SEC. File Nos. 2-10760
811-32
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549
FORM N-1A
Registration Statement
Under
the Securities Act of 1933
Post-Effective Amendment No. 78
and
Registration Statement
Under
The Investment Company Act of 1940
Amendment No. 21
FUNDAMENTAL INVESTORS, INC.
(Exact Name of Registrant as specified in charter)
P. O. Box 7650, Four Embarcadero Center
San Francisco, California 94111
(Address of principal executive offices)
Registrant's telephone number, including area code:
(415) 421-9360
JULIE F. WILLIAMS
P. O. Box 7650, Four Embarcadero Center
San Francisco, California 94111
(name and address of agent for service)
Copies to:
Cary I. Klafter, Esq.
MORRISON & FOERSTER
345 California Street
San Francisco, California 94104
(Counsel for the Registrant)
The Registrant has filed a declaration pursuant to rule 24f-2
registering an indefinite number of shares under the Securities Act of 1933.
On February 16 , 1995, it filed its 24f-2 notice for fiscal 1994.
Approximate date of proposed public offering:
It is proposed that this filing become effective on March 1, 1995, pursuant to
paragraph ( b ) of rule 485.
FUNDAMENTAL INVESTORS, INC.
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
Item Number of
PART "A" OF FORM N-1A CAPTIONS IN PROSPECTUS (PART "A")
<S> <C> <C>
1. COVER PAGE COVER PAGE
2. SYNOPSIS SUMMARY OF EXPENSES
3. FINANCIAL HIGHLIGHTS FINANCIAL HIGHLIGHTS
4. GENERAL DESCRIPTION OF REGISTRANT FUND ORGANIZATION AND MANAGEMENT; INVESTMENT
OBJECTIVES
AND POLICIES; CERTAIN SECURITIES AND TECHNIQUES
5. MANAGEMENT OF THE FUND SUMMARY OF EXPENSES; FUND ORGANIZATION AND MANAGEMENT
6. CAPITAL STOCK AND OTHER SECURITIES INVESTMENT OBJECTIVES AND POLICIES; CERTAIN
SECURITIES
AND INVESTMENT TECHNIQUES; FUND ORGANIZATION AND
MANAGEMENT; DIVIDENDS, DISTRIBUTIONS AND TAXES
7. PURCHASE OF SECURITIES BEING OFFERED PURCHASING SHARES; SHAREHOLDER SERVICES
8. REDEMPTION OR REPURCHASE REDEEMING SHARES
9. LEGAL PROCEEDINGS N/A
</TABLE>
<TABLE>
<CAPTION>
ITEM NUMBER OF CAPTIONS IN STATEMENT OF
PART "B" OF FORM N-1A ADDITIONAL INFORMATION (PART "B")
<S> <C> <C>
10. COVER PAGE COVER
11. TABLE OF CONTENTS TABLE OF CONTENTS
12. GENERAL INFORMATION AND HISTORY NONE
13. INVESTMENT OBJECTIVES AND POLICIES DESCRIPTION OF CERTAIN SECURITIES; FUNDAMENTAL
POLICIES AND INVESTMENT RESTRICTIONS
14. MANAGEMENT OF THE REGISTRANT FUND OFFICERS AND DIRECTORS; MANAGEMENT
15. CONTROL PERSONS AND PRINCIPAL HOLDERS FUND OFFICERS AND DIRECTORS
OF SECURITIES
16. INVESTMENT ADVISORY AND OTHER SERVICES MANAGEMENT
17. BROKERAGE ALLOCATION AND OTHER PRACTICES EXECUTION OF PORTFOLIO TRANSACTIONS
18. CAPITAL STOCK AND OTHER SECURITIES NONE
19. PURCHASE, REDEMPTION AND PRICING OF PURCHASE OF SHARES; SHAREHOLDER
SECURITIES BEING OFFERED ACCOUNT SERVICES AND PRIVILEGES
20. TAX STATUS DIVIDENDS, DISTRIBUTIONS AND FEDERAL TAXES
21. UNDERWRITER MANAGEMENT -- PRINCIPAL UNDERWRITER
22. CALCULATION OF PERFORMANCE DATA INVESTMENT RESULTS
23. FINANCIAL STATEMENTS FINANCIAL STATEMENTS
</TABLE>
<TABLE>
<CAPTION>
ITEM IN PART "C"
<S> <C>
24. FINANCIAL STATEMENTS AND EXHIBITS
25. PERSONS CONTROLLED BY OR UNDER
COMMON CONTROL WITH REGISTRANT
26. NUMBER OF HOLDERS OF SECURITIES
27. INDEMNIFICATION
28. BUSINESS AND OTHER CONNECTIONS OF
INVESTMENT ADVISER
29. PRINCIPAL UNDERWRITERS
30. LOCATION OF ACCOUNTS AND RECORDS
31. MANAGEMENT SERVICES
32. UNDERTAKINGS
SIGNATURE PAGE
</TABLE>
<PAGE>
PROSPECTUS
FUNDAMENTAL
INVESTORS(SM)
AN OPPORTUNITY FOR LONG-TERM
GROWTH OF CAPITAL AND INCOME
THROUGH A DIVERSIFIED PORTFOLIO
OF COMMON STOCKS
[LOGO OF THE AMERICAN FUNDS GROUP(R)]
March 1, 1995
FUNDAMENTAL INVESTORS, INC.
Four Embarcadero Center
Suite 1800
San Francisco, CA 94111
The investment objective of the fund is to increase its shareholders' capital
and income return over time. The fund strives to accomplish this objective by
investing primarily in a diversified portfolio of common stocks, or securities
convertible into common stocks.
This prospectus presents information you should know before investing in the
fund. It should be retained for future reference.
You may obtain the statement of additional information for the fund dated March
1, 1995, which contains the fund's financial statements, without charge by
writing to the Secretary of the fund at the above address or telephoning
800/421-0180. These requests will be honored within three business days of
receipt.
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR INSURED, GUARANTEED,
OR ENDORSED BY, THE U.S. GOVERNMENT, ANY BANK, THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY, ENTITY OR PERSON.
THE PURCHASE OF FUND SHARES INVOLVES INVESTMENT RISKS, INCLUDING THE POSSIBLE
LOSS OF PRINCIPAL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
10-010-395
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
Summary of Expenses........................ 3
Financial Highlights....................... 4
Investment Objective and Policies.......... 4
Certain Securities and Investment
Techniques................................ 5
Investment Results......................... 7
Dividends, Distributions and Taxes......... 7
Fund Organization and Management........... 8
The American Funds Shareholder Guide....... 11-19
Purchasing Shares........................ 11
Reducing Your Sales Charge............... 14
Shareholder Services..................... 15
Redeeming Shares......................... 17
Retirement Plans......................... 19
</TABLE>
IMPORTANT PHONE NUMBERS
Shareholder Services........ 800/421-0180 ext. 1
Dealer Services............. 800/421-9900 ext. 11
American FundsLine(R)....... 800/325-3590
(24-hour information)
<PAGE>
- -------------------------------------------------------------------------------
SUMMARY
OF EXPENSES
Average annual
expenses paid over a
10-year period would
be approximately
$14 per year,
assuming a $1,000
investment and a 5%
annual return.
This table is designed to help you understand costs of
investing in the fund. These are historical expenses;
your actual expenses may vary.
SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<S> <C>
Maximum sales charge on purchases
(as a percentage of offering price).................... 5.75%/1/
</TABLE>
The fund has no sales charge on reinvested dividends,
deferred sales charge,/2/ redemption fees or exchange
fees.
ANNUAL FUND OPERATING EXPENSES (as a percentage of
average net assets)
<TABLE>
<S> <C>
Management fees......................................... 0.35%
12b-1 expenses.......................................... 0.20%/3/
Other expenses (including audit, legal, shareholder
services, transfer agent and custodian expenses)....... 0.13%
Total fund operating expenses........................... 0.68%
</TABLE>
<TABLE>
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ------- ------ ------- ------- --------
<S> <C> <C> <C> <C>
You would pay the following
cumulative expenses on a $1,000
investment, assuming a 5% annual $64 $78 $93 $137
return./4/
</TABLE>
/1/ Sales charges are reduced for certain large
purchases. (See "The American Funds Shareholder Guide:
Purchasing Shares--Sales Charges.")
/2/ Any defined contribution plan qualified under
Section 401(a) of the Internal Revenue Code including
a "401(k)" plan with 200 or more eligible employees or
any other purchaser investing at least $1 million in
shares of the fund (or in combination with shares of
other funds in The American Funds Group other than the
money market funds) may purchase shares at net asset
value; however, a contingent deferred sales charge of
1% applies on certain redemptions within 12 months
following such purchases. (See "The American Funds
Shareholder Guide: Redeeming Shares--Contingent
Deferred Sales Charge.")
/3/ These expenses may not exceed 0.25% of the fund's
average net assets annually. (See "Fund Organization
and Management--Plan of Distribution.") Due to these
distribution expenses, long-term shareholders may pay
more than the economic equivalent of the maximum
front-end sales charge permitted by the National
Association of Securities Dealers.
/4/ Use of this assumed 5% return is required by the
Securities and Exchange Commission; it is not an
illustration of past or future investment results.
THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION
OF PAST OR FUTURE EXPENSES; ACUTAL EXPENSES MAY BE
GREATER OR LESSER THAN THOSE SHOWN.
3
<PAGE>
- -------------------------------------------------------------------------------
FINANCIAL The following information for the four years ended De-
HIGHLIGHTS cember 31, 1994 has been audited by Deloitte & Touche
(For a share LLP, independent accountants, whose unqualified report
outstanding covering each of the most recent four years is included
throughout the in the statement of additional information, and for the
fiscal year) six years ended December 31, 1990 by KPMG Peat Marwick,
independent accountants.This information should be read
in conjunction with the financial statements and accom-
panying notes which are included in the statement of
additional information.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
-------------------------------------------------------------------------------
1994 1993 1992 1991 1990 1989 1988 1987 1986 1985
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Begin-
ning of Year........... $18.15 $17.52 $17.47 $14.32 $16.43 $14.60 $13.45 $14.21 $14.36 $11.94
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income. .42 .44 .44 .41 .48 .58 .43 .39 .38 .41
Net realized and
unrealized gain
(loss) on invest-
ments................ (.18) 2.65 1.27 3.82 (1.52) 3.53 1.65 .20 2.62 3.00
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total income from in-
vestment
operations.......... .24 3.09 1.71 4.23 (1.04) 4.11 2.08 .59 3.00 3.41
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from net in-
vestment
income............... (.44) (.43) (.42) (.40) (.49) (.62) (.47) (.40) (.40) (.40)
Distributions from
capital gains........ (.45) (2.03) (1.24) (.68) (.58) (1.66) (.46) (.95) (2.75) (.59)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total distributions.. (.89) (2.46) (1.66) (1.08) (1.07) (2.28) (.93) (1.35) (3.15) (.99)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net Asset Value, End of
Year................... $17.50 $18.15 $17.52 $17.47 $14.32 $16.43 $14.60 $13.45 $14.21 $14.36
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
Total Return/1/......... 1.33% 18.16% 10.19% 30.34% (6.24)% 28.56% 15.95% 3.77% 22.05% 30.18%
RATIOS/SUPPLEMENTAL
DATA:
Net assets, end of year
(in millions)......... $2,611 $1,979 $1,440 $1,156 $823 $758 $632 $610 $502 $460
Ratio of expenses to
average net assets.... .68% .65% .65% .69% .70% .67% .68% .63% .62% .65%
Ratio of net income to
average net assets.... 2.45% 2.43% 2.56% 2.50% 3.15% 3.40% 2.97% 2.42% 2.53% 3.22%
Portfolio turnover
rate.................. 23.02% 29.22% 23.98% 17.07% 11.92% 18.59% 8.09% 12.40% 19.40% 20.20%
</TABLE>
--------
/1/ This was calculated without deducting a sales charge. The maximum
sales charge is 5.75% of the fund's offering price.
INVESTMENT The fund's investment objective is to increase its
OBJECTIVE AND shareholders' capital and income return over time. The
POLICIES fund seeks to accomplish this objective by investing
primarily in a diversified portfolio of common stocks,
The fund aims to or securities convertible into common stocks. Assets
provide you with may also be held in straight debt securities that are
long- term growth generally rated in the top three quality categories by
of capital and Standard & Poor's Corporation or Moody's Investors
income. Service, Inc. or determined to be of equivalent quality
by the fund's investment adviser, Capital Research and
Management Company; however, up to 10% of the fund's
assets may be invested in lower rated straight debt se-
curities. These securities may be rated, measured at
the time of the purchase, as high as Baa by Moody's or
BBB by S&P and as low as Ca by Moody's or CC by S&P.
These bonds are described by the rating agencies as
"speculative in a high degree, often in default or
[having] other marked shortcomings." Securities rated
Ba or BB or below or unrated securities that are deter-
mined to be of equivalent quality are commonly known as
"junk" or "high-yield, high-risk" bonds. (See the
statement of additional information for a complete de-
scription of the bond ratings.)
4
<PAGE>
- -------------------------------------------------------------------------------
Additionally, assets may be held in cash or cash
equivalents, U.S. Government securities, or
nonconvertible preferred stocks. (For further
information, see the statement of additional
information.)
The fund's investment restrictions (which are described
in the statement of additional information) and
objective cannot be changed without shareholder
approval. All other investment practices may be changed
by the fund's board.
ACHIEVEMENT OF THE FUND'S INVESTMENT OBJECTIVE CANNOT,
OF COURSE, BE ASSURED DUE TO THE RISK OF CAPITAL LOSS
FROM FLUCTUATING PRICES INHERENT IN ANY INVESTMENT IN
SECURITIES.
CERTAIN RISKS OF INVESTING IN STOCKS AND BONDS Because the fund
SECURITIES AND invests in stocks or securities convertible into
INVESTMENT stocks, the fund is subject to various stock market-re-
TECHNIQUES lated risks. For example, the fund is subject to the
possibility that stock prices in general will decline
Investing in over short or even extended periods.
stocks and bonds
involves certain The market values of fixed-income securities such as
risks. bonds tend to vary inversely with the level of interest
rates -- when interest rates rise, their values will
tend to decline and vice versa. The values of high-
yield, high-risk securities are subject to greater
fluctuations in value than are higher rated securities
because the values of high-yield, high-risk securities
tend to reflect short-term corporate and market
developments and investor perceptions of the issuer's
credit quality to a greater extent. It may be more
difficult to dispose of, or determine the value of,
high-yield, high-risk securities.
The average monthly composition of the fund's portfolio
based on the higher of the Moody's or S&P ratings for
the fiscal year ended December 31, 1994 was as follows:
bonds--Aaa/AAA--2.41%; Baa/BBB--.79%; and B/B--2.22%.
Other investments, including equity-type securities and
cash or cash equivalents amounted to 85.82% and 8.75%,
respectively.
RISKS OF INVESTING IN VARIOUS COUNTRIES Generally, the
fund will invest no more than 10% of its assets in
securities of issuers which are not included in the
Standard & Poor's 500 Composite Index (a broad measure
of the U.S. stock market) and which are domiciled
outside the U.S. Non-U.S. companies may not be subject
to uniform accounting, auditing and financial reporting
standards and practices or regulatory requirements
comparable to those applicable to U.S. companies. There
may also be less public information available about
non-U.S. companies. Additionally, specific local
political and economic factors must be evaluated in
making these investments including trade balances and
imbalances and related economic policies; expropriation
or confiscatory taxation; limitations on the removal of
funds or other assets; political or social instability;
the diverse structure and liquidity of the various
securities markets; and nationalization policies of
governments around the world. However, investing
outside the U.S. can also reduce risks due to greater
diversification opportunities.
5
<PAGE>
- --------------------------------------------------------------------------------
PRIVATE PLACEMENTS Private placements may be either
purchased from another institutional investor that
originally acquired the securities in a private
placement or directly from the issuers of the
securities. Generally, securities acquired in private
placements are subject to contractual restrictions on
resale and may not be resold except pursuant to a
registration statement under the Securities Act of 1933
or in reliance upon an exemption from the registration
requirements under that Act, for example, private
placements sold pursuant to Rule 144A. Accordingly, any
such obligation will be deemed illiquid unless
procedures are adopted by the fund's board of directors
for determining liquidity, and the fund may incur
certain additional costs in disposing of such
securities.
MULTIPLE PORTFOLIO COUNSELOR SYSTEM The basic
investment philosophy of Capital Research and
Management Company is to seek fundamental values at
reasonable prices, using a system of multiple portfolio
counselors in managing mutual fund assets. Under this
system the portfolio of the fund is divided into
segments managed by individual counselors. Each
counselor decides how the segment will be invested
(within the limits provided by the fund's objective and
policies and by Capital Research and Management
Company's investment committee). In addition, Capital
Research and Management Company's research
professionals make investment decisions with respect to
a portion of the fund's portfolio. The primary
individual portfolio counselors for the fund are listed
below.
<TABLE>
<CAPTION> YEARS OF
EXPERIENCE AS YEARS OF EXPERIENCE AS
PORTFOLIO INVESTMENT PROFESSIONAL
COUNSELOR (APPROXIMATE)
(AND RESEARCH
PROFESSIONAL, IF WITH CAPITAL
APPLICABLE) RESEARCH AND
PORTFOLIO FOR FUNDAMENTAL MANAGEMENT
COUNSELORS FOR INVESTORS, INC COMPANY OR
FUNDAMENTAL ITS TOTAL
INVESTOR'S, INC. PRIMARY TITLE(S) (APPROXIMATE) AFFILIATES YEARS
- -----------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
James E. Drasdo President of the fund; 11 years, plus 5 18 years 23 years
Senior Vice President and years as a research
Director, Capital professional prior
Research and Management to becoming a
Company portfolio counselor
for the fund
- -----------------------------------------------------------------------------------------------------------------
Gordon Crawford Senior Vice President of 4 years, plus 13 24 years 24 years
the fund; Senior Vice years as a research
President and Director, professional prior
Capital Research Company* to becoming a
portfolio counselor
for the fund
- -----------------------------------------------------------------------------------------------------------------
Dina N. Perry Senior Vice President of 2 years, plus 1 3 years 28 years
the fund; Vice President, year as a research
Capital Research and professional prior
Management Company to becoming a
portfolio counselor
for the fund
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
*Company affiliated with Capital Research and Management Company
6
<PAGE>
- -------------------------------------------------------------------------------
INVESTMENT RESULTS The fund may from time to time compare its investment
results to various unmanaged indices or other mutual
funds in reports to shareholders, sales literature and
advertisements. The results may be calculated on a to-
tal return and/or yield basis for various periods, with
or without sales charges. Results calculated without a
sales charge will be higher. Total returns assume the
reinvestment of all dividends and capital gain distri-
butions.
The fund has The fund's yield and the average annual total returns
averaged a total are calculated in accordance with the Securities and
return of 14.29% a Exchange Commission requirements which provide that the
year (assuming the maximum sales charge be reflected. The fund's yield for
maximum sales the 30-day period ended December 31, 1994 was 2.51%.
charge was paid) The fund's total return over the past 12 months and av-
under Capital erage annual total returns over the past five-year and
Research and ten-year periods, as of December 31, 1994, were -4.51%,
Management 8.73% and 14.08%, respectively. Of course, past results
Company's are not an indication of future results. Further infor-
management (July mation regarding the fund's investment results is con-
31, 1978 through tained in the fund's annual report which may be ob-
December 31, tained without charge by writing to the Secretary of
1994). the fund at the address indicated on the cover of this
prospectus.
DIVIDENDS, DIVIDENDS AND DISTRIBUTIONS Dividends are usually paid
DISTRIBUTIONS AND in February, May, August and November. Capital gains,
TAXES if any, are usually distributed in November. When a
dividend or capital gain is distributed, the net asset
Income value per share is reduced by the amount of the pay-
distributions are ment.
usually made in
February, May, FEDERAL TAXES The fund intends to operate as a "regu-
August and lated investment company" under the Internal Revenue
November Code. In any fiscal year in which the fund so qualifies
and distributes to shareholders all of its net invest-
ment income and net capital gains, the fund itself is
relieved of federal income tax.
All dividends and capital gains are taxable whether
they are reinvested or received in cash--unless you are
exempt from taxation or entitled to tax deferral. Early
each year, you will be notified as to the amount and
federal tax status of all dividends and capital gains
paid during the prior year. Such dividends and capital
gains may also be subject to state or local taxes.
IF YOU HAVE NOT FURNISHED A CERTIFIED CORRECT TAXPAYER
IDENTIFICATION NUMBER (GENERALLY YOUR SOCIAL SECURITY
NUMBER) AND HAVE NOT CERTIFIED THAT WITHHOLDING DOES
NOT APPLY, OR IF THE INTERNAL REVENUE SERVICE HAS
NOTIFIED THE FUND THAT THE TAXPAYER IDENTIFICATION
NUMBER LISTED ON YOUR ACCOUNT IS INCORRECT ACCORDING TO
THEIR RECORDS OR THAT YOU ARE SUBJECT TO BACKUP
WITHHOLDING, FEDERAL LAW GENERALLY REQUIRES THE FUND TO
WITHHOLD 31% FROM ANY DIVIDENDS AND/OR REDEMPTIONS
(INCLUDING EXCHANGE REDEMPTIONS). Amounts withheld are
applied to your federal tax liability; a refund may be
obtained from the Service if withholding results in
overpayment of taxes. Federal law also requires the
fund to
7
<PAGE>
- -------------------------------------------------------------------------------
withhold 30% or the applicable tax treaty rate from
dividends paid to certain nonresident alien, non-U.S.
partnership and non-U.S. corporation shareholder ac-
counts.
THIS IS A BRIEF SUMMARY OF SOME OF THE TAX LAWS THAT
AFFECT YOUR INVESTMENT IN THE FUND. PLEASE SEE THE
STATEMENT OF ADDITIONAL INFORMATION AND YOUR TAX AD-
VISER FOR FURTHER INFORMATION.
FUND ORGANIZATION FUND ORGANIZATION AND VOTING RIGHTS The fund, an open-
AND MANAGEMENT end diversified management investment company, was
organized as a Delaware corporation in 1932 and
The fund is a reorganized as a Maryland corporation in 1990. The
member of The fund's board supervises fund operations and performs
American Funds duties required by applicable state and federal law.
Group, which is Members of the board who are not employed by Capital
managed by one of Research and Management Company or its affiliates are
the largest and paid certain fees for services rendered to the fund as
most experienced described in the statement of additional information.
investment They may elect to defer all or a portion of these fees
advisers. through a deferred compensation plan in effect for the
fund. Shareholders have one vote per share owned and,
at the request of the holders of at least 10% of the
shares, the fund will hold a meeting at which any
member of the board could be removed by a majority
vote. There will not usually be a shareholder meeting
in any year except, for example, when the election of
the board is required to be acted upon by shareholders
under the Investment Company Act of 1940.
THE INVESTMENT ADVISER Capital Research and Management
Company, a large and experienced investment management
organization founded in 1931, is the investment adviser
to the fund and other funds, including those in The
American Funds Group. Capital Research and Management
Company is located at 333 South Hope Street, Los Ange-
les, CA 90071 and at 135 South State College Boulevard,
Brea, CA 92621. (See "The American Funds Shareholder
Guide: Purchasing Shares--Investment Minimums and Fund
Numbers" for a listing of funds in The American Funds
Group.) Capital Research and Management Company manages
the investment portfolio and business affairs of the
fund and receives a fee at the annual rate of 0.39% on
the first $800 million of the fund's net assets, plus
0.336% on net assets over $800 million to $1.8 billion,
plus 0.30% on net assets over $1.8 billion to $3 bil-
lion, plus 0.276% on net assets over $3 billion.
Capital Research and Management Company is a wholly
owned subsidiary of The Capital Group Companies, Inc.
(formerly "The Capital Group, Inc."), which is located
at 333 South Hope Street, Los Angeles, CA 90071. The
research activities of Capital Research and Management
Company are conducted by affiliated companies which
have offices in Los Angeles, San Francisco, New York,
Washington, D.C., London, Geneva, Singapore, Hong Kong
and Tokyo.
8
<PAGE>
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Capital Research and Management Company and its
affiliated companies have adopted a personal investing
policy that is consistent with the recommendations
contained in the report dated May 9, 1994 issued by the
Investment Company Institute's Advisory Group on
Personal Investing. (See the statement of additional
information).
PORTFOLIO TRANSACTIONS Orders for the fund's portfolio
securities transactions are placed by Capital Research
and Management Company, which strives to obtain the
best available prices, taking into account the costs
and quality of executions. In the over-the-counter mar-
ket, purchases and sales are transacted directly with
principal market-makers except in those circumstances
where it appears better prices and executions are
available elsewhere.
Subject to the above policy, when two or more brokers
are in a position to offer comparable prices and execu-
tions, preference may be given to brokers that have
sold shares of the fund or have provided investment re-
search, statistical, and other related services for the
benefit of the fund and/or of other funds served by
Capital Research and Management Company.
PRINCIPAL UNDERWRITER American Funds Distributors,
Inc., a wholly owned subsidiary of Capital Research and
Management Company, is the principal underwriter of the
fund's shares. American Funds Distributors is located
at 333 South Hope Street, Los Angeles, CA 90071, 135
South State College Boulevard, Brea, CA 92621, 8000 IH-
10 West, San Antonio, TX 78230, 8332 Woodfield Crossing
Boulevard, Indianapolis, IN 46240 and 5300 Robin Hood
Road, Norfolk, VA 23513. Telephone conversations with
American Funds Distributors may be recorded or
monitored for verification, recordkeeping and quality
assurance purposes.
PLAN OF DISTRIBUTION The fund has a plan of distribu-
tion or "12b-1 Plan" under which it may finance activi-
ties primarily intended to sell shares, provided the
categories of expenses are approved in advance by the
board and the expenses paid under the plan were in-
curred within the last 12 months and accrued while the
plan is in effect. Expenditures by the fund under the
plan may not exceed 0.25% of its average net assets an-
nually (all of which may be for service fees). See
"Purchasing Shares--Sales Charges" below.
TRANSFER AGENT American Funds Service Company, a wholly
owned subsidiary of Capital Research and Management
Company, is the transfer agent and performs shareholder
service functions. It was paid a fee of $1,662,000 for
the fiscal year ended December 31, 1994. Telephone con-
versations with American Funds Service Company may be
recorded or monitored for verification, recordkeeping
and quality assurance purposes.</R.
9
<PAGE>
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AMERICAN FUNDS SERVICE COMPANY SERVICE AREAS
SERVICE ADDRESS AREAS SERVED
AREA
----------------------------------------------------------
WEST P.O. Box 2205 AK, AZ, CA, HI, ID,
Brea, CA 92622-2205 MT, NV, OR, UT, WA
Fax: 714/671-7080 and outside the U.S.
----------------------------------------------------------
CENTRAL- P.O. Box 659522 AR, CO, IA, KS, LA,
WEST San Antonio, TX 78265-9522 MN, MO, ND, NE, NM,
Fax: 210/530-4050 OK, SD, TX, and WY
----------------------------------------------------------
CENTRAL- P.O. Box 6007 AL, IL, IN, KY, MI,
EAST Indianapolis, IN 46206-6007 MS, OH, TNand WI
Fax: 317/735-6620
----------------------------------------------------------
EAST P.O. Box 2280 CT, DE, FL, GA, MA,
Norfolk, VA 23501-2280 MD, ME, NC, NH, NJ,
Fax: 804/670-4773 NY, PA, RI, SC, VA,
VT, WV and Washingt,
D.C.
----------------------------------------------------------
ALL SHAREHOLDERS MAY CALL AMERICAN FUNDS SERVICE
COMPANY AT 800/421-0180 FOR SERVICE.
----------------------------------------------------------
[MAP OF THE UNITED STATES OF AMERICA]
----------------------------------------------------------
West (light grey); Central-West (white); Central-East
(dark grey), East (orange)
10
<PAGE>
THE AMERICAN FUNDS SHAREHOLDER GUIDE
PURCHASING SHARES METHOD INITIAL INVESTMENT ADDITIONAL INVESTMENTS
---------------------------------------------------------
Your investment See "Investment $50 minimum (except
dealer can help Minimums and Fund where a lower
you establish your Numbers" for minimum is noted
account--and help initial under "Investment
you add to it investment Minimums and Fund
whenever you like. minimums. Numbers").
---------------------------------------------------------
By Visit any Mail directly to
contacting investment dealer your investment
your who is registered dealer's address
investment in the state printed on your
dealer where the account statement.
purchase is made
and who has a
sales agreement
with American
Funds
Distributors.
---------------------------------------------------------
By mail Make your check Fill out the account
payable to the additions form at the
fund and mail to bottom of a recent
the address account statement,
indicated on the make your check
account payable to the fund,
application. write your account
Please indicate number on your check,
an investment and mail the check
dealer on the and form in the
account envelope provided
application. with your account
statement.
---------------------------------------------------------
By wire Call 800/421-0180 Your bank should wire
to obtain your your additional
account investments in the
number(s), if same manner as
necessary. Please described under
indicate an "Initial Investment."
investment dealer
on the account.
Instruct your
bank to wire
funds to:
Wells Fargo Bank
155 Fifth Street
Sixth Floor
San
Francisco,CA 94106
(ABA #121000248)
For credit to the
account of:
American Funds
Service Company
a/c #4600-076178
(fund name)
(your fund acct.
no.)
---------------------------------------------------------
THE FUNDS AND AMERICAN FUNDS DISTRIBUTORS RESERVE
THE RIGHT TO REJECT ANY PURCHASE ORDER.
SHARE PRICE Shares are purchased at the next offering
price after the order is received by the fund or
American Funds Service Company. In the case of orders
sent directly to the fund or American Funds Service
Company, an investment dealer MUST be indicated. This
price is the net asset value plus a sales charge, if
applicable. Dealers are responsible for promptly
transmitting orders. (See the statement of additional
information under "Purchase of Shares--Price of
Shares.")
The net asset value per share is determined as of the
close of trading (currently 4:00 p.m., New York time) on
each day the New York Stock Exchange is open. The
current value of the fund's total assets, less all
liabilities, is divided by the total number of shares
outstanding and the result, rounded to the nearer cent,
is the net asset value per share. The net asset value
per share of the money market funds normally will remain
constant at $1.00 based on the funds' current practice
of valuing their shares on the basis of the penny-
rounding method in accordance with rules of the
Securities and Exchange Commission.
SHARE CERTIFICATES Shares are credited to your account
and certificates are not issued unless specifically
requested. This eliminates the costly problem of lost or
destroyed certificates.
11
<PAGE>
- -------------------------------------------------------------------------------
If you would like certificates issued, please request
them by writing to American Funds Service Company.
There is usually no charge for issuing certificates in
reasonable denominations. CERTIFICATES ARE NOT
AVAILABLE FOR THE MONEY MARKET FUNDS.
INVESTMENT MINIMUMS AND FUND NUMBERS Here are the
minimum initial investments required by the funds in
The American Funds Group along with fund numbers for
use with our automated phone line, American
FundsLine(R) (see description below):
<TABLE>
<CAPTION>
MINIMUM
INITIAL FUND
FUND INVESTMENT NUMBER
- ---- ---------- ------
<S> <C> <C>
STOCK AND STOCK/BOND FUNDS
AMCAP Fund(R).......................... $1,000 02
American Balanced Fund(R).............. 500 11
American Mutual Fund(R)................ 250 03
Capital Income Builder(R).............. 1,000 12
Capital World Growth and Income
Fund(SM)............................. 1,000 33
EuroPacific Growth Fund(R)............. 250 16
Fundamental Investors(SM).............. 250 10
The Growth Fund of America(R).......... 1,000 05
The Income Fund of America(R).......... 1,000 06
The Investment Company of America(R)... 250 04
The New Economy Fund(R)................ 1,000 14
New Perspective Fund(R)................ 250 07
SMALLCAP World Fund(SM)................ 1,000 35
Washington Mutual Investors Fund(SM)... 250 01
</TABLE>
<TABLE>
<CAPTION>
MINIMUM
INITIAL FUND
FUND INVESTMENT NUMBER
- ---- ---------- ------
<S> <C> <C>
BOND FUNDS
American High-Income Municipal Bond
Fund(SM)............................. $1,000 40
American High-Income Trust(R).......... 1,000 21
The Bond Fund of America(SM)........... 1,000 08
Capital World Bond Fund(R)............. 1,000 31
Intermediate Bond Fund of America(R)... 1,000 23
Limited Term Tax-Exempt Bond Fund of
America(SM).......................... 1,000 43
The Tax-Exempt Bond Fund of
America(SM).......................... 1,000 19
The Tax-Exempt Fund of California(R)*.. 1,000 20
The Tax-Exempt Fund of Maryland(R)*.... 1,000 24
The Tax-Exempt Fund of Virginia(R)*.... 1,000 25
U.S. Government Securities Fund(SM).... 1,000 22
MONEY MARKET FUNDS
The Cash Management Trust of
America(R)........................... 2,500 09
The Tax-Exempt Money Fund of
America(SM).......................... 2,500 39
The U.S. Treasury Money Fund of
America(SM).......................... 2,500 49
</TABLE>
--------
* Available only in certain states.
For retirement plan investments, the minimum is $250,
except that the money market funds have a minimum of
$1,000 for individual retirement accounts (IRAs).
Minimums are reduced to $50 for purchases through
"Automatic Investment Plans" (except for the money
market funds) or to $25 for purchases by retirement
plans through payroll deductions and may be reduced or
waived for shareholders of other funds in The American
Funds Group. TAX-EXEMPT FUNDS SHOULD NOT SERVE AS
RETIREMENT PLAN INVESTMENTS. The minimum is $50 for
additional investments (except as noted above).
SALES CHARGES The sales charges you pay when purchasing
the stock, stock/bond, and bond funds of The American
Funds Group are set forth below. The money market funds
of The American Funds Group are offered at net asset
value. (See "Investment Minimums and Fund Numbers" for
a listing of the funds.)
12
<PAGE>
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DEALER
SALES CHARGE AS CONCESSION
PERCENTAGE OF THE: AS PERCENTAGE
------------------ OF THE
AMOUNT OF PURCHASE NET AMOUNT OFFERING OFFERING
AT THE OFFERING PRICE INVESTED PRICE PRICE
--------------------- ---------- -------- -------------
<S> <C> <C> <C>
STOCK AND STOCK/BOND FUNDS
Less than $50,000................. 6.10% 5.75% 5.00%
$50,000 but less than $100,000.... 4.71 4.50 3.75
BOND FUNDS
Less than $25,000................. 4.99 4.75 4.00
$25,000 but less than $50,000..... 4.71 4.50 3.75
$50,000 but less than $100,000.... 4.17 4.00 3.25
STOCK, STOCK/BOND, AND BOND FUNDS
$100,000 but less than $250,000... 3.63 3.50 2.75
$250,000 but less than $500,000... 2.56 2.50 2.00
$500,000 but less than $1,000,000. 2.04 2.00 1.60
$1,000,000 or more................ none none (see below)
</TABLE>
Commissions of up to 1% will be paid to dealers who
initiate and are responsible for purchases of $1
million or more, for purchases by any defined
contribution plan qualified under Section 401(a) of the
Internal Revenue Code including a "401(k)" plan with
200 or more eligible employees (paid pursuant to the
fund's plan of distribution), and for purchases made at
net asset value by certain retirement plans of
organizations with collective retirement plan assets of
$100 million or more as set forth in the statement of
additional information (paid by American Funds
Distributors).
American Funds Distributors, at its expense (from a
designated percentage of its income), will provide
additional promotional incentives to dealers. Currently
these incentives are limited to the top one hundred
dealers who have sold shares of the fund or other funds
in The American Funds Group. These incentive payments
will be based on a pro rata share of a qualifying
dealer's sales.
Any defined contribution plan qualified under Section
401(a) of the Internal Revenue Code including a
"401(k)" plan with 200 or more eligible employees or
any other purchaser investing at least $1 million in
shares of the fund (or in combination with shares of
other funds in The American Funds Group other than the
money market funds) may purchase shares at net asset
value; however, a contingent deferred sales charge of
1% is imposed on certain redemptions within one year of
the purchase. (See "Redeeming Shares--Contingent
Deferred Sales Charge.")
Qualified dealers currently are paid a continuing
service fee not to exceed 0.25% of average net assets
(0.15% in the case of the money market funds) annually
in order to promote selling efforts and to compensate
them for providing certain services. (See "Fund
Organization and Management--
13
<PAGE>
- -------------------------------------------------------------------------------
Plan of Distribution.") These services include
processing purchase and redemption transactions,
establishing shareholder accounts and providing certain
information and assistance with respect to the fund.
NET ASSET VALUE PURCHASES The stock, stock/bond and
bond funds may sell shares at net asset value to: (1)
current or retired directors, trustees, officers and
advisory board members of the funds managed by Capital
Research and Management Company, employees of
Washington Management Corporation, employees and
partners of The Capital Group Companies, Inc. and its
affiliated companies, certain family members of the
above persons, and trusts or plans primarily for such
persons; (2) current or retired registered
representatives or full-time employees and their
spouses and minor children of dealers having sales
agreements with American Funds Distributors and plans
for such persons; (3) companies exchanging securities
with the fund through a merger, acquisition or exchange
offer; (4) trustees or other fiduciaries purchasing
shares for certain retirement plans of organizations
with retirement plan assets of $100 million or more;
(5) insurance company separate accounts; (6) accounts
managed by subsidiaries of The Capital Group Companies,
Inc.; and (7) The Capital Group Companies, Inc., its
affiliated companies and Washington Management
Corporation. Shares are offered at net asset value to
these persons and organizations due to anticipated
economies in sales effort and expense.
REDUCING AGGREGATION Sales charge discounts are available for
YOUR SALES certain aggregated investments. Qualifying investments
CHARGE include those by you, your spouse and your children
under the age of 21, if all parties are purchasing
You and your shares for their own account(s), which may include
immediate family purchases through employee benefit plan(s) such as an
may combine IRA, individual-type 403(b) plan or single-participant
investments to Keogh-type plan or by a business solely controlled by
reduce your costs. these individuals (for example, the individuals own the
entire business) or by a trust (or other fiduciary
arrangement) solely for the benefit of these
individuals. Individual purchases by a trustee(s) or
other fiduciary(ies) may also be aggregated if the
investments are (1) for a single trust estate or
fiduciary account, including an employee benefit plan
other than those described above or (2) made for two or
more employee benefit plans of a single employer or of
affiliated employers as defined in the Investment
Company Act of 1940, again excluding employee benefit
plans described above, or (3) for a diversified common
trust fund or other diversified pooled account not
specifically formed for the purpose of accumulating
fund shares. Purchases made for nominee or street name
accounts (securities held in the name of an investment
dealer or another nominee such as a bank trust
department instead of the customer) may not be
aggregated with those made for other accounts and may
not be aggregated with other nominee or street name
accounts unless otherwise qualified as described above.
14
<PAGE>
- -------------------------------------------------------------------------------
CONCURRENT PURCHASES To qualify for a reduced sales
charge, you may combine concurrent purchases of two or
more funds in The American Funds Group, except direct
purchases of the money market funds. (Shares of the
money market funds purchased through an exchange,
reinvestment or cross-reinvestment from a fund having a
sales charge do qualify.) For example, if you
concurrently invest $25,000 in one fund and $25,000 in
another, the sales charge would be reduced to reflect a
$50,000 purchase.
RIGHT OF ACCUMULATION The sales charge for your invest-
ment may also be reduced by taking into account the
current value of your existing holdings in The American
Funds Group. Direct purchases of the money market funds
are excluded. (See account application.)
STATEMENT OF INTENTION You may reduce sales charges on
all investments by meeting the terms of a statement of
intention, a non-binding commitment to invest a certain
amount in fund shares subject to a commission within a
13-month period. Five percent of the statement amount
will be held in escrow to cover additional sales
charges which may be due if your total investments over
the statement period are insufficient to qualify for a
sales charge reduction. (See account application.)
YOU MUST LET YOUR INVESTMENT DEALER OR AMERICAN FUNDS
SERVICE COMPANY KNOW IF YOU QUALIFY FOR A REDUCTION IN
YOUR SALES CHARGE USING ONE OR ANY COMBINATION OF THE
METHODS DESCRIBED ABOVE.
SHAREHOLDER AUTOMATIC INVESTMENT PLAN You may make regular monthly
SERVICES or quarterly investments through automatic charges to
your bank account. Once a plan is established, your ac-
The fund offers count will normally be charged by the 10th day of the
you a valuable month during which an investment is made (or by the
array of services 15th day of the month in the case of any retirement
designed to plan for which Capital Guardian Trust Company--another
increase the affiliate of The Capital Group Companies, Inc.--acts as
convenience and trustee or custodian).
flexibility of
your investment-- AUTOMATIC REINVESTMENT Dividends and capital gain dis-
services you can tributions are reinvested in additional shares at no
use to alter your sales charge unless you indicate otherwise on the
investment program account application. You also may elect to have divi-
as your needs and dends and/or capital gain distributions paid in cash by
circumstances informing the fund, American Funds Service Company or
change. your investment dealer.
CROSS-REINVESTMENT You may cross-reinvest dividends or
dividends and capital gain distributions paid by one
fund into another fund in The American Funds Group,
subject to conditions outlined in the statement of ad-
ditional information. Generally, to use this service
the value of your account in the paying fund must equal
at least $5,000.
EXCHANGE PRIVILEGE You may exchange shares into other
funds in The American Funds Group. Exchange purchases
are subject to the minimum investment requirements of
the fund purchased and no sales
15
<PAGE>
- -------------------------------------------------------------------------------
charge generally applies. However, exchanges of shares
from the money market funds are subject to applicable
sales charges on the fund being purchased, unless the
money market fund shares were acquired by an exchange
from a fund having a sales charge, or by reinvestment
or cross-reinvestment of dividends or capital gain
distributions.
You may exchange shares by writing to American Funds
Service Company (see "Redeeming Shares"), by contacting
your investment dealer, by using American FundsLine(R)
(see "Shareholder Services--American FundsLine(R)" be-
low), or by telephoning 800/421-0180 toll-free, faxing
(see "Transfer Agent" above for the appropriate fax
numbers) or telegraphing American Funds Service Compa-
ny. (See "Telephone Redemptions and Exchanges" below.)
Shares held in corporate-type retirement plans for
which Capital Guardian Trust Company serves as trustee
may not be exchanged by telephone, fax or telegraph.
Exchange redemptions and purchases are processed simul-
taneously at the share prices next determined after the
exchange order is received. (See "Purchasing Shares--
Share Price.") THESE TRANSACTIONS HAVE THE SAME TAX
CONSEQUENCES AS ORDINARY SALES AND PURCHASES.
AUTOMATIC EXCHANGES You may automatically exchange
shares (in amounts of $50 or more) among any of the
funds in The American Funds Group on any day (or pre-
ceding business day if the day falls on a non-business
day) of each month you designate. You must either meet
the minimum initial investment requirement for the re-
ceiving fund OR the originating fund's balance must be
at least $5,000 and the receiving fund's minimum must
be met within one year.
AUTOMATIC WITHDRAWALS You may make automatic
withdrawals of $50 or more as follows: five or more
times per year if you have an account of $10,000 or
more, or four or fewer times per year if you have an
account of $5,000 or more. Withdrawals are made on or
about the 15th day of each month you designate, and
checks will be sent within seven days. (See "Other
Important Things to Remember.") Additional investments
in a withdrawal account must not be less than one
year's scheduled withdrawals or $1,200, whichever is
greater. However, additional investments in a
withdrawal account may be inadvisable due to sales
charges and tax liabilities.
THESE SERVICES ARE AVAILABLE ONLY IN STATES WHERE THE
FUND TO BE PURCHASED MAY BE LEGALLY OFFERED AND MAY BE
TERMINATED OR MODIFIED AT ANY TIME UPON 60 DAYS'
WRITTEN NOTICE.
ACCOUNT STATEMENTS Your account is opened in accordance
with your registration instructions. Transactions in
the account, such as additional investments and
dividend reinvestments, will be reflected on regular
confirmation statements from American Funds Service
Company.
16
<PAGE>
- -------------------------------------------------------------------------------
AMERICAN FUNDSLINE(R) You may check your share balance,
the price of your shares, or your most recent account
transaction, redeem shares (up to $10,000 per fund, per
account each day), or exchange shares around the clock
with American FundsLine(R). To use this service, call
800/325-3590 from a TouchTone(TM) telephone.
Redemptions and exchanges through American FundsLine(R)
are subject to the conditions noted above and in
"Redeeming Shares--Telephone Redemptions and Exchanges"
below. You will need your fund number (see the list of
funds in The American Funds Group under "Purchasing
Shares--Investment Minimums and Fund Numbers"),
personal identification number (the last four digits of
your Social Security number or other tax identification
number associated with your account) and account
number.
--------------------------------------------------------
REDEEMING By writing to Send a letter of instruction
SHARES American specifying the name of the fund, the
Funds Service number of shares or dollar amount to
You may take money Company (at be sold, your name and account
out of your the number. You should also enclose any
account whenever appropriate share certificates you wish to
you please. address redeem. For redemptions over $50,000
indicated and for certain redemptions of
under "Fund $50,000 or less (see below), your
Organization signature must be guaranteed by a
and bank, savings association, credit
Management-- union, or member firm of a domestic
Transfer stock exchange or the National
Agent") Association of Securities Dealers,
Inc., that is an eligible guarantor
institution. You should verify with
the institution that it is an
eligible guarantor prior to signing.
Additional documentation may be
required for redemption of shares
held in corporate, partnership or
fiduciary accounts. Notarization by a
Notary Public is not an acceptable
signature guarantee.
--------------------------------------------------------
By contacting If you redeem shares through your
your investment dealer, you may be charged
investment for this service. SHARES HELD FOR YOU
dealer IN YOUR INVESTMENT DEALER'S STREET
NAME MUST BE REDEEMED THROUGH THE
DEALER.
--------------------------------------------------------
You may have You may use this option, provided the
a redemption account is registered in the name of
check sent to an individual(s), a UGMA/UTMA
you by using custodian, or a non-retirement plan
American trust. These redemptions may not
FundsLine(R) exceed $10,000 per day, per fund
or by account and the check must be made
telephoning, payable to the shareholder(s) of
faxing, or record and be sent to the address of
telegraphing record provided the address has been
American used with the account for at least 10
Funds Service days. See "Transfer Agent" and
Company "Exchange Privilege" above for the
(subject to appropriate telephone or fax number.
the
conditions
noted in this
section and
in "Telephone
Redemptions
and
Exchanges"
below)
--------------------------------------------------------
In the case Upon request (use the account
of the money application for the money market
market funds, funds) you may establish telephone
you may have redemption privileges (which will
redemptions enable you to have a redemption sent
wired to your to your bank account) and/or check
bank by writing privileges. If you request
telephoning check writing privileges, you will be
American provided with checks that you may use
Funds Service to draw against your account. These
Company checks may be made payable to anyone
($1,000 or you designate and must be signed by
more) or by the authorized number of registered
writing a shareholders exactly as indicated on
check ($250 your checking account signature card.
or more)
--------------------------------------------------------
A SIGNATURE GUARANTEE IS NOT CURRENTLY REQUIRED FOR ANY
REDEMPTION OF $50,000 OR LESS PROVIDED THE REDEMPTION
CHECK IS MADE PAYABLE TO THE REGISTERED SHAREHOLDER(S)
AND IS MAILED TO THE ADDRESS OF RECORD, PROVIDED THE
ADDRESS HAS BEEN USED WITH THE ACCOUNT FOR AT LEAST 10
DAYS.
17
<PAGE>
- -------------------------------------------------------------------------------
THE PRICE YOU RECEIVE FOR THE SHARES YOU REDEEM IS THE
NET ASSET VALUE NEXT DETERMINED AFTER YOUR ORDER AND
ALL REQUIRED DOCUMENTATION ARE RECEIVED BY THE FUND OR
AMERICAN FUNDS SERVICE COMPANY. (SEE "PURCHASING
SHARES--SHARE PRICE.")
TELEPHONE REDEMPTIONS AND EXCHANGES By using the
telephone (including American FundsLine(R)), telex, fax
or telegraph redemption and/or exchange options, you
agree to hold the fund, American Funds Service Company,
any of its affiliates or mutual funds managed by such
affiliates, and each of their respective directors,
trustees, officers, employees and agents harmless from
any losses, expenses, costs or liability (including
attorney fees) which may be incurred in connection with
the exercise of these privileges. Generally, all
shareholders are automatically eligible to use these
options. However, you may elect to opt out of these
options by writing American Funds Service Company (you
may reinstate them at any time also by writing American
Funds Service Company). If American Funds Service
Company does not employ reasonable procedures to
confirm that the instructions received from any person
with appropriate account information are genuine, the
fund may be liable for losses due to unauthorized or
fraudulent instructions. In the event that shareholders
are unable to reach the fund by telephone because of
technical difficulties, market conditions, or a natural
disaster, redemption and exchange requests may be made
in writing only.
CONTINGENT DEFERRED SALES CHARGE A contingent deferred
sales charge of 1% applies to certain redemptions
within the first year on investments of $1 million or
more and on any investment made with no initial sales
charge by any defined contribution plan qualified under
Section 401(a) of the Internal Revenue Code including a
"401(k)" plan with 200 or more eligible employees. The
charge is 1% of the lesser of the value of the shares
redeemed (exclusive of reinvested dividends and capital
gain distributions) or the total cost of such shares.
Shares held for the longest period are assumed to be
redeemed first for purposes of calculating this charge.
The charge is waived for exchanges (except if shares
acquired by exchange were then redeemed within 12
months of the initial purchase); for distributions from
qualified retirement plans and other employee benefit
plans; for distributions from 403(b) plans or IRAs due
to death, disability or attainment of age 59 1/2; for
tax-free returns of excess contributions to IRAs; for
redemptions through certain automatic withdrawals not
exceeding 10% of the amount that would otherwise be
subject to the charge; and for redemptions in
connection with loans made by qualified retirement
plans.
REINSTATEMENT PRIVILEGE You may reinvest proceeds from
a redemption or a dividend or capital gain distribution
without sales charge (any contingent deferred sales
charge paid will be credited to your account) in any
fund in The American Funds Group. Send a written
18
<PAGE>
- -------------------------------------------------------------------------------
request and a check to American Funds Service Company
within 90 days after the date of the redemption or
distribution. Reinvestment will be at the next
calculated net asset value after receipt. The tax
status of a gain realized on a redemption will not be
affected by exercise of the reinstatement privilege,
but a loss may be nullified if you reinvest in the same
fund within 30 days. If you redeem your shares within
90 days after purchase and the sales charge on the
purchase of other shares is waived under the
reinstatement privilege, the sales charge you
previously paid for the shares may not be taken into
account when you calculate your gain or loss on that
redemption.
OTHER IMPORTANT THINGS TO REMEMBER The net asset value
for redemptions is determined as indicated under
"Purchasing Shares--Share Price." Because each stock,
stock/bond and bond fund's net asset value fluctuates,
reflecting the market value of the fund's portfolio,
the amount a shareholder receives for shares redeemed
may be more or less than the amount paid for them.
Redemption proceeds will not be mailed until sufficient
time has passed to provide reasonable assurance that
checks or drafts (including certified or cashier's
checks) for shares purchased have cleared (which may
take up to 15 calendar days from the purchase date).
Except for delays relating to clearance of checks for
share purchases or in extraordinary circumstances (and
as permissible under the Investment Company Act of
1940), redemption proceeds will be paid on or before
the seventh day following receipt of a proper
redemption request.
A fund may, with 60 days' written notice, close your
account if, due to a redemption, the account has a
value of less than the minimum required initial
investment. (For example, a fund may close an account
if a redemption is made shortly after a minimum initial
investment is made.)
RETIREMENT You may invest in the funds through various retirement
PLANS plans including the following plans for which Capital
Guardian Trust Company acts as trustee or custodian:
IRAs, Simplified Employee Pension plans, 403(b) plans
and Keogh- and corporate-type business retirement
plans. For further information about any of the plans,
agreements, applications and annual fees, contact
American Funds Distributors or your investment dealer.
To determine which retirement plan is appropriate for
you, please consult your tax adviser. TAX-EXEMPT FUNDS
SHOULD NOT SERVE AS INVESTMENTS FOR RETIREMENT PLANS.
FOR MORE INFORMATION, PLEASE REFER TO THE ACCOUNT
APPLICATION OR THE STATEMENT OF ADDITIONAL INFORMATION.
IF YOU HAVE ANY QUESTIONS ABOUT ANY OF THE SHAREHOLDER
SERVICES DESCRIBED HEREIN OR YOUR ACCOUNT, PLEASE
CONTACT YOUR INVESTMENT DEALER OR AMERICAN FUNDS
SERVICE COMPANY.
[RECYCLE LOGO] This prospectus has been printed on
recycled paper that meets the
guidelines of the United States
Environmental Protection Agency
19
<PAGE>
PROSPECTUS
for Eligible Retirement Plans
FUNDAMENTAL INVESTORS(SM)
AN OPPORTUNITY FOR LONG-TERM GROWTH
OF CAPITAL AND INCOME THROUGH A DIVERSIFIED
PORTFOLIO OF COMMON STOCKS.
March 1, 1995
[LOGO OF THE AMERICAN FUNDS GROUP(R)]
FUNDAMENTAL INVESTORS, INC.
Four Embarcadero Center
Suite 1800
San Francisco, CA 94111
The investment objective of the fund is to increase its shareholders' capital
and income return over time. The fund strives to accomplish this objective by
investing primarily in a diversified portfolio of commons stocks, or
securities convertible into common stocks.
This prospectus relates only to shares of the fund offered without a sales
charge to eligible retirement plans. For a prospectus regarding shares of the
fund to be acquired otherwise, contact the Secretary of the fund at the
address indicated above.
This prospectus presents information you should know before investing in the
fund. It should be retained for future reference.
You may obtain the statement of additional information, dated March 1, 1995,
which contains the fund's financial statements, without charge by writing to
the Secretary of the fund at the above address or telephoning 800/421-0180.
These requests will be honored within three business days of receipt.
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR INSURED, GUARANTEED,
OR ENDORSED BY, THE U.S. GOVERNMENT, ANY BANK, THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY, ENTITY OR PERSON.
THE PURCHASE OF FUND SHARES INVOLVES INVESTMENT RISKS, INCLUDING THE POSSIBLE
LOSS OF PRINCIPAL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
RP 10-010-0395
<PAGE>
- -------------------------------------------------------------------------------
SUMMARY
OF EXPENSES
Average annual
expenses paid over a
10-year period would
be approximately
$9 per year,
assuming a $1,000
investment and a 5%
annual return.
TABLE OF CONTENTS
<TABLE>
<S> <C>
Summary of Expenses......... 2
Financial Highlights........ 3
Investment Objective and
Policies................... 3
Certain Securities and
Investment Techniques...... 4
Investment Results.......... 6
Dividends, Distributions
and Taxes.................. 6
Fund Organization and
Management................. 7
Purchasing Shares........... 8
Shareholder Services........ 10
Redeeming Shares............ 10
</TABLE>
This table is designed to help you understand the costs of investing in the
fund. These are historical expenses; your actual expenses may vary.
SHAREHOLDER TRANSACTION EXPENSES
Certain retirement plans may purchase shares of the fund with no sales
charge./1/ The fund also has no sales charge on reinvested dividends, deferred
sales charge, redemption fees or exchange fees.
ANNUAL FUND OPERATING EXPENSES (as a percentage of average net assets)
<TABLE>
<S> <C>
Management fees....................................................... 0.35%
12b-1 expenses........................................................ 0.20%/2/
Other expenses (including audit, legal, shareholder services, transfer
agent and custodian expenses)........................................ 0.13%
Total fund operating expenses......................................... 0.68%
</TABLE>
<TABLE>
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ------- ------ ------- ------- --------
<S> <C> <C> <C> <C>
You would pay the following cumulative ex-
penses on a $1,000 investment, assuming a 5%
annual return./3/ $7 $22 $38 $85
</TABLE>
/1/ Retirement plans of organizations with $100 million or more in collective
retirement plan assets may purchase shares of the fund with no sales charge.
Any defined contribution plan qualified under Section 401(a) of the Internal
Revenue Code including a "401(k)" plan with 200 or more eligible employees
or any other plan that invests at least $1 million in shares of the fund (or
in combination with shares of other funds in The American Funds Group other
than the money market funds) may purchase shares at net asset value;
however, a contingent deferred sales charge of 1% applies on certain
redemptions within 12 months following such purchases. (See "Redeeming
Shares--Contingent Deferred Sales Charge.")
/2/ These expenses may not exceed 0.25% of the fund's average net assets
annually. (See "Fund Organization and Management--Plan of Distribution.")
Due to these distribution expenses, long-term shareholders may pay more than
the economic equivalent of the maximum front-end sales charge permitted by
the National Association of Securities Dealers.
/3/ Use of this assumed 5% return is required by the Securities and Exchange
Commission; it is not an illustration of past or future investment results.
THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES; ACTUAL EXPENSES MAY BE GREATER OR LESSER THAN THOSE SHOWN.
2
<PAGE>
- -------------------------------------------------------------------------------
FINANCIAL The following information for the four years ended
HIGHLIGHTS December 31, 1994 has been audited by Deloitte & Touche
(For a share LLP, independent accountants, whose unqualified report
outstanding covering each of the most recent four years is included
throughout the in the statement of additional information, and for the
fiscal year) six years ended December 31, 1990 by KPMG Peat Marwick,
independent accountants. This information should be
read in conjunction with the financial statements and
accompanying notes which are included in the statement
of additional information.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
-------------------------------------------------------------------------------
1994 1993 1992 1991 1990 1989 1988 1987 1986 1985
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Begin-
ning of Year........... $18.15 $17.52 $17.47 $14.32 $16.43 $14.60 $13.45 $14.21 $14.36 $11.94
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income.. .42 .44 .44 .41 .48 .58 .43 .39 .38 .41
Net realized and
unrealized gain
(loss) on
investments........... (.18) 2.65 1.27 3.82 (1.52) 3.53 1.65 .20 2.62 3.00
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total income from
investment
operations.......... .24 3.09 1.71 4.23 (1.04) 4.11 2.08 .59 3.00 3.41
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from net
investment income..... (.44) (.43) (.42) (.40) (.49) (.62) (.47) (.40) (.40) (.40)
Distributions from
capital gains......... (.45) (2.03) (1.24) (.68) (.58) (1.66) (.46) (.95) (2.75) (.59)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total distributions.. (.89) (2.46) (1.66) (1.08) (1.07) (2.28) (.93) (1.35) (3.15) (.99)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net Asset Value, End of
Year................... $17.50 $18.15 $17.52 $17.47 $14.32 $16.43 $14.60 $13.45 $14.21 $14.36
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
Total Return/1/......... 1.33% 18.16% 10.19% 30.34% (6.24)% 28.56% 15.95% 3.77% 22.05% 30.18%
RATIOS/SUPPLEMENTAL
DATA:
Net assets, end of
year (in millions).... $2,611 $1,979 $1,440 $1,156 $ 823 $ 758 $ 632 $ 610 $ 502 $ 460
Ratio of expenses to
average net assets.... .68% .65% .65% .69% .70% .67% .68% .63% .62% .65%
Ratio of net income to
average net assets.... 2.45% 2.43% 2.56% 2.50% 3.15% 3.40% 2.97% 2.42% 2.53% 3.22%
Portfolio turnover
rate.................. 23.02% 29.22% 23.98% 17.07% 11.92% 18.59% 8.09% 12.40% 19.40% 20.20%
</TABLE>
--------
/1/ Calculated with no sales charge.
The fund's investment objective is to increase its
INVESTMENT shareholders' capital and income return over time. The
OBJECTIVE fund seeks to accomplish this objective by investing
AND POLICIES primarily in a diversified portfolio of common stocks,
or securities convertible into common stocks. Assets
The fund aims to may also be held in straight debt securities that are
provide you with generally rated in the top three quality categories by
long- term growth Standard & Poor's Corporation or Moody's Investors
of capital and Service, Inc. or determined to be of equivalent quality
income. by the fund's investment adviser, Capital Research and
Management Company; however, up to 10% of the fund's
assets may be invested in lower rated straight debt
securities. These securities may be rated, measured at
the time of the purchase, as high as Baa by Moody's or
BBB by S&P and as low as Ca by Moody's or CC by S&P.
These bonds are described by the rating agencies as
"speculative in a high degree, often in default or
[having] other marked shortcomings." Securities rated
Ba or BB or below or unrated securities that are
determined to be of equivalent quality are commonly
known as "junk" or "high-yield, high-risk" bonds. (See
the statement of additional information for a complete
description of the bond ratings.)
3
<PAGE>
- -------------------------------------------------------------------------------
Additionally, assets may be held in cash or cash
equivalents, U.S. Government securities, or
nonconvertible preferred stocks. (For further
information, see the statement of additional
information.)
The fund's investment restrictions (which are described
in the statement of additional information) and
objective cannot be changed without shareholder
approval. All other investment practices may be changed
by the fund's board.
ACHIEVEMENT OF THE FUND'S INVESTMENT OBJECTIVE CANNOT,
OF COURSE, BE ASSURED DUE TO THE RISK OF CAPITAL LOSS
FROM FLUCTUATING PRICES INHERENT IN ANY INVESTMENT IN
SECURITIES.
CERTAIN SECURITIES RISKS OF INVESTING IN STOCKS AND BONDS Because the fund
AND INVESTMENT invests in stocks or securities convertible into
TECHNIQUES stocks, the fund is subject to various stock market-
related risks. For example, the fund is subject to the
Investing in possibility that stock prices in general will decline
stocks and bonds over short or even extended periods.
involves certain The market values of fixed-income securities such as
risks. bonds tend to vary inversely with the level of interest
rates -- when interest rates rise, their values will
tend to decline and vice versa. The values of high-
yield, high-risk securities are subject to greater
fluctuations in value than are higher rated securities
because the values of high-yield, high-risk securities
tend to reflect short-term corporate and market
developments and investor perceptions of the issuer's
credit quality to a greater extent. It may be more
difficult to dispose of, or determine the value of,
high-yield, high-risk securities.
The average monthly composition of the fund's portfolio
based on the higher of the Moody's or S&P ratings for
the fiscal year ended December 31, 1994 was as follows:
bonds--Aaa/AAA--2.41%; Baa/BBB--.79%; and B/B--2.22%.
Other investments, including equity-type securities and
cash or cash equivalents amounted to 85.82% and 8.75%,
respectively.
RISKS OF INVESTING IN VARIOUS COUNTRIES Generally, the
fund will invest no more than 10% of its assets in
securities of issuers which are not included in the
Standard & Poor's 500 Composite Index (a broad measure
of the U.S. stock market) and which are domiciled
outside the U.S. Non-U.S. companies may not be subject
to uniform accounting, auditing and financial reporting
standards and practices or regulatory requirements
comparable to those applicable to U.S. companies. There
may also be less public information available about
non-U.S. companies. Additionally, specific local
political and economic factors must be evaluated in
making these investments including trade balances and
imbalances and related economic policies; expropriation
or confiscatory taxation; limitations on the removal of
funds or other assets; political or
4
<PAGE>
- -------------------------------------------------------------------------------
social instability; the diverse structure and liquidity
of the various securities markets; and nationalization
policies of governments around the world. However,
investing outside the U.S. can also reduce risks due to
greater diversification opportunities.
PRIVATE PLACEMENTS Private placements may be either
purchased from another institutional investor that
originally acquired the securities in a private
placement or directly from the issuers of the
securities. Generally, securities acquired in private
placements are subject to contractual restrictions on
resale and may not be resold except pursuant to a
registration statement under the Securities Act of 1933
or in reliance upon an exemption from the registration
requirements under that Act, for example, private
placements sold pursuant to Rule 144A. Accordingly, any
such obligation will be deemed illiquid unless
procedures are adopted by the fund's board of directors
for determining liquidity, and the fund may incur
certain additional costs in disposing of such
securities.
MULTIPLE PORTFOLIO COUNSELOR SYSTEM The basic invest-
ment philosophy of Capital Research and Management Com-
pany is to seek fundamental values at reasonable pric-
es, using a system of multiple portfolio counselors in
managing mutual fund assets. Under this system the
portfolio of the fund is divided into segments managed
by individual counselors. Each counselor decides how
the segment will be invested (within the limits pro-
vided by the fund's objective and policies and by Capi-
tal Research and Management Company's investment com-
mittee). In addition, Capital Research and Management
Company's research professionals make investment deci-
sions with respect to a portion of the fund's portfo-
lio. The primary individual portfolio counselors for
the fund are listed below.
<TABLE>
<CAPTION>
YEARS OF EXPERIENCE AS
INVESTMENT PROFESSIONAL
YEARS OF EXPERIENCE AS (APPROXIMATE)
PORTFOLIO COUNSELORS PORTFOLIO COUNSELOR (AND WITH CAPITAL
FOR PRIMARY TITLE(S) RESEARCH PROFESSIONAL, IF RESEARCH AND
FUNDAMENTAL APPLICABLE) FOR MANAGEMENT
INVESTORS, INC. FUNDAMENTAL INVESTORS, INC. COMPANY OR
(APPROXIMATE) ITS
AFFILIATES TOTAL YEARS
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
James E. Drasdo President of the fund; 11 years, plus 5 years as a 18 years 23 years
Senior Vice President research professional prior
and Director, Capital to becoming a portfolio
Research and counselor for the fund
Management Company
- -------------------------------------------------------------------------------------------------------
Gordon Crawford Senior Vice President 4 years, plus 13 years as a 24 years 24 years
of the fund; Senior research professional prior
Vice President and Di- to becoming a portfolio
rector, Capital Re- counselor for the fund
search Company*
- -------------------------------------------------------------------------------------------------------
Dina N. Perry Senior Vice President 2 years, plus 1 year as a 3 years 28 years
of the fund; Vice research professional prior
President, Capital to becoming a portfolio
Research and counselor for the fund
Management Company
- ------------------------------------------------------------------------------------------------------
</TABLE>
* Company affiliated with Capital Research and Management Company
5
<PAGE>
- -------------------------------------------------------------------------------
INVESTMENT The fund may from time to time compare its investment
RESULTS results to various unmanaged indices or other mutual
funds in reports to shareholders, sales literature and
The fund has advertisements. The results may be calculated on a to-
averaged a total tal return and/or yield basis for various periods, with
return of 14.71% a or without sales charges. Results calculated without a
year (at no sales sales charge will be higher. Total returns assume the
charge) under reinvestment of all dividends and capital gain distri-
Capital Research butions.
and Management
Company's The fund's yield and the average annual total returns
management are calculated in accordance with the Securities and
(July 31, Exchange Commission requirements with no sales charge.
1978 through The fund's yield for the 30-day period ended December
December 31, 31, 1994 was 2.67%. The fund's total return over the
1994). past 12 months and the average annual total returns
over the past five-year and ten-year periods, as of De-
cember 31, 1994, were 1.33%, 10.03% and 14.76%, respec-
tively. Of course, past results are not an indication
of future results. Further information regarding the
fund's investment results is contained in the fund's
annual report which may be obtained without charge by
writing to the Secretary of the fund at the address in-
dicated on the cover of this prospectus.
DIVIDENDS AND DISTRIBUTIONS Dividends are usually paid
DIVIDENDS, in February, May, August and November. Capital gains,
DISTRIBUTIONS if any, are usually distributed in November. When a
AND TAXES dividend or capital gain is distributed, the net asset
value per share is reduced by the amount of the pay-
Income ment.
distributions are
usually made in The terms of your plan will govern how your plan may
February, May, receive distributions from the fund. Generally, peri-
August and odic distributions from the fund to your plan are rein-
November vested in additional fund shares, although your plan
may permit fund distributions from net investment in-
come to be received by you in cash while reinvesting
capital gain distributions in additional shares or all
fund distributions to be received in cash. Unless you
select another option, all distributions will be rein-
vested in additional fund shares.
FEDERAL TAXES The fund intends to operate as a "regu-
lated investment company" under the Internal Revenue
Code. In any fiscal year in which the fund so qualifies
and distributes to shareholders all of its net invest-
ment income and net capital gains, the fund itself is
relieved of federal income tax. The tax treatment of
redemptions from a retirement plan may differ from re-
demptions from an ordinary shareholder account.
PLEASE SEE THE STATEMENT OF ADDITIONAL INFORMATION AND
YOUR TAX ADVISER FOR FURTHER INFORMATION.
6
<PAGE>
- -------------------------------------------------------------------------------
FUND FUND ORGANIZATION AND VOTING RIGHTS The fund, an open-
ORGANIZATION end, diversified management investment company, was or-
AND ganized as a Delaware corporation in 1932 and reorga-
MANAGEMENT nized as a Maryland corporation in 1990. The fund's
board supervises fund operations and performs duties
The fund is a required by applicable state and federal law. Members
member of The of the board who are not employed by Capital Research
American Funds and Management Company or its affiliates are paid cer-
Group, which is tain fees for services rendered to the fund as de-
managed by one of scribed in the statement of additional information.
the largest and They may elect to defer all or a portion of these fees
most experienced through a deferred compensation plan in effect for the
investment fund. Shareholders have one vote per share owned and,
advisers. at the request of the holders of at least 10% of the
shares, the fund will hold a meeting at which any mem-
ber of the board could be removed by a majority vote.
There will not usually be a shareholder meeting in any
year except, for example, when the election of the
board is required to be acted upon by shareholders un-
der the Investment Company Act of 1940.
THE INVESTMENT ADVISER Capital Research and Management
Company, a large and experienced investment management
organization founded in 1931, is the investment adviser
to the fund and other funds, including those in The
American Funds Group. Capital Research and Management
Company is located at 333 South Hope Street, Los Ange-
les, CA 90071 and at 135 South State College Boulevard,
Brea, CA 92621. Capital Research and Management Company
manages the investment portfolio and business affairs
of the fund and receives a fee at the annual rate of
0.39% on the first $800 million of the fund's net as-
sets, plus 0.336% on net assets over $800 million to
$1.8 billion, plus 0.30% on net assets over $1.8 bil-
lion to $3 billion, plus 0.276% on net assets over
$3 billion.
Capital Research and Management Company is a wholly
owned subsidiary of The Capital Group Companies, Inc.
(formerly "The Capital Group, Inc."), which is located
at 333 South Hope Street, Los Angeles, CA 90071. The
research activities of Capital Research and Management
Company are conducted by affiliated companies which
have offices in Los Angeles, San Francisco, New York,
Washington, D.C., London, Geneva, Singapore, Hong Kong
and Tokyo.
Capital Research and Management Company and its affili-
ated companies have adopted a personal investing policy
that is consistent with the recommendations contained
in the report dated May 9, 1994 issued by the Invest-
ment Company Institute's Advisory Group on Personal In-
vesting. (See the statement of additional information).
PORTFOLIO TRANSACTIONS Orders for the fund's portfolio
securities transactions are placed by Capital Research
and Management Company, which strives to obtain the
best available prices, taking into account the costs
and quality of executions. In the over-the-counter mar-
ket, purchases
7
<PAGE>
- -------------------------------------------------------------------------------
and sales are transacted directly with principal mar-
ket-makers except in those circumstances where it ap-
pears better prices and executions are available else-
where.
Subject to the above policy, when two or more brokers
are in a position to offer comparable prices and
executions, preference may be given to brokers that
have sold shares of the fund or have provided
investment research, statistical, and other related
services for the benefit of the fund and/or of other
funds served by Capital Research and Management
Company.
PRINCIPAL UNDERWRITER American Funds Distributors,
Inc., a wholly owned subsidiary of Capital Research and
Management Company, is the principal underwriter of the
fund's shares. American Funds Distributors is located
at 333 South Hope Street, Los Angeles, CA 90071, 135
South State College Boulevard, Brea, CA 92621, 8000 IH-
10 West, San Antonio, TX 78230, 8332 Woodfield Crossing
Boulevard, Indianapolis, IN 46240 and 5300 Robin Hood
Road, Norfolk, VA 23513. Telephone conversations with
American Funds Distributors may be recorded or moni-
tored for verification, recordkeeping and quality as-
surance purposes.
PLAN OF DISTRIBUTION The fund has a plan of distribu-
tion or "12b-1 Plan" under which it may finance activi-
ties primarily intended to sell shares, provided the
categories of expenses are approved in advance by the
board and the expenses paid under the plan were in-
curred within the last 12 months and accrued while the
plan is in effect. Expenditures by the fund under the
plan may not exceed 0.25% of its average net assets an-
nually (all of which may be for service fees).
TRANSFER AGENT American Funds Service Company, 800/421-
0180, a wholly owned subsidiary of Capital Research and
Management Company, is the transfer agent and performs
shareholder service functions. American Funds Service
Company is located at 333 South Hope Street, Los Ange-
les, CA 90071, 135 South State College Boulevard, Brea,
CA 92621, 8000 IH-10 West, San Antonio, TX 78230, 8332
Woodfield Crossing Boulevard, Indianapolis, IN 46240
and 5300 Robin Hood Road, Norfolk, VA 23513. It was
paid a fee of $1,662,000 for the fiscal year ended De-
cember 31, 1994. Telephone conversations with American
Funds Service Company may be recorded or monitored for
verification, recordkeeping and quality assurance pur-
poses.
PURCHASING SHARES ALL ORDERS TO PURCHASE SHARES MUST BE MADE THROUGH YOUR
RETIREMENT PLAN. FOR MORE INFORMATION ABOUT HOW TO
PURCHASE SHARES OF THE FUND THROUGH YOUR PLAN OR
LIMITATIONS ON THE AMOUNT THAT MAY BE PURCHASED, PLEASE
CONSULT WITH YOUR EMPLOYER. Shares are sold to eligible
retirement plans at the net asset value per share next
determined after receipt of an order by the fund or
American Funds Service Company. Orders must be
8
<PAGE>
- -------------------------------------------------------------------------------
received before the close of regular trading on the New
York Stock Exchange in order to receive that day's net
asset value. Plans of organizations with collective
retirement plan assets of $100 million or more may
purchase shares at net asset value. In addition, any
defined contribution plan qualified under Section
401(a) of the Internal Revenue Code including a
"401(k)" plan with 200 or more eligible employees or
any other plan that invests at least $1 million in
shares of the fund (or in combination with shares of
other funds in The American Funds Group other than the
money market funds may purchase shares at net asset
value); however, a contingent deferred sales charge of
1% is imposed on certain redemptions within one year of
such purchase. (See "Redeeming Shares--Contingent
Deferred Sales Charge.") Plans may also qualify to
purchase shares at net asset value by completing a
statement of intention to purchase $1 million in fund
shares subject to a commission over a maximum of 13
consecutive months. Certain redemptions of such shares
may also be subject to a contingent deferred sales
charge as described above. (See the statement of
additional information.)
American Funds Distributors, at its expense (from a
designated percentage of its income), will provide
additional promotional incentives to dealers. Currently
these incentives are limited to the top one hundred
dealers who have sold shares of the fund or other funds
in The American Funds Group. Such incentive payments
will be based on a pro rata share of a qualifying
dealer's sales.
Qualified dealers currently are paid a continuing
service fee not to exceed 0.25% of average net assets
(0.15% in the case of the money market funds) annually
in order to promote selling efforts and to compensate
them for providing certain services. (See "Fund
Organization and Management--Plan of Distribution.")
These services include processing purchase and
redemption transactions, establishing shareholder
accounts and providing certain information and
assistance with respect to the fund.
Shares of the fund are offered to other shareholders
pursuant to another prospectus at public offering
prices that may include an initial sales charge.
SHARE PRICE Shares are offered to eligible retirement
plans at the net asset value after the order is
received by the fund or American Funds Service Company.
In the case of orders sent directly to the fund or
American Funds Service Company, an investment dealer
must be indicated. Dealers are responsible for promptly
transmitting orders. (See the statement of additional
information under "Purchase of Shares--Price of
Shares.")
The fund's net asset value per share is determined as
of the close of trading (currently 4:00 p.m., New York
time) on each day the New York Stock Exchange is open.
The current value of the fund's total assets, less
9
<PAGE>
- -------------------------------------------------------------------------------
all liabilities, is divided by the total number of
shares outstanding and the result, rounded to the
nearer cent, is the net asset value per share.
SHAREHOLDER Subject to any restrictions contained in your plan, you
SERVICES can exchange your shares for shares of other funds in
The American Funds Group which are offered through the
plan at net asset value. In addition, again depending
on your plan, you may be able to exchange shares
automatically or cross-reinvest dividends in shares of
other funds. Contact your plan administrator/trustee
regarding how to use these services. Also, see the
fund's statement of additional information for a
description of these and other services that may be
available through your plan. These services are
available only in states where the fund to be purchased
may be legally offered and may be terminated or
modified at any time upon 60 days' written notice.
REDEEMING SHARES Subject to any restrictions imposed by your plan, you
can sell your shares through the plan any day the New
York Stock Exchange is open. For more information about
how to sell shares of the fund through your retirement
plan, including any charges that may be imposed by the
plan, please consult with your employer.
--------------------------------------------------------
By Your plan administrator/trustee must
contacting send a letter of instruction
your plan specifying the name of the fund, the
administrator/ number of shares or dollar amount to
trustee be sold, and, if applicable, your
name and account number. You should
also enclose any certificates you
wish to redeem. For your protection,
if you redeem more than $50,000, the
signatures of the registered owners
or their legal representatives must
be guaranteed by a bank, savings
association, credit union, or member
firm of a domestic stock exchange or
the National Association of
Securities Dealers, Inc., that is an
eligible guarantor institution. Your
plan administrator/trustee should
verify with the institution that it
is an eligible guarantor prior to
signing. Additional documentation may
be required to redeem shares from
certain accounts. Notarization by a
Notary Public is not an acceptable
signature guarantee.
--------------------------------------------------------
By Shares may also be redeemed through
contacting an investment dealer; however, you or
an your plan may be charged for this
investment service. SHARES HELD FOR YOU IN AN
dealer INVESTMENT DEALER'S STREET NAME MUST
BE REDEEMED THROUGH THE DEALER.
---------------------------------------------------------
THE PRICE YOU RECEIVE FOR THE SHARES YOU REDEEM IS THE
NET ASSET VALUE NEXT DETERMINED AFTER YOUR ORDER AND ALL
REQUIRED DOCUMENTATION ARE RECEIVED BY THE FUND OR
AMERICAN FUNDS SERVICE COMPANY. (SEE "PURCHASING
SHARES--SHARE PRICE.")
CONTINGENT DEFERRED SALES CHARGE A contingent deferred
sales charge of 1% applies to certain redemptions
within the first year on investments of $1 million or
more and on any investment made with no initial sales
charge by any defined contribution plan qualified under
Section 401(a) of the Internal Revenue Code including a
"401(k)" plan
10
<PAGE>
- -------------------------------------------------------------------------------
with 200 or more eligible employees. The charge is 1%
of the lesser of the value of the shares redeemed
(exclusive of reinvested dividends and capital gain
distributions) or the total cost of such shares. Shares
held for the longest period are assumed to be redeemed
first for purposes of calculating this charge. The
charge is waived for exchanges (except if shares
acquired by exchange were then redeemed within 12
months of the initial purchase); for distributions from
qualified retirement plans and other employee benefit
plans; and for redemptions in connection with loans
made by qualified retirement plans.
OTHER IMPORTANT THINGS TO REMEMBER The net asset value
for redemptions is determined as indicated under
"Purchasing Shares--Share Price." Because the fund's
net asset value fluctuates, reflecting the market value
of the portfolio, the amount you receive for shares
redeemed may be more or less than the amount paid for
them.
Redemption proceeds will not be mailed until sufficient
time has passed to provide reasonable assurance that
checks or drafts (including certified or cashier's
checks) for shares purchased have cleared (which may
take up to 15 calendar days from the purchase date).
Except for delays relating to clearance of checks for
share purchases or in extraordinary circumstances (and
as permissible under the Investment Company Act of
1940), redemption proceeds will be paid on or before
the seventh day following receipt of a proper
redemption request.
[RECYCLE LOGO] This prospectus has been printed on
recycled paper that meets the
guidelines of the United States
Environmental Protection Agency
11
<PAGE>
----------------------------------------------------------
THIS PROSPECTUS RELATES ONLY TO SHARES OF THE FUND
OFFERED WITHOUT A SALES CHARGE TO ELIGIBLE RETIREMENT
PLANS. FOR A PROSPECTUS REGARDING SHARES OF THE FUND
TO BE ACQUIRED OTHERWISE, CONTACT THE SECRETARY OF
THE FUND AT THE ADDRESS INDICATED ON THE FRONT.
----------------------------------------------------------
FUNDAMENTAL INVESTORS, INC.
Part B
Statement of Additional Information
MARCH 1, 1995
This document is not a prospectus but should be read in conjunction with the
current prospectus of Fundamental Investors, Inc. (the "fund" or "FI") dated
March 1, 1995. The prospectus may be obtained from your investment dealer or
financial planner or by writing to the fund at the following address:
Fundamental Investors, Inc.
Attention: Secretary
Four Embarcadero Center
P.0. Box 7650
San Francisco, CA 94120
Telephone: (415) 421-9360
The fund has two forms of prospectuses. Each reference to the prospectus in
this Statement of Additional Information includes both of the fund's
prospectuses. Shareholders who purchase shares at net asset value through
eligible retirement plans should note that not all of the services or features
described below may be available to them, and they should contact their
employer for details.
TABLE OF CONTENTS
<TABLE>
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ITEM PAGE NO.
<S> <C>
DESCRIPTION OF CERTAIN SECURITIES 1
CERTAIN RISK FACTORS RELATING TO HIGH-YIELD, HIGH-RISK BONDS 2
FUNDAMENTAL POLICIES AND INVESTMENT RESTRICTIONS 3
FUND OFFICERS AND DIRECTORS 5
MANAGEMENT 10
DIVIDENDS, DISTRIBUTIONS AND FEDERAL TAXES 12
PURCHASE OF SHARES 14
SHAREHOLDER ACCOUNT SERVICES AND PRIVILEGES 15
EXECUTION OF PORTFOLIO TRANSACTIONS 16
GENERAL INFORMATION 16
INVESTMENT RESULTS 18
DESCRIPTION OF BOND RATINGS 23
FINANCIAL STATEMENTS ATTACHED
</TABLE>
DESCRIPTION OF CERTAIN SECURITIES
U.S. GOVERNMENT SECURITIES - Securities guaranteed by the U.S. Government
include: (1) direct obligations of the U.S. Treasury (such as Treasury bills,
notes and bonds) and (2) federal agency obligations guaranteed as to principal
and interest by the U.S. Treasury. In these securities, the payment of
principal and interest is unconditionally guaranteed by the U.S. Government,
and thus they are of the highest possible credit quality. Such securities are
subject to variations in market value due to fluctuations in interest rates,
but, if held to maturity, will be paid in full.
Certain securities issued by U.S. Government instrumentalities and certain
federal agencies are neither direct obligations of, nor guaranteed by, the
Treasury. However, they generally involve federal sponsorship in one way or
another; some are backed by specific types of collateral; some are supported by
the issuer's right to borrow from the Treasury; some are supported by the
discretionary authority of the Treasury to purchase certain obligations of the
issuer; and others are supported only by the credit of the issuing government
agency or instrumentality. These agencies and instrumentalities include, but
are not limited to, Federal Land Banks, Farmers Home Administration, Central
Bank for Cooperatives, and Federal Intermediate Credit Banks.
CASH EQUIVALENTS - These securities include (1) commercial paper (short-term
notes up to 9 months in maturity issued by corporations or governmental
bodies), (2) commercial bank obligations (for example, certificates of deposit,
bankers' acceptances (time drafts on a commercial bank where the bank accepts
an irrevocable obligation to pay at maturity) and documented discount notes
(corporate promissory discount notes accompanied by a commercial bank guarantee
to pay at maturity)), (3) savings association and savings bank obligations (for
example, certificates of deposit issued by savings banks or savings and loan
associations), (4) securities of the U.S. Government, its agencies or
instrumentalities that mature, or may be redeemed, in one year or less, and (5)
corporate bonds and notes that mature, or that may be redeemed, in one year or
less.
CERTAIN RISK FACTORS RELATING TO HIGH-YIELD, HIGH-RISK BONDS
SENSITIVITY TO INTEREST RATE AND ECONOMIC CHANGES - High-yield, high-risk bonds
can be sensitive to adverse economic changes and corporate developments.
During an economic downturn or substantial period of rising interest rates,
highly leveraged issuers may experience financial stress that would adversely
affect their ability to service their principal and interest payment
obligations, to meet projected business goals, and to obtain additional
financing. If the issuer of a bond defaulted on its obligations to pay
interest or principal or entered into bankruptcy proceedings, the fund may
incur losses or expenses in seeking recovery of amounts owed to it. In
addition, periods of economic uncertainty and changes can be expected to result
in increased volatility of market prices of high-yield, high-risk bonds.
PAYMENT EXPECTATIONS - High-yield, high-risk bonds, like other bonds, may
contain redemption or call provisions. If an issuer exercised these provisions
in a declining interest rate market, the fund would have to replace the
security with a lower yielding security, resulting in a decreased return for
investors. Conversely, a high-yield, high-risk bond's value will decrease in a
rising interest rate market, as it will with all bonds.
LIQUIDITY AND VALUATION - There may be little trading in the secondary market
for particular bonds, which may affect adversely the fund's ability to value
accurately or dispose of such bonds. Adverse publicity and investor
perceptions, whether or not based on fundamental analysis, may decrease the
values and liquidity of high-yield, high-risk bonds, especially in a thin
market.
The fund's investment adviser, Capital Research and Management Company,
attempts to reduce the fund's risks through diversification of the portfolio by
credit analysis of each issuer as well as by monitoring broad economic trends
and corporate developments, but there can be no assurance that it will be
successful in doing so. The fund's investment policy with respect to investing
in high-yield, high-risk securities is a "non-fundamental" policy and thus, may
be changed by the board of directors at any time. It is contemplated that most
of the fund's common stock investments will be made in securities that are
listed on a stock exchange.
FUNDAMENTAL POLICIES AND INVESTMENT RESTRICTIONS
The fund has adopted certain fundamental policies and investment restrictions
for the protection of the fund's shareholders that may not be changed without
shareholder approval. (Approval requires the affirmative vote of 67% or more
of the voting securities present at a meeting of shareholders, provided more
than 50% of such securities are represented at the meeting or the vote of more
than 50% of the outstanding voting securities, whichever is less.)
The fund may not:
1. borrow money or securities;
2. buy securities "on margin";
3. effect "short sales" of securities;
4. mortgage, pledge or hypothecate securities;
5. lend money or securities (but the purchase of a portion of an issue of
publicly distributed debt securities is not considered the making of a loan);
6. invest in the securities of any issuer which, including predecessors, has
a record of less than three years continuous operation;
7. invest in the securities of any issuer if any officer or director of the
fund owns more than 1/2 of 1% of the securities of that issuer or if the fund's
officers and directors together own more than 5% of the securities of that
issuer;
8. invest any of its assets in the securities of any managed investment trust
or of any other managed investment company;
9. invest more than 5% of its total assets at the market value at the time of
investment in securities of any one issuer, or hold more than 10% of such
securities of any one issuer, but these limitations do not apply to obligations
of or guaranteed by the U.S.;
10. purchase or sell real estate;
11. purchase or sell commodities or commodity contracts;
12. act as underwriter of securities issued by other persons;
13. make investments in other companies for the purpose of exercising control
or management;
14. concentrate its investments in any one industry or group of industries,
but may invest up to 25% of its assets in any one industry.
Notwithstanding investment restriction number 8, the fund may invest in
securities of other managed investment companies if deemed advisable by its
officers in connection with the administration of a deferred compensation plan
adopted by Trustees pursuant to an exemptive order granted by the Securities
and Exchange Commission.
For purposes of investment restriction number 14, the fund will not invest 25%
or more (rather than more than 25%) of its total assets in the securities of
issuers in the same industry.
Although not fundamental policies, the fund has further agreed that it will
not invest more than 5% of the value of the fund's assets in warrants, valued
at the lower of cost or market, with no more than 2% being unlisted on the New
York or American Stock Exchanges (warrants acquired by the fund in units or
attached to securities may be deemed to be without value); or invest in puts or
calls, or in oil, gas or other mineral exploration programs; or invest more
than 10% of the value of its total assets in securities which are not readily
marketable (including repurchase agreements maturing in more than seven days or
securities for which there is no active and substantial market). In addition,
in connection with investment restriction number 10 above, the fund has
undertaken to the State of Texas that it will not, as a matter of
non-fundamental policy, purchase or sell limited partnerships in real estate
(excluding securities of companies, such as real estate investment trusts,
which deal in real estate or interests therein).
No officer or director of the fund may sell portfolio securities to the fund
or buy portfolio securities from it.
FUND OFFICERS AND DIRECTORS
Directors and Director Compensation
(with their principal occupations during the past five years)#
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NAME, ADDRESS AND AGE POSITION WITH PRINCIPAL OCCUPATION(S) DURING AGGREGATE TOTAL COMPENSATION TOTAL NUMBER
REGISTRANT PAST 5 YEARS (POSITIONS WITHIN THE COMPENSATION FROM ALL FUNDS OF FUND
BOARDS
ORGANIZATIONS LISTED MAY HAVE (INCLUDING MANAGED BY CAPITAL ON WHICH
CHANGED DURING THIS PERIOD) VOLUNTARILY DEFERRED RESEARCH AND DIRECTOR
SERVES/2/
COMPENSATION/1/) FROM MANAGEMENT COMPANY/2/
FUND DURING FISCAL
YEAR ENDED 12/31/94
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Guilford C. Babcock Director Associate Professor of Finance, $10,300/3/ $23,300 2
1575 Circle Drive School of Business Administration,
San Marino, CA 91108 University of Southern California
Age: 63
Charles H. Black Director Private investor and consultant; $10,600 $102,300 4
525 Alma Real Drive former Executive Vice President
Pacific Palisades, CA and Director, KaiserSteel
90272 Corporation
Age: 68
Martin Fenton, Jr. Director Chairman, Senior Resource Group $10,600/3/ $93,050 15
4350 Executive Drive (management of senior living
Suite 101 centers)
San Diego, CA 92123
Age: 59
Herbert Hoover III Director Private Investor $9,500 $57,850 14
200 S. Los Robles
Avenue
Suite 520
Pasadena, CA
91101-2431
Age: 57
Gail L. Neale Director Executive Vice President, Salzburg $11,400/3/ $51,000 4
Salzburg Seminar Seminar; former Director of
P.O. Box 886 Development and the Capital
The Marbleworks Campaign, Hampshire College;
Middlebury, VT 05753 Special Advisor, The
Age: 60 Commonwealth Fund and Mount
Holyoke College
Kirk P. Pendleton Director President, Cairnwood, Inc. $11,400/3/ $24,400 2
Box 546
Bryn Athyn, PA 19009
Age: 55
+* James W. Ratzlaff Director Vice Chairman of the Board,
Age: 58 Capital Research and Management none/4/ none/4/ 8
Company; Chairman of the Board,
American Funds Service Company;
Senior Partner, The Capital Group
Partners, L.P.
Henry E. Riggs Director President and Professor of
Kingston Hall 201 Engineering, Harvey Mudd College; $11,800/3/ $66,600 5
Harvey Mudd College former Thomas W. and Joan B.
Claremont, CA 91711 Ford Professor of Engineering and
Age: 60 Vice President of Development,
Stanford University
+* R. Michael Shanahan Director Chairman of the Board and
Age: 56 Principal Executive Officer, Capital none/4/ none/4/ 2
Research and Management
Company; Director, The Capital
Group Companies, Inc.; Director,
Capital Group Research, Inc.
Walter P. Stern Chairman of Chairman, Capital Group
630 Fifth Avenue the Board International, Inc.; Vice Chairman, none/4/ none/4/ 8
New York, NY 10111 Capital Research International;
Age: 66 Director, The Capital Group
Companies, Inc.; Chairman, Capital
International, Inc.; Director,
Temple-Inland, Inc.
Charles Wolf, Jr. Director Dean, The RAND Graduate School;
1700 Main Street Director, International Economic $10,300/3/ $51,900 4
Santa Monica, CA 90406 Studies, The RAND Corporation
Age: 70
</TABLE>
# Positions within the organizations listed may have changed during this
period.
+ Directors who are considered "interested persons as defined in the Investment
Company Act of 1940, as amended (the "1940 Act"), on the basis of their
affiliation with the fund's Investment Adviser, Capital Research and Management
Company.
* Address is 333 South Hope Street, Los Angeles, CA 90071//
/1/ Amounts may be deferred by eligible directors under a non-qualified
deferred compensation plan adopted by the Fund in 1993. Deferred amounts
accumulate at an earnings rate determined by the total return of one or more
funds in The American Funds Group as designated by the Director.
/2/ Capital Research and Management Company manages The American Funds Group
consisting of 28 funds: AMCAP Fund, Inc., American Balanced Fund, Inc.,
American High-Income Municipal Bond Fund, Inc., American High-Income Trust,
American Mutual Fund, Inc., The Bond Fund of America, Inc., The Cash Management
Trust of America, Capital Income Builder, Inc., Capital World Growth and Income
Fund, Inc., Capital World Bond Fund, Inc., EuroPacific Growth Fund, Fundamental
Investors, Inc., The Growth Fund of America, Inc., The Income Fund of America,
Inc., Intermediate Bond Fund of America, The Investment Company of America,
Limited Term Tax-Exempt Bond Fund of America, The New Economy Fund, New
Perspective Fund, Inc., SMALLCAP World Fund, Inc., The Tax-Exempt Bond Fund of
America, Inc., The Tax-Exempt Fund of California, The Tax-Exempt Fund of
Maryland, The Tax-Exempt Fund of Virginia, The Tax-Exempt Money Fund of
America, The U. S. Treasury Money Fund of America, U.S. Government Securities
Fund and Washington Mutual Investors Fund, Inc. Capital Research and Management
Company also manages American Variable Insurance Series and Anchor Pathway Fund
which serve as the underlying investment vehicle for certain variable insurance
contracts; and Bond Portfolio for Endowments, Inc. and Endowments, Inc. whose
shares may be owned only by tax-exempt organizations.
/3/ Since the plan's adoption, the total amount of deferred compensation
accrued by the fund (plus earnings thereon) for participating Directors is as
follows: Guilford C. Babcock ($10,766), Martin Fenton, Jr. ($11,038), Gail L.
Neale ($4,586), Kirk P. Pendleton ($11,666), Henry E. Riggs ($12,329) and
Charles Wolf, Jr. ($10,758). Amounts deferred and accumulated earnings thereon
are not funded and are general unsecured liabilities of the fund until paid to
the Director.
/4/ James W. Ratzlaff, R. Michael Shanahan and Walter P. Stern are affiliated
with the Investment Adviser and, accordingly, receive no compensation from the
Fund.
OFFICERS
Walter P. Stern, CHAIRMAN OF THE BOARD.
Fund Officers whose other positions are not described above are:
* James E. Drasdo, PRESIDENT. Senior Vice President and Director, Capital
Research and Management Company.
* Paul G. Haaga, Jr., SENIOR VICE PRESIDENT. Senior Vice President and
Director, Capital Research and Management Company.
* Gordon Crawford, SENIOR VICE PRESIDENT. Senior Vice President and Director,
Capital Research Company .
* Dina N. Perry, SENIOR VICE PRESIDENT. Vice President, Capital Research and
Management Company.
* Julie F. Williams, SECRETARY. Capital Research and Management Company,
Vice President --Fund Business Management Group.
** Steven N. Kearsley, TREASURER. Vice President and Treasurer, Capital
Research and Management
Company.
* David E. Carter, ASSISTANT SECRETARY. Capital Research and Management
Company, Associate.
& Patrick F. Quan, ASSISTANT SECRETARY. Capital Research and Management
Company, Vice President -- Fund Business Management Group.
** Mary C. Cremin, ASSISTANT TREASURER. Capital Research and Management
Company, Senior Vice President -- Fund Business Management Group.
** Robert P. Simmer, ASSISTANT TREASURER. Capital Research and Management
Company, Vice President -- Fund Business Management Group.
_____________________
# Positions within the organizations listed may have changed during this
period.
* Address is 333 South Hope Street, Los Angeles, CA 90071.
** Address is 135 South State College Boulevard, Brea, CA 92621.
& Address is P.O. Box 7650, San Francisco, CA 94120.
No compensation is paid by the fund to any officer or director who is a
director, officer or employee of the Investment Adviser or affiliated
companies. The compensation paid by the fund to directors who are not
affiliated with the Investment Adviser is $7,000 per annum, plus $700 for each
Board of Directors meeting attended, plus $400 for each meeting attended as a
member of a committee of the Board of Directors. No pension or retirement
benefits are accrued as part of fund expenses. The Directors may elect, on a
voluntary basis, to defer all or a portion of these fees through a deferred
compensation plan in effect for the fund. The fund also reimburses certain
expenses of the Directors who are not affiliated with the Investment Adviser.
The total compensation paid by the fund to directors who are not affiliated
with the Investment Adviser during the year ended December 31, 1994 was
$84,000. As of February 1, 1995 the officers and directors of the fund and
their families, as a group, owned beneficially or of record less than 1% of the
outstanding shares of the fund.
MANAGEMENT
INVESTMENT ADVISER - The Investment Adviser, founded in 1931, maintains
research facilities in the U.S. and abroad, with a staff of professionals, many
of whom have a number of years of investment experience. The Investment
Adviser's professionals travel several million miles a year, making more than
5,000 research visits in more than 50 countries around the world. The
Investment Adviser believes that it is able to attract and retain quality
personnel.
An affiliate of the Investment Adviser compiles indices for major stock
markets around the world and compiles and edits the Morgan Stanley Capital
International Perspective, providing financial and market information about
more than 2,400 companies around the world.
The Investment Adviser is responsible for approximately $100 billion of
stocks, bonds and money market instruments and serves over five million
investors of all types throughout the world. These investors include privately
owned businesses and large corporations as well as schools, colleges,
foundations and other non-profit and tax-exempt organizations.
INVESTMENT ADVISORY AND SERVICE AGREEMENT - The Investment Advisory and Service
Agreement (the Advisory Agreement) between the fund and the Investment Adviser,
dated December 1, 1991 and approved by shareholders on November 14, 1991, shall
be in effect until the close of business on March 31, 1995, and may be renewed
from year to year thereafter, provided that any such renewal has been
specifically approved at least annually by (i) the Board of Directors of the
fund, or by the vote of a majority (as defined in the 1940 Act) of the
outstanding voting securities of the fund, and (ii) the vote of a majority of
directors who are not parties to the Advisory Agreement or interested persons
(as defined in said Act) of any such party, cast in person, at a meeting called
for the purpose of voting on such approval. The Advisory Agreement also
provides that either party has the right to terminate it without penalty, upon
60 days' written notice to the other party, and that the Advisory Agreement
automatically terminates in the event of its assignment (as defined in said
Act).
The Investment Adviser, in addition to providing investment advisory
services, furnishes the services and pays the compensation and travel expenses
of persons to perform the executive, administrative, clerical and bookkeeping
functions of the fund, provides suitable office space, necessary small office
equipment and utilities, and provides general purpose accounting forms,
supplies, and postage used at the offices of the fund relating to the services
furnished by the Investment Adviser. The fund pays all expenses not
specifically assumed by the Investment Adviser as provided herein. Such
expenses shall include, but shall not be limited to, custodian, stock transfer
and dividend disbursing fees and expenses; costs of the designing, printing and
mailing of reports, prospectuses, proxy statements, and notices to its
shareholders; taxes; expenses of the issuance and redemption of shares of the
fund (including stock certificates, registration and qualification fees and
expenses); expenses pursuant to the fund's Plan of Distribution (described
below); legal and auditing expenses; compensation, fees, and expenses paid to
directors; association dues; costs of stationery and forms prepared exclusively
for the fund; and costs of assembling and storing shareholder account data.
The Advisory Agreement provides for an advisory fee reduction to the extent
that the fund's annual ordinary operating expenses exceed 1% of the average net
assets of the fund. Expenses which are not subject to this limitation are
interest, taxes, and extraordinary expenses. Expenditures, including costs
incurred in connection with the purchase or sale of portfolio securities, which
are capitalized in accordance with generally accepted accounting principles
applicable to investment companies, are accounted for as capital items and not
as expenses.
During the fiscal years ended December 31, 1994, 1993, and 1992 the
Investment Adviser received from the fund advisory fees of $7,967,000,
$6,162,000, and $4,726,000, respectively.
PRINCIPAL UNDERWRITER - American Funds Distributors, Inc. (the Principal
Underwriter) is the principal underwriter of the fund's shares. The fund has
adopted a Plan of Distribution (the Plan), pursuant to rule 12b-1 (see
"Principal Underwriter" in the prospectus). The Principal Underwriter receives
amounts payable pursuant to the Plan (described below) and commissions
consisting of that portion of the sales charge remaining after the discounts
which it allows to investment dealers. Commissions retained by the Principal
Underwriter on sales of fund shares during the fiscal year ended December 31,
1994 amounted to $3,299,000 after allowance of $16,822,000 to dealers. During
the fiscal years ended December 31, 1993 and 1992, the Principal Underwriter
retained $2,054,000 and $1,495,000, after allowance of $10,464,000 and
$7,667,000 to dealers, respectively.
As required by rule 12b-1, the Plan (together with the Principal Underwriting
Agreement) has been approved by the full Board of Directors, and separately by
a majority of the directors who are not "interested" persons of the fund and
who have no direct or indirect financial interest in the operation of the Plan
or the Principal Underwriting Agreement, and the Plan has been approved by the
vote of a majority of the outstanding voting securities of the fund. The
officers and directors who are "interested" persons of the fund may, due to
present or past affiliations with the Investment Adviser and related companies,
be considered to have a direct or indirect financial interest in the operation
of the Plan. Potential benefits of the plan to the fund include improved
shareholder services, savings to the fund in transfer agency costs, savings to
the fund in advisory fees and other expenses, benefits to the investment
process from growth or stability of assets and maintenance of a financially
healthy management organization. The selection and nomination of directors who
are not "interested persons" of the fund are committed to the discretion of the
directors who are not interested persons during the existence of the Plan. The
Plan is reviewed quarterly and must be renewed annually by the Board of
Directors.
Under the Plan the fund may expend up to 0.25% of its net assets annually
to finance any activity which is primarily intended to result in the sale of
fund shares, provided the fund's Board of Directors has approved the category
of expenses for which payment is being made. These include service fees for
qualified dealers and dealer commissions and wholesaler compensation on sales
of shares exceeding $1 million (including purchases by any defined contribution
plan qualified under Section 401(a) of the Internal Revenue Code including a
"401(k) plan with 200 or more eligible employees). Only expenses incurred
during the preceding 12 months and accrued while the Plan is in effect may be
paid by the fund. During the year ended December 31, 1994, the fund paid or
accrued $4,509,000 under the Plan as compensation to dealers. As of December
31, 1994, distribution expenses accrued and unpaid distribution expenses were
$311,000.
The Glass-Steagall Act and other applicable laws, among other things,
generally prohibit commercial banks from engaging in the business of
underwriting, selling or distributing securities, but permit banks to make
shares of mutual funds available to their customers and to perform
administrative and shareholder servicing functions. However, judicial or
administrative decisions or interpretations of such laws, as well as changes in
either federal or state statutes or regulations relating to the permissible
activities of banks or their subsidiaries of affiliates, could prevent a bank
from continuing to perform all or a part of its servicing activities. If a
bank were prohibited from so acting, shareholder clients of such bank would be
permitted to remain shareholders of the fund and alternate means for continuing
the servicing of such shareholders would be sought. In such event, changes in
the operation of the fund might occur and shareholders serviced by such bank
might no longer be able to avail themselves of any automatic investment or
other services then being provided by such bank. It is not expected that
shareholders would suffer with adverse financial consequences as a result of
any of these occurrences.
In addition, state securities laws on this issue may differ from the
interpretations of federal law expressed herein and certain banks and financial
institutions may be required to be registered as dealers pursuant to state law.
DIVIDENDS, DISTRIBUTIONS AND FEDERAL TAXES
The fund intends to meet all the requirements and has elected the tax status
of a "regulated investment company" under the provisions of Subchapter M of the
Internal Revenue Code of 1986 (the Code). Under Subchapter M, if the fund
distributes within specified times at least 90% of its investment company
taxable income, it will be taxed only on that portion of such investment
company taxable income that it retains.
To qualify, the fund must (a) derive at least 90% of its gross income from
dividends, interest, certain payments with respect to securities loans, and
gains from the sale or other disposition of stock, securities, currencies or
other income derived with respect to its business of investing in such stock,
securities or currencies; (b) derive less than 30% of its gross income from the
gains or sale or other disposition of stock or securities held less than three
months; and (c) diversify its holdings so that, at the end of each fiscal
quarter, (i) at least 50% of the market value of the fund's assets is
represented by cash, cash items, U.S. Government securities, securities of
other regulated investment companies, and other securities (but such other
securities must be limited, in respect of any one issuer, to an amount not
greater than 5% of the fund's assets and 10% of the outstanding voting
securities of such issuer), and (ii) not more than 25% of the value of its
assets is invested in the securities of any one issuer (other than U.S.
Government securities or the securities of other regulated investment
companies), or in two or more issuers which the fund controls and which are
engaged in the same or similar trades or businesses or related trades or
businesses.
Under the Code, a nondeductible excise tax of 4% is imposed on the excess of a
regulated investment company's "required distribution" for the calendar year
ending within the regulated investment company's taxable year over the
"distributed amount" for such calendar year. The term "required distribution"
means the sum of (i) 98% of ordinary income (generally net investment income)
for the calendar year, (ii) 98% of capital gains (both long-term and
short-term) for the one-year period ending on October 31 (as though the
one-year period ending on October 31 were the regulated investment company's
taxable year), and (iii) the sum of any untaxed, undistributed net investment
income and net capital gains of the regulated investment company for prior
periods. The term "distributed amount" generally means the sum of (i) amounts
actually distributed by the fund from its current year's ordinary income and
capital gain net income and (ii) any amount on which the fund pays income tax
for the year. The fund intends to distribute net investment income and net
capital gains so as to minimize or avoid the excise tax liability.
The fund also intends to distribute to shareholders all of the excess of net
long-term capital gain over net short-term capital loss on sales of securities.
If the net asset value of shares of the fund should, by reason of a
distribution of realized capital gains, be reduced below a shareholder's cost,
such distribution would to that extent be a return of capital to that
shareholder even though taxable to the shareholder, and a sale of shares by a
shareholder at net asset value at that time would establish a capital loss for
federal tax purposes. In particular, investors should consider the tax
implications of purchasing shares just prior to a dividend or distribution
record date. Those investors purchasing shares just prior to such a date will
then receive a partial return of capital upon the dividend or distribution,
which will nevertheless be taxable to them as an ordinary or capital gains
dividend.
Dividends generally are taxable to shareholders at the time they are paid.
However, dividends declared in October, November and December and made payable
to shareholders of record in such a month are treated as paid and are thereby
taxable as of December 31, provided that the fund pays the dividend no later
than the end of January of the following year.
If a shareholder exchanges or otherwise disposes of shares of the fund within
90 days of having acquired such shares, and if, as a result of having acquired
those shares, the shareholder subsequently pays a reduced sales charge for
shares of the fund, or of a different fund, the sales charge previously
incurred acquiring the fund's shares shall not be taken into account (to the
extent such previous sales charges do not exceed the reduction in sales
charges) for the purpose of determining the amount of gain or loss on the
exchange, but will be treated as having been incurred in the acquisition of
such other shares. Also, any loss realized on a redemption or exchange of
shares of a fund will be disallowed to the extent shares are reacquired within
the 61-day period beginning 30 days before and ending 30 days after the shares
are disposed of.
The fund may be required to pay withholding and other taxes imposed by foreign
countries generally at rates from 10% to 40% which would reduce the fund's
investment income. Tax conventions between certain countries and the United
States may reduce or eliminate such taxes. It is not anticipated that
shareholders will be entitled to take a foreign tax credit or deduction for
such foreign taxes. Corporate shareholders of the fund will be eligible for
the dividends-received deduction on the dividends (excluding the net capital
gain dividends) paid by the fund to the extent the fund's income is derived
from dividends received from domestic corporations. In order to qualify for
the dividends-received deduction, a corporate shareholder must hold the fund
shares on which the dividends are paid for at least 46 days.
Under the Code, distributions of net investment income by the fund to a
shareholder who, as to the U.S., is a nonresident alien individual, nonresident
alien fiduciary of a trust or estate, foreign corporation or foreign
partnership (a "foreign shareholder") will be subject to U.S. withholding tax
(at a rate of 30% or lower treaty rate). Withholding will not apply if a
dividend paid by the fund to a foreign shareholder is "effectively connected"
with a U.S. trade or business, in which case the reporting and withholding
requirements applicable to U.S. citizens or domestic corporations will apply.
However, if the distribution is effectively connected with the conduct of the
non-U.S. shareholder's trade or business within the U.S., the distribution
would be included in the net income of the shareholder and subject to U.S.
income tax at the applicable marginal rate. Distributions of capital gains not
effectively connected with a U.S. trade or business are not subject to the
withholding, but if the non-U.S. shareholder was an individual who was
physically present in the U.S. during the tax year for more than 182 days and
such shareholder is nonetheless treated as a nonresident alien, the
distributions would be subject to a 30% tax.
As of the date of this statement of additional information, the maximum
individual tax rate applicable to ordinary income is 39.6% (effective tax rates
may be higher for some individuals due to phase out of exemptions and
elimination of deductions); the maximum individual tax rate applicable to net
capital gain is 28%; and the maximum corporate tax applicable to ordinary
income and net capital gain is 35% (except that corporations with income in
excess of $100,000 for a taxable year will be required to pay an additional
income tax liability of up to $11,700 and corporations which have taxable
income in excess of $15,000,000 for a taxable year will be required to pay an
additional amount of tax of up to $100,000). Naturally, the amount of tax
payable by an individual will be affected by a combination of tax law rules
covering, E.G., deductions, credits, deferrals, exemptions, sources of income
and other matters. Under the Code, an individual is entitled to establish an
IRA each year (prior to the tax return filing deadline for the year) whereby
earnings on investments are tax-deferred. In addition, in some cases, the IRA
contribution itself may be deductible.
The foregoing is limited to a summary of federal taxation and should not be
viewed as a comprehensive discussion of all provisions of the Code relevant to
investors. Dividends and capital gain distributions may also be subject to
state or local taxes. Investors are urged to consult their tax advisers with
specific reference to their own tax situations.
PURCHASE OF SHARES
PRICE OF SHARES - Purchases of shares are made at the offering price next
determined after the purchase order is received by the fund or American Funds
Service Company (the Transfer Agent); this offering price is effective for
orders received by the Transfer Agent or the fund prior to the time of
determination of the net asset value and, in the case of orders placed with
dealers, accepted by the Principal Underwriter prior to its close of business.
The dealer is responsible for promptly transmitting purchase orders to the
Principal Underwriter. Orders received by the investment dealer, the Transfer
Agent, or the fund after the time of the determination of the net asset value
will be entered at the next calculated offering price. Prices which appear in
the newspaper are not always indicative of prices at which you will be
purchasing and redeeming shares of the fund, since such prices generally
reflect the previous day's closing price whereas purchases and redemptions are
made at the next calculated price.
The price you pay for shares, the offering price, is based on the net asset
value per share which is calculated once daily at the close of trading
(currently 4:00 p.m., New York time) each day the New York Stock Exchange is
open. The New York Stock Exchange is currently closed on weekends and on the
following holidays: New Year's Day, Presidents' Day, Good Friday, Memorial
Day, Independence Day, Labor Day, Thanksgiving and Christmas Day. The net
asset value per share is determined as follows:
1. Stocks, and convertible bonds and debentures, traded on the New York Stock
Exchange are valued at the last sale price on such exchange on the day of
valuation, or if there is no sale on the day of valuation, at the last-reported
bid price. Non-convertible bonds and debentures, and other long-term debt
securities normally are valued at prices obtained for the day of valuation from
a bond pricing service, when such prices are available; however, in
circumstances where the Investment Adviser deems it appropriate to do so, an
over-the-counter or exchange quotation may be used. U.S. Treasury bills, and
other short-term obligations issued or guaranteed by the U.S. Government, its
agencies or instrumentalities, certificates of deposit issued by banks,
corporate short-term notes and other short-term investments with original or
remaining maturities in excess of 60 days are valued at the mean of
representative quoted bid and asked prices for such securities or, if such
prices are not available, for securities of comparable maturity, quality and
type. Short-term securities with 60 days or less to maturity are amortized to
maturity based on their cost to the fund if acquired within 60 days of maturity
or, if already held by the fund on the 60th day, based on the value determined
on the 61st day. Other securities are valued on the basis of last sale or bid
prices in what is, in the opinion of the Investment Adviser, the broadest and
most representative market, which may be either a securities exchange or the
over-the-counter market. Where quotations are not readily available,
securities are valued at fair value as determined in good faith by the Board of
Directors. The fair value of all other assets is added to the value of
securities to arrive at the total assets;
2. There are deducted from total assets, thus determined, the liabilities,
including proper accruals of taxes and other expense items; and
3. The value of the net assets so obtained is then divided by the total
number of shares outstanding, and the result, rounded to the nearer cent, is
the net asset value per share.
STATEMENT OF INTENTION - The reduced sales charges and offering prices set
forth in the prospectus apply to purchases of $50,000 or more made within a
13-month period pursuant to the terms of a written statement of intention (the
Statement) in the form provided by the Principal Underwriter and signed by the
purchaser. The Statement is not a binding obligation to purchase the indicated
amount. When a shareholder signs a Statement in order to qualify for a reduced
sales charge, shares equal to 5% of the dollar amount specified in the
Statement will be held in escrow in the shareholder's account out of the
initial purchase (or subsequent purchases, if necessary) by the Transfer Agent.
All dividends and any capital gain distributions on shares held in escrow will
be credited to the shareholder's account in shares (or paid in cash, if
requested). If the intended investment is not completed within the specified
13-month period, the purchaser will be required to remit to the Principal
Underwriter the difference between the sales charge actually paid and the sales
charge which would have been paid if the total purchases had been made at a
single time. If the difference is not paid within 20 days after written
request by the Principal Underwriter or the securities dealer, the appropriate
number of shares will be redeemed to pay such difference. If the proceeds from
this redemption are inadequate, the purchaser will be liable to the Principal
Underwriter for the balance still outstanding. The Statement may be revised
upward at any time during the 13-month period, and such a revision will be
treated as a new Statement, except that the 13-month period during which the
purchase must be made will remain unchanged and there will be no retroactive
reduction of the sales charges paid on prior purchases.
In the case of purchase orders by the trustees of certain retirement plans by
payroll deduction, the sales charge for the investments made during the
13-month period will be handled as follows: The investment made the first
month of the 13-month period will be multiplied by 13 and then multiplied by
1.5. On the first investment and all other investments made pursuant to the
Statement, a sales charge will be assessed according to the sales charge
breakpoint thus determined. There will be no retroactive adjustments in sales
charges on investments previously made during the 13-month period.
DEALER COMMISSIONS - The following commissions will be paid to dealers who
initiate and are responsible for purchases of $1 million or more, for purchases
by any defined contribution plan qualified under Section 401(a) of the Internal
Revenue Code including a 401(k) plan with 200 or more eligible employees, and
for purchases made at net asset value by certain retirement plans of
organizations with collective retirement plan assets of $100 million or more:
1.00% on amounts to $2 million, 0.80% on amounts over $2 million to $3 million,
0.50% on amounts over $3 million to $50 million, 0.25% on amounts over $50
million to $100 million, and 0.15% on amounts over $100 million. The level of
dealer commissions will be determined based on sales made over a 12-month
period commencing from the date of the first sale at net asset value. See "The
American Funds Shareholder Guide" in the prospectus for more information.
SHAREHOLDER ACCOUNT SERVICES AND PRIVILEGES
AUTOMATIC INVESTMENT PLAN - The automatic investment plan enables shareholders
to make regular monthly or quarterly investments in shares through automatic
charges to their bank accounts. With shareholder authorization and bank
approval, the Transfer Agent will automatically charge the bank account for the
amount specified ($50 minimum), which will be automatically invested in shares
at the public offering price on or about the 10th day of the month (or on or
about the 15th day of the month in the case of accounts for retirement plans
for which Capital Guardian Trust Company serves as custodian or trustee). Bank
accounts will be charged on the day or a few days before investments are
credited, depending on the bank's capabilities, and shareholders will receive a
confirmation statement showing the current transaction. Participation in the
plan will begin within 30 days after receipt of the account application. If
the shareholder's bank account cannot be charged due to insufficient funds, a
stop-payment order or closing of the account, the plan may be terminated and
the related investment reversed. The shareholder may change the amount of the
investment or discontinue the plan at any time by writing to the Transfer
Agent.
AUTOMATIC WITHDRAWALS - Withdrawal payments are not to be considered as
dividends, yield or income. Automatic investments may not be made into a
shareholder account from which there are automatic withdrawals. Withdrawals of
amounts exceeding reinvested dividends and distributions and increases in share
value would reduce the aggregate value of the shareholder's account. The
Transfer Agent arranges for the redemption by the fund of sufficient shares,
deposited by the shareholder with the Transfer Agent, to provide the withdrawal
payment specified.
CROSS-REINVESTMENT OF DIVIDENDS AND DISTRIBUTIONS - A shareholder in one fund
may elect to cross-reinvest dividends or dividends and capital gain
distributions paid by that fund (the paying fund) into any other fund in The
American Funds Group (the receiving fund) subject to the following conditions:
(i) the aggregate value of the shareholder's account(s) in the paying fund(s)
must equal or exceed $5,000 (this condition is waived if the value of the
account in the receiving fund equals or exceeds that fund's minimum initial
investment requirement), (ii) as long as the value of the account in the
receiving fund is below that fund's minimum initial investment requirement,
dividends and capital gain distributions paid by the receiving fund must be
automatically reinvested in the receiving fund, and (iii) if this privilege is
discontinued with respect to a particular receiving fund, the value of the
account in that fund must equal or exceed the fund's minimum initial investment
requirement or the fund shall have the right, if the shareholder fails to
increase the value of the account to such minimum within 90 days after being
notified of the deficiency, automatically to redeem the account and send the
proceeds to the shareholder. These cross-reinvestments of dividends and
capital gain distributions will be at net asset value (without sales charge).
EXECUTION OF PORTFOLIO TRANSACTIONS
There are occasions on which portfolio transactions for the fund may be
executed as part of concurrent authorizations to purchase or sell the same
security for other of the funds served by the Investment Adviser, or for trust
or other accounts served by affiliated companies of the Investment Adviser.
Although such concurrent authorizations potentially could be either
advantageous or disadvantageous to the fund, they are effected only when the
Investment Adviser believes that to do so is in the interest of the fund. When
such concurrent authorizations occur, the objective is to allocate the
executions in an equitable manner. The fund will not pay a mark-up for
research in principal transactions.
The fund held certain debt and equity securities of three of its regular
brokers or dealers or their parents which included securities of Associates
Corp. of North America in the amount of $11,095,000, Ford Motor Credit Co. in
the amount of $51,023,000 and General Electric Capital Corp. in the amount of
$18,360,000 at December 31, 1994.
Brokerage commissions paid on portfolio transactions, including dealer
concessions on underwritings, during the years ended December 31, 1994, 1993,
and 1992 amounted to $2,714,000, $2,961,000, and $1,844,000, respectively.
GENERAL INFORMATION
CUSTODIAN OF ASSETS - Securities and cash owned by the fund, including proceeds
from the sale of shares of the fund and of securities in the fund's portfolio,
are held by State Street Bank and Trust Company, 225 Franklin Street, Boston,
MA 02101, as Custodian.
TRANSFER AGENT - American Funds Service Company, a wholly owned subsidiary of
the Investment Adviser, maintains the record of each shareholder's account,
processes purchases and redemptions of the fund's shares, acts as dividend and
capital gain distribution disbursing agent, and performs other related
shareholder service functions. When fund shares are purchased by an insurance
company separate account to serve as the underlying investment vehicle for
variable insurance contracts, the fund may pay a fee to the insurance company
or another party for performing certain transfer agent services with respect to
contract owners having interests in the fund.
INDEPENDENT ACCOUNTANTS - Deloitte & Touche LLP, 1000 Wilshire Boulevard, Los
Angeles, CA 90017, serves as the fund's independent auditors providing audit
services, preparation of tax returns and review of certain documents to be
filed with the Securities and Exchange Commission. The financial statements
included in this Statement of Additional Information from the Annual Report,
have been so included in reliance on the report of Deloitte & Touche LLP given
on the authority of said firm as experts in auditing and accounting. The
selection of the company's independent accountant is reviewed and determined
annually by the Board of Directors.
REMOVAL OF DIRECTORS BY SHAREHOLDERS - At any meeting of shareholders, duly
called and at which a quorum is present, the shareholders may, by the
affirmative vote of the holders of a majority of the votes entitled to be cast
thereon, remove any director or directors from office and may elect a successor
or successors to fill any resulting vacancies for the unexpired terms of
removed directors. The fund has made an undertaking, at the request of the
staff of the Securities and Exchange Commission, to apply the provisions of
section 16(c) of the 1940 Act with respect to the removal of directors as
though the fund were a common-law trust. Accordingly, the directors of the
fund shall promptly call a meeting of shareholders for the purpose of voting
upon the question of removal of any director when requested in writing to do so
by the record holders of not less than 10% of the outstanding shares.
REPORTS TO SHAREHOLDERS - The fund's fiscal year ends on December 31.
Shareholders are provided at least semi-annually with reports showing the
investment portfolio, financial statements and other information. The annual
financial statements are audited annually by the fund's independent
accountants, Deloitte & Touche LLP.
PERSONAL INVESTING POLICY - Capital Research and Management Company and its
affiliated companies have adopted a personal investing policy consistent with
Investment Company Institute guidelines. This policy includes: a ban on
acquisitions of securities pursuant to an initial public offering; restrictions
on acquisitions of private placement securities; pre-clearance and reporting
requirements; review of duplicate confirmation statements; annual
recertification of compliance with codes of ethics; disclosure of personal
holdings by certain investment personnel prior to recommendation for purchase
for the fund; blackout periods on personal investing for certain investment
personnel; ban on short-term trading profits for investment personnel;
limitations on service as a director of publicly traded companies; and
disclosure of personal securities transactions.
The financial statements including the investment portfolio and the report of
Independent Auditors contained in the Annual Report are included in this
Statement of Additional Information. The following information is not included
in the Annual Report:
<TABLE>
<CAPTION>
DETERMINATION OF NET ASSET VALUE, REDEMPTION PRICE AND
OFFERING PRICE PER SHARE--DECEMBER 31, 1994
<S> <C>
Net asset value and redemption price per share $ 17.50
(Net assets divided by shares outstanding)
Maximum offering price per share $ 18.57
(100/94.25 of net asset value per share which takes into
account the fund's current maximum sales charge)
</TABLE>
INVESTMENT RESULTS
The fund's yield is 2.51% based on a 30-day (or one month) period ended
December 31, 1994, computed by dividing the net investment income per share
earned during the period by the maximum offering price per share on the last
day of the period, according to the following formula:
YIELD = 2[(a-b/cd+1)/6/-1]
Where: a = dividends and interest earned during the period.
b = expenses accrued for the period (net of reimbursements).
c = the average daily number of shares outstanding during the period that were
entitled to receive dividends.
d = the maximum offering price per share on the last day of the period.
As of December 31, 1994, the fund's total return over the past twelve
months and average annual total returns over the past five and ten-year periods
were -4.51%, 8.73% and 14.08%, respectively. The average annual total return
(T) is computed by using the value at the end of the period (ERV) of a
hypothetical initial investment of $1,000 (P) over a period of years (n)
according to the following formula as required by the Securities and Exchange
Commission: P(1+T)/n/ = ERV.
To calculate total return, an initial investment is divided by the offering
price (which includes the sales charge) as of the first day of the period in
order to determine the initial number of shares purchased. Subsequent
dividends and capital gain distributions are then reinvested at net asset value
on the reinvestment date determined by the Board of Directors. The sum of the
initial shares purchased and shares acquired through reinvestment is multiplied
by the net asset value per share as of the end of the period in order to
determine ending value. The difference between the ending value and the
initial investment divided by the initial investment converted to a percentage
equals total return. The resulting percentage indicates the positive or
negative investment results that an investor would have experienced from
reinvested dividends and capital gain distributions and changes in share price
during the period. Total return may be calculated for one year, five years,
ten years and for other periods of years. The average annual total return over
periods greater than one year also may be computed by utilizing ending values
as determined above.
The following assumptions will be reflected in computations made in accordance
with the formula stated above: (1) deduction of the maximum sales load of
5.75% from the $1,000 initial investment; (2) reinvestment of dividends and
distributions at net asset value on the reinvestment date determined by the
Board; and (3) a complete redemption at the end of any period illustrated.
The fund may also, at times, calculate total return based on net asset value
per share (rather than the offering price), in which case the figure would not
reflect the effect of any sales charges which would have been paid if shares
were purchased during the period reflected in the computation. Consequently,
total return calculated in this manner will be higher. These total returns may
be calculated over periods in addition to those described above.
The fund may include information on its investment results and/or comparisons
of its investment results to various unmanaged indices (such as The Dow Jones
Average of 30 Industrial Stocks and The Standard and Poor's 500 Stock Composite
Index) or results of other mutual funds or investment or savings vehicles in
advertisements or in reports furnished to present or prospective shareholders.
Total return for the unmanaged indices will be calculated assuming reinvestment
of dividends and interest, but will not reflect any deductions for advisory
fees, brokerage costs or administrative expenses.
The fund may refer to results compiled by organizations such as CDA Investment
Technologies, Ibbotson Associates, Lipper Analytical Services and Wiesenberger
Investment Companies Services and by the U.S. Department of Commerce.
Additionally, the fund may, from time to time, refer to results published in
various newspapers or periodicals, including Barrons, Forbes, Fortune,
Institutional Investor, Kiplinger's Personal Finance Magazine, Money, U.S. News
and World Report and The Wall Street Journal.
The fund may, from time to time, illustrate the benefits of tax-deferral by
comparing taxable investments to investments made through tax-deferred
retirement plans.
The fund may, from time to time, compare its investment results with the
Consumer Price Index, which is a measure of the average change in prices over
time in a fixed market basket of goods and services (E.G. food, clothing, and
fuels, transportation, and other goods and services that people buy for
day-to-day living).
The investment results for the fund set forth below were calculated as
described in the fund's prospectus. The fund's results will vary from time to
time depending upon market conditions, the composition of the fund's portfolio
and operating expenses of the fund, so that any investment results reported by
the fund should not be considered representative of what an investment in the
fund may earn in any future period. These factors and possible differences in
calculation methods should be considered when comparing the fund's investment
results with those published for other mutual funds, other investment vehicles
and unmanaged indices. The fund's results also should be considered relative
to the risks associated with the fund's investment objective and policies.
THE FUND VS. VARIOUS UNMANAGED INDICES
<TABLE>
<CAPTION>
PERIOD FI DJIA/1/ S&P 500/2/
1/1 - 12/31 AVERAGE
SAVINGS
ACCOUNT/3/
<S> <C> <C> <C> <C>
1985 - 1994 +273% +349% +282% +77%
1984 - 1993 +290 +333 +301 +88
1983 - 1992 +316 +367 +346 +99
1982 - 1991 +406 +452 +404 +112
1981 - 1990 +284 +328 +267 +122
1980 - 1989 +396 +426 +402 +125
1979 - 1988 +345 +340 +352 +125
1978/#/ - 1987 +273 +265 +280 +118
</TABLE>
_____________
# From 7/31/78, the date Capital Research and Management Company became the
fund's Investment Adviser.
/1/ The Dow Jones Average of 30 Industrial Stocks is comprised of 30 industrial
companies such as General Motors and General Electric.
/2/ The Standard and Poor's 500 Stock Composite Index is comprised of
industrial, transportation, public utilities and financial stocks and
represents a large portion of the value of issues traded on the New York Stock
Exchange. Selected issues traded on the American Stock Exchange are also
included.
/3/ Based on figures supplied by the U.S. League of Savings Institutions and
the Federal Reserve Board which reflect all kinds of savings deposits,
including longer-term certificates. Savings accounts offer a guaranteed return
of principal, but no opportunity for capital growth. During a portion of the
period, the maximum rates paid on some savings deposits were fixed by law.
If you are considering the fund for an Individual Retirement Account...
<TABLE>
<CAPTION>
Here's how much you would have if you invested $2,000 a year in the fund
over the past 5 and 10 years and the period under CRMC management:
<S> <C> <C>
5 Years 10 Years Lifetime
(1/1/90 - 12/31/94) (1/1/85 - 12/31/94) (7/31/78 - 12/31/94)
$ 12,935 $ 127,135 SEE THE DIFFERENCE TIME CAN
$ 39,279 MAKE IN AN INVESTMENT
PROGRAM
</TABLE>
<TABLE>
<CAPTION>
If you had invested ...and taken all
$10,000 in the fund distributions in shares,
this many years ago... your investment would
have been worth this
much at December 31, 1994
| |
Periods Value**
Number of Years 1/1-12/31
<S> <C> <C>
1 1994 $ 9,549
2 1993 - 1994 11,284
3 1992 - 1994 12,431
4 1991 - 1994 16,211
5 1990 - 1994 15,198
6 1989 - 1994 19,537
7 1988 - 1994 22,654
8 1987 - 1994 23,503
9 1986 - 1994 28,682
10 1985 - 1994 37,345
11 1984 - 1994 39,507
12 1983 - 1994 49,830
13 1982 - 1994 66,794
14 1981 - 1994 66,007
15 1980 - 1994 80,011
16 1979 - 1994 92,339
Lifetime* 1981 - 1994 89,641
</TABLE>
* From July 31, 1978, the date Capital Research and Management Company became
the fund's Investment Adviser.
** Results assume deduction of the maximum sales charge of 5.75% from the
initial purchase payment.
ILLUSTRATION OF A $10,000 INVESTMENT IN THE FUND
WITH DIVIDENDS REINVESTED AND CAPITAL GAIN DISTRIBUTIONS TAKEN IN SHARES
(For the period under CRMC management: July 31, 1978 - December 31, 1994)
<TABLE>
<CAPTION>
COST OF SHARES VALUE OF SHARES**
Fiscal Annual Dividends Total From From From Total
Year End Dividends (cumulative) Investment Initial Capital Dividends Value
December 31 Cost Investment Gains Reinvested
Reinvested
<S> <C> <C> <C> <C> <C> <C> <C>
1978* $ 217 $ 217 $10,217 $ 8,947 -- $ 208 $ 9,155
1979 421 638 10,638 9,892 -- 664 10,556
1980 603 1,241 11,241 11,390 -- 1,417 12,807
1981 665 1,906 11,906 10,688 -- 1,966 12,654
1982 769 2,675 12,675 13,522 -- 3,435 16,957
1983 755 3,430 13,430 16,424 -- 4,965 21,389
1984 734 4,164 14,164 16,113 $ 841 5,666 22,620
1985 795 4,959 14,959 19,379 2,351 7,718 29,448
1986 894 5,853 15,853 19,177 8,262 8,502 35,941
1987 1,034 6,887 16,887 18,151 10,221 8,923 37,295
1988 1,328 8,215 18,215 19,703 12,464 11,079 43,246
1989 1,877 10,092 20,092 22,173 19,099 14,325 55,597
1990 1,678 11,770 21,770 19,325 18,712 14,093 52,130
1991 1,477 13,247 23,247 23,576 25,593 18,778 67,947
1992 1,655 14,902 24,902 23,644 30,728 20,499 74,871
1993 1,857 16,759 26,759 24,494 40,880 23,091 88,466
1994 2,171 18,930 28,930 23,617 41,632 24,392 89,641
</TABLE>
The dollar amount of capital gain distributions during the period was $37,175.
* From July 31, 1978, the date Capital Research and Management Company became
the fund's Investment Adviser.
** Results assume deduction of the maximum sales charge of 5.75% from the
initial purchase payment.
EXPERIENCE OF INVESTMENT ADVISER
Capital Research and Management Company manages nine common stock funds
that are at least 10 years old. In the rolling 10-year periods since 1964 (115
in all), those funds have had better total returns than the Standard and Poor's
500 Stock Composite Index in 94 of the 115 periods.
Note that past results are not an indication of future investment results.
Also, the fund has different investment policies than the funds mentioned
above. These results are included solely for the purpose of informing
investors about the experience and history of Capital Research and Management
Company.
DESCRIPTION OF BOND RATINGS
CORPORATE DEBT SECURITIES
MOODY'S INVESTORS SERVICE, INC. rates the long-term debt securities issued by
various entities from "Aaa" to "C".
"AAA -- Best quality. These securities carry the smallest degree of investment
risk and are generally referred to as "gilt edge." Interest payments are
protected by a large, or by an exceptionally stable margin and principal is
secure. While the various protective elements are likely to change, such
changes as can be visualized are most unlikely to impair the fundamentally
strong position of such issues."
"AA -- High quality by all standards. They are rated lower than the best bond
because margins of protection may not be as large as in Aaa securities,
fluctuation of protective elements may be of greater amplitude, or there may be
other elements present which make the long-term risks appear somewhat greater."
"A -- Upper medium grade obligations. These bonds possess many favorable
investment attributes. Factors giving security to principal and interest are
considered adequate, but elements may be present which suggest a susceptibility
to impairment sometime in the future."
"BAA -- Medium grade obligations. Interest payments and principal security
appear adequate for the present but certain protective elements may be lacking
or may be characteristically unreliable over any great length of time. Such
bonds lack outstanding investment characteristics and, in fact, have
speculative characteristics as well."
"BA -- Have speculative elements; future cannot be considered as well assured.
The protection of interest and principal payments may be very moderate and
thereby not well safeguarded during both good and bad times over the future.
Bonds in this class are characterized by uncertainty of position."
"B -- Generally lack characteristics of the desirable investment; assurance of
interest and principal payments or of maintenance of other terms of the
contract over any long period of time may be small."
"CAA -- Of poor standing. Issues may be in default or there may be present
elements of danger with respect to principal or interest."
"CA -- Speculative in a high degree; often in default or have other marked
shortcomings."
"C -- Lowest rated class of bonds; can be regarded as having extremely poor
prospects of ever attaining any real investment standing."
STANDARD & POOR'S CORPORATION rates the long-term securities debt of various
entities in categories ranging from "AAA" to "D" according to quality.
"AAA -- Highest rating. Capacity to pay interest and repay principal is
extremely strong."
"AA -- High grade. Very strong capacity to pay interest and repay principal.
Generally, these bonds differ from AAA issues only in a small degree."
"A -- Have a strong capacity to pay interest and repay principal, although they
are somewhat more susceptible to the adverse effects of change in circumstances
and economic conditions, than debt in higher rated categories."
"BBB -- Regarded as having adequate capacity to pay interest and repay
principal. These bonds normally exhibit adequate protection parameters, but
adverse economic conditions or changing circumstances are more likely to lead
to a weakened capacity to pay interest and repay principal than for debt in
higher rated categories."
"BB, B, CCC, CC, C -- Regarded, on balance, as predominantly speculative with
respect to capacity to pay interest and repay principal in accordance with the
terms of the obligation. BB indicates the lowest degree of speculation and C
the highest degree of speculation. While such debt will likely have some
quality and protective characteristics, these are outweighed by large
uncertainties or major risk exposures to adverse conditions."
"C1 -- Reserved for income bonds on which no interest is being paid."
"D -- In default and payment of interest and/or repayment of principal is in
arrears."
Financial Statements
FUNDAMENTAL INVESTORS, INC.
(TO BE FILED BY AMENDMENT)
FUNDAMENTAL INVESTORS, INC.
INVESTMENT PORTFOLIO - December 31, 1994
<TABLE>
<CAPTION>
Percent
Of
LARGEST INDIVIDUAL HOLDINGS Net Assets
<S> <C> <C> <C>
Time Warner 2.45%
Capital Cities/ABC 2.29
International Business Machines 2.27
Phillips Petroleum 1.93
News Corp. 1.90
Amoco 1.87
Caterpillar 1.69
Intel 1.64
Federal Express 1.50
Houston Industries 1.33
LARGEST INVESTMENT CATEGORIES
Services 23.89%
Capital Equipment 16.19
Consumer Goods 13.20
LARGEST INDUSTRY HOLDINGS
Broadcasting & Publishing 9.92%
Energy Sources 8.03
Business & Public Services 6.21
Banking 6.30
Data Processing & Reproduction 5.07
Shares Market Percent
or
EQUITY-TYPE SECURITIES Value Of
Principal
(common and preferred stocks and Amount (000) Net Assets
convertible debentures)
- ---------------------------------------------------- ---------- ---------- ----------
ENERGY
ENERGY SOURCES- 8.03%
Amoco Corp. 825,000 $48,778 1.87%
Atlantic Richfield Co. 325,000 33,069 1.27
British Petroleum Co. PLC (American Depositary
Receipts) (United Kingdom) 141,298 11,286 0.43
Cyprus Amax Minerals Co., convertible preferred,
Series A 100,000 5,800 0.22
Exxon Corp. 120,000 7,290 0.28
Norsk Hydro AS (American Depositary Receipts)(Norway) 375,000 14,672 0.56
Phillips Petroleum Co. 1,540,000 50,435 1.93
Royal Dutch Petroleum Co. (New York Registered
Shares) (Netherlands) 130,000 13,975 0.54
"Shell" Transport and Trading Co., PLC (United 50,000 3,269 0.13
Kingdom)
Sun Co., Inc. 194,500 5,592 0.21
Texaco Inc. 220,000 13,172 0.5
TOTAL, Class B (American Depositary Receipts)
(France) 80,000 2,360 0.09
UTILITIES: ELECTRIC & GAS- 3.93%
Detroit Edison Co. 700,000 18,288 0.7
Eastern Utilities Associates 640,000 14,080 0.54
Entergy Corp. 250,000 5,469 0.21
General Public Utilities Corp. 180,000 4,725 0.18
Houston Industries Inc. 975,000 34,734 1.33
Long Island Lighting Co. 350,000 5,381 0.2
Pacific Gas and Electric Co. 430,000 10,481 0.4
Texas Utilities Co. 306,970 9,823 0.37
----------- -----------
312,679 11.96
----------- -----------
MATERIALS
BUILDING MATERIALS & COMPONENTS- 0.46%
Cemex, SA, Class A (Mexico) 900,000 4,518
Cemex, SA, Class B 4.25% convertible debentures 1997 $9,210,000 7,368 0.46
CHEMICALS- 2.62%
Betz Laboratories, Inc. 200,000 8,850 0.34
Eastman Chemical Co. 600,000 30,300 1.16
BFGoodrich Co. 165,000 7,157 0.27
Imperial Chemical Industries PLC (American Depositary
Receipts) (United Kingdom) 200,000 9,300 0.36
Nalco Chemical Co. 220,000 7,370 0.28
PPG Industries, Inc. 150,000 5,569 0.21
FOREST PRODUCTS & PAPER- 0.91%
ITT Rayonier Inc. 300,000 9,150 0.35
Union Camp Corp. 310,000 14,609 0.56
METALS: NONFERROUS- 3.31%
Alumax Inc./1/ 300,000 8,512
Alumax Inc., convertible preferred, Series A 23,333 2,806 0.44
Aluminum Co. of America 335,000 29,019 1.11
Freeport-McMoRan Copper & Gold Inc., Class A 3,750 80 0
Inco Ltd.(Canada) 600,000 17,175 0.66
Phelps Dodge Corp. 465,900 28,828 1.1
METALS: STEEL- 0.44%
Armco Inc./1/ 600,000 3,975
Armco Inc., cumulative convertible preferred 150,000 7,500 0.44
MISCELLANEOUS MATERIALS & COMMODITIES- 1.24%
Freeport-McMoRan Inc. 100,000 1,775 0.07
Potash Corp. of Saskatchewan Inc. (Canada) 100,000 6,800 0.26
TRINOVA Corp. 800,000 23,500 0.91
----------- -----------
234,161 8.98
----------- -----------
CAPITAL EQUIPMENT
AEROSPACE & MILITARY TECHNOLOGY- 1.88%
Boeing Co. 385,000 17,999 0.69
E-Systems, Inc. 250,000 10,406 0.4
Litton Industries, Inc./1/ 255,900 9,468 0.36
United Technologies Corp. 180,000 11,318 0.43
DATA PROCESSING & REPRODUCTION- 5.07%
Adobe Systems Inc. 625,000 18,594 0.71
Apple Computer, Inc. 554,000 21,467 0.82
Compaq Computer Corp./1/ 110,000 4,345 0.17
Dell Computer Corp., convertible preferred,
Series A/2/ 27,600 4,699 0.18
Digital Equipment Corp./1/ 284,000 9,443 0.36
International Business Machines Corp. 805,000 59,167 2.27
Tandem Computers Inc./1/ 850,000 14,556 0.56
ELECTRICAL & ELECTRONICS- 0.71%
General Electric Co. 360,000 18,360 0.71
Hubbell Inc., Class B 500 27 0
ELECTRONIC COMPONENTS- 3.27%
Intel Corp. 675,000 42,947 1.64
Motorola, Inc. 370,000 21,414 0.82
Texas Instruments Inc. 279,564 20,932 0.81
ENERGY EQUIPMENT- 0.72%
Cooper Industries, Inc. 300,000 10,238 0.39
Western Atlas Inc./1/ 230,300 8,665 0.33
INDUSTRIAL COMPONENTS- 1.39%
Dana Corp. 300,000 7,012 0.27
Goodyear Tire & Rubber Co. 550,000 18,494 0.71
Rockwell International Corp. 300,000 10,725 0.41
MACHINERY & ENGINEERING- 3.15%
Case Corp. 500,000 10,750 0.41
Caterpillar Inc. 800,000 44,100 1.69
Deere & Co. 100,000 6,625 0.25
Parker Hannifin Corp. 260,000 11,830 0.45
Sundstrand Corp. 200,000 9,100 0.35
----------- -----------
422,681 16.19
----------- -----------
CONSUMER GOODS
AUTOMOBILES- 2.61%
Chrysler Corp., convertible preferred, Series A/2/ 100,000 13,687 0.52
Ford Motor Co., Class A 460,000 12,880
Ford Motor Co., cumulative convertible
preferred, Series A 108,000 9,936 0.87
General Motors Corp. 750,000 31,688 1.22
BEVERAGES & TOBACCO- 1.35%
PepsiCo, Inc. 160,000 5,800 0.22
Seagram Co. Ltd. (Canada) 1,000,000 29,500 1.13
FOOD & HOUSEHOLD PRODUCTS- 3.88%
Archer Daniels Midland Co. 537,862 11,093 0.42
Colgate-Palmolive Co. 300,000 19,013 0.73
CPC International Inc. 400,000 21,300 0.82
General Mills, Inc. 335,000 19,095 0.73
H.J. Heinz Co. 300,000 11,025 0.42
Procter & Gamble Co. 280,000 17,360 0.66
Sara Lee Corp. 100,000 2,525 0.1
HEALTH & PERSONAL CARE- 4.92%
Baxter International Inc. 450,000 12,713 0.49
Bristol-Myers Squibb Co. 240,000 13,890 0.53
Johnson & Johnson 370,000 20,257 0.78
Eli Lilly and Co. 200,000 13,125 0.5
Mckesson Corp. 125,000 4,078 0.16
Merck & Co., Inc. 625,000 23,828 0.91
Pfizer Inc. 425,000 32,831 1.26
Upjohn Co. 250,000 7,688 0.29
RECREATION & OTHER CONSUMER PRODUCTS- 0.44%
Eastman Kodak Co. 240,000 11,460 0.44
----------- -----------
344,772 13.2
----------- -----------
SERVICES
BROADCASTING & PUBLISHING- 9.92%
CBS Inc. 396,925 21,980 0.84
Capital Cities/ABC, Inc. 700,000 59,675 2.29
Multimedia, Inc./1/ 27,000 769 0.03
News Corp. Ltd. (American Depositary Receipts)
(Australia) 2,200,000 34,375
News Corp. Ltd., preferred shares (American Depositary
Receipts)/1/ 1,100,000 15,263 1.9
E.W. Scripps Co., Class A 500,000 15,125 0.58
Tele-Communications, Inc., Class A/1/ 1,004,015 21,837 0.84
Time Warner Inc. 1,824,000 64,068 2.45
Tribune Co. 475,000 26,006 0.99
BUSINESS & PUBLIC SERVICES- 6.30%
Avery Dennison Corp. 500,000 17,750 0.68
Dun & Bradstreet Corp. 575,000 31,625 1.21
Federal Express Corp./1/ 650,000 39,162 1.5
Humana Inc./1/ 1,000,000 22,625 0.87
Interpublic Group of Companies, Inc. 575,000 18,472 0.71
Omnicom Group Inc. 250,000 12,938 0.5
True North Communications, Inc.
(formerly Foote, Cone & Belding Communications, Inc.) 250,000 10,750 0.41
WMX Technlogies, Inc. 425,000 11,156 0.42
LEISURE & TOURISM- 1.22%
Circus Circus Enterprises/1/ 220,400 5,124 0.2
Walt Disney Co. 450,000 20,756 0.79
McDonald's Corp. 200,000 5,850 0.23
MERCHANDISING- 1.56%
Limited Inc. 600,000 10,875 0.42
May Department Stores Co. 300,000 10,125 0.39
Melville Corp. 200,000 6,175 0.24
Tandy Corp., preferred equity redemption
cumulative stock 350,000 13,213 0.51
TELECOMMUNICATIONS- 2.04%
Ameritech Corp. 106,500 4,300 0.16
AT&T Corp. 300,000 15,075 0.58
Bell Atlantic Corp. 125,000 6,219 0.24
MCI Communications Corp. 506,200 9,301 0.36
NYNEX Corp. 200,000 7,350 0.28
Sprint Corp. 400,000 11,050 0.42
TRANSPORTATION: AIRLINES- 1.37%
AMR Corp./1/ 350,000 18,638
AMR Corp., 6.125% convertible debentures 2024 $5,500,000 4,373 0.88
Delta Air Lines, Inc. 250,000 12,625 0.49
TRANSPORTATION: RAIL & ROAD- 1.48%
Chicago and North Western Holdings Corp./1/ 700,000 13,475 0.52
Conrail Inc. 320,000 16,160 0.62
Union Pacific Corp. 200,000 9,125 0.34
----------- -----------
623,385 23.89
----------- -----------
FINANCE
BANKING- 6.21%
AmSouth Bancorporation 630,000 16,223 0.62
Bank One Corp. 667,125 16,928 0.65
Citicorp 700,000 28,963
Citicorp, convertible preferred, Series 13 27,000 3,085 1.23
CoreStates Financial Corp 500,000 13,000 0.5
First Fidelity Bancorporation 550,000 24,681 0.95
First Interstate Bancorp 430,000 29,079 1.11
NBD Bancorp, Inc. 202,800 5,552 0.21
Norwest Corp. 900,000 21,037 0.81
PNC Bank Corp 160,000 3,380 0.13
FINANCIAL SERVICES- 0.92%
American Express Co. 280,000 8,260 0.32
Federal National Mortgage Assn. 215,000 15,668 0.6
INSURANCE- 1.10%
Allstate Corp. 330,000 7,796 0.3
American International Group, Inc. 72,500 7,105 0.27
SAFECO Corp. 230,000 11,960 0.46
TIG Holdings, Inc. 100,000 1,875 0.07
----------- -----------
214,592 8.23
----------- -----------
MULTI-INDUSTRY
MULTI-INDUSTRY- 2.36%
CITIC Pacific Ltd. (Hong Kong) 7,000,000 16,873 0.65
Hanson PLC (American Depositary
Receipts) (United Kingdom) 400,000 7,200 0.28
Harsco Corp. 75,000 3,066 0.12
Tenneco Inc. 200,000 8,500 0.32
Textron Inc. 525,000 26,447 0.99
----------- -----------
62,086 2.36
----------- -----------
MISCELLANEOUS
Other equity-type securities in initial period
of acquisition 130,830 5.01
----------- -----------
TOTAL EQUITY-TYPE SECURITIES (cost: $2,047,609,000) 2,345,186 89.82
----------- -----------
Principal
Amount
Bonds & Notes (000)
- ----------------------------------------------------- ---------- ---------- -----------
INDUSTRIALS - 2.42%
Adelphia Communications Corp. 12.50% 2002 $19,000 17,765 0.68
Cablevision System Corp. 9.875% 2013 10,000 9,000
Cablevision System Corp. 9.875% 2023 21,850 19,228 1.08
News America Holdings Inc. 12.00% 2001 10,000 11,111 0.43
Time Warner Inc. 10.15% 2012 6,000 6,038 0.23
---------- ----------
63,142 2.42
---------- ----------
U.S. TREASURY OBLIGATIONS- 2.07%
7.00% 1996 20,000 19,800 0.76
6.375% 1997 15,000 14,538 0.56
6.875% 1997 20,000 19,638 0.75
---------- ----------
53,976 2.07
---------- ----------
TOTAL BONDS & NOTES (cost: $125,482,000) 117,118 4.49
---------- ----------
SHORT-TERM SECURITIES
- ----------------------------------------------------
CORPORATE SHORT-TERM NOTES-5.33%
AT&T Corp. 5.43%-5.48% due 1/4-1/5/95 5,300 5,296 0.21
Anheuser-Busch Companies, Inc. 5.98% due 1/18/95 5,000 4,985 0.19
Associates Corp. of North America 5.90% due 1/3/95 11,100 11,095 0.42
Chevron Transport Corp. 5.64% due 1/20/95 3,500 3,489 0.13
Duke Power Co. 5.95% due 1/12/95 13,500 13,473 0.52
Ford Motor Credit Co. 5.82%-6.05% due 1/9-1/23/95 28,300 28,207 1.07
H.J. Heinz Co. 5.70%-6.05% due 1/19-2/1/95 37,800 37,603 1.44
National Rural Utilities Cooperative Finance Corp.
5.85%-6.05% due 1/13-1/23/95 25,000 24,930 0.95
J.C. Penney Funding Corp. 5.92% due 1/17/95 10,000 9,972 0.4
---------- ----------
TOTAL SHORT-TERM SECURITIES (cost: $139,050,000) 139,050 5.33
---------- ----------
TOTAL INVESTMENT SECURITIES (cost: $2,312,141,000) 2,601,354 99.64
Excess of cash and receivables over payables 9,716 0.36
---------- ----------
NET ASSETS $2,611,070 100%
========== ==========
1 Non-income-producing securities
2 Purchased in a private placement transaction;
resale potential extends to qualified institutional
buyers.
See Notes to Financial Statements
EQUITY-TYPE SECURITIES APPEARING IN
THE PORTFOLIO SINCE JUNE 30, 1994
Adobe Systems
Atlantic Richfield
Case
Cemex
Circus Circus Enterprises
E-Systems
Exxon
General Mills
Goodyear Tire & Rubber
Harsco
H.J. Heinz
Hubbell
Humana
Imperial Chemical Industries
Interpublic Group
McDonald's
McKesson
Norsk Hydro
Norwest
Pfizer
Potash Corp. of Saskatchewan
E.W. Scripps
"Shell" Transport and Trading
TOTAL
TRINOVA
EQUITY-TYPE SECURITIES ELIMINATED FROM
THE PORTFOLIO SINCE JUNE 30, 1994
American Cyanamid
ITT
Kmart
Mobil
Tektronix
UNUM
</TABLE>
Fundamental Investors, Inc.
Financial Statements
<TABLE>
<CAPTION>
<S> <C> <C>
Statement of Assets and Liabilities (dollars in thousands)
at December 31, 1994
- ---------------------------------------- ------------ ------------
Assets:
Investment securities at market
(cost: $2,312,141) $2,601,354
Cash 109
Receivables for--
Sales of investments $7,645
Sales of fund's shares 9,404
Dividends and accrued interest 8,058 25,107
------------ ------------
2,626,570
Liabilities:
Payables for--
Purchases of investments 6,864
Repurchases of fund's shares 7,482
Management services 742
Accrued expenses 412 15,500
------------ ------------
Net Assets at December 31, 1994-
Equivalent to $17.50 per share on
149,243,612 shares of $1 par value
capital stock outstanding (authorized
capital stock--150,000,000 shares) $2,611,070
=============
Statement of Operations
for the year ended December 31, 1994 (dollars in thousands)
------------ ------------
Investment Income:
Income:
Dividends $52,031
Interest 19,959 $71,990
------------
Expenses:
Management services fee 7,967
Distribution expenses 4,509
Transfer agent fee 1,662
Reports to shareholders 262
Registration statement and prospectus 309
Postage, stationery and supplies 468
Directors' fees 84
Auditing and legal fees 44
Custodian fee 246
Taxes other than federal income tax 1
Other expenses 36 15,588
------------ ------------
Net investment income 56,402
------------
Realized Gain and Unrealized
Appreciation on Investments:
Net realized gain 82,430
Net change in unrealized
appreciation on investments:
Beginning of year 399,479
End of year 289,213
Net unrealized depreciation ------------
on investments (110,266)
Net realized gain and unrealized ------------
depreciation on investments: (27,836)
Net Increase in Net Assets Resulting ------------
from Operations $28,566
============
Statement of Changes in Net
Assets (dollars in thousands)
- ---------------------------------------- ------------- -------------
Year ended Year ended
December 31, December 31,
1994 1993
Operations: ------------- -------------
Net investment income $56,402 $41,515
Net realized gain on investments 82,430 199,868
Net unrealized appreciation
(depreciation) on investments (110,266) 40,449
------------- -------------
Net increase in net assets
resulting from operations 28,566 281,832
------------- -------------
Dividends and Distributions Paid to
Shareholders:
Dividends from net investment income (56,692) (38,995)
Distributions from net realized
gain on investments (61,479) (194,776)
------------- -------------
Total dividends and distributions (118,171) (233,771)
------------- -------------
Capital Share Transactions:
Proceeds from shares sold:
51,307,623 and 28,082,944
shares, respectively 922,115 523,560
Proceeds from shares issued in
reinvestment of net investment income
dividends and distributions of net
realized gain on investments:
5,849,294 and 11,380,691 shares,
respectively 103,581 202,508
Cost of shares repurchased:
16,975,145 and 12,596,570
shares, respectively (304,324) (234,571)
Net increase in net assets resulting ------------- -------------
from capital share transactions 721,372 491,497
------------- -------------
Total Increase in Net Assets 631,767 539,558
Net Assets:
Beginning of year 1,979,303 1,439,745
End of year (including undistributed ------------- -------------
net investment income: $5,226 and
$5,516, respectively $2,611,070 $1,979,303
============= =============
</TABLE>
See Notes to Financial Statements
NOTES TO FINANCIAL STATEMENTS
FUNDAMENTAL INVESTORS, INC.
1. Fundamental Investors, Inc. (the "fund") is registered under the Investment
Company Act of 1940 as an open-end, diversified management investment company.
The following paragraphs summarize the significant accounting policies
consistently followed by the fund in the preparation of its financial
statements:
Equity-type are stated at market value based upon closing sales prices
reported on recognized securities exchanges on the last business day of the
year or, for listed securities having no sales reported and for unlisted
securities, upon last-reported bid prices on that date. Bonds and notes are
valued at prices obtained from a bond-pricing service provided by a major
dealer in bonds, when such prices are available; however, in circumstances
where the investment adviser deems it appropriate to do so, such securities
will be valued at the mean of their representative quoted bid and asked prices
or, if such prices are not available, at the mean of such prices for securities
of comparable maturity, quality, and type. Short-term securities with original
or remaining maturities in excess of 60 days are valued at the mean of their
quoted bid and asked prices. Short-term securities with 60 days or less to
maturity are valued at amortized cost. Securities for which market quotations
are not readily available are valued at fair value as determined in good faith
by the Valuation Committee of the Board of Directors.
As is customary in the mutual fund industry, securities transactions are
accounted for on the date the securities are purchased or sold. Realized gains
and losses from securities transactions are reported on an identified cost
basis. Dividend and interest income is reported on the accrual basis.
Discounts on securities purchased are amortized over the life of the respective
securities. The fund does not amortize premiums on securities purchased.
Dividends and distributions paid to shareholders are recorded on the
ex-dividend date.
Investment securities and other assets and liabilities denominated in
non-U.S. currencies are recorded in the financial statements after translation
into U.S. dollars utilizing rates of exchange on the last business day of the
year. Purchases and sales of investment securities, income and expenses are
calculated using the prevailing exchange rate as accrued. The fund does not
identify the portion of each amount shown in the fund's Statement of Operations
under the caption "Realized Gain and Unrealized Appreciation on Investments"
that arises from changes in non-U.S. currency exchange rates.
Pursuant to the custodian agreement, the fund receives credits against its
custodian fee for imputed interest on certain balances with the custodian bank.
The custodian fee of $246,000 includes $11,000 that was paid by these credits
rather than in cash.
2. It is the fund's policy to continue to comply with the requirements of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its net taxable income, including any net realized gain on
investments, to its shareholders. Therefore, no federal income tax provision
is required.
As of December 31, 1994, net unrealized appreciation on investments for book
and federal income tax purposes aggregated $289,213,000, of which $367,262,000
related to appreciated securities and $78,049,000 related to depreciated
securities. There was no difference between book and tax realized gains on
securities transactions for the year ended December 31, 1994. The cost of
portfolio securities for book and federal income tax purposes was
$2,312,141,000 at December 31, 1994.
3. The fee of $7,967,000 for management services was paid pursuant to an
agreement with Capital Research and Management Company (CRMC), with which
certain officers and Directors of the fund are affiliated. The Investment
Advisory and Service Agreement provides for monthly fees, accrued daily, based
on an annual rate of 0.39% of the first $800 million of average net assets;
0.336% of such assets in excess of $800 million but not exceeding $1.8 billion;
0.30% of such assets in excess of $1.8
billion but not exceeding $3.0 billion; and 0.276% of such assets in excess of
$3.0 billion.
Pursuant to a Plan of Distribution, the fund may expend up to 0.25% of its
average net assets annually for any activities primarily intended to result in
sales of fund shares, provided the categories of expenses for which
reimbursement is made are approved by the fund's Board of Directors. Fund
expenses under the Plan include payments to dealers to compensate them for
their selling and servicing efforts. During the period ended December 31,
1994, distribution expenses under the Plan were $4,509,000. As of December 31,
1994, accrued and unpaid distribution expenses were $311,000.
American Funds Service Company (AFS), the transfer agent for the fund, was paid
a fee of $1,662,000. American Funds Distributors, Inc.(AFD), the principal
underwriter of the fund's shares, received $3,299,000 (after allowances to
dealers) as its portion of the sales charges paid by purchasers of the fund's
shares. Such sales charges are not an expense of the fund and, hence, are not
reflected in the accompanying statement of operations.
Directors of the fund who are unaffiliated with CRMC may elect to defer part or
all of the fees earned for services as members of the board. Amounts deferred
are not funded and are general unsecured liabilities of the fund. As of
December 31, 1994, aggregate amounts deferred were $58,000.
CRMC is owned by The Capital Group Companies, Inc. AFS and AFD are both wholly
owned subsidiaries of CRMC. Certain Directors and officers of the fund are or
may be considered to be affiliated with CRMC, AFS, and AFD. No affiliated
officers, Director's or employees of CRMC received any remuneration directly
from the fund.
4. As of December 31, 1994, accumulated undistributed net realized gain on
investments was $29,878,000 and additional paid-in capital was $2,137,509,000.
The fund made purchases and sales of investment securities, excluding
short-term securities, of $1,090,690,000 and $484,974,000, respectively, during
the year ended December
31, 1994.
PER-SHARE DATA AND RATIOS
<TABLE>
<CAPTION>
Year ended December 31
-------- -------- -------- -------- ---------
- -
1994 1993 1992 1991 1990
-------- -------- -------- -------- ---------
- -
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning
of Year $18.15 $17.52 $17.47 $14.32 $16.43
-------- -------- -------- -------- ---------
- -
Income from Investment
Operations:
Net investment income 0.42 0.44 0.44 0.41 0.48
Net realized and unrealized
gain (loss) on investments (0.18) 2.65 1.27 3.82 (1.52)
Total income from investment -------- -------- -------- -------- ---------
- -
operations 0.24 3.09 1.71 4.23 (1.04)
-------- -------- -------- -------- ---------
- -
Less Distributions:
Dividends from net investment
income (0.44) (0.43) (0.42) (0.4) (0.49)
Distributions from net realized
gains (0.45) (2.03) (1.24) (0.68) (0.58)
-------- -------- -------- -------- ---------
- -
Total distributions (0.89) (2.46) (1.66) (1.08) (1.07)
-------- -------- -------- -------- ---------
- -
Net Asset Value, End of Year $17.50 $18.15 $17.52 $17.47 $14.32
======== ======== ======== ======== =========
= =
Total Return* 18.16% 10.19% 30.34% (6.24)%
1.33%
Ratios/Supplemental Data:
Net assets, end of period
(in millions) $2,611 $1,979 $1,440 $1,156 $823
Ratio of expenses to average
net assets .68% .65% .65% .69% .70%
Ratio of net income to
average net assets 2.45% 2.43% 2.56% 2.50% 3.15%
Portfolio turnover rate 23.02% 29.22% 23.98% 17.07% 11.92%
</TABLE>
*This was calculated without deducting a sales charge. The maximum sales
charge is 5.75% of the fund's offering price.
Independent Auditors' Report
To the Board of Directors and Shareholders of
Fundamental Investors, Inc.
We have audited the accompanying statement of
liabilities, including the investment portfolio, of
Fundamental Investors, Inc. ("the fund") as of December 31, 1994,
the related statements of operations for the year
then ended and of changes in net assets for the years
ended December 31, 1994 and 1993, and the per-share
data and ratios for each of the five years in the period
ended December 31, 1994. These financial statements and the
per-share data and ratios are the responsibility of the
fund's management. Our responsibility is to express an
opinion on these financial statements and the per-share
data and ratios based on our audits. The per-share data and
ratios for the year ended December 31, 1990 were audited by
other auditors whose report dated January 25, 1991 expressed
an unqualified opinion on the per-share data and ratios.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that
we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and the
per-share data and ratios are free of material
misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included
confirmation of securities owned at December 31, 1994 by
correspondence with the custodian and brokers; where replies
were not received from brokers, we performed other procedures.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as
evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, the financial statements referred to above and the
per-share data and ratios for each of the four years in the period ended
December 31, 1994 present fairly, in all material respects, the financial
position of Fundamental Investors, Inc. at December 31, 1994, and the
results of its operations, the changes in its net assets
and the per-share data and ratios for the respective
stated years, in conformity with generally accepted
accounting principles.
Los Angeles, California
January 27, 1995
Tax Information (unaudited)
- -----------------------------------------------------------------------------
During the fiscal year ended December 31, 1994, 78% of the dividends
paid by the fund from investment income earned qualified for
the corporate dividends-received deduction. Of those dividends paid,
4% were derived from interest on direct U.S. Treasury
obligations.
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(A) FINANCIAL STATEMENTS:
Included in Prospectus - Part A
Financial Highlights (TO BE PROVIDED BY AMENDMENT)
Included in statement of additional information - Part B (TO BE PROVIDED BY
AMENDMENT)
Statement of Assets and Liabilities Per Share Data and Ratios
Statement of Operations Notes to Financial Statements
Statement of Changes in Net Assets Report of Independent Accountants
(B) EXHIBITS
1. On file (see SEC file nos. 811-32 and 2-10760)
2. On file (see SEC file nos. 811-32 and 2-10760)
3. None
4. On file (see SEC file nos. 811-32 and 2-10760)
5. On file (see SEC file nos. 811-32 and 2-10760)
6. Form of Bank Selling Group Agreement
7. None
8. On file (see SEC file nos. 811-32 and 2-10760)
9. On file (see SEC file nos. 811-32 and 2-10760)
10. Not applicable to this filing
11. Consent of Independent Accountants (TO BE PROVIDED BY AMENDMENT)
12. None
13. None
14. On file (see SEC file nos. 811-32 and 2-10760)
15. On file (see SEC file nos. 811-32 and 2-10760)
16. Updates to previously filed schedule for computation of each performance
quotation provided in the Registration Statement in response to Item 22 (see
SEC file nos. 811-32 and 2-10760)
(TO BE PROVIDED BY AMENDMENT)
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
None.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES.
<TABLE>
<CAPTION>
As of December 31, 1994
<S> <C>
Title of Class Number of Record-Holders
Common Stock 206,892
($1.00 Par Value)
</TABLE>
ITEM 27. INDEMNIFICATION.
The registrant is a joint-insured under an Investment Adviser/Mutual Fund
Errors and Omissions Policy. The carrier of the primary policy in the amount
of $15 million is American International Surplus Lines Insurance Company and it
has a $250,000 deductible. The carrier of the secondary policy in the amount
of $10 million is Chubb Custom Insurance Company. The carrier of the excess
policy in the amount of $20 million is ICI Mutual Insurance Company.
The fund's Articles of Incorporation state:
The Corporation shall indemnify (1) its directors and officers, whether
serving the Corporation or at its request any other entity, to the full extent
required or permitted by the General Laws of the State of Maryland now or
hereafter in force, including the advance of expenses under the procedures and
to the full extent permitted by law, and (2) its other employees and agents to
such extent as shall be authorized by the Board of Directors or the
Corporation's By-Laws and be permitted by law. The foregoing rights of
indemnification shall not be exclusive of any other rights to which those
seeking indemnification may be entitled. The Board of Directors may take such
action as is necessary to carry out these indemnification provisions and is
expressly empowered to adopt, approve and amend from time to time such by-laws,
resolutions or contracts implementing such provisions or such further
indemnification arrangements as may be permitted by law. No amendment of this
Charter of the Corporation shall limit or eliminate the right to
indemnification provided hereunder with respect to acts or omissions occurring
prior to such amendment or repeal. Nothing contained herein shall be construed
to authorize the Corporation to indemnify any director or officer of the
Corporation against any liability to the Corporation or to any holders of
securities of the Corporation to which he is subject by reason of willful
misfeasance, bad faith, gross negligence, or reckless disregard of the duties
involved in the conduct of his office. Any indemnification by the Corporation
shall be consistent with the requirements of law, including the Investment
Company Act of 1940.
To the fullest extent permitted by Maryland statutory and decisional law and
the 1940 Act, as amended or interpreted, no director or officer of the
Corporation shall be personally liable to the Corporation or its stockholders
for money damages; provided, however, that nothing herein shall be construed to
protect any director or officer of the Corporation against any liability to
which such director or officer would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence, or reckless disregard of the duties
involved in the conduct of his office. No amendment, modification or repeal of
this Article VIII shall adversely affect any right or protection of a director
or officer that exists at the time of such amendment, modification or repeal.
Section 2-418 (b) of The Annotated Code of Maryland states:
Permitted indemnification of director:
1. A corporation may indemnify any director made a party to any proceeding
by reason of service in that capacity unless it is established that:
(i) The act or omission of the director was material to the matter giving
rise to the proceeding; and
1. Was committed in bad faith; or
2. Was the result of active and deliberate dishonesty; or
(ii) The director actually received an improper personal benefit in money,
property, or services; or
(iii) In the case of any criminal proceeding, the director had reasonable
cause to believe that the act or omission was unlawful.
2. (i) Indemnification may be against judgments, penalties, fines,
settlements, and reasonable expenses actually incurred by the director in
connection with the proceeding.
(ii) However, if the proceeding was one by or in the right of the
corporation, indemnification may not be made in respect of any proceeding in
which the director shall have been adjudged to be liable to the corporation.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER.
None.
ITEM 29. PRINCIPAL UNDERWRITERS.
(a) American Funds Distributors, Inc. is also the Principal Underwriter of
shares of: AMCAP Fund, Inc., American Balanced Fund, Inc., The American Funds
Income Series, The American Funds Tax-Exempt Series I, The American Funds
Tax-Exempt Series II, American High-Income Municipal Bond Fund, Inc., American
High-Income Trust, American Mutual Fund, Inc., The Bond Fund of America, Inc.,
Capital Income Builder, Inc., Capital World Bond Fund, Inc., Capital World
Growth and Income Fund, Inc., The Cash Management Trust of America, EuroPacific
Growth Fund, The Growth Fund of America, Inc., The Income Fund of America,
Inc., Intermediate Bond Fund of America, The Investment Company of America,
Limited Term Tax-Exempt Bond Fund of America, The New Economy Fund, New
Perspective Fund, Inc., SMALLCAP World Fund, Inc., The Tax-Exempt Bond Fund of
America, Inc., The Tax-Exempt Money Fund of America, The U.S. Treasury Money
Fund of America and Washington Mutual Investors Fund, Inc.
ITEM 29. PRINCIPAL UNDERWRITERS. (cont.)
<TABLE>
<CAPTION>
(B) (1) (2) (3)
NAME AND PRINCIPAL POSITIONS AND OFFICES POSITIONS AND OFFICES
BUSINESS ADDRESS WITH UNDERWRITER WITH REGISTRANT
<S> <C> <C> <C>
# David L. Abzug Assistant Vice President None
Robert B. Aprison Regional Vice President None
2983 Bryn Wood Drive
Madison, WI 53711
# Richard Armstrong Assistant Vice President None
* William W. Bagnard Vice President None
Steven L. Barnes Vice President None
8000 Town Line Avenue South
Suite 204
Minneapolis, MN 55438
Michelle A. Bergeron Regional Vice President None
1190 Rockmart Circle
Kennesaw, GA 30144
Joseph T. Blair Vice President None
27 Drumlin Road
West Simsbury, CT 06092
Ian B. Bodell Regional Vice President None
5900 Robert E. Lee Court
Nashville, TN 37215
Michael L. Brethower Vice President None
108 Hagen Court
Georgetown, TX 78628
C. Alan Brown Regional Vice President None
4619 McPherson Avenue
St. Louis, MO 63108
* Daniel C. Brown Director, Sr. Vice President None
@ J. Peter Burns Vice President None
Brian C. Casey Regional Vice President None
9508 Cable Drive
Kensington, MO 20895
Victor C. Cassato Vice President None
999 Green Oaks Drive
Littleton, CO 80121
Christopher J. Cassin Regional Vice President None
231 Burlington
Clarendon Hills, IL 60514
* Larry P. Clemmensen Director, Treasurer None
* Kevin G. Clifford Senior Vice President None
Ruth M. Collier Vice President None
145 West 67th St. Ste. 12K
New York, NY 10023
Thomas E. Cournoyer Vice President None
2333 Granada Boulevard
Coral Gables, FL 33134
Douglas A. Critchell Vice President None
1230 31st Street
Washington, DC 20007
* Carl D. Cutting Vice President None
Michael A. Dilella Vice President None
P.O. Box 661
Ramsey, NJ 07446
G. Michael Dill Vice President None
3622 E. 87th Street
Tulsa, OK 74137
Kirk D. Dodge Vice President None
2617 Salisbury Road
Ann Arbor, MI 48103
Peter J. Doran Sr. Vice President None
1205 Franklin Avenue
Garden City, NY 11530
* Michael J. Downer Secretary None
Robert W. Durbin Vice President None
74 Sunny Lane
Tiffin, OH 44883
% Lloyd G. Edwards Vice President None
@ Richard A. Eychner Vice President None
* Paul H. Fieberg Sr. Vice President None
John Fodor Regional Vice President None
5 Marlborough Street, Suite 51
Boston, MA 02116
Steven S. Fogerty Regional Vice President None
535 Spring Club Drive
Altamonte Springs, FL 32714
* Mark P. Freeman, Jr. Director, President None
Clyde E. Gardner Vice President None
Route 2, Box 3162
Osage Beach, MO 65065
# Evelyn K. Glassford Vice President None
Jeffrey J. Greiner Regional Vice President None
5898 Heather Glen Court
Dublin, OH 43017
* Paul G. Haaga, Jr. Director Sr. Vice President
David E. Harper Vice President None
R.D. 1, Box 210, Rte 519
Baptistown, NJ 08825
Ronald R. Hulsey Regional Vice President None
6744 Avalon
Dallas, TX 75214
* Robert L. Johansen Vice President, Controller None
* V. John Kriss Sr. Vice President None
Arthur J. Levine Vice President None
12558 Highlands Place
Fishers, IN 46038
# Karl A. Lewis Assistant Vice President None
T. Blake Liberty Regional Vice President None
12585-E East Tennessee Circle
Aurora, CO 80012
# Heather A. Maier Assistant Vice President - None
Institutional Investment Services
Division
Stephen A. Malbasa Regional Vice President None
13405 Lake Shore Blvd.
Cleveland, OH 44110
Steven M. Markel Vice President None
5241 South Race Street
Littleton, CO 90121
* John C. Massar Vice President None
E. Lee McClennahan Vice President None
4445 N. Highway AIA, Ste.
232
Vero Beach, FL 32963
Laurie B. McCurdy Regional Vice President None
5200 Valley View Road
Edina, MN 55436
& John V. McLaughlin Senior Vice President None
Terry W. McNabb Vice President None
2002 Barrett Station Road
St. Louis, MO 63131
* R. William Melinat Vice President - Institutional None
Investment Services Division
Patrick J. Miller Vice President None
5304 Clipper Cove Road
Midlothian, VA 23112
David R. Murray Regional Vice President None
25701 S.E. 32nd Place
Issaquah, WA 98027
Stephen S. Nelson Vice President None
7215 Trevor Court
Charlotte, NC 28226
* Barbara G. Nicholich Assistant Vice President - None
Institutional Investment Services
Division
Fredric Phillips Regional Vice President None
32 Ridge Avenue
Newton Centre, MA 02159
Steven J. Reitman Vice President None
212 The Lane
Hinsdale, IL 60521
Brian A. Roberts Regional Vice President None
12025 Delmahoy Drive
Charlotte, NC 28277
* George L. Romine Vice President - Institutional None
Investment Services Division
George S. Ross Vice President None
55 Madison Avenue
Morristown, NJ 07962
* Julie D. Roth Vice President None
* Christopher Rowey Regional Vice President None
Dean B. Rydquist Vice President None
155 Willow Brook Drive
Roswell, GA 30076
Richard R. Samson Vice President None
4604 Glencoe Avenue, No. 4
Marina del Rey, CA 90292
* R. Michael Shanahan Chairman of the Board Director
David W. Short Vice President None
1000 RIDC Plaza, Ste 212
Pittsburgh, PA 15238
* Victor S. Sidhu Vice President - Institutional None
Investment Services Division
William P. Simon, Jr. Vice President None
554 Canterbury Lane
Berwyn, PA 19312
* John C. Smith Assistant Vice President - None
Institutional Investment Services
Division
# Mark S. Smith Director, Sr. Vice President None
Rodney G. Smith Regional Vice President None
2350 Lakeside Blvd., #850
Richardson, TX 75082
Daniel S. Spradling Senior Vice President None
#4 West Fourth Avenue, Suite
406
San Mateo, CA 94402
Craig R. Strauser Regional Vice President None
308 S. Eagle Nest Lane
Danville, CA 94506
# James P. Toomey Assistant Vice President None
% Christopher E. Trede Assistant Vice President None
George F. Truesdail Vice President None
400 Abbotsford Court
Charlotte, NC 28270
Scott W. Ursin-Smith Regional Vice President None
606 Glenwood Avenue
Mill Valley, CA 94941
@ Andrew J. Ward Vice President None
* David M. Ward Assistant Vice President - None
Institutional Investment Services
Division
Thomas E. Warren Regional Vice President None
1231 Starboard Lane
Sarasota, FL 34242
@ J. Kelly Webb Sr. Vice President None
Gregory J. Weimer Regional Vice President None
125 Surrey Drive
Canonsburg, PA 15317
# Timothy W. Weiss Director None
** N. Dexter Williams Vice President None
Timothy J. Wilson Regional Vice President None
113 Farmview Place
Venetia, PA 15367
* Marshall D. Wingo Sr. Vice President None
* Robert L. Winston Director, Sr. Vice President None
William Yost Regional Vice President None
9320 Overlook Trail
Eden Prairie, MN 55347
Janet M. Young Regional Vice President None
1616 Vermont
Houston, TX 77006
</TABLE>
* Business Address, 333 South Hope Street, Los Angeles, CA 90071
** Business Address, Four Embarcadero Center, Suite 1800, San Francisco, CA
94111
# Business Address, 135 South State College Boulevard, Brea, CA 92621
& Business Address, 8000 IH-10, Suite 1400, San Antonio, TX 78230
@ Business Address, 5300 Robin Hood Road, Norfolk, VA 23513
% Business Address, 8332 Woodfield Crossing Blvd., Indianapolis, IN 46240
(c) None.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS.
Accounts, books and other records required by Rules 31a-1 and 31a-2 under the
Investment Company Act of 1940, are maintained and held in the offices of the
registrant's investment adviser, Capital Research and Management Company, 333
South Hope Street, Los Angeles, California 90071, and/or 135 South State
College Boulevard, Brea, California 92621, and/or the offices of the
Registrant, Four Embarcadero Center (Suite 1800), San Francisco, California
94111.
The registrant's records covering shareholder accounts are maintained and kept
by the registrant's transfer agent, American Funds Service Company, 135 South
State College Boulevard, Brea, California 92621, 8000 IH-10, Suite 1400, San
Antonio, Texas 78230, 5300 Robin Hood Road, Norfolk, VA 23513, and 8332
Woodfield Crossing Boulevard, Indianapolis, Indiana 46240.
The registrant's records covering portfolio transactions are maintained and
kept by the registrant's custodian, State Street Bank and Trust Company, 225
Franklin Street, Boston, MA 02101.
ITEM 31. MANAGEMENT SERVICES.
None.
ITEM 32. UNDERTAKINGS
(c) As reflected in the prospectus, the registrant undertakes to provide each
person to whom a prospectus is delivered with a copy of the registrant's latest
annual report to shareholders, upon request and without charge.
SIGNATURE OF REGISTRANT
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant certifies that it meets all of the
requirements for effectiveness of this Registration Statement pursuant to Rule
485(b) under the Securities Act of 1933 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Los Angeles, and State of California, on the 24th
day of February, 1995.
FUNDAMENTAL INVESTORS, INC.
By: /s/ Walter P. Stern
(Walter P. Stern, Chairman of the Board)
Pursuant to the requirements of the Securities Act of 1933, this amendment to
Registration Statement has been signed below on February 24, 1995, by the
following persons in the capacities indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE
<S> <C> <C>
(1) Principal Executive Officer:
/s/ Walter P. Stern Chairman of the Board
(Walter P. Stern)
(2) Principal Financial Officer and
Principal Accounting Officer:
/s/ Steven N. Kearsley Treasurer
(Steven N. Kearsley)
(3) Directors:
Guilford C. Babcock* Director
Charles H. Black* Director
Martin Fenton, Jr.* Director
Gail L. Neale* Director
Kirk P. Pendleton* Director
James W. Ratzlaff* Director
Henry E. Riggs* Director
/s/ R. Michael Shanahan
(R. Michael Shanahan) Director
/s/ Walter P. Stern
(Walter P. Stern) Chairman of the Board
Charles Wolf, Jr.* Director
</TABLE>
*By /s/ Julie F. Williams
(Julie F. Williams, Attorney-in-Fact)
Counsel reports that the amendment does not contain disclosures that would
make the amendment ineligible for effectiveness under the provisions of rule
485(b).
/s/ Michael J. Downer
(Michael J. Downer)
CONSENT OF INDEPENDENT AUDITORS
Fundamental Investors, Inc.
We consent to (a) the use in this Post-Effective Amendment No. 78 to
Registration Statement No. 2-10760 on Form N-1A of our report dated January 27,
1995 appearing in the Financial Statements which are included in Part B, the
Statement of Additional Information of such Registration Statements, (b) the
reference to us under the heading "General Information" in such Statement of
Additional Information, and (c) the reference to us under the heading
"Financial Highlights" in the Prospectus, which is a part of such Registration
Statement.
\s\ Deloitte & Touche LLP
Los Angeles, California
February 24, 1995
SCHEDULE FOR COMPUTATION OF EACH PERFORMANCE QUOTATION
PROVIDED IN THE REGISTRATION STATEMENT
(1) ENDING REDEMPTION VALUE AND TOTAL RETURN
Value of an initial investment at the end of a period and total return for the
period are computed as set forth below.
(A) Initial investment DIVIDED BY
Public offering price for one share at
beginning of period EQUALS
Number of shares initially purchased
(B) Number of shares initially purchased PLUS
Number of shares acquired at net asset
value through reinvestment of dividends
and capital gain distributions during period EQUALS
Number of shares purchased during period
(C) Number of shares purchased during period MULTIPLIED BY
Net asset value of one share as of the last day
of the period EQUALS
Value of investment at end of period
(D) Value of investment at end of period DIVIDED BY
Initial investment
minus one and then multiplied by 100 EQUALS
Total return for the period expressed as a
percentage
EXHIBIT 16
(2) AVERAGE ANNUAL TOTAL RETURN
Average annual total return quotations for the 1-, 5- and 10-year periods ended
December 31, 1994 are computed according to the formula set forth below.
P(1+T)/n/ = ERV
WHERE: P= a hypothetical initial investment of $1,000
T= average annual total return
n= number of years
RV= ending redeemable value of a hypothetical $1,000 investment as of the end
of 1 year and lifetime periods (computed in accordance with the formula shown
in (1), above)
THUS:
AVG. ANNUAL TOTAL RETURN AT PUBLIC OFFERING PRICE:
1 Year Total Return 1,000(1+T)/1/ = 954.89
T = -4.51 %
5 Year Average Annual Total Return 1,000(1+T)/5/ = 1,519.79
T = +8.73 %
10 Year Average Annual Total Return 1,000(1+T)/10/ = 3,734.45
T = +14.08 %
Hypothetical illustrations which are based on $1,000 and $10,000 initial
investments used to obtain ending values over various time periods are
attached. Illustrations of $2,000 per year which show the benefits of
systematic investing are also included.
(3) YIELD
Yield is computed as set forth below.
(A) Dividends and interest earned during the period MINUS
Expenses accrued for the period EQUALS
Net investment income
(B) Net income investment DIVIDED BY
Average daily number of shares
outstanding during the period that
were entitled to receive dividends EQUALS
Net investment income per share earned
during the period
(C) Net investment income per share earned
during the period DIVIDED BY
Maximum offering price per share on
last day of the period EQUALS
Current month's yield
(D) Current months yield PLUS ONE RAISED TO THE SIXTH
POWER EQUALS
Semiannual compounded yield
(E) Semiannual compounded yield MINUS ONE
MULTIPLIED
BY TWO EQUALS
Annualized rate
<PAGE>
<TABLE>
<CAPTION>
FUNDAMENTAL INVESTORS, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
7/31/78 1000.00 7.41 5.75 % 134.953 6.980 942
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/78 1000 22 22 1022 0 895 0 895 20 915.55 138.092
12/31/79 1000 41 63 1063 0 989 0 989 66 1055.57 144.007
12/31/80 1000 60 123 1123 0 1139 0 1139 141 1280.69 151.740
12/31/81 1000 67 190 1190 0 1069 0 1069 196 1265.37 159.769
12/31/82 1000 77 267 1267 0 1352 0 1352 343 1695.71 169.233
12/31/83 1000 75 342 1342 0 1642 0 1642 496 2138.93 175.754
12/31/84 1000 74 416 1416 76 1611 84 1695 567 2262.04 189.451
12/31/85 1000 79 495 1495 112 1938 235 2173 771 2944.86 205.074
12/31/86 1000 90 585 1585 596 1918 826 2744 850 3594.08 252.926
12/31/87 1000 103 688 1688 246 1815 1022 2837 892 3729.55 277.290
12/31/88 1000 133 821 1821 130 1970 1246 3216 1108 4324.58 296.204
12/31/89 1000 188 1009 2009 505 2217 1910 4127 1432 5559.71 338.388
12/31/90 1000 168 1177 2177 200 1933 1871 3804 1409 5213.07 364.041
12/31/91 1000 147 1324 2324 253 2358 2559 4917 1877 6794.71 388.936
12/31/92 1000 166 1490 2490 492 2364 3073 5437 2050 7487.15 427.349
12/31/93 1000 186 1676 2676 884 2449 4088 6537 2309 8846.65 487.419
12/31/94 1000 218 1894 2894 223 2362 4163 6525 2439 8964.17 512.238
TOTAL $ 3717
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FUNDAMENTAL INVESTORS, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
1/01/94 1000.00 19.26 5.75 % 51.921 18.150 942
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/94 1000 22 22 1022 24 909 24 933 21 954.89 54.565
TOTAL $ 24
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FUNDAMENTAL INVESTORS, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
1/01/90 1000.00 17.43 5.75 % 57.372 16.430 943
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/90 1000 29 29 1029 34 822 35 857 26 883.84 61.721
12/31/91 1000 24 53 1053 43 1002 90 1092 60 1152.01 65.942
12/31/92 1000 29 82 1082 83 1005 176 1181 88 1269.39 72.454
12/31/93 1000 31 113 1113 150 1041 335 1376 123 1499.86 82.637
12/31/94 1000 36 149 1149 38 1004 361 1365 154 1519.79 86.845
TOTAL $ 348
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FUNDAMENTAL INVESTORS, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
1/01/85 1000.00 12.67 5.75 % 78.927 11.940 942
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/85 1000 32 32 1032 47 1133 56 1189 37 1226.83 85.434
12/31/86 1000 39 71 1071 248 1122 303 1425 72 1497.29 105.369
12/31/87 1000 44 115 1115 103 1062 386 1448 105 1553.73 115.519
12/31/88 1000 56 171 1171 54 1152 476 1628 173 1801.60 123.397
12/31/89 1000 79 250 1250 210 1297 747 2044 272 2316.15 140.971
12/31/90 1000 69 319 1319 83 1130 738 1868 303 2171.73 151.657
12/31/91 1000 61 380 1380 105 1379 1015 2394 436 2830.63 162.028
12/31/92 1000 68 448 1448 205 1383 1229 2612 507 3119.12 178.032
12/31/93 1000 78 526 1526 368 1433 1650 3083 602 3685.50 203.058
12/31/94 1000 91 617 1617 93 1381 1683 3064 670 3734.45 213.397
TOTAL $ 1516
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FUNDAMENTAL INVESTORS, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
7/31/78 1000.00 6.98 0.00 % 143.266 6.980 1000
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/78 1000 23 23 1023 0 950 0 950 21 971.94 146.597
12/31/79 1000 45 68 1068 0 1050 0 1050 70 1120.58 152.876
12/31/80 1000 64 132 1132 0 1209 0 1209 150 1359.57 161.087
12/31/81 1000 71 203 1203 0 1135 0 1135 208 1343.32 169.611
12/31/82 1000 82 285 1285 0 1436 0 1436 364 1800.15 179.656
12/31/83 1000 80 365 1365 0 1744 0 1744 526 2270.67 186.579
12/31/84 1000 79 444 1444 80 1711 89 1800 601 2401.38 201.121
12/31/85 1000 84 528 1528 119 2057 250 2307 819 3126.23 217.704
12/31/86 1000 95 623 1623 633 2036 877 2913 902 3815.43 268.503
12/31/87 1000 110 733 1733 261 1927 1085 3012 947 3959.28 294.370
12/31/88 1000 141 874 1874 138 2092 1323 3415 1175 4590.96 314.449
12/31/89 1000 199 1073 2073 536 2354 2028 4382 1520 5902.13 359.229
12/31/90 1000 178 1251 2251 213 2052 1986 4038 1496 5534.15 386.463
12/31/91 1000 157 1408 2408 268 2503 2717 5220 1993 7213.22 412.892
12/31/92 1000 176 1584 2584 523 2510 3262 5772 2176 7948.32 453.671
12/31/93 1000 197 1781 2781 938 2600 4340 6940 2451 9391.55 517.441
12/31/94 1000 231 2012 3012 237 2507 4420 6927 2589 9516.33 543.790
TOTAL $ 3946
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FUNDAMENTAL INVESTORS, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
1/01/94 1000.00 18.15 0.00 % 55.096 18.150 1000
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/94 1000 26 26 1026 25 964 25 989 24 1013.29 57.902
TOTAL $ 25
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FUNDAMENTAL INVESTORS, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
1/01/90 1000.00 16.43 0.00 % 60.864 16.430 1000
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/90 1000 30 30 1030 36 872 37 909 28 937.66 65.479
12/31/91 1000 28 58 1058 45 1063 95 1158 64 1222.18 69.959
12/31/92 1000 30 88 1088 89 1066 186 1252 94 1346.74 76.869
12/31/93 1000 34 122 1122 159 1105 356 1461 130 1591.30 87.675
12/31/94 1000 40 162 1162 40 1065 383 1448 164 1612.45 92.140
TOTAL $ 369
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FUNDAMENTAL INVESTORS, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
1/01/85 1000.00 11.94 0.00 % 83.752 11.940 1000
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/85 1000 35 35 1035 49 1203 59 1262 39 1301.83 90.657
12/31/86 1000 39 74 1074 264 1190 321 1511 77 1588.85 111.812
12/31/87 1000 46 120 1120 109 1126 410 1536 112 1648.75 122.584
12/31/88 1000 58 178 1178 58 1223 506 1729 182 1911.80 130.945
12/31/89 1000 82 260 1260 223 1376 793 2169 288 2457.83 149.594
12/31/90 1000 74 334 1334 89 1199 783 1982 322 2304.56 160.933
12/31/91 1000 65 399 1399 112 1463 1077 2540 463 3003.77 171.939
12/31/92 1000 72 471 1471 218 1467 1304 2771 538 3309.88 188.920
12/31/93 1000 82 553 1553 391 1520 1751 3271 639 3910.89 215.476
12/31/94 1000 97 650 1650 99 1466 1786 3252 710 3962.86 226.449
TOTAL $ 1612
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FUNDAMENTAL INVESTORS, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
1/01/85 10000.00 12.67 5.75 % 789.266 11.940 9424
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/85 10000 331 331 10331 466 11334 558 11892 376 12268.37 854.343
12/31/86 10000 372 703 10703 2484 11215 3025 14240 733 14973.05 1053.698
12/31/87 10000 430 1133 11133 1026 10616 3863 14479 1058 15537.48 1155.203
12/31/88 10000 553 1686 11686 543 11523 4764 16287 1729 18016.33 1233.995
12/31/89 10000 782 2468 12468 2103 12968 7475 20443 2718 23161.90 1409.732
12/31/90 10000 699 3167 13167 834 11302 7375 18677 3040 21717.73 1516.601
12/31/91 10000 617 3784 13784 1053 13788 10150 23938 4368 28306.96 1620.318
12/31/92 10000 690 4474 14474 2052 13828 12287 26115 5076 31191.68 1780.347
12/31/93 10000 775 5249 15249 3682 14325 16498 30823 6032 36855.35 2030.598
12/31/94 10000 904 6153 16153 930 13812 16831 30643 6701 37344.98 2133.999
TOTAL $ 15173
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
DOW JONES INDUSTRIAL AVERAGE
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
1/01/85 10000.00 1211.57 0.00 % 8.254 1211.570 10000
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/85 10000 522 522 10522 0 12766 0 12766 597 13363.23 8.640
12/31/86 10000 588 1110 11110 0 15649 0 15649 1334 16983.92 8.958
12/31/87 10000 646 1756 11756 0 16003 0 16003 1929 17932.24 9.249
12/31/88 10000 747 2503 12503 0 17899 0 17899 2943 20842.13 9.611
12/31/89 10000 1006 3509 13509 0 22724 0 22724 4824 27548.52 10.006
12/31/90 10000 1053 4562 14562 0 21737 0 21737 5655 27392.70 10.401
12/31/91 10000 1002 5564 15564 0 26155 0 26155 7878 34033.23 10.740
12/31/92 10000 1095 6659 16659 0 27246 0 27246 9300 36546.59 11.071
12/31/93 10000 1116 7775 17775 0 30985 0 30985 11751 42736.56 11.384
12/31/94 10000 1238 9013 19013 0 31648 0 31648 13249 44897.46 11.709
TOTAL $ 0
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STANDARD & POOR'S 500 COMPOSITE INDEX
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
1/01/85 10000.00 167.24 0.00 % 59.794 167.240 10000
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/85 10000 480 480 10480 0 12633 0 12633 533 13166.34 62.317
12/31/86 10000 524 1004 11004 0 14480 0 14480 1130 15610.52 64.461
12/31/87 10000 575 1579 11579 0 14774 0 14774 1662 16436.01 66.521
12/31/88 10000 657 2236 12236 0 16606 0 16606 2552 19158.79 68.986
12/31/89 10000 772 3008 13008 0 21131 0 21131 4085 25216.50 71.354
12/31/90 10000 876 3884 13884 0 19745 0 19745 4682 24427.36 73.973
12/31/91 10000 912 4796 14796 0 24940 0 24940 6910 31850.24 76.363
12/31/92 10000 956 5752 15752 0 26053 0 26053 8215 34268.16 78.649
12/31/93 10000 1000 6752 16752 0 27891 0 27891 9820 37711.55 80.848
12/31/94 10000 1078 7830 17830 0 27462 0 27462 10737 38199.32 83.174
TOTAL $ 0
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AVERAGE FIXED INCOME ACCOUNT
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
1/01/85 10000.00 10.00 0.00 % 1000.000 10.000 10000
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/85 10000 812 812 10812 0 10000 0 10000 810 10810.53 1081.053
12/31/86 10000 747 1559 11559 0 10000 0 10000 1557 11557.79 1155.779
12/31/87 10000 715 2274 12274 0 10000 0 10000 2271 12271.85 1227.185
12/31/88 10000 803 3077 13077 0 10000 0 10000 3075 13075.01 1307.501
12/31/89 10000 981 4058 14058 0 10000 0 10000 4055 14055.93 1405.593
12/31/90 10000 1012 5070 15070 0 10000 0 10000 5067 15067.46 1506.746
12/31/91 10000 919 5989 15989 0 10000 0 10000 5985 15985.76 1598.576
12/31/92 10000 661 6650 16650 0 10000 0 10000 6646 16646.38 1664.638
12/31/93 10000 530 7180 17180 0 10000 0 10000 7175 17175.26 1717.526
12/31/94 10000 546 7726 17726 0 10000 0 10000 7720 17720.95 1772.095
TOTAL $ 0
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AVERAGE FIXED INCOME ACCOUNT
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
1/01/84 10000.00 10.00 0.00 % 1000.000 10.000 10000
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/84 10000 956 956 10956 0 10000 0 10000 956 10956.52 1095.652
12/31/85 10000 889 1845 11845 0 10000 0 10000 1844 11844.59 1184.459
12/31/86 10000 819 2664 12664 0 10000 0 10000 2663 12663.31 1266.331
12/31/87 10000 782 3446 13446 0 10000 0 10000 3445 13445.67 1344.567
12/31/88 10000 880 4326 14326 0 10000 0 10000 4325 14325.65 1432.565
12/31/89 10000 1074 5400 15400 0 10000 0 10000 5400 15400.39 1540.039
12/31/90 10000 1108 6508 16508 0 10000 0 10000 6508 16508.66 1650.866
12/31/91 10000 1006 7514 17514 0 10000 0 10000 7514 17514.78 1751.478
12/31/92 10000 724 8238 18238 0 10000 0 10000 8238 18238.59 1823.859
12/31/93 10000 579 8817 18817 0 10000 0 10000 8818 18818.06 1881.806
TOTAL $ 0
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FUNDAMENTAL INVESTORS, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
1/01/90 2000.00 17.43 5.75 % 114.745 16.430 1885
ANNUAL INVESTMENTS OF $ 2000.00 -- SAME DAY AS INITIAL INVESTMENT
DIVIDENDS AND CAPITAL GAINS REINVESTED
RIGHT OF ACCUMULATION DISCOUNT REFLECTED WHERE APPLICABLE IN THIS ILLUSTRATION
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/90 2000 57 57 2057 68 1643 70 1713 54 1767.70 123.443
12/31/91 4000 104 161 4161 177 4305 279 4584 177 4761.54 272.555
12/31/92 6000 162 323 6323 482 6207 775 6982 341 7323.41 418.003
12/31/93 8000 229 552 8552 1087 8383 1916 10299 581 10880.31 599.466
12/31/94 10000 313 865 10865 322 9900 2167 12067 867 12934.62 739.121
TOTAL $ 2136
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FUNDAMENTAL INVESTORS, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
1/01/85 2000.00 12.67 5.75 % 157.853 11.940 1885
ANNUAL INVESTMENTS OF $ 2000.00 -- SAME DAY AS INITIAL INVESTMENT
DIVIDENDS AND CAPITAL GAINS REINVESTED
RIGHT OF ACCUMULATION DISCOUNT REFLECTED WHERE APPLICABLE IN THIS ILLUSTRATION
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/85 2000 67 67 2067 93 2267 112 2379 74 2453.66 170.868
12/31/86 4000 132 199 4199 878 4108 985 5093 201 5294.59 372.596
12/31/87 6000 207 406 6406 492 5672 1412 7084 365 7449.83 553.891
12/31/88 8000 332 738 8738 327 8203 1875 10078 746 10824.19 741.383
12/31/89 10000 552 1290 11290 1484 11353 3601 14954 1385 16339.13 994.469
12/31/90 12000 551 1841 13841 656 11538 3816 15354 1734 17088.07 1193.301
12/31/91 14000 538 2379 16379 920 16376 5661 22037 2693 24730.17 1415.579
12/31/92 16000 648 3027 19027 1929 18313 7660 25973 3354 29327.03 1673.917
12/31/93 18000 775 3802 21802 3684 20924 11707 32631 4248 36879.26 2031.915
12/31/94 20000 952 4754 24754 978 21992 12259 34251 5028 39279.00 2244.514
TOTAL $ 11441
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FUNDAMENTAL INVESTORS, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
8/01/78 2000.00 7.41 5.75 % 269.906 6.980 1884
ANNUAL INVESTMENTS OF $ 2000.00 -- SAME DAY AS INITIAL INVESTMENT
DIVIDENDS AND CAPITAL GAINS REINVESTED
RIGHT OF ACCUMULATION DISCOUNT REFLECTED WHERE APPLICABLE IN THIS ILLUSTRATION
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/78 2000 43 43 2043 0 1789 0 1789 42 1831.09 276.182
12/31/79 4000 133 176 4176 0 3912 0 3912 181 4093.12 558.407
12/31/80 6000 288 464 6464 0 6479 0 6479 516 6995.87 828.894
12/31/81 8000 419 883 8883 0 7832 0 7832 887 8719.52 1100.949
12/31/82 10000 580 1463 11463 0 12414 0 12414 1830 14244.31 1421.588
12/31/83 12000 668 2131 14131 0 17066 0 17066 2923 19989.53 1642.525
12/31/84 14000 722 2853 16853 706 18913 786 19699 3647 23346.64 1955.330
12/31/85 16000 851 3704 19704 1154 24851 2328 27179 5352 32531.46 2265.422
12/31/86 18000 1014 4718 22718 6748 26415 9020 35435 6275 41710.58 2935.298
12/31/87 20000 1221 5939 25939 2929 26424 11397 37821 6975 44796.85 3330.621
12/31/88 22000 1629 7568 29568 1612 30560 14065 44625 9278 53903.94 3692.051
12/31/89 24000 2385 9953 33953 6451 36138 22307 58445 12803 71248.66 4336.498
12/31/90 26000 2186 12139 38139 2630 33165 22157 55322 13253 68575.56 4788.796
12/31/91 28000 1967 14106 42106 3390 42444 30738 73182 18278 91460.24 5235.274
12/31/92 30000 2252 16358 46358 6751 44435 37766 82201 20598 102799.91 5867.575
12/31/93 32000 2575 18933 50933 12339 47891 51755 99646 23910 123556.78 6807.536
12/31/94 34000 3058 21991 55991 3157 48048 53035 101083 26052 127135.09 7264.862
TOTAL $ 47867
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FUNDAMENTAL INVESTORS, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
7/31/78 10000.00 7.41 5.75 % 1349.528 6.980 9420
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/78 10000 217 217 10217 0 8947 0 8947 208 9155.45 1380.912
12/31/79 10000 421 638 10638 0 9892 0 9892 663 10555.56 1440.049
12/31/80 10000 603 1241 11241 0 11390 0 11390 1416 12806.78 1517.391
12/31/81 10000 665 1906 11906 0 10688 0 10688 1965 12653.67 1597.686
12/31/82 10000 769 2675 12675 0 13522 0 13522 3435 16957.06 1692.321
12/31/83 10000 755 3430 13430 0 16424 0 16424 4965 21389.21 1757.536
12/31/84 10000 734 4164 14164 756 16113 841 16954 5666 22620.50 1894.514
12/31/85 10000 795 4959 14959 1118 19379 2351 21730 7718 29448.32 2050.719
12/31/86 10000 894 5853 15853 5963 19177 8262 27439 8501 35940.53 2529.242
12/31/87 10000 1034 6887 16887 2462 18151 10221 28372 8923 37295.38 2772.891
12/31/88 10000 1328 8215 18215 1304 19703 12464 32167 11078 43245.54 2962.023
12/31/89 10000 1877 10092 20092 5048 22173 19099 41272 14324 55596.72 3383.854
12/31/90 10000 1678 11770 21770 2002 19325 18712 38037 14093 52130.21 3640.378
12/31/91 10000 1477 13247 23247 2528 23576 25593 49169 18777 67946.66 3889.334
12/31/92 10000 1655 14902 24902 4924 23644 30728 54372 20499 74871.05 4273.462
12/31/93 10000 1857 16759 26759 8838 24494 40880 65374 23091 88465.84 4874.151
12/31/94 10000 2171 18930 28930 2232 23617 41632 65249 24392 89641.14 5122.351
TOTAL $ 37175
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FUNDAMENTAL INVESTORS, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
1/01/79 10000.00 7.03 5.75 % 1422.475 6.630 9431
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/79 10000 433 433 10433 0 10427 0 10427 446 10873.26 1483.391
12/31/80 10000 621 1054 11054 0 12006 0 12006 1186 13192.26 1563.064
12/31/81 10000 685 1739 11739 0 11266 0 11266 1768 13034.53 1645.774
12/31/82 10000 792 2531 12531 0 14253 0 14253 3214 17467.44 1743.257
12/31/83 10000 779 3310 13310 0 17312 0 17312 4721 22033.01 1810.436
12/31/84 10000 757 4067 14067 778 16984 866 17850 5451 23301.36 1951.538
12/31/85 10000 819 4886 14886 1151 20427 2422 22849 7485 30334.72 2112.446
12/31/86 10000 921 5807 15807 6143 20213 8511 28724 8298 37022.34 2605.372
12/31/87 10000 1066 6873 16873 2536 19132 10528 29660 8757 38417.97 2856.355
12/31/88 10000 1368 8241 18241 1344 20768 12840 33608 10939 44547.26 3051.182
12/31/89 10000 1935 10176 20176 5200 23371 19674 43045 14225 57270.23 3485.711
12/31/90 10000 1730 11906 21906 2062 20370 19275 39645 14054 53699.37 3749.956
12/31/91 10000 1522 13428 23428 2604 24851 26363 51214 18777 69991.91 4006.406
12/31/92 10000 1705 15133 25133 5073 24922 31653 56575 20549 77124.72 4402.096
12/31/93 10000 1913 17046 27046 9104 25818 42111 67929 23199 91128.74 5020.867
12/31/94 10000 2237 19283 29283 2299 24893 42885 67778 24561 92339.42 5276.538
TOTAL $ 38294
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FUNDAMENTAL INVESTORS, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
1/01/80 10000.00 7.78 5.75 % 1285.347 7.330 9422
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/80 10000 538 538 10538 0 10848 0 10848 582 11430.98 1354.381
12/31/81 10000 593 1131 11131 0 10180 0 10180 1114 11294.30 1426.048
12/31/82 10000 686 1817 11817 0 12879 0 12879 2256 15135.37 1510.516
12/31/83 10000 674 2491 12491 0 15643 0 15643 3448 19091.38 1568.725
12/31/84 10000 656 3147 13147 675 15347 751 16098 4092 20190.41 1690.989
12/31/85 10000 710 3857 13857 998 18458 2099 20557 5727 26284.75 1830.414
12/31/86 10000 798 4655 14655 5323 18265 7375 25640 6439 32079.50 2257.530
12/31/87 10000 923 5578 15578 2198 17288 9123 26411 6877 33288.82 2475.005
12/31/88 10000 1185 6763 16763 1164 18766 11125 29891 8708 38599.76 2643.819
12/31/89 10000 1675 8438 18438 4506 21118 17047 38165 11459 49624.10 3020.335
12/31/90 10000 1499 9937 19937 1787 18406 16702 35108 11422 46530.00 3249.302
12/31/91 10000 1318 11255 21255 2257 22455 22843 45298 15349 60647.35 3471.514
12/31/92 10000 1477 12732 22732 4395 22519 27427 49946 16881 66827.87 3814.376
12/31/93 10000 1658 14390 24390 7889 23329 36489 59818 19144 78962.21 4350.535
12/31/94 10000 1938 16328 26328 1992 22494 37159 59653 20358 80011.24 4572.071
TOTAL $ 33184
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FUNDAMENTAL INVESTORS, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
1/01/81 10000.00 8.95 5.75 % 1117.318 8.440 9430
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/81 10000 490 490 10490 0 8849 0 8849 468 9317.43 1176.443
12/31/82 10000 565 1055 11055 0 11196 0 11196 1290 12486.19 1246.127
12/31/83 10000 555 1610 11610 0 13598 0 13598 2151 15749.78 1294.148
12/31/84 10000 540 2150 12150 556 13341 619 13960 2696 16656.43 1395.011
12/31/85 10000 587 2737 12737 823 16045 1731 17776 3908 21684.06 1510.032
12/31/86 10000 658 3395 13395 4391 15877 6084 21961 4503 26464.53 1862.388
12/31/87 10000 762 4157 14157 1813 15028 7526 22554 4908 27462.17 2041.797
12/31/88 10000 977 5134 15134 961 16313 9178 25491 6352 31843.53 2181.064
12/31/89 10000 1382 6516 16516 3717 18358 14063 32421 8517 40938.25 2491.677
12/31/90 10000 1236 7752 17752 1474 16000 13778 29778 8607 38385.71 2680.566
12/31/91 10000 1088 8840 18840 1862 19520 18845 38365 11667 50032.02 2863.882
12/31/92 10000 1219 10059 20059 3626 19575 22626 42201 12929 55130.76 3146.733
12/31/93 10000 1368 11427 21427 6508 20279 30102 50381 14760 65141.18 3589.046
12/31/94 10000 1598 13025 23025 1643 19553 30655 50208 15798 66006.61 3771.806
TOTAL $ 27374
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FUNDAMENTAL INVESTORS, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
1/01/82 10000.00 8.40 5.75 % 1190.476 7.920 9429
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/82 10000 572 572 10572 0 11929 0 11929 706 12635.12 1260.990
12/31/83 10000 564 1136 11136 0 14488 0 14488 1449 15937.63 1309.583
12/31/84 10000 547 1683 11683 563 14214 627 14841 2014 16855.10 1411.650
12/31/85 10000 593 2276 12276 833 17095 1752 18847 3095 21942.71 1528.044
12/31/86 10000 666 2942 12942 4443 16917 6156 23073 3707 26780.21 1884.603
12/31/87 10000 770 3712 13712 1835 16012 7616 23628 4161 27789.74 2066.152
12/31/88 10000 990 4702 14702 972 17381 9288 26669 5554 32223.37 2207.080
12/31/89 10000 1399 6101 16101 3761 19560 14231 33791 7635 41426.57 2521.398
12/31/90 10000 1251 7352 17352 1492 17048 13943 30991 7852 38843.56 2712.539
12/31/91 10000 1101 8453 18453 1884 20798 19070 39868 10760 50628.79 2898.042
12/31/92 10000 1234 9687 19687 3669 20857 22896 43753 12035 55788.36 3184.267
12/31/93 10000 1384 11071 21071 6586 21607 30461 52068 13850 65918.19 3631.856
12/31/94 10000 1618 12689 22689 1663 20833 31021 51854 14939 66793.97 3816.798
TOTAL $ 27701
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FUNDAMENTAL INVESTORS, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
1/01/83 10000.00 10.63 5.75 % 940.734 10.020 9426
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/83 10000 420 420 10420 0 11449 0 11449 440 11889.92 976.986
12/31/84 10000 409 829 10829 420 11232 467 11699 875 12574.37 1053.130
12/31/85 10000 441 1270 11270 621 13509 1307 14816 1553 16369.87 1139.963
12/31/86 10000 498 1768 11768 3315 13368 4593 17961 2017 19978.76 1405.965
12/31/87 10000 576 2344 12344 1369 12653 5682 18335 2396 20731.91 1541.406
12/31/88 10000 738 3082 13082 725 13735 6929 20664 3375 24039.51 1646.542
12/31/89 10000 1045 4127 14127 2806 15456 10617 26073 4832 30905.36 1881.032
12/31/90 10000 934 5061 15061 1113 13471 10402 23873 5105 28978.38 2023.630
12/31/91 10000 821 5882 15882 1405 16435 14227 30662 7108 37770.49 2162.020
12/31/92 10000 920 6802 16802 2737 16482 17081 33563 8056 41619.65 2375.551
12/31/93 10000 1034 7836 17836 4913 17074 22725 39799 9377 49176.81 2709.466
12/31/94 10000 1207 9043 19043 1240 16463 23142 39605 10225 49830.11 2847.435
TOTAL $ 20664
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FUNDAMENTAL INVESTORS, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
1/01/84 10000.00 12.91 5.75 % 774.593 12.170 9427
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/84 10000 323 323 10323 333 9249 371 9620 349 9969.46 834.963
12/31/85 10000 351 674 10674 493 11123 1036 12159 819 12978.68 903.808
12/31/86 10000 394 1068 11068 2628 11007 3641 14648 1191 15839.96 1114.705
12/31/87 10000 455 1523 11523 1085 10418 4505 14923 1514 16437.07 1222.087
12/31/88 10000 585 2108 12108 575 11309 5493 16802 2257 19059.48 1305.444
12/31/89 10000 828 2936 12936 2225 12727 8417 21144 3359 24503.00 1491.357
12/31/90 10000 739 3675 13675 882 11092 8247 19339 3636 22975.22 1604.415
12/31/91 10000 652 4327 14327 1114 13532 11279 24811 5134 29945.94 1714.135
12/31/92 10000 728 5055 15055 2170 13571 13543 27114 5883 32997.71 1883.431
12/31/93 10000 819 5874 15874 3895 14059 18017 32076 6913 38989.29 2148.170
12/31/94 10000 957 6831 16831 984 13555 18348 31903 7604 39507.27 2257.558
TOTAL $ 16384
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FUNDAMENTAL INVESTORS, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
1/01/85 10000.00 12.67 5.75 % 789.266 11.940 9424
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/85 10000 331 331 10331 466 11334 558 11892 376 12268.37 854.343
12/31/86 10000 372 703 10703 2484 11215 3025 14240 733 14973.05 1053.698
12/31/87 10000 430 1133 11133 1026 10616 3863 14479 1058 15537.48 1155.203
12/31/88 10000 553 1686 11686 543 11523 4764 16287 1729 18016.33 1233.995
12/31/89 10000 782 2468 12468 2103 12968 7475 20443 2718 23161.90 1409.732
12/31/90 10000 699 3167 13167 834 11302 7375 18677 3040 21717.73 1516.601
12/31/91 10000 617 3784 13784 1053 13788 10150 23938 4368 28306.96 1620.318
12/31/92 10000 690 4474 14474 2052 13828 12287 26115 5076 31191.68 1780.347
12/31/93 10000 775 5249 15249 3682 14325 16498 30823 6032 36855.35 2030.598
12/31/94 10000 904 6153 16153 930 13812 16831 30643 6701 37344.98 2133.999
TOTAL $ 15173
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FUNDAMENTAL INVESTORS, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
1/01/86 10000.00 15.24 5.75 % 656.168 14.360 9423
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/86 10000 287 287 10287 1908 9324 1899 11223 276 11499.88 809.281
12/31/87 10000 331 618 10618 788 8825 2566 11391 542 11933.39 887.241
12/31/88 10000 425 1043 11043 417 9580 3223 12803 1034 13837.25 947.757
12/31/89 10000 601 1644 11644 1615 10781 5250 16031 1758 17789.27 1082.731
12/31/90 10000 537 2181 12181 641 9396 5237 14633 2047 16680.06 1164.809
12/31/91 10000 473 2654 12654 809 11463 7274 18737 3003 21740.84 1244.467
12/31/92 10000 530 3184 13184 1576 11496 8914 20410 3546 23956.43 1367.376
12/31/93 10000 595 3779 13779 2828 11909 12130 24039 4267 28306.36 1559.579
12/31/94 10000 695 4474 14474 714 11483 12404 23887 4795 28682.45 1638.997
TOTAL $ 11296
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FUNDAMENTAL INVESTORS, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
1/01/87 10000.00 15.08 5.75 % 663.130 14.210 9423
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/87 10000 271 271 10271 646 8919 629 9548 230 9778.30 727.011
12/31/88 10000 348 619 10619 342 9682 1042 10724 614 11338.33 776.598
12/31/89 10000 493 1112 11112 1324 10895 2503 13398 1178 14576.65 887.197
12/31/90 10000 440 1552 11552 525 9496 2723 12219 1448 13667.78 954.454
12/31/91 10000 387 1939 11939 663 11585 4047 15632 2182 17814.63 1019.727
12/31/92 10000 434 2373 12373 1291 11618 5386 17004 2626 19630.09 1120.439
12/31/93 10000 487 2860 12860 2317 12036 7951 19987 3207 23194.39 1277.928
12/31/94 10000 570 3430 13430 585 11605 8247 19852 3650 23502.55 1343.003
TOTAL $ 7693
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FUNDAMENTAL INVESTORS, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
1/01/88 10000.00 14.27 5.75 % 700.771 13.450 9425
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/88 10000 336 336 10336 330 10231 346 10577 352 10929.09 748.568
12/31/89 10000 475 811 10811 1276 11514 1671 13185 865 14050.51 855.174
12/31/90 10000 425 1236 11236 506 10035 1979 12014 1160 13174.44 920.003
12/31/91 10000 373 1609 11609 639 12242 3113 15355 1816 17171.61 982.920
12/31/92 10000 418 2027 12027 1244 12278 4401 16679 2242 18921.55 1079.997
12/31/93 10000 470 2497 12497 2234 12719 6846 19565 2792 22357.22 1231.803
12/31/94 10000 548 3045 13045 564 12263 7160 19423 3231 22654.24 1294.528
TOTAL $ 6793
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FUNDAMENTAL INVESTORS, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
1/01/89 10000.00 15.49 5.75 % 645.578 14.600 9425
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/89 10000 410 410 10410 1100 10607 1105 11712 405 12117.44 737.519
12/31/90 10000 366 776 10776 436 9245 1414 10659 702 11361.87 793.427
12/31/91 10000 321 1097 11097 551 11278 2327 13605 1204 14809.11 847.688
12/31/92 10000 361 1458 11458 1073 11311 3437 14748 1570 16318.30 931.410
12/31/93 10000 404 1862 11862 1926 11717 5533 17250 2031 19281.33 1062.332
12/31/94 10000 473 2335 12335 486 11298 5817 17115 2422 19537.49 1116.428
TOTAL $ 5572
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FUNDAMENTAL INVESTORS, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
1/01/90 10000.00 17.43 5.75 % 573.723 16.430 9426
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/90 10000 284 284 10284 339 8216 350 8566 272 8838.53 617.216
12/31/91 10000 251 535 10535 429 10023 896 10919 601 11520.17 659.426
12/31/92 10000 281 816 10816 835 10052 1757 11809 885 12694.19 724.554
12/31/93 10000 314 1130 11130 1498 10413 3354 13767 1232 14999.14 826.399
12/31/94 10000 368 1498 11498 378 10040 3609 13649 1549 15198.42 868.481
TOTAL $ 3479
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FUNDAMENTAL INVESTORS, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
1/01/91 10000.00 15.19 5.75 % 658.328 14.320 9427
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/91 10000 268 268 10268 457 11501 500 12001 286 12287.52 703.350
12/31/92 10000 299 567 10567 891 11534 1417 12951 588 13539.77 772.818
12/31/93 10000 335 902 10902 1598 11949 3104 15053 945 15998.30 881.449
12/31/94 10000 393 1295 11295 404 11521 3393 14914 1296 16210.86 926.335
TOTAL $ 3350
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FUNDAMENTAL INVESTORS, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
1/01/92 10000.00 18.54 5.75 % 539.374 17.470 9423
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/92 10000 230 230 10230 683 9450 702 10152 231 10383.16 592.646
12/31/93 10000 258 488 10488 1226 9790 1982 11772 496 12268.49 675.950
12/31/94 10000 302 790 10790 309 9439 2218 11657 774 12431.49 710.371
TOTAL $ 2218
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FUNDAMENTAL INVESTORS, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
1/01/93 10000.00 18.59 5.75 % 537.924 17.520 9424
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/93 10000 234 234 10234 1113 9763 1139 10902 233 11135.68 613.536
12/31/94 10000 273 507 10507 281 9414 1377 10791 492 11283.62 644.778
TOTAL $ 1394
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FUNDAMENTAL INVESTORS, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
1/01/94 10000.00 19.26 5.75 % 519.211 18.150 9424
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/94 10000 231 231 10231 238 9086 236 9322 226 9548.86 545.649
TOTAL $ 238
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<INVESTMENTS-AT-COST> 2,312,141
<INVESTMENTS-AT-VALUE> 2,601,354
<RECEIVABLES> 25,107
<ASSETS-OTHER> 109
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2,626,570
<PAYABLE-FOR-SECURITIES> 6,864
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 8,636
<TOTAL-LIABILITIES> 15,500
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 2,137,509
<SHARES-COMMON-STOCK> 149,244
<SHARES-COMMON-PRIOR> 109,062
<ACCUMULATED-NII-CURRENT> 5,226
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 29,878
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 289,213
<NET-ASSETS> 2,611,070
<DIVIDEND-INCOME> 52,031
<INTEREST-INCOME> 19,959
<OTHER-INCOME> 0
<EXPENSES-NET> 15,558
<NET-INVESTMENT-INCOME> 56,402
<REALIZED-GAINS-CURRENT> 82,430
<APPREC-INCREASE-CURRENT> (110,226)
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<EQUALIZATION> 0
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<DISTRIBUTIONS-OF-GAINS> 61,479
<DISTRIBUTIONS-OTHER> 0
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<NUMBER-OF-SHARES-REDEEMED> 16,975
<SHARES-REINVESTED> 5,849
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<PER-SHARE-NAV-BEGIN> 18.15
<PER-SHARE-NII> .42
<PER-SHARE-GAIN-APPREC> (.18)
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<PER-SHARE-NAV-END> 17.50
<EXPENSE-RATIO> .007
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</TABLE>
