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: 811-05888
SMALLCAP World Fund, Inc.
(Exact Name of Registrant as Specified in Charter)
333 South Hope Street
Los Angeles, California 90071
(Address of Principal Executive Offices)
Registrant's telephone number, including area code: (213) 486-9200
Date of fiscal year end: September 30
Date of reporting period: September 30, 2010
Patrick F. Quan
Capital Research and Management Company
P.O. Box 7650, One Market, Steuart Tower
San Francisco, California 94120
(Name and Address of Agent for Service)
Copies to:
Mark D. Perlow
K&L Gates LLP
Four Embarcadero Center, Suite 1200
San Francisco, California 94111
(Counsel for the Registrant)
ITEM 1 – Reports to Stockholders
SMALLCAP World Fund®
[photo of the side of a mirrored-glass building]
Special feature
Different approaches, one goal
u See page 4
Annual report for the year ended September 30, 2010
SMALLCAP World Fund® seeks long-term growth of capital through investments in smaller companies in the United States and around the world.
This fund is one of the 30 American Funds. American Funds is one of the nation’s largest mutual fund families. For nearly 80 years, Capital Research and Management Company,SM the American Funds adviser, has invested with a long-term focus based on thorough research and attention to risk.
Fund results 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. Share prices and returns will vary, so investors may lose money. Investing for short periods makes losses more likely. Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so they may lose value. For current information and month-end results, visit americanfunds.com.
Results at a glance | ||||||||||||||||
For periods ended September 30, 2010, with all distributions reinvested | ||||||||||||||||
Average annual total returns | ||||||||||||||||
Total returns | Lifetime (since | |||||||||||||||
1 year | 5 years | 10 years | 4/30/90) | |||||||||||||
SMALLCAP World Fund | ||||||||||||||||
(Class A shares) | 19.1 | % | 5.9 | % | 3.3 | % | 9.6 | % | ||||||||
MSCI All Country World | ||||||||||||||||
Small Cap Index1,2 | 16.1 | 5.3 | 7.4 | n/a | ||||||||||||
Lipper Global Small-Cap | ||||||||||||||||
Funds Average3 | 17.3 | 3.8 | 3.6 | 9.6 | ||||||||||||
1 The market index cited in this report is unmanaged, and its results include reinvested distributions but do not reflect the effect of sales charges, commissions, account fees, expenses or taxes. | ||||||||||||||||
2 The MSCI All Country World Small Cap Index is a free float-adjusted market capitalization weighted index that is designed to measure equity market results of smaller capitalization companies in both developed and emerging markets. | ||||||||||||||||
3 Lipper averages do not reflect the effect of sales charges, account fees or taxes. |
Investment results assume all distributions are reinvested and reflect applicable fees and expenses. The fund’s investment adviser waived a portion of its management fees from September 1, 2004, through December 31, 2008. Applicable fund results shown reflect the waiver, without which they would have been lower. See the Financial Highlights table on pages 26 and 27 for details.
See page 3 for Class A share results with relevant sales charges deducted. Results for other share classes can be found on page 34.
Equity investments are subject to market fluctuations. Investing outside the United States may be subject to additional risks, such as currency fluctuations and political instability. These risks may be heightened in connection with investments in developing countries. Investing in small-capitalization stocks can involve greater risk than is customarily associated with investing in stocks of larger, more established companies. See the prospectus and the Risk Factors section of this report for more information on these and other risks associated with investing in the fund.
Fellow shareholders:
The global economy continued with an uneven and, at this point, incomplete recovery during SMALLCAP World Fund’s most recent fiscal year. Despite this uncertain environment, the fund produced a total return of 19.1% for the 12 months ended September 30, 2010. This total return assumes reinvestment of dividends, which totaled 19.6 cents a share during the period.
This total return surpassed those of its primary benchmark and its peers. The MSCI All Country World Small Cap Index, an unmanaged measure of global small-capitalization stocks, gained 16.1%. The fund’s peer group, as represented by the Lipper Global Small-Cap Funds Average, saw a total return of 17.3%.
The year in review
The global economy, which embarked on recovery in mid-2009, continued to show gradual signs of improvement during the fund’s fiscal year, with its strongest signals of growth coming in late 2009 and early 2010. In developed nations, a coordinated fiscal and monetary stimulus effort appeared to produce short-term benefits, while emerging economies built on their resilience in the 2008–2009 downturn.
The second half of the fiscal year saw a number of issues come to a head, starting with the Greek financial crisis and potential problems for other over-leveraged European nations. This was exacerbated by signs of slowing economic growth in both Europe and the United States. Unemployment in the developed world remains high, and governments with mounting debt have fewer options to further stimulate the economy.
Despite these concerns, most equity markets around the world saw positive gains for the period, with small-capitalization stocks generally outperforming large-cap stocks domestically and abroad. However, most of these gains came in the first six months of the fiscal year. Overall, equity markets have been volatile since then, though small-cap stocks continued to post gains around the world in the most recent quarter.
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[Begin Sidebar]
In this report | |
Special feature | |
4 | Different approaches, one goal |
The fund’s portfolio counselors have different perspectives on today’s market, but are united in their goals to find the best potential investments for the fund. | |
Contents | |
1 | Letter to shareholders |
3 | The value of a long-term perspective |
10 | Summary investment |
portfolio | |
17 | Financial statements |
35 | Board of directors and other officers |
[End Sidebar]
[Begin Sidebar]
Where are SMALLCAP’s holdings located?
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As of September 30, 2010 | Percent of net assets | |||
n United States | 39.1 | % | ||
n Asia & Pacific Basin | 27.9 | |||
n Europe | 19.5 | |||
n Other (including Canada | ||||
& Latin America) | 6.5 | |||
n Short-term securities & | ||||
other assets less liabilities | 7.0 |
[end pie chart]
[begin pie chart]
As of September 30, 2009 | Percent of net assets | |||
n United States | 41.1 | % | ||
n Asia & Pacific Basin | 24.7 | |||
n Europe | 19.9 | |||
n Other (including Canada | ||||
& Latin America) | 5.7 | |||
n Short-term securities & | ||||
other assets less liabilities | 8.6 |
[end pie chart]
[End Sidebar]
[Begin Sidebar]
Largest equity holdings | Percent of net assets | |||
ENN Energy Holdings | 1.0 | % | ||
Kingboard Chemical Holdings | .8 | |||
Container Corp. of India | .8 | |||
AAC Acoustic Technologies Holdings | .8 | |||
Pacific Rubiales Energy | .7 | |||
Dah Sing Financial Holdings | .6 | |||
Modern Times Group | .6 | |||
MSC Industrial Direct | .6 | |||
lululemon athletica | .6 | |||
Thoratec | .6 |
[End Sidebar]
How the fund responded
Unlike consumers and governments in the developed world, corporations in both developed and emerging markets have relatively strong balance sheets, making the corporate investment environment more accommodating than the general economic backdrop at this time. In general, valuations of small-cap emerging markets stocks are approaching those of small-cap stocks from the developed world, given the latter regions’ economic uncertainties.
Of the 45 countries that the MSCI All Country World Small Cap Index represents, 37 saw positive total returns for the full fiscal year, measured in U.S. dollars. Of the eight nations with negative returns, four of them — Greece, Ireland, Portugal and Spain — were at the forefront of Europe’s financial crisis. Some of the index’s best returns came from Latin America, particularly Brazil and Chile, as well as from Asia, notably Thailand, Malaysia, the Philippines and China.
Our investments cover a broad range of companies from all over the world and across the industry spectrum. Each of our top 10 holdings produced at least double-digit returns for the period; our fifth-largest holding, Pacific Rubiales Energy, rose 126.7% for the period. The fund’s top holding, ENN Energy Holdings, gained 44.3% as well.
Overall, strong returns from energy and financial stocks helped the fund, as did holdings from emerging markets, while housing-related holdings, both domestic and international, were among those whose returns fell during the past year.
The road ahead
There are a number of growing concerns about the health and trajectory of the current economic recovery, particularly in the developed world. With stimulus spending now waning, there seems little in the way of catalysts to help economies grow at their previous pace.
At the very least, slower economic growth seems like a reasonable forecast for the coming year, but there is also the chance things may worsen further. Nonetheless, the fund’s portfolio counselors believe that their bottom-up, intensive research can help uncover potential investments in almost any economic environment. And as we pointed out earlier, corporations are generally in better shape than governments and consumers. High-quality small companies with sound balance sheets and growth potential should continue to represent strong potential investment opportunities.
For more on the portfolio counselors’ views on the global economy and investing, please read “Different approaches, one goal,” starting on page 4.
We are pleased to report this year’s returns, which surpassed their benchmarks. However, just as the 2008–2009 downturn was an unusually difficult time, we would caution that returns at these levels aren’t typical, either. We continue to focus on long-term investing, and encourage you to take a similar approach to your personal holdings.
Thank you for your continued support. We look forward to reporting to you again in six months.
Sincerely,
/s/ Gordon Crawford
Gordon Crawford
Vice Chairman of the Board
/s/ Gregory W. Wendt
Gregory W. Wendt
President
November 10, 2010
For current information about the fund, visit americanfunds.com.
The value of a long-term perspective
This chart shows how a $10,000 investment in SMALLCAP World Fund’s Class A shares grew from April 30, 1990 — the fund’s inception — through September 30, 2010, the end of the fund’s latest fiscal year. As you can see, the $10,000 would have grown to $61,657 even after deducting the maximum 5.75% sales charge.
Fund results shown reflect deduction of the maximum sales charge of 5.75% on the $10,000 investment.1 Thus, the net amount invested was $9,425.
[begin mountain chart]
Date | SMALLCAP World Fund | Date | Consumer Price Index3 | Date | MSCI All Country World Small Cap Index2 | ||||||||||
4/30/1990 | $ | 9,425 | 4/30/1990 | $ | 10,000 | 4/30/1990 | $ | 10,000 | |||||||
Fiscal Year 1990 | |||||||||||||||
High | 16-Jul-90 | $ | 9,963 | 30-Sep-90 | $ | 10,295 | 17-Jul-90 | $ | 11,596 | ||||||
Low | 28-Sep-90 | $ | 8,288 | 30-Apr-90 | $ | 10,000 | 28-Sep-90 | $ | 8,918 | ||||||
Close | 30-Sep-90 | $ | 8,288 | 30-Sep-90 | $ | 10,295 | 30-Sep-90 | $ | 8,918 | ||||||
Fiscal Year 1991 | |||||||||||||||
High | 30-Sep-91 | $ | 11,307 | 30-Sep-91 | $ | 10,644 | 17-Apr-91 | $ | 11,421 | ||||||
Low | 11-Oct-90 | $ | 8,231 | 01-Oct-90 | $ | 10,357 | 16-Jan-91 | $ | 8,897 | ||||||
Close | 30-Sep-91 | $ | 11,307 | 30-Sep-91 | $ | 10,644 | 30-Sep-91 | $ | 11,210 | ||||||
Fiscal Year 1992 | |||||||||||||||
High | 12-Feb-92 | $ | 12,666 | 30-Sep-92 | $ | 10,962 | 7-Feb-92 | $ | 11,884 | ||||||
Low | 9-Oct-91 | $ | 11,140 | 01-Oct-91 | $ | 10,659 | 12-Aug-92 | $ | 10,570 | ||||||
Close | 30-Sep-92 | $ | 11,640 | 30-Sep-92 | $ | 10,962 | 30-Sep-92 | $ | 10,999 | ||||||
Fiscal Year 1993 | |||||||||||||||
High | 30-Sep-93 | $ | 15,418 | 30-Sep-93 | $ | 11,257 | 3-Sep-93 | $ | 14,469 | ||||||
Low | 5-Oct-92 | $ | 11,368 | 01-Oct-92 | $ | 11,001 | 9-Oct-92 | $ | 10,649 | ||||||
Close | 30-Sep-93 | $ | 15,418 | 30-Sep-93 | $ | 11,257 | 30-Sep-93 | $ | 14,341 | ||||||
Fiscal Year 1994 | |||||||||||||||
High | 3-Feb-94 | $ | 17,254 | 30-Sep-94 | $ | 11,590 | 2-Sep-94 | $ | 15,727 | ||||||
Low | 24-Jun-94 | $ | 15,474 | 01-Oct-93 | $ | 11,303 | 29-Nov-93 | $ | 13,616 | ||||||
Close | 30-Sep-94 | $ | 16,744 | 30-Sep-94 | $ | 11,590 | 30-Sep-94 | $ | 15,468 | ||||||
Fiscal Year 1995 | |||||||||||||||
High | 11-Sep-95 | $ | 20,046 | 30-Sep-95 | $ | 11,885 | 11-Sep-95 | $ | 16,260 | ||||||
Low | 30-Jan-95 | $ | 15,821 | 03-Oct-94 | $ | 11,598 | 13-Dec-94 | $ | 14,289 | ||||||
Close | 30-Sep-95 | $ | 19,856 | 30-Sep-95 | $ | 11,885 | 30-Sep-95 | $ | 16,221 | ||||||
Fiscal Year 1996 | |||||||||||||||
High | 20-May-96 | $ | 23,573 | 30-Sep-96 | $ | 12,242 | 20-May-96 | $ | 18,617 | ||||||
Low | 18-Dec-95 | $ | 19,323 | 31-Dec-95 | $ | 11,908 | 27-Oct-95 | $ | 15,635 | ||||||
Close | 30-Sep-96 | $ | 22,877 | 30-Sep-96 | $ | 12,242 | 30-Sep-96 | $ | 17,857 | ||||||
Fiscal Year 1997 | |||||||||||||||
High | 30-Sep-97 | $ | 28,689 | 30-Sep-97 | $ | 12,506 | 30-Sep-97 | $ | 19,522 | ||||||
Low | 28-Apr-97 | $ | 22,594 | 01-Oct-96 | $ | 12,281 | 14-Apr-97 | $ | 16,713 | ||||||
Close | 30-Sep-97 | $ | 28,689 | 30-Sep-97 | $ | 12,506 | 30-Sep-97 | $ | 19,522 | ||||||
Fiscal Year 1998 | |||||||||||||||
High | 13-Oct-97 | $ | 29,202 | 30-Sep-98 | $ | 12,692 | 21-Apr-98 | $ | 20,484 | ||||||
Low | 31-Aug-98 | $ | 22,174 | 31-Dec-97 | $ | 12,514 | 31-Aug-98 | $ | 15,352 | ||||||
Close | 30-Sep-98 | $ | 22,749 | 30-Sep-98 | $ | 12,692 | 30-Sep-98 | $ | 15,611 | ||||||
Fiscal Year 1999 | |||||||||||||||
High | 13-Sep-99 | $ | 33,760 | 30-Sep-99 | $ | 13,026 | 13-Sep-99 | $ | 21,579 | ||||||
Low | 8-Oct-98 | $ | 20,294 | 31-Dec-98 | $ | 12,715 | 8-Oct-98 | $ | 14,369 | ||||||
Close | 30-Sep-99 | $ | 32,172 | 30-Sep-99 | $ | 13,026 | 30-Sep-99 | $ | 20,984 | ||||||
Fiscal Year 2000 | |||||||||||||||
High | 10-Mar-00 | $ | 56,595 | 30-Sep-00 | $ | 13,476 | 10-Mar-00 | $ | 26,069 | ||||||
Low | 18-Oct-99 | $ | 31,127 | 01-Oct-99 | $ | 13,049 | 18-Oct-99 | $ | 20,444 | ||||||
Close | 30-Sep-00 | $ | 44,532 | 30-Sep-00 | $ | 13,476 | 30-Sep-00 | $ | 22,985 | ||||||
Fiscal Year 2001 | |||||||||||||||
High | 2-Oct-00 | $ | 43,857 | 30-Sep-01 | $ | 13,832 | 2-Oct-00 | $ | 22,743 | ||||||
Low | 21-Sep-01 | $ | 23,450 | 02-Oct-00 | $ | 13,499 | 21-Sep-01 | $ | 16,368 | ||||||
Close | 30-Sep-01 | $ | 24,516 | 30-Sep-01 | $ | 13,832 | 30-Sep-01 | $ | 17,180 | ||||||
Fiscal Year 2002 | |||||||||||||||
High | 17-Apr-02 | $ | 31,220 | 30-Sep-02 | $ | 14,042 | 17-May-02 | $ | 21,364 | ||||||
Low | 24-Sep-02 | $ | 22,831 | 31-Dec-01 | $ | 13,708 | 24-Sep-02 | $ | 16,279 | ||||||
Close | 30-Sep-02 | $ | 23,121 | 30-Sep-02 | $ | 14,042 | 30-Sep-02 | $ | 16,429 | ||||||
Fiscal Year 2003 | |||||||||||||||
High | 19-Sep-03 | $ | 31,932 | 30-Sep-03 | $ | 14,368 | 19-Sep-03 | $ | 23,605 | ||||||
Low | 9-Oct-02 | $ | 21,288 | 31-Dec-02 | $ | 14,034 | 9-Oct-02 | $ | 15,159 | ||||||
Close | 30-Sep-03 | $ | 30,626 | 30-Sep-03 | $ | 14,368 | 30-Sep-03 | $ | 22,898 | ||||||
Fiscal Year 2004 | |||||||||||||||
High | 12-Apr-04 | $ | 38,954 | 30-Sep-04 | $ | 14,732 | 7-Apr-04 | $ | 28,999 | ||||||
Low | 1-Oct-03 | $ | 31,035 | 31-Dec-03 | $ | 14,298 | 1-Oct-03 | $ | 23,259 | ||||||
Close | 30-Sep-04 | $ | 36,736 | 30-Sep-04 | $ | 14,732 | 30-Sep-04 | $ | 28,339 | ||||||
Fiscal Year 2005 | |||||||||||||||
High | 30-Sep-05 | $ | 46,392 | 30-Sep-05 | $ | 15,423 | 30-Sep-05 | $ | 36,324 | ||||||
Low | 14-Oct-04 | $ | 36,577 | 31-Dec-04 | $ | 14,763 | 14-Oct-04 | $ | 28,253 | ||||||
Close | 30-Sep-05 | $ | 46,392 | 30-Sep-05 | $ | 15,423 | 30-Sep-05 | $ | 36,324 | ||||||
Fiscal Year 2006 | |||||||||||||||
High | 9-May-06 | $ | 58,016 | 31-Aug-06 | $ | 15,818 | 9-May-06 | $ | 44,841 | ||||||
Low | 27-Oct-05 | $ | 43,590 | 31-Dec-05 | $ | 15,268 | 20-Oct-05 | $ | 34,197 | ||||||
Close | 30-Sep-06 | $ | 53,477 | 30-Sep-06 | $ | 15,741 | 30-Sep-06 | $ | 41,361 | ||||||
Fiscal Year 2007 | |||||||||||||||
High | 19-Jul-07 | $ | 73,253 | 17-Sep-07 | $ | 16,175 | 13-Jul-07 | $ | 53,980 | ||||||
Low | 10-Jan-07 | $ | 58,657 | 16-Nov-06 | $ | 15,632 | 3-Oct-06 | $ | 41,194 | ||||||
Close | 30-Sep-07 | $ | 72,413 | 30-Sep-07 | $ | 16,175 | 30-Sep-07 | $ | 51,547 | ||||||
Fiscal Year 2008 | |||||||||||||||
High | 31-Oct-07 | $ | 76,428 | 16-Jul-08 | $ | 17,065 | 31-Oct-07 | $ | 53,830 | ||||||
Low | 29-Sep-08 | $ | 47,556 | 01-Oct-07 | $ | 16,175 | 29-Sep-08 | $ | 36,826 | ||||||
Close | 30-Sep-08 | $ | 48,685 | 30-Sep-08 | $ | 16,973 | 30-Sep-08 | $ | 37,157 | ||||||
Fiscal Year 2009 | |||||||||||||||
High | 22-Sep-09 | $ | 52,124 | 01-Oct-08 | $ | 16,973 | 22-Sep-09 | $ | 41,186 | ||||||
Low | 9-Mar-09 | $ | 28,688 | 16-Dec-08 | $ | 16,309 | 9-Mar-09 | $ | 21,316 | ||||||
Close | 30-Sep-09 | $ | 51,765 | 30-Sep-09 | $ | 16,755 | 30-Sep-09 | $ | 40,572 | ||||||
Fiscal Year 2010 | |||||||||||||||
High | 30-Sep-10 | $ | 61,657 | 16-Sep-10 | $ | 16,946 | 26-Apr-10 | $ | 48,172 | ||||||
Low | 28-Oct-09 | $ | 50,003 | 01-Jul-10 | $ | 16,910 | 2-Oct-09 | $ | 39,125 | ||||||
Close | 30-Sep-10 | $ | 61,657 | 30-Sep-10 | $ | 16,946 | 30-Sep-10 | $ | 47,100 |
[end mountain chart]
Past results are not predictive of results in future periods. The results shown are before taxes on fund distributions and sale of fund shares.
1As outlined in the prospectus, the sales charge is reduced for accounts (and aggregated investments) of $25,000 or more and is eliminated for purchases of $1 million or more. There is no sales charge on dividends or capital gain distributions that are reinvested in additional shares. |
2This index is unmanaged, and its results include reinvested distributions but do not reflect the effect of sales charges, commissions, account fees, expenses or taxes. Because the index was not in existence at the time of the fund’s inception, cumulative returns through May 1994 reflect the returns of the S&P Developed <$1.2 Billion Index. |
3Computed from data supplied by the U.S. Department of Labor, Bureau of Labor Statistics. |
4For the period April 30, 1990 (when the fund began operations) through September 30, 1990. |
Average annual total returns based on a $1,000 investment (for periods ended September 30, 2010)* | ||||||||||||
1 year | 5 years | 10 years | ||||||||||
Class A shares | 12.25 | % | 4.61 | % | 2.70 | % | ||||||
*Assumes reinvestment of all distributions and payment of the maximum 5.75% sales charge. |
The total annual fund operating expense ratio was 1.13% for Class A shares as of the most recent fiscal year-end.
Investment results assume all distributions are reinvested and reflect applicable fees and expenses. The fund’s investment adviser waived a portion of its management fees from September 1, 2004, through December 31, 2008. Applicable fund results shown reflect the waiver, without which they would have been lower. See the Financial Highlights table on pages 26 and 27 for details.
Different approaches, one goal
[Begin Photo Caption]
[photo of Gordon Crawford]
Gordon Crawford
[End Photo Caption]
[Begin Photo Caption]
[photo of Brady Enright]
Brady Enright
[End Photo Caption]
[Begin Photo Caption]
[photo of Claudia Huntington]
Claudia Huntington
[End Photo Caption]
[Begin Photo Caption]
[photo of Jonathan Knowles]
Jonathan Knowles
[End Photo Caption]
[Begin Sidebar]
The portfolio counselors of SMALLCAP World Fund have different perspectives on today’s changing investment environment. Yet their approach to investing remains the same: to find strong potential investments among the world’s best up-and-coming companies.
[End Sidebar]
[photo of the side of a mirrored-glass building]
The strength and duration of the current economic recovery are some of the biggest variables investors face today. Growth has returned to the United States and many other developed nations, but problems remain.
Nevertheless, the portfolio counselors of SMALLCAP World Fund continue to put shareholders’ money to work in investments they feel will provide the best returns for the long term. While the portfolio counselors have different ideas about the future of the global economy, they’re unified by a single goal — bringing shareholders the best possible returns.
Recently, four of the fund’s portfolio counselors — Gordon Crawford, Brady Enright, Claudia Huntington and Jonathan Knowles — took the time to answer questions about their views of today’s economic picture and their approaches to investing.
How would you describe the evolution of the global economy over the past year?
Gordon: Certainly, there’s been a recovery among developed nations, but that has been fueled by the stimulus money the U.S. and Europe have poured into the system. That level of stimulus was unprecedented in history. And while it certainly gave us a boost last year, the reality of it is that you’ve seen economic growth start to decline over the past few quarters. The government just doesn’t have any more money to spend, and meanwhile, consumers — who are roughly 70% of the U.S. economy — are dampening their rate of spending while saving more. So you’re seeing the recovery start to slow.
Brady: I don’t think there’s any question that our recovery is going to flatten out, but that’s not the end of the world. There’s strong growth in Asia, particularly in China and wrapping around to India. Latin America is an area of strength. And even in Western Europe and the U.S., there’s still growth happening. It’s not great, but I don’t see a huge amount of downside.
[photo of the reflection of a crane in a mirrored-glass building]
[Begin Sidebar]
I think Asian countries, generally, will continue to do well, and because of that, companies that export to Asia also will do well.
Jonathan Knowles
[End Sidebar]
[Begin Sidebar]
Frankly, I’m seeing opportunities in nearly every market. Every week, our analysts discuss companies that seem really interesting and are worth a close look.
Claudia Huntington
[End Sidebar]
[photo of the side of a mirrored-glass building]
I just think we’ve had a nice bounce-back from the lows, and now we’re going to go forward with slower growth, but growth nonetheless.Jonathan: The economy today, at least in the United States and Western Europe, reminds me of a bobsled run. It’s a very difficult track, and you can wipe out on either side with the slightest error. You’ve poured a lot of money into the global economy, so you’re running fast. On the one side you have inflation, the other side you have deflation. So far, we’re on the sled and we’ve not driven off the run yet. But it’s a dangerous course. We’re going to have to make all of our turns perfectly from here.
Claudia: I’m not all that pessimistic, actually. We’re in a recovery, even if it’s not the robust one we might hope for. Many investors seem to have expected that the U.S. would climb out of the downturn as rapidly as it sank into it, but it’s not going to work like that this time around in large part due to the recession’s breadth and depth. Clearly there are issues of consumer debt and government deficits, and while these will take a while to work through, we may be surprised that they correct faster than currently expected. It’s going to be bumpy, but in general I believe we are clearly in a recovery and it will continue.
Several of your answers focused on the United States or Europe. What about the economies of the rest of the world?
Claudia: Other economies, particularly in emerging markets, have the problem of figuring out how to slow down rampant growth to avoid inflation or a bubble. That’s not necessarily a bad problem to have, and so far, I would say that many of these nations are doing a pretty good job of managing things.
Jonathan: Many Asian countries are doing particularly well, as Brady said. China is in the process of stimulating its own economy and doing a good job of it. India is a fairly self-sufficient economy, and they have excellent bank regulation. They didn’t see many of the problems the developed world experienced. I think Asian countries, generally, will continue to do well, and because of that, companies that export to Asia also will do well.
Brady: One of the things about the success of emerging markets, though, is that they’re becoming more expensive. Ten years ago, it used to be the case when you found a good emerging-market stock, you could buy it at a nice discount to stocks in the developed world. That’s not the case any more. So while you have faster and stronger growth in the emerging markets world, you’re paying a premium for it, generally speaking. That leaves a tough choice between stocks in the developed world that are cheaper but dealing with slower economies, and stocks in emerging markets that are seeing faster growth but are more expensive.
You each have different views on the economy right now. How do those views play out when you’re forming an investment thesis?
Gordon: If you think that the global economy is going to suffer in the future, then there’s no real silver bullet in terms of investing. My best-case scenario has us sort of grinding it out, with a flat economy for a while, at least here in the U.S. and in Europe. So when I look at the world, I want to look for companies that aren’t going to be as affected by that. You look at the emerging markets like Brazil and India, for example, and you see domestic companies filling domestic needs — telecommunications, retailing, that sort of thing. If those economies grow faster than ours, and I think they will, these companies will do well because they’re domestically focused, and not relying on exporting.
Claudia: Frankly, I’m seeing opportunities in nearly every market. Every week, our analysts discuss companies that seem really interesting and are worth a close look. There are so many crosscurrents now that where I get the most comfort is to focus on the individual investment opportunity. So, I look at companies with respect to the continuum of their evolution, how they might grow, whether their strategy makes sense, etcetera. Even in a volatile economic environment, you can have great companies that are growing revenues and market share and have very fair valuations. And this is one of those times.
Jonathan: Even here in Europe, we’re seeing companies that we’re excited about, and parts of Europe are doing far worse than the United States right now. There are companies that have great balance sheets and are doing smart things, the things they need to do to increase market share and grow. Generally speaking, I do like emerging markets more than developed markets right now, but I also think that there’s opportunity all across the world.
Can you talk about your outlook for the global economy in the year ahead?
Brady: I think you’re seeing two perspectives on this. On the one side, there are folks who think that economic recovery is going to deteriorate further. There’s even some talk about a double-dip recession. But to me, when I look at the world, I see more risk on the upside than down. I think the economy around the world will grow, and I think stocks will see some pretty good returns — not amazing, but certainly good.
Jonathan: I see a two-tiered world ahead, at least for the medium term. You’ll have your Asian economies and some other emerging markets doing very well, and then you’ll have some developed debt-laden economies that will be struggling. How much will they struggle? I’m not optimistic on that account. I think it could be quite protracted.
Gordon: I do think the developing world is in good shape. They generally don’t have a lot of debt, and they’re seeing growth. I have to wonder if we’re seeing the start of a shift of global wealth from the developed world to emerging markets. But there’s a big swath of the globe in the developed world that I’m afraid isn’t going to be growing as rapidly as in the past.
Claudia: This wasn’t a conventional downturn, and this isn’t going to be a conventional recovery. In the U.S. and Europe, we’re going to have to do two things at once — grow our economies conventionally while paying off a lot of government debt, and consumer debt to a degree. That makes growth more difficult. That said, I do think there will be enough growth within private sector businesses to help the developed world continue with recovery.
[photo of the side of a mirrored-glass building]
It seems like the two perspectives Brady mentioned are represented well between the four of you. With such economic uncertainty out there, how do you decide on which investments to make?
Claudia: Lots of ways. One is by listening to each other. Some of us are contrarian investors. Some of us are more value oriented, or more pure growth oriented. That’s one of the big benefits of the multiple portfolio counselor system. By talking through a potential investment, our dialogue is likely to isolate the risks and opportunities of a specific idea. You combine that with your own view of the individual company, the market and country and industry fundamentals, and then make a judgment on valuation.
Gordon: And that collaboration doesn’t result in group-think. We still invest our own portion of the fund according to our beliefs. That helps reduce volatility. If I’m more defensive, that can only help the overall fund if stocks don’t do as well. And if stocks do all right, then part of the fund will be positioned to take advantage of that as well.
[Begin Sidebar]
No matter what happens, I’m going to do my best to find companies in attractive niches where they can grow.
Brady Enright
[End Sidebar]
Brady: For me, it’s never been about which sectors, or which economy. It’s just not the way I view the world. It’s a bottom-up process for me, and I have a real broad assortment of companies in my portfolio. No matter what happens, I’m going to do my best to find companies in attractive niches where they can grow. Maybe it’s because the underlying dynamics are favorable, or maybe they’ve built that better mousetrap or a superior approach to the market. And you can find those companies almost anywhere if you do your homework.
Jonathan: Obviously, I think we all believe in stocks. We’re equity investors. And if you look at the 1970s, or even the last decade, you’ll see that you can make money in a down economy, in a flat market. The onus is on us to pick the right stocks. If we do that, then the environment in which we pick doesn’t matter as much. That’s why we research our potential investments so carefully, because we want stocks that can stand up to whatever the world has to throw at them. We can’t get complacent about it. n
[Begin Sidebar]
The multiple portfolio counselor system
The portfolio counselors of SMALLCAP World Fund have different views on the state of the global economy. Through the multiple portfolio counselor system, they can put their own investment theories to work separately, even as they work together to find potential investments around the world.
Indeed, for more than 50 years, Capital Research and Management Company has relied on this system to provide broad diversification, continuity of management and a history of consistent long-term results.
Under this system, the fund’s assets are divided among the fund’s 13 portfolio counselors. Each counselor can invest as he or she sees fit, within the guidelines of the fund. Another portion is set aside for the fund’s analysts, who share responsibility for investing those assets.
This system provides a great deal of flexibility in terms of accommodating increasing assets and changes in management. It also can help to reduce volatility: The results of portfolio counselors whose philosophies and styles are currently in favor help to temper the results of those whose investments are contrary to the market’s direction.
SMALLCAP World Fund’s counselors bring together a wealth of investment experience. Here are the specific years* of experience for these primary decision makers for the fund:
Gordon Crawford | 39 years |
Claudia P. Huntington | 38 years |
Mark E. Denning | 28 years |
Kathryn M. Peters | 23 years |
Noriko H. Chen | 20 years |
Brady L. Enright | 19 years |
Jonathan Knowles | 19 years |
Bradford F. Freer | 18 years |
J. Blair Frank | 17 years |
Lawrence Kymisis | 16 years |
Kristian Stromsoe | 14 years |
Dylan J. Yolles | 13 years |
Terrance P. McGuire | 12 years |
*As of December 2010
[End Sidebar]
Summary investment portfolio September 30, 2010
The following summary investment portfolio is designed to streamline the report and help investors better focus on a fund’s principal holdings. See the inside back cover for details on how to obtain a complete schedule of portfolio holdings.
[begin pie chart]
(percent of | ||||
Industry sector diversification | net assets) | |||
Consumer discretionary | 15.66 | % | ||
Industrials | 14.22 | |||
Information technology | 13.28 | |||
Financials | 11.18 | |||
Health care | 10.34 | |||
Other industries | 26.14 | |||
Other asset types | 2.21 | |||
Short-term securities & other assets less liabilities | 6.97 |
[end pie chart]
Country diversification | (percent of net assets) | |||
United States | 39.1 | % | ||
Euro zone* | 7.5 | |||
United Kingdom | 8.1 | |||
China | 5.8 | |||
India | 5.5 | |||
Australia | 3.7 | |||
Canada | 3.2 | |||
Hong Kong | 3.0 | |||
Brazil | 2.1 | |||
Thailand | 2.0 | |||
Japan | 1.9 | |||
Other countries | 11.1 | |||
Short-term securities & other assets less liabilities | 7.0 | |||
*Countries using the euro as a common currency; those represented in the fund's portfolio are Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Slovenia and Spain. |
Percent | ||||||||||||
Value | of net | |||||||||||
Common stocks - 90.82% | Shares | (000 | ) | assets | ||||||||
Consumer discretionary - 15.66% | ||||||||||||
Modern Times Group MTG AB, Class B (1) | 1,713,000 | $ | 127,672 | .63 | % | |||||||
Involved in broadcasting, publishing and electronic retailing. | ||||||||||||
lululemon athletica inc. (2) | 2,658,214 | 118,875 | .59 | |||||||||
Manufacturer and retailer of yoga-inspired athletic apparel. | ||||||||||||
Virgin Media Inc. (2) | 5,062,500 | 116,539 | .58 | |||||||||
United Kingdom-based provider of television, Internet, mobile phone and fixed-line telephone services. | ||||||||||||
CTC Media, Inc. | 5,125,000 | 112,443 | .56 | |||||||||
Television media company based in Russia. | ||||||||||||
Pantaloon Retail (India) Ltd. (1) | 8,524,816 | 91,753 | .46 | |||||||||
Major retail chain operator in India. | ||||||||||||
Strayer Education, Inc. | 515,700 | 89,990 | .45 | |||||||||
Provider of post-secondary education services through its subsidiary, Strayer University, Inc. | ||||||||||||
Minth Group Ltd. (1) | 43,114,000 | 86,022 | .43 | |||||||||
Automobile body parts supplier based in China. | ||||||||||||
Chipotle Mexican Grill, Inc. (2) | 443,000 | 76,196 | .38 | |||||||||
Mexican food restaurant chain in the U.S. and Canada. | ||||||||||||
Lions Gate Entertainment Corp. (2) (3) | 9,100,000 | 66,885 | .33 | |||||||||
Independent motion picture and television producer and distributor. | ||||||||||||
SuperGroup PLC (1) (2) | 3,442,000 | 65,748 | .32 | |||||||||
United Kingdom-based clothing retailer focused on the youth fashion market. | ||||||||||||
Other securities | 2,200,895 | 10.93 | ||||||||||
3,153,018 | 15.66 | |||||||||||
Industrials - 14.22% | ||||||||||||
Container Corp. of India Ltd. (1) | 5,367,645 | 155,364 | .77 | |||||||||
Provider of rail transportation and other logistical support for cargo shipments throughout India. | ||||||||||||
MSC Industrial Direct Co., Inc., Class A | 2,338,500 | 126,373 | .63 | |||||||||
Distributer of industrial maintenance and repair products. | ||||||||||||
Jain Irrigation Systems Ltd. (1) (3) | 3,925,140 | 103,785 | .52 | |||||||||
India-based manufacturer of irrigation systems, polyethylene pipes and plastic sheets. | ||||||||||||
Intertek Group PLC (1) | 3,255,000 | 93,669 | .47 | |||||||||
Provider of business research, consulting and training to the financial services industry. | ||||||||||||
SIA Engineering Co. Ltd. (1) | 20,776,000 | 72,702 | .36 | |||||||||
Aircraft maintenance, repair and overhaul services provider in the Asia-Pacific region. | ||||||||||||
Pipavav Shipyard Ltd. (1) (2) | 32,910,000 | 69,446 | .34 | |||||||||
Shipbuilding company based in India. | ||||||||||||
Michael Page International PLC (1) | 9,538,502 | 69,082 | .34 | |||||||||
Major recruitment company based in the United Kingdom. | ||||||||||||
Other securities | 2,172,822 | 10.79 | ||||||||||
2,863,243 | 14.22 | |||||||||||
Information technology - 13.28% | ||||||||||||
Kingboard Chemical Holdings Ltd. (1) | 33,764,200 | 170,459 | .85 | |||||||||
Maker of printed circuit boards, as well as laminates, copper foil and chemicals used in printed circuit boards. | ||||||||||||
AAC Acoustic Technologies Holdings Inc. (1) (3) | 70,922,000 | 154,670 | .77 | |||||||||
China-based manufacturer of miniature acoustic components. | ||||||||||||
Rovi Corp. (2) | 1,955,800 | 98,592 | .49 | |||||||||
Technology solutions provider for digital entertainment devices and services. | ||||||||||||
Compuware Corp. (2) (3) | 11,270,000 | 96,133 | .48 | |||||||||
Enterprise software and IT services provider focused on large companies. | ||||||||||||
Hittite Microwave Corp. (2) (3) | 1,959,000 | 93,346 | .46 | |||||||||
Manufacturer of integrated circuits, modules and subsystems for radio frequency, microwave and millimeter-wave applications. | ||||||||||||
AOL Inc. (2) | 3,335,000 | 82,541 | .41 | |||||||||
Web services company operating in the U.S. | ||||||||||||
National Instruments Corp. | 2,457,653 | 80,267 | .40 | |||||||||
Develops and manufactures hardware and software for test and measurement instrumentation. | ||||||||||||
Kingboard Laminates Holdings Ltd. (1) | 67,009,736 | 68,166 | .34 | |||||||||
Manufacturer of paper laminates and related products. | ||||||||||||
Digital River, Inc. (2) | 1,984,200 | 67,542 | .33 | |||||||||
Provider of global e-commerce solutions. | ||||||||||||
Monster Worldwide, Inc. (2) | 5,151,000 | 66,757 | .33 | |||||||||
Online recruitment advertising and executive search firm. | ||||||||||||
Other securities | 1,694,526 | 8.42 | ||||||||||
2,672,999 | 13.28 | |||||||||||
Financials - 11.18% | ||||||||||||
Dah Sing Financial Holdings Ltd. (1) (3) | 16,819,400 | 129,943 | .65 | |||||||||
Provides banking and financial services in Hong Kong. | ||||||||||||
East West Bancorp, Inc. | 6,937,515 | 112,943 | .56 | |||||||||
Commercial bank serving consumers and businesses throughout California. | ||||||||||||
YES BANK Ltd. (1) | 13,275,845 | 103,309 | .51 | |||||||||
India-based commercial banking company. | ||||||||||||
Kotak Mahindra Bank Ltd. (1) | 7,833,098 | 83,064 | .41 | |||||||||
Financial solutions provider based in India. | ||||||||||||
Other securities | 1,821,788 | 9.05 | ||||||||||
2,251,047 | 11.18 | |||||||||||
Health care - 10.34% | ||||||||||||
Thoratec Corp. (2) (3) | 3,201,500 | 118,391 | .59 | |||||||||
Manufacturer of medical devices used for circulatory support. | ||||||||||||
Endo Pharmaceuticals Holdings Inc. (2) | 3,308,100 | 109,961 | .55 | |||||||||
Specialty health care solutions company focused on pain management. | ||||||||||||
Cochlear Ltd. (1) | 1,441,910 | 97,982 | .49 | |||||||||
Major designer and manufacturer of hearing implants and hearing aids sold around the world. | ||||||||||||
Alere Inc. (2) | 3,136,471 | 97,011 | .48 | |||||||||
Manufacturer of consumer and professional medical diagnostic products focused on cardiology, women's health and infectious diseases. | ||||||||||||
Hikma Pharmaceuticals PLC (1) | 6,769,153 | 73,235 | .36 | |||||||||
Multinational pharmaceutical company based in the United Kingdom. | ||||||||||||
American Medical Systems Holdings, Inc. (2) | 3,353,000 | 65,652 | .32 | |||||||||
Makes medical devices that treat urological disorders. | ||||||||||||
Other securities | 1,519,415 | 7.55 | ||||||||||
2,081,647 | 10.34 | |||||||||||
Materials - 7.99% | ||||||||||||
Rhodia SA (1) | 3,196,043 | 76,900 | .38 | |||||||||
Manufacturer of specialty chemicals used in plastics, fibers, consumer products and pharmaceuticals. | ||||||||||||
AptarGroup, Inc. | 1,484,682 | 67,805 | .34 | |||||||||
Manufacturer of dispensing systems for fragrances, pharmaceuticals and personal care products. | ||||||||||||
African Minerals Ltd. (1) (2) | 10,904,721 | 67,757 | .34 | |||||||||
Diamond exploration company in Africa. | ||||||||||||
Centamin Egypt Ltd. (1) (2) | 23,540,037 | 65,482 | ||||||||||
Mineral exploration, development and mining company focused in Egypt. | ||||||||||||
Centamin Egypt Ltd. (CAD denominated) (2) | 3,000 | 8 | .33 | |||||||||
Mineral exploration, development and mining company focused in Egypt. | ||||||||||||
Yingde Gases Group Co. Ltd. (1) (2) | 69,190,000 | 65,215 | .32 | |||||||||
Industrial gas supplier serving China. | ||||||||||||
Other securities | 1,264,614 | 6.28 | ||||||||||
1,607,781 | 7.99 | |||||||||||
Energy - 6.13% | ||||||||||||
Pacific Rubiales Energy Corp. (2) | 4,871,300 | 136,968 | .68 | |||||||||
Canada-based producer of heavy crude oil and natural gas focused in Colombia and northern Peru. | ||||||||||||
Gulf Keystone Petroleum Ltd. (1) (2) (3) (4) | 51,987,632 | 114,528 | .57 | |||||||||
Oil and gas company operating in the Kurdistan Region of Northern Iraq and the Republic of Algeria. | ||||||||||||
Niko Resources Ltd. | 920,000 | 90,543 | .45 | |||||||||
Oil and natural gas developer with interests in India, Bangladesh, Pakistan, Indonesia and other regions. | ||||||||||||
Banpu PCL (1) | 3,617,500 | 85,833 | .42 | |||||||||
Thailand-based energy company focused on coal mining and coal-fired power generation. | ||||||||||||
FMC Technologies, Inc. (2) | 1,115,000 | 76,143 | .38 | |||||||||
Engaged in offshore energy production, food processing and airplane loading systems. | ||||||||||||
Other securities | 730,903 | 3.63 | ||||||||||
1,234,918 | 6.13 | |||||||||||
Consumer staples - 4.32% | ||||||||||||
Drogasil SA, ordinary nominative (3) | 3,253,500 | 83,068 | .42 | |||||||||
Brazil-based retailer of pharmaceutical health care, skin care and personal care products. | ||||||||||||
Other securities | 785,627 | 3.90 | ||||||||||
868,695 | 4.32 | |||||||||||
Utilities - 1.79% | ||||||||||||
ENN Energy Holdings Ltd. (1) (3) | 69,350,000 | 198,815 | .99 | |||||||||
China-based operator of gas pipeline infrastructure and a distributor of piped and bottled gas. | ||||||||||||
Other securities | 162,418 | .80 | ||||||||||
361,233 | 1.79 | |||||||||||
Telecommunication services - 0.93% | ||||||||||||
tw telecom inc. (2) | 5,635,000 | 104,642 | .52 | |||||||||
Business provider of broadband voice and data networking services. | ||||||||||||
Other securities | 82,063 | .41 | ||||||||||
186,705 | .93 | |||||||||||
Miscellaneous - 4.98% | ||||||||||||
Other common stocks in initial period of acquisition | 1,002,429 | 4.98 | ||||||||||
Total common stocks (cost: $13,862,648,000) | 18,283,715 | 90.82 | ||||||||||
Rights & warrants - 0.06% | ||||||||||||
Other - 0.06% | ||||||||||||
Other securities | 10,602 | .06 | ||||||||||
Miscellaneous - 0.00% | ||||||||||||
Other rights & warrants in initial period of acquisition | 564 | .00 | ||||||||||
Total rights & warrants (cost: $3,077,000) | 11,166 | .06 | ||||||||||
Convertible securities - 0.41% | ||||||||||||
Other - 0.41% | ||||||||||||
Other securities | 83,295 | .41 | ||||||||||
Total convertible securities (cost: $85,566,000) | 83,295 | .41 | ||||||||||
Principal | Percent | |||||||||||
amount | Value | of net | ||||||||||
Bonds & notes - 1.74% | (000 | ) | (000 | ) | assets | |||||||
Bonds & notes of U.S. government - 1.69% | ||||||||||||
U.S. Treasury: | ||||||||||||
3.50% 2020 | $ | 229,635 | 249,306 | |||||||||
4.375% 2040 | 79,790 | 89,626 | 1.69 | |||||||||
338,932 | 1.69 | |||||||||||
Financials - 0.05% | ||||||||||||
Other securities | 10,723 | .05 | ||||||||||
Total bonds & notes (cost: $331,075,000) | 349,655 | 1.74 | ||||||||||
Short-term securities - 6.68% | ||||||||||||
Bank of Nova Scotia 0.21%-0.275% due 10/5-11/17/2010 | 261,800 | 261,737 | 1.30 | |||||||||
Novartis Finance Corp.0.23%- 0.27% due 10/12-12/1/2010 (4) | 134,000 | 133,971 | .67 | |||||||||
Société Générale North America, Inc. 0.26%-0.27% due 10/8-12/1/2010 | 130,000 | 129,958 | .65 | |||||||||
Fannie Mae 0.25%-0.30% due 12/22/2010-1/18/2011 | 129,300 | 129,241 | .64 | |||||||||
Toronto-Dominion Holdings USA Inc. 0.21%-0.24% due 10/13/2010-1/14/2011 (4) | 106,400 | 106,360 | .53 | |||||||||
Freddie Mac 0.23%-0.265% due 10/5-12/21/2010 | 90,700 | 90,672 | .45 | |||||||||
Jupiter Securitization Co., LLC 0.26% due 10/18-12/2/2010 (4) | 77,300 | 77,274 | .38 | |||||||||
Shell International Finance BV 0.19%-0.20% due 10/14-10/25/2010 (4) | 71,000 | 70,992 | .35 | |||||||||
General Electric Co. 0.17% due 10/1/2010 | 67,000 | 67,000 | .33 | |||||||||
Other securities | 277,835 | 1.38 | ||||||||||
Total short-term securities (cost: $1,345,004,000) | 1,345,040 | 6.68 | ||||||||||
Total investment securities (cost: $15,627,370,000) | 20,072,871 | 99.71 | ||||||||||
Other assets less liabilities | 59,363 | .29 | ||||||||||
Net assets | $ | 20,132,234 | 100.00 | % |
"Miscellaneous" securities include holdings in their initial period of acquisition that have not previously been publicly disclosed. | |||
"Other securities" includes all issues that are not disclosed separately in the summary investment portfolio. |
Investments in affiliates | ||||||
A company is considered to be an affiliate of the fund under the Investment Company Act of 1940 if the fund's holdings in that company represent 5% or more of the outstanding voting shares. The value of the fund's affiliated-company holdings is either shown in the summary investment portfolio or included in the value of "Other securities" under the respective industry sectors. Further details on such holdings and related transactions during the year ended September 30, 2010, appear below. |
Beginning shares or principal amount | Additions | Reductions | Ending shares or principal amount | Dividend or interest income (000) | Value of affiliates at 9/30/2010 (000) | |||||||||||||||||||
ENN Energy Holdings Ltd. (1) | 72,350,000 | - | 3,000,000 | 69,350,000 | $ | 1,932 | $ | 198,815 | ||||||||||||||||
AAC Acoustic Technologies Holdings Inc. (1) | 57,582,000 | 38,200,000 | 24,860,000 | 70,922,000 | 1,906 | 154,670 | ||||||||||||||||||
Dah Sing Financial Holdings Ltd. (1) | 14,557,000 | 2,262,400 | - | 16,819,400 | 433 | 129,943 | ||||||||||||||||||
Thoratec Corp. (2) | 3,076,500 | 125,000 | - | 3,201,500 | - | 118,391 | ||||||||||||||||||
Gulf Keystone Petroleum Ltd. (1) (2) (4) | 37,087,632 | 14,900,000 | - | 51,987,632 | - | 114,528 | ||||||||||||||||||
Jain Irrigation Systems Ltd. (1) | 4,674,949 | - | 749,809 | 3,925,140 | 383 | 103,785 | ||||||||||||||||||
Compuware Corp. (2) | - | 11,270,000 | - | 11,270,000 | - | 96,133 | ||||||||||||||||||
Hittite Microwave Corp. (2) | 1,765,000 | 194,000 | - | 1,959,000 | - | 93,346 | ||||||||||||||||||
Drogasil SA, ordinary nominative | 2,791,900 | 1,035,900 | 574,300 | 3,253,500 | 813 | 83,068 | ||||||||||||||||||
Lions Gate Entertainment Corp. (2) | 9,000,000 | 100,000 | - | 9,100,000 | - | 66,885 | ||||||||||||||||||
Manappuram General Finance and Leasing Ltd. (1) | - | 19,962,050 | - | 19,962,050 | 165 | 64,743 | ||||||||||||||||||
athenahealth, Inc. (2) | 620,000 | 1,274,998 | - | 1,894,998 | - | 62,573 | ||||||||||||||||||
Jumbo SA (1) | 9,689,912 | - | 440,034 | 9,249,878 | 2,862 | 62,208 | ||||||||||||||||||
Harry Winston Diamond Corp. (CAD denominated) (2) | - | 4,292,400 | - | 4,292,400 | - | 49,937 | ||||||||||||||||||
Harry Winston Diamond Corp. (2) | - | 372,600 | - | 372,600 | - | 4,337 | ||||||||||||||||||
SeLoger.com (1) (5) | 660,000 | 322,201 | - | 982,201 | 235 | 50,233 | ||||||||||||||||||
Ekornes ASA (1) | 2,937,598 | - | 917,848 | 2,019,750 | 1,942 | 49,467 | ||||||||||||||||||
Delticom AG (1) | - | 728,265 | - | 728,265 | 676 | 49,215 | ||||||||||||||||||
ZOLL Medical Corp. (2) | 1,121,183 | 393,087 | - | 1,514,270 | - | 48,865 | ||||||||||||||||||
Hana Microelectronics PCL (1) | 53,925,000 | - | - | 53,925,000 | 2,083 | 45,277 | ||||||||||||||||||
National Financial Partners Corp. (2) | - | 3,174,800 | - | 3,174,800 | - | 40,225 | ||||||||||||||||||
National Financial Partners Corp. 4.00% convertible notes 2017 (4) | $ | - | $ | 4,000,000 | $ | - | $ | 4,000,000 | 47 | 4,740 | ||||||||||||||
Goodpack Ltd. (1) | 26,360,000 | - | - | 26,360,000 | 569 | 38,308 | ||||||||||||||||||
Goodpack Ltd., warrants, expire 2012 (2) | - | 5,272,000 | - | 5,272,000 | - | 4,891 | ||||||||||||||||||
Goodpack Ltd., rights, expire 2009 | - | 5,272,000 | 5,272,000 | - | - | - | ||||||||||||||||||
Petroleum Development Corp. (2) | - | 1,537,000 | - | 1,537,000 | - | 42,421 | ||||||||||||||||||
PixArt Imaging Inc. (1) | - | 8,415,000 | - | 8,415,000 | 1,054 | 41,188 | ||||||||||||||||||
Ennis, Inc. | 2,065,810 | - | - | 2,065,810 | 1,281 | 36,957 | ||||||||||||||||||
Blue Nile, Inc. (2) | 829,140 | - | - | 829,140 | - | 36,888 | ||||||||||||||||||
Northgate PLC (1) (2) | 10,581,804 | 45,001 | - | 10,626,805 | - | 36,210 | ||||||||||||||||||
Coal of Africa Ltd. (1) (2) | - | 27,975,000 | - | 27,975,000 | - | 36,184 | ||||||||||||||||||
Internet Capital Group, Inc. (2) | 3,096,000 | - | - | 3,096,000 | - | 34,149 | ||||||||||||||||||
Mobile Mini, Inc. (2) | - | 2,221,600 | - | 2,221,600 | - | 34,079 | ||||||||||||||||||
Interline Brands, Inc. (2) (5) | 211,377 | 1,670,623 | - | 1,882,000 | - | 33,951 | ||||||||||||||||||
Jaguar Mining Inc. (2) (5) | 1,824,900 | 3,210,100 | - | 5,035,000 | - | 32,542 | ||||||||||||||||||
Gem Diamonds Ltd. (1) (2) | 800,000 | 9,889,551 | 434,551 | 10,255,000 | - | 32,047 | ||||||||||||||||||
Gem Diamonds Ltd. | 2,953,639 | - | 2,953,639 | - | - | - | ||||||||||||||||||
Net 1 UEPS Technologies, Inc. (2) | 1,168,873 | 1,600,000 | - | 2,768,873 | - | 32,008 | ||||||||||||||||||
FormFactor, Inc. (2) | 900,000 | 2,815,000 | - | 3,715,000 | - | 31,949 | ||||||||||||||||||
Exponent, Inc. (2) | 936,400 | - | - | 936,400 | - | 31,454 | ||||||||||||||||||
Fourlis (1) | 4,074,000 | - | 218,460 | 3,855,540 | 1,123 | 30,897 | ||||||||||||||||||
First Southern Bancorp, Inc. (1) (2) (6) | - | 1,344,915 | - | 1,344,915 | - | 28,378 | ||||||||||||||||||
First Southern Bancorp, Inc., Series C, convertible preferred (1) (2) (6) | - | 2,299 | - | 2,299 | - | 2,299 | ||||||||||||||||||
CKX, Inc. (2) | - | 6,250,000 | 179,573 | 6,070,427 | - | 29,745 | ||||||||||||||||||
Duff & Phelps Corp., Class A | 958,000 | 1,247,300 | - | 2,205,300 | 392 | 29,705 | ||||||||||||||||||
Shengli Oil & Gas Pipe Holdings Ltd. (1) | - | 137,365,500 | - | 137,365,500 | 9 | 28,657 | ||||||||||||||||||
LoopNet, Inc. (2) | 2,444,035 | 319,405 | 485,000 | 2,278,440 | - | 26,977 | ||||||||||||||||||
Avid Technology, Inc. (2) | 1,633,400 | 406,544 | - | 2,039,944 | - | 26,744 | ||||||||||||||||||
Quantum Corp. (2) | - | 12,568,897 | - | 12,568,897 | - | 26,646 | ||||||||||||||||||
Masterskill Education Group Bhd. (1) | - | 24,300,000 | - | 24,300,000 | 548 | 26,210 | ||||||||||||||||||
Domino's Pizza Enterprises Ltd. (1) | 4,759,100 | - | 276,800 | 4,482,300 | 729 | 25,934 | ||||||||||||||||||
BrisConnections Unit Trusts (1) (2) | 27,300,000 | - | - | 27,300,000 | - | 24,803 | ||||||||||||||||||
Petroceltic International PLC (1) (2) | 68,700,000 | 70,024,000 | 1,709,348 | 137,014,652 | - | 23,677 | ||||||||||||||||||
Exillon Energy PLC (1) (2) | - | 7,369,660 | - | 7,369,660 | - | 23,340 | ||||||||||||||||||
Infotech Enterprises Ltd. (1) | 3,000,000 | 3,000,000 | - | 6,000,000 | 133 | 20,943 | ||||||||||||||||||
Comfort Systems USA, Inc. | - | 1,905,000 | - | 1,905,000 | 87 | 20,441 | ||||||||||||||||||
Tethys Petroleum Ltd. (2) | - | 11,505,100 | - | 11,505,100 | - | 18,227 | ||||||||||||||||||
Gruppo MutuiOnline SpA (1) | 3,160,000 | - | 771,032 | 2,388,968 | 1,287 | 17,699 | ||||||||||||||||||
Standard Parking Corp. (2) (5) | 30,400 | 967,600 | - | 998,000 | - | 17,066 | ||||||||||||||||||
Home Federal Bancorp, Inc. | 1,384,249 | - | - | 1,384,249 | 304 | 16,846 | ||||||||||||||||||
Houston Wire & Cable Co. | 1,678,900 | - | - | 1,678,900 | 571 | 16,839 | ||||||||||||||||||
Gran Colombia Gold SA (2) | - | 45,056,000 | - | 45,056,000 | - | 13,356 | ||||||||||||||||||
Gran Colombia Gold SA, warrants, expire 2015 (2) | - | 22,528,000 | - | 22,528,000 | - | 2,956 | ||||||||||||||||||
Gran Colombia Gold SA, subscription receipts | - | 45,056,000 | 45,056,000 | - | - | - | ||||||||||||||||||
Green Packet Bhd. (1) (2) (4) | - | 29,583,116 | - | 29,583,116 | - | 8,906 | ||||||||||||||||||
Green Packet Bhd. (1) (2) | - | 23,016,100 | - | 23,016,100 | - | 6,929 | ||||||||||||||||||
Douglas Dynamics, Inc. | - | 1,175,000 | - | 1,175,000 | 214 | 14,511 | ||||||||||||||||||
BG Medicine, Inc., Series D, convertible preferred (1) (2) (6) | 1,538,462 | - | - | 1,538,462 | - | 13,754 | ||||||||||||||||||
BG Medicine, Inc. 12.00% convertible notes 2011 (1) (6) | $ | - | $ | 500,000 | $ | - | $ | 500,000 | 30 | 500 | ||||||||||||||
BG Medicine, Inc., warrants, expire 2020 (1) (2) (6) | - | 57,692 | - | 57,692 | - | 206 | ||||||||||||||||||
Fluidigm Corp., Series E, convertible preferred (1) (2) (6) | 1,251,055 | 58,685 | - | 1,309,740 | - | 14,370 | ||||||||||||||||||
Fluidigm Corp., warrant, expires 2019 (1) (2) (6) | 1 | - | - | 1 | - | - | ||||||||||||||||||
Fluidigm Corp. 14.06% convertible notes 2009 | $ | 794,292 | $ | - | $ | 794,292 | $ | - | 16 | - | ||||||||||||||
SAF-HOLLAND SA, non-registered shares (1) (2) | - | 1,655,600 | - | 1,655,600 | - | 13,164 | ||||||||||||||||||
EACOM Timber Corp. (2) (4) | - | 23,000,000 | - | 23,000,000 | - | 12,742 | ||||||||||||||||||
EACOM Timber Corp., subscription receipts | - | 23,000,000 | 23,000,000 | - | - | - | ||||||||||||||||||
Mood Media Corp. (2) (4) | - | 6,375,000 | - | 6,375,000 | - | 11,772 | ||||||||||||||||||
Mood Media Corp., subscription receipts | - | 6,375,000 | 6,375,000 | - | - | - | ||||||||||||||||||
Obtala Resources Ltd. (1) (2) | 7,000,000 | 1,500,000 | - | 8,500,000 | - | 5,474 | ||||||||||||||||||
Obtala Resources Ltd.(1) (2) (4) | 7,950,000 | - | - | 7,950,000 | - | 5,120 | ||||||||||||||||||
Vital Images, Inc. (2) | 792,000 | - | - | 792,000 | - | 10,478 | ||||||||||||||||||
National American University Holdings, Inc. | - | 1,515,000 | - | 1,515,000 | 42 | 10,181 | ||||||||||||||||||
Bloomsbury Publishing PLC (1) | 5,405,000 | - | - | 5,405,000 | 352 | 9,998 | ||||||||||||||||||
Cpl Resources PLC (1) | 2,975,986 | - | - | 2,975,986 | 129 | 9,209 | ||||||||||||||||||
Maple Energy PLC (1) (2) | - | 9,390,000 | - | 9,390,000 | - | 9,145 | ||||||||||||||||||
Petrodorado Energy Ltd. (2) | - | 22,400,000 | - | 22,400,000 | - | 7,402 | ||||||||||||||||||
Regal Petroleum PLC (1) (2) | 21,693,000 | - | - | 21,693,000 | - | 6,306 | ||||||||||||||||||
TranS1 Inc. (2) | 1,620,000 | - | 281,269 | 1,338,731 | - | 3,307 | ||||||||||||||||||
Newron Pharmaceuticals SpA (1) (2) | 257,000 | - | - | 257,000 | - | 1,700 | ||||||||||||||||||
Newron Pharmaceuticals SpA (1) (2) (4) | - | 142,000 | - | 142,000 | - | 939 | ||||||||||||||||||
Imagelinx PLC (1) (2) | 21,385,714 | - | - | 21,385,714 | - | 420 | ||||||||||||||||||
CEC Unet PLC (1) (2) | 35,100,775 | - | - | 35,100,775 | - | - | ||||||||||||||||||
KAB Distribution Inc. (1) (2) | 9,700,000 | - | - | 9,700,000 | - | - | ||||||||||||||||||
African Minerals Ltd. (1) (2) (7) | 10,676,082 | 805,818 | 577,179 | 10,904,721 | - | - | ||||||||||||||||||
African Petroleum Corp. Ltd. (2) (7) | - | 50,454,545 | - | 50,454,545 | - | - | ||||||||||||||||||
American Axle & Manufacturing Holdings, Inc. (2) (7) | 1,800,000 | 2,200,000 | 1,712,000 | 2,288,000 | - | - | ||||||||||||||||||
American Medical Systems Holdings, Inc. (2) (7) | 3,935,400 | 369,328 | 951,728 | 3,353,000 | - | - | ||||||||||||||||||
ASOS PLC (1) (2) (7) | 2,905,000 | 2,021,262 | 2,830,000 | 2,096,262 | - | - | ||||||||||||||||||
Astaldi SpA (7) | 5,344,954 | - | 5,344,954 | - | 461 | - | ||||||||||||||||||
austriamicrosystems AG, non-registered shares (7) | 715,000 | - | 715,000 | - | - | - | ||||||||||||||||||
AVEVA Group PLC (1) (7) | 5,225,000 | - | 2,452,500 | 2,772,500 | 1,045 | - | ||||||||||||||||||
Beacon Roofing Supply, Inc. (2) (7) | 2,504,225 | - | 1,144,225 | 1,360,000 | - | - | ||||||||||||||||||
Bowne & Co., Inc. (5) (7) | 1,736,682 | 863,318 | 2,600,000 | - | 275 | - | ||||||||||||||||||
Cirrus Logic, Inc. (2) (7) | - | 3,479,668 | 950,000 | 2,529,668 | - | - | ||||||||||||||||||
Digital River, Inc. (2) (7) | 2,982,700 | 133,600 | 1,132,100 | 1,984,200 | - | - | ||||||||||||||||||
Dolphin Capital Investors Ltd. (7) | 36,765,400 | - | 36,765,400 | - | - | - | ||||||||||||||||||
Domino's Pizza UK & IRL PLC (1) (7) | 8,286,034 | 3,015,000 | 6,256,034 | 5,045,000 | 531 | - | ||||||||||||||||||
East West Bancorp, Inc. (7) | 1,783,600 | 8,143,964 | 2,990,049 | 6,937,515 | 123 | - | ||||||||||||||||||
East West Bancorp, Inc. (7) | - | 8,143,964 | 8,143,964 | - | 137 | - | ||||||||||||||||||
East West Bancorp, Inc. 13.00% convertible preferred (7) | - | 48,286 | 48,286 | - | - | - | ||||||||||||||||||
eHealth, Inc. (7) | 1,504,054 | 885,000 | 2,389,054 | - | - | - | ||||||||||||||||||
Fisher & Paykel Healthcare Corp. Ltd. (1) (7) | 26,890,690 | 956,475 | 10,599,470 | 17,247,695 | 2,200 | - | ||||||||||||||||||
Frigoglass SAIC (1) (7) | 2,067,833 | 1,465 | 1,200,000 | 869,298 | 221 | - | ||||||||||||||||||
Glacier Bancorp, Inc. (7) | 3,959,000 | - | 3,959,000 | - | 515 | - | ||||||||||||||||||
Grontmij NV, depository receipts (7) | 1,107,000 | - | 1,107,000 | - | 377 | - | ||||||||||||||||||
Integra LifeSciences Holdings Corp. (2) (7) | 1,604,890 | 84,400 | 306,700 | 1,382,590 | - | - | ||||||||||||||||||
Ipca Laboratories Ltd. (1) (7) | 1,794,000 | 7,176,000 | 7,675,000 | 1,295,000 | 375 | - | ||||||||||||||||||
Kenmare Resources PLC (1) (2) (7) | 55,956,000 | 39,920,802 | - | 95,876,802 | - | - | ||||||||||||||||||
Kenmare Resources PLC (1) (2) (4) (7) | - | 14,095,980 | - | 14,095,980 | - | - | ||||||||||||||||||
Kingboard Chemical Holdings Ltd. (1) (7) | 55,295,200 | - | 21,531,000 | 33,764,200 | 4,642 | - | ||||||||||||||||||
Kingboard Chemical Holdings Ltd., warrants, expire 2012 (2) (7) | - | 4,192,810 | 106,490 | 4,086,320 | - | - | ||||||||||||||||||
LECG Corp. (7) | 1,863,800 | - | 1,863,800 | - | - | - | ||||||||||||||||||
Live Nation Entertainment, Inc. (7) | 5,782,000 | - | 5,782,000 | - | - | - | ||||||||||||||||||
Lonrho PLC (7) | 42,015,000 | 12,300,000 | 54,315,000 | - | - | - | ||||||||||||||||||
Manila Water Co., Inc. (1) (7) | 111,206,800 | - | 70,006,800 | 41,200,000 | 592 | - | ||||||||||||||||||
MARR SpA (1) (7) | 3,380,063 | - | 917,698 | 2,462,365 | 1,210 | - | ||||||||||||||||||
Mineral Deposits Ltd. (1) (2) (7) | 16,142,844 | - | 1,199,236 | 14,943,608 | - | - | ||||||||||||||||||
Mineral Deposits Ltd. (CAD denominated) (2) (7) | 12,400,000 | - | 2,272,000 | 10,128,000 | - | - | ||||||||||||||||||
Nakanishi Inc. (1) (7) | 557,100 | - | 331,100 | 226,000 | 453 | - | ||||||||||||||||||
Ono Sokki Co., Ltd. (7) | 1,609,000 | - | 1,609,000 | - | 42 | - | ||||||||||||||||||
OpenTable, Inc. (2) (7) | - | 1,478,800 | 858,600 | 620,200 | - | - | ||||||||||||||||||
Pantaloon Retail (India) Ltd. (1) (7) | 8,524,816 | - | - | 8,524,816 | 110 | - | ||||||||||||||||||
Pantaloon Retail (India) Ltd., Class B (1) (7) | 551,250 | - | - | 551,250 | 8 | - | ||||||||||||||||||
Redwood Trust, Inc. (2) (7) | 4,450,000 | - | 3,600,000 | 850,000 | - | - | ||||||||||||||||||
Resources Connection, Inc. (7) | 3,477,500 | - | 2,957,500 | 520,000 | 21 | - | ||||||||||||||||||
Rockhopper Exploration PLC (7) | - | 11,000,000 | 11,000,000 | - | - | - | ||||||||||||||||||
Rusoro Mining Ltd. (2) (4) (7) | 20,000,000 | - | - | 20,000,000 | - | - | ||||||||||||||||||
Rusoro Mining Ltd. (2) (7) | 19,297,000 | - | 17,860,000 | 1,437,000 | - | - | ||||||||||||||||||
SkillSoft PLC (ADR) (7) | 6,289,000 | - | 6,289,000 | - | - | - | ||||||||||||||||||
SonoSite, Inc. (7) | 1,354,100 | - | 1,354,100 | - | - | - | ||||||||||||||||||
SVB Financial Group (2) (7) | 1,789,000 | - | 1,455,600 | 333,400 | - | - | ||||||||||||||||||
Techwell, Inc. (7) | 825,000 | 425,000 | 1,250,000 | - | - | - | ||||||||||||||||||
Ten Alps PLC (1) (2) (7) | 3,439,001 | - | - | 3,439,001 | - | - | ||||||||||||||||||
Territorial Bancorp Inc. (7) | 782,500 | - | 434,067 | 348,433 | 103 | - | ||||||||||||||||||
Trinity Ltd. (1) (4) (7) | 82,337,500 | - | 46,869,600 | 35,467,900 | 967 | - | ||||||||||||||||||
Veeco Instruments Inc. (7) | 2,566,396 | - | 2,566,396 | - | - | - | ||||||||||||||||||
Vision-Sciences, Inc. (7) | 2,200,000 | - | 2,200,000 | - | - | - | ||||||||||||||||||
Volcano Corp. (2) (7) | 2,991,900 | - | 2,017,900 | 974,000 | - | - | ||||||||||||||||||
Zoloto Resources Ltd. (7) | 8,175,000 | - | 8,175,000 | - | - | - | ||||||||||||||||||
$ | 36,755 | $ | 2,901,528 |
The following footnotes apply to either the individual securities noted or one or more of the securities aggregated and listed as a single line item. | |||
(1) Valued under fair value procedures adopted by authority of the board of directors. The total value of all such securities, including those in "Miscellaneous" and "Other securities," was $9,622,362,000, which represented 47.80% of the net assets of the fund. This amount includes $9,501,434,000 related to certain securities trading outside the U.S. whose values were adjusted as a result of significant market movements following the close of local trading. | |||
(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) Acquired in a transaction exempt from registration under the Securities Act of 1933. May be resold in the U.S. in transactions exempt from registration, normally to qualified institutional buyers. The total value of all such securities, including those in "Other securities," was $896,479,000, which represented 4.45% of the net assets of the fund. | |||
(5) This security was an unaffiliated issuer in its initial period of acquisition at 9/30/2009; it was not publicly disclosed. | |||
(6) Acquired in a transaction exempt from registration under the Securities Act of 1933. May be subject to legal or contractual restrictions on resale. Further details on these holdings appear below. |
Acquisition date(s) | Cost (000) | Value (000) | Percent of net assets | ||||||||||
First Southern Bancorp, Inc. | 12/17/2009 | $ | 28,378 | $ | 28,378 | .14 | % | ||||||
First Southern Bancorp, Inc., Series C, convertible preferred | 12/17/2009 | 2,299 | 2,299 | .01 | |||||||||
BG Medicine, Inc., Series D, convertible preferred | 7/9/2008 | 10,000 | 13,754 | .07 | |||||||||
BG Medicine, Inc. 12.00% convertible notes 2011 | 3/30/2010-9/27/2010 | 500 | 500 | .01 | |||||||||
BG Medicine, Inc., warrants, expire 2020 | 3/30/2010-9/27/2010 | - | 206 | .00 | |||||||||
Fluidigm Corp., Series E, convertible preferred | 12/21/2006-11/16/2009 | 18,337 | 14,370 | .07 | |||||||||
Fluidigm Corp., warrant, expires 2019 | 8/17/2009 | - | - | .00 | |||||||||
Other restricted securities | 86,639 | 22,292 | .11 | ||||||||||
Total restricted securities | $ | 146,153 | $ | 81,799 | .41 | % |
(7) Unaffiliated issuer at 9/30/2010. | |||
Key to abbreviations | |||
ADR = American Depositary Receipts | |||
CAD = Canadian dollars | |||
The descriptions of the companies shown in the summary investment portfolio, which were obtained from published reports and other sources believed to be reliable, are supplemental and are not covered by the Report of Independent Registered Public Accounting Firm. | |||
See Notes to Financial Statements |
Financial statements
Statement of assets and liabilities | ||||||||
at September 30, 2010 | (dollars in thousands) | |||||||
Assets: | ||||||||
Investment securities, at value: | ||||||||
Unaffiliated issuers (cost: $13,065,499) | $ | 17,171,343 | ||||||
Affiliated issuers (cost: $2,561,871) | 2,901,528 | $ | 20,072,871 | |||||
Cash denominated in currencies other than U.S. dollars | ||||||||
(cost: $27,542) | 27,779 | |||||||
Cash | 9,909 | |||||||
Receivables for: | ||||||||
Sales of investments | 124,106 | |||||||
Sales of fund's shares | 24,797 | |||||||
Dividends and interest | 26,319 | |||||||
Other | 121 | 175,343 | ||||||
20,285,902 | ||||||||
Liabilities: | ||||||||
Payables for: | ||||||||
Purchases of investments | 81,064 | |||||||
Repurchases of fund's shares | 28,832 | |||||||
Investment advisory services | 10,143 | |||||||
Services provided by affiliates | 8,297 | |||||||
Directors' deferred compensation | 1,681 | |||||||
Non-U.S. taxes | 23,046 | |||||||
Other | 605 | 153,668 | ||||||
Net assets at September 30, 2010 | $ | 20,132,234 | ||||||
Net assets consist of: | ||||||||
Capital paid in on shares of capital stock | $ | 18,444,579 | ||||||
Distributions in excess of net investment income | (39,983 | ) | ||||||
Accumulated net realized loss | (2,695,567 | ) | ||||||
Net unrealized appreciation | 4,423,205 | |||||||
Net assets at September 30, 2010 | $ | 20,132,234 |
(dollars and shares in thousands, except per-share amounts) | ||||||||||||
Total authorized capital stock - 1,000,000 shares, $.01 par value (566,159 total shares outstanding) | ||||||||||||
Net assets | Shares outstanding | Net asset value per share | ||||||||||
Class A | $ | 14,432,116 | 402,937 | $ | 35.82 | |||||||
Class B | 396,983 | 11,720 | 33.87 | |||||||||
Class C | 865,302 | 25,744 | 33.61 | |||||||||
Class F-1 | 653,999 | 18,409 | 35.53 | |||||||||
Class F-2 | 245,567 | 6,835 | 35.93 | |||||||||
Class 529-A | 548,211 | 15,387 | 35.63 | |||||||||
Class 529-B | 51,745 | 1,512 | 34.23 | |||||||||
Class 529-C | 194,349 | 5,685 | 34.19 | |||||||||
Class 529-E | 31,474 | 897 | 35.11 | |||||||||
Class 529-F-1 | 47,112 | 1,319 | 35.72 | |||||||||
Class R-1 | 43,138 | 1,257 | 34.32 | |||||||||
Class R-2 | 711,833 | 20,750 | 34.30 | |||||||||
Class R-3 | 666,659 | 19,030 | 35.03 | |||||||||
Class R-4 | 485,560 | 13,638 | 35.60 | |||||||||
Class R-5 | 347,239 | 9,589 | 36.21 | |||||||||
Class R-6 | 410,947 | 11,450 | 35.89 | |||||||||
See Notes to Financial Statements |
Statement of operations | ||||||||
for the year ended September 30, 2010 | (dollars in thousands) | |||||||
Investment income: | ||||||||
Income: | ||||||||
Dividends (net of non-U.S. taxes of $17,126; | ||||||||
also includes $36,662 from affiliates) | $ | 279,218 | ||||||
Interest (includes $93 from affiliates) | 8,416 | $ | 287,634 | |||||
Fees and expenses*: | ||||||||
Investment advisory services | 118,528 | |||||||
Distribution services | 57,527 | |||||||
Transfer agent services | 27,166 | |||||||
Administrative services | 10,702 | |||||||
Reports to shareholders | 1,503 | |||||||
Registration statement and prospectus | 1,657 | |||||||
Directors' compensation | 623 | |||||||
Auditing and legal | 244 | |||||||
Custodian | 3,177 | |||||||
State and local taxes | 327 | |||||||
Other | 1,685 | 223,139 | ||||||
Net investment income | 64,495 | |||||||
Net realized gain and unrealized appreciation | ||||||||
on investments and currency: | ||||||||
Net realized gain on: | ||||||||
Investments (includes $60,663 net gain from affiliates) | 960,879 | |||||||
Currency transactions | 1,453 | 962,332 | ||||||
Net unrealized appreciation on: | ||||||||
Investments (net of non-U.S. taxes of $23,046) | 2,198,025 | |||||||
Currency translations | 374 | 2,198,399 | ||||||
Net realized gain and unrealized appreciation | ||||||||
on investments and currency | 3,160,731 | |||||||
Net increase in net assets resulting | ||||||||
from operations | $ | 3,225,226 | ||||||
*Additional information related to class-specific fees and expenses is included in the Notes to Financial Statements. | ||||||||
See Notes to Financial Statements | ||||||||
Statements of changes in net assets | (dollars in thousands) | |||||||
Year ended September 30 | ||||||||
2010 | 2009 | |||||||
Operations: | ||||||||
Net investment income | $ | 64,495 | $ | 97,693 | ||||
Net realized gain (loss) on investments and currency transactions | 962,332 | (3,563,228 | ) | |||||
Net unrealized appreciation on investments and currency translations | 2,198,399 | 4,089,754 | ||||||
Net increase in net assets resulting from operations | 3,225,226 | 624,219 | ||||||
Dividends paid to shareholders from net investment income | (103,851 | ) | - | |||||
Net capital share transactions | (485,003 | ) | (710,466 | ) | ||||
Total increase (decrease) in net assets | 2,636,372 | (86,247 | ) | |||||
Net assets: | ||||||||
Beginning of year | 17,495,862 | 17,582,109 | ||||||
End of year (including distributions in excess of | ||||||||
net investment income: $(39,983) and $(57,446), respectively) | $ | 20,132,234 | $ | 17,495,862 | ||||
See Notes to Financial Statements |
Notes to financial statements
1. | Organization |
SMALLCAP World Fund, Inc. (the "fund") is registered under the Investment Company Act of 1940 as an open-end, diversified management investment company. The fund seeks long-term growth of capital through investments in smaller companies in the U.S. and around the world.
On November 24, 2009, shareholders approved a proposal to reorganize the fund from a Maryland corporation to a Delaware statutory trust. The reorganization is expected to be completed in 2011; however, the fund reserves the right to delay the implementation. Shareholders also approved amendments to the fund’s Investment Advisory and Service Agreement and amendments to and elimination of certain fundamental investment policies of the fund.
The fund has 16 share classes consisting of five retail share classes, five 529 college savings plan share classes and six retirement plan share classes. The 529 college savings plan share classes (529-A, 529-B, 529-C, 529-E and 529-F-1) can be used to save for college education. The six retirement plan share classes (R-1, R-2, R-3, R-4, R-5 and R-6) are generally offered only through eligible employer-sponsored retirement plans. The fund’s share classes are described below:
Share class | Initial sales charge | Contingent deferred sales charge upon redemption | Conversion feature |
Classes A and 529-A | Up to 5.75% | None (except 1% for certain redemptions within one year of purchase without an initial sales charge) | None |
Classes B and 529-B* | None | Declines from 5% to 0% for redemptions within six years of purchase | Classes B and 529-B convert to Classes A and 529-A, respectively, after eight years |
Class C | None | 1% for redemptions within one year of purchase | Class C converts to Class F-1 after 10 years |
Class 529-C | None | 1% for redemptions within one year of purchase | None |
Class 529-E | None | None | None |
Classes F-1, F-2 and 529-F-1 | None | None | None |
Classes R-1, R-2, R-3, R-4, R-5 and R-6 | None | None | None |
*Class B and 529-B shares of the fund are not available for purchase.
Holders of all share classes have equal pro rata rights to assets, dividends and liquidation proceeds. Each share class has identical voting rights, except for the exclusive right to vote on matters affecting only its class. Share classes have different fees and expenses ("class-specific fees and expenses"), primarily due to different arrangements for distribution, administrative and shareholder services. Differences in class-specific fees and expenses will result in differences in net investment income and, therefore, the payment of different per-share dividends by each class.
2. | Significant accounting policies |
The financial statements have been prepared to comply with accounting principles generally accepted in the United States of America. These principles require management to make estimates and assumptions that affect reported amounts and disclosures. Actual results could differ from those estimates. The fund follows the significant accounting policies described below, 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. Dividend income is recognized on the ex-dividend date and interest income is recognized on an accrual basis. Market discounts, premiums and original issue discounts on fixed-income securities are amortized daily over the expected life of the security.
Class allocations – Income, fees and expenses (other than class-specific fees and expenses) and realized and unrealized gains and losses are allocated daily among the various share classes based on their relative net assets. Class-specific fees and expenses, such as distribution, administrative and shareholder services, are charged directly to the respective share class.
Dividends and distributions to shareholders – Dividends and distributions paid to shareholders are recorded on the ex-dividend date.
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 in effect 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. On the accompanying financial statements, 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. 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.
Loan transactions – The fund may enter into loan transactions in which the fund acquires a loan either through an agent, by assignment from another holder, or as a participation interest in another holder's portion of a loan. The loan is often administered by a financial institution that acts as agent for the holders of the loan, and the fund may be required to receive approval from the agent and/or borrower prior to the sale of the investment. The loan's interest rate and maturity date may change based on the terms of the loan, including potential early payments of principal.
3. | Valuation |
The fund’s investments are reported at fair value as defined by accounting principles generally accepted in the United States of America. The fund generally determines its net asset value as of approximately 4:00 p.m. New York time each day the New York Stock Exchange is open.
Methods and inputs – The fund uses the following methods and inputs to establish the fair value of its 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 in which the security trades.
Fixed-income securities, including short-term securities purchased with more than 60 days left to maturity, are generally valued at prices obtained as of approximately 3:00 p.m. New York time 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 |
Where the investment adviser deems it appropriate to do so (such as when vendor prices are unavailable or not deemed to be representative), fixed-income securities will be valued in good faith at the mean quoted bid and asked prices that are reasonably and timely available (or bid prices, if asked 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 above for either equity or fixed-income securities, depending on which method is deemed most appropriate by the investment adviser. Short-term securities purchased within 60 days to maturity are valued at amortized cost, which approximates fair value. The value of short-term securities originally purchased with maturities greater than 60 days is determined based on an amortized value to par when they reach 60 days.
Securities and other assets for which representative market quotations are not readily available or are considered unreliable by the investment adviser are fair valued as determined in good faith under guidelines adopted by authority of the fund's board of directors. Market quotations may be considered unreliable if events occur that materially affect the value of securities (particularly equity securities trading outside the U.S.) between the close of trading in those securities and the close of regular trading on the New York Stock Exchange. Various inputs may be reviewed in order to make a good faith determination of a security’s fair value. These inputs include, but are not limited to, 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. 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.
Classifications - The fund classifies its 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. Level 3 values are based on significant unobservable inputs that reflect the fund’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, 2010 (dollars in thousands):
Investment securities: | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||
Common stocks: | ||||||||||||||||||||
Consumer discretionary | $ | 1,429,637 | $ | 1,723,131 | (1) | $ | 250 | $ | 3,153,018 | |||||||||||
Industrials | 1,068,296 | 1,794,947 | (1) | - | 2,863,243 | |||||||||||||||
Information technology | 1,621,031 | 1,051,838 | (1) | 130 | 2,672,999 | |||||||||||||||
Financials | 1,165,649 | 1,045,360 | (1) | 40,038 | 2,251,047 | |||||||||||||||
Health care | 1,397,445 | 684,199 | (1) | 3 | 2,081,647 | |||||||||||||||
Materials | 459,955 | 1,147,826 | (1) | - | 1,607,781 | |||||||||||||||
Energy | 681,971 | 541,060 | (1) | 11,887 | 1,234,918 | |||||||||||||||
Consumer staples | 209,023 | 659,672 | (1) | - | 868,695 | |||||||||||||||
Utilities | 23,565 | 337,668 | (1) | - | 361,233 | |||||||||||||||
Telecommunication services | 129,342 | 57,363 | (1) | - | 186,705 | |||||||||||||||
Miscellaneous | 527,494 | 474,420 | (1) | 515 | 1,002,429 | |||||||||||||||
Rights & Warrants | 10,396 | 564 | 206 | 11,166 | ||||||||||||||||
Convertible securities | 12,503 | 19,507 | 51,285 | 83,295 | ||||||||||||||||
Bonds & notes | - | 349,655 | - | 349,655 | ||||||||||||||||
Short-term securities | - | 1,345,040 | - | 1,345,040 | ||||||||||||||||
Total | $ | 8,736,307 | $ | 11,232,250 | $ | 104,314 | $ | 20,072,871 | ||||||||||||
(1)Includes certain securities trading outside the U.S. whose values were adjusted as a result of significant market movements following the close of local trading; therefore, $9,501,434,000 of investment securities were classified as Level 2 instead of Level 1. |
The following table reconciles the valuation of the fund's Level 3 investment securities and related transactions for the year ended September 30, 2010 (dollars in thousands): | ||||||||||||||||||||||||
Beginning value at 10/1/2009 | Net purchases and sales | Net realized loss(2) | Net unrealized appreciation(2) | Net transfers out of Level 3(3) | Ending value at 9/30/2010 | |||||||||||||||||||
Investment securities | $ | 60,321 | $ | 113,640 | $ | (18,524 | ) | $ | 55,331 | $ | (106,454 | ) | $ | 104,314 | ||||||||||
Net unrealized appreciation during the period on Level 3 investment securities held at September 30, 2010 (dollars in thousands)(2): | $ | 1,903 | ||||||||||||||||||||||
(2)Net realized loss and unrealized appreciation are included in the related amounts on investments in the statement of operations. | ||||||||||||||||||||||||
(3)Transfers into or out of Level 3 are based on the beginning market value of the quarter in which they occurred. |
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 securities held by the fund may decline due to market conditions and other factors, including those directly involving the issuers of securities held by the fund.
Investing in growth-oriented stocks — Growth-oriented stocks and other equity-type securities may involve larger price swings and greater potential for loss than other types of investments. These risks may be even greater in the case of smaller capitalization stocks.
Investing in small companies —Investing in smaller companies may pose additional risks. For example, it is often more difficult to value or dispose of small company stocks and more difficult to obtain information about smaller companies. In addition, the prices of their stocks may be more volatile than stocks of larger, more established companies.
Investing outside the U.S. — Securities of issuers domiciled outside the U.S., or with significant operations outside the U.S., may lose value because of political, social or economic developments in the country or region in which the issuer operates. These securities may also lose value due to changes in the exchange rate of the country’s currency against the U.S. dollar. 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 settlement and accounting practices and different regulatory, legal and reporting standards than those in the U.S. The risks of investing outside the U.S. may be heightened in connection with investments in developing countries.
Management — The investment adviser to the fund actively manages the fund’s investments. Consequently, the fund is subject to the risk that the techniques and risk analyses employed by the investment adviser in this process may not produce the desired results. This could cause the fund to lose value or its results to lag relevant benchmarks or other funds with similar objectives.
5. | 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 September 30, 2010, 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 is not subject to examination by U.S. federal tax authorities for tax years before 2006, by state tax authorities for tax years before 2005 and by tax authorities outside the U.S. for tax years before 2003.
Non-U.S. taxation – Dividend and interest income is recorded net of non-U.S. taxes paid. Gains realized by the fund on the sale of securities in certain countries are subject to non-U.S. taxes. The fund records a liability based on unrealized gains to provide for potential non-U.S. taxes payable upon the sale of these securities.
Distributions – Distributions paid to shareholders are based on net investment income and net realized gains determined on a tax basis, which may differ from net investment income and net realized gains for financial reporting purposes. These differences are due primarily to 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; unrealized appreciation of certain investments in securities outside the U.S.; cost of investments sold; net capital losses; non-U.S. taxes on capital gains; and income on certain inves tments. 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.
During the year ended September 30, 2010, the fund reclassified $56,943,000 from accumulated net realized loss to distributions in excess of net investment income; and $124,000 from distributions in excess of net investment income to capital paid in on shares of capital stock to align financial reporting with tax reporting.
As of September 30, 2010, the tax basis components of distributable earnings, unrealized appreciation (depreciation) and cost of investment securities were as follows:
(dollars in thousands) | ||||||||
Undistributed ordinary income | $ | 206,213 | ||||||
Capital loss carryforwards*: | ||||||||
Expiring 2017 | $ | (365,461 | ) | |||||
Expiring 2018 | (2,299,111 | ) | (2,664,572 | ) | ||||
Gross unrealized appreciation on investment securities | 5,162,544 | |||||||
Gross unrealized depreciation on investment securities | (992,545 | ) | ||||||
Net unrealized appreciation on investment securities | 4,169,999 | |||||||
Cost of investment securities | 15,902,872 | |||||||
*The capital loss carryforwards will be used to offset any capital gains realized by the fund in future years through the expiration dates. The fund will not make distributions from capital gains while capital loss carryforwards remain. |
No distributions were paid to shareholders during the year ended September 30, 2009. Ordinary income distributions paid to shareholders from net investment income during the year ended September 30, 2010, were as follows:
Share class | (dollars in thousands) | |||
Class A | $ | 82,116 | ||
Class B | - | |||
Class C | 320 | |||
Class F-1 | 4,116 | |||
Class F-2 | 1,894 | |||
Class 529-A | 3,021 | |||
Class 529-B | - | |||
Class 529-C | - | |||
Class 529-E | 109 | |||
Class 529-F-1 | 331 | |||
Class R-1 | 34 | |||
Class R-2 | - | |||
Class R-3 | 2,561 | |||
Class R-4 | 3,241 | |||
Class R-5 | 2,757 | |||
Class R-6 | 3,351 | |||
Total | $ | 103,851 |
6. | Fees and transactions with related parties |
Capital Research and Management Company ("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.
Investment advisory services - The Investment Advisory and Service Agreement with CRMC provides for monthly fees accrued daily. These fees are based on a series of decreasing annual rates beginning with 0.800% on the first $1 billion of daily net assets and decreasing to 0.595% on such assets in excess of $27 billion. For the year ended September 30, 2010, the investment advisory services fee was $118,528,000, which was equivalent to an annualized rate of 0.642% of average daily net assets.
Class-specific fees and expenses – Expenses that are specific to individual share classes are accrued directly to the respective share class. The principal class-specific fees and expenses are described below:
Distribution services – The fund has adopted plans of distribution for all share classes, except Classes F-2, R-5 and R-6. Under the plans, the board of directors 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 0.30% to 1.00% as noted below. In some cases, the board of directors 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 tha t 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.
For Classes A and 529-A, the board of directors has also approved the reimbursement of dealer and wholesaler commissions paid by AFD for certain shares sold without a sales charge. These classes reimburse AFD for amounts billed within the prior 15 months but only to the extent that the overall annual expense limit of 0.30% is not exceeded. As of September 30, 2010, there were no unreimbursed expenses subject to reimbursement for Classes A or 529-A.
Share class | Currently approved limits | Plan limits |
Class A | 0.30% | 0.30% |
Class 529-A | 0.30 | 0.50 |
Classes B and 529-B | 1.00 | 1.00 |
Classes C, 529-C and R-1 | 1.00 | 1.00 |
Class R-2 | 0.75 | 1.00 |
Classes 529-E and R-3 | 0.50 | 0.75 |
Classes F-1, 529-F-1 and R-4 | 0.25 | 0.50 |
Transfer agent services – The fund has a transfer agent agreement with AFS for Classes A and B. Under this agreement, these share classes compensate AFS for transfer agent services including shareholder recordkeeping, communications and transaction processing. AFS is also compensated for certain transfer agent services provided to all other share classes from the administrative services fees paid to CRMC as described below.
Administrative services – The fund has an administrative services agreement with CRMC for all share classes, except Classes A and B, to provide certain services, including transfer agent and recordkeeping services; coordinating, monitoring, assisting and overseeing third-party service providers; and educating advisers and shareholders about the impact of market-related events, tax laws affecting investments, retirement plan restrictions, exchange limitations and other related matters. Each relevant share class pays CRMC annual fees up to 0.15% (0.10% for Class R-5 and 0.05% for Class R-6) based on its respective average daily net assets. Each relevant share class also pays AFS additional amounts for certain transfer agent services. CRMC and AFS may use these fees to compensate third parties for performing these services.
Each 529 share class is subject to an additional administrative services fee payable to the Commonwealth of Virginia for the maintenance of the 529 college savings plan. The quarterly fee is based on a series of decreasing annual rates beginning with 0.10% on the first $30 billion of the net assets invested in Class 529 shares of the American Funds and decreasing to 0.06% on such assets between $120 billion and $150 billion. The fee for any given calendar quarter is accrued and calculated on the basis of the average net assets of Class 529 shares of the American Funds for the last month of the prior calendar quarter. Although these amounts are included with administrative services fees on the accompanying financial statements, the Commonwealth of Virginia is not considered a related part y.
Expenses under the agreements described above for the year ended September 30, 2010, were as follows (dollars in thousands):
Administrative services | ||||||||||||||||||||
Share class | Distribution services | Transfer agent services | CRMC administrative services | Transfer agent services | Commonwealth of Virginia administrative services | |||||||||||||||
Class A | $ | 31,484 | $ | 26,347 | Not applicable | Not applicable | Not applicable | |||||||||||||
Class B | 4,068 | 819 | Not applicable | Not applicable | Not applicable | |||||||||||||||
Class C | 7,899 | Included in administrative services | $ | 1,186 | $ | 293 | Not applicable | |||||||||||||
Class F-1 | 1,478 | 893 | 116 | Not applicable | ||||||||||||||||
Class F-2 | Not applicable | 244 | 16 | Not applicable | ||||||||||||||||
Class 529-A | 967 | 647 | 123 | $ | 473 | |||||||||||||||
Class 529-B | 513 | 71 | 24 | 51 | ||||||||||||||||
Class 529-C | 1,713 | 236 | 71 | 172 | ||||||||||||||||
Class 529-E | 138 | 38 | 7 | 28 | ||||||||||||||||
Class 529-F-1 | - | 55 | 10 | 40 | ||||||||||||||||
Class R-1 | 391 | 42 | 30 | Not applicable | ||||||||||||||||
Class R-2 | 4,848 | 967 | 2,240 | Not applicable | ||||||||||||||||
Class R-3 | 2,969 | 885 | 623 | Not applicable | ||||||||||||||||
Class R-4 | 1,059 | 629 | 26 | Not applicable | ||||||||||||||||
Class R-5 | Not applicable | 282 | 10 | Not applicable | ||||||||||||||||
Class R-6 | Not applicable | 172 | 2 | Not applicable | ||||||||||||||||
Total | $ | 57,527 | $ | 27,166 | $ | 6,347 | $ | 3,591 | $ | 764 |
Directors’ deferred compensation – Since the adoption of the deferred compensation plan in 1993, directors who are unaffiliated with CRMC may elect to defer the cash payment of part or all of their compensation. These deferred amounts, which remain as liabilities of the fund, are treated as if invested in shares of the fund or other American Funds. These amounts represent general, unsecured liabilities of the fund and vary according to the total returns of the selected funds. Directors’ compensation of $623,000, shown on the accompanying financial statements, includes $488,000 in current fees (either paid in cash or deferred) and a net increase of $135,000 in the value of the deferred amounts.
Affiliated officers and directors – Officers and certain directors of the fund are or may be considered to be affiliated with CRMC, AFS and AFD. No affiliated officers or directors received any compensation directly from the fund.
7. | Capital share transactions |
Capital share transactions in the fund were as follows (dollars and shares in thousands):
Sales* | Reinvestments of dividends and distributions | Repurchases* | Net (decrease) increase | |||||||||||||||||||||||||||||
Share class | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | ||||||||||||||||||||||||
Year ended September 30, 2010 | ||||||||||||||||||||||||||||||||
Class A | $ | 1,831,865 | 56,548 | $ | 78,893 | 2,504 | $ | (2,553,407 | ) | (79,601 | ) | $ | (642,649 | ) | (20,549 | ) | ||||||||||||||||
Class B | 25,953 | 842 | - | - | (123,854 | ) | (4,048 | ) | (97,901 | ) | (3,206 | ) | ||||||||||||||||||||
Class C | 161,750 | 5,306 | 309 | 10 | (167,005 | ) | (5,525 | ) | (4,946 | ) | (209 | ) | ||||||||||||||||||||
Class F-1 | 239,017 | 7,411 | 3,785 | 121 | (229,350 | ) | (7,215 | ) | 13,452 | 317 | ||||||||||||||||||||||
Class F-2 | 98,591 | 3,047 | 1,549 | 49 | (47,932 | ) | (1,475 | ) | 52,208 | 1,621 | ||||||||||||||||||||||
Class 529-A | 91,398 | 2,844 | 3,020 | 97 | (48,681 | ) | (1,524 | ) | 45,737 | 1,417 | ||||||||||||||||||||||
Class 529-B | 2,502 | 80 | - | - | (10,279 | ) | (329 | ) | (7,777 | ) | (249 | ) | ||||||||||||||||||||
Class 529-C | 33,679 | 1,092 | - | - | (23,126 | ) | (754 | ) | 10,553 | 338 | ||||||||||||||||||||||
Class 529-E | 4,953 | 158 | 109 | 3 | (2,978 | ) | (94 | ) | 2,084 | 67 | ||||||||||||||||||||||
Class 529-F-1 | 10,907 | 341 | 331 | 11 | (6,404 | ) | (201 | ) | 4,834 | 151 | ||||||||||||||||||||||
Class R-1 | 14,676 | 471 | 34 | 1 | (14,029 | ) | (457 | ) | 681 | 15 | ||||||||||||||||||||||
Class R-2 | 202,425 | 6,515 | - | - | (201,145 | ) | (6,522 | ) | 1,280 | (7 | ) | |||||||||||||||||||||
Class R-3 | 224,770 | 7,101 | 2,559 | 83 | (195,218 | ) | (6,179 | ) | 32,111 | 1,005 | ||||||||||||||||||||||
Class R-4 | 170,724 | 5,318 | 3,239 | 103 | (137,357 | ) | (4,321 | ) | 36,606 | 1,100 | ||||||||||||||||||||||
Class R-5 | 111,984 | 3,427 | 2,744 | 86 | (78,067 | ) | (2,424 | ) | 36,661 | 1,089 | ||||||||||||||||||||||
Class R-6 | 106,396 | 3,341 | 3,351 | 107 | (77,684 | ) | (2,444 | ) | 32,063 | 1,004 | ||||||||||||||||||||||
Total net increase | ||||||||||||||||||||||||||||||||
(decrease) | $ | 3,331,590 | 103,842 | $ | 99,923 | 3,175 | $ | (3,916,516 | ) | (123,113 | ) | $ | (485,003 | ) | (16,096 | ) | ||||||||||||||||
Year ended September 30, 2009 | ||||||||||||||||||||||||||||||||
Class A | $ | 1,518,160 | 66,129 | $ | - | - | $ | (2,496,271 | ) | (115,414 | ) | $ | (978,111 | ) | (49,285 | ) | ||||||||||||||||
Class B | 33,662 | 1,604 | - | - | (102,029 | ) | (4,910 | ) | (68,367 | ) | (3,306 | ) | ||||||||||||||||||||
Class C | 118,514 | 5,423 | - | - | (151,900 | ) | (7,489 | ) | (33,386 | ) | (2,066 | ) | ||||||||||||||||||||
Class F-1 | 189,538 | 8,394 | - | - | (274,502 | ) | (12,521 | ) | (84,964 | ) | (4,127 | ) | ||||||||||||||||||||
Class F-2 | 138,781 | 5,589 | - | - | (15,874 | ) | (659 | ) | 122,907 | 4,930 | ||||||||||||||||||||||
Class 529-A | 58,688 | 2,607 | - | - | (37,550 | ) | (1,725 | ) | 21,138 | 882 | ||||||||||||||||||||||
Class 529-B | 3,585 | 174 | - | - | (4,393 | ) | (210 | ) | (808 | ) | (36 | ) | ||||||||||||||||||||
Class 529-C | 23,679 | 1,084 | - | - | (17,451 | ) | (829 | ) | 6,228 | 255 | ||||||||||||||||||||||
Class 529-E | 3,847 | 173 | - | - | (2,835 | ) | (131 | ) | 1,012 | 42 | ||||||||||||||||||||||
Class 529-F-1 | 7,052 | 316 | - | - | (4,494 | ) | (204 | ) | 2,558 | 112 | ||||||||||||||||||||||
Class R-1 | 11,379 | 514 | - | - | (6,450 | ) | (303 | ) | 4,929 | 211 | ||||||||||||||||||||||
Class R-2 | 183,512 | 8,507 | - | - | (121,903 | ) | (5,671 | ) | 61,609 | 2,836 | ||||||||||||||||||||||
Class R-3 | 164,814 | 7,409 | - | - | (108,008 | ) | (4,940 | ) | 56,806 | 2,469 | ||||||||||||||||||||||
Class R-4 | 176,324 | 7,415 | - | - | (72,671 | ) | (3,225 | ) | 103,653 | 4,190 | ||||||||||||||||||||||
Class R-5 | 171,532 | 7,719 | - | - | (335,288 | ) | (14,570 | ) | (163,756 | ) | (6,851 | ) | ||||||||||||||||||||
Class R-6† | 243,388 | 10,650 | - | - | (5,302 | ) | (204 | ) | 238,086 | 10,446 | ||||||||||||||||||||||
Total net increase | ||||||||||||||||||||||||||||||||
(decrease) | $ | 3,046,455 | 133,707 | $ | - | - | $ | (3,756,921 | ) | (173,005 | ) | $ | (710,466 | ) | (39,298 | ) | ||||||||||||||||
*Includes exchanges between share classes of the fund. | ||||||||||||||||||||||||||||||||
†Class R-6 was offered beginning May 1, 2009. |
8. | Investment transactions |
The fund made purchases and sales of investment securities, excluding short-term securities and U.S. government obligations, if any, of $7,356,512,000 and $8,140,211,000, respectively, during the year ended September 30, 2010.
Financial highlights(1)
Income (loss) from investment operations(2) | Dividends and distributions | |||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | Net investment income (loss) | 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 return(3) (4) | Net assets, end of period (in millions) | Ratio of expenses to average net assets before reimbursements/ waivers | Ratio of expenses to average net assets after reimbursements/ waivers(4) | Ratio of net income (loss) to average net assets(4) | ||||||||||||||||||||||||||||||||||||||||
Class A: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 9/30/2010 | $ | 30.26 | $ | .14 | $ | 5.62 | $ | 5.76 | $ | (.20 | ) | $ | - | $ | (.20 | ) | $ | 35.82 | 19.11 | % | $ | 14,432 | 1.13 | % | 1.13 | % | .43 | % | ||||||||||||||||||||||||
Year ended 9/30/2009 | 28.46 | .19 | 1.61 | 1.80 | - | - | - | 30.26 | 6.32 | 12,814 | 1.25 | 1.24 | .82 | |||||||||||||||||||||||||||||||||||||||
Year ended 9/30/2008 | 47.43 | .31 | (14.35 | ) | (14.04 | ) | (.76 | ) | (4.17 | ) | (4.93 | ) | 28.46 | (32.77 | ) | 13,453 | 1.07 | 1.01 | .80 | |||||||||||||||||||||||||||||||||
Year ended 9/30/2007 | 38.87 | .37 | 12.50 | 12.87 | (.70 | ) | (3.61 | ) | (4.31 | ) | 47.43 | 35.41 | 20,913 | 1.04 | .98 | .86 | ||||||||||||||||||||||||||||||||||||
Year ended 9/30/2006 | 34.77 | .25 | 4.94 | 5.19 | (.41 | ) | (.68 | ) | (1.09 | ) | 38.87 | 15.27 | 15,167 | 1.08 | 1.01 | .68 | ||||||||||||||||||||||||||||||||||||
Class B: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 9/30/2010 | 28.66 | (.11 | ) | 5.32 | 5.21 | - | - | - | 33.87 | 18.18 | 397 | 1.89 | 1.89 | (.37 | ) | |||||||||||||||||||||||||||||||||||||
Year ended 9/30/2009 | 27.16 | .01 | 1.49 | 1.50 | - | - | - | 28.66 | 5.52 | 428 | 2.02 | 2.00 | .06 | |||||||||||||||||||||||||||||||||||||||
Year ended 9/30/2008 | 45.49 | .01 | (13.72 | ) | (13.71 | ) | (.45 | ) | (4.17 | ) | (4.62 | ) | 27.16 | (33.27 | ) | 495 | 1.83 | 1.77 | .03 | |||||||||||||||||||||||||||||||||
Year ended 9/30/2007 | 37.41 | .04 | 12.02 | 12.06 | (.37 | ) | (3.61 | ) | (3.98 | ) | 45.49 | 34.40 | 815 | 1.81 | 1.74 | .10 | ||||||||||||||||||||||||||||||||||||
Year ended 9/30/2006 | 33.59 | (.03 | ) | 4.78 | 4.75 | (.25 | ) | (.68 | ) | (.93 | ) | 37.41 | 14.39 | 581 | 1.85 | 1.78 | (.09 | ) | ||||||||||||||||||||||||||||||||||
Class C: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 9/30/2010 | 28.44 | (.10 | ) | 5.28 | 5.18 | (.01 | ) | - | (.01 | ) | 33.61 | 18.19 | 865 | 1.88 | 1.88 | (.32 | ) | |||||||||||||||||||||||||||||||||||
Year ended 9/30/2009 | 26.93 | .03 | 1.48 | 1.51 | - | - | - | 28.44 | 5.64 | 738 | 1.94 | 1.92 | .13 | |||||||||||||||||||||||||||||||||||||||
Year ended 9/30/2008 | 45.18 | .01 | (13.63 | ) | (13.62 | ) | (.46 | ) | (4.17 | ) | (4.63 | ) | 26.93 | (33.31 | ) | 754 | 1.86 | 1.79 | .02 | |||||||||||||||||||||||||||||||||
Year ended 9/30/2007 | 37.21 | .02 | 11.95 | 11.97 | (.39 | ) | (3.61 | ) | (4.00 | ) | 45.18 | 34.35 | 1,107 | 1.85 | 1.79 | .04 | ||||||||||||||||||||||||||||||||||||
Year ended 9/30/2006 | 33.45 | (.04 | ) | 4.74 | 4.70 | (.26 | ) | (.68 | ) | (.94 | ) | 37.21 | 14.33 | 696 | 1.89 | 1.83 | (.12 | ) | ||||||||||||||||||||||||||||||||||
Class F-1: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 9/30/2010 | 30.03 | .15 | 5.57 | 5.72 | (.22 | ) | - | (.22 | ) | 35.53 | 19.16 | 654 | 1.10 | 1.10 | .46 | |||||||||||||||||||||||||||||||||||||
Year ended 9/30/2009 | 28.21 | .21 | 1.61 | 1.82 | - | - | - | 30.03 | 6.45 | 543 | 1.14 | 1.13 | .94 | |||||||||||||||||||||||||||||||||||||||
Year ended 9/30/2008 | 47.08 | .31 | (14.23 | ) | (13.92 | ) | (.78 | ) | (4.17 | ) | (4.95 | ) | 28.21 | (32.77 | ) | 627 | 1.07 | 1.01 | .82 | |||||||||||||||||||||||||||||||||
Year ended 9/30/2007 | 38.65 | .36 | 12.41 | 12.77 | (.73 | ) | (3.61 | ) | (4.34 | ) | 47.08 | 35.41 | 815 | 1.05 | .98 | .84 | ||||||||||||||||||||||||||||||||||||
Year ended 9/30/2006 | 34.58 | .26 | 4.91 | 5.17 | (.42 | ) | (.68 | ) | (1.10 | ) | 38.65 | 15.28 | 446 | 1.08 | 1.01 | .70 | ||||||||||||||||||||||||||||||||||||
Class F-2: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 9/30/2010 | 30.39 | .25 | 5.63 | 5.88 | (.34 | ) | - | (.34 | ) | 35.93 | 19.46 | 246 | .81 | .81 | .78 | |||||||||||||||||||||||||||||||||||||
Year ended 9/30/2009 | 28.47 | .23 | 1.69 | 1.92 | - | - | - | 30.39 | 6.78 | 158 | .87 | .87 | .91 | |||||||||||||||||||||||||||||||||||||||
Period from 8/1/2008 to 9/30/2008 | 33.66 | .08 | (5.27 | ) | (5.19 | ) | - | - | - | 28.47 | (15.42 | ) | 8 | .14 | .13 | .26 | ||||||||||||||||||||||||||||||||||||
Class 529-A: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 9/30/2010 | 30.13 | .13 | 5.58 | 5.71 | (.21 | ) | - | (.21 | ) | 35.63 | 19.06 | 548 | 1.16 | 1.16 | .41 | |||||||||||||||||||||||||||||||||||||
Year ended 9/30/2009 | 28.32 | .19 | 1.62 | 1.81 | - | - | - | 30.13 | 6.39 | 421 | 1.22 | 1.21 | .84 | |||||||||||||||||||||||||||||||||||||||
Year ended 9/30/2008 | 47.23 | .29 | (14.28 | ) | (13.99 | ) | (.75 | ) | (4.17 | ) | (4.92 | ) | 28.32 | (32.79 | ) | 371 | 1.11 | 1.05 | .78 | |||||||||||||||||||||||||||||||||
Year ended 9/30/2007 | 38.76 | .34 | 12.44 | 12.78 | (.70 | ) | (3.61 | ) | (4.31 | ) | 47.23 | 35.33 | 479 | 1.10 | 1.04 | .79 | ||||||||||||||||||||||||||||||||||||
Year ended 9/30/2006 | 34.68 | .25 | 4.93 | 5.18 | (.42 | ) | (.68 | ) | (1.10 | ) | 38.76 | 15.25 | 284 | 1.11 | 1.05 | .66 | ||||||||||||||||||||||||||||||||||||
Class 529-B: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 9/30/2010 | 28.98 | (.13 | ) | 5.38 | 5.25 | - | - | - | 34.23 | 18.12 | 52 | 1.97 | 1.97 | (.44 | ) | |||||||||||||||||||||||||||||||||||||
Year ended 9/30/2009 | 27.47 | .01 | 1.50 | 1.51 | - | - | - | 28.98 | 5.50 | 51 | 2.05 | 2.03 | .02 | |||||||||||||||||||||||||||||||||||||||
Year ended 9/30/2008 | 45.96 | (.02 | ) | (13.89 | ) | (13.91 | ) | (.41 | ) | (4.17 | ) | (4.58 | ) | 27.47 | (33.35 | ) | 49 | 1.93 | 1.87 | (.05 | ) | |||||||||||||||||||||||||||||||
Year ended 9/30/2007 | 37.77 | (.01 | ) | 12.14 | 12.13 | (.33 | ) | (3.61 | ) | (3.94 | ) | 45.96 | 34.25 | 71 | 1.92 | 1.86 | (.02 | ) | ||||||||||||||||||||||||||||||||||
Year ended 9/30/2006 | 33.93 | (.07 | ) | 4.82 | 4.75 | (.23 | ) | (.68 | ) | (.91 | ) | 37.77 | 14.24 | 48 | 1.97 | 1.90 | (.20 | ) | ||||||||||||||||||||||||||||||||||
Class 529-C: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 9/30/2010 | 28.94 | (.12 | ) | 5.37 | 5.25 | - | - | - | 34.19 | 18.10 | 194 | 1.97 | 1.97 | (.40 | ) | |||||||||||||||||||||||||||||||||||||
Year ended 9/30/2009 | 27.43 | .01 | 1.50 | 1.51 | - | - | - | 28.94 | 5.54 | 155 | 2.04 | 2.03 | .02 | |||||||||||||||||||||||||||||||||||||||
Year ended 9/30/2008 | 45.92 | (.01 | ) | (13.89 | ) | (13.90 | ) | (.42 | ) | (4.17 | ) | (4.59 | ) | 27.43 | (33.36 | ) | 140 | 1.93 | 1.86 | (.04 | ) | |||||||||||||||||||||||||||||||
Year ended 9/30/2007 | 37.77 | (.01 | ) | 12.13 | 12.12 | (.36 | ) | (3.61 | ) | (3.97 | ) | 45.92 | 34.23 | 188 | �� | 1.92 | 1.86 | (.02 | ) | |||||||||||||||||||||||||||||||||
Year ended 9/30/2006 | 33.94 | (.07 | ) | 4.83 | 4.76 | (.25 | ) | (.68 | ) | (.93 | ) | 37.77 | 14.27 | 115 | 1.96 | 1.90 | (.19 | ) | ||||||||||||||||||||||||||||||||||
Class 529-E: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 9/30/2010 | 29.70 | .04 | 5.50 | 5.54 | (.13 | ) | - | (.13 | ) | 35.11 | 18.71 | 31 | 1.46 | 1.46 | .11 | |||||||||||||||||||||||||||||||||||||
Year ended 9/30/2009 | 28.00 | .12 | 1.58 | 1.70 | - | - | - | 29.70 | 6.07 | 25 | 1.52 | 1.51 | .54 | |||||||||||||||||||||||||||||||||||||||
Year ended 9/30/2008 | 46.76 | .18 | (14.15 | ) | (13.97 | ) | (.62 | ) | (4.17 | ) | (4.79 | ) | 28.00 | (33.01 | ) | 22 | 1.42 | 1.35 | .47 | |||||||||||||||||||||||||||||||||
Year ended 9/30/2007 | 38.40 | .21 | 12.33 | 12.54 | (.57 | ) | (3.61 | ) | (4.18 | ) | 46.76 | 34.93 | 30 | 1.41 | 1.35 | .49 | ||||||||||||||||||||||||||||||||||||
Year ended 9/30/2006 | 34.42 | .12 | 4.89 | 5.01 | (.35 | ) | (.68 | ) | (1.03 | ) | 38.40 | 14.86 | 18 | 1.44 | 1.37 | .34 | ||||||||||||||||||||||||||||||||||||
Class 529-F-1: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 9/30/2010 | $ | 30.20 | $ | .20 | $ | 5.59 | $ | 5.79 | $ | (.27 | ) | $ | - | $ | (.27 | ) | $ | 35.72 | 19.31 | % | $ | 47 | .95 | % | .95 | % | .62 | % | ||||||||||||||||||||||||
Year ended 9/30/2009 | 28.33 | .24 | 1.63 | 1.87 | - | - | - | 30.20 | 6.60 | 35 | 1.02 | 1.01 | 1.04 | |||||||||||||||||||||||||||||||||||||||
Year ended 9/30/2008 | 47.24 | .37 | (14.28 | ) | (13.91 | ) | (.83 | ) | (4.17 | ) | (5.00 | ) | 28.33 | (32.66 | ) | 30 | .92 | .85 | .98 | |||||||||||||||||||||||||||||||||
Year ended 9/30/2007 | 38.77 | .42 | 12.44 | 12.86 | (.78 | ) | (3.61 | ) | (4.39 | ) | 47.24 | 35.56 | 35 | .91 | .85 | .98 | ||||||||||||||||||||||||||||||||||||
Year ended 9/30/2006 | 34.64 | .31 | 4.93 | 5.24 | (.43 | ) | (.68 | ) | (1.11 | ) | 38.77 | 15.44 | 19 | .94 | .87 | .83 | ||||||||||||||||||||||||||||||||||||
Class R-1: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 9/30/2010 | 29.05 | (.09 | ) | 5.39 | 5.30 | (.03 | ) | - | (.03 | ) | 34.32 | 18.25 | 43 | 1.87 | 1.87 | (.30 | ) | |||||||||||||||||||||||||||||||||||
Year ended 9/30/2009 | 27.51 | .02 | 1.52 | 1.54 | - | - | - | 29.05 | 5.60 | 36 | 1.94 | 1.93 | .11 | |||||||||||||||||||||||||||||||||||||||
Year ended 9/30/2008 | 46.04 | .02 | (13.91 | ) | (13.89 | ) | (.47 | ) | (4.17 | ) | (4.64 | ) | 27.51 | (33.29 | ) | 28 | 1.84 | 1.77 | .05 | |||||||||||||||||||||||||||||||||
Year ended 9/30/2007 | 37.89 | .01 | 12.17 | 12.18 | (.42 | ) | (3.61 | ) | (4.03 | ) | 46.04 | 34.32 | 38 | 1.88 | 1.80 | .03 | ||||||||||||||||||||||||||||||||||||
Year ended 9/30/2006 | 34.07 | (.04 | ) | 4.83 | 4.79 | (.29 | ) | (.68 | ) | (.97 | ) | 37.89 | 14.31 | 21 | 1.92 | 1.82 | (.11 | ) | ||||||||||||||||||||||||||||||||||
Class R-2: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 9/30/2010 | 29.03 | (.11 | ) | 5.38 | 5.27 | - | - | - | 34.30 | 18.19 | 712 | 1.93 | 1.93 | (.37 | ) | |||||||||||||||||||||||||||||||||||||
Year ended 9/30/2009 | 27.55 | (.02 | ) | 1.50 | 1.48 | - | - | - | 29.03 | 5.37 | 603 | 2.15 | 2.14 | (.09 | ) | |||||||||||||||||||||||||||||||||||||
Year ended 9/30/2008 | 46.13 | (.01 | ) | (13.95 | ) | (13.96 | ) | (.45 | ) | (4.17 | ) | (4.62 | ) | 27.55 | (33.36 | ) | 494 | 1.94 | 1.86 | (.04 | ) | |||||||||||||||||||||||||||||||
Year ended 9/30/2007 | 37.93 | .03 | 12.18 | 12.21 | (.40 | ) | (3.61 | ) | (4.01 | ) | 46.13 | 34.36 | 673 | 1.93 | 1.77 | .06 | ||||||||||||||||||||||||||||||||||||
Year ended 9/30/2006 | 34.09 | (.03 | ) | 4.83 | 4.80 | (.28 | ) | (.68 | ) | (.96 | ) | 37.93 | 14.35 | 414 | 2.06 | 1.80 | (.09 | ) | ||||||||||||||||||||||||||||||||||
Class R-3: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 9/30/2010 | 29.64 | .04 | 5.49 | 5.53 | (.14 | ) | - | (.14 | ) | 35.03 | 18.71 | 667 | 1.44 | 1.44 | .13 | |||||||||||||||||||||||||||||||||||||
Year ended 9/30/2009 | 27.94 | .12 | 1.58 | 1.70 | - | - | - | 29.64 | 6.05 | 534 | 1.53 | 1.51 | .53 | |||||||||||||||||||||||||||||||||||||||
Year ended 9/30/2008 | 46.68 | .18 | (14.12 | ) | (13.94 | ) | (.63 | ) | (4.17 | ) | (4.80 | ) | 27.94 | (32.99 | ) | 435 | 1.42 | 1.35 | .48 | |||||||||||||||||||||||||||||||||
Year ended 9/30/2007 | 38.34 | .20 | 12.31 | 12.51 | (.56 | ) | (3.61 | ) | (4.17 | ) | 46.68 | 34.88 | 555 | 1.42 | 1.35 | .47 | ||||||||||||||||||||||||||||||||||||
Year ended 9/30/2006 | 34.39 | .11 | 4.87 | 4.98 | (.35 | ) | (.68 | ) | (1.03 | ) | 38.34 | 14.82 | 319 | 1.49 | 1.42 | .30 | ||||||||||||||||||||||||||||||||||||
Class R-4: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 9/30/2010 | 30.12 | .15 | 5.58 | 5.73 | (.25 | ) | - | (.25 | ) | 35.60 | 19.15 | 486 | 1.09 | 1.09 | .48 | |||||||||||||||||||||||||||||||||||||
Year ended 9/30/2009 | 28.29 | .20 | 1.63 | 1.83 | - | - | - | 30.12 | 6.47 | 378 | 1.14 | 1.13 | .88 | |||||||||||||||||||||||||||||||||||||||
Year ended 9/30/2008 | 47.20 | .32 | (14.29 | ) | (13.97 | ) | (.77 | ) | (4.17 | ) | (4.94 | ) | 28.29 | (32.78 | ) | 236 | 1.07 | 1.01 | .84 | |||||||||||||||||||||||||||||||||
Year ended 9/30/2007 | 38.73 | .35 | 12.45 | 12.80 | (.72 | ) | (3.61 | ) | (4.33 | ) | 47.20 | 35.41 | 259 | 1.06 | 1.00 | .82 | ||||||||||||||||||||||||||||||||||||
Year ended 9/30/2006 | 34.68 | .25 | 4.91 | 5.16 | (.43 | ) | (.68 | ) | (1.11 | ) | 38.73 | 15.20 | 126 | 1.11 | 1.04 | .67 | ||||||||||||||||||||||||||||||||||||
Class R-5: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 9/30/2010 | 30.60 | .26 | 5.66 | 5.92 | (.31 | ) | - | (.31 | ) | 36.21 | 19.50 | 347 | .78 | .78 | .79 | |||||||||||||||||||||||||||||||||||||
Year ended 9/30/2009 | 28.64 | .28 | 1.68 | 1.96 | - | - | - | 30.60 | 6.84 | 260 | .82 | .80 | 1.26 | |||||||||||||||||||||||||||||||||||||||
Year ended 9/30/2008 | 47.70 | .44 | (14.45 | ) | (14.01 | ) | (.88 | ) | (4.17 | ) | (5.05 | ) | 28.64 | (32.57 | ) | 440 | .77 | .70 | 1.17 | |||||||||||||||||||||||||||||||||
Year ended 9/30/2007 | 39.10 | .48 | 12.56 | 13.04 | (.83 | ) | (3.61 | ) | (4.44 | ) | 47.70 | 35.77 | 403 | .77 | .71 | �� | 1.11 | |||||||||||||||||||||||||||||||||||
Year ended 9/30/2006 | 34.93 | .36 | 4.97 | 5.33 | (.48 | ) | (.68 | ) | (1.16 | ) | 39.10 | 15.60 | 216 | .80 | .74 | .97 | ||||||||||||||||||||||||||||||||||||
Class R-6: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 9/30/2010 | 30.31 | .27 | 5.62 | 5.89 | (.31 | ) | - | (.31 | ) | 35.89 | 19.57 | 411 | .73 | .73 | .84 | |||||||||||||||||||||||||||||||||||||
Period from 5/1/2009 to 9/30/2009 | 22.33 | .13 | 7.85 | 7.98 | - | - | - | 30.31 | 35.74 | 317 | .33 | .33 | .51 |
Year ended September 30 | ||||||||||||||||||||
2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||
Portfolio turnover rate for all classes of shares | 45 | % | 56 | % | 50 | % | 48 | % | 45 | % |
(1)Based on operations for the periods shown (unless otherwise noted) and, accordingly, may not be representative of a full year. | |||||||||||||
(2)Based on average shares outstanding. | |||||||||||||
(3)Total returns exclude any applicable sales charges, including contingent deferred sales charges. | |||||||||||||
(4)This column reflects the impact, if any, of certain reimbursements/waivers from CRMC. During some of the periods shown, CRMC reduced fees for investment advisory services. In addition, during some of the periods shown, CRMC paid a portion of the fund's transfer agent fees for certain retirement plan share classes. | |||||||||||||
See Notes to Financial Statements |
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors of SMALLCAP World Fund, Inc.:
We have audited the accompanying statement of assets and liabilities, including the summary investment portfolio, of SMALLCAP World Fund, Inc. (the “Fund”), as of September 30, 2010, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the periods presented. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts a nd disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of September 30, 2010, by correspondence with the custodian and brokers; where replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of SMALLCAP World Fund, Inc. as of September 30, 2010, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the periods presented, in conformity with accounting principles generally accepted in the United States of America.
Deloitte & Touche LLP
Costa Mesa, California
November 10, 2010
Tax information
unaudited
We are required to advise you within 60 days of the fund’s fiscal year-end regarding the federal tax status of certain distributions received by shareholders during such fiscal year. The fund hereby designates the following amounts for the fund’s fiscal year ended September 30, 2010:
Foreign taxes | $0.03 per share | |||
Foreign source income | $0.43 per share | |||
Qualified dividend income | $ | 217,487,000 | ||
Corporate dividends received deduction | $ | 54,654,000 | ||
U.S. government income that may be exempt from state taxation | $ | 1,881,000 |
Individual shareholders should refer to their Form 1099 or other tax information, which will be mailed in January 2011, to determine the calendar year amounts to be included on their 2010 tax returns. Shareholders should consult their tax advisers.
Expense example
unaudited
As a shareholder of the fund, 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 period (April 1, 2010, through September 30, 2010).
Actual expenses:
The first line of each share class in the table on the next 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 entitled "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 next 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:
There are some account fees that are charged to certain types of accounts, such as individual retirement accounts and 529 college savings plan accounts (generally, a $10 fee is charged to set up the account and an additional $10 fee is charged to the account annually), that would increase the amount of expenses paid on your account. In addition, retirement plan participants may be subject to certain fees charged by the plan sponsor, and Class F-1, F-2 and 529-F-1 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 th e amount of these fees.
Note that the expenses shown in the table 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.
Beginning account value 4/1/2010 | Ending account value 9/30/2010 | Expenses paid during period* | Annualized expense ratio | |||||||||||||
Class A -- actual return | $ | 1,000.00 | $ | 1,063.21 | $ | 5.69 | 1.10 | % | ||||||||
Class A -- assumed 5% return | 1,000.00 | 1,019.55 | 5.57 | 1.10 | ||||||||||||
Class B -- actual return | 1,000.00 | 1,059.11 | 9.65 | 1.87 | ||||||||||||
Class B -- assumed 5% return | 1,000.00 | 1,015.69 | 9.45 | 1.87 | ||||||||||||
Class C -- actual return | 1,000.00 | 1,059.25 | 9.60 | 1.86 | ||||||||||||
Class C -- assumed 5% return | 1,000.00 | 1,015.74 | 9.40 | 1.86 | ||||||||||||
Class F-1 -- actual return | 1,000.00 | 1,063.45 | 5.64 | 1.09 | ||||||||||||
Class F-1 -- assumed 5% return | 1,000.00 | 1,019.60 | 5.52 | 1.09 | ||||||||||||
Class F-2 -- actual return | 1,000.00 | 1,064.61 | 4.19 | .81 | ||||||||||||
Class F-2 -- assumed 5% return | 1,000.00 | 1,021.01 | 4.10 | .81 | ||||||||||||
Class 529-A -- actual return | 1,000.00 | 1,062.95 | 5.90 | 1.14 | ||||||||||||
Class 529-A -- assumed 5% return | 1,000.00 | 1,019.35 | 5.77 | 1.14 | ||||||||||||
Class 529-B -- actual return | 1,000.00 | 1,058.77 | 10.06 | 1.95 | ||||||||||||
Class 529-B -- assumed 5% return | 1,000.00 | 1,015.29 | 9.85 | 1.95 | ||||||||||||
Class 529-C -- actual return | 1,000.00 | 1,058.83 | 10.06 | 1.95 | ||||||||||||
Class 529-C -- assumed 5% return | 1,000.00 | 1,015.29 | 9.85 | 1.95 | ||||||||||||
Class 529-E -- actual return | 1,000.00 | 1,061.38 | 7.39 | 1.43 | ||||||||||||
Class 529-E -- assumed 5% return | 1,000.00 | 1,017.90 | 7.23 | 1.43 | ||||||||||||
Class 529-F-1 -- actual return | 1,000.00 | 1,064.35 | 4.81 | .93 | ||||||||||||
Class 529-F-1 -- assumed 5% return | 1,000.00 | 1,020.41 | 4.71 | .93 | ||||||||||||
Class R-1 -- actual return | 1,000.00 | 1,059.25 | 9.55 | 1.85 | ||||||||||||
Class R-1 -- assumed 5% return | 1,000.00 | 1,015.79 | 9.35 | 1.85 | ||||||||||||
Class R-2 -- actual return | 1,000.00 | 1,058.94 | 9.86 | 1.91 | ||||||||||||
Class R-2 -- assumed 5% return | 1,000.00 | 1,015.49 | 9.65 | 1.91 | ||||||||||||
Class R-3 -- actual return | 1,000.00 | 1,061.51 | 7.34 | 1.42 | ||||||||||||
Class R-3 -- assumed 5% return | 1,000.00 | 1,017.95 | 7.18 | 1.42 | ||||||||||||
Class R-4 -- actual return | 1,000.00 | 1,063.34 | 5.53 | 1.07 | ||||||||||||
Class R-4 -- assumed 5% return | 1,000.00 | 1,019.70 | 5.42 | 1.07 | ||||||||||||
Class R-5 -- actual return | 1,000.00 | 1,065.01 | 3.99 | .77 | ||||||||||||
Class R-5 -- assumed 5% return | 1,000.00 | 1,021.21 | 3.90 | .77 | ||||||||||||
Class R-6 -- actual return | 1,000.00 | 1,065.29 | 3.73 | .72 | ||||||||||||
Class R-6 -- assumed 5% return | 1,000.00 | 1,021.46 | 3.65 | .72 | ||||||||||||
*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). |
Approval of Investment Advisory and Service Agreement
The fund’s board has approved the fund’s Investment Advisory and Service Agreement (the “agreement”) with Capital Research and Management Company (“CRMC”) for an additional one-year term through November 30, 2011. The board approved the agreement following the recommendation of the fund’s Contracts Committee (the “committee”), which is composed of all of the fund’s independent board members. The board and the committee determined that the fund’s advisory fee structure was fair and reasonable in relation to the services provided and that approving the agreement was in the best interests of the fund and its shareholders.
In reaching this decision, the board and the committee took into account information furnished to them throughout the year, as well as information prepared specifically in connection with their review of the agreement and were advised by their independent counsel. They considered the factors discussed below, among others, but did not identify any single issue or particular piece of information that, in isolation, was the controlling factor.
1. Nature, extent and quality of services
The board and the committee considered the depth and quality of CRMC’s investment management process, including its global research capabilities; the experience, capability and integrity of its senior management and other personnel; the low turnover rates of its key personnel; the overall financial strength and stability of its organization; and the ongoing evolution of CRMC’s organizational structure designed to maintain and strengthen these qualities. The board and the committee considered, among other things, the impact of current market conditions on the fund and CRMC. The board and the committee also considered the nature, extent and quality of administrative, compliance and shareholder services provided by CRMC to the fund under the agreement and other agreements as well as the benefits to fund shareholders from investing in a fun d that is part of a large family of funds. The board and the committee concluded that the nature, extent and quality of the services provided by CRMC have benefited and should continue to benefit the fund and its shareholders.
2. Investment results
The board and the committee considered the investment results of the fund in light of its objective of providing long-term growth of capital. They compared the fund’s total returns with those of other relevant funds (including the other funds that are the basis of the Lipper index for the category in which the fund is included) and market data such as relevant market indices, in each case as available at the time of the related board and committee meetings. This report, including the letter to shareholders and related disclosures, contains certain information about the fund’s investment results. The board and the committee concluded that the fund’s results have been satisfactory and that CRMC’s record in managing the fund indicated that its continued management should benefit the fund and its shareholders.
3. Advisory fees and total expenses
The board and the committee compared the advisory fees and total expense levels of the fund to those of other relevant funds. They observed that the fund’s advisory fees and expenses remain significantly below those of most other relevant funds. The board and the committee also noted the breakpoint discounts in the fund’s advisory fee structure that reduce the level of fees charged by CRMC to the fund as fund assets increase. In addition, they reviewed information regarding the advisory fees paid by clients of an affiliate of CRMC. They noted that, to the extent there were differences among the advisory fees paid by those clients and the advisory fees paid by the fund, the differences appropriately reflected the investment, operational and regulatory differences between advising the fund and the other clients. The board and the committe e concluded that the fund’s cost structure was fair and reasonable in relation to the services provided, and that the shareholders receive reasonable value in return for the advisory fees and other amounts paid to CRMC by the fund.
4. Ancillary benefits
The board and the committee considered a variety of other benefits received by CRMC and its affiliates as a result of CRMC’s relationship with the fund and the other American Funds, including fees for administrative services provided to certain share classes; fees paid to CRMC’s affiliated transfer agent; sales charges and distribution fees received and retained by the fund’s principal underwriter, an affiliate of CRMC; and possible ancillary benefits to CRMC’s institutional management affiliates. The board and the committee reviewed CRMC’s portfolio trading practices, noting that while CRMC receives the benefit of research provided by broker-dealers executing portfolio transactions on behalf of the fund, it does not obtain third-party research or other services in return for allocating brokerage to such broker-dealers . The board and the committee took these ancillary benefits into account in evaluating the reasonableness of the advisory fees and other amounts paid to CRMC by the fund.
5. Adviser financial information
The board and the committee reviewed information regarding CRMC’s costs of providing services to the American Funds, including personnel, systems and resources of investment, compliance, trading, accounting and other administrative operations. They considered CRMC’s costs and willingness to invest in technology, infrastructure and staff to maintain and expand services and capabilities, respond to industry and regulatory developments and attract and retain qualified personnel. They noted information regarding the compensation structure for CRMC’s investment professionals. The board and the committee also compared CRMC’s profitability to the reported results of several large, publicly held investment management companies. The board and the committee noted the competitiveness and cyclicality of both the mutual fund industry and the capital markets, and the importance in that environment of CRMC’s long-term profitability for maintaining its independence, company culture and management continuity. They further considered the breakpoint discounts in the fund’s advisory fee structure and the termination of CRMC’s 10% advisory fee waiver effective December 31, 2008. The board and the committee concluded that the fund’s advisory fee structure reflected a reasonable sharing of benefits between CRMC and the fund’s shareholders.
Other share class results
unaudited
Classes B, C, F and 529
Fund results shown 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. Share prices and returns will vary, so investors may lose money. For current information and month-end results, visit americanfunds.com.
Average annual total returns for periods ended | 10 years1/ | |||||||||||
September 30, 2010 | 1 year | 5 years | Life of class | |||||||||
Class B shares2 | ||||||||||||
Reflecting applicable contingent deferred sales charge | ||||||||||||
(CDSC), maximum of 5%, payable only if shares are | ||||||||||||
sold within six years of purchase | 13.18 | % | 4.72 | % | 2.67 | % | ||||||
Not reflecting CDSC | 18.18 | 5.05 | 2.67 | |||||||||
Class C shares — first sold 3/15/01 | ||||||||||||
Reflecting CDSC, maximum of 1%, payable only | ||||||||||||
if shares are sold within one year of purchase | 17.19 | 5.04 | 6.74 | |||||||||
Not reflecting CDSC | 18.19 | 5.04 | 6.74 | |||||||||
Class F-1 shares3 — first sold 3/15/01 | ||||||||||||
Not reflecting annual asset-based fee charged | ||||||||||||
by sponsoring firm | 19.16 | 5.89 | 7.60 | |||||||||
Class F-2 shares3 — first sold 8/1/08 | ||||||||||||
Not reflecting annual asset-based fee charged | ||||||||||||
by sponsoring firm | 19.46 | — | 3.57 | |||||||||
Class 529-A shares4 — first sold 2/19/02 | ||||||||||||
Reflecting 5.75% maximum sales charge | 12.20 | 4.58 | 8.57 | |||||||||
Not reflecting maximum sales charge | 19.06 | 5.83 | 9.31 | |||||||||
Class 529-B shares2,4 — first sold 2/20/02 | ||||||||||||
Reflecting applicable CDSC, maximum of 5%, payable | ||||||||||||
only if shares are sold within six years of purchase | 13.12 | 4.63 | 8.36 | |||||||||
Not reflecting CDSC | 18.12 | 4.96 | 8.36 | |||||||||
Class 529-C shares4 — first sold 2/20/02 | ||||||||||||
Reflecting CDSC, maximum of 1%, payable only | ||||||||||||
if shares are sold within one year of purchase | 17.10 | 4.97 | 8.31 | |||||||||
Not reflecting CDSC | 18.10 | 4.97 | 8.31 | |||||||||
Class 529-E shares3,4 — first sold 3/15/02 | 18.71 | 5.51 | 8.17 | |||||||||
Class 529-F-1 shares3,4 — first sold 9/17/02 | ||||||||||||
Not reflecting annual asset-based fee charged | ||||||||||||
by sponsoring firm | 19.31 | 6.03 | 12.51 |
1Applicable to Class B shares only. All other share classes reflect results for the life of the class. |
2These shares are not available for purchase. |
3These shares are sold without any initial or contingent deferred sales charge. |
4Results shown do not reflect the $10 account setup fee and an annual $10 account maintenance fee. |
Investment results assume all distributions are reinvested and reflect applicable fees and expenses. The fund’s investment adviser waived a portion of its management fees from September 1, 2004, through December 31, 2008. Applicable fund results shown reflect the waiver, without which they would have been lower. See the Financial Highlights table on pages 26 and 27 for details that include expense ratios for all share classes.
For information regarding the differences among the various share classes, refer to the fund’s prospectus.
Board of directors and other officers
“Independent” directors1 | ||
Year first | ||
elected a | ||
director of | ||
Name and age | the fund2 | Principal occupation(s) during past five years |
Ronald P. Badie, 67 | 2010 | Retired |
Joseph C. Berenato, 64 | 2000 | Chairman, Ducommun Incorporated |
Chairman of the Board | (aerospace components manufacturer); | |
(Independent and | former CEO, Ducommun Incorporated | |
Non-Executive) | ||
Louise H. Bryson, 66 | 2010 | Chair Emerita of the Board of Trustees, J. Paul Getty |
Trust; former President, Distribution, Lifetime | ||
Entertainment Network; former Executive Vice | ||
President and General Manager, Lifetime Movie | ||
Network | ||
Robert J. Denison, 69 | 2010 | Chair, First Security Management (private investment) |
Mary Anne Dolan, 63 | 2008 | Founder and President, MAD Ink (communications |
company) | ||
Robert A. Fox, 73 | 2010 | Managing General Partner, Fox Investments LP; |
corporate director | ||
John G. Freund, 57 | 2000 | Founder and Managing Director, Skyline Ventures |
(venture capital investor in health care companies) | ||
Leonade D. Jones, 63 | 1995 | Retired |
William H. Kling, 68 | 1990 | President and CEO, American Public Media Group |
John G. McDonald, 73 | 2010 | Stanford Investors Professor, Graduate School of |
Business, Stanford University | ||
Christopher E. Stone, 54 | 2007 | Daniel and Florence Guggenheim Professor of the |
Practice of Criminal Justice, John F. Kennedy School | ||
of Government, Harvard University | ||
“Independent” directors1 | ||
Number of | ||
portfolios | ||
in fund | ||
complex3 | ||
overseen by | ||
Name and age | director | Other directorships4 held by director |
Ronald P. Badie, 67 | 4 | Amphenol Corporation; Merisel, Inc.; Nautilus, Inc.; |
Obagi Medical Products, Inc. | ||
Joseph C. Berenato, 64 | 6 | None |
Chairman of the Board | ||
(Independent and | ||
Non-Executive) | ||
Louise H. Bryson, 66 | 6 | None |
Robert J. Denison, 69 | 7 | None |
Mary Anne Dolan, 63 | 9 | None |
Robert A. Fox, 73 | 9 | None |
John G. Freund, 57 | 3 | Mako Surgical Corporation; MAP Pharmaceuticals, Inc.; XenoPort, Inc. |
Leonade D. Jones, 63 | 9 | None |
William H. Kling, 68 | 9 | None |
John G. McDonald, 73 | 12 | iStar Financial, Inc.; Plum Creek Timber Co.; |
QuinStreet, Inc.; Scholastic Corporation | ||
Christopher E. Stone, 54 | 6 | None |
“Interested” directors5 | ||
Year first | ||
elected a | ||
director or | Principal occupation(s) during past five years and | |
Name, age and | officer of | positions held with affiliated entities or the |
position with fund | the fund2 | principal underwriter of the fund |
Gordon Crawford, 63 | 1992 | Senior Vice President — Capital Research |
Vice Chairman of the Board | Global Investors, Capital Research and Management Company | |
Gregory W. Wendt, 49 | 1992 | Senior Vice President — Capital Research |
President | Global Investors, Capital Research Company;6 | |
Director, Capital Research and Management | ||
Company; Director, American Funds Distributors, | ||
Inc.;6 Director, Capital Management Services, Inc.6 | ||
“Interested” directors5 | ||
Number of | ||
portfolios | ||
in fund | ||
complex3 | ||
Name, age and | overseen by | |
position with fund | director | Other directorships4 held by director |
Gordon Crawford, 63 | 1 | None |
Vice Chairman of the Board | ||
Gregory W. Wendt, 49 | 1 | None |
President |
The fund’s statement of additional information includes further details about fund directors and is available without charge upon request by calling American Funds Service Company at 800/421-0180 or by visiting the American Funds website at americanfunds.com. The address for all directors and officers of the fund is 333 South Hope Street, Los Angeles, CA 90071, Attention: Secretary.
See page 36 for footnotes.
Other officers6 | ||
Year first | ||
elected | Principal occupation(s) during past five years | |
Name, age and | an officer | and positions held with affiliated entities |
position with fund | of the fund2 | or the principal underwriter of the fund |
Paul F. Roye, 56 | 2007 | Senior Vice President — Fund Business Management |
Executive Vice President | Group, Capital Research and Management Company; | |
Director, American Funds Service Company;6 former | ||
Director, Division of Investment Management, United | ||
States Securities and Exchange Commission | ||
Brady L. Enright, 43 | 2004 | Senior Vice President — Capital World Investors, |
Senior Vice President | Capital Research and Management Company | |
J. Blair Frank, 44 | 1999 | Senior Vice President — Capital Research Global |
Senior Vice President | Investors, Capital Research and Management | |
Company | ||
Jonathan Knowles, Ph.D., 49 | 2000 | Director, Capital Research and Management |
Senior Vice President | Company; Senior Vice President — Capital World | |
Investors, Capital Research Company6 | ||
Walter R. Burkley, 44 | 2007 | Senior Vice President and Senior Counsel — Fund |
Vice President | Business Management Group, Capital Research and | |
Management Company | ||
Grant L. Cambridge, 48 | 2001 | Senior Vice President — Capital World Investors, |
Vice President | Capital Research Company6 | |
Noriko H. Chen, 43 | 2006 | Senior Vice President — Capital World Investors, |
Vice President | Capital Research Company;6 Director, Capital | |
Research Company6 | ||
Bradford F. Freer, 41 | 2008 | Senior Vice President — Capital World Investors, |
Vice President | Capital Research Company;6 Director, Capital | |
Research Company6 | ||
Lawrence Kymisis, 40 | 2008 | Senior Vice President — Capital Research Global |
Vice President | Investors, Capital Research Company;6 Director, | |
Capital Research Company6 | ||
Kristian Stromsoe, 38 | 2008 | Senior Vice President — Capital Research Global |
Vice President | Investors, Capital Research Company6 | |
Patrick F. Quan, 52 | 2010 | Vice President — Fund Business Management |
Secretary | Group, Capital Research and Management Company | |
Jeffrey P. Regal, 39 | 2010 | Vice President — Fund Business Management |
Treasurer | Group, Capital Research and Management Company | |
Julie E. Lawton, 37 | 2010 | Associate, Capital Research and Management |
Assistant Secretary | Company | |
Neal F. Wellons, 39 | 2008 | Vice President — Fund Business Management |
Assistant Treasurer | Group, Capital Research and Management Company |
1The term “independent” director refers to a director who is not an “interested person” of the fund within the meaning of the 1940 Act. |
2Directors and officers of the fund serve until their resignation, removal or retirement. |
3Capital Research and Management Company manages the American Funds, consisting of 30 funds. Capital Research and Management Company also manages American Funds Insurance Series,® which is composed of 16 funds and serves as the underlying investment vehicle for certain variable insurance contracts; American Funds Target Date Retirement Series,® Inc., which is composed of 10 funds and is available through tax-deferred retirement plans and IRAs; and Endowments,SM which is available to certain nonprofit organizations. |
4This includes all directorships (other than those in the American Funds or other funds managed by Capital Research and Management Company) that are held by each director as a director of a public company or a registered investment company. |
5“Interested persons” within the meaning of the 1940 Act, as amended, on the basis of their affiliation with the fund’s investment adviser, Capital Research and Management Company, or affiliated entities (including the fund’s principal underwriter). |
6Company affiliated with Capital Research and Management Company. |
Offices
Offices of the fund and of the investment adviser
Capital Research and Management Company
333 South Hope Street
Los Angeles, CA 90071-1406
6455 Irvine Center Drive
Irvine, CA 92618
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
K&L Gates LLP
Four Embarcadero Center, Suite 1200
San Francisco, CA 94111-5994
Independent registered public accounting firm
Deloitte & Touche LLP
695 Town Center Drive
Suite 1200
Costa Mesa, CA 92626-7188
Principal underwriter
American Funds Distributors, Inc.
333 South Hope Street
Los Angeles, CA 90071-1406
Investors should carefully consider the investment objectives, risks, charges and expenses of the American Funds. This and other important information is contained in the fund’s summary prospectus and 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 800/421-0180 or visit the American Funds website at americanfunds.com.
“American Funds Proxy Voting Procedures and Principles” — which describes how we vote proxies relating to portfolio securities — is available on the American Funds 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 the American Funds website.
A complete September 30, 2010, portfolio of SMALLCAP World Fund’s investments is available free of charge by calling AFS or visiting the SEC website (where it is part of Form N-CSR).
SMALLCAP World Fund files a complete list of its portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. This filing is available free of charge on the SEC website. You may also review or, for a fee, copy this filing at the SEC’s Public Reference Room in Washington, D.C. Additional information regarding the operation of the Public Reference Room may be obtained by calling the SEC’s Office of Investor Education and Advocacy at 800/SEC-0330. Additionally, the list of portfolio holdings is available by calling AFS.
This report is for the information of shareholders of SMALLCAP World Fund, but it also may be used as sales literature when preceded or accompanied by the current summary prospectus or prospectus, which gives details about charges, expenses, investment objectives and operating policies of the fund. If used as sales material after December 31, 2010, this report must be accompanied by an American Funds statistical update for the most recently completed calendar quarter.
What makes American Funds different?
For nearly 80 years, we have followed a consistent philosophy to benefit our investors. Our 30 carefully conceived, broadly diversified funds, in addition to the target date retirement series, offer opportunities that have attracted over 50 million shareholder accounts.
Our unique combination of strengths includes these five factors:
•A long-term, value-oriented approach |
We seek to buy securities at reasonable prices relative to their prospects and hold them for the long term. |
•An extensive global research effort |
Our investment professionals travel the world to find the best investment opportunities and gain a comprehensive understanding of companies and markets. |
•The multiple portfolio counselor system |
Our unique approach to portfolio management, developed more than 50 years ago, blends teamwork with individual accountability and has provided American Funds with a sustainable method of achieving fund objectives. |
•Experienced investment professionals |
American Funds portfolio counselors have an average of 26 years of investment experience, providing a depth of knowledge and broad perspective that few organizations have. |
•A commitment to low management fees |
The American Funds provide exceptional value for shareholders, with management fees that are among the lowest in the mutual fund industry. |
American Funds span a range of investment objectives
•Growth funds |
Emphasis on long-term growth through stocks |
AMCAP Fund® |
EuroPacific Growth Fund® |
The Growth Fund of America® |
The New Economy Fund® |
New Perspective Fund® |
New World Fund® |
>SMALLCAP World Fund® |
•Growth-and-income funds |
Emphasis on long-term growth and dividends through stocks |
American Mutual Fund® |
Capital World Growth and Income FundSM |
Fundamental InvestorsSM |
International Growth and Income FundSM |
The Investment Company of America® |
Washington Mutual Investors FundSM |
•Equity-income funds |
Emphasis on above-average income and growth through stocks and/or bonds |
Capital Income Builder® |
The Income Fund of America® |
•Balanced fund |
Emphasis on long-term growth and current income through stocks and bonds |
American Balanced Fund® |
•Bond funds |
Emphasis on current income through bonds |
American High-Income TrustSM |
The Bond Fund of AmericaSM |
Capital World Bond Fund® |
Intermediate Bond Fund of America® |
Short-Term Bond Fund of AmericaSM |
U.S. Government Securities FundSM |
•Tax-exempt bond funds |
Emphasis on tax-exempt current income through municipal bonds |
American Funds Short-Term Tax-Exempt Bond FundSM |
American High-Income Municipal Bond Fund® |
Limited Term Tax-Exempt Bond Fund of AmericaSM |
The Tax-Exempt Bond Fund of America® |
State-specific tax-exempt funds |
The Tax-Exempt Fund of California® |
The Tax-Exempt Fund of Maryland® |
The Tax-Exempt Fund of Virginia® |
•Money market fund |
American Funds Money Market Fund® |
•American Funds Target Date Retirement Series® |
The Capital Group Companies
American Funds Capital Research and Management Capital International Capital Guardian Capital Bank and Trust
Lit. No. MFGEAR-935-1110P
Litho in USA BBC/Q/8067-S26182
Printed on paper containing 10% post-consumer waste
Printed with inks containing soy and/or vegetable oil
ITEM 2 – Code of Ethics
The Registrant has adopted a Code of Ethics that applies to its Principal Executive Officer and Principal Financial Officer. The Registrant undertakes to provide to any person without charge, upon request, a copy of the Code of Ethics. Such request can be made to American Funds Service Company at 800/421-0180 or to the Secretary of the Registrant, 333 South Hope Street, Los Angeles, California 90071.
ITEM 3 – Audit Committee Financial Expert
The Registrant’s board has determined that Ronald P. Badie, a member of the Registrant’s audit committee, is an “audit committee financial expert” and "independent," as such terms are defined in this Item. This designation will not increase the designee’s duties, obligations or liability as compared to his or her duties, obligations and liability as a member of the audit committee and of the board, nor will it reduce the responsibility of the other audit committee members. There may be other individuals who, through education or experience, would qualify as "audit committee financial experts" if the board had designated them as such. Most importantly, the board believes each member of the audit committee contributes significantly to the effective oversight of the Registrant’s financial st atements and condition.
ITEM 4 – Principal Accountant Fees and Services
Registrant: | ||||
a) Audit Fees: | ||||
2009 | $108,000 | |||
2010 | $101,000 | |||
b) Audit-Related Fees: | ||||
2009 | $5,000 | |||
2010 | $6,000 | |||
The audit-related fees consist of assurance and related services relating to the examination of the Registrant’s investment adviser conducted in accordance with Statement on Auditing Standards Number 70 issued by the American Institute of Certified Public Accountants. | ||||
c) Tax Fees: | ||||
2009 | $28,000 | |||
2010 | $40,000 | |||
The tax fees consist of professional services relating to the preparation of the Registrant’s tax returns including returns relating to the Registrant’s investments in non-U.S. jurisdictions. | ||||
d) All Other Fees: | ||||
2009 | None | |||
2010 | None | |||
Adviser and affiliates (includes only fees for non-audit services billed to the adviser and affiliates for engagements that relate directly to the operations and financial reporting of the Registrant and were subject to the pre-approval policies described below): | ||||
a) Audit Fees: | ||||
Not Applicable | ||||
b) Audit-Related Fees: | ||||
2009 | $1,034,000 | |||
2010 | $999,000 | |||
The audit-related fees consist of assurance and related services relating to the examination of the Registrant’s transfer agent, principal underwriter and investment adviser conducted in accordance with Statement on Auditing Standards Number 70 issued by the American Institute of Certified Public Accountants. | ||||
c) Tax Fees: | ||||
2009 | None | |||
2010 | $10,000 | |||
The tax fees consist of consulting services relating to the Registrant’s investments. | ||||
d) All Other Fees: | ||||
2009 | $2,000 | |||
2010 | $2,000 | |||
The other fees consist of subscription services related to an accounting research tool. | ||||
All audit and permissible non-audit services that the Registrant’s audit committee considers compatible with maintaining the independent registered public accounting firm’s independence are required to be pre-approved by the committee. The pre-approval requirement will extend to all non-audit services provided to the Registrant, the investment adviser, and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the Registrant, if the engagement relates directly to the operations and financial reporting of the Registrant. The committee will not delegate its responsibility to pre-approve these services to the investment adviser. The committee may delegate to one or more committee members the authority to review and pre-approve audit and permissible non-audi t services. Actions taken under any such delegation will be reported to the full committee at its next meeting. The pre-approval requirement is waived with respect to non-audit services if certain conditions are met. The pre-approval requirement was not waived for any of the non-audit services listed above provided to the Registrant, adviser and affiliates.
Aggregate non-audit fees paid to the Registrant’s auditors, including fees for all services billed to the Registrant, adviser and affiliates that provide ongoing services to the Registrant, were $1,553,000 for fiscal year 2009 and $1,449,000 for fiscal year 2010. The non-audit services represented by these amounts were brought to the attention of the committee and considered to be compatible with maintaining the auditors’ independence.
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
SMALLCAP World Fund®
Investment portfolio
September 30, 2010
Common stocks — 90.82% | Shares | Value (000) | ||||||
CONSUMER DISCRETIONARY — 15.66% | ||||||||
Modern Times Group MTG AB, Class B1 | 1,713,000 | $ | 127,672 | |||||
lululemon athletica inc.2 | 2,658,214 | 118,875 | ||||||
Virgin Media Inc.2 | 5,062,500 | 116,539 | ||||||
CTC Media, Inc. | 5,125,000 | 112,443 | ||||||
Pantaloon Retail (India) Ltd.1 | 8,524,816 | 91,753 | ||||||
Pantaloon Retail (India) Ltd., Class B1 | 551,250 | 4,620 | ||||||
Strayer Education, Inc. | 515,700 | 89,990 | ||||||
Minth Group Ltd.1 | 43,114,000 | 86,022 | ||||||
Chipotle Mexican Grill, Inc.2 | 443,000 | 76,196 | ||||||
Lions Gate Entertainment Corp.2,3 | 9,100,000 | 66,885 | ||||||
SuperGroup PLC1,2 | 3,442,000 | 65,748 | ||||||
Paddy Power PLC1 | 1,806,726 | 63,399 | ||||||
CarMax, Inc.2 | 2,257,000 | 62,880 | ||||||
Jumbo SA1,3 | 9,249,878 | 62,208 | ||||||
John Wiley & Sons, Inc., Class A | 1,330,983 | 54,384 | ||||||
Great Wall Motor Co. Ltd., Class H1 | 19,511,500 | 52,653 | ||||||
Capella Education Co.2 | 669,000 | 51,928 | ||||||
SeLoger.com1,3 | 982,201 | 50,233 | ||||||
Ekornes ASA1,3 | 2,019,750 | 49,467 | ||||||
Delticom AG1,3 | 728,265 | 49,215 | ||||||
Parkson Retail Group Ltd.1 | 26,990,500 | 46,765 | ||||||
Tiffany & Co. | 947,000 | 44,500 | ||||||
Stella International Holdings Ltd.1 | 21,495,500 | 42,167 | ||||||
Lojas Renner SA, ordinary nominative | 1,227,600 | 42,074 | ||||||
Shimano Inc.1 | 767,400 | 40,683 | ||||||
Brunswick Corp. | 2,578,000 | 39,237 | ||||||
ASOS PLC1,2 | 2,096,262 | 37,423 | ||||||
Domino’s Pizza UK & IRL PLC1 | 5,045,000 | 37,262 | ||||||
Blue Nile, Inc.2,3 | 829,140 | 36,888 | ||||||
Cox and Kings (India) Ltd.1 | 2,716,000 | 34,369 | ||||||
Cox and Kings (India) Ltd. (GDR)1 | 165,000 | 2,088 | ||||||
Tractor Supply Co. | 912,200 | 36,178 | ||||||
Mr Price Group Ltd.1 | 4,518,408 | 35,640 | ||||||
Trinity Ltd.1,4 | 35,467,900 | 34,698 | ||||||
Billabong International Ltd.1 | 4,422,271 | 34,068 | ||||||
Golden Eagle Retail Group Ltd.1 | 11,982,000 | 33,919 | ||||||
Navitas Ltd.1 | 8,125,000 | 33,415 | ||||||
Timberland Co., Class A2 | 1,667,000 | 33,023 | ||||||
Hankook Tire Co., Ltd.1 | 1,106,840 | 31,985 | ||||||
AutoNation, Inc.2 | 1,375,000 | 31,969 | ||||||
Fourlis1,3 | 3,855,540 | 30,897 | ||||||
TOD’S SpA1 | 322,000 | 30,616 | ||||||
WMS Industries Inc.2 | 782,000 | 29,771 | ||||||
CKX, Inc.2,3 | 6,070,427 | 29,745 | ||||||
Halfords Group PLC1 | 4,200,000 | 29,210 | ||||||
CFAO1 | 725,000 | 28,899 | ||||||
New Oriental Education & Technology Group Inc. (ADR)2 | 295,000 | 28,786 | ||||||
Scholastic Corp. | 1,000,000 | 27,820 | ||||||
Masterskill Education Group Bhd.1,3 | 24,300,000 | 26,210 | ||||||
Domino’s Pizza Enterprises Ltd.1,3 | 4,482,300 | 25,934 | ||||||
Education Management Corp.2 | 1,684,132 | 24,723 | ||||||
GEOX SpA1 | 4,346,080 | 24,667 | ||||||
Rightmove PLC1 | 2,038,594 | 23,487 | ||||||
Jubilant FoodWorks Ltd.1,2 | 2,220,098 | 23,346 | ||||||
Mitchells & Butlers PLC1,2 | 5,087,000 | 23,242 | ||||||
Leggett & Platt, Inc. | 990,000 | 22,532 | ||||||
K12 Inc.2 | 750,018 | 21,773 | ||||||
Harman International Industries, Inc.2 | 650,000 | 21,717 | ||||||
Aristocrat Leisure Ltd.1 | 6,350,000 | 21,667 | ||||||
Urban Outfitters, Inc.2 | 675,000 | 21,222 | ||||||
PCD Stores (Group) Ltd.1,2 | 67,280,000 | 21,198 | ||||||
Dollarama Inc.2 | 800,000 | 21,032 | ||||||
Café de Coral Holdings Ltd.1 | 7,380,000 | 20,963 | ||||||
American Axle & Manufacturing Holdings, Inc.2 | 2,288,000 | 20,638 | ||||||
TAKKT AG1 | 1,456,778 | 18,992 | ||||||
Melco Crown Entertainment Ltd. (ADR)2 | 3,500,000 | 17,815 | ||||||
PetMed Express, Inc. | 1,000,000 | 17,500 | ||||||
Weight Watchers International, Inc. | 545,000 | 16,999 | ||||||
HUGO BOSS AG1 | 283,000 | 16,456 | ||||||
Mekonomen AB1 | 552,683 | 16,293 | ||||||
Parkson Holdings Bhd.1 | 8,307,250 | 15,654 | ||||||
REXLot Holdings Ltd.1 | 165,000,000 | 15,631 | ||||||
Fielmann AG1 | 157,500 | 14,687 | ||||||
Boyd Gaming Corp.2 | 2,000,000 | 14,500 | ||||||
Signet Jewelers Ltd.2 | 450,000 | 14,283 | ||||||
BWG Homes ASA1,2 | 4,506,578 | 13,726 | ||||||
SAF-HOLLAND SA, non-registered shares1,2,3 | 1,655,600 | 13,164 | ||||||
Headlam Group PLC1 | 2,809,685 | 12,933 | ||||||
Promethean World PLC1 | 6,042,400 | 12,110 | ||||||
Group 1 Automotive, Inc.2 | 400,000 | 11,952 | ||||||
Mood Media Corp.2,3,4 | 6,375,000 | 11,772 | ||||||
P.F. Chang’s China Bistro, Inc. | 250,000 | 11,550 | ||||||
National American University Holdings, Inc.3 | 1,515,000 | 10,181 | ||||||
Bloomsbury Publishing PLC1,3 | 5,405,000 | 9,998 | ||||||
Mothercare PLC1 | 1,215,000 | 9,962 | ||||||
Dixons Retail PLC1,2 | 24,553,542 | 9,936 | ||||||
J D Wetherspoon PLC1 | 1,375,000 | 9,484 | ||||||
Little Sheep Group Ltd., Class H1 | 14,009,000 | 9,479 | ||||||
Corinthian Colleges, Inc.2 | 1,134,800 | 7,966 | ||||||
Intercontinental Hotels Group PLC1 | 430,678 | 7,713 | ||||||
Bijou Brigitte modische Accessoires AG1 | 52,000 | 7,355 | ||||||
Raffles Education Corp. Ltd.1,2 | 30,000,000 | 6,393 | ||||||
Toll Corp.2 | 300,000 | 5,706 | ||||||
KB Home | 500,000 | 5,665 | ||||||
Praktiker Bau- und Heimwerkermärkte Holding AG1 | 605,280 | 5,120 | ||||||
Titan Industries Ltd.1 | 66,000 | 4,802 | ||||||
Oceanus Group Ltd.1,2 | 19,225,334 | 4,686 | ||||||
Schibsted ASA1 | 185,000 | 4,631 | ||||||
Cheil Worldwide Inc.1 | 250,000 | 2,962 | ||||||
GVC Holdings PLC1 | 1,392,400 | 2,373 | ||||||
Ten Alps PLC1,2 | 3,439,001 | 783 | ||||||
Spot Runner, Inc.1,2,5 | 2,980,544 | 225 | ||||||
Forbes Travel Guide, Inc.1,2,5 | 96,033 | 25 | ||||||
CEC Unet PLC1,2,3 | 35,100,775 | — | ||||||
Fontainebleau Resorts LLC, Class A, nonvoting units1,2,5 | 1,900,000 | — | ||||||
3,153,018 | ||||||||
INDUSTRIALS — 14.22% | ||||||||
Container Corp. of India Ltd.1 | 5,367,645 | 155,364 | ||||||
MSC Industrial Direct Co., Inc., Class A | 2,338,500 | 126,373 | ||||||
Jain Irrigation Systems Ltd.1,3 | 3,925,140 | 103,785 | ||||||
Intertek Group PLC1 | 3,255,000 | 93,669 | ||||||
SIA Engineering Co. Ltd.1 | 20,776,000 | 72,702 | ||||||
Pipavav Shipyard Ltd.1,2 | 32,910,000 | 69,446 | ||||||
Michael Page International PLC1 | 9,538,502 | 69,082 | ||||||
IDEX Corp. | 1,735,000 | 61,610 | ||||||
Herman Miller, Inc. | 2,800,000 | 55,104 | ||||||
Downer EDI Ltd.1 | 11,540,000 | 55,000 | ||||||
Corrections Corporation of America2 | 2,095,300 | 51,712 | ||||||
Meggitt PLC1 | 10,612,081 | 49,448 | ||||||
AirAsia Bhd.1,2 | 64,000,000 | 46,616 | ||||||
Sintex Industries Ltd.1 | 5,423,726 | 46,320 | ||||||
Johnson Electric Holdings Ltd.1 | 87,119,500 | 45,946 | ||||||
MTU Aero Engines Holding AG1 | 766,100 | 43,816 | ||||||
Goodpack Ltd.1,3 | 26,360,000 | 38,308 | ||||||
MITIE Group PLC1 | 12,509,000 | 37,594 | ||||||
Uponor Oyj1 | 2,246,600 | 37,201 | ||||||
Ennis, Inc.3 | 2,065,810 | 36,957 | ||||||
OSG Corp.1 | 3,760,000 | 36,838 | ||||||
BELIMO Holding AG1 | 22,506 | 36,404 | ||||||
Watsco, Inc. | 653,500 | 36,387 | ||||||
Northgate PLC1,2,3 | 10,626,805 | 36,210 | ||||||
Heidelberger Druckmaschinen AG, non-registered shares1,2 | 7,517,000 | 36,036 | ||||||
Applied Industrial Technologies, Inc. | 1,150,000 | 35,190 | ||||||
AMR Corp.2 | 5,600,000 | 35,112 | ||||||
Mobile Mini, Inc.2,3 | 2,221,600 | 34,079 | ||||||
Interline Brands, Inc.2,3 | 1,882,000 | 33,951 | ||||||
Serco Group PLC1 | 3,490,000 | 33,751 | ||||||
Robert Half International Inc. | 1,270,522 | 33,034 | ||||||
URS Corp.2 | 858,915 | 32,622 | ||||||
WABCO Holdings Inc.2 | 776,200 | 32,554 | ||||||
Chemring Group PLC1 | 666,000 | 31,485 | ||||||
Exponent, Inc.2,3 | 936,400 | 31,454 | ||||||
Singapore Post Private Ltd.1 | 32,395,000 | 30,066 | ||||||
Mine Safety Appliances Co. | 1,084,231 | 29,383 | ||||||
TrueBlue, Inc.2 | 2,101,600 | 28,687 | ||||||
easyJet PLC1,2 | 4,570,000 | 26,575 | ||||||
Ultra Electronics Holdings PLC1 | 980,000 | 26,252 | ||||||
Konecranes Oyj1 | 700,000 | 26,212 | ||||||
Flughafen Wien AG, non-registered shares1 | 434,700 | 25,168 | ||||||
BrisConnections Unit Trusts1,2,3 | 27,300,000 | 24,803 | ||||||
Société BIC SA1 | 308,000 | 24,735 | ||||||
Pfeiffer Vacuum Technology AG, non-registered shares1 | 254,000 | 24,034 | ||||||
Graco Inc. | 725,000 | 23,004 | ||||||
Continental Airlines, Inc., Class B2 | 921,600 | 22,893 | ||||||
Gardner Denver, Inc. | 414,698 | 22,261 | ||||||
United Stationers Inc.2 | 410,100 | 21,944 | ||||||
China Automation Group Ltd.1 | 27,000,000 | 21,703 | ||||||
Ellaktor SA1 | 5,451,818 | 21,612 | ||||||
Zumtobel AG1 | 1,245,000 | 21,367 | ||||||
Dalian Port (PDA) Co. Ltd., Class H1 | 50,604,000 | 20,940 | ||||||
Ritchie Bros. Auctioneers Inc. | 1,005,000 | 20,874 | ||||||
Andritz AG1 | 293,600 | 20,627 | ||||||
AIA Engineering Ltd.1 | 2,301,093 | 20,470 | ||||||
Comfort Systems USA, Inc.3 | 1,905,000 | 20,441 | ||||||
Beacon Roofing Supply, Inc.2 | 1,360,000 | 19,815 | ||||||
Harsco Corp. | 800,000 | 19,664 | ||||||
Austal Ltd.1 | 8,200,000 | 19,428 | ||||||
S1 Corp.1 | 350,000 | 19,215 | ||||||
Copart, Inc.2 | 580,391 | 19,135 | ||||||
Polypore International, Inc.2 | 600,000 | 18,096 | ||||||
KEPCO Plant Service & Engineering Co., Ltd.1 | 285,000 | 17,247 | ||||||
Standard Parking Corp.2,3 | 998,000 | 17,066 | ||||||
Wavin NV1,2 | 1,355,058 | 16,915 | ||||||
Houston Wire & Cable Co.3 | 1,678,900 | 16,839 | ||||||
Murray & Roberts Holdings Ltd.1 | 2,558,000 | 16,469 | ||||||
Knight Transportation, Inc. | 848,000 | 16,392 | ||||||
Globaltrans Investment PLC (GDR)1 | 1,070,000 | 16,174 | ||||||
Steelcase Inc., Class A | 1,900,000 | 15,827 | ||||||
KBR, Inc. | 605,000 | 14,907 | ||||||
LS Industrial Systems Co., Ltd.1 | 181,000 | 14,842 | ||||||
Douglas Dynamics, Inc.3 | 1,175,000 | 14,511 | ||||||
Wienerberger AG1,2 | 868,000 | 14,289 | ||||||
Hays PLC1 | 7,755,000 | 13,788 | ||||||
SAI Global Ltd.1 | 3,158,843 | 13,349 | ||||||
Rational AG1 | 62,500 | 13,283 | ||||||
Geberit AG1 | 74,000 | 13,189 | ||||||
Reunert Ltd.1 | 1,440,000 | 12,800 | ||||||
EACOM Timber Corp.2,3,4 | 23,000,000 | 12,742 | ||||||
TransDigm Group Inc. | 203,000 | 12,596 | ||||||
Landstar System, Inc. | 310,000 | 11,972 | ||||||
Frigoglass SAIC1 | 869,298 | 10,715 | ||||||
Mabuchi Motor Co., Ltd.1 | 192,000 | 9,816 | ||||||
G&K Services, Inc., Class A | 405,000 | 9,258 | ||||||
Cpl Resources PLC1,3 | 2,975,986 | 9,209 | ||||||
DCC PLC1 | 320,000 | 9,164 | ||||||
Norwegian Air Shuttle ASA1,2 | 570,000 | 8,987 | ||||||
Seco Tools AB, Class B1,2 | 650,000 | 8,816 | ||||||
Curtiss-Wright Corp. | 268,600 | 8,139 | ||||||
PRONEXUS INC.1 | 1,338,300 | 7,433 | ||||||
Resources Connection, Inc. | 520,000 | 7,155 | ||||||
Kaba Holding AG1 | 19,000 | 6,342 | ||||||
Teleperformance SA1 | 200,000 | 5,701 | ||||||
Prysmian SpA1 | 260,000 | 4,759 | ||||||
JetBlue Airways Corp.2 | 700,000 | 4,683 | ||||||
Corporate Executive Board Co. | 122,710 | 3,873 | ||||||
ITE Group PLC1 | 824,000 | 2,313 | ||||||
American Shipping Co. ASA1,2 | 544,006 | 499 | ||||||
Imagelinx PLC1,2,3 | 21,385,714 | 420 | ||||||
Aker Philadelphia Shipyard ASA1,2,4 | 346,000 | 200 | ||||||
2,863,243 | ||||||||
INFORMATION TECHNOLOGY — 13.28% | ||||||||
Kingboard Chemical Holdings Ltd.1 | 33,764,200 | 170,459 | ||||||
AAC Acoustic Technologies Holdings Inc.1,3 | 70,922,000 | 154,670 | ||||||
Rovi Corp.2 | 1,955,800 | 98,592 | ||||||
Compuware Corp.2,3 | 11,270,000 | 96,133 | ||||||
Hittite Microwave Corp.2,3 | 1,959,000 | 93,346 | ||||||
AOL Inc.2 | 3,335,000 | 82,541 | ||||||
National Instruments Corp. | 2,457,653 | 80,267 | ||||||
Kingboard Laminates Holdings Ltd.1 | 67,009,736 | 68,166 | ||||||
Digital River, Inc.2 | 1,984,200 | 67,542 | ||||||
Monster Worldwide, Inc.2 | 5,151,000 | 66,757 | ||||||
AVEVA Group PLC1 | 2,772,500 | 63,837 | ||||||
FactSet Research Systems, Inc. | 670,000 | 54,357 | ||||||
eAccess Ltd.1 | 63,100 | 48,449 | ||||||
Global Payments Inc. | 1,090,000 | 46,750 | ||||||
Hana Microelectronics PCL1,3 | 53,925,000 | 45,277 | ||||||
Cirrus Logic, Inc.2 | 2,529,668 | 45,129 | ||||||
SINA Corp.2 | 872,000 | 44,106 | ||||||
VTech Holdings Ltd.1 | 4,279,000 | 43,736 | ||||||
OpenTable, Inc.2 | 620,200 | 42,223 | ||||||
Akamai Technologies, Inc.2 | 827,000 | 41,499 | ||||||
PixArt Imaging Inc.1,3 | 8,415,000 | 41,188 | ||||||
MICROS Systems, Inc.2 | 919,000 | 38,901 | ||||||
Intersil Corp., Class A | 3,003,000 | 35,105 | ||||||
Wistron Corp.1 | 19,118,752 | 34,864 | ||||||
Microchip Technology Inc. | 1,100,000 | 34,595 | ||||||
Internet Capital Group, Inc.2,3 | 3,096,000 | 34,149 | ||||||
Genpact Ltd.2 | 1,905,387 | 33,783 | ||||||
Net 1 UEPS Technologies, Inc.2,3 | 2,768,873 | 32,008 | ||||||
FormFactor, Inc.2,3 | 3,715,000 | 31,949 | ||||||
Semtech Corp.2 | 1,580,000 | 31,900 | ||||||
Trimble Navigation Ltd.2 | 900,000 | 31,536 | ||||||
Renesas Electronics Corp.1,2 | 3,650,000 | 31,314 | ||||||
Tripod Technology Corp.1 | 7,980,000 | 30,374 | ||||||
Neopost SA1 | 401,077 | 29,860 | ||||||
Kapsch TrafficCom AG1 | 548,989 | 29,263 | ||||||
RichTek Technology Corp.1 | 3,795,000 | 28,169 | ||||||
LoopNet, Inc.2,3 | 2,278,440 | 26,977 | ||||||
Avid Technology, Inc.2,3 | 2,039,944 | 26,744 | ||||||
Halma PLC1 | 5,365,000 | 26,709 | ||||||
Quantum Corp.2,3 | 12,568,897 | 26,646 | ||||||
Heartland Payment Systems, Inc. | 1,750,000 | 26,635 | ||||||
MKS Instruments, Inc.2 | 1,420,000 | 25,532 | ||||||
Ralink Technology Corp.1 | 5,900,700 | 24,322 | ||||||
Autodesk, Inc.2 | 705,000 | 22,539 | ||||||
Delta Electronics (Thailand) PCL1 | 25,012,000 | 22,440 | ||||||
centrotherm photovoltaics AG1,2 | 530,000 | 22,328 | ||||||
Red Hat, Inc.2 | 531,145 | 21,777 | ||||||
OnMobile Global Ltd.1,2 | 2,837,000 | 21,650 | ||||||
Infotech Enterprises Ltd.1,3 | 6,000,000 | 20,943 | ||||||
Internet Brands, Inc., Class A2 | 1,486,437 | 19,740 | ||||||
Novellus Systems, Inc.2 | 736,000 | 19,563 | ||||||
OBIC Co., Ltd.1 | 102,830 | 19,469 | ||||||
DTS, Inc.2 | 503,900 | 19,234 | ||||||
Cognex Corp. | 694,000 | 18,613 | ||||||
CoreLogic, Inc. | 945,700 | 18,120 | ||||||
Trina Solar Ltd. (ADR)2 | 590,000 | 17,806 | ||||||
Lender Processing Services, Inc. | 528,000 | 17,545 | ||||||
Cadence Design Systems, Inc.2 | 2,235,504 | 17,057 | ||||||
SuccessFactors, Inc.2 | 645,000 | 16,196 | ||||||
Acer Inc.1 | 6,268,262 | 15,921 | ||||||
Green Packet Bhd.1,2,3,4 | 29,583,116 | 8,906 | ||||||
Green Packet Bhd.1,2,3 | 23,016,100 | 6,929 | ||||||
Jabil Circuit, Inc. | 1,044,000 | 15,044 | ||||||
Comverse Technology, Inc.2 | 2,050,000 | 13,797 | ||||||
Dolby Laboratories, Inc., Class A2 | 218,400 | 12,407 | ||||||
KLA-Tencor Corp. | 340,650 | 12,001 | ||||||
Spectris PLC1 | 680,000 | 11,475 | ||||||
THQ Inc.2 | 2,738,033 | 11,007 | ||||||
Celestica Inc.2 | 1,300,000 | 10,959 | ||||||
Perfect World Co., Ltd., Class B (ADR)2 | 404,000 | 10,367 | ||||||
Ultimate Software Group, Inc.2 | 250,000 | 9,660 | ||||||
Solera Holdings, Inc. | 200,000 | 8,832 | ||||||
Global Unichip Corp.1 | 2,204,307 | 7,826 | ||||||
SEEK Ltd.1 | 999,737 | 7,241 | ||||||
Playtech Ltd.1 | 1,012,000 | 6,902 | ||||||
Alpha and Omega Semiconductor Ltd.2 | 487,635 | 5,540 | ||||||
DemandTec, Inc.2 | 536,597 | 5,049 | ||||||
Redington (India) Ltd.1 | 2,498,255 | 5,030 | ||||||
Oakton Ltd.1 | 1,520,000 | 4,121 | ||||||
Micrel, Inc. | 200,000 | 1,972 | ||||||
HSW International, Inc.2,4 | 81,521 | 504 | ||||||
HSW International, Inc.1,2,5 | 29,470 | 130 | ||||||
KAB Distribution Inc.1,2,3 | 9,700,000 | — | ||||||
2,672,999 | ||||||||
FINANCIALS — 11.18% | ||||||||
Dah Sing Financial Holdings Ltd.1,3 | 16,819,400 | 129,943 | ||||||
East West Bancorp, Inc. | 6,937,515 | 112,943 | ||||||
YES BANK Ltd.1 | 13,275,845 | 103,309 | ||||||
Kotak Mahindra Bank Ltd.1 | 7,833,098 | 83,064 | ||||||
Zions Bancorporation | 3,145,000 | 67,177 | ||||||
Manappuram General Finance and Leasing Ltd.1,3 | 19,962,050 | 64,743 | ||||||
Daegu Bank, Ltd.1 | 4,879,110 | 64,234 | ||||||
Synovus Financial Corp. | 23,527,654 | 57,878 | ||||||
Onex Corp. | 2,000,000 | 56,196 | ||||||
City National Corp. | 1,030,450 | 54,686 | ||||||
Hospitality Properties Trust | 2,350,000 | 52,475 | ||||||
First Pacific Co. Ltd.1 | 53,160,000 | 48,305 | ||||||
Industrial and Commercial Bank of China (Asia) Ltd.1 | 12,939,050 | 47,529 | ||||||
Osaka Securities Exchange Co., Ltd.1 | 9,630 | 47,243 | ||||||
Cullen/Frost Bankers, Inc. | 841,000 | 45,305 | ||||||
Banco Industrial e Comercial SA, preferred nominative | 4,934,100 | 45,054 | ||||||
Banco Compartamos, SA, Institución de Banca Múltiple, Class O | 6,750,000 | 43,028 | ||||||
JSE Ltd.1 | 3,990,234 | 42,104 | ||||||
National Financial Partners Corp.2,3 | 3,174,800 | 40,225 | ||||||
Banco Cruzeiro do Sul SA, preferred nominative | 5,543,100 | 39,968 | ||||||
TISCO Financial Group PCL1 | 31,317,000 | 39,932 | ||||||
Northwest Bancshares, Inc. | 3,337,500 | 37,347 | ||||||
Rayonier Inc. | 675,000 | 33,831 | ||||||
Banco ABC Brasil SA, preferred nominative | 3,270,700 | 32,862 | ||||||
IG Group Holdings PLC1 | 4,119,700 | 32,224 | ||||||
BOK Financial Corp. | 710,000 | 32,042 | ||||||
Robinsons Land Corp., Class B1 | 85,348,300 | 31,212 | ||||||
Duff & Phelps Corp., Class A3 | 2,205,300 | 29,705 | ||||||
Savills PLC1 | 5,942,825 | 28,391 | ||||||
First Southern Bancorp, Inc.1,2,3,5 | 1,344,915 | 28,378 | ||||||
Topdanmark A/S1,2 | 222,900 | 28,080 | ||||||
First Niagara Financial Group, Inc. | 2,400,000 | 27,960 | ||||||
Portfolio Recovery Associates, Inc.2 | 413,936 | 26,761 | ||||||
Banco Panamericano SA, preferred nominative | 5,212,500 | 25,878 | ||||||
Bolsa Mexicana de Valores, SAB de CV, Series A | 14,240,000 | 23,877 | ||||||
Busan Bank1 | 1,920,000 | 23,659 | ||||||
Ascendas India Trust1 | 31,124,000 | 23,646 | ||||||
Oriental Financial Group Inc.4 | 1,700,299 | 22,614 | ||||||
Eaton Vance Corp., nonvoting shares | 750,000 | 21,780 | ||||||
Popular, Inc.2 | 7,250,017 | 21,025 | ||||||
Midland Holdings Ltd.1 | 20,200,000 | 18,638 | ||||||
Gruppo MutuiOnline SpA1,3 | 2,388,968 | 17,699 | ||||||
CapitalSource Inc. | 3,300,000 | 17,622 | ||||||
National Penn Bancshares, Inc. | 2,781,549 | 17,385 | ||||||
AEON Mall Co., Ltd.1 | 705,000 | 17,171 | ||||||
Bank of Ireland1,2 | 20,087,500 | 17,060 | ||||||
Home Federal Bancorp, Inc.3 | 1,384,249 | 16,846 | ||||||
Umpqua Holdings Corp. | 1,436,176 | 16,286 | ||||||
Hellenic Exchanges SA1 | 2,259,000 | 16,087 | ||||||
Banque Cantonale Vaudoise1 | 30,850 | 15,820 | ||||||
Kiatnakin Bank PCL1 | 12,200,000 | 15,656 | ||||||
Paraná Banco SA, preferred nominative | 2,318,400 | 14,689 | ||||||
PacWest Bancorp | 760,000 | 14,486 | ||||||
Starwood Property Trust, Inc. | 725,000 | 14,406 | ||||||
First American Financial Corp. | 945,700 | 14,129 | ||||||
SVB Financial Group2 | 333,400 | 14,109 | ||||||
Land and Houses PCL, nonvoting depository receipt1 | 56,718,700 | 13,808 | ||||||
Home BancShares, Inc. | 660,000 | 13,411 | ||||||
Hung Poo Real Estate Development Corp.1 | 9,317,250 | 12,969 | ||||||
Redwood Trust, Inc.2 | 850,000 | 12,291 | ||||||
First Horizon National Corp.2 | 1,077,167 | 12,290 | ||||||
CenterState Banks, Inc. | 1,375,400 | 11,801 | ||||||
Oslo Børs VPS Holding ASA1 | 1,002,335 | 11,078 | ||||||
Frasers Centrepoint Trust1 | 9,800,000 | 11,045 | ||||||
Jyske Bank A/S1,2 | 258,619 | 10,070 | ||||||
First Michigan Bancorp, Inc.1,2,5 | 1,650,000 | 9,900 | ||||||
Colony Financial, Inc. | 490,000 | 9,055 | ||||||
Bao Viet Holdings1 | 2,978,030 | 8,469 | ||||||
Banco Daycoval SA, preferred nominative | 1,166,200 | 7,678 | ||||||
Azimut Holding SpA1 | 774,607 | 7,603 | ||||||
Territorial Bancorp Inc. | 348,433 | 5,864 | ||||||
Islamic Arab Insurance Co. (Salama)1,2 | 21,700,000 | 5,255 | ||||||
Indiabulls Financial Services Ltd.1 | 1,483,436 | 4,692 | ||||||
Central Pattana PCL1 | 4,638,600 | 4,622 | ||||||
FirstMerit Corp. | 146,500 | 2,684 | ||||||
Sterling Financial Corp.1,2,4 | 8,800,000 | 1,760 | ||||||
2,251,047 | ||||||||
HEALTH CARE — 10.34% | ||||||||
Thoratec Corp.2,3 | 3,201,500 | 118,391 | ||||||
Endo Pharmaceuticals Holdings Inc.2 | 3,308,100 | 109,961 | ||||||
Cochlear Ltd.1 | 1,441,910 | 97,982 | ||||||
Alere Inc.2 | 3,136,471 | 97,011 | ||||||
Hikma Pharmaceuticals PLC1 | 6,769,153 | 73,235 | ||||||
American Medical Systems Holdings, Inc.2 | 3,353,000 | 65,652 | ||||||
athenahealth, Inc.2,3 | 1,894,998 | 62,573 | ||||||
Fleury SA, ordinary nominative | 5,027,150 | 62,394 | ||||||
Myriad Genetics, Inc.2 | 3,432,000 | 56,319 | ||||||
Integra LifeSciences Holdings Corp.2 | 1,382,590 | 54,557 | ||||||
Savient Pharmaceuticals, Inc.2 | 2,326,345 | 53,203 | ||||||
Ansell Ltd.1 | 3,800,000 | 49,034 | ||||||
ZOLL Medical Corp.2,3 | 1,514,270 | 48,865 | ||||||
Sysmex Corp.1 | 672,000 | 46,610 | ||||||
Emergency Medical Services Corp., Class A2 | 870,600 | 46,359 | ||||||
ResMed Inc.2 | 1,214,000 | 39,831 | ||||||
ResMed Inc. (CDI)1,2 | 1,980,000 | 6,477 | ||||||
Grifols, SA1 | 3,165,000 | 45,373 | ||||||
Intuitive Surgical, Inc.2 | 155,000 | 43,980 | ||||||
Bangkok Dusit Medical Services PCL1 | 33,161,200 | 43,174 | ||||||
Omega Pharma NV1 | 1,141,350 | 42,557 | ||||||
Auxilium Pharmaceuticals, Inc.2 | 1,696,000 | 42,027 | ||||||
Fisher & Paykel Healthcare Corp. Ltd.1 | 17,247,695 | 37,557 | ||||||
VCA Antech, Inc.2 | 1,730,000 | 36,486 | ||||||
Genomma Lab Internacional, SAB de CV, Series B2 | 17,130,000 | 32,937 | ||||||
Covance Inc.2 | 700,000 | 32,753 | ||||||
Hill-Rom Holdings, Inc. | 889,900 | 31,938 | ||||||
Hologic, Inc.2 | 1,965,000 | 31,460 | ||||||
Emeritus Corp.2 | 1,765,000 | 30,111 | ||||||
Illumina, Inc.2 | 590,000 | 29,028 | ||||||
Invacare Corp. | 1,089,400 | 28,880 | ||||||
Tecan Group AG1 | 415,586 | 28,139 | ||||||
Top Glove Corp. Bhd.1 | 16,324,000 | 27,133 | ||||||
Volcano Corp.2 | 974,000 | 25,305 | ||||||
Virbac SA1 | 183,000 | 25,288 | ||||||
Nakanishi Inc.1 | 226,000 | 24,918 | ||||||
Insulet Corp.2 | 1,645,000 | 23,260 | ||||||
Martek Biosciences Corp.2 | 1,015,000 | 22,969 | ||||||
Greatbatch, Inc.2 | 990,400 | 22,967 | ||||||
RHÖN-KLINIKUM AG, non-registered shares1 | 1,015,000 | 22,394 | ||||||
NuVasive, Inc.2 | 596,836 | 20,973 | ||||||
MEDICA SA1,2 | 1,070,000 | 20,234 | ||||||
Abaxis, Inc.2 | 834,700 | 19,282 | ||||||
JSC Pharmstandard (GDR)1,2 | 842,651 | 18,879 | ||||||
Sonic Healthcare Ltd.1 | 1,552,967 | 16,533 | ||||||
Beckman Coulter, Inc. | 318,300 | 15,530 | ||||||
Tsumura & Co.1 | 490,000 | 15,238 | ||||||
Mettler-Toledo International Inc.2 | 115,000 | 14,311 | ||||||
Odontoprev SA, ordinary nominative | 1,157,600 | 13,608 | ||||||
Eurand NV2 | 1,316,362 | 12,953 | ||||||
EGIS Nyrt.1 | 107,000 | 11,743 | ||||||
Amylin Pharmaceuticals, Inc.2 | 539,000 | 11,238 | ||||||
TECHNE Corp. | 175,000 | 10,803 | ||||||
Vital Images, Inc.2,3 | 792,000 | 10,478 | ||||||
Ipca Laboratories Ltd.1 | 1,295,000 | 8,941 | ||||||
Array BioPharma Inc.2 | 1,920,000 | 6,202 | ||||||
ArthroCare Corp.2 | 200,000 | 5,436 | ||||||
Laboratorios Farmacéuticos ROVI, SA1 | 710,000 | 4,915 | ||||||
Merck Ltd.1 | 299,383 | 4,709 | ||||||
Movetis NV1,2 | 160,000 | 4,142 | ||||||
Wright Medical Group, Inc.2 | 285,000 | 4,107 | ||||||
Piramal Healthcare Ltd.1 | 320,000 | 3,556 | ||||||
TranS1 Inc.2,3 | 1,338,731 | 3,307 | ||||||
Newron Pharmaceuticals SpA1,2,3 | 257,000 | 1,700 | ||||||
Newron Pharmaceuticals SpA1,2,3,4 | 142,000 | 939 | ||||||
Krka, dd, Novo mesto1 | 27,820 | 2,407 | ||||||
Exiqon A/S1,2 | 360,368 | 392 | ||||||
Allied Medical Ltd.1,2,5 | 147,030 | 3 | ||||||
2,081,647 | ||||||||
MATERIALS — 7.99% | ||||||||
Rhodia SA1 | 3,196,043 | 76,900 | ||||||
AptarGroup, Inc. | 1,484,682 | 67,805 | ||||||
African Minerals Ltd.1,2 | 10,904,721 | 67,757 | ||||||
Centamin Egypt Ltd.1,2 | 23,540,037 | 65,482 | ||||||
Centamin Egypt Ltd. (CAD denominated)2 | 3,000 | 8 | ||||||
Yingde Gases Group Co. Ltd.1,2 | 69,190,000 | 65,215 | ||||||
FUCHS PETROLUB AG1 | 541,360 | 59,303 | ||||||
Aquarius Platinum Ltd.1 | 8,611,111 | 47,221 | ||||||
Aquarius Platinum Ltd. (GBP denominated)1 | 1,931,493 | 10,347 | ||||||
Harry Winston Diamond Corp. (CAD denominated)2,3 | 4,292,400 | 49,937 | ||||||
Harry Winston Diamond Corp.2,3 | 372,600 | 4,337 | ||||||
Talvivaara Mining Co. PLC1,2 | 6,773,800 | 52,450 | ||||||
Scotts Miracle-Gro Co., Class A | 879,000 | 45,471 | ||||||
James Hardie Industries SE1,2 | 8,245,000 | 44,631 | ||||||
Lynas Corp. Ltd.1,2 | 30,980,000 | 40,877 | ||||||
Midas Holdings Ltd.1 | 45,417,000 | 34,430 | ||||||
Midas Holdings Ltd. (HKD denominated)1 | 8,353,000 | 6,332 | ||||||
Bemis Co., Inc. | 1,225,000 | 38,894 | ||||||
Eastern Platinum Ltd.2 | 24,721,450 | 34,118 | ||||||
Eastern Platinum Ltd.2,4 | 2,500,000 | 3,450 | ||||||
Coal of Africa Ltd.1,2,3 | 27,975,000 | 36,184 | ||||||
Kenmare Resources PLC1,2 | 95,876,802 | 30,338 | ||||||
Kenmare Resources PLC1,2,4 | 14,095,980 | 4,460 | ||||||
Croda International PLC1 | 1,485,000 | 34,629 | ||||||
OCI Materials Co., Ltd.1 | 370,000 | 34,364 | ||||||
China Forestry Holdings Co., Ltd.1 | 78,236,000 | 34,208 | ||||||
African Petroleum Corp. Ltd.2 | 50,454,545 | 34,137 | ||||||
Jaguar Mining Inc.2,3 | 5,035,000 | 32,542 | ||||||
Gem Diamonds Ltd.1,2,3 | 10,255,000 | 32,047 | ||||||
Symrise AG1 | 1,042,500 | 29,020 | ||||||
China Shanshui Cement Group Ltd.1 | 46,337,000 | 28,429 | ||||||
LANXESS AG1 | 500,000 | 27,443 | ||||||
Petropavlovsk PLC1 | 1,553,901 | 27,148 | ||||||
Huabao International Holdings Ltd.1 | 17,050,000 | 26,572 | ||||||
Mineral Deposits Ltd.1,2 | 14,943,608 | 15,094 | ||||||
Mineral Deposits Ltd. (CAD denominated)2 | 10,128,000 | 10,140 | ||||||
RPM International, Inc. | 1,200,000 | 23,904 | ||||||
OCI Co. Ltd.1 | 75,514 | 23,412 | ||||||
Martin Marietta Materials, Inc. | 300,000 | 23,091 | ||||||
PT Indocement Tunggal Prakarsa Tbk1 | 10,995,000 | 22,715 | ||||||
Vicat S.A.1 | 316,000 | 22,353 | ||||||
Siam City Cement PCL1 | 2,654,000 | 20,962 | ||||||
Cheil Industries Inc.1 | 235,000 | 20,569 | ||||||
Sundance Resources Ltd.1,2 | 66,575,000 | 15,945 | ||||||
Sino-Forest Corp.2 | 900,000 | 14,993 | ||||||
Buzzi Unicem SpA1 | 1,370,000 | 14,487 | ||||||
Yamana Gold Inc. | 1,200,000 | 13,681 | ||||||
Gran Colombia Gold SA2,3 | 45,056,000 | 13,356 | ||||||
AK Steel Holding Corp. | 905,000 | 12,498 | ||||||
Sika AG, non-registered shares1 | 6,750 | 12,461 | ||||||
PT Indah Kiat Pulp & Paper Tbk1,2 | 47,250,000 | 12,283 | ||||||
Obtala Resources Ltd.1,2,3 | 8,500,000 | 5,474 | ||||||
Obtala Resources Ltd.1,2,3,4 | 7,950,000 | 5,120 | ||||||
Gold Wheaton Gold Corp.2,4 | 2,282,400 | 7,010 | ||||||
Gold Wheaton Gold Corp.2 | 630,000 | 1,935 | ||||||
Calgon Carbon Corp.2 | 600,000 | 8,700 | ||||||
Mountain Province Diamonds Inc.2,4 | 1,904,762 | 8,590 | ||||||
TFS Corporation Ltd1 | 9,851,120 | 8,571 | ||||||
Bellzone Mining PLC1,2 | 8,006,138 | 8,497 | ||||||
Titan Cement Co. SA1 | 400,000 | 8,078 | ||||||
Vatukoula Gold Mines PLC1,2,4 | 160,704,054 | 7,678 | ||||||
STR Holdings, Inc.2 | 300,000 | 6,462 | ||||||
Rusoro Mining Ltd.2,4 | 20,000,000 | 4,568 | ||||||
Rusoro Mining Ltd.2 | 1,437,000 | 328 | ||||||
Birla Corp. Ltd.1 | 484,500 | 4,746 | ||||||
J.K. Cement Ltd.1 | 945,000 | 3,594 | ||||||
1,607,781 | ||||||||
ENERGY — 6.13% | ||||||||
Pacific Rubiales Energy Corp.2 | 4,871,300 | 136,968 | ||||||
Gulf Keystone Petroleum Ltd.1,2,3.4 | 51,987,632 | 114,528 | ||||||
Niko Resources Ltd. | 920,000 | 90,543 | ||||||
Banpu PCL1 | 3,617,500 | 85,833 | ||||||
FMC Technologies, Inc.2 | 1,115,000 | 76,143 | ||||||
Heritage Oil Ltd.1 | 11,898,000 | 55,565 | ||||||
Concho Resources Inc.2 | 725,000 | 47,973 | ||||||
Core Laboratories NV | 540,000 | 47,542 | ||||||
Zhaikmunai LP (GDR)1,2,4 | 5,540,000 | 44,313 | ||||||
Zhaikmunai LP (GDR)1,2 | 353,650 | 2,829 | ||||||
Petroleum Development Corp.2,3 | 1,537,000 | 42,421 | ||||||
Rosetta Resources Inc.2 | 1,625,000 | 38,171 | ||||||
Uranium One Inc.2 | 10,305,500 | 34,756 | ||||||
Cimarex Energy Co. | 481,500 | 31,866 | ||||||
Karoon Gas Australia Ltd.1,2 | 4,200,000 | 30,650 | ||||||
Comstock Resources, Inc.2 | 1,280,000 | 28,787 | ||||||
Shengli Oil & Gas Pipe Holdings Ltd.1,3 | 137,365,500 | 28,657 | ||||||
Bill Barrett Corp.2 | 700,000 | 25,200 | ||||||
Petroceltic International PLC1,2,3 | 137,014,652 | 23,677 | ||||||
Exillon Energy PLC1,2,3 | 7,369,660 | 23,340 | ||||||
Miclyn Express Offshore Ltd.1,2 | 13,550,000 | 22,934 | ||||||
Gran Tierra Energy Inc.2 | 2,450,000 | 18,914 | ||||||
Tethys Petroleum Ltd.2,3 | 11,505,100 | 18,227 | ||||||
Dockwise Ltd.1,2 | 722,252 | 17,936 | ||||||
Harvest Natural Resources, Inc.2 | 1,650,000 | 17,193 | ||||||
Eurasia Drilling Co. Ltd. (GDR)1 | 690,000 | 16,041 | ||||||
Wellstream Holdings PLC1 | 1,270,000 | 15,292 | ||||||
WorleyParsons Ltd.1 | 589,556 | 12,679 | ||||||
Value Creation Inc.1,2,5 | 4,529,354 | 11,887 | ||||||
Borders & Southern Petroleum PLC1,2 | 10,017,000 | 11,342 | ||||||
Schoeller-Bleckmann Oilfield Equipment AG1 | 173,000 | 11,317 | ||||||
Oceaneering International, Inc.2 | 205,000 | 11,041 | ||||||
Maple Energy PLC1,2,3 | 9,390,000 | 9,145 | ||||||
Petroleum Geo-Services ASA1,2 | 760,000 | 8,676 | ||||||
BNK Petroleum Inc.2,4 | 2,000,000 | 4,665 | ||||||
BNK Petroleum Inc.2 | 1,590,380 | 3,710 | ||||||
Petrodorado Energy Ltd.2,3 | 22,400,000 | 7,402 | ||||||
Regal Petroleum PLC1,2,3 | 21,693,000 | 6,306 | ||||||
High Arctic Energy Services Inc.2 | 1,923,000 | 449 | ||||||
1,234,918 | ||||||||
CONSUMER STAPLES — 4.32% | ||||||||
Drogasil SA, ordinary nominative3 | 3,253,500 | 83,068 | ||||||
Lindt & Sprüngli AG1 | 1,369 | 38,251 | ||||||
Lindt & Sprüngli AG, participation certificate1 | 11,121 | 26,668 | ||||||
China Yurun Food Group Ltd.1 | 15,660,000 | 58,105 | ||||||
Ralcorp Holdings, Inc.2 | 765,900 | 44,790 | ||||||
TreeHouse Foods, Inc.2 | 880,000 | 40,568 | ||||||
Emami Ltd.1 | 3,950,000 | 40,427 | ||||||
Kernel Holding SA1,2 | 1,618,150 | 36,709 | ||||||
CP ALL PCL1 | 25,948,500 | 36,137 | ||||||
Godrej Consumer Products Ltd.1 | 3,978,150 | 35,697 | ||||||
Hite Brewery Co., Ltd.1 | 305,000 | 33,971 | ||||||
ARYZTA AG1 | 768,000 | 33,828 | ||||||
Davide Campari-Milano SpA1 | 5,120,000 | 30,640 | ||||||
Colgate-Palmolive (India) Ltd.1 | 1,574,824 | 30,541 | ||||||
Strauss Group Ltd.1 | 1,863,350 | 27,790 | ||||||
MARR SpA1 | 2,462,365 | 26,563 | ||||||
Emmi AG1 | 136,100 | 22,577 | ||||||
Hypermarcas SA, ordinary nominative2 | 1,400,000 | 21,753 | ||||||
Nong Shim Co., Ltd.1 | 113,716 | 21,732 | ||||||
Coca-Cola Icecek AS, Class C1 | 1,672,785 | 20,456 | ||||||
PZ Cussons PLC1 | 3,347,947 | 19,308 | ||||||
Church & Dwight Co., Inc. | 290,174 | 18,844 | ||||||
AMOREPACIFIC Corp.1 | 17,600 | 17,688 | ||||||
Thai Union Frozen Products PCL1 | 8,600,000 | 16,340 | ||||||
Poslovni sistem Mercator, dd1 | 62,112 | 12,786 | ||||||
Asian Citrus Holdings Ltd.1 | 12,890,000 | 12,447 | ||||||
Wumart Stores, Inc., Class H1 | 5,205,000 | 12,425 | ||||||
Origin Enterprises PLC1 | 3,213,300 | 12,052 | ||||||
Philip Morris CR as1 | 22,200 | 11,487 | ||||||
Tassal Group Ltd.1 | 6,500,000 | 8,802 | ||||||
GlaxoSmithKline Consumer Healthcare Ltd.1 | 183,670 | 8,315 | ||||||
Eurocash SA1 | 877,000 | 7,930 | ||||||
868,695 | ||||||||
UTILITIES — 1.79% | ||||||||
ENN Energy Holdings Ltd.1,3 | 69,350,000 | 198,815 | ||||||
Hyflux Ltd1 | 15,602,000 | 36,879 | ||||||
AES Tietê SA, preferred nominative | 1,765,000 | 23,565 | ||||||
KSK Energy Ventures Ltd.1,2 | 5,700,000 | 22,035 | ||||||
Glow Energy PCL1 | 13,654,000 | 19,243 | ||||||
Manila Water Co., Inc.1 | 41,200,000 | 17,810 | ||||||
CESC Ltd.1 | 1,746,400 | 14,937 | ||||||
Greenko Group PLC1,2 | 4,214,000 | 10,311 | ||||||
Thai Tap Water Supply PCL1 | 49,600,000 | 9,306 | ||||||
Indiabulls Power Ltd.1,2 | 12,947,069 | 8,332 | ||||||
361,233 | ||||||||
TELECOMMUNICATION SERVICES — 0.93% | ||||||||
tw telecom inc.2 | 5,635,000 | 104,642 | ||||||
Leap Wireless International, Inc.2 | 2,000,000 | 24,700 | ||||||
Total Access Communication PCL1 | 17,046,000 | 23,574 | ||||||
Daisy Group PLC1,2,4 | 10,000,000 | 15,717 | ||||||
Partner Communications Co. Ltd.1 | 630,000 | 11,695 | ||||||
StarHub Ltd1 | 3,246,840 | 6,377 | ||||||
186,705 | ||||||||
MISCELLANEOUS — 4.98% | ||||||||
Other common stocks in initial period of acquisition | 1,002,429 | |||||||
Total common stocks (cost: $13,862,648,000) | 18,283,715 | |||||||
Rights & warrants — 0.06% | ||||||||
INDUSTRIALS — 0.03% | ||||||||
Goodpack Ltd., warrants, expire 20122,3 | 5,272,000 | 4,891 | ||||||
INFORMATION TECHNOLOGY — 0.01% | ||||||||
Kingboard Chemical Holdings Ltd., warrants, expire 20122 | 4,086,320 | 2,549 | ||||||
MATERIALS — 0.02% | ||||||||
Gran Colombia Gold SA, warrants, expire 20152,3 | 22,528,000 | 2,956 | ||||||
HEALTH CARE — 0.00% | ||||||||
BG Medicine, Inc., warrants, expire 20201,2,3,5 | 57,692 | 206 | ||||||
Fluidigm Corp., warrant, expires 20191,2,3,5 | 1 | — | ||||||
206 | ||||||||
MISCELLANEOUS — 0.00% | ||||||||
Other rights & warrants in initial period of acquisition | 564 | |||||||
Total rights & warrants (cost: $3,077,000) | 11,166 | |||||||
Shares or | ||||||||
Convertible securities — 0.41% | principal amount | |||||||
FINANCIALS — 0.20% | ||||||||
Sterling Financial Corp., Series D, convertible preferred1,2,4 | 220,000 | 20,240 | ||||||
Synovus Financial Corp. 8.25% convertible preferred 2013, units | 522,700 | 12,503 | ||||||
National Financial Partners Corp. 4.00% convertible notes 20173,4 | $ | 4,000,000 | 4,740 | |||||
First Southern Bancorp, Inc., Series C, convertible preferred1,2,3,5 | 2,299 | 2,299 | ||||||
39,782 | ||||||||
HEALTH CARE — 0.14% | ||||||||
Fluidigm Corp., Series E, convertible preferred1,2,3,5 | 1,309,740 | 14,370 | ||||||
BG Medicine, Inc., Series D, convertible preferred1,2,3,5 | 1,538,462 | 13,754 | ||||||
BG Medicine, Inc. 12.00% convertible notes 20111,3,5 | $ | 500,000 | 500 | |||||
28,624 | ||||||||
INDUSTRIALS — 0.03% | ||||||||
AMR Corp. 6.25% convertible notes 2014 | $ | 7,000,000 | 6,842 | |||||
ENERGY — 0.03% | ||||||||
Harvest Natural Resources, Inc. 8.25% convertible notes 2013 | $ | 3,000,000 | 6,049 | |||||
TELECOMMUNICATION SERVICES — 0.01% | ||||||||
tw telecom inc. 2.375% convertible debentures 2026 | $ | 1,600,000 | 1,876 | |||||
CONSUMER DISCRETIONARY — 0.00% | ||||||||
Spot Runner, Inc., Series C, convertible preferred1,2,5 | 1,626,016 | 122 | ||||||
Total convertible securities (cost: $85,566,000) | 83,295 | |||||||
Principal amount | ||||||||
Bonds & notes — 1.74% | (000 | ) | ||||||
BONDS & NOTES OF U.S. GOVERNMENT — 1.69% | ||||||||
U.S. Treasury 3.50% 2020 | $ | 229,635 | 249,306 | |||||
U.S. Treasury 4.375% 2040 | 79,790 | 89,626 | ||||||
338,932 | ||||||||
FINANCIALS — 0.05% | ||||||||
Zions Bancorporation 5.50% 2015 | 3,510 | 3,470 | ||||||
Zions Bancorporation 6.00% 2015 | 4,055 | 4,031 | ||||||
CIT Group Inc., Term Loan 3, 6.25% 20156,7,8 | 3,191 | 3,222 | ||||||
10,723 | ||||||||
Total bonds & notes (cost: $331,075,000) | 349,655 | |||||||
Short-term securities — 6.68% | ||||||||
Bank of Nova Scotia 0.21%–0.275% due 10/5–11/17/2010 | 261,800 | 261,737 | ||||||
Novartis Finance Corp. 0.23%–0.27% due 10/12–12/1/20104 | 134,000 | 133,971 | ||||||
Société Générale North America, Inc. 0.26%–0.27% due 10/8–12/1/2010 | 130,000 | 129,958 | ||||||
Fannie Mae 0.25%–0.30% due 12/22/2010–1/18/2011 | 129,300 | 129,241 | ||||||
Toronto-Dominion Holdings USA Inc. 0.21%–0.24% due 10/13/2010–1/14/20114 | 106,400 | 106,360 | ||||||
Freddie Mac 0.23%–0.265% due 10/5–12/21/2010 | 90,700 | 90,672 | ||||||
Jupiter Securitization Co., LLC 0.26% due 10/18–12/2/20104 | 77,300 | 77,274 | ||||||
Shell International Finance BV 0.19%–0.20% due 10/14–10/25/20104 | 71,000 | 70,992 | ||||||
General Electric Co. 0.17% due 10/1/2010 | 67,000 | 67,000 | ||||||
Federal Home Loan Bank 0.19%–0.22% due 10/15–11/17/2010 | 57,300 | 57,294 | ||||||
Straight-A Funding LLC 0.22% due 10/25/20104 | 54,400 | 54,392 | ||||||
International Bank for Reconstruction and Development 0.19% due 1/7/2011 | 51,900 | 51,873 | ||||||
Private Export Funding Corp. 0.23% due 11/8/20104 | 40,000 | 39,990 | ||||||
Wal-Mart Stores Inc. 0.20% due 11/2/20104 | 39,500 | 39,493 | ||||||
Abbott Laboratories 0.20% due 11/1/20104 | 34,800 | 34,793 | ||||||
Total short-term securities (cost: $1,345,004,000) | 1,345,040 | |||||||
Total investment securities (cost: $15,627,370,000) | 20,072,871 | |||||||
Other assets less liabilities | 59,363 | |||||||
Net assets | $ | 20,132,234 |
“Miscellaneous” securities include holdings in their initial period of acquisition that have not previously been publicly disclosed.
1Valued under fair value procedures adopted by authority of the board of directors. The total value of all such securities, including those in “Miscellaneous,” was $9,622,362,000, which represented 47.80% of the net assets of the fund. This amount includes $9,501,434,000 related to certain securities trading outside the U.S. whose values were adjusted as a result of significant market movements following the close of local trading.
2Security did not produce income during the last 12 months.
3Represents an affiliated company as defined under the Investment Company Act of 1940.
4Acquired in a transaction exempt from registration under the Securities Act of 1933. May be resold in the U.S. in transactions exempt from registration, normally to qualified institutional buyers. The total value of all such securities was $896,479,000, which represented 4.45% of the net assets of the fund.
5Acquired in a transaction exempt from registration under the Securities Act of 1933. May be subject to legal or contractual restrictions on resale. Further details on these holdings appear below.
Acquisition date(s) | Cost (000) | Value (000) | Percent of net assets | ||||||||||
First Southern Bancorp, Inc. | 12/17/2009 | $ | 28,378 | $ | 28,378 | .14 | % | ||||||
First Southern Bancorp, Inc., Series C, convertible preferred | 12/17/2009 | 2,299 | 2,299 | .01 | |||||||||
BG Medicine, Inc., Series D, convertible preferred | 7/9/2008 | 10,000 | 13,754 | .07 | |||||||||
BG Medicine, Inc. 12.00% convertible notes 2011 | 3/30/2010–9/27/2010 | 500 | 500 | .01 | |||||||||
BG Medicine, Inc., warrants, expire 2020 | 3/30/2010–9/27/2010 | — | 206 | .00 | |||||||||
Fluidigm Corp., Series E, convertible preferred | 12/21/2006–11/16/2009 | 18,337 | 14,370 | .07 | |||||||||
Fluidigm Corp., warrant, expires 2019 | 8/17/2009 | — | — | .00 | |||||||||
Value Creation Inc. | 8/25/2005–9/1/2006 | 33,229 | 11,887 | .06 | |||||||||
First Michigan Bancorp, Inc. | 4/28/2010 | 9,900 | 9,900 | .05 | |||||||||
Spot Runner, Inc. | 10/25/2006–3/20/2008 | 15,071 | 225 | .00 | |||||||||
Spot Runner, Inc., Series C, convertible preferred | 10/25/2006 | 6,000 | 122 | .00 | |||||||||
HSW International, Inc. | 12/17/2007 | 907 | 130 | .00 | |||||||||
Forbes Travel Guide, Inc. | 12/17/2007 | 24 | 25 | .00 | |||||||||
Allied Medical Ltd. | 8/26/2005–11/15/2005 | 8 | 3 | .00 | |||||||||
Fontainebleau Resorts LLC, Class A, nonvoting units | 10/5/2005–6/1/2007 | 21,500 | — | .00 | |||||||||
Total restricted securities | $ | 146,153 | $ | 81,799 | .41 | % |
6Principal payments may be made periodically. Therefore, the effective maturity date may be earlier than the stated maturity date.
7Coupon rate may change periodically.
8Loan participations and assignments; may be subject to legal or contractual restrictions on resale. The total value of all such loans was $3,222,000, which represented .02% of the net assets of the fund.
Key to abbreviations
ADR = American Depositary Receipts
CDI = CREST Depository Interest
GDR = Global Depositary Receipts
CAD = Canadian dollars
GBP = British pounds
HKD = Hong Kong dollars
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 the investment objectives, risks, charges and expenses of the American Funds. This and other important information is contained in the fund’s summary prospectus and 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 800/421-0180 or visit the American Funds website at americanfunds.com.
MFGEFP-935-1110O-S25530
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON INVESTMENT PORTFOLIO
To the Shareholders and Board of Directors of
SMALLCAP World Fund, Inc.:
We have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the financial statements of SMALLCAP World Fund, Inc. (the “Fund”) as of September 30, 2010, and for the year then ended and have issued our report thereon dated November 10, 2010, which report and financial statements are included in Item 1 of this Certified Shareholder Report on Form N-CSR. Our audit also included the Fund’s investment portfolio (the “Schedule”) as of September 30, 2010, appearing in Item 6 of this Form N-CSR. This Schedule is the responsibility of the Fund’s management. Our responsibility is to express an opinion based on our audit. In our opinion, the Schedule referred to above, when considered in relation to the basic financial statem ents taken as a whole of the Fund referred to above, presents fairly, in all material respects, the information set forth therein.
DELOITTE & TOUCHE LLP
Costa Mesa, California
November 10, 2010
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 directors 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 directors. 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 second fiscal quarter of the 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) | The Code of Ethics that is the subject of the disclosure required by Item 2 is attached as an exhibit hereto. |
(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.
SMALLCAP WORLD FUND, INC. | |
By /s/ Paul F. Roye | |
Paul F. Roye, Executive Vice President and Principal Executive Officer | |
Date: November 30, 2010 |
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/ Paul F. Roye |
Paul F. Roye, Executive Vice President and Principal Executive Officer |
Date: November 30, 2010 |
By /s/ Jeffrey P. Regal |
Jeffrey P. Regal, Treasurer and Principal Financial Officer |
Date: November 30, 2010 |