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: 811-32
Fundamental Investors, Inc.
(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: December 31, 2003
Date of reporting period: June 30, 2003
Patrick F. Quan
Secretary
Fundamental Investors, Inc.
P.O. Box 7650, One Market, Steuart Tower
San Francisco, California 94120
(name and address of agent for service)
Copies to:
Robert E. Carlson, Esq.
Paul, Hastings, Janofsky &Walker LLP
515 South Flower Street
Los Angeles, California 90071
(Counsel for the Registrant)
<page>
ITEM 1 - Reports to Stockholders
[logo] American Funds(R)
The right choice for the long term(R)
FUNDAMENTAL INVESTORS
[abstract painting that shows a giant-sized man holding up the roof of a
building]
Semi-annual report for the six months ended June 30, 2003
Fundamental Investors(SM) seeks long-term growth of capital and income primarily
through investments in common stocks.
This fund is one of the 29 American Funds, the nation's third-largest mutual
fund family. For more than seven decades, Capital Research and Management
Company,SM the American Funds adviser, has invested with a long-term focus based
on thorough research and attention to risk.
Fund results in this report were calculated for Class A shares at net asset
value (without a sales charge) unless otherwise indicated. Here are the average
annual total returns on a $1,000 investment with all distributions reinvested
for periods ended June 30, 2003:
CLASS A SHARES 1 YEAR 5 YEARS 10 YEARS
Reflecting 5.75% maximum sales charge -8.98% +0.71% +10.12%
The fund's 30-day yield for Class A shares as of July 31, 2003, calculated in
accordance with the Securities and Exchange Commission formula, was 1.85%. The
fund's distribution rate for Class A shares as of that date was 1.90%. Both
reflect the 5.75% maximum sales charge. The SEC yield reflects the rate at which
the fund is earning income on its current portfolio of securities while the
distribution rate reflects the fund's past dividends paid to shareholders.
Accordingly, the fund's SEC yield and distribution rate may differ.
Results for other share classes can be found on page 28. For the most current
investment results, please refer to americanfunds.com. Please see the inside
back cover for important information about other share classes.
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. INVESTING OUTSIDE THE
UNITED STATES INVOLVES ADDITIONAL RISKS, SUCH AS CURRENCY FLUCTUATIONS,
POLITICAL INSTABILITY, DIFFERING SECURITIES REGULATIONS AND PERIODS OF
ILLIQUIDITY, WHICH ARE DETAILED IN THE FUND'S PROSPECTUS.
FELLOW SHAREHOLDERS:
[abstract painting that shows a giant-sized man holding up the roof of a
building]
The stock market experienced an upswing in the first half of 2003, helped by low
interest rates and stimulative fiscal policies. In this environment, Fundamental
Investors posted a 9.4% gain, with dividends reinvested, for the six months
ended June 30, 2003.
By comparison, the Lipper Large-Cap Core Index, which tracks funds that allow a
wide latitude of companies in their portfolios, returned 10.2% for the period.
The Lipper Large-Cap Value Index, which measures funds that invest in companies
that are undervalued within their industries, gained 10.7%. The unmanaged
Standard & Poor's 500 Composite Index, which tracks relatively large companies
listed on U.S. exchanges, increased by 11.8%.
Despite an environment where interest rates dropped to their lowest level in
decades, we are pleased to report that the fund continued to pay two 10-cent
quarterly dividends in February and May. The fund's 12-month distribution rate
at net asset value was 2.05%, which surpasses the rates for all three of its
benchmarks: 0.66% for the Lipper Large-Cap Core Index, 0.92% for the Lipper
Large-Cap Value Index, and 1.66% for the S&P 500.
[Begin Sidebar]
RESULTS AT A GLANCE
Returns for periods ended June 30, 2003, with all distributions reinvested.
6 months 1 year 5 years (1) 10 years (1) Lifetime (1), (2)
Fundamental Investors 9.44% -3.42% 1.92% 10.78% 13.62%
Lipper Large-Cap Core Index 10.15 -1.00 -2.10 8.51 --3
Lipper Large-Cap Value Index 10.75 -2.13 -0.75 9.15 12.72
Standard & Poor's
500 Composite Index 11.75 0.25 -1.61 10.04 13.13
(1) Average annual total return.
(2) Since Capital Research and Management Company began managing the fund on
August 1, 1978.
(3) Index began on December 29, 1978.
The market indexes are unmanaged.
[End Sidebar]
THE SIX MONTHS IN REVIEW
Fundamental Investors' portfolio was helped by a favorable stock and bond market
environment. Some of the strongest stocks during the period were among those
that were hardest hit during the bear market of the past three years. These
include J.P. Morgan Chase, the global financial services firm, up 42.4%; AOL
Time Warner, the media giant, up 22.8%; and Texas Instruments, a global
semiconductor maker, up 17.3%. All are among our 20 largest holdings.
Pharmaceutical companies, which constitute about 8% of the fund's overall
portfolio, also experienced a rebound. AstraZeneca (+14.5%) and Eli Lilly
(+8.6%), both among our top five holdings, saw some recovery in their stock
prices during this period as each made progress in getting new products to
market. AstraZeneca's new cancer drug, IRESSA,(R) and its new
cholesterol-lowering drug, Crestor,(R) were approved by the Food and Drug
Administration, while an application for the approval of Exanta,TM a drug
formulated to prevent blood clots, is expected to be submitted to the FDA by the
end of 2003.
Eli Lilly, our largest holding, has had FDA approval for several new products
delayed until it completes upgrades of the manufacturing control systems at two
of its plants. That has hindered several promising new medications, including an
injectable version of Zyprexa,(R) the top-selling oral drug for the treatment of
schizophrenia, and Cymbalta,TM a new anti-depressant to replace Prozac, which is
now off patent. Despite these issues, we believe long-term growth prospects for
the company are favorable.
The fund has held some cyclical stocks, including Caterpillar (+21.7%), a
manufacturer of construction and mining machinery, and Alcoa (+11.9%), an
aluminum producer, in anticipation of an economic recovery. The U.S. dollar has
declined 8.7% on a trade-weighted basis over the past year (1), helping U.S.
cyclical companies to gain market share on a global basis. With signs of a
continuing global economic recovery, we hope this part of the portfolio will
continue to do well.
(1) As measured by the J.P. Morgan Trade-Weighted Real Broad Effective U.S.
Dollar Index.
The weakness in the U.S. dollar also benefited many of the fund's non-U.S.
holdings, which currently make up 18.5% of the portfolio.
A CUT IN TAXES
Perhaps one of the biggest boosts to the stock market during the period was the
passage of President Bush's tax bill, which included substantial cuts in taxes
on both dividends and capital gains. Dividends had previously been taxed as
ordinary income at federal tax rates as high as 38.6%, while capital gains on
investments held longer than one year were taxed up to 20%; in each case,
maximum rates were reduced to 15%. Non-qualified dividends will still be taxed
at ordinary income tax rates.
Over the long term, we believe that these tax law changes will help to encourage
buy-and-hold investing and provide an incentive for company managements to pay
more dividends. This change in focus is very significant to a fund like
Fundamental Investors, whose objective is to provide capital appreciation as
well as income.
LOOKING AHEAD
We believe the fund's portfolio is well-positioned to take advantage of a global
economic recovery. Our long-term focus has helped the fund to hold its value
relatively well during periods of declining stock prices and to produce
competitive returns during periods of economic prosperity. Over the past 10-year
period, Fundamental Investors has produced an average annual return of 10.8%,
surpassing the 8.5% gain of the Lipper Large-Cap Core Index, the 9.2% return of
the Lipper Large-Cap Value Index, and the 10.0% advance of the S&P 500.
A NEW PRESIDENT
Finally, we are pleased to announce that Dina N. Perry, who has served as a
portfolio counselor for Fundamental Investors for the past decade, has been
named president of the fund. She succeeds James E. Drasdo, who remains on the
board of directors as vice chairman and will continue to serve as a portfolio
counselor for the fund. We thank Jim for his nine years as president.
As always, we appreciate your continued support.
Sincerely,
/s/ James F. Rothenberg /s/ Dina N. Perry
James F. Rothenberg Dina N. Perry
Chairman President
August 14, 2003
INVESTMENT PORTFOLIO June 30, 2003 unaudited
LARGEST EQUITY HOLDINGS
Percent of
Net Assets
Eli Lilly 2.39 %
Dow Chemical 2.27
AOL Time Warner 2.18
FleetBoston Financial 2.17
AstraZeneca 2.14
Altria Group 2.02
General Electric 1.98
Suncor Energy 1.90
Norsk Hydro 1.81
Raytheon 1.80
LARGEST INDUSTRY HOLDINGS
Percent of
Net Assets
Oil & Gas 9.03 %
Pharmaceuticals 7.98
Media 6.33
Aerospace & Defense 5.14
Insurance 4.61
Market
EQUITY SECURITIES Shares or principal value
(common and preferred stocks and convertible debentures) amount (000)
OIL & GAS - 9.03%
Suncor Energy Inc. (Canada) 17,838,485 $ 333,920
Norsk Hydro AS (ADR) (Norway) 3,559,000 174,925
Norsk Hydro AS 2,934,600 144,014
LUKoil Holding (ADR) (Russia) 2,250,000 177,975
Murphy Oil Corp. 2,639,200 138,822
Shell Canada Ltd. (Canada) 3,273,200 127,258
Exxon Mobil Corp. 3,500,000 125,685
Unocal Corp. 3,000,000 86,070
Unocal Capital Trust 6.25% 450,000 21,600
convertible preferred 2026
ConocoPhillips 1,700,000 93,160
ChevronTexaco Corp. 1,000,000 72,200
Burlington Resources Inc. 1,000,000 54,070
Imperial Oil Ltd. (Canada) 1,180,018 41,206
PHARMACEUTICALS - 7.98%
Eli Lilly and Co. 6,115,000 421,752
AstraZeneca PLC (United Kingdom) 5,525,000 223,996
AstraZeneca PLC 2,000,000 80,302
AstraZeneca PLC (ADR) 1,776,266 $ 72,418
Sanofi-Synthelabo (France) 2,350,000 137,588
Bristol-Myers Squibb Co. 4,350,000 118,102
Johnson & Johnson 2,000,000 103,400
Merck & Co., Inc. 1,250,000 75,687
Schering-Plough Corp. 3,900,000 72,540
Pfizer Inc (formed by the merger of Pfizer Inc 1,900,000 64,885
and Pharmacia Corp.)
Forest Laboratories, Inc. (1) 650,000 35,587
MEDIA - 6.33%
AOL Time Warner Inc. (1) 23,815,000 383,183
Viacom Inc., Class B, nonvoting (1) 4,900,000 213,934
News Corp. Ltd., preferred (ADR) (Australia) 7,050,000 176,602
News Corp. Ltd. (ADR) 700,000 21,189
Comcast Corp., Class A (1) 3,712,162 112,033
Comcast Corp., Class A, special stock, nonvoting (1) 1,000,000 28,830
Liberty Media Corp., Class A (1) 6,800,000 78,608
Dow Jones & Co., Inc. 1,800,000 77,454
Adelphia Communications Corp. 6.00% convertible $ 86,000,000 14,620
subordinated notes 2006 (2)
Interpublic Group of Companies, Inc. 1.87% convertible $ 8,168,000 7,157
subordinated notes 2006 (3)
UnitedGlobalCom, Inc., Class A 225,035 1,047
(formerly United Pan-Europe Communications NV) (1)(3)(4)
AEROSPACE & DEFENSE - 5.14%
Raytheon Co. 7,592,732 249,345
Raytheon Co. - RC Trust I 8.25% convertible preferred 2006 1,180,000 units 67,543
Boeing Co. 6,850,000 235,092
Northrop Grumman Corp. 1,150,000 99,233
Northrop Grumman Corp. 7.25% convertible preferred 2004 369,690 units 37,616
General Dynamics Corp. 1,500,000 108,750
Honeywell International Inc. 1,500,000 40,275
United Technologies Corp. 425,000 30,103
Bombardier Inc., Class B (Canada) 7,500,000 25,319
Lockheed Martin Corp. 248,200 11,807
INSURANCE - 4.61%
American International Group, Inc. 3,800,000 209,684
Allstate Corp. 4,800,000 171,120
XL Capital Ltd., Class A 1,825,000 151,475
Berkshire Hathaway Inc., Class A (1) 1,000 72,500
Chubb Corp. 7.00% convertible preferred 2005 1,200,000 units 31,260
Chubb Corp. 300,000 18,000
Irish Life & Permanent PLC (Ireland) 4,425,000 $ 47,751
21st Century Insurance Group 3,000,000 42,900
Aon Corp. 1,767,400 42,559
St. Paul Companies, Inc. 700,000 25,557
COMMERCIAL BANKS - 4.46%
FleetBoston Financial Corp. 12,880,000 382,665
Allied Irish Banks, PLC (Ireland) 8,871,485 133,315
Cullen/Frost Bankers, Inc. 2,550,000 81,855
KeyCorp 3,100,000 78,337
National Bank of Canada (Canada) 1,405,000 38,236
Comerica Inc. 800,000 37,200
St. George Bank Ltd. (Australia) 2,400,000 34,769
ELECTRIC UTILITIES - 4.01%
Dominion Resources, Inc. 4,590,000 294,999
Exelon Corp. 3,000,000 179,430
Constellation Energy Group, Inc. 2,296,100 78,756
DTE Energy Co. 1,606,900 62,091
American Electric Power Co., Inc. 1,902,100 56,740
TXU Corp. 1,167,200 26,204
Entergy Corp. 150,000 7,917
METALS & MINING - 3.81%
Alcoa Inc. 7,108,700 181,272
BHP Billiton Ltd. (Australia) 23,945,030 138,758
Freeport-McMoRan Copper & Gold Inc., Class B 4,973,100 121,841
Rio Tinto PLC (United Kingdom) 6,000,000 113,017
Phelps Dodge Corp. (1) 965,620 37,022
Inco Ltd. (Canada) (1) 1,632,300 34,507
Massey Energy Co. 2,011,700 26,454
Arch Coal, Inc. 5.00% convertible preferred (undated) 200,000 13,337
BHP Steel Ltd. (Australia) 2,113,020 5,272
CHEMICALS - 3.40%
Dow Chemical Co. 12,925,000 400,158
E.I. du Pont de Nemours and Co. 3,000,000 124,920
Air Products and Chemicals, Inc. 1,200,000 49,920
Lyondell Chemical Co. 1,450,000 19,618
Potash Corp. of Saskatchewan Inc. (Canada) 69,200 4,429
DIVERSIFIED TELECOMMUNICATION SERVICES - 3.17%
SBC Communications Inc. 11,750,000 $ 300,212
AT&T Corp. 5,455,000 105,009
Verizon Communications Inc. 2,000,000 78,900
Swisscom AG (Switzerland) 167,510 47,651
Deutsche Telekom International Finance BV Euro 12,000,000 15,233
6050% convertible notes 2006 (Germany)
Sprint Corp. - FON Group 847,300 12,201
INDUSTRIAL CONGLOMERATES - 3.04%
General Electric Co. 12,175,000 349,179
Tyco International Ltd. 5,125,000 97,272
3M Co. 500,000 64,490
Siemens AG (Germany) 503,200 24,638
MACHINERY - 3.01%
Deere & Co. 6,217,000 284,117
Caterpillar Inc. 2,600,000 144,716
Parker Hannifin Corp. 2,400,000 100,776
FOOD PRODUCTS - 2.91%
Unilever NV, New York registered (Netherlands) 4,100,000 221,400
Nestle SA (Switzerland) 475,000 98,096
General Mills, Inc. 1,404,200 66,573
Sara Lee Corp. 3,375,000 63,484
H.J. Heinz Co. 1,700,000 56,066
Kraft Foods Inc., Class A 200,000 6,510
PAPER & FOREST PRODUCTS - 2.63%
International Paper Co. 4,775,000 170,611
Weyerhaeuser Co. 2,883,000 155,682
Norske Skogindustrier ASA, Class A (Norway) 6,566,900 98,042
Bowater Inc. 700,000 26,215
Georgia-Pacific Corp., Georgia-Pacific Group 698,640 13,239
SPECIALTY RETAIL - 2.54%
Lowe's Companies, Inc. 5,650,000 242,667
Limited Brands, Inc. 13,200,000 204,600
MULTI-UTILITIES & UNREGULATED POWER - 2.26%
Duke Energy Corp. 10,275,000 $ 204,986
Questar Corp. 3,000,000 100,410
El Paso Corp. 11,550,000 93,324
TOBACCO - 2.02%
Altria Group, Inc. (formerly Philip Morris Companies Inc.) 7,825,000 355,568
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 1.98%
Texas Instruments Inc. 11,863,024 208,789
National Semiconductor Corp. (1) 1,750,000 34,510
Maxim Integrated Products, Inc. 1,000,000 34,190
Linear Technology Corp. 1,000,000 32,210
Semtech Corp. 4.50% convertible subordinated notes 2007 $ 20,000,000 20,625
Semtech Corp. (1) 750,000 10,680
ASML Holding NV 5.25% convertible notes 2010 (Netherlands) Euro 6,000,000 7,026
IT SERVICES - 1.58%
Automatic Data Processing, Inc. 5,075,000 171,840
Sabre Holdings Corp., Class A 2,045,304 50,417
Electronic Data Systems Corp. 1,400,000 30,030
Electronic Data Systems Corp. 7.625% Feline Prides 2004 279,600 units 6,165
Ceridian Corp. (1) 1,200,000 20,364
CAPITAL MARKETS - 1.54%
J.P. Morgan Chase & Co. 7,950,000 271,731
MULTILINE RETAIL - 1.51%
Target Corp. 4,890,000 185,038
May Department Stores Co. 3,600,000 80,136
ENERGY EQUIPMENT & SERVICES - 1.48%
Halliburton Co. 6,700,000 154,100
Baker Hughes Inc. 3,200,000 107,424
COMMUNICATIONS EQUIPMENT - 1.47%
Cisco Systems, Inc. (1) 9,300,000 $ 155,217
Motorola, Inc. 7,000,000 66,010
Motorola, Inc. 7.00% convertible preferred 2004 800,000 units 26,080
Corning Inc. (1) 1,520,000 11,233
COMPUTERS & PERIPHERALS - 1.41%
International Business Machines Corp. 2,225,000 183,563
Hewlett-Packard Co. 3,000,000 63,900
ELECTRONIC EQUIPMENT & INSTRUMENTS - 1.36%
Sanmina Corp. 0% convertible $ 166,000,000 80,510
subordinated debentures 2020
SCI Systems, Inc. 3.00% convertible $ 54,500,000 48,096
subordinated debentures 2007
Agilent Technologies, Inc. (1) 3,700,000 72,335
Agilent Technologies, Inc. 3.00% $ 15,074,000 14,735
convertible debentures 2021 (5)
Agilent Technologies, Inc. 3.00% $ 10,370,000 10,137
convertible debentures 2021 (3),(5)
Solectron Corp. 7.25% Aces 1,200,000 units 14,088
convertible preferred 2004
DDi Corp. 5.25% convertible $ 10,000,000 500
subordinated notes 2008 (2)
BEVERAGES - 1.34%
Anheuser-Busch Companies, Inc. 1,700,000 86,785
PepsiCo, Inc. 1,800,000 80,100
Coca-Cola Co. 1,500,000 69,615
ROAD & RAIL - 1.26%
Union Pacific Corp. 1,500,000 87,030
Canadian Pacific Railway Ltd. (Canada) 3,300,000 74,580
Burlington Northern Santa Fe Corp. 2,110,000 60,008
ELECTRICAL EQUIPMENT - 0.93%
Emerson Electric Co. 3,200,000 163,520
SOFTWARE - 0.91%
Microsoft Corp. 6,240,000 159,806
HOUSEHOLD PRODUCTS - 0.79%
Colgate-Palmolive Co. 2,409,400 139,625
THRIFTS & MORTGAGE FINANCE - 0.77%
Fannie Mae 2,017,800 136,080
FOOD & STAPLES RETAILING - 0.68%
Walgreen Co. 3,750,000 112,875
SYSCO Corp. 200,000 6,008
CONTAINERS & PACKAGING - 0.67%
Temple-Inland Inc. (6) 2,750,000 118,003
GAS UTILITIES - 0.62%
KeySpan Corp. 1,584,000 56,153
NiSource Inc. 2,800,000 53,200
AUTOMOBILES - 0.47%
General Motors Corp. 2,300,000 82,800
REAL ESTATE - 0.45%
Equity Residential 2,850,000 73,958
Plum Creek Timber Co., Inc. 205,500 5,333
AUTO COMPONENTS - 0.38%
Magna International Inc., Class A (Canada) 1,000,000 67,270
HEALTH CARE PROVIDERS & SERVICES - 0.38%
CIGNA Corp. 725,000 34,032
HCA Inc. 1,000,000 32,040
AIRLINES - 0.37%
Continental Airlines, Inc., Class B (1) 2,675,000 40,045
Southwest Airlines Co. 1,500,000 25,800
OTHER - 0.44%
Amgen Inc. (1) 500,000 33,220
Allied Waste Industries, Inc., Series C, 360,000 21,132
6.25% convertible preferred 2006
Sprint Corp. 7.125% convertible preferred 2004 1,525,000 units 12,124
Avon Products, Inc. 170,000 10,574
Miscellaneous - 1.58%
Other equity securities in initial period of acquisition $ 278,576
TOTAL EQUITY SECURITIES (cost: $16,724,291,000) 16,686,585
Bonds & notes Principal
amount
(000)
AIRLINES - 0.87%
Northwest Airlines, Inc.:
8.875% 2006 $ 49,185 39,102
7.625% 2005 37,860 32,181
8.52% 2004 24,540 23,068
7.875% 2008 16,566 12,673
9.875% 2007 15,335 12,191
Continental Airlines, Inc. 8.00% 2005 28,600 25,740
Delta Air Lines, Inc., Series 1993-A2, 10.50% 2016 (7) 11,500 8,822
MEDIA - 0.54%
United Pan-Europe Communications NV: (2)
10.875% 2009 119,615 26,315
11.50% 2010 30,575 6,727
Series B, 11.25% 2010 30,175 6,639
0%/13.75% 2010 (8) 33,950 4,838
Series B, 11.25% 2009 15,250 3,279
Charter Communications Holdings, LLC 8.25% 2007 50,000 38,750
Time Warner Inc. 10.15% 2012 6,000 8,224
DIVERSIFIED TELECOMMUNICATION SERVICES - 0.17%
Comcast UK Cable Partners Ltd. 11.20% 2007 19,570 19,203
AT&T Corp. 6.50% 2006 (3) Euro 8,950 10,942
TOTAL BONDS & notes (cost: $381,100,000) 278,694
Short-term securities Principal Market
amount value
(000) (000)
CORPORATE SHORT-TERM NOTES - 2.02%
Triple-A One Funding Corp. 1.05%-1.35% $ 88,000 $ 87,973
due 7/1-7/25/2003 (3)
Verizon Network Funding Corp. 0.98%-1.21% 71,000 70,912
due 7/14-8/26/2003
Pfizer Inc 0.91%-0.96% due 8/4-8/12/2003 (3) 61,000 60,941
E.I. DuPont de Nemours & Co. 1.00%-1.10% 52,000 51,950
due 7/18-8/14/2003
Edison Asset Securitization LLC 1.22% 35,000 34,974
due 7/22/2003 (3)
Corporate Asset Funding Co. Inc. 1.22% 25,000 24,997
due 7/3/2003 (3)
Merck & Co. Inc. 1.02%-1.21% due 7/10-7/11/2003 24,697 24,689
FEDERAL AGENCY DISCOUNT NOTES - 1.45%
Fannie Mae 0.94%-1.20% due 7/7-9/19/2003 183,973 183,748
Freddie Mac 1.13%-1.155% due 9/3-9/15/2003 39,300 39,223
Federal Home Loan Bank 1.15%-1.19% 31,387 31,377
due 7/2-7/25/2003
TOTAL SHORT-TERM SECURITIES (cost: $610,766,000) 610,784
TOTAL INVESTMENT SECURITIES (cost: $17,716,157,000) 17,576,063
OTHER ASSETS LESS LIABILITIES 40,458
NET ASSETS $17,616,521
(1) Security did not produce income during the last 12 months.
(2) Company not making scheduled interest payments; bankruptcy proceedings
pending.
(3) Purchased in a private placement transaction; resale may be limited to
qualified institutional buyers; resale to the public may require
registration.
(4) Valued under fair value procedures adopted by authority of the Board of
Directors.
(5) Coupon rate may change periodically.
(6) The fund owns 5.09% of the outstanding voting securities of Temple-Inland
Inc., and thus is considered an affiliate of this company under the
Investment Company Act of 1940.
(7) Pass-through security backed by a pool of mortgages or other loans on which
principal payments are periodically made. Therefore, the effective maturity
is shorter than the stated maturity.
(8) Step bond; coupon rate will increase at a later date.
ADR = American Depositary Receipts
See Notes to Financial Statements
EQUITY SECURITIES APPEARING IN THE PORTFOLIO SINCE DECEMBER 31, 2002:
Allied Waste Industries HCA
Amgen Inco
Arch Coal Irish Life & Permanent
ASML Holding Kraft Foods
Avon Products Linear Technology
Burlington Resources Lyondell Chemical
ChevronTexaco Magna International
CIGNA National Bank of Canada
Comerica NiSource
Deutsche Telekom Potash Corp. of Saskatchewan
Emerson Electric St. George Bank
Freeport-McMoRan Copper & Gold St. Paul Companies
General Dynamics SYSCO
EQUITY SECURITIES ELIMINATED FROM THE PORTFOLIO SINCE DECEMBER 31, 2002:
Albertson's Jabil Circuit
AMP Kellogg
Applera Marsh & McLennan Companies
Archer Daniels Midland Monsanto
BANK ONE National City
Cypress Semiconductor NTL
Dell Computer PNC Financial Services Group
Delta Air Lines Qwest Trends Trust
EnCana Statoil
ENI SpA Sumitomo Mitsui Financial Group
FedEx Sun Microsystems
Ford Motor Telefonos de Mexico
FPL Group Unibail
Genentech Williams Companies
Gillette Wyeth
Household International Xcel Energy
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES UNAUDITED
at June 30, 2003 (dollars and shares in thousands, except per-share amounts)
ASSETS:
Investment securities at market:
Unaffiliated issuers (cost: $17,595,792) $17,458,060
Affiliated issuers (cost: $120,365) 118,003 $17,576,063
Cash 69
Receivables for:
Sales of investments 82,638
Sales of fund's shares 19,851
Dividends and interest 46,000 148,489
17,724,621
LIABILITIES:
Payables for:
Purchases of investments 75,611
Repurchases of fund's shares 21,954
Investment advisory services 4,021
Services provided by affiliates 5,459
Deferred Directors' compensation 956
Other fees and expenses 99 108,100
NET ASSETS AT JUNE 30, 2003 $17,616,521
NET ASSETS CONSIST OF:
Capital paid in on shares of capital stock $19,192,809
Undistributed net investment income 33,521
Accumulated net realized loss (1,470,006)
Net unrealized depreciation (139,803)
NET ASSETS AT JUNE 30, 2003 $17,616,521
TOTAL AUTHORIZED CAPITAL STOCK - 1,000,000 SHARES, $1.00 PAR VALUE
NET ASSETS SHARES NET ASSET
OUTSTANDING VALUE PER SHARE (1)
Class A $16,146,187 669,739 $24.11
Class B 681,161 28,303 24.07
Class C 310,102 12,894 24.05
Class F 240,746 9,989 24.10
Class 529-A 57,308 2,378 24.10
Class 529-B 12,020 499 24.10
Class 529-C 17,095 709 24.10
Class 529-E 2,811 117 24.09
Class 529-F 465 19 24.09
Class R-1 721 30 24.06
Class R-2 23,172 963 24.05
Class R-3 38,716 1,607 24.09
Class R-4 25,237 1,048 24.09
Class R-5 60,780 2,520 24.12
(1) Maximum offering price and redemption price per share were equal to the net
asset value per share for all share classes, except for classes A and
529-A, for which the maximum offering prices per share were $25.58 and
$25.57, respectively.
See Notes to Financial Statements
STATEMENT OF OPERATIONS UNAUDITED
for the six months ended June 30, 2003 (dollars in thousands)
INVESTMENT INCOME:
Income:
Dividends (net of non-U.S. withholding tax of
$6,991, also includes $1,615 from affiliates) $213,296
Interest 40,391 $253,687
Fees and expenses:
Investment advisory services 22,372
Distribution services 22,853
Transfer agent services 10,199
Administrative services 722
Reports to shareholders 263
Registration statement and prospectus 219
Postage, stationery and supplies 1,304
Directors' compensation 138
Auditing and legal 58
Custodian 457
State and local taxes 1
Other 104
Total expenses before reimbursement 58,690
Reimbursement of expenses 54 58,636
Net investment income 195,051
NET REALIZED LOSS AND UNREALIZED APPRECIATION ON
INVESTMENTS AND NON-U.S. CURRENCY:
Net realized (loss) gain on:
Investments (654,613)
Non-U.S. currency transactions 510 (654,103)
Net unrealized appreciation on:
Investments 1,960,329
Non-U.S. currency translations 52 1,960,381
Net realized loss and unrealized appreciation
on investments and non-U.S. currency 1,306,278
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $1,501,329
See Notes to Financial Statements
STATEMENT OF CHANGES IN NET ASSETS
(dollars in thousands)
Six months Year ended
ended June 30, December 31,
2003* 2002
OPERATIONS:
Net investment income $195,051 $306,427
Net realized loss on investments and
non-U.S. currency transactions (654,103) (425,234)
Net unrealized appreciation (depreciation)
on investments and non-U.S. currency translations 1,960,381 (3,522,999)
Net increase (decrease) in net assets
resulting from operations 1,501,329 (3,641,806)
DIVIDENDS PAID TO SHAREHOLDERS
FROM NET INVESTMENT INCOME (142,354) (362,738)
CAPITAL SHARE TRANSACTIONS (168,466) 90,287
TOTAL INCREASE (DECREASE) IN NET ASSETS 1,190,509 (3,914,257)
NET ASSETS:
Beginning of period 16,426,012 20,340,269
End of period (including undistributed
(distributions in excess of) net investment
income: $33,521 and $(19,176), respectively) $17,616,521 $16,426,012
*Unaudited
See Notes to Financial Statements
NOTES TO FINANCIAL STATEMENTS unaudited
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION - Fundamental Investors, Inc. (the "fund") is registered under the
Investment Company Act of 1940 as an open-end, diversified management investment
company. The fund seeks long-term growth of capital and income primarily through
investments in common stocks.
The fund offers 14 share classes consisting of four retail share classes, five
CollegeAmerica savings plan share classes and five retirement plan share
classes. The CollegeAmerica savings plan share classes (529-A, 529-B, 529-C,
529-E and 529-F) are sponsored by the Commonwealth of Virginia and can be
utilized to save for college education. The five retirement plan share classes
(R-1, R-2, R-3, R-4 and R-5) are sold without any sales charges and do not carry
any conversion rights. The fund's share classes are described below:
- ---------------------------------------------------------------------------------------------------------
Share class Initial sales Contingent deferred sales
charge charge upon redemption Conversion feature
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
Classes A and 529-A Up to 5.75% None (except 1% for certain None
redemptions within one year of
purchase without an initial
sales charge)
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
Classes B and 529-B None Declines from 5% to zero for Classes B and 529-B
redemptions within six years convert to classes A
of purchase and 529-A respectively,
after eight years
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
Class C None 1% for redemptions within Class C converts to
one year of purchase Class F after 10 years
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
Class 529-C None 1% for redemptions within None
one year of purchase
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
Class 529-E None None None
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
Classes F and 529-F None None None
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
Classes R-1, R-2, R-3, None None None
R-4 and R-5
- ---------------------------------------------------------------------------------------------------------
Holders of all share classes have equal pro rata rights to assets, dividends and
liquidation. Each share class has identical voting rights, except for the
exclusive right to vote on matters affecting only its class. Share classes have
different fees and expenses ("class-specific fees and expenses"), primarily due
to different arrangements for distribution, administrative and shareholder
services. Differences in class-specific fees and expenses will result in
differences in net investment income and, therefore, the payment of different
per-share dividends by each class.
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 fund:
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
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 at prices for securities of comparable maturity, quality
and type. Short-term securities maturing within 60 days are valued at
amortized cost, which approximates market value. The ability of the issuers
of the debt securities held by the fund 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 are valued at fair value as determined in good faith
by authority of the fund's Board of Directors.
SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME - Security transactions
are recorded by the fund 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.
CLASS ALLOCATIONS - Income, fees and expenses (other than class-specific
fees and expenses) and realized and unrealized gains and losses are
allocated daily among the various share classes based on their relative net
assets. Class-specific fees and expenses, such as distribution,
administrative and shareholder services, are charged directly to the
respective share class.
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 at the end of the
reporting period. 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.
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 fund complies with the requirements under Subchapter M of the Internal
Revenue Code applicable to mutual funds and intends to distribute substantially
all of its net taxable income and net capital gains each year. The fund is not
subject to income taxes to the extent such distributions are made.
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
non-U.S. currency gains and losses; short-term capital gains and losses; capital
losses related to sales of securities within 30 days of purchase; scheduled
interest payments not received; expenses deferred for tax purposes; cost of
investments sold; and net capital losses. 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 fund. As of June 30, 2003, the cost of
investment securities for federal income tax purposes was $17,731,119,000.
As of June 30, 2003, the components of distributable earnings on a tax basis
were as follows:
(dollars in thousands)
Undistributed net investment income and currency gains $ 45,549
Accumulated short-term capital losses (850,190)
Accumulated long-term capital losses (605,365)
Gross unrealized appreciation on investment securities 1,725,754
Gross unrealized depreciation on investment securities (1,880,810)
Accumulated short-term capital losses above include capital loss carryforwards
of $95,779,000 and $577,387,000 expiring in 2009 and 2010, respectively. The
capital loss carryforwards will be used to offset any capital gains realized by
the fund in the current year or in future years through the expiration dates.
The fund will not make distributions from capital gains while capital loss
carryforwards remain.
The tax character of distributions paid to shareholders was as follows (dollars
in thousands):
DISTRIBUTIONS FROM ORDINARY INCOME
DISTRIBUTIONS TOTAL
NET INVESTMENT INCOME SHORT-TERM FROM LONG-TERM DISTRIBUTIONS
SHARE CLASS(1) AND CURRENCY GAINS CAPITAL GAINS CAPITAL GAINS PAID
SIX MONTHS ENDED JUNE 30, 2003
Class A $ 134,380 - - $ 134,380
Class B 3,212 - - 3,212
Class C 1,364 - - 1,364
Class F 1,865 - - 1,865
Class 529-A 427 - - 427
Class 529-B 44 - - 44
Class 529-C 63 - - 63
Class 529-E 15 - - 15
Class 529-F 2 - - 2
Class R-1 2 - - 2
Class R-2 84 - - 84
Class R-3 190 - - 190
Class R-4 137 - - 137
Class R-5 569 - - 569
Total $ 142,354 - - $ 142,354
YEAR ENDED DECEMBER 31, 2002
Class A $ 345,886 - - $ 345,886
Class B 8,215 - - 8,215
Class C 3,168 - - 3,168
Class F 3,838 - - 3,838
Class 529-A 482 - - 482
Class 529-B 64 - - 64
Class 529-C 90 - - 90
Class 529-E 15 - - 15
Class 529-F 2 - - 2
Class R-1 1 - - 1
Class R-2 49 - - 49
Class R-3 78 - - 78
Class R-4 43 - - 43
Class R-5 807 - - 807
Total $ 362,738 - - $ 362,738
(1) Class 529-A, 529-B, 529-C, 529-E and 529-F shares were offered beginning
February 15, 2002. Class R-1, R-2, R-3, R-4 and R-5 shares were
offered beginning May 15, 2002.
4. FEES AND TRANSACTIONS WITH RELATED PARTIES
Capital Research and Management Company ("CRMC"), the fund's investment adviser,
is the parent company of American Funds Service Company ("AFS"), the fund's
transfer agent, and American Funds Distributors, Inc. ("AFD"), the principal
underwriter of the fund's shares.
INVESTMENT ADVISORY SERVICES -The Investment Advisory and Service Agreement with
CRMC provides for monthly fees accrued daily. These fees are based on a
declining series of annual rates beginning with 0.390% on the first $1 billion
of daily net assets and decreasing to 0.246% on such assets in excess of $27
billion. For the six months ended June 30, 2003, the investment advisory
services fee was equivalent to an annualized rate of 0.277% of average daily net
assets.
CLASS-SPECIFIC FEES AND EXPENSES - Expenses that are specific to individual
share classes are accrued directly to the respective share class. The principal
class-specific fees and expenses are described below:
DISTRIBUTION SERVICES - The fund has adopted plans of distribution for all
share classes, except Class R-5. Under the plans, the Board of Directors
approves certain categories of expenses that are used to finance activities
primarily intended to sell fund shares. The plans provide for annual
expenses, based on a percentage of average daily net assets, ranging from
0.25% to 1.00% as noted below. In some cases, the Board of Directors has
approved expense amounts lower than plan limits.
-----------------------------------------------------------------------
SHARE CLASS CURRENTLY APPROVED LIMITS PLAN LIMITS
-----------------------------------------------------------------------
-----------------------------------------------------------------------
Class A 0.25% 0.25%
-----------------------------------------------------------------------
-----------------------------------------------------------------------
Class 529-A 0.25 0.50
-----------------------------------------------------------------------
-----------------------------------------------------------------------
Classes B and 529-B 1.00 1.00
-----------------------------------------------------------------------
-----------------------------------------------------------------------
Classes C, 529-C and R-1 1.00 1.00
-----------------------------------------------------------------------
-----------------------------------------------------------------------
Class R-2 0.75 1.00
-----------------------------------------------------------------------
-----------------------------------------------------------------------
Classes 529-E and R-3 0.50 0.75
-----------------------------------------------------------------------
-----------------------------------------------------------------------
Classes F, 529-F and R-4 0.25 0.50
-----------------------------------------------------------------------
All share classes may use up to 0.25% of average daily net assets to
pay service fees, or to compensate AFD for paying service fees, to
firms that have entered into agreements with AFD for providing certain
shareholder services. Expenses in excess of these amounts, up to
approved limits, may be used to compensate dealers and wholesalers for
shares sold.
For classes A and 529-A, the Board of Directors has also approved the
reimbursement of dealer and wholesaler commissions paid by AFD for
certain shares sold without a sales charge. Each class reimburses AFD
for amounts billed within the prior 15 months but only to the extent
that the overall annual expense limit of 0.25% is not exceeded. As of
June 30, 2003, there were no unreimbursed expenses subject to
reimbursement for classes A or 529-A.
TRANSFER AGENT SERVICES - The fund has a transfer agent agreement with
AFS for classes A and B. Under this agreement, these share classes
compensate AFS for transfer agent services including shareholder
recordkeeping, communications and transaction processing. AFS is also
compensated for certain transfer agent services provided to all other
share classes from the administrative services fees paid to CRMC
described below.
ADMINISTRATIVE SERVICES - The fund has an administrative services
agreement with CRMC to provide transfer agent and other related
shareholder services for all classes of shares other than classes A
and B. Each relevant class pays CRMC annual fees of 0.15% (0.10% for
Class R-5) based on its respective average daily net assets. Each
relevant class also pays AFS additional amounts for certain transfer
agent services. CRMC and AFS may use these fees to compensate third
parties for performing these services. During the start-up period for
classes R-1, R-2 and R-3, CRMC has voluntarily agreed to pay a portion
of these fees. Each 529 share class is subject to an additional annual
administrative services fee of 0.10% of its respective average daily
net assets; this fee is payable to the Commonwealth of Virginia for
the maintenance of the CollegeAmerica plan. Although these amounts are
included with administrative services fees in the accompanying
financial statements, the Commonwealth of Virginia is not considered a
related party. Administrative services fees are presented gross of any
payments made by CRMC.
Expenses under the agreements described above for the six months ended
June 30, 2003, were as follows (dollars in thousands):
- ---------------------------------------------------------------------------------------------------------------
ADMINISTRATIVE SERVICES
-------------------------------------------------------------
COMMONWEALTH OF
DISTRIBUTION TRANSFER AGENT CRMC TRANSFER AGENT VIRGINIA
SHARE SERVICES SERVICES ADMINISTRATIVE SERVICES ADMINISTRATIVE
CLASS SERVICES SERVICES
- ---------------------------------------------------------------------------------------------------------------
Class A $17,861 $9,716 Not applicable Not applicable Not applicable
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
Class B 3,089 483 Not applicable Not applicable Not applicable
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
Class C 1,364 Included $205 $ 76 Not applicable
in
administrative
services
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
Class F 263 Included 158 20 Not applicable
in
administrative
services
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
Class 529-A 17 Included 35 5 $23
in
administrative
services
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
Class 529-B 48 Included 7 3 5
in
administrative
services
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
Class 529-C 68 Included 10 4 7
in
administrative
services
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
Class 529-E 5 Included 2 -* 1
in
administrative
services
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
Class 529-F -* Included -* -* -*
in
administrative
services
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
Class R-1 2 Included -* 1 Not applicable
in
administrative
services
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
Class R-2 55 Included 11 65 Not applicable
in
administrative
services
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
Class R-3 63 Included 19 24 Not applicable
in
administrative
services
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
Class R-4 18 Included 11 2 Not applicable
in
administrative
services
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
Class R-5 Not applicable Included 27 1 Not applicable
in
administrative
services
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
Total $22,853 $10,199 $485 $201 $36
- ----------------===============================================================================================
* Amount less than one thousand
DEFERRED DIRECTORS' COMPENSATION - Since the adoption of the deferred
compensation plan in 1993, Directors who are unaffiliated with CRMC may elect to
defer the cash payment of part or all of their compensation. These deferred
amounts, which remain as liabilities of the fund, are treated as if invested in
shares of the fund or other American Funds. These amounts represent general,
unsecured liabilities of the fund and vary according to the total returns of the
selected funds. Directors' fees in the accompanying financial statements include
the current fees (either paid in cash or deferred) and the net increase or
decrease in the value of the deferred amounts.
AFFILIATED OFFICERS AND DIRECTORS - Officers and certain Directors of the fund
are or may be considered to be affiliated with CRMC, AFS and AFD. No affiliated
officers or Directors received any compensation directly from the fund.
5. CAPITAL SHARE TRANSACTIONS
Capital share transactions in the fund were as follows (dollars and shares in
thousands):
REINVESTMENTS OF DIVIDENDS NET (DECREASE)
SALES(2) AND DISTRIBUTIONS REPURCHASES(2) INCREASE
SHARE CLASS (1) AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES
SIX MONTHS ENDED JUNE 30, 2003
Class A $ 827,114 37,105 $ 126,632 5,733 $ (1,255,306) (57,057) $ (301,560) (14,219)
Class B 53,082 2,389 3,102 141 (45,294) (2,070) 10,890 460
Class C 43,943 1,973 1,311 59 (24,234) (1,115) 21,020 917
Class F 48,999 2,194 1,630 74 (30,868) (1,399) 19,761 869
Class 529-A 14,182 637 427 19 (827) (37) 13,782 619
Class 529-B 3,168 142 43 2 (143) (6) 3,068 138
Class 529-C 4,876 219 63 3 (310) (14) 4,629 208
Class 529-E 971 43 15 1 (10) -* 976 44
Class 529-F 226 10 3 -* (25) (1) 204 9
Class R-1 555 25 2 -* (62) (3) 495 22
Class R-2 18,511 836 84 4 (4,314) (195) 14,281 645
Class R-3 33,290 1,506 190 9 (8,788) (403) 24,692 1,112
Class R-4 17,996 798 137 6 (1,656) (75) 16,477 729
Class R-5 3,740 164 456 21 (1,377) (61) 2,819 124
Total net increase
(decrease) $ 1,070,653 48,041 $ 134,095 6,072 $ (1,373,214) (62,436) $ (168,466) (8,323)
YEAR ENDED DECEMBER 31, 2002
Class A $ 2,510,082 99,589 $ 325,159 13,445 $ (3,217,263) (133,389) $ (382,022) (20,355)
Class B 196,132 7,724 7,923 335 (96,136) (4,053) 107,919 4,006
Class C 161,418 6,407 3,050 130 (46,109) (1,969) 118,359 4,568
Class F 135,377 5,446 3,355 141 (48,639) (2,052) 90,093 3,535
Class 529-A 44,610 1,774 482 21 (818) (36) 44,274 1,759
Class 529-B 9,031 362 64 3 (81) (4) 9,014 361
Class 529-C 12,734 508 90 4 (247) (11) 12,577 501
Class 529-E 1,753 72 15 1 (5) -* 1,763 73
Class 529-F 227 10 2 -* -* -* 229 10
Class R-1 179 8 1 -* (2) -* 178 8
Class R-2 8,884 402 49 2 (1,911) (86) 7,022 318
Class R-3 14,900 674 78 3 (4,035) (182) 10,943 495
Class R-4 7,251 326 43 2 (188) (9) 7,106 319
Class R-5 69,699 2,695 607 27 (7,474) (326) 62,832 2,396
Total net increase
(decrease) $ 3,172,277 125,997 $ 340,918 14,114 $ (3,422,908) (142,117) $ 90,287 (2,006)
* Amount less than one thousand.
(1) Class 529-A, 529-B, 529-C, 529-E and 529-F shares were offered beginning
February 15, 2002. Class R-1, R-2, R-3, R-4 and R-5 shares were offered
beginning May 15, 2002.
(2) Includes exchanges between share classes of the fund.
6. RESTRICTED SECURITIES
The fund has invested in certain securities for which resale may be limited to
qualified buyers or which are otherwise restricted. These securities are
identified in the investment portfolio. As of June 30, 2003, the total value of
restricted securities was $238,168,000, which represents 1.35% of the net assets
of the fund.
7. INVESTMENT TRANSACTIONS AND OTHER DISCLOSURES
The fund made purchases and sales of investment securities, excluding short-term
securities, of $2,771,544,000 and $2,935,807,000, respectively, during the six
months ended June 30, 2003.
The fund receives a reduction in its custodian fee equal to the amount of
interest calculated on certain cash balances held at the custodian bank. For the
six months ended June 30, 2003, the custodian fee of $457,000 includes $6,000
that was offset by this reduction, rather than paid in cash.
FINANCIAL HIGHLIGHTS (1)
INCOME (LOSS) FROM INVESTMENT OPERATIONS (3)
NET
NET ASSET GAINS(LOSSES)
VALUE, NET ON SECURITIES TOTAL FROM
BEGINNING INVESTMENT (BOTH REALIZED INVESTMENT
OF PERIOD INCOME AND UNREALIZED) OPERATIONS
CLASS A:
Six months ended 6/30/2003 (2) $22.23 $.27 $1.81 $2.08
Year ended 12/31/2002 27.45 .42 (5.14) (4.72)
Year ended 12/31/2001 31.16 .40 (3.34) (2.94)
Year ended 12/31/2000 32.59 .42 .90 1.32
Year ended 12/31/1999 28.92 .41 6.45 6.86
Year ended 12/31/1998 27.40 .42 4.09 4.51
CLASS B:
Six months ended 6/30/2003 (2) 22.19 .19 1.80 1.99
Year ended 12/31/2002 27.40 .23 (5.14) (4.91)
Year ended 12/31/2001 31.12 .18 (3.34) (3.16)
Period from 3/15/2000 to 12/31/2000 31.93 .15 1.02 1.17
CLASS C:
Six months ended 6/30/2003 (2) 22.17 .18 1.81 1.99
Year ended 12/31/2002 27.39 .21 (5.14) (4.93)
Period from 3/15/2001 to 12/31/2001 28.52 .11 (1.13) (1.02)
CLASS F:
Six months ended 6/30/2003 (2) 22.22 .27 1.81 2.08
Year ended 12/31/2002 27.44 .40 (5.14) (4.74)
Period from 3/15/2001 to 12/31/2001 28.56 .28 (1.12) (.84)
CLASS 529-A:
Six months ended 6/30/2003 (2) 22.22 .28 1.80 2.08
Period from 2/15/2002 to 12/31/2002 26.71 .33 (4.34) (4.01)
CLASS 529-B:
Six months ended 6/30/2003 (2) 22.22 .17 1.81 1.98
Period from 2/19/2002 to 12/31/2002 26.27 .16 (3.91) (3.75)
CLASS 529-C:
Six months ended 6/30/2003 (2) 22.22 .17 1.81 1.98
Period from 2/15/2002 to 12/31/2002 26.71 .16 (4.34) (4.18)
CLASS 529-E:
Six months ended 6/30/2003 (2) 22.21 .23 1.80 2.03
Period from 3/7/2002 to 12/31/2002 28.13 .26 (5.85) (5.59)
CLASS 529-F:
Six months ended 6/30/2003 (2) 22.22 .26 1.80 2.06
Period from 9/23/2002 to 12/31/2002 21.22 .12 1.08 1.20
CLASS R-1:
Six months ended 6/30/2003 (2) 22.19 .19 1.80 1.99
Period from 6/19/2002 to 12/31/2002 26.04 .13 (3.75) (3.62)
CLASS R-2:
Six months ended 6/30/2003 (2) 22.18 .19 1.80 1.99
Period from 5/21/2002 to 12/31/2002 27.39 .14 (5.13) (4.99)
CLASS R-3:
Six months ended 6/30/2003 (2) 22.21 .24 1.80 2.04
Period from 6/4/2002 to 12/31/2002 26.66 .18 (4.38) (4.20)
CLASS R-4:
Six months ended 6/30/2003 (2) 22.21 .28 1.80 2.08
Period from 7/25/2002 to 12/31/2002 21.75 .22 .55 .77
CLASS R-5:
Six months ended 6/30/2003 (2) 22.23 .30 1.82 2.12
Period from 5/15/2002 to 12/31/2002 27.62 .28 (5.34) (5.06)
DIVIDENDS AND DISTRIBUTIONS
DIVIDENDS DISTRIBUTIONS TOTAL
(FROM NET (FROM DIVIDENDS
INVESTMENT CAPITAL AND
INCOME) GAINS) DISTRIBUTIONS
CLASS A:
Six months ended 6/30/2003 (2) $(.20) $- $(.20)
Year ended 12/31/2002 (.50) - (.50)
Year ended 12/31/2001 (.40) (.37) (.77)
Year ended 12/31/2000 (.40) (2.35) (2.75)
Year ended 12/31/1999 (.40) (2.79) (3.19)
Year ended 12/31/1998 (.40) (2.59) (2.99)
CLASS B:
Six months ended 6/30/2003 (2) (.11) - (.11)
Year ended 12/31/2002 (.30) - (.30)
Year ended 12/31/2001 (.19) (.37) (.56)
Period from 3/15/2000 to 12/31/2000 (.13) (1.85) (1.98)
CLASS C:
Six months ended 6/30/2003 (2) (.11) - (.11)
Year ended 12/31/2002 (.29) - (.29)
Period from 3/15/2001 to 12/31/2001 (.11) - (.11)
CLASS F:
Six months ended 6/30/2003 (2) (.20) - (.20)
Year ended 12/31/2002 (.48) - (.48)
Period from 3/15/2001 to 12/31/2001 (.28) - (.28)
CLASS 529-A:
Six months ended 6/30/2003 (2) (.20) - (.20)
Period from 2/15/2002 to 12/31/2002 (.48) - (.48)
CLASS 529-B:
Six months ended 6/30/2003 (2) (.10) - (.10)
Period from 2/19/2002 to 12/31/2002 (.30) - (.30)
CLASS 529-C:
Six months ended 6/30/2003 (2) (.10) - (.10)
Period from 2/15/2002 to 12/31/2002 (.31) - (.31)
CLASS 529-E:
Six months ended 6/30/2003 (2) (.15) - (.15)
Period from 3/7/2002 to 12/31/2002 (.33) - (.33)
CLASS 529-F:
Six months ended 6/30/2003 (2) (.19) - (.19)
Period from 9/23/2002 to 12/31/2002 (.20) - (.20)
CLASS R-1:
Six months ended 6/30/2003 (2) (.12) - (.12)
Period from 6/19/2002 to 12/31/2002 (.23) - (.23)
CLASS R-2:
Six months ended 6/30/2003 (2) (.12) - (.12)
Period from 5/21/2002 to 12/31/2002 (.22) - (.22)
CLASS R-3:
Six months ended 6/30/2003 (2) (.16) - (.16)
Period from 6/4/2002 to 12/31/2002 (.25) - (.25)
CLASS R-4:
Six months ended 6/30/2003 (2) (.20) - (.20)
Period from 7/25/2002 to 12/31/2002 (.31) - (.31)
CLASS R-5:
Six months ended 6/30/2003 (2) (.23) - (.23)
Period from 5/15/2002 to 12/31/2002 (.33) - (.33)
RATIO OF RATIO OF
NET ASSET NET ASSETS, EXPENSES NET INCOME
VALUE, END TOTAL END OF PERIOD TO AVERAGE TO AVERAGE
OF PERIOD RETURN(4) (IN MILLIONS) NET ASSETS NET ASSETS
CLASS A:
Six months ended 6/30/2003 (2) $24.11 9.44% $16,146 .68% (6) 2.46% (6)
Year ended 12/31/2002 22.23 (17.34) 15,201 .67 1.68
Year ended 12/31/2001 27.45 (9.55) 19,331 .65 1.41
Year ended 12/31/2000 31.16 4.27 19,872 .64 1.28
Year ended 12/31/1999 32.59 24.58 16,603 .63 1.33
Year ended 12/31/1998 28.92 16.72 12,713 .63 1.47
CLASS B:
Six months ended 6/30/2003 (2) 24.07 9.04 681 1.46 (6) 1.67 (6)
Year ended 12/31/2002 22.19 (17.97) 618 1.45 .91
Year ended 12/31/2001 27.40 (10.24) 653 1.42 .64
Period from 3/15/2000 to 12/31/2000 31.12 3.73 299 1.39 (6) .53 (6)
CLASS C:
Six months ended 6/30/2003 (2) 24.05 9.03 310 1.51 (6) 1.63 (6)
Year ended 12/31/2002 22.17 (18.06) 266 1.50 .86
Period from 3/15/2001 to 12/31/2001 27.39 (3.60) 203 1.55 (6) .49 (6)
CLASS F:
Six months ended 6/30/2003 (2) 24.10 9.43 241 .72 (6) 2.43 (6)
Year ended 12/31/2002 22.22 (17.38) 203 .72 1.65
Period from 3/15/2001 to 12/31/2001 27.44 (2.97) 153 .74 (6) 1.31 (6)
CLASS 529-A:
Six months ended 6/30/2003 (2) 24.10 9.46 57 .65 (6) 2.51 (6)
Period from 2/15/2002 to 12/31/2002 22.22 (15.16) 39 .76 (6) 1.64 (6)
CLASS 529-B:
Six months ended 6/30/2003 (2) 24.10 8.96 12 1.63 (6) 1.53 (6)
Period from 2/19/2002 to 12/31/2002 22.22 (14.35) 8 1.62 (6) .77 (6)
CLASS 529-C:
Six months ended 6/30/2003 (2) 24.10 8.96 17 1.61 (6) 1.55 (6)
Period from 2/15/2002 to 12/31/2002 22.22 (15.74) 11 1.60 (6) .79 (6)
CLASS 529-E:
Six months ended 6/30/2003 (2) 24.09 9.20 3 1.11 (6) 2.06 (6)
Period from 3/7/2002 to 12/31/2002 22.21 (19.92) 2 1.07 (6) 1.35 (6)
CLASS 529-F:
Six months ended 6/30/2003 (2) 24.09 9.34 - (5) .83 (6) 2.34 (6)
Period from 9/23/2002 to 12/31/2002 22.22 5.65 - (5) .22 .51
CLASS R-1:
Six months ended 6/30/2003 (2) 24.06 8.99 1 1.50 (6,7) 1.66 (6)
Period from 6/19/2002 to 12/31/2002 22.19 (13.91) - (5) 1.50 (6,7) 1.11 (6)
CLASS R-2:
Six months ended 6/30/2003 (2) 24.05 9.04 23 1.46 (6,7) 1.74 (6)
Period from 5/21/2002 to 12/31/2002 22.18 (18.22) 7 1.46 (6,7) 1.05 (6)
CLASS R-3:
Six months ended 6/30/2003 (2) 24.09 9.26 39 1.08 (6,7) 2.14 (6)
Period from 6/4/2002 to 12/31/2002 22.21 (15.75) 11 1.08 (6,7) 1.41 (6)
CLASS R-4:
Six months ended 6/30/2003 (2) 24.09 9.45 25 .72 (6) 2.52 (6)
Period from 7/25/2002 to 12/31/2002 22.21 3.51 7 .32 (7) .96
CLASS R-5:
Six months ended 6/30/2003 (2) 24.12 9.63 61 .40 (6) 2.75 (6)
Period from 5/15/2002 to 12/31/2002 22.23 (18.34) 53 .40 (6) 1.91 (6)
SIX MONTHS ENDED YEAR ENDED DECEMBER 31
JUNE 30, 2003 (2) 2002 2001 2000 1999 1998
Portfolio turnover rate
for all classes of shares 18% 38% 29% 43% 46% 53%
(1) Based on operations for the period shown (unless otherwise noted) and,
accordingly, may not be representative of a full year.
(2) Unaudited.
(3) Years ended 1999 and 1998 are based on shares outstanding on the last day
of the year; all other periods are based on average shares outstanding.
(4) Total returns exclude all sales charges, including contingent deferred
sales charges.
(5) Amount less than 1 million.
(6) Annualized.
(7) During the start-up period for this class, CRMC voluntarily agreed to pay a
portion of the fees relating to transfer agent services. Had CRMC not paid
such fees, expense ratios would have been 2.05%, 2.08% and 1.14% for classes
R-1, R-2, and R-3, respectively, during the six months ended June 30, 2003,
and 4.20%, 1.64%, 1.13% and .34% for classes R-1, R-2, R-3 and R-4,
respectively, during the period ended December 31, 2002.
OTHER SHARE CLASS RESULTS unaudited
CLASS B, CLASS C, CLASS F AND CLASS 529
Returns for periods ended June 30, 2003:
1 YEAR LIFE OF
CLASS
CLASS B SHARES
Reflecting applicable contingent deferred sales charge
(CDSC), maximum of 5%, payable only if shares are sold
within six years of purchase -8.89% -6.19% (1)
Not reflecting CDSC -4.16% -5.41% (1)
CLASS C SHARES
Reflecting CDSC, maximum of 1%, payable only if shares
are sold within one year of purchase -5.18% -6.31% (2)
Not reflecting CDSC -4.24% -6.31% (2)
CLASS F SHARES (3)
Not reflecting annual asset-based fee charged by
sponsoring firm -3.48% -5.55% (2)
CLASS 529-A SHARES
Reflecting 5.75% maximum sales charge -9.04% -9.27% (4)
Not reflecting maximum sales charge -3.49% -5.26% (4)
CLASS 529-B SHARES
Reflecting applicable CDSC, maximum of 5%, payable only
if shares are sold within six years of purchase -9.03% -7.73% (5)
Not reflecting CDSC -4.31% -4.96% (5)
CLASS 529-C SHARES
Reflecting CDSC, maximum of 1%, payable only if shares
are sold within one year of purchase -5.24% -6.05% (4)
Not reflecting CDSC -4.30% -6.05% (4)
CLASS 529-E SHARES (3) -3.86% -9.70% (6)
CLASS 529-F SHARES (3)
Not reflecting annual asset-based fee charged by
sponsoring firm -- +15.51% (7)
(1) Average annual total return from March 15, 2000, when Class B shares were
first sold
(2) Average annual total return from March 15, 2001, when Class C and Class F
shares were first sold.
(3) These shares are sold without any initial or contingent deferred sales
charge.
(4) Average annual total return from February 15, 2002, when Class 529-A and
Class 529-C shares were first sold.
(5) Average annual total return from February 19, 2002, when Class 529-B shares
were first sold.
(6) Average annual total return from March 7, 2002, when Class 529-E shares
were first sold.
(7) Cumulative total return from September 23, 2002, when Class 529-F shares
were first sold.
OFFICE OF THE FUND
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
135 South State College Boulevard
Brea, CA 92821-5823
TRANSFER AGENT FOR SHAREHOLDER ACCOUNTS
American Funds Service Company
(Please write to the address nearest you.)
P.O. Box 25065
Santa Ana, CA 92799-5065
P.O. Box 659522
San Antonio, TX 78265-9522
P.O. Box 6007
Indianapolis, IN 46206-6007
P.O. Box 2280
Norfolk, VA 23501-2280
CUSTODIAN OF ASSETS
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02105-1713
COUNSEL
Paul, Hastings, Janofsky & Walker LLP
515 South Flower Street
Los Angeles, CA 90071-2371
INDEPENDENT AUDITORS
Deloitte & Touche LLP
Two California Plaza
350 South Grand Avenue
Los Angeles, CA 90071-3462
PRINCIPAL UNDERWRITER
American Funds Distributors, Inc.
333 South Hope Street
Los Angeles, CA 90071-1406
There are several ways to invest in Fundamental Investors. Class A shares are
subject to a 5.75% maximum up-front sales charge that declines for accounts of
$25,000 or more. Other share classes, which are generally not available for
certain employer-sponsored retirement plans, have no up-front sales charges but
are subject to additional annual expenses and fees. Annualized expenses for
Class B shares were 0.78 percentage points higher than for Class A shares; Class
B shares convert to Class A shares after eight years of ownership. If redeemed
within six years, Class B shares may also be subject to a contingent deferred
sales charge ("CDSC") of up to 5% that declines over time. Class C shares were
subject to annualized expenses 0.83 percentage points higher than those for
Class A shares and a 1% CDSC if redeemed within the first year after purchase.
Class C shares convert to Class F shares after 10 years. Class F shares, which
are available only through certain fee-based programs offered by broker-dealer
firms and registered investment advisers, had higher annualized expenses (by
0.04 percentage points) than did Class A shares, and an annual asset-based fee
charged by the sponsoring firm. Expenses are deducted from income earned by the
fund. As a result, dividends and investment results will differ for each share
class.
FOR MORE INFORMATION ABOUT YOUR ACCOUNT OR ANY OF THE FUND'S SERVICES, OR FOR A
PROSPECTUS FOR ANY OF THE AMERICAN FUNDS, PLEASE CONTACT YOUR FINANCIAL ADVISER.
YOU MAY ALSO CALL AMERICAN FUNDS SERVICE COMPANY AT 800/421-0180 OR VISIT US AT
AMERICANFUNDS.COM. PLEASE READ THE PROSPECTUS CAREFULLY BEFORE YOU INVEST OR
SEND MONEY.
This report is for the information of shareholders of Fundamental Investors, 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 fund. If used as sales material after
September 30, 2003, this report must be accompanied by an American Funds
statistical update for the most recently completed calendar quarter.
[logo] American Funds(R)
The right choice for the long term(R)
WHAT MAKES AMERICAN FUNDS DIFFERENT?
For more than 70 years, we have followed a consistent philosophy that we firmly
believe is in our investors' best interests. The range of opportunities offered
by our family of just 29 carefully conceived, broadly diversified funds has
attracted over 20 million shareholder accounts.
OUR UNIQUE COMBINATION OF STRENGTHS INCLUDES THESE FIVE FACTORS:
o A LONG-TERM, VALUE-ORIENTED APPROACH
Rather than follow fads, we pursue a consistent strategy, focusing on each
investment's long-term potential.
o AN UNPARALLELED GLOBAL RESEARCH EFFORT
American Funds draws on one of the industry's most globally integrated
research networks.
o THE MULTIPLE PORTFOLIO COUNSELOR SYSTEM
Every American Fund is divided among a number of portfolio counselors. Each
takes responsibility for a portion independently, within each fund's
objectives; in most cases, research analysts manage a portion as well. Over
time this method has contributed to a consistency of results and continuity
of management.
o EXPERIENCED INVESTMENT PROFESSIONALS
The recent market decline was not the first for most of the portfolio
counselors who serve the American Funds. Nearly 70% of them were in the
investment business before the sharp market decline of 1987.
o A COMMITMENT TO LOW OPERATING EXPENSES
American Funds' operating expenses are among the lowest in the mutual fund
industry. Our portfolio turnover rates are low as well, keeping transaction
costs and tax consequences contained.
29 MUTUAL FUNDS, CONSISTENT PHILOSOPHY, CONSISTENT RESULTS
GROWTH FUNDS
AMCAP Fund(R)
EuroPacific Growth Fund(R)
The Growth Fund of America(R)
The New Economy Fund(R)
New Perspective Fund(R)
New World FundSM
SMALLCAP World Fund(R)
GROWTH-AND-INCOME FUNDS
American Mutual Fund(R)
Capital World Growth and Income FundSM
FUNDAMENTAL INVESTORSSM
The Investment Company of America(R)
Washington Mutual Investors FundSM
EQUITY-INCOME FUNDS
Capital Income Builder(R)
The Income Fund of America(R)
BALANCED FUND
American Balanced Fund(R)
BOND FUNDS
American High-Income TrustSM
The Bond Fund of AmericaSM
Capital World Bond Fund(R)
Intermediate Bond Fund of America(R)
U.S. Government Securities FundSM
TAX-EXEMPT BOND FUNDS
American High-Income Municipal Bond Fund(R)
Limited Term Tax-Exempt Bond Fund of AmericaSM
The Tax-Exempt Bond Fund of America(R)
STATE-SPECIFIC TAX-EXEMPT FUNDS
The Tax-Exempt Fund of California(R)
The Tax-Exempt Fund of Maryland(R)
The Tax-Exempt Fund of Virginia(R)
MONEY MARKET FUNDS
The Cash Management Trust of America(R)
The Tax-Exempt Money Fund of AmericaSM
The U.S. Treasury Money Fund of AmericaSM
THE CAPITAL GROUP COMPANIES
American Funds
Capital Research and Management
Capital International
Capital Guardian
Capital Bank and Trust
Lit. No. FI-013-0803
Litho in USA KBD/CG/8083
Printed on recycled paper
ITEM 2 - Code of Ethics
Not applicable for filing of Semiannual Reports to Shareholders.
ITEM 3 - Audit Committee Financial Expert
Not applicable for filing of Semiannual Reports to Shareholders.
ITEM 4 - Principal Accountant Fees and Services
Form N-CSR disclosure requirement not yet effective with respect to Registrant.
ITEM 5 - Audit Committee of Listed Registrants
Not applicable.
ITEM 6 - Reserved
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 - Reserved
ITEM 9 - Controls and Procedures
(a) The officers providing the certifications in this report in accordance with
rule 30a-2 under the Investment Company Act of 1940 have concluded, based
on their evaluation of the Registrant's disclosure controls and procedures
(as such term is defined in such rule), 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 last fiscal half-year (the
Registrant's second fiscal half-year in the case of an annual report) that
has materially affected, or is reasonably likely to materially affect, the
Registrant's internal control over financial reporting.
<page>
ITEM 10 - Exhibits
(a) Code of Ethics - not applicable for filing of Semiannual Reports to
Shareholders.
(b) 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.
<page>
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.
FUNDAMENTAL INVESTORS, INC.
By /s/ James F. Rothenberg
James F. Rothenberg, Chairman and PEO
Date: September 5, 2003
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/ James F. Rothenberg,
James F. Rothenberg, Chairman and PEO
Date: September 5, 2003
By /s/ Sheryl F. Johnson
Sheryl F. Johnson, Treasurer
Date: September 5, 2003
<page>