ENDOWMENTS, INC. AND BOND PORTFOLIO FOR ENDOWMENTS, INC.
SEMI-ANNUAL REPORT
For the Six Months Ended January 31, 1998
[logo: Capital Research and Management Company]
CAPITAL RESEARCH AND MANAGEMENT COMPANY
SIX-MONTH TOTAL RETURNS (8/1/97 - 1/31/98)
<TABLE>
<CAPTION>
Lipper
Standard Lipper Growth Lehman Corporate A-Rated
& Poor's & Income Aggregate Bond Funds
ENDI 500 Index Funds Index BENDI Bond Index Average
<S> <C> <C> <C> <C> <C>
+5.4% +3.6% +2.4% +3.7% +4.9% +4.4%
</TABLE>
The indexes are unmanaged.
ENDOWMENTS, INC. (SM) (ENDI) seeks to provide long-term growth of principal,
with income and preservation of capital as secondary objectives, primarily
through investments in common
stocks.
BOND PORTFOLIO FOR ENDOWMENTS, INC. (SM) (BENDI) seeks to provide as high a
level of current income as is consistent with the preservation of capital
through investments in fixed-income securities.
Total returns and average annual compound returns with all distributions
reinvested for periods ended December 31, 1997 (the most recent calendar
quarter) are as follows: ENDI - 10 years: +314.15%, or +15.27% a year; 5 years:
+115.91%, or +16.64% a year; 12 months: +28.81%. BENDI - 10 years: +141.55%, or
+9.22% a year; 5 years: +40.82%, or +7.09% a year; 12 months: +8.72%.
These results reflect the effect of a voluntary fee waiver. Without the waiver,
the results would have been lower. BENDI's 30-day yield as of February 28,
1998, calculated in accordance with the Securities and Exchange Commission
formula, was 5.82% (5.70% without the fee waiver).
THE FIGURES IN THIS REPORT REFLECT PAST RESULTS AND ARE NOT PREDICTIVE OF
FUTURE RESULTS. SHARE PRICE AND RETURN WILL VARY, SO YOU MAY LOSE MONEY BY
INVESTING IN THE FUNDS. THE SHORTER THE TIME PERIOD OF YOUR INVESTMENT, THE
GREATER THE POSSIBILITY OF LOSS. FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS
OF, OR INSURED OR GUARANTEED BY, THE U.S. GOVERNMENT, ANY FINANCIAL
INSTITUTION, THE FEDERAL DEPOSIT INSURANCE CORPORATION, OR ANY OTHER AGENCY,
ENTITY OR PERSON.
DEAR SHAREHOLDER:
The six months ended January 31 were marked by a severe financial crisis
in Asia and by wide swings in U.S. stock prices. Meanwhile, the bond market
strengthened and interest rates declined. For the period, both ENDOWMENTS, INC.
and BOND PORTFOLIO FOR ENDOWMENTS, INC. recorded positive results.
ENDOWMENTS, INC. (ENDI):
During the fiscal half-year, the U.S. stock market dropped sharply and
then rebounded; it finished the period with prices generally moving upward. The
unmanaged Standard & Poor's 500 Composite Index ended the six months with a
small gain of 3.6% on a total return basis.
ENDI outpaced its principal benchmark. The value of an investment rose
5.4%, measured in total return. This was significantly better than the return
of 2.4% recorded by the Lipper Growth & Income Funds Index, which tracks the 30
largest comparable funds.
A closer look at the six months reveals that much of ENDI's superior
performance can be traced to its share value going down considerably less than
the S&P 500 during the October slide. Between October 7 and October 27, the
fund declined 6% while the index lost 11%. In November and December, when the
market was recovering, the fund participated in the upturn but rose somewhat
less than the index. Historically, ENDI has followed that pattern, displaying
less volatility than the index. We believe this is important to many nonprofit
organizations. Conservation of principal is a goal for which we strive.
ENDI's results for the half-year reflected favorable showings by health
care stocks and interest-rate-sensitive issues, chiefly banks and electric and
gas utilities. In terms of industries, utilities have become the fund's largest
area of concentration; on January 31 they accounted for nearly 10% of net
assets compared with about 8% at the beginning of the fiscal year.
A maximum of 10% of ENDI's net assets can be invested in the securities of
companies based outside the United States. During the six months, the fund's
British holdings, which currently represent about 6% of net assets, did very
well. With valuations in the U.S. market becoming less attractive, we have been
finding better values elsewhere. On January 31, our non-U.S. investments
accounted for just over 8% of net assets compared with less than 7% at the
start of fiscal 1998 and less than 3% one year ago.
The biggest gainer in the portfolio during the first half of fiscal 1998
was AT&T, which rose 70%. This is a stock ENDI has owned for some time. It was
the only holding that declined in price in our prior fiscal year. During the
recent half-year, the stock reacted favorably to a management change and a
corporate restructuring.
ENDI's gain for the August - January period was held down by poor showings
among paper and forest products companies and investments in multinational
firms doing business in Asia such as Avon, Caterpillar and Nokia.
ENDI continues to maintain a generally cautious investment approach. With
common stock valuations at historically high levels, attractive values in the
market have been difficult to find. On January 31, the fund had 76% of net
assets invested in equities and a reserve of cash and short-term securities
equal to 24% of assets.
BOND PORTFOLIO FOR ENDOWMENTS, INC. (BENDI):
BENDI's total return for the six months ended January 31 was 3.7%. This
was less than the 4.9% return generated by the unmanaged Lehman Aggregate Bond
Index and below the 4.4% return recorded by the average of 147 corporate
A-rated bond funds tracked by Lipper Analytical Services.
There were two reasons why the fund lagged these benchmarks. One is that
BENDI's maturities were comparatively short; this was beneficial early in the
period but not during the final three months. The other reason was the impact
of the troubles in Asia on the securities of several Asian companies in BENDI's
portfolio, including Swire Pacific and Hutchison Whampoa Finance in Hong Kong.
Even though both are well-managed firms, their debt instruments as well as
their common stocks were caught up in the financial panic and fell in price.
The crisis in Asia destroyed massive amounts of wealth in that region and
may yet damage the U.S. economy. So far, however, the principal negative impact
has been on individual companies that are dependent on Asian markets. Fueled
primarily by rising incomes and job growth, business conditions in the United
States remain strong. Inflation has stayed under control, and many analysts
believe that lower prices on imports should help keep it from getting out of
hand. There have been suggestions, in fact, that deflation rather than
inflation could become the principal concern in the future.
In this environment, the Federal Reserve has left short-term interest
rates unchanged. Meanwhile, long-term rates have dropped, with the yield on
30-year Treasuries slipping to a 20-year low of 5.7% before edging back up to
around 6%. It is unclear to what degree the Asian slowdown and currency
revaluations may temper the pace of growth in the U.S. and cause interest rates
to change significantly. Because of this, BENDI has avoided investments with
either extremely short or extremely long maturities. Its portfolio has been
positioned so the fund can continue pursuing its objective of high current
income while benefiting from any further decline in interest rates. At the same
time, we have tried to structure the portfolio so it is not exposed to
excessive risk if rates begin to rise. On January 31, the average effective
maturity of the fund's holdings was about eight years, up from six years at the
start of the period. Approximately 50% of net assets was invested in U.S. and
other government issues, while 43% was invested in corporate bonds; the balance
was held in cash and equivalents.
LONG-TERM RESULTS
During their 22 1/2 years under the stewardship of Capital Research and
Management Company, both ENDI and BENDI have built solid records. ENDI has
generated results only slightly lower than those of the S&P 500, while steering
a steadier course. Its share value has risen an average of 15.2% a year
(including reinvestment), while the index registered an average return of
15.6%. During this time, ENDI has been about 20% less volatile than the index,
based on standard deviation, a widely used measure of volatility. BENDI's
average annual compound return for the 22 1/2 years is 9.8%. The most relevant
bond market index that covers this entire period and is useful for comparison
purposes is the Lipper corporate A-rated universe (consisting of 17 funds over
the period), which rose an average of 9.7% a year. During this lengthy span,
the Consumer Price Index increased at an average annual rate of 5.0%.
Finally, we would like to remind you that the progress of investments in
both funds can be followed in the financial sections of major daily newspapers.
They usually appear under the symbols "Endow" and "BdEndw."
We look forward to reporting to you again in another six months.
Cordially,
[/s/ Robert B. Egelston] [/s/ Frank L. Ellsworth]
Robert B. Egelston Frank L. Ellsworth
Chairman of the Board President
March 19, 1998
<TABLE>
ENDOWMENTS, INC.
INVESTMENT PORTFOLIO, JANUARY 31, 1998
<S> <C> <C> <C>
Percent
of Net
INDUSTRY DIVERSIFICATION Assets
- ----------------------------------------------- ----------
EQUITY SECURITIES
Utilities: Electric & Gas 9.73
Health & Personal Care 8.43
Energy Sources 7.86
Insurance 6.35
Business & Public Services 6.31
Banking 6.08
Forest Products & Paper 4.44
Chemicals 4.01
Broadcasting & Publishing 3.33
Beverages & Tobacco 3.00
Telecommunications 2.62
Merchandising 2.24
Financial Services 2.09
Real Estate 1.81
Automobiles 1.69
Electrical & Electronics 1.46
Metals: Nonferrous 1.20
Industrial Components 1.12
Transportation: Rail & Road .85
Machinery & Engineering .75
----------
75.37
Equity securities in initial period of acquisition .86
Short-Term Securities 22.93
Excess of cash and receivables over payables .84
----------
Net Assets 100.00
==========
Percent
of Net
TEN LARGEST HOLDINGS Assets
- ----------------------------------------------- ----------
Duke Energy 3.16
Atlantic Richfield 3.08
Glaxo Wellcome 3.01
Fulton Financial 2.76
Trenwick Group 2.34
Houston Industries 2.25
Cendant (formerly CUC International) 2.24
Ultramar Diamond Shamrock 2.24
Merck 2.10
Beneficial 2.09
----------
25.27
==========
Shares or Percent
EQUITY SECURITIES PrincipaMarket Of Net
Common and preferred stocks and convertible debAmount Value Assets
- -------------------------------------------------------------------- ----------
ENERGY
Energy Sources-7.86%
Amoco Corp. 5000 $ 406,875 .91
Atlantic Richfield Co. 18500 1375938 3.08
Kerr-McGee Corp. 5000 313125 .70
Texaco Inc. 8000 416500 .93
Ultramar Diamond Shamrock Corp. 30000 999375 2.24
Utilities: Electric & Gas-9.73%
Ameren Corp. 10000 366250 .82
DPL Inc. 37500 686719 1.54
Duke Energy Corp. 26000 1408875 3.16
GPU, Inc. 20000 786250 1.76
Southern Electric PLC (United Kingdom) 60000 523309 1.17
Williams Companies, Inc. 20000 570000 1.28
------------- ----------
7853216 17.59
------------- ----------
MATERIALS
Chemicals-4.01%
Dow Chemical Co. 4000 360000 .81
Praxair, Inc. 15000 621563 1.39
Witco Corp. 20000 810000 1.81
Forest Products & Paper-4.44%
Georgia-Pacific Corp., Georgia-Pacific Group 5000 275625
Georgia-Pacific Corp., Timber Group 5000 116250 .88
Louisiana-Pacific Corp. 30000 601875 1.35
Union Camp Corp. 12000 686250 1.54
Weyerhaeuser Co. 6000 298875 .67
Metals: Nonferrous-1.20%
Aluminum Co. of America 7000 534625 1.20
------------- ----------
4305063 9.65
------------- ----------
CAPITAL EQUIPMENT
Electrical & Electronics-1.46%
Nokia Corp., Class A (American Depositary
Receipts) (Finland) 4000 304000 .68
Telefonaktiebolaget LM Ericsson, Class B
(American Depositary Receipts) (Sweden) 9000 347625 .78
Industrial Components-1.12%
Genuine Parts Co. 15000 497813 1.12
Machinery & Engineering-0.75%
Caterpillar Inc. 7000 336000 .75
------------- ----------
1485438 3.33
------------- ----------
CONSUMER GOODS
Automobiles-1.69%
Chrysler Corp. 10000 348125 .78
Ford Motor Co. 8000 408000 .91
Beverages & Tobacco-3.00%
Anheuser-Busch Companies, Inc. 8000 359500 .81
Imperial Tobacco Ltd. 60000 438051 .98
Philip Morris Companies Inc. 13000 539500 1.21
Health & Personal Care-8.43%
Avon Products, Inc. 15000 900000 2.02
Glaxo Wellcome PLC (American Depositary
Receipts) (United Kingdom) 25000 1345313 3.01
Merck & Co., Inc. 8000 938000 2.10
Schering-Plough Corp. 8000 579000 1.30
------------- ----------
5855489 13.12
------------- ----------
SERVICES
Broadcasting & Publishing-3.33%
Gannett Co., Inc. 8000 484000 1.08
Houston Industries Inc., 7.00% Automatic Common
Exchange Securities 7/1/00 (1) 17000 1003000 2.25
Business & Public Services-6.31%
Avery Dennison Corp. 20000 897500 2.01
Browning-Ferris Industries, Inc. 10000 345625 .77
Cendant Corp. (formerly CUC International),
3.00% convertible debentures 2/15/02 (2) $800,000 1001000 2.24
Electronic Data Systems Corp. 10000 416250 .93
Waste Management, Inc. 6596 155006 .36
Merchandising-2.24%
American Stores Co. 15000 326250 .73
J.C. Penney Co., Inc. 10000 673750 1.51
Telecommunications-2.62%
Ameritech Corp. 20000 858750 1.92
AT&T Corp. 5000 313124 .70
Transportation: Rail & Road-0.85%
Norfolk Southern Corp. 12000 378750 .85
------------- ----------
6853005 15.35
------------- ----------
FINANCE
Banking-6.08%
Bank of Tokyo-Mitsubishi, Ltd. (American
Depositary Receipts) (Japan) 25000 367188 .82
First Financial Bancorp. 5500 269500 .60
Fulton Financial Corp. 40770 1233293 2.76
Huntington Bancshares Inc. 25190 850162 1.90
Financial Services-2.09%
Beneficial Corp. 12000 931500 2.09
Insurance-6.35%
Aetna Inc. 5000 367500 .82
General Re Corp. 2500 520313 1.17
Liberty Corp. 10000 454375 1.02
Royal & Sun Alliance Insurance Group PLC
(United Kingdom) 40000 447034 1.00
Trenwick Group Inc. 30000 1042500 2.34
Real Estate-1.81%
Security Capital Pacific Trust 34285 807838 1.81
------------- ----------
7291203 16.33
------------- ----------
MISCELLANEOUS
Other equity securities in initial period of
acquisition 384200 .86
------------- ----------
TOTAL EQUITY SECURITIES (cost: $27,059,735) 34027614 76.23
------------- ----------
Principal
Amount
SHORT-TERM SECURITIES (000)
Corporate Short-Term Notes-22.93%
A.I. Credit Corp. 5.44% due 2/17/98 $1,000 997431 2.23
Abbott Laboratories 5.42% due 2/13/98 1,000 998043 2.24
American Express Credit Corp. 5.47% due 2/20/ 1,000 996961 2.23
BellSouth Telecommunications, Inc. 5.72%
due 2/3/98 400 399809 .90
General Electric Capital Corp. 5.62% due 2/2/ 950 949703 2.13
H.J. Heinz Co. 5.54% due 2/4/98 1,100 1099323 2.46
Lucent Technologies Inc. 5.44% due 2/4/98 1,000 999396 2.24
Monsanto Co. 5.50% due 2/10/98 1,100 1098319 2.46
Procter & Gamble Co. 5.42% due 2/24/98 1,100 1096025 2.46
Sara Lee Corp. 5.48% due 2/10/98 1,000 998478 2.24
Xerox Corp. 5.44% due 2/13/98 600 598822 1.34
------------ ----------
10232310 22.93
------------ ----------
----------- ----------
TOTAL SHORT-TERM SECURITIES (cost: $10,232,310) 10232310 22.93
------------ ----------
TOTAL INVESTMENT SECURITIES (cost: $37,292,045) 44259924 99.16
Excess of cash and receivables over payables 374354 .84
------------- ----------
NET ASSETS $44,634,278 100.00
============= ==========
(1)Security is convertible into Time Warner shares.
(2)Purchased in a private placement transaction;
resale may be limited to qualified institutional
buyers; resale to the public may require
registration.
See Notes to Financial Statements
Equity securities added to the portfolio
since July 31, 1997
- --------------------------------------
Aetna
American Stores
Anheuser-Busch Companies
Avery Dennison
Chrysler
First Financial Bancorp.
Fulton Financial
Genuine Parts
Imperial Tobacco
Kerr-McGee
Merck
Norfolk Southern
Praxair
Weyerhaeuser
Equity securities eliminated from the portfolio
since July 31, 1997
- --------------------------------------
Alexander & Baldwin
American Home Products
Arthur J. Gallagher & Co.
Cognizant
CoreStates Financial
CSX
General Mills
H.F. Ahmanson & Co.
International Paper
McCormick & Co.
RPM
</TABLE>
<TABLE>
Endowments, Inc.
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
at January 31, 1998
<S> <C> <C>
Assets:
Investment securities at market
(cost: $37,292,045) $44,259,924
Cash 64,068
Receivables for-
Sales of investments $639,354
Sales of fund's shares 25,500
Dividends and accrued interest 69,958 734,812
-----------------------
45,058,804
Liabilities:
Payables for -
Purchases of investments 384,995
Management services 16,220
Accrued expenses 23,311 424,526
-----------------------
Net Assets at January 31, 1998 -
Equivalent to $16.13 per share on
2,766,536 shares of $1 par value
capital stock outstanding (authorized
capital stock--6,000,000 shares) $44,634,278
=============
Statement of Operations
for the six months ended January 31, 1998
Investment Income:
Income:
Dividends $ 534,819
Interest 269,891 $804,710
------------
Expenses:
Management services fee 118,336
Custodian fee 1,098
Registration statement and prospectus 11,804
Postage, stationery and supplies 4,262
Reports to shareholders 15,471
Auditing fees 15,748
Legal fees 4,216
Taxes other than federal income tax 14,832
Other expenses 12,973
------------
Total expenses before reimbursement 198,740
Reimbursement of expenses 23,351 175,389
-----------------------
Net investment income 629,321
------------
Realized Gain and Unrealized
Appreciation on Investments:
Net realized gain 5,341,100
Net change in unrealized
appreciation on investments:
Beginning of period 10,415,185
End of period 6,967,789
------------
Net change in unrealized appreciatio
investments (3,447,396)
------------
Net realized gain and unrealized
appreciation on investments 1,893,704
------------
Net Increase in Net Assets Resulting
from Operations $ 2,523,025
=============
See Notes to Financial Statements
Statement of Changes in Net Assets
Six months
ended Year ended
1/31/98 7/31/97
Operations:
Net investment income $ 629,32$ 1,504,30
Net realized gain on investments 5,341,100 14,485,532
Net unrealized appreciation (depreciation)
on investments (3,447,396) 1,781,952
-----------------------
Net increase in net assets resulting
from operations 2,523,025 17,771,788
------------------------
Dividends and Distributions Paid to
Shareholders:
Dividends from net investment income (543,870) (1,543,830)
Distributions from net realized
gain on investments (15,332,648 (6,480,136)
------------------------
Total dividends and distributions (15,876,518 (8,023,966)
------------------------
Capital Share Transactions:
Proceeds from shares sold:
65,680 and 198,622
shares, respectively 1,222,299 3,944,263
Proceeds from shares issued in
reinvestment of net investment income
dividends and distributions of net
realized gain on investments:
961,526 and 396,508 shares,
respectively 15,336,073 7,514,541
Cost of shares repurchased:
366,739 and 1,675,374
shares, respectively (6,298,090) (32,784,034)
------------------------
Net increase (decrease) in net assets
resulting from capital share transac10,260,282 (21,325,230)
------------------------
Total Decrease in Net Assets (3,093,211) (11,577,408)
Net Assets:
Beginning of period 47,727,489 59,304,897
------------------------
End of period (including undistributed
net investment income: $203,465 and
$118,014, respectively) $44,634,278$ 47,727,489
========================
See Notes to Financial Statements
</TABLE>
ENDOWMENTS, INC.
NOTES TO FINANCIAL STATEMENTS
1. Endowments, Inc. (the "fund") is registered under the Investment Company
Act of 1940 as an open-end, diversified management investment company. The fund
seeks to provide long-term growth of principal, with income and preservation of
capital as secondary objectives, primarily through investments in common
stocks. The following paragraphs summarize the significant accounting policies
consistently followed by the fund in the preparation of its financial
statements:
Equity securities, including depositary receipts, are valued at the last
reported sale price on the exchange or market on which such securities are
traded, as of the close of business on the day the securities are being valued
or, lacking any sales, at the last available bid price. In cases where equity
securities are traded on more than one exchange, the securities are valued on
the exchange or market determined by the investment adviser to be the broadest
and most representative market, which may be either a securities exchange or
the over-the counter market. Fixed-income securities are valued at prices
obtained from a pricing service, when such prices are available; however, in
circumstances where the investment adviser deems it appropriate to do so, such
securities will be valued at the mean quoted bid and asked prices or at prices
for securities of comparable maturity, quality and type. Securities with
original maturities of one year or less having 60 days or less to maturity are
amortized to maturity based on their cost if acquired within 60 days of
maturity or, if already held on the 60th day, based on the value determined on
the 61st day.
ASSETS OR LIABILITIES INITIALLY EXPRESSED IN TERMS OF FOREIGN CURRENCIES
ARE TRANSLATED INTO U.S. DOLLARS AT THE PREVAILING MARKET RATES AT THE END OF
THE REPORTING PERIOD. PURCHASES AND SALES OF SECURITIES AND INCOME AND EXPENSES
ARE TRANSLATED INTO U.S. DOLLARS AT THE PREVAILING MARKET RATES ON THE DATES OF
SUCH TRANSACTIONS. THE EFFECTS OF CHANGES IN FOREIGN CURRENCY EXCHANGE RATES ON
INVESTMENT SECURITIES ARE INCLUDED WITH THE NET REALIZED AND UNREALIZED GAIN OR
LOSS ON INVESTMENT SECURITIES.
Securities and assets for which representative market quotations are not
readily available are valued at fair value as determined in good faith by a
committee appointed by the Board of Directors.
As is customary in the mutual fund industry, securities transactions are
accounted for on the date the securities are purchased or sold. Realized gains
and losses from securities transactions are reported on an identified cost
basis. Dividend and interest income is reported on the accrual basis. DISCOUNTS
ON SECURITIES PURCHASED ARE AMORTIZED. THE FUND DOES NOT AMORTIZE PREMIUMS ON
SECURITIES PURCHASED. Dividends and distributions paid to shareholders are
recorded on the ex-dividend date.
Shares of the fund may be owned only by organizations exempt from federal
income taxation under Section 501(c)(3) of the Internal Revenue Code. The fund
itself is exempt from federal taxation under Section 501(c)(2) of the Internal
Revenue Code.
2. The fund is tax-exempt; therefore, no federal income tax provision is
required. However, it is the fund's policy to continue to comply with the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute all of its net investment income, including any net
realized gain on investments, to its shareholders.
As of January 31, 1998, net unrealized appreciation on investments for
book and federal income tax purposes aggregated $6,967,879, of which $7,312,980
related to appreciated securities and $345,101 related to depreciated
securities. There was no difference between book and tax realized gains on
securities transactions for the six months ended January 31, 1998. The cost of
portfolio securities for book and federal income tax purposes was $37,292,045
at January 31, 1998.
3. The fee of $118,336 for management services was incurred pursuant to an
agreement with Capital Research and Management Company (CRMC), with which
certain officers and Directors of the fund are affiliated. The Investment
Advisory and Service Agreement provides for monthly fees, accrued daily, based
on an annual rate of 0.50% of the first $150 million of average net assets and
0.40% of such assets in excess of $150 million. The Investment Advisory and
Service Agreement provides for a fee reduction to the extent the fund's annual
ordinary operating expenses exceed 1.50% of the first $30 million of the
average net assets of the fund and 1.00% of the average net assets in excess
thereof. Expenses which are not subject to this limitation are interest,
taxes, brokerage commissions, transaction costs, and extraordinary expenses.
As of January 31, 1998, no such fee reduction was required.
In addition, CRMC has voluntarily agreed to waive its management services
fees to the extent necessary to ensure that the fund's annual ordinary
operating expenses do not exceed 0.75% of average net assets. Fee reductions
were $23,351 for the six months ended January 31, 1998.
No fees were paid by the fund to its officers and Directors.
4. As of January 31, 1998, accumulated undistributed net realized gain on
investments was $2,788,426 and additional paid-in capital was $31,907,762.
The fund made purchases and sales of investment securities, excluding
short-term securities, of $7,972,090 and $15,575,298, respectively, during the
six months ended January 31, 1998.
Pursuant to the custodian agreement, the fund receives credits against its
custodian fee for imputed interest on certain balances with the custodian bank.
The custodian fee of $1,098 was paid by these credits rather than in cash.
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
ENDOWMENTS, INC. Six months
PER-SHARE DATA AND RATIOS ended
1/31/98 Year Ended July 31
----------- -------------------------------------------------
1998 1997 1996 1995 1994 1993
----------- -------------------------------------------------
Net Asset Value, Beginning of Period $22.66 $18.61 $18.06 $17.18 $18.43 $18.26
----------- -------------------------------------------------
Income from Investment Operations:
Net investment income .28 .56 .58 .63 .65 .66
Net realized and unrealized
gain (loss) on investments .83 6.04 1.73 2.21 (.16) 1.05
----------- -------------------------------------------------
Total income from investment operations 1.11 6.60 2.31 2.84 .49 1.71
----------- -------------------------------------------------
Less Distributions:
Dividends from net investment income (.26) (.55) (.61) (.61) (.66) (.69)
Distributions from net realized gains (7.38) (2.00) (1.15) (1.35) (1.08) (.85)
----------- -------------------------------------------------
Total distributions (7.64) (2.55) (1.76) (1.96) (1.74) (1.54)
----------- -------------------------------------------------
Net Asset Value, End of Period $16.13 $22.66 $18.61 $18.06 $17.18 $18.43
=========== =================================================
Total Return 5.43% (1) 38.40% 13.22% 18.57% 2.77% 10.05%
Ratios/Supplemental Data:
Net assets, end of period (in millions) $45 $48 $59 $57 $53 $72
Ratio of expenses to average net assets .38%(1),(2 .74% .72% .73% .73% .64%
Ratio of net income to average net assets 1.34% (1) 2.73% 3.12% 3.70% 3.78% 3.72%
Average commissions paid per share(3) 4.94c 4.98c 5.87c 5.94c 6.27c 7.03c
Portfolio turnover rate 21.38% (1) 50.69% 38.73% 24.04% 25.58% 29.70%
(1) Based on operations for the period shown and,
accordingly, not representative of a full
year's operations.
(2) Had CRMC not waived management services fees,
the fund's expense ratio would have been 0.42%
for the six months ended January 31, 1998.
(3) Brokerage commissions paid on portfolio
transactions increase the cost of securities
purchased or reduce the proceeds of securities
sold and are not separately reflected in the
fund's statement of operations.
Shares traded on a principal basis (without
commissions), such as most over-the-counter
and fixed-income transactions, are excluded.
</TABLE>
Endowments, Inc.
RESULTS OF ANNUAL MEETING OF SHAREHOLDERS held November 20, 1997
Shares outstanding on October 2, 1997 (record date) 2,075,099
Shares voting on November 20, 1997 1,667,900 (80.4%)
ELECTION OF DIRECTORS
<TABLE>
<CAPTION>
Percent of Percent of
Votes Shares Votes Shares
Director For Voting For Withheld Withheld
<S> <C> <C> <C> <C>
Robert B. Egelston 1,667,900 100.0% 00.0%
Frank L. Ellsworth 1,667,900 100.0 00.0
Steven D. Lavine 1,667,900 100.0 00.0
Patricia A. McBride 1,664,277 99.8 3,6230.2
Charles R. Redmond 1,664,277 99.8 3,6230.2
Thomas E. Terry 1,667,900 100.0 00.0
Robert C. Ziebarth 1,667,900 100.0 00.0
</TABLE>
RATIFICATION OF AUDITORS
<TABLE>
<CAPTION>
Percent of
Percent of Shares Percent of
Votes Shares Votes Voting Shares
For Voting For Against Against Abstentions Abstaining
<S> <C> <C> <C> <C> <C> <C>
Deloitte & 1,667,900 100% 0 0% 0 0%
Touche LLP
</TABLE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholders of
Endowments, Inc.:
We have audited the accompanying statement of assets and liabilities of
Endowments, Inc. (the "fund"), including the investment portfolio, as of
January 31, 1998, and the related statement of operations for the six-month
period then ended, the statement of changes in net assets for the six-month
period then ended and for the year ended July 31, 1997, and the per-share data
and ratios for the six-month period ended January 31, 1998 and for each of the
five years in the period ended July 31, 1997. These financial statements and
per-share data and ratios are the responsibility of the fund's management. Our
responsibility is to express an opinion on these financial statements and
per-share data and ratios 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
per-share data and ratios 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 at January 31, 1998, by correspondence with the custodian and brokers;
where replies were not received from brokers, we performed other auditing
procedures. 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 per-share data and ratios
referred to above present fairly, in all material respects, the financial
position of Endowments, Inc. at January 31, 1998, the results of its operations
for the six-month period then ended, the changes in its net assets for the
six-month period then ended and for the year ended July 31, 1997, and the
per-share data and ratios for the six-month period ended January 31, 1998 and
for each of the five years in the period ended July 31, 1997, in conformity
with generally accepted accounting principles.
/s/Deloitte & Touche LLP
Los Angeles, California
February 20, 1998
<TABLE>
BOND PORTFOLIO FOR ENDOWMENTS, INC.
INVESTMENT PORTFOLIO, JANUARY 31, 1998
<S> <C> <C> <C>
Principal Percent
Amount Market of Net
BONDS & NOTES (000) Value Assets
Industrials - 14.49%
Comcast Corp. 8.375% due 5/01/07 (1) $ 250 $ 278,940 .93%
Hutchison Whampoa Finance Ltd. 6.988% due 8/1/37 (1) 300 276990 .93
Hyundai Semiconductor America, Inc.
8.625% due 5/15/07 (1) 450 376875 1.26
Inco Ltd.:
9.875% due 6/15/19 300 321054 3.78
9.60% due 6/15/22 700 811454
News America Holdings Inc. 7.43% due 10/1/26 500 540805 1.81
Petrozuata Finance Inc., Series A, 7.63% due 4/1/09 (1) 250 257508 .86
Tele-Communications, Inc. 9.80% due 2/1/12 250 311335 1.04
Time Warner Inc.:
Pass-Through Asset Trust, Series 1997-1
6.10% due 12/30/01 (1),(2) 250 247768 3.46
0% convertible debentures due 6/22/13 1500 789375
Wharf International Finance Ltd., Series A,
7.625% due 3/13/07 (1) 500 403854 1.35
--------- ---------
4615958 15.42
--------- ---------
Electric Utilities - 3.53%
Big Rivers Electric Corp. 10.70% due 9/15/17 1000 1055890 3.53
--------- ---------
Leisure & Tourism - 1.71%
Royal Caribbean Cruises Ltd. 7.00% due 10/15/07 500 513300 1.71
--------- ---------
Telephone - 1.74%
U S West Capital Funding, Inc. 6.95% due 1/15/37 500 520325 1.74
--------- ---------
Transportation (2) - 8.59%
Airplanes Pass Through Trust, Class C, 8.15% due 3/15/1 1000 1052500 3.52
Jet Equipment Trust, Series 1994-A,
11.79% due 6/15/13 (1) 750 1011518 3.38
USAir, Inc., Series 1996-B, 7.50% due 4/15/08 475 507354 1.69
--------- ---------
2571372 8.59
--------- ---------
Financial - 4.71%
Barnett Capital I 8.06% due 12/1/26 500 535715 1.79
MBNA Capital A, MBNA Corp., Series A,
8.278% due 12/1/26 300 318114 1.06
Terra Nova (Bermuda) Holdings Ltd. 10.75% due 7/1/05 500 557220 1.86
--------- ---------
1411049 4.71
--------- ---------
Real Estate - 2.55%
Irvine Co. 7.46% due 3/15/06 (1),(3) 500 513050 1.71
SocGen Real Estate Co. LLC, Series A,
7.64% due 12/29/49 (1) 250 251115 .84
--------- ---------
764165 2.55
--------- ---------
Collateralized Mortgage/Asset-Backed
Obligations (2) - 4.85%
Asset Backed Securities Investment Trust, Series 1997-D,
6.79% due 8/17/03 250 250425 .84
Asset Securitization Corp., Series 1997-D5, Class A-1A,
6.50% due 2/14/43 486 494320 1.65
Merrill Lynch Mortgage Investors, Inc., Series 1995-A,
7.338% due 6/15/21 (4) 305 312685 1.04
Prudential Home Mortgage Securities Co., Inc.,
Series 1992-2033, Class A-12, 7.50% due 11/25/22 48 47454 .16
Structured Asset Securities Corp, Series 1996-CFL,
Class A2A, 7.75% due 2/25/28 342 345776 1.16
--------- ---------
1450660 4.85
--------- ---------
Governments (excluding U.S. Government) &
Governmental Authorities - 3.86%
Quebec (Province of) 13.25% due 9/15/14 1000 1154410 3.86
--------- ---------
Federal Agency Obligations - Mortgage
Pass-Throughs (2) - 12.13%
Fannie Mae (formerly Federal National Mortgage Assn.):
9.00% due 11/1/20 205 218724 2.24
6.191% due 3/1/33 (4) 449 451462
Freddie Mac (formerly Federal Home Loan Mortgage Corp.):
8.75% due 7/1/08 105 110502
12.50% due 12/1/12 48 56840 .97
9.00% due 3/1/20 114 122307
Government National Mortgage Assn.:
8.50% due 12/15/08 317 338172
10.00% due 12/15/19 350 391316
7.50% due 1/15/24 575 594382 8.92
7.00% due 2/20/24 (4) 665 679089
7.375% due 6/20/24 (4) 652 668278
--------- ---------
2960886 12.13
--------- ---------
U.S. Treasury Obligations - 34.18%
9.25% due 8/15/98 1000 1019999
7.25% due 5/15/04 1500 1640865
11.625% due 11/15/04 500 670545 34.18
10.375% due 11/15/12 2000 2690320
7.50% due 11/15/16 1000 1183590
8.875% due 8/15/17 2250 3027309
--------- ---------
10,232,628 34.18
--------- ---------
TOTAL BONDS & NOTES (cost: $27,328,759) 27250643 93.27
--------- ---------
Number
STOCKS of Shares
Preferred Stocks - 0.70%
Swire Pacific Ltd. 8.84% cumulative guaranteed perpetua 10000 208750 .70
capital (1) --------- ---------
TOTAL EQUITY-TYPE SECURITIES (COST $250,000) 208750 .70
Principal --------- ---------
Amount
SHORT-TERM SECURITIES (000)
Corporate Short-Term Notes - 4.31%
General Electric Capital Corp. 5.59% due 2/2/98 1290 1289597 4.31
--------- ---------
TOTAL SHORT-TERM SECURITIES (cost: $1,289,597) 1289597 4.31
--------- ---------
TOTAL INVESTMENT SECURITIES (cost: $28,868,356) 28748990 98.28
Excess of cash and receivables over payables 517023 1.72
--------- ---------
NET ASSETS $29,266,013 100.00%
======== =========
(1) Purchased in a private placement transaction; resale
may be limited to qualified institutional buyers;
resale to the public may require registration.
(2) Pass-through securities backed by a pool of
mortgages or other loans on which principal
payments are periodically made. Therefore, the
effective maturity is shorter than the stated maturity.
(3) Valued under procedures established
by the Board of Directors.
(4) Coupon rate changes periodically.
See Notes to Financial Statements
</TABLE>
<TABLE>
Bond Portfolio for Endowments, Inc.
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
at January 31, 1998
<S> <C> <C>
Assets:
Investment securities at market
(cost: $28,868,356) $29,419,176
Cash 51,781
Receivables for-
Sales of investments $ 602
Accrued interest 515,061 515,663
--------- ---------
29,986,620
Liabilities:
Payables for-
Repurchases of Fund's shares 22,500
Management services 283
Accrued expenses 27,638 50,421
--------- ---------
Net Assets at January 31, 1998-
Equivalent to $17.15 per share on
1,745,671 shares of $1 par value
capital stock outstanding (authorized
capital stock - 5,000,000 shares) $29,936,199
===========
Statement of Operations
for the period ended January 31, 1998
Investment Income:
Interest income $ 1,211,224
Expenses:
Management services fee $ 81,421
Custodian fee 666
Registration statement and prospectus 12,824
Reports to shareholders 19,970
Auditing fees 17,998
Legal fees 4,216
Taxes other than federal income tax 14,408
Other expenses 13,004
---------
Total expenses before fee waiver 164,507
Fee waiver 44,890 119,617
--------- ---------
Net investment income 1,091,607
---------
Realized Gain and Unrealized
Appreciation on Investments:
Net realized gain 147,681
Net change in unrealized appreciation
(depreciation) on investments:
Beginning of period 625,522
End of period 550,820
---------
Net unrealized appreciation on
investments (74,702)
---------
Net realized gain and unrealized
appreciation on investments 72,979
---------
Net Increase in Net Assets Resulting
from Operations $ 1,164,586
===========
Statement of Changes in Net Assets
Six months
ended Year ended
1/31/98 7/31/97
Operations: --------- ---------
Net investment income $ 1,091,607 $ 2,508,147
Net realized gain (loss) on investments 147,681 (216,967)
Net unrealized appreciation (depreciation) on
investments (74,702) 1,356,940
--------- ---------
Net increase in net assets resulting
from operations 1,164,586 3,648,120
--------- ---------
Dividends and Distributions Paid to
Shareholders:
Dividends from net investment income (1,197,029) (2,533,400)
--------- ---------
Capital Share Transactions:
Proceeds from shares sold:
62,046 and 187,635
shares, respectively 1,053,575 3,152,584
Proceeds from shares issued in
reinvestment of net investment income
dividends and distributions of net
realized gain on investments:
28,173 and 65,746 shares,
respectively 474,183 1,089,420
Cost of shares repurchased:
268,592 and 822,286
shares, respectively (4,591,811) (13,772,096)
--------- ---------
Net decrease in net assets resulting
from capital share transactions (3,064,053) (9,530,092)
--------- ---------
Total Decrease in Net Assets (3,096,496) (8,415,372)
Net Assets:
Beginning of period 33,032,695 41,448,067
--------- ---------
End of period (including undistributed
net investment income: $168,918 and
$274,339, respectively) $29,936,199 $33,032,695
===============================
See Notes to Financial Statements
</TABLE>
NOTES TO FINANCIAL STATEMENTS
1. Bond Portfolio for Endowments, Inc. (the "fund") is registered under the
Investment Company Act of 1940 as an open-end, diversified management
investment company. The fund seeks to provide as high a level of current income
as is consistent with preservation of capital. The following paragraphs
summarize the significant accounting policies consistently followed by the fund
in the preparation of its financial statements:
Fixed-income securities are valued at prices obtained from a pricing service,
when such prices are available; however, in circumstances where the investment
adviser deems it appropriate to do so, such securities will be valued at the
mean quoted bid and asked prices or at prices for securities of comparable
maturity, quality and type. Securities with original maturities of one year or
less having 60 days or less to maturity are amortized to maturity based on
their cost if acquired within 60 days of maturity or, if already held on the
60th day, based on the value determined on the 61st day. Securities and assets
for which representative market quotations are not readily available are valued
at fair value as determined in good faith by a committee appointed by the Board
of Directors.
As is customary in the mutual fund industry, securities transactions are
accounted for on the date the securities are purchased or sold. In the event
the fund purchases securities on a delayed-delivery or "when-issued" basis, it
will segregate with its custodian liquid assets in an amount sufficient to meet
its payment obligations in these transactions. Realized gains and losses from
securities transactions are reported on an identified cost basis. Interest
income is reported on the accrual basis. Discounts on securities purchased are
amortized. The fund does not amortize premiums on securities purchased.
Distributions paid to shareholders are recorded on the ex-dividend date.
Shares of the fund may be owned only by organizations exempt from federal
income taxation under Section 501(c)(3) of the Internal Revenue Code. The fund
itself is exempt from taxation under Section 501(c)(2) of the Internal Revenue
Code.
2. The fund is tax-exempt; therefore, no federal income tax provision is
required. However, it is the fund's policy to continue to comply with the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute all of its net investment income, including any net
realized gain on investments, to its shareholders.
As of January 31, 1998, net unrealized appreciation on investments, for book
and federal income tax purposes aggregated $550,820, of which $1,082,975
related to appreciated securities and $532,155 related to depreciated
securities. There was no difference between book and tax realized gains on
securities transactions for the six months ended January 31, 1998. The cost of
portfolio securities for book and federal income tax purposes was $28,868,356
at January 31, 1998.
3. The fee of $81,421 for management services was incurred pursuant to an
agreement with Capital Research and Management Company (CRMC), with which
certain officers and Directors of the fund are affiliated. The Investment
Advisory and Service Agreement provides for monthly fees, accrued daily, based
on an annual rate of 0.50% of the first $150 million of average net assets and
0.40% of such assets in excess of $150 million. The Investment Advisory and
Service Agreement provides for a fee reduction to the extent the fund's annual
ordinary operating expenses exceed 1.50% of the first $30 million of the
average net assets of the fund and 1.00% of the average net assets in excess
thereof. Expenses not subject to this limitation are interest, taxes and
extraordinary expenses. For the period ended January 31, 1998, no such fee
reduction was required.
In addition, CRMC has voluntarily agreed to waive its management services fees
to the extent necessary to ensure that the fund's expenses do not exceed 0.75%
of average net assets. For the period ended January 31, 1998, fee reductions
were $44,890.
No fees were paid by the fund to its officers and Directors.
4. As of January 31, 1998, accumulated net realized loss on investments was
$395,774 and additional paid-in capital was $27,866,564.
The fund made purchases and sales of investment securities, excluding
short-term securities, of $5,706,067 and $6,521,814, respectively, during the
six months ended January 31, 1998.
Pursuant to the custodian agreement, the fund receives credits against its
custodian fee for imputed interest on certain balances with the custodian bank.
The custodian fee of $666 was paid by these credits rather than in cash.
<TABLE>
BOND PORTFOLIO FOR ENDOWMENTS, INC.
PER-SHARE DATA AND RATIOS
<S> <C> <C> <C> <C> <C> <C>
Six months Year ended July 31
ended -------------------- ---------- --------------------
1/31/98 1997 1996 1995 1994 1993
Net Asset Value, Beginning of Period 17.17 16.63 16.82 16.86 19.66 19.44
---------- -------------------- ---------- --------------------
Income from Investment Operations:
Net investment income .59 1.21 1.22 1.26 1.32 1.49
Net realized and unrealized
gain (loss) on investments .03 .52 (.19) .01 (1.51) .64
---------- -------------------- ---------- --------------------
Total income (loss) from investment
operations .62 1.73 1.03 1.27 (.19) 2.13
---------- -------------------- ---------- --------------------
Less Distributions:
Dividends from net investment income (.64) (1.19) (1.22) (1.24) (1.35) (1.48)
Distributions from net realized gains - - - (.07) (1.26) (.43)
---------- -------------------- ---------- --------------------
Total distributions (.64) (1.19) (1.22) (1.31) (2.61) (1.91)
---------- -------------------- ---------- --------------------
Net Asset Value, End of Period 17.15 17.17 16.63 16.82 16.86 19.66
========== ==================== ========== ====================
Total Return 3.72% /1/ 10.83% 6.25% 7.97% (1.44)% 11.74%
Ratios/Supplemental Data:
Net assets, end of period (in millions) $30 $33 $41 $44 $46 $67
Ratio of expenses to average net assets .38% /1//2/.75% /2/ .75% /2/ .76% .77% .65%
Ratio of net income to average net assets 3.41% /1/ 7.04% 7.17% 7.52% 6.99% 7.69%
Portfolio turnover rate 19.89% /1/ 22.18% 54.43% 69.22% 82.12% 35.97%
/1/ Based on operations for the period shown and, accordingly,
not representative of a full year's operations.
/2/ Had CRMC not waived management services fees, the fund's
expense ratio would have been 0.51%, 0.85% and 0.80% for
the six months ended January 31, 1998 and the fiscal years
ended 1997 and 1996, respectively.
</TABLE>
Bond Portfolio for Endowments, Inc.
RESULTS OF ANNUAL MEETING OF SHAREHOLDERS held November 20, 1997
Shares outstanding on October 2, 1997 (record date) 1,977,834
Shares voting on November 20, 1997 1,608,735 (81.3%)
ELECTION OF DIRECTORS
<TABLE>
<CAPTION>
Percent of Percent of
Votes Shares Votes Shares
Director For Voting For Withheld Withheld
<S> <C> <C> <C> <C>
Robert B. Egelston 1,608,735 100.0% 00.0%
Frank L. Ellsworth 1,608,735 100.0 00.0
Steven D. Lavine 1,579,171 98.2 29,5641.8
Patricia A. McBride 1,600,366 99.5 8,3690.5
Charles R. Redmond 1,600,366 99.5 8,3690.5
Thomas E. Terry 1,608,735 100.0 00.0
Robert C. Ziebarth 1,608,735 100.0 00.0
</TABLE>
RATIFICATION OF AUDITORS
<TABLE>
<CAPTION>
Percent Percent of
of Shares Shares Percent of
Votes Voting Votes Voting Shares
For For Against Against Abstentions Abstaining
<S> <C> <C> <C> <C> <C> <C>
Deloitte & 1,608,735 100% 0 0% 0 0%
Touche LLP
</TABLE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholders of
Bond Portfolio for Endowments, Inc.:
We have audited the accompanying statement of assets and liabilities of Bond
Portfolio for Endowments, Inc. (the "fund"), including the investment
portfolio, as of January 31, 1998, and the related statement of operations for
the six-month period then ended, the statement of changes in net assets for the
six-month period then ended and for the year ended July 31, 1997, and the
per-share data and ratios for the six-month period ended January 31, 1998 and
for each of the five years in the period ended July 31, 1997. These financial
statements and per-share data and ratios are the responsibility of the fund's
management. Our responsibility is to express an opinion on these financial
statements and per-share data and ratios 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 per-share data
and ratios 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 at January
31, 1998, by correspondence with the custodian and brokers; where replies were
not received from brokers, we performed other procedures. 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 per-share data and ratios
referred to above present fairly, in all material respects, the financial
position of Bond Portfolio for Endowments, Inc. at January 31, 1998, the
results of its operations for the six-month period then ended, the changes in
its net assets the six-month period then ended and for the year ended July 31,
1997, and the per-share data and ratios for the six-month period ended January
31, 1998 and for each of the five years in the period ended July 31, 1997, in
conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Los Angeles, California
February 20, 1998
ENDOWMENTS, INC. AND BOND PORTFOLIO FOR ENDOWMENTS, INC.
BOARD OF DIRECTORS
ROBERT B. EGELSTON, Los Angeles, California
Chairman of the Board of the funds
Former Chairman of the Board,
The Capital Group Companies, Inc.
(213) 486-9444
FRANK L. ELLSWORTH, Ph.D.,
Los Angeles, California
President and Chief Executive Officer of the funds
Vice President, Capital Research and
Management Company
(213) 486-9560
STEVEN D. LAVINE, Ph.D., Valencia, California
President, California Institute of the Arts
(805) 255-1050
PATRICIA A. McBRIDE, Dallas, Texas
Chief Financial Officer, Kevin L. McBride,
D.D.S., Inc.
(214) 368-0268
GAIL L. NEALE, Burlington, Vermont
President, The Lovejoy Consulting Group, Inc.,
former Executive Vice President of the Salzburg
Seminar; former Director of Development and of
the Capital Campaign, Hampshire College
(802) 658-5674
CHARLES R. REDMOND, Los Angeles, California
Former Chairman, Pfaffinger Foundation;
former President and Chief Executive Officer,
Times Mirror Foundation; former Executive
Vice President and Member of the Management
Committee, The Times Mirror Company
(213) 237-3977
THOMAS E. TERRY, Los Angeles, California
Consultant; former Vice President and Secretary,
Capital Research and Management Company
(213) 486-9410
ROBERT C. ZIEBARTH, Ketchum, Idaho
Management Consultant, Ziebarth Company
(208) 725-0535
OTHER OFFICERS
ABNER D. GOLDSTINE, Los Angeles, California
Senior Vice President of the funds
Senior Vice President and Director,
Capital Research and Management Company
ROBERT G. O'DONNELL,
San Francisco, California
Senior Vice President of the funds
Senior Vice President and Director,
Capital Research and Management Company
CLAUDIA P. HUNTINGTON,
Los Angeles, California
Vice President of Endowments, Inc.
Senior Vice President, Capital Research and
Management Company
JOHN H. SMET, Los Angeles, California
Vice President of Bond Portfolio for Endowments, Inc.
Vice President, Capital Research and
Management Company
LISA G. HATHAWAY, Los Angeles, California
Assistant Vice President of the funds
Assistant Vice President - Fund Business
Management Group, Capital Research and Management Company
PATRICK F. QUAN, San Francisco, California
Secretary of the funds
Vice President - Fund Business
Management Group, Capital Research and
Management Company
MARY C. HALL, Brea, California
Treasurer of the funds
Senior Vice President - Fund Business
Management Group, Capital Research and
Management Company
ROBERT P. SIMMER, Norfolk, Virginia
Assistant Treasurer of the funds
Vice President - Fund Business
Management Group, Capital Research and
Management Company
John R. Metcalf retired from the Board of Directors effective November 20,
1997. He had been a Director of the funds since 1971. The Directors wish to
thank him for his many contributions to ENDI and BENDI.
In February 1998, Gail L. Neale, President of The Lovejoy Consulting Group,
Inc., was elected a Director of both funds.
Endowments, Inc. and Bond Portfolio for Endowments, Inc.
OFFICE OF THE FUNDS
One Market
Steuart Tower, Suite 1800
Mailing address: P.O. Box 7650
San Francisco, California 94120-7650
INVESTMENT ADVISER
Capital Research and Management Company
333 South Hope Street
Los Angeles, California 90071-1443
TRANSFER AGENT FOR SHAREHOLDER ACCOUNTS
American Funds Service Company
P.O. Box 7650
San Francisco, California 94120-7650
135 South State College Boulevard
Brea, California 92821-5804
CUSTODIAN OF ASSETS
The Chase Manhattan Bank
One Chase Manhattan Plaza
New York, New York 10081-0001
COUNSEL
Paul, Hastings, Janofsky & Walker LLP
555 South Flower Street
Los Angeles, California 90071
INDEPENDENT AUDITORS
Deloitte & Touche LLP
1000 Wilshire Boulevard
Los Angeles, California 90017-2472
This report is for the information of shareholders of Endowments, Inc. and Bond
Portfolio for Endowments, Inc., but it may also be used as sales literature
when preceded or accompanied by the current prospectus, which gives details
about charges, expenses, investment objectives and operating policies of the
funds.
(c)1998 Endowments, Inc.
Litho in USA TAG/PL/3710
(c)1998 Bond Portfolio for Endowments, Inc.
Lit. No. ENDI-BENDI-013-0398 (NLS)
