N-CSRS 1 fi_ncsrs.htm N-CSRS

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM N-CSR

Certified Shareholder Report of

Registered Management Investment Companies

 

Investment Company Act File Number: 811-00032

 

American Funds Fundamental Investors

(Exact Name of Registrant as Specified in Charter)

 

6455 Irvine Center Drive

Irvine, California 92618

(Address of Principal Executive Offices)

 

Registrant's telephone number, including area code: (949) 975-5000

 

Date of fiscal year end: December 31

 

Date of reporting period: June 30, 2021

 

Hong T. Le

American Funds Fundamental Investors

6455 Irvine Center Drive

Irvine, California 92618

(Name and Address of Agent for Service)

 
 

 

ITEM 1 – Reports to Stockholders

 

 

Fundamental Investors®
 
Semi-annual report
for the six months ended
June 30, 2021

 

 

Flexibility can help
uncover value in any
market environment

 

 

Fundamental Investors seeks long-term growth of capital and income.

 

This fund is one of more than 40 offered by Capital Group, home of American Funds, one of the nation’s largest mutual fund families. For 90 years, Capital Group has invested with a long-term focus based on thorough research and attention to risk.

 

Fund results shown in this report, unless otherwise indicated, are for Class A shares at net asset value. If a sales charge (maximum 5.75%) had been deducted, the results would have been lower. Results are for past periods and are not predictive of results for future periods. Current and future results may be lower or higher than those shown. Prices and returns will vary, so investors may lose money. Investing for short periods makes losses more likely. For current information and month-end results, visit capitalgroup.com.

 

Here are the average annual total returns on a $1,000 investment with all distributions reinvested for periods ended June 30, 2021:

 

Class A shares 1 year 5 years 10 years
       
Reflecting 5.75% maximum sales charge 31.01% 14.49% 12.61%

 

For other share class results, visit capitalgroup.com and americanfundsretirement.com.

 

The total annual fund operating expense ratio was 0.61% for Class A shares as of the prospectus dated March 1, 2021.

 

Investment results assume all distributions are reinvested and reflect applicable fees and expenses. When applicable, investment results reflect fee waivers and/or expense reimbursements, without which results would have been lower. Visit capitalgroup.com for more information.

 

The fund’s 30-day yield for Class A shares as of July 31, 2021, calculated in accordance with the U.S. Securities and Exchange Commission (SEC) formula, was 0.95%. The fund’s 12-month distribution rate for Class A shares as of that date was 1.22%. Both reflect the 5.75% maximum sales charge. The SEC yield reflects the rate at which the fund is earning income on its current portfolio of securities while the distribution rate reflects the fund’s past dividends paid to shareholders. Accordingly, the fund’s SEC yield and distribution rate may differ.

 

Investing outside the United States may be subject to risks, such as currency fluctuations, periods of illiquidity and price volatility. These risks may be heightened in connection with investments in developing countries. Refer to the fund prospectus and the Risk Factors section of this report for more information on these and other risks associated with investing in the fund.

 

Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so they may lose value.

 

Fellow investors:

 

Results for Fundamental Investors for the periods ended June 30, 2021, are shown in the table below, as well as results of the fund’s benchmark.

 

For additional information about the fund, its investment results, holdings and portfolio managers, visit capitalgroup.com/individual/investments/fund/ancfx. You can also access information about Capital Group’s American Funds and read our insights about the markets, retirement, saving for college, investing fundamentals and more at capitalgroup.com.

 

Contents

 

1   Results at a glance
     
2   Investment portfolio
     
10   Financial statements
     
14   Notes to financial statements
     
24   Financial highlights

 

Results at a glance

 

For periods ended June 30, 2021, with all distributions reinvested

 

   Cumulative total returns  Average annual total returns
   6 months  1 year  5 years  10 years  Lifetime
(since 8/1/78)1
                
Fundamental Investors (Class A shares)   14.04%   39.02%   15.86%   13.28%   12.70%
Standard & Poor’s 500 Composite Index2,3   15.25    40.79    17.65    14.84    12.16 
                          
1 The date Capital Research and Management Company began managing the fund.
2 Source: S&P Dow Jones Indices.
3 The market index is unmanaged and, therefore, has no expenses. Investors cannot invest directly in an index.  
   
Fundamental Investors 1
 
Investment portfolio June 30, 2021 unaudited

 

Industry sector diversification Percent of net assets

 

 

Country diversification by domicile  Percent of
net assets
United States   79.02%
Eurozone*   5.48 
United Kingdom   3.45 
Canada   2.45 
Taiwan   1.22 
Switzerland   .91 
Brazil   .87 
Sweden   .85 
India   .64 
Other countries   3.51 
Short-term securities & other assets less liabilities   1.60 

 

* Countries using the euro as a common currency; those represented in the fund’s portfolio are Belgium, France, Germany, Ireland, Italy, the Netherlands and Spain.

 

Common stocks 98.06%  Shares   Value
(000)		 
Information technology 23.92%          
Microsoft Corp.   23,491,406   $6,363,822 
Broadcom, Inc.   10,971,958    5,231,868 
Taiwan Semiconductor Manufacturing Company, Ltd.   60,645,000    1,295,066 
Taiwan Semiconductor Manufacturing Company, Ltd. (ADR)   2,350,683    282,458 
Applied Materials, Inc.   10,622,573    1,512,654 
ASML Holding NV   1,898,575    1,304,366 
ASML Holding NV (New York registered) (ADR)   73,907    51,058 
Advanced Micro Devices, Inc.1   12,739,293    1,196,602 
Apple, Inc.   6,738,158    922,858 
Arista Networks, Inc.1   2,179,413    789,623 
NortonLifeLock, Inc.   26,646,064    725,306 
TE Connectivity, Ltd.   5,073,292    685,960 
PayPal Holdings, Inc.1   2,345,933    683,793 
Mastercard, Inc., Class A   1,814,530    662,467 
Intel Corp.   10,703,294    600,883 
Fidelity National Information Services, Inc.   3,498,147    495,582 
HubSpot, Inc.1   836,843    487,645 
KLA Corp.   1,483,459    480,952 
Texas Instruments, Inc.   2,494,749    479,740 
Motorola Solutions, Inc.   2,145,474    465,246 
RingCentral, Inc., Class A1   1,537,261    446,697 
FleetCor Technologies, Inc.1   1,479,017    378,717 
SK hynix, Inc.   3,135,100    354,948 
Visa, Inc., Class A   1,402,898    328,026 
Samsung Electronics Co., Ltd.   4,568,381    327,371 
Square, Inc., Class A1   1,226,709    299,072 
MongoDB, Inc., Class A1   799,327    288,973 
Ceridian HCM Holding, Inc.1   2,864,649    274,777 
VeriSign, Inc.1   1,200,004    273,229 
Cisco Systems, Inc.   4,990,678    264,506 
Micron Technology, Inc.1   3,048,233    259,039 
Paychex, Inc.   2,278,918    244,528 
STMicroelectronics NV   6,063,674    220,050 
Dell Technologies, Inc., Class C1   2,056,672    204,988 
SAP SE   1,144,811    161,321 
MicroStrategy, Inc., Class A1,2   232,406    154,434 
EPAM Systems, Inc.1   287,839    147,074 
Shopify, Inc., Class A, subordinate voting shares1   99,274    145,037 
Adobe, Inc.1   247,021    144,665 
Lam Research Corp.   212,859    138,507 
Automatic Data Processing, Inc.   677,902    134,645 
Cree, Inc.1   1,271,527    124,521 
NetApp, Inc.   1,494,561    122,285 
Autodesk, Inc.1   399,254    116,542 

 

2 Fundamental Investors
 
Common stocks (continued)  Shares   Value
(000)		 
Information technology (continued)          
ServiceNow, Inc.1   204,088   $112,157 
Smartsheet, Inc., Class A1   1,543,916    111,656 
Edenred SA   1,607,140    91,567 
Amadeus IT Group SA, Class A, non-registered shares1   1,189,155    83,644 
Concentrix Corp.1   513,063    82,501 
LiveRamp Holdings, Inc.1   1,136,654    53,252 
ON Semiconductor Corp.1   1,382,705    52,930 
Dolby Laboratories, Inc., Class A   409,139    40,214 
Snowflake, Inc., Class A1   162,071    39,189 
Keyence Corp.   76,100    38,408 
         30,977,419 
           
Communication services 12.33%          
Facebook, Inc., Class A1   12,939,971    4,499,357 
Alphabet, Inc., Class C1   869,163    2,178,401 
Alphabet, Inc., Class A1   260,429    635,913 
Comcast Corp., Class A   42,937,250    2,448,282 
Netflix, Inc.1   3,806,809    2,010,795 
Charter Communications, Inc., Class A1   1,774,286    1,280,059 
Sea, Ltd., Class A (ADR)1   2,450,841    673,001 
Walt Disney Company1   3,490,768    613,572 
Activision Blizzard, Inc.   3,952,546    377,231 
T-Mobile US, Inc.1   1,936,765    280,502 
Snap, Inc., Class A1   2,992,086    203,881 
Tencent Holdings, Ltd.   1,927,600    144,986 
Pinterest, Inc., Class A1   1,709,776    134,987 
AT&T, Inc.   3,991,599    114,878 
New York Times Co., Class A   2,115,405    92,126 
JOYY Inc., Class A (ADR)2   1,359,870    89,711 
Vivendi SA2   2,572,585    86,419 
SoftBank Corp.   3,980,500    52,078 
HUYA, Inc. (ADR)1,2   1,950,894    34,433 
CD Projekt SA   374,833    18,188 
         15,968,800 
           
Health care 11.60%          
UnitedHealth Group, Inc.   4,715,535    1,888,289 
Pfizer, Inc.   38,674,990    1,514,513 
Centene Corp.1   18,785,355    1,370,016 
Thermo Fisher Scientific, Inc.   2,054,872    1,036,621 
AstraZeneca PLC   7,458,804    895,891 
AstraZeneca PLC (ADR)2   716,369    42,911 
Eli Lilly and Company   4,064,035    932,777 
Cigna Corp.   2,564,381    607,938 
Regeneron Pharmaceuticals, Inc.1   963,352    538,071 
Abbott Laboratories   4,027,900    466,954 
Molina Healthcare, Inc.1   1,442,005    364,914 
Baxter International, Inc.   4,433,327    356,883 
Bristol-Myers Squibb Company   5,038,309    336,660 
Allakos, Inc.1,3   3,507,512    299,436 
Illumina, Inc.1   593,430    280,817 
ResMed, Inc.   1,064,160    262,337 
Edwards Lifesciences Corp.1   2,423,294    250,981 
Novo Nordisk A/S, Class B   2,533,440    212,249 
Agilon Health, Inc.1   5,157,367    209,234 
Humana Inc.   426,103    188,644 
Vertex Pharmaceuticals, Inc.1   914,440    184,379 
Danaher Corp.   672,423    180,451 
Twist Bioscience Corp.1   1,262,642    168,247 
Teva Pharmaceutical Industries, Ltd. (ADR)1   16,696,268    165,293 
NovoCure, Ltd.1   660,609    146,536 
Ultragenyx Pharmaceutical, Inc.1   1,508,549    143,840 
Seagen, Inc.1   894,842    141,278 
Rede D’Or Sao Luiz SA   9,827,058    136,387 
Galapagos NV (ADR)1   1,721,311    118,581 
Zimmer Biomet Holdings, Inc.   716,679    115,256 
Biogen, Inc.1   329,129    113,968 
Applied Molecular Transport, Inc.1,2,3   2,286,388    104,579 

 

Fundamental Investors 3
 
Common stocks (continued)  Shares   Value
(000)		 
Health care (continued)          
Cortexyme, Inc.1,2,3   1,919,211   $101,718 
BeiGene, Ltd. (ADR)1   292,118    100,252 
Anthem, Inc.   254,480    97,160 
Daiichi Sankyo Company, Ltd.   4,263,150    91,886 
BioNTech SE (ADR)1   399,159    89,364 
Notre Dame Intermédica Participações SA   4,645,000    79,316 
GlaxoSmithKline PLC   3,877,505    76,133 
Kronos Bio, Inc.1,2,3   3,133,214    75,040 
Merck & Co., Inc.   867,232    67,445 
AmerisourceBergen Corp.   564,570    64,638 
Mettler-Toledo International, Inc.1   44,762    62,011 
Insulet Corp.1   206,504    56,687 
Incyte Corp.1   668,310    56,225 
Oak Street Health, Inc.1   825,539    48,352 
Carl Zeiss Meditec AG, non-registered shares   249,340    48,177 
Gilead Sciences, Inc.   658,259    45,328 
Guardant Health, Inc.1   283,007    35,147 
Tandem Diabetes Care, Inc.1   249,164    24,269 
Bausch Health Companies, Inc.1   747,180    21,907 
Organon & Co.1   86,722    2,624 
         15,018,610 
           
Consumer discretionary 10.32%          
Amazon.com, Inc.1   874,877    3,009,717 
Home Depot, Inc.   2,815,555    897,852 
Evolution AB   5,629,975    889,681 
Dollar General Corp.   3,831,920    829,189 
Restaurant Brands International, Inc.   11,449,951    737,835 
Prosus NV   6,543,389    639,870 
Target Corp.   2,600,143    628,559 
Booking Holdings, Inc.1   202,503    443,095 
LVMH Moët Hennessy-Louis Vuitton SE   502,613    394,117 
Flutter Entertainment PLC (CDI)1   1,314,540    239,029 
Flutter Entertainment PLC1   677,483    122,668 
Industria de Diseño Textil, SA   9,989,717    351,924 
NIKE, Inc., Class B   2,123,362    328,038 
Domino’s Pizza, Inc.   697,990    325,605 
Marriott International, Inc., Class A1   1,810,280    247,139 
McDonald’s Corp.   997,900    230,505 
B&M European Value Retail SA   28,673,243    227,352 
Caesars Entertainment, Inc.1   2,137,613    221,777 
Shop Apotheke Europe NV, non-registered shares1,3   1,166,589    219,112 
YUM! Brands, Inc.   1,895,722    218,065 
Galaxy Entertainment Group, Ltd.1   24,318,000    194,656 
Burlington Stores, Inc.1   553,466    178,211 
TJX Companies, Inc.   2,496,292    168,300 
Darden Restaurants, Inc.   1,049,266    153,182 
Hilton Worldwide Holdings, Inc.1   1,156,118    139,451 
Entain PLC1   5,521,379    133,317 
Peloton Interactive, Inc., Class A1   1,026,945    127,362 
Cie. Financière Richemont SA, Class A   978,601    118,405 
Kering SA   129,512    113,180 
Arrival Group1,2   6,384,239    100,041 
Trainline PLC1   22,560,332    91,626 
Five Below, Inc.1   465,769    90,019 
Carvana Co., Class A1   296,875    89,603 
Floor & Decor Holdings, Inc., Class A1   796,992    84,242 
Toll Brothers, Inc.   1,392,515    80,501 
adidas AG   214,930    79,999 
MercadoLibre, Inc.1   48,458    75,487 
THG PLC1   8,485,900    71,605 
Lowe’s Companies, Inc.   285,581    55,394 
Airbnb, Inc., Class A1   89,963    13,777 
         13,359,487 

 

4 Fundamental Investors
 
Common stocks (continued)  Shares   Value
(000)		 
Financials 10.29%          
JPMorgan Chase & Co.   11,137,893   $1,732,388 
The Blackstone Group, Inc.   12,326,827    1,197,428 
CME Group, Inc., Class A   3,110,453    661,531 
Intercontinental Exchange, Inc.   5,543,960    658,068 
KKR & Co., Inc.   10,681,162    632,752 
BlackRock, Inc.   638,008    558,238 
Bank of America Corp.   13,522,639    557,538 
Apollo Global Management, Inc., Class A   8,712,106    541,893 
Aon PLC, Class A   2,013,886    480,835 
HDFC Bank, Ltd.   22,825,000    459,970 
Sberbank of Russia PJSC (ADR)   23,510,850    390,398 
Synchrony Financial   7,850,515    380,907 
Truist Financial Corp.   6,573,251    364,815 
Chubb, Ltd.   1,918,043    304,854 
Citigroup, Inc.   4,290,967    303,586 
Moody’s Corp.   826,525    299,508 
Capital One Financial Corp.   1,933,871    299,151 
Marsh & McLennan Companies, Inc.   2,038,844    286,825 
First Republic Bank   1,519,961    284,491 
AIA Group, Ltd.   22,183,000    275,705 
Citizens Financial Group, Inc.   5,445,318    249,777 
Discover Financial Services   2,086,118    246,767 
Arthur J. Gallagher & Co.   1,751,482    245,348 
Arch Capital Group, Ltd.1   5,828,953    226,979 
S&P Global, Inc.   501,973    206,035 
Kotak Mahindra Bank, Ltd.1   7,571,000    173,752 
Société Générale   5,321,652    156,870 
Brookfield Asset Management, Inc., Class A   2,944,788    150,125 
Travelers Companies, Inc.   815,653    122,111 
T. Rowe Price Group, Inc.   558,956    110,657 
Ares Management Corp., Class A   1,715,449    109,085 
W. R. Berkley Corp.   1,196,898    89,085 
PNC Financial Services Group, Inc.   448,308    85,519 
BNP Paribas SA   1,227,416    76,947 
Ping An Insurance (Group) Company of China, Ltd., Class H   7,711,000    75,528 
QBE Insurance Group, Ltd.   8,944,247    72,377 
London Stock Exchange Group PLC   554,335    61,115 
Toronto-Dominion Bank (CAD denominated)   807,740    56,606 
Oscar Health, Inc., Class A1,2   1,809,663    38,908 
Bank of Nova Scotia (CAD denominated)   597,745    38,876 
Progressive Corp.   340,415    33,432 
Willis Towers Watson PLC   136,684    31,440 
Brookfield Asset Management Reinsurance Partners, Ltd., Class A1   20,308    1,056 
         13,329,276 
           
Industrials 9.20%          
TransDigm Group, Inc.1   1,673,602    1,083,306 
Honeywell International, Inc.   4,859,128    1,065,850 
CSX Corp.   31,065,210    996,572 
Deere & Company   2,150,473    758,493 
Parker-Hannifin Corp.   1,965,862    603,736 
Airbus SE, non-registered shares1   4,570,423    587,677 
Union Pacific Corp.   2,568,881    564,974 
Carrier Global Corp.   11,107,429    539,821 
Emerson Electric Co.   5,172,840    497,834 
Safran SA   3,496,242    484,712 
ABB, Ltd.   14,120,504    479,052 
Norfolk Southern Corp.   1,601,037    424,931 
Caterpillar, Inc.   1,886,422    410,542 
ITT, Inc.   4,055,819    371,472 
Nidec Corp.   2,289,300    265,311 
Northrop Grumman Corp.   728,927    264,914 
Waste Connections, Inc.   1,968,801    235,134 
Lockheed Martin Corp.   619,700    234,463 
Rockwell Automation   793,518    226,962 
Boeing Company1   801,572    192,025 
LIXIL Corp.   4,575,100    118,315 
L3Harris Technologies, Inc.   530,552    114,679 

 

Fundamental Investors 5
 
Common stocks (continued)  Shares   Value
(000)		 
Industrials (continued)          
Raytheon Technologies Corp.   1,333,663   $113,775 
TFI International, Inc. (CAD denominated)   1,161,928    106,079 
BWX Technologies, Inc.   1,769,486    102,843 
Lifco AB, Class B   4,359,400    101,878 
MTU Aero Engines AG   356,586    88,327 
Armstrong World Industries, Inc.   822,950    88,270 
AMETEK, Inc.   602,057    80,375 
IMCD NV   498,121    79,206 
FTI Consulting, Inc.1   579,334    79,143 
Dun & Bradstreet Holdings, Inc.1   3,589,539    76,708 
Shoals Technologies Group, Inc., Class A1   2,013,126    71,466 
United Rentals, Inc.1   219,208    69,930 
Equifax, Inc.   280,337    67,143 
Uber Technologies, Inc.1   1,122,032    56,236 
ASSA ABLOY AB, Class B   1,744,263    52,543 
Rexnord Corp.   997,362    49,908 
DSV Panalpina A/S   194,266    45,304 
Sweco AB, Class B, non-registered shares   1,796,901    32,692 
PACCAR, Inc.   261,310    23,322 
         11,905,923 
           
Consumer staples 8.47%          
Philip Morris International, Inc.   24,284,173    2,406,804 
Altria Group, Inc.   41,196,412    1,964,245 
British American Tobacco PLC   44,400,211    1,719,726 
British American Tobacco PLC (ADR)   1,038,814    40,836 
Conagra Brands, Inc.   18,336,914    667,097 
Keurig Dr Pepper, Inc.   16,940,797    596,994 
Nestlé SA   4,698,846    585,140 
Mondelez International, Inc.   8,292,551    517,787 
Constellation Brands, Inc., Class A   1,886,971    441,344 
Procter & Gamble Company   2,036,613    274,800 
Walmart, Inc.   1,866,514    263,216 
Archer Daniels Midland Company   4,043,943    245,063 
Anheuser-Busch InBev SA/NV   3,070,844    221,425 
Bunge, Ltd.   2,820,940    220,456 
Reckitt Benckiser Group PLC (ADR)   6,018,200    107,726 
Reckitt Benckiser Group PLC   1,187,010    105,038 
Kraft Heinz Company   4,855,043    197,989 
Kellogg Co.   2,593,141    166,817 
ITC, Ltd.   38,035,066    103,723 
Church & Dwight Co., Inc.   877,934    74,817 
General Mills, Inc.   684,219    41,689 
Tesco PLC   1    —4
         10,962,732 
           
Materials 4.97%          
Vale SA, ordinary nominative shares (ADR)   26,471,240    603,809 
Vale SA, ordinary nominative shares   13,329,000    303,492 
LyondellBasell Industries NV   5,620,189    578,149 
Eastman Chemical Company   4,899,099    571,970 
Grupo México, SAB de CV, Series B   114,129,118    536,809 
Dow Inc.   8,352,310    528,534 
Barrick Gold Corp.   19,805,639    409,581 
Linde PLC   1,257,620    363,578 
Wheaton Precious Metals Corp.   7,019,435    309,346 
Rio Tinto PLC   3,755,261    309,030 
Corteva, Inc.   6,881,798    305,208 
Royal Gold, Inc.   2,274,983    259,575 
First Quantum Minerals, Ltd.   11,230,363    258,835 
Westlake Chemical Corp.   2,595,418    233,821 
Franco-Nevada Corp.   1,478,000    214,486 
BHP Group PLC   5,519,690    162,634 
PPG Industries, Inc.   658,415    111,779 
Air Products and Chemicals, Inc.   324,384    93,319 
Packaging Corporation of America   685,188    92,788 

 

6 Fundamental Investors
 
Common stocks (continued)  Shares   Value
(000)		 
Materials (continued)          
Asian Paints, Ltd.   2,142,500   $86,262 
CCL Industries, Inc., Class B, nonvoting shares   1,157,633    63,756 
Sherwin-Williams Company   149,605    40,760 
         6,437,521 
           
Energy 3.07%          
ConocoPhillips   11,450,258    697,321 
Canadian Natural Resources, Ltd. (CAD denominated)   17,986,913    652,961 
Exxon Mobil Corp.   7,338,596    462,919 
Valero Energy Corp.   5,593,286    436,724 
Chevron Corp.   3,747,953    392,561 
EOG Resources, Inc.   4,689,797    391,317 
BP PLC   74,592,999    325,031 
Baker Hughes Co., Class A   9,110,824    208,364 
Pioneer Natural Resources Company   720,284    117,060 
Chesapeake Energy Corp.   2,179,922    113,181 
Cabot Oil & Gas Corp.   6,359,615    111,039 
Equitrans Midstream Corp.   7,954,710    67,695 
         3,976,173 
           
Utilities 2.32%          
Enel SpA   101,492,433    942,539 
AES Corp.   21,163,867    551,742 
DTE Energy Company   2,918,715    378,265 
Sempra Energy   1,724,107    228,410 
Ørsted AS   1,288,040    180,742 
Xcel Energy, Inc.   2,414,398    159,061 
Exelon Corp.   3,545,332    157,094 
CenterPoint Energy, Inc.   5,877,126    144,107 
CMS Energy Corp.   1,990,220    117,582 
NextEra Energy, Inc.   997,900    73,126 
Iberdrola, SA, non-registered shares   3,196,958    38,969 
Brookfield Infrastructure Partners LP   573,483    31,839 
         3,003,476 
           
Real estate 1.57%          
Crown Castle International Corp. REIT   4,129,101    805,588 
VICI Properties, Inc. REIT   12,248,436    379,946 
Gaming and Leisure Properties, Inc. REIT   6,426,884    297,757 
Equinix, Inc. REIT   293,522    235,581 
AvalonBay Communities, Inc. REIT   674,303    140,720 
Digital Realty Trust, Inc. REIT   301,203    45,319 
Brookfield Property Partners LP   1,894,989    35,910 
Shimao Group Holdings, Ltd.   14,560,000    35,705 
KE Holdings, Inc., Class A (ADR)1   658,614    31,403 
K-Fast Holding AB, Class B1   3,114,076    22,742 
         2,030,671 
           
Total common stocks (cost: $69,689,490,000)        126,970,088 
           
Preferred securities 0.02%          
Information technology 0.02%          
Samsung Electronics Co., Ltd., nonvoting preferred shares   500,000    32,722 
           
Total preferred securities (cost: $14,544,000)        32,722 
           
Rights & warrants 0.00%          
Consumer discretionary 0.00%          
Cie. Financière Richemont SA, Class A, warrants, expire 20231   179,714    120 
           
Total rights & warrants (cost: $0)        120 

 

Fundamental Investors 7
 
Convertible stocks 0.32%  Shares   Value
(000)		 
Information technology 0.17%        
Broadcom, Inc., Series A, cumulative convertible preferred shares, 8.00% 2022   141,340   $214,819 
           
Financials 0.08%          
KKR & Co., Inc., Series C, 6.00% convertible preferred shares   1,269,092    97,796 
           
Utilities 0.07%          
AES Corp., convertible preferred units, 6.875% 2024   640,552    68,904 
NextEra Energy, Inc., convertible preferred units, 6.219% 2023   558,524    27,591 
         96,495 
           
Total convertible stocks (cost: $300,903,000)        409,110 
           
Short-term securities 1.64%          
Money market investments 1.54%          
Capital Group Central Cash Fund 0.04%3,5   19,920,667    1,992,067 
           
Money market investments purchased with collateral from securities on loan 0.10%          
Goldman Sachs Financial Square Government Fund, Institutional Shares 0.02%5,6   73,519,217    73,519 
Capital Group Central Cash Fund 0.04%3,5,6   594,327    59,433 
Invesco Short-Term Investments Trust – Government & Agency Portfolio, Institutional Class 0.03%5,6   390,363    390 
         133,342 
           
Total short-term securities (cost: $2,125,259,000)        2,125,409 
Total investment securities 100.04% (cost: $72,130,196,000)        129,537,449 
Other assets less liabilities (0.04)%        (52,842)
           
Net assets 100.00%       $129,484,607 

 

8 Fundamental Investors
 

Investments in affiliates3

 

   Value of
affiliates at
1/1/2021
(000)		   Additions
(000)		   Reductions
(000)		   Net
realized
gain (loss)
(000)		   Net
unrealized
(depreciation)
appreciation
(000)		   Value of
affiliates at
6/30/2021
(000)		   Dividend
income
(000)		 
Common stocks 0.62%                                   
Health care 0.45%                                   
Allakos, Inc.1  $481,945   $8,988   $924   $368   $(190,941)  $299,436   $— 
Applied Molecular Transport, Inc.1,2   65,542    6,407    303    128    32,805    104,579    — 
Cortexyme, Inc.1,2   30,137    29,983    253    101    41,750    101,718    — 
Kronos Bio, Inc.1,2   —    88,318    171    (7)   (13,100)   75,040    — 
GW Pharmaceuticals PLC (ADR)1,7   230,820    —    430,382    195,041    4,521    —    — 
                             580,773      
Consumer discretionary 0.17%                                   
Shop Apotheke Europe NV, non-registered shares1   64,638    210,409    595    62    (55,402)   219,112    — 
Total common stocks                            799,885      
Short-term securities 1.58%                                   
Money market investments 1.54%                                   
Capital Group Central Cash Fund 0.04%5   2,361,500    4,163,909    4,533,108    20    (254)   1,992,067    842 
Money market investments purchased with collateral from securities on loan 0.04%                                   
Capital Group Central Cash Fund 0.04%5,6   —    59,4338                   59,433    —9
Total short-term securities                            2,051,500      
Total 2.20%                 $195,713   $(180,621)  $2,851,385   $842 
   
1 Security did not produce income during the last 12 months.
2 All or a portion of this security was on loan. The total value of all such securities was $193,980,000, which represented .15% of the net assets of the fund. Refer to Note 5 for more information on securities lending.
3 Affiliate of the fund or part of the same “group of investment companies” as the fund, as defined under the Investment Company Act of 1940, as amended.
4 Amount less than one thousand.
5 Rate represents the seven-day yield at 6/30/2021.
6 Security purchased with cash collateral from securities on loan. Refer to Note 5 for more information on securities lending.
7 Unaffiliated issuer at 6/30/2021.
8 Represents net activity. Refer to Note 5 for more information on securities lending.
9 Dividend income is included with securities lending income in the fund’s statement of operations and is not shown in this table.

 

Key to abbreviations

ADR = American Depositary Receipts

CAD = Canadian dollars

CDI = CREST Depository Interest

 

See notes to financial statements.

 

Fundamental Investors 9
 

Financial statements

  

Statement of assets and liabilities unaudited
at June 30, 2021 (dollars in thousands)

 

Assets:        
Investment securities, at value (includes $193,980 of investment securities on loan):          
Unaffiliated issuers (cost: $69,285,752)  $126,686,064      
Affiliated issuers (cost: $2,844,444)   2,851,385   $129,537,449 
Cash        4,267 
Cash denominated in currencies other than U.S. dollars (cost: $8,421)        8,421 
Cash collateral received for securities on loan        14,816 
Receivables for:          
Sales of investments   246,129      
Sales of fund’s shares   81,082      
Dividends   151,757      
Securities lending income   6    478,974 
         130,043,927 
Liabilities:          
Collateral for securities on loan        148,158 
Payables for:          
Purchases of investments   235,817      
Repurchases of fund’s shares   92,962      
Investment advisory services   25,308      
Services provided by related parties   24,702      
Trustees’ deferred compensation   4,658      
Non-U.S. taxes   26,349      
Other   1,366    411,162 
Net assets at June 30, 2021       $129,484,607 
           
Net assets consist of:          
Capital paid in on shares of beneficial interest       $66,651,460 
Total distributable earnings        62,833,147 
Net assets at June 30, 2021       $129,484,607 

 

See notes to financial statements.

 

10 Fundamental Investors
 

Financial statements (continued)

 

Statement of assets and liabilities at June 30, 2021 (continued) unaudited
(dollars and shares in thousands, except per-share amounts)

 

Shares of beneficial interest issued and outstanding (no stated par value) —
unlimited shares authorized (1,696,133 total shares outstanding)

 

   Net assets   Shares
outstanding		   Net asset value
per share		 
Class A  $67,655,907    885,907   $76.37 
Class C   1,741,081    22,926    75.94 
Class T   13    —*   76.34 
Class F-1   2,400,840    31,456    76.32 
Class F-2   13,275,175    173,926    76.33 
Class F-3   9,396,245    123,104    76.33 
Class 529-A   3,633,318    47,664    76.23 
Class 529-C   144,387    1,892    76.30 
Class 529-E   105,341    1,383    76.16 
Class 529-T   18    —*   76.35 
Class 529-F-1   13    —*   76.15 
Class 529-F-2   272,240    3,565    76.36 
Class 529-F-3   13    —*   76.36 
Class R-1   117,989    1,554    75.95 
Class R-2   785,155    10,351    75.86 
Class R-2E   107,379    1,415    75.92 
Class R-3   1,949,066    25,594    76.15 
Class R-4   1,872,930    24,587    76.17 
Class R-5E   592,722    7,779    76.19 
Class R-5   1,239,999    16,225    76.43 
Class R-6   24,194,776    316,805    76.37 

 

* Amount less than one thousand.

 

See notes to financial statements.

 

Fundamental Investors 11
 

Financial statements (continued)

 

Statement of operations unaudited
for the six months ended June 30, 2021 (dollars in thousands)

 

Investment income:        
Income:        
Dividends (net of non-U.S. taxes of $30,767; also includes $842 from affiliates)  $1,119,650      
Securities lending income (net of fees)   3,891      
Interest   72   $1,123,613 
Fees and expenses*:          
Investment advisory services   146,079      
Distribution services   104,721      
Transfer agent services   38,216      
Administrative services   18,324      
Reports to shareholders   1,195      
Registration statement and prospectus   919      
Trustees’ compensation   881      
Auditing and legal   46      
Custodian   2,140      
Other   1,271      
Total fees and expenses before waiver/reimbursement   313,792      
Less waiver/reimbursement of fees and expenses:          
Investment advisory services waiver   41      
Transfer agent services reimbursement   —†      
Total fees and expenses after waiver/reimbursement        313,751 
Net investment income        809,862 
           
Net realized gain and unrealized appreciation:          
Net realized gain on:          
Investments (net of non-U.S. taxes of $2,255):          
Unaffiliated issuers   4,831,566      
Affiliated issuers   195,713      
In-kind redemptions   188,858      
Currency transactions   628    5,216,765 
Net unrealized appreciation (depreciation) on:          
Investments (net of non-U.S. taxes of $21,636):          
Unaffiliated issuers   10,312,445      
Affiliated issuers   (180,621)     
Currency translations   (2,050)   10,129,774 
Net realized gain and unrealized appreciation        15,346,539 
Net increase in net assets resulting from operations       $16,156,401 

 

* Additional information related to class-specific fees and expenses is included in the notes to financial statements.
† Amount less than one thousand.

 

See notes to financial statements.

 

12 Fundamental Investors
 

Financial statements (continued)

 

Statements of changes in net assets  
  (dollars in thousands)

 

   Six months ended
June 30,
2021*		  Year ended
December 31,
2020		 
Operations:          
Net investment income  $809,862   $1,595,075 
Net realized gain   5,216,765    3,782,868 
Net unrealized appreciation   10,129,774    9,474,995 
Net increase in net assets resulting from operations   16,156,401    14,852,938 
           
Distributions paid to shareholders   (4,119,420)   (3,132,095)
           
Net capital share transactions   1,627,157    (4,417,779)
           
Total increase in net assets   13,664,138    7,303,064 
           
Net assets:          
Beginning of period   115,820,469    108,517,405 
End of period  $129,484,607   $115,820,469 

 

* Unaudited.

 

See notes to financial statements.

 

Fundamental Investors 13
 

Notes to financial statements unaudited

 

1. Organization

 

American Funds Fundamental Investors (the “trust”) is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end, diversified management investment company and has initially issued one series of shares, Fundamental Investors (the “fund”). The fund seeks long-term growth of capital and income.

 

The fund has 21 share classes consisting of six retail share classes (Classes A, C, T, F-1, F-2 and F-3), seven 529 college savings plan share classes (Classes 529-A, 529-C, 529-E, 529-T, 529-F-1, 529-F-2 and 529-F-3) and eight retirement plan share classes (Classes R-1, R-2, R-2E, R-3, R-4, R-5E, R-5 and R-6). The 529 college savings plan share classes can be used to save for college education. The retirement plan share classes are generally offered only through eligible employer-sponsored retirement plans. The fund’s share classes are described further in the following table:

 

Share class   Initial sales charge   Contingent deferred sales
charge upon redemption		   Conversion feature  
Classes A and 529-A   Up to 5.75% for Class A; up to 3.50% for Class 529-A   None (except 1% for certain redemptions within 18 months of purchase without an initial sales charge)   None  
Classes C and 529-C   None   1% for redemptions within one year of purchase   Class C converts to Class A after eight years and Class 529-C converts to Class 529-A after five years  
Class 529-E   None   None   None  
Classes T and 529-T*   Up to 2.50%   None   None  
Classes F-1, F-2, F-3, 529-F-1, 529-F-2 and 529-F-3   None   None   None  
Classes R-1, R-2, R-2E, R-3, R-4, R-5E, R-5 and R-6   None   None   None  
* Class T and 529-T shares are not available for purchase.

 

Holders of all share classes have equal pro rata rights to the assets, dividends and liquidation proceeds of the fund. Each share class has identical voting rights, except for the exclusive right to vote on matters affecting only its class. Share classes have different fees and expenses (“class-specific fees and expenses”), primarily due to different arrangements for distribution, transfer agent and administrative services. Differences in class-specific fees and expenses will result in differences in net investment income and, therefore, the payment of different per-share dividends by each share class.

 

2. Significant accounting policies

 

The fund is an investment company that applies the accounting and reporting guidance issued in Topic 946 by the U.S. Financial Accounting Standards Board. The fund’s financial statements have been prepared to comply with U.S. generally accepted accounting principles (“U.S. GAAP”). These principles require the fund’s investment adviser to make estimates and assumptions that affect reported amounts and disclosures. Actual results could differ from those estimates. Subsequent events, if any, have been evaluated through the date of issuance in the preparation of the financial statements. The fund follows the significant accounting policies described in this section, as well as the valuation policies described in the next section on valuation.

 

Security transactions and related investment income — Security transactions are recorded by the fund as of the date the trades are executed with brokers. Realized gains and losses from security transactions are determined based on the specific identified cost of the securities. In the event a security is purchased with a delayed payment date, the fund will segregate liquid assets sufficient to meet its payment obligations. Dividend income is recognized on the ex-dividend date and interest income is recognized on an accrual basis. Market discounts, premiums and original issue discounts on fixed-income securities are amortized daily over the expected life of the security.

 

Class allocations — Income, fees and expenses (other than class-specific fees and expenses), realized gains and losses and unrealized appreciation and depreciation are allocated daily among the various share classes based on their relative net assets. Class-specific fees and expenses, such as distribution, transfer agent and administrative services, are charged directly to the respective share class.

 

Distributions paid to shareholders — Income dividends and capital gain distributions are recorded on the ex-dividend date.

 

14 Fundamental Investors
 

Currency translation — Assets and liabilities, including investment securities, denominated in currencies other than U.S. dollars are translated into U.S. dollars at the exchange rates supplied by one or more pricing vendors on the valuation date. Purchases and sales of investment securities and income and expenses are translated into U.S. dollars at the exchange rates on the dates of such transactions. The effects of changes in exchange rates on investment securities are included with the net realized gain or loss and net unrealized appreciation or depreciation on investments in the fund’s statement of operations. The realized gain or loss and unrealized appreciation or depreciation resulting from all other transactions denominated in currencies other than U.S. dollars are disclosed separately.

 

In-kind redemptions — The fund normally redeems shares in cash; however, under certain conditions and circumstances, payment of the redemption price wholly or partly with portfolio securities or other fund assets may be permitted. A redemption of shares in-kind is based upon the closing value of the shares being redeemed as of the trade date. Realized gains/losses resulting from redemptions of shares in-kind are reflected separately in the fund’s statement of operations.

 

3. Valuation

 

Capital Research and Management Company (“CRMC”), the fund’s investment adviser, values the fund’s investments at fair value as defined by U.S. GAAP. The net asset value per share is calculated once daily as of the close of regular trading on the New York Stock Exchange, normally 4 p.m. New York time, each day the New York Stock Exchange is open.

 

Methods and inputs — The fund’s investment adviser uses the following methods and inputs to establish the fair value of the fund’s assets and liabilities. Use of particular methods and inputs may vary over time based on availability and relevance as market and economic conditions evolve.

 

Equity securities are generally valued at the official closing price of, or the last reported sale price on, the exchange or market on which such securities are traded, as of the close of business on the day the securities are being valued or, lacking any sales, at the last available bid price. Prices for each security are taken from the principal exchange or market on which the security trades.

 

Fixed-income securities, including short-term securities, are generally valued at prices obtained from one or more pricing vendors. Vendors value such securities based on one or more of the inputs described in the following table. The table provides examples of inputs that are commonly relevant for valuing particular classes of fixed-income securities in which the fund is authorized to invest. However, these classifications are not exclusive, and any of the inputs may be used to value any other class of fixed-income security.

 

Fixed-income class   Examples of standard inputs
All   Benchmark yields, transactions, bids, offers, quotations from dealers and trading systems, new issues, spreads and other relationships observed in the markets among comparable securities; and proprietary pricing models such as yield measures calculated using factors such as cash flows, financial or collateral performance and other reference data (collectively referred to as “standard inputs”)
Corporate bonds, notes & loans; convertible securities   Standard inputs and underlying equity of the issuer
Bonds & notes of governments & government agencies   Standard inputs and interest rate volatilities
Mortgage-backed; asset-backed obligations   Standard inputs and cash flows, prepayment information, default rates, delinquency and loss assumptions, collateral characteristics, credit enhancements and specific deal information

 

When the fund’s investment adviser deems it appropriate to do so (such as when vendor prices are unavailable or deemed to be not representative), fixed-income securities will be valued in good faith at the mean quoted bid and ask prices that are reasonably and timely available (or bid prices, if ask prices are not available) or at prices for securities of comparable maturity, quality and type.

 

Securities with both fixed-income and equity characteristics, or equity securities traded principally among fixed-income dealers, are generally valued in the manner described for either equity or fixed-income securities, depending on which method is deemed most appropriate by the fund’s investment adviser. The Capital Group Central Cash Fund (“CCF”), a fund within the Capital Group Central Fund Series (“Central Funds”), is valued based upon a floating net asset value, which fluctuates with changes in the value of CCF’s portfolio securities. The underlying securities are valued based on the policies and procedures in CCF’s statement of additional information.

 

Fundamental Investors 15
 

Securities and other assets for which representative market quotations are not readily available or are considered unreliable by the fund’s investment adviser are fair valued as determined in good faith under fair valuation guidelines adopted by authority of the fund’s board of trustees as further described. The investment adviser follows fair valuation guidelines, consistent with U.S. Securities and Exchange Commission rules and guidance, to consider relevant principles and factors when making fair value determinations. The investment adviser considers relevant indications of value that are reasonably and timely available to it in determining the fair value to be assigned to a particular security, such as the type and cost of the security; contractual or legal restrictions on resale of the security; relevant financial or business developments of the issuer; actively traded similar or related securities; conversion or exchange rights on the security; related corporate actions; significant events occurring after the close of trading in the security; and changes in overall market conditions. In addition, the closing prices of equity securities that trade in markets outside U.S. time zones may be adjusted to reflect significant events that occur after the close of local trading but before the net asset value of each share class of the fund is determined. Fair valuations and valuations of investments that are not actively trading involve judgment and may differ materially from valuations that would have been used had greater market activity occurred.

 

Processes and structure — The fund’s board of trustees has delegated authority to the fund’s investment adviser to make fair value determinations, subject to board oversight. The investment adviser has established a Joint Fair Valuation Committee (the “Fair Valuation Committee”) to administer, implement and oversee the fair valuation process, and to make fair value decisions. The Fair Valuation Committee regularly reviews its own fair value decisions, as well as decisions made under its standing instructions to the investment adviser’s valuation teams. The Fair Valuation Committee reviews changes in fair value measurements from period to period and may, as deemed appropriate, update the fair valuation guidelines to better reflect the results of back testing and address new or evolving issues. The Fair Valuation Committee reports any changes to the fair valuation guidelines to the board of trustees. The fund’s board and audit committee also regularly review reports that describe fair value determinations and methods.

 

The fund’s investment adviser has also established a Fixed-Income Pricing Review Group to administer and oversee the fixed-income valuation process, including the use of fixed-income pricing vendors. This group regularly reviews pricing vendor information and market data. Pricing decisions, processes and controls over security valuation are also subject to additional internal reviews facilitated by the investment adviser’s global risk management group.

 

Classifications — The fund’s investment adviser classifies the fund’s assets and liabilities into three levels based on the inputs used to value the assets or liabilities. Level 1 values are based on quoted prices in active markets for identical securities. Level 2 values are based on significant observable market inputs, such as quoted prices for similar securities and quoted prices in inactive markets. Certain securities trading outside the U.S. may transfer between Level 1 and Level 2 due to valuation adjustments resulting from significant market movements following the close of local trading. Level 3 values are based on significant unobservable inputs that reflect the investment adviser’s determination of assumptions that market participants might reasonably use in valuing the securities. The valuation levels are not necessarily an indication of the risk or liquidity associated with the underlying investment. For example, U.S. government securities are reflected as Level 2 because the inputs used to determine fair value may not always be quoted prices in an active market. At June 30, 2021, all of the fund’s investments were classified as Level 1.

 

4. Risk factors

 

Investing in the fund may involve certain risks including, but not limited to, those described below.

 

Market conditions — The prices of, and the income generated by, the common stocks and other securities held by the fund may decline — sometimes rapidly or unpredictably — due to various factors, including events or conditions affecting the general economy or particular industries; overall market changes; local, regional or global political, social or economic instability; governmental, governmental agency or central bank responses to economic conditions; and currency exchange rate, interest rate and commodity price fluctuations.

 

Economies and financial markets throughout the world are highly interconnected. Economic, financial or political events, trading and tariff arrangements, wars, terrorism, cybersecurity events, natural disasters, public health emergencies (such as the spread of infectious disease) and other circumstances in one country or region, including actions taken by governmental or quasi-governmental authorities in response to any of the foregoing, could have impacts on global economies or markets. As a result, whether or not the fund invests in securities of issuers located in or with significant exposure to the countries affected, the value and liquidity of the fund’s investments may be negatively affected by developments in other countries and regions.

 

16 Fundamental Investors
 

Issuer risks — The prices of, and the income generated by, securities held by the fund may decline in response to various factors directly related to the issuers of such securities, including reduced demand for an issuer’s goods or services, poor management performance, major litigation, investigations or other controversies related to the issuer, changes in government regulations affecting the issuer or its competitive environment and strategic initiatives such as mergers, acquisitions or dispositions and the market response to any such initiatives.

 

Investing in growth-oriented stocks — Growth-oriented common stocks and other equity-type securities (such as preferred stocks, convertible preferred stocks and convertible bonds) may involve larger price swings and greater potential for loss than other types of investments.

 

Investing in income-oriented stocks — The value of the fund’s securities and income provided by the fund may be reduced by changes in the dividend policies of, and the capital resources available for dividend payments at, the companies in which the fund invests.

 

Investing outside the U.S. — Securities of issuers domiciled outside the U.S., or with significant operations or revenues outside the U.S., may lose value because of adverse political, social, economic or market developments (including social instability, regional conflicts, terrorism and war) in the countries or regions in which the issuers operate or generate revenue. These securities may also lose value due to changes in foreign currency exchange rates against the U.S. dollar and/or currencies of other countries. Issuers of these securities may be more susceptible to actions of foreign governments, such as nationalization, currency blockage or the imposition of price controls or punitive taxes, each of which could adversely impact the value of these securities. Securities markets in certain countries may be more volatile and/or less liquid than those in the U.S. Investments outside the U.S. may also be subject to different accounting practices and different regulatory, legal and reporting standards and practices, and may be more difficult to value, than those in the U.S. In addition, the value of investments outside the U.S. may be reduced by foreign taxes, including foreign withholding taxes on interest and dividends. Further, there may be increased risks of delayed settlement of securities purchased or sold by the fund. The risks of investing outside the U.S. may be heightened in connection with investments in emerging markets.

 

Management — The investment adviser to the fund actively manages the fund’s investments. Consequently, the fund is subject to the risk that the methods and analyses, including models, tools and data, employed by the investment adviser in this process may be flawed or incorrect and may not produce the desired results. This could cause the fund to lose value or its investment results to lag relevant benchmarks or other funds with similar objectives.

 

5. Certain investment techniques

 

Securities lending — The fund has entered into securities lending transactions in which the fund earns income by lending investment securities to brokers, dealers or other institutions. Each transaction involves three parties: the fund, acting as the lender of the securities, a borrower, and a lending agent that acts as an intermediary.

 

Securities lending transactions are entered into by the fund under a securities lending agent agreement with the lending agent. The lending agent facilitates the exchange of securities between the fund and approved borrowers, ensures that securities loans are properly coordinated and documented, marks-to-market the value of collateral daily, secures additional collateral from a borrower if it falls below preset terms, and may reinvest cash collateral on behalf of the fund according to agreed parameters. The lending agent provides indemnification to the fund against losses resulting from a borrower default. Although risk is mitigated by the collateral and indemnification, the fund could experience a delay in recovering its securities and a potential loss of income or value if a borrower fails to return securities, collateral investments decline in value or the lending agent fails to perform.

 

The borrower is required to post highly liquid assets, such as cash or U.S. government securities, as collateral for the loan in an amount at least equal to the value of the securities loaned. Investments made with cash collateral are recognized as assets in the fund’s investment portfolio. The same amount is recorded as a liability in the fund’s statement of assets and liabilities. While securities are on loan, the fund will continue to receive the equivalent of the interest, dividends or other distributions paid by the issuer, as well as a portion of the interest on the investment of the collateral. Additionally, although the fund does not have the right to vote on securities while they are on loan, the fund has a right to consent on corporate actions and a right to recall loaned securities to vote. A borrower is obligated to return loaned securities at the conclusion of a loan or, during the pendency of a loan, on demand from the fund.

 

As of June 30, 2021, the total value of securities on loan was $193,980,000, and the total value of collateral received was $201,295,000. Collateral received includes cash of $148,158,000 and U.S. government securities of $53,137,000. Investment securities purchased from cash collateral are disclosed in the fund’s investment portfolio as short-term securities. Securities received as collateral are not recognized as fund assets. The contractual maturity of cash collateral received under the securities lending agreement is classified as overnight and continuous.

 

Fundamental Investors 17
 

Collateral — The fund receives highly liquid assets, such as cash or U.S. government securities, as collateral in exchange for lending investment securities. The purpose of the collateral is to cover potential losses that could occur in the event the borrower cannot meet its contractual obligation. The lending agent may reinvest cash collateral from securities lending transactions according to agreed parameters. Cash collateral reinvested by the lending agent, if any, is disclosed in the fund’s investment portfolio.

 

6. Taxation and distributions

 

Federal income taxation — The fund complies with the requirements under Subchapter M of the Internal Revenue Code applicable to mutual funds and intends to distribute substantially all of its net taxable income and net capital gains each year. The fund is not subject to income taxes to the extent such distributions are made. Therefore, no federal income tax provision is required.

 

As of and during the period ended June 30, 2021, the fund did not have a liability for any unrecognized tax benefits. The fund recognizes interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the statement of operations. During the period, the fund did not incur any significant interest or penalties.

 

The fund’s tax returns are generally not subject to examination by federal, state and, if applicable, non-U.S. tax authorities after the expiration of each jurisdiction’s statute of limitations, which is typically three years after the date of filing but can be extended in certain jurisdictions.

 

Non-U.S. taxation — Dividend and interest income are recorded net of non-U.S. taxes paid. The fund may file withholding tax reclaims in certain jurisdictions to recover a portion of amounts previously withheld. As a result of rulings from European courts, the fund filed for additional reclaims related to prior years. These reclaims are recorded when the amount is known and there are no significant uncertainties on collectability. During the six months ended June 30, 2021, the fund recognized $388,000 in reclaims (net of fees and the effect of realized gain or loss from currency translations) related to European court rulings, which is included in dividend income in the fund’s statement of operations. Gains realized by the fund on the sale of securities in certain countries, if any, may be subject to non-U.S. taxes. If applicable, the fund records an estimated deferred tax liability based on unrealized gains to provide for potential non-U.S. taxes payable upon the sale of these securities.

 

Distributions — Distributions determined on a tax basis may differ from net investment income and net realized gains for financial reporting purposes. These differences are due primarily to different treatment for items such as currency gains and losses; short-term capital gains and losses; capital losses related to sales of certain securities within 30 days of purchase and cost of investments sold. The fiscal year in which amounts are distributed may differ from the year in which the net investment income and net realized gains are recorded by the fund for financial reporting purposes.

 

The components of distributable earnings on a tax basis are reported as of the fund’s most recent year-end. As of December 31, 2020, the components of distributable earnings on a tax basis were as follows (dollars in thousands):

 

Undistributed ordinary income  $164,207 
Undistributed long-term capital gains   3,505,019 

 

As of June 30, 2021, the tax basis unrealized appreciation (depreciation) and cost of investments were as follows (dollars in thousands):

 

Gross unrealized appreciation on investments  $57,662,894 
Gross unrealized depreciation on investments   (373,706)
Net unrealized appreciation on investments   57,289,188 
Cost of investments   72,248,261 

 

18 Fundamental Investors
 

Distributions paid were characterized for tax purposes as follows (dollars in thousands):

 

   Six months ended June 30, 2021   Year ended December 31, 2020 
Share class  Ordinary
income		   Long-term
capital gains		   Total
distributions
paid		   Ordinary
income		   Long-term
capital gains		   Total
distributions
paid		 
Class A  $294,215   $1,831,077   $2,125,292   $902,306   $690,446   $1,592,752 
Class C   1,380    47,343    48,723    14,955    23,616    38,571 
Class T   —*   —*   —*   —*   —*   —*
Class F-1   10,026    65,268    75,294    38,141    30,455    68,596 
Class F-2   70,650    359,226    429,876    193,513    129,288    322,801 
Class F-3   54,581    253,783    308,364    145,972    93,395    239,367 
Class 529-A   15,052    98,198    113,250    45,940    34,880    80,820 
Class 529-C   91    3,902    3,993    1,485    3,945    5,430 
Class 529-E   327    2,850    3,177    1,235    1,140    2,375 
Class 529-T   —*   1    1    —*   —*   —*
Class 529-F-1   —*   —*   —*   1,930    2,506    4,436 
Class 529-F-2†   1,411    7,337    8,748    1,814    —    1,814 
Class 529-F-3†   —*   —*   —*   —*   —    —*
Class R-1   73    3,218    3,291    950    1,557    2,507 
Class R-2   529    21,419    21,948    6,137    8,709    14,846 
Class R-2E   226    2,946    3,172    1,097    1,167    2,264 
Class R-3   5,448    53,160    58,608    23,128    22,756    45,884 
Class R-4   7,889    50,906    58,795    28,378    22,602    50,980 
Class R-5E   3,039    15,741    18,780    6,904    4,744    11,648 
Class R-5   7,146    33,617    40,763    22,874    15,677    38,551 
Class R-6   140,541    656,804    797,345    371,495    236,958    608,453 
Total  $612,624   $3,506,796   $4,119,420   $1,808,254   $1,323,841   $3,132,095 

 

* Amount less than one thousand.
† Class 529-F-2 and 529-F-3 shares began investment operations on October 30, 2020.

 

7. Fees and transactions with related parties

 

CRMC, the fund’s investment adviser, is the parent company of American Funds Distributors®, Inc. (“AFD”), the principal underwriter of the fund’s shares, and American Funds Service Company® (“AFS”), the fund’s transfer agent. CRMC, AFD and AFS are considered related parties to the fund.

 

Investment advisory services — The fund has an investment advisory and service agreement with CRMC that provides for monthly fees accrued daily. These fees are based on a series of decreasing annual rates beginning with 0.390% on the first $1 billion of daily net assets and decreasing to 0.229% on such assets in excess of $89 billion. During the six months ended June 30, 2021, CRMC waived $41,000 of investment advisory service fees. CRMC does not intend to recoup this waiver. As a result, the fees shown on the statement of operations of $146,079,000 were reduced to $146,038,000, both of which were equivalent to an annualized rate of 0.239% of average daily net assets.

 

Fundamental Investors 19
 

Class-specific fees and expenses — Expenses that are specific to individual share classes are accrued directly to the respective share class. The principal class-specific fees and expenses are further described below:

 

Distribution services — The fund has plans of distribution for all share classes, except Class F-2, F-3, 529-F-2, 529-F-3, R-5E, R-5 and R-6 shares. Under the plans, the board of trustees approves certain categories of expenses that are used to finance activities primarily intended to sell fund shares and service existing accounts. The plans provide for payments, based on an annualized percentage of average daily net assets, ranging from 0.25% to 1.00% as noted in this section. In some cases, the board of trustees has limited the amounts that may be paid to less than the maximum allowed by the plans. All share classes with a plan may use up to 0.25% of average daily net assets to pay service fees, or to compensate AFD for paying service fees, to firms that have entered into agreements with AFD to provide certain shareholder services. The remaining amounts available to be paid under each plan are paid to dealers to compensate them for their sales activities.

 

Share class Currently approved limits  Plan limits
Class A  0.25%  0.25%
Class 529-A  0.25   0.50 
Classes C, 529-C and R-1  1.00   1.00 
Class R-2  0.75   1.00 
Class R-2E  0.60   0.85 
Classes 529-E and R-3  0.50   0.75 
Classes T, F-1, 529-T, 529-F-1 and R-4  0.25   0.50 

 

For Class A and 529-A shares, distribution-related expenses include the reimbursement of dealer and wholesaler commissions paid by AFD for certain shares sold without a sales charge. These share classes reimburse AFD for amounts billed within the prior 15 months but only to the extent that the overall annual expense limits are not exceeded. As of June 30, 2021, there were no unreimbursed expenses subject to reimbursement for Class A or 529-A shares.

 

Transfer agent services — The fund has a shareholder services agreement with AFS under which the fund compensates AFS for providing transfer agent services to each of the fund’s share classes. These services include recordkeeping, shareholder communications and transaction processing. In addition, the fund reimburses AFS for amounts paid to third parties for performing transfer agent services on behalf of fund shareholders. For the six months ended June 30, 2021, CRMC reimbursed transfer agent services fees of less than $1,000 for Class 529-F-3 shares. CRMC does not intend to recoup this reimbursement.

 

Administrative services — The fund has an administrative services agreement with CRMC under which the fund compensates CRMC for providing administrative services to all share classes. Administrative services are provided by CRMC and its affiliates to help assist third parties providing non-distribution services to fund shareholders. These services include providing in-depth information on the fund and market developments that impact fund investments. Administrative services also include, but are not limited to, coordinating, monitoring and overseeing third parties that provide services to fund shareholders. The agreement provides the fund the ability to charge an administrative services fee at the annual rate of 0.05% of the average daily net assets attributable to each share class of the fund. Currently the fund pays CRMC an administrative services fee at the annual rate of 0.03% of the average daily net assets attributable to each share class of the fund for CRMC’s provision of administrative services.

 

529 plan services — Each 529 share class is subject to service fees to compensate the Virginia College Savings Plan (“Virginia529”) for its oversight and administration of the CollegeAmerica 529 college savings plan. The fee is based on the combined net assets invested in Class 529 and ABLE shares of the American Funds. Class ABLE shares are offered on other American Funds by Virginia529 through ABLEAmerica®, a tax-advantaged savings program for individuals with disabilities. The quarterly fee is based on a series of decreasing annual rates beginning with 0.09% on the first $20 billion of the combined net assets invested in the American Funds and decreasing to 0.03% on such assets in excess of $100 billion. The fee for any given calendar quarter is accrued and calculated on the basis of the average net assets of Class 529 and ABLE shares of the American Funds for the last month of the prior calendar quarter. The fee is included in other expenses in the fund’s statement of operations. Virginia529 is not considered a related party to the fund.

 

20 Fundamental Investors
 

For the six months ended June 30, 2021, class-specific expenses under the agreements were as follows (dollars in thousands):

 

Share class  Distribution
services		   Transfer agent
services		   Administrative
services		   529 plan
services		 
Class A   $77,654    $23,669    $9,577    Not applicable 
Class C   8,432    624    254    Not applicable 
Class T   —    —*   —*   Not applicable 
Class F-1   3,036    1,517    364    Not applicable 
Class F-2   Not applicable    6,332    1,855    Not applicable 
Class F-3   Not applicable    79    1,323    Not applicable 
Class 529-A   3,947    1,149    511    $1,016 
Class 529-C   695    49    21    43 
Class 529-E   247    17    15    30 
Class 529-T   —    —*   —*   —*
Class 529-F-1   —    —*   —*   —*
Class 529-F-2   Not applicable    75    37    74 
Class 529-F-3   Not applicable    —*   —*   —*
Class R-1   571    60    17    Not applicable 
Class R-2   2,806    1,325    112    Not applicable 
Class R-2E   307    107    15    Not applicable 
Class R-3   4,737    1,459    284    Not applicable 
Class R-4   2,289    947    275    Not applicable 
Class R-5E   Not applicable    383    80    Not applicable 
Class R-5   Not applicable    323    186    Not applicable 
Class R-6   Not applicable    101    3,398    Not applicable 
Total class-specific expenses   $104,721    $38,216    $18,324    $1,163 

 

* Amount less than one thousand.

 

Trustees’ deferred compensation — Trustees who are unaffiliated with CRMC may elect to defer the cash payment of part or all of their compensation. These deferred amounts, which remain as liabilities of the fund, are treated as if invested in shares of the fund or other American Funds. These amounts represent general, unsecured liabilities of the fund and vary according to the total returns of the selected funds. Trustees’ compensation of $881,000 in the fund’s statement of operations reflects $245,000 in current fees (either paid in cash or deferred) and a net increase of $636,000 in the value of the deferred amounts.

 

Affiliated officers and trustees — Officers and certain trustees of the fund are or may be considered to be affiliated with CRMC, AFD and AFS. No affiliated officers or trustees received any compensation directly from the fund.

 

Investment in CCF — The fund holds shares of CCF, an institutional prime money market fund managed by CRMC. CCF invests in high-quality, short-term money market instruments. CCF is used as the primary investment vehicle for the fund’s short-term instruments. CCF shares are only available for purchase by CRMC, its affiliates, and other funds managed by CRMC or its affiliates, and are not available to the public. CRMC does not receive an investment advisory services fee from CCF.

 

Security transactions with related funds — The fund purchased securities from, and sold securities to, other funds managed by CRMC (or funds managed by certain affiliates of CRMC) under procedures adopted by the fund’s board of trustees. The funds involved in such transactions are considered related by virtue of having a common investment adviser (or affiliated investment advisers), common trustees and/or common officers. Each transaction was executed at the current market price of the security and no brokerage commissions or fees were paid in accordance with Rule 17a-7 of the 1940 Act. During the six months ended June 30, 2021, the fund engaged in such purchase and sale transactions with related funds in the amounts of $599,120,000 and $314,390,000, respectively, which generated $103,554,000 of net realized gains from such sales.

 

Interfund lending — Pursuant to an exemptive order issued by the SEC, the fund, along with other CRMC-managed funds (or funds managed by certain affiliates of CRMC), may participate in an interfund lending program. The program provides an alternate credit facility that permits the funds to lend or borrow cash for temporary purposes directly to or from one another, subject to the conditions of the exemptive order. The fund did not lend or borrow cash through the interfund lending program at any time during the six months ended June 30, 2021.

 

Fundamental Investors 21
 

8. Indemnifications

 

The fund’s organizational documents provide board members and officers with indemnification against certain liabilities or expenses in connection with the performance of their duties to the fund. In the normal course of business, the fund may also enter into contracts that provide general indemnifications. The fund’s maximum exposure under these arrangements is unknown since it is dependent on future claims that may be made against the fund. The risk of material loss from such claims is considered remote. Insurance policies are also available to the fund’s board members and officers.

 

9. Capital share transactions

 

Capital share transactions in the fund were as follows (dollars and shares in thousands):

 

   Sales1   Reinvestments of
distributions		   Repurchases1   Net increase
(decrease)		 
Share class  Amount   Shares   Amount   Shares   Amount   Shares   Amount   Shares 
                                         
Six months ended June 30, 2021                     
                                         
Class A  $2,225,466    30,074   $2,089,944    27,641   $(3,525,189)   (47,816)  $790,221    9,899 
Class C   101,631    1,381    48,559    644    (249,086)   (3,398)   (98,896)   (1,373)
Class T   —    —    —    —    —    —    —    — 
Class F-1   63,237    861    74,732    989    (505,477)   (6,885)   (367,508)   (5,035)
Class F-2   1,356,850    18,347    418,203    5,537    (1,279,513)   (17,340)   495,540    6,544 
Class F-3   891,170    12,093    306,811    4,062    (957,674)   (12,982)   240,307    3,173 
Class 529-A   155,645    2,112    113,224    1,500    (189,237)   (2,584)   79,632    1,028 
Class 529-C   10,816    147    3,991    52    (29,091)   (395)   (14,284)   (196)
Class 529-E   3,665    50    3,176    42    (7,373)   (102)   (532)   (10)
Class 529-T   —    —    1    —2   —    —    1    —2
Class 529-F-1   —    —    —2   —2   —    —    —2   —2
Class 529-F-2   25,890    349    8,747    116    (18,097)   (246)   16,540    219 
Class 529-F-3   —    —    —2   —2   —    —    —2   —2
Class R-1   6,100    83    3,277    43    (15,475)   (211)   (6,098)   (85)
Class R-2   57,857    791    21,940    292    (97,771)   (1,349)   (17,974)   (266)
Class R-2E   10,856    151    3,172    42    (15,749)   (219)   (1,721)   (26)
Class R-3   127,278    1,735    58,532    776    (276,641)   (3,767)   (90,831)   (1,256)
Class R-4   104,020    1,412    58,787    780    (320,776)   (4,390)   (157,969)   (2,198)
Class R-5E   186,724    2,595    18,778    249    (83,002)   (1,122)   122,500    1,722 
Class R-5   66,043    902   40,740    539    (244,668)   (3,320)   (137,885)   (1,879)
Class R-6   2,473,440    33,038    792,383    10,486    (2,489,709)   (33,315)   776,114    10,209 
Total net increase (decrease)  $7,866,688    106,121   $4,064,997    53,790   $(10,304,528)   (139,441)  $1,627,157    20,470 

 

See end of table for footnotes.

 

22 Fundamental Investors
 
   Sales1   Reinvestments of
distributions		   Repurchases1   Net (decrease)
increase		 
Share class  Amount   Shares   Amount   Shares   Amount   Shares   Amount   Shares 
                                         
Year ended December 31, 2020                     
                                         
Class A  $3,693,583    63,532   $1,564,823    26,638   $(7,476,986)   (128,585)  $(2,218,580)   (38,415)
Class C   194,230    3,386    38,353    652    (768,266)   (13,162)   (535,683)   (9,124)
Class T   —    —    —    —    —    —    —    — 
Class F-1   219,773    3,791    67,464    1,155    (761,519)   (13,157)   (474,282)   (8,211)
Class F-2   2,368,919    40,342    312,251    5,335    (3,041,000)   (52,827)   (359,830)   (7,150)
Class F-3   1,408,140    24,069    237,677    4,065    (1,777,869)   (30,698)   (132,052)   (2,564)
Class 529-A   416,367    7,016    80,801    1,373    (426,980)   (7,143)   70,188    1,246 
Class 529-C   24,042    409    5,427    94    (240,423)   (4,071)   (210,954)   (3,568)
Class 529-E   7,485    126    2,374    41    (17,205)   (289)   (7,346)   (122)
Class 529-T   —    —    —2   —2   —    —    —2   —2
Class 529-F-1   31,453    542    4,436    80    (224,413)   (3,785)   (188,524)   (3,163)
Class 529-F-23   204,994    3,419    1,814    26    (6,653)   (99)   200,155    3,346 
Class 529-F-33   10    —2   —2   —2   —    —    10    —2
Class R-1   13,558    240    2,513    43    (48,037)   (794)   (31,966)   (511)
Class R-2   118,650    2,032   14,841    251    (210,277)   (3,587)   (76,786)   (1,304)
Class R-2E   19,697    341    2,263    39    (24,268)   (409)   (2,308)   (29)
Class R-3   234,556    4,009    45,820    780    (595,894)   (10,053)   (315,518)   (5,264)
Class R-4   221,075    3,797    50,965    872    (573,960)   (9,727)   (301,920)   (5,058)
Class R-5E   82,456    1,390    11,646    199    (97,877)   (1,659)   (3,775)   (70)
Class R-5   128,184    2,165    38,534    661    (390,008)   (6,533)   (223,290)   (3,707)
Class R-6   2,683,376    47,347    606,137    10,355    (2,894,831)   (48,648)   394,682    9,054 
Total net increase (decrease)  $12,070,548    207,953   $3,088,139    52,659   $(19,576,466)   (335,226)  $(4,417,779)   (74,614)

 

1 Includes exchanges between share classes of the fund.
2 Amount less than one thousand.
3 Class 529-F-2 and 529-F-3 shares began investment operations on October 30, 2020.

 

10. Investment transactions

 

The fund made purchases and sales of investment securities, excluding short-term securities and U.S. government obligations, if any, of $15,336,465,000 and $16,578,084,000, respectively, during the six months ended June 30, 2021.

 

Fundamental Investors 23
 

Financial highlights

 

       Income (loss) from
investment operations1		   Dividends and distributions                         
Period ended  Net asset
value,
beginning
of period		   Net
investment
income		   Net gains
(losses) on
securities
(both
realized and
unrealized)		   Total from
investment
operations		   Dividends
(from net
investment
income)		   Distributions
(from capital
gains)		   Total
dividends
and
distributions		   Net asset
value,
end
of period		   Total return2,3   Net assets,
end of period
(in millions)		   Ratio of
expenses to
average net
assets before
waivers/
reimbursements4		   Ratio of
expenses to
average net
assets after
waivers/
reimbursements3,4		   Ratio of
net income
to average
net assets3		 
Class A:                                                                 
6/30/20215,6  $69.15   $.46   $9.22   $9.68   $(.34)  $(2.12)  $(2.46)  $76.37    14.04%7   $67,656    .60%8    .60%8    1.24%8 
12/31/2020   62.02    .89    8.05    8.94    (1.03)   (.78)   (1.81)   69.15    14.95    60,572    .61    .61    1.48 
12/31/2019   52.29    .98    13.30    14.28    (.94)   (3.61)   (4.55)   62.02    27.61    56,715    .61    .61    1.65 
12/31/2018   62.21    1.01    (5.19)   (4.18)   (.99)   (4.75)   (5.74)   52.29    (6.60)   47,045    .59    .59    1.61 
12/31/2017   54.44    .93    11.65    12.58    (.91)   (3.90)   (4.81)   62.21    23.37    53,885    .60    .60    1.55 
12/31/2016   50.71    .87    5.43    6.30    (.87)   (1.70)   (2.57)   54.44    12.54    47,308    .61    .61    1.68 
Class C:                                                                 
6/30/20215,6   68.77    .18    9.17    9.35    (.06)   (2.12)   (2.18)   75.94    13.627    1,741    1.358    1.358    .488 
12/31/2020   61.66    .45    8.01    8.46    (.57)   (.78)   (1.35)   68.77    14.08    1,671    1.35    1.35    .76 
12/31/2019   52.00    .52    13.23    13.75    (.48)   (3.61)   (4.09)   61.66    26.66    2,061    1.37    1.37    .89 
12/31/2018   61.88    .50    (5.15)   (4.65)   (.48)   (4.75)   (5.23)   52.00    (7.35)   1,996    1.39    1.39    .81 
12/31/2017   54.18    .45    11.58    12.03    (.43)   (3.90)   (4.33)   61.88    22.37    2,535    1.40    1.40    .75 
12/31/2016   50.48    .45    5.40    5.85    (.45)   (1.70)   (2.15)   54.18    11.64    2,426    1.41    1.41    .87 
Class T:                                                                 
6/30/20215,6   69.12    .54    9.22    9.76    (.42)   (2.12)   (2.54)   76.34    14.177,9    —10    .368,9    .368,9    1.478,9 
12/31/2020   62.02    1.04    8.02    9.06    (1.18)   (.78)   (1.96)   69.12    15.229    —10    .369    .369    1.749 
12/31/2019   52.28    1.12    13.32    14.44    (1.09)   (3.61)   (4.70)   62.02    27.959    —10    .379    .379    1.909 
12/31/2018   62.20    1.14    (5.19)   (4.05)   (1.12)   (4.75)   (5.87)   52.28    (6.41)9    —10    .389    .389    1.829 
12/31/20175,11   57.85    .81    8.30    9.11    (.86)   (3.90)   (4.76)   62.20    15.967,9    —10    .398,9    .398,9    1.808,9 
Class F-1:                                                                 
6/30/20215,6   69.10    .43    9.22    9.65    (.31)   (2.12)   (2.43)   76.32    14.017    2,401    .658    .658    1.178 
12/31/2020   61.98    .87    8.03    8.90    (1.00)   (.78)   (1.78)   69.10    14.89    2,522    .65    .65    1.45 
12/31/2019   52.26    .94    13.29    14.23    (.90)   (3.61)   (4.51)   61.98    27.53    2,771    .66    .66    1.60 
12/31/2018   62.17    .96    (5.18)   (4.22)   (.94)   (4.75)   (5.69)   52.26    (6.67)   2,352    .67    .67    1.52 
12/31/2017   54.41    .88    11.65    12.53    (.87)   (3.90)   (4.77)   62.17    23.27    2,970    .67    .67    1.47 
12/31/2016   50.69    .83    5.42    6.25    (.83)   (1.70)   (2.53)   54.41    12.45    2,688    .68    .68    1.61 
Class F-2:                                                                 
6/30/20215,6   69.11    .54    9.22    9.76    (.42)   (2.12)   (2.54)   76.33    14.177    13,275    .388    .388    1.468 
12/31/2020   62.00    1.02    8.03    9.05    (1.16)   (.78)   (1.94)   69.11    15.20    11,567    .39    .39    1.71 
12/31/2019   52.27    1.10    13.30    14.40    (1.06)   (3.61)   (4.67)   62.00    27.87    10,821    .40    .40    1.86 
12/31/2018   62.19    1.13    (5.19)   (4.06)   (1.11)   (4.75)   (5.86)   52.27    (6.43)   8,654    .41    .41    1.80 
12/31/2017   54.43    1.00    11.68    12.68    (1.02)   (3.90)   (4.92)   62.19    23.57    7,688    .42    .42    1.68 
12/31/2016   50.70    .99    5.41    6.40    (.97)   (1.70)   (2.67)   54.43    12.77    8,424    .41    .41    1.88 
Class F-3:                                                                 
6/30/20215,6   69.11    .57    9.23    9.80    (.46)   (2.12)   (2.58)   76.33    14.227    9,396    .288    .288    1.568 
12/31/2020   62.00    1.08    8.03    9.11    (1.22)   (.78)   (2.00)   69.11    15.32    8,288    .29    .29    1.81 
12/31/2019   52.27    1.17    13.29    14.46    (1.12)   (3.61)   (4.73)   62.00    28.01    7,595    .30    .30    1.97 
12/31/2018   62.19    1.19    (5.19)   (4.00)   (1.17)   (4.75)   (5.92)   52.27    (6.34)   5,448    .31    .31    1.89 
12/31/20175,12   56.55    1.11    9.52    10.63    (1.09)   (3.90)   (4.99)   62.19    19.087   5,541    .318   .318   1.968
Class 529-A:                                                                 
6/30/20215,6   69.02    .44    9.22    9.66    (.33)   (2.12)   (2.45)   76.23    14.037    3,633    .648    .648    1.208 
12/31/2020   61.92    .86    8.02    8.88    (1.00)   (.78)   (1.78)   69.02    14.88    3,219    .65    .65    1.43 
12/31/2019   52.21    .94    13.28    14.22    (.90)   (3.61)   (4.51)   61.92    27.53    2,810    .67    .67    1.60 
12/31/2018   62.12    .96    (5.18)   (4.22)   (.94)   (4.75)   (5.69)   52.21    (6.68)   2,304    .67    .67    1.53 
12/31/2017   54.37    .88    11.64    12.52    (.87)   (3.90)   (4.77)   62.12    23.28    2,533    .67    .67    1.47 
12/31/2016   50.65    .83    5.42    6.25    (.83)   (1.70)   (2.53)   54.37    12.44    1,995    .69    .69    1.60 

 

See end of table for footnotes.

 

24 Fundamental Investors
 

Financial highlights (continued)

 

       Income (loss) from
investment operations1		   Dividends and distributions                         
Period ended  Net asset
value,
beginning
of period		   Net
investment
income		   Net gains
(losses) on
securities
(both
realized and
unrealized)		   Total from
investment
operations		   Dividends
(from net
investment
income)		   Distributions
(from capital
gains)		   Total
dividends
and
distributions		   Net asset
value,
end
of period		   Total return2,3   Net assets,
end of period
(in millions)		   Ratio of
expenses to
average net
assets before
waivers/
reimbursements4		   Ratio of
expenses to
average net
assets after
waivers/
reimbursements3,4		   Ratio of
net income
to average
net assets3		 
Class 529-C:                                                    
6/30/20215,6  $69.09   $.16   $9.22   $9.38   $(.05)  $(2.12)  $(2.17)  $76.30    13.60%7   $145    1.38%8    1.38%8    .45%8 
12/31/2020   61.90    .46    8.03    8.49    (.52)   (.78)   (1.30)   69.09    14.05    144    1.40    1.40    .78 
12/31/2019   52.19    .50    13.27    13.77    (.45)   (3.61)   (4.06)   61.90    26.59    350    1.41    1.41    .84 
12/31/2018   62.08    .48    (5.18)   (4.70)   (.44)   (4.75)   (5.19)   52.19    (7.39)   340    1.43    1.43    .76 
12/31/2017   54.31    .41    11.62    12.03    (.36)   (3.90)   (4.26)   62.08    22.32    430    1.45    1.45    .69 
12/31/2016   50.60    .42    5.41    5.83    (.42)   (1.70)   (2.12)   54.31    11.57    479    1.47    1.47    .82 
Class 529-E:                                                                 
6/30/20215,6   68.96    .36    9.20    9.56    (.24)   (2.12)   (2.36)   76.16    13.907    105    .878    .878    .978 
12/31/2020   61.85    .73    8.03    8.76    (.87)   (.78)   (1.65)   68.96    14.65    96    .87    .87    1.23 
12/31/2019   52.16    .81    13.26    14.07    (.77)   (3.61)   (4.38)   61.85    27.24    94    .89    .89    1.37 
12/31/2018   62.06    .81    (5.17)   (4.36)   (.79)   (4.75)   (5.54)   52.16    (6.88)   82    .90    .90    1.29 
12/31/2017   54.33    .74    11.62    12.36    (.73)   (3.90)   (4.63)   62.06    22.97    93    .91    .91    1.24 
12/31/2016   50.61    .71    5.41    6.12    (.70)   (1.70)   (2.40)   54.33    12.20    80    .93    .93    1.36 
Class 529-T:                                                                 
6/30/20215,6   69.13    .52    9.23    9.75    (.41)   (2.12)   (2.53)   76.35    14.147,9    —10    .428,9    .428,9    1.428,9 
12/31/2020   62.02    1.00    8.04    9.04    (1.15)   (.78)   (1.93)   69.13    15.179    —10    .419    .419    1.689 
12/31/2019   52.28    1.09    13.31    14.40    (1.05)   (3.61)   (4.66)   62.02    27.869    —10    .429    .429    1.859 
12/31/2018   62.20    1.10    (5.18)   (4.08)   (1.09)   (4.75)   (5.84)   52.28    (6.46)9    —10    .449    .449    1.769 
12/31/20175,11   57.85    .78    8.30    9.08    (.83)   (3.90)   (4.73)   62.20    15.907,9    —10    .458,9    .458,9    1.758,9 
Class 529-F-1:                                                                 
6/30/20215,6   68.95    .51    9.21    9.72    (.40)   (2.12)   (2.52)   76.15    14.147,9    —10    .458,9    .458,9    1.398,9 
12/31/2020   61.85    .97    8.05    9.02    (1.14)   (.78)   (1.92)   68.95    15.199    —10    .429    .429    1.669 
12/31/2019   52.15    1.08    13.27    14.35    (1.04)   (3.61)   (4.65)   61.85    27.84    196    .43    .43    1.83 
12/31/2018   62.07    1.10    (5.19)   (4.09)   (1.08)   (4.75)   (5.83)   52.15    (6.48)   149    .44    .44    1.76 
12/31/2017   54.34    1.01    11.62    12.63    (1.00)   (3.90)   (4.90)   62.07    23.53    137    .45    .45    1.69 
12/31/2016   50.62    .94    5.42    6.36    (.94)   (1.70)   (2.64)   54.34    12.71    98    .48    .48    1.82 
Class 529-F-2:                                                                 
6/30/20215,6   69.14    .53    9.22    9.75    (.41)   (2.12)   (2.53)   76.36    14.157    272    .408    .408    1.458 
12/31/20205,13   59.63    .19    9.87    10.06    (.55)   —    (.55)   69.14    16.877   231    .077   .077   .297
Class 529-F-3:                                                                 
6/30/20215,6   69.13    .55    9.24    9.79    (.44)   (2.12)   (2.56)   76.36    14.207    —10    .378    .348    1.508 
12/31/20205,13   59.63    .20    9.86    10.06    (.56)   —    (.56)   69.13    16.887   —10    .097   .067   .307
Class R-1:                                                                 
6/30/20215,6   68.77    .17    9.18    9.35    (.05)   (2.12)   (2.17)   75.95    13.627    118    1.388    1.388    .468 
12/31/2020   61.65    .42    8.02    8.44    (.54)   (.78)   (1.32)   68.77    14.05    113    1.39    1.39    .71 
12/31/2019   52.00    .50    13.23    13.73    (.47)   (3.61)   (4.08)   61.65    26.60    132    1.40    1.40    .86 
12/31/2018   61.88    .49    (5.16)   (4.67)   (.46)   (4.75)   (5.21)   52.00    (7.38)   128    1.41    1.41    .78 
12/31/2017   54.18    .44    11.59    12.03    (.43)   (3.90)   (4.33)   61.88    22.37    160    1.41    1.41    .74 
12/31/2016   50.49    .45    5.39    5.84    (.45)   (1.70)   (2.15)   54.18    11.65    145    1.41    1.41    .88 

 

See end of table for footnotes.

 

Fundamental Investors 25
 

Financial highlights (continued)

 

       Income (loss) from
investment operations1		   Dividends and distributions                         
Period ended  Net asset
value,
beginning
of period		   Net
investment
income		   Net gains
(losses) on
securities
(both
realized and
unrealized)		   Total from
investment
operations		   Dividends
(from net
investment
income)		   Distributions
(from capital
gains)		   Total
dividends
and
distributions		   Net asset
value,
end
of period		   Total return2,3   Net assets,
end of period
(in millions)		   Ratio of
expenses to
average net
assets before
waivers/
reimbursements4		   Ratio of
expenses to
average net
assets after
waivers/
reimbursements3,4		   Ratio of
net income
to average
net assets3		 
Class R-2:                                                                 
6/30/20215,6  $68.70   $.17   $9.16   $9.33   $(.05)  $(2.12)  $(2.17)  $75.86    13.61%7   $785    1.38%8    1.38%8    .46%8 
12/31/2020   61.61    .43    8.01    8.44    (.57)   (.78)   (1.35)   68.70    14.06    729    1.38    1.38    .72 
12/31/2019   51.97    .51    13.22    13.73    (.48)   (3.61)   (4.09)   61.61    26.62    734    1.40    1.40    .87 
12/31/2018   61.86    .49    (5.15)   (4.66)   (.48)   (4.75)   (5.23)   51.97    (7.37)   658    1.41    1.41    .79 
12/31/2017   54.16    .44    11.59    12.03    (.43)   (3.90)   (4.33)   61.86    22.39    797    1.40    1.40    .74 
12/31/2016   50.47    .46    5.39    5.85    (.46)   (1.70)   (2.16)   54.16    11.65    744    1.39    1.39    .89 
Class R-2E:                                                                 
6/30/20215,6   68.75    .28    9.17    9.45    (.16)   (2.12)   (2.28)   75.92    13.787    108    1.098    1.098    .758 
12/31/2020   61.67    .60    8.01    8.61    (.75)   (.78)   (1.53)   68.75    14.39    99    1.08    1.08    1.01 
12/31/2019   52.02    .69    13.23    13.92    (.66)   (3.61)   (4.27)   61.67    26.99    91    1.09    1.09    1.17 
12/31/2018   61.92    .69    (5.16)   (4.47)   (.68)   (4.75)   (5.43)   52.02    (7.08)   65    1.11    1.11    1.10 
12/31/2017   54.24    .64    11.58    12.22    (.64)   (3.90)   (4.54)   61.92    22.74    56    1.10    1.10    1.06 
12/31/2016   50.56    .66    5.38    6.04    (.66)   (1.70)   (2.36)   54.24    12.04    20    1.10    1.10    1.26 
Class R-3:                                                                 
6/30/20215,6   68.96    .33    9.19    9.52    (.21)   (2.12)   (2.33)   76.15    13.847    1,949    .938    .938    .908 
12/31/2020   61.84    .70    8.03    8.73    (.83)   (.78)   (1.61)   68.96    14.58    1,851    .93    .93    1.17 
12/31/2019   52.15    .77    13.27    14.04    (.74)   (3.61)   (4.35)   61.84    27.17    1,986    .94    .94    1.31 
12/31/2018   62.05    .78    (5.18)   (4.40)   (.75)   (4.75)   (5.50)   52.15    (6.95)   1,880    .96    .96    1.24 
12/31/2017   54.31    .71    11.63    12.34    (.70)   (3.90)   (4.60)   62.05    22.93    2,360    .95    .95    1.19 
12/31/2016   50.60    .69    5.41    6.10    (.69)   (1.70)   (2.39)   54.31    12.15    2,181    .96    .96    1.33 
Class R-4:                                                                 
6/30/20215,6   68.97    .44    9.20    9.64    (.32)   (2.12)   (2.44)   76.17    14.037    1,873    .638    .638    1.208 
12/31/2020   61.87    .88    8.01    8.89    (1.01)   (.78)   (1.79)   68.97    14.92    1,847    .63    .63    1.47 
12/31/2019   52.17    .95    13.28    14.23    (.92)   (3.61)   (4.53)   61.87    27.57    1,970    .64    .64    1.62 
12/31/2018   62.07    .96    (5.17)   (4.21)   (.94)   (4.75)   (5.69)   52.17    (6.65)   1,879    .65    .65    1.54 
12/31/2017   54.33    .89    11.63    12.52    (.88)   (3.90)   (4.78)   62.07    23.30    2,523    .65    .65    1.49 
12/31/2016   50.62    .85    5.40    6.25    (.84)   (1.70)   (2.54)   54.33    12.47    2,318    .66    .66    1.63 
Class R-5E:                                                                 
6/30/20215,6   68.99    .53    9.20    9.73    (.41)   (2.12)   (2.53)   76.19    14.157    593    .428    .428    1.458 
12/31/2020   61.90    .99    8.02    9.01    (1.14)   (.78)   (1.92)   68.99    15.14    418    .43    .43    1.67 
12/31/2019   52.19    1.09    13.28    14.37    (1.05)   (3.61)   (4.66)   61.90    27.85    379    .43    .43    1.84 
12/31/2018   62.12    1.14    (5.22)   (4.08)   (1.10)   (4.75)   (5.85)   52.19    (6.45)   255    .45    .45    1.86 
12/31/2017   54.38    1.02    11.64    12.66    (1.02)   (3.90)   (4.92)   62.12    23.54    16    .44    .44    1.70 
12/31/2016   50.69    1.03    5.30    6.33    (.94)   (1.70)   (2.64)   54.38    12.62    10    .57    .57    1.99 
Class R-5:                                                                 
6/30/20215,6   69.19    .55    9.25    9.80    (.44)   (2.12)   (2.56)   76.43    14.197    1,240    .338    .338    1.508 
12/31/2020   62.08    1.06    8.03    9.09    (1.20)   (.78)   (1.98)   69.19    15.25    1,253    .33    .33    1.77 
12/31/2019   52.33    1.13    13.33    14.46    (1.10)   (3.61)   (4.71)   62.08    27.95    1,354    .34    .34    1.91 
12/31/2018   62.25    1.16    (5.19)   (4.03)   (1.14)   (4.75)   (5.89)   52.33    (6.37)   1,326    .35    .35    1.84 
12/31/2017   54.47    1.07    11.67    12.74    (1.06)   (3.90)   (4.96)   62.25    23.68    2,041    .35    .35    1.79 
12/31/2016   50.74    1.00    5.43    6.43    (1.00)   (1.70)   (2.70)   54.47    12.81    1,800    .35    .35    1.93 
Class R-6:                                                                 
6/30/20215,6   69.14    .57    9.24    9.81    (.46)   (2.12)   (2.58)   76.37    14.237    24,195    .288    .288    1.568 
12/31/2020   62.04    1.08    8.03    9.11    (1.23)   (.78)   (2.01)   69.14    15.30    21,200    .28    .28    1.80 
12/31/2019   52.30    1.17    13.31    14.48    (1.13)   (3.61)   (4.74)   62.04    28.01    18,458    .29    .29    1.98 
12/31/2018   62.22    1.19    (5.19)   (4.00)   (1.17)   (4.75)   (5.92)   52.30    (6.33)   13,670    .30    .30    1.90 
12/31/2017   54.45    1.10    11.66    12.76    (1.09)   (3.90)   (4.99)   62.22    23.72    12,701    .30    .30    1.84 
12/31/2016   50.72    1.04    5.42    6.46    (1.03)   (1.70)   (2.73)   54.45    12.88    8,948    .31    .31    1.99 

 

See end of table for footnotes.

 

26 Fundamental Investors
 

Financial highlights (continued)

 

    Six months
ended		   Year ended December 31,
    June 30,
20215,6,7		   2020   2019   2018   2017   2016
Portfolio turnover rate for all share classes14   13%   48%   40%   34%   29%   24%

 

1   Based on average shares outstanding.
2   Total returns exclude any applicable sales charges, including contingent deferred sales charges.
3   This column reflects the impact, if any, of certain waivers/reimbursements from CRMC. During one of the periods shown, CRMC waived a portion of investment advisory services fees and during the periods shown reimbursed a portion of transfer agent services fees for Class 529-F-3 shares.
4   Ratios do not include expenses of any Central Funds. The fund indirectly bears its proportionate share of the expenses of any Central Funds.
5   Based on operations for a period that is less than a full year.
6   Unaudited.
7   Not annualized.
8   Annualized.
9   All or a significant portion of assets in this class consisted of seed capital invested by CRMC and/or its affiliates. Fees for distribution services are not charged or accrued on these seed capital assets. If such fees were paid by the fund on seed capital assets, fund expenses would have been higher and net income and total return would have been lower.
10   Amount less than $1 million.
11   Class T and 529-T shares began investment operations on April 7, 2017.
12   Class F-3 shares began investment operations on January 27, 2017.
13   Class 529-F-2 and 529-F-3 shares began investment operations on October 30, 2020.
14   Rates do not include the fund’s portfolio activity with respect to any Central Funds.

 

See notes to financial statements.

 

Fundamental Investors 27
 

Expense example unaudited

 

As a fund shareholder, you incur two types of costs: (1) transaction costs, such as initial sales charges on purchase payments and contingent deferred sales charges on redemptions (loads), and (2) ongoing costs, including management fees, distribution and service (12b-1) fees, and other expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the fund so you can compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire six-month period (January 1, 2021, through June 30, 2021).

 

Actual expenses:

The first line of each share class in the table on the following page provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading titled “Expenses paid during period” to estimate the expenses you paid on your account during this period.

 

Hypothetical example for comparison purposes:

The second line of each share class in the table on the following page provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio for the share class and an assumed rate of return of 5.00% per year before expenses, which is not the actual return of the share class. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the fund and other funds. To do so, compare this 5.00% hypothetical example with the 5.00% hypothetical examples that appear in the shareholder reports of the other funds.

 

Notes:

Retirement plan participants may be subject to certain fees charged by the plan sponsor, and Class F-1, F-2, F-3, 529-F-1, 529-F-2 and 529-F-3 shareholders may be subject to fees charged by financial intermediaries, typically ranging from 0.75% to 1.50% of assets annually depending on services offered. You can estimate the impact of these fees by adding the amount of the fees to the total estimated expenses you paid on your account during the period as calculated above. In addition, your ending account value would be lower by the amount of these fees.

 

Note that the expenses shown in the table on the following page are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads). Therefore, the second line of each share class in the table is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

 

28 Fundamental Investors
 
Expense example (continued)           
                 
  Beginning
account value
1/1/2021		   Ending
account value
6/30/2021		   Expenses paid
during period*		   Annualized
expense ratio		 
Class A – actual return  $1,000.00   $1,140.43   $3.18    .60%
Class A – assumed 5% return   1,000.00    1,021.82    3.01    .60 
Class C – actual return   1,000.00    1,136.21    7.15    1.35 
Class C – assumed 5% return   1,000.00    1,018.10    6.76    1.35 
Class T – actual return   1,000.00    1,141.74    1.91    .36 
Class T – assumed 5% return   1,000.00    1,023.01    1.81    .36 
Class F-1 – actual return   1,000.00    1,140.14    3.45    .65 
Class F-1 – assumed 5% return   1,000.00    1,021.57    3.26    .65 
Class F-2 – actual return   1,000.00    1,141.67    2.02    .38 
Class F-2 – assumed 5% return   1,000.00    1,022.91    1.91    .38 
Class F-3 – actual return   1,000.00    1,142.20    1.49    .28 
Class F-3 – assumed 5% return   1,000.00    1,023.41    1.40    .28 
Class 529-A – actual return   1,000.00    1,140.32    3.40    .64 
Class 529-A – assumed 5% return   1,000.00    1,021.62    3.21    .64 
Class 529-C – actual return   1,000.00    1,135.95    7.31    1.38 
Class 529-C – assumed 5% return   1,000.00    1,017.95    6.90    1.38 
Class 529-E – actual return   1,000.00    1,139.05    4.61    .87 
Class 529-E – assumed 5% return   1,000.00    1,020.48    4.36    .87 
Class 529-T – actual return   1,000.00    1,141.43    2.23    .42 
Class 529-T – assumed 5% return   1,000.00    1,022.71    2.11    .42 
Class 529-F-1 – actual return   1,000.00    1,141.41    2.39    .45 
Class 529-F-1 – assumed 5% return   1,000.00    1,022.56    2.26    .45 
Class 529-F-2 – actual return   1,000.00    1,141.51    2.12    .40 
Class 529-F-2 – assumed 5% return   1,000.00    1,022.81    2.01    .40 
Class 529-F-3 – actual return   1,000.00    1,141.96    1.81    .34 
Class 529-F-3 – assumed 5% return   1,000.00    1,023.11    1.71    .34 
Class R-1 – actual return   1,000.00    1,136.21    7.31    1.38 
Class R-1 – assumed 5% return   1,000.00    1,017.95    6.90    1.38 
Class R-2 – actual return   1,000.00    1,136.08    7.31    1.38 
Class R-2 – assumed 5% return   1,000.00    1,017.95    6.90    1.38 
Class R-2E – actual return   1,000.00    1,137.81    5.78    1.09 
Class R-2E – assumed 5% return   1,000.00    1,019.39    5.46    1.09 
Class R-3 – actual return   1,000.00    1,138.44    4.93    .93 
Class R-3 – assumed 5% return   1,000.00    1,020.18    4.66    .93 
Class R-4 – actual return   1,000.00    1,140.26    3.34    .63 
Class R-4 – assumed 5% return   1,000.00    1,021.67    3.16    .63 
Class R-5E – actual return   1,000.00    1,141.48    2.23    .42 
Class R-5E – assumed 5% return   1,000.00    1,022.71    2.11    .42 
Class R-5 – actual return   1,000.00    1,141.87    1.75    .33 
Class R-5 – assumed 5% return   1,000.00    1,023.16    1.66    .33 
Class R-6 – actual return   1,000.00    1,142.27    1.49    .28 
Class R-6 – assumed 5% return   1,000.00    1,023.41    1.40    .28 

 

* The “expenses paid during period” are equal to the “annualized expense ratio,” multiplied by the average account value over the period, multiplied by the number of days in the period, and divided by 365 (to reflect the one-half year period).

 

Fundamental Investors 29
 

This page was intentionally left blank.

 

30 Fundamental Investors
 

This page was intentionally left blank.

 

Fundamental Investors 31
 

Office of the fund

6455 Irvine Center Drive

Irvine, CA 92618-4518


Investment adviser

Capital Research and Management Company

333 South Hope Street

Los Angeles, CA 90071-1406

 

Transfer agent for shareholder accounts

American Funds Service Company

(Write to the address near you.)

 

P.O. Box 6007

Indianapolis, IN 46206-6007

 

P.O. Box 2280

Norfolk, VA 23501-2280

 

Custodian of assets

State Street Bank and Trust Company

One Lincoln Street

Boston, MA 02111

 

Counsel

Dechert LLP

One Bush Street, Suite 1600

San Francisco, CA 94104-4446

 

Independent registered public accounting firm

Deloitte & Touche LLP

695 Town Center Drive

Suite 1000

Costa Mesa, CA 92626-7188

 

Principal underwriter

American Funds Distributors, Inc.

333 South Hope Street

Los Angeles, CA 90071-1406

 

32 Fundamental Investors
 

Investors should carefully consider investment objectives, risks, charges and expenses. This and other important information is contained in the fund prospectus and summary prospectus, which can be obtained from your financial professional and should be read carefully before investing. You may also call American Funds Service Company (AFS) at (800) 421-4225 or visit the Capital Group website at capitalgroup.com.

 

“American Funds Proxy Voting Procedures and Principles” — which describes how we vote proxies relating to portfolio securities — is available on our website or upon request by calling AFS. The fund files its proxy voting record with the U.S. Securities and Exchange Commission (SEC) for the 12 months ended June 30 by August 31. The proxy voting record is available free of charge on the SEC website at sec.gov and on our website.

 

Fundamental Investors files a complete list of its portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form NPORT-P. The list of portfolio holdings is available free of charge on the SEC website and on our website.

 

This report is for the information of shareholders of Fundamental Investors, but it also may be used as sales literature when preceded or accompanied by the current prospectus or summary prospectus, which gives details about charges, expenses, investment objectives and operating policies of the fund. If used as sales material after September 30, 2021, this report must be accompanied by an American Funds statistical update for the most recently completed calendar quarter.

 

The Standard & Poor’s 500 Composite Index (“Index”) is a product of S&P Dow Jones Indices LLC and/or its affiliates and has been licensed for use by Capital Group. Copyright © 2021 S&P Dow Jones Indices LLC, a division of S&P Global, and/or its affiliates. All rights reserved. Redistribution or reproduction in whole or in part is prohibited without written permission of S&P Dow Jones Indices LLC.

 

American Funds Distributors, Inc., member FINRA.

 

The Capital Advantage®

 

Since 1931, Capital Group, home of American Funds, has helped investors pursue long-term investment success. Our consistent approach — in combination with The Capital SystemSM — has resulted in superior outcomes.

 

  Aligned with investor success
  We base our decisions on a long-term perspective, which we believe aligns our goals with the interests of our clients. Our portfolio managers average 27 years of investment industry experience, including 21 years at our company, reflecting a career commitment to our long-term approach.1
   
  The Capital System
  The Capital System combines individual accountability with teamwork. Funds using The Capital System are divided into portions that are managed independently by investment professionals with diverse backgrounds, ages and investment approaches. An extensive global research effort is the backbone of our system.
   
  American Funds’ superior outcomes
  Equity funds have beaten their Lipper peer indexes in 91% of 10-year periods and 98% of 20-year periods.2 Fixed income funds have helped investors achieve diversification through attention to correlation between bonds and equities.3 Fund management fees have been among the lowest in the industry.4

 

  1 Investment industry experience as of December 31, 2020.
     
  2 Based on Class F-2 share results for rolling calendar-year periods starting the first full calendar year after each fund’s inception through December 31, 2020. Periods covered are the shorter of the fund’s lifetime or since the comparable Lipper index inception date (except Capital Income Builder and SMALLCAP World Fund, for which the Lipper average was used). Expenses differ for each share class, so results will vary.
     
  3 Based on Class F-2 share results as of December 31, 2020. Thirteen of the 17 fixed income American Funds that have been in existence for the three-year period showed a three-year correlation below 0.3. Standard & Poor’s 500 Index was used as an equity market proxy. Correlation based on monthly total returns. Correlation is a statistical measure of how two securities move in relation to each other. A correlation ranges from –1 to 1. A positive correlation close to 1 implies that as one security moves, either up or down, the other security will move in “lockstep,” in the same direction. A negative correlation close to –1 indicates that the securities have moved in the opposite direction.
     
  4 On average, our management fees were in the lowest quintile 66% of the time, based on the 20-year period ended December 31, 2020, versus comparable Lipper categories, excluding funds of funds.
     
    Class F-2 shares were first offered on August 1, 2008. Class F-2 share results prior to the date of first sale are hypothetical based on the results of the original share class of the fund without a sales charge, adjusted for typical estimated expenses. Results for certain funds with an inception date after August 1, 2008, also include hypothetical returns because those funds’ Class F-2 shares sold after the funds’ date of first offering. Visit capitalgroup.com for more information on specific expense adjustments and the actual dates of first sale.
     
    All Capital Group trademarks mentioned are owned by The Capital Group Companies, Inc., an affiliated company or fund. All other company and product names mentioned are the property of their respective companies.

 

 

 

ITEM 2 – Code of Ethics

 

Not applicable for filing of semi-annual reports to shareholders.

 

ITEM 3 – Audit Committee Financial Expert

 

Not applicable for filing of semi-annual reports to shareholders.

 

ITEM 4 – Principal Accountant Fees and Services

 

Not applicable for filing of semi-annual reports to shareholders.

 

ITEM 5 – Audit Committee of Listed Registrants

 

Not applicable to this Registrant, insofar as the Registrant is not a listed issuer as defined in Rule 10A-3 under the Securities Exchange Act of 1934.

 

ITEM 6 – Schedule of Investments

 

Not applicable, insofar as the schedule is included as part of the report to shareholders filed under Item 1 of this Form.

 

ITEM 7 – Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.

 

Not applicable to this Registrant, insofar as the Registrant is not a closed-end management investment company.

 

ITEM 8 – Portfolio Managers of Closed-End Management Investment Companies

 

Not applicable to this Registrant, insofar as the Registrant is not a closed-end management investment company.

 

ITEM 9 – Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers

 

Not applicable to this Registrant, insofar as the Registrant is not a closed-end management investment company.

 

ITEM 10 – Submission of Matters to a Vote of Security Holders

 

There have been no material changes to the procedures by which shareholders may recommend nominees to the Registrant’s board of trustees since the Registrant last submitted a proxy statement to its shareholders. The procedures are as follows. The Registrant has a nominating and governance committee comprised solely of persons who are not considered ‘‘interested persons’’ of the Registrant within the meaning of the Investment Company Act of 1940, as amended. The committee periodically reviews such issues as the board’s composition, responsibilities, committees, compensation and other relevant issues, and recommends any appropriate changes to the full board of trustees. While the committee normally is able to identify from its own resources an ample number of qualified candidates, it will consider shareholder suggestions of persons to be considered as nominees to fill future vacancies on the board. Such suggestions must be sent in writing to the nominating and governance committee of the Registrant, c/o the Registrant’s Secretary, and must be accompanied by complete biographical and occupational data on the prospective nominee, along with a written consent of the prospective nominee for consideration of his or her name by the nominating and governance committee.

 

ITEM 11 – Controls and Procedures

 

(a) The Registrant’s Principal Executive Officer and Principal Financial Officer have concluded, based on their evaluation of the Registrant’s disclosure controls and procedures (as such term is defined in Rule 30a-3 under the Investment Company Act of 1940), that such controls and procedures are adequate and reasonably designed to achieve the purposes described in paragraph (c) of such rule.
   
(b)

There were no changes in the Registrant’s internal controls over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) that occurred during the Registrant’s semi-annual period covered by this report that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting.

 

 

ITEM 12 – Exhibits

 

(a)(1) Not applicable for filing of semi-annual reports to shareholders.
   
(a)(2) The certifications required by Rule 30a-2 of the Investment Company Act of 1940 and Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 are attached as exhibits hereto.

 

 
 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

  AMERICAN FUNDS FUNDAMENTAL INVESTORS
   
  By __/s/ Walter R. Burkley____________________
 

Walter R. Burkley,

Principal Executive Officer

   
  Date: August 31, 2021

 

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

 

 

 

By __/s/ Walter R. Burkley_________________

Walter R. Burkley,

Principal Executive Officer

 
Date: August 31, 2021

 

 

 

By ___/s/ Hong T. Le    __________

Hong T. Le, Treasurer and

Principal Financial Officer

 
Date: August 31, 2021