<PAGE> 1
[SENTRY FUND, INC. LOGO]
[LOGO]
No sales charges
-
No redemption fees
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No 12b-1 fees
ANNUAL REPORT
OCTOBER 31, 1999
[SENTRY FUND, INC. LOGO]
<PAGE> 2
[SENTRY FUND, INC. LETTERHEAD]
1800 North Point Drive - Stevens Point, Wisconsin 54481
MESSAGE TO SHAREHOLDERS DECEMBER 2, 1999
The continued growth of the U.S. economy and persistent rise in the stock market
has rekindled inflation fears at the Federal Reserve. In response, the Federal
Reserve has been tightening monetary policy resulting in a steady rise in
interest rates since mid 1999.
The U.S. Gross Domestic Product (GDP) slowed somewhat in the second quarter,
recording a modest increase of 1.6%. This could prove to be the slowest quarter
of the year as the third quarter GDP rebounded to 4.8% and consensus opinion for
the fourth quarter is in excess of 3%.
The Federal Reserve tried to clamp down on growth by raising the Federal funds
rate to fight off the potential for a rise in inflation. The Federal Reserve's
monetary policy has resulted in an upward bias in interest rates, as U.S.
Government Treasury rates have increased approximately 1% since the end of 1998.
We believe the tightening has been sufficient to slow the economy modestly and
keep inflation in check.
Uncertainty about the direction of Federal Reserve Policy has generated
volatility in the equity markets. We expect this to persist until the Federal
Reserve moves to a neutral or loosening posture.
We appreciate your participation and support of the Sentry Fund. We look forward
to your continued participation in the future.
Sincerely,
James J. Weishan
James J. Weishan
President
[LINE GRAPH]
Average Annual Total Return** Periods Ended October 31, 1999
<TABLE>
<CAPTION>
1 year 5 year 10 year
<S> <C> <C> <C>
Sentry Fund -.57% 13.36% 11.87%
S&P "500" 25.75% 26.03% 17.82%
Russell 2000 15.00% 12.66% 11.71%
</TABLE>
**"Total Return" is calculated including reinvestment of all income dividends
and capital gain distributions. Results represent past performance, and do not
indicate future results. The value of an investment in the Fund and the return
on the investment both will fluctuate, and redemption proceeds may be higher or
lower than an investor's original cost. When first organized in 1970, the Fund
applied a sales charge to each share purchase. The Fund's sales charge was
eliminated on March 1, 1991. The performance data shown does not reflect its
deduction, and had it been reflected, the charge would reduce the performance
quoted.
The S&P "500" Index is an unmanaged index generally considered to be
representative of stock market activity. This data is derived by Sentry Equity
Services, Inc. and the Total Return includes reinvestment of all income.
<PAGE> 3
PORTFOLIO OF INVESTMENT SECURITIES--OCTOBER 31, 1999 SENTRY FUND, INC.
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
------ --------
<S> <C> <C>
COMMON STOCKS (97.4%)
BUSINESS & CONSUMER SERVICES (19.0%)
52,800+ Advantage Learning Systems.... $1,458,600
150,000 Analysts Int'l Corp........... 1,753,125
25,000 Block (H & R), Inc............ 1,064,062
30,800 Central Parking............... 825,825
50,000+ Championship Auto Racing...... 1,146,875
10,000+ Consolidated Graphics......... 200,000
25,000 Deluxe Corp................... 706,250
140,000 Ennis Business Forms Inc...... 1,233,750
135,000+ Fiserv, Inc................... 4,320,000
60,000 Regis Corp.................... 1,113,750
50,000+ Republic Services, Inc........ 612,500
75,000 Stewart Enterprises Class A... 356,250
35,000+ Sybron Int'l Corp. (Wis)...... 833,438
100,000+ United Stationers, Inc........ 2,550,000
DRUG & HEALTH CARE (0.6%)
160,000+ Endosonics Corp............... 595,000
ELECTRONICS (4.0%)
30,000 Int'l. Business Machines Corp. 2,951,250
190,000+ Savior Technology Group....... 878,750
ENERGY (4.5%)
27,300 Cabot Oil & Gas Corp.......... 440,212
10,000 Exxon Corporation............. 740,625
250,000+ Petroglyph Energy Inc......... 750,000
150,000 Range Resources Corp.......... 562,500
20,000 Texaco Inc.................... 1,227,500
20,000 USX - Marathon Group.......... 582,500
FINANCIAL (18.9%)
39,375 Amsouth Bancorporation........ 1,013,906
48,290 Associated Banc - Corp........ 1,857,656
99,225 Charter One Financial......... 2,437,214
74,100 Community First Bankshares.... 1,410,216
30,000 Home Federal Bancorp Co....... 656,250
80,800 National City Corp............ 2,383,600
60,000 PNC Bank Corp................. 3,577,500
80,750 Southtrust Corp............... 3,230,000
65,884 Washington Federal, Inc....... 1,502,979
FOODS & RESTAURANT (14.6%)
107,500+ Consolidated Products......... 1,236,250
41,000 Cooker Restaurant Corp........ 130,688
180,000+ Ihop Corp..................... 3,251,250
70,000 McDonald's Corp............... 2,887,500
119,400+ Morton's Restaurant Group..... 2,074,575
50,000+ Outback Steakhouse............ 1,150,000
50,000+ Rare Hospitality Int'l........ 996,875
70,000 Ruby Tuesday Inc.............. 1,334,375
50,000+ U S Foodservice............... 959,375
</TABLE>
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
------ --------
<S> <C> <C>
MANUFACTURING (17.5%)
102,500 Applied Power................. 2,978,906
20,000 Black & Decker Corp........... 860,000
80,000 BICC General Capital Inc...... 590,000
63,000+ ITI Technologies.............. 1,708,875
132,500+ Jason Inc..................... 1,002,031
90,000 Manitowoc Co. Inc............. 2,688,750
20,000 Maytag Corp................... 801,250
120,000 Oshkosh Truck Corp............ 3,607,500
100,000+ Rayovac Corp.................. 2,487,500
RETAIL (6.8%)
195,000 Hancock Fabrics Inc........... 804,375
20,000+ Men's Wearhouse Inc. (The).... 438,750
160,000 Walgreen Company ............. 4,030,000
30,000+ Zale Corp..................... 1,256,250
TOBACCO (5.8%)
120,000 Philip Morris Cos., Inc....... 3,022,500
90,000 UST, Inc...................... 2,491,875
TRANSPORTATION (5.7%)
92,500 Harley-Davidson, Inc.......... 5,486,406
----------
TOTAL COMMON STOCKS 93,247,939
(Cost $66,586,328) ----------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
---------
<S> <C> <C>
SHORT-TERM SECURITIES (2.6%)
COMMERCIAL PAPER - DISCOUNTED
$1,447,000 Ford Motor Credit Corp.
Note due 11/2/99 1,446,788
1,000,000 Chevron USA Inc.
Note due 11/4/99 999,560
------------
TOTAL SHORT-TERM SECURITIES 2,446,348
(Cost $2,446,348) ------------
TOTAL INVESTMENTS (100.0%) 95,694,287
(Cost $69,032,676)
CASH AND RECEIVABLES
LESS LIABILITIES (0.0%) (5,192)
------------
NET ASSETS (100.0%) $ 95,689,095
============
</TABLE>
+Non-income producing security during the year ended October 31, 1999.
See accompanying notes to financial statements
<PAGE> 4
SENTRY FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
October 31, 1999
<TABLE>
<S> <C> <C>
ASSETS:
Investments in securities, at
value (cost $69,032,676) $95,694,287
Cash 134,217
Dividends receivable 62,516
-----------
Total assets $95,891,020
LIABILITIES:
Investment advisory fees 189,232
Transfer agent fees 2,530
Custodian fees 663
Professional services 9,500
-----------
Total liabilities 201,925
-----------
NET ASSETS $95,689,095
===========
ANALYSIS OF NET ASSETS:
Paid in capital $55,089,417
Undistributed net investment income 519,691
Accumulated undistributed net realized gain
on sales of investments 13,418,376
Net unrealized appreciation on investments 26,661,611
-----------
Net assets, for 5,423,325 shares outstanding $95,689,095
===========
Net Asset Value and
Redemption and Offering Price per Share $ 17.64
===========
</TABLE>
STATEMENT OF OPERATIONS
For the Year Ended October 31, 1999
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Income:
Dividends $1,554,049
Interest 243,983
----------
Total investment income $ 1,798,032
Expenses:
Investment advisory fees 815,524
Transfer agent fees 30,091
Professional services 14,296
Printing, stationery and postage 5,221
Licenses and fees 19,605
Directors' fees 3,000
Other expenses 26,473
----------
Total expenses 914,210
-----------
Net investment income $ 883,822
-----------
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS:
Net realized gain on sales of investments 13,802,594
Decrease in unrealized appreciation
of investment securities (14,526,417)
-----------
Net realized and unrealized loss
on investments (723,823)
-----------
Net increase in net assets resulting
from operations $ 159,999
===========
</TABLE>
See accompanying notes to financial statements
<PAGE> 5
SENTRY FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
For the Years Ended October 31, 1999 and 1998
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
INCREASE(DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income $ 883,822 $ 645,532
Net realized gain on sales
of investments 13,802,594 11,134,702
Decrease in unrealized
appreciation on investments (14,526,417) (12,571,994)
------------- -------------
Net change in net assets
resulting from operations 159,999 (791,760)
------------- -------------
DISTRIBUTIONS:
Dividends from net
investment income (673,692) (587,956)
Distributions of net realized gains (11,228,402) (19,130,268)
------------- -------------
Total distributions to shareholders (11,902,094) (19,718,224)
------------- -------------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sale of shares 3,763,233 7,148,297
Net asset value of shares issued to
shareholders in reinvestment
of distributions 11,731,012 19,569,199
------------- -------------
15,494,245 26,717,496
Cost of shares redeemed (19,912,629) (12,636,079)
------------- -------------
Net (decrease) increase in net assets
derived from share transactions (4,418,384) 14,081,417
------------- -------------
Total decrease in net assets (16,160,479) (6,428,567)
NET ASSETS:
Beginning of year 111,849,574 118,278,141
------------- -------------
End of year $ 95,689,095 $ 111,849,574
============= =============
</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 require mangement to make certain estimates and
assumptions at the date of the financial statements. Actual results could
differ from those estimates.
The following summarizes the significant accounting policies of the Fund.
Security Valuation -- Portfolio securities which are traded on a national
securities exchange are valued at the last price as of the close of trading
on the New York Stock Exchange 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. 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
<PAGE> 6
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
2. CAPITAL SHARES
At October 31, 1999, there were 10,000,000 shares of $1 par value capital
stock authorized. Transactions in capital stock for the years ended October
31, 1999 and 1998 were as follows:
<TABLE>
<CAPTION>
1999 1998
-------- ---------
<S> <C> <C>
Shares sold 199,698 343,870
Shares issued to shareholders in reinvestment of distributions 638,663 985,343
---------- ---------
838,361 1,329,213
Shares redeemed (1,064,164) (619,438)
---------- ---------
Net (decrease) increase in shares outstanding (225,803) 709,775
========== =========
</TABLE>
3. PURCHASES AND SALES OF SECURITIES
Purchases and sales of common stock during the year ended October 31, 1999
aggregated $25,275,871 and $35,245,584, 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 assets 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 1.5% of the first $30,000,000 and 1% of the balance
of the average daily net assets 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, 1999.
Sentry Equity Services, Inc., (SESI), as principal underwriter of the Fund,
paid $14,119 in commissions to sales representatives for the year ended
October 31, 1999. 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, 1999, Sentry Insurance and the Sentry 401(k) Plan held
26% and 28%, 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 17, 1998 and June 10, 1999, the Fund distributed $10,779,294
($1.92 per share) and $449,108 ($.08 per share) related to net realized
capital gains. Undistributed realized capital gains and net investment
income as of October 31, 1999 will be paid out on December 16, 1999. On
December 17, 1998, and June 10, 1999, the Fund distributed $449,138 ($.08
per share) and $224,554 ($.04 per share), respectively, from net investment
income.
<PAGE> 7
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, 1999 were as
follows:
<TABLE>
<S> <C>
Gross unrealized gains $38,167,753
Gross unrealized losses 11,506,142
-----------
Net $26,661,611
===========
</TABLE>
The aggregate investment cost for both financial statement and Federal
income tax purposes at October 31, 1999 was $69,032,676.
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,
----------------------------------------------
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 19.80 $ 23.95 $ 18.19 $ 16.29 $ 15.39
------- -------- --------- ------- -------
Income From Investment Operations
Net Investment Income .15 .11 .13 .17 .18
Net Realized and Unrealized Gains (Losses)
on Investments (.19) (.30) 6.70 3.01 1.65
------- -------- --------- ------- -------
Total from Investment Operations (.04) (.19) 6.83 3.18 1.83
Less Distributions
Dividends From Net Investment Income (.12) (.11) (.16) (.17) (.17)
Distribution From Net Realized Gains (2.00) (3.85) (.91) (1.11) (.76)
------- -------- --------- ------- -------
Total Distributions (2.12) (3.96) (1.07) (1.28) (.93)
Net Asset Value End of Period $ 17.64 $ 19.80 $ 23.95 $ 18.19 $ 16.29
======= ======== ========= ======= =======
Total Return (.57%) (.76%) 39.23% 20.60% 12.97%
Net Assets, End of Period (in Thousands) $ 95,689 $111,850 $ 118,278 $97,154 $84,374
Ratio of Expenses to Average Net Assets .84% .83% .83% .84% .86%
Ratio of Net Investment Income to
Average Net Assets .81% .55% .61% .95% 1.17%
Portfolio Turnover Rate 24.33% 29.85% 40.75% 28.28% 26.54%
</TABLE>
See accompanying notes to financial statements
<PAGE> 8
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF SENTRY FUND, INC.:
In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investment securities, and the related statements of operations
and of changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Sentry Fund, Inc. (the "Fund") at
October 31, 1999, and 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. These financial
statements and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Fund's management; our responsibility
is to express an opinion on these financial statements based on our audits. We
conducted our audits of these financial statements in accordance with generally
accepted auditing standards, which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at October 31, 1999 by
correspondence with the custodian, provide a reasonable basis for the opinion
expressed above.
PRICEWATERHOUSECOOPERS L.L.P.
Chicago, Illinois
November 19, 1999
1999 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.
<PAGE> 9
BOARD OF DIRECTORS
Thomas R. Copps
David W. Graebel
William J. Lohr
Dale R. Schuh, Chairman
Steven J. Umland
OFFICERS
James J. Weishan, President
Susan M. DeBruin, Vice President
William M. O'Reilly, Secretary
William J. Lohr, Treasurer
INVESTMENT ADVISOR
Sentry Investment Management, Inc.
Stevens Point, Wisconsin
UNDERWRITER
Sentry Equity Services, Inc.
Stevens Point, Wisconsin
CUSTODIAN
Citibank, N.A.
New York, New York
LEGAL COUNSEL
Godfrey & Kahn
Milwaukee, Wisconsin
INDEPENDENT AUDITORS
PricewaterhouseCoopers LLP
Chicago, Illinois
This report has been prepared for the general information of shareholders of the
Fund and is not authorized for distribution to prospective investors unless
preceded or accompanied by an effective Prospectus which contains details
concerning sales charges and other pertinent information.
