As filed with the U.S. Securities and Exchange Commission on July 29, 1998
Securities Act File No. 2-34371
Investment Company Act File No. 811-1884
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
Registration Statement Under The Securities Act of 1933 _
Pre-Effective Amendment No. ____
Post-Effective Amendment No. 47 X
and/or
Registration Statement Under The Investment Company Act of 1940 X
Amendment No. 26
(Check appropriate box or boxes)
_______________
ENDOWMENTS
(which by this Amendment is adopting and succeeding to the Registration
Statement under the
Investment Company Act of 1940 of Endowments, Inc. (File No. 811-1884) and
adopting
and succeeding to the registration of its shares under the Securities Act of
1933 of Bond Portfolio
for Endowments, Inc. (File No. 2-41200) and Endowments, Inc. (File No. 2-34371)
for
all purposes, including for purposes of calculating registration fees under
Rule 24f-2
under the Investment Company Act of 1940)
(Exact Name of Registrant as Specified in Charter)
P.O. Box 7650, One Market, Steuart Tower
San Francisco, California 94120
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including area code:
(415) 421-9360
Patrick F. Quan, Secretary
Endowments
P.O. Box 7650, One Market, Steuart Tower
San Francisco, California 94120
(Name and Address of Agent for Service)
Copies to:
<TABLE>
<CAPTION>
<S> <C>
Robert E. Carlson, Esq. Robert W. Helm, Esq.
Paul, Hastings, Janofsky & Walker LLP Dechert Price & Rhoads
555 South Flower Street 1775 Eye Street, N.W.
Los Angeles, California 90071 Washington, DC 20006-2401
</TABLE>
Approximate Date of Proposed Public Offering: It is proposed that this filing
will become effective on August 1, 1998 pursuant to paragraph (b) of Rule 485.
CROSS-REFERENCE SHEET
REQUIRED BY RULE 495
UNDER THE SECURITIES ACT OF 1933
PART A
Information Required in Prospectus
<TABLE>
<CAPTION>
Item Number Heading
<S> <C>
1 Cover Page
2 Expenses
3 Financial Highlights
4 Organization and Management of Endowments; Investment
Policies and Risks
5 Multiple Portfolio Counselor System;
Organization and Management of Endowments
5A Investment Results
6 Shareholder Services; Purchasing Shares--Share
Price; Dividends, Distributions and Taxes
7 Purchasing Shares--Share Price
8 Selling Shares
9 Not Applicable
</TABLE>
PART B
Information Required in Statement of Additional Information
<TABLE>
<CAPTION>
Item Number Heading
<S> <C>
10 Cover Page
11 Table of Contents
12 About Endowments
13 Description of Certain Securities; Fundamental
Policies and Investment Restrictions
14 Management of the Trust
15 Not Applicable
16 Management of the Trust
17 Execution of Portfolio Transactions
18 General Information
19 Purchase of Shares; Redemption of Shares
20 Dividends, Distributions and Federal Taxes
21 Not Applicable
22 Investment Results
23 Financial Statements
</TABLE>
- --------------------------------------------------------------------------------
Endowments
Prospectus
AUGUST 1, 1998
<PAGE>
ENDOWMENTS
One Market
Steuart Tower, Suite 1800
P.O. Box 7650
San Francisco, CA 94120
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
Expenses 4 Investment Results 15
.................................. ..................................
Financial Highlights 5 Dividends, Distributions and Taxes 18
.................................. ..................................
Investment Policies and Risks 6 Organization and Management of
.................................. Endowments 19
Securities and Investment ..................................
Techniques 8 Shareholder Services 21
..................................
Multiple Portfolio Counselor
System 13
- --------------------------------------------------------------------------------
Endowments (the "Trust") is an open-end management investment company with two
diversified series, Growth and Income Portfolio and Bond Portfolio
(collectively, the "funds"). In a transaction approved by shareholders and
completed on July 31, 1998, Growth and Income Portfolio acquired all of the
assets and liabilities of Endowments, Inc. Bond Portfolio entered into a
similar transaction with Bond Portfolio for Endowments, Inc. on the same date.
As a result, certain financial and other information appearing in this
prospectus reflects the operations of these predecessor entities.
GROWTH AND INCOME PORTFOLIO The primary investment objective of Growth and
Income Portfolio is long-term growth of principal, with income and preservation
of capital as secondary objectives. The fund strives to accomplish these
objectives by normally investing primarily in common stocks or securities
convertible into common stock. Major investment emphasis will be given to
stocks of companies which appear to have favorable prospects for long-term
growth of capital and income.
BOND PORTFOLIO The investment objective of Bond Portfolio is to seek as high a
level of current income as is consistent with the preservation of capital. Any
capital appreciation is incidental to the fund's objective of current income.
The fund strives to accomplish this objective by investing primarily in
quality-oriented fixed-income securities, as described further in this
prospectus.
<PAGE>
Shareholders of the Trust must be: (i) any entity exempt from taxation under
Section 501(c)(3) of the Internal Revenue Code of 1986, as amended ("501(c)(3)
organizations"); (ii) any trust, the present or future beneficiary of which is
a 501(c)(3) organization, and (iii) any other entity formed for the primary
purpose of benefiting a 501(c)(3) organization. The Trust may change this
policy at any time without the approval of the Trust's shareholders. An
investment in the funds involves a certain amount of risk and may not be
suitable for all investors. See "Investment Policies and Risks."
This prospectus presents information you should know before investing in the
fund(s). You should keep it on file for future reference.
YOU MAY LOSE MONEY BY INVESTING IN THE FUND(S). THE LIKELIHOOD OF LOSS IS
GREATER IF YOU INVEST FOR A SHORTER PERIOD OF TIME. YOUR INVESTMENT IN THE
FUND(S) IS NOT A DEPOSIT OR OBLIGATION OF, OR INSURED OR GUARANTEED BY, ANY
ENTITY OR PERSON INCLUDING THE U.S. GOVERNMENT AND THE FEDERAL DEPOSIT
INSURANCE CORPORATION.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
ENDOWMENTS / PROSPECTUS 3
- --------------------------------------------------------------------------------
<PAGE>
EXPENSES
The effect of the expenses described below is reflected in the funds' share
prices and investment returns.
Shareholders pay no shareholder transaction expenses when buying or selling
shares of either fund. Operating expenses are paid by the funds.
SHAREHOLDER TRANSACTION EXPENSES
The funds have no sales charges on purchases or reinvested dividends, deferred
sales charges, redemption fees or exchange fees.
FUND OPERATING EXPENSES (as of July 31, 1997)
(as a percentage of average net assets after fee waiver)
<TABLE>
<CAPTION>
BOND PORTFOLIO
FOR
ENDOWMENTS, INC. ENDOWMENTS, INC.
- --------------------------------------------------------------------------------
<S> <C> <C>
Management fees 0.50% 0.40%
................................................................................
12b-1 expenses none none
................................................................................
Other expenses 0.24% 0.35%
................................................................................
Total fund operating expenses 0.74% 0.75%/1/
</TABLE>
/1/ Capital Research and Management Company has been voluntarily waiving fees
to the extent necessary to ensure that each fund's expenses do not exceed
0.75% of average net assets per annum. Without such a waiver, fees for Bond
Portfolio for Endowments, Inc. (as a percentage of average net assets)
would have been 0.85%.
EXAMPLES
Assuming a hypothetical annual return of 5% and shareholder transaction and
operating expenses as described above, for every $1,000 you invested, you would
pay the following total expenses over the following periods:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Growth and Income Portfolio $8 $24 $41 $92
................................................................................
Bond Portfolio $8 $24 $42 $93
</TABLE>
THESE EXAMPLES ARE NOT MEANT TO REPRESENT YOUR ACTUAL INVESTMENT RESULTS OR
EXPENSES, WHICH MAY VARY.
- --------------------------------------------------------------------------------
4 ENDOWMENTS / PROSPECTUS
- --------------------------------------------------------------------------------
<PAGE>
FINANCIAL HIGHLIGHTS
The following information for the six months ended January 31, 1998 and the
seven years ended July 31, 1997 has been audited by Deloitte & Touche llp,
independent auditors, and for the three years ended July 31, 1990 by KPMG Peat
Marwick, independent auditors. These tables should be read together with the
financial statements which are included in the statement of additional
information, annual report and semi-annual report of each respective portfolio.
ENDOWMENTS, INC.
SELECTED PER-SHARE DATA*
<TABLE>
<CAPTION>
SIX
MONTHS
ENDED YEARS ENDED JULY 31
....... ...................
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1/31/98 1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
-----------------------------------------------------------------------------------------------------------
Net asset value,
beginning of year $22.66 $18.61 $18.06 $17.18 $18.43 $18.26 $17.89 $16.91 $18.22 $16.71 $19.70
- -------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income .28 .56 .58 .63 .65 .66 .78 .78 .89 .98 .82
........................................................................................................................
Net realized and
unrealized gain (loss)
on investments .83 6.04 1.73 2.21 (.16) 1.05 1.74 1.60 (.16) 2.52 (1.16)
........................................................................................................................
Total income from
investment operations 1.11 6.60 2.31 2.84 .49 1.71 2.52 2.38 .73 3.50 (.34)
- -------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net
investment income (.26) (.55) (.61) (.61) (.66) (.69) (.73) (.87) (1.01) (.89) (.85)
........................................................................................................................
Distributions from net
realized gains (7.38) (2.00) (1.15) (1.35) (1.08) (.85) (1.42) (.53) (1.03) (1.10) (1.80)
........................................................................................................................
Total distributions (7.64) (2.55) (1.76) (1.96) (1.74) (1.54) (2.15) (1.40) (2.04) (1.99) (2.65)
........................................................................................................................
Net asset value,
end of year $16.13 $22.66 $18.61 $18.06 $17.18 $18.43 $18.26 $17.89 $16.91 $18.22 $16.71
- -------------------------------------------------------------------------------------------------------------------------
Total return 5.43%/2/ 38.40% 13.22% 18.57% 2.77% 10.05% 15.74% 15.03% 4.13% 23.22% (2.31)%
- -------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year
(in millions) $45 $48 $59 $57 $53 $72 $58 $46 $39 $43 $36
........................................................................................................................
Ratio of expenses to
average net assets .38%/2/,/3/ .74% .82% .73% .73% .64% .70% .69% .68% .69% .63%
........................................................................................................................
Ratio of net income
to average net assets 1.34%/2/ 2.73% 3.12% 3.70% 3.78% 3.72% 4.37% 4.63% 5.08% 5.76% 4.86%
........................................................................................................................
Average commission paid
per share/1/ 4.94c 5.00c 5.87c 5.94c 6.27c 7.03c 7.14c 7.17c 7.83c 7.43c 7.20c
........................................................................................................................
Portfolio turnover
rate 21.38%/2/ 50.69% 38.73% 24.04% 25.58% 29.70% 20.35% 34.43% 20.75% 19.70% 33.48%
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
* All per share data reflects the 100-for-1 stock split for Endowments, Inc.
effected on February 16, 1988.
/1/ Brokerage commissions paid on portfolio transactions increases 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 commission), such as fixed-income
transactions, are excluded. Generally, non-U.S. commissions are lower than
U.S. commissions when expressed as cents per share but higher when
expressed as a percentage of transactions because of the lower per-share
prices of many non-U.S. securities.
/2/ Based on operations for the period shown and, accordingly, not representive
of a full year's operations.
/3/ Had Capital Research and Management Company not waived management services
fees, the fund's expense ratio would have been 0.42% for the six months
ended January 31, 1998.
- --------------------------------------------------------------------------------
ENDOWMENTS / PROSPECTUS 5
- --------------------------------------------------------------------------------
<PAGE>
BOND PORTFOLIO FOR ENDOWMENTS, INC.
SELECTED PER-SHARE DATA*
<TABLE>
<CAPTION>
SIX
MONTHS
ENDED YEARS ENDED JULY 31
..... ...................
1/31/98 1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of year $17.17 $16.63 $16.82 $16.86 $19.66 $19.44 $17.76 $17.50 $17.83 $17.10 $17.62
- -------------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income .59 1.21 1.22 1.26 1.32 1.49 1.47 1.49 1.61 1.60 1.51
...............................................................................................................................
Net realized and
unrealized gain (loss)
on investments .03 .52 (.19) .01 (1.51) .64 1.70 .28 (.46) .61 (.09)
...............................................................................................................................
Total income from
investment operations .62 1.73 1.03 1.27 (.19) 2.13 3.17 1.77 1.15 2.21 1.42
- -------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net
investment income (.64) (1.19) (1.22) (1.24) (1.35) (1.48) (1.49) (1.51) (1.48) (1.48) (1.40)
...............................................................................................................................
Distributions from net
realized gains -- -- -- (.07) (1.26) (.43) -- -- -- -- (.54)
...............................................................................................................................
Total distributions (.64) (1.19) (1.22) (1.31) (2.61) (1.91) (1.49) (1.51) (1.48) (1.48) (1.94)
...............................................................................................................................
Net asset value,
end of year $17.15 $17.17 $16.63 $16.82 $16.86 $19.66 $19.44 $17.76 $17.50 $17.83 $17.10
- -------------------------------------------------------------------------------------------------------------------------------
Total return 3.72%/2/ 10.83% 6.25% 7.97% (1.44)% 11.74% 18.69% 10.78% 6.86% 13.68% 8.62%
- -------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year
(in millions) $30 $33 $41 $44 $46 $67 $65 $46 $39 $40 $33
...............................................................................................................................
Ratio of expenses to
average net assets .38%/1/,/2/ .75%/1/ .75%/1/ .76% .77% .65% .68% .68% .69% .70% .64%
...............................................................................................................................
Ratio of net income
to average net assets 3.41%/2/ 7.04% 7.17% 7.52% 6.99% 7.69% 8.04% 8.76% 9.25% 9.28% 8.69%
...............................................................................................................................
Portfolio turnover
rate 19.89%/2/ 22.18% 54.43% 69.22% 82.12% 35.97% 63.30% 54.86% 42.90% 64.21% 128.52%
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* All per share data reflects the 50-for-1 stock split for Bond Portfolio for
Endowments, Inc. effected on February 16, 1988.
/1/ Had Capital Research and Management Company not waived management services
fees, the fund's ratios 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.
/2/ Based on operations for the period shown and, accordingly, not
representative of a full year's operations.
- --------------------------------------------------------------------------------
INVESTMENT POLICIES AND RISKS
Growth and Income Portfolio's primary investment objective is long-term growth
of principal, with income and preservation of capital as secondary objectives.
The fund will normally invest primarily in common stocks or securities
convertible into common stock, including those issued by real estate investment
trusts. Emphasis will be given to stocks of companies which have favorable
prospects for long-term growth of both capital and income. The fund may also
purchase preferred stocks and straight corporate debt securities that are rated
in
- --------------------------------------------------------------------------------
6 ENDOWMENTS / PROSPECTUS
- --------------------------------------------------------------------------------
<PAGE>
the top three quality categories by Moody's Investors Service, Inc. or
Standard & Poor's, or unrated but determined to be of equivalent quality by
Capital Research and Management Company, the funds' investment adviser. In
addition, cash and cash equivalents and U.S. Government securities may also be
held. The fund may from time to time invest up to 10% of its assets in common
stocks and other securities of issuers domiciled outside the U.S. The fund will
normally diversify its investments among different industries although the
degree of diversification will vary from time to time in accordance with the
judgment of management.
Bond Portfolio's investment objective is to seek as high a level of current
income as is consistent with the preservation of capital.
The fund invests primarily in fixed-income securities, including bonds and
debentures. These securities will be investment grade, which are rated in the
top four quality categories (those rated Baa or above by Moody's or BBB or
above by S&P) or unrated but determined to be of equivalent quality by Capital
Research and Management Company, the fund's investment adviser. Securities
rated Baa or BBB are considered investment grade but may have speculative
characteristics.
Normally, at least 65% of the fund's assets will be invested in bonds. (For
this purpose, bonds are considered to be any debt securities having initial
maturities in excess of one year.) The fund may also invest up to 10% of its
assets in obligations of corporations or government entities outside the U.S.
and Canada. All Canadian and other non-U.S. securities purchased by the fund
will be liquid, U.S. dollar-denominated and meet the quality standards set
forth above. In addition, the fund may invest in notes and bonds issued by
governments, their agencies or instrumentalities, or corporations in which the
principal value and/or interest payments vary with the rate of inflation.
The fixed-income securities in which the fund invests may have stock conversion
or purchase rights; however, such securities will generally not exceed 20% of
the fund's assets. The fund will not acquire common stocks except through the
exercise of conversion or stock purchase rights and will retain such common
stocks only when it is consistent with the fund's objective of current income.
In addition, the fund may hold cash or cash equivalents.
* * *
As the majority of the funds' shareholders are non-profit institutions,
investments will be made consonant with the standards generally considered
prudent by fiduciaries and trustees of such institutions.
- --------------------------------------------------------------------------------
ENDOWMENTS / PROSPECTUS 7
- --------------------------------------------------------------------------------
<PAGE>
MORE INFORMATION ON THE FUNDS' INVESTMENT POLICIES AND INVESTMENT RESTRICTIONS
ARE CONTAINED IN THE STATEMENT OF ADDITIONAL INFORMATION.
Investment limitations are considered at the time securities are purchased.
These limits are based on the funds' net assets unless otherwise indicated. The
funds' fundamental investment restrictions (described in the statement of
additional information) and their investment objectives may not be changed
without shareholder approval.
THE FUNDS MAY NOT ACHIEVE THEIR INVESTMENT OBJECTIVES DUE TO MARKET CONDITIONS
AND OTHER FACTORS. IN ADDITION, THE FUNDS MAY EXPERIENCE DIFFICULTY LIQUIDATING
CERTAIN PORTFOLIO SECURITIES DURING SIGNIFICANT MARKET DECLINES OR PERIODS OF
HEAVY REDEMPTIONS.
- --------------------------------------------------------------------------------
SECURITIES AND INVESTMENT TECHNIQUES
PERTAINS TO GROWTH AND INCOME PORTFOLIO AND BOND PORTFOLIO:
DEBT SECURITIES
Bonds and other debt securities are used by issuers to borrow money. Issuers
pay investors interest and generally must repay the amount borrowed at
maturity. Some debt securities, such as zero coupon bonds, do not pay current
interest, but are purchased at a discount from their face values. The prices of
debt securities fluctuate depending on such factors as interest rates, credit
quality and maturity. In general their prices decline when interest rates rise
and vice versa.
Capital Research and Management Company attempts to reduce the risks described
above through diversification of the portfolio and by credit analysis of each
issuer as well as by monitoring broad economic trends and corporate and
legislative developments.
- --------------------------------------------------------------------------------
8 ENDOWMENTS / PROSPECTUS
- --------------------------------------------------------------------------------
<PAGE>
OTHER SECURITIES
The funds may also invest in securities that have a combination of equity and
debt characteristics such as non-convertible preferred stocks and convertible
securities. These securities may at times resemble equity more than debt and
vice versa. Non-convertible preferred stocks are similar to debt in that they
have a stated dividend rate akin to the coupon of a bond or note even though
they are often classified as equity securities. The prices and yields of non-
convertible preferred stocks generally move with changes in interest rates and
the issuer's credit quality, similar to the factors affecting debt securities.
Bonds, preferred stocks, and other securities may sometimes be converted into
shares of common stock or other securities at a stated exchange ratio. These
securities prior to conversion pay a fixed rate of interest or a dividend.
Because convertible securities have both debt and equity characteristics their
value varies in response to many factors, including the value of the underlying
equity, general market and economic conditions, convertible market valuations,
as well as changes in interest rates, credit spreads, and the credit quality of
the issuer.
U.S. GOVERNMENT SECURITIES
The funds may invest in securities guaranteed by the U.S. Government including
(1) direct obligations of the U.S. Treasury (such as Treasury bills, notes and
bonds) and (2) federal agency obligations guaranteed as to principal and
interest by the U.S. Treasury.
Certain securities issued by U.S. Government instrumentalities and certain
federal agencies are neither direct obligations of, nor guaranteed by, the
Treasury. However, they generally involve federal sponsorship in one way or
another: some are backed by specific types of collateral; some are supported by
the issuer's right to borrow from the Treasury; some are supported by the
discretionary authority of the Treasury to purchase certain obligations of the
issuer; and others are supported only by the credit of the issuing government
agency or instrumentality.
RESTRICTED AND ILLIQUID SECURITIES
The funds may purchase securities subject to restrictions on resale. All such
securities whose principal trading market is in the U.S. will be considered
illiquid unless they have been specifically determined to be liquid under
procedures which have been adopted by the funds' board of trustees, taking into
account factors such as the frequency and volume of trading, the commitment of
dealers to make markets and the availability of qualified investors, all of
which can change from time to time. The funds may incur certain additional
costs in disposing of illiquid securities.
- --------------------------------------------------------------------------------
ENDOWMENTS / PROSPECTUS 9
- --------------------------------------------------------------------------------
<PAGE>
INVESTING IN VARIOUS COUNTRIES
Investing outside the U.S. involves special risks caused by, among other
things, fluctuating currency values; different accounting, auditing, and
financial reporting regulations and practices in some countries; changing local
and regional economic, political, and social conditions; expropriation or
confiscatory taxation; greater market volatility; differing securities market
structures; and various administrative difficulties such as delays in clearing
and settling portfolio transactions or in receiving payment of dividends.
However, in the opinion of Capital Research and Management Company, investing
outside the U.S. also can reduce certain portfolio risks due to greater
diversification opportunities.
Additional costs could be incurred in connection with the funds' investment
activities outside the U.S. The Growth and Income Portfolio can purchase and
sell currencies to facilitate transactions in securities denominated in
currencies other than the U.S. dollar. Brokerage commissions may be higher
outside the U.S., and the Growth and Income Portfolio may bear certain expenses
in connection with its currency transactions. Furthermore, increased custodian
costs for either fund may be associated with the maintenance of assets in
certain jurisdictions.
PERTAINS TO GROWTH AND INCOME PORTFOLIO:
EQUITY SECURITIES
The fund will ordinarily invest in equity securities, which represent an
ownership position in a company. The prices of equity securities fluctuate
based on changes in the financial condition of their issuers and on market and
economic conditions. The fund's results will be related to the overall market
for these securities.
- --------------------------------------------------------------------------------
10 ENDOWMENTS / PROSPECTUS
- --------------------------------------------------------------------------------
<PAGE>
PERTAINS TO BOND PORTFOLIO:
PASS-THROUGH SECURITIES
The fund may invest in various debt obligations backed by a pool of mortgages
or other assets including loans on single family residences, home equity loans,
mortgages on commercial buildings, credit card receivables, and leases on
airplanes or other equipment. Principal and interest payments made on the
underlying asset pools backing these obligations are typically passed through
to investors. Mortgage-backed securities permit borrowers to prepay their
underlying mortgages. Prepayments can alter the effective maturity of these
instruments. Pass-through securities may have either fixed or adjustable
coupons. These securities include those discussed below.
"Mortgage-backed securities" are issued both by U.S. Government agencies,
including the Government National Mortgage Association (GNMA), the Federal
National Mortgage Association (FNMA), and the Federal Home Loan Mortgage
Corporation (FHLMC), and by private entities. The payment of interest and
principal on securities issued by U.S. Government agencies is guaranteed by the
full faith and credit of the U.S. Government (in the case of GNMA securities)
or the issuer (in the case of FNMA and FHLMC securities). However, the
guarantees do not apply to the market prices and yields of these securities,
which vary with changes in interest rates.
Mortgage-backed securities issued by private entities are structured similarly
to mortgage-backed securities issued by GNMA, FNMA, and FHLMC. These securities
and the underlying mortgages are not guaranteed by government agencies. In
addition, these securities generally are structured with one or more types of
credit enhancement. Mortgage-backed securities generally permit borrowers to
prepay their underlying mortgages. Prepayments by borrowers on underlying
obligations can alter the effective maturity of these instruments.
"Collateralized mortgage obligations" (CMOs) are also backed by a pool of
mortgages, mortgage-backed securities or mortgage loans, which are divided into
two or more separate bond issues. CMOs issued by U.S. Government agencies are
backed by agency mortgages, while privately issued CMOs may be backed by either
government agency mortgages or private mortgages. Payments of principal and
interest are passed through to each bond at varying schedules resulting in
bonds with different coupons, effective maturities, and sensitivities to
interest rates. In fact, some CMOs may be structured in a way that when
interest rates change the impact of changing prepayment rates on these
securities' effective maturities is magnified.
- --------------------------------------------------------------------------------
ENDOWMENTS / PROSPECTUS 11
- --------------------------------------------------------------------------------
<PAGE>
"Commercial mortgage-backed securities" are backed by mortgages of commercial
property, such as hotels, office buildings, retail stores, hospitals, and other
commercial buildings. These securities may have a lower prepayment risk than
other mortgage-related securities because commercial mortgage loans generally
prohibit or impose penalties on prepayments of principal. In addition,
commercial mortgage-related securities often are structured with some form of
credit enhancement to protect against potential losses on the underlying
mortgage loans. Many of the risks of investing in commercial mortgage-backed
securities reflect the risks of investing in the real estate securing the
underlying mortgage loans, including the effects of local and other economic
conditions on real estate markets, the ability of tenants to make loan
payments, and the ability of a property to attract and retain tenants.
"Asset-backed securities" are backed by other assets such as credit card,
automobile or consumer loan receivables, retail installment loans, or
participations in pools of leases. Credit support for these securities may be
based on the underlying assets and/or provided through credit enhancements by a
third party. The values of these securities are sensitive to changes in the
credit quality of the underlying collateral, the credit strength of the credit
enhancement, changes in interest rates, and at times the financial condition of
the issuer. Some asset-backed securities also may receive prepayments which can
change the bonds' effective maturities.
FORWARD COMMITMENTS
The fund may enter into commitments to purchase or sell securities at a future
date. When the fund agrees to purchase such securities, it assumes the risk of
any decline in value of the securities beginning on the date of the agreement.
When the fund agrees to sell such securities, it does not participate in
further gains or losses with respect to the securities. If the other party to
such a transaction fails to deliver or pay for the securities, the fund could
miss a favorable price or yield opportunity, or could experience a loss. In
addition, the fund may also enter into reverse repurchase agreements, which are
the sale of a security by the fund and its agreement to repurchase the security
at a specified time and price at a later date.
The fund may also enter into "roll" transactions which are the sale of
mortgage-backed securities or other securities together with a commitment to
purchase similar, but not identical, securities at a later date. The fund
assumes the rights and risks of ownership, including the risk of price and
yield fluctuations as of the time of the agreement.
- --------------------------------------------------------------------------------
12 ENDOWMENTS / PROSPECTUS
- --------------------------------------------------------------------------------
<PAGE>
REPURCHASE AGREEMENTS
The fund may enter into repurchase agreements, under which it buys a security
and obtains a simultaneous commitment from the seller to repurchase the
security at a specified time and price. The seller must maintain with the
fund's custodian collateral equal to at least 100% of the repurchase price
including accrued interest as monitored daily by Capital Research and
Management Company. The fund only enters into repurchase agreements involving
securities in which they could otherwise invest and with selected banks and
securities dealers whose financial condition is monitored by Capital Research
and Management Company. If the seller under a repurchase agreement defaults,
the fund may incur a loss if the value of the collateral securing the
repurchase agreement has declined and may incur disposition costs in connection
with liquidating the collateral. If bankruptcy proceedings are commenced with
respect to the seller, liquidation of the collateral by the fund may be delayed
or limited.
- --------------------------------------------------------------------------------
MULTIPLE PORTFOLIO COUNSELOR SYSTEM
The basic investment philosophy of Capital Research and Management Company is
to seek fundamental values at reasonable prices. Capital Research and
Management Company utilizes a system of multiple portfolio counselors in
managing mutual fund assets. Under this system a fund's portfolio is divided
into segments which are managed by individual counselors. Counselors decide how
their respective segments will be invested (within the limits provided by a
fund's objective(s) and policies and by Capital Research and Management
Company's investment committee). In addition, Capital Research and Management
Company's research professionals may make investment decisions with respect to
a portion of a fund's portfolio. The primary individual portfolio counselors
for Growth and Income Portfolio and Bond Portfolio are listed on next page.
- --------------------------------------------------------------------------------
ENDOWMENTS / PROSPECTUS 13
- --------------------------------------------------------------------------------
<PAGE>
GROWTH AND INCOME PORTFOLIO
<TABLE>
<CAPTION>
================================================================================
YEARS OF EXPERIENCE
AS
INVESTMENT
PROFESSIONAL
(APPROXIMATE)
....................
YEARS OF EXPERIENCE WITH CAPITAL
PORTFOLIO AS PORTFOLIO COUNSELOR RESEARCH AND
COUNSELORS (AND RESEARCH PROFESSIONAL, MANAGEMENT
FOR GROWTH IF APPLICABLE) FOR COMPANY OR
AND INCOME PRIMARY GROWTH AND INCOME PORTFOLIO ITS TOTAL
PORTFOLIO TITLE(S) (APPROXIMATE) AFFILIATES YEARS
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ROBERT G. Senior Vice 8 years (in 23 years 26 years
O'DONNELL President. addition to 18
Senior Vice years as a
President and research
Director, professional
Capital prior to
Research and becoming a
Management portfolio
Company counselor for
the fund).
- --------------------------------------------------------------------------------
CLAUDIA P. Vice President 2 years (in 21 years 23 years
HUNTINGTON (Growth and addition to 20
Income years as a
Portfolio). research
Senior Vice professional
President, prior to
Capital becoming a
Research and portfolio
Management counselor for
Company the fund).
================================================================================
</TABLE>
BOND PORTFOLIO
<TABLE>
<CAPTION>
================================================================================
YEARS OF EXPERIENCE AS
INVESTMENT
PROFESSIONAL
(APPROXIMATE)
.........................
YEARS OF
EXPERIENCE WITH CAPITAL
AS PORTFOLIO RESEARCH AND
PORTFOLIO COUNSELOR MANAGEMENT
COUNSELORS FOR BOND COMPANY OR
FOR PRIMARY PORTFOLIO ITS TOTAL
BOND PORTFOLIO TITLE(S) (APPROXIMATE) AFFILIATES YEARS
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ABNER D. Senior Vice 23 years 31 years 46 years
GOLDSTINE President.
Senior Vice
President and
Director,
Capital
Research and
Management
Company
- -------------------------------------------------------------------------------
JOHN H. Vice President 10 years 15 years 16 years
SMET (Bond
Portfolio).
Vice
President,
Capital
Research and
Management
Company
================================================================================
</TABLE>
Capital Research and Management Company has managed the funds' assets since
July 26, 1975.
- --------------------------------------------------------------------------------
14 ENDOWMENTS / PROSPECTUS
- --------------------------------------------------------------------------------
<PAGE>
INVESTMENT RESULTS
The funds may compare investment results to various indices or other mutual
funds. Fund results may be calculated on a total return, yield and/or
distribution rate basis.
X TOTAL RETURN is the change in value of an investment in a fund over a given
period, assuming reinvestment of any dividends and capital gain
distributions.
X YIELD is computed by dividing the net investment income per share earned by a
fund over a given period of time by the maximum offering price per share on
the last day of the period, according to a formula mandated by the Securities
and Exchange Commission. A yield calculated using this formula may be
different than the income actually paid to shareholders.
X DISTRIBUTION RATE reflects dividends that were paid by a fund. The
distribution rate is calculated by dividing the dividends paid over the last
12 months by the sum of the month-end price and the capital gain
distributions paid over the last 12 months.
- --------------------------------------------------------------------------------
ENDOWMENTS / PROSPECTUS 15
- --------------------------------------------------------------------------------
<PAGE>
ENDOWMENTS, INC.
INVESTMENT RESULTS
(FOR PERIODS ENDED JUNE 30, 1998)
<TABLE>
<CAPTION>
AVERAGE
ANNUAL THE FUND
TOTAL AT NET
RETURNS: ASSET VALUE/1/ S&P 500/2/
- --------------------------------------------------------------------------------
<S> <C> <C>
One year 19.75% 30.09%
................................................................................
Five years 16.80% 23.03%
................................................................................
Ten years 14.90% 18.52%
................................................................................
Lifetime/3/ 15.23% 16.03%
</TABLE>
- --------------------------------------------------------------------------------
Yield/1/: 2.64%
Distribution Rate: 1.97%
BOND PORTFOLIO FOR ENDOWMENTS, INC.
INVESTMENT RESULTS
(FOR PERIODS ENDED JUNE 30, 1998)
<TABLE>
<CAPTION>
AVERAGE
ANNUAL THE FUND LEHMAN
TOTAL AT NET AGGREGATE
RETURNS: ASSET VALUE/1/ BOND INDEX/4/
- --------------------------------------------------------------------------------
<S> <C> <C>
One year 8.99% 10.54%
................................................................................
Five years 6.13% 6.88%
................................................................................
Ten years 9.05% 9.07%
................................................................................
Lifetime/3/ 9.73% 9.77%/5/
</TABLE>
- --------------------------------------------------------------------------------
Yield/1/: 5.63%
Distribution Rate: 7.17%
/1/ These fund results were calculated according to a standard formula that is
required for all stock and bond funds.
/2/ The Standard & Poor's 500 Composite Index represents stocks. This index is
unmanaged and does not reflect sales charges, commissions or expenses.
/3/ For the period beginning July 26, 1975 (when Capital Research and
Management Company became the investment adviser of the funds' assets).
/4/ Lehman Brothers Aggregate Bond Index represents investment grade debt. This
index is unmanaged and does not reflect sales charges, commissions or
expenses.
/5/ Lehman/Brothers Aggregate Bond Index did not exist until December 31, 1975.
For the period between July 31, 1975 and December 31, 1975, Lehman Brothers
Government/Corporate Bond Index results were used. The Lehman Brothers
indices are based on July 31, 1975 index value.
- --------------------------------------------------------------------------------
16 ENDOWMENTS / PROSPECTUS
- --------------------------------------------------------------------------------
<PAGE>
Here are the fund's annual total returns. This information is being supplied on
a calendar year basis for comparative purposes.
- --------------------------------------------------------------------------------
[CHART APPEARS HERE]
ENDOWMENTS, INC.
<TABLE>
88 89 90 91 92 93 94 95 96 97
- -- -- -- -- -- -- -- -- -- --
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
13.37 25.4 0.42 22.57 9.56 9.56 1.54 28.31 17.43 28.81
- -----------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
[CHART APPEARS HERE]
BOND PORTFOLIO FOR ENDOWMENTS, INC.
<TABLE>
88 89 90 91 92 93 94 95 96 97
- -- -- -- -- -- -- -- -- -- --
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
9.18 12.56 6.04 20.32 9.4 12.23 -4.31 15.99 3.98 8.72
- ----------------------------------------------------------------------------
</TABLE>
Past results are not an indication of future results and may reflect a fee
waiver.
- --------------------------------------------------------------------------------
ENDOWMENTS / PROSPECTUS 17
- --------------------------------------------------------------------------------
<PAGE>
DIVIDENDS, DISTRIBUTIONS AND TAXES
DIVIDENDS AND DISTRIBUTIONS
The funds usually pay dividends, which may fluctuate, in March, June, September
and December. Capital gains, if any, are usually distributed in December. When
a dividend or capital gain is distributed, the net asset value per share is
reduced by the amount of the payment.
If a shareholder has elected to receive dividends and/or capital gain
distributions in cash, and the postal or other delivery service is unable to
deliver checks to the shareholder's address of record, or the shareholder does
not respond to mailings from American Funds Service Company with regard to
uncashed distribution checks, the shareholder's distribution option will
automatically be converted to having all dividends and other distributions
reinvested in additional shares.
FEDERAL TAXES
In any fiscal year in which the Trust qualifies as a regulated investment
company and distributes to shareholders all of its net investment income and
net capital gains, the Trust itself (and hence the funds) is relieved of
federal income tax.
Generally, all dividends and capital gains are taxable whether they are
reinvested or received in cash -- unless you are exempt from taxation or
entitled to tax deferral. Early each year, you will be notified as to the
amount and federal tax status of all income distributions paid during the prior
year. Such distributions may also be subject to state or local taxes.
This is a brief summary of some of the tax laws that affect your investment in
the funds. Please see the statement of additional information and your tax
adviser for further information.
- --------------------------------------------------------------------------------
18 ENDOWMENTS / PROSPECTUS
- --------------------------------------------------------------------------------
<PAGE>
ORGANIZATION AND MANAGEMENT OF ENDOWMENTS
TRUST ORGANIZATION AND VOTING RIGHTS
Endowments, Inc., the predecessor to the Growth and Income Portfolio, was
organized as a Delaware corporation in 1969; Bond Portfolio for Endowments,
Inc., the predecessor to the Bond Portfolio, was organized as a Delaware
corporation in 1970. Each fund is now a separate series of a Delaware business
trust which is a registered, open-end, diversified management investment
company. The Trust was organized on May 14, 1998. All fund operations are
supervised by the Trust's board of trustees who meet periodically and perform
duties required by applicable state and federal laws. The funds do not hold
annual meetings of shareholders. However, significant matters that require
shareholder approval, such as certain elections of board members or a change in
a fundamental investment policy, will be presented to shareholders at a meeting
called for such purpose. Shareholders have one vote per share owned. At the
request of the holders of at least 10% of the shares of either fund, that fund
will hold a meeting at which any member of the board could be removed by a
majority vote.
As of June 30, 1998, the following shareholders owned 5% or more of the funds'
outstanding shares:
Endowments, Inc. -- California Institute of the Arts (24700 McBean Parkway,
Valencia, CA 91355) (398,897 shares, 14.55%); Citizens' Scholarship Foundation
of America (1505 Riverview Road, P.O. Box 297, St. Peter, MN 56082)
(212,369 shares, 7.74%); DeKalb County Community Foundation (2225 Gateway
Drive, Sycamore, IL 60178) (150,307 shares, 5.48%); Foundation for Reproductive
Research and Education (333 E. Superior Street, Prentice 490, Chicago, IL
60611) (158,100 shares, 5.77%); and Loyola Marymount University (7900 Loyola
Boulevard, Los Angeles, CA 90045) (156,660 shares, 5.71%).
Bond Portfolio for Endowments, Inc. -- California Institute for the Arts
(24700 McBean Parkway, Valencia, CA 91355) (514,168 shares, 30.17%); Citizens'
Scholarship of America (1505 Riverview Road, P.O. Box 297, St. Peter, MN 56082)
(151,872 shares, 8.91%); Foundation for Reproductive Research and Education
(333 E. Superior Street, Prentice 490, Chicago, IL 60611) (91,828 shares,
5.39%); and Hudson Institute, 5395 Emerson Way, (P.O. Box 26919, Indianapolis,
IN 46226) (142,565 shares, 8.37%). As California Institute of the Arts owns in
excess of 25% of the voting shares of the fund, it is, pursuant to the
Investment Company Act of 1940, presumed to be a controlling person of the
fund.
Shareholder inquiries may be made in writing to Endowments, One Market, Steuart
Tower, Suite 1800, P.O. Box 7650, San Francisco, CA 94120 or by calling
415/393-7105.
- --------------------------------------------------------------------------------
ENDOWMENTS / PROSPECTUS 19
- --------------------------------------------------------------------------------
<PAGE>
THE INVESTMENT ADVISER
Capital Research and Management Company, a large and experienced investment
management organization founded in 1931, has managed the funds' assets since
July 25, 1975 and is the investment adviser to other funds, including those in
The American Funds Group. Capital Research and Management Company, a wholly
owned subsidiary of The Capital Group Companies, Inc., is headquartered at 333
South Hope Street, Los Angeles, CA 90071. Capital Research and Management
Company manages the investment portfolio and business affairs of the funds. The
management fee paid by the funds to Capital Research and Management Company may
not exceed 0.50% of each fund's average net assets annually and declines at
certain asset levels. The total management fees paid by each fund, as a
percentage of average net assets, for the previous fiscal year are discussed
earlier under "Expenses."
Capital Research and Management Company and its affiliated companies have
adopted a personal investing policy that is consistent with the recommendations
contained in the May 9, 1994 report issued by the Investment Company
Institute's Advisory Group on Personal Investing. This policy has also been
incorporated into the funds' code of ethics.
PORTFOLIO TRANSACTIONS
Orders for the funds' portfolio securities transactions are placed by Capital
Research and Management Company, which strives to obtain the best available
prices, taking into account the costs and quality of executions. Fixed-income
securities are generally traded on a "net" basis with a dealer acting as
principal for its own account without a stated commission, although the price
of the security usually includes a profit to the dealer. In underwritten
offerings, securities are usually purchased at a fixed price which includes an
amount of compensation to the dealer, generally referred to as a concession or
discount. On occasion, securities may be purchased directly from an issuer, in
which case no commissions or discounts are paid. In the over-the-counter
market, purchases and sales are transacted directly with principal market-
makers except in those circumstances where it appears better prices and
executions are available elsewhere.
Subject to the above policy, when two or more brokers (either directly or
through their correspondent clearing agents) are in a position to offer
comparable prices and executions, preference may be given to brokers who have
provided investment research, statistical, and other related services for the
benefit of the funds and/or other funds served by Capital Research and
Management Company.
TRANSFER AGENT
American Funds Service Company serves as the transfer agent for the funds and
performs shareholder service functions. An agent of American Funds Service
Company who performs transfer agent services for the funds is located at
One Market, Steuart Tower, Suite 1800, San Francisco, CA 94105.
- --------------------------------------------------------------------------------
20 ENDOWMENTS / PROSPECTUS
- --------------------------------------------------------------------------------
<PAGE>
SHAREHOLDER SERVICES
The funds offer you a valuable array of services you can use to alter your
investment program as your needs and circumstances change. These services,
which are summarized below, are available only in states where they may be
legally offered and may be terminated or modified at any time upon 60 days'
written notice.
- --------------------------------------------------------------------------------
PURCHASING SHARES
Shares of the funds may be purchased directly from the funds only by (i) any
entity exempt from taxation under Section 501(c)(3) of the Internal Revenue
Code of 1986, as amended ("501(c)(3) organizations"); (ii) any trust, the
present or future beneficiary of which is a 501(c)(3) organization and (iii)
any other entity formed for the primary purpose of benefiting a 501(c)(3)
organization. The minimum initial purchase is $50,000 for either fund; there is
no minimum on subsequent investments. The minimum initial investment may be
reduced by the board of trustees for investments which meet certain standards.
Any shareholder which no longer fulfills the characteristics described above
must transfer its shares to an eligible entity or, at the shareholder's option,
sell its shares at net asset value.
The purchase of shares may be paid in cash or in a like value of acceptable
securities, said securities to be valued in accordance with the valuation
procedures described in the statement of additional information under "Purchase
of Shares -- Price of Shares." Acceptable securities shall be those securities
deemed acceptable by Capital Research and Management Company; that is, those
securities which management deems to be consistent with the investment
objectives and policies of the funds.
Various services are available as described below:
X Automatic Reinvestment
Dividends and capital gain distributions are reinvested in additional shares
at no sales charge unless you indicate otherwise. You also may elect to have
dividends and/or capital gain distributions paid in cash.
X Right of Accumulation
You may take into account the current value of your existing holdings in the
Growth and Income Portfolio and the Bond Portfolio, as well as your holdings
in The American Funds Group, to determine your sales charge on investments
in accounts eligible to be aggregated, or when making a gift to an
individual or charity.
- --------------------------------------------------------------------------------
ENDOWMENTS / PROSPECTUS 21
- --------------------------------------------------------------------------------
<PAGE>
X Exchange Feature
As a shareholder of the Growth and Income Portfolio or the Bond Portfolio,
you may exchange all or part of your shares at net asset value for shares of
the other, and for shares of The Cash Management Trust of America or The
U.S. Treasury Money Fund of America, whose shares may be similarly exchanged
for shares of the Growth and Income Portfolio and/or the Bond Portfolio. The
Cash Management Trust of America and The U.S. Treasury Money Fund of America
are money market funds whose shares are sold at net asset value. This
feature is available only if the fund for which you are exchanging is
qualified in the state where you reside.
This exchange may or may not have potential tax consequences for the
shareholder. Shareholders should consult their tax or financial advisers
before exchanging their shares under this option.
X Automatic Withdrawals
Shareholders may authorize automatic withdrawals from their accounts. All
shares owned or purchased by a shareholder will be credited to the
shareholder's withdrawal account, and a sufficient number of shares will be
sold from the account to meet the requested withdrawal payments. All income
dividends and other distributions, if any, must be reinvested in fund shares
at net asset value and credited to the withdrawal account. Liquidation of
shares in excess of investment income will reduce and may deplete a
shareholder's invested capital. Withdrawal payments, therefore, should not
be considered as a yield or income on the investment.
X Account Statements
A shareholder account is opened in accordance with your registration
instructions. Transactions in the account, such as additional investments
and dividend reinvestments, will be reflected on regular confirmation
statements from American Funds Service Company.
SHARE PRICE
Each fund's share price, also called net asset value, is determined as of 4:00
p.m. New York time which is the normal close of trading on the New York Stock
Exchange, every day the Exchange is open. Each fund calculates its net asset
value per share, generally using market prices, by dividing the total value of
its assets after subtracting liabilities by the number of its shares
outstanding. Shares are purchased at the net asset value next determined after
your investment is received and accepted.
- --------------------------------------------------------------------------------
22 ENDOWMENTS / PROSPECTUS
- --------------------------------------------------------------------------------
<PAGE>
SELLING SHARES
Shares are credited to your account and shares of the funds are redeemable
through the funds at net asset value. Shareholders may sell (redeem) their
shares, by tendering a request in proper form, at the offices of the funds,
P.O. Box 7650, One Market, Steuart Tower (Suite 1800), San Francisco,
California 94120. Proper tender of shares requires a written request for
redemption. Requests to sell must be signed and the authorized signature(s) of
the shareholder guaranteed by an "eligible guarantor" which includes a bank or
savings and loan association that is federally insured or a member firm of the
National Association of Securities Dealers, Inc. Notarization by a notary
public is not an acceptable signature guarantee.
The funds do not have dealer agreements and do not accept redemption orders
from broker-dealers. The price you receive for the shares you sell is the net
asset value next determined after your order and all required documents are
received. (See "Purchasing Shares -- Share Price.") Because the funds' net
asset values fluctuate, reflecting the market value of the funds' portfolios,
the amount a shareholder receives for shares sold may be more or less than the
amount paid for them.
- --------------------------------------------------------------------------------
OTHER IMPORTANT THINGS TO REMEMBER
YEAR 2000
The date-related computer issue known as the "Year 2000 problem" could have an
adverse impact on the quality of services provided to the funds and its
shareholders. However, the funds understand that their key service providers --
including the investment adviser and its affiliates -- are taking steps to
address the issue. In addition, the Year 2000 problem may adversely affect the
companies in which the funds invest. For example, companies may incur
substantial costs to address the problem. They may also suffer losses caused by
corporate and governmental data processing errors. The funds and their
investment adviser will continue to monitor developments relating to this
issue.
- --------------------------------------------------------------------------------
ENDOWMENTS / PROSPECTUS 23
- --------------------------------------------------------------------------------
<PAGE>
================================================================================
OTHER FUND INFORMATION
ANNUAL/SEMI-ANNUAL STATEMENT OF ADDITIONAL
REPORT TO SHAREHOLDERS INFORMATION (SAI)
Includes financial Contains more detailed
statements, detailed information on all aspects
performance information, of the funds, including the
portfolio holdings, a funds' financial statements.
statement from portfolio
management and the
independent auditor's
report.
A current SAI has been filed
CODE OF ETHICS with the Securities and
Exchange Commission ("SEC").
Includes a description of It is incorporated by
the funds' personal reference into this
investing policy. prospectus and is available
along with other related
materials on the SEC's
Internet Web site at
http://www.sec.gov.
To request a free copy of any of the documents above:
Write to the Secretary
of the funds
P.O. Box 7650
San Francisco, CA 94120
================================================================================
This prospectus has been printed on recycled paper. [RECLYCLE LOGO]
- --------------------------------------------------------------------------------
24 ENDOWMENTS / PROSPECTUS
- --------------------------------------------------------------------------------
ENDOWMENTS
Part B
Statement of Additional Information
August 1, 1998
Endowments (the "Trust") is an open-end management investment company,
commonly known as a mutual fund. The Trust offers two diversified investment
portfolios, Growth and Income Portfolio and Bond Portfolio (collectively, the
"funds").
This document is not a prospectus but should be read in conjunction with the
current Prospectus of Endowments dated August 1, 1998. The Prospectus may be
obtained by writing to the funds' at the following address:
ENDOWMENTS
ATTENTION: SECRETARY
ONE MARKET
STEUART TOWER, SUITE 1800
P.O. BOX 7650
SAN FRANCISCO, CALIFORNIA 94120
TELEPHONE: (415) 421-9360
Table of Contents
Item Page No.
ABOUT ENDOWMENTS 1
DESCRIPTION OF CERTAIN SECURITIES 2
FUNDAMENTAL POLICIES AND INVESTMENT RESTRICTIONS 6
MANAGEMENT OF THE TRUST 7
DIVIDENDS, DISTRIBUTIONS AND FEDERAL TAXES 11
PURCHASE OF SHARES 15
EXECUTION OF PORTFOLIO TRANSACTIONS 16
REDEMPTION OF SHARES 17
GENERAL INFORMATION 17
INVESTMENT RESULTS 18
FINANCIAL STATEMENTS ATTACHED
ABOUT ENDOWMENTS
Endowments is a business trust organized under the laws of the state of
Delaware on May 14, 1998 with two separate series, Growth and Income Portfolio
and Bond Portfolio. Growth and Income Portfolio was formerly known as
Endowments, Inc. and was organized as a Delaware corporation. Bond Portfolio
was formerly known as Bond Portfolio for Endowments, Inc. and was organized as
a separate Delaware corporation. Endowments, Inc. and Bond Portfolio for
Endowments, Inc. were reorganized as separate series of Endowments on July 31,
1998 with all of the assets of each predecessor fund transferred to Growth and
Income Portfolio and Bond Portfolio, respectively. As a result, certain
financial information appearing in this prospectus reflects the operations of
these predecessor entities.
DESCRIPTION OF CERTAIN SECURITIES
BOND PORTFOLIO
DEBT SECURITIES - The fund has no current intention (at least during the next
12 months) of investing in securities rated BB or below by Standard & Poor's
("S&P") and Ba or below by Moody's Investors Service, Inc. ("Moody's")
(commonly known as "junk" bonds) or unrated but determined to be of equivalent
quality by Capital Research and Management Company ("CRMC"). The fund is not
normally required to dispose of a security in the event that its rating is
reduced below BBB or Baa (or it is not rated and its quality becomes equivalent
to such a security). The fund, however, has no current intention of holding
more than 5% of its net assets in junk bonds. Junk bonds are described by the
rating agencies as speculative and involve greater risk of default or price
changes due to changes in the issuer's creditworthiness than higher rated
bonds, or they may already be in default. The market prices of these
securities may fluctuate more than higher quality securities and may decline
significantly. It may be more difficult to dispose of or to determine the
value of junk bonds.
MATURITY - There are no restrictions on the maturity composition of the
portfolio, although it is anticipated that the fund normally will be invested
substantially in securities with maturities in excess of three years. Under
normal market conditions, longer term securities yield more than shorter term
securities, but are subject to greater price fluctuations.
FORWARD COMMITMENTS - The fund may enter into commitments to purchase or sell
securities at a future date. When a fund purchases such securities it assumes
the risk of any decline in value of the security beginning on the date of the
agreement. When a fund agrees to sell such securities, it does not participate
in further gains or losses with respect to such securities. If the other
party to such a transaction fails to deliver or pay for the securities, the
fund could miss a favorable price or yield opportunity, or could experience a
loss.
As the fund's aggregate commitments under these transactions increase, the
opportunity for leverage similarly may increase. The fund will not use these
transactions for the purpose of leveraging and will segregate liquid assets
which will be marked to market daily in an amount sufficient to meet its
payment obligations in these transactions. Although these transactions will
not be entered into for leveraging purposes, to the extent the fund's aggregate
commitments under these transactions exceed its segregated assets, the fund
temporarily could be in a leveraged position (because it will have an amount
greater than its net assets subject to market risk). Should market values of
the fund's portfolio securities decline while the fund is in a leveraged
position, greater depreciation of its net assets would likely occur than were
it not in such a position. The fund will not borrow money to settle these
transactions and, therefore, will liquidate other portfolio securities in
advance of settlement if necessary to generate additional cash to meet its
obligations thereunder.
The fund also may enter into "roll" transactions, which consist of the sale of
mortgage-backed securities or other securities together with a commitment to
purchase similar, but not identical, securities at a future date. The fund
intends to treat roll transactions as two separate transactions: one involving
the purchase of a security and a separate transaction involving the sale of a
security. Since the fund does not intend to enter into roll transactions for
financing purposes, it may treat these transactions as not falling within the
definition of "borrowing" set forth in Section 2(a)(23) of the Investment
Company Act of 1940.
REVERSE REPURCHASE AGREEMENTS - This type of agreement involves the sale of a
security by the fund and its commitment to repurchase the security at a
specified time and price. The fund will identify liquid assets which will be
marked to market daily in an amount sufficient to cover its obligations under
reverse repurchase agreements with broker-dealers (but no collateral is
required on reverse repurchase agreements with banks). Under the Investment
Company Act of 1940, reverse repurchase agreements may be considered borrowings
by the fund. The use of reverse repurchase agreements by the fund creates
leverage which increases the fund's investment risk. As the fund's aggregate
commitments under these reverse repurchase agreements increases, the
opportunity for leverage similarly increases. If the income and gains on
securities purchased with the proceeds of reverse repurchase agreements exceed
the costs of the agreements, the fund's earnings or net asset value will
increase faster than otherwise would be the case; conversely if the income and
gains fail to exceed the costs, earnings or net asset value would decline
faster than otherwise would be the case.
WARRANTS AND RIGHTS - The fund may only acquire warrants or rights that are
issued together with bonds or preferred stocks. Warrants generally entitle the
holder to buy a stated amount of common stock or additional bonds to be
exercised at a specified price. At the time the warrant is issued, the
exercise price is usually higher than the current market price. Warrants may be
issued with an expiration date or in perpetuity. The fund may also acquire
rights to purchase common stocks. Rights are similar to warrants except that
they normally entitle the holder to purchase common stock at a lower price than
the current market price.
INFLATION-INDEXED BONDS - The fund may invest in inflation-indexed bonds
issued by governments, their agencies or instrumentalities, or corporations.
The principal value of this type of bond is periodically adjusted according to
changes in the rate of inflation. The interest rate is generally fixed at
issuance; however, interest payments are based on an inflation adjusted
principal value. For example, in a period of falling inflation, principal
value will be adjusted downward, reducing the interest payable.
Repayment of the original bond principal upon maturity (as adjusted for
inflation) is guaranteed in the case of U.S. Treasury inflation indexed bonds,
even during a period of deflation. However, the current market value of the
bonds is not guaranteed, and will fluctuate. The fund may also invest in other
bonds which may or may not provide a similar guarantee. If a guarantee of
principal is not provided, the adjusted principal value of the bond repaid at
maturity may be less than the original principal.
GROWTH AND INCOME PORTFOLIO
REPURCHASE AGREEMENTS - Although the fund has no current intention in doing
so, the fund may enter into repurchase agreements, under which it buys a
security and obtains a simultaneous commitment from the seller to repurchase
the security at a specified time and price. The seller must maintain with the
fund's custodian collateral equal to at least 100% of the repurchase price
including accrued interest as monitored daily by Capital Research and
Management Company. The fund only enters into repurchase agreements involving
securities in which they could otherwise invest and with selected banks and
securities dealers whose financial condition is monitored by Capital Research
and Management Company. If the seller under a repurchase agreement defaults,
the fund may incur a loss if the value of the collateral securing the
repurchase agreement has declined and may incur disposition costs in connection
with liquidating the collateral. If bankruptcy proceedings are commenced with
respect to the seller, liquidation of the collateral by the fund may be delayed
or limited.
CURRENCY TRANSACTIONS - Although the fund has no current intention to do so,
the fund has the ability to enter into forward currency contracts to protect
against changes in currency exchange rates. A forward currency contract is an
obligation to purchase or sell a specific currency at a future date, which may
be any fixed number of days from the date of the contract agreed upon by the
parties, at a price set at the time of the contract. Forward currency
contracts entered into by the fund will involve the purchase or sale of a
currency against the U.S. dollar. The fund will segregate liquid assets which
will be marked to market daily to meet its forward contract commitments to the
extent required by the Securities and Exchange Commission.
Certain provisions of the Internal Revenue Code may affect the extent to which
the fund may enter into forward contracts. Such transactions may also affect,
for U.S. federal income tax purposes, the character and timing of income, gain
or loss recognized by the fund.
REAL ESTATE INVESTMENT TRUSTS - The fund may invest in securities issued by
real estate investment trusts (REITs), which are pooled investment vehicles
that invest primarily in real estate or real estate-related loans. REITs are
not taxed on income distributed to shareholders provided they meet requirements
imposed by the Internal Revenue Code. The return on REITs is dependent on such
factors as the skill of management and the real estate environment in general.
In addition, the risks associated with REIT debt and equity instruments, are
similar to the risks of investing in corporate-issued debt and common stocks,
respectively. Debt that is issued by REITs is typically rated by the credit
rating agencies as investment grade or above.
GROWTH AND INCOME PORTFOLIO AND BOND PORTFOLIO
BOND RATINGS - Growth and Income Portfolio may invest in debt securities which
are rated in the top three quality categories by any national rating service
(or determined to be equivalent by Capital Research and Management Company)
including bonds rated at least A by Standard & Poor's or Moody's Investors
Service, Inc. Bond Portfolio invests in bonds and debentures (including
straight debt securities), which are rated in the top four quality categories
by any national rating service (or determined to be equivalent by Capital
Research and Management Company). The top four rating categories for Standard
& Poor's and Moody's are described below:
Standard & Poor's:
"Debt rated 'AAA' has the highest rating assigned by Standard & Poor's.
Capacity to pay interest and repay principal is extremely strong."
"Debt rated 'AA' has a very strong capacity to pay interest and repay
principal and differs from the higher rated issues only in a small degree."
"Debt rated 'A' has a strong capacity to pay interest and repay principal,
although they are somewhat more susceptible to the adverse effects of change in
circumstances and economic conditions than debt in higher categories."
"Debt rated $BBB' has an adequate capacity to pay interest and repay principal.
Whereas they normally exhibit adequate protection parameters, adverse economic
conditions or changing circumstances are more likely to lead to a weakened
capacity to pay interest and repay principal than for debt in higher rated
categories."
Standard & Poor's applies indicators "+", no character and "-" to its rating
categories. The indicators show relative standing within the major rating
categories.
Moody's Investors Service, Inc.:
"Bonds rated Aaa are judged to be of the best quality. They carry the
smallest degree of investment risk and are generally referred to as 'gilt
edge.' Interest payments are protected by a large or by an exceptionally
stable margin, and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues."
"Bonds rated Aa are judged to be of high quality by all standards. Together
with the Aaa group, they comprise what are generally known as high-grade bonds.
They are rated lower than the best bonds because margins of protection may not
be as large as in Aaa securities, or fluctuation of protective elements may be
of greater amplitude, or there may be other elements present which make the
long-term risks appear somewhat larger than the Aaa securities."
"Bonds rated A are judged to be of upper medium grade obligations. These
bonds possess many favorable investment attributes. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future."
"Bonds rated Baa are judged to be medium grade obligations, I.E., they are
neither highly protected nor poorly secured. Interest payments and principal
security appear adequate for the present but certain protective elements may be
lacking or may be characteristically unreliable over any great length of time.
Such bonds lack outstanding investment characteristics and, in fact, have
speculative characteristics as well."
Moody's also supplies numerical indicators 1, 2 and 3 to rating categories.
The modifier 1 indicates that the obligation ranks in the higher end of its
generic rating category; the modifier 2 indicates a mid-range ranking; and 3
indicates a ranking toward the lower end of that generic rating category.
CASH AND CASH EQUIVALENTS - Each fund may invest in cash or cash equivalents.
These securities include (1) commercial paper (short-term notes issued by
corporations or governmental bodies), (2) commercial bank obligations (E.G.,
certificates of deposit (interest bearing time deposits), and bankers'
acceptances (time drafts on a commercial bank where the bank accepts an
irrevocable obligation to pay at maturity)) , (3) savings association and
savings bank obligations (E.G., certificates of deposit issued by savings banks
or savings associations), (4) securities of the U.S. Government, its agencies
or instrumentalities that mature, at the time of purchase, or may be redeemed,
in one year or less, and (5) corporate bonds and notes that mature, at the time
of purchase, or that may be redeemed, in one year or less.
PORTFOLIO TURNOVER - Portfolio changes will be made without regard to the
length of time particular investments may have been held. Short-term trading
profits are not the funds' objective and changes in their investments are
generally accomplished gradually, though short-term transactions may
occasionally be made. Management's appraisal of changing economic conditions
and trends may cause a change in emphasis within the portfolio, both among
individual securities and among various types of fixed-income securities in
order to achieve the objectives of the funds. High portfolio turnover (100% or
more) involves correspondingly greater transaction costs in the form of dealer
spreads or brokerage commissions. Fixed-income securities are generally traded
on a net basis and usually neither brokerage commissions nor transfer taxes are
involved. The funds do not anticipate that their portfolio turnovers will
exceed 100% annually. A fund's portfolio turnover rate would equal 100% if each
security in either fund's portfolio were replaced once per year.
FUNDAMENTAL POLICIES AND INVESTMENT RESTRICTIONS
The Trust has adopted certain fundamental policies and investment restrictions
for the funds which cannot be changed without shareholder approval. The funds'
investment objectives described in the Prospectus and the following fundamental
investment restrictions require shareholder approval to be changed. (Approval
requires the affirmative vote of 67% or more of the voting securities present
at a meeting of shareholders, provided more than 50% of such securities are
represented at the meeting, or the vote of more than 50% of the outstanding
voting securities, whichever is less.) Investment limitations expressed in the
following restrictions are considered at the time securities are purchased and
are based on the funds' net assets unless otherwise indicated. The following
are the funds' fundamental investment restrictions:
1. A fund may not invest in a security if, as a result of such investment,
more than 25% of its total assets would be invested in the securities of
issuers in any particular industry, except that the restriction does not apply
to securities issued or guaranteed by the U.S. Government or its agencies or
instrumentalities (or repurchase agreements with respect thereto).
2. A fund may not make loans, but this limitation does not apply (i) to
purchases of debt securities, loan participations, or the entry into of
repurchase agreements, or (ii) to loans of portfolio securities if, as a
result, no more than 33 1/3% of a fund's total assets would be on loan to third
parties.
3. A fund may not purchase or sell real estate unless acquired as a result
of ownership of securities or other instruments (this shall not prevent the
funds from investing in securities or other instruments backed by real estate,
or the securities of companies engaged in the real estate business).
4. A fund may not purchase or sell commodities or commodities contracts.
This restriction shall not prohibit the funds, subject to restrictions
described in the funds' prospectus and statement of additional information,
from purchasing, selling or entering into futures contracts, options on futures
contracts, foreign currency forward contracts, foreign currency options, or any
interest rate, securities-related or foreign currency-related hedging
instrument, including swap agreements and other derivative instruments, subject
to compliance with applicable provisions of the federal securities and
commodities laws.
5. A fund may not issue senior securities, except as permitted under the
Investment Company Act of 1940, as amended.
6. A fund may not borrow money, except temporarily for extraordinary or
emergency purposes, in an amount not exceeding 5% of its total assets at the
time of such borrowing.
7. A fund may not, with respect to 75% of its total assets, invest more than
5% of the value of its total assets in the securities of any one issuer, or
acquire more than 10% of the voting securities of any one issuer. These
limitations do not apply to securities issued or guaranteed by the U.S.
Government, its agencies or instrumentalities.
8. A fund may not engage in the business of underwriting securities of other
issuers, except to the extent that a fund may be deemed an underwriter under
the Securities Act of 1933, as amended, in disposing of portfolio securities.
The following investment policies of the funds and all other policies
described in the funds' prospectus and this statement of additional information
are considered non-fundamental and may be changed at any time with the approval
of the Trust's board of trustees. The following nonfundamental policies apply
to both funds:
1. The funds may not invest in other companies for the purpose of exercising
control or management.
2. The funds may not purchase puts, calls or hedges.
3. The funds may not invest in securities of other investments companies,
except as permitted by the Investment Company Act of 1940, as amended.
The following non-fundamental policy applies to Growth and Income Portfolio
only:
1. The fund may not invest more than 10% of its total assets in securities
that are not readily marketable.
The following non-fundamental policy applies to Bond Portfolio only:
1. The fund may not invest more than 15% of its total assets in securities
that are not readily marketable.
Restricted securities are treated as not readily marketable by the funds,
with the exception of those securities that have been determined to be liquid
pursuant to procedures adopted by the Trust's board of trustees.
MANAGEMENT OF THE TRUST
The Trust is managed by its board of trustees. The Trustees and officers of
the Trust are listed below.
Trustees and Officers
(with their principal occupations for the past five years#)
TRUSTEES
ROBERT B. EGELSTON*, 333 South Hope Street, Los Angeles, CA 90071, Age: 67.
Chairman of the Board. Senior Partner, The Capital Group Partners L.P.; former
Chairman of the Board, The Capital Group Companies, Inc.
FRANK L. ELLSWORTH*, 333 South Hope Street, Los Angeles, CA 90071, Age: 55.
President and Trustee. Vice President, Capital Research and Management Company;
former President, Independent Colleges of Southern California.
STEVEN D. LAVINE, 24700 McBean Parkway, Valencia, CA 91355, Age: 51. Trustee.
President, California Institute of the Arts.
PATRICIA A. McBRIDE, 4933 Mangold Circle, Dallas, TX 75229, Age: 55. Trustee.
Chief Financial Officer, Kevin L. McBride, D.D.S., Inc.
GAIL L. NEALE, 154 Prospect Parkway, Burlington, VT 05401, Age: 63. Trustee.
President, The Lovejoy Consulting Group, Inc.
CHARLES R. REDMOND, Times Mirror Square, Los Angeles, CA 90053, Age: 71.
Trustee. Former Chairman, Pfaffinger Foundation and former President and Chief
Executive Officer, Times Mirror Foundation.
THOMAS E. TERRY*, 333 South Hope Street, Los Angeles, CA 90071, Age: 60.
Trustee. Consultant; former Vice President and Secretary, Capital Research and
Management Company (retired 1994).
ROBERT C. ZIEBARTH, P.O. Box 2156, Ketchum, ID 83340, Age: 61. Trustee.
Management Consultant, Ziebarth Company.
All of the officers listed are officers or employees of the investment adviser
or affiliated companies. The Trust does not pay any salaries or fees to its
trustees or officers. However, the Trust reimburses certain expenses of the
trustees who are not affiliated with the investment adviser.
OFFICERS
<TABLE>
<CAPTION>
NAME AND ADDRESS AGE POSITION(S) HELD PRINCIPAL OCCUPATION(S) DURING
WITH REGISTRANT PAST 5 YEARS#
<S> <C> <C> <C>
Robert G. O'Donnell 54 Senior Vice Senior Vice President and
P.O. Box 7650 President Director, Capital Research and
San Francisco, CA 94120 Management Company
Abner D. Goldstine 68 Senior Vice Senior Vice President and
11100 Santa Monica Blvd. President Director, Capital Research and
Los Angeles, CA 90025 Management Company
Claudia P. Huntington 46 Vice President Vice President, Capital
333 South Hope Street (Growth and Income Research and Management Company
Los Angeles, CA 90071 Portfolio)
John H. Smet 41 Vice President Vice President, Capital
11100 Santa Monica Blvd. (Bond Portfolio) Research and Management Company
Los Angeles, CA 90025
Patrick F. Quan 40 Secretary Vice President, Fund Business
P.O. Box 7650 Management Group, Capital
San Francisco, CA 94120 Research and Management Company
Lisa G. Hathaway 35 Assistant Vice Assistant Vice President, Fund
333 South Hope Street President Business Management Group,
Los Angeles, CA 90071 Capital Research and Management
Company
Mary C. Hall 40 Treasurer Senior Vice President, Fund
135 South State College Blvd. Business Management Group,
Brea, CA 92821 Capital Research and Management
Company
Robert P. Simmer 37 Assistant Treasurer Vice President, Fund Business
5300 Robin Hood Road Management Group, Capital
Norfolk, VA 23513 Research and Management Company
</TABLE>
_________________
# Positions within the organizations listed may have changed during this
period.
* An "interested person" of the funds within the meaning of the Investment
Company Act of 1940 the basis of his affiliation with Capital Research and
Management Company, the funds' investment adviser.
All of the officers listed are officers or employees of Capital Research and
Management Company or affiliated companies.
All of the Trustees serve or have served on boards of tax-exempt 501(c)(3)
organizations and have had experience in dealing with the administrative and
financial needs of these institutions as indicated: Robert B. Egelston -
California Institute of the Arts, Claremont University Center, Los Angeles
Festival, The Los Angeles Philharmonic Association, The Music Center of Los
Angeles County, The Wharton School of Finance and Commerce, University of
Pennsylvania; Frank L. Ellsworth - Claremont University Center, English
Village, Seattle, Foundation for Independent Higher Education, Global Partners,
Canada, Graphic Arts Counsel--Los Angeles County Museum of Art, Independent
Colleges of Southern California, Inc., The Japanese-American National Museum,
Japanese Foundation of International Education, The Los Angeles Dance Center,
Pitzer College, Southwestern University School of Law; Steven D. Lavine -
American Council on the Arts, KCRW-FM National Public Radio, The Music Center
Operating Company, The Music Center of Los Angeles County; Patricia A. McBride
- - Commemara Conservancy Foundation, Dallas Museum of Art League, Dallas
Symphony Orchestra Association, Dallas Symphony Orchestra League, Dallas
Women's Foundation, Girl Scout Council, Inc., Eugene and Margaret McDermott Art
Fund, St. Mark's School of Texas, Southwest Museum of Science and Technology;
Gail L. Neale - The Flynn Theater, National Advisory Council, Hampshire
College, The JL Foundation, Origami Society of America, Shelburne Farms, The
Vera Institute of Justice; Thomas E. Terry - Academy of Arts and Sciences,
Citizens' Scholarship Foundation of America, Edgewood High School, Elvehjem
Museum of Art, Ketchum YMCA, Madison Community Foundation, Madison Opera, Inc.,
National Football Scholarship Foundation, Tin Chimneys Foundation, University
of Wisconsin; Charles R. Redmond - AMAN Folk Ensemble, Catholic Charities of
the Archdiocese of Los Angeles, Immaculate Heart High School, Loyola Marymount
University, Los Angeles Urban League, The Music Center of Los Angeles County, A
Noise Within, Pasadena Playhouse, Pfaffinger Foundation, Times Mirror
Foundation; Robert C. Ziebarth - Chicago Maternity Center, Choate School,
Foundation for Reproductive Research & Education, Latin School of Chicago,
National Association of Independent Schools, Naval Historical Foundation,
Northwestern Memorial Hospital.
INVESTMENT ADVISER - Capital Research and Management Company, the investment
adviser, founded in 1931, maintains research facilities in the United States
and abroad (Los Angeles, San Francisco, New York, Washington D.C., London,
Geneva, Singapore, Hong Kong and Tokyo), with a staff of professionals, many of
whom have a number of years of investment experience. Capital Research and
Management Company is located at 333 South Hope Street, Los Angeles, CA 90071,
and at 135 South State College Boulevard, Brea, CA 92821. Capital Research and
Management Company's research professionals travel several million miles a
year, making more than 5,000 research visits in more than 50 countries around
the world. Capital Research and Management Company believes that it is able to
attract and retain quality personnel.
An affiliate of Capital Research and Management Company compiles indices for
major stock markets around the world and compiles and edits the Morgan Stanley
Capital International Perspective, providing financial and market information
about more than 2,400 companies around the world.
Capital Research and Management Company is responsible for managing more than
$175 billion of stocks, bonds and money market instruments and serves over
eight million investors of all types. These investors include privately owned
businesses and large corporations as well as schools, colleges, foundations and
other non-profit and tax-exempt organizations.
INVESTMENT ADVISORY AND SERVICE AGREEMENT - The Investment Advisory and
Service Agreements (the "Agreements") between the Trust, on behalf of Growth
and Income Portfolio and Bond Portfolio, and Capital Research and Management
Company, dated July 31, 1998, may be renewed from year to year, provided that
any such renewal has been specifically approved at least annually by (i) the
board of trustees of the Trust, or by the vote of a majority (as defined in the
Investment Company Act of 1940) of the outstanding voting securities of the
Trust, and (ii) the vote of a majority of the Trustees who are not parties to
the Agreement or interested persons (as defined in said Act) of any such party,
cast in person, at a meeting called for the purpose of voting on such approval.
The Agreements also provide that either party has the right to terminate them
without penalty, upon 60 days' written notice to the other party, and that the
Agreements automatically terminates in the event of their assignment (as
defined in said Act). The Agreements are identical except for conforming
changes as the Investment Advisory and Service Agreements entered into by the
funds in 1975 before their reorganization as separate series of a Delaware
business trust.
Capital Research and Management Company, in addition to providing investment
advisory services, furnishes the services and pays the compensation and travel
expenses of persons to perform the executive, administrative, clerical and
bookkeeping functions of the funds, provides suitable office space, necessary
small office equipment and utilities, and provides general purpose accounting
forms, supplies, and postage used at the offices of the funds. The Trust pays
all expenses not specifically assumed by Capital Research and Management
Company, including, but not limited to, custodian, stock transfer and dividend
disbursing fees and expenses; costs of the designing, printing and mailing of
reports, prospectuses, proxy statements, and notices to shareholders; taxes;
expenses of the issuance and redemption of shares of the funds (including stock
certificates, registration and qualification fees and expenses); legal and
auditing expenses; expenses paid to Trustees unaffiliated with Capital Research
and Management Company; association dues; and costs of stationery and forms
prepared exclusively for the funds.
Capital Research and Management Company receives a management fee at the
annual rates of 1/2 of 1% of each fund's net assets up to $150,000,000 and 4/10
of 1% of such assets over $150,000,000.
The Agreements provide for an advisory fee reduction to the extent that a
fund's annual ordinary operating expenses exceed 0.75% of the average net
assets of the fund. Expenses which are not subject to this limitation are
interest, taxes, and extraordinary expenses. Expenditures, including costs
incurred in connection with the purchase or sale of portfolio securities, which
are capitalized in accordance with generally accepted accounting principles
applicable to investment companies are accounted for as capital items and not
as expenses.
During the years ended July 31, 1997, 1996 and 1995, Capital Research and
Management Company received from Endowments, Inc. advisory fees of $276,008,
$300,818, and $273,381, and from Bond Portfolio for Endowments, Inc. advisory
fees of $177,223, $214,202, and $223,573, respectively.
DIVIDENDS, DISTRIBUTIONS AND FEDERAL TAXES
Set forth below is a discussion of certain U.S. federal income tax issues
concerning the funds and the purchase, ownership, and disposition of the funds'
shares. This discussion does not purport to be complete or to deal with all
aspects of federal income taxation that may be relevant to shareholders in
light of their particular circumstances. This discussion is based upon present
provisions of the Internal Revenue Code of 1986, as amended, the regulations
promulgated thereunder, and judicial and administrative ruling authorities, all
of which are subject to change, which change may be retroactive. Prospective
investors should consult their own tax advisors with regard to the federal tax
consequences of the purchase, ownership, or disposition of the funds' shares,
as well as the tax consequences arising under the laws of any state, foreign
country or other taxing jurisdiction.
The Trust (including each fund) intends each year to qualify and elect to be
treated as a "regulated investment company" under the provisions of Subchapter
M of the Internal Revenue Code. Under Subchapter M, if the Trust distributes
within specified times at least 90% of its investment company taxable income,
it will be taxed only on that portion of such investment company taxable income
that it retains.
To qualify as a "regulated investment company," a fund must (a) in each
taxable year, derive at least 90% of its gross income from dividends, interest,
certain payments with respect to securities loans, and gains from the sale or
other disposition of stock, securities, currencies or other income derived with
respect to its business of investing in such stock, securities or currencies;
and (b) diversify its holdings so that, at the end of each fiscal quarter, (i)
at least 50% of the market value of the fund's assets is represented by cash,
cash items, U.S. Government securities, securities of other regulated
investment companies, and other securities (but such other securities must be
limited, in respect of any one issuer, to an amount not greater than 5% of the
fund's assets and 10% of the outstanding voting securities of such issuer), and
(ii) not more than 25% of the value of its assets is invested in the securities
of any one issuer (other than U.S. Government securities or the securities of
other regulated investment companies), or in two or more issuers which the fund
controls and which are engaged in the same or similar trades or businesses or
related trades or businesses.
Under the Internal Revenue Code, a nondeductible excise tax of 4% is imposed
on the excess of a regulated investment company's "required distribution" for
the calendar year ending within the regulated investment company's taxable year
over the "distributed amount" for such calendar year. The term "required
distribution" means the sum of (i) 98% of ordinary income (generally net
investment income) for the calendar year, (ii) 98% of capital gain net income
(both long-term and short-term) for the one-year period ending on October 31
(as though the one-year period ending on October 31 were the regulated
investment company's taxable year), and (iii) the sum of any untaxed,
undistributed net investment income and net capital gains of the regulated
investment company for prior periods. The term "distributed amount" generally
means the sum of (i) amounts actually distributed by the fund from its current
year's ordinary income and capital gain net income and (ii) any amount on which
the fund pays income tax for the year. The funds intend to distribute net
investment income and net capital gains so as to minimize or avoid the excise
tax liability.
The funds also intend to continue distributing to shareholders all of the
excess of net long-term capital gain over net short-term capital loss on sales
of securities. If the net asset value of shares of a fund should, by reason of
a distribution of realized capital gains, be reduced below a shareholder's
cost, such distribution would to that extent be a return of capital to that
shareholder even though taxable to the shareholder, and a sale of shares by a
shareholder at net asset value at that time would establish a capital loss for
federal tax purposes.
Dividends generally are taxable to shareholders at the time they are paid.
However, dividends declared in October, November and December and made payable
to shareholders of record in such a month are treated as paid and are thereby
taxable as of December 31, provided that the fund pays the dividend no later
than the end of January of the following year.
Any loss realized on a redemption or exchange of shares of a fund will be
disallowed to the extent substantially identical shares are reacquired within
the 61 day period beginning 30 days before and ending 30 days after the shares
are disposed of.
The funds may be required to pay withholding and other taxes imposed by
foreign countries which would reduce a fund's investment income. Tax
conventions between certain countries and the United States may reduce or
eliminate such taxes.
The funds may invest in shares of foreign corporations that may be classified
under the Internal Revenue Code as passive foreign investment companies
("PFICs"). In general, a foreign corporation is classified as a PFIC if at
least one-half of its assets constitute investment-type assets, or 75% or more
of its gross income is investment-type income. If the funds receive a
so-called "excess distribution" with respect to PFIC stock, the funds itself
may be subject to a tax on a portion of the excess distribution, whether or not
the corresponding income is distributed by the funds to shareholders. In
general, under the PFIC rules, an excess distribution is treated as having been
realized ratably over the period during which the funds held the PFIC shares.
The funds will itself be subject to tax on the portion, if any, of an excess
distribution that is so allocated to prior fund taxable years and an interest
factor will be added to the tax, as if the tax had been payable in such prior
taxable years. Certain distributions from a PFIC as well as gain from the sale
of PFIC shares are treated as excess distributions. Excess distributions are
characterized as ordinary income even though, absent application of the PFIC
rules, certain excess distributions might have been classified as capital gain.
The funds may be eligible to elect alternative tax treatment with respect to
PFIC shares. Under an election that currently is available in some
circumstances, the fund would be required to include in its gross income its
share of the earnings of a PFIC on a current basis, regardless of whether
distributions were received from the PFIC in a given year. If this election
were made, the special rules, discussed above, relating to the taxation of
excess distributions, would not apply. In addition, another election would
involve marking to market the fund's PFIC shares at the end of each taxable
year, with the result that unrealized gains would be treated as though they
were realized and reported as ordinary income. Any mark-to-market losses and
any loss from an actual disposition of PFIC shares would be deductible as
ordinary losses to the extent of any net mark-to-market gains included in
income in prior years.
Distributions of investment company taxable income are taxable to a U.S.
shareholder as ordinary income, whether paid in cash or shares. Dividends paid
by the funds to a corporate shareholder, to the extent such dividends are
attributable to dividends received by the funds from U.S. corporations, may,
subject to limitation, be eligible for the dividends received deduction.
However, the alternative minimum tax applicable to corporations may reduce the
value of the dividends received deduction.
If a fund purchases a debt security at a price lower than the stated
redemption price of such debt security, the excess of the stated redemption
price over the purchase price is "market discount". If the amount of market
discount is more than a DE MINIMIS amount, a portion of such market discount
must be included as ordinary income (not capital gain) by the fund in each
taxable year in which the fund owns an interest in such debt security and
receives a principal payment on it. In particular, the fund will be required
to allocate that principal payment first to the portion of the market discount
on the debt security that has accrued but has not previously been includable in
income. In general, the amount of market discount that must be included for
each period is equal to the lesser of (i) the amount of market discount
accruing during such period (plus any accrued market discount for prior periods
not previously taken into account) or (ii) the amount of the principal payment
with respect to such period. Generally, market discount accrues on a daily
basis for each day the debt security is held by the fund at a constant rate
over the time remaining to the debt security's maturity or, at the election of
the fund, at a constant yield to maturity which takes into account the
semi-annual compounding of interest. Gain realized on the disposition of a
market discount obligation must be recognized as ordinary interest income (not
capital gain) to the extent of the "accrued market discount."
Certain debt securities acquired by a fund may be treated as debt securities
that were originally issued at a discount. Very generally, original issue
discount is defined as the difference between the price at which a security was
issued and its stated redemption price at maturity. Although no cash income on
account of such discount is actually received by the fund, original issue
discount that accrues on a debt security in a given year generally is treated
for federal income tax purposes as interest and, therefore, such income would
be subject to the distribution requirements applicable to regulated investment
companies. Some debt securities may be purchased by a fund at a discount that
exceeds the original issue discount on such debt securities, if any. This
additional discount represents market discount for federal income tax purposes
(see above).
Any regulated futures contracts and certain options (namely, nonequity options
and dealer equity options) in which a fund may invest may be "section 1256
contracts." Gains (or losses) on these contracts generally are considered to
be 60% long-term and 40% short-term capital gains or losses. Also, section
1256 contracts held by a fund at the end of each taxable year (and on certain
other dates prescribed in the Internal Revenue Code) are "marked to market"
with the result that unrealized gains or losses are treated as though they were
realized.
Transactions in options, futures and forward contracts undertaken by a fund
may result in "straddles" for federal income tax purposes. The straddle rules
may affect the character of gains (or losses) realized by the fund, and losses
realized by the fund on positions that are part of a straddle may be deferred
under the straddle rules, rather than being taken into account in calculating
the taxable income for the taxable year in which the losses are realized. In
addition, certain carrying charges (including interest expense) associated with
positions in a straddle may be required to be capitalized rather than deducted
currently. Certain elections that a fund may make with respect to its straddle
positions may also affect the amount, character and timing of the recognition
of gains or losses from the affected positions.
Because only a few regulations implementing the straddle rules have been
promulgated, the consequences of such transactions to the fund are not entirely
clear. The straddle rules may increase the amount of short-term capital gain
realized by a fund, which is taxed as ordinary income when distributed to
shareholders. Because application of the straddle rules may affect the
character of gains or losses, defer losses and/or accelerate the recognition of
gains or losses from the affected straddle positions, the amount which must be
distributed to shareholders as ordinary income or long-term capital gain may be
increased or decreased substantially as compared to a fund that did not engage
in such transactions.
Recently enacted rules may affect the timing and character of gain if a fund
engages in transactions that reduce or eliminate its risk of loss with respect
to appreciated financial positions. If a fund enters into certain transactions
in property while holding substantially identical property, the fund would be
treated as if it had sold and immediately repurchased the property and would be
taxed on any gain (but not loss) from the constructive sale. The character of
gain from a constructive sale would depend upon the fund's holding period in
the property. Loss from a constructive sale would be recognized when the
property was subsequently disposed of, and its character would depend on the
fund's holding period and the application of various loss deferral provisions
of the Internal Revenue Code.
Gains or losses attributable to fluctuations in exchange rates which occur
between the time a fund accrues income or other receivables or accrues expenses
or other liabilities denominated in a foreign currency and the time the fund
actually collects such receivables or pays such liabilities generally are
treated as ordinary income or ordinary loss. Similarly, on disposition of some
investments, including debt securities and certain forward contracts
denominated in a foreign currency, gains or losses attributable to fluctuations
in the value of the foreign currency between the acquisition and disposition of
the position also are treated as ordinary gain or loss. These gains and
losses, referred to under the Internal Revenue Code as "section 988" gains or
losses, increase or decrease the amount of the fund's investment company
taxable income available to be distributed to its shareholders as ordinary
income. If section 988 losses exceed other investment company taxable income
during a taxable year, a fund would not be able to make any ordinary dividend
distributions, or distributions made before the losses were realized would be
recharacterized as a return of capital to shareholders, rather than as an
ordinary dividend, reducing each shareholder's basis in his or her fund shares.
The foregoing is limited to a summary of federal income taxation and should
not be viewed as a comprehensive discussion of all tax considerations relevant
to investors. Dividends and capital gain distributions may also be subject to
state, foreign or local taxes. Investors are urged to consult their tax
advisers with specific reference to their own tax situations.
PURCHASE OF SHARES
The purchase of shares may be paid in cash or in a like value of acceptable
securities. Such securities will (i) be acquired for investment and not for
resale; (ii) be liquid securities which are not restricted as to transfer
either by law or liquidity of market; and (iii) have a value which is readily
ascertainable.
PRICE OF SHARES - The price you pay for shares is the net asset value per
share which is calculated once daily at 4:00 p.m., New York time each day the
New York Stock Exchange is open. For example, if the Exchange closes at 1:00
p.m. on one day and at 4:00 p.m. on the next, the funds' share prices would be
determined as of 4:00 p.m. New York time on both days. The New York Stock
Exchange is currently closed on weekends and on the following holidays: New
Year's Day, Presidents' Day, Martin Luther King, Jr.'s Birthday, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving and Christmas Day.
Such net asset value is effective for orders to purchase shares of the funds
received by the funds before the close of trading on the New York Stock
Exchange; orders received after the close of trading will be entered at the net
asset value as computed as of the close of trading of the New York Stock
Exchange on the next business day. Prices which appear in the newspaper are
not always indicative of prices at which you will be purchasing and redeeming
shares of the funds, since such prices generally reflect the previous day's
closing price whereas purchases and redemptions are made at the next calculated
price.
All portfolio securities of funds managed by Capital Research and Management
Company, other than the money market funds, are valued, and the net asset value
per share is determined, as follows:
1. 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 Capital Research and Management Company 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 Capital Research and Management
Company 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. Forward currency contracts are valued at the mean
of representative quoted bid and asked prices.
Assets or liabilities initially expressed in terms of foreign currencies are
translated prior to the next determination of the net asset value of the fund's
shares into U.S. dollars at the prevailing market rates.
Securities and assets for which representative market quotations are not
readily available are valued at fair value as determined in good faith under
policies approved by the fund's Board. The fair value of all other assets is
added to the value of securities to arrive at the total assets;
2. Liabilities, including accruals of taxes and other expense items, are
deducted from total assets; and
3. Net assets so obtained are then divided by the total number of shares
outstanding, and the result, rounded to the nearer cent, is the net asset value
per share.
EXECUTION OF PORTFOLIO TRANSACTIONS
Orders for the funds' portfolio securities transactions are placed by the
investment adviser. The investment adviser strives to obtain the best
available prices in its portfolio transactions taking into account the costs
and promptness of executions. When circumstances relating to a proposed
transaction indicate that a particular broker (either directly or through their
correspondent clearing agents) is in a position to obtain the best price and
execution, the order is placed with that broker. This may or may not be a
broker who has provided investment research, statistical, or other related
services to the investment adviser or has sold shares of other funds served by
the investment adviser. The funds do not consider that they have an obligation
to obtain the lowest available commission rate to the exclusion of price,
service and qualitative considerations.
There are occasions on which portfolio transactions for the funds may be
executed as part of concurrent authorizations to purchase or sell the same
security for other funds served by the investment adviser, or for trusts or
other accounts served by affiliated companies of the investment adviser.
Although such concurrent authorizations potentially could be either
advantageous or disadvantageous to the funds, they are effected only when the
investment adviser believes that to do so is in the interest of the funds.
When such concurrent authorizations occur, the objective is to allocate the
executions in an equitable manner. The funds will not pay a mark-up for
research in principal transactions.
Brokerage commissions paid on portfolio transactions during the fiscal years
ended July 31, 1997, 1996 and 1995, amounted to $61,000, $52,000, and $38,000
for Endowments, Inc. There are no brokerage commissions paid on portfolio
transactions for Bond Portfolio for Endowments, Inc.
BOND PORTFOLIO FOR ENDOWMENTS, INC.
The fund is required to disclose information regarding investments in the
securities of broker-dealers (or parents of broker-dealers that derive more
than 15% of their revenue from broker-dealer activities) which have certain
relationships with the fund. During the fiscal year ended July 31, 1997,
Merrill Lynch, Pierce, Fenner & Smith, Inc. was among the top 10 dealers that
acted as principals in portfolio transactions. The fund held debt securities
issued by Merrill Lynch in the amount of $376,000 as July 31, 1997.
REDEMPTION OF SHARES
For redemption requests received after the close of trading on the New York
Stock Exchange, the redemption price will be the net asset value determined as
of the close of trading on the next business day of the New York Stock
Exchange. There is no charge to the shareholder for redemption. Payment in
cash or in kind is made as soon as reasonably practicable after tender in
proper form (as described above), and must, in any event, be made within seven
days thereafter. Either fund may, however, suspend the right of redemption
during any period when: (a) trading on the New York Stock Exchange is
restricted as determined by the Securities and Exchange Commission or such
exchange is closed for other than weekends or holidays; (b) the Securities and
Exchange Commission has by order permitted such suspension; or (c) any
emergency as determined by the Securities and Exchange Commission exists,
making disposal of portfolio securities or valuation of net assets of the fund
not reasonably practicable.
Although they would not normally do so, the funds have the right to pay the
redemption price in whole or in part in portfolio securities as selected by the
board of trustees, taken at their value as used in determining net asset value
for purposes of computing the redemption price. A shareholder that redeems
fund shares, and is given by the fund a proportionate amount of the fund's
portfolio securities in lieu of cash, may incur brokerage commissions in the
event of a sale of the securities through a broker.
GENERAL INFORMATION
CUSTODIAN OF ASSETS - Securities and cash owned by the funds, including
proceeds from the sale of shares of the funds and of securities in the funds'
portfolios, are held by The Chase Manhattan Bank, One Chase Manhattan Plaza,
New York, NY 10081, as Custodian. Non-U.S. securities may be held by the
Custodian pursuant to sub-custodial arrangements in non-U.S. banks or foreign
branches of U.S. banks.
INDEPENDENT AUDITORS - Deloitte & Touche LLP, located at 1000 Wilshire
Boulevard, Los Angeles, CA 90017, serves as the Trust's independent auditors,
providing audit services, preparing tax returns and reviewing certain documents
of the Trust to be filed with the Securities and Exchange Commission. The
financial statements included in this statement of additional information from
the Annual and Semi-Annual Reports have been so included in reliance on the
reports of Deloitte & Touche LLP given on the authority of said firm as experts
in auditing and accounting.
COUNSEL - Paul, Hastings, Janofsky & Walker LLP, 555 South Flower Street, Los
Angeles, CA 90071, has passed upon the legality of the shares offered hereby.
REPORTS TO SHAREHOLDERS - The Trust's fiscal year ends on July 31.
Shareholders are provided at least semi-annually with reports showing the
investment portfolio, financial statements and other information audited by the
funds' independent auditors, Deloitte & Touche LLP, whose selection is
determined annually by the board of trustees of the Trust.
The financial statements including the investment portfolios and the Reports
of Independent Auditors contained in the Annual Report as of July 31, 1997 and
Semi-Annual Report as of January 31, 1998 are included in this statement of
additional information.
YEAR 2000 - The funds and its shareholders depend on the proper functioning of
computer systems maintained by the Investment Adviser and its affiliates and
other key service providers. Many computer systems in use today will require
reprogramming or replacement prior to the year 2000 because of the way they
store dates and make date-related calculations. The funds understand that
these service providers are taking steps to address the "Year 2000 problem".
However, there can be no assurance that these steps will be sufficient to avoid
any adverse impact on the fund. In addition, the funds' investments could be
adversely affected by the Year 2000 problem. For example, the markets for
securities in which the funds invest could experience settlement problems and
liquidity issues. Corporate and governmental data processing errors may cause
losses for individual companies and overall economic uncertainties. Earnings of
individual issuers are likely to be affected by the costs of addressing the
problem, which may be substantial and may be reported inconsistently.
PERSONAL INVESTING POLICY - Capital Research and Management Company and its
affiliated companies have adopted a personal investing policy consistent with
Investment Company Institute guidelines. This policy includes: a ban on
acquisitions of securities pursuant to an initial public offering; restrictions
on acquisitions of private placement securities; pre-clearance and reporting
requirements; review of duplicate confirmation statements; annual
recertification of compliance with codes of ethics; blackout periods on
personal investing for certain investment personnel; ban on short-term trading
profits for investment personnel; limitations on service as a trustee of
publicly traded companies; and disclosure of personal securities transactions.
REMOVAL OF TRUSTEES BY SHAREHOLDERS - At any meeting of shareholders, duly
called and at which a quorum is present, the shareholders may, by the
affirmative vote of the holders of a majority of the votes entitled to be cast
thereon, remove any Trustee or Trustees from office and may elect a successor
or successors to fill any resulting vacancies for the unexpired terms of
removed Trustees. The Trustees shall promptly call a meeting of shareholders
for the purpose of voting upon the question of removal of any Trustees when
requested in writing to do so by the record holders of not less than 10% of the
outstanding shares of the Trust.
INVESTMENT RESULTS
Endowments, Inc.'s yield was 2.51% and Bond Portfolio for Endowments, Inc.'s
yield was 5.96% based on a 30-day (or one month) period ended July 31, 1997,
computed by dividing the net investment income per share earned during the
period by the maximum offering price per share on the last day of the period,
according to the following formula:
YIELD = 2[(a-b/cd+1)/6/-1]
Where: a = dividends and interest earned during the period.
b = expenses accrued for the period (net of reimbursements).
c = the average daily number of shares outstanding during the period that were
entitled to receive dividends.
d = the maximum offering price per share on the last day of the period.
(Endowments, Inc. and Bond Portfolio for Endowments, Inc. do not have a sales
charge.)
Endowments, Inc.'s average annual total return for the one-, five- and
ten-year periods ended on July 31, 1997 was +38.40%, +16.01% and +13.35%,
respectively. Bond Portfolio for Endowments, Inc.'s average annual total
return for the one-, five- and ten-year periods ended on July 31, 1997 was
+10.83%, +6.96% and +9.28%, respectively. The average annual total return (T)
is computed by equating the value at the end of the period (ERV) with a
hypothetical initial investment of $1,000 (P) over a period of years (n)
according to the following formula as required by the Securities and Exchange
Commission: P(1+T)/n/ = ERV.
The following assumptions will be reflected in computations made in accordance
with the formula stated above: (1) reinvestment of dividends and distributions
at net asset value on the reinvestment date determined by the board of
trustees; and (2) a complete redemption at the end of any period illustrated.
The funds may also calculate a distribution rate on a taxable and tax
equivalent basis. The distribution rate is computed by dividing the dividends
paid by the fund over the last 12 months by the sum of the month-end net asset
value and the capital gains paid over the last 12 months. The distribution
rate may differ from the yield.
The funds may include information on their investment results and/or
comparisons of their investment results to various unmanaged indices (such as
The Dow Jones Average of 30 Industrial Stocks, The Standard & Poor's 500 Stock
Composite Index and the Lipper Growth & Income Fund Index for Endowments, Inc.
and the Lehman Aggregate Bond Index for Bond Portfolio for Endowments, Inc.) or
results of other mutual funds or investment or savings vehicles in
advertisements or in reports furnished to present or prospective shareholders.
Total return for the unmanaged indices will be calculated assuming
reinvestment of dividends and interest, but will not reflect any deductions for
advisory fees, brokerage costs or administrative expenses.
The funds may refer to results compiled by organizations such as CDA
Investment Services, Ibbotson Associates, Lipper Analytical Services, and
Morningstar, Inc. and by the U.S. Department of Commerce. Additionally, the
funds may, from time to time, refer to results published in various newspapers
and periodicals, including Barrons, Forbes, Fortune, Institutional Investor,
Kiplinger's Personal Finance Magazine, Money, U.S. News and World Report and
The Wall Street Journal.
The funds may, from time to time, compare their investment results with the
Consumer Price Index, which is a measure of the average change in prices over
time in a fixed market basket of goods and services (E.G. food, clothing,
fuels, transportation, and other goods and services that people buy for
day-to-day living).
The investment results for the funds set forth below were calculated as
described in the funds' prospectus. The percentage increases shown in the
table below or used in published reports of the funds are obtained by
subtracting the index results at the beginning of the period from the index
results at the end of the period and dividing the difference by the index
results at the beginning of the period.
Endowments, Inc. vs. Various Unmanaged Indices
<TABLE>
<CAPTION>
10-Year Endowments, Inc. DJIA/1/ S&P 500/2/ Lipper Growth
8/1 - 7/31 and Income/3/
<S> <C> <C> <C> <C>
1987 - 1997 +251% +336% +303% +252%
1986 - 1996 +204 +330 +269 +220
1985 - 1995 +238 +391 +306 +255
1984 - 1994 +271 +385 +327 +290
1983 - 1993 +260 +333 +294 +249
1982 - 1992 +411 +528 +478 +381
1981 - 1991 +325 +392 +343 +290
1980 - 1990 +326 +392 +344 +301
1979 - 1989 +379 +409 +416 +387
1978 - 1988 +328 +308 +326 +329
1977 - 1987 +384 +388 +417 +412
1976 - 1986 +329 +208 +271 +301
1975 - 1985 +335 +177 +250 +287
1975# - 1985 +333 +177 +248 +287
</TABLE>
Bond Portfolio for Endowments, Inc. vs. Various Unmanaged Indices
<TABLE>
<CAPTION>
Lehman Lipper Average of
10-Year Bond Portfolio for Brothers Corporate A-Rated
8/1 - 7/31 Endowments, Inc. Aggregate/4/ Debt Funds/5/
<S> <C> <C> <C>
1987 - 1997 +143% +139% +135%
1986 - 1996 +129 +126 +119
1985 - 1995 +161 +160 +148
1984 - 1994 +191 +193 +178
1983 - 1993 +219 +218 +201
1982 - 1992 +254 +251 +232
1981 - 1991 +253 +269 +233
1980 - 1990 +204 +217 +188
1979 - 1989 +195 +201 +184
1978 - 1988 +178 +178 +164
1977 - 1987 +157 +164 +151
1976 - 1986 +178 +181 +168
1975 - 1985 +157 N/A +158
1975# - 1985 +158 N/A N/A
</TABLE>
________________
# From July 26, 1975
/1/ The Dow Jones Average of 30 Industrial Stocks is comprised of 30 industrial
companies such as General Motors and General Electric.
/2/ The Standard & Poor's 500 Stock Composite Index is comprised of industrial,
transportation, public utilities, and financial stocks and represents a large
portion of the value of issues traded on the New York Stock Exchange. Selected
issues traded on the American Stock Exchange are also included.
/3/ The Lipper Growth & Income Fund Index is a non-weighted index of the 30
largest funds within the Lipper Growth & Income investment objective. It is
calculated daily with adjustments for income dividends and capital gain
distributions as of the ex-dividend dates.
/4/ The Lehman Brothers Aggregate Bond Index covers all sectors of the fixed
income market and is a combination of the Lehman Brothers Treasury Bond Index,
the Agency Bond Index, the Corporate Bond Index, the Yankee Bond Index and the
Mortgage Backed Securities Index. Its inception date is December 31, 1975.
/5/ The Lipper Average of Corporate A-Rated Debt Funds is an average of the
cumulative total reinvestment performance of funds that invest at least 65% of
assets in corporate debt issues rated "A" or better or government issues.
SEE THE DIFFERENCE TIME CAN MAKE IN AN INVESTMENT PROGRAM
<TABLE>
<CAPTION>
If you had . . . and had taken
invested $50,000 all dividends and
in Endowments, Inc. this many capital gain
years ago . . . distributions
in shares, your
investment would
have been worth
this much at
7/31/97
| |
<S> <C> <C>
Number Periods
of Years 8/1 - 7/31 Value
1 1996 - 1997
$69,199
2 1995 - 1997
78,344
3 1994 - 1997
92,894
4 1993 - 1997
95,467
5 1992 - 1997
105,060
6 1991 - 1997
121,600
7 1990 - 1997
139,878
8 1989 - 1997
145,650
9 1988 - 1997
179,471
10 1987 - 1997
175,330
11 1986 - 1997
210,593
12 1985 - 1997
264,439
13 1984 - 1997
344,935
14 1983 - 1997
343,762
15 1982 - 1997
536,330
16 1981 - 1997
516,604
17 1980 - 1997
595,306
18 1979 - 1997
697,857
19 1978 - 1997
769,045
20 1977 - 1997
847,981
21 1976 - 1997
902,945
22 1975#- 1997
1,146,270
</TABLE>
# From July 26, 1975
SEE THE DIFFERENCE TIME CAN MAKE IN AN INVESTMENT PROGRAM
<TABLE>
<CAPTION>
. . . and had taken
all dividends and
If you had capital gain
invested $50,000 distributions
in Bond Portfolio for Endowments, Inc. this many in shares, your
years ago . . . investment would
have been worth
this much at
7/31/97
| |
<S> <C> <C>
Number Periods
of Years 8/1 - 7/31 Value
1 1996 - 1997
$55,413
2 1995 - 1997
58,877
3 1994 - 1997
63,572
4 1993 - 1997
62,654
5 1992 - 1997
70,011
6 1991 - 1997
83,093
7 1990 - 1997
92,049
8 1989 - 1997
98,359
9 1988 - 1997
111,818
10 1987 - 1997
121,453
11 1986 - 1997
126,814
12 1985 - 1997
153,398
13 1984 - 1997
185,059
14 1983 - 1997
199,782
15 1982 - 1997
247,638
16 1981 - 1997
293,217
17 1980 - 1997
279,795
18 1979 - 1997
290,179
19 1978 - 1997
310,440
20 1977 - 1997
312,715
21 1976 - 1997
351,971
22 1975#- 1997
395,088
</TABLE>
# From July 26, 1975
Illustration of a $50,000 investment in Endowments, Inc. with
dividends reinvested and capital gain distributions taken in shares
(for the period July 26, 1975 through July 31, 1997)
<TABLE>
<CAPTION>
COST OF SHARES VALUE OF SHARES
Year Total From From
Ended Annual Dividends Investment From Initial Capital Gains Dividends Total
July 31 Dividends (cumulative) Cost Investment Reinvested Reinvested Value
<S> <C> <C> <C> <C> <C> <C> <C>
1975# $ 0 $ 0 $50,000 $49,769 $ 0 $ 0 $49,770
1976 2,408 2,408 52,408 60,781 0 2,695 63,476
1977 2,454 4,862 54,862 62,331 0 5,259 67,590
1978 2,899 7,761 57,761 65,910 0 8,615 74,525
1979 3,511 11,272 61,272 69,263 0 12,868 82,131
1980 4,322 15,594 65,594 77,021 0 19,256 96,277
1981 6,326 21,920 71,920 79,847 4,739 26,356 110,942
1982 7,869 29,789 79,789 64,678 13,443 28,739 106,860
1983 6,722 36,511 86,511 96,477 20,052 50,197 166,726
1984 7,502 44,013 94,013 83,847 31,536 50,774 166,157
1985 9,036 53,049 103,049 95,601 53,303 67,832 216,736
1986 10,623 63,672 113,672 104,971 81,000 86,184 272,155
1987 12,851 76,523 126,523 104,222 123,158 99,505 326,885
1988 15,733 92,256 142,256 88,382 130,787 100,178 319,347
1989 17,918 110,174 160,174 96,368 167,745 129,388 393,501
1990 22,799 132,973 182,973 89,440 178,016 142,283 409,739
1991 21,836 154,809 204,809 94,623 202,831 173,872 471,326
1992 20,318 175,127 225,127 96,580 249,826 199,127 545,533
1993 21,415 196,542 246,542 97,479 279,694 223,176 600,349
1994 22,417 218,959 268,959 90,868 296,050 230,062 616,980
1995 22,961 241,920 291,920 95,522 369,066 266,973 731,561
1996 25,984 267,904 317,904 98,431 428,636 301,171 828,238
1997 25,982 293,886 343,886 119,852 629,560 396,858 1,146,270
</TABLE>
# From July 26, 1975
The dollar amount of capital gain distributions during the period was $473,360.
Illustration of a $50,000 investment in Bond Portfolio for Endowments, Inc.
with
dividends reinvested and capital gain distributions taken in shares
(for the period July 26, 1975 through July 31, 1997)
<TABLE>
<CAPTION>
COST OF SHARES VALUE OF SHARES
Year Total From From
Ended Annual Dividends Investment From Initial Capital Gains Dividends Total
July 31 Dividends (cumulative) Cost Investment Reinvested Reinvested Value
<S> <C> <C> <C> <C> <C> <C> <C>
1975# $ 0 $ 0 $50,000 $50,065 $ 0 $ 0 $50,064
1976 3,466 3,466 53,466 52,455 0 3,668 56,123
1977 4,395 7,861 57,861 54,854 0 8,315 63,169
1978 4,798 12,659 62,659 51,161 0 12,472 63,633
1979 5,595 18,254 68,254 50,165 0 17,913 68,078
1980 7,331 25,585 75,585 46,568 0 24,036 70,604
1981 7,990 33,575 83,575 39,235 0 28,137 67,372
1982 9,678 43,253 93,253 40,739 0 39,032 79,771
1983 10,518 53,771 103,771 45,384 0 53,497 98,881
1984 11,193 64,964 114,964 43,796 0 62,950 106,746
1985 12,231 77,195 127,195 47,570 0 81,205 128,775
1986 13,557 90,752 140,752 52,296 0 103,480 155,776
1987 13,829 104,581 154,581 50,040 0 112,609 162,649
1988 13,553 118,134 168,134 48,557 5,210 122,900 176,667
1989 15,800 133,934 183,934 50,630 5,433 144,778 200,841
1990 17,213 151,147 201,147 49,693 5,332 159,584 214,609
1991 19,146 170,293 220,293 50,432 5,411 181,896 237,739
1992 20,570 190,863 240,863 55,202 5,923 221,039 282,164
1993 22,376 213,239 263,239 55,827 12,805 246,660 315,292
1994 22,971 236,210 286,210 47,876 29,925 232,942 310,743
1995 23,564 259,774 309,774 47,762 31,232 256,528 335,522
1996 25,003 284,777 334,777 47,223 30,879 278,391 356,493
1997 26,094 310,871 360,871 48,756 31,882 314,450 395,088
</TABLE>
# From July 26, 1975
The dollar amount of capital gain distributions during the period was $33,339.
EXPERIENCE OF INVESTMENT ADVISER - The Investment Adviser manages nine growth
and growth-income funds that are at least 10 years old. In the rolling 10-year
periods since January 1, 1968 (133 in all), those funds have had better total
returns than their comparable Lipper indexes in 124 of 133 periods.
Note that past results are not an indication of future investment results.
Also, the fund has different investment policies than the funds mentioned
above. These results are included solely for the purpose of informing
investors about the experience and history of Capital Research and Management
Company.
<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>
<TABLE>
<S> <C> <C> <C>
ENDOWMENTS, INC.
INVESTMENT PORTFOLIO, JULY 31, 1997
Percent
of Net
INDUSTRY DIVERSIFICATION Assets
- --------------------------------------------------- -----
EQUITY-TYPE SECURITIES
Utilities: Electric & Gas 8.40%
Energy Sources 8.12
Health & Personal Care 7.01
Insurance 6.92
Business & Public Services 6.50
Chemicals 6.07
Banking 6.02
Forest Products & Paper 4.61
Food & Household Products 4.42
Metals: Nonferrous 4.08
Broadcasting & Publishing 2.74
Telecommunications 2.62
Merchandising 2.45
Financial Services 1.82
Electrical & Electronics 1.57
Real Estate 1.44
Transportation: Rail & Road 1.29
Beverages & Tobacco 1.23
Machinery & Engineering 1.17
Automobiles .69
-----
79.17
Equity-type securities in initial period of acquisition 4.09
Short-Term Securities 16.18
Excess of cash and receivables over payables .56
-----
Net Assets 100.00%
=====
Percent
of Net
TEN LARGEST HOLDINGS Assets
- --------------------------------------------------- ---------
Aluminum Co. of America 4.08%
Atlantic Richfield 4.08
General Mills 3.33
Duke Energy 2.97
American Home Products 2.59
RPM 2.56
J.C. Penney 2.45
Trenwick 2.41
H.F. Ahmanson 2.23
Glaxo Wellcome 2.23
-----
28.93%
=====
Shares or Percent
EQUITY-TYPE SECURITIES Principal Market Of Net
Common and preferred stocks and convertible debentures Amount Value Assets
- --------------------------------------------------- --------- --------- ---------
ENERGY
Energy Sources-8.12%
Amoco Corp. 5000 $ 470,000 0.98%
Atlantic Richfield Co. 26000 1945125 4.08
Texaco Inc. 4000 464250 .97
Ultramar Diamond Shamrock Corp. 30000 997500 2.09
Utilities: Electric & Gas-8.40%
DPL Inc. 25000 615625 1.29
Duke Energy Corp. 28000 1419250 2.97
GPU, Inc. 20000 693750 1.45
Southern Electric PLC (United Kingdom) 60000 439982 .92
Union Electric Co. 10000 385000 .81
Williams Companies, Inc. 10000 457500 .96
--------- ---------
7887982 16.52
--------- ---------
MATERIALS
Chemicals-6.07%
Dow Chemical Co. 8000 760000 1.59
RPM, Inc. 60000 1222500 2.56
Witco Corp. 20000 912500 1.92
Forest Products & Paper-4.61%
Georgia-Pacific Corp. 5000 472188 .99
International Paper Co. 6000 336000 .70
Louisiana-Pacific Corp. 30000 688125 1.44
Union Camp Corp. 12000 702750 1.48
Metals: Nonferrous-4.08%
Aluminum Co. of America 22000 1947000 4.08
--------- ---------
7041063 14.76
--------- ---------
CAPITAL EQUIPMENT
Electrical & Electronics-1.57%
Nokia Corp., Class A (American Depositary
Receipts) (Finland) 4000 342500 .72
Telefonaktiebolaget LM Ericsson, Class B
(American Depositary Receipts) (Sweden) 9000 407250 .85
Machinery & Engineering-1.17%
Caterpillar Inc. 10000 560000 1.17
--------- ---------
1309750 2.74
--------- ---------
CONSUMER GOODS
Automobiles-0.69%
Ford Motor Co. 8000 327000 .69
Beverages & Tobacco-1.23%
Philip Morris Companies Inc. 13000 586625 1.23
Food & Household Products-4.42%
General Mills, Inc. 23000 1589875 3.33
McCormick & Co. 20000 520000 1.09
Health & Personal Care-7.01%
American Home Products Corp. 15000 1236563 2.59
Avon Products, Inc. 3900 282994 .59
Glaxo Wellcome PLC (American Depositary
Receipts) (United Kingdom) 25000 1062500 2.23
Schering-Plough Corp. 14000 763874 1.60
--------- ---------
6369431 13.35
--------- ---------
SERVICES
Broadcasting & Publishing-2.74%
Gannett Co., Inc. 4000 397250 .83
Houston Industries Inc., 7.00% Automatic Common
Exchange Securities 7/1/00 (1) (2) 17000 911625 1.91
Business & Public Services-6.50%
Alexander & Baldwin, Inc. 30000 810000 1.70
Browning-Ferris Industries, Inc. 13000 481000 1.01
Cognizant Corp. 8000 341000 .71
CUC International Inc., 3.00% convertible
debentures 2/15/02 (3) $800,000 824000 1.73
Electronic Data Systems Corp. 10000 432500 .91
Waste Management, Inc.(formerly WMX
Technologies, Inc.) 6596 211072 .44
Merchandising-2.45%
J.C. Penney Co., Inc. 20000 1170000 2.45
Telecommunications-2.62%
Ameritech Corp. 12000 809250 1.70
AT&T Corp. 12000 441750 .92
Transportation: Rail & Road-1.29%
CSX Corp. 10000 617500 1.29
--------- ---------
7446947 15.60
--------- ---------
FINANCE
Banking-6.02%
H.F. Ahmanson & Co. 20000 1063750 2.23
Bank of Tokyo-Mitsubishi, Ltd. (American
Depositary Receipts) (Japan) 25000 473438 .99
CoreStates Financial Corp. 10000 616875 1.29
Huntington Bancshares Inc. 25190 717915 1.51
Financial Services-1.82%
Beneficial Corp. 12000 870000 1.82
Insurance-6.92%
Arthur J. Gallagher & Co. 15000 543750 1.14
General Re Corp. 3000 626625 1.31
Liberty Corp. 10000 447500 .94
Royal & Sun Alliance Insurance Group PLC
(United Kingdom) 65000 535295 1.12
Trenwick Group Inc. 30000 1147500 2.41
Real Estate-1.44%
Security Capital Pacific Trust 30000 686249 1.44
--------- ---------
7728897 16.20
--------- ---------
MISCELLANEOUS
Other equity-type securities in initial period of acquisition 1953241 4.09
--------- ---------
TOTAL EQUITY-TYPE SECURITIES (cost: $29,322,142) 39737311 83.26
--------- ---------
Principal
Amount
SHORT-TERM SECURITIES (000)
Corporate Short-Term Notes-14.29%
Associates Corp. of North America 5.85%
due 8/1/97 $890 889855 1.86
Bell Atlantic Financial Services, Inc. 5.47%
due 8/11/97 1,000 998329 2.09
E.I. du Pont de Nemours and Co. 5.45% due 9/4/97 1,300 1293112 2.71
Lucent Technologies Inc. 5.47%-5.50%
due 8/4-9/11/97 1,000 997947 2.09
Pitney Bowes Credit Corp. 5.51% due 8/15/97 1,200 1197245 2.51
United Parcel Service of America, Inc.5.49%
due 9/23/97 700 694236 1.46
Weyerhaeuser Co. 5.53% due 8/7/97 750 749192 1.57
--------- ---------
6819916 14.29
--------- ---------
Federal Agency Discount Notes-1.89%
Federal National Mortgage Assn. 5.45% due 8/26/97 905 901,454 1.89
--------- ---------
TOTAL SHORT-TERM SECURITIES (cost: $7,721,354) 7721370 16.18
--------- ---------
TOTAL INVESTMENT SECURITIES (cost: $37,043,496) 47458681 99.44
Excess of cash and receivables over payables 268808 .56
--------- ---------
NET ASSETS $47,727,489 100.00%
========= =========
(1)Non-income-producing security.
(2) Security is convertible into Time Warner shares.
(3)Purchased in a private placement transaction;
resale to the public may require registration
or sale only to qualified institutional buyers.
See Notes to Financial Statements
Equity-type securities added to the portfolio
since January 31, 1997
- --------------------------------------
Avon Products
Bank of Tokyo-Mitsubishi
CSX
CUC International
Electronic Data Systems
Arthur J. Gallagher
Glaxo Wellcome
Houston Industries
Royal & Sun Alliance Insurance
Southern Electric
Texaco
Ultramar Diamond Shamrock
Williams Companies
Witco
Equity-type securities eliminated from the portfolio
since January 31, 1997
- --------------------------------------
ACNielsen
American Greetings
Anheuser-Busch
Central Fidelity Banks
Crompton & Knowles
Exxon
International Business Machines
Jefferson BankShares
Merck & Co.
Parker Hannifin
PepsiCo
PG&E
Tambrands
U.S. Bancorp
USLIFE
Volvo
Warner-Lambert
</TABLE>
<TABLE>
<S> <C> <C>
Endowments, Inc.
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
at July 31, 1997
Assets:
Investment securities at market
(cost: $37,043,496) $47,458,681
Cash 54,940
Receivables for-
Sales of Investments $191,019
Dividends and accrued interest $68,014 259,033
------------ ------------
47,772,654
Liabilities:
Payables for -
Management services 21,838
Accrued expenses 23,327 45,165
------------ ------------
Net Assets at July 31, 1997 -
Equivalent to $22.66 per share on
2,106,069 shares of $1 par value
capital stock outstanding (authorized
capital stock--6,000,000 shares) $47,727,489
=============
Statement of Operations
for the year ended July 31, 1997
Investment Income:
Income:
Dividends $ 1,257,590
Interest 652,824 $1,910,414
------------
Expenses:
Management services fee 276,008
Custodian fee 2,768
Registration statement and prospectus 14,819
Reports to shareholders 10,753
Auditing fees 46,844
Legal fees 4,810
Taxes other than federal income tax 30,070
Other expenses 20,038 406,110
Net investment income 1,504,304
Realized Gain and Unrealized
Appreciation on Investments:
Net realized gain 14,485,532
Net increase in unrealized
appreciation on investments:
Beginning of year 8,633,233
End of year 10,415,185
------------
Net unrealized appreciation on investments 1,781,952
Net realized gain and unrealized
appreciation on investments 16,267,484
Net Increase in Net Assets Resulting
from Operations $ 17,771,788
See Notes to Financial Statements
Statement of Changes in Net Assets
Year ended Year ended
7/31/97 7/31/96
Operations:
Net investment income $ 1,504,304 $ 1,871,962
Net realized gain on investments 14,485,532 6,351,802
Net unrealized appreciation (depreciation)
on investments 1,781,952 (726,814)
------------ ------------
Net increase in net assets resulting
from operations 17,771,788 7,496,950
------------- -------------
Dividends and Distributions Paid to
Shareholders:
Dividends from net investment income (1,543,830) (1,975,816)
Distributions from net realized
gain on investments (6,480,136) (3,710,692)
------------- -------------
Total dividends and distributions (8,023,966) (5,686,508)
------------- -------------
Capital Share Transactions:
Proceeds from shares sold:
198,622 and 279,532
shares, respectively 3,944,263 5,201,405
Proceeds from shares issued in
reinvestment of net investment income
dividends and distributions of net
realized gain on investments:
396,508 and 283,073 shares,
respectively 7,514,541 5,156,184
Cost of shares repurchased:
1,675,374 and 518,349
shares, respectively (32,784,034) (9,598,279)
------------- -------------
Net increase (decrease) in net assets
resulting from capital share transactions (21,325,230) 759,310
------------- -------------
Total Increase (Decrease) in Net Assets (11,577,408) 2,569,752
Net Assets:
Beginning of year 59,304,897 56,735,145
------------- -------------
End of year (including undistributed
net investment income: $118,014 and
$157,540, respectively) $47,727,489 $ 59,304,897
============= =============
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-type securities traded on a national securities exchange (or reported
on the Nasdaq national market) and securities traded in the over-the-counter
market are stated at the last reported sales price on the day of valuation;
other securities, and securities for which no sale was reported on that date,
are stated at the last quoted bid price. Short-term securities with original or
remaining maturities in excess of 60 days are valued at the mean of their
quoted bid and asked prices. Short-term securities with 60 days or less to
maturity are valued at amortized cost, which approximates market value.
Securities for which market quotations are not readily available are valued at
fair value by the Board of Directors or a committee thereof.
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
and premiums on securities purchased are amortized over the life of the
respective securities. 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.
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 $2,768 was paid by these credits rather than in cash.
2. 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. Therefore, no federal income tax provision is
required.
As of July 31, 1997, net unrealized appreciation on investments for book and
federal income tax purposes aggregated $10,415,185, of which $10,440,334
related to appreciated securities and $25,149 related to depreciated
securities. There was no difference between book and tax realized gains on
securities transactions for the year ended July 31, 1997. The cost of portfolio
securities for book and federal income tax purposes was $37,043,496 at July 31,
1997.
3. The fee of $276,008 for management services was paid 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, and extraordinary expenses. For the year ended of July 31, 1997, 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 expenses do not exceed
0.75% of average net assets. For the year ended July 31, 1997, no such fee
reduction was required.
No fees were paid by the fund to its officers and Directors.
4. As of July 31, 1997, accumulated undistributed net realized gain on
investments was $12,780,274 and additional paid-in capital was $22,307,947.
The fund made purchases and sales of investment securities, excluding
short-term securities, of $21,861,248 and $44,658,716, respectively, during the
year ended July 31, 1997.
<TABLE>
<S> <C> <C> <C> <C> <C>
ENDOWMENTS, INC.
PER-SHARE DATA AND RATIOS
Year ended July 31
-------- -------- -------- -------- --------
1997 1996 1995 1994 1993
-------- -------- -------- -------- --------
Net Asset Value, Beginning of Year 18.61 18.06 17.18 18.43 18.26
-------- -------- -------- -------- --------
Income from Investment Operations:
Net investment income .56 .58 .63 .65 .66
Net realized and unrealized
gain (loss) on investments 6.04 1.73 2.21 (.16) 1.05
-------- -------- -------- -------- --------
Total income from investment operations 6.60 2.31 2.84 .49 1.71
-------- -------- -------- -------- --------
Less Distributions:
Dividends from net investment income (.55) (.61) (.61) (.66) (.69)
Distributions from net realized gains (2.00) (1.15) (1.35) (1.08) (.85)
-------- -------- -------- -------- --------
Total distributions (2.55) (1.76) (1.96) (1.74) (1.54)
-------- -------- -------- -------- --------
Net Asset Value, End of Year 22.66 18.61 18.06 17.18 18.43
======== ======== ======== ======== ========
Total Return 38.40% 13.22% 18.57% 2.77% 10.05%
Ratios/Supplemental Data:
Net assets, end of year (in millions) $48 $59 $57 $53 $72
Ratio of expenses to average net assets .74% .72% .73% .73% .64%
Ratio of net income to average net assets 2.73% 3.12% 3.70% 3.78% 3.72%
Average commissions paid per share(1) 5.00c 5.87c 5.94c 6.27c 7.03c
Portfolio turnover rate 50.69% 38.73% 24.04% 25.58% 29.70%
(1)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>
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 schedule of portfolio investments,
as of July 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 per-share data and ratios for each of the five years
in the period then ended. 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 July 31, 1997 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 Endowments, Inc. as of
July 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 per-share data and ratios for each of the five years in the period then
ended, in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Los Angeles, California
August 29, 1997
<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 .37% /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
<TABLE>
<S> <C> <C> <C>
BOND PORTFOLIO FOR ENDOWMENTS, INC.
INVESTMENT PORTFOLIO, JULY 31, 1997
Principal Percent
Amount Market of Net
BONDS & NOTES (000) Value Assets
Industrials - 14.20%
Comcast Corp. 8.375% due 5/01/07 (1) $ 250 $ 275,783 0.84%
Hutchison Whampoa Finance Ltd. 6.988% due 8/1/37 (1) 200 203040 .61
Hyundai Semiconductor America, Inc.
8.625% due 5/15/07 (1) 500 527000 1.60
Inco Ltd.:
9.875% due 6/15/19 300 325062 3.40
9.60% due 6/15/22 700 799365
Millennium America Inc. 7.00% due 11/15/06 250 251440 .76
News America Holdings Inc. 7.43% due 10/1/26 500 524520 1.59
Petrozuata Finance Inc., Series A, 7.63% due 4/1/09 (1) 250 260800 .79
Tele-Communications, Inc. 9.80% due 2/1/12 250 301268 .91
Time Warner Inc.:
Pass-Through Asset Trust, Series 1997-1 ,
6.10% due 12/30/01 (1)(2) 250 244183 2.92
0% convertible debentures due 6/22/13 1500 721875
Wharf International Finance Ltd., Series A,
7.625% due 3/13/07 (1) 250 257236 .78
--------- ------
4691572 14.20
--------- ------
Electric Utilities - 3.21%
Big Rivers Electric Corp. 10.70% due 9/15/17 1000 1059910 3.21
--------- ------
Telephone - 4.95%
U S West Capital Funding, Inc. 6.95% due 1/15/37 500 516085 4.95
U S West, Inc. 0% convertible
debentures due 6/25/11 3000 1117500
--------- ------
1,633,585 4.95
--------- ------
Transportation (2) - 9.26%
Airplanes Pass Through Trust, Class C, 8.15% due 3/15/19 1000 1058000 3.20
Jet Equipment Trust:
Series 1994-A, 11.79% due 6/15/13 (1) 750 991575 4.54
Series 1995-B, Class A, 7.63% due 2/15/15 (1) 480 506971
USAir, Inc., Series 1996-B, 7.50% due 4/15/08 481 501622 1.52
--------- ------
3058168 9.26
--------- ------
Financial - 5.67%
American Re Corp. 10.875% due 9/15/04 1000 1052060 3.18
Capital One Bank 8.125% due 3/1/00 250 260733 .79
Terra Nova (Bermuda) Holdings Ltd. 10.75% due 7/1/05 500 560900 1.70
--------- ------
1873693 5.67
--------- ------
Real Estate - 1.51%
Irvine Co. 7.46% due 3/15/06 (1)(3) 500 498100 1.51
--------- ------
Collateralized Mortgage/Asset-Backed
Obligations (2) - 2.95%
Merrill Lynch Mortgage Investors, Inc., Series 1995-A,
7.383% due 6/15/21 (4) 369 376367 1.14
Prudential Home Mortgage Securities Co., Inc.,
Series 1992-2033, Class A-12, 7.50% due 11/25/22 213 212705 .64
Structured Asset Securities Corp., Series 1996-CFL,
Class A2A, 7.75% due 2/25/28 381 386028 1.17
--------- ------
975100 2.95
--------- ------
Floating Rate Eurodollar Notes (Undated) (4) - 5.42%
Bank of Nova Scotia 5.75% 1000 896300 2.71
Canadian Imperial Bank of Commerce 5.688% 1000 893750 2.71
--------- ------
1790050 5.42
--------- ------
Governments (excluding U.S. Government) &
Governmental Authorities - 3.56%
Quebec (Province of) 13.25% due 9/15/14 1000 1177640 3.56
--------- ------
Federal Agency Obligations - Mortgage
Pass-Throughs (2) - 13.27%
Federal Home Loan Mortgage Corp.:
8.75% due 7/1/08 118 122705
12.50% due 12/1/12 52 60747 .95
9.00% due 3/1/20 124 133214
Federal National Mortgage Assn.:
9.00% due 11/1/20 240 255397 2.20
6.03% due 3/1/33 (4) 474 471134
Government National Mortgage Assn.:
8.50% due 12/15/08 347 367368
10.00% due 12/15/19 402 445302
7.50% due 1/15/24 584 597550 10.12
7.00% due 2/20/24 (4) 749 764818
7.375% due 6/20/24 (4) 749 769465
8.50% due 10/15/25 378 394775
--------- ------
4382475 13.27
--------- ------
U.S. Treasury Obligations - 22.48%
9.25% due 8/15/98 1000 1036091
7.25% due 5/15/04 500 535470
11.625% due 11/15/04 500 663595 22.48
10.375% due 11/15/12 2000 2627820
8.875% due 8/15/17 2000 2564380
--------- ------
7,427,356 22.48
--------- ------
TOTAL BONDS & NOTES (cost: $27,966,316) 28567649 86.48
--------- ------
Number
STOCKS of Shares
Preferred Stocks - 0.83%
Swire Pacific Ltd. 8.84% cumulative guaranteed perpetual 10000 274200 .83
capital (1) --------- ------
TOTAL STOCKS (COST $250,000) 274200 .83
--------- ------
SHORT-TERM SECURITIES
Corporate Short-Term Notes - 11.58%
Associates Corp. of North America 5.85% due 8/1/97 980 979841 2.97
Atlantic Richfield Co. 5.50% due 8/6/97 1150 1148946 3.48
Pfizer Inc 5.45% due 9/11/97 (1) 1200 1192370 3.61
Xerox Corp. 5.48% due 10/17/97 510 503933 1.52
--------- ------
TOTAL SHORT-TERM SECURITIES (cost: $3,825,101) 3825090 11.58
--------- ------
TOTAL INVESTMENT SECURITIES (cost: $32,041,417) 32666939 98.89
Excess of cash and receivables over payables 365756 1.11
--------- ------
NET ASSETS $33,032,695 100.00%
========= =======
(1) Purchased in a private placement transaction; resale
to the public may require registration or sale only to
qualified institutional buyers.
(2) Pass-through securities backed by a pool of
mortgages or other loans on which principal
payments are periodically made. Therefore, the
effective maturity of these securities 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>
<S> <C> <C>
Bond Portfolio for Endowments, Inc.
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
at July 31, 1997
Assets:
Investment securities at market
(cost: $32,041,417) $32,666,939
Cash 50,708
Receivables for-
Sales of investments $ 1,697
Accrued interest 546,152 547,849
----------- -----------
33,265,496
Liabilities:
Payables for-
Purchases of investments 200,000
Management services 10,540
Accrued expenses 22,261 232,801
----------- -----------
Net Assets at July 31, 1997-
Equivalent to $17.17 per share on
1,924,044 shares of $1 par value
capital stock outstanding (authorized
capital stock - 5,000,000 shares) $33,032,695
===========
Statement of Operations
for the year ended July 31, 1997
Investment Income:
Interest income $ 2,775,511
Expenses:
Management services fee $ 177,223
Custodian fee 2,022
Registration statement and prospectus 15,568
Reports to shareholders 10,753
Auditing fees 46,844
Legal fees 4,810
Taxes other than federal income tax 25,071
Other expenses 20,124
-----------
Total expenses before fee waiver 302,415
Fee waiver 35,051 267,364
----------- -----------
Net investment income 2,508,147
-----------
Realized Loss and Unrealized
Appreciation on Investments:
Net realized loss (216,967)
Net change in unrealized appreciation
(depreciation) on investments:
Beginning of year (731,418)
End of year 625,522
-----------
Net unrealized appreciation on
investments 1,356,940
-----------
Net realized loss and unrealized
appreciation on investments 1,139,973
-----------
Net Increase in Net Assets Resulting
from Operations $ 3,648,120
===========
Statement of Changes in Net Assets
Year ended July 31
1997 1996
Operations:
Net investment income $ 2,508,147 $ 3,075,042
Net realized gain (loss) on investments (216,967) 123,217
Net unrealized appreciation (depreciation) on
investments 1,356,940 (526,188)
----------- -----------
Net increase in net assets resulting
from operations 3,648,120 2,672,071
----------- -----------
Dividends Paid to Shareholders:
Dividends from net investment income (2,533,400) (3,085,285)
----------- -----------
Capital Share Transactions:
Proceeds from shares sold:
187,635 and 168,909
shares, respectively 3,152,584 2,838,556
Proceeds from shares issued in
reinvestment of net investment income
dividends: 65,746 and 94,993 shares,
respectively 1,089,420 1,596,233
Cost of shares repurchased:
822,286 and 377,703
shares, respectively (13,772,096) (6,407,611)
----------- -----------
Net decrease in net assets resulting
from capital share transactions (9,530,092) (1,972,822)
----------- -----------
Total Decrease in Net Assets (8,415,372) (2,386,036)
Net Assets:
Beginning of year 41,448,067 43,834,103
----------- -----------
End of year (including undistributed
net investment income: $274,340 and
$299,593, respectively) $33,032,695 $41,448,067
=========== ===========
See Notes to Financial Statements
</TABLE>
Bond Portfolio for Endowments, Inc.
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 the preservation of capital. The following paragraphs
summarize the significant accounting policies consistently followed by the fund
in the preparation of its financial statements:
Bonds and notes are valued at prices obtained from a bond-pricing service
provided by a major dealer in bonds, 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 of their representative quoted bid
and asked prices or, if such prices are not available, at prices for securities
of comparable maturity, quality, and type. Short-term securities with original
or remaining maturities in excess of 60 days are valued at the mean of their
quoted bid and asked prices. Short-term securities with 60 days or less to
maturity are valued at amortized cost, which approximates market value.
Securities for which market quotations are not readily available are valued at
fair value by the Board of Directors or a committee thereof.
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. Interest income is reported on the accrual basis. Discounts on
securities purchased are amortized over the life of the respective securities.
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.
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 $2,022 was paid by these credits rather than in cash.
2. 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. Therefore, no federal income tax provision is
required.
As of July 31, 1997, net unrealized appreciation on investments for book and
federal income tax purposes aggregated $625,522, of which $994,372 related to
appreciated securities and $368,850 related to depreciated securities. There
was no difference between book and tax realized gains on securities
transactions for the year ended July 31, 1997. The fund has available at July
31, 1997 a net capital loss carryforward totaling $543,455, which may be used
to offset capital gains realized during subsequent years through July 31, 2004.
It is the intention of the fund not to make distributions from capital gains
until the capital loss carryforward is utilized. The cost of portfolio
securities for book and federal income tax purposes was $32,041,417 at July 31,
1997.
3. The fee of $177,223 for management services was paid 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, and extraordinary expenses. For the year ended July 31, 1997, 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 year ended July 31, 1997, fee reductions were
$35,051.
No fees were paid by the fund to its officers and Directors.
4. As of July 31, 1997, accumulated net realized loss on investments was
$543,455 and additional paid-in capital was $30,752,244.
The fund made purchases and sales of investment securities, excluding
short-term securities, of $6,975,429 and $18,694,604, respectively, during the
year ended July 31, 1997.
<TABLE>
<S> <C> <C> <C> <C> <C>
BOND PORTFOLIO FOR ENDOWMENTS, INC.
PER-SHARE DATA AND RATIOS
Year ended July 31
---------- ---------- ------------------------------
1997 1996 1995 1994 1993
---------- ---------- ------------------------------
Net Asset Value, Beginning of Year 16.63 16.82 16.86 19.66 19.44
---------- ---------- ------------------------------
Income from Investment Operations
Net investment income 1.21 1.22 1.26 1.32 1.49
Net realized and unrealized
gain (loss) on investments .52 (.19) .01 (1.51) .64
---------- ---------- ------------------------------
Total income (loss) from investment operations 1.73 1.03 1.27 (.19) 2.13
---------- ---------- ------------------------------
Less Distributions:
Dividends from net investment income (1.19) (1.22) (1.24) (1.35) (1.48)
Distributions from net realized gains - - (.07) (1.26) (.43)
---------- ---------- ------------------------------
Total distributions (1.19) (1.22) (1.31) (2.61) (1.91)
---------- ---------- ------------------------------
Net Asset Value, End of Year 17.17 16.63 16.82 16.86 19.66
======= ======= ======= ======= =======
Total Return 10.83% 6.25% 7.97% (1.44)% 11.74%
Ratios/Supplemental Data:
Net assets, end of year (in millions) $33 $41 $44 $46 $67
Ratio of expenses to average net assets .75% /1/ .75% /1/ .76% .77% .65%
Ratio of net income to average net assets 7.04% 7.17% 7.52% 6.99% 7.69%
Portfolio turnover rate 22.18% 54.43% 69.22% 82.12% 35.97%
/1/ Had Capital Research and Management Company not waived fees,
the fund's ratios of expenses to average net assets would have
been 0.85% and 0.80%, respectively, for the periods shown.
</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 schedule of
portfolio investments, as of July 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 per-share data and
ratios for each of the five years in the period then ended. 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 as of July
31, 1997 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. as of July 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 per-share
data and ratios for each of the five years in the period then ended, in
conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Los Angeles, California
August 29, 1997
OTHER INFORMATION
Item 24. Financial Statements and Exhibits.
(a) Included in Prospectus - Part A, for the six months ended January 31,
1998 and for the 10 years ended July 31, 1997.
Financial Highlights
Included in Statement of Additional Information - Part B, for the six months
ended January 31, 1998 and the fiscal year ended July 31, 1997.
Investment Portfolio
Statement of Assets and Liabilities
Statement of Operations
Statement of Changes in Net Assets
Notes to Financial Statements
Selected Per-Share Data and Ratios
Independent Auditors' Report
(b) Exhibits.
1. On file (see SEC file nos. 811-1884 and 2-34371)
2. On file (see SEC file nos. 811-1884 and 2-34371)
3. None
4. None
5. Forms of Investment Advisory and Service Agreements between Endowments (on
behalf of Growth and Income Portfolio and Bond Portfolio) and Capital Research
and Management Company
6. None
7. None
8. Form of Custody Agreement between Endowments (on behalf of Growth and
Income Portfolio and Bond Portfolio) and Capital Research and Management
Company
9. Form of Transfer Agency Agreement between Endowments and American Funds
Service Company
10. Opinion of Counsel
11. Consent of Independent Auditors
12. None
13. None
14. None
15. None
16. Calculation of Performance Data
17. Financial Data Schedule (EDGAR)
Item 25. Persons Controlled by or under Common Control with Registrant.
None.
Item 26. Number of Holders of Securities.
As of June 30, 1998, there were 64 record holders of shares of beneficial
interest of Growth and Income Portfolio and 55 record holders of shares of
beneficial interest of Bond Portfolio.
Item 27. Indemnification.
Registrant is a joint-insured under Investment Adviser/Mutual Fund Errors and
Omissions Policies written by American International Surplus Lines Insurance
Company, Chubb Custom Insurance Company, and ICI Mutual Insurance Company which
insures its officers and directors against certain liabilities.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to trustees, officers and controlling persons of the
Registrant by the Registrant pursuant to the Trust's Trust Instrument, its
By-Laws or otherwise, the Registrant is aware that in the opinion of the
Securities and Exchange Commission, such indemnification is against public
policy as expressed in the Act and, therefore, is 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 trustees, officers or
controlling persons of the Registrant in connection with the successful defense
of any act, suit or proceeding) is asserted by such trustees, officers or
controlling persons in connection with shares 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 whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issues.
Item 28. Business and Other Connections of Investment Adviser.
None.
Item 29. Principal Underwriters.
(a) Not Applicable.
(b) Not Applicable.
(c) Not Applicable.
Item 30. Location of Accounts and Records.
Accounts, books and other records required by Rules 31a-1 and 31a-2 under the
Investment Company Act of 1940 are maintained and held in the offices of its
investment adviser, Capital Research and Management Company, 333 South Hope
Street, Los Angeles, California 90071, and/or 135 South State College
Boulevard, Brea, California 92821, and/or the offices of the Registrant, One
Market, Steuart Tower (Suite 1800), San Francisco, California 94105.
Registrant's records covering shareholder accounts are maintained and kept by
the fund's transfer agent, American Funds Service Company, 135 South State
College Boulevard, Brea, California 92821, 8332 Woodfield Crossing Boulevard,
Indianapolis, IN 46240, 8000 IH-10, Suite 1400, San Antonio, Texas 78230 and
5300 Robin Hood Road, Norfolk, VA 23513.
Registrant's records covering portfolio transactions are also maintained and
kept by the fund's custodian, The Chase Manhattan Bank, One Chase Manhattan
Plaza, New York, New York 10081.
Item 31. Management Services.
None.
Item 32. Undertakings.
(a) Not Applicable
(b) Registrant 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.
(c) Registrant undertakes to call a meeting of shareholders for the purpose
of voting upon the question of removal of a person serving as Director if
requested in writing to do so by the holders of not less than 10% of the
outstanding shares of Registrant.
SIGNATURE OF REGISTRANT
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940 the Registrant certifies that it meets all of the
requirements for effectiveness of this Registration Statement pursuant to Rule
485(b) under the Securities Act of 1933 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City and County of San Francisco, and State of California on
the 29th day of July 1998.
ENDOWMENTS
By /s/ Patrick F. Quan
Patrick F. Quan, Secretary
ATTEST:
/s/ Jennifer L. Yardley
Jennifer L. Yardley
Pursuant to the requirements of the Securities Act of 1933, this amendment to
its registration statement has been signed below on July 29, 1998 by the
following persons in the capacities indicated.
<TABLE>
<CAPTION>
<S> <C> <C>
Signature Title
(1) Principal Executive Officer:
President and
/s/ Frank L. Ellsworth Trustee
(Frank L. Ellsworth)
(2) Principal Financial Officer and
Principal Accounting Officer:
/s/ Mary C. Hall Treasurer
(Mary C. Hall)
(3) Trustees:
/s/ Robert B. Egelston
Robert B. Egelston Chairman
Steven D. Lavine* Trustee
Patricia A. McBride* Trustee
Gail L. Neale* Trustee
Charles R. Redmond* Trustee
Thomas E. Terry* Trustee
Robert C. Ziebarth* Trustee
</TABLE>
*By /s/ Patrick F. Quan
Patrick F. Quan, Attorney-in-Fact
Counsel reports that the amendment does not contain disclosures that would
make the amendment ineligible for effectiveness under the provisions of Rule
485(b).
/s/ Michele Y. Yang
Michele Y. Yang, Counsel
FORM OF
INVESTMENT ADVISORY AND SERVICE AGREEMENT
Growth and Income Portfolio
THIS AGREEMENT, dated and effective as of the 31st day of July, 1998, is made
and entered into by and between ENDOWMENTS, a Delaware business trust
(hereinafter called the "Trust"), on behalf of the Growth and Income Portfolio,
a series of the Trust (the "Fund"), and CAPITAL RESEARCH AND MANAGEMENT
COMPANY, a Delaware corporation, (hereinafter called the "Adviser"). The
parties agree as follows:
1.
The Trust hereby employs the Adviser to furnish advice to the Trust with
respect to the investment and reinvestment of the assets of the Fund. The
Adviser hereby accepts such employment and agrees to render the services and to
assume the obligations to the extent herein set forth, for the compensation
herein provided. The Adviser shall, for all purposes herein, be deemed an
independent contractor and not an agent of the Trust.
2.
The Adviser agrees to provide supervision of the Fund's portfolio and to
determine what securities or other property shall be purchased or sold on
behalf of the Fund, giving due consideration to the policies of the Fund as
expressed in the currently effective Prospectus (the "Prospectus") and
Statement of Additional Information ("SAI") relating to the Fund included in
the Trust's Registration Statement, as amended from time to time (the
"Registration Statement) filed by the Trust under the Investment Company Act of
1940, as amended (the "1940 Act") and the Securities Act of 1933, as amended,
as well as to the factors affecting the Fund's status as a series of a
regulated investment company under the Internal Revenue Code of 1986, as
amended, and subject always to policies and instructions adopted by the Trust's
Board of Trustees.
The Adviser shall provide adequate facilities and qualified personnel for the
placement of orders for the purchase, or other acquisition, and sale, or other
disposition, of portfolio securities for the Fund. With respect to such
transactions, the Adviser, subject to such directions as may be furnished from
time to time on behalf of the Fund by the Board of Trustees of the Trust, shall
endeavor as the primary objective to obtain the most favorable prices and
executions of orders. Subject to such primary objective, the Adviser may place
orders with broker-dealer firms which have sold shares of the Fund or which
furnish statistical and other information to the Adviser, taking into account
the value and quality of the brokerage services of such broker-dealers,
including the availability and quality of such statistical and other
information. Receipt by the Adviser of any such statistical and other
information and services shall not be deemed to give rise to any requirement
for abatement of the advisory fee payable pursuant to Section 6 hereof.
3.
The Adviser shall furnish the services of persons to perform the executive,
administrative, clerical, and bookkeeping functions of the Fund, including the
daily determination of the Fund's net asset value and offering price per share.
The Adviser shall pay the compensation and travel expenses of all such persons,
and they shall serve without additional compensation from the Fund. The
Adviser shall also, at its expense, provide the Fund with suitable office space
(which may be in the offices of the Adviser); all necessary small office
equipment and utilities; and general purpose accounting forms, supplies, and
postage used at the offices of the Trust.
4.
The Fund shall pay all its expenses not assumed by the Adviser as provided
herein. Such expenses shall include, but shall not be limited to, custodian,
registrar, stock transfer and dividend disbursing fees and expenses; costs of
the designing, printing and mailing of reports, Prospectuses, SAI's, proxy
statements, and notices to its shareholders; taxes; expenses of the issuance
and redemption of shares of the Fund (including stock certificates,
registration and qualification fees and expenses); legal and auditing expenses;
compensation, fees, and expenses paid to trustees; association dues; and costs
of stationery and forms prepared exclusively for the Trust.
5.
The Trust on behalf of the Fund shall pay to the Adviser on or before the
tenth (10th) day of each month, as compensation for the services rendered by
the Adviser during the preceding month, an amount to be computed by applying to
the total net asset value of the Fund at the annual rates of 0.50% on the first
$150,000,000 of net assets, plus 0.40% on net assets in excess of $150,000,000.
The advisory fee shall be accrued daily at 1/365th of the applicable annual
rate set forth above. The net asset value of the Fund shall be determined in
the manner set forth in the Trust's Declaration of Trust and the Registration
Statement and always in accordance with applicable law.
Upon any termination of this Agreement on a day other than the last day of the
month the fee for the period from the beginning of the month in which
termination occurs to the date of termination shall be prorated according to
the proportion which such period bears to the full month of the Trust.
6.
The Adviser agrees to reduce the fee payable to it under this Agreement by the
amount by which the ordinary operating expenses of the Fund for any fiscal
year, excluding interest, taxes and extraordinary expenses, shall exceed 0.75%
of the average net assets of the Fund determined pursuant to Section 5. Costs
incurred in connection with the purchase or sale of portfolio securities,
including brokerage fees and commissions, which are capitalized in accordance
with generally accepted accounting principles applicable to investment
companies, shall be accounted for as capital items and not as expenses. Proper
accruals shall be made by the Trust on behalf of the Fund for any projected
reduction hereunder, and corresponding amounts shall be withheld from the fees
paid by the Trust on behalf of the Fund to the Adviser. Any additional
reduction computed at the end of the fiscal year shall be deducted from the fee
for the last month of such fiscal year, and any excess shall be paid to the
Fund immediately after the fiscal year end, and in any event prior to
publication of the Fund's annual report as a reduction of the fees previously
paid during the fiscal year.
7.
Nothing contained in this Agreement shall be construed to prohibit the Adviser
from performing investment advisory, management, or distribution services for
other investment companies (or series thereof) and other persons or companies,
or to prohibit affiliates of the Adviser from engaging in such businesses or in
other related or unrelated businesses.
8.
The Adviser shall have no liability to the Fund, or its shareholders, for any
error of judgment, mistake of law, or for any loss arising out of any
investment, or for any other act or omission in the performance of its
obligations to the Fund not involving willful misfeasance, bad faith, gross
negligence or reckless disregard of its obligations and duties hereunder.
9.
This Agreement shall continue in effect until the close of business on July
27, 1999. It may thereafter be renewed from year to year by mutual consent,
provided that such renewal shall be specifically approved at least annually by
(i) the Board of Trustees of the Trust, or by the vote of a majority (as
defined in the 1940 Act) of the outstanding voting securities of the Fund, and
(ii) a majority of those trustees who are not parties to this Agreement or
interested persons (as defined in the 1940 Act) of any such party cast in
person at a meeting called for the purpose of voting on such approval. Such
mutual consent to renewal shall not be deemed to have been given unless
evidenced by a writing signed by both parties hereto.
10.
The obligations of the Trust under this Agreement are not binding upon any of
the Trustees, officers, employees, agents or shareholders of the Trust
individually, but bind only the Trust Estate. The Adviser agrees to look
solely to the assets of the Fund for the satisfaction of any liability of the
Trust in respect of this Agreement and will not seek recourse against such
Trustees, officers, employees, agents or shareholders, or any of them, or any
of their personal assets for such satisfaction.
11.
This Agreement may be terminated at any time, without payment of any penalty,
by the Board of Trustees of the Trust or by the vote of a majority (as defined
in the 1940 Act) of the outstanding voting securities of the Fund, on sixty
(60) days' written notice to the Adviser, or by the Adviser on like notice to
the Trust. This Agreement shall automatically terminate in the event of its
assignment (as defined in the 1940 Act).
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate originals by their officers thereunto duly authorized as
of the day and year first above written.
ENDOWMENTS
on behalf of the Growth and Income Portfolio
By
By
CAPITAL RESEARCH AND
MANAGEMENT COMPANY
By
By
FORM OF
INVESTMENT ADVISORY AND SERVICE AGREEMENT
Bond Portfolio
THIS AGREEMENT, dated and effective as of the 31st day of July, 1998, is made
and entered into by and between ENDOWMENTS, a Delaware business trust
(hereinafter called the "Trust"), on behalf of the Bond Portfolio, a series of
the Trust (the "Fund"), and CAPITAL RESEARCH AND MANAGEMENT COMPANY, a Delaware
corporation, (hereinafter called the "Adviser"). The parties agree as follows:
1.
The Trust hereby employs the Adviser to furnish advice to the Trust with
respect to the investment and reinvestment of the assets of the Fund. The
Adviser hereby accepts such employment and agrees to render the services and to
assume the obligations to the extent herein set forth, for the compensation
herein provided. The Adviser shall, for all purposes herein, be deemed an
independent contractor and not an agent of the Trust.
2.
The Adviser agrees to provide supervision of the Fund's portfolio and to
determine what securities or other property shall be purchased or sold on
behalf of the Fund, giving due consideration to the policies of the Fund as
expressed in the currently effective Prospectus (the "Prospectus") and
Statement of Additional Information ("SAI") relating to the Fund included in
the Trust's Registration Statement, as amended from time to time (the
"Registration Statement) filed by the Trust under the Investment Company Act of
1940, as amended (the "1940 Act") and the Securities Act of 1933, as amended,
as well as to the factors affecting the Fund's status as a series of a
regulated investment company under the Internal Revenue Code of 1986, as
amended, and subject always to policies and instructions adopted by the Trust's
Board of Trustees.
The Adviser shall provide adequate facilities and qualified personnel for the
placement of orders for the purchase, or other acquisition, and sale, or other
disposition, of portfolio securities for the Fund. With respect to such
transactions, the Adviser, subject to such directions as may be furnished from
time to time on behalf of the Fund by the Board of Trustees of the Trust, shall
endeavor as the primary objective to obtain the most favorable prices and
executions of orders. Subject to such primary objective, the Adviser may place
orders with broker-dealer firms which have sold shares of the Fund or which
furnish statistical and other information to the Adviser, taking into account
the value and quality of the brokerage services of such broker-dealers,
including the availability and quality of such statistical and other
information. Receipt by the Adviser of any such statistical and other
information and services shall not be deemed to give rise to any requirement
for abatement of the advisory fee payable pursuant to Section 6 hereof.
3.
The Adviser shall furnish the services of persons to perform the executive,
administrative, clerical, and bookkeeping functions of the Fund, including the
daily determination of the Fund's net asset value and offering price per share.
The Adviser shall pay the compensation and travel expenses of all such persons,
and they shall serve without additional compensation from the Fund. The
Adviser shall also, at its expense, provide the Fund with suitable office space
(which may be in the offices of the Adviser); all necessary small office
equipment and utilities; and general purpose accounting forms, supplies, and
postage used at the offices of the Trust.
4.
The Fund shall pay all its expenses not assumed by the Adviser as provided
herein. Such expenses shall include, but shall not be limited to, custodian,
registrar, stock transfer and dividend disbursing fees and expenses; costs of
the designing, printing and mailing of reports, Prospectuses, SAI's, proxy
statements, and notices to its shareholders; taxes; expenses of the issuance
and redemption of shares of the Fund (including stock certificates,
registration and qualification fees and expenses); legal and auditing expenses;
compensation, fees, and expenses paid to trustees; association dues; and costs
of stationery and forms prepared exclusively for the Trust.
5.
The Trust on behalf of the Fund shall pay to the Adviser on or before the
tenth (10th) day of each month, as compensation for the services rendered by
the Adviser during the preceding month, an amount to be computed by applying to
the total net asset value of the Fund at the annual rates of 0.50% on the first
$150,000,000 of net assets, plus 0.40% on net assets in excess of $150,000,000.
The advisory fee shall be accrued daily at 1/365th of the applicable annual
rate set forth above. The net asset value of the Fund shall be determined in
the manner set forth in the Trust's Declaration of Trust and the Registration
Statement and always in accordance with applicable law.
Upon any termination of this Agreement on a day other than the last day of the
month the fee for the period from the beginning of the month in which
termination occurs to the date of termination shall be prorated according to
the proportion which such period bears to the full month of the Trust.
6.
The Adviser agrees to reduce the fee payable to it under this Agreement by the
amount by which the ordinary operating expenses of the Fund for any fiscal
year, excluding interest, taxes and extraordinary expenses, shall exceed 0.75%
of the average net assets of the Fund determined pursuant to Section 5. Costs
incurred in connection with the purchase or sale of portfolio securities,
including brokerage fees and commissions, which are capitalized in accordance
with generally accepted accounting principles applicable to investment
companies, shall be accounted for as capital items and not as expenses. Proper
accruals shall be made by the Trust on behalf of the Fund for any projected
reduction hereunder, and corresponding amounts shall be withheld from the fees
paid by the Trust on behalf of the Fund to the Adviser. Any additional
reduction computed at the end of the fiscal year shall be deducted from the fee
for the last month of such fiscal year, and any excess shall be paid to the
Fund immediately after the fiscal year end, and in any event prior to
publication of the Fund's annual report as a reduction of the fees previously
paid during the fiscal year.
7.
Nothing contained in this Agreement shall be construed to prohibit the Adviser
from performing investment advisory, management, or distribution services for
other investment companies (or series thereof) and other persons or companies,
or to prohibit affiliates of the Adviser from engaging in such businesses or in
other related or unrelated businesses.
8.
The Adviser shall have no liability to the Fund, or its shareholders, for any
error of judgment, mistake of law, or for any loss arising out of any
investment, or for any other act or omission in the performance of its
obligations to the Fund not involving willful misfeasance, bad faith, gross
negligence or reckless disregard of its obligations and duties hereunder.
9.
This Agreement shall continue in effect until the close of business on July
27, 1999. It may thereafter be renewed from year to year by mutual consent,
provided that such renewal shall be specifically approved at least annually by
(i) the Board of Trustees of the Trust, or by the vote of a majority (as
defined in the 1940 Act) of the outstanding voting securities of the Fund, and
(ii) a majority of those trustees who are not parties to this Agreement or
interested persons (as defined in the 1940 Act) of any such party cast in
person at a meeting called for the purpose of voting on such approval. Such
mutual consent to renewal shall not be deemed to have been given unless
evidenced by a writing signed by both parties hereto.
10.
The obligations of the Trust under this Agreement are not binding upon any of
the Trustees, officers, employees, agents or shareholders of the Trust
individually, but bind only the Trust Estate. The Adviser agrees to look
solely to the assets of the Fund for the satisfaction of any liability of the
Trust in respect of this Agreement and will not seek recourse against such
Trustees, officers, employees, agents or shareholders, or any of them, or any
of their personal assets for such satisfaction.
11.
This Agreement may be terminated at any time, without payment of any penalty,
by the Board of Trustees of the Trust or by the vote of a majority (as defined
in the 1940 Act) of the outstanding voting securities of the Fund, on sixty
(60) days' written notice to the Adviser, or by the Adviser on like notice to
the Trust. This Agreement shall automatically terminate in the event of its
assignment (as defined in the 1940 Act).
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate originals by their officers thereunto duly authorized as
of the day and year first above written.
ENDOWMENTS
on behalf of the Bond Portfolio
By
By
CAPITAL RESEARCH AND
MANAGEMENT COMPANY
By
By
FORM OF GLOBAL CUSTODY AGREEMENT
This AGREEMENT is effective __________ and is between THE CHASE MANHATTAN BANK
(the "Bank") and ENDOWMENTS (the "Customer").
1. Customer Accounts.
The Bank agrees to establish and maintain the following accounts ("Accounts"):
(a) A custody account in the name of the Customer ("Custody Account") for any
and all stocks, shares, bonds, debentures, notes, mortgages or other
obligations for the payment of money, bullion, coin and any certificates,
receipts, warrants or other instruments representing rights to receive,
purchase or subscribe for the same or evidencing or representing any other
rights or interests therein and other similar property whether certificated or
uncertificated as may be received by the Bank or its Subcustodian (as defined
in Section 3) for the account of the Customer ("Securities"); and
(b) A deposit account in the name of the Customer ("Deposit Account") for any
and all cash in any currency received by the Bank or its Subcustodian for the
account of the Customer, which cash shall not be subject to withdrawal by draft
or check.
The Customer warrants its authority to: 1) deposit the cash and Securities
("Assets") received in the Accounts and 2) give Instructions (as defined in
Section 11) concerning the Accounts. The Bank may deliver securities of the
same class in place of those deposited in the Custody Account.
Upon written agreement between the Bank and the Customer, additional Accounts
may be established and separately accounted for as additional Accounts under
the terms of this Agreement.
The Bank shall be accountable under the terms of this agreement to the
Customer for all Assets held in the accounts and shall take prompt and
appropriate action to remedy any discrepancies with respect to such Assets.
2. Maintenance of Securities and Cash at Bank and Subcustodian Locations.
Unless Instructions specifically require another location acceptable to the
Bank:
(a) Securities will be held in the country or other jurisdiction in which the
principal trading market for such Securities is located, where such Securities
are to be presented for payment or where such Securities are acquired; and
(b) Cash will be credited to an account in a country or other jurisdiction in
which such cash may be legally deposited or is the legal currency for the
payment of public or private debts.
Cash may be held pursuant to Instructions in either interest or non-interest
bearing accounts as may be available for the particular currency. To the
extent Instructions are issued and the Bank can comply with such Instructions,
the Bank is authorized to maintain cash balances on deposit for the Customer
with itself or one of its affiliates at such reasonable rates of interest as
may from time to time be paid on such accounts, or in non-interest bearing
accounts as the Customer may direct, if acceptable to the Bank.
If the Customer wishes to have any of its Assets held in the custody of an
institution other than the established Subcustodians as defined in Section 3
(or their securities depositories), such arrangement must be authorized by a
written agreement, signed by the Bank and the Customer.
3. Subcustodians and Securities Depositories.
The Bank may act under this Agreement through the subcustodians listed in
Schedule A of this Agreement with which the Bank has entered into subcustodial
agreements ("Subcustodians"). The Customer authorizes the Bank to hold Assets
in the Accounts in accounts which the Bank has established with one or more of
its branches or Subcustodians. The Bank and Subcustodians are authorized to
hold any of the Securities in their account with any securities depository in
which they participate.
The Bank reserves the right to add new, replace or remove Subcustodians. The
Customer will be given reasonable notice by the Bank of any amendment to
Schedule A. Upon request by the Customer, the Bank will identify the name,
address and principal place of business of any Subcustodian of the Customer's
Assets and the name and address of the governmental agency or other regulatory
authority that supervises or regulates such Subcustodian.
The terms Subcustodian and securities depositories as used in this Agreement
shall mean a branch of a qualified U.S. bank, an eligible foreign custodian or
an eligible foreign securities depository, which are further defined as
follows:
(a) "qualified U.S. Bank" shall mean a qualified U.S. bank as defined in Rule
17f-5 under the Investment Company Act of 1940;
(b) "eligible foreign custodian" shall mean (i) a banking institution or trust
company incorporated or organized under the laws of a country other than the
United States that is regulated as such by that country's government or an
agency thereof and that has shareholders' equity in excess of $200 million in
U.S. currency (or a foreign currency equivalent thereof), (ii) a majority owned
direct or indirect subsidiary of a qualified U.S. bank or bank holding company
that is incorporated or organized under the laws of a country other than the
United States and that has shareholders' equity in excess of $100 million in
U.S. currency (or a foreign currency equivalent thereof) (iii) a banking
institution or trust company incorporated or organized under the laws of a
country other than the United States or a majority owned direct or indirect
subsidiary of a qualified U.S. bank or bank holding company that is
incorporated or organized under the laws of a country other than the United
States which has such other qualifications as shall be specified in
Instructions and approved by the Bank; or (iv) any other entity that shall have
been so qualified by exemptive order, rule or other appropriate action of the
SEC; and
(c) "eligible foreign securities depository" shall mean a securities
depository or clearing agency, incorporated or organized under the laws of a
country other than the United States, which operates (i) the central system for
handling securities or equivalent book-entries in that country, or (ii) a
transnational system for the central handling of securities or equivalent
book-entries.
The Customer represents that its Board of Directors will approve each of the
Subcustodians listed in Schedule A to this Agreement before Assets are held by
such Subcustodian and the form of the subcustody agreements between the Bank
and each Subcustodian, and further represents that its Board will determine
that the use of such Subcustodian and the terms of each subcustody agreement
are consistent with the best interests of the customer's fund(s) and its
(their) shareholders prior to placing Assets with any such Subcustodian. The
Bank will supply the Customer with any amendment to Schedule A for approval
within such reasonable period of time as agreed to by the Bank and the
Customer. Upon request, the Customer has supplied or will supply the Bank with
certified copies of its Board of Directors resolutions with respect to the
foregoing prior to placing Assets with any Subcustodian so approved.
The Bank shall furnish annually to the Customer information concerning
Subcustodians employed by the Bank. Such information shall be similar in kind
and scope to that furnished to the Customer in connection with the initial
approval of the subcustodian by the Customer's Board of Directors. In
addition, the Bank will promptly inform the Customer in the event that the Bank
learns of a material adverse change in the financial condition of a
Subcustodian or is notified by a foreign banking institution employed as a
Subcustodian that there appears to be a substantial likelihood that its
shareholders's equity as required by Rule 17f-5 or any order thereunder. With
regard to the foregoing paragraphs, the Bank shall not be deemed to have
assumed any fiduciary duties imposed upon Customer by law.
The Bank will supply periodically, as mutually agreed upon, a statement in
respect of any Securities and cash, including identification of the foreign
entities having custody of the Securities and cash and descriptions thereof.
4. Use of Subcustodian.
(a) The Bank will identify such Assets on its books as belonging to the
Customer.
(b) A Subcustodian will hold such Assets together with assets belonging to
other customers of the Bank in accounts identified on such Subcustodian's books
as special custody accounts for the exclusive benefit of customers of the Bank.
(c) Any Assets in the Accounts held by a Subcustodian will be subject only to
the instructions of the Bank or its agent. Any Securities held in a securities
depository for the account of a Subcustodian will be subject only to the
instructions of such Subcustodian.
(d) Any agreement the Bank enters into with a Subcustodian for holding its
customer's assets shall provide that such assets will not be subject to any
right, charge, security interest, lien or claim of any kind in favor of such
Subcustodian except for safe custody or administration, and that the beneficial
ownership of such assets will be freely transferable without the payment of
money or value other than for safe custody or administration. The foregoing
shall not apply to the extent of any special agreement or arrangement made by
the Customer with any particular Subcustodian.
5. Deposit Account Transactions.
(a) The Bank or its Subcustodians will make payments from the Deposit Account
upon receipt of Instructions which include all information required by the
Bank.
(b) In the event that any payment to be made under this Section 5 exceeds the
funds available in the Deposit Account, the Bank, in its discretion, may
advance the Customer such excess amount which shall be deemed a loan payable on
demand, bearing interest at the rate customarily charged by the Bank on similar
loans.
(c) If the Bank credits the Deposit Account on a payable date, or at any time
prior to actual collection and reconciliation to the Deposit Account, with
interest, dividends, redemptions or any other amount due, the Customer will
promptly return any such amount upon oral or written notification: (i) that
such amount has not been received in the ordinary course of business or (ii)
that such amount was incorrectly credited. If the Customer does not promptly
return any amount upon such notification, the Bank shall be entitled, upon oral
or written notification to the Customer, to reverse such credit by debiting the
Deposit Account for the amount previously credited. The Bank or its
Subcustodian shall have no duty or obligation to institute legal proceedings,
file a claim or a proof of claim in any insolvency proceeding or take any other
action with respect to the collection of such amount, but may act for the
Customer upon Instructions after consultation with the Customer.
6. Custody Account Transactions.
(a) Securities will be transferred, exchanged or delivered by the Bank or its
Subcustodian upon receipt by the Bank of Instructions which include all
information required by the Bank. Settlement and payment for Securities
received for, and delivery of Securities out of, the Custody Account may be
made in accordance with the customary or established securities trading or
securities processing practices and procedures in the jurisdiction or market in
which the transaction occurs, including, without limitation, delivery of
Securities to a purchaser, dealer or their agents against a receipt with the
expectation of receiving later payment and free delivery. Delivery of
Securities out of the Custody Account may also be made in any manner
specifically required by Instructions acceptable to the Bank.
(b) The Bank, in its discretion, may credit or debit the Accounts on a
contractual settlement date with cash or Securities with respect to any sale,
exchange or purchase of Securities. Otherwise, such transactions will be
credited or debited to the Accounts on the date cash or Securities are actually
received by the Bank and reconciled to the Account.
(i) The Bank may reverse credits or debits made to the Accounts in its
discretion if the related transaction fails to settle within a reasonable
period, determined by the Bank in its discretion, after the contractual
settlement date for the related transaction; provided however that prior to
taking action, the Bank will use every reasonable effort to give Customer
written notice of any such reversal which may include back valuation.
(ii) If any Securities delivered pursuant to this Section 6 are returned by
the recipient thereof, the Bank may reverse the credits and debits of the
particular transaction at any time.
7. Actions of the Bank.
The Bank shall follow Instructions received regarding assets held in the
Accounts. However, until it receives Instructions to the contrary, the Bank
will:
(a) Present for payment any Securities which are called, redeemed or retired
or otherwise become payable and all coupons and other income items which call
for payment upon presentation, to the extent that the Bank or Subcustodian is
actually aware of such opportunities.
(b) Execute in the name of the Customer such ownership and other certificates
as may be required to obtain payments in respect of Securities.
(c) Exchange interim receipts or temporary Securities for definitive
Securities.
(d) Appoint brokers and agents for any transaction involving the Securities,
including, without limitation, affiliates of the Bank or any Subcustodian.
(e) Issue statements to the Customer, at times mutually agreed upon,
identifying the Assets in the Accounts.
The Bank will send the Customer an advice or notification of any transfers of
Assets to or from the Accounts. Such statements, advices or notifications
shall indicate the identity of the entity having custody of the Assets. Unless
the Customer sends the Bank a written exception or objection to certain bank
statements as shall be mutually agreed upon in writing within 180 days of
receipt, the Customer shall be deemed to have approved such statement. In such
event, or where the Customer has otherwise approved any such statement, the
Bank shall, to the extent permitted by law, be released, relieved and
discharged with respect to all matters set forth in such statement or
reasonably implied therefrom as though it had been settled by the decree of a
court of competent jurisdiction in an action where the Customer and all persons
having or claiming an interest in the Customer or the Customer's Accounts were
parties.
All collections of funds or other property paid or distributed in respect of
Securities in the Custody Account shall be made at the risk of the Customer.
The Bank shall have no liability for any loss occasioned by delay in the actual
receipt of notice by the Bank or by its Subcustodians of any payment,
redemption or other transaction regarding Securities in the Custody Account in
respect of which the Bank has agreed to take any action under this Agreement.
8. Corporate Actions; Proxies.
Whenever the Bank receives information concerning the Securities which
requires discretionary action by the beneficial owner of the Securities (other
than a proxy), such as subscription rights, bonus issues, stock repurchase
plans and rights offerings, or legal notices or other material intended to be
transmitted to securities holders ("Corporate Actions"), the Bank will give the
Customer prompt notice of such Corporate Actions to the extent that the Bank's
central corporate actions department has actual knowledge of a Corporate Action
in time to notify its customers.
When a rights entitlement or a fractional interest resulting from a rights
issue, stock dividend, stock split or similar Corporate Action is received
which bears an expiration date, the Bank will endeavor to obtain Instructions
from the Customer or its Authorized Person, but if Instructions are not
received in time for the Bank to take timely action, or actual notice of such
Corporate Action was received too late to seek Instructions, the Bank is
authorized to sell such rights entitlement or fractional interest and to credit
the Deposit Account with the proceeds or take any other action it deems, in
good faith, to be appropriate in which case it shall be held harmless for any
such action.
The Bank will deliver proxies to the Customer or its designated agent pursuant
to special arrangements which may have been agreed to in writing. Such proxies
shall be executed in the appropriate nominee name relating to Securities in the
Custody Account registered in the name of such nominee but without indicating
the manner in which such proxies are to be voted; and where bearer Securities
are involved, proxies will be delivered in accordance with Instructions.
9. Nominees.
Securities which are ordinarily held in registered form may be registered in a
nominee name of the Bank, Subcustodian or securities depository, as the case
may be. The Bank may without notice to the Customer cause any such Securities
to cease to be registered in the name of any such nominee and to be registered
in the name of the Customer. In the event that any Securities registered in a
nominee name are called for partial redemption by the issuer, the Bank may
allot the called portion to the respective beneficial holders of such class of
security in any manner the Bank deems to be fair and equitable. The Customer
agrees to hold the Bank, Subcustodians, and their respective nominees harmless
from any liability arising directly or indirectly from their status as a mere
record holder of Securities in the Custody Account.
10. Authorized Persons.
As used in this Agreement, the term "Authorized Person" means employees or
agents including investment managers as have been designated by written notice
from the Customer or its designated agent to act on behalf of the Customer
under this Agreement. Such persons shall continue to be Authorized Persons
until such time as the Bank receives Instructions from the Customer or its
designated agent that any such employee or agent is no longer an Authorized
Person.
11. Instructions.
The term "Instructions" means instructions of any Authorized Person received
by the Bank, via telephone, telex, TWX, facsimile transmission, bank wire or
other teleprocess or electronic instruction or trade information system
acceptable to the Bank which the Bank believes in good faith to have been given
by Authorized Persons or which are transmitted with proper testing or
authentication pursuant to terms and conditions which the Bank may specify.
Unless otherwise expressly provided, all Instructions shall continue in full
force and effect until canceled or superseded.
Any Instructions delivered to the Bank by telephone shall promptly thereafter
be confirmed in writing by an Authorized Person (which confirmation may bear
the facsimile signature of such Person), but the Customer will hold the Bank
harmless for the failure of an Authorized Person to send such confirmation in
writing, the failure of such confirmation to conform to the telephone
instructions received or the Bank's failure to produce such confirmation at any
subsequent time. The Bank may electronically record any Instructions given by
telephone, and any other telephone discussions with respect to the Custody
Account. The Customer shall be responsible for safeguarding any testkeys,
identification codes or other security devices which the Bank shall make
available to the Customer or its Authorized Persons.
Deposit Account Payments and Custody Account Transactions made pursuant to
Section 5 and 6 of this Agreement may be made only for the purposes listed
below. Instructions must specify the purpose for which any transaction is to
be made and Customer shall be solely responsible to assure that Instructions
are in accord with any limitations or restrictions applicable to the Customer
by law or as may be set forth in its prospectus.
(a) In connection with the purchase or sale of Securities at prices as
confirmed by Instructions;
(b) When Securities are called, redeemed or retired, or otherwise become
payable;
(c) In exchange for or upon conversion into other securities alone or other
securities and cash pursuant to any plan or merger, consolidation,
reorganization, recapitalization or readjustment;
(d) Upon conversion of Securities pursuant to their terms into other
securities;
(e) Upon exercise of subscription, purchase or other similar rights
represented by Securities;
(f) For the payment of interest, taxes, management or supervisory fees,
distributions or operating expenses;
(g) In connection with any borrowings by the Customer requiring a pledge of
Securities, but only against receipt of amounts borrowed;
(h) In connection with any loans, but only against receipt of adequate
collateral as specified in Instructions which shall reflect any restrictions
applicable to the Customer;
(i) For the purpose of redeeming shares of the capital stock of the Customer
and the delivery to, or the crediting to the account of, the Bank, its
Subcustodian or the Customer's transfer agent, such shares to be purchased or
redeemed;
(j) For the purpose of redeeming in kind shares of the Customer against
delivery to the Bank, its Subcustodian or the Customer's transfer agent of such
shares to be so redeemed;
(k) For delivery in accordance with the provisions of any agreement among the
Customer, the Bank and a broker-dealer registered under the Securities Exchange
Act of 1934 (the "Exchange Act") and a member of The National Association of
Securities Dealers, Inc. ("NASD"), relating to compliance with the rules of The
Options Clearing Corporation and of any registered national securities
exchange, or of any similar organization or organizations, regarding escrow or
other arrangements in connection with transactions by the Customer;
(l) For release of Securities to designated brokers under covered call
options, provided, however, that such Securities shall be released only upon
payment to the Bank of monies for the premium due and a receipt for the
Securities which are to be held in escrow. Upon exercise of the option, or at
expiration, the Bank will receive from brokers the Securities previously
deposited. The Bank will act strictly in accordance with Instructions in the
delivery of Securities to be held in escrow and will have no responsibility or
liability for any such Securities which are not returned promptly when due
other than to make proper request for such return;
(m) For spot or forward foreign exchange transactions to facilitate security
trading, receipt of income from Securities or related transactions;
(n) For other proper purposes as may be specified in Instructions issued by an
officer of the Customer which shall include a statement of the purpose for
which the delivery or payment is to be made, the amount of the payment or
specific Securities to be delivered, the name of the person or persons to whom
delivery or payment is to be made, and a certification that the purpose is a
proper purpose under the instruments governing the Customer; and
(o) Upon the termination of this Agreement as set forth in Section 14(i).
12. Standard of Care; Liabilities.
(a) The Bank shall be responsible for the performance of only such duties as
are set forth in this Agreement or expressly contained in Instructions which
are consistent with the provisions of this Agreement as follows:
(i) The Bank will use reasonable care with respect to its obligations under
this Agreement and the safekeeping of Assets. The Bank shall be liable to the
Customer for any loss which shall occur as the result of the failure of a
Subcustodian to exercise reasonable care with respect to the safekeeping of
such Assets to the same extent that the Bank would be liable to the Customer if
the Bank were holding such Assets in New York. In the event of any loss to the
Customer by reason of the failure of the Bank or its Subcustodian to utilize
reasonable care, the Bank shall be liable to the Customer only to the extent of
the Customer's direct damages, to be determined based on the market value of
the property which is the subject of the loss at the date of discovery of such
loss and without reference to any special conditions or circumstances.
(ii) The Bank will not be responsible for any act, omission, default or for
the solvency of any broker or agent which it or a Subcustodian appoints unless
such appointment was made negligently or in bad faith.
(iii) The Bank shall be indemnified by, and without liability to the Customer
for any action taken or omitted by the Bank whether pursuant to Instructions or
otherwise within the scope of this Agreement if such act or omission was in
good faith, without negligence. In performing its obligations under this
Agreement, the Bank may rely on the genuineness of any document which it
believes in good faith to have been validly executed.
(iv) The Customer agrees to pay for and hold the Bank harmless from any
liability or loss resulting from the imposition or assessment of any taxes or
other governmental charges, and any related expenses with respect to income
from or Assets in the Accounts.
(v) The Bank shall be entitled to rely, and may act, upon the advice of
counsel (who may be counsel for the Customer) on all matters and shall be
without liability for any action reasonably taken or omitted pursuant to such
advice.
(vi) The Bank need not maintain any insurance for the benefit of the Customer.
(vii) Without limiting the foregoing, the Bank shall not be liable for any
loss which results from: 1) the general risk of investing, or 2) investing or
holding Assets in a particular country including, but not limited to, losses
resulting from nationalization, expropriation or other governmental actions;
regulation of the banking or securities industry; currency restrictions,
devaluations or fluctuations; and market conditions which prevent the orderly
execution of securities transactions or affect the value of Assets.
(viii) Neither party shall be liable to the other for any loss due to forces
beyond their control including, but not limited to strikes or work stoppages,
acts of war or terrorism, insurrection, revolution, nuclear fusion, fission or
radiation, or acts of God.
(b) Consistent with and without limiting the first paragraph of this Section
12, it is specifically acknowledged that the Bank shall have no duty or
responsibility to:
(i) question Instructions or make any suggestions to the Customer or an
Authorized Person regarding such Instructions;
(ii) supervise or make recommendations with respect to investments or the
retention of Securities;
(iii) advise the Customer or an Authorized Person regarding any default in the
payment of principal or income of any security other than as provided in
Section 5(c) of this Agreement;
(iv) evaluate or report to the Customer or an Authorized Person regarding the
financial condition of any broker, agent or other party to which Securities are
delivered or payments are made pursuant to this Agreement;
(v) review or reconcile trade confirmations received from brokers. The
Customer or its Authorized Persons (as defined in Section 10) issuing
Instructions shall bear any responsibility to review such confirmations against
Instructions issued to and statements issued by the Bank.
(c) The Bank hereby warrants to the Customer that in its opinion, after due
inquiry, the established procedures to be followed by each of its branches,
each branch of a qualified U.S. bank, each eligible foreign custodian and each
eligible foreign securities depository holding the Customer's Securities
pursuant to this Agreement afford protection for such Securities at least equal
to that afforded by the Bank's established procedures with respect to similar
securities held by the Bank and its securities depositories in New York.
(d) The Customer authorizes the Bank to act under this Agreement
notwithstanding that the Bank or any of its divisions or affiliates may have a
material interest in a transaction, or circumstances are such that the Bank may
have a potential conflict of duty or interest including the fact that the Bank
or any of its affiliates may provide brokerage services to other customers, act
as financial advisor to the issuer of Securities, act as a lender to the issuer
of Securities, act in the same transaction as agent for more than one customer,
have a material interest in the issue of Securities, or earn profits from any
of the activities listed herein.
13. Fees and Expenses.
The Customer agrees to pay the Bank for its services under this Agreement such
amount as may be agreed upon in writing, together with the Bank's reasonable
out-of-pocket or incidental expenses, including, but not limited to, legal fees
incurred on behalf of the Customer. The Bank shall have a lien on and is
authorized to charge any Accounts of the Customer for any amount owing to the
Bank under any provision of this Agreement.
14. Miscellaneous.
(a) Foreign Exchange Transactions. To facilitate the administration of the
Customer's trading and investment activity, the Bank is authorized to enter
into spot or forward foreign exchange contracts with the Customer or an
Authorized Person for the Customer and may also provide foreign exchange
through its subsidiaries, affiliates or Subcustodians. Instructions, including
standing instructions, may be issued with respect to such contracts but the
Bank may establish rules or limitations concerning any foreign exchange
facility made available. In all cases where the Bank, its subsidiaries,
affiliates or Subcustodians enter into a foreign exchange contract related to
Accounts, the terms and conditions of the then current foreign exchange
contract of the Bank, its subsidiary, affiliate or Subcustodian and, to the
extent not inconsistent, this Agreement shall apply to such transaction.
(b) Certification of Residency, etc. The Customer certifies that it is a
resident of the United States and agrees to notify the Bank of any changes in
residency. The Bank may rely upon this certification or the certification of
such other facts as may be required to administer the Bank's obligations under
this Agreement. The Customer will indemnify the Bank against all losses,
liability, claims or demands arising directly or indirectly from any such
certifications.
(c) Access to Records. The Bank shall allow the Customer's independent public
accountant reasonable access to the records of the Bank relating to the Assets
as is required in connection with their examination of books and records
pertaining to the Customer's affairs. Subject to restrictions under applicable
law, the Bank shall also obtain an undertaking to permit the Customer's
independent public accountants reasonable access to the records of any
Subcustodian which has physical possession of any Assets as may be required in
connection with the examination of the Customer's books and records. Upon
reasonable request from the Customer, the Bank shall furnish the Customer such
reports (or portions thereof) of the Bank's system of internal accounting
controls applicable to the Bank's duties under this Agreement. The Bank shall
endeavor to obtain and furnish the Customer with such similar reports as it may
reasonably request with respect to each Subcustodian and securities depository
holding the Customer's assets. The Bank shall not unreasonably refuse to
furnish to the Customer such reports (or portions thereof) of the Bank's
external auditors as they relate directly to the Bank's system of internal
accounting controls applicable to the Bank's duties under this Agreement. The
Bank shall endeavor to obtain and furnish the Customer with such similar
reports as the Customer may reasonably request with respect to each
Subcustodian holding Assets of the Customer. Expenses of the Bank and any
Subcustodians under this provision shall be paid by the Customer.
(d) Governing Law; Successors and Assigns. This Agreement shall be governed
by the laws of the State of New York and shall not be assignable by either
party, but shall bind the successors in interest of the Customer and the Bank.
(e) Entire Agreement; Applicable Riders. Customer represents that the Assets
deposited in the Accounts are (Check one):
____ Employee Benefit Plan or other assets subject to the Employee Retirement
Income Security Act of 1974, as amended ("ERISA");
X Mutual Fund assets subject to certain Securities and Exchange Commission
("SEC") rules and regulations;
____ Neither of the above.
This Agreement consists exclusively of this document together with Schedule A,
and the following Rider(s) [Check applicable rider(s)]:
____ ERISA
X MUTUAL FUND
X SPECIAL TERMS AND CONDITIONS
There are no other provisions of this Agreement and this Agreement supersedes
any other agreements, whether written or oral, between the parties. Any
amendment to this Agreement must be in writing, executed by both parties.
(f) Severability. In the event that one or more provisions of this Agreement
are held invalid, illegal or enforceable in any respect on the basis of any
particular circumstances or in any jurisdiction, the validity, legality and
enforceability of such provision or provisions under other circumstances or in
other jurisdictions and of the remaining provisions will not in any way be
affected or impaired.
(g) Waiver. Except as otherwise provided in this Agreement, no failure or
delay on the part of either party in exercising any power or right under this
Agreement operates as a waiver, nor does any single or partial exercise of any
power or right preclude any other or further exercise, or the exercise of any
other power or right. No waiver by a party of any provision of this Agreement,
or waiver of any breach or default, is effective unless in writing and signed
by the party against whom the waiver is to be enforced.
(h) Notices. All notices under this Agreement shall be effective when
actually received. Any notices or other communications which may be required
under this Agreement are to be sent to the parties at the following addresses
or such other addresses as may subsequently be given to the other party in
writing:
Bank: The Chase Manhattan Bank
4 Chase MetroTech Center
Brooklyn, NY 11245
Attention: Global Custody Division
or telex:
Customer: Capital Research and Management Company
135 South State College Blvd.
Brea, CA 92821
or telex:
(i) Termination. This Agreement may be terminated by the Customer or the Bank
by giving sixty (60) days written notice to the other, provided that such
notice to the Bank shall specify the names of the persons to whom the Bank
shall deliver the Assets in the Accounts. If notice of termination is given by
the Bank, the Customer shall, within sixty (60) days following receipt of the
notice, deliver to the Bank Instructions specifying the names of the persons to
whom the Bank shall deliver the Assets. In either case the Bank will deliver
the Assets to the persons so specified, after deducting any amounts which the
Bank determines in good faith to be owed to it under Section 13. If within
sixty (60) days following receipt of a notice of termination by the Bank, the
Bank does not receive Instructions from the Customer specifying the names of
the persons to whom the Bank shall deliver the Assets, the Bank, at its
election, may deliver the Assets to a bank or trust company doing business in
the State of New York to be held and disposed of pursuant to the provisions of
this Agreement, or to Authorized Persons, or may continue to hold the Assets
until Instructions are provided to the Bank.
ENDOWMENTS
By:
Title:
THE CHASE MANHATTAN BANK
By:
Title:
STATE OF )
: ss.
COUNTY OF )
On this day of , 19 , before me personally came
, to me known, who being by me duly sworn, did
depose and say that he/she resides in at
;
that he/she is of
, the entity described in and which executed the foregoing
instrument; that he/she knows the seal of said entity, that the seal affixed to
said instrument is such seal, that it was so affixed by order of said entity,
and that he/she signed his/her name thereto by like order.
Sworn to before me this
day of , 19 .
Notary
STATE OF NEW YORK )
: ss.
COUNTY OF NEW YORK )
On this day of ,19 , before me
personally came , to me known, who being by me duly
sworn, did depose and say that he/she resides in
at
; that he/she is a Vice
President of THE CHASE MANHATTAN BANK, the corporation described in and which
executed the foregoing instrument; that he/she knows the seal of said
corporation, that the seal affixed to said instrument is such corporate seal,
that it was so affixed by order of the Board of Directors of said corporation,
and that he/she signed his/her name thereto by like order.
Sworn to before me this
day of , 19 .
Notary
FORM OF
SHAREHOLDER SERVICES AGREEMENT
1. The parties to this Agreement, which is effective as of July 31, 1998, are
Endowments, a Delaware business trust (the Trust"), and American Funds Service
Company, a California corporation ("AFS"). The Trust is a management
investment company with different series of shares representing interests in
separate investment portfolios. The two initial series are the Growth and
Income Portfolio and the Bond Portfolio. The Trustees of the Trust may
designate additional series of shares from time to time. AFS is a wholly owned
subsidiary of Capital Research and Management Company ("CRMC"). This Agreement
will continue in effect with respect to each series of the Trust, including
those designated after the date of this Agreement, until amended or terminated
in accordance with its terms. Series of the Trust for which services are
rendered hereunder are referred to as "participating series".
2. The Trust, on behalf of each participating series, hereby employs AFS, and
AFS hereby accepts such employment by the Trust, as the transfer agent for each
such series. In such capacity AFS will provide the services of stock transfer
agent, dividend disbursing agent, redemption agent, and such additional related
services as the Trust, on behalf of each participating series, may from time to
time require, all of which services are sometimes referred to herein as
"shareholder services."
3. AFS has entered into substantially identical agreements with other
investment companies for which CRMC serves as investment adviser. (For the
purposes of this Agreement, such investment companies are called "participating
investment companies.")
4. AFS has entered into an agreement with DST Systems, Inc. (hereinafter
called "DST"), to provide AFS with electronic data processing services
sufficient for the performance of the shareholder services referred to in
paragraph 2.
5. The participating investment companies will maintain a Review and Advisory
Committee, which Committee will review and may make recommendations to the
boards of the participating investment companies regarding all fees and charges
provided for in this Agreement, as well as review the level and quality of the
shareholder services rendered to the participating investment companies and
their shareholders. Each participating investment company may select one
director or trustee who is not affiliated with CRMC, or any of its affiliated
companies, or with Washington Management Corporation or any of its affiliated
companies, to serve on the Review and Advisory Committee.
6. AFS will provide to the Trust, on behalf of the participating series, the
shareholder services referred to herein in return for the fees specified on
Schedule A hereto (which, in the case of the Trust and other series investment
companies, shall be computed for, and constitute an obligation in respect of,
each such series individually). For this purpose, "transactions" shall include
all types of transactions included in an "activity index" as reported to the
Review and Advisory Committee at least annually. AFS will bill the Trust, in
respect of each participating series, monthly, on or shortly after the first of
each calendar month, and the Trust, on behalf of each participating series,
will pay to AFS within five business days of such billing. Any revision of the
schedule of charges set forth on Schedule A shall require the affirmative vote
of a majority of the members of the Board of Trustees of the Trust.
7. All fund-specific charges from third parties -- including DST charges,
payments described in the next sentence, postage, NSCC transaction charges and
similar out-of-pocket expenses -- will be passed through directly to each
participating series of the Trust or other participating investment companies,
as applicable. AFS, subject to approval of its board of directors, is
authorized in its discretion to negotiate payments to third parties for account
maintenance and/or transaction processing services provided such payments do
not exceed the anticipated savings to each participating series of the Trust,
either in fees payable to AFS hereunder or in other direct expenses of the
series that AFS reasonably anticipates would be realized by the Trust from
using the services of such third party, rather than maintaining the accounts
directly on AFS' books and/or processing non-automated transactions.
8. It is understood that AFS may have income in excess of its expenses and may
accumulate capital and surplus. AFS is not, however, permitted to distribute
any net income or accumulated surplus to its parent, CRMC, in the form of a
dividend without the affirmative vote of a majority of the members of the
boards of directors/trustees of the Trust and all participating investment
companies.
9. This Agreement may be amended at any time by mutual agreement of the
parties, with agreement of the Trust, on behalf of each participating series,
to be evidenced by affirmative vote of a majority of the members of the Board
of Trustees of the Trust.
10. This Agreement may be terminated on 180 days' written notice by either
party. In the event of a termination of this Agreement, AFS and the Trust will
each extend full cooperation in effecting a conversion to whatever successor
shareholder service provider(s) the Trust, on behalf of any series, may select,
it being understood that all records relating to the Trust and its shareholders
are property of the Trust.
11. In the event of a termination of this Agreement by the Trust, the Trust
will pay, on behalf of each affected series, to AFS as a termination fee the
series' proportionate share of any costs of conversion of the series'
shareholder service from AFS to a successor. In the event of termination of
this Agreement and all corresponding agreements with all of the participating
investment companies, all assets of AFS will be sold or otherwise converted to
cash, with a view to the liquidation of AFS when it ceases to provide
shareholder services for the participating investment companies. To the extent
any such assets are sold by AFS to CRMC and/or any of its affiliates, such
sales shall be at fair market value at the time of sale as agreed upon by AFS,
the purchasing company or companies, and the Review and Advisory Committee.
After all assets of AFS have been converted to cash and all liabilities of AFS
have been paid or discharged, an amount equal to any capital or paid-in surplus
of AFS that shall have been contributed by CRMC or its affiliates shall be set
aside in cash for distribution to CRMC upon liquidation of AFS. Any other
capital or surplus and any assets of AFS remaining after the foregoing
provisions for liabilities and return of capital or paid-in surplus to CRMC
shall be distributed to the participating investment companies (including any
series thereof) in such proportions as may be determined by the Review and
Advisory Committee.
12. In the event of disagreement between the Trust and AFS, or between the
Trust and other participating investment companies as to any matter arising
under this Agreement, which the parties to the disagreement are unable to
resolve, the question shall be referred to the Review and Advisory Committee
for resolution. If the Review and Advisory Committee is unable to resolve the
question to the satisfaction of both parties, either party may elect to submit
the question to arbitration; one arbitrator to be named by each party to the
disagreement and a third arbitrator to be selected by the two arbitrators named
by the original parties. The decision of a majority of the arbitrators shall
be final and binding on all parties to the arbitration. The expenses of such
arbitration shall be paid by the party electing to submit the question to
arbitration.
13. The obligations of the Trust under this Agreement are not binding upon any
of the directors, trustees, officers, employees, agents or shareholders of the
Trust individually, but bind only the Trust itself. AFS agrees to look solely
to the assets of the Trust for the satisfaction of any liability of the Trust
under this Agreement and will not seek recourse against such directors,
trustees, officers, employees, agents or shareholders, or any of them or their
personal assets for such satisfaction. AFS further agrees to look solely to
the assets attributable to a series of the Trust for the satisfaction of any
liability arising from services rendered on behalf of such series.
AMERICAN FUNDS SERVICE COMPANY ENDOWMENTS
By------------- By ---------------
By------------- By ---------------
SCHEDULE A
to the Shareholder Services Agreement, dated July 31, 1998
between
American Funds Service Company ("AFS") and Endowments (the "Trust")
Due to the fact that there are relatively few shareholders of each
participating series of the Trust, and because many of the functions related to
transfer agency matter are performed by or under the direction of an officer of
the Trust, thus reducing the level of activities performed by AFS, no fees
shall be payable by the Trust on behalf of any participating series for
services rendered to such series by AFS under the Agreement. In addition, AFS
shall not seek reimbursement for, and will not pass through to the Trust, any
fund-specific charges described in paragraph 7 of the Agreement.
AMERICAN FUNDS SERVICE COMPANY ENDOWMENTS
By ----------- By --------------
By ----------- By --------------
PAUL, HASTINGS, JANOFSKY & WALKER LLP
555 West Flower Street
Los Angeles, California 90071
(213) 683-6000
July 28, 1998
Endowments
P.O. Box 7650
One Market, Steuart Town
San Francisco, California 94120
Ladies and Gentlemen:
We have acted as counsel to Endowments, a Delaware business trust (the
"Company"), in connection with the issuance of an indefinite number of units of
beneficial interest ("Shares") of the Bond Portfolio and Growth and Income
Portfolio series of Shares of the Company (each a "Fund") in a public offering
pursuant to a Registration Statement on Form N-1A (Registration No 2-34371), as
amended, filed with the Securities and Exchange Commission under the Securities
Act of 1933, as amended (the "Registration Statement").
In our capacity as counsel for the Company, we have examined the Trust
Instrument of the Company dated May 14, 1998, the bylaws of the Company, and
originals or copies of actions of the Board of Trustees of the Company, as
furnished to us by the Company, certificates of public officials, statutes and
such other documents, records and certificates as we have deemed necessary for
the purposes of this opinion.
Based upon our examination as aforesaid, we are of the opinion that the
Shares of each Fund are duly authorized and, when purchased and paid for as
described in the Registration Statement, will be validly issued, fully paid and
nonassessable.
We hereby consent to the filing of this opinion of counsel as an exhibit to
the Registration Statement.
Very truly yours,
PAUL, HASTINGS, JANOFSKY & WALKER LLP
CONSENT OF INDEPENDENT AUDITORS
Endowments:
We consent to (a) the use in this Post-Effective Amendment No. 47 to
Registration Statement No. 2-34371 on Form N-1A of our reports dated February
20, 1998 and August 29, 1997, on the financial statements of Endowments, Inc.
and Bond Portfolio for Endowments, Inc. for the six months period ended January
31, 1998 and the year ended July 31, 1997, respectively, appearing in the
Financial Statements, which are included in Part B, the Statement of Additional
Information of such Registration Statement, (b) the references to us under the
heading "General Information" in such Statement of Additional Information and
(c) the reference to us under the heading "Financial Highlights" in the
Prospectus, which is a part of such Registration Statement.
DELOITTE & TOUCHE LLP
July 28, 1998
Los Angeles, California
EXHIBIT 16
ENDOWMENTS, INC.
SCHEDULE FOR COMPUTATION OF EACH PERFORMANCE QUOTATION
PROVIDED IN THE REGISTRATION STATEMENT
(1) ENDING REDEMPTION VALUE AND TOTAL RETURN
Value of an initial investment at the end of a period and total return for the
period are computed as set forth below.
(A) INITIAL INVESTMENT divided by
PUBLIC OFFERING PRICE FOR ONE SHARE AT
BEGINNING OF PERIOD equals
NUMBER OF SHARES INITIALLY PURCHASED
(B) NUMBER OF SHARES INITIALLY PURCHASED plus
NUMBER OF SHARES ACQUIRED AT NET ASSET
VALUE THROUGH REINVESTMENT OF DIVIDENDS
AND CAPITAL GAIN DISTRIBUTIONS DURING
PERIOD equals
NUMBER OF SHARES PURCHASED DURING PERIOD
(C) NUMBER OF SHARES PURCHASED DURING PERIOD multiplied by
NET ASSET VALUE OF ONE SHARE AS OF THE LAST
DAY OF THE PERIOD equals
VALUE OF INVESTMENT AT END OF PERIOD
(D) VALUE OF INVESTMENT AT END OF PERIOD divided by
INITIAL INVESTMENT minus one
and then
multiplied by
100 equals
TOTAL RETURN FOR THE PERIOD EXPRESSED AS A
PERCENTAGE
(2) AVERAGE ANNUAL TOTAL RETURN
Average annual total return quotations for the 1-, 5-, and 10-year periods
ended on the date of the most recent fiscal year are computed according to the
formula set forth below.
P(1+T)/n/ = ERV
WHERE: P = a hypothetical initial investment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1,000 investment as of the
end of 1-, 5-, and 10-year periods (computed in accordance with the formula
shown in (1), above)
THUS:
AVG. ANNUAL TOTAL RETURN AT PUBLIC OFFERING PRICE FOR ENDOWMENTS
1 Year Total Return 1,000(1+T)/1/ = 1,384.03
T = +38.40%
5 Year Avg. Annual Total Return 1,000(1+T)/5/ = 2,101.19
T = +16.01%
10 Year Avg. Annual Total Return 1,000(1+T)/10/ = 3,501.72
T = +13.35%
AVG. ANNUAL TOTAL RETURN AT PUBLIC OFFERING PRICE FOR BOND PORTFOLIO FOR
ENDOWMENTS
1 Year Total Return 1,000(1+T)/1/ = 1,108.27
T = +10.83%
5 Year Avg. Annual Total Return 1,000(1+T)/5/ = 1,400.21
T = +6.96%
10 Year Avg. Annual Total Return 1,000(1+T)/10/ = 2,428.15
T = +9.28%
Hypothetical illustrations based on $1,000 and $10,000 initial investments used
to obtain ending values over various time periods are attached.
(3) YIELD
Yield is computed as set forth below.
(A) DIVIDENDS AND INTEREST EARNED DURING
THE PERIOD minus
EXPENSES ACCRUED FOR THE PERIOD equals
NET INVESTMENT INCOME
(B) NET INVESTMENT INCOME divided by
AVERAGE DAILY NUMBER OF SHARES OUTSTANDING
DURING THE PERIOD THAT WERE ENTITLED
TO RECEIVE DIVIDENDS equals
NET INVESTMENT INCOME PER SHARE EARNED
DURING THE PERIOD
(C) NET INVESTMENT INCOME PER SHARE EARNED
DURING THE PERIOD divided by
MAXIMUM OFFERING PRICE PER SHARE ON
LAST DAY OF THE PERIOD equals
CURRENT MONTH'S YIELD
(D) CURRENT MONTH'S YIELD plus one, raised
to the sixth
power equals
SEMIANNUAL COMPOUNDED YIELD
(E) SEMIANNUAL COMPOUNDED YIELD minus one,
multiplied by
two equals
ANNUALIZED RATE
<PAGE>
<TABLE>
<CAPTION>
ENDOWMENTS, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
7/01/96 1000.00 19.10 0.00 % 52.356 19.100 1000
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
6/30/97 1000 32 32 1032 106 1115 119 1234 33 1267.54 59.509
TOTAL $ 106
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENDOWMENTS, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
7/01/92 1000.00 17.59 0.00 % 56.850 17.590 1000
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
6/30/93 1000 40 40 1040 49 1036 52 1088 41 1129.37 61.985
6/30/94 1000 42 82 1082 68 948 113 1061 78 1139.86 68.337
6/30/95 1000 44 126 1126 93 996 225 1221 129 1350.44 77.080
6/30/96 1000 49 175 1175 89 1086 340 1426 191 1617.56 84.689
6/30/97 1000 48 223 1223 171 1211 572 1783 267 2050.32 96.259
TOTAL $ 470
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENDOWMENTS, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
7/01/87 1000.00 1942.49 0.00 % 0.515 1942.490 1000
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
6/30/88 1000 49 49 1049 93 866 82 948 50 998.07 59.303
6/30/89 1000 55 104 1104 66 892 159 1051 109 1160.73 67.017
6/30/90 1000 71 175 1175 70 883 228 1111 179 1290.24 75.189
6/30/91 1000 68 243 1243 40 900 276 1176 253 1429.86 81.753
6/30/92 1000 63 306 1306 117 906 406 1312 318 1630.70 92.706
6/30/93 1000 66 372 1372 80 938 505 1443 398 1841.70 101.081
6/30/94 1000 70 442 1442 110 859 569 1428 430 1858.82 111.440
6/30/95 1000 71 513 1513 152 902 771 1673 529 2202.23 125.698
6/30/96 1000 81 594 1594 146 983 995 1978 659 2637.79 138.104
6/30/97 1000 80 674 1674 278 1097 1423 2520 823 3343.55 156.974
TOTAL $ 1152
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENDOWMENTS, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
7/25/75 1000.00 945.33 0.00 % 1.058 945.330 1000
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
6/30/76 1000 48 48 1048 0 1225 0 1225 53 1278.93 1.104
6/30/77 1000 49 97 1097 0 1250 0 1250 104 1354.22 1.146
6/30/78 1000 58 155 1155 0 1245 0 1245 161 1406.98 1.195
6/30/79 1000 70 225 1225 0 1359 0 1359 250 1609.35 1.253
6/30/80 1000 86 311 1311 0 1439 0 1439 357 1796.71 1.321
6/30/81 1000 126 437 1437 90 1608 96 1704 528 2232.18 1.468
6/30/82 1000 157 594 1594 208 1319 274 1593 583 2176.53 1.746
6/30/83 1000 134 728 1728 0 1981 412 2393 1027 3420.13 1.826
6/30/84 1000 150 878 1878 298 1677 631 2308 1011 3319.70 2.094
6/30/85 1000 181 1059 2059 306 1929 1076 3005 1363 4368.79 2.396
6/30/86 1000 212 1271 2271 371 2151 1659 3810 1760 5570.69 2.740
6/30/87 1000 257 1528 2528 770 2055 2426 4481 1958 6439.35 3.315
6/30/88 1000 315 1843 2843 597 1780 2632 4412 2016 6428.05 381.940
6/30/89 1000 357 2200 3200 425 1832 3186 5018 2457 7475.73 431.624
6/30/90 1000 456 2656 3656 449 1815 3610 5425 2884 8309.76 484.252
6/30/91 1000 436 3092 4092 260 1850 3963 5813 3395 9208.90 526.524
6/30/92 1000 406 3498 4498 756 1861 4809 6670 3832 10502.51 597.073
6/30/93 1000 428 3926 4926 512 1927 5526 7453 4408 11861.33 651.006
6/30/94 1000 447 4373 5373 709 1764 5744 7508 4463 11971.57 717.720
6/30/95 1000 458 4831 5831 977 1853 7155 9008 5175 14183.19 809.543
6/30/96 1000 519 5350 6350 938 2020 8792 10812 6176 16988.28 889.439
6/30/97 1000 520 5870 6870 1792 2253 11826 14079 7454 21533.45 1010.960
TOTAL $ 9458
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STANDARD & POOR'S 500 COMPOSITE INDEX
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
7/01/96 1000000.00 670.63 0.00 % 1491.135 670.630 1000000
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
6/30/97 1000000 22786 22786 1022786 0 1319863 0 1319863 26483 1346346.62 1521.055
TOTAL $ 0
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STANDARD & POOR'S 500 COMPOSITE INDEX
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
7/01/92 1000000.00 408.14 0.00 % 2450.140 408.140 1000000
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
6/30/93 1000000 31016 31016 1031016 0 1103861 0 1103861 32168 1136029.42 2521.540
6/30/94 1000000 32714 63730 1063730 0 1088524 0 1088524 63173 1151697.11 2592.336
6/30/95 1000000 35031 98761 1098761 0 1334714 0 1334714 116657 1451371.98 2664.290
6/30/96 1000000 38366 137127 1137127 0 1643137 0 1643137 185174 1828311.74 2726.260
6/30/97 1000000 41659 178786 1178786 0 2168717 0 2168717 292824 2461541.59 2780.963
TOTAL $ 0
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STANDARD & POOR'S 500 COMPOSITE INDEX
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
7/01/87 1000000.00 304.00 0.00 % 3289.474 304.000 1000000
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
6/30/88 1000000 30742 30742 1030742 0 899671 0 899671 31391 931062.65 3404.251
6/30/89 1000000 35568 66310 1066310 0 1045987 0 1045987 76045 1122032.18 3528.625
6/30/90 1000000 41702 108012 1108012 0 1177697 0 1177697 128542 1306239.91 3648.511
6/30/91 1000000 44947 152959 1152959 0 1220921 0 1220921 181134 1402055.79 3777.497
6/30/92 1000000 47091 200050 1200050 0 1342566 0 1342566 247327 1589893.45 3895.461
6/30/93 1000000 49312 249362 1249362 0 1482007 0 1482007 324157 1806164.86 4008.978
6/30/94 1000000 52012 301374 1301374 0 1461414 0 1461414 369661 1831075.24 4121.537
6/30/95 1000000 55695 357069 1357069 0 1791941 0 1791941 515585 2307526.68 4235.937
6/30/96 1000000 60998 418067 1418067 0 2206020 0 2206020 700800 2906820.25 4334.462
6/30/97 1000000 66234 484301 1484301 0 2911645 0 2911645 1001943 3913588.09 4421.434
TOTAL $ 0
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STANDARD & POOR'S 500 COMPOSITE INDEX
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
7/25/75 1000000.00 89.29 0.00 % 11199.462 89.290 1000000
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
6/30/76 1000000 42772 42772 1042772 0 1167880 0 1167880 47288 1215168.37 11652.938
6/30/77 1000000 51625 94397 1094397 0 1125322 0 1125322 97422 1222744.54 12169.034
6/30/78 1000000 60925 155322 1155322 0 1069885 0 1069885 154630 1224515.96 12818.130
6/30/79 1000000 69847 225169 1225169 0 1152537 0 1152537 239801 1392338.03 13529.667
6/30/80 1000000 82024 307193 1307193 0 1279427 0 1279427 351347 1630774.06 14274.983
6/30/81 1000000 92918 400111 1400111 0 1469481 0 1469481 496283 1965764.34 14981.818
6/30/82 1000000 104178 504289 1504289 0 1227573 0 1227573 511291 1738864.22 15864.102
6/30/83 1000000 112325 616614 1616614 0 1882742 0 1882742 918344 2801086.14 16662.222
6/30/84 1000000 123855 740469 1740469 0 1715534 0 1715534 956016 2671550.19 17440.594
6/30/85 1000000 137342 877811 1877811 0 2148617 0 2148617 1348009 3496626.44 18225.835
6/30/86 1000000 149899 1027710 2027710 0 2809273 0 2809273 1937654 4746927.77 18924.126
6/30/87 1000000 163251 1190961 2190961 0 3404637 0 3404637 2533100 5937737.42 19532.031
6/30/88 1000000 182533 1373494 2373494 0 3063053 0 3063053 2465353 5528406.47 20213.552
6/30/89 1000000 211190 1584684 2584684 0 3561205 0 3561205 3101131 6662336.04 20952.060
6/30/90 1000000 247616 1832300 2832300 0 4009632 0 4009632 3746481 7756113.06 21663.910
6/30/91 1000000 266881 2099181 3099181 0 4156792 0 4156792 4168253 8325045.68 22429.803
6/30/92 1000000 279613 2378794 3378794 0 4570949 0 4570949 4869427 9440376.56 23130.241
6/30/93 1000000 292809 2671603 3671603 0 5045694 0 5045694 5678846 10724540.47 23804.276
6/30/94 1000000 308835 2980438 3980438 0 4975585 0 4975585 5896866 10872451.78 24472.622
6/30/95 1000000 330704 3311142 4311142 0 6100907 0 6100907 7600591 13701498.61 25151.902
6/30/96 1000000 362190 3673332 4673332 0 7510695 0 7510695 9749257 17259952.00 25736.922
6/30/97 1000000 393284 4066616 5066616 0 9913092 0 9913092 13324789 23237881.37 26253.340
TOTAL $ 0
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENDOWMENTS, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
8/01/96 1000.00 18.61 0.00 % 53.735 18.610 1000
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
7/31/97 1000 32 32 1032 108 1218 130 1348 36 1384.03 61.078
TOTAL $ 108
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENDOWMENTS, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
8/01/92 1000.00 18.26 0.00 % 54.765 18.260 1000
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
7/31/93 1000 40 40 1040 47 1009 50 1059 41 1100.49 59.712
7/31/94 1000 41 81 1081 65 941 112 1053 77 1130.98 65.831
7/31/95 1000 43 124 1124 90 989 224 1213 128 1341.01 74.253
7/31/96 1000 48 172 1172 86 1019 319 1338 180 1518.22 81.581
7/31/97 1000 48 220 1220 164 1241 586 1827 274 2101.19 92.727
TOTAL $ 452
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENDOWMENTS, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
8/01/87 1000.00 1970.49 0.00 % 0.507 1970.490 1000
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
7/31/88 1000 48 48 1048 91 848 80 928 47 975.56 58.382
7/31/89 1000 55 103 1103 65 924 164 1088 114 1202.08 65.976
7/31/90 1000 69 172 1172 69 858 221 1079 172 1251.71 74.022
7/31/91 1000 67 239 1239 40 908 278 1186 253 1439.82 80.482
7/31/92 1000 62 301 1301 116 927 414 1341 325 1666.52 91.266
7/31/93 1000 65 366 1366 78 935 502 1437 396 1833.95 99.509
7/31/94 1000 69 435 1435 108 872 576 1448 436 1884.77 109.707
7/31/95 1000 71 506 1506 149 916 782 1698 536 2234.82 123.744
7/31/96 1000 79 585 1585 143 944 954 1898 632 2530.16 135.957
7/31/97 1000 80 665 1665 274 1150 1490 2640 861 3501.72 154.533
TOTAL $ 1133
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENDOWMENTS, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
8/01/87 10000.00 1970.49 0.00 % 5.075 1970.490 10000
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
7/31/88 10000 481 481 10481 914 8480 805 9285 484 9769.30 584.638
7/31/89 10000 549 1030 11030 651 9246 1647 10893 1144 12037.77 660.690
7/31/90 10000 698 1728 11728 688 8581 2212 10793 1741 12534.54 741.250
7/31/91 10000 668 2396 12396 398 9079 2784 11863 2555 14418.55 805.956
7/31/92 10000 621 3017 13017 1157 9267 4151 13418 3270 16688.65 913.946
7/31/93 10000 655 3672 13672 784 9353 5032 14385 3980 18365.55 996.503
7/31/94 10000 685 4357 14357 1086 8719 5771 14490 4384 18874.33 1098.622
7/31/95 10000 702 5059 15059 1495 9165 7837 17002 5377 22379.52 1239.176
7/31/96 10000 795 5854 15854 1436 9444 9554 18998 6338 25336.99 1361.472
7/31/97 10000 795 6649 16649 2744 11499 14926 26425 8641 35066.06 1547.487
TOTAL $ 11353
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
DOW JONES INDUSTRIAL AVERAGE
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
8/01/87 1000000.00 2572.07 0.00 % 388.792 2572.070 1000000
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
7/31/88 1000000 29100 29100 1029100 0 827633 0 827633 29389 857022.44 402.598
7/31/89 1000000 37702 66802 1066802 0 1034443 0 1034443 81682 1116125.58 419.492
7/31/90 1000000 44581 111383 1111383 0 1129518 0 1129518 136544 1266062.92 435.792
7/31/91 1000000 43920 155303 1155303 0 1176026 0 1176026 190424 1366450.34 451.746
7/31/92 1000000 43664 198967 1198967 0 1319474 0 1319474 260775 1580249.18 465.631
7/31/93 1000000 47973 246940 1246940 0 1376117 0 1376117 322485 1698602.27 479.903
7/31/94 1000000 49122 296062 1296062 0 1463607 0 1463607 392547 1856154.49 493.068
7/31/95 1000000 55236 351298 1351298 0 1830615 0 1830615 555670 2386285.56 506.807
7/31/96 1000000 63018 414316 1414316 0 2149595 0 2149595 719372 2868967.99 518.903
7/31/97 1000000 70386 484702 1484702 0 3196884 0 3196884 1157719 4354603.81 529.589
TOTAL $ 0
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STANDARD & POOR'S 500 COMPOSITE INDEX
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
8/01/87 1000000.00 318.66 0.00 % 3138.141 318.660 1000000
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
7/31/88 1000000 29327 29327 1029327 0 853637 0 853637 29785 883422.76 3247.639
7/31/89 1000000 33931 63258 1063258 0 1086048 0 1086048 78958 1165006.68 3366.293
7/31/90 1000000 39784 103042 1103042 0 1117649 0 1117649 121989 1239638.48 3480.664
7/31/91 1000000 42879 145921 1145921 0 1217002 0 1217002 180555 1397557.49 3603.717
7/31/92 1000000 44924 190845 1190845 0 1331231 0 1331231 245241 1576472.11 3716.254
7/31/93 1000000 47045 237890 1237890 0 1406295 0 1406295 307599 1713894.70 3824.548
7/31/94 1000000 49619 287509 1287509 0 1438084 0 1438084 363761 1801845.33 3931.928
7/31/95 1000000 53133 340642 1340642 0 1763823 0 1763823 507498 2271321.56 4041.066
7/31/96 1000000 58192 398834 1398834 0 2008253 0 2008253 637978 2646231.01 4135.059
7/31/97 1000000 63188 462022 1462022 0 2994696 0 2994696 1030527 4025223.85 4218.030
TOTAL $ 0
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENDOWMENTS, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
7/25/75 50000.00 945.33 0.00 % 52.892 945.330 50000
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
7/31/75 50000 0 0 50000 0 49769 0 49769 0 49769.79 52.892
7/31/76 50000 2408 2408 52408 0 60781 0 60781 2695 63476.15 55.237
7/31/77 50000 2454 4862 54862 0 62331 0 62331 5258 67589.97 57.354
7/31/78 50000 2899 7761 57761 0 65910 0 65910 8614 74524.80 59.805
7/31/79 50000 3511 11272 61272 0 69263 0 69263 12868 82131.10 62.718
7/31/80 50000 4322 15594 65594 0 77021 0 77021 19256 96277.32 66.115
7/31/81 50000 6326 21920 71920 4496 79847 4739 84586 26355 110941.93 73.489
7/31/82 50000 7869 29789 79789 10435 64678 13443 78121 28739 106860.32 87.387
7/31/83 50000 6722 36511 86511 0 96477 20052 116529 50197 166726.38 91.404
7/31/84 50000 7502 44013 94013 14899 83847 31536 115383 50774 166157.44 104.814
7/31/85 50000 9036 53049 103049 15303 95601 53303 148904 67831 216735.52 119.909
7/31/86 50000 10623 63672 113672 18586 104971 81000 185971 86184 272155.05 137.130
7/31/87 50000 12851 76523 126523 38534 104222 123158 227380 99504 326884.59 165.890
7/31/88 50000 15733 92256 142256 29860 88382 130787 219169 100177 319346.83 19111.121
7/31/89 50000 17918 110174 160174 21276 96368 167745 264113 129387 393500.60 21597.179
7/31/90 50000 22799 132973 182973 22490 89440 178016 267456 142283 409739.40 24230.597
7/31/91 50000 21836 154809 204809 13007 94623 202831 297454 173872 471326.11 26345.786
7/31/92 50000 20318 175127 225127 37831 96580 249826 346406 199127 545533.44 29875.873
7/31/93 50000 21415 196542 246542 25629 97479 279694 377173 223175 600348.90 32574.547
7/31/94 50000 22417 218959 268959 35491 90868 296050 386918 230062 616980.44 35912.715
7/31/95 50000 22961 241920 291920 48882 95522 369066 464588 266972 731560.88 40507.247
7/31/96 50000 25984 267904 317904 46955 98431 428636 527067 301170 828237.75 44504.984
7/31/97 50000 25982 293886 343886 89686 119852 629560 749412 396857 1146269.63 50585.597
TOTAL $ 473360
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENDOWMENTS, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
8/01/76 50000.00 1149.16 0.00 % 43.510 1149.160 50000
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
7/31/77 50000 1932 1932 51932 0 51275 0 51275 1964 53239.74 45.177
7/31/78 50000 2283 4215 54215 0 54219 0 54219 4483 58702.69 47.108
7/31/79 50000 2765 6980 56980 0 56978 0 56978 7716 64694.71 49.403
7/31/80 50000 3405 10385 60385 0 63360 0 63360 12477 75837.96 52.079
7/31/81 50000 4983 15368 65368 3541 65684 3732 69416 17972 87388.53 57.887
7/31/82 50000 6198 21566 71566 8220 53206 10589 63795 20379 84174.19 68.835
7/31/83 50000 5295 26861 76861 0 79365 15795 95160 36172 131332.32 72.000
7/31/84 50000 5909 32770 82770 11736 68975 24841 93816 37067 130883.82 82.563
7/31/85 50000 7118 39888 89888 12054 78644 41988 120632 50095 170727.41 94.455
7/31/86 50000 8368 48256 98256 14641 86352 63806 150158 64225 214383.88 108.021
7/31/87 50000 10123 58379 108379 30354 85736 97015 182751 74744 257495.75 130.676
7/31/88 50000 12394 70773 120773 23522 72705 103026 175731 75826 251557.42 15054.304
7/31/89 50000 14114 84887 134887 16759 79275 132138 211413 98557 309970.19 17012.634
7/31/90 50000 17960 102847 152847 17716 73575 140228 213803 108958 322761.91 19087.044
7/31/91 50000 17201 120048 170048 10246 77839 159776 237615 133660 371275.28 20753.230
7/31/92 50000 16005 136053 186053 29801 79449 196795 276244 153486 429730.27 23533.969
7/31/93 50000 16869 152922 202922 20189 80189 220323 300512 172397 472909.76 25659.781
7/31/94 50000 17659 170581 220581 27957 74750 233207 307957 178053 486010.86 28289.340
7/31/95 50000 18087 188668 238668 38506 78579 290723 369302 206966 576268.72 31908.567
7/31/96 50000 20468 209136 259136 36987 80972 337648 418620 233803 652423.50 35057.684
7/31/97 50000 20467 229603 279603 70648 98594 495921 594515 308430 902945.12 39847.534
TOTAL $ 372877
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENDOWMENTS, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
8/01/77 50000.00 1178.47 0.00 % 42.428 1178.470 50000
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
7/31/78 50000 2144 2144 52144 0 52871 0 52871 2260 55131.28 44.242
7/31/79 50000 2597 4741 54741 0 55560 0 55560 5198 60758.26 46.397
7/31/80 50000 3198 7939 57939 0 61784 0 61784 9439 71223.23 48.910
7/31/81 50000 4680 12619 62619 3326 64051 3505 67556 14515 82071.58 54.365
7/31/82 50000 5821 18440 68440 7720 51882 9944 61826 17225 79051.71 64.646
7/31/83 50000 4973 23413 73413 0 77391 14833 92224 31115 123339.29 67.618
7/31/84 50000 5549 28962 78962 11022 67259 23329 90588 32329 122917.89 77.538
7/31/85 50000 6684 35646 85646 11321 76688 39432 116120 44214 160334.29 88.705
7/31/86 50000 7858 43504 93504 13749 84204 59923 144127 57205 201332.82 101.445
7/31/87 50000 9507 53011 103011 28506 83604 91110 174714 67106 241820.50 122.721
7/31/88 50000 11639 64650 114650 22090 70897 96754 167651 68593 236244.58 14137.916
7/31/89 50000 13256 77906 127906 15739 77303 124095 201398 89703 291101.61 15977.037
7/31/90 50000 16867 94773 144773 16637 71745 131692 203437 99677 303114.66 17925.172
7/31/91 50000 16154 110927 160927 9622 75903 150050 225953 122721 348674.90 19489.933
7/31/92 50000 15031 125958 175958 27986 77473 184816 262289 141282 403571.55 22101.399
7/31/93 50000 15842 141800 191800 18960 78194 206911 285105 159017 444122.60 24097.808
7/31/94 50000 16582 158382 208382 26255 72891 219011 291902 164524 456426.23 26567.301
7/31/95 50000 16986 175368 225368 36162 76625 273026 349651 191538 541189.88 29966.217
7/31/96 50000 19222 194590 244590 34736 78958 317095 396053 216655 612708.96 32923.641
7/31/97 50000 19221 213811 263811 66347 96141 465734 561875 286105 847980.73 37421.921
TOTAL $ 350178
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENDOWMENTS, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
8/01/78 50000.00 1246.13 0.00 % 40.124 1246.130 50000
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
7/31/79 50000 2356 2356 52356 0 52544 0 52544 2559 55103.71 42.079
7/31/80 50000 2900 5256 55256 0 58429 0 58429 6165 64594.56 44.358
7/31/81 50000 4245 9501 59501 3016 60573 3179 63752 10680 74432.80 49.305
7/31/82 50000 5280 14781 64781 7001 49065 9018 58083 13610 71693.89 58.629
7/31/83 50000 4510 19291 69291 0 73189 13452 86641 25217 111858.66 61.324
7/31/84 50000 5033 24324 74324 9996 63607 21157 84764 26711 111475.48 70.320
7/31/85 50000 6062 30386 80386 10267 72524 35761 108285 37124 145409.76 80.448
7/31/86 50000 7127 37513 87513 12469 79632 54344 133976 48615 182591.77 92.002
7/31/87 50000 8622 46135 96135 25853 79064 82629 161693 57618 219311.60 111.298
7/31/88 50000 10556 56691 106691 20034 67048 87748 154796 59457 214253.40 12821.867
7/31/89 50000 12021 68712 118712 14274 73106 112543 185649 78354 264003.97 14489.790
7/31/90 50000 15297 84009 134009 15089 67850 119434 187284 87614 274898.75 16256.579
7/31/91 50000 14650 98659 148659 8727 71782 136082 207864 108353 316217.97 17675.683
7/31/92 50000 13632 112291 162291 25381 73267 167612 240879 125125 366004.50 20044.058
7/31/93 50000 14367 126658 176658 17195 73949 187650 261599 141181 402780.79 21854.628
7/31/94 50000 15039 141697 191697 23811 68933 198624 267557 146382 413939.09 24094.243
7/31/95 50000 15405 157102 207102 32796 72464 247611 320075 170737 490812.38 27176.765
7/31/96 50000 17433 174535 224535 31502 74671 287578 362249 193424 555673.96 29858.891
7/31/97 50000 17431 191966 241966 60171 90921 422380 513301 255744 769045.10 33938.442
TOTAL $ 317582
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENDOWMENTS, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
8/01/79 50000.00 1309.53 0.00 % 38.182 1309.530 50000
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
7/31/80 50000 2631 2631 52631 0 55600 0 55600 3012 58612.45 40.250
7/31/81 50000 3851 6482 56482 2737 57640 2885 60525 7016 67541.29 44.740
7/31/82 50000 4790 11272 61272 6353 46690 8183 54873 10182 65055.09 53.200
7/31/83 50000 4093 15365 65365 0 69646 12207 81853 19648 101501.64 55.646
7/31/84 50000 4567 19932 69932 9070 60528 19197 79725 21430 101155.44 63.810
7/31/85 50000 5501 25433 75433 9316 69013 32450 101463 30486 131949.31 73.001
7/31/86 50000 6467 31900 81900 11315 75777 49313 125090 40600 165690.49 83.486
7/31/87 50000 7824 39724 89724 23460 75236 74979 150215 48794 199009.64 100.995
7/31/88 50000 9578 49302 99302 18179 63801 79625 143426 50994 194420.45 11634.976
7/31/89 50000 10909 60211 110211 12953 69567 102125 171692 67873 239565.76 13148.505
7/31/90 50000 13880 74091 124091 13692 64565 108378 172943 76509 249452.04 14751.747
7/31/91 50000 13293 87384 137384 7919 68307 123485 191792 95154 286946.44 16039.488
7/31/92 50000 12370 99754 149754 23032 69720 152096 221816 110308 332124.35 18188.628
7/31/93 50000 13037 112791 162791 15603 70369 170280 240649 124847 365496.35 19831.598
7/31/94 50000 13647 126438 176438 21607 65596 180238 245834 129787 375621.77 21863.898
7/31/95 50000 13979 140417 190417 29760 68956 224690 293646 151733 445379.10 24661.080
7/31/96 50000 15819 156236 206236 28586 71056 260957 332013 172223 504236.65 27094.930
7/31/97 50000 15818 172054 222054 54601 86520 383281 469801 228055 697856.53 30796.846
TOTAL $ 288183
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENDOWMENTS, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
8/01/80 50000.00 1456.21 0.00 % 34.336 1456.210 50000
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
7/31/81 50000 3286 3286 53286 2335 51835 2461 54296 3319 57615.41 38.165
7/31/82 50000 4087 7373 57373 5419 41987 6981 48968 6528 55496.15 45.383
7/31/83 50000 3491 10864 60864 0 62630 10414 73044 13542 86586.30 47.469
7/31/84 50000 3896 14760 64760 7737 54431 16377 70808 15482 86290.46 54.433
7/31/85 50000 4692 19452 69452 7947 62062 27682 89744 22814 112558.45 62.273
7/31/86 50000 5517 24969 74969 9652 68144 42067 110211 31129 141340.82 71.217
7/31/87 50000 6674 31643 81643 20012 67658 63962 131620 38145 169765.60 86.154
7/31/88 50000 8170 39813 89813 15508 57375 67924 125299 40551 165850.26 9925.210
7/31/89 50000 9306 49119 99119 11049 62560 87118 149678 54683 204361.42 11216.324
7/31/90 50000 11840 60959 110959 11680 58062 92452 150514 62280 212794.92 12583.969
7/31/91 50000 11340 72299 122299 6755 61427 105340 166767 78012 244779.48 13682.475
7/31/92 50000 10552 82851 132851 19647 62697 129746 192443 90875 283318.49 15515.799
7/31/93 50000 11121 93972 143972 13310 63281 145258 208539 103247 311786.43 16917.332
7/31/94 50000 11642 105614 155614 18432 58989 153752 212741 107682 320423.91 18650.984
7/31/95 50000 11924 117538 167538 25387 62010 191672 253682 126248 379930.35 21037.118
7/31/96 50000 13494 131032 181032 24386 63899 222610 286509 143629 430138.70 23113.310
7/31/97 50000 13494 144526 194526 46578 77805 326958 404763 190543 595306.05 26271.229
TOTAL $ 245834
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENDOWMENTS, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
8/01/81 50000.00 1509.64 0.00 % 33.120 1509.640 50000
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
7/31/82 50000 3547 3547 53547 4703 40501 4329 44830 3330 48160.33 39.384
7/31/83 50000 3029 6576 56576 0 60414 6457 66871 8269 75140.33 41.194
7/31/84 50000 3381 9957 59957 6715 52504 11970 64474 10410 74884.51 47.238
7/31/85 50000 4072 14029 64029 6897 59865 21466 81331 16348 97679.11 54.041
7/31/86 50000 4788 18817 68817 8376 65732 33697 99429 23226 122655.34 61.802
7/31/87 50000 5792 24609 74609 17366 65263 52717 117980 29341 147321.71 74.764
7/31/88 50000 7090 31699 81699 13458 55344 56578 111922 32002 143924.12 8613.053
7/31/89 50000 8076 39775 89775 9589 60345 73021 133366 43977 177343.97 9733.478
7/31/90 50000 10277 50052 100052 10136 56007 77835 133842 50820 184662.51 10920.314
7/31/91 50000 9840 59892 109892 5862 59252 88880 148132 64286 212418.58 11873.593
7/31/92 50000 9157 69049 119049 17050 60478 110007 170485 75377 245862.54 13464.542
7/31/93 50000 9652 78701 128701 11551 61041 123444 184485 86081 270566.92 14680.788
7/31/94 50000 10102 88803 138803 15995 56901 130993 187894 90168 278062.49 16185.244
7/31/95 50000 10348 99151 149151 22030 59815 163775 223590 106111 329701.93 18255.921
7/31/96 50000 11710 110861 160861 21162 61637 190545 252182 121090 373272.55 20057.633
7/31/97 50000 11709 122570 172570 40420 75051 280524 355575 161029 516604.08 22798.062
TOTAL $ 211310
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENDOWMENTS, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
8/01/82 50000.00 1222.84 0.00 % 40.888 1222.840 50000
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
7/31/83 50000 3146 3146 53146 0 74583 0 74583 3428 78011.40 42.768
7/31/84 50000 3510 6656 56656 6971 64819 6601 71420 6324 77744.32 49.042
7/31/85 50000 4227 10883 60883 7160 73906 15642 89548 11861 101409.79 56.105
7/31/86 50000 4970 15853 65853 8696 81149 27690 108839 18500 127339.11 64.162
7/31/87 50000 6012 21865 71865 18030 80570 47489 128059 24888 152947.46 77.619
7/31/88 50000 7361 29226 79226 13971 68325 52600 120925 28494 149419.77 8941.937
7/31/89 50000 8383 37609 87609 9955 74499 69115 143614 40501 184115.71 10105.143
7/31/90 50000 10668 48277 98277 10523 69142 74595 143737 47976 191713.71 11337.298
7/31/91 50000 10216 58493 108493 6086 73149 85701 158850 61679 220529.64 12326.978
7/31/92 50000 9506 67999 117999 17701 74662 107500 182162 73088 255250.64 13978.677
7/31/93 50000 10019 78018 128018 11992 75357 121387 196744 84154 280898.36 15241.365
7/31/94 50000 10488 88506 138506 16606 70246 129683 199929 88751 288680.11 16803.266
7/31/95 50000 10742 99248 149248 22872 73844 163394 237238 105053 342291.36 18953.010
7/31/96 50000 12158 111406 161406 21970 76093 190983 267076 120449 387525.71 20823.520
7/31/97 50000 12157 123563 173563 41963 92653 282911 375564 160766 536330.23 23668.589
TOTAL $ 214496
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENDOWMENTS, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
8/01/83 50000.00 1824.06 0.00 % 27.411 1824.060 50000
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
7/31/84 50000 2249 2249 52249 4468 43454 4231 47685 2144 49829.48 31.433
7/31/85 50000 2710 4959 54959 4589 49546 10026 59572 5425 64997.70 35.960
7/31/86 50000 3185 8144 58144 5574 54402 17749 72151 9465 81616.75 41.124
7/31/87 50000 3854 11998 61998 11556 54014 30438 84452 13577 98029.91 49.749
7/31/88 50000 4719 16717 66717 8955 45804 33714 79518 16252 95770.86 5731.350
7/31/89 50000 5374 22091 72091 6381 49943 44300 94243 23766 118009.28 6476.909
7/31/90 50000 6837 28928 78928 6745 46353 47812 94165 28714 122879.24 7266.661
7/31/91 50000 6548 35476 85476 3901 49039 54931 103970 37378 141348.85 7900.998
7/31/92 50000 6094 41570 91570 11345 50053 68902 118955 44648 163603.32 8959.656
7/31/93 50000 6421 47991 97991 7686 50519 77803 128322 51720 180042.25 9768.977
7/31/94 50000 6723 54714 104714 10643 47093 83121 130214 54816 185030.01 10770.082
7/31/95 50000 6886 61600 111600 14660 49505 104728 154233 65159 219392.21 12147.963
7/31/96 50000 7792 69392 119392 14082 51012 122411 173423 74962 248385.19 13346.867
7/31/97 50000 7792 77184 127184 26896 62114 181333 243447 100314 343761.67 15170.418
TOTAL $ 137481
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENDOWMENTS, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
8/01/84 50000.00 1585.26 0.00 % 31.541 1585.260 50000
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
7/31/85 50000 2719 2719 52719 4605 57009 5220 62229 2991 65220.02 36.083
7/31/86 50000 3197 5916 55916 5593 62597 12493 75090 6806 81896.58 41.265
7/31/87 50000 3867 9783 59783 11595 62150 25264 87414 10950 98364.89 49.919
7/31/88 50000 4735 14518 64518 8985 52704 29353 82057 14040 96097.74 5750.912
7/31/89 50000 5392 19910 69910 6402 57467 39570 97037 21375 118412.07 6499.016
7/31/90 50000 6861 26771 76771 6768 53335 43445 96780 26518 123298.64 7291.463
7/31/91 50000 6571 33342 83342 3914 56426 50326 106752 35079 141831.28 7927.964
7/31/92 50000 6115 39457 89457 11384 57593 64246 121839 42322 164161.71 8990.236
7/31/93 50000 6443 45900 95900 7712 58129 73132 131261 49395 180656.78 9802.321
7/31/94 50000 6745 52645 102645 10680 54187 78802 132989 52672 185661.55 10806.842
7/31/95 50000 6909 59554 109554 14710 56962 100247 157209 62932 220141.05 12189.427
7/31/96 50000 7819 67373 117373 14130 58697 117844 176541 72692 249233.01 13392.424
7/31/97 50000 7819 75192 125192 26988 71471 175881 247352 97583 344935.03 15222.199
TOTAL $ 133466
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENDOWMENTS, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
8/01/85 50000.00 1807.50 0.00 % 27.663 1807.500 50000
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
7/31/86 50000 2451 2451 52451 4288 54900 5184 60084 2702 62786.39 31.636
7/31/87 50000 2965 5416 55416 8890 54509 15005 69514 5896 75410.65 38.270
7/31/88 50000 3629 9045 59045 6889 46224 18804 65028 8643 73671.87 4408.849
7/31/89 50000 4134 13179 63179 4908 50401 26302 76703 14075 90778.82 4982.372
7/31/90 50000 5259 18438 68438 5188 46777 29563 76340 18185 94525.02 5589.889
7/31/91 50000 5038 23476 73476 3001 49488 34621 84109 24623 108732.79 6077.853
7/31/92 50000 4688 28164 78164 8727 50512 45211 95723 30129 125852.08 6892.228
7/31/93 50000 4940 33104 83104 5913 50982 51986 102968 35529 138497.75 7514.799
7/31/94 50000 5171 38275 88275 8188 47524 56609 104133 38201 142334.58 8284.900
7/31/95 50000 5297 43572 93572 11277 49958 72855 122813 45954 168767.79 9344.839
7/31/96 50000 5994 49566 99566 10832 51480 86223 137703 53367 191070.69 10267.098
7/31/97 50000 5995 55561 105561 20690 62683 129820 192503 71936 264439.21 11669.868
TOTAL $ 98791
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENDOWMENTS, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
8/01/86 50000.00 1984.65 0.00 % 25.193 1984.650 50000
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
7/31/87 50000 2361 2361 52361 7079 49643 7850 57493 2561 60054.62 30.477
7/31/88 50000 2890 5251 55251 5486 42098 11498 53596 5074 58670.50 3511.101
7/31/89 50000 3292 8543 58543 3909 45902 17156 63058 9236 72294.04 3967.840
7/31/90 50000 4189 12732 62732 4132 42602 20025 62627 12650 75277.45 4451.653
7/31/91 50000 4011 16743 66743 2390 45071 23849 68920 17672 86592.18 4840.256
7/31/92 50000 3733 20476 70476 6950 46003 32206 78209 22016 100225.58 5488.805
7/31/93 50000 3935 24411 74411 4709 46431 37565 83996 26300 110296.29 5984.606
7/31/94 50000 4118 28529 78529 6520 43282 41508 84790 28561 113351.85 6597.896
7/31/95 50000 4219 32748 82748 8981 45499 54262 99761 34641 134402.61 7442.005
7/31/96 50000 4774 37522 87522 8627 46885 64794 111679 40485 152164.11 8176.470
7/31/97 50000 4775 42297 92297 16477 57088 98671 155759 54834 210593.04 9293.603
TOTAL $ 75260
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENDOWMENTS, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
8/01/87 50000.00 1970.49 0.00 % 25.374 1970.490 50000
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
7/31/88 50000 2407 2407 52407 4567 42400 4030 46430 2416 48846.44 2923.186
7/31/89 50000 2741 5148 55148 3254 46232 8240 54472 5716 60188.80 3303.447
7/31/90 50000 3487 8635 58635 3440 42908 11063 53971 8701 62672.65 3706.248
7/31/91 50000 3340 11975 61975 1990 45395 13922 59317 12775 72092.82 4029.783
7/31/92 50000 3108 15083 65083 5787 46333 20756 67089 16354 83443.36 4569.735
7/31/93 50000 3275 18358 68358 3920 46765 25162 71927 19900 91827.79 4982.517
7/31/94 50000 3429 21787 71787 5429 43593 28859 72452 21919 94371.72 5493.115
7/31/95 50000 3513 25300 75300 7477 45826 39186 85012 26885 111897.63 6195.882
7/31/96 50000 3974 29274 79274 7182 47222 47772 94994 31691 126685.06 6807.365
7/31/97 50000 3975 33249 83249 13718 57498 74633 132131 43199 175330.39 7737.440
TOTAL $ 56764
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENDOWMENTS, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
8/01/88 50000.00 16.71 0.00 % 2992.220 16.710 50000
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
7/31/89 50000 2805 2805 52805 3331 54518 3936 58454 3156 61610.24 3381.462
7/31/90 50000 3570 6375 56375 3521 50598 7149 57747 6405 64152.74 3793.775
7/31/91 50000 3419 9794 59794 2037 53531 9834 63365 10430 73795.36 4124.950
7/31/92 50000 3181 12975 62975 5923 54638 16738 71376 14037 85413.96 4677.654
7/31/93 50000 3353 16328 66328 4013 55147 21206 76353 17643 93996.41 5100.185
7/31/94 50000 3509 19837 69837 5557 51406 25299 76705 19895 96600.43 5622.842
7/31/95 50000 3595 23432 73432 7653 54039 35653 89692 24848 114540.26 6342.207
7/31/96 50000 4069 27501 77501 7352 55685 44306 99991 29685 129676.94 6968.132
7/31/97 50000 4067 31568 81568 14042 67804 70801 138605 40866 179471.05 7920.170
TOTAL $ 53429
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENDOWMENTS, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
8/01/89 50000.00 18.22 0.00 % 2744.237 18.220 50000
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
7/31/90 50000 2898 2898 52898 2858 46405 2837 49242 2821 52063.37 3078.851
7/31/91 50000 2775 5673 55673 1653 49094 4844 53938 5950 59888.87 3347.617
7/31/92 50000 2583 8256 58256 4807 50110 10383 60493 8824 69317.97 3796.165
7/31/93 50000 2721 10977 60977 3257 50576 13979 64555 11728 76283.06 4139.070
7/31/94 50000 2848 13825 63825 4510 47146 17520 64666 13730 78396.34 4563.233
7/31/95 50000 2918 16743 66743 6211 49561 25768 75329 17626 92955.45 5147.035
7/31/96 50000 3302 20045 70045 5966 51070 32694 83764 21475 105239.66 5655.006
7/31/97 50000 3301 23346 73346 11396 62184 53486 115670 29980 145650.25 6427.637
TOTAL $ 40658
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENDOWMENTS, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
8/01/90 50000.00 16.91 0.00 % 2956.830 16.910 50000
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
7/31/91 50000 2665 2665 52665 1587 52898 1769 54667 2848 57515.35 3214.944
7/31/92 50000 2479 5144 55144 4616 53992 7029 61021 5549 66570.81 3645.718
7/31/93 50000 2613 7757 57757 3127 54494 10455 64949 8310 73259.90 3975.035
7/31/94 50000 2735 10492 60492 4331 50798 14057 64855 10434 75289.43 4382.388
7/31/95 50000 2802 13294 63294 5965 53400 21836 75236 14035 89271.54 4943.053
7/31/96 50000 3172 16466 66466 5730 55027 28399 83426 17642 101068.90 5430.892
7/31/97 50000 3169 19635 69635 10944 67002 47715 114717 25160 139877.96 6172.902
TOTAL $ 36300
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENDOWMENTS, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
8/01/91 50000.00 17.89 0.00 % 2794.857 17.890 50000
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
7/31/92 50000 2155 2155 52155 4013 51034 4540 55574 2298 57872.18 3169.342
7/31/93 50000 2272 4427 54427 2719 51509 7504 59013 4674 63687.19 3455.626
7/31/94 50000 2378 6805 56805 3765 48016 10743 58759 6692 65451.52 3809.751
7/31/95 50000 2435 9240 59240 5186 50475 17430 67905 9701 77606.64 4297.156
7/31/96 50000 2756 11996 61996 4981 52012 23088 75100 12762 87862.46 4721.250
7/31/97 50000 2757 14753 64753 9514 63331 39532 102863 18737 121600.45 5366.304
TOTAL $ 30178
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENDOWMENTS, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
8/01/92 50000.00 18.26 0.00 % 2738.226 18.260 50000
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
7/31/93 50000 1963 1963 51963 2349 50465 2524 52989 2035 55024.02 2985.568
7/31/94 50000 2054 4017 54017 3253 47043 5591 52634 3914 56548.37 3291.523
7/31/95 50000 2104 6121 56121 4480 49452 11180 60632 6418 67050.06 3712.628
7/31/96 50000 2382 8503 58503 4304 50958 15950 66908 9002 75910.84 4079.035
7/31/97 50000 2381 10884 60884 8220 62048 29286 91334 13725 105059.51 4636.342
TOTAL $ 22606
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENDOWMENTS, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
8/01/93 50000.00 18.43 0.00 % 2712.968 18.430 50000
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
7/31/94 50000 1868 1868 51868 2956 46609 2942 49551 1834 51385.16 2990.987
7/31/95 50000 1913 3781 53781 4071 48996 7911 56907 4020 60927.97 3373.642
7/31/96 50000 2163 5944 55944 3911 50488 12177 62665 6314 68979.70 3706.593
7/31/97 50000 2164 8108 58108 7469 61476 23792 85268 10198 95466.94 4213.016
TOTAL $ 18407
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENDOWMENTS, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
8/01/94 50000.00 17.18 0.00 % 2910.361 17.180 50000
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
7/31/95 50000 1861 1861 51861 3961 52561 4688 57249 2036 59285.56 3282.700
7/31/96 50000 2106 3967 53967 3805 54162 8748 62910 4210 67120.26 3606.677
7/31/97 50000 2106 6073 56073 7268 65949 19375 85324 7569 92893.54 4099.450
TOTAL $ 15034
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENDOWMENTS, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
8/01/95 50000.00 18.06 0.00 % 2768.549 18.060 50000
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
7/31/96 50000 1775 1775 51775 3209 51523 3303 54826 1781 56607.58 3041.783
7/31/97 50000 1776 3551 53551 6130 62735 11379 74114 4230 78344.12 3457.375
TOTAL $ 9339
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENDOWMENTS, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
8/01/96 50000.00 18.61 0.00 % 2686.728 18.610 50000
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
7/31/97 50000 1570 1570 51570 5414 60881 6498 67379 1820 69199.33 3053.810
TOTAL $ 5414
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENDOWMENTS, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
8/01/97 50000.00 22.66 0.00 % 2206.531 22.660 50000
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
7/31/97 50000 0 0 50000 0 50000 0 50000 0 49999.99 2206.531
TOTAL $ 0
</TABLE>
EXHIBIT 16
BOND PORTFOLIO FOR ENDOWMENTS, INC.
SCHEDULE FOR COMPUTATION OF EACH PERFORMANCE QUOTATION
PROVIDED IN THE REGISTRATION STATEMENT
(1) ENDING REDEMPTION VALUE AND TOTAL RETURN
Value of an initial investment at the end of a period and total return for the
period are computed as set forth below.
(A) INITIAL INVESTMENT divided by
PUBLIC OFFERING PRICE FOR ONE SHARE AT
BEGINNING OF PERIOD equals
NUMBER OF SHARES INITIALLY PURCHASED
(B) NUMBER OF SHARES INITIALLY PURCHASED plus
NUMBER OF SHARES ACQUIRED AT NET ASSET
VALUE THROUGH REINVESTMENT OF DIVIDENDS
AND CAPITAL GAIN DISTRIBUTIONS DURING
PERIOD equals
NUMBER OF SHARES PURCHASED DURING PERIOD
(C) NUMBER OF SHARES PURCHASED DURING PERIOD multiplied by
NET ASSET VALUE OF ONE SHARE AS OF THE LAST
DAY OF THE PERIOD equals
VALUE OF INVESTMENT AT END OF PERIOD
(D) VALUE OF INVESTMENT AT END OF PERIOD divided by
INITIAL INVESTMENT minus one
and then
multiplied by
100 equals
TOTAL RETURN FOR THE PERIOD EXPRESSED AS A
PERCENTAGE
(2) AVERAGE ANNUAL TOTAL RETURN
Average annual total return quotations for the 1-, 5-, and 10-year periods
ended on the date of the most recent balance sheet are computed according to
the formula set forth below.
P(1+T)/n/ = ERV
WHERE: P = a hypothetical initial investment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1,000 investment as of the
end of 1-, 5-, and 10-year periods (computed in accordance with the formula
shown in (1), above)
THUS:
AVG. ANNUAL TOTAL RETURN AT PUBLIC OFFERING PRICE:
1 Year Total Return 1,000(1+T)/1/ = 1,062.51
T = +6.25%
5 Year Avg. Annual Total Return 1,000(1+T)/5/ = 1,499.48
T = +8.44%
10 Year Avg. Annual Total Return 1,000(1+T)/10/ = 2,288.17
T = +8.63%
Hypothetical illustrations based on $1,000 and $10,000 initial investments used
to obtain ending values over various time periods are attached.
(3) YIELD
Yield is computed as set forth below.
(A) DIVIDENDS AND INTEREST EARNED DURING
THE PERIOD minus
EXPENSES ACCRUED FOR THE PERIOD equals
NET INVESTMENT INCOME
(B) NET INVESTMENT INCOME divided by
AVERAGE DAILY NUMBER OF SHARES OUTSTANDING
DURING THE PERIOD THAT WERE ENTITLED
TO RECEIVE DIVIDENDS equals
NET INVESTMENT INCOME PER SHARE EARNED
DURING THE PERIOD
(C) NET INVESTMENT INCOME PER SHARE EARNED
DURING THE PERIOD divided by
MAXIMUM OFFERING PRICE PER SHARE ON
LAST DAY OF THE PERIOD equals
CURRENT MONTH'S YIELD
(D) CURRENT MONTH'S YIELD plus one,
raised to the
sixth power
equals
SEMIANNUAL COMPOUNDED YIELD
(E) SEMIANNUAL COMPOUNDED YIELD minus one,
multiplied by
two equals
ANNUALIZED RATE
<PAGE>
<TABLE>
<CAPTION>
BOND PORTFOLIO FOR ENDOWMENTS, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
7/01/96 1000.00 16.58 0.00 % 60.314 16.580 1000
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
6/30/97 1000 72 72 1072 0 1012 0 1012 74 1086.37 64.742
TOTAL $ 0
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BOND PORTFOLIO FOR ENDOWMENTS, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
7/01/92 1000.00 18.81 0.00 % 53.163 18.810 1000
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
6/30/93 1000 82 82 1082 23 1036 25 1061 83 1144.86 58.741
6/30/94 1000 85 167 1167 75 884 89 973 148 1121.97 67.507
6/30/95 1000 86 253 1253 5 895 96 991 239 1230.38 73.063
6/30/96 1000 91 344 1344 0 881 94 975 326 1301.80 78.516
6/30/97 1000 96 440 1440 0 892 95 987 427 1414.20 84.279
TOTAL $ 103
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BOND PORTFOLIO FOR ENDOWMENTS, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
7/01/87 1000.00 886.95 0.00 % 1.127 886.950 1000
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
6/30/88 1000 83 83 1083 31 966 32 998 82 1080.56 63.080
6/30/89 1000 96 179 1179 0 989 32 1021 185 1206.33 68.776
6/30/90 1000 105 284 1284 0 974 32 1006 287 1293.13 74.877
6/30/91 1000 118 402 1402 0 984 32 1016 410 1426.24 81.733
6/30/92 1000 126 528 1528 0 1060 35 1095 572 1667.02 88.624
6/30/93 1000 137 665 1665 39 1099 77 1176 732 1908.48 97.921
6/30/94 1000 140 805 1805 126 937 180 1117 753 1870.32 112.534
6/30/95 1000 144 949 1949 8 949 191 1140 911 2051.06 121.797
6/30/96 1000 152 1101 2101 0 935 188 1123 1047 2170.12 130.888
6/30/97 1000 159 1260 2260 0 946 190 1136 1221 2357.56 140.498
TOTAL $ 204
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BOND PORTFOLIO FOR ENDOWMENTS, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
7/25/75 1000.00 880.40 0.00 % 1.136 880.400 1000
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
6/30/76 1000 70 70 1070 0 1038 0 1038 73 1111.23 1.216
6/30/77 1000 88 158 1158 0 1099 0 1099 168 1267.14 1.309
6/30/78 1000 96 254 1254 0 1012 0 1012 247 1259.75 1.414
6/30/79 1000 112 366 1366 0 1000 0 1000 357 1357.84 1.542
6/30/80 1000 147 513 1513 0 953 0 953 493 1446.17 1.723
6/30/81 1000 160 673 1673 0 802 0 802 575 1377.70 1.951
6/30/82 1000 194 867 1867 0 781 0 781 749 1530.20 2.225
6/30/83 1000 210 1077 2077 0 935 0 935 1103 2038.19 2.476
6/30/84 1000 224 1301 2301 0 847 0 847 1218 2065.51 2.770
6/30/85 1000 245 1546 2546 0 955 0 955 1632 2587.05 3.077
6/30/86 1000 271 1817 2817 0 1048 0 1048 2077 3125.11 3.386
6/30/87 1000 276 2093 3093 0 1007 0 1007 2270 3277.28 3.695
6/30/88 1000 271 2364 3364 102 973 104 1077 2465 3542.84 206.821
6/30/89 1000 317 2681 3681 0 996 107 1103 2852 3955.18 225.495
6/30/90 1000 344 3025 4025 0 981 105 1086 3153 4239.72 245.496
6/30/91 1000 383 3408 4408 0 991 106 1097 3579 4676.13 267.973
6/30/92 1000 411 3819 4819 0 1068 115 1183 4282 5465.47 290.562
6/30/93 1000 449 4268 5268 127 1107 254 1361 4896 6257.17 321.045
6/30/94 1000 460 4728 5728 412 944 591 1535 4597 6132.13 368.961
6/30/95 1000 472 5200 6200 26 956 626 1582 5142 6724.72 399.330
6/30/96 1000 500 5700 6700 0 942 616 1558 5557 7115.09 429.137
6/30/97 1000 522 6222 7222 0 953 624 1577 6152 7729.52 460.639
TOTAL $ 667
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BOND PORTFOLIO FOR ENDOWMENTS, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
8/01/96 1000.00 16.63 0.00 % 60.132 16.630 1000
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
7/31/97 1000 72 72 1072 0 1032 0 1032 76 1108.27 64.547
TOTAL $ 0
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BOND PORTFOLIO FOR ENDOWMENTS, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
8/01/92 1000.00 19.44 0.00 % 51.440 19.440 1000
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
7/31/93 1000 79 79 1079 23 1011 24 1035 82 1117.38 56.835
7/31/94 1000 81 160 1160 73 867 88 955 146 1101.26 65.318
7/31/95 1000 84 244 1244 5 865 93 958 231 1189.09 70.695
7/31/96 1000 89 333 1333 0 855 91 946 317 1263.43 75.973
7/31/97 1000 92 425 1425 0 883 94 977 423 1400.21 81.550
TOTAL $ 101
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BOND PORTFOLIO FOR ENDOWMENTS, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
8/01/87 1000.00 881.10 0.00 % 1.135 881.100 1000
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
7/31/88 1000 84 84 1084 31 970 32 1002 83 1085.80 63.497
7/31/89 1000 97 181 1181 0 1012 33 1045 189 1234.35 69.229
7/31/90 1000 106 287 1287 0 993 32 1025 293 1318.99 75.371
7/31/91 1000 118 405 1405 0 1008 33 1041 420 1461.15 82.272
7/31/92 1000 126 531 1531 0 1103 36 1139 595 1734.16 89.206
7/31/93 1000 138 669 1669 39 1116 78 1194 743 1937.75 98.563
7/31/94 1000 141 810 1810 126 957 184 1141 768 1909.77 113.272
7/31/95 1000 145 955 1955 8 954 192 1146 916 2062.06 122.596
7/31/96 1000 154 1109 2109 0 944 189 1133 1057 2190.94 131.746
7/31/97 1000 160 1269 2269 0 974 196 1170 1258 2428.15 141.418
TOTAL $ 204
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BOND PORTFOLIO FOR ENDOWMENTS, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
8/01/87 10000.00 881.10 0.00 % 11.349 881.100 10000
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
7/31/88 10000 833 833 10833 314 9704 321 10025 836 10861.49 635.175
7/31/89 10000 971 1804 11804 0 10118 334 10452 1895 12347.72 692.525
7/31/90 10000 1058 2862 12862 0 9931 328 10259 2935 13194.14 753.951
7/31/91 10000 1177 4039 14039 0 10078 333 10411 4205 14616.20 822.984
7/31/92 10000 1265 5304 15304 0 11032 365 11397 5950 17347.40 892.356
7/31/93 10000 1376 6680 16680 391 11156 788 11944 7440 19384.15 985.969
7/31/94 10000 1412 8092 18092 1264 9568 1840 11408 7696 19104.45 1133.123
7/31/95 10000 1448 9540 19540 81 9545 1920 11465 9162 20627.85 1226.388
7/31/96 10000 1537 11077 21077 0 9437 1899 11336 10581 21917.19 1317.931
7/31/97 10000 1604 12681 22681 0 9743 1960 11703 12587 24290.04 1414.679
TOTAL $ 2050
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BOND PORTFOLIO FOR ENDOWMENTS, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
7/25/75 50000.00 880.40 0.00 % 56.792 880.400 50000
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
7/31/75 50000 0 0 50000 0 50065 0 50065 0 50064.42 56.792
7/31/76 50000 3466 3466 53466 0 52455 0 52455 3668 56123.45 60.764
7/31/77 50000 4395 7861 57861 0 54854 0 54854 8314 63168.86 65.401
7/31/78 50000 4798 12659 62659 0 51161 0 51161 12472 63633.34 70.637
7/31/79 50000 5595 18254 68254 0 50165 0 50165 17912 68077.70 77.072
7/31/80 50000 7331 25585 75585 0 46568 0 46568 24036 70604.34 86.106
7/31/81 50000 7990 33575 83575 0 39235 0 39235 28136 67371.69 97.520
7/31/82 50000 9678 43253 93253 0 40739 0 40739 39032 79771.40 111.206
7/31/83 50000 10518 53771 103771 0 45384 0 45384 53496 98880.71 123.737
7/31/84 50000 11193 64964 114964 0 43796 0 43796 62949 106745.51 138.422
7/31/85 50000 12231 77195 127195 0 47570 0 47570 81204 128774.86 153.739
7/31/86 50000 13557 90752 140752 0 52296 0 52296 103479 155775.89 169.169
7/31/87 50000 13829 104581 154581 0 50040 0 50040 112609 162649.30 184.598
7/31/88 50000 13553 118134 168134 5103 48557 5210 53767 122899 176666.56 10331.378
7/31/89 50000 15800 133934 183934 0 50630 5433 56063 144777 200840.94 11264.214
7/31/90 50000 17213 151147 201147 0 49693 5332 55025 159583 214608.71 12263.355
7/31/91 50000 19146 170293 220293 0 50432 5411 55843 181896 237739.20 13386.216
7/31/92 50000 20570 190863 240863 0 55202 5923 61125 221038 282163.71 14514.594
7/31/93 50000 22376 213239 263239 6361 55827 12805 68632 246660 315292.32 16037.249
7/31/94 50000 22971 236210 286210 20561 47876 29925 77801 232941 310742.85 18430.774
7/31/95 50000 23564 259774 309774 1314 47762 31232 78994 256527 335521.54 19947.773
7/31/96 50000 25003 284777 334777 0 47223 30879 78102 278391 356493.10 21436.747
7/31/97 50000 26094 310871 360871 0 48756 31882 80638 314450 395088.41 23010.391
TOTAL $ 33339
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BOND PORTFOLIO FOR ENDOWMENTS, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
8/01/76 50000.00 923.63 0.00 % 54.134 923.630 50000
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
7/31/77 50000 3916 3916 53916 0 52287 0 52287 3989 56276.42 58.265
7/31/78 50000 4276 8192 58192 0 48767 0 48767 7922 56689.59 62.929
7/31/79 50000 4985 13177 63177 0 47817 0 47817 12831 60648.26 68.661
7/31/80 50000 6531 19708 69708 0 44388 0 44388 18511 62899.08 76.709
7/31/81 50000 7118 26826 76826 0 37399 0 37399 22620 60019.67 86.878
7/31/82 50000 8622 35448 85448 0 38832 0 38832 32233 71065.88 99.070
7/31/83 50000 9370 44818 94818 0 43260 0 43260 44829 88089.39 110.233
7/31/84 50000 9972 54790 104790 0 41746 0 41746 53349 95095.60 123.315
7/31/85 50000 10896 65686 115686 0 45344 0 45344 69377 114721.27 136.961
7/31/86 50000 12077 77763 127763 0 49848 0 49848 88927 138775.53 150.707
7/31/87 50000 12319 90082 140082 0 47698 0 47698 97200 144898.66 164.452
7/31/88 50000 12074 102156 152156 4546 46285 4642 50927 106459 157386.38 9203.882
7/31/89 50000 14075 116231 166231 0 48261 4840 53101 125821 178922.52 10034.914
7/31/90 50000 15334 131565 181565 0 47367 4750 52117 139070 191187.80 10925.017
7/31/91 50000 17057 148622 198622 0 48071 4821 52892 158901 211793.99 11925.337
7/31/92 50000 18325 166947 216947 0 52618 5277 57895 193475 251370.30 12930.571
7/31/93 50000 19935 186882 236882 5667 53214 11408 64622 216261 280883.50 14287.055
7/31/94 50000 20463 207345 257345 18317 45635 26659 72294 204536 276830.56 16419.369
7/31/95 50000 20992 228337 278337 1171 45527 27824 73351 225554 298905.07 17770.813
7/31/96 50000 22274 250611 300611 0 45013 27509 72522 245065 317587.95 19097.291
7/31/97 50000 23245 273856 323856 0 46474 28403 74877 277094 351971.25 20499.199
TOTAL $ 29701
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BOND PORTFOLIO FOR ENDOWMENTS, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
8/01/77 50000.00 965.87 0.00 % 51.767 965.870 50000
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
7/31/78 50000 3799 3799 53799 0 46634 0 46634 3733 50367.42 55.911
7/31/79 50000 4429 8228 58228 0 45726 0 45726 8159 53885.72 61.005
7/31/80 50000 5803 14031 64031 0 42447 0 42447 13438 55885.06 68.155
7/31/81 50000 6324 20355 70355 0 35763 0 35763 17563 53326.71 77.190
7/31/82 50000 7661 28016 78016 0 37134 0 37134 26006 63140.82 88.022
7/31/83 50000 8326 36342 86342 0 41368 0 41368 36897 78265.81 97.940
7/31/84 50000 8860 45202 95202 0 39920 0 39920 44570 84490.60 109.563
7/31/85 50000 9681 54883 104883 0 43361 0 43361 58566 101927.46 121.687
7/31/86 50000 10731 65614 115614 0 47668 0 47668 75631 123299.14 133.900
7/31/87 50000 10945 76559 126559 0 45612 0 45612 83126 128738.40 146.111
7/31/88 50000 10728 87287 137287 4039 44261 4124 48385 91447 139832.58 8177.344
7/31/89 50000 12505 99792 149792 0 46150 4300 50450 108516 158966.73 8915.689
7/31/90 50000 13624 113416 163416 0 45296 4220 49516 120348 169864.01 9706.515
7/31/91 50000 15154 128570 178570 0 45969 4283 50252 137919 188171.91 10595.265
7/31/92 50000 16281 144851 194851 0 50317 4688 55005 168329 223334.18 11488.384
7/31/93 50000 17712 162563 212563 5035 50887 10135 61022 188533 249555.66 12693.574
7/31/94 50000 18182 180745 230745 16274 43639 23685 67324 178630 245954.76 14588.064
7/31/95 50000 18651 199396 249396 1040 43536 24720 68256 197311 265567.26 15788.779
7/31/96 50000 19790 219186 269186 0 43044 24441 67485 214681 282166.38 16967.311
7/31/97 50000 20654 239840 289840 0 44442 25234 69676 243038 312714.81 18212.860
TOTAL $ 26388
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BOND PORTFOLIO FOR ENDOWMENTS, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
8/01/78 50000.00 900.85 0.00 % 55.503 900.850 50000
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
7/31/79 50000 4396 4396 54396 0 49026 0 49026 4465 53491.76 60.559
7/31/80 50000 5760 10156 60156 0 45511 0 45511 9965 55476.71 67.657
7/31/81 50000 6278 16434 66434 0 38344 0 38344 14593 52937.07 76.626
7/31/82 50000 7605 24039 74039 0 39814 0 39814 22866 62680.30 87.380
7/31/83 50000 8264 32303 82303 0 44354 0 44354 33341 77695.24 97.226
7/31/84 50000 8795 41098 91098 0 42802 0 42802 41073 83875.22 108.765
7/31/85 50000 9610 50708 100708 0 46491 0 46491 54694 101185.33 120.801
7/31/86 50000 10652 61360 111360 0 51109 0 51109 71292 122401.33 132.925
7/31/87 50000 10866 72226 122226 0 48904 0 48904 78897 127801.79 145.048
7/31/88 50000 10648 82874 132874 4009 47455 4094 51549 87266 138815.49 8117.865
7/31/89 50000 12415 95289 145289 0 49481 4269 53750 104060 157810.46 8850.839
7/31/90 50000 13526 108815 158815 0 48565 4190 52755 115873 168628.50 9635.914
7/31/91 50000 15044 123859 173859 0 49287 4252 53539 133264 186803.23 10518.200
7/31/92 50000 16164 140023 190023 0 53949 4654 58603 163106 221709.74 11404.822
7/31/93 50000 17583 157606 207606 4998 54560 10061 64621 183119 247740.52 12601.247
7/31/94 50000 18049 175655 225655 16156 46789 23513 70302 173863 244165.78 14481.956
7/31/95 50000 18515 194170 244170 1033 46678 24540 71218 192417 263635.60 15673.936
7/31/96 50000 19646 213816 263816 0 46151 24263 70414 209699 280113.99 16843.896
7/31/97 50000 20503 234319 284319 0 47649 25051 72700 237740 310440.19 18080.384
TOTAL $ 26196
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BOND PORTFOLIO FOR ENDOWMENTS, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
8/01/79 50000.00 883.30 0.00 % 56.606 883.300 50000
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
7/31/80 50000 5384 5384 55384 0 46415 0 46415 5440 51855.72 63.241
7/31/81 50000 5869 11253 61253 0 39106 0 39106 10375 49481.44 71.624
7/31/82 50000 7108 18361 68361 0 40605 0 40605 17982 58587.93 81.675
7/31/83 50000 7725 26086 76086 0 45235 0 45235 27387 72622.43 90.878
7/31/84 50000 8222 34308 84308 0 43652 0 43652 34747 78399.21 101.664
7/31/85 50000 8983 43291 93291 0 47414 0 47414 47165 94579.86 112.915
7/31/86 50000 9957 53248 103248 0 52124 0 52124 62287 114411.29 124.248
7/31/87 50000 10157 63405 113405 0 49875 0 49875 69584 119459.54 135.580
7/31/88 50000 9955 73360 123360 3748 48398 3827 52225 77530 129755.33 7588.031
7/31/89 50000 11605 84965 134965 0 50464 3990 54454 93056 147510.55 8273.166
7/31/90 50000 12642 97607 147607 0 49530 3917 53447 104175 157622.52 9007.001
7/31/91 50000 14064 111671 161671 0 50266 3975 54241 120370 174611.01 9831.701
7/31/92 50000 15108 126779 176779 0 55021 4351 59372 147867 207239.23 10660.454
7/31/93 50000 16435 143214 193214 4672 55644 9405 65049 166522 231571.07 11778.793
7/31/94 50000 16872 160086 210086 15102 47719 21979 69698 158531 228229.67 13536.754
7/31/95 50000 17306 177392 227392 965 47606 22939 70545 175883 246428.74 14650.936
7/31/96 50000 18364 195756 245756 0 47068 22680 69748 192083 261831.63 15744.536
7/31/97 50000 19165 214921 264921 0 48596 23416 72012 218166 290178.51 16900.321
TOTAL $ 24487
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BOND PORTFOLIO FOR ENDOWMENTS, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
8/01/80 50000.00 819.97 0.00 % 60.978 819.970 50000
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
7/31/81 50000 5658 5658 55658 0 42127 0 42127 5584 47711.48 69.062
7/31/82 50000 6854 12512 62512 0 43741 0 43741 12751 56492.61 78.754
7/31/83 50000 7449 19961 69961 0 48729 0 48729 21296 70025.29 87.628
7/31/84 50000 7928 27889 77889 0 47024 0 47024 28571 75595.27 98.028
7/31/85 50000 8661 36550 86550 0 51076 0 51076 40120 91196.72 108.876
7/31/86 50000 9601 46151 96151 0 56150 0 56150 54168 110318.20 119.803
7/31/87 50000 9793 55944 105944 0 53728 0 53728 61457 115185.32 130.729
7/31/88 50000 9598 65542 115542 3614 52136 3690 55826 69286 125112.37 7316.513
7/31/89 50000 11189 76731 126731 0 54362 3848 58210 84022 142232.26 7977.132
7/31/90 50000 12190 88921 138921 0 53356 3777 57133 94849 151982.39 8684.708
7/31/91 50000 13559 102480 152480 0 54148 3833 57981 110382 168363.01 9479.899
7/31/92 50000 14568 117048 167048 0 59270 4195 63465 136358 199823.72 10278.998
7/31/93 50000 15847 132895 182895 4505 59941 9069 69010 154274 223284.89 11357.319
7/31/94 50000 16268 149163 199163 14561 51404 21193 72597 147466 220063.03 13052.374
7/31/95 50000 16688 165851 215851 931 51282 22118 73400 164210 237610.93 14126.690
7/31/96 50000 17706 183557 233557 0 50703 21869 72572 179890 252462.64 15181.157
7/31/97 50000 18480 202037 252037 0 52349 22579 74928 204867 279795.23 16295.587
TOTAL $ 23611
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BOND PORTFOLIO FOR ENDOWMENTS, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
8/01/81 50000.00 690.85 0.00 % 72.375 690.850 50000
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
7/31/82 50000 7182 7182 57182 0 51916 0 51916 7286 59202.68 82.532
7/31/83 50000 7806 14988 64988 0 57836 0 57836 15548 73384.79 91.832
7/31/84 50000 8308 23296 73296 0 55812 0 55812 23409 79221.27 102.730
7/31/85 50000 9077 32373 82373 0 60622 0 60622 34948 95570.77 114.098
7/31/86 50000 10061 42434 92434 0 66645 0 66645 48965 115610.21 125.550
7/31/87 50000 10263 52697 102697 0 63769 0 63769 56941 120710.70 137.000
7/31/88 50000 10058 62755 112755 3787 61880 3867 65747 65367 131114.13 7667.493
7/31/89 50000 11726 74481 124481 0 64522 4032 68554 80501 149055.27 8359.802
7/31/90 50000 12774 87255 137255 0 63328 3958 67286 91987 159273.14 9101.322
7/31/91 50000 14209 101464 151464 0 64269 4016 68285 108154 176439.54 9934.659
7/31/92 50000 15266 116730 166730 0 70348 4396 74744 134665 209409.45 10772.091
7/31/93 50000 16607 133337 183337 4721 71144 9504 80648 153348 233996.07 11902.140
7/31/94 50000 17048 150385 200385 15260 61012 22209 83221 147398 230619.66 13678.509
7/31/95 50000 17488 167873 217873 975 60867 23179 84046 164963 249009.32 14804.359
7/31/96 50000 18556 186429 236429 0 60179 22918 83097 181476 264573.50 15909.411
7/31/97 50000 19365 205794 255794 0 62134 23662 85796 207421 293217.24 17077.300
TOTAL $ 24743
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BOND PORTFOLIO FOR ENDOWMENTS, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
8/01/82 50000.00 717.33 0.00 % 69.703 717.330 50000
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
7/31/83 50000 6593 6593 56593 0 55701 0 55701 6276 61977.35 77.557
7/31/84 50000 7017 13610 63610 0 53752 0 53752 13154 66906.61 86.761
7/31/85 50000 7666 21276 71276 0 58385 0 58385 22329 80714.74 96.362
7/31/86 50000 8498 29774 79774 0 64185 0 64185 33453 97638.37 106.033
7/31/87 50000 8667 38441 88441 0 61415 0 61415 40531 101946.79 115.704
7/31/88 50000 8495 46936 96936 3198 59596 3266 62862 47871 110733.00 6475.614
7/31/89 50000 9903 56839 106839 0 62140 3406 65546 60339 125885.27 7060.307
7/31/90 50000 10789 67628 117628 0 60990 3343 64333 70181 134514.80 7686.560
7/31/91 50000 12002 79630 129630 0 61896 3392 65288 83724 149012.78 8390.359
7/31/92 50000 12892 92522 142522 0 67751 3713 71464 105393 176857.67 9097.617
7/31/93 50000 14026 106548 156548 3987 68518 8027 76545 121077 197622.42 10052.005
7/31/94 50000 14398 120946 170946 12888 58760 18757 77517 117253 194770.87 11552.246
7/31/95 50000 14770 135716 185716 824 58620 19576 78196 132105 210301.96 12503.089
7/31/96 50000 15671 151387 201387 0 57958 19355 77313 146133 223446.75 13436.365
7/31/97 50000 16356 167743 217743 0 59840 19984 79824 167813 247637.97 14422.712
TOTAL $ 20897
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BOND PORTFOLIO FOR ENDOWMENTS, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
8/01/83 50000.00 799.12 0.00 % 62.569 799.120 50000
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
7/31/84 50000 5660 5660 55660 0 48251 0 48251 5726 53977.34 69.995
7/31/85 50000 6185 11845 61845 0 52409 0 52409 12708 65117.42 77.741
7/31/86 50000 6855 18700 68700 0 57615 0 57615 21155 78770.56 85.543
7/31/87 50000 6993 25693 75693 0 55129 0 55129 27117 82246.28 93.345
7/31/88 50000 6853 32546 82546 2580 53496 2634 56130 33203 89333.87 5224.203
7/31/89 50000 7989 40535 90535 0 55780 2747 58527 43030 101557.99 5695.905
7/31/90 50000 8703 49238 99238 0 54748 2696 57444 51075 108519.86 6201.135
7/31/91 50000 9682 58920 108920 0 55561 2736 58297 61919 120216.11 6768.925
7/31/92 50000 10401 69321 119321 0 60817 2995 63812 78868 142680.00 7339.506
7/31/93 50000 11316 80637 130637 3216 61505 6475 67980 91451 159431.96 8109.459
7/31/94 50000 11616 92253 142253 10397 52745 15132 67877 89254 157131.49 9319.780
7/31/95 50000 11915 104168 154168 665 52620 15793 68413 101248 169661.17 10086.871
7/31/96 50000 12643 116811 166811 0 52026 15614 67640 112625 180265.74 10839.792
7/31/97 50000 13194 130005 180005 0 53715 16121 69836 129946 199782.00 11635.527
TOTAL $ 16858
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BOND PORTFOLIO FOR ENDOWMENTS, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
8/01/84 50000.00 771.16 0.00 % 64.837 771.160 50000
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
7/31/85 50000 5729 5729 55729 0 54309 0 54309 6009 60318.69 72.012
7/31/86 50000 6351 12080 62080 0 59704 0 59704 13261 72965.65 79.239
7/31/87 50000 6478 18558 68558 0 57128 0 57128 19057 76185.19 86.466
7/31/88 50000 6348 24906 74906 2390 55436 2440 57876 24874 82750.42 4839.206
7/31/89 50000 7401 32307 82307 0 57802 2544 60346 33727 94073.68 5276.146
7/31/90 50000 8062 40369 90369 0 56733 2497 59230 41292 100522.50 5744.143
7/31/91 50000 8968 49337 99337 0 57576 2534 60110 51246 111356.80 6270.090
7/31/92 50000 9635 58972 108972 0 63022 2774 65796 66369 132165.19 6798.621
7/31/93 50000 10481 69453 119453 2979 63735 5998 69733 77949 147682.62 7511.832
7/31/94 50000 10760 80213 130213 9631 54658 14016 68674 76877 145551.67 8632.958
7/31/95 50000 11037 91250 141250 616 54528 14629 69157 88001 157158.01 9343.520
7/31/96 50000 11710 102960 152960 0 53912 14464 68376 98605 166981.07 10040.954
7/31/97 50000 12222 115182 165182 0 55663 14933 70596 114463 185059.08 10778.048
TOTAL $ 15616
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BOND PORTFOLIO FOR ENDOWMENTS, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
8/01/85 50000.00 837.62 0.00 % 59.693 837.620 50000
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
7/31/86 50000 5264 5264 55264 0 54967 0 54967 5515 60482.88 65.683
7/31/87 50000 5369 10633 60633 0 52595 0 52595 10556 63151.08 71.673
7/31/88 50000 5261 15894 65894 1981 51037 2023 53060 15533 68593.18 4011.297
7/31/89 50000 6134 22028 72028 0 53216 2109 55325 22654 77979.20 4373.483
7/31/90 50000 6683 28711 78711 0 52231 2070 54301 29023 83324.73 4761.413
7/31/91 50000 7434 36145 86145 0 53007 2101 55108 37197 92305.45 5197.379
7/31/92 50000 7987 44132 94132 0 58021 2300 60321 49232 109553.87 5635.487
7/31/93 50000 8688 52820 102820 2470 58678 4972 63650 58766 122416.51 6226.679
7/31/94 50000 8919 61739 111739 7983 50321 11619 61940 58710 120650.13 7155.998
7/31/95 50000 9148 70887 120887 510 50202 12126 62328 67942 130270.80 7744.994
7/31/96 50000 9708 80595 130595 0 49635 11989 61624 76789 138413.30 8323.109
7/31/97 50000 10131 90726 140726 0 51246 12379 63625 89773 153398.46 8934.098
TOTAL $ 12944
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BOND PORTFOLIO FOR ENDOWMENTS, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
8/01/86 50000.00 920.83 0.00 % 54.299 920.830 50000
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
7/31/87 50000 4439 4439 54439 0 47843 0 47843 4363 52206.06 59.251
7/31/88 50000 4351 8790 58790 1638 46425 1672 48097 8608 56705.67 3316.121
7/31/89 50000 5071 13861 63861 0 48407 1744 50151 14314 64465.06 3615.539
7/31/90 50000 5525 19386 69386 0 47511 1712 49223 19661 68884.18 3936.239
7/31/91 50000 6146 25532 75532 0 48217 1737 49954 26354 76308.50 4296.650
7/31/92 50000 6603 32135 82135 0 52778 1901 54679 35888 90567.69 4658.832
7/31/93 50000 7183 39318 89318 2042 53376 4110 57486 43715 101201.17 5147.567
7/31/94 50000 7373 46691 96691 6600 45774 9605 55379 44361 99740.91 5915.831
7/31/95 50000 7563 54254 104254 422 45665 10025 55690 52004 107694.29 6402.752
7/31/96 50000 8025 62279 112279 0 45149 9911 55060 59365 114425.64 6880.676
7/31/97 50000 8375 70654 120654 0 46616 10233 56849 69964 126813.79 7385.777
TOTAL $ 10702
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BOND PORTFOLIO FOR ENDOWMENTS, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
8/01/87 50000.00 881.10 0.00 % 56.747 881.100 50000
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
7/31/88 50000 4166 4166 54166 1569 48519 1601 50120 4188 54308.37 3175.928
7/31/89 50000 4857 9023 59023 0 50590 1670 52260 9479 61739.71 3462.687
7/31/90 50000 5291 14314 64314 0 49654 1639 51293 14679 65972.03 3769.830
7/31/91 50000 5886 20200 70200 0 50392 1663 52055 21027 73082.49 4115.005
7/31/92 50000 6323 26523 76523 0 55158 1821 56979 29759 86738.85 4461.875
7/31/93 50000 6880 33403 83403 1955 55782 3936 59718 37204 96922.80 4929.949
7/31/94 50000 7061 40464 90464 6321 47838 9199 57037 38487 95524.26 5665.733
7/31/95 50000 7243 47707 97707 404 47724 9601 57325 45816 103141.40 6132.069
7/31/96 50000 7686 55393 105393 0 47185 9492 56677 52911 109588.19 6589.789
7/31/97 50000 8021 63414 113414 0 48717 9800 58517 62935 121452.63 7073.537
TOTAL $ 10249
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BOND PORTFOLIO FOR ENDOWMENTS, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
8/01/88 50000.00 17.10 0.00 % 2923.977 17.100 50000
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
7/31/89 50000 4472 4472 54472 0 52135 0 52135 4706 56841.83 3187.988
7/31/90 50000 4872 9344 59344 0 51170 0 51170 9568 60738.39 3470.765
7/31/91 50000 5420 14764 64764 0 51930 0 51930 15354 67284.77 3788.557
7/31/92 50000 5821 20585 70585 0 56842 0 56842 23015 79857.79 4107.911
7/31/93 50000 6334 26919 76919 1800 57485 1929 59414 29819 89233.85 4538.853
7/31/94 50000 6501 33420 83420 5819 49298 7015 56313 31633 87946.28 5216.268
7/31/95 50000 6668 40088 90088 372 49181 7389 56570 38389 94959.13 5645.608
7/31/96 50000 7076 47164 97164 0 48626 7305 55931 44963 100894.48 6067.016
7/31/97 50000 7384 54548 104548 0 50205 7543 57748 54069 111817.70 6512.388
TOTAL $ 7991
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BOND PORTFOLIO FOR ENDOWMENTS, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
8/01/89 50000.00 17.83 0.00 % 2804.262 17.830 50000
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
7/31/90 50000 4286 4286 54286 0 49075 0 49075 4352 53427.52 3053.001
7/31/91 50000 4767 9053 59053 0 49804 0 49804 9381 59185.91 3332.540
7/31/92 50000 5122 14175 64175 0 54515 0 54515 15730 70245.53 3613.453
7/31/93 50000 5571 19746 69746 1584 55132 1697 56829 21664 78493.02 3992.524
7/31/94 50000 5718 25464 75464 5119 47280 6171 53451 23909 77360.42 4588.400
7/31/95 50000 5866 31330 81330 327 47168 6499 53667 29862 83529.15 4966.061
7/31/96 50000 6224 37554 87554 0 46635 6426 53061 35689 88750.10 5336.747
7/31/97 50000 6497 44051 94051 0 48149 6635 54784 43574 98358.53 5728.511
TOTAL $ 7030
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BOND PORTFOLIO FOR ENDOWMENTS, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
8/01/90 50000.00 17.50 0.00 % 2857.143 17.500 50000
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
7/31/91 50000 4461 4461 54461 0 50743 0 50743 4645 55388.96 3118.748
7/31/92 50000 4793 9254 59254 0 55543 0 55543 10196 65739.08 3381.640
7/31/93 50000 5213 14467 64467 1482 56171 1588 57759 15698 73457.47 3736.392
7/31/94 50000 5352 19819 69819 4790 48171 5775 53946 18451 72397.53 4294.041
7/31/95 50000 5490 25309 75309 306 48057 6082 54139 24031 78170.51 4647.474
7/31/96 50000 5825 31134 81134 0 47514 6014 53528 29528 83056.52 4994.379
7/31/97 50000 6079 37213 87213 0 49057 6209 55266 36782 92048.52 5361.009
TOTAL $ 6578
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BOND PORTFOLIO FOR ENDOWMENTS, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
8/01/91 50000.00 17.76 0.00 % 2815.315 17.760 50000
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
7/31/92 50000 4326 4326 54326 0 54730 0 54730 4613 59343.11 3052.629
7/31/93 50000 4705 9031 59031 1338 55349 1433 56782 9528 66310.55 3372.866
7/31/94 50000 4832 13863 63863 4324 47466 5213 52679 12674 65353.71 3876.258
7/31/95 50000 4956 18819 68819 276 47354 5491 52845 17720 70565.05 4195.306
7/31/96 50000 5260 24079 74079 0 46819 5429 52248 22727 74975.64 4508.457
7/31/97 50000 5487 29566 79566 0 48339 5605 53944 29148 83092.77 4839.416
TOTAL $ 5938
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BOND PORTFOLIO FOR ENDOWMENTS, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
8/01/92 50000.00 19.44 0.00 % 2572.016 19.440 50000
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
7/31/93 50000 3966 3966 53966 1127 50566 1208 51774 4096 55870.48 2841.835
7/31/94 50000 4070 8036 58036 3644 43364 4392 47756 7308 55064.29 3265.972
7/31/95 50000 4175 12211 62211 233 43261 4626 47887 11568 59455.13 3534.788
7/31/96 50000 4431 16642 66642 0 42773 4574 47347 15824 63171.33 3798.637
7/31/97 50000 4624 21266 71266 0 44162 4723 48885 21125 70010.50 4077.490
TOTAL $ 5004
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BOND PORTFOLIO FOR ENDOWMENTS, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
8/01/93 50000.00 19.66 0.00 % 2543.235 19.660 50000
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
7/31/94 50000 3643 3643 53643 3261 42879 3004 45883 3395 49278.56 2922.809
7/31/95 50000 3737 7380 57380 208 42777 3216 45993 7215 53208.03 3163.379
7/31/96 50000 3966 11346 61346 0 42294 3179 45473 11060 56533.77 3399.505
7/31/97 50000 4138 15484 65484 0 43667 3282 46949 15705 62654.33 3649.058
TOTAL $ 3469
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BOND PORTFOLIO FOR ENDOWMENTS, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
8/01/94 50000.00 16.86 0.00 % 2965.599 16.860 50000
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
7/31/95 50000 3792 3792 53792 211 49881 222 50103 3884 53987.04 3209.693
7/31/96 50000 4023 7815 57815 0 49318 219 49537 7824 57361.43 3449.274
7/31/97 50000 4198 12013 62013 0 50919 226 51145 12426 63571.58 3702.480
TOTAL $ 211
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BOND PORTFOLIO FOR ENDOWMENTS, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
8/01/95 50000.00 16.82 0.00 % 2972.652 16.820 50000
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
7/31/96 50000 3727 3727 53727 0 49435 0 49435 3690 53125.23 3194.542
7/31/97 50000 3888 7615 57615 0 51040 0 51040 7836 58876.79 3429.050
TOTAL $ 0
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BOND PORTFOLIO FOR ENDOWMENTS, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
8/01/96 50000.00 16.63 0.00 % 3006.615 16.630 50000
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
7/31/97 50000 3660 3660 53660 0 51624 0 51624 3789 55413.19 3227.326
TOTAL $ 0
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BOND PORTFOLIO FOR ENDOWMENTS, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
8/01/97 50000.00 17.17 0.00 % 2912.056 17.170 50000
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
7/31/97 50000 0 0 50000 0 50000 0 50000 0 50000.00 2912.056
TOTAL $ 0
</TABLE>
