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: 811-5888
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, 2004
Date of reporting period: March 31, 2004
Chad L. Norton
Capital Research and Management Company
333 South Hope Street
Los Angeles, California 90071
(name and address of agent for service)
Copies to:
Michael J. Fairclough, Esq.
O'Melveny & Myers LLP
400 South Hope Street
Los Angeles, California 90071
(Counsel for the Registrant)
ITEM 1 - Reports to Stockholders
[logo - American Funds(R)]
The right choice for the long term(R)
SMALLCAP World Fund
[cover: global view of Asia]
Semi-annual report for the six months ended March 31, 2004
SMALLCAP WORLD FUND(R) 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 29 American Funds, the nation's third-largest mutual
fund family. For more than seven decades, 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.
INVESTMENT HIGHLIGHTS
Cumulative total returns for periods ended March 31, 2004, with all
distributions reinvested
GLOBAL SMALL-
SMALLCAP S&P/CITIGROUP WORLD COMPANY MUTUAL
WORLD FUND SMALLCAP INDEX FUNDS AVERAGE
Six months +23.8% +25.1% +21.1%
1 year +69.9 +72.8 +63.0
5 years +42.2 +69.5 +52.2
10 years +134.0 +121.8 +104.2
Since fund's inception on April 30, 1990 +302.4 +228.5 +241.6
Since fund's inception (annualized) +10.5 +8.9 +9.2
All market indexes cited in this report are unmanaged and include reinvestment
of all distributions. The S&P/Citigroup World Smallcap Index (formerly the
Salomon Smith Barney World Smallcap Index) tracks about 5,000 publicly traded
stocks in 28 countries with market capitalizations between $100 million and $1.5
billion. The global small-company mutual funds average is computed by Lipper.
Here are the average annual total returns on a $1,000 investment with all
distributions reinvested for periods ended March 31, 2004:
CLASS A SHARES 1 YEAR 5 YEARS 10 YEARS
Reflecting 5.75% maximum sales charge + 60.18% + 6.03% + 8.23%
Results for other share classes can be found on page 36. Please see the inside
back cover for important information about other share classes.
FIGURES SHOWN ON THESE TWO PAGES ARE PAST RESULTS FOR CLASS A SHARES AND ARE NOT
PREDICTIVE OF RESULTS IN 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 THE MOST CURRENT INFORMATION AND MONTH-END RESULTS, VISIT
AMERICANFUNDS.COM. FUND RESULTS SHOWN, UNLESS OTHERWISE INDICATED, ARE AT NET
ASSET VALUE. IF A SALES CHARGE (MAXIMUM 5.75%) HAD BEEN DEDUCTED, THE RESULTS
WOULD HAVE BEEN LOWER.
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. Investing outside the United States is subject to additional risks, such
as currency fluctuations and political instability, which are detailed in the
fund's prospectus. Investing in small-capitalization stocks can involve greater
risk than is customarily associated with investing in stocks of larger, more
established companies.
FELLOW SHAREHOLDERS:
SMALLCAP World Fund recorded robust results for the six months ended March 31,
2004, as small cap stocks generally continued a year-long surge even as the
overall stock market flattened in recent months.
For the period, the fund returned 23.8% with dividends reinvested. As you can
see in the Investment Highlights table at left, that was slightly behind the
25.1% return of its main benchmark, the S&P/Citigroup World Smallcap Index
(although that unmanaged index includes no expenses) and slightly ahead of the
21.1% return of its Lipper peer group. The fund's results exceeded by a wide
margin the unmanaged Standard & Poor's 500 Composite Index (+14.1%), which
measures large cap stocks.
The six months complete what a Lehman Brothers analyst calls the best 12 months
small-company stocks have ever recorded, gaining 72.8% as measured by the
Citigroup index. It's also the best period relative to large cap stocks (the S&P
500 returned roughly half as much, 35.1%). SMALLCAP World Fund, with its
intensive research effort, participated fully in the rebound, which came after
three years of very difficult times. The fund rose 69.9% compared with 63.0% for
the Lipper average.
[Begin Sidebar]
WHERE ARE SMALLCAP'S HOLDINGS LOCATED?
[begin pie chart]
Percent of
AS OF MARCH 31, 2004 net assets
o United States 48.4%
o Asia & Pacific Basin 24.3
o Europe 14.6
o Other (including Canada
& Latin America) 6.1
o Cash & equivalents 6.6
[end pie chart]
[begin pie chart]
Percent of
AS OF SEPTEMBER 30, 2003 net assets
o United States 50.2%
o Asia & Pacific Basin 20.2
o Europe 15.1
o Other (including Canada
& Latin America) 6.5
o Cash & equivalents 8.0
[end pie chart]
[End Sidebar]
Without understating the importance of that 12-month result, we do want to point
out that coming as it did on the heels of that long period of sharply negative
returns, taking a longer view is important. What pleases us most is that it has
enhanced a respectable longer term and lifetime set of results, as the
Investment Highlights table also shows.
RIDING A BROAD GLOBAL TREND
Clearly, two things that have helped us recently are the breadth of the market
gains among smaller stocks as well as a switch from headwinds to tailwinds in
our non-U.S. investment activities. Economic growth, particularly in Japan,
China and the entire crescent from India to Taiwan and South Korea, has
substantially added to returns. The strength of many non-U.S. currencies against
the dollar also has been an important contributor. Many areas contributed to the
uptrend. In fact, of the securities in the fund for the full six months, 80%
showed price gains for the period.
Internet stocks such as Ask Jeeves, the fund's second-largest holding (up 84%),
did well in the period, along with oil and natural resources stocks such as
Wheaton River Minerals (up 114%). Our investments in companies in emerging
markets also were important contributors. Technology company stocks, which did
well early in the general market recovery, tended to lag in the recent period.
TAKING ADVANTAGE OF OUR GLOBAL RESOURCES
We have said many times that the global reach of SMALLCAP World Fund -- as
opposed to being simply a U.S. fund -- has strengthened our hand in seeking the
best possible results. To that end, the fund has augmented its already strong
global research effort. Currently, it can call on 88 research analysts of the
fund's adviser, Capital Research and Management Company. Capital Research
investment professionals hail from more than two dozen countries and speak as
many languages.
In addition, the fund has raised the maximum market capitalization for companies
to be considered for the portfolio to $2 billion from $1.5 billion -- while
keeping the lower figure for the emerging market world and the minimum at $50
million. When we started the fund, the limit was $1 billion and we have raised
it in stages to reflect rising valuations in the small cap universe.
LOOKING AHEAD
We remain especially optimistic about Japan, India and other growing Asian
economies. We continue to view long-term prospects in China as quite favorable.
In the near-term, however, Chinese stocks are going through a correction. Hence,
we are being cautious and focusing more on companies with exposure to the entire
booming Asian economy. The fund currently is underweighted in Europe, where we
are less sanguine about the outlook for smaller companies. We remain confident
about continued growth in the U.S. economy.
At the same time, don't expect small cap stock prices to continue expanding at
the pace they have off the March 2003 bottom. An upturn in business often has a
more dramatic immediate impact on smaller companies than on larger ones, and the
fund has benefited from that in the past year. Currently, there is uncertainty
in Iraq and signs that with the first synchronized expansion in world economies
in many years, rising inflation and interest rates may be on the horizon.
Nonetheless, we are optimistic that the global reach of this fund should help it
participate in small-company growth wherever it is strongest.
We appreciate the patience our investors have shown in maintaining a long-term
view, as we do in choosing companies for this fund. We also welcome all our new
shareholders.
Cordially,
/s/ Gordon Crawford /s/ Gregory W. Wendt
Gordon Crawford Gregory W. Wendt
Chairman of the Board President
May 12, 2004
Past results are not predictive of results in future periods. Current and future
results may be lower or higher than past results. Share prices and returns will
vary, so investors may lose money.
For current information about the fund, visit americanfunds.com.
INVESTMENT PORTFOLIO March 31, 2004 unaudited
[begin pie chart]
Percent of
INDUSTRY DIVERSIFICATION net assets
Commercial Services & Supplies 6.8 %
Media 5.9
Internet Software & Services 5.2
Hotels, Restaurants & Leisure 4.8
Semiconductors & Semiconductor Equipment 4.7
All other industries 66.0
Cash & equivalents 6.6
[end pie chart]
Percent of
LARGEST EQUITY HOLDINGS net assets
Michaels Stores 1.16 %
Ask Jeeves .95
Performance Food Group .91
Sylvan Learning Systems .89
HDFC Bank .89
Medicis Pharmaceutical .76
CNET Networks .74
Yankee Candle Company .74
Venture .74
Gemstar-TV Guide International .71
MARKET
VALUE
EQUITY SECURITIES (common and preferred stocks) - 93.27% SHARES (000)
COMMERCIAL SERVICES & SUPPLIES - 6.84%
Sylvan Learning Systems, Inc. (USA) (1) (2) 2,820,000 $ 99,010
School Specialty, Inc. (USA) (1) (2) 1,210,000 43,040
Vedior NV (Netherlands) 2,948,571 42,858
United Rentals, Inc. (USA) (1) 2,391,900 42,504
Downer EDI Ltd. (Australia) (2) 16,460,012 39,315
John H. Harland Co. (USA) 1,150,000 35,788
Education Management Corp. (USA) (1) 1,120,000 35,650
Herman Miller, Inc. (USA) 1,275,000 33,953
Sumitomo Real Estate Sales Co., Ltd. (Japan) 700,000 33,580
ChoicePoint Inc. (USA) (1) 850,000 32,325
Brinks Company (USA) 1,100,000 30,338
Imagistics International Inc. (USA) (1) 626,100 27,580
Kroll Inc. (USA) (1) 1,000,000 26,850
Arbitron Inc. (USA) (1) 621,060 25,004
Corrections Corporation of America (USA) (1) 700,000 24,920
Buhrmann NV (Netherlands) 2,500,000 22,596
Tetra Tech, Inc. (USA) (1) 1,000,000 21,460
Kelly Services, Inc., Class A (USA) 700,000 20,727
Techem AG (Germany) (1) 947,300 20,153
S1 Corp. (South Korea) 675,940 16,040
Duratek, Inc. (USA) (1) (2) 891,100 14,177
PARK 24 Co., Ltd. (Japan) 357,000 11,440
CoStar Group, Inc. (USA) (1) 300,000 11,067
Michael Page International PLC (United Kingdom) 2,837,000 9,607
Corporate Express Australia Ltd. (Australia) 2,489,700 8,835
MITIE Group PLC (United Kingdom) 3,560,000 7,731
Oslo Bors Holding ASA (Norway) 191,500 6,977
Informatics Holdings Ltd. (Singapore) (2) 16,065,000 6,958
Reliance Security Group PLC (United Kingdom) 440,000 5,603
Proffice AB, Class B (Sweden) 1,050,000 3,033
ZOOTS (USA) (1) (2) (3) (4) 12,586,913 1,208
MEDIA - 5.90%
Gemstar-TV Guide International, Inc. (formerly Gemstar International Group Ltd.) (USA) (1) 11,750,000 78,842
Astral Media Inc., Class A (Canada) 3,349,100 73,279
UnitedGlobalCom, Inc., Class A (USA) (1) 8,610,144 73,100
SBS Broadcasting SA (Luxembourg) (1) (2) 1,855,000 66,465
Reader's Digest Assn., Inc., Class A (USA) 3,650,000 51,392
Schibsted ASA (Norway) 2,170,000 39,529
Lions Gate Entertainment Corp., USD denominated (Canada) (1) (2) 3,050,000 19,062
Lions Gate Entertainment Corp. (1) (2) 2,728,500 16,941
Valassis Communications, Inc. (USA) (1) 1,000,000 30,400
Corus Entertainment Inc., nonvoting, Class B (Canada) 1,405,000 29,661
Clear Media Ltd. (Hong Kong) (1) (2) 32,579,000 28,639
Phoenix Satellite Television Holdings Ltd. (Hong Kong) (1) 129,889,000 25,670
Catalina Marketing Corp. (USA) (1) 1,275,000 24,722
Sanctuary Group PLC (United Kingdom) (2) 21,490,000 19,021
Toei Animation Co., Ltd. (Japan) 290,000 15,831
Journal Communications, Inc., Class A (USA) 687,000 13,740
Next Media Ltd. (Hong Kong) (1) 31,146,000 13,590
Austereo Group Ltd. (Australia) 9,820,000 10,266
Modern Times Group MTG AB, Class B (Sweden) (1) 500,000 9,307
Zee Telefilms Ltd. (India) 2,700,000 8,353
BKN International AG (Germany) (1) (2) (4) 451,143 2,158
BKN International AG (1) (2) 348,857 1,768
GWR Group PLC (United Kingdom) 439,500 2,222
ABS-CBN Holdings Corp. (PDR) (Philippines) (1) 2,957,100 1,041
INTERNET SOFTWARE & SERVICES - 5.20%
Ask Jeeves, Inc. (USA) (1) (2) 2,953,700 105,536
CNET Networks, Inc. (USA) (1) 8,000,000 82,640
InfoSpace.com, Inc. (USA) (1) (2) 1,910,200 74,249
SkillSoft PLC (ADR) (Ireland) (1) 3,610,300 46,573
Sohu.com Inc. (USA) (1) 1,800,000 44,802
lastminute.com PLC (United Kingdom) (1) 10,625,000 38,520
NHN Corp. (South Korea) 450,652 33,144
FindWhat.com (USA) (1) (2) 1,400,000 30,310
DoubleClick Inc. (USA) (1) 2,600,000 29,250
Homestore, Inc. (USA) (1) 4,600,000 19,458
Digital River, Inc. (USA) (1) 800,000 18,728
ValueClick, Inc. (USA) (1) 1,600,000 17,280
Autobytel Inc. (USA) (1) 1,300,000 17,160
EarthLink, Inc. (USA) (1) 1,577,300 13,975
Knot, Inc. (USA) (1) (2) (4) 1,200,000 5,220
Knot, Inc. (1) (2) 119,200 519
Meet World Trade, Series C, convertible preferred (USA) (1) (3) (4) 389,416 362
Muse Prime Software, Inc., Series B, convertible preferred (USA) (1) (2) (3) (4) 1,770,000 230
Orbiscom Ltd. (Ireland) (1) (3) (4) 3,905,874 98
ProcurePoint Travel Solutions Inc. (formerly ProcurePoint Travel Solutions Inc.,
Series B, convertible preferred) (USA) (1) (3) (4) 25,746 -
HOTELS, RESTAURANTS & LEISURE - 4.76%
Aristocrat Leisure Ltd. (Australia) (2) 24,981,849 65,388
J D Wetherspoon PLC (United Kingdom) 8,014,960 43,475
Mandalay Resort Group (USA) 675,400 38,673
Orient-Express Hotels Ltd., Class A (USA) 1,760,000 31,486
Triarc Companies, Inc., Class B (USA) 1,900,000 20,824
Triarc Companies, Inc., Class A 950,000 10,393
William Hill PLC (United Kingdom) 3,020,000 28,858
Stanley Leisure PLC (United Kingdom) 2,740,000 25,590
O'Charley's Inc. (USA) (1) (2) 1,350,000 24,637
California Pizza Kitchen, Inc. (USA) (1) (2) 1,230,000 24,600
Cafe de Coral Holdings Ltd. (Hong Kong) 24,036,000 24,368
Sonic Corp. (USA) (1) 690,000 23,653
IHOP Corp. (USA) 675,000 23,247
Paddy Power PLC (Ireland) 1,821,270 20,380
Steak n Shake Co. (USA) (1) 1,024,750 19,726
Pinnacle Entertainment, Inc. (USA) (1) 1,400,000 19,320
Restaurant Group PLC (formerly City Centre Restaurants PLC) (United Kingdom) (2) 12,629,000 18,500
Luminar PLC (United Kingdom) 2,000,000 16,784
P.F. Chang's China Bistro, Inc. (USA) (1) 312,000 15,697
Sky City Ltd. (New Zealand) 4,029,600 11,858
Applebee's International, Inc. (USA) 200,000 8,270
Greene King PLC (United Kingdom) 422,457 7,448
Panera Bread Co., Class A (USA) (1) 150,000 5,838
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 4.68%
Cymer, Inc. (USA) (1) (2) 2,000,000 77,220
O2Micro International Ltd. (USA) (1) (2) 2,495,000 42,989
Varian Semiconductor Equipment Associates, Inc. (USA) (1) 1,000,000 42,000
Power Integrations, Inc. (USA) (1) 1,400,000 41,062
Cypress Semiconductor Corp. (USA) (1) 1,500,000 30,705
Integrated Circuit Systems, Inc. (USA) (1) 1,200,000 30,036
Semtech Corp. (USA) (1) 1,300,000 29,679
Micronas Semiconductor Holding AG (Switzerland) (1) 542,493 25,641
Brooks Automation, Inc. (USA) (1) 1,200,000 25,176
Atheros Communications, Inc. (USA) (1) 1,469,496 25,143
ASE Test Ltd. (Taiwan) (1) 2,075,000 22,825
Vanguard International Semiconductor Corp. (Taiwan) (1) (3) 50,000,000 22,796
Axcelis Technologies, Inc. (USA) (1) 2,000,000 22,240
PDF Solutions, Inc. (USA) (1) (2) 1,510,000 17,380
KEC Corp. (South Korea) (2) 523,540 16,124
Faraday Technology Corp. (Taiwan) 4,999,125 11,700
ASM International NV (New York registered) (Netherlands) (1) 419,100 9,262
MKS Instruments, Inc. (USA) (1) 300,000 7,203
King Yuan Electronics Co., Ltd. (Taiwan) (1) 5,053,000 6,927
VIA Technologies, Inc. (Taiwan) 4,121,000 5,010
ASM Pacific Technology Ltd. (Hong Kong) 940,000 4,186
MegaChips Corp. (Japan) 295,000 3,198
Zeevo, Inc., Series E-1, convertible preferred (USA) (1) (3) (4) 942,839 943
Zeevo, Inc., Series C-1, convertible preferred (1) (3) (4) 461,157 461
Zeevo, Inc., Series E-1, warrants, expire 2008 (1) (3) (4) 3 -
ClearSpeed Technology Ltd. (United Kingdom) (1) (3) (4) 2,300,000 31
SPECIALTY RETAIL - 4.67%
Michaels Stores, Inc. (USA) 2,650,000 128,843
Valora Holding AG (Switzerland) (2) 222,000 54,918
CarMax, Inc. (USA) (1) 1,800,000 52,560
Big Lots, Inc. (USA) (1) 2,771,400 40,185
Charles Vogele Holding AG (Switzerland) (1) (2) 530,000 35,548
Edion Corp. (Japan) 2,815,000 34,219
Sharper Image Corp. (USA) (1) (2) 950,000 30,951
JJB Sports PLC (United Kingdom) 4,904,900 28,975
Williams-Sonoma, Inc. (USA) (1) 750,000 25,650
KOMERI Co., Ltd. (Japan) 648,100 18,187
Culture Convenience Club Co., Ltd. (Japan) 1,686,100 17,762
Nobia AB (Sweden) 1,255,000 12,554
DFS Furniture Co. PLC (United Kingdom) 1,545,300 12,257
Lithia Motors, Inc., Class A (USA) 325,000 8,986
Payless ShoeSource, Inc. (USA) (1) 500,000 6,980
Carpetright PLC (United Kingdom) 307,213 5,682
Restoration Hardware, Inc. (USA) (1) 713,000 3,544
Chico's FAS, Inc. (USA) (1) 25,000 1,160
COMMERCIAL BANKS - 4.61%
HDFC Bank Ltd. (India) 11,292,240 98,774
Cathay General Bancorp, Inc. (formerly Cathay Bancorp, Inc.) (USA) 1,182,600 77,839
Pusan Bank (South Korea) (2) 9,520,500 60,967
Aareal Bank AG (Germany) 1,478,000 48,891
Daegu Bank, Ltd. (South Korea) 6,606,100 39,480
ICICI Bank Ltd. (India) 5,584,503 38,215
Sterling Bancshares, Inc. (USA) (2) 2,700,000 36,153
Fulton Financial Corp. (USA) 1,540,350 34,304
First Community Bancorp (USA) 645,000 24,117
Southwest Bancorporation of Texas, Inc. (USA) 510,000 19,242
Citizens Banking Corp. (USA) 549,900 17,943
Old National Bancorp (USA) 333,200 7,530
First Financial Bancorp. (USA) 256,468 4,745
First Regional Bancorp (USA) (1) (3) (4) 139,200 3,579
ELECTRONIC EQUIPMENT & INSTRUMENTS - 4.16%
Venture Corp. Ltd. (Singapore) 7,099,600 81,863
Kingboard Chemical Holdings Ltd. (Hong Kong) (2) 39,882,000 76,772
Veeco Instruments, Inc. (USA) (1) (2) 1,500,000 42,075
Rogers Corp. (USA) (1) 756,800 40,390
Littelfuse, Inc. (USA) (1) 1,077,500 40,083
National Instruments Corp. (USA) 1,237,500 38,932
Citizen Electronics Co., Ltd. (Japan) 552,900 34,215
Orbotech Ltd. (Israel) (1) 887,000 21,332
Vaisala Oyj, Class A (Finland) 848,095 21,171
Micronic Laser Systems AB (Sweden) (1) (2) 2,638,952 19,928
Hana Microelectronics PCL (Thailand) 4,135,000 14,760
Digital Theater Systems, Inc. (USA) (1) 250,000 6,407
Hankuk Electric Glass Co., Ltd. (South Korea) 119,810 5,749
Rotork PLC (United Kingdom) 793,446 5,622
Renishaw PLC (United Kingdom) 574,108 5,283
Jahwa Electronics Co., Ltd. (South Korea) 540,000 5,159
Taiflex Scientific Co., Ltd. (Taiwan) (1) 1,084,000 2,949
OIL & GAS - 4.12%
Spinnaker Exploration Co. (USA) (1) (2) 1,980,000 71,122
Cabot Oil & Gas Corp., Class A (USA) 1,438,000 43,945
First Calgary Petroleums Ltd., GBP denominated (Canada) (1) 4,800,000 28,620
First Calgary Petroleums Ltd. (1) 2,146,000 12,556
Magnum Hunter Resources, Inc. (USA) (1) (2) 3,600,000 36,504
OPTI Canada Inc., Class C (Canada) (1) (3) (4) 2,534,000 36,197
Patina Oil & Gas Corp. (USA) 1,320,000 34,650
Western Oil Sands Inc., Class A (Canada) (1) 1,320,000 33,789
Quicksilver Resources Inc. (USA) (1) 810,000 31,396
Encore Acquisition Co. (USA) (1) 950,000 26,315
Premcor Inc. (USA) (1) 778,112 24,098
Venture Production Company Ltd. (United Kingdom) (1) (2) 6,500,000 19,737
Harvest Natural Resources, Inc. (USA) (1) 1,242,800 18,157
Australian Worldwide Exploration Ltd. (Australia) (1) 11,666,666 12,464
Penn West Petroleum Ltd. (Canada) 225,000 10,508
Canadian Oil Sands Trust (Canada) 279,380 9,472
Sibir Energy PLC (United Kingdom) (1) (4) 8,495,992 4,456
Sibir Energy PLC (1) 4,008 2
PetroFalcon Corp. (Canada) (1) 2,300,000 3,645
BIOTECHNOLOGY - 3.32%
Amylin Pharmaceuticals, Inc. (USA) (1) 2,959,400 70,108
IDEXX Laboratories, Inc. (USA) (1) 875,000 49,761
Q-Med AB (Sweden) (1) (2) 1,610,000 46,180
Vicuron Pharmaceuticals Inc. (USA) (1) 1,500,000 34,125
Neurocrine Biosciences, Inc. (USA) (1) 500,000 29,550
NPS Pharmaceuticals, Inc. (USA) (1) 905,900 25,863
Incyte Corp. (USA) (1) 2,500,000 20,775
Transkaryotic Therapies, Inc. (USA) (1) 1,208,300 20,734
Onyx Pharmaceuticals, Inc. (USA) (1) 500,000 20,230
Eyetech Pharmaceuticals, Inc. (USA) (1) 462,500 15,355
Alkermes, Inc. (USA) (1) 804,600 12,866
InterMune Inc. (USA) (1) 600,000 11,688
OSI Pharmaceuticals, Inc. (USA) (1) 287,000 11,021
Control Delivery Systems Inc., Series A, convertible preferred (USA) (1) (3) (4) 55,824 300
PHARMACEUTICALS - 2.59%
Medicis Pharmaceutical Corp., Class A (USA) 2,110,000 84,400
Valeant Pharmaceuticals International (formerly ICN Pharmaceuticals, Inc.) (USA) 2,400,000 57,288
Recordati SpA (Italy) (2) 2,652,000 46,181
MGI PHARMA, Inc. (USA) (1) 687,000 42,086
Eon Labs, Inc. (USA) (1) 275,000 18,447
Inspire Pharmaceuticals, Inc. (USA) (1) 1,250,000 16,100
Elan Corp., PLC (ADR) (Ireland) (1) 590,000 12,166
Penwest Pharmaceuticals Co. (USA) (1) 500,000 7,305
NexMed, Inc. (USA) (1) 1,100,000 3,080
NexMed, Inc. (1) (4) 152,355 427
NexMed, Inc., warrants, expire 2004 (1) (3) (4) 30,471 12
Generex Biotechnology Corp., warrants, expire 2005 (USA) (1) (3) (4) 164,467 1
SOFTWARE - 2.29%
Mentor Graphics Corp. (USA) (1) (2) 3,572,200 63,657
Manhattan Associates, Inc. (USA) (1) (2) 1,850,000 51,430
Creo Inc., USD denominated (Canada) (1) (2) 3,134,000 29,710
Creo Inc. (1) (2) 430,000 4,029
Borland Software Corp. (USA) (1) 3,600,000 32,688
Parametric Technology Corp. (USA) (1) 6,691,300 30,245
Lawson Software, Inc. (USA) (1) 3,000,000 24,900
Macromedia, Inc. (USA) (1) 800,000 16,056
Infoteria Corp. (Japan) (1) (2) (3) (4) 2,672 1,602
diCarta (USA) (1) (3) (4) 103,135 105
Versata, Inc. (USA) (1) 24,597 44
MMC AS (Norway) (1) (3) (4) 4,150,000 6
Monterey Design Systems Inc. (USA) (1) (3) (4) 100,000 0
HOUSEHOLD DURABLES - 2.14%
Yankee Candle Company, Inc. (USA) (1) (2) 2,975,000 82,050
Ekornes ASA (Norway) 1,725,598 34,640
Blyth, Inc. (USA) 1,000,000 32,670
Fisher & Paykel Appliances Holdings Ltd. (New Zealand) 9,102,000 26,240
Tupperware Corp. (USA) 1,350,000 24,043
Rational AG (Germany) 242,100 15,621
Palm Harbor Homes, Inc. (USA) (1) 663,906 13,915
Rinnai Corp. (Japan) 230,000 6,168
Compass East Industry (Thailand) PCL (Thailand) 8,514,100 2,160
ENERGY EQUIPMENT & SERVICES - 2.12%
Helmerich & Payne, Inc. (USA) 2,300,000 65,895
CARBO Ceramics Inc. (USA) 475,000 29,901
Hydril (formerly Hydril Co.) (USA) (1) 917,500 24,038
Expro International Group PLC (United Kingdom) (2) 4,250,000 19,631
China Oilfield Services Ltd., Class H (China) 60,637,100 18,287
Enerflex Systems Ltd. (Canada) 895,000 16,324
Rowan Companies, Inc. (USA) (1) 770,600 16,252
Newpark Resources, Inc. (USA) (1) 2,500,000 13,000
Calfrac Well Services Ltd. (Canada) (1) 591,200 10,472
FMC Technologies, Inc. (USA) (1) 350,000 9,460
TODCO, Class A (USA) (1) 636,000 9,286
Cie. Generale de Geophysique (France) (1) 59,844 2,697
BUILDING PRODUCTS - 2.11%
Royal Group Technologies Ltd. (Canada) (1) 4,645,000 50,888
Masonite International Corp. (Canada) (1) 1,734,000 48,746
Geberit AG (Switzerland) 65,901 36,193
Uponor Oyj (Finland) 1,125,450 33,879
Noritz Corp. (Japan) 1,460,000 25,354
Kumgang Korea Chemical Co., Ltd. (South Korea) 240,000 22,509
York International Corp. (USA) 300,000 11,793
Ultraframe PLC (United Kingdom) 1,575,000 4,782
HEALTH CARE PROVIDERS & SERVICES - 1.89%
Rhon-Klinikum AG (Germany) (2) 927,800 46,584
Rhon-Klinikum AG, nonvoting preferred (2) 561,300 23,958
Service Corp. International (USA) (1) 6,000,000 44,820
American Healthways, Inc. (USA) (1) 1,200,000 29,304
Sonic Healthcare Ltd. (Australia) 3,975,100 24,480
LifePoint Hospitals, Inc. (USA) (1) 550,000 17,787
Ramsay Health Care Ltd. (Australia) 3,450,000 13,163
Triad Hospitals, Inc. (USA) (1) 250,000 7,705
Symbion, Inc. (USA) (1) 113,200 2,056
HEALTH CARE EQUIPMENT & SUPPLIES - 1.88%
Wilson Greatbatch Technologies, Inc. (USA) (1) (2) 1,118,400 40,576
ResMed Inc (USA) (1) 451,000 20,381
ResMed Inc, AUD denominated (1) 750,000 3,388
Tecan Group Ltd., Mannedorf (Switzerland) 598,083 22,606
Kobayashi Pharmaceutical Co., Ltd. (Japan) 807,300 21,919
Nobel Biocare Holding AG (Switzerland) 156,000 21,419
Cochlear Ltd. (Australia) 1,287,000 19,868
Straumann Holding AG (Switzerland) 74,000 12,788
Coloplast A/S, Class B (Denmark) 137,000 12,721
Nakanishi Inc. (Japan) 199,000 10,520
Aspect Medical Systems, Inc. (USA) (1) 561,458 8,366
TriPath Imaging, Inc. (USA) (1) 886,242 8,118
Vision-Sciences, Inc. (USA) (1) 984,500 3,633
Lumenis Ltd. (Israel) (1) (2) 2,270,000 2,735
METALS & MINING - 1.82%
Yanzhou Coal Mining Co. Ltd., Class H (China) 26,400,000 29,306
Minara Resources Ltd. (Australia) (1) 12,939,428 28,536
CONSOL Energy Inc. (USA) 1,000,000 26,800
Wheaton River Minerals Ltd. (Canada) (1) (4) 4,775,500 16,299
Wheaton River Minerals Ltd., warrants, expire 2007 (1) (4) 1,562,500 3,369
Wheaton River Minerals Ltd., Series A, warrants, expire 2007 (1) (4) 817,000 1,799
Wheaton River Minerals Ltd., Series B, warrants, expire 2008 (1) (4) 441,250 706
First Quantum Minerals Ltd. (Canada) (1) 1,677,700 19,019
Gabriel Resources Ltd. (Canada) (1) 6,160,000 17,130
Hindalco Industries Ltd. (India) 500,000 14,092
Peter Hambro Mining PLC (United Kingdom) (1) 1,390,000 12,880
Northern Orion Resources Inc. (Canada) (1) (4) 2,800,000 8,831
Northern Orion Resources Inc., warrants, expire 2008 (1) (4) 1,400,000 2,656
DiamondWorks Ltd. (Canada) (1) (2) 4,055,000 8,959
American Mineral Fields Inc. (Canada) (1) (4) 2,625,000 4,400
Thistle Mining Inc. (Canada) (1) 6,156,909 1,360
Thistle Mining Inc. (1) (3) 6,000,000 1,127
Thistle Mining Inc., GBP denominated (1) 4,525,000 1,041
Thistle Mining Inc., warrants, expire 2009 (1) (3) (4) 3,000,000 45
Kenmare Resources PLC (Ireland) (1) 7,200,000 2,451
Kenmare Resources PLC (1) (4) 2,500,000 851
FOOD PRODUCTS - 1.81%
Nestle India Ltd. (India) 3,599,650 52,581
IOI Corp. Bhd. (Malaysia) 17,000,000 48,316
Lindt & Sprungli AG (Switzerland) 1,694 17,010
Lindt & Sprungli AG, participation certificate 19,166 16,984
Interstate Bakeries Corp. (USA) 1,460,600 16,607
National Foods Ltd. (Australia) 4,971,539 15,783
Burns, Philp & Co. Ltd. (Australia) (1) 26,869,569 11,687
DyDo Drinco (Japan) 350,000 11,148
Binggrae Co., Ltd. (South Korea) 495,000 8,421
Yantai North Andre Juice Co., Ltd., Class H (China) (1) 19,000,000 2,560
CONSTRUCTION & ENGINEERING - 1.70%
Daelim Industrial Co., Ltd. (South Korea) 1,729,640 60,361
Chiyoda Corp. (Japan) (1) 6,004,000 43,260
Hyundai Development Co. (South Korea) 2,600,000 30,169
Heijmans NV (Netherlands) 910,000 21,832
LG Engineering & Construction Co., Ltd. (South Korea) 1,100,000 17,754
Royal Boskalis Westminster NV (Netherlands) (1) 598,620 16,011
FOOD & STAPLES RETAILING - 1.64%
Performance Food Group Co. (USA) (1) (2) 2,935,000 100,817
Cawachi Ltd. (Japan) 235,000 10,912
Cawachi Ltd. (1) (3) (5) 235,000 10,912
CP Seven Eleven PCL (Thailand) (1) 10,985,100 18,486
Winn-Dixie Stores, Inc. (USA) 2,400,000 18,240
Whole Foods Market, Inc. (USA) 200,000 14,990
BJ's Wholesale Club, Inc. (USA) (1) 164,700 4,192
Wumart Stores, Inc., Class H (China) (1) 2,498,000 3,687
CHEMICALS - 1.64%
Millennium Chemicals Inc. (USA) (2) 3,852,300 57,553
Cambrex Corp. (USA) 1,300,000 34,970
Asian Paints (India) Ltd. (India) 4,442,883 30,936
Georgia Gulf Corp. (USA) 800,000 24,120
Ferro Corp. (USA) 700,000 18,305
Hyosung Corp. (South Korea) (2) 1,844,128 16,025
TRANSPORTATION INFRASTRUCTURE - 1.33%
Zhejiang Expressway Co. Ltd., Class H (China) 67,000,000 49,440
SembCorp Logistics Ltd. (Singapore) 39,605,200 46,614
Jiangsu Expressway Co. Ltd., Class H (China) 72,050,000 42,071
Anhui Expressway Co. Ltd., Class H (China) 24,000,000 10,164
THRIFTS & MORTGAGE FINANCE - 1.20%
Housing Development Finance Corp. Ltd. (India) 2,212,480 32,868
Saxon Capital, Inc. (USA) (1) 1,050,000 29,830
Hudson River Bancorp, Inc. (USA) 1,436,200 29,586
IndyMac Bancorp, Inc. (USA) 675,000 24,496
Federal Agricultural Mortgage Corp., Class C (USA) (1) 630,000 16,512
REAL ESTATE - 1.11%
Unibail Holding (France) 222,000 23,218
Able Inc. (Japan) (2) 705,000 21,644
Central Pattana PCL (Thailand) 16,413,400 19,774
Capital Lease Funding, Inc. (USA) (1) (2) 1,530,000 19,615
Ascendas Real Estate Investment Trust (Singapore) 16,599,000 12,594
FelCor Lodging Trust Inc. (USA) (1) 997,700 10,396
Gladstone Commercial Corp. (USA) (2) 493,000 8,430
Golden Land Property Development PLC, non-voting depositary receipt (Thailand) (1) 20,000,000 5,354
Shanghai Real Estate Ltd. (Hong Kong) 19,152,000 1,991
INTERNET & CATALOG RETAIL - 1.01%
Internet Auction Co. Ltd. (South Korea) (1) 575,000 42,641
GSI Commerce, Inc. (USA) (1) (2) 2,294,491 23,289
drugstore.com, inc. (USA) (1) 2,830,700 15,229
Provide Commerce, Inc. (USA) (1) (2) 654,800 14,897
1-800-FLOWERS.COM, Inc., Class A (USA) (1) 1,300,000 12,441
RedEnvelope, Inc. (USA) (1) 274,285 2,447
RedEnvelope, Inc. (1) (4) 85,995 767
ROAD & RAIL - 0.90%
SIRVA, Inc. (USA) (1) 1,660,600 40,054
Container Corp. of India Ltd. (India) 2,257,907 37,738
Northgate PLC (United Kingdom) 2,145,000 22,461
CONSTRUCTION MATERIALS - 0.83%
Associated Cement Companies Ltd. (India) 8,250,000 48,519
Hanil Cement Co., Ltd. (South Korea) (2) 491,700 26,125
AMCOL International Corp. (USA) 750,000 13,087
Zhejiang Glass Co. Ltd., Class H (China) 11,499,400 4,833
MACHINERY - 0.76%
Federal Signal Corp. (USA) 1,201,100 23,842
ZENON Environmental Inc. (Canada) (1) 778,000 12,151
Kaulin Manufacturing Co. Ltd. (Taiwan) 5,227,000 8,897
Seco Tools AB, Class B (Sweden) 225,000 8,779
Lincoln Electric Holdings, Inc. (USA) 288,800 8,130
KCI Konecranes International Corp. (Finland) 211,200 7,921
Spirax-Sarco Engineering PLC (United Kingdom) 560,000 5,823
Chen Hsong Holdings Ltd. (Hong Kong) 7,172,000 4,371
LTG Technologies PLC (United Kingdom) (1) (2) 17,785,714 4,304
COMPUTERS & PERIPHERALS - 0.73%
Moser Baer India Ltd. (India) 3,750,000 26,488
Silicon Graphics, Inc. (USA) (1) 9,000,000 22,860
Anoto Group AB (Sweden) (1) (2) 7,156,244 15,833
High Tech Computer Corp. (Taiwan) 3,804,960 15,440
TEXTILES, APPAREL & LUXURY GOODS - 0.72%
Phillips-Van Heusen Corp. (USA) 1,300,000 24,050
Cheil Industries Inc. (South Korea) 1,300,000 19,791
Gildan Activewear Inc. (Canada) (1) 500,000 15,656
Columbia Sportswear Co. (USA) (1) 250,000 13,860
Nien Hsing Textile Co., Ltd. (Taiwan) 7,000,000 7,043
WIRELESS TELECOMMUNICATION SERVICES - 0.63%
Tele Celular Sul Participacoes SA, preferred nominative (ADR) (Brazil) 1,132,400 16,975
Tele Celular Sul Participacoes SA, ordinary nominative 2,247,692,036 2,708
Nextel Partners, Inc., Class A (USA) (1) 1,400,000 17,724
GLOBE TELECOM, Inc. (Philippines) 902,000 13,184
Tele Nordeste Celular Participacoes SA, preferred nominative (ADR) (Brazil) 401,700 10,898
Unwired Group Ltd. (Australia) (1) (4) 8,900,000 5,433
Unwired Group Ltd. (1) 2,600,000 1,587
Total Access Communication PCL (Thailand) (1) 667,700 1,809
TRADING COMPANIES & DISTRIBUTORS - 0.62%
MSC Industrial Direct Co., Inc., Class A (USA) 1,150,000 34,443
Hughes Supply, Inc. (USA) 650,000 34,060
AIRLINES - 0.55%
WestJet Airlines Ltd. (Canada) (1) 1,981,000 39,617
AMR Corp. (USA) (1) 1,700,000 21,641
ELECTRIC UTILITIES - 0.50%
Reliance Energy Ltd. (India) 2,259,500 39,867
Cleco Corp. (USA) 825,000 15,700
INSURANCE - 0.47%
China Insurance International Holdings Co. Ltd. (Hong Kong) 45,208,000 23,932
LG Insurance Co., Ltd. (South Korea) (2) 3,000,000 16,463
First American Corp. (USA) 300,000 9,126
Dongbu Insurance Co., Ltd. (South Korea) 484,030 2,323
PAPER & FOREST PRODUCTS - 0.45%
Chung Hwa Pulp Corp. (Taiwan) (2) 37,046,000 26,011
M-real Oyj, Class B (Finland) 2,610,000 24,232
IT SERVICES - 0.43%
Baycorp Advantage Ltd. (Australia) (1) (2) 13,892,100 27,033
Teleca AB, Class B (Sweden) 2,886,341 16,826
iPayment, Inc. (USA) (1) 115,700 3,848
Socratic Technologies, Inc., Series A, convertible preferred
(formerly Lone Star Research, Inc.) (USA) (1) (3) (4) 375,000 0
BEVERAGES - 0.40%
Anadolu Efes Biracilik ve Malt Sanayii AS (Turkey) 2,130,000,000 29,223
Cott Corp. (Canada) (1) 250,000 7,312
Robert Mondavi Corp., Class A (USA) (1) 193,200 7,305
Wolverhampton & Dudley Breweries, PLC (United Kingdom) 34,269 531
COMMUNICATIONS EQUIPMENT - 0.38%
CIENA Corp. (USA) (1) 3,900,000 19,383
Echelon Corp. (USA) (1) 1,064,178 11,993
CSR PLC (formerly Cambridge Silicon Radio, Series II, convertible preferred)
(United Kingdom) (1) (3) (4) 3,025,214 11,215
ELECTRICAL EQUIPMENT - 0.38%
LG Industrial Systems Co., Ltd. (South Korea) (1) 1,029,350 16,883
Bharat Heavy Electricals Ltd. (India) 852,700 11,901
Korea Electric Terminal Co., Ltd. (South Korea) 350,000 6,107
LG Cable Ltd. (South Korea) 315,000 4,686
Moatech Co., Ltd. (South Korea) 266,000 2,344
AUTO COMPONENTS - 0.37%
Cheng Shin Rubber (Xiamen) Ind., Ltd. (Taiwan) 21,927,000 31,591
Nokian Renkaat Oyj (Finland) 123,000 9,901
CONTAINERS & PACKAGING - 0.33%
Owens-Illinois, Inc. (USA) (1) 1,650,000 23,133
Hung Hing Printing Group Ltd. (Hong Kong) 17,199,000 13,464
GAS UTILITIES - 0.30%
Xinao Gas Holdings Ltd. (China) (1) 37,300,000 19,386
International Energy Group Ltd. (United Kingdom) (2) 4,640,000 13,577
OTHER - 2.03%
WD-40 Co. (USA) 640,900 22,432
American Capital Strategies, Ltd. (USA) 600,000 19,944
Perusahaan Perseroan (Persero) PT Indonesian Satellite Corp. Tbk (ADR) (Indonesia) 850,000 18,700
Largan Precision Co., Ltd. (Taiwan) 1,451,800 17,298
Warehouse Group Ltd. (New Zealand) 5,850,000 16,748
Impact 21 Co., Ltd. (Japan) 510,500 12,440
Grasim Industries Ltd. (India) 501,284 12,364
MEDION AG (Germany) 276,100 11,713
Universal Corp. (USA) 228,500 11,612
Wilh. Wilhelmsen ASA, Class A (Norway) 399,800 10,779
Hong Kong Exchanges and Clearing Ltd. (Hong Kong) 4,482,000 9,606
AMOREPACIFIC Corp. (South Korea) 55,850 9,575
Zebra Technologies Corp., Class A (USA) (1) 135,000 9,365
Maruti Udyog Ltd. (India) (1) 750,000 8,616
Mandom Corp. (Japan) 337,200 7,522
JCG Holdings Ltd. (Hong Kong) 7,937,000 6,315
Hero Honda Motors Ltd. (India) 500,000 5,665
Curtiss-Wright Corp. (USA) 112,100 5,254
TECMO, Ltd. (Japan) 450,000 4,987
TSX Group Inc. (Canada) 107,000 4,304
Multiplex, Inc., Series C, convertible preferred (USA) (1) (3) (4) 1,358,696 190
MISCELLANEOUS - 4.95%
Other equity securities in initial period of acquisition 549,750
TOTAL EQUITY SECURITIES (cost: $7,919,822,000) 10,360,907
PRINCIPAL MARKET
AMOUNT VALUE
FIXED-INCOME SECURITIES - 0.08% (000) (000)
FOOD & STAPLES RETAILING - 0.08%
Winn-Dixie Stores, Inc. 8.875% 2008 $ 9,925 8,833
TOTAL FIXED-INCOME SECURITIES (cost: $8,788,000) 8,833
PRINCIPAL MARKET
AMOUNT VALUE
SHORT-TERM SECURITIES - 7.03% (000) (000)
CORPORATE SHORT-TERM NOTES - 5.98%
BMW U.S. Capital Corp. 1.00%-1.02% due 4/8-4/12/2004 75,000 $ 74,981
American Honda Finance Corp. 1.01%-1.03% due 4/19-6/9/2004 75,000 74,881
Societe Generale North America Inc. 1.03%-1.045% due 4/13-5/3/2004 42,400 42,375
NBNZ International Ltd. 1.03%-1.04% due 4/19-5/25/2004 (4) 35,000 34,961
Canadian Wheat Board 0.96%-0.99% due 4/26-6/1/2004 34,300 34,262
FCAR Owner Trust I 1.04% due 4/5/2004 33,800 33,795
Electricite de France 0.99%-1.02% due 4/15-4/28/2004 33,000 32,981
Dexia Delaware LLC 1.03% due 5/18/2004 31,000 30,957
Bank of Montreal 1.00% due 4/20-4/21/2004 30,000 29,983
National Australia Funding (Delaware) Inc. 1.02% due 4/2/2004 27,500 27,498
Toyota Motor Credit Corp. 1.04% due 4/5/2004 27,200 27,196
Alcon Capital Corp 1.00% due 4/29/2004 (4) 27,000 26,978
Siemens Capital Co. LLC 1.01%-1.02% due 4/5-6/1/2004 26,800 26,766
Credit Lyonnais N.A. Inc. 1.03% due 4/13/2004 25,000 24,991
Thunder Bay Funding, LLC 1.025 due 4/19/2004 (4) 25,000 24,987
CBA (Delaware) Finance Inc. 1.03% due 4/8/2004 24,000 23,995
Svenska Handelsbanken 1.03% due 4/6/2004 20,500 20,497
Novartis Finance Corp. 0.98% due 5/17/2004 (4) 20,400 20,374
HBOS Treasury Services PLC 1.04% due 5/6/2004 20,000 19,980
Diageo Capital PLC 1.03% due 5/4/2004 (4) 17,000 16,984
Shell Finance (U.K.) PLC 1.00%-1.03% due 4/16-6/1/2004 14,800 14,787
U.S. TREASURIES - 0.45%
U.S. Treasury Bills 0.885%-0.9275% due 4/22-6/24/2004 49,900 49,840
FEDERAL AGENCY DISCOUNT NOTES - 0.34%
Federal Home Loan Bank 0.99% due 4/7/2004 25,400 25,395
Fannie Mae 1.015% due 5/5/2004 12,900 12,888
CERTIFICATES OF DEPOSIT - 0.26%
HBOS Treasury Services PLC 1.01% due 4/15/2004 29,000 29,000
TOTAL SHORT-TERM SECURITIES (cost: $781,326,000) 781,332
TOTAL INVESTMENT SECURITIES (cost: $8,709,936,000) 11,151,072
NEW TAIWANESE DOLLAR (cost: $5,339,000) NT$ 177,115 5,384
OTHER ASSETS LESS LIABILITIES (47,346)
NET ASSETS $11,109,110
(1) Security did not produce income during the last 12 months.
(2) Represents an affiliated company as defined under the Investment Company
Act of 1940.
(3) Valued under fair value procedures adopted by authority of the Board of
Directors.
(4) Purchased in a private placement transaction; resale may be limited to
qualified institutional buyers; resale to the public may require
registration
(5) This security has been authorized but has not yet been issued.
ADR = American Depositary Receipts
PDR = Philippine Depositary Receipts
See Notes to Financial Statements
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES at March 31, 2004 unaudited
(dollars and shares in thousands, except per-share amounts)
ASSETS:
Investment securities at market:
Unaffiliated issuers (cost: $6,819,976) $8,946,835
Affiliated issuers (cost: $1,889,960) 2,204,237 $11,151,072
Cash denominated in non-U.S. currencies
(cost: $5,339) 5,384
Cash 13,898
Receivables for:
Sales of investments 66,308
Sales of fund's shares 23,810
Dividends and interest 16,099 106,217
11,276,571
LIABILITIES:
Payables for:
Purchases of investments 116,477
Repurchases of fund's shares 11,429
Investment advisory services 6,067
Services provided by affiliates 3,640
Deferred Directors' compensation 828
Other fees and expenses 29,020 167,461
NET ASSETS AT MARCH 31, 2004 $11,109,110
NET ASSETS CONSIST OF:
Capital paid in on shares of capital stock $10,328,164
Accumulated net investment loss (40,042)
Accumulated net realized loss (1,591,944)
Net unrealized appreciation 2,412,932
NET ASSETS AT MARCH 31, 2004 $11,109,110
TOTAL AUTHORIZED CAPITAL STOCK - 800,000 SHARES, $0.01 PAR VALUE
SHARES NET ASSET VALUE
NET ASSETS OUTSTANDING PER SHARE (1)
Class A $10,035,816 349,368 $28.73
Class B 305,449 10,953 27.89
Class C 234,097 8,418 27.81
Class F 108,759 3,802 28.61
Class 529-A 80,433 2,803 28.70
Class 529-B 18,163 644 28.22
Class 529-C 37,127 1,315 28.23
Class 529-E 4,989 175 28.54
Class 529-F 6,262 219 28.64
Class R-1 3,858 136 28.35
Class R-2 98,919 3,488 28.36
Class R-3 66,599 2,334 28.53
Class R-4 15,511 540 28.70
Class R-5 93,128 3,229 28.84
(1) Maximum offering price and redemption price per share were equal to the net
asset value per share for all share classes, except for classes A and
529-A, for which the maximum offering prices per share were $30.48 and
$30.45, respectively.
See Notes to Financial Statements
STATEMENT OF OPERATIONS for the six months ended March 31, 2004 unaudited
(dollars in thousands)
INVESTMENT INCOME:
Income:
Interest $4,609
Dividends (net of non-U.S. withholding tax of $4,667;
also includes $8,008 from affiliates) 45,834 $50,443
Fees and expenses:
Investment advisory services 33,266
Distribution services 14,988
Transfer agent services 6,840
Administrative services 872
Reports to shareholders 408
Registration statement and prospectus 334
Postage, stationery and supplies 850
Directors' compensation 228
Auditing and legal 143
Custodian 1,343
State and local taxes 176
Other 68
Total expenses before reimbursement 59,516
Reimbursement of expenses 170 59,346
Net investment loss (8,903)
NET REALIZED GAIN AND UNREALIZED APPRECIATION ON INVESTMENTS AND NON-U.S. CURRENCY:
Net realized gain on:
Investments (including $157,476 net gain from affiliates) 824,721
Non-U.S. currency transactions 752 825,473
Net unrealized appreciation (depreciation) on:
Investments 1,243,404
Non-U.S. currency translations (277) 1,243,127
Net realized gain and
unrealized appreciation
on investments and non-U.S. currency 2,068,600
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $2,059,697
See Notes to Financial Statements
STATEMENT OF CHANGES IN NET ASSETS (dollars in thousands)
SIX MONTHS YEAR ENDED
ENDED MARCH 31, SEPTEMBER 30,
2004* 2003
OPERATIONS:
Net investment loss ($8,903) ($6,477)
Net realized gain(loss) on investments and non-U.S. currency transactions 825,473 (247,386)
Net unrealized appreciation on investments and non-U.S. currency translations 1,243,127 2,279,082
Net increase in net assets resulting from operations 2,059,697 2,025,219
DIVIDENDS PAID TO SHAREHOLDERS FROM NET INVESTMENT INCOME AND CURRENCY GAINS (10,989) -
CAPITAL SHARE TRANSACTIONS 607,437 (136,746)
TOTAL INCREASE IN NET ASSETS 2,656,145 1,888,473
NET ASSETS:
Beginning of period 8,452,965 6,564,492
End of period (including accumulated net investment loss:
$40,042 and $20,150,respectively) $11,109,110 $8,452,965
*Unaudited
See Notes to Financial Statements
NOTES TO FINANCIAL STATEMENTS unaudited
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
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.
The fund offers 14 share classes consisting of four retail share classes, five
CollegeAmerica savings plan share classes and five retirement plan share
classes. The CollegeAmerica savings plan share classes (529-A, 529-B, 529-C,
529-E and 529-F) are sponsored by the Commonwealth of Virginia and can be
utilized to save for college education. The five retirement plan share classes
(R-1, R-2, R-3, R-4 and R-5) are sold without any sales charges and do not carry
any conversion rights. The fund's share classes are described below:
- --------------------------------------------------------------------------------------------------------------
INITIAL SALES CONTINGENT DEFERRED SALES
SHARE CLASS CHARGE CHARGE UPON REDEMPTION CONVERSION FEATURE
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
Classes A and 529-A Up to 5.75% None (except 1% for certain None
redemptions within one year of
purchase without an initial
sales charge)
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
Classes B and 529-B None Declines from 5% to zero for Classes B and 529-B
redemptions within six years convert to classes A
of purchase and 529-A, respectively,
after eight years
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
Class C None 1% for redemptions within Class C converts to Class F
one year of purchase after 10 years
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
Class 529-C None 1% for redemptions within None
one year of purchase
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
Class 529-E None None None
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
Classes F and 529-F None None None
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
Classes R-1, R-2, R-3, None None None
R-4 and R-5
- --------------------------------------------------------------------------------------------------------------
Holders of all share classes have equal pro rata rights to assets, dividends and
liquidation. 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.
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 following is a summary of the significant accounting
policies followed by the fund:
SECURITY VALUATION - Equity securities are 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
are valued at prices obtained from an independent pricing service, when
such prices are available. However, where the investment adviser deems it
appropriate, such securities will be valued at the mean quoted bid and
asked prices or at prices for securities of comparable maturity, quality
and type. Short-term securities maturing within 60 days are valued at
amortized cost, which approximates market value. The ability of the issuers
of the debt securities held by the fund to meet their obligations may be
affected by economic developments in a specific industry, state or region.
Forward currency contracts are valued at the mean of their representative
quoted bid and asked prices. Securities and other assets for which
representative market quotations are not readily available are fair valued
as determined in good faith by authority of the fund's Board of Directors.
Various factors may be reviewed in order to make a good faith determination
of a security's fair value. These factors 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.
SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME - Security transactions
are recorded by the fund as of the date the trades are executed with
brokers. Realized gains and losses from security transactions are
determined based on the specific identified cost of the securities. In the
event a security is purchased with a delayed payment date, the fund will
segregate liquid assets sufficient to meet its payment obligations.
Dividend income is recognized on the ex-dividend date and interest income
is recognized on an accrual basis. Market discounts, premiums and original
issue discounts on fixed-income securities are amortized daily over the
expected life of the security.
CLASS ALLOCATIONS - Income, fees and expenses (other than class-specific
fees and expenses) 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.
NON-U.S. CURRENCY TRANSLATION - Assets and liabilities, including
investment securities, denominated in non-U.S. currencies are translated
into U.S. dollars at the exchange rates in effect at the end of the
reporting period. 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. In the accompanying financial statements, the
effects of changes in non-U.S. 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 non-U.S. currencies are disclosed separately.
FORWARD CURRENCY CONTRACTS - The fund may enter into forward currency
contracts, which represent agreements to exchange non-U.S. currencies on
specific future dates at predetermined rates. The fund enters into these
contracts to manage its exposure to changes in non-U.S. exchange rates
arising from investments denominated in non-U.S. currencies. Upon entering
into these contracts, risks may arise from the potential inability of
counterparties to meet the terms of their contracts and from possible
movements in non-U.S. exchange rates. Due to these risks, the fund could
incur losses up to the entire contract amount, which may exceed the net
unrealized value shown in the accompanying financial statements. On a daily
basis, the fund values forward currency contracts based on the applicable
exchange rates and records unrealized gains or losses. The fund records
realized gains or losses at the time the forward contract is closed or
offset by another contract with the same broker for the same settlement
date and currency.
2. NON-U.S. INVESTMENTS
INVESTMENT RISK - The risks of investing in securities of non-U.S. issuers may
include, but are not limited to, investment and repatriation restrictions;
revaluation of currencies; adverse political, social and economic developments;
government involvement in the private sector; limited and less reliable investor
information; lack of liquidity; certain local tax law considerations; and
limited regulation of the securities markets.
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. For the six months ended March 31, 2004, non-U.S. taxes paid on
realized gains were $40,000. As of March 31, 2004, non-U.S. taxes provided on
unrealized gains were $28,747,000.
3. FEDERAL INCOME TAXATION AND DISTRIBUTIONS
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.
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 differing treatment for items such as
non-U.S. currency gains and losses; short-term capital gains and losses; capital
losses related to sales of securities within 30 days of purchase; unrealized
appreciation of certain investments in non-U.S. securities; deferred expenses;
cost of investments sold; net capital losses; and net operating losses. 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. As of
March 31, 2004, the cost of investment securities and cash denominated in
non-U.S. currencies, for federal income tax purposes was $8,757,870,000.
As of March 31, 2004, the components of distributable earnings on a tax basis
were as follows:
(DOLLARS IN THOUSANDS)
Undistributed net investment income and currency gains $4,953
Accumulated short-term capital losses (2,071,940)
Undistributed long-term capital gains 478,407
Gross unrealized appreciation on investment securities 2,849,970
Gross unrealized depreciation on investment securities (451,384)
Accumulated short-term capital losses above include capital loss carryforwards
of $53,865,000, $1,186,404,000 and $1,122,269,000 expiring in 2009, 2010, and
2011, respectively. The capital loss carryforwards will be used to offset any
capital gains realized by the fund in the current or in subsequent years through
the expiration dates. The fund will not make distributions from capital gains
while capital loss carryforwards remain. Also included in accumulated short-term
capital losses and undistributed long-term capital gains are capital losses of
$54,399,000 that were realized during the period November 1, 2002 through
September 30, 2003.
Tax basis distributions paid to shareholders from net investment income and
currency gains were as follows (dollars in thousands):
SHARE CLASS SIX MONTHS ENDED MARCH 31, 2004
Class A $ 10,144
Class B -
Class C -
Class F 202
Class 529-A 148
Class 529-B -
Class 529-C -
Class 529-E 2
Class 529-F 12
Class R-1 2
Class R-2 50
Class R-3 80
Class R-4 25
Class R-5 324
Total $ 10,989
No distributions were paid to shareholders during the year ended September 30,
2003.
4. FEES AND TRANSACTIONS WITH RELATED PARTIES
Capital Research and Management Company ("CRMC"), the fund's investment adviser,
is the parent company of American Funds Service Company ("AFS"), the fund's
transfer agent, and American Funds Distributors, Inc. ("AFD"), the principal
underwriter of the fund's shares.
INVESTMENT ADVISORY SERVICES -The Investment Advisory and Service Agreement with
CRMC provides for monthly fees accrued daily. These fees are based on a
declining series of 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 six months ended March 31, 2004, the investment advisory
services fee was $33,266,000, which was equivalent to an annualized rate of
0.662% 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 Class R-5. Under the plans, the Board of Directors
approves certain categories of expenses that are used to finance activities
primarily intended to sell fund shares. The plans provide for annual
expenses, based on a percentage of average daily net assets, ranging from
0.30% to 1.00% as noted below. In some cases, the Board of Directors has
approved expense amounts lower than plan limits. All share classes may use
up to 0.25% of average daily net assets to pay service fees, or to
compensate AFD for paying service fees, to firms that have entered into
agreements with AFD for providing certain shareholder services. Expenses in
excess of these amounts, up to approved limits, may be used to compensate
dealers and wholesalers for shares sold.
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. Each class reimburses 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 March 31, 2004, 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, 529-F 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 described below.
ADMINISTRATIVE SERVICES - The fund has an administrative services agreement
with CRMC to provide transfer agent and other related shareholder services
for all classes of shares other than classes A and B. Each relevant class
pays CRMC annual fees of 0.15% (0.10% for Class R-5) based on its
respective average daily net assets. Each relevant 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.
During the start-up period for classes R-1, R-2, R-3 and R-4, CRMC has
voluntarily agreed to pay a portion of these fees. Each 529 share class is
subject to an additional annual administrative services fee of 0.10% of its
respective average daily net assets; this fee is payable to the
Commonwealth of Virginia for the maintenance of the CollegeAmerica plan.
Although these amounts are included with administrative services fees in
the accompanying financial statements, the Commonwealth of Virginia is not
considered a related party. Administrative services fees are presented
gross of any payments made by CRMC.
Expenses under the agreements described above for the six months ended
March 31, 2004, were as follows (dollars in thousands):
--------------------------------------------------------------------------------------------------------------
ADMINISTRATIVE SERVICES
------------------------------------------------------------
COMMONWEALTH OF
CRMC VIRGINIA
DISTRIBUTION TRANSFER AGENT ADMINISTRATIVE TRANSFER AGENT ADMINISTRATIVE
SHARE CLASS SERVICES SERVICES SERVICES SERVICES SERVICES
--------------------------------------------------------------------------------------------------------------
Class A $11,977 $6,638 Not applicable Not applicable Not applicable
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Class B 1,296 202 Not applicable Not applicable Not applicable
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Class C 909 Included $136 $43 Not applicable
in
administrative
services
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Class F 108 Included 65 21 Not applicable
in
administrative
services
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Class 529-A 54 Included 46 8 $ 31
in
administrative
services
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Class 529-B 71 Included 11 5 7
in
administrative
services
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Class 529-C 142 Included 21 8 14
in
administrative
services
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Class 529-E 10 Included 3 1 2
in
administrative
services
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Class 529-F 6 Included 4 1 2
in
administrative
services
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Class R-1 14 Included 2 2 Not applicable
in
administrative
services
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Class R-2 266 Included 53 249 Not applicable
in
administrative
services
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Class R-3 120 Included 36 47 Not applicable
in
administrative
services
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Class R-4 15 Included 9 1 Not applicable
in
administrative
services
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Class R-5 Not applicable Included 43 1 Not applicable
in
administrative
services
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Total $14,988 $6,840 $429 $387 $56
==============================================================================================================
DEFERRED DIRECTORS' 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 in the accompanying financial statements
includes $97,000 in current fees (either paid in cash or deferred) and a net
increase of $131,000 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.
5. CAPITAL SHARE TRANSACTIONS
Capital share transactions in the fund were as follows (dollars and shares in
thousands):
REINVESTMENTS
SALES(1) OF DIVIDENDS REPURCHASES(1) NET INCREASE (DECREASE)
SHARE CLASS AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES
SIX MONTHS ENDED MARCH 31, 2004
Class A $ 1,038,709 38,814 $ 9,695 376 $ (728,399) (27,192) $ 320,005 11,998
Class B 70,135 2,698 - - (16,952) (650) 53,183 2,048
Class C 92,025 3,549 - - (16,777) (648) 75,248 2,901
Class F 54,853 2,056 184 7 (19,339) (720) 35,698 1,343
Class 529-A 27,132 1,012 148 6 (1,150) (42) 26,130 976
Class 529-B 5,344 203 - - (137) (5) 5,207 198
Class 529-C 12,808 484 - - (539) (20) 12,269 464
Class 529-E 1,698 64 2 - * (87) (3) 1,613 61
Class 529-F 2,743 104 12 - * (225) (8) 2,530 96
Class R-1 1,854 70 2 - * (572) (22) 1,284 48
Class R-2 50,985 1,909 50 2 (11,124) (418) 39,911 1,493
Class R-3 34,722 1,300 80 3 (7,547) (284) 27,255 1,019
Class R-4 8,317 314 25 1 (5,163) (206) 3,179 109
Class R-5 12,567 473 284 11 (8,926) (329) 3,925 155
Total net increase
(decrease) $ 1,413,892 53,050 $ 10,482 406 $ (816,937) (30,547) $ 607,437 22,909
YEAR ENDED SEPTEMBER 30, 2003
Class A $ 1,130,418 58,444 $ - - $ (1,479,092) (79,492) $ (348,674) (21,048)
Class B 62,773 3,257 - - (23,085) (1,233) 39,688 2,024
Class C 86,227 4,503 - - (42,533) (2,269) 43,694 2,234
Class F 48,187 2,475 - - (26,459) (1,397) 21,728 1,078
Class 529-A 19,948 1,027 - - (1,191) (64) 18,757 963
Class 529-B 5,233 272 - - (178) (10) 5,055 262
Class 529-C 9,480 494 - - (419) (22) 9,061 472
Class 529-E 1,507 79 - - (75) (3) 1,432 76
Class 529-F 2,385 124 - - (27) (1) 2,358 123
Class R-1 1,936 98 - - (211) (11) 1,725 87
Class R-2 43,636 2,264 - - (7,789) (404) 35,847 1,860
Class R-3 30,982 1,612 - - (8,304) (433) 22,678 1,179
Class R-4 11,864 641 - - (3,997) (211) 7,867 430
Class R-5 11,090 544 - - (9,052) (467) 2,038 77
Total net increase
(decrease) $ 1,465,666 75,834 $ - - $ (1,602,412) (86,017) $ (136,746) (10,183)
* Amount less than one thousand.
(1) Includes exchanges between share classes of the fund.
6. RESTRICTED SECURITIES
The fund has invested in certain securities for which resale may be limited to
qualified buyers or which are otherwise restricted. These securities are
identified in the investment portfolio. As of March 31, 2004, the total value of
restricted securities was $238,241,000, which represented 2.14% of the net
assets of the fund.
7. INVESTMENT TRANSACTIONS AND OTHER DISCLOSURES
The fund made purchases and sales of investment securities, excluding short-term
securities, of $2,794,437,000 and $2,312,886,000, respectively, during the six
months ended March 31, 2004.
The fund receives a reduction in its custodian fee equal to the amount of
interest calculated on certain cash balances held at the custodian bank. For the
six months ended March 31, 2004, the custodian fee of $1,343,000 included $7,000
that was offset by this reduction, rather than paid in cash.
8. TRANSACTIONS WITH AFFILIATES
If the fund's holdings of an issuer represent 5% or more of the outstanding
voting securities of the issuer, that issuer is considered to be an affiliated
issuer, as defined under the Investment Company Act of 1940. A summary of the
fund's transactions in the securities of affiliated issuers during the six
months ended March 31, 2004 is as follows:
MARKET
VALUE OF
DIVIDEND AFFILIATES AT
BEGINNING ENDING INCOME MARCH 31, 2004
SECURITY SHARES PURCHASES SALES SHARES (000) (000)
Able - 705,000 - 705,000 $725 $21,644
American Healthways (1) 850,000 750,000 400,000 1,200,000 - -
Anoto Group 6,623,244 533,000 - 7,156,244 - 15,833
Aristocrat Leisure 19,558,157 5,423,692 - 24,981,849 515 65,388
Ask Jeeves 2,800,000 153,700 - 2,953,700 - 105,536
ASM International (1) 3,119,100 - 2,700,000 419,100 - -
Baycorp Advantage 13,892,100 - - 13,892,100 - 27,033
BKN International 244,200 555,800 - 800,000 - 3,926
Cafe de Coral Holdings (1) 28,192,000 - 4,156,000 24,036,000 465 -
California Pizza Kitchen 400,000 830,000 - 1,230,000 - 24,600
Cambrex (1) 1,300,000 - - 1,300,000 78 -
CapLease - 1,530,000 - 1,530,000 - 19,615
Cathay General Bancorp (1) 1,015,000 167,600 - 1,182,600 142 -
Charles Vogele Holding - 530,000 - 530,000 - 35,548
Chung Hwa Pulp - 37,046,000 - 37,046,000 - 26,011
Clear Media 32,579,000 - - 32,579,000 - 28,639
Creo 2,916,000 648,000 - 3,564,000 - 33,739
Cymer 2,000,000 - - 2,000,000 - 77,220
DiamondWorks - 4,055,000 - 4,055,000 - 8,959
Downer EDI 51,045,208 10,579,765 45,164,961 16,460,012 460 39,315
Duratek 891,100 - - 891,100 - 14,177
Ekornes (1) 1,725,598 - - 1,725,598 - -
Expro International Group - 4,250,000 - 4,250,000 228 19,631
Extended Stay America (1) 6,190,000 - 6,190,000 - 495 -
FindWhat.com 900,000 500,000 - 1,400,000 - 30,310
Gladstone Commercial 428,000 65,000 - 493,000 61 8,430
GSI Commerce - 2,294,491 - 2,294,491 - 23,289
Hanil Cement 447,000 44,700 - 491,700 389 26,125
Hutchinson Technology (1) 1,300,000 200,000 1,500,000 - - -
Hyosung 1,773,200 70,928 - 1,844,128 124 16,025
Informatics Holdings 16,065,000 - - 16,065,000 47 6,958
InfoSpace.com 2,005,000 35,000 129,800 1,910,200 - 74,249
Infoteria 2,672 - - 2,672 - 1,602
International Energy Group 4,640,000 - - 4,640,000 187 13,577
J D Wetherspoon (1) 10,644,724 - 2,629,764 8,014,960 588 -
KEC 523,540 - - 523,540 274 16,124
Kingboard Chemical Holdings 34,662,000 5,220,000 - 39,882,000 224 76,772
Kingboard Chemical Holdings,
warrants, expire 2003 (1) 2,772,000 - 2,772,000 - - -
The Knot - 1,319,200 - 1,319,200 - 5,739
LG Insurance Co. 3,000,000 - - 3,000,000 435 16,463
Lions Gate Entertainment 3,803,500 1,975,000 - 5,778,500 - 36,003
LTG Technologies 17,785,714 - - 17,785,714 - 4,304
Lumenis 2,270,000 - - 2,270,000 - 2,735
Magnum Hunter Resources - 3,600,000 - 3,600,000 - 36,504
Manhattan Associates 800,000 1,050,000 - 1,850,000 - 51,430
MatrixOne (1) 2,500,000 - 2,500,000 - - -
Mentor Graphics 500,000 3,072,200 - 3,572,200 - 63,657
Micrel (1) 4,767,112 - 4,767,112 - - -
Micronic Laser Systems 2,638,952 - - 2,638,952 - 19,928
Millennium Chemicals 3,995,000 - 142,700 3,852,300 - 57,553
Muse Prime Software 1,770,000 - - 1,770,000 - 230
Navan Mining (1) 13,800,000 - 13,800,000 - - -
O'Charley's 400,000 950,000 - 1,350,000 - 24,637
O2Micro International 1,759,500 1,095,000 359,500 2,495,000 - 42,989
PDF Solutions 1,500,000 10,000 - 1,510,000 - 17,380
Performance Food Group 2,935,000 - - 2,935,000 - 100,817
Provide Commerce - 656,400 1,600 654,800 - 14,897
Pusan Bank 9,520,500 - - 9,520,500 1,792 60,967
Q-Med 1,610,000 - - 1,610,000 - 46,180
Recordati 2,652,000 - - 2,652,000 - 46,181
Restaurant Group 7,710,000 4,919,000 - 12,629,000 - 18,500
Rhon-Klinikum 863,800 64,000 - 927,800 - 46,584
Rhon-Klinikum, nonvoting preferred 561,300 - - 561,300 - 23,958
Rogers (1) 856,800 - 100,000 756,800 - -
Sanctuary Group 19,470,839 2,019,161 - 21,490,000 155 19,021
SBS Broadcasting 1,800,000 55,000 - 1,855,000 - 66,465
School Specialty 1,130,000 80,000 - 1,210,000 - 43,040
Sharper Image 950,000 - - 950,000 - 30,951
S1 Corp. (1) 2,090,000 - 1,414,060 675,940 367 -
Spinnaker Exploration - 1,980,000 - 1,980,000 - 71,122
Sterling Bancshares - 2,700,000 - 2,700,000 256 36,153
Sylvan Learning Systems 2,589,516 230,484 - 2,820,000 - 99,010
Techem (1) 1,413,300 - 466,000 947,300 - -
Valora - 222,000 - 222,000 - 54,918
Veeco Instruments - 1,500,000 - 1,500,000 - 42,075
Venture Production 6,500,000 - - 6,500,000 - 19,737
Wilson Greatbatch Technologies 465,800 802,600 150,000 1,118,400 - 40,576
Xinao Gas Holdings (1) 37,300,000 - - 37,300,000 - -
Yankee Candle Company 2,769,600 205,400 - 2,975,000 - 82,050
Zeevo, 5.00% convertible notes (1) 398,561 - 398,561 - 1 -
Zeevo, Series C-1, convertible preferred (1) 1,587,301 - 1,126,144 461,157 - -
Zeevo, Series E-1, convertible preferred (1) - 942,839 - 942,839 - -
Zeevo, Series E-1, warrants, expire 2008 (1) 3 - - 3 - -
ZOOTS 12,586,913 - - 12,586,913 - 1,208
$8,008 $2,204,237
(1) Unaffiliated at March 31, 2004.
FINANCIAL HIGHLIGHTS (1)
INCOME (LOSS) FROM INVESTMENT OPERATIONS(2)
NET
NET ASSET GAINS(LOSSES)
VALUE, NET ON SECURITIES TOTAL FROM
BEGINNING INVESTMENT (BOTH REALIZED INVESTMENT
OF PERIOD (LOSS) INCOME AND UNREALIZED) OPERATIONS
CLASS A:
Six months ended 3/31/2004 (5) $23.22 $(.02) $5.56 $5.54
Year ended 9/30/2003 17.53 (.01) 5.70 5.69
Year ended 9/30/2002 18.62 (.07) (.98) (1.05)
Year ended 9/30/2001 40.24 - (7) (16.33) (16.33)
Year ended 9/30/2000 29.57 - (7) 11.29 11.29
Year ended 9/30/1999 22.14 .03 8.78 8.81
CLASS B:
Six months ended 3/31/2004 (5) 22.60 (.11) 5.40 5.29
Year ended 9/30/2003 17.20 (.16) 5.56 5.40
Year ended 9/30/2002 18.38 (.23) (.95) (1.18)
Year ended 9/30/2001 40.08 (.21) (16.20) (16.41)
Period from 3/15/2000 to 9/30/2000 47.11 (.12) (6.91) (7.03)
CLASS C:
Six months ended 3/31/2004 (5) 22.54 (.12) 5.39 5.27
Year ended 9/30/2003 17.15 (.16) 5.55 5.39
Year ended 9/30/2002 18.33 (.22) (.95) (1.17)
Period from 3/15/2001 to 9/30/2001 23.06 (.16) (4.57) (4.73)
CLASS F:
Six months ended 3/31/2004 (5) 23.16 (.02) 5.53 5.51
Year ended 9/30/2003 17.48 (.01) 5.69 5.68
Year ended 9/30/2002 18.60 (.07) (.98) (1.05)
Period from 3/15/2001 to 9/30/2001 23.27 (.03) (4.64) (4.67)
CLASS 529-A:
Six months ended 3/31/2004 (5) 23.24 (.02) 5.55 5.53
Year ended 9/30/2003 17.53 .01 5.70 5.71
Period from 2/19/2002 to 9/30/2002 21.68 (.03) (4.12) (4.15)
CLASS 529-B:
Six months ended 3/31/2004 (5) 22.88 (.14) 5.48 5.34
Year ended 9/30/2003 17.43 (.19) 5.64 5.45
Period from 2/20/2002 to 9/30/2002 21.82 (.14) (4.25) (4.39)
CLASS 529-C:
Six months ended 3/31/2004 (5) 22.89 (.13) 5.47 5.34
Year ended 9/30/2003 17.44 (.18) 5.63 5.45
Period from 2/20/2002 to 9/30/2002 21.82 (.14) (4.24) (4.38)
CLASS 529-E:
Six months ended 3/31/2004 (5) 23.09 (.06) 5.53 5.47
Year ended 9/30/2003 17.50 (.07) 5.66 5.59
Period from 3/15/2002 to 9/30/2002 23.21 (.06) (5.65) (5.71)
CLASS 529-F:
Six months ended 3/31/2004 (5) 23.20 (.03) 5.54 5.51
Year ended 9/30/2003 17.53 (.02) 5.69 5.67
Period from 9/17/2002 to 9/30/2002 18.24 - (7) (.71) (.71)
CLASS R-1:
Six months ended 3/31/2004 (5) $23.00 $(.12) $5.49 $5.37
Year ended 9/30/2003 17.49 (.16) 5.67 5.51
Period from 6/19/2002 to 9/30/2002 21.60 (.04) (4.07) (4.11)
CLASS R-2:
Six months ended 3/31/2004 (5) 23.00 (.11) 5.49 5.38
Year ended 9/30/2003 17.49 (.15) 5.66 5.51
Period from 5/31/2002 to 9/30/2002 22.62 (.05) (5.08) (5.13)
CLASS R-3:
Six months ended 3/31/2004 (5) 23.12 (.06) 5.52 5.46
Year ended 9/30/2003 17.51 (.07) 5.68 5.61
Period from 6/20/2002 to 9/30/2002 21.43 (.02) (3.90) (3.92)
CLASS R-4:
Six months ended 3/31/2004 (5) 23.22 (.02) 5.56 5.54
Year ended 9/30/2003 17.53 - (7) 5.69 5.69
Period from 7/24/2002 to 9/30/2002 18.55 (.01) (1.01) (1.02)
CLASS R-5:
Six months ended 3/31/2004 (5) 23.33 .02 5.59 5.61
Year ended 9/30/2003 17.55 .05 5.73 5.78
Period from 5/15/2002 to 9/30/2002 23.36 - (7) (5.81) (5.81)
DIVIDENDS AND DISTRIBUTIONS
DIVIDENDS
(FROM NET DISTRIBUTIONS TOTAL NET ASSET
INVESTMENT (FROM CAPITAL DIVIDENDS AND VALUE, END TOTAL
INCOME) GAINS) DISTRIBUTIONS OF PERIOD RETURN(3)
CLASS A:
Six months ended 3/31/2004 (5) $(.03) $ - $(.03) $28.73 23.83%
Year ended 9/30/2003 - - - 23.22 32.46
Year ended 9/30/2002 (.04) - (.04) 17.53 (5.69)
Year ended 9/30/2001 - (5.29) (5.29) 18.62 (44.95)
Year ended 9/30/2000 (.02) (.60) (.62) 40.24 38.42
Year ended 9/30/1999 (.09) (1.29) (1.38) 29.57 41.42
CLASS B:
Six months ended 3/31/2004 (5) - - - 27.89 23.36
Year ended 9/30/2003 - - - 22.60 31.40
Year ended 9/30/2002 - - - 17.20 (6.42)
Year ended 9/30/2001 - (5.29) (5.29) 18.38 (45.38)
Period from 3/15/2000 to 9/30/2000 - - - 40.08 (14.92)
CLASS C:
Six months ended 3/31/2004 (5) - - - 27.81 23.34
Year ended 9/30/2003 - - - 22.54 31.43
Year ended 9/30/2002 (.01) - (.01) 17.15 (6.42)
Period from 3/15/2001 to 9/30/2001 - - - 18.33 (20.51)
CLASS F:
Six months ended 3/31/2004 (5) (.06) - (.06) 28.61 23.80
Year ended 9/30/2003 - - - 23.16 32.49
Year ended 9/30/2002 (.07) - (.07) 17.48 (5.73)
Period from 3/15/2001 to 9/30/2001 - - - 18.60 (20.07)
CLASS 529-A:
Six months ended 3/31/2004 (5) (.07) - (.07) 28.70 23.78
Year ended 9/30/2003 - - - 23.24 32.57
Period from 2/19/2002 to 9/30/2002 - - - 17.53 (19.14)
CLASS 529-B:
Six months ended 3/31/2004 (5) - - - 28.22 23.29
Year ended 9/30/2003 - - - 22.88 31.27
Period from 2/20/2002 to 9/30/2002 - - - 17.43 (20.12)
CLASS 529-C:
Six months ended 3/31/2004 (5) - - - 28.23 23.33
Year ended 9/30/2003 - - - 22.89 31.25
Period from 2/20/2002 to 9/30/2002 - - - 17.44 (20.07)
CLASS 529-E:
Six months ended 3/31/2004 (5) (.02) - (.02) 28.54 23.64
Year ended 9/30/2003 - - - 23.09 31.94
Period from 3/15/2002 to 9/30/2002 - - - 17.50 (24.60)
CLASS 529-F:
Six months ended 3/31/2004 (5) (.07) - (.07) 28.64 23.79
Year ended 9/30/2003 - - - 23.20 32.34
Period from 9/17/2002 to 9/30/2002 - - - 17.53 (3.89)
CLASS R-1:
Six months ended 3/31/2004 (5) $(.02) - $(.02) $28.35 23.33 %
Year ended 9/30/2003 - - - 23.00 31.50
Period from 6/19/2002 to 9/30/2002 - - - 17.49 (19.03)
CLASS R-2:
Six months ended 3/31/2004 (5) (.02) - (.02) 28.36 23.36
Year ended 9/30/2003 - - - 23.00 31.50
Period from 5/31/2002 to 9/30/2002 - - - 17.49 (22.68)
CLASS R-3:
Six months ended 3/31/2004 (5) (.05) - (.05) 28.53 23.63
Year ended 9/30/2003 - - - 23.12 32.04
Period from 6/20/2002 to 9/30/2002 - - - 17.51 (18.29)
CLASS R-4:
Six months ended 3/31/2004 (5) (.06) - (.06) 28.70 23.88
Year ended 9/30/2003 - - - 23.22 32.46
Period from 7/24/2002 to 9/30/2002 - - - 17.53 (5.50)
CLASS R-5:
Six months ended 3/31/2004 (5) (.10) - (.10) 28.84 24.04
Year ended 9/30/2003 - - - 23.33 32.93
Period from 5/15/2002 to 9/30/2002 - - - 17.55 (24.87)
RATIO OF EXPENSES RATIO OF EXPENSES RATIO OF NET
NET ASSETS, TO AVERAGE NET TO AVERAGE NET (LOSS) INCOME
END OF PERIOD ASSETS BEFORE ASSETS AFTER TO AVERAGE
(IN MILLIONS) REIMBURSEMENT REIMBURSEMENT (4) NET ASSETS
CLASS A:
Six months ended 3/31/2004 (5) $10,036 1.14% (6) 1.14% (6) -(.14)(6)
Year ended 9/30/2003 7,833 1.19 1.19 (.07)
Year ended 9/30/2002 6,283 1.17 1.17 (.32)
Year ended 9/30/2001 7,265 1.09 1.09 (.01)
Year ended 9/30/2000 14,098 1.10 1.10 - (8)
Year ended 9/30/1999 8,983 1.09 1.09 .12
CLASS B:
Six months ended 3/31/2004 (5) 305 1.89 (6) 1.89 (6) (.88)(6)
Year ended 9/30/2003 201 1.97 1.97 (.85)
Year ended 9/30/2002 118 1.95 1.95 (1.09)
Year ended 9/30/2001 86 1.89 1.89 (.81)
Period from 3/15/2000 to 9/30/2000 73 1.84 (6) 1.84 (6) (.57)(6)
CLASS C:
Six months ended 3/31/2004 (5) 234 1.93 (6) 1.93 (6) (.90)(6)
Year ended 9/30/2003 124 1.97 1.97 (.85)
Year ended 9/30/2002 56 1.96 1.96 (1.08)
Period from 3/15/2001 to 9/30/2001 17 2.11 (6) 2.11 (6) (1.11)(6)
CLASS F:
Six months ended 3/31/2004 (5) 109 1.17 (6) 1.17 (6) (.14)(6)
Year ended 9/30/2003 57 1.18 1.18 (.06)
Year ended 9/30/2002 24 1.20 1.20 (.32)
Period from 3/15/2001 to 9/30/2001 7 1.23 (6) 1.23 (6) (.21)(6)
CLASS 529-A:
Six months ended 3/31/2004 (5) 80 1.18 (6) 1.18 (6) (.16)(6)
Year ended 9/30/2003 42 1.11 1.11 .03
Period from 2/19/2002 to 9/30/2002 15 1.18 (6) 1.18 (6) (.25)(6)
CLASS 529-B:
Six months ended 3/31/2004 (5) 18 2.06 (6) 2.06 (6) (1.03)(6)
Year ended 9/30/2003 10 2.09 2.09 (.95)
Period from 2/20/2002 to 9/30/2002 3 2.08 (6) 2.08 (6) (1.15)(6)
CLASS 529-C:
Six months ended 3/31/2004 (5) 37 2.04 (6) 2.04 (6) (1.01)(6)
Year ended 9/30/2003 20 2.07 2.07 (.94)
Period from 2/20/2002 to 9/30/2002 7 2.05 (6) 2.05 (6) (1.12)(6)
CLASS 529-E:
Six months ended 3/31/2004 (5) 5 1.51 (6) 1.51 (6) (.48)(6)
Year ended 9/30/2003 3 1.53 1.53 (.38)
Period from 3/15/2002 to 9/30/2002 1 1.51 (6) 1.51 (6) (.60)(6)
CLASS 529-F:
Six months ended 3/31/2004 (5) 6 1.26 (6) 1.26 (6) (.22)(6)
Year ended 9/30/2003 3 1.27 1.27 (.10)
Period from 9/17/2002 to 9/30/2002 - (9) .04 .04 .01
CLASS R-1:
Six months ended 3/31/2004 (5) $4 2.04%(6) 1.93%(6) (.90)(6)
Year ended 9/30/2003 2 2.43 1.93 (.78)
Period from 6/19/2002 to 9/30/2002 - (9) 7.56 .54 (.22)
CLASS R-2:
Six months ended 3/31/2004 (5) 99 2.33 (6) 1.89 (6) (.86)(6)
Year ended 9/30/2003 46 2.59 1.89 (.75)
Period from 5/31/2002 to 9/30/2002 2 .85 .63 (.29)
CLASS R-3:
Six months ended 3/31/2004 (5) 67 1.57 (6) 1.51 (6) (.47)(6)
Year ended 9/30/2003 30 1.67 1.51 (.37)
Period from 6/20/2002 to 9/30/2002 2 .52 .42 (.11)
CLASS R-4:
Six months ended 3/31/2004 (5) 16 1.14 (6) 1.14 (6) (.12)(6)
Year ended 9/30/2003 10 1.17 1.16 (.02)
Period from 7/24/2002 to 9/30/2002 - (9) .70 .21 (.03)
CLASS R-5:
Six months ended 3/31/2004 (5) 93 .82 (6) .82 (6) .18 (6)
Year ended 9/30/2003 72 .83 .83 .28
Period from 5/15/2002 to 9/30/2002 53 .31 .31 .01
SIX MONTHS ENDED YEAR ENDED SEPTEMBER 30,
MARCH 31, 2004(5) 2003 2002 2001 2000 1999
Portfolio turnover rate for all classes of shares 25% 49% 51% 60% 63% 50%
(1) Based on operations for the period shown (unless otherwise noted) and,
accordingly, may not be representative of a full year.
(2) Year ended 1999 is based on shares outstanding on the last day of the year;
all other periods are based on average shares outstanding.
(3) Total returns exclude all sales charges, including contingent deferred
sales charges.
(4) The ratios in this column reflect the impact, if any, of certain
reimbursements and payments from CRMC. During the start up period for the
retirement share classes (except R-5), CRMC voluntarily agreed to pay a
portion of the fees related to transfer agent services.
(5) Unaudited.
(6) Annualized.
(7) Amount less than one cent.
(8) Amount less than .01 percent.
(9) Amount less than $1 million.
See Notes to Financial Statements
OTHER SHARE CLASS RESULTS unaudited
CLASS B, CLASS C, CLASS F AND CLASS 529
RETURNS FOR PERIODS ENDED MARCH 31, 2004 1 YEAR LIFE OF CLASS
CLASS B SHARES
Reflecting applicable contingent deferred sales charge (CDSC),
maximum of 5%, payable only if shares are sold within
six years of purchase +63.66% -8.67% (1)
Not reflecting CDSC +68.66% -8.28% (1)
CLASS C SHARES
Reflecting CDSC, maximum of 1%, payable only if shares
are sold within one year of purchase +67.59% +6.34% (2)
Not reflecting CDSC +68.59% +6.34% (2)
CLASS F SHARES (3)
Not reflecting annual asset-based fee charged by sponsoring firm +69.96% +7.21% (2)
CLASS 529-A SHARES
Reflecting 5.75% maximum sales charge +60.17% +11.19% (4)
Not reflecting maximum sales charge +69.92% +14.35% (4)
CLASS 529-B SHARES
Reflecting applicable CDSC, maximum of 5%, payable only
if shares are sold within six years of purchase +63.42% +11.29% (5)
Not reflecting CDSC +68.42% +12.97% (5)
CLASS 529-C SHARES
Reflecting CDSC, maximum of 1%, payable only if shares
are sold within one year of purchase +67.44% +13.00% (5)
Not reflecting CDSC +68.44% +13.00% (5)
CLASS 529-E SHARES (3) +69.33% +10.66% (6)
CLASS 529-F SHARES (3)
Not reflecting annual asset-based fee charged by sponsoring firm +69.84% +34.43% (7)
Figures shown on this page are past results and are not predictive of results in
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 the
most current information and month-end results, visit americanfunds.com.
(1) Average annual total return from March 15, 2000, when Class B shares were
first sold.
(2) Average annual total return from March 15, 2001, when Class C and Class F
shares were first sold.
(3) These shares are sold without any initial or contingent deferred sales
charge.
(4) Average annual total return from February 19, 2002, when Class 529-A shares
were first sold.
(5) Average annual total return from February 20, 2002, when Class 529-B and
Class 529-C shares were first sold.
(6) Average annual total return from March 15, 2002, when Class 529-E shares
were first sold.
(7) Average annual total return from September 17, 2002, when Class 529-F
shares were first sold.
OFFICES OF THE FUND AND OF THE INVESTMENT ADVISER
Capital Research and Management Company
333 South Hope Street
Los Angeles, CA 90071-1406
135 South State College Boulevard
Brea, CA 92821-5823
TRANSFER AGENT FOR SHAREHOLDER ACCOUNTS
American Funds Service Company
(Please write to the address nearest you.)
P.O. Box 25065 Santa Ana, CA 92799-5065
P.O. Box 659522 San Antonio, TX 78265-9522
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
225 Franklin Street
Boston, MA 02105-1713
COUNSEL
O'Melveny & Myers LLP
400 South Hope Street
Los Angeles, CA 90071-2899
INDEPENDENT AUDITORS
Deloitte & Touche LLP
Two California Plaza
350 South Grand Avenue
Los Angeles, CA 90071-3462
PRINCIPAL UNDERWRITER
American Funds Distributors, Inc.
333 South Hope Street
Los Angeles, CA 90071-1406
There are several ways to invest in SMALLCAP World Fund. Class A shares are
subject to a 5.75% maximum up-front sales charge that declines for accounts (and
aggregated investments) of $25,000 or more. Other share classes, which are
generally not available for certain employer-sponsored retirement plans, have no
up-front sales charges but are subject to additional annual expenses and fees.
Annualized expenses for Class B shares were 0.75 percentage points higher than
for Class A shares; Class B shares convert to Class A shares after eight years
of ownership. If redeemed within six years, Class B shares may also be subject
to a contingent deferred sales charge ("CDSC") of up to 5% that declines over
time. Class C shares were subject to annualized expenses 0.79 percentage points
higher than those for Class A shares and a 1% CDSC if redeemed within the first
year after purchase. Class C shares convert to Class F shares after 10 years.
Class F shares, which are available only through certain fee-based programs
offered by broker-dealer firms and registered investment advisers, had higher
annualized expenses (by 0.03 percentage points) than did Class A shares, and an
annual asset-based fee charged by the sponsoring firm. Expenses are deducted
from income earned by the fund. As a result, dividends and investment results
will differ for each share class.
INVESTORS SHOULD CAREFULLY CONSIDER THE INVESTMENT OBJECTIVES, RISKS, CHARGES
AND EXPENSES OF SMALLCAP WORLD FUND AND COLLEGEAMERICA. THIS AND OTHER IMPORTANT
INFORMATION IS CONTAINED IN THE PROSPECTUS, WHICH CAN BE OBTAINED FROM YOUR
FINANCIAL ADVISER AND SHOULD BE READ CAREFULLY BEFORE INVESTING. YOU MAY ALSO
CALL AMERICAN FUNDS SERVICE COMPANY AT 800/421-0180 OR VISIT THE AMERICAN FUNDS
WEBSITE AT AMERICANFUNDS.COM.
"AMERICAN FUNDS PROXY VOTING GUIDELINES" -- WHICH DESCRIBES HOW WE VOTE PROXIES
RELATING TO PORTFOLIO SECURITIES -- IS AVAILABLE UPON REQUEST, FREE OF CHARGE,
BY CALLING AMERICAN FUNDS SERVICE COMPANY, VISITING THE AMERICAN FUNDS WEBSITE
OR ACCESSING THE U.S. SECURITIES AND EXCHANGE COMMISSION WEBSITE AT WWW.SEC.GOV.
This report is for the information of shareholders of SMALLCAP World Fund, but
it may also be used as sales literature when preceded or accompanied by the
current prospectus, which gives details about charges, expenses, investment
objectives and operating policies of the fund. If used as sales material after
June 30, 2004, this report must be accompanied by an American Funds statistical
update for the most recently completed calendar quarter.
[logo - American Funds(R)]
The right choice for the long term(R)
WHAT MAKES AMERICAN FUNDS DIFFERENT?
For more than 70 years, we have followed a consistent philosophy that we firmly
believe is in our investors' best interests. The range of opportunities offered
by our family of just 29 carefully conceived, broadly diversified funds has
attracted over 25 million shareholder accounts.
OUR UNIQUE COMBINATION OF STRENGTHS INCLUDES THESE FIVE FACTORS:
o A LONG-TERM, VALUE-ORIENTED APPROACH
Rather than follow fads, we pursue a consistent strategy, focusing on each
investment's long-term potential.
o AN UNPARALLELED GLOBAL RESEARCH EFFORT
American Funds draws on one of the industry's most globally integrated
research networks.
o THE MULTIPLE PORTFOLIO COUNSELOR SYSTEM
Every American Fund is divided among a number of portfolio counselors. Each
takes responsibility for a portion independently, within each fund's
objectives; in most cases, research analysts manage a portion as well. Over
time this method has contributed to a consistency of results and continuity
of management.
o EXPERIENCED INVESTMENT PROFESSIONALS
The recent market decline was not the first for most of the portfolio
counselors who serve the American Funds. Nearly 70% of them were in the
investment business before the sharp market decline of 1987.
o A COMMITMENT TO LOW OPERATING EXPENSES
American Funds' operating expenses are among the lowest in the mutual fund
industry. Our portfolio turnover rates are low as well, keeping transaction
costs and tax consequences contained.
29 MUTUAL FUNDS, CONSISTENT PHILOSOPHY, CONSISTENT RESULTS
o GROWTH FUNDS
AMCAP Fund(R)
EuroPacific Growth Fund(R)
The Growth Fund of America(R)
The New Economy Fund(R)
New Perspective Fund(R)
New World FundSM
> SMALLCAP World Fund(R)
o GROWTH-AND-INCOME FUNDS
American Mutual Fund(R)
Capital World Growth and Income FundSM
Fundamental InvestorsSM
The Investment Company of America(R)
Washington Mutual Investors FundSM
o EQUITY-INCOME FUNDS
Capital Income Builder(R)
The Income Fund of America(R)
o BALANCED FUND
American Balanced Fund(R)
o BOND FUNDS
American High-Income TrustSM
The Bond Fund of AmericaSM
Capital World Bond Fund(R)
Intermediate Bond Fund of America(R)
U.S. Government Securities FundSM
o TAX-EXEMPT BOND FUNDS
American High-Income Municipal Bond Fund(R)
Limited Term Tax-Exempt Bond Fund of AmericaSM
The Tax-Exempt Bond Fund of America(R)
STATE-SPECIFIC TAX-EXEMPT FUNDS
The Tax-Exempt Fund of California(R)
The Tax-Exempt Fund of Maryland(R)
The Tax-Exempt Fund of Virginia(R)
o MONEY MARKET FUNDS
The Cash Management Trust of America(R)
The Tax-Exempt Money Fund of AmericaSM
The U.S. Treasury Money Fund of AmericaSM
THE CAPITAL GROUP COMPANIES
American Funds
Capital Research and Management
Capital International
Capital Guardian
Capital Bank and Trust
Lit. No. MFGESR-935-0504
Litho in USA BDC/AL/8094
Printed on recycled paper
ITEM 2 - Code of Ethics
Not applicable for filing of Semiannual Reports to Shareholders.
ITEM 3 - Audit Committee Financial Expert
Not applicable for filing of Semiannual Reports to Shareholders.
ITEM 4 - Principal Accountant Fees and Services
Not applicable for filing of Semiannual Reports to Shareholders.
ITEM 5 - Audit Committee of Listed Registrants
Not applicable.
ITEM 6 - Reserved
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 - Reserved
ITEM 9 - 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 committee comprised solely of persons
who are not considered "interested persons" of the registrant within the meaning
of the Investment Company Act of 1940. 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 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 committee.
ITEM 10 - Controls and Procedures
(a) The officers providing the certifications in this report in accordance with
rule 30a-2 under the Investment Company Act of 1940 have concluded, based
on their evaluation of the Registrant's disclosure controls and procedures
(as such term is defined in such rule), 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 last fiscal half-year (the
Registrant's second fiscal half-year in the case of an annual report) that
has materially affected, or is reasonably likely to materially affect, the
Registrant's internal control over financial reporting.
ITEM 11 - Exhibits
(a) The Code of Ethics - not applicable for filing of Semiannual Reports to
Shareholders.
(b) The certifications required by Rule 30a-2 of the Investment Company Act of
1940, as amended, 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/ Gordon Crawford
Gordon Crawford, Chairman and PEO
Date: June 8, 2004
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/ Gordon Crawford
Gordon Crawford, Chairman and PEO
Date: June 8, 2004
By /s/ David A. Pritchett
David A. Pritchett, Treasurer
Date: June 8, 2004