UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
Certified Shareholder Report of
Registered Management Investment Companies
Investment Company Act File Number: 811-01884
Endowments
(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)
Registrant's telephone number, including area code: (415) 421-9360
Date of fiscal year end: July 31
Date of reporting period: January 31, 2007
Patrick F. Quan
Capital Research and Management Company
P.O. Box 7650, One Market, Steuart Tower
San Francisco, California 94120
(Name and address of agent for service)
Copies to:
Mitchell E. Nichter
Paul, Hastings, Janofsky & Walker LLP
55 Second Street
Twenty-Fourth Floor
San Francisco, California 94105
(Counsel for the registrant)
ITEM 1 - Reports to Stockholders
[logo - Capital Research and ManagementSM]
Endowments
Investments for nonprofit institutions
Semi-annual report for the six months ended January 31, 2007
EndowmentsSM is managed by Capital Research and Management Company,SM which also manages the 30 American Funds.® The American Funds organization ranks among the nation’s three largest mutual fund families. For 75 years, Capital Research has invested with a long-term focus based on thorough research and attention to risk.
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 the preservation of capital through investments in fixed-income securities.
Figures shown are past results and are not predictive of results in future periods. Current and future results may be lower or higher than those shown. Share prices and returns will vary, so investors 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. For current information and month-end results, visit americanfunds.com/endowments.
Here are returns on a $1,000 investment with all distributions reinvested for periods ended December 31, 2006 (the most recent calendar quarter): | ||||||||||
1 year | 5 years | 10 years | ||||||||
Growth and Income Portfolio | ||||||||||
Average annual total return | — | + 7.93 | % | + 0.09 | % | |||||
Cumulative total return | +13.99 | % | +46.47 | % | +161.48 | % | ||||
Bond Portfolio | ||||||||||
Average annual total return | — | + 5.92 | % | + 6.26 | % | |||||
Cumulative total return | + 5.09 | % | +33.33 | % | +83.46 | % |
The total annual fund operating expense ratios for Growth and Income Portfolio and Bond Portfolio were 0.71% and 0.79%, respectively, as of the most recent fiscal year-end. These figures do not reflect a fee waiver that currently is in effect and which causes the actual expense ratios to be 0.66% and 0.74%, respectively.
The funds’ investment adviser waived 5% of its management fees from September 1, 2004, through March 31, 2005, and increased it to 10% on April 1, 2005. Fund results shown reflect actual expenses, with the waiver applied. Fund results would have been lower without the waiver. Please see the Financial Highlights table on pages 22 and 23 for details.
The return of principal in the Bond Portfolio is not guaranteed. Fund shares are subject to the same interest rate, inflation and credit risks associated with the underlying bonds owned by the fund.
Dear shareholders:
We are pleased to report to you at the midpoint of our 2007 fiscal year.
Growth and Income Portfolio
For the six months ended January 31, 2007, the value of an investment in the Growth and Income Portfolio rose 11.4%.* Over the same period, the unmanaged Standard & Poor’s 500 Composite Index gained 13.7% and the Lipper Growth and Income Funds Index rose 12.5%.
There were three factors that contributed to the S&P 500’s substantial gain of almost 14% in the six-month period. First, inflationary pressures eased, driven by a decline in the price of oil from a high of $77 at the start of the period to about $58 at the end. Second, the Federal Reserve did not raise the federal funds rate for the first time in over two years. Third, corporate earnings continued to be very strong, driven by an extremely high level of profit margins.
While the fund’s total return was a bit less than that of the market, its absolute increase was still quite rewarding. Indeed, it is not at all uncommon for the portfolio to lag the market slightly in very strong periods given our objective of mitigating risk. Our return was enhanced by a number of information technology stocks that had strong gains in the first half. We continue to feel positive about prospects for the technology sector, where recent valuations don’t seem to fully reflect future growth potential.
On the other hand, returns were depressed slightly by some of our holdings in the oil and health care industries. Reflecting the decline in the price of the commodity, oil stocks were generally weak in the period. In light of strong results in other areas, the normally steady earnings growth in the health care sector appeared somewhat lackluster.
*All percentage gain/loss figures used throughout this letter include reinvestment of distributions.
Looking ahead, the environment seems generally favorable. Nevertheless, it remains to be seen how long high corporate profit margins and a benign competitive climate can continue. It would not surprise us if the economy began to slow somewhat, reflecting an inverted yield curve and a maturing economic recovery. Should this occur, corporate earnings growth would come under some pressure.
The fund ended the period with 85% in equities and 15% in short-term instruments. This is a small change from where we began the year.
Bond Portfolio
For the six months ended January 31, 2007, the Bond Portfolio posted a total return of 3.9%. Over the same period, the unmanaged Lehman Brothers Aggregate Bond Index gained 3.6%, as did the Lipper Corporate Debt A-Rated Bond Funds Average.
Bond market returns were aided, in part, by a halt in Federal Reserve rate hikes. Since June 2006, the Fed has left the federal funds rate unchanged at 5.25%. With the Fed on the sidelines, intermediate- and long-term bonds rallied during the first four months of the reporting period. By early December, however, the rally cooled, as evidence of sustained economic growth dampened hopes of a Fed rate cut in 2007. Though the market gave back some of its interim gains, bond yields were nonetheless lower at the end of the period than at the start, allowing most sectors to record solid gains.
In this environment, long-term bonds generally produced stronger returns than did short- and intermediate-term bonds. In the investment-grade universe, which is where the Bond Portfolio invests, lower rated bonds delivered higher returns than did the highest rated debt.
The fund’s results were helped by its corporate debt holdings, which totaled about 46% of portfolio assets. Within this sector, our holdings in automobiles and airlines proved especially beneficial, as did our exposure to financials, which accounted for about half of our corporate holdings. In addition, holdings of finance-related preferred securities helped to boost returns for the period. Over the past year, the fund has increased its exposure to newer varieties of these securities.
Mortgage- and asset-backed obligations totaled about 25% of portfolio assets, a slightly higher weighting than at the start of the period. Returns for these securities were in line with the market average, though longer maturity bonds generally delivered better results. This was also the case for U.S. Treasuries and government agency obligations, which totaled about 13% of assets.
Finally, the Bond Portfolio has maintained a slightly shorter duration in light of ongoing interest rate concerns. At the end of the period, the fund held 96% of assets in fixed-income securities (bonds and preferred securities) with maturities longer than one year — a slight increase from our last report. The remainder was held in interest-bearing cash equivalents.
We look forward to reporting to you again at the close of this fiscal year.
Cordially,
/s/ Robert G. O’Donnell
Robert G. O’Donnell
Vice Chairman of the Board
and Principal Executive Officer
/s/ John H. Smet
John H. Smet
President
President
February 26, 2007
Bond Portfolio’s 30-day yield as of February 28, 2007, calculated in accordance with the Securities and Exchange Commission formula, was 5.04% (4.99% without the fee waiver).
For current information about the fund, visit americanfunds.com/endowments.
Summary investment portfolio
The following summary investment portfolio is designed to streamline the report and help investors better focus on a fund’s principal holdings. For details on how to obtain a complete schedule of portfolio holdings, please see the back cover.
Growth and Income Portfolio, January 31, 2007
unaudited
[begin pie chart]Industry sector diversification | ||||
Information technology | 18.11 | % | ||
Consumer staples | 13.71 | |||
Health care | 11.49 | |||
Financials | 10.29 | |||
Consumer discretionary | 9.09 | |||
Energy | 9.08 | |||
Industrials | 8.04 | |||
Materials | 2.66 | |||
Telecommunication services | 1.78 | |||
Miscellaneous | 0.12 | |||
Convertible securities | 0.70 | |||
Short-term securities & other assets less liabilities | 14.93 |
[end pie chart]
Percent | ||||||||||
Market | of net | |||||||||
Common stocks - 84.37% | Shares | value | assets | |||||||
Information technology - 18.11% | ||||||||||
Microsoft Corp. | 186,000 | $ | 5,739,960 | 5.01 | % | |||||
Oracle Corp. (1) | 147,000 | 2,522,520 | 2.20 | |||||||
Cisco Systems, Inc. (1) | 68,000 | 1,808,120 | 1.58 | |||||||
Nokia Corp. (ADR) | 78,000 | 1,723,800 | 1.50 | |||||||
Intel Corp. | 80,000 | 1,676,800 | 1.46 | |||||||
International Business Machines Corp. | 13,000 | 1,288,950 | 1.12 | |||||||
Motorola, Inc. | 62,000 | 1,230,700 | 1.07 | |||||||
QUALCOMM Inc. | 30,000 | 1,129,800 | .99 | |||||||
Other securities | 3,636,920 | 3.18 | ||||||||
20,757,570 | 18.11 | |||||||||
Consumer staples - 13.71% | ||||||||||
Wal-Mart Stores, Inc. | 73,000 | 3,481,370 | 3.04 | |||||||
Altria Group, Inc. | 35,000 | 3,058,650 | 2.67 | |||||||
PepsiCo, Inc. | 32,000 | 2,087,680 | 1.82 | |||||||
Walgreen Co. | 30,000 | 1,359,000 | 1.19 | |||||||
Bunge Ltd. | 14,000 | 1,077,300 | .94 | |||||||
L'Oréal SA (2) | 10,000 | 1,054,984 | .92 | |||||||
Coca-Cola Co. | 20,000 | 957,600 | .83 | |||||||
Other securities | 2,640,515 | 2.30 | ||||||||
15,717,099 | 13.71 | |||||||||
Health care - 11.49% | ||||||||||
Medtronic, Inc. | 48,000 | 2,565,600 | 2.24 | |||||||
Eli Lilly and Co. | 29,000 | 1,569,480 | 1.37 | |||||||
Roche Holding AG (2) | 8,000 | 1,505,364 | 1.31 | |||||||
Pfizer Inc | 52,000 | 1,364,480 | 1.19 | |||||||
Novo Nordisk A/S, Class B (2) | 15,000 | 1,288,793 | 1.12 | |||||||
Merck & Co., Inc. | 25,000 | 1,118,750 | .98 | |||||||
Johnson & Johnson | 14,000 | 935,200 | .82 | |||||||
Other securities | 2,817,883 | 2.46 | ||||||||
13,165,550 | 11.49 | |||||||||
Financials - 10.29% | ||||||||||
Berkshire Hathaway Inc., Class A (1) | 20 | 2,201,000 | 1.92 | |||||||
Wells Fargo & Co. | 60,000 | 2,155,200 | 1.88 | |||||||
Citigroup Inc. | 20,000 | 1,102,600 | .96 | |||||||
Bank of America Corp. | 20,000 | 1,051,600 | .92 | |||||||
American International Group, Inc. | 15,000 | 1,026,750 | .90 | |||||||
Wachovia Corp. | 15,000 | 847,500 | .74 | |||||||
Fannie Mae | 14,000 | 791,420 | .69 | |||||||
SunTrust Banks, Inc. | 8,000 | 664,800 | .58 | |||||||
Other securities | 1,947,980 | 1.70 | ||||||||
11,788,850 | 10.29 | |||||||||
Consumer discretionary - 9.09% | ||||||||||
Target Corp. | 30,000 | 1,840,800 | 1.61 | |||||||
Lowe's Companies, Inc. | 54,000 | 1,820,340 | 1.59 | |||||||
Time Warner Inc. | 80,000 | 1,749,600 | 1.53 | |||||||
Walt Disney Co. | 30,000 | 1,055,100 | .92 | |||||||
Other securities | 3,956,061 | 3.44 | ||||||||
10,421,901 | 9.09 | |||||||||
Energy - 9.08% | ||||||||||
Exxon Mobil Corp. | 48,000 | 3,556,800 | 3.10 | |||||||
Chevron Corp. | 32,000 | 2,332,160 | 2.03 | |||||||
Royal Dutch Shell PLC, Class A (ADR) | 33,000 | 2,252,250 | 1.97 | |||||||
Schlumberger Ltd. | 20,000 | 1,269,800 | 1.11 | |||||||
ConocoPhillips | 15,000 | 996,150 | .87 | |||||||
10,407,160 | 9.08 | |||||||||
Industrials - 8.04% | ||||||||||
General Electric Co. | 53,000 | 1,910,650 | 1.67 | |||||||
Lockheed Martin Corp. | 18,000 | 1,749,420 | 1.53 | |||||||
United Parcel Service, Inc., Class B | 18,000 | 1,301,040 | 1.14 | |||||||
Caterpillar Inc. | 20,000 | 1,281,400 | 1.12 | |||||||
Avery Dennison Corp. | 15,000 | 1,025,400 | .89 | |||||||
Other securities | 1,943,360 | 1.69 | ||||||||
9,211,270 | 8.04 | |||||||||
Materials - 2.66% | ||||||||||
Air Products and Chemicals, Inc. | 13,000 | 970,580 | .85 | |||||||
Other securities | 2,083,400 | 1.81 | ||||||||
3,053,980 | 2.66 | |||||||||
Telecommunication services - 1.78% | ||||||||||
Other securities | 2,042,125 | 1.78 | ||||||||
Miscellaneous - 0.12% | ||||||||||
Other common stocks in initial period of acquisition | 134,295 | .12 | ||||||||
Total common stocks (cost: $75,919,326) | 96,699,800 | 84.37 | ||||||||
Percent | ||||||||||
Market | of net | |||||||||
Convertible securities - 0.70% | value | assets | ||||||||
Information technology - 0.70% | ||||||||||
Other securities | 804,000 | .70 | ||||||||
Total convertible securities (cost: $819,630) | 804,000 | .70 | ||||||||
Principal | Percent | |||||||||
amount | Market | of net | ||||||||
Short-term securities - 14.26% | (000 | ) | value | assets | ||||||
Federal Home Loan Bank 5.13% due 3/23/2007 | $ | 2,900 | 2,877,889 | 2.51 | ||||||
CAFCO, LLC 5.23% due 2/26/2007 (3) | 2,000 | 1,992,470 | 1.74 | |||||||
Colgate-Palmolive Co. 5.20% due 2/2/2007 (3) | 1,700 | 1,699,508 | 1.48 | |||||||
Three Pillars Funding, LLC 5.28% due 2/1/2007 (3) | 1,600 | 1,599,765 | 1.40 | |||||||
Johnson & Johnson 5.18% due 3/6/2007 (3) | 1,600 | 1,592,172 | 1.39 | |||||||
Procter & Gamble International Funding S.C.A. 5.23% due 2/8/2007 (3) | 1,500 | 1,498,254 | 1.31 | |||||||
Variable Funding Capital Corp. 5.255% due 2/16/2007 (3) | 1,100 | 1,097,430 | .96 | |||||||
Atlantic Industries 5.23% due 2/28/2007 (3) | 1,100 | 1,095,636 | .96 | |||||||
Emerson Electric Co. 5.21% due 2/6/2007 (3) | 1,000 | 999,130 | .87 | |||||||
Harley-Davidson Funding Corp. 5.25% due 2/14/2007 (3) | 1,000 | 997,953 | .87 | |||||||
Fannie Mae 5.145% due 3/14/2007 | 893 | 887,409 | .77 | |||||||
Total short-term securities (cost: $16,338,660) | 16,337,616 | 14.26 | ||||||||
Total investment securities (cost: $93,077,616) | 113,841,416 | 99.33 | ||||||||
Other assets less liabilities | 764,676 | .67 | ||||||||
Net assets | $ | 114,606,092 | 100.00 | % | ||||||
"Miscellaneous" securities include holdings in their initial period of acquisition that have not previously been publicly disclosed. | ||||||||||
"Other securities" includes all issues that are not disclosed separately in the summary investment portfolio. | ||||||||||
The following footnotes apply to either the individual securities noted or one or more of the securities aggregated and listed as a single line item. | ||||||||||
(1) Security did not produce income during the last 12 months. | ||||||||||
(2) Valued under fair value procedures adopted by authority of the board of trustees. The total value of all such securities, including those in “Miscellaneous” and “Other securities,” was $5,722,310. | ||||||||||
(3) Purchased in a private placement transaction; resale may be limited to qualified institutional buyers; resale to the public may require registration. In practice, restricted securities in this fund are typically as liquid as unrestricted securities. The total value of all such restricted securities, including those in "Other securities" in the summary investment portfolio, was $12,572,318, which represented 10.97% of the net assets of the fund. | ||||||||||
ADR = American Depositary Receipts | ||||||||||
See Notes to Financial Statements |
Summary investment portfolio
The following summary investment portfolio is designed to streamline the report and help investors better focus on a fund’s principal holdings. For details on how to obtain a complete schedule of portfolio holdings, please see the back cover.
Bond Portfolio, January 31, 2007
unaudited
[begin pie chart]
Holdings by investment type | ||||
Financials | 23.37 | % | ||
Consumer discretionary | 4.95 | |||
Industrials | 4.49 | |||
Telecommunication services | 4.37 | |||
Utilities | 3.75 | |||
Materials | 1.60 | |||
Energy | 1.39 | |||
Health care | 0.78 | |||
Information technology | 0.63 | |||
Consumer staples | 0.46 | |||
Mortgage- and asset-backed obligations | 25.26 | |||
U.S. government & government agency bonds & notes | 13.07 | |||
Municipals | 1.63 | |||
Non-U.S. government bonds & notes | 0.41 | |||
Preferred securities | 9.93 | |||
Short-term securities & other assets less liabilities | 3.91 |
[end pie chart]
Principal | Percent | |||||||||
amount | Market | of net | ||||||||
Bonds & notes - 86.16% | (000 | ) | value | assets | ||||||
Corporate bonds & notes - 45.79% | ||||||||||
Financials - 23.37% | ||||||||||
General Motors Acceptance Corp.: | ||||||||||
7.25% 2011 | $ | 455 | $ | 468,461 | ||||||
7.569% 2014 (1) | 250 | 263,287 | ||||||||
Residential Capital Corp.: | ||||||||||
6.46% 2009 (1) | 470 | 474,173 | ||||||||
6.375% 2010 | 250 | 252,278 | 2.43 | % | ||||||
Washington Mutual, Inc. 5.665% 2012 (1) | 650 | 652,134 | ||||||||
Washington Mutual Preferred Funding I Ltd. 6.534% (undated) (1) (2) | 400 | 394,658 | 2.25 | |||||||
Washington Mutual Preferred Funding II Ltd. 6.665% (undated) (1) (2) | 300 | 304,914 | ||||||||
Ford Motor Credit Co.: | ||||||||||
7.875% 2010 | 650 | 660,025 | ||||||||
7.375% 2009 | 150 | 151,042 | 1.35 | |||||||
ILFC E-Capital Trust II 6.25% 2065 (1) (2) | 255 | 260,037 | ||||||||
American General Finance Corp., Series I, 5.40% 2015 | 250 | 246,679 | ||||||||
AIG SunAmerica Global Financing VII 5.85% 2008 (2) | 125 | 125,802 | 1.05 | |||||||
Hospitality Properties Trust: | ||||||||||
6.30% 2016 | 400 | 407,002 | ||||||||
6.75% 2013 | 215 | 223,949 | 1.05 | |||||||
Development Bank of Singapore Ltd. 7.875% 2009 (2) | 250 | 264,788 | ||||||||
DBS Bank Ltd. 5.97% 2021 (1) (2) | 250 | 257,258 | .87 | |||||||
Lincoln National Corp. 7.00% 2066 (1) | 485 | 513,804 | .86 | |||||||
Standard Chartered PLC 6.409% (undated) (2) | 500 | 492,751 | .82 | |||||||
TuranAlem Finance BV 8.50% 2015 (2) | 400 | 409,000 | .68 | |||||||
SocGen Real Estate Co. LLC, Series A, 7.64% (undated) (1) (2) | 375 | 379,940 | .63 | |||||||
Resona Bank, Ltd. 5.85% (undated) (1) (2) | 375 | 365,161 | .61 | |||||||
JPM Capital Trust I, cumulative capital securities trust, 7.54% 2027 | 345 | 357,849 | .60 | |||||||
Abbey National PLC 6.70% (undated) (1) | 250 | 253,353 | ||||||||
Santander Issuances, SA Unipersonal 5.805% 2016 (1) (2) | 100 | 100,497 | .59 | |||||||
Other securities | 5,741,240 | 9.58 | ||||||||
14,020,082 | 23.37 | |||||||||
Consumer discretionary - 4.95% | ||||||||||
DaimlerChrysler North America Holding Corp. 8.00% 2010 | 600 | 641,750 | 1.07 | |||||||
Federated Retail Holdings, Inc. 5.90% 2016 | 300 | 299,416 | .50 | |||||||
Other securities | 2,028,864 | 3.38 | ||||||||
2,970,030 | 4.95 | |||||||||
Industrials - 4.49% | ||||||||||
Continental Airlines, Inc.: | ||||||||||
Series 2001-1, Class A-2, 6.503% 2011 (3) | 385 | 396,309 | ||||||||
Series 2000-2, Class A-1, 7.707% 2022 (3) | 186 | 203,779 | 1.00 | |||||||
BAE SYSTEMS 2001 Asset Trust, Series 2001, Class G, MBIA insured, 6.664% 2013 (2) (3) | 332 | 346,552 | .58 | |||||||
Other securities | 1,748,309 | 2.91 | ||||||||
2,694,949 | 4.49 | |||||||||
Telecommunication services - 4.37% | ||||||||||
AT&T Wireless Services, Inc.: | ||||||||||
8.125% 2012 | 500 | 560,350 | ||||||||
7.875% 2011 | 100 | 108,770 | ||||||||
SBC Communications Inc. 5.625%-6.25% 2011-2016 | 400 | 407,517 | ||||||||
BellSouth Corp. 6.55% 2034 | 100 | 102,307 | 1.96 | |||||||
Nextel Communications, Inc.: | ||||||||||
6.875% 2013 | 500 | 507,491 | ||||||||
7.375% 2015 | 150 | 153,874 | 1.10 | |||||||
Other securities | 783,835 | 1.31 | ||||||||
2,624,144 | 4.37 | |||||||||
Utilities - 3.75% | ||||||||||
Homer City Funding LLC 8.734% 2026 (3) | 293 | 338,337 | .56 | |||||||
Other securities | 1,912,315 | 3.19 | ||||||||
2,250,652 | 3.75 | |||||||||
Materials - 1.60% | ||||||||||
Norske Skogindustrier ASA 7.625% 2011 (2) | 500 | 527,553 | .88 | |||||||
Alcoa Inc. 5.55% 2017 | 300 | 298,741 | .50 | |||||||
Other securities | 135,715 | .22 | ||||||||
962,009 | 1.60 | |||||||||
Energy - 1.39% | ||||||||||
Tengizchevroil Finance Co. S.àr.l., Series A, 6.124% 2014 (2) (3) | 300 | 299,310 | .50 | |||||||
Other securities | 532,989 | .89 | ||||||||
832,299 | 1.39 | |||||||||
Health care - 0.78% | ||||||||||
Other securities | 470,212 | .78 | ||||||||
Information technology - 0.63% | ||||||||||
Other securities | 375,200 | .63 | ||||||||
Consumer staples - 0.46% | ||||||||||
Other securities | 276,136 | .46 | ||||||||
Mortgage- and asset-backed obligations (3) - 25.26% | ||||||||||
Freddie Mac: | ||||||||||
6.00% 2036 | 585 | 587,290 | ||||||||
0%-8.75% 2008-2036 | 1,015 | 954,637 | 2.57 | |||||||
Fannie Mae: | ||||||||||
7.30% 2010 | 500 | 531,479 | ||||||||
5.50% 2036 | 433 | 426,135 | ||||||||
6.00%-12.049% 2011-2041 (1) | 405 | 422,807 | 2.30 | |||||||
Wells Fargo Mortgage-backed Securities Trust: | ||||||||||
5.00% 2019 | 607 | 589,817 | ||||||||
5.25%-5.697% 2033-2036 | 412 | 407,104 | 1.66 | |||||||
SBA CMBS Trust: | ||||||||||
6.219% 2035 (2) | 320 | 323,373 | ||||||||
5.314%-5.852% 2036 (2) | 500 | 497,716 | 1.37 | |||||||
ARG Funding Corp.: | ||||||||||
Series 2005-2, Class A-1, AMBAC insured, 4.54% 2009 (2) | 500 | 495,517 | ||||||||
Series 2005-1, Class A-3, MBIA insured, 4.29% 2011 (2) | 250 | 242,884 | 1.23 | |||||||
Countrywide Alternative Loan Trust 5.50%-6.00% 2035-2036 (1) | 713 | 707,444 | 1.18 | |||||||
GMAC Mortgage Loan Trust, Series 2006-AR1, Class 2-A-1, 5.647% 2036 (1) | 465 | 462,343 | .77 | |||||||
Morgan Stanley Capital I, Inc., Series 1998-HF2, Class A-2, 6.48% 2030 | 379 | 383,080 | .64 | |||||||
Chase Commercial Mortgage Securities Corp., Series 1998-2, Class A-2, 6.39% 2030 | 343 | 347,357 | .58 | |||||||
Crown Castle Towers LLC, Series 2005-1, Class D, 5.612% 2035 (2) | 325 | 322,006 | .54 | |||||||
Residential Funding Mortgage Securities I, Inc., Series 2004-SA1, Class A-II, 4.313% 2034 (1) | 319 | 312,267 | .52 | |||||||
L.A. Arena Funding, LLC, Series 1, Class A, 7.656% 2026 (2) | 281 | 305,129 | .51 | |||||||
Other securities | 6,837,576 | 11.39 | ||||||||
15,155,961 | 25.26 | |||||||||
U.S. government & government agency bonds & notes - 13.07% | ||||||||||
U.S. Treasury: | ||||||||||
4.50% 2011 | 750 | 739,627 | ||||||||
4.25% 2013 | 2,950 | 2,858,727 | ||||||||
12.50% 2014 | 1,200 | 1,415,808 | ||||||||
11.25% 2015 | 800 | 1,138,624 | ||||||||
4.50% 2036 | 1,275 | 1,191,921 | 12.24 | |||||||
Fannie Mae 5.25% 2007 | 500 | 499,820 | .83 | |||||||
7,844,527 | 13.07 | |||||||||
Municipals - 1.63% | ||||||||||
State of California, Golden State Tobacco Securitization Corp., Tobacco Settlement Asset-backed Bonds, Series 2003-A-1, 6.25% 2033 | 325 | 362,667 | .61 | |||||||
Other securities | 616,688 | 1.02 | ||||||||
979,355 | 1.63 | |||||||||
Non-U.S. government bonds & notes - 0.41% | ||||||||||
Other securities | 245,520 | .41 | ||||||||
Total bonds & notes (cost: $51,257,489) | 51,701,076 | 86.16 | ||||||||
Percent | ||||||||||
Market | of net | |||||||||
Preferred securities - 9.93% | Shares | value | assets | |||||||
Financials - 9.93% | ||||||||||
BNP U.S. Funding LLC, Series A, 7.738% noncumulative preferred (1) (2) | 375,000 | 380,995 | ||||||||
BNP Paribas 5.186% noncumulative (1) (2) | 300,000 | 287,121 | ||||||||
BNP Paribas Capital Trust 9.003% noncumulative trust preferred (1) (2) | 150,000 | 166,840 | 1.39 | |||||||
Fannie Mae, Series O, 7.00% (1) (2) | 15,000 | 804,375 | 1.34 | |||||||
Banco Santander Central Hispano, SA 6.80% (2) (4) | 10,000 | 256,000 | ||||||||
Banco Santander Central Hispano, SA 6.50% (2) (4) | 10,000 | 252,188 | .85 | |||||||
MUFG Capital Finance 1 Ltd. 6.346% noncumulative preferred (1) | 450,000 | 453,099 | .75 | |||||||
HSBC Capital Funding LP, Series 1, 9.547% noncumulative step-up perpetual preferred (1) (2) | 400,000 | 448,354 | .75 | |||||||
Fuji JGB Investment LLC, Series A, 9.87% noncumulative preferred (1) (2) | 360,000 | 379,908 | .63 | |||||||
Deutsche Bank Capital Funding Trust I 7.872% (1) (2) | 300,000 | 315,355 | .53 | |||||||
Resona Preferred Global Securities (Cayman) Ltd. 7.191% (1) (2) | 250,000 | 261,870 | .44 | |||||||
DBS Capital Funding Corp., Series A, 7.657% noncumulative guaranteed preference shares (1) (2) | 125,000 | 134,365 | .22 | |||||||
Other securities | 1,815,311 | 3.03 | ||||||||
Total preferred securities (cost: $5,826,718) | 5,955,781 | 9.93 | ||||||||
Principal | Percent | |||||||||
amount | Market | of net | ||||||||
Short-term securities - 2.00% | (000 | ) | value | assets | ||||||
Three Pillars Funding, LLC 5.28% due 2/1/2007 (2) | $ | 700 | 699,897 | 1.17 | ||||||
Johnson & Johnson 5.18% due 3/6/2007 (2) | 500 | 497,554 | .83 | |||||||
Total short-term securities (cost: $1,197,451) | 1,197,451 | 2.00 | ||||||||
Total investment securities (cost: $58,281,658) | 58,854,308 | 98.09 | ||||||||
Other assets less liabilities | 1,148,396 | 1.91 | ||||||||
Net assets | $ | 60,002,704 | 100.00 | % | ||||||
"Other securities" includes all issues that are not disclosed separately in the summary investment portfolio. | ||||||||||
The following footnotes apply to either the individual securities noted or one or more of the securities aggregated and listed as a single line item. | ||||||||||
(1) Coupon rate may change periodically. | ||||||||||
(2) Purchased in a private placement transaction; resale may be limited to qualified institutional buyers; resale to the public may require registration. In practice, restricted securities in this fund are typically as liquid as unrestricted securities. The total value of all such restricted securities, including those in "Other securities" in the summary investment portfolio, was $17,287,385, which represented 28.81% of the net assets of the fund. | ||||||||||
(3) Principal payments may be made periodically. Therefore, the effective maturity date may be earlier than the stated maturity date. | ||||||||||
(4) Security did not produce income during the last 12 months. | ||||||||||
See Notes to Financial Statements |
Financial statements
unaudited
Statement of assets and liabilities | |||||||
at January 31, 2007 | |||||||
Growth and Income Portfolio | Bond Portfolio | ||||||
Assets: | |||||||
Investment securities at market (cost: $93,077,616 and $58,281,658, respectively) | $ | 113,841,416 | $ | 58,854,308 | |||
Cash | 95,983 | 15,344 | |||||
Receivables for: | |||||||
Sales of investments | 579,847 | 399,232 | |||||
Sales of fund's shares | 63,092 | 10,711 | |||||
Dividends and interest | 114,426 | 764,001 | |||||
Total assets | 114,694,764 | 60,043,596 | |||||
Liabilities: | |||||||
Payables for: | |||||||
Repurchases of fund's shares | 27,290 | - | |||||
Investment advisory services | 43,312 | 23,274 | |||||
Other | 18,070 | 17,618 | |||||
Total liabilities | 88,672 | 40,892 | |||||
Net assets at January 31, 2007 | $ | 114,606,092 | $ | 60,002,704 | |||
Net assets consist of: | |||||||
Capital paid in on shares of beneficial interest | $ | 92,715,910 | $ | 61,608,675 | |||
Undistributed (distributions in excess of) net investment income | 385,241 | (617,962 | ) | ||||
Undistributed (accumulated) net realized gain (loss) | 740,755 | (1,561,009 | ) | ||||
Net unrealized appreciation | 20,764,186 | 573,000 | |||||
Net assets at January 31, 2007 | $ | 114,606,092 | $ | 60,002,704 | |||
Shares of beneficial interest issued and outstanding - unlimited shares authorized | |||||||
Shares outstanding | 7,332,808 | 3,719,948 | |||||
Net asset value per share | $ | 15.63 | $ | 16.13 | |||
See Notes to Financial Statements | |||||||
Statement of operations | unaudited | ||||||
for the six months ended January 31, 2007 | |||||||
Growth and Income Portfolio | Bond Portfolio | ||||||
Investment income: | |||||||
Income: | |||||||
Dividends (net of non-U.S. taxes of $5,545 on Growth and Income Portfolio) | $ | 830,588 | $ | 48,937 | |||
Interest | 452,996 | 1,716,886 | |||||
Total income | 1,283,584 | 1,765,823 | |||||
Fees and expenses: | |||||||
Investment advisory services | 274,408 | 153,614 | |||||
Transfer agent services | 264 | 226 | |||||
Reports to shareholders | 8,333 | 4,800 | |||||
Registration statement and prospectus | 13,094 | 9,425 | |||||
Trustees' compensation | 35,054 | 20,116 | |||||
Trustees' travel expenses | 11,861 | 6,773 | |||||
Auditing | 21,311 | 21,299 | |||||
Legal | 16,973 | 16,973 | |||||
Custodian | 774 | 606 | |||||
Other | 6,087 | 5,912 | |||||
Total fees and expenses before waiver | 388,159 | 239,744 | |||||
Less waiver of fees and expenses: | |||||||
Investment advisory services | 27,441 | 15,361 | |||||
Total fees and expenses after waiver | 360,718 | 224,383 | |||||
Net investment income | 922,866 | 1,541,440 | |||||
Net realized gain (loss) and unrealized | |||||||
appreciation on investments and non-U.S. currency: | |||||||
Net realized gain (loss) on: | |||||||
Investments | 2,486,855 | (857,755 | ) | ||||
Non-U.S. currency transactions | 601 | - | |||||
2,487,456 | (857,755 | ) | |||||
Net unrealized appreciation on: | |||||||
Investments | 8,256,051 | 1,669,425 | |||||
Non-U.S. currency translations | 180 | 228 | |||||
8,256,231 | 1,669,653 | ||||||
Net realized gain (loss) and | |||||||
unrealized appreciation on investments and non-U.S. currency | 10,743,687 | 811,898 | |||||
Net increase in net assets resulting from operations | $ | 11,666,553 | $ | 2,353,338 | |||
See Notes to Financial Statements | |||||||
Statements of changes in net assets | |||||||
GROWTH AND INCOME PORTFOLIO | |||||||
Six months ended January 31, 2007* | Year ended July 31, 2006 | ||||||
Operations: | |||||||
Net investment income | $ | 922,866 | $ | 1,595,069 | |||
Net realized gain on investments and non-U.S. currency transactions | 2,487,456 | 3,677,773 | |||||
Net unrealized appreciation (depreciation) on investments and non-U.S. currency translations | 8,256,231 | (950,332 | ) | ||||
Net increase in net assets resulting from operations | 11,666,553 | 4,322,510 | |||||
Dividends and distributions paid to shareholders: | |||||||
Dividends from net investment income | (899,564 | ) | (1,573,538 | ) | |||
Distributions from net realized gain on investments | (5,357,078 | ) | (3,411,060 | ) | |||
Total dividends and distributions paid to shareholders | (6,256,642 | ) | (4,984,598 | ) | |||
Capital share transactions | 5,262,261 | (1,714,131 | ) | ||||
Total increase (decrease) in net assets | 10,672,172 | (2,376,219 | ) | ||||
Net assets: | |||||||
Beginning of period | 103,933,920 | 106,310,139 | |||||
End of period (including undistributed | |||||||
net investment income: $385,241 and $361,939, respectively) | $ | 114,606,092 | $ | 103,933,920 | |||
BOND PORTFOLIO | |||||||
Six months ended January 31, 2007* | Year ended July 31, 2006 | ||||||
Operations: | |||||||
Net investment income | $ | 1,541,440 | $ | 2,962,876 | |||
Net realized (loss) gain on investments and non-U.S. currency transactions | (857,755 | ) | 156,207 | ||||
Net unrealized appreciation (depreciation) on investments and non-U.S. currency translations | 1,669,653 | (2,027,434 | ) | ||||
Net increase in net assets resulting from operations | 2,353,338 | 1,091,649 | |||||
Dividends paid to shareholders from net investment income | (1,788,120 | ) | (3,392,290 | ) | |||
Capital share transactions | (782,402 | ) | (2,252,490 | ) | |||
Total decrease in net assets | (217,184 | ) | (4,553,131 | ) | |||
Net assets: | |||||||
Beginning of period | 60,219,888 | 64,773,019 | |||||
End of period (including distributions in excess of | |||||||
net investment income: $(617,962) and $(371,282), respectively) | $ | 60,002,704 | $ | 60,219,888 | |||
*Unaudited. | |||||||
See Notes to Financial Statements |
Notes to financial statements
unaudited
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 the preservation of capital through investments in fixed-income securities.
Significant accounting policies - The financial statements have been prepared to comply with accounting principles generally accepted in the United States of America. These principles require management to make estimates and assumptions that affect reported amounts and disclosures. Actual results could differ from those estimates. The following is a summary of the significant accounting policies followed by the trust:
Security valuation - Equity securities are valued at the official closing price of, or 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. Prices for each security are taken from the principal exchange or market in which the security trades. Fixed-income securities, including short-term securities purchased with more than 60 days left to maturity, are valued at prices obtained from an independent pricing service when such prices are available. However, where the investment adviser deems it appropriate, such securities will be valued at the mean quoted bid and asked prices (or bid prices, if asked prices are not available) or at prices for securities of comparable maturity, quality and type. Securities with both fixed-income and equity characteristics, or equity securities traded principally among fixed-income dealers, are valued in the manner described above for either equity or fixed-income securities, depending on which method is deemed most appropriate by the investment adviser. Short-term securities purchased within 60 days to maturity are valued at amortized cost, which approximates market value. The value of short-term securities originally purchased with maturities greater than 60 days is determined based on an amortized value to par when they reach 60 days or less remaining to maturity. The ability of the issuers of the debt securities held by the funds to meet their obligations may be affected by economic developments in a specific industry, state or region.
Securities and other assets for which representative market quotations are not readily available or are considered unreliable by the investment adviser are fair valued as determined in good faith under procedures adopted by authority of the trust's board of trustees. Market quotations may be considered unreliable if events occur that materially affect the value of securities (particularly non-U.S. securities) between the close of trading in those securities and the close of regular trading on the New York Stock Exchange. Various factors may be reviewed in order to make a good faith determination of a security’s fair value. These factors include, but are not limited to, the type and cost of the security; contractual or legal restrictions on resale of the security; relevant financial or business developments of the issuer; actively traded similar or related securities; conversion or exchange rights on the security; related corporate actions; significant events occurring after the close of trading in the security; and changes in overall market conditions.
Security transactions and related investment income - Security transactions are recorded by the funds as of the date the trades are executed with brokers. Realized gains and losses from security transactions are determined based on the specific identified cost of the securities. Dividend income is recognized on the ex-dividend date and interest income is recognized on an accrual basis. Market discounts, premiums and original issue discounts on fixed-income securities are amortized daily over the expected life of the security.
Dividends and distributions to shareholders - Dividends and distributions paid to shareholders are recorded on the ex-dividend date.
Non-U.S. currency translation - Assets and liabilities, including investment securities, denominated in non-U.S. currencies are translated into U.S. dollars at the exchange rates in effect on the valuation date. Purchases and sales of investment securities and income and expenses are translated into U.S. dollars at the exchange rates on the dates of such transactions. In the accompanying financial statements, the effects of changes in non-U.S. exchange rates on investment securities are included with the net realized gain or loss and net unrealized appreciation or depreciation on investments. The realized gain or loss and unrealized appreciation or depreciation resulting from all other transactions denominated in non-U.S. currencies are disclosed separately.
Mortgage dollar rolls - Bond Portfolio may enter into mortgage dollar roll transactions in which the fund sells a mortgage-backed security to a counterparty and simultaneously enters into an agreement with the same counterparty to buy back a similar security on a specific future date at a predetermined price. Each mortgage dollar roll is treated as a financing transaction; therefore, any gain or loss is considered unrealized until the roll reaches completion. Risks may arise due to the delayed payment date and the potential inability of counterparties to complete the transaction. Income is generated as consideration for entering into these transactions and is included in interest income on the accompanying financial statements.
2. | Non-U.S. investments |
Investment risk - The risks of investing in securities of non-U.S. issuers may include, but are not limited to, investment and repatriation restrictions; revaluation of currencies; adverse political, social and economic developments; government involvement in the private sector; limited and less reliable investor information; lack of liquidity; certain local tax law considerations; and limited regulation of the securities markets.
Taxation - Dividend and interest income is recorded net of non-U.S. taxes paid.
3. Federal income taxation and distributions
The funds comply with the requirements under Subchapter M of the Internal Revenue Code applicable to mutual funds and intend to distribute substantially all of their net taxable income and net capital gains each year. The funds are not subject to income taxes to the extent such distributions are made. Therefore, no federal income tax provision is required.
Distributions - Distributions paid to shareholders are based on net investment income and net realized gains determined on a tax basis, which may differ from net investment income and net realized gains for financial reporting purposes. These differences are due primarily to differing treatment for items such as short-term capital gains and losses; unrealized appreciation of certain investments in non-U.S. securities; net capital losses; and amortization of premiums. 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 for financial reporting purposes.
The components of distributable earnings on a tax basis are reported as of the funds’ most recent year-end. As of July 31, 2006, the components of distributable earnings on a tax basis were as follows:
Growth and Income Portfolio | Bond Portfolio | |||||||||
Undistributed ordinary income | $ | 939,438 | $ | 450,671 | ||||||
Undistributed long-term capital gain | 3,089,247 | - | ||||||||
Capital loss carryforwards*: | ||||||||||
Expiring 2011 | - | $ | (197,714 | ) | ||||||
Expiring 2014 | - | (345,751 | ) | (543,465 | ) | |||||
Post-October capital loss deferrals | ||||||||||
(realized during the period November 1, 2005, | ||||||||||
through July 31, 2006)† | - | (145,536 | ) | |||||||
*The capital loss carryforwards will be used to offset any capital gains realized by the fund in the current year or in subsequent years through the expiration dates. The fund will not make distributions from capital gains while capital loss carryforwards remain. †These deferrals are considered incurred in the subsequent year. |
As of January 31, 2007, the tax basis unrealized appreciation (depreciation) and cost of investments were as follows:
Growth and Income Portfolio | Bond Portfolio | ||||||
Gross unrealized appreciation on investment securities | $ | 21,921,271 | $ | 546,090 | |||
Gross unrealized depreciation on investment securities | (1,213,841 | ) | (532,581 | ) | |||
Net unrealized appreciation on investment securities | 20,707,430 | 13,509 | |||||
Cost of investment securities | 93,133,986 | 58,840,799 |
For the six months ended January 31, 2007, Growth and Income Portfolio made distributions from ordinary income in the amount of $1,456,144 and from long-term capital gains in the amount of $4,800,498. Bond Portfolio made distributions from ordinary income in the amount of $1,788,120.
4. Fees and transactions with related parties
Capital Research and Management Company ("CRMC"), the funds’ investment adviser, is the parent company of American Funds Service Company SM ("AFS"), the funds’ transfer agent, and American Funds Distributors,SM Inc. ("AFD"), the principal underwriter of the funds’ shares.
Investment advisory services - The Investment Advisory and Service Agreement with CRMC provides for monthly fees accrued daily. These fees are based on an annual rate of 0.50% on the first $150 million of each fund’s daily net assets and 0.40% on such assets in excess of $150 million.
The Investment Advisory and Service Agreement provides for a fee reduction to the extent that annual operating expenses exceed 0.75% of the average daily net assets of each fund. Expenses related to interest, taxes, brokerage commissions, transaction costs and extraordinary items are not subject to these limitations. For the six months ended January 31, 2007, no such fee reductions were required, but CRMC is voluntarily waiving 10% of investment advisory services fees. During the six months ended January 31, 2007, total investment advisory services fees waived by CRMC were $27,441 and $15,361 for Growth and Income Portfolio and Bond Portfolio, respectively. As a result, the fees shown on the accompanying financial statements of $274,408 and $153,614, for Growth and Income Portfolio and Bond Portfolio, respectively, were both reduced to an annualized rate of 0.450% of average daily net assets
Transfer agent services - The funds have a transfer agent agreement with AFS. Under this agreement, the funds compensate AFS for transfer agent services including shareholder recordkeeping and communications.
Distribution services - The trust has a principal underwriting agreement with AFD. AFD does not receive compensation for any sales of the funds’ shares.
Affiliated officers and trustees - Officers and certain trustees of the trust are or may be considered to be affiliated with CRMC and AFS. No affiliated officers or trustees received any compensation directly from the funds.
5. Capital share transactions
Capital share transactions in the funds were as follows:
Sales | Reinvestments of dividends and distributions | Repurchases | Net increase (decrease) | ||||||||||||||||||||||
Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | ||||||||||||||||||
Six months ended January 31, 2007 | |||||||||||||||||||||||||
Growth and Income Portfolio | $ | 3,910,204 | 248,794 | $ | 5,889,228 | 382,729 | $ | (4,537,171 | ) | (295,081 | ) | $ | 5,262,261 | 336,442 | |||||||||||
Bond Portfolio | 3,008,419 | 185,948 | 1,523,451 | 94,703 | (5,314,272 | ) | (327,899 | ) | (782,402 | ) | (47,248 | ) | |||||||||||||
Year ended July 31, 2006 | |||||||||||||||||||||||||
Growth and Income Portfolio | $ | 13,316,629 | 901,807 | $ | 4,649,782 | 317,885 | $ | (19,680,542 | ) | (1,336,012 | ) | $ | (1,714,131 | ) | (116,320 | ) | |||||||||
Bond Portfolio | 6,094,902 | 377,010 | 2,805,680 | 174,045 | (11,153,072 | ) | (680,419 | ) | (2,252,490 | ) | (129,364 | ) |
6. Investment transactions
Growth and Income Portfolio and Bond Portfolio made purchases of investment securities of $11,793,632 and $14,477,072 and sales of investment securities of $14,067,800 and $14,582,022, respectively, during the six months ended January 31, 2007. Short-term securities were excluded.
Financial highlights(1)
Income (loss) from investment operations(2) | Dividends and distributions | |||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | Net investment income | Net gains (losses) on securities (both realized and unrealized | ) | Total from investment operations | Dividends (from net investment income | ) | Distributions (from capital gains | ) | Total dividends and distributions | Net asset value, end of period | Total return | Net assets, end of period (in millions | ) | Ratio of expenses to average net assets before waivers | Ratio of expenses to average net assets after waivers | (3 | ) | Ratio of net income to average net assets | ||||||||||||||||||||||||||||||||||
Growth and Income Portfolio | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 1/31/2007 | (4 | ) | $ | 14.86 | $ | .13 | $ | 1.54 | $ | 1.67 | $ | (.13 | ) | $ | (.77 | ) | $ | (.90 | ) | $ | 15.63 | 11.36 | % | $ | 115 | .71 | % | (5 | ) | .66 | % | (5 | ) | 1.68 | % | (5 | ) | |||||||||||||||
Year ended 7/31/2006 | 14.95 | .23 | .44 | .67 | (.23 | ) | (.53 | ) | (.76 | ) | 14.86 | 4.61 | 104 | .71 | .66 | 1.56 | ||||||||||||||||||||||||||||||||||||
Year ended 7/31/2005 | 14.10 | .24 | 1.20 | 1.44 | (.21 | ) | (.38 | ) | (.59 | ) | 14.95 | 10.33 | 106 | .69 | .66 | 1.60 | ||||||||||||||||||||||||||||||||||||
Year ended 7/31/2004 | 12.57 | .20 | 1.53 | 1.73 | (.20 | ) | - | (.20 | ) | 14.10 | 13.81 | 90 | .64 | .64 | 1.43 | |||||||||||||||||||||||||||||||||||||
Year ended 7/31/2003 | 11.61 | .22 | .94 | 1.16 | (.20 | ) | - | (.20 | ) | 12.57 | 10.18 | 76 | .68 | .68 | 1.88 | |||||||||||||||||||||||||||||||||||||
Year ended 7/31/2002 | 13.11 | .23 | (1.33 | ) | (1.10 | ) | (.24 | ) | (.16 | ) | (.40 | ) | 11.61 | (8.60 | ) | 63 | .66 | .66 | 1.81 | |||||||||||||||||||||||||||||||||
Income from investment operations(2) | Dividends and distributions | |||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | Net investment income | Net gains (losses) on securities (both realized and unrealized | ) | Total from investment operations | Dividends (from net investment income | ) | Distributions (from capital gains | ) | Total dividends and distributions | Net asset value, end of period | Total return | Net assets, end of period (in millions | ) | Ratio of expenses to average net assets before waivers | Ratio of expenses to average net assets after waivers | (3 | ) | Ratio of net income to average net assets | ||||||||||||||||||||||||||||||||||
Bond Portfolio | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 1/31/2007 | (4 | ) | $ | 15.99 | $ | .41 | $ | .21 | $ | .62 | $ | (.48 | ) | $ | - | $ | (.48 | ) | $ | 16.13 | 3.91 | % | $ | 60 | .78 | % | (5 | ) | .73 | % | (5 | ) | 5.02 | % | (5 | ) | ||||||||||||||||
Year ended 7/31/2006 | 16.62 | .81 | (.50 | ) | .31 | (.94 | ) | - | (.94 | ) | 15.99 | 1.94 | 60 | .79 | .74 | 5.00 | ||||||||||||||||||||||||||||||||||||
Year ended 7/31/2005 | 16.72 | .78 | .05 | .83 | (.93 | ) | - | (.93 | ) | 16.62 | 5.07 | 65 | .74 | .71 | 4.61 | |||||||||||||||||||||||||||||||||||||
Year ended 7/31/2004 | 16.57 | .83 | .22 | 1.05 | (.90 | ) | - | (.90 | ) | 16.72 | 6.37 | 59 | .70 | .70 | 4.93 | |||||||||||||||||||||||||||||||||||||
Year ended 7/31/2003 | 15.93 | .89 | .77 | 1.66 | (1.02 | ) | - | (1.02 | ) | 16.57 | 10.64 | 59 | .71 | .71 | 5.38 | |||||||||||||||||||||||||||||||||||||
Year ended 7/31/2002 | 16.56 | .99 | (.53 | ) | .46 | (1.09 | ) | - | (1.09 | ) | 15.93 | 2.82 | 50 | .70 | .70 | 6.07 |
Six months ended January 31, | Year ended July 31 | ||||||||||||||||||
2007(4 | ) | 2006 | 2005 | 2004 | 2003 | 2002 | |||||||||||||
Growth and Income Portfolio | 13 | % | 25 | % | 31 | % | 32 | % | 29 | % | 50 | % | |||||||
Bond Portfolio | 25 | % | 62 | % | 51 | % | 36 | % | 25 | % | 70 | % |
(1) Based on operations for the periods shown (unless otherwise noted) and, accordingly, may not be representative of a full year. |
(2) Based on average shares outstanding. |
(3) The ratios in this column reflect the impact, if any, of certain waivers from CRMC. During some of the periods shown, CRMC reduced fees for investment advisory services. |
(4) Unaudited. |
(5) Annualized. |
See Notes to Financial Statements |
Expense example unaudited
As a shareholder of the funds, you incur certain ongoing costs, including management fees and other expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the funds so you can compare these costs with the ongoing costs of investing in other mutual funds. The examples below are based on an investment of $1,000 invested at the beginning of the period and held for the entire period (August 1, 2006, through January 31, 2007).
Actual expenses:
The first line for each fund in the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled "Expenses paid during period" to estimate the expenses you paid on your account during this period. Shareholders may be subject to fees charged by financial intermediaries. You can estimate the impact of these fees by adding the amount of the fees to the total estimated expenses you paid on your account during the period as calculated above. In addition, your ending account value would also be lower by the amount of these fees.
Hypothetical example for comparison purposes:
The second line for each fund in the table below provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio for the fund and an assumed rate of return of 5% per year before expenses, which is not the actual return of the fund. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the funds and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Shareholders may be subject to fees charged by financial intermediaries. You can estimate the impact of these fees by adding the amount of the fees to the total estimated expenses you paid on your account during the period as calculated above. In addition, your ending account value would also be lower by the amount of these fees.
Beginning account value 8/1/2006 | Ending account value 1/31/2007 | Expenses paid during period* | Annualized expense ratio | ||||||||||
Growth and Income Portfolio -- actual return | $ | 1,000.00 | $ | 1,113.59 | $ | 3.52 | .66 | % | |||||
Growth and Income Portfolio -- assumed 5% return | 1,000.00 | 1,021.88 | 3.36 | .66 | |||||||||
Bond Portfolio -- actual return | 1,000.00 | 1,039.09 | 3.75 | .73 | |||||||||
Bond Portfolio -- assumed 5% return | 1,000.00 | 1,021.53 | 3.72 | .73 | |||||||||
* Expenses are equal to the annualized expense ratio, multiplied by the average account value over the period, multiplied by the number of days in the period (184), and divided by 365 (to reflect the one-half year period). |
Result of meeting of shareholders held September 12, 2006
Shares outstanding on record date (July 18, 2006): | |||||||
Endowments — Growth and Income Portfolio | 7,000,730 | ||||||
Endowments — Bond Portfolio | 3,757,192 | ||||||
Total shares voting on September 12, 2006: | |||||||
Endowments — Growth and Income Portfolio | 4,255,092 | (60.8 | %) | ||||
Endowments — Bond Portfolio | 2,076,613 | (55.3 | %) |
Proposal 1: Election of trustees
Percent | Percent | |||
of shares | Votes | of shares | ||
Trustee | Votes for | voting for | withheld | withheld |
Endowments — Growth and Income Portfolio | ||||
Ronald P. Badie | 4,255,092 | 100% | none | 0% |
Robert J. Denison | 4,255,092 | 100% | none | 0% |
John E. Kobara | 4,255,092 | 100% | none | 0% |
Steven D. Lavine | 4,255,092 | 100% | none | 0% |
Patricia A. McBride | 4,255,092 | 100% | none | 0% |
Gail L. Neale | 4,255,092 | 100% | none | 0% |
Robert G. O’Donnell | 4,255,092 | 100% | none | 0% |
Thomas E. Terry | 4,255,092 | 100% | none | 0% |
Robert C. Ziebarth | 4,255,092 | 100% | none | 0% |
Endowments — Bond Portfolio | ||||
Ronald P. Badie | 2,076,613 | 100% | none | 0% |
Robert J. Denison | 2,076,613 | 100% | none | 0% |
John E. Kobara | 2,076,613 | 100% | none | 0% |
Steven D. Lavine | 2,076,613 | 100% | none | 0% |
Patricia A. McBride | 2,076,613 | 100% | none | 0% |
Gail L. Neale | 2,076,613 | 100% | none | 0% |
Robert G. O’Donnell | 2,076,613 | 100% | none | 0% |
Thomas E. Terry | 2,076,613 | 100% | none | 0% |
Robert C. Ziebarth | 2,076,613 | 100% | none | 0% |
[logo - Capital Research and ManagementSM]
Office of the trust
One Market
Steuart Tower, Suite 1800
Mailing address: P.O. Box 7650
San Francisco, CA 94120-7650
Investment adviser
Capital Research and Management Company
333 South Hope Street
Los Angeles, CA 90071-1406
Transfer agent for shareholder accounts
American Funds Service Company
Institutional Investment Services/HOST
P.O. Box 25065
Santa Ana, CA 92799-5965
Custodian of assets
JPMorgan Chase Bank
270 Park Avenue
New York, NY 10017-2070
Independent registered public accounting firm
Deloitte & Touche LLP
695 Town Center Drive
Suite 1200
Costa Mesa, CA 92626-7188
Counsel
Paul, Hastings, Janofsky & Walker LLP
515 South Flower Street
Los Angeles, CA 90071-2228
Principal underwriter
American Funds Distributors, Inc.
333 South Hope Street
Los Angeles, CA 90071-1406
For more information about any of the American Funds, please ask your investment professional
for a prospectus.
“American Funds Proxy Voting Guidelines” — which describes how we vote proxies relating to portfolio securities — is available free of charge on the U.S. Securities and Exchange Commission (SEC) website at sec.gov, on the American Funds website at americanfunds.com or upon request by calling American Funds Service Company (AFS) at 800/421-0180. The fund files its proxy voting record with the SEC for the 12 months ended June 30 by August 31. The report also is available on the Endowments website at americanfunds.com/endowments and on the SEC website.
A complete January 31, 2007, portfolio of Endowments’ investments is available free of charge by
calling AFS or visiting the SEC website (where it is part of Form N-CSR).
Endowments files a complete list of its portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. This filing is available free of charge on the SEC website. You may also review or, for a fee, copy this filing at the SEC’s Public Reference Room in Washington, D.C. (800/SEC-0330). Additionally, the list of portfolio holdings also is available by calling AFS.
This report is for the information of shareholders of Endowments, but it also may 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. If used as sales material after March 31, 2007, this report must be accompanied by an Endowments statistical update for the most recently completed calendar quarter. This update is available at americanfunds.com/endowments.
The Capital Group Companies
Capital International Capital Guardian Capital Research and Management Capital Bank and Trust American Funds
Lit. No. MFGESR-985-0307P
Litho in USA REG/PL/9141-S9559
© 2007 ENDOWMENTS
Printed on recycled paper
ITEM 2 - Code of Ethics
Not applicable for filing of semi-annual reports to shareholders.
ITEM 3 - Audit Committee Financial Expert
Not applicable for filing of semi-annual reports to shareholders.
ITEM 4 - Principal Accountant Fees and Services
Not applicable for filing of semi-annual reports to shareholders.
ITEM 5 - Audit Committee of Listed Registrants
Not applicable to this Registrant, insofar as the Registrant is not a listed issuer as defined in Rule 10A-3 under the Securities Exchange Act of 1934.
ITEM 6 - Schedule of Investments
[logo - Capital Research and Management sm]
Endowments, Growth and Income PortfolioSM
Investment portfolio
January 31, 2007
unaudited
Common stocks — 84.37% | Shares | Market value | |||||
INFORMATION TECHNOLOGY — 18.11% | |||||||
Microsoft Corp. | 186,000 | $ | 5,739,960 | ||||
Oracle Corp.1 | 147,000 | 2,522,520 | |||||
Cisco Systems, Inc.1 | 68,000 | 1,808,120 | |||||
Nokia Corp. (ADR) | 78,000 | 1,723,800 | |||||
Intel Corp. | 80,000 | 1,676,800 | |||||
International Business Machines Corp. | 13,000 | 1,288,950 | |||||
Motorola, Inc. | 62,000 | 1,230,700 | |||||
QUALCOMM Inc. | 30,000 | 1,129,800 | |||||
Texas Instruments Inc. | 28,000 | 873,320 | |||||
Analog Devices, Inc. | 20,000 | 655,000 | |||||
EMC Corp.1 | 45,000 | 629,550 | |||||
Dell Inc.1 | 24,000 | 582,000 | |||||
Linear Technology Corp. | 15,000 | 464,250 | |||||
Hewlett-Packard Co. | 10,000 | 432,800 | |||||
20,757,570 | |||||||
CONSUMER STAPLES — 13.71% | |||||||
Wal-Mart Stores, Inc. | 73,000 | 3,481,370 | |||||
Altria Group, Inc. | 35,000 | 3,058,650 | |||||
PepsiCo, Inc. | 32,000 | 2,087,680 | |||||
Walgreen Co. | 30,000 | 1,359,000 | |||||
Bunge Ltd. | 14,000 | 1,077,300 | |||||
L’Oréal SA2 | 10,000 | 1,054,984 | |||||
Coca-Cola Co. | 20,000 | 957,600 | |||||
Avon Products, Inc. | 26,500 | 911,335 | |||||
Kraft Foods Inc., Class A | 25,000 | 873,000 | |||||
WD-40 Co. | 26,000 | 856,180 | |||||
15,717,099 | |||||||
HEALTH CARE — 11.49% | |||||||
Medtronic, Inc. | 48,000 | 2,565,600 | |||||
Eli Lilly and Co. | 29,000 | 1,569,480 | |||||
Roche Holding AG2 | 8,000 | 1,505,364 | |||||
Pfizer Inc | 52,000 | 1,364,480 | |||||
Novo Nordisk A/S, Class B2 | 15,000 | 1,288,793 | |||||
Merck & Co., Inc. | 25,000 | 1,118,750 | |||||
Bristol-Myers Squibb Co. | 33,000 | 950,070 | |||||
Johnson & Johnson | 14,000 | 935,200 | |||||
Becton, Dickinson and Co. | 11,000 | 846,340 | |||||
Sanofi-Aventis2 | 6,000 | 528,883 | |||||
Amgen Inc.1 | 7,000 | 492,590 | |||||
13,165,550 | |||||||
FINANCIALS — 10.29% | |||||||
Berkshire Hathaway Inc., Class A1 | 20 | $ | 2,201,000 | ||||
Wells Fargo & Co. | 60,000 | 2,155,200 | |||||
Citigroup Inc. | 20,000 | 1,102,600 | |||||
Bank of America Corp. | 20,000 | 1,051,600 | |||||
American International Group, Inc. | 15,000 | 1,026,750 | |||||
Wachovia Corp. | 15,000 | 847,500 | |||||
Lincoln National Corp. | 12,000 | 805,680 | |||||
Fannie Mae | 14,000 | 791,420 | |||||
SunTrust Banks, Inc. | 8,000 | 664,800 | |||||
U.S. Bancorp | 18,000 | 640,800 | |||||
Marsh & McLennan Companies, Inc. | 17,000 | 501,500 | |||||
11,788,850 | |||||||
CONSUMER DISCRETIONARY — 9.09% | |||||||
Target Corp. | 30,000 | 1,840,800 | |||||
Lowe’s Companies, Inc. | 54,000 | 1,820,340 | |||||
Time Warner Inc. | 80,000 | 1,749,600 | |||||
Walt Disney Co. | 30,000 | 1,055,100 | |||||
Vivendi SA2 | 22,000 | 907,041 | |||||
Home Depot, Inc. | 22,000 | 896,280 | |||||
Idearc Inc.1 | 26,000 | 842,920 | |||||
Carnival Corp., units | 13,000 | 670,280 | |||||
Gannett Co., Inc. | 11,000 | 639,540 | |||||
10,421,901 | |||||||
ENERGY — 9.08% | |||||||
Exxon Mobil Corp. | 48,000 | 3,556,800 | |||||
Chevron Corp. | 32,000 | 2,332,160 | |||||
Royal Dutch Shell PLC, Class A (ADR) | 33,000 | 2,252,250 | |||||
Schlumberger Ltd. | 20,000 | 1,269,800 | |||||
ConocoPhillips | 15,000 | 996,150 | |||||
10,407,160 | |||||||
INDUSTRIALS — 8.04% | |||||||
General Electric Co. | 53,000 | 1,910,650 | |||||
Lockheed Martin Corp. | 18,000 | 1,749,420 | |||||
United Parcel Service, Inc., Class B | 18,000 | 1,301,040 | |||||
Caterpillar Inc. | 20,000 | 1,281,400 | |||||
Avery Dennison Corp. | 15,000 | 1,025,400 | |||||
Illinois Tool Works Inc. | 14,000 | 713,860 | |||||
Northrop Grumman Corp. | 10,000 | 709,400 | |||||
3M Co. | 7,000 | 520,100 | |||||
9,211,270 | |||||||
MATERIALS — 2.66% | |||||||
Air Products and Chemicals, Inc. | 13,000 | 970,580 | |||||
Dow Chemical Co. | 20,000 | 830,800 | |||||
Alcoa Inc. | 20,000 | 646,000 | |||||
International Paper Co. | 18,000 | 606,600 | |||||
3,053,980 | |||||||
TELECOMMUNICATION SERVICES — 1.78% | |||||||
Verizon Communications Inc. | 25,000 | 963,000 | |||||
Sprint Nextel Corp., Series 1 | 36,000 | 641,880 | |||||
Vodafone Group PLC2 | 150,000 | 437,245 | |||||
2,042,125 | |||||||
MISCELLANEOUS — 0.12% | |||||||
Other common stocks in initial period of acquisition | 134,295 | ||||||
Total common stocks (cost: $75,919,326) | 96,699,800 | ||||||
Convertible securities — 0.70% | Principal amount (000 | ) | |||||
INFORMATION TECHNOLOGY — 0.70% | |||||||
Lucent Technologies Inc. 8.00% convertible notes 2031 | $ | 800 | 804,000 | ||||
Total convertible securities (cost: $819,630) | 804,000 | ||||||
Short-term securities — 14.26% | |||||||
Federal Home Loan Bank 5.13% due 3/23/2007 | 2,900 | 2,877,889 | |||||
CAFCO, LLC 5.23% due 2/26/20073 | 2,000 | 1,992,470 | |||||
Colgate-Palmolive Co. 5.20% due 2/2/20073 | 1,700 | 1,699,508 | |||||
Three Pillars Funding, LLC 5.28% due 2/1/20073 | 1,600 | 1,599,765 | |||||
Johnson & Johnson 5.18% due 3/6/20073 | 1,600 | 1,592,172 | |||||
Procter & Gamble International Funding S.C.A. 5.23% due 2/8/20073 | 1,500 | 1,498,254 | |||||
Variable Funding Capital Corp. 5.255% due 2/16/20073 | 1,100 | 1,097,430 | |||||
Atlantic Industries 5.23% due 2/28/20073 | 1,100 | 1,095,636 | |||||
Emerson Electric Co. 5.21% due 2/6/20073 | 1,000 | 999,130 | |||||
Harley-Davidson Funding Corp. 5.25% due 2/14/20073 | 1,000 | 997,953 | |||||
Fannie Mae 5.145% due 3/14/2007 | 893 | 887,409 | |||||
Total short-term securities (cost: $16,338,660) | 16,337,616 | ||||||
Total investment securities (cost: $93,077,616) | 113,841,416 | ||||||
Other assets less liabilities | 764,676 | ||||||
Net assets | $ | 114,606,092 |
“Miscellaneous” securities include holdings in their initial period of acquisition that have not previously been publicly disclosed.
1 Security did not produce income during the last 12 months.
2 Valued under fair value procedures adopted by authority of the board of trustees. The total value of all such securities, including those in “Miscellaneous,” was $5,722,310.
3 Purchased in a private placement transaction; resale may be limited to qualified institutional buyers; resale to the public may require registration. In practice, restricted securities in this fund are typically as liquid as unrestricted securities. The total value of all such restricted securities was $12,572,318, which represented 10.97% of the net assets of the fund.
ADR = American Depositary Receipts
Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so you may lose money.
Investors should carefully consider the investment objectives, risks, charges and expenses of the American Funds. This and other important information is contained in each fund’s prospectus, which can be obtained from a financial adviser and should be read carefully before investing.
Endowments, Bond PortfolioSM
Investment portfolio
January 31, 2007
unaudited
Bonds & notes — 86.16% | Principal amount (000) | Market value | |||||
CORPORATE BONDS & NOTES — 45.79% | |||||||
Financials — 23.37% | |||||||
Residential Capital Corp. 6.46% 20091 | $ | 470 | $ | 474,173 | |||
Residential Capital Corp. 6.375% 2010 | 250 | 252,278 | |||||
General Motors Acceptance Corp. 7.25% 2011 | 455 | 468,461 | |||||
General Motors Acceptance Corp. 7.569% 20141 | 250 | 263,287 | |||||
Washington Mutual, Inc. 5.665% 20121 | 650 | 652,134 | |||||
Washington Mutual Preferred Funding I Ltd. 6.534% (undated)1,2 | 400 | 394,658 | |||||
Washington Mutual Preferred Funding II Ltd. 6.665% (undated)1,2 | 300 | 304,914 | |||||
Ford Motor Credit Co. 7.375% 2009 | 150 | 151,042 | |||||
Ford Motor Credit Co. 7.875% 2010 | 650 | 660,025 | |||||
AIG SunAmerica Global Financing VII 5.85% 20082 | 125 | 125,802 | |||||
American General Finance Corp., Series I, 5.40% 2015 | 250 | 246,679 | |||||
ILFC E-Capital Trust II 6.25% 20651,2 | 255 | 260,037 | |||||
Hospitality Properties Trust 6.75% 2013 | 215 | 223,949 | |||||
Hospitality Properties Trust 6.30% 2016 | 400 | 407,002 | |||||
JPM Capital Trust I, cumulative capital securities trust, 7.54% 2027 | 345 | 357,849 | |||||
JPMorgan Chase Capital XX, Series T, 6.55% 2066 | 175 | 179,397 | |||||
Development Bank of Singapore Ltd. 7.875% 20092 | 250 | 264,788 | |||||
DBS Bank Ltd. 5.97% 20211,2 | 250 | 257,258 | |||||
Lincoln National Corp. 7.00% 20661 | 485 | 513,804 | |||||
TuranAlem Finance BV 8.50% 20152 | 400 | 409,000 | |||||
TuranAlem Finance BV 8.25% 20372 | 100 | 102,413 | |||||
Standard Chartered PLC 6.409% (undated)2 | 500 | 492,751 | |||||
EOP Operating LP 4.65% 2010 | 200 | 197,248 | |||||
EOP Operating LP 8.10% 2010 | 125 | 136,161 | |||||
EOP Operating LP 6.75% 2012 | 125 | 133,220 | |||||
PRICOA Global Funding I 4.20% 20102 | 250 | 241,224 | |||||
Prudential Holdings, LLC, Series C, 8.695% 20232,3 | 150 | 186,438 | |||||
SocGen Real Estate Co. LLC, Series A, 7.64% (undated)1,2 | 375 | 379,940 | |||||
Simon Property Group, LP 4.875% 2010 | 125 | 123,185 | |||||
Simon Property Group, LP 5.60% 2011 | 250 | 251,538 | |||||
CIT Group Inc. 3.65% 2007 | 125 | 123,372 | |||||
CIT Group Inc. 6.10% 20671 | 250 | 249,812 | |||||
Resona Bank, Ltd. 5.85% (undated)1,2 | 375 | 365,161 | |||||
Santander Issuances, SA Unipersonal 5.805% 20161,2 | 100 | 100,497 | |||||
Abbey National PLC 6.70% (undated)1 | 250 | 253,353 | |||||
Banco Santander-Chile 5.375% 20142 | 300 | 293,989 | |||||
CNA Financial Corp. 6.50% 2016 | 250 | 259,283 | |||||
United Overseas Bank Ltd. 5.375% 20191,2 | 250 | 245,435 | |||||
Berkshire Hathaway Finance Corp. 4.125% 2010 | 250 | 242,629 | |||||
PNC Funding Corp., Series I, 6.517% (undated)1,2 | 200 | 205,470 | |||||
UniCredito Italiano SpA 5.584% 20171,2 | 200 | 200,120 | |||||
MBNA Global Capital Funding, Series B, 6.171% 20271 | 200 | 199,770 | |||||
AXA SA 6.379% (undated)1,2 | 200 | 196,297 | |||||
SLM Corp., Series A, 4.50% 2010 | 200 | 194,766 | |||||
Kimco Realty Corp., Series C, 4.82% 2014 | 200 | 189,827 | |||||
Downey Financial Corp. 6.50% 2014 | 150 | 149,710 | |||||
Sumitomo Mitsui Banking Corp. 6.078% (undated)1,2 | 150 | 149,149 | |||||
Nationwide Mutual Insurance Co. 7.875% 20332 | 125 | 148,157 | |||||
First Industrial, LP 6.875% 2012 | 125 | 130,352 | |||||
Household Finance Corp. 6.375% 2011 | 125 | 130,215 | |||||
Rouse Co. 7.20% 2012 | 125 | 129,625 | |||||
BCI U.S. Funding Trust I 8.01% noncumulative preferred (undated)1,2 | 125 | 128,850 | |||||
United Dominion Realty Trust, Inc. 6.50% 2009 | 125 | 128,133 | |||||
Financial Security Assurance Holdings Ltd. 6.40% 20661,2 | 125 | 125,652 | |||||
Allstate Financial Global Funding LLC 5.25% 20072 | 125 | 125,000 | |||||
ORIX Corp. 5.48% 2011 | 125 | 124,324 | |||||
John Hancock Global Funding II, Series 2004-A, 3.50% 20092 | 125 | 120,479 | |||||
14,020,082 | |||||||
Consumer discretionary — 4.95% | |||||||
DaimlerChrysler North America Holding Corp. 8.00% 2010 | 600 | 641,750 | |||||
Tele-Communications, Inc. 9.80% 2012 | 215 | 253,064 | |||||
Comcast Corp. 6.50% 2017 | 150 | 157,278 | |||||
MDC Holdings, Inc. 5.50% 2013 | 150 | 143,536 | |||||
MDC Holdings, Inc. 5.375% 2014 | 250 | 233,681 | |||||
Federated Retail Holdings, Inc. 5.90% 2016 | 300 | 299,416 | |||||
D.R. Horton, Inc. 5.25% 2015 | 300 | 282,273 | |||||
Ryland Group, Inc. 5.375% 2012 | 250 | 240,344 | |||||
AOL Time Warner Inc. 7.625% 2031 | 125 | 140,524 | |||||
Seminole Tribe of Florida 5.798% 20132,3 | 135 | 132,469 | |||||
Hyatt Equities, LLC 6.875% 20072 | 125 | 125,413 | |||||
Viacom Inc. 6.875% 2036 | 125 | 124,904 | |||||
Royal Caribbean Cruises Ltd. 7.25% 2016 | 100 | 103,052 | |||||
Toll Brothers, Inc. 5.15% 2015 | 100 | 92,326 | |||||
2,970,030 | |||||||
Industrials — 4.49% | |||||||
Continental Airlines, Inc., Series 2001-1, Class A-2, 6.503% 20113 | 385 | 396,309 | |||||
Continental Airlines, Inc., Series 2000-2, Class A-1, 7.707% 20223 | 186 | 203,779 | |||||
Hutchison Whampoa International Ltd. 7.00% 20112 | 250 | 263,589 | |||||
Hutchison Whampoa International Ltd. 6.50% 20132 | 150 | 156,367 | |||||
Delta Air Lines, Inc., Series 2002-1, Class G-2, MBIA insured, 6.417% 20143 | 200 | 202,625 | |||||
Delta Air Lines, Inc., Series 2002-1, Class G-1, MBIA insured, 6.718% 20243 | 143 | 145,322 | |||||
BAE SYSTEMS 2001 Asset Trust, Series 2001, Class G, MBIA insured, 6.664% 20132,3 | 332 | 346,552 | |||||
Northwest Airlines Trust, Series 2, Class A, 9.25% 2014 | 120 | 125,898 | |||||
Northwest Airlines, Inc., Series 2001-1, Class A-1, 7.041% 20233 | 150 | 151,640 | |||||
American Airlines, Inc., Series 2001-2, Class A-1, 6.978% 20123 | 262 | 268,231 | |||||
General Electric Capital Corp., Series A, 6.00% 2012 | 125 | 128,911 | |||||
USG Corp. 6.30% 20162 | 125 | 125,212 | |||||
Union Pacific Railroad Co. Pass Through Trust, Series 2003-1, 4.698% 20243 | 121 | 114,694 | |||||
Southern Capital Corp. Pass Through Trust, Series 2002-1, Class G, MBIA insured, 5.70% 20232,3 | 67 | 65,820 | |||||
2,694,949 | |||||||
Telecommunication services — 4.37% | |||||||
SBC Communications Inc. 6.25% 2011 | 250 | 257,788 | |||||
AT&T Wireless Services, Inc. 7.875% 2011 | 100 | 108,770 | |||||
AT&T Wireless Services, Inc. 8.125% 2012 | 500 | 560,350 | |||||
SBC Communications Inc. 5.625% 2016 | 150 | 149,729 | |||||
BellSouth Corp. 6.55% 2034 | 100 | 102,307 | |||||
Nextel Communications, Inc., Series E, 6.875% 2013 | 500 | 507,491 | |||||
Nextel Communications, Inc., Series D, 7.375% 2015 | 150 | 153,874 | |||||
France Télécom 7.75% 20111 | 250 | 271,557 | |||||
Embarq Corp. 6.738% 2013 | 250 | 256,629 | |||||
Deutsche Telekom International Finance BV 8.25% 20301 | 125 | 153,174 | |||||
Telecom Italia Capital SA 7.20% 2036 | 100 | 102,475 | |||||
2,624,144 | |||||||
Utilities — 3.75% | |||||||
FPL Energy American Wind, LLC 6.639% 20232,3 | 248 | 255,362 | |||||
FPL Energy National Wind, LLC 5.608% 20242,3 | 226 | 222,301 | |||||
Midwest Generation, LLC, Series B, 8.56% 20163 | 83 | 91,880 | |||||
Homer City Funding LLC 8.734% 20263 | 293 | 338,337 | |||||
Reliant Energy Resources Corp. 7.75% 2011 | 250 | 268,737 | |||||
AES Ironwood, LLC 8.857% 20253 | 228 | 255,247 | |||||
MidAmerican Energy Holdings Co., Series D, 5.00% 2014 | 225 | 216,748 | |||||
Constellation Energy Group, Inc. 6.125% 2009 | 200 | 203,554 | |||||
Abu Dhabi National Energy Co. PJSC (TAQA) 6.50% 20362 | 150 | 152,770 | |||||
Virginia Electric and Power Co., Series 2002-A, 5.375% 2007 | 125 | 125,000 | |||||
PSEG Power LLC 3.75% 2009 | 125 | 120,716 | |||||
2,250,652 | |||||||
Materials — 1.60% | |||||||
Norske Skogindustrier ASA 7.625% 20112 | 500 | 527,553 | |||||
Alcoa Inc. 5.55% 2017 | 300 | 298,741 | |||||
Stora Enso Oyj 7.25% 20362 | 100 | 104,358 | |||||
International Paper Co. 5.85% 2012 | 31 | 31,357 | |||||
962,009 | |||||||
Energy — 1.39% | |||||||
Tengizchevroil Finance Co. S.àr.l., Series A, 6.124% 20142,3 | 300 | 299,310 | |||||
Energy Transfer Partners, LP 5.65% 2012 | 180 | 179,789 | |||||
Energy Transfer Partners, LP 6.625% 2036 | 100 | 102,896 | |||||
Ras Laffan Liquefied Natural Gas Co. Ltd. 3.437% 20092,3 | 154 | 150,324 | |||||
Qatar Petroleum 5.579% 20112,3 | 100 | 99,980 | |||||
832,299 | |||||||
Health care — 0.78% | |||||||
Cardinal Health, Inc. 6.75% 2011 | 250 | 261,010 | |||||
Cardinal Health, Inc. 4.00% 2015 | 100 | 88,171 | |||||
Amgen Inc. 4.00% 2009 | 125 | 121,031 | |||||
470,212 | |||||||
Information technology — 0.63% | |||||||
Cisco Systems, Inc. 5.25% 2011 | 250 | 250,038 | |||||
Electronic Data Systems Corp., Series B, 6.50% 20131 | 125 | 125,162 | |||||
375,200 | |||||||
Consumer staples — 0.46% | |||||||
Tyson Foods, Inc. 6.85% 20161 | 150 | 153,032 | |||||
CVS Corp. 6.036% 20282,3 | 125 | 123,104 | |||||
276,136 | |||||||
MORTGAGE- AND ASSET-BACKED OBLIGATIONS3— 25.26% | |||||||
Freddie Mac 8.75% 2008 | 1 | 1,414 | |||||
Freddie Mac 4.00% 2015 | 176 | 165,763 | |||||
Freddie Mac 5.00% 2035 | 234 | 224,897 | |||||
Freddie Mac 5.00% 2035 | 118 | 113,537 | |||||
Freddie Mac 5.50% 2035 | 115 | 113,222 | |||||
Freddie Mac, Series 3156, Class PO, principal only, 0% 2036 | 122 | 88,941 | |||||
Freddie Mac, Series 3257, Class PA, 5.50% 2036 | 249 | 246,863 | |||||
Freddie Mac 6.00% 2036 | 585 | 587,290 | |||||
Fannie Mae, Series 2000-T5, Class B, 7.30% 2010 | 500 | 531,479 | |||||
Fannie Mae, Series 2001-T6B, 6.088% 2011 | 250 | 258,124 | |||||
Fannie Mae 6.00% 2021 | 24 | 24,198 | |||||
Fannie Mae, Series 2001-4, Class GA, 10.264% 20251 | 36 | 39,330 | |||||
Fannie Mae 7.00% 2026 | 21 | 21,573 | |||||
Fannie Mae 7.00% 2031 | 9 | 9,658 | |||||
Fannie Mae 7.50% 2031 | 8 | 8,032 | |||||
Fannie Mae, Series 2001-20, Class C, 12.049% 20311 | 34 | 38,195 | |||||
Fannie Mae 5.50% 2036 | 433 | 426,135 | |||||
Fannie Mae, Series 2001-T10, Class A-1, 7.00% 2041 | 23 | 23,697 | |||||
Wells Fargo Mortgage-backed Securities Trust, Series 2004-2, Class A-1, 5.00% 2019 | 607 | 589,817 | |||||
Wells Fargo Mortgage-backed Securities Trust, Series 2003-3, Class II-A-1, 5.25% 2033 | 230 | 226,103 | |||||
Wells Fargo Mortgage-backed Securities Trust, Series 2006-AR15, Class A-1, 5.697% 2036 | 182 | 181,001 | |||||
SBA CMBS Trust, Series 2005-1, Class D, 6.219% 20352 | 320 | 323,373 | |||||
SBA CMBS Trust, Series 2006-1A, Class A, 5.314% 20362 | 200 | 198,978 | |||||
SBA CMBS Trust, Series 2006-1A, Class D, 5.852% 20362 | 300 | 298,738 | |||||
ARG Funding Corp., Series 2005-2, Class A-1, AMBAC insured, 4.54% 20092 | 500 | 495,517 | |||||
ARG Funding Corp., Series 2005-1, Class A-3, MBIA insured, 4.29% 20112 | 250 | 242,884 | |||||
Countrywide Alternative Loan Trust, Series 2005-40CB, Class A-1, 5.50% 2035 | 208 | 203,363 | |||||
Countrywide Alternative Loan Trust, Series 2005-62, Class 2-A-1, 5.883% 20351 | 183 | 183,146 | |||||
Countrywide Alternative Loan Trust, Series 2005-21CB, Class A-17, 6.00% 2035 | 189 | 188,761 | |||||
Countrywide Alternative Loan Trust, Series 2006-16CB, Class A-2, 6.00% 2036 | 133 | 132,174 | |||||
Chase Commercial Mortgage Securities Corp., Series 1998-2, Class A-2, 6.39% 2030 | 343 | 347,357 | |||||
Chase Commercial Mortgage Securities Corp., Series 2000-1, Class A-2, 7.757% 2032 | 197 | 207,097 | |||||
Residential Funding Mortgage Securities I, Inc., Series 2004-S9, Class II-A-1, 4.75% 2019 | 230 | 220,701 | |||||
Residential Funding Mortgage Securities I, Inc., Series 2004-SA1, Class A-II, 4.313% 20341 | 319 | 312,267 | |||||
Crown Castle Towers LLC, Series 2005-1, Class A-FX, 4.643% 20352 | 200 | 195,130 | |||||
Crown Castle Towers LLC, Series 2005-1, Class D, 5.612% 20352 | 325 | 322,006 | |||||
GS Mortgage Securities Corp. II, Series 1998-C1, Class E, 7.197% 20301 | 250 | 256,683 | |||||
GS Mortgage Securities Corp. II, Series 1998-C1, Class D, 7.197% 20301 | 250 | 256,450 | |||||
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2005-LDP4, Class A-2, 4.79% 2042 | 250 | 245,081 | |||||
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2005-LDP1, Class A-2, 4.625% 2046 | 250 | 244,762 | |||||
CS First Boston Mortgage Securities Corp., Series 2004-C4, Class A-4, 4.283% 2039 | 255 | 243,522 | |||||
CS First Boston Mortgage Securities Corp., Series 2005-C6, Class A-3, 5.23% 2040 | 125 | 122,979 | |||||
CS First Boston Mortgage Securities Corp., Series 1998-C1, Class A-1B, 6.48% 2040 | 107 | 107,930 | |||||
WaMu Mortgage Pass-Through Certificates Trust, Series 2004-AR1, Class A, 4.229% 20341 | 55 | 54,187 | |||||
WaMu Mortgage Pass-Through Certificates Trust, Series 2006-AR2, Class 2-A1, 5.845% 20371 | 236 | 233,685 | |||||
WaMu Mortgage Pass-Through Certificates Trust, Series 2005-AR15, Class A-1-A, 5.58% 20451 | 176 | 176,466 | |||||
GMAC Mortgage Loan Trust, Series 2006-AR1, Class 2-A-1, 5.647% 20361 | 465 | 462,343 | |||||
Morgan Stanley Capital I, Inc., Series 1998-HF2, Class A-2, 6.48% 2030 | 379 | 383,080 | |||||
L.A. Arena Funding, LLC, Series 1, Class A, 7.656% 20262 | 281 | 305,129 | |||||
Bear Stearns Commercial Mortgage Securities Inc., Series 2001-TOP2, Class A-2, 6.48% 2035 | 250 | 259,324 | |||||
Morgan Stanley Dean Witter Capital I Trust, Series 2001-TOP5, Class A-3, 6.16% 2035 | 250 | 253,439 | |||||
Triad Automobile Receivables Trust, Series 2006-C, Class A-3, AMBAC insured, 5.26% 2011 | 250 | 249,220 | |||||
UPFC Auto Receivables Trust, Series 2005-B, Class A-3, XLCA insured, 4.98% 2011 | 250 | 248,945 | |||||
Wachovia Bank Commercial Mortgage Trust, Series 2005-C17, Class A-2, 4.782% 2042 | 250 | 245,593 | |||||
PG&E Energy Recovery Funding LLC, Series 2005-1, Class A-3, 4.14% 2012 | 250 | 243,409 | |||||
Capital One Multi-asset Execution Trust, Series 2006-10, Class A, 5.15% 2014 | 235 | 234,523 | |||||
Structured Adjustable Rate Mortgage Loan Trust, Series 2005-22, Class 5-A-1, 6.02% 20351 | 201 | 201,488 | |||||
Long Beach Acceptance Auto Receivables Trust, Series 2006-B, Class A-4, FSA insured, 5.18% 2013 | 200 | 199,150 | |||||
CHL Mortgage Pass-Through Trust, Series 2005-HYB8, Class 4-A-1, 5.672% 20351 | 196 | 195,088 | |||||
IndyMac INDX Mortgage Loan Trust, Series 2006-AR5, Class 2-A-1, 5.874% 20361 | 185 | 183,519 | |||||
AmeriCredit Automobile Receivables Trust, Series 2006-B-G, Class A-4, FGIC insured, 5.21% 2013 | 150 | 149,437 | |||||
Vanderbilt Mortgage and Finance, Inc., Series 1999-B, Class I-B-1, 8.395% 2016 | 2 | 2,289 | |||||
Vanderbilt Mortgage and Finance, Inc., Series 2001-A, Class B-1, 8.20% 2020 | 132 | 134,700 | |||||
Residential Accredit Loans, Inc., Series 2003-QS14, Class A-1, 5.00% 2018 | 140 | 136,022 | |||||
LB-UBS Commercial Mortgage Trust, Series 2000-C3, Class A-2, 7.95% 2025 | 125 | 132,886 | |||||
Chase Manhattan Bank — First Union National Bank, Commercial Mortgage Trust, Series 1999-1, Class B, 7.619% 2031 | 125 | 131,143 | |||||
DLJ Commercial Mortgage Corp., Series 1999-CG1, Class A-1B, 6.46% 2032 | 125 | 127,056 | |||||
Hertz Vehicle Financing LLC, Rental Car Asset-backed Notes, Series 2005-2, Class A-6, AMBAC insured, 5.08% 20112 | 125 | 123,659 | |||||
HarborView Mortgage Loan Trust, Series 2005-15, Class 2-A1A2, 6.12% 20451 | 115 | 116,288 | |||||
Cendant Timeshare Receivables Funding, LLC, Series 2005-1, Class A-1, FGIC insured, 4.67% 20172 | 108 | 106,961 | |||||
Washington Mutual Securities Corp., Series 2005-AR1, Class A-1-A, 5.58% 20351 | 106 | 106,243 | |||||
Salomon Brothers Commercial Mortgage Trust, Series 2001-C1, Class A-2, 6.226% 2035 | 96 | 96,181 | |||||
PP&L Transition Bond Co. LLC, Series 1999-1, Class A-7, 7.05% 2009 | 83 | 83,183 | |||||
Morgan Stanley Mortgage Loan Trust, Series 2004-3, Class 4-A, 5.686% 20341 | 79 | 76,808 | |||||
Residential Asset Securities Corp. Trust, Series 2004-KS12, Class A-1-2, 5.55% 20351 | 64 | 63,963 | |||||
Government National Mortgage Assn. 8.50% 2008 | 3 | 3,414 | |||||
Government National Mortgage Assn. 10.00% 2020 | 45 | 50,499 | |||||
Structured Asset Securities Corp., Series 1998-RF2, Class A, 8.52% 20271,2 | 42 | 42,305 | |||||
Bear Stearns ARM Trust, Series 2003-6, Class I-A-2, 3.97% 20331 | 39 | 38,684 | |||||
GMAC Commercial Mortgage Securities, Inc., Series 1997-C1, Class A-3, 6.869% 2029 | 37 | 37,484 | |||||
15,155,961 | |||||||
U.S. GOVERNMENT & GOVERNMENT AGENCY BONDS & NOTES — 13.07% | |||||||
U.S. Treasury 4.50% 2011 | 750 | 739,627 | |||||
U.S. Treasury 4.25% 2013 | 2,950 | 2,858,727 | |||||
U.S. Treasury 12.50% 2014 | 1,200 | 1,415,808 | |||||
U.S. Treasury 11.25% 2015 | 800 | 1,138,624 | |||||
U.S. Treasury 4.50% 2036 | 1,275 | 1,191,921 | |||||
Fannie Mae 5.25% 2007 | 500 | 499,820 | |||||
7,844,527 | |||||||
MUNICIPALS — 1.63% | |||||||
State of California, Golden State Tobacco Securitization Corp., Tobacco Settlement Asset-backed Bonds, Series 2003-A-1, 6.25% 2033 | 325 | 362,667 | |||||
State of Wisconsin, Badger Tobacco Asset Securitization Corp., Tobacco Settlement Asset-backed Bonds, 6.125% 2027 | 260 | 278,190 | |||||
State of South Dakota, Educational Enhancement Funding Corp., Tobacco Settlement Asset-backed Bonds, Series 2002-A, Class A, 6.72% 2025 | 168 | 167,078 | |||||
State of North Carolina, Eastern Municipal Power Agency., Power System Revenue Refunding Bonds, Federally Taxable, Series 2003-E, 5.55% 2014 | 125 | 121,331 | |||||
State of Louisiana, Tobacco Settlement Financing Corp., Tobacco Settlement Asset-backed Bonds, Series 2001-A, Class A, 6.36% 2025 | 50 | 50,089 | |||||
979,355 | |||||||
NON-U.S. GOVERNMENT BONDS & NOTES — 0.41% | |||||||
Israeli Government 7.50% 2014 | ILS935 | 245,520 | |||||
Total bonds & notes (cost: $51,257,489) | 51,701,076 | ||||||
Preferred securities — 9.93% | Shares | Market value | |||||
FINANCIALS — 9.93% | |||||||
BNP U.S. Funding LLC, Series A, 7.738% noncumulative preferred1,2 | 375,000 | $ | 380,995 | ||||
BNP Paribas 5.186% noncumulative1,2 | 300,000 | 287,121 | |||||
BNP Paribas Capital Trust 9.003% noncumulative trust preferred1,2 | 150,000 | 166,840 | |||||
Fannie Mae, Series O, 7.00%1,2 | 15,000 | 804,375 | |||||
Banco Santander Central Hispano, SA 6.80%2,4 | 10,000 | 256,000 | |||||
Banco Santander Central Hispano, SA 6.50%2,4 | 10,000 | 252,188 | |||||
MUFG Capital Finance 1 Ltd. 6.346% noncumulative preferred1 | 450,000 | 453,099 | |||||
HSBC Capital Funding LP, Series 1, 9.547% noncumulative step-up perpetual preferred1,2 | 400,000 | 448,354 | |||||
Fuji JGB Investment LLC, Series A, 9.87% noncumulative preferred1,2 | 360,000 | 379,908 | |||||
Deutsche Bank Capital Funding Trust I 7.872%1,2 | 300,000 | 315,355 | |||||
Swire Pacific Capital Ltd. 8.84% cumulative guaranteed perpetual capital securities2 | 10,000 | 281,250 | |||||
ING Capital Funding Trust III 8.439% noncumulative preferred1 | 250,000 | 275,352 | |||||
National Bank of Canada, Series A, 8.35% exchangeable preferred depositary shares | 10,000 | 264,400 | |||||
Resona Preferred Global Securities (Cayman) Ltd. 7.191%1,2 | 250,000 | 261,870 | |||||
Shinsei Finance II (Cayman) Ltd. 7.16% noncumulative preferred1,2 | 250,000 | 253,672 | |||||
Wachovia Capital Trust III 5.80%1 | 250,000 | 251,951 | |||||
Freddie Mac, 5.57%4 | 10,000 | 249,688 | |||||
Chuo Mitsui Trust and Banking Co., Ltd. 5.506%1,2 | 250,000 | 238,998 | |||||
DBS Capital Funding Corp., Series A, 7.657% noncumulative guaranteed preference shares1,2 | 125,000 | 134,365 | |||||
Total preferred securities (cost: $5,826,718) | 5,955,781 | ||||||
Short-term securities — 2.00% | Principal amount (000 | ) | |||||
Three Pillars Funding, LLC 5.28% due 2/1/20072 | $ | 700 | 699,897 | ||||
Johnson & Johnson 5.18% due 3/6/20072 | 500 | 497,554 | |||||
Total short-term securities (cost: $1,197,451) | 1,197,451 | ||||||
Total investment securities (cost: $58,281,658) | 58,854,308 | ||||||
Other assets less liabilities | 1,148,396 | ||||||
Net assets | $ | 60,002,704 |
1 Coupon rate may change periodically.
2 Purchased in a private placement transaction; resale may be limited to qualified institutional buyers; resale to the public may require registration. In practice, restricted securities in this fund are typically as liquid as unrestricted securities. The total value of all such restricted securities was $17,287,385, which represented 28.81% of the net assets of the fund.
3 Principal payments may be made periodically. Therefore, the effective maturity date may be earlier than the stated maturity date.
4 Security did not produce income during the last 12 months.
Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so you may lose money.
Investors should carefully consider the investment objectives, risks, charges and expenses of the American Funds. This and other important information is contained in each fund’s prospectus, which can be obtained from a financial adviser and should be read carefully before investing.
MFGEFP-985-0307-S6907
ITEM 7 - Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies
Not applicable to this Registrant, insofar as the Registrant is not a closed-end management investment company.
ITEM 8 - Portfolio Managers of Closed-End Management Investment Companies
Not applicable to this Registrant, insofar as the Registrant is not a closed-end management investment company.
ITEM 9 - Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers
Not applicable to this Registrant, insofar as the Registrant is not a closed-end management investment company.
ITEM 10 - Submission of Matters to a Vote of Security Holders
There have been no material changes to the procedures by which shareholders may recommend nominees to the Registrant’s board of trustees since the Registrant last submitted a proxy statement to its shareholders. The procedures are as follows. The Registrant has a committee on governance comprised solely of persons who are not considered ‘‘interested persons’’ of the Registrant within the meaning of the Investment Company Act of 1940, as amended. The committee periodically reviews such issues as the Board’s composition, responsibilities, committees, compensation and other relevant issues, and recommends any appropriate changes to the full Board of trustees. While the committee normally is able to identify from its own resources an ample number of qualified candidates, it will consider shareholder suggestions of persons to be considered as nominees to fill future vacancies on the board. Such suggestions must be sent in writing to the committee on governance of the Registrant, c/o the Registrant’s Secretary, and must be accompanied by complete biographical and occupational data on the prospective nominee, along with a written consent of the prospective nominee for consideration of his or her name by the committee on governance.
ITEM 11 - Controls and Procedures
(a) | The Registrant’s Principal Executive Officer and Principal Financial Officer have concluded, based on their evaluation of the Registrant’s disclosure controls and procedures (as such term is defined in Rule 30a-3 under the Investment Company Act of 1940), that such controls and procedures are adequate and reasonably designed to achieve the purposes described in paragraph (c) of such rule. |
(b) | There were no changes in the Registrant’s internal controls over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) that occurred during the Registrant’s second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting. |
ITEM 12 - Exhibits
(a)(1) | Not applicable for filing of semi-annual reports to shareholders. |
(a)(2) | The certifications required by Rule 30a-2 of the Investment Company Act of 1940, as amended, and Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 are attached as exhibits hereto. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
ENDOWMENTS | |
By /s/ Robert G. O'Donnell | |
Robert G. O'Donnell, Vice Chairman and Principal Executive Officer | |
Date: April 10, 2007 |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
By /s/ Robert G. O'Donnell |
Robert G. O'Donnell, Vice Chairman and Principal Executive Officer |
Date: April 10, 2007 |
By /s/ Dori Laskin |
Dori Laskin, Treasurer and Principal Financial Officer |
Date: April 10, 2007 |