Endowments
Investments for Nonprofit Institutions
Semi-Annual Report
For the Six Months Ended
January 31, 2000
[The Capital Group Companies, Inc. logo (r)]
Capital Research and Management Company
<PAGE>
Endowments is managed by Capital Research and Management Company, which also
manages the 29 funds in The American Funds Group(r). Since 1931, Capital has
invested with a long-term focus based on thorough research and attention to
risk.
Growth And Income Portfolio (ENDI) seeks to provide long-term growth of
principal, with income and preservation of capital as secondary objectives,
primarily through investments in common stocks.
Bond Portfolio (BENDI) seeks to provide as high a level of current income as is
consistent with the preservation of capital through investments in
quality-oriented fixed-income securities.
Results at a Glance (with all distributions reinvested)
<TABLE>
<CAPTION>
Standard & Lipper Lehman Lipper
Poor's 500 Multi-Cap Brothers A-Rated
Composite Value Aggregate Bond Funds
ENDI Index Funds Index* BENDI Bond Index Average
<S> <C> <C> <C> <C> <C> <C>
Total return for the
six months ended
January 31, 2000 -9.5% +5.6% -6.8% +1.0% +0.7% -0.1%
</TABLE>
*Tracks 30 of the largest U.S. multi-cap value funds. These funds seek
long-term growth of capital by investing in companies that have a broad range
of market capitalizations and are considered to be undervalued when compared
with a major unmanaged stock index. The index reflects reinvested dividends.
Lipper, Inc. recently reclassified U.S. domestic equity funds into several new
categories based on portfolio holdings. As a result of these changes, ENDI is
now included in the Lipper Multi-Cap Value Funds Index.
Market indexes are unmanaged.
Here are the total returns and average annual compound returns with all
distributions reinvested for periods ended December 31, 1999 (the most recent
calendar quarter): ENDI - 10 years: +235.78%, or +12.88% a year; 5 years:
+123.82%, or +17.48% a year; 12 months: +3.64%. BENDI - 10 years: +110.38%, or
+7.72% a year; 5 years: +40.35%, or +7.01% a year; 12 months: -0.40%.
BENDI's 30-day yield as of February 29, 2000, calculated in accordance with the
Securities and Exchange Commission formula, was 6.98%.
FIGURES SHOWN ARE PAST RESULTS AND ARE NOT PREDICTIVE OF FUTURE RESULTS. SHARE
PRICE AND RETURN WILL VARY, SO YOU MAY LOSE MONEY. INVESTING FOR SHORT PERIODS
MAKES LOSSES MORE LIKELY. INVESTMENTS ARE NOT FDIC-INSURED, NOR ARE THEY
DEPOSITS OF OR GUARANTEED BY A BANK OR ANY OTHER ENTITY.
Dear Shareholder:
The six months ended January 31 - the first half of our 2000 fiscal year - saw
a sharply mixed stock market and considerable turbulence in the bond market. It
was a very difficult period for the Growth and Income Portfolio (ENDI). The
Bond Portfolio (BENDI)* held up better than its principal benchmark and the
average fund in its peer group.
*The acronyms ENDI and BENDI have been commonly used since before these
investment vehicles became a series with the Endowments fund in 1998.
Growth and Income Portfolio (ENDI):
The value of an investment in ENDI, with all distributions taken in shares,
fell 9.5% in the fiscal half-year.+ Two indexes that track the performance of
ENDI's investment universe also recorded declines, albeit smaller ones. The
Lipper Multi-Cap Value Funds Index showed a six-month total return of -6.8%.
This index, created as part of the reclassification of U.S. equity funds into
new categories by Lipper, will be used exclusively as ENDI's benchmark in the
future. The Lipper Growth and Income Funds Index, which we have used in the
past, registered a 0.8% decline.
+All percentage gain/loss figures include reinvestment of distributions unless
otherwise indicated.
For this same period, the unmanaged Standard & Poor's 500 Composite Index was
on the plus side, with a total return of 5.6%. It should be pointed out,
however, that about two-thirds of the stocks in that index went down in price
during the six months. Of those that went up, many were technology issues. The
index is heavily weighted toward such issues, and without their big increases
the S&P 500 would have declined as well.
ENDI holds some investments that benefited from the market's enthusiasm for
technology, including Corning, which produces fiber-optic cable, and Nokia, the
Finnish telecommunications company. Those two stocks rose 120% and 115%,
respectively, for the six months. They were the fund's biggest gainers.
Looking at astronomical gains such as these, it is easy to say in retrospect
that the fund should have been more heavily invested in technology stocks.
However, we feel there has been excessive speculation in this area of the
market, particularly among Internet issues. In fact, one could argue that we
have been witnessing one of the most speculative bubbles of all time. In the
past, conditions like these have often ended rather abruptly, with unfortunate
consequences for many of those who abandoned sound investment practices.
With that in mind, we have been very selective in investing in the technology
sector. Our limited exposure to that area of the market hurt the fund's
relative results during the past half-year and will continue to do so as long
as the current frothy environment continues.
[Begin Sidebar]
Long-Term Results
During their 24-1/2 years under the stewardship of Capital Research and
Management Company, both ENDI and BENDI have built solid records. From July 25,
1975 through January 31, 2000, ENDI generated an average annual compound return
within two percentage points of the S&P 500, while steering a steadier course.
Its share value has risen an average of 14.3% a year (including reinvestment).
During this time ENDI has been about 18% less volatile than the index based on
standard deviation, a widely used measure of volatility. BENDI's average annual
compound return over the 24-1/2 years is 9.2%. The most relevant bond market
indicator that covers the entire period and is useful for comparison purposes
is the Lipper corporate A-rated universe (consisting of 17 funds over this
period), which rose an average of 9.1% a year. During this lengthy span, the
Consumer Price Index increased at an average annual rate of 4.7%.
[End Sidebar]
Meanwhile, we have taken advantage of price weakness and better valuations
elsewhere and added to our holdings of companies in the food, household
products and financial services industries.
On January 31, 2000, 79% of net assets was invested in common stocks, about the
same as at the start of the period. The remainder was held in interest-bearing
cash equivalents.
Bond Portfolio (BENDI):
In the first half of fiscal 2000, bond prices generally fell and interest rates
rose. Concerned about the prospect of future inflation, the Federal Reserve has
now raised short-term rates four times in eight months (including twice during
the fiscal half-year) and has indicated that further increases are likely.
In this difficult environment, the Bond Portfolio managed to generate a small
positive total return for the six months. For shareholders who reinvested
dividends totaling 58 cents a share as well as a 1-cent capital gain paid in
December, a decline in net asset value was more than offset by a 3.6% income
return. The result was a total return of 1.0%. This compares with a decline of
0.1% for the average of 176 corporate A-rated bond funds tracked by Lipper,
Inc. The unmanaged Lehman Brothers Aggregate Bond Index recorded a total return
of +0.7%.
During the six months, we reduced BENDI's average effective maturity to 7.9
years from 8.4 years at the start of the period. Drawing on the research
capabilities of our investment adviser, we continued to identify attractive
opportunities and made a number of additions to the portfolio, notably federal
agency bonds. At the end of January, 42% of net assets was invested in various
U.S. government issues, while 31% was invested in corporate bonds; the balance
was held in short-term investments and cash equivalents.
As we enter the second half of fiscal 2000, the fixed-income markets continue
to display a great deal of volatility. Meanwhile, the economic expansion in the
United States is breaking records for longevity, and growth is accelerating in
many European, Asian and Latin American countries. This environment could
result in lower bond prices and further increases in interest rates. At some
point, however, we look for rates to begin declining in the U.S. and perhaps
elsewhere as well. Because of the inherent strength in the economy and the
flexibility of monetary policy, we do not believe these conditions are likely
to lead to recession. In our view, the greater likelihood is that it will
enable growth to proceed at a more normal pace, allowing rates to stop climbing
and turn downward again.
We look forward to reporting to you again in another six months.
Cordially,
/s/ Robert G. O'Donnell /s/ Frank L. Ellsworth
Robert G. O'Donnell Frank L. Ellsworth
Chairman of the Board President
March 16, 2000
[Begin Sidebar]
In February 2000, Robert G. O'Donnell, senior vice president of the Trust and a
portfolio counselor of ENDI since 1991, was elected chairman of Endowments. He
succeeds Robert B. Egelston, who had been chairman since 1989 and will continue
to serve on the Board of Trustees. Everyone associated with ENDI and BENDI
would like to thank Mr. Egelston for his many contributions and wise counsel
during his years as chairman.
[End Sidebar]
<TABLE>
Endowments - Growth and Income Portfolio
January 31, 2000
<S> <C>
INDUSTRY DIVERSIFICATION
EQUITY SECURITIES
Health & Personal Care 8.51
Banking 7.64
Insurance 6.82
Utilities: Electric & Gas 6.26
Food & Household Products 6.01
Merchandising 4.85
Chemicals 4.69
Energy Sources 4.16
Real Estate 3.40
Beverages & Tobacco 2.26
Machinery & Engineering 2.21
Diversified Telecommunication Services 2.08
Forest Products & Paper 2.08
Electronic Components 2.02
Industrial Components 1.91
Leisure & Tourism 1.89
Electrical & Electronics 1.85
Aerospace & Military Technology 1.79
Recreation Other Consumer Products 1.44
Broadcasting & Publishing 1.17
Business & Public Services 1.11
Miscellaneous Materials & Commodities 0.76
Metals: Nonferrous 0.73
Transportation: Rail & Road 0.71
Metals: Steel 0.66
77.01
Equity securities in initial period of acquisition 2.28
Short-Term Securities 22.34
Excess of payables over cash and receivables 1.63
Net Assets 100.00%
</TABLE>
<TABLE>
<S> <C>
TEN LARGEST HOLDINGS
PERCENT
OF NET
ASSETS
Sara Lee 2.13%
Kimberly-Clark 1.95
Avon Products 1.94
Seagram 1.89
Albertson's 1.89
Campbell Soup 1.65
J.C. Penney 1.65
NSTAR 1.58
U S WEST 1.49
Allstate 1.46
17.63%
</TABLE>
<TABLE>
Endowments, Growth and Income Portfolio
Investment Portfolio, January 31, 2000
(Unaudited)
<S> <C> <C> <C>
Shares Market Percent
Value of Net
Equity Securities Assets
- -------------------------------------------- -------- -------- --------
ENERGY
ENERGY SOURCES - 4.16%
Atlantic Richfield Co. 5,000 $ 385,00 .81%
Conoco Inc., Class A 13,000 303,06 .64
Texaco Inc. 12,000 634,50 1.33
Ultramar Diamond Shamrock Corp. 30,000 656,25 1.38
UTILITIES: ELECTRIC & GAS - 6.26%
Ameren Corp. 15,000 488,43 1.02
DPL Inc. 30,000 575,62 1.21
GPU, Inc. 20,000 580,00 1.22
NSTAR (formerly BEC Energy) 18,000 754,87 1.58
TECO Energy, Inc. 30,000 588,74 1.23
---------- ----------
4,966,50 10.42
---------- ----------
MATERIALS
CHEMICALS - 4.69%
CK Witco Corp. (merger of Witco Corp. and 27,726 330,97 .70
Crompton & Knowles Corp.)
Hercules Inc. 10,000 171,25 .36
International Flavors & Fragrances Inc. 15,000 535,31 1.12
Monsanto Co. 10,000 353,12 .74
PPG Industries, Inc. 8,000 440,50 .92
Praxair, Inc. 10,000 405,62 .85
FOREST PRODUCTS & PAPER - 2.08%
Georgia-Pacific Corp., Timber Group 15,000 $ 325,31 .68%
International Paper Co. 8,000 381,00 .80
Weyerhaeuser Co. 5,000 286,87 .60
METALS: NONFERROUS - 0.73%
Alcoa Inc. 5,000 348,43 .73
METALS: STEEL - 0.66%
Allegheny Technologies Inc. (formerly Allegheny 15000 313,12 0.657205828
Teledyne Inc.)
MISCELLANEOUS MATERIALS & COMMODITIES - 0.76%
American National Can Group, Inc. 30,000 359,99 .76
---------- ----------
4,251,54 8.92
---------- ----------
CAPITAL EQUIPMENT
AEROSPACE & MILITARY TECHNOLOGY - 1.79%
Lockheed Martin Corp. 15,000 281,25 .59
Raytheon Co., Class A 25,000 570,31 1.20
ELECTRICAL & ELECTRONICS - 1.85%
Hitachi, Ltd. (Japan) 30,000 425,17 .89
Nokia Corp., Class A (ADR) (Finland) 2,500 457,50 .96
ELECTRONIC COMPONENTS - 2.02%
Corning Inc. 4,000 617,00 1.30
Texas Instruments Inc. 3,200 345,20 .72
INDUSTRIAL COMPONENTS - 1.91%
Eaton Corp. 6,000 428,62 .90
Genuine Parts Co. 20,000 482,50 1.01
MACHINERY & ENGINEERING - 2.21%
Caterpillar Inc. 7,000 $ 297,06 .62%
Deere & Co. 10,000 436,87 .92
Foster Wheeler Corp. 45,000 317,81 .67
---------- ----------
4,659,31 9.78
---------- ----------
CONSUMER GOODS
BEVERAGES & TOBACCO - 2.26%
Imperial Tobacco Ltd. (United Kingdom) 35,000 255,00 .53
PepsiCo, Inc. 15,000 511,87 1.07
Philip Morris Companies Inc. 15,000 314,06 .66
FOOD & HOUSEHOLD PRODUCTS - 6.01%
Campbell Soup Co. 25,000 785,93 1.65
General Mills, Inc. 14,000 436,62 .92
Sara Lee Corp. 55,000 1,014,06 2.13
Wm. Wrigley Jr. Co. 8,000 623,99 1.31
HEALTH & PERSONAL CARE - 8.51%
Avon Products, Inc. 29,000 922,56 1.94
Becton, Dickinson and Co. 22,000 576,12 1.21
Eli Lilly and Co. 7,000 468,12 .98
Glaxo Wellcome PLC (ADR) (United Kingdom) 10,000 527,50 1.11
Kimberly-Clark Corp. 15,000 929,06 1.95
Merck & Co., Inc. 8,000 630,49 1.32
RECREATION & OTHER CONSUMER PRODUCTS - 1.44%
Pennzoil-Quaker State Co. 60,000 686,25 1.44%
---------- ----------
8,681,69 18.22
---------- ----------
SERVICES
BROADCASTING & PUBLISHING - 1.17%
Gannett Co., Inc. 8,000 556,00 1.17
BUSINESS & PUBLIC SERVICE - 1.11%
United HealthCare Corp. 10,000 530,00 1.11
LEISURE & TOURISM - 1.89%
The Seagram Co. Ltd. (Canada)
Seagram Co. Ltd. 7.50% Automatic Common Exchange Securities
convertible preferred 2002 (Canada) 15,700 902,10 1.89
MERCHANDISING - 4.85%
Albertson's, Inc. 29,450 901,90 1.89
J.C. Penney Co., Inc. 40,000 785,00 1.65
May Department Stores Co. 20,000 622,50 1.31
DIVERSIFIED TELECOMMUNICATION SERVICES - 2.08%
Telefonos de Mexico, S.A. de C.V. 4.25% 220,000 278,85 .59
convertible debentures 2004 (Mexico)
U S WEST, Inc. 10,700 711,55 1.49
TRANSPORTATION: RAIL & ROAD - 0.71%
Norfolk Southern Corp. 20,000 340,00 .71
---------- ----------
5,627,90 11.81
---------- ----------
FINANCE
BANKING - 7.64%
Bank of Tokyo-Mitsubishi, Ltd. (ADR) (Japan) 25,000 $ 325,00 .68%
BANK ONE CORP. 20,000 596,25 1.25
FleetBoston Financial Corp. (formerly Fleet 15,000 471,56 .99
Financial Group, Inc.)
Fulton Financial Corp. 27,500 450,31 .95
Huntington Bancshares Inc. 30,479 657,20 1.38
National City Corp. 25,000 540,62 1.13
Wells Fargo & Co. 15,000 599,99 1.26
INSURANCE - 6.82%
Aetna Inc. 5,000 266,25 .56
Allstate Corp. 30,000 695,62 1.46
HCC Insurance Holdings, Inc. 50,000 665,62 1.40
Mercury General Corp. 20,000 475,00 1.00
Royal & Sun Alliance Insurance Group PLC 60,000 391,02 .82
(United Kingdom)
Trenwick Group Inc. 20,000 281,25 .59
XL Capital Ltd. (Supranational) 10,500 473,81 .99
REAL ESTATE - 3.40%
Apartment Investment and Management Co., Class A 10,000 378,75 .80
Archstone Communities Trust 20,000 401,25 .84
Boston Properties, Inc. 15,000 450,00 .94
Spieker Properties, Inc. 10,000 388,75 .82
---------- ----------
8,508,29 17.86
---------- ----------
MISCELLANEOUS
Other equity securities in initial period of acquisition 1,084,65 2.28
---------- ----------
Total Equity Securities (cost: $42,554,066) 37,779,89 79.29
---------- ----------
Principal
Amount
Short Term Securities (000)
- -------------------------------------------- --------
Corporate Short-Term Notes - 13.75%
Avon Capital Corp. 5.65% due 02/24/00 (1) 900 $ 896,61 1.88%
Corporate Asset Funding Co., Inc. 5.67% due 02/11/00 (1 500 499,13 1.05
General Motors Acceptance Corp. 5.65% due 02/14/00 500 498,90 1.05
Heinz (H.J.) Co. 5.70% due 03/02/00 1,200 1,194,11 2.51
John Hancock Capital Corp. 5.60% due 02/02/00 (1) 500 499,84 1.05
Motiva Enterprises LLC 5.70% due 03/13/00 1,000 993,35 2.08
National Rural Utilities 5.73% due 02/17/00 970 967,37 2.03
Park Avenue Receivables Corp. 5.68% due 02/01/00 (1) 1,000 999,84 2.10
---------- ----------
6,549,16 13.75
---------- ----------
Federal Agency Short-Term Obligations - 8.59%
Fannie Mae 5.57%-5.60% due 02/02-02/14/00 2,500 2,497,36 5.24
Federal Home Loan Banks 5.55% due 02-25-00 1,200 1,195,37 2.51
Freddie Mac 5.56% due 02/23/00 400 398,57 .84
---------- ----------
4,091,32 8.59
---------- ----------
---------- ----------
Total Short-Term Securities (cost: $10,640,488) 10,640,48 22.34
---------- ----------
Total Investment Securities (cost:$53,194,554) 48,420,38 101.63
Excess of payables over cash and receivables $ 775,49 1.63%
---------- ----------
NET ASSETS $ 47,644,89 100.00%
========== ==========
(1) Purchased in a private placement transaction;
resale may be limited to qualified institutional buyers;
resale to the public may require registration.
ADR = American Depositary Receipts
See Notes to Financial Statements
</TABLE>
<TABLE>
<S> <C>
COMPANIES ADDED TO THE COMPANIES ELIMINATED FROM THE
PORTFOLIO SINCE JULY 31, 1999 PORTFOLIO SINCE JULY 31, 1999
American National Can Group Bank of America
BANK ONE Boeing
Becton, Dickinson and Co. Browning-Ferris Industries
Foster Wheeler CCA Prison Realty Trust
HCC Insurance Holdings Emerson Electric
Hitachi GTE
National City Kerr-McGee
PepsiCo Orion Capital
Raytheon Schlumberger
Telefonos de Mexico
Texaco
Texas Instruments
Wm. Wrigley Jr.
XL Capital
</TABLE>
<TABLE>
Endowments, Bond Portfolio
Investment Portfolio, January 31, 2000
(Unaudited)
<S> <C> <C> <C>
Shares/Princip Market Percent
Amount (000) Value of Net
Fixed Income Securities Assets
- -------------------------------------------- ----------------------------------
Industrials - 12.82%
BHP Finance Ltd. 8.50% 2012 $145 $ 148,86 .48%
Ceridian Corp. 7.25% 2004 250 236,838 .76
Columbia/HCA Healthcare Corp. 8.85% 2007 125 120,625 .39
Equistar Chemicals LP 8.75% 2009 250 245,543 .79
Fox/Liberty Networks, LLC, FLN Finance, Inc. 450 456,750 1.47
8.875% 2007
Hutchison Whampoa Finance (CI) Ltd., Series D, 300 278,676 .90
6.988% 2037 (1)
Hyundai Semiconductor America, Inc. 8.625% 2007 (1) 200 173,235 .56
Inco Ltd. 9.60% 2022 700 673,939 2.17
J.C. Penney Co., Inc. 7.95% 2017 200 176,886 .57
Lilly Del Mar Inc. 7.355% 2029 (1,3) 250 249,988 .80
Petrozuata Finance, Inc., Series A, 7.63% 2009 (1) 250 196,251 .63
Scotia Pacific Co. LLC, Series B:
Class A-1, 6.55% 2028 (2) 217 206,092
Class A-3, 7.71% 2028 250 207,500 1.33
TRW Inc. 7.125% 2009 125 116,938 .38
Tyco International Group SA 6.875% 2002 (1) 200 196,054 .63
Union Pacific Resources Group Inc. 7.30% 2009 200 190,322 .61
Waste Management, Inc. 6.875% 2009 (1) 125 107,290 .35
--------------------
3,981,788 12.82
--------------------
Electric Utilities - 0.87%
Israel Electric Corp. Ltd.: (1)
7.75% 2009 125 118,904
7.75% 2027 175 152,075 .87
--------------------
270,979 .87
--------------------
Multi-Industry - 2.15%
Swire Pacific Capital Ltd. 8.84% cumulative 10,000 shares $ 200,00 .64%
guaranteed perpetual capital securities (1)
Wharf International Finance Ltd., Series A, $500 468,239 1.51
7.625% 2007
--------------------
668,239 2.15
--------------------
Diversified Telecommunication Services - 0.80%
Bell Atlantic Financial Services, Inc., Senior 250 249,375 .80
Exchangeable Notes, 5.75% 2003
--------------------
Transportation - 6.62%
Airplanes Pass Through Trust, pass-through 1,178 1,076,435 3.46
certificates, Series 1, Class C, 8.15% 2019 (2)
Continental Airlines, Inc., pass-through certificates, 125 111,791 .36
Series 1998-3, Class A-2, 6.32% 2008 (2)
Jet Equipment Trust, Series 1994-A, Class B1, 750 867,015 2.80
11.79% 2013 (1)
--------------------
2,055,241 6.62
--------------------
Financial - 10.69%
Abbey National PLC 6.70% (undated) (3) 200 180,316 .58
BNP U.S. Funding LLC, Series A, 7.738% 500 461,341 1.49
noncumulative preferred (undated) (3)
Conseco, Inc. 9.00% 2006 125 125,651 .40
Deutsche Bank Capital Funding Trust I, 7.872% 200 186,191 .60
(undated) (1,3)
Ford Motor Credit Co.:
5.80% 2009 150 130,346
7.375% 2009 250 241,615 1.20
General Motors Acceptance Corp. 9.00% 2002 300 310,860 1.00
IBJ Preferred Capital Co. LLC, Series A, 250 232,500 .75
8.79% noncumulative preferred (undated) (1,3)
MBNA Corp., MBNA Capital:
A, Series A, 8.278% 2026 250 218,723
B, Series B, 7.005% 2027 (3) 200 166,675 1.24
NB Capital Corp. 8.35% exchangeable depositary 10,000 shares 228,120 .73
shares
Providian Master Trust, Series 1999-2, Class A, $250 246,104 .79
6.60% 2007 (2)
ReliaStar Financial Corp. 8.00% 2006 125 124,829 .40
SocGen Real Estate Co. LLC, Series A, 7.64%/ 250 229,825 .74
8.406% (undated) (1,3)
Washington Mutual Capital I Subordinated Capital 250 239,198 .77
Income Securities 8.375% 2027
--------------------
$ 3,322,29 10.69%
--------------------
Real Estate - 0.37%
ProLogis Trust 7.05% 2006 125 116,379 .37
--------------------
Collateralized Mortgage/Asset-Backed
Obligations(2) - 12.63%
Boston Edison Co., Series 1999-1, Class A-5, 200 192,113 .62
7.03% 2012
Chase Commercial Mortgage Securities Corp., 250 228,109 .73
Series 1998-2, Class A-2, 6.39% 2030
CS First Boston Mortgage Securities Corp., 220 208,740 .67
Series 1998-C1, Class A-1A, 6.26% 2040
First Consumer Master Trust, Series 1999-A, 250 237,164 .76
Class A, 5.80% 2005 (1)
GMAC Commercial Mortgage Securities, Inc., 125 116,757 .38
Series 1997-C1, Class A3, 6.869% 2007
Green Tree Financial Corp., pass-through 246 210,293 .68
certificates, Series 1996-5, Class B-2, 8.45% 2027
GS Mortgage Securities Corp. II, mortgage
pass-through certificates, Series 1998-C1 (3):
Class D, 7.45% 2030 250 222,322
Class E, 7.45% 2030 250 210,675 1.40
L.A. Arena Funding, LLC, Series 1, Class A, 325 290,355 .93
7.656% 2026 (1)
Merrill Lynch Mortgage Investors, Inc., Seller
Manufactured Housing Contracts,
Series 1995-C2, Class A-1, 7.079% 2021 (3) 136 133,847 .43
Morgan Stanley Capital I Inc., Series 1998-HF2, 500 460,568 1.48
Class A-2, 6.48% 2030
Nomura Asset Securities Corp., Series 1998-D6, 217 206,178 .66
Class A-A1, 6.28% 2030 (3)
Norwest Asset Securities Corp., Series 1998-31, 217 203,980 .66
Class A-1, 6.25% 2014
PP&L Transition Bond Co. LLC, Series 1999-1, 250 245,934 .79
Class A-7, 7.05% 2009
Puerto Rico Public Financing Corp., Series 1, 238 227,434 .73
Class A, 6.15% 2008
Sears Credit Account Master Trust II, Series 250 232,499 .75
1998-2, Class A, 5.25% 2008
Structured Asset Securities Corp., Series 292 296,195 .96
1998-RF2, Class A, 8.547% 2022 (1,3)
--------------------
3,923,163 12.63
--------------------
Federal Agency Obligations - Mortgage Pass-
Throughs (2) - 13.79%
Fannie Mae:
7.00% 2012-2026 566 545,975
9.00% 2020 83 86,408 2.04
Freddie Mac:
8.75% 2008 $57 $ 58,530
9.00% 2020 58 60,367 .47%
12.50% 2019 26 28,931
Government National Mortgage Assn.:
6.00% 2029 246 219,661
7.00% 2024-2029 1,402 1,337,840
7.50% 2023-2024 502 492,840
8.00% 2023 690 688,003 11.28
8.50% 2008 180 185,527
10.00% 2019-2020 542 578,583
--------------------
4,282,665 13.79
--------------------
Federal Agency Obligations - Other - 7.19%
Fannie Mae 5.25% 2009 1,000 864,059 2.78
Federal Home Loan Bank Bonds 5.625% 2001 250 247,188 .80
Freddie Mac:
5.125% 2008 750 644,183
6.60% 2009 520 479,456 3.61
--------------------
2,234,886 7.19
--------------------
U.S. Treasury Obligations - 21.02%
11.625% November 2002 1,640 1,839,621
11.625% November 2004 2,015 2,406,031 21.02
8.875% August 2017 1,875 2,283,393
--------------------
6,529,045 21.02
--------------------
Miscellaneous
Other bonds, notes & preferred stocks in initial 322,500 1.04
period of acquisition
--------------------
Total Bonds, Notes & Preferred Stocks 27,956,554 89.99
(cost: $29,729,542)
Short Term Securities
- --------------------------------------------
Corporate Short-Term Notes - 5.46%
Citigroup Inc. 5.87% due 02/01/2000 $700 $ 699,88 2.26%
Heinz (H.J.) Co. 5.69% due 2/23/2000 500 498,182 1.60
USAA Capital Corp.5.74% due 02/29/2000 500 497,688 1.60
--------------------
1,695,756 5.46
--------------------
Federal Agency Short-Term Obligations - 2.56%
Federal Home Loan Bank Discount Note 5.55% due 2/25/2000 800 796,917 2.56
--------------------
--------------------
Total Short Term Securities (cost: $2,492,673) 2,492,673 8.02
--------------------
Total Investment Securities (cost:$32,222,215) 30,449,227 98.01
Excess of cash and receivables over payables 617,213 1.99
--------------------
NET ASSETS $31,066,44 100.00
(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 maturities are shorter than the stated
maturities.
(3) Coupon rate may change periodically.
See Notes to Financial Statements
</TABLE>
<TABLE>
Endowments
Financial Statements Unaudited
<S> <C> <C>
Statement of Assets and Liabilities Growth and IncomeBond Portfolio
at January 31, 2000 Portfolio
Assets:
Investment securities at market
(cost: $53,194,554 and $32,222,215, respectively) $48,420,388 $30,449,227
Cash 60,285 130,562
Receivables for-
Sales of investments 6,580 48,591
Sales of fund's shares 32,685 21,876
Dividends and accrued interest 101,442 437,572
------------ ------------
Total Assets 48,621,380 31,087,828
------------ ------------
Liabilities:
Payables for -
Purchases of investments 943,847 -
Management services 18,281 7,133
Accrued expenses 14,361 14,255
------------ ------------
Total Liabilities 976,489 21,388
------------ ------------
Net Assets at January 31, 2000 $47,644,891 $31,066,440
============= =============
Shares outstanding(1) 4,201,899 1,973,764
Net asset value per share $11.34 $15.74
(1)Shares of beneficial interest issued and outstanding;
unlimited shares authorized.
See Notes to Financial Statements
<PAGE>
Endowments Unaudited
Statement of Operations
for the six months ended January 31, 2000 Growth and IncomeBond Portfolio
Portfolio
Investment Income:
Income:
Dividends $ 594,333 $ 27,011
Interest 301,602 1,212,579
------------ ------------
Total Income 895,935 1,239,590
------------ ------------
Expenses:
Management services fee 124,006 79,950
Transfer agent fee 8,331 8,330
Reports to shareholders 11,550 11,550
Registration statement and prospectus 12,135 8,384
Postage, stationery and supplies 740 740
Auditing fees 18,450 18,950
Legal fees 5,100 5,100
Trustees' meeting expenses 10,064 10,064
Custodian fee 646 341
------------ ------------
Total expenses before reimbursement 191,022 143,409
Reimbursement of expenses 5,013 23,483
------------ ------------
Net Expenses 186,009 119,926
------------ ------------
Net investment income 709,926 1,119,664
------------ ------------
Realized Gain (Loss) and Change in Unrealized
(Depreciation) on Investments:
Net realized gain (loss) 1,697,672 (505,424)
Net change in unrealized depreciation
on investments (7,318,921) (272,966)
------------ ------------
Net realized gain (loss) and change in unrealized
depreciation on investments (5,621,249) (778,390)
------------ ------------
Net (Decrease) Increase in Net Assets Resulting
from Operations $(4,911,323) $ 341,274
============= =============
See Notes to Financial Statements
<PAGE>
Endowments, Growth and Income Portfolio
Statement of Changes in Net Assets
Six Months Ended Year Ended
January 31, 2000* 1999
Operations:
Net investment income $ 709,926 $ 1,359,022
Net realized gain on investments 1,697,672 3,548,696
Net unrealized (depreciation) appreciation
on investments (7,318,921) 3,069,731
------------ ------------
Net (decrease) increase in net assets resulting
from operations (4,911,323) 7,977,449
------------- -------------
Dividends and Distributions Paid to
Shareholders:
Dividends from net investment income (632,309) (1,251,179)
Distributions from net realized
gain on investments (4,153,742) -
------------- -------------
Total dividends and distributions (4,786,051) (1,251,179)
------------- -------------
Capital Share Transactions:
Proceeds from shares sold:
263,792 and 428,901
shares, respectively 3,209,110 5,431,127
Proceeds from shares issued in
reinvestment of net investment income
dividends and distributions of net
realized gain on investments:
388,598 and 71,284 shares,
respectively 4,552,165 890,752
Cost of shares repurchased:
157,151 and 362,633
shares, respectively (1,981,998) (4,626,061)
------------- -------------
Net increase in net assets
resulting from capital share transactions 5,779,277 1,695,818
------------- -------------
Total (Decrease) Increase in Net Assets (3,918,097) 8,422,088
Net Assets:
Beginning of period 51,562,988 43,140,900
------------- -------------
End of period (including undistributed
net investment income: $185,165 and
$107,548, respectively) $47,644,891 $51,562,988
============= =============
*Unaudited
See Notes to Financial Statements
<PAGE>
Endowments, Bond Portfolio
Statement of Changes in Net Assets
Six Months Ended Year Ended
January 31, 2000* 1999
Operations:
Net investment income $ 1,119,664 $ 2,035,407
Net realized (loss) on investments (505,424) (81,253)
Net unrealized (depreciation) on
investments (272,966) (1,472,279)
---------------- ------------
Net increase in net assets resulting
from operations 341,274 481,875
---------------- ------------
Dividends Paid to
Shareholders:
Dividends from net investment income (1,127,578) (1,880,282)
Distributions from net realized
gain on investments (23,049) -
------------- -------------
Total dividends and distributions (1,150,627) (1,880,282)
------------- -------------
Capital Share Transactions:
Proceeds from shares sold:
257,572 and 265,672
shares, respectively 4,105,847 4,421,000
Proceeds from shares issued in
reinvestment of net investment income
dividends and distributions of net
realized gain on investments:
36,585 and 49,414 shares,
respectively 580,570 819,899
Cost of shares repurchased:
264,581 and 88,164
shares, respectively (4,249,064) (1,483,454)
---------------- ------------
Net increase in net assets resulting
from capital share transactions 437,353 3,757,445
---------------- ------------
Total (Decrease) Increase in Net Assets (372,000) 2,359,038
Net Assets:
Beginning of period 31,438,440 29,079,402
---------------- ------------
End of period (including undistributed
net investment income: $147,211 and
$155,125, respectively) $31,066,440 $31,438,440
================ ===========
*Unaudited
See Notes to Financial Statements
</TABLE>
Notes to Financial Statements
ENDOWMENTS
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION - Endowments(the "trust") is registered under the Investment
Company Act of 1940 as an open-end, diversified management investment company
and has initially issued two series of shares, Growth and Income Portfolio and
Bond Portfolio(the "funds"). Growth and Income Portfolio seeks to provide
long-term growth of principal, with income and preservation of capital as
secondary objectives, primarily through investments in common stocks. Bond
Portfolio seeks to provide as high a level of current income as is consistent
with preservation of capital.
SIGNIFICANT ACCOUNTING POLICIES - The financial statements have been
prepared in conformity with generally accepted accounting principles which
require management to make estimates and assumptions that affect the reported
amounts and disclosures in the financial statements. Actual results could
differ from those estimates. The following is a summary of the significant
accounting policies consistently followed by the trust in the preparation of
its financial statements:
SECURITY VALUATION - 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. The ability of the issuers of the debt
securities held by the trust to meet their obligations may be affected by
economic developments in a specific industry, state or region. Short-term
securities maturing within 60 days are valued at amortized cost, which
approximates market value. 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 Trustees.
SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME - Security
transactions are accounted for as of the trade date. Realized gains and losses
from securities transactions are determined based on specific identified cost.
Dividend income is recognized on the ex-dividend date, and interest income is
recognized on an accrual basis. Market discounts and original issue discounts
on securities purchased are amortized daily over the expected life of the
security. The trust does not amortize premiums on securities purchased.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS - Dividends and distributions
paid to shareholders are recorded on the ex-dividend date.
2. FEDERAL INCOME TAXATION
The funds comply with the requirements of the Internal Revenue Code
applicable to regulated investment companies and intends to distribute all of
its net taxable income and net capital gains for the fiscal year. As regulated
investment companies, the funds are not subject to income taxes if such
distributions are made. Required distributions are determined on a tax basis
and may differ from net investment income and net realized gains for financial
reporting purposes. In addition, the fiscal year in which amounts are
distributed may differ from the year in which the net investment income and net
realized gains are recorded by the funds.
As of January 31, 2000, net unrealized depreciation on investments for
book and federal income tax purposes for Growth and Income Portfolio aggregated
$4,774,166, of which $3,041,517 related to appreciated securities and
$7,815,683 related to depreciated securities. For Bond Portfolio, net
unrealized depreciation aggregated $1,772,988 of which $99,298 related to
appreciated securities and $1,872,286 related to depreciated securities. There
was no difference between book and tax realized gains and losses on securities
transactions for the six months ended January 31, 2000. The cost of portfolio
securities for book and federal income tax purposes was $53,195,000 and
$32,222,000 for Growth and Income and Bond Portfolios, respectively, at January
31, 2000.
3. FEES AND TRANSACTIONS WITH RELATED PARTIES
INVESTMENT ADVISORY FEE - The fees of $124,006 and $79,950 for Growth and
Income and Bond Portfolios, respectively, for management services was incurred
pursuant to an agreement with Capital Research and Management Company (CRMC),
with which certain officers and Trustees of the trust 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 operating expenses exceed 0.75% of the average
net assets of the funds. Expenses that are not subject to these limitations are
interest, taxes, brokerage commissions, transaction costs, and extraordinary
expenses. Fee reductions were $5,013 and $23,483 for Growth and Income and
Bond Portfolios, respectively, for the six months ended January 31, 2000.
No fees were paid by the funds to its officers or Trustees. The
independent Trustees were reimbursed by the trust for expenses incurred while
traveling to fund meetings.
TRANSFER AGENT FEE - American Funds Service Company (AFS), the transfer
agent for the fund, was paid a fee of $8,331 and $8,330 for Growth and Income
and Bond Portfolios, respectively.
CRMC is owned by The Capital Group Companies, Inc. AFS and AFD are both
wholly owned subsidiaries of CRMC. Certain Trustees and officers of the trust
are or may be considered to be affiliated with CRMC, AFS and AFD. No such
persons received any remuneration directly from the funds.
4. INVESTMENT TRANSACTIONS AND OTHER DISCLOSURES
Pursuant to the custodian agreement, the funds receive credits against its
custodian fee for imputed interest on certain balances with the custodian bank.
The custodian fees of $646 and $341 for Growth and Income and Bond Portfolios,
respectively, were paid by these credits rather than in cash.
<TABLE>
Growth
and Income Bond
Portfolio Portfolio
<S> <C> <C>
As of January 31, 2000:
Accumulated undistributed net realized
gain (loss) on investments $ 185,165 $ 147,211
Paid-in capital 46,939,105 31,328,495
During the six months ended January 31, 2000:
Purchases and sales of investment securities,
excluding shrot-term securities
Purchases 10,453,141 8,719,341
Sales 8,764,143 8,030,231
</TABLE>
<PAGE>
<TABLE>
Endowments, Growth and Income Portfolio
Per-Share Data and Ratios
<S> <C> <C> <C> <C> <C> <C>
Six months Year ended
ended July 31
1/31/2000 (1) 1999 1998 1997 1996 1995
Net Asset Value, Beginning of Period $13.91 $12.09 $22.66 $18.61 $18.06 $17.18
----------- -------------------------------------------------------
Income From Investment Operations:
Net investment income .18 .37 .51 .56 .58 .63
Net loss or gains on securities (both
realized and unrealized) (1.47) 1.79 1.16 6.04 1.73 2.21
----------- -------------------------------------------------------
Total from investment operations (1.29) 2.16 1.67 6.60 2.31 2.84
----------- -------------------------------------------------------
Less Distributions:
Dividends (from net investment income) (.17) (.34) (.57) (.55) (.61) (.61)
Distributions (from capital gains) (1.11) - (11.67) (2.00) (1.15) (1.35)
----------- -------------------------------------------------------
Total distributions (1.28) (.34) (12.24) (2.55) (1.76) (1.96)
----------- ---------------------- --------- ---------- ---------
Net Asset Value, End of Period $11.34 $13.91 $12.09 $22.66 $18.61 $18.06
========== ========== ========== ======== ======== =======
Total Return (9.53)% (2) 18.21% 9.05% 38.40% 13.22% 18.57%
Ratios/Supplemental Data:
Net assets, end of period (in millions) $48 $52 $43 $48 $59 $57
Ratio of expenses to average net assets .38% (2),(3) .75% (3) .75% (3) .74% .72% .73%
Ratio of net income to average net assets 1.44% 2.90% 2.69% 2.73% 3.12% 3.70%
Portfolio turnover rate 22.47% (2) 52.36% 48.59% 50.69% 38.73% 24.04%
(1) Unaudited.
(2) Based on operations for the period
shown and, accordingly, not
representative of a full year.
(3) Had CRMC not waived management services
fees, the fund's expense ratio would
have been 0.39%, 0.79% and 0.89%
for the six months ended January 31,
2000, and the fiscal years ended
1999 and 1998, respectively.
</TABLE>
<TABLE>
Endowments, Bond Portfolio
Per-Share Data and Ratios
<S> <C> <C> <C> <C> <C> <C>
Six months
ended Year ended July 31
01/31/2000 (1) 1999 1998 1997 1996 1995
Net Asset Value, Beginning of Period $16.17 $16.93 $17.17 $16.63 $16.82 $16.86
------------ ------------ -------------------- ------------------
Income From Investment Operations:
Net investment income .58 1.14 1.19 1.21 1.22 1.26
Net gains or losses on securities (both
realized and unrealized) (.42) (.84) (.09) .52 (.19) .01
------------ ------------ -------------------- ------------------
Total from investment operations .16 .30 1.10 1.73 1.03 1.27
----------- ----------- --------- -----------------------------
Less Distributions:
Dividends (from net investment income) (.58) (1.06) (1.34) (1.19) (1.22) (1.24)
Distributions (from capital gains) (.01) - - - - (.07)
----------- ----------- --------- -----------------------------
Total distributions (.59) (1.06) (1.34) (1.19) (1.22) (1.31)
----------- ----------- --------- ---------- ------------------
Net Asset Value, End of Period $15.74 $16.17 $16.93 $17.17 $16.63 $16.82
========== ========== ======== ======== ======= =======
Total Return 1.01% (2) 1.75% 6.70% 10.83% 6.25% 7.97%
Ratios/Supplemental Data:
Net assets, end of period (in millions) $31 $31 $29 $33 $41 $44
Ratio of expenses to average net assets .38% (2),(3) .75% (3) .75% (3) .75% (3) .75% (3) .76%
Ratio of net income to average net assets 3.54% 6.84% 6.87% 7.04% 7.17% 7.52%
Portfolio turnover rate 26.76% (2) 53.66% 50.40% 22.18% 54.43% 69.22%
(1) Unaudited.
(2) Based on operations for the period
shown and, accordingly, not
representative of a full year.
(3) Had CRMC not waived management
services fees, the fund's expense
ratio would have been 0.45%, 0.95%,
1.08%, 0.85%, and 0.80% for the six
months ended January 31, 2000 and
the fiscal years ended 1999, 1998,
1997, and 1996, respectively.
</TABLE>
Endowments
Board of Trustees
Robert B. Egelston, Los Angeles, California
Former Chairman of the Board,
The Capital Group Companies, Inc.
213/486-9444
Frank L. Ellsworth, Ph.D.,
Los Angeles, California
President and Principal Executive Officer
of the Trust
Vice President, Capital Research and Management Company
213/486-9560
Steven D. Lavine, Ph.D., Valencia, California
President, California Institute of the Arts
661/255-1050
Patricia A. McBride, Dallas, Texas
Chief Financial Officer,
Kevin L. McBride, D.D.S., Inc.
214/368-0268
Gail L. Neale, Burlington, Vermont
President, The Lovejoy Consulting Group, Inc.;
former Executive Vice President of the Salzburg Seminar
802/658-5674
Robert G. O'Donnell,
San Francisco, California
Chairman of the Board of the Trust
Senior Vice President and Director,
Capital Research and Management Company
415/393-7120
Charles R. Redmond, Los Angeles, California
Former Chairman of the Board, Pfaffinger Foundation; former President and Chief
Executive Officer, Times Mirror Foundation; former Executive Vice President and
Member of the Management Committee, The Times Mirror Company
213/237-3977
Thomas E. Terry, Los Angeles, California
Consultant; former Vice President and Secretary, Capital Research and
Management Company
213/486-9410
Robert C. Ziebarth, Ketchum, Idaho
Management consultant, Ziebarth Company
208/725-0535
Other Officers
Abner D. Goldstine, Los Angeles, California
Senior Vice President of the Trust
Senior Vice President and Director,
Capital Research and Management Company
Claudia P. Huntington,
Los Angeles, California
Senior Vice President of the Trust
Senior Vice President, Capital Research and Management Company
John H. Smet, Los Angeles, California
Senior Vice President of the Trust
Vice President, Capital Research and Management Company
Patrick F. Quan, San Francisco, California
Vice President and Secretary of the Trust
Vice President -
Fund Business Management Group,
Capital Research and Management Company
Anthony W. Hynes, Jr., Brea, California
Treasurer of the Trust
Vice President -
Fund Business Management Group,
Capital Research and Management Company
Susi M. Silverman, Brea, California
Assistant Treasurer of the Trust
Assistant Vice President -
Fund Business Management Group,
Capital Research and Management Company
Endowments
Office Of The Trust
One Market
Steuart Tower, Suite 1800
Mailing Address: P.O. Box 7650
San Francisco, California 94120-7650
Investment Adviser
Capital Research and Management Company
333 South Hope Street
Los Angeles, California 90071-1443
Transfer Agent For Shareholder Accounts
American Funds Service Company
P.O. Box 7650
San Francisco, California 94120-7650
135 South State College Boulevard
Brea, California 92821-5823
Custodian Of Assets
The Chase Manhattan Bank
One Chase Manhattan Plaza
New York, New York 10081-0001
Counsel
Paul, Hastings, Janofsky & Walker LLP
555 South Flower Street
Los Angeles, California 90071-2371
This report is for the information of shareholders of Endowments, but it may
also be used as sales literature when preceded or accompanied by the current
prospectus, which gives details about charges, expenses, investment objectives
and operating policies of the funds.
For more information about any of the American Funds, including risks, charges,
expenses, investment objectives and operation policies, please ask your
investment professional for a prospectus. Read it carefully before you invest
or send money.
Litho in USA KK/PL/4565
(c) 2000 Endowments
Lit. No. Endi-Bendi-013-0300 (NLS)
