Fundamental Investors®
Investment portfolio
September 30, 2019
unaudited
Common stocks 94.80% Information technology 21.65% | Shares | Value (000) |
Microsoft Corp. | 39,102,600 | $5,436,434 |
Broadcom Inc. | 11,332,200 | 3,128,480 |
Taiwan Semiconductor Manufacturing Co., Ltd.1 | 172,768,000 | 1,513,034 |
Taiwan Semiconductor Manufacturing Co., Ltd. (ADR) | 2,798,000 | 130,051 |
Intel Corp. | 29,415,300 | 1,515,770 |
ASML Holding NV | 4,680,636 | 1,159,352 |
ASML Holding NV (New York registered) | 1,260,100 | 313,034 |
Samsung Electronics Co., Ltd. | 21,885,000 | 897,429 |
Texas Instruments Inc. | 6,697,700 | 865,611 |
Mastercard Inc., Class A | 2,400,000 | 651,768 |
Visa Inc., Class A | 3,541,400 | 609,156 |
QUALCOMM Inc. | 5,968,300 | 455,262 |
ServiceNow, Inc.2 | 1,580,350 | 401,172 |
Autodesk, Inc.2 | 2,480,000 | 366,296 |
Advanced Micro Devices, Inc.2 | 12,000,000 | 347,880 |
Applied Materials, Inc. | 6,683,434 | 333,503 |
TE Connectivity Ltd. | 3,446,319 | 321,128 |
SAP SE | 2,500,000 | 293,960 |
Apple Inc. | 1,138,600 | 255,012 |
Micron Technology, Inc.2 | 5,708,000 | 244,588 |
SK hynix, Inc. | 3,545,000 | 243,614 |
Analog Devices, Inc. | 2,138,300 | 238,912 |
FleetCor Technologies, Inc.2 | 743,000 | 213,078 |
Dell Technologies Inc., Class C2 | 3,500,000 | 181,510 |
Intuit Inc. | 500,000 | 132,970 |
Symantec Corp. | 5,353,079 | 126,493 |
HubSpot, Inc.2 | 722,300 | 109,508 |
LiveRamp Holdings, Inc.2 | 2,480,700 | 106,571 |
Keyence Corp. | 170,000 | 105,184 |
Global Payments Inc. | 590,000 | 93,810 |
RingCentral, Inc., Class A2 | 727,000 | 91,355 |
Arista Networks, Inc.2 | 347,000 | 82,905 |
HP Inc. | 4,143,281 | 78,391 |
Tokyo Electron Ltd. | 400,000 | 76,079 |
DocuSign, Inc.2 | 1,200,000 | 74,304 |
NetApp, Inc. | 1,360,000 | 71,414 |
Smartsheet Inc., Class A2 | 1,935,000 | 69,718 |
Adobe Inc.2 | 248,000 | 68,510 |
Paycom Software, Inc.2 | 200,000 | 41,898 |
Lam Research Corp. | 173,200 | 40,028 |
KLA Corp. | 235,000 | 37,471 |
ON Semiconductor Corp.2 | 1,739,900 | 33,423 |
Micro Focus International PLC | 1,442,342 | 20,160 |
Datadog, Inc., Class A2 | 499,800 | 16,948 |
Jack Henry & Associates, Inc. | 65,000 | 9,488 |
21,602,662 |
Fundamental Investors — Page 1 of 9
unaudited
Common stocks (continued) Financials 12.22% | Shares | Value (000) |
Berkshire Hathaway Inc., Class A2 | 7,990 | $2,491,538 |
JPMorgan Chase & Co. | 12,616,800 | 1,484,871 |
Capital One Financial Corp. | 8,991,900 | 818,083 |
CME Group Inc., Class A | 3,582,500 | 757,126 |
Citigroup Inc. | 8,991,300 | 621,119 |
Discover Financial Services | 7,455,000 | 604,526 |
Wells Fargo & Co. | 10,815,000 | 545,509 |
The Blackstone Group Inc., Class A | 9,467,040 | 462,370 |
Chubb Ltd. | 2,525,000 | 407,636 |
PNC Financial Services Group, Inc. | 2,683,900 | 376,175 |
Intercontinental Exchange, Inc. | 4,004,500 | 369,495 |
Goldman Sachs Group, Inc. | 1,770,000 | 366,797 |
Legal & General Group PLC | 109,784,921 | 335,305 |
BlackRock, Inc. | 689,600 | 307,313 |
SunTrust Banks, Inc. | 3,698,500 | 254,457 |
CIT Group Inc.3 | 5,170,000 | 234,253 |
HDFC Bank Ltd. | 11,081,000 | 191,923 |
BNP Paribas SA | 3,841,200 | 187,021 |
Arch Capital Group Ltd.2 | 4,351,776 | 182,688 |
First Republic Bank | 1,847,448 | 178,648 |
Apollo Global Management, Inc., Class A | 3,924,500 | 148,425 |
T. Rowe Price Group, Inc. | 1,250,000 | 142,812 |
Zurich Insurance Group AG | 286,551 | 109,676 |
Bank of New York Mellon Corp. | 2,000,300 | 90,434 |
Hong Kong Exchanges and Clearing Ltd. | 3,077,600 | 90,313 |
Moody’s Corp. | 390,000 | 79,884 |
Aon PLC, Class A | 410,000 | 79,364 |
Kotak Mahindra Bank Ltd. | 3,315,000 | 76,922 |
AIA Group Ltd. | 5,878,800 | 55,542 |
Ares Management Corp., Class A | 1,661,300 | 44,539 |
SVB Financial Group2 | 180,000 | 37,611 |
State Street Corp. | 590,000 | 34,922 |
CenterState Bank Corp. | 1,276,700 | 30,622 |
12,197,919 | ||
Health care 11.96% | ||
UnitedHealth Group Inc. | 10,357,126 | 2,250,811 |
Boston Scientific Corp.2 | 20,840,000 | 847,980 |
Merck & Co., Inc. | 9,906,600 | 833,938 |
Regeneron Pharmaceuticals, Inc.2 | 2,681,500 | 743,848 |
Thermo Fisher Scientific Inc. | 2,414,500 | 703,271 |
Cigna Corp. | 3,706,972 | 562,681 |
Pfizer Inc. | 15,038,000 | 540,315 |
Centene Corp.2 | 11,838,764 | 512,145 |
Humana Inc. | 1,612,000 | 412,140 |
Vertex Pharmaceuticals Inc.2 | 2,236,827 | 378,963 |
Johnson & Johnson | 2,291,500 | 296,474 |
Gilead Sciences, Inc. | 4,660,000 | 295,351 |
AstraZeneca PLC | 3,251,900 | 290,322 |
CVS Health Corp. | 4,253,481 | 268,267 |
Bristol-Myers Squibb Co. | 5,200,000 | 263,692 |
Molina Healthcare, Inc.2 | 2,253,000 | 247,199 |
Anthem, Inc. | 944,200 | 226,703 |
Eli Lilly and Co. | 1,947,600 | 217,800 |
Daiichi Sankyo Co., Ltd. | 3,415,000 | 214,896 |
Fundamental Investors — Page 2 of 9
unaudited
Common stocks (continued) Health care (continued) | Shares | Value (000) |
Danaher Corp. | 1,344,800 | $194,230 |
ResMed Inc. | 1,365,000 | 184,425 |
Seattle Genetics, Inc.2 | 2,090,600 | 178,537 |
Bluebird Bio, Inc.2 | 1,894,600 | 173,962 |
Illumina, Inc.2 | 545,000 | 165,800 |
Biogen Inc.2 | 635,000 | 147,841 |
Abbott Laboratories | 1,657,400 | 138,675 |
Neurocrine Biosciences, Inc.2 | 1,009,400 | 90,957 |
Edwards Lifesciences Corp.2 | 367,100 | 80,729 |
Notre Dame Intermédica Participações SA | 5,490,000 | 71,681 |
Sage Therapeutics, Inc.2 | 505,970 | 70,983 |
AbbVie Inc. | 891,900 | 67,535 |
Ultragenyx Pharmaceutical Inc.2 | 1,401,125 | 59,940 |
Incyte Corp.2 | 672,900 | 49,949 |
Allakos Inc.2 | 595,244 | 46,804 |
GlaxoSmithKline PLC | 1,421,600 | 30,494 |
Novo Nordisk A/S, Class B | 461,556 | 23,728 |
Teva Pharmaceutical Industries Ltd. (ADR)2 | 3,148,000 | 21,658 |
WellCare Health Plans, Inc.2 | 60,000 | 15,550 |
BioMarin Pharmaceutical Inc.2 | 176,300 | 11,883 |
11,932,157 | ||
Industrials 11.46% | ||
Boeing Co. | 5,515,800 | 2,098,596 |
TransDigm Group Inc. | 2,104,800 | 1,095,906 |
Airbus SE, non-registered shares | 7,855,568 | 1,020,611 |
Parker-Hannifin Corp. | 4,650,000 | 839,837 |
Deere & Co. | 4,622,700 | 779,757 |
Union Pacific Corp. | 4,510,000 | 730,530 |
CSX Corp. | 9,106,915 | 630,836 |
MTU Aero Engines AG | 1,421,201 | 377,656 |
Honeywell International Inc. | 2,175,051 | 368,019 |
Northrop Grumman Corp. | 958,200 | 359,124 |
Emerson Electric Co. | 5,000,000 | 334,300 |
Johnson Controls International PLC | 7,052,000 | 309,512 |
Safran SA | 1,951,502 | 307,251 |
Rockwell Automation | 1,800,000 | 296,640 |
United Parcel Service, Inc., Class B | 2,400,000 | 287,568 |
Westinghouse Air Brake Technologies Corp. | 3,847,662 | 276,493 |
Armstrong World Industries, Inc. | 2,187,419 | 211,523 |
Lockheed Martin Corp. | 502,000 | 195,810 |
Norfolk Southern Corp. | 1,033,000 | 185,589 |
FedEx Corp. | 759,500 | 110,560 |
Waste Management, Inc. | 939,000 | 107,985 |
Grafton Group PLC, units | 11,328,532 | 105,860 |
Caterpillar Inc. | 800,289 | 101,085 |
United Technologies Corp. | 573,000 | 78,226 |
Waste Connections, Inc. | 750,000 | 69,000 |
Edenred SA | 1,201,000 | 57,637 |
RELX PLC | 1,970,000 | 46,809 |
Alaska Air Group, Inc. | 470,200 | 30,521 |
General Electric Co. | 2,841,600 | 25,404 |
11,438,645 |
Fundamental Investors — Page 3 of 9
unaudited
Common stocks (continued) Communication services 10.65% | Shares | Value (000) |
Facebook, Inc., Class A2 | 13,187,400 | $2,348,412 |
Charter Communications, Inc., Class A2 | 5,004,300 | 2,062,372 |
Alphabet Inc., Class C2 | 1,195,901 | 1,457,803 |
Alphabet Inc., Class A2 | 402,600 | 491,631 |
Comcast Corp., Class A | 27,577,373 | 1,243,188 |
Netflix, Inc.2 | 4,003,700 | 1,071,470 |
Activision Blizzard, Inc. | 12,719,569 | 673,120 |
Walt Disney Co. | 3,000,000 | 390,960 |
T-Mobile US, Inc.2 | 3,221,040 | 253,721 |
WPP PLC | 11,500,000 | 143,944 |
Verizon Communications Inc. | 2,200,000 | 132,792 |
Yandex NV, Class A2 | 3,000,000 | 105,030 |
Tencent Holdings Ltd. | 1,364,800 | 57,499 |
HUYA, Inc. (ADR)2 | 2,184,423 | 51,640 |
SoftBank Group Corp. | 1,300,000 | 50,978 |
CBS Corp., Class B | 1,149,127 | 46,390 |
Pinterest, Inc., Class A2 | 1,425,200 | 37,697 |
Adevinta ASA, Class B2 | 973,961 | 11,262 |
10,629,909 | ||
Consumer discretionary 8.29% | ||
Amazon.com, Inc.2 | 1,277,300 | 2,217,278 |
Home Depot, Inc. | 7,089,000 | 1,644,790 |
NIKE, Inc., Class B | 8,440,000 | 792,685 |
Marriott International, Inc., Class A | 3,651,551 | 454,143 |
Target Corp. | 4,000,000 | 427,640 |
Booking Holdings Inc.2 | 193,484 | 379,734 |
General Motors Co. | 9,835,000 | 368,616 |
Industria de Diseño Textil, SA | 9,200,000 | 284,782 |
Domino’s Pizza, Inc. | 1,109,000 | 271,250 |
LVMH Moët Hennessy-Louis Vuitton SE | 657,841 | 261,459 |
Wynn Resorts, Ltd. | 1,980,000 | 215,266 |
Galaxy Entertainment Group Ltd. | 24,606,000 | 153,048 |
MGM Resorts International | 5,500,000 | 152,460 |
Restaurant Brands International Inc. | 2,000,000 | 142,280 |
Ross Stores, Inc. | 660,000 | 72,501 |
Prosus NV2 | 970,000 | 71,206 |
GVC Holdings PLC | 5,420,000 | 49,541 |
Las Vegas Sands Corp. | 850,000 | 49,096 |
Valeo SA, non-registered shares | 1,455,000 | 47,180 |
Naspers Ltd., Class N | 297,000 | 45,007 |
Wyndham Hotels & Resorts, Inc. | 745,100 | 38,551 |
EssilorLuxottica | 264,703 | 38,156 |
Meituan Dianping, Class B2 | 3,630,000 | 37,098 |
Samsonite International SA | 16,674,000 | 35,315 |
Carnival Corp., units | 550,200 | 24,049 |
8,273,131 | ||
Consumer staples 6.87% | ||
Philip Morris International Inc. | 15,373,000 | 1,167,272 |
British American Tobacco PLC | 28,809,400 | 1,065,335 |
Altria Group, Inc. | 22,983,886 | 940,041 |
Anheuser-Busch InBev SA/NV | 6,166,000 | 587,518 |
Keurig Dr Pepper Inc. | 20,537,121 | 561,074 |
Walmart Inc. | 3,800,000 | 450,984 |
Fundamental Investors — Page 4 of 9
unaudited
Common stocks (continued) Consumer staples (continued) | Shares | Value (000) |
Costco Wholesale Corp. | 1,277,100 | $367,945 |
Nestlé SA | 3,285,000 | 356,395 |
Procter & Gamble Co. | 2,400,000 | 298,512 |
The Estée Lauder Companies Inc., Class A | 1,300,000 | 258,635 |
Mondelez International, Inc. | 3,900,000 | 215,748 |
Coca-Cola Co. | 3,500,000 | 190,540 |
Coca-Cola European Partners PLC | 2,515,000 | 139,457 |
Sysco Corp. | 1,170,000 | 92,898 |
Conagra Brands, Inc. | 1,755,000 | 53,843 |
Church & Dwight Co., Inc. | 650,000 | 48,906 |
Constellation Brands, Inc., Class A | 197,000 | 40,834 |
Reckitt Benckiser Group PLC (ADR) | 930,600 | 14,787 |
6,850,724 | ||
Energy 4.77% | ||
Enbridge Inc. (CAD denominated) | 18,784,954 | 659,320 |
Royal Dutch Shell PLC, Class B | 10,872,720 | 320,311 |
Royal Dutch Shell PLC, Class B (ADR) | 4,972,594 | 297,858 |
Royal Dutch Shell PLC, Class A (GBP denominated) | 165,244 | 4,844 |
Baker Hughes, a GE Co., Class A | 19,868,600 | 460,951 |
Chevron Corp. | 3,826,137 | 453,780 |
Suncor Energy Inc. | 10,493,740 | 331,006 |
BP PLC | 50,000,000 | 317,101 |
Exxon Mobil Corp. | 4,085,300 | 288,463 |
Occidental Petroleum Corp. | 5,483,000 | 243,829 |
ConocoPhillips | 3,895,700 | 221,977 |
Concho Resources Inc. | 2,566,403 | 174,259 |
Keyera Corp. | 6,937,000 | 168,444 |
Murphy Oil Corp. | 6,781,900 | 149,948 |
Diamondback Energy, Inc. | 1,549,491 | 139,315 |
Canadian Natural Resources, Ltd. (CAD denominated) | 4,771,500 | 126,954 |
EOG Resources, Inc. | 1,710,000 | 126,916 |
Noble Energy, Inc. | 3,010,400 | 67,614 |
Pioneer Natural Resources Co. | 500,000 | 62,885 |
Equitrans Midstream Corp. | 3,242,500 | 47,178 |
Viper Energy Partners LP | 1,429,289 | 39,548 |
Schlumberger Ltd. | 1,003,500 | 34,290 |
Cenovus Energy Inc. (CAD denominated) | 2,492,500 | 23,385 |
4,760,176 | ||
Materials 4.39% | ||
DuPont de Nemours Inc. | 8,884,783 | 633,574 |
BHP Group PLC | 18,000,000 | 383,413 |
Corteva, Inc. | 13,690,462 | 383,333 |
LyondellBasell Industries NV | 4,121,600 | 368,760 |
Linde PLC | 1,795,000 | 347,727 |
Royal Gold, Inc. | 2,284,000 | 281,412 |
Dow Inc. | 5,036,333 | 239,981 |
Rio Tinto PLC | 4,243,000 | 219,583 |
Shin-Etsu Chemical Co., Ltd. | 1,883,700 | 201,393 |
Barrick Gold Corp. | 11,453,232 | 198,485 |
LANXESS AG | 2,500,000 | 152,593 |
Franco-Nevada Corp. | 1,540,000 | 140,324 |
First Quantum Minerals Ltd. | 14,927,800 | 125,408 |
Norsk Hydro ASA | 34,987,339 | 123,064 |
Fundamental Investors — Page 5 of 9
unaudited
Common stocks (continued) Materials (continued) | Shares | Value (000) |
Sherwin-Williams Co. | 213,500 | $117,397 |
Koninklijke DSM NV | 975,000 | 117,322 |
Packaging Corp. of America | 957,699 | 101,612 |
Alcoa Corp.2 | 5,000,000 | 100,350 |
Akzo Nobel NV | 749,000 | 66,771 |
Vale SA, ordinary nominative | 4,100,000 | 47,118 |
Allegheny Technologies Inc.2 | 1,301,700 | 26,359 |
4,375,979 | ||
Real estate 1.98% | ||
Simon Property Group, Inc. REIT | 6,145,000 | 956,469 |
American Tower Corp. REIT | 1,303,400 | 288,221 |
Equinix, Inc. REIT | 466,000 | 268,789 |
Crown Castle International Corp. REIT | 1,553,845 | 216,000 |
AGNC Investment Corp. REIT | 10,912,000 | 175,574 |
CoreSite Realty Corp. REIT | 545,000 | 66,408 |
1,971,461 | ||
Utilities 0.56% | ||
DTE Energy Co. | 920,000 | 122,323 |
Sempra Energy | 800,000 | 118,088 |
Edison International | 1,305,800 | 98,483 |
Exelon Corp. | 1,925,000 | 92,997 |
Enel SpA | 10,289,312 | 76,833 |
Ørsted AS | 489,000 | 45,445 |
554,169 | ||
Total common stocks (cost: $64,436,485,000) | 94,586,932 | |
Preferred securities 0.21% Energy 0.08% | ||
Petróleo Brasileiro SA (Petrobras), preferred nominative | 12,470,000 | 82,684 |
Information technology 0.07% | ||
Samsung Electronics Co., Ltd., nonvoting preferred shares | 2,100,000 | 69,348 |
Financials 0.06% | ||
Itaú Unibanco Holding SA, preferred nominative (ADR) | 7,815,000 | 65,724 |
Total preferred securities (cost: $194,366,000) | 217,756 | |
Convertible stocks 0.12% Information technology 0.12% | ||
Broadcom Inc., Series A, cumulative convertible preferred, 8.00% 2022 | 115,000 | 117,919 |
Total convertible stocks (cost: $117,917,000) | 117,919 |
Fundamental Investors — Page 6 of 9
unaudited
Short-term securities 5.04% Money market investments 5.04% | Shares | Value (000) |
Capital Group Central Cash Fund 2.07%4 | 50,268,954 | $5,026,393 |
Total short-term securities (cost: $5,026,652,000) | 5,026,393 | |
Total investment securities100.17% (cost: $69,775,420,000) | 99,949,000 | |
Other assets less liabilities (0.17)% | (172,242) | |
Net assets100.00% | $99,776,758 |
Investments in affiliates
A company is an affiliate of the fund under the Investment Company Act of 1940 if the fund’s holdings represent 5% or more of the outstanding voting shares of that company. Further details on these holdings and related transactions during the nine months ended September 30, 2019, appear below.
Beginning shares | Additions | Reductions | Ending shares | Net realized gain (loss) (000) | Net unrealized appreciation (depreciation) (000) | Dividend income (000) | Value of affiliates at 9/30/2019 (000) | |
Common stocks 0.23% | ||||||||
Financials 0.23% | ||||||||
CIT Group Inc. | 7,752,515 | — | 2,582,515 | 5,170,000 | $22,208 | $29,174 | $5,292 | $234,253 |
Energy 0.00% | ||||||||
Concho Resources Inc.5 | 10,228,523 | — | 7,662,120 | 2,566,403 | (232,946) | 83,506 | 2,725 | — |
Short-term securities 0.00% | ||||||||
Money market investments 0.00% | ||||||||
Capital Group Central Cash Fund 2.07%4,5 | — | 110,344,615 | 60,075,661 | 50,268,954 | 129 | (259) | 58,956 | — |
Total 0.23% | $(210,609) | $112,421 | $66,973 | $234,253 |
1 | Valued under fair value procedures adopted by authority of the board of trustees. The total value of the security was $1,513,034,000, which represented 1.52% of the net assets of the fund. |
2 | Security did not produce income during the last 12 months. |
3 | Represents an affiliated company as defined under the Investment Company Act of 1940. |
4 | Rate represents the seven-day yield at 9/30/2019. |
5 | Unaffiliated issuer at 9/30/2019. |
Valuation disclosures
Capital Research and Management Company (“CRMC”), the fund’s investment adviser, values the fund’s investments at fair value as defined by accounting principles generally accepted in the United States of America. The net asset value of each share class of the fund is generally determined as of approximately 4:00 p.m. New York time each day the New York Stock Exchange is open. Security transactions are recorded by the fund as of the date the trades are executed with brokers. 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.
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.
Fundamental Investors — Page 7 of 9
unaudited
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; 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.
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, including an annual control self-evaluation program facilitated by the investment adviser’s compliance group.
Fundamental Investors — Page 8 of 9
unaudited
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. The following table presents the fund’s valuation levels as of September 30, 2019 (dollars in thousands):
Investment securities | ||||
Level 1 | Level 2 | Level 3 | Total | |
Assets: | ||||
Common stocks: | ||||
Information technology | $20,089,628 | $1,513,034 | $— | $21,602,662 |
Financials | 12,197,919 | — | — | 12,197,919 |
Health care | 11,932,157 | — | — | 11,932,157 |
Industrials | 11,438,645 | — | — | 11,438,645 |
Communication services | 10,629,909 | — | — | 10,629,909 |
Consumer discretionary | 8,273,131 | — | — | 8,273,131 |
Consumer staples | 6,850,724 | — | — | 6,850,724 |
Energy | 4,760,176 | — | — | 4,760,176 |
Materials | 4,375,979 | — | — | 4,375,979 |
Real estate | 1,971,461 | — | — | 1,971,461 |
Utilities | 554,169 | — | — | 554,169 |
Preferred securities | 217,756 | — | — | 217,756 |
Convertible stocks | 117,919 | — | — | 117,919 |
Short-term securities | 5,026,393 | — | — | 5,026,393 |
Total | $98,435,966 | $1,513,034 | $— | $99,949,000 |
Key to abbreviations |
ADR = American Depositary Receipts |
CAD = Canadian dollars |
GBP = British pounds |
Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so they may lose value.
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.
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.
American Funds Distributors, Inc., member FINRA.
© 2019 Capital Group. All rights reserved.
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