Annual Report - American Balanced Fund - American Funds

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We take an active hand in maintaininga balance of growth and stability.6 American Balanced Fund
Greg JohnsonPortfolio ManagerHilda ApplbaumPortfolio ManagerJim MulallyPortfolio ManagerBalance. We can see it innature. Many of us seek itin our everyday lives. Andinvestment professionalsstress its importance as wepursue our long-termfinancial goals.But when it comes tothe right mix of investments,balance isn’t so muchfound as created. Andonce achieved, it must bemaintained. The portfoliomanagers and analysts ofAmerican Balanced Fund(AMBAL) are dedicatedto this task.The role of balanced investing“Our job is to help investors growtheir wealth and generate incomewithout keeping them up all nightworrying about volatility,” says GregJohnson, president and portfoliomanager of AMBAL.Balanced funds, like AMBAL, combineequity and fixed-income securitiesto enable investors to mitigatedownside risk while still being ableto take advantage of some upsidemarket potential. By nature, balancedfunds typically lag pure equity fundsin a sharply rising market but tendto hold up better during a decline.The concept of balanced investingisn’t new. The potential benefits ofthis strategy probably first becameclear when the stock market crashof 1929 wiped out 89% of stockmarket value, as measured by theDow Jones Industrial Averageexcluding dividends. Over the years,the popularity of balanced funds hasgrown as more and more investorshave sought relative safety in additionto growth.AMBAL can serve as a completeinvestment program for an investor.It may be particularly attractive tothose who don’t keep up with themarkets and aren’t sure how to createa balanced investment strategy ontheir own. Older investors nearingretirement may find some peaceof mind from a conservative approachdesigned to help them preservetheir hard-earned nest eggs whileseeking growth to last through theirgolden years.Why investors choose AMBAL“AMBAL has proven over time to bean investment vehicle for all seasons,”says Greg.The fund’s objectives — conservation ofcapital, current income and long-termgrowth of capital and income — maynot be so different from other balancedfunds. It’s in the execution of these goalsthat AMBAL can be distinguished.Investors should start by asking “Whatexactly does ‘balanced’ mean?“ suggestsGreg. “At American Funds, balance is notonly the allocation between equity andfixed income, though that’s obviouslyone piece of it. To us, balance is alsostrategic diversification of investmentsin both areas.”Portfolio Manager Hilda Applbaumadds, “Diversification isn’t necessarilyabout the number of securities youinvest in. You can hold hundredsof stocks and not be diversified ifthey’re all basically doing the samething. True diversification requiresdifferent ideas working together withinthe fund.” In AMBAL, these ideasare introduced through a diversifiedteam of investment professionalswith different backgrounds, eachowning their best ideas. The fundoperates in a research-drivenenvironment that enables theseportfolio managers and analysts toidentify investment opportunitiesand manage risk.American Balanced Fund 7
Page 3 and 4: Special feature6 We take an active
Page 6: The value of along-term perspective
Page 11 and 12: John SmetPortfolio ManagerWesley Ph
Page 13 and 14: Four of our investment analysts des
Page 15 and 16: SharesValue(000)Nestlé SA 2 8,140,
Page 17 and 18: Principal amount(000)Value(000)Gene
Page 19 and 20: for the year ended December 31, 201
Page 21 and 22: Dividends and distributions to shar
Page 23 and 24: Investing in the fund may involve c
Page 25 and 26: As of December 31, 2014, the tax-ba
Page 27 and 28: For the year ended December 31, 201
Page 29 and 30: Financial highlightsIncome (loss) f
Page 31 and 32: Income (loss) frominvestment operat
Page 33 and 34: Expense exampleunauditedAs a fund s
Page 35 and 36: Approval of Investment Advisory and
Page 37 and 38: Board of trustees and other officer
Page 39 and 40: Office of the fund6455 Irvine Cente

Annual Report - American Balanced Fund - American Funds

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