <C>
100,000 Analysts Int'l Corp. $4,512,500
25,000 Deluxe Corp. 818,750
110,000 + Diamond Home Service, Inc. 935,000
100,000 Ennis Business Form Inc. 1,050,000
67,500 + Fiserv, Inc. 3,020,625
25,000 Block (H & R), Inc. 925,000
196,500 Richardson Electronics 2,407,125
235,000 + Richey Electronics, Inc. 2,291,250
DRUG & HEALTH CARE (5.4%)
40,000 Bristol-Myers Squibb Co. 3,510,000
100,000 Dentsply International Inc. 2,837,500
ELECTRICAL EQUIPMENT (1.6%)
30,000 General Electric Co. 1,936,890
ELECTRONICS (5.0%)
60,000 Int'l. Business Machines Corp. 5,883,780
ENERGY (22.2%)
27,300 Cabot Oil & Gas Corp. 655,200
451,700 + Coho Energy, Inc. 5,307,475
81,000 + Dawson Production Service 1,964,250
10,000 Exxon Corporation 614,380
30,000 + Marine Drilling Companies. 888,750
70,000 + Noble Drilling Corp 2,489,410
35,000 + Nuevo Energy Co. 1,450,330
80,000 + Oceaneering International, Inc. 1,985,040
193,000 + Petroglyph Energy Inc 2,147,125
35,000 Pogo Producing Co. 1,266,580
78,000 + Pool Energy Services Co. 2,647,164
25,000 + Reading & Bater Corp. 1,059,375
20,000 Texaco, Inc. 1,138,760
30,500 Tidewater Inc. 2,003,484
20,000 USX - Marathon Group 715,000
FINANCIAL (10.3%)
38,633 Associated Banc - Corp. 1,936,454
40,000 Firstar Corp. 1,445,000
40,400 National City Corp. 2,413,900
60,000 PNC Bank Corp. 2,850,000
40,500 Southtrust Corp 1,944,000
54,450 Washington Federal, Inc. 1,606,275
FOODS & RESTAURANT (9.4%)
46,400 + Consolidated Products. 893,200
41,000 Cooker Restaurant Corp. 410,000
90,000 + Ihop Corp. 3,037,500
55,000 Lancaster Colony Corp. 2,722,500
70,000 McDonald's Corp 3,136,910
43,900 + Morton's Restaurant Group. 949,338
MANUFACTURING (9.8%)
75,000 Applied Power . 4,640,625
31,400 Belden Inc. 1,075,450
40,000 BMC Industries Inc.. 1,287,520
60,000 + ITI Technoligies. 1,537,500
145,000 + Shaw Group Inc. 3,026,875
RETAIL (7.5%)
112,500 + Mac Frugal's Bargains - Close 3,825,000
180,000 Walgreen Company 5,062,500
TOBACCO (6.3%)
120,000 Philip Morris Cos., Inc. 4,755,000
90,000 UST, Inc. 2,694,420
TRANSPORTATION (5.7%)
90,000 + Global Motorsport Group Inc. 1,372,500
120,000 Harley-Davidson, Inc. 3,330,000
66,800 Wabash National Corp 1,995,650
------------
Total Common Stocks 114,408,860
(Cost $60,648,838) ============
<CAPTION>
Principal
Amount
- ---------
SHORT-TERM SECURITIES (3.0%)
----------------------------
COMMERCIAL PAPER - DISCOUNTED
<S> <C> <C>
$1,116,000 Commercial Credit Co.
Note due 11/4/97 1,115,489
179,000 General Electric Co.
Note due 11/6/97 178,863
530,000 Ford Motor Credit Co.
Note due 11/6/97 529,593
736,000 General Electric Capital Corp.
Note due 11/6/97 735,423
1,000,000 American General Finance Corp.
Note due 11/10/97 998,590
------------
TOTAL SHORT-TERM SECURITIES 3,557,958
(Cost $3,557,958) ------------
TOTAL INVESTMENTS (99.7%) 117,966,818
(Cost $64,206,796)
CASH AND RECEIVABLES
LESS LIABILITIES (0.3%) 311,323
------------
NET ASSETS (100%) $118,278,141
============
</TABLE>
+Non-income producing security during the year ended October 31, 1997.
See accompanying notes to financial statements
B-14
<PAGE> 33
SENTRY FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
October 31, 1997
<TABLE>
<S> <C> <C>
ASSETS:
Investments in securities, at
market value (cost $64,206,796) $117,966,818
Cash 192,111
Receivables:
Investment securities sold 809,348
Dividends 62,973
------------
Total assets $119,031,250
LIABILITIES:
Investment securities purchased 522,000
Investment advisory fees 219,045
Transfer agent fees 2,202
Custodian fees 462
Professional services 9,400
------------
Total liabilities 753,109
------------
NET ASSETS $118,278,141
============
ANALYSIS OF NET ASSETS:
Capital shares $45,426,384
Undistributed net investment income 251,985
Undistributed net realized gain on
sales of investments 18,839,750
Unrealized appreciation on investments 53,760,022
------------
Net assets applicable to outstanding shares $118,278,141
============
Capital Shares Outstanding 4,939,353
============
Net Asset Value and
Redemption and Offering Price per Share $23.95
=======
</TABLE>
STATEMENT OF OPERATIONS
For the Year Ended October 31, 1997
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Income:
Dividends $1,263,845
Interest 297,132
------------
Total investment income $1,560,977
Expenses:
Investment advisory fees 810,738
Transfer agent fees 25,236
Professional services 12,975
Printing, stationery and postage 5,712
Licenses and fees 17,060
Directors' fees 3,000
Other expenses 23,413
------------
Total expenses 898,134
------------
Net investment income 662,843
============
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS:
Net realized gain on sales of investments 19,070,123
Increase in unrealized appreciation
of investments 15,950,516
------------
Net realized and unrealized gain
on investments 35,020,639
------------
Net increase in net assets resulting
from operations $35,683,482
============
</TABLE>
See accompanying notes to financial statements
B-15
<PAGE> 34
SENTRY FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
For the Years Ended October 31, 1997 and 1996
<TABLE>
<CAPTION>
1997 1996
------------ -----------
<S> <C> <C>
OPERATIONS:
Net investment income $ 662,843 $ 871,853
Net realized gain on sales
of investments 19,070,123 4,921,007
Increase in unrealized
appreciation on investments 15,950,516 11,259,861
------------ -----------
Change in net assets
resulting from operations 35,683,482 17,052,721
------------ -----------
DISTRIBUTIONS:
Dividends from net
investment income (861,685) (894,861)
Distributions of net realized gains (4,859,092) (5,784,937)
------------ -----------
Total distributions to shareholders (5,720,777) (6,679,798)
------------ -----------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sale of shares 6,180,829 20,647,795
Net asset value of shares issued to
shareholders in reinvestment
of distributions 5,658,760 6,625,630
------------ -----------
11,839,589 27,273,425
Cost of shares redeemed (20,677,679) (24,866,512)
------------ -----------
(Decrease) Increase in net assets
derived from capital share
transactions (8,838,090) 2,406,913
------------ -----------
Total increase in net assets 21,124,615 12,779,836
NET ASSETS:
Beginning of year 97,153,526 84,373,690
------------ -----------
End of year (including
undistributed net investment
income of $251,985 and
$450,827, respectively) $118,278,141 $97,153,526
============ ===========
</TABLE>
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
Sentry Fund, Inc. (Fund) is registered with the Securities and Exchange
Commission under the Investment Company Act of 1940, as amended, as a
diversified, open-end management investment company. The financial
statements have been prepared in conformity with generally accepted
accounting principles which permit management to make certain estimates and
assumptions at the date of the financial statements.
The following summarizes the significant accounting policies of the Fund.
Security Valuation -- Securities traded on any national securities exchange
or over-the-counter market are valued at the last reported sales price;
short-term securities are stated at amortized cost, which approximates
current value.
Federal Income and Excise Taxes -- No provision for Federal income or
excise taxes is considered necessary since the Fund intends to distribute
to its shareholders substantially all of its taxable income, and to
otherwise comply with the provisions of the Internal Revenue Code
applicable to regulated investment companies.
Investment Income and Security Transactions -- Security transactions are
accounted for on the trade date. Dividend income and distributions to
shareholders are recorded on the ex-dividend date and the record date,
respectively. Interest income is recognized when earned. Realized gains and
losses from securities transactions are determined by comparing the
identified cost of the security lot sold with the net sales proceeds.
See accompanying notes to financial statements
B-16
<PAGE> 35
NOTES TO FINANCIAL STATEMENTS (Continued)
2. CAPITAL SHARES
At October 31, 1997, there were 10,000,000 shares of $1 par value capital
stock authorized. Transactions in capital stock for the years ended October
31, 1997 and 1996 were as follows:
<TABLE>
<CAPTION>
1997 1996
------------ ------------
<S> <C> <C>
Shares sold 301,671 1,259,981
Shares issued to shareholders in reinvestment of distributions 302,598 412,197
------------ ------------
604,269 1,672,178
Shares redeemed (1,005,067) (1,511,484)
------------ ------------
Net (decrease) increase in shares outstanding (400,798) 160,694
============ ============
</TABLE>
3. PURCHASES AND SALES OF SECURITIES
Purchases and sales of common stock during the year ended October 31, 1997
aggregated $41,665,786 and $57,505,594, respectively.
4. INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Under terms of its investment advisory agreement with Sentry Investment
Management, Inc., the Fund pays an advisory fee equal to .75% of the average
daily net asset value of the Fund. However, under the terms of the
agreement, if the total annual expenses of the Fund (excluding taxes,
portfolio brokerage commissions and interest, but including investment
advisory fees) exceed 1-1/2% of the first $30,000,000 and 1% of the balance
of the average daily net asset value of the Fund in any one fiscal year, the
investment adviser will reimburse the Fund for such excess. Expenses did not
exceed the applicable limitation for the year ended October 31, 1997.
Sentry Equity Services, Inc., (SESI), as principal underwriter of the Fund,
paid $25,917 in commissions to sales representatives for the year ended
October 31, 1997. In addition, SESI also acts as transfer agent and receives
annual fees from the Fund of $8.50 per shareholder account.
As of October 31, 1997, Sentry Insurance and the Sentry 401K Plan held 21%
and 37%, respectively, of the Fund's outstanding capital stock.
5. DISTRIBUTIONS TO SHAREHOLDERS
Net realized gains from security transactions are distributed to
shareholders by the end of the succeeding year, unless there are capital
loss carryovers which may be applied against such realized gains. On
December 18, 1996 and June 11, 1997, the Fund distributed $4,583,693 ($.86
per share) and $275,399 ($.05 per share) related to net realized capital
gains. Undistributed realized capital gains and net investment income as of
October 31, 1997 will be paid out on December 18, 1997. On December 18,
1996, and June 11, 1997, the Fund distributed $586,286 ($.11 per share) and
$275,399 ($.05 per share), respectively, from net investment income.
B-17
<PAGE> 36
NOTES TO FINANCIAL STATEMENTS (Continued)
6. INCOME TAX INFORMATION
Unrealized gains and losses on investment securities for both financial
statement and Federal income tax purposes at October 31, 1997 were as
follows:
Gross unrealized gains $56,416,545
Gross unrealized losses 2,656,523
-----------
Net $53,760,022
===========
The aggregate investment cost for both financial statement and Federal
income tax purposes at October 31, 1997 was $64,206,796.
FINANCIAL HIGHLIGHTS
The following presents information relating to a share of capital stock of
the Fund outstanding for the entire period:
<TABLE>
<CAPTION>
Year Ended October 31,
1997 1996 1995 1994 1993
------- ------ ----- ------ -----
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 18.19 $16.29 $15.39 $15.93 $15.17
-------- ------- ------- ------- -------
Income From Investment Operations
- ---------------------------------
Net Investment Income .13 .17 .18 .18 .23
Net Realized and Unrealized Gains
on Investments 6.70 3.01 1.65 .53 1.12
-------- ------- ------- ------- -------
Total from Investment Operations 6.83 3.18 1.83 .71 1.35
Less Distributions
- ------------------
Dividends From Net Investment Income (.16) (.17) (.17) (.22) (.23)
Distribution From Net Realized Gains (.91) (1.11) (.76) (1.03) (.36)
-------- ------- ------- ------- ---------
Total Distributions (1.07) (1.28) (.93) (1.25) (.59)
Net Asset Value End of Period $23.95 $18.19 $16.29 $15.39 $15.93
======== ======= ======= ======= =========
Total Return 39.23% 20.60% 12.97% 4.86% 9.17%
Net Assets, End of Period (in Thousands) $118,278 $97,154 $84,374 $79,622 $76,315
Ratio of Expenses to Average Net Assets .83% .84% .86% .86% .87%
Ratio of Net Investment Income to
Average Net Assets .61% .95% 1.17% 1.19% 1.48%
Portfolio Turnover Rate 40.75% 28.28% 26.54% 16.31% 22.34%
*Average Commission Rate $ .04 $ .03
</TABLE>
*Disclosure required, effective for reporting periods beginning after
September 1, 1995.
B-18
<PAGE> 37
INDEPENDENT ACCOUNTANTS' REPORT
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF SENTRY FUND, INC.:
We have audited the accompanying statement of assets and liabilities of Sentry
Fund, Inc., including the portfolio of investment securities, as of October 31,
1997, and the related statement of operations for the year then ended, the
statement of changes in net assets for each of the two years in the period then
ended, and the financial highlights for each of the five years in the period
then ended. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits. We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1997 by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Sentry Fund, Inc. as of October 31, 1997, the results of its operations for the
year then ended, the changes in its net assets for each of the two years in the
period then ended, and the financial highlights for each of the five years in
the period then ended, in conformity with generally accepted accounting
principles.
/s/COOPERS & LYBRAND LLP
Chicago, Illinois
November 21, 1997
1997 FEDERAL INCOME TAX INFORMATION
Long term capital gains are taxable to shareholders as long term capital gains,
regardless of how long a person has been a shareholder. In order to avoid an
excise tax on undistributed amounts, the Fund must declare by the end of the
calendar year a dividend representing 98% of its ordinary income for the
calendar year and 98% of its net capital gains for the period of November 1 of
the previous year through October 31 of the current year. Capital gains and
income distributions declared and made payable to shareholders of record before
the end of the calendar year will be "deemed" to have been received by the
shareholders on December 31 so long as the dividends are actually paid during
January of the following year.
For individual tax information, shareholders should consult their own tax
advisors.
B-19
<PAGE> 38
PART C
<PAGE> 39
PART C
OTHER INFORMATION
ITEM 24
(a) Financial Statements of Sentry Fund, Inc.
Included in Part A:
Financial Highlights
Included in Part B:
Portfolio of Investment Securities, October 31, 1997
Statement of Assets and Liabilities, October 31, 1997
Statement of Operations for the Year Ended October 31, 1997
Statements of Changes in Net Assets for the Years Ended
October 31, 1997 and 1996
Notes to Financial Statements
Financial Highlights
Independent Accountants' Report
All other schedules not included have been omitted as they are not applicable or
the information required is shown elsewhere in the financial statements.
<PAGE> 40
<TABLE>
<CAPTION>
ITEM 24
<S> <C> <C>
(b) Exhibits
1. Articles of Incorporation of Registrant*
2. (a) Bylaws of Registrant*
(b) Rules and Regulations adopted by Board of Directors*
3. None
4. Specimen Stock Certificate*
5. Investment Advisory Agreement with Sentry Investment Management, Inc. dated March 1, 1991*
6. (a) Underwriter Agreement with Sentry Equity Services, Inc. dated December 4, 1990*
(b) Form of Dealer Agreement*
7. None
8. Custodian Agreement with Citibank, N.A. dated May 1, 1989*
9. (a) Agency Agreement with Sentry Equity Services, Inc. dated May 14, 1970*
(b) Name Agreement with Hardware Mutual Casualty Company dated May 9, 1969*
(c) Agreement between Sentry Equity Services, Inc. and Hardware Mutual Casualty Company
dated May 14, 1970*
10. Opinion and Consent of Vedder, Price, Kaufman & Kammholz, Counsel for Registrant, dated May 15,
1970*
11. Consent of Coopers & Lybrand L.L.P.
12. None
13. Subscription Agreement executed by Sentry Life Insurance Company dated July 9, 1969*
14. (a) Model Keogh Plan, Custodial Agreement and Adoption Agreement*
(b) Model Individual Retirement Custodial Account*
(c) Model IRA Disclosure Statement*
(d) Model Roth Individual Retirement Custodial Account
(e) Model Education Individual Retirement Custodial Account
15. None
16. Performance Computation Schedule*
17. Financial Data Schedule**
18. None
</TABLE>
** Items 1, 2(a), 2(b), 4, 5, 6(a), 6(b), 8, 9(a), 9(b), 9(c), 10, 13, 14(a),
14(b), 14(c), and 16 are incorporated herein by reference to such items
in the Registration Statement under the Securities Act of 1933 of
Registrant in Amendment No. 34 to Form N-1A filed on or about February 28,
1997.
** Item 17 is incorporated by reference to such item in the Form N-SAR
filing made by Registrant on December 30, 1997.
<PAGE> 41
ITEM 25. Persons Controlled by or under Common Control with Registrant
The following is a description of all persons who might be considered
to be directly or indirectly controlled by or under common control with the
Registrant:
<TABLE>
<CAPTION>
<S> <C>
1. Sentry Insurance a Mutual Company ("Sentry Insurance"), a Wisconsin
corporation, is affiliated with the Registrant, a Maryland corporation.
2. Sentry Insurance is also affiliated with Sentry Insurance Foundation,
Inc., a Wisconsin corporation.
3. Sentry Insurance is also affiliated with Sentry Lloyd's of Texas, a
Texas Lloyd's corporation.
4. The following companies are wholly-owned subsidiaries of Sentry Insurance:
(a) Middlesex Insurance Company ("Middlesex"), a Wisconsin corporation;
(b) Dairyland Insurance Company ("Dairyland"), a Wisconsin corporation;
(c) Sentry Life Insurance Company ("Sentry Life"), a Wisconsin corporation;
(d) Parker Stevens Agency, Inc., a Wisconsin corporation;
(e) Parker Stevens Agency of Mass., Inc., a Massachusetts corporation;
(f) Sentry Investment Management, Inc., a Delaware corporation;
(g) Sentry Equity Services, Inc., a Delaware corporation;
(h) Sentry Services, Inc., a Wisconsin corporation;
(i) Sentry Aviation Services, Inc., a Wisconsin corporation; and
(j) WAULECO, Inc., a Wisconsin corporation.
5. Patriot General Insurance Company, a Wisconsin corporation, is a wholly-owned
subsidiary of Middlesex.
6. Sentry Life Insurance Company of New York, a New York corporation, is a
wholly-owned subsidiary of Sentry Life.
7. Dairyland County Mutual Insurance Company of Texas, a Texas corporation, is
affiliated with Dairyland.
</TABLE>
ITEM 26. Number of Holders of Securities (As of January 15, 1998)
Title of Class Number of Record Holders
- -------------- ------------------------
Common Stock, $1.00 par value 2,800
ITEM 27. Indemnification
The Maryland General Corporation Law, Section 2-418 provides for
indemnification of directors, officers, employees and agents. Officers,
directors, employees and agents of the Fund will be indemnified to the fullest
extent allowed by Maryland law.
Article VII, Section "H" of the Registrant's Articles of Incorporation
provides that the Registrant will indemnify its directors and officers against
expenses, judgments, fines and settlements reasonable incurred by them by reason
of their offices, provided that such persons acted in good faith and subject to
other specified conditions. In addition, the same section of the Articles
permits the Registrant to purchase insurance against certain liabilities of
directors and officers.
In accordance with Section 17(h) of the Investment Company Act, this
provision of the Articles shall not protect any person against any liability to
the Registrant or its stockholders to which he or she would otherwise be subject
by reason of willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his or her office.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers, and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such
<PAGE> 42
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer, or controlling persons of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question of whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
The Registrant participates in an insurance policy covering the
Registrant and the Investment Adviser and their respective directors, officers,
and employees against certain liabilities arising out of acts, omissions and
breaches of duty in connection with their offices and employment with such
entities. This insurance policy has limits of $2,500,000 per occurrence and
$10,000,000 in the aggregate.
ITEM 28. Business and Other Connections of Investment Adviser
Sentry Investment Management, Inc., the investment adviser of the
Registrant, also acts as investment adviser to other companies (primarily
insurance companies) affiliated with the adviser.
The following table describes all other business, professions,
vocations and employments of a substantial nature in which each director or
officer of the adviser is, or has been during the past two fiscal years, engaged
for his own account or in the capacity of director, officer, employee, partner
or trustee. The principal business address for the companies listed is 1800
North Point Drive, Stevens Point, Wisconsin 54481.
<TABLE>
<CAPTION>
Capacity with
Sentry Investment Substantial Business
Name Management, Inc. and Other Connections
---- ----------------- ----------------------
<S> <C> <C>
Steven R. Boehlke Director and President of Sentry Fund,
President Inc.; Vice President-
Investments of Sentry
Insurance a Mutual Company
("Sentry Insurance"); and a
director of various other
companies in the Sentry Group
Larry C. Ballard Director (Chairman Chairman of the Board of
of the Board) of Sentry Insurance; Chairman
of the Board of Sentry Life
Insurance Company; and a
director of various other
companies in the Sentry Group.
William M. O'Reilly Secretary and Director Vice President, General
Counsel and Corporate
Secretary of Sentry Insurance;
Secretary of Sentry Fund,
Inc.; and an officer and a
director of various other
companies in the Sentry Group.
William J. Lohr Treasurer Vice President and Treasurer
of Sentry Insurance, and
Treasurer and Director of
various companies in the
Sentry Group
Dale R. Schuh Director Chief Executive Officer and
President of Sentry Insurance,
and an officer or a director
of various other companies in
the Sentry Group.
</TABLE>
<PAGE> 43
<TABLE>
<CAPTION>
<S> <C> <C>
ITEM 29. Principal Underwriter
(a) None
(b) The principal business address of each director and officer of
the principal underwriter is 1800 North Point Drive, Stevens
Point, Wisconsin 54481. Other required information is as
follows:
</TABLE>
<TABLE>
<CAPTION>
(1) (2) (3)
Name Positions and Positions and
------ Offices with Underwriter Offices with Registrant
------------------------ -----------------------
<S> <C> <C>
John A. Stenger President Vice President
David M. Potts Vice President None
William J. Lohr Treasurer Treasurer and Director
William M. O'Reilly Secretary Secretary
Larry C. Ballard Director (Chairman None
of the Board)
Dale R. Schuh Director Director (Chairman
of the Board)
</TABLE>
(c) Inapplicable.
ITEM 30. Location of Accounts and Records
All accounts, books and other documents are maintained at the offices
of Sentry Equity Services, Inc., 1800 North Point Drive, Stevens Point,
Wisconsin 54481.
ITEM 31. Management Services
None.
ITEM 32. Undertakings
The Registrant hereby undertakes to furnish each person to whom a
Prospectus is delivered a copy of the Registrant's latest Annual Report to
Shareholders, upon request and without charge.
<PAGE> 44
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that this amendment to
its Registration Statement meets all the requirements for effectiveness of this
Registration pursuant to Rule 485(b) under the Securities Act of 1933, and has
duly caused this amendment to its Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized in the City of Stevens
Point, and State of Wisconsin, on February 9, 1998.
SENTRY FUND, INC., Registrant
BY: s/ Steven R. Boehlke
----------------------------
Steven R. Boehlke, President
Pursuant to the requirements of the Securities Act of 1933, this
amendment to the Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated:
Principal Executive Officers and Directors Date
- ------------------------------------------ ----
s/ Dale R. Schuh February 20, 1998
- ------------------------------------------ -----------------------
Dale R. Schuh, Director and Chairman
of the Board (Principal Executive Officer)
s/ Steven R. Boehlke February 20, 1998
- ------------------------------------------ -----------------------
Steven R. Boehlke, President
s/ William J. Lohr February 20, 1998
- ------------------------------------------ -----------------------
William J. Lohr, Treasurer and Director
(Principal Financial Officer)
s/ John A. Stenger February 20, 1998
- ------------------------------------------ -----------------------
John A. Stenger, Vice President
s/ William M. O'Reilly February 20, 1998
- ------------------------------------------ -----------------------
William M. O'Reilly, Secretary
s/ David W. Graebel February 20, 1998
- ------------------------------------------ -----------------------
David W. Graebel, Director
s/ Thomas R. Copps February 20, 1998
- ------------------------------------------ -----------------------
Thomas R. Copps, Director
s/ Steven J. Umland February 20, 1998
- ------------------------------------------ -----------------------
Steven J. Umland, Director
<PAGE> 45
INDEX TO EXHIBITS
Exhibits
<TABLE>
<CAPTION>
<S> <C>
1. Articles of Incorporation of Registrant*
2. (a) Bylaws of Registrant*
(b) Rules and Regulations adopted by Board of Directors*
3. None
4. Specimen Stock Certificate*
5. Investment Advisory Agreement with Sentry Investment Management, Inc. dated March 1, 1991*
6. (a) Underwriter Agreement with Sentry Equity Services, Inc. dated December 4, 1990*
(b) Form of Dealer Agreement*
7. None
8. Custodian Agreement with Citibank, N.A. dated May 1, 1989*
9. (a) Agency Agreement with Sentry Equity Services, Inc. dated May 14, 1970*
(b) Name Agreement with Hardware Mutual Casualty Company dated May 9, 1969*
(c) Agreement between Sentry Equity Services, Inc. and Hardware Mutual Casualty Company
dated May 14, 1970*
10. Opinion and Consent of Vedder, Price, Kaufman & Kammholz, Counsel for Registrant, dated May 15,
1970*
11. Consent of Coopers & Lybrand L.L.P.
12. None
13. Subscription Agreement executed by Sentry Life Insurance Company dated July 9, 1969*
14. (a) Model Keogh Plan, Custodial Agreement and Adoption Agreement*
(b) Model Individual Retirement Custodial Account*
(c) Model IRA Disclosure Statement*
(d) Model Roth Individual Retirement Custodial Account
(e) Model Education Individual Retirement Custodial Account
15. None
16. Performance Computation Schedule*
17. Financial Data Schedule**
18. None
</TABLE>
** Items 1, 2(a), 2(b), 4, 5, 6(a), 6(b), 8, 9(a), 9(b), 9(c), 10, 13, 14(a),
14(b), 14(c), and 16 are incorporated herein by reference to such items
in the Registration Statement under the Securities Act of 1933 of
Registrant in Amendment No. 34 to Form N-1A filed on or about February 28,
1997.
** Item 17 is incorporated by reference to such item in the Form N-SAR
filing made by Registrant on December 30, 1997.
<PAGE> 1
EXHIBIT 11
<PAGE> 2
[COOPERS & LYBRAND LETTERHEAD]
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in Post-Effective Amendment No. 35 to the
Registration Statement of Sentry Fund, Inc. (the "Fund") on Form N1-A (File No.
2-34038) of our report dated November 21, 1997, on our audit of the financial
statements and financial highlights of the Fund. We also consent to the
reference to our Firm under the caption "Independent Accountant."
s/ Coopers & Lybrand L.L.P.
Chicago, Illinois
February 16, 1998
<PAGE> 1
EXHIBIT 14(d)
<PAGE> 2
<TABLE>
<S><C>
Form 5305-RA | |
(January 1998) | |
| Roth Individual Retirement Custodial Account | DO NOT File
| (Under section 408A of the Internal Revenue (Code) | With the
Department of the Treasury | | Internal Revenue Service
Internal Revenue Service | |
- -----------------------------------------------------------------------------------------------------------------
Name of depositor |Date of birth of depositor | Social security number
| | | |
- -----------------------------------------------------------------------------------------------------------------
Address of depositor |Check if Roth Conversion IRA / /
|Check if Amendment.. / /
- -----------------------------------------------------------------------------------------------------------------
Name of custodian |Address or principal place of business of custodian
Marshall & Ilsley | 1000 North Water Street
Trust Company | Milwaukee, Wisconsin 53202
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
The depositor whose name appears above is establishing a Roth individual
retirement account (Roth IRA) under section 408A to provide for his or her
retirement and for the support of his or her beneficiaries after death.
The custodian named above has given the depositor the disclosure statement
required under Regulations section 1.408-6.
The depositor assigned the custodial account $
--------------------
The depositor and the custodian make the following agreement:
- -------------------------------------------------------------------------------
Article I
1. If this Roth IRA is not designated as a Roth Conversion IRA, then, except
in the case of a rollover contribution described in section 408A(e), the
custodian will accept only cash contributions and only up to a maximum amount
of $2,000 for any tax year of the depositor.
2. If this Roth IRA is designated as a Roth Conversion IRA, no contributions
other than IRA Conversion Contributions made during the same tax year will be
accepted.
Article II
The $2,000 limit described in Article I is gradually reduced to $0 between
certain levels of adjusted gross income (AGI). For a single depositor, the
$2,000 annual contribution is phased out between AGI of $95,000 and $110,000;
for a married depositor who files jointly, between AGI of $150,000 and $160,000
and for a married depositor who files separately, between $0 and $10,000. In
the case of a conversion, the custodian will not accept IRA Conversion
Contributions in a tax year if the depositor's AGI for that tax year exceeds
$100,000 or if the depositor is married and files a separate return. Adjusted
gross income is defined in section 408A(c)(3) and does not include IRA
Conversion Contributions.
Article III
The depositor's interest in the balance in the custodial account is
nonforfeitable.
Article IV
1. No part of the custodial funds may be invested in life insurance
contracts, nor may the assets of the custodial account be commingled with other
property except in a common trust fund or common investment fund (within the
meaning of section 408(a)(5)).
2. No part of the custodial funds may be invested in collectibles (within
the meaning of section 408(m)) except as otherwise permitted by section
408(m)(3), which provides an exception for certain gold, silver, and platinum
coins, coins issued under the laws of any state, and certain bullion.
Article V
1. If the depositor dies before his or her entire interest is distributed
to him or her and the depositor's surviving spouse is not the sole beneficiary,
the entire remaining interest will, at the election of the depositor, if the
depositor has not so elected, at the election of the beneficiary or
beneficiaries, either:
(a) Be distributed by December 31 of the year containing the fifth
anniversary of the depositor's death, or
(b) Be distributed over the life expectancy of the designated
beneficiary starting no later than December 31 of the year following the year
of the depositor's death
If distributions do not begin by the date described in (b),
distribution method (a) will apply.
2. In the case of distribution method 1(b) above, to determine the minimum
annual payment for each year, divide the depositor's entire interest in the
custodial account as of the close of business on December 31 of the preceding
year by the life expectancy of the designated beneficiary using the attained
age of the designated beneficiary as of the beneficiary's birthday in the year
distributions are required to commence and subtract 1 for each subsequent year.
3. If the depositor's spouse is the sole beneficiary on the depositor's date
of death, such spouse will then be treated as the depositor.
Article VI
1. The depositor agrees to provide the custodian with information necessary
for the custodian to prepare any reports required under sections 408(i) and
408A(d)(3)(E), Regulations sections 1.408-5 and 1.408-6, and under guidance
published by the Internal Revenue Service.
2. The custodian agrees to submit reports to the Internal Revenue Service
and the depositor prescribed by the Internal Revenue Service.
- -------------------------------------------------------------------------------
Cat. No. 25094Y Form 5305-RA (1-98)
30-142-RA 1-98
<PAGE> 3
Form 5305-RA (1-98) Page 2
- --------------------------------------------------------------------------------
Article VII
Notwithstanding any other articles which may be added or incorporated, the
provisions of Articles I through IV and this sentence will be controlling. Any
additional articles that are not consistent with section 408A, the related
regulations, and other published guidance will be invalid.
Article VIII
This agreement will be amended from time to time to comply with the
provisions of the Code, related regulations, and other published guidance.
Other amendments may be made with the consent of the persons whose signatures
appear below.
- --------------------------------------------------------------------------------
Note: The following space (Article IX) may be used for any other provisions you
want to add. If you do not want to add any other provisions, draw a
line through this space. If you do add provisions, they must comply
with applicable requirements of state law and the Internal Revenue
Code.
- --------------------------------------------------------------------------------
Article IX
1. THE NAMED BENEFICIARY IS:
___________________________________
2. The entire amount contributed is a roll-over from an employee trust
or annuity plan qualified under section 401(a) or 403(a): [ ] Yes [ ] No
3. Minimum Contribution: $500 initial and $50 subsequent for Sentry Fund,
Inc. (subject to maximums described in General Instructions below).
4. All contributions will be invested in shares of Sentry Fund, Inc.
5. Custodian fees to be changed per calendar year against each custodial
account:
$5.00 Annual maintenance change.
$1.00 For each contribution in excess of one per calendar year.
$5.00 For each distribution from the account, except the charge
will be $1.00 for each installment distribution.
$5.00 For each withdrawal of excess contributions.
- --------------------------------------------------------------------------------
Depositor's signature....................................Date...................
Custodian's signature....................................Date...................
Witness' signature.......................................Date...................
(Use only if signature of the depositor or the custodian is required to be
witnessed.)
- --------------------------------------------------------------------------------
GENERAL INSTRUCTIONS
Section references are to the Internal Revenue Code unless otherwise noted.
PURPOSE OF FORM
Form 5305-RA is a model custodial account agreement that meets the requirements
of section 408A and has been automatically approved by the IRS. A Roth
individual retirement account (Roth IRA) is established after the form is
fully executed by both the individual (depositor) and the custodian. This
account must be created in the United States for the exclusive benefit of the
depositor or his or her beneficiaries.
Do not file Form 5305-RA with the IRS. Instead, keep it for your records.
Unlike contributions to traditional individual retirement arrangements,
contributions to a Roth IRA are not deductible from the depositor's gross
income; and distributions after 5 years that are made when the depositor is
59-1/2 years of age or older or on acocunt of death, disability, or the purchase
of a home by a first-time homebuyer (limited to $10,000), are not includible in
gross income. For more information on Roth IRAs, including the required
disclosure the depositor can get from the custodian, see Pub. 590, Individual
Retirement Arrangements (IRAs).
This Roth IRA can be used by a despositor to hold: (1) IRA Conversion
Contributions, amounts rolled over or transferred from another Roth IRA, and
annual cash contributions of up to $2,000 from the depositor; or (2) if
designated as a Roth Conversion IRA (by checking the box on page 1), only IRA
Conversion Contributions for the same tax year.
To simplify the identification of funds distributed from Roth IRAs, depositors
are encouraged to maintian IRA Conversion Contributions for each tax year in a
separate Roth IRA.
DEFINITIONS
Roth Conversion IRA. A Roth Conversion IRA is a Roth IRA that accepts only IRA
Conversion Contributions made during the same tax year.
IRA Conversion Contributions. IRA Conversion Contributions are amounts rolled
over, transferred from a nonRoth IRA to a Roth IRA. A nonRoth IRA is an
individual retirement account or annuity described in section 408(a) or 408(b),
other than a Roth IRA.
Custodian. The custodian must be a bank or savings and loan association, as
defined in section 408(n), or any person who has the approval of the IRS to act
as custodian.
Depositor. The depositor is the person who establishes the custodial account.
SPECIFIC INSTRUCTIONS.
Article I. The depositor may be subject to a 6 percent tax on excess
contributions if (1) contributions to other individual retirement arrangements
of the depositor have been made for the same tax year, (2) the depositor's
adjusted gross income exceeds the applicable limits in Article II for the tax
year, or (3) the depositor's and spouse's compensation does not exceed the
amount contributed for them for the tax year. The depositor should see the
disclosure statement or Pub. 590 for more information.
Article IX.-Article IX and any that follow it may incorporate additional
provisions that are agreed to by the despositor and custodian to complete the
agreement. They may include, for example, definitions, investment powers,
voting rights, exculpatory provisions, amendment and termination, removal of the
custodian, custodian's fees, state law requirements, beginning date of
distributions, accepting only cash, treatment of excess contributions,
prohibited transactions with the depositor, etc. Use additional pages if
necessary and attach them to this form.
Note: Form 5305-RA may be reproduced and reduced in size for adaption to
passbook purposes.
<PAGE> 1
EXHIBIT 14(e)
<PAGE> 2
Form 5305-EA
<TABLE>
<S><C>
EDUCATION INDIVIDUAL RETIREMENT
(January 1988) CUSTODIAL ACCOUNT DO NOT File
Department of the Treasury With the Internal
Internal Revenue Service (Under Section 530 of the Internal Revenue Code) Revenue Service
- -----------------------------------------------------------------------------------------------
Name of Depositor Depositor's Identification number
Check if Amendment [ ]
- -----------------------------------------------------------------------------------------------
Named of designated beneficiary Designated beneficiary's indentification number
- -----------------------------------------------------------------------------------------------
Address of designated beneficiary Date of Birth designated beneficiary
- -----------------------------------------------------------------------------------------------
NAme of responsible individual (generally the parent or guardian of the designated beneficiary)
- -----------------------------------------------------------------------------------------------
Address of responsible individual
- -----------------------------------------------------------------------------------------------
Name of Custodian MARSHALL & ILSLEY Address or principal place of business of
TRUST COMPANY custodian
1000 North Water Street, Milwaukee, WI 53202
- -----------------------------------------------------------------------------------------------
</TABLE>
The depositor whose name appears above is establishing an education
individual retirement custodial account under section 530 for the benefit of the
designated beneficiary whose name appears above exclusively to pay for the
qualified higher education expenses, within the meaning of section 530(b)(2), of
such designated beneficiary.
The custodian named above has provided the depositor with a concise statement
disclosing the provisions governing section 530. This disclosure statement must
include an explanation of the statutory requirements applicable to, and the
income tax consequences of establishing and maintaining an account under,
section 530. Providing the depositor with a copy of Notice 97-60, 1997-46
I.R.B. 8 (November 17, 1997) is considered a sufficient disclosure statement.
The custodian also will provide a copy of this form and the disclosure statement
to the responsible individual, as defined in Article VI below, if the
responsible individual is not the same person as the depositor.
The depositor assigned the custodial account.... dollars ($.......) in
cash.
The depositor and the custodian make the following agreement:
- --------------------------------------------------------------------------------
Article I
The custodian may accept additional cash contributions.
These contributions may be from the depositor, or from any other individual,
for the benefit of the designated beneficiary, provided the designated
beneficiary has not attained the age of 18 as of the date such contributions
are made. Total contributions that are not rollover contributions described in
section 530(d)(5) are limited to a maximum amount of $500 for the taxable
year.
Article II
The maximum aggregate contribution that an individual may make to the
custodial account in any year may not exceeed the $500 in total contributions
that the custodial account can receive. In addition, the maximum aggregate
contribution that an individual may make to the custodial account in any year is
phased out for unmarried individuals who have modified adjusted gross income
(AGI) between $95,000 and $110,000 for the year of the contribution and for
married individuals who file joint returns with modified AGI between $150,000
and $160,000 for the year of the contribution. Unmarried individuals with
modified AGI above $110,000 for the year and married individuals who file
joint returns and have modified AGI above $160,000 for the year may not make a
contribution for that year. Modified AGI is defined in section 530(c)(2).
Aticle III
No part of the custodial account funds may be invested in life insurance
contracts, nor may the assets of the custodial account be commingled with other
property except in a common investment fund (within the meaning of section
530(b)(1)(D)).
Article IV
1. Any balance to the credit of the designated beneficiary on the date
on which such designated beneficiary attains age 30 shall be distributed to the
designated beneficiary within 30 days of such date.
2. Any balance to the credit of the designated beneficiary shall be
distributed to the estate of the designated beneficiary within 30 days of the
date of such designated beneficiary's death.
Article V
The depostor shall have the power to direct the custodian regarding the
investment of the above-listed amount assigned to the custodial account
(including earnings thereon) in the investment choices offered by the custodian.
The responsible individual, however, shall have the power to redirect the
custodian regarding the investment of such amounts, as well as the power to
direct the custodian regarding the investment of all additional contributions
(including earning thereon) to the custodial account. In the event that the
responsible individual does not direct the custodian regarding the investment of
additional contributions (including earnings thereon), the initial investment
direction of the despositor also will govern all additional contributions made
to the custodial account until such time as the responsible individual otherwise
directs the custodian. Unless otherwise provided in this agreement; the
responsible individual also shall have the power to direct the custodian
regarding the administration, management, and distribution of the account.
Article VI
The "responsible individual" named by the depositor shall be a parent or
guardian of the designated beneficiary. The custodial account shall have only
one responsible individual at any time if the responsible individual becomes
incapacitated or dies while the designated beneficiary is a minor under state
law, the successor responsible individual shall be the person named to succeed
in that capacity by the preceding responsible individual in a witnessed writing
or, if no successor is so named, the successor responisible individual shall be
the designated beneficairy's other parent or succesor gaurdian. Unless otherwise
directed by checking the option below, at the time that the designated
beneficiary attains the age of majority under state law, the designated
beneficiary becomes the rsponsible individual.
---- Option (This portion is effective only if checked): The
responsible individual shall continue to serve as the responsible indvidual for
the custodial account after the designated beneficiary attains the age of
majority under state law and until such time as all assets have been distributed
from the custodial account and the custodial account terminates. If the
responsible individual becomes incapacitated or dies after the designated
beneficiary reaches the age of majority under state law, the responsible
individual shall be the designated beneficiary.
- -------------------------------------------------------------------------------
Form 5305-EA (1-98)
<PAGE> 3
Form 5305-EA (1-98) Page 2
- --------------------------------------------------------------------------------
ARTICLE VII
The responsible individual______ may or ______ may not change the
beneficiary designated under this agreement to another member of the designated
beneficiary's family described in section 529(e)(2) in accordance with the
custodian's procedures.
ARTICLE VIII
1. The depositor agrees to provide the custodian with the information
necessary for the custodian to prepare any reports required under section
530(h).
2. The custodian agrees to submit reports to the Internal Revenue
Service and the responsible individual as prescribed by the Internal Revenue
Service.
ARTICLE IX
Notwithstanding any other articles which may be added or incorporated,
the provisions of Article I through IV will be controlling. Any additional
articles that are not consistent with section 530 and related regulations will
be invalid.
ARTICLE X
This agreement will be amended from time to time to comply with the
provisions of the Code and related regulations. Other amendments may be made
with the consent of the depositor and the custodian whose signatures appear
below.
- --------------------------------------------------------------------------------
Note: The following space (Article XI) may be used for any other provisions
you want to add. If you do not want to add any other provisions, draw a line
through this space. If you do add provisions, they must comply with applicable
requirements of state law and the Internal Revenue Code.
- --------------------------------------------------------------------------------
ARTICLE XI
1. The entire amount contributed is a roll-over from another Education IRA:
/ / Yes / / No
2. Minimum Contribution: $500 annually.
3. All contributions will be invested in shares of Sentry Fund, Inc.
4. Custodian fees to be charged per calendar year against each custodial
account:
$5.00 Annual maintenance charge.
$1.00 For each contribution in excess of one per calendar year.
$5.00 For each distribution from the account, except the charge will
be $1.00 for each installment distribution.
$5.00 For each withdrawal of excess contributions.
- --------------------------------------------------------------------------------
Depositor's signature.................................. Date...................
Custodian's signature.................................. Date...................
Witness' signature..................................... Date...................
(Use only if signature of the depositor or the custodian is required to be
witnessed.)
- --------------------------------------------------------------------------------
GENERAL INSTRUCTIONS
Section references are to the Internal Revenue Code unless otherwise noted.
PURPOSE OF FORM
Form 5305-EA is a model custodial account agreement that meets the requirements
of section 530(a) and has been automatically approved by the IRS. An education
individual retirement account (Ed IRA) is established after the form is fully
executed by both the depositor and the custodian. This account must be created
in the United States for the exclusive purpose of paying the qualified higher
education expenses of the designated beneficiary.
Do not file Form 5305-EA with the IRS. Instead, keep it for your
records.
For more information, including information about the required
disclosure you must get from your custodian, see Notice 97-60, 1997-46 I.R.B. 8
(November 17, 1997).
DEFINITIONS
CUSTODIAN. The custodian must be a bank or savings and loan association, as
defined in section 408(n), or any person who has the approval of the IRS to act
as custodian. Any person who may serve as a custodian of a traditional IRA may
serve as the custodian of an Ed IRA.
DEPOSITOR. The depositor is the person who establishes the custodial account.
Designated beneficiary. The designated beneficiary is the person on whose
behalf the custodial account has been established.
RESPONSIBLE INDIVIDUAL. The responsible individual, generally, is a parent or
guardian of the designated beneficiary. However, under certain circumstances,
the responsible individual may be the designated beneficiary.
IDENTIFICATION NUMBERS
The depositor's and designated beneficiary's social security numbers will
serve as their identification numbers. If the depositor is a nonresident
alien and does not have an identification number, write "Foreign" in the block
where the number is requested. The designated beneficiary's social security
number is the identification number of his or her Ed IRA. An employer
identification number (EIN) is required only for an Ed IRA for which a return
in filed to report unrelated business income. An EIN is required for a common
fund created for Ed IRAs.
SPECIFIC INSTRUCTIONS
ARTICLE XI. Article XI and any that follow may incorporate additional
provisions that are agreed to by the depositor and custodian to complete the
agreement. They may include, for example, provisions relating to:
definitions, investment powers, voting rights, exculpatory provisions,
amendment and termination, removal of the custodian, custodian's fees, state
law requirements, treatment of excess contributions, and prohibited
transactions with the depositor, designated beneficiary, or responsible
individual, etc. Use additional pages as necessary and attach them to this
form.
OPTIONAL PROVISIONS IN ARTICLE VI AND ARTICLE VII. Form 5305-EA may be
reproduced in a manner that provides only those optional provisions offered by
the custodian.
NOTE: Form 5305-EA may be reproduced and reduced in size for adaption to
passbook purposes.
- --------------------------------------------------------------------------------
