SMALLCAP WORLD FUND
1997 Semi-Annual Report
For the six months ended March 31
[cover: globe and various graphs]
[The American Funds Group(r)]
SMALLCAP World Fund(r) seeks long-term growth of capital through investments in
smaller companies in the U.S. and around the world.
INVESTMENT HIGHLIGHTS
Total returns for periods ended March 31, 1997 with all distributions
reinvested
<TABLE>
<CAPTION>
FT/S&P-Actuaries
SMALLCAP Medium-Small Cap MSCI
World Fund World Index S&P 500 EAFE Index
<S> <C> <C> <C> <C>
6 months +0.7% +1.2% +0.1%
12 months +6.4 +4.1 + 19.8 +1.8
5 years +87.6 +72.0 +113.6 +67.8
Since fund's inception
on April 30, 1990 +144.5 +81.8 +178.6 +60.5
Average annual compound
return since
fund's inception +13.8 +9.0 +16.0 +7.1
</TABLE>
All market indexes cited in this report are unmanaged and include reinvestment
of all distributions. The Financial Times/S&P-Actuaries Medium-Small Cap World
Index, calculated by Goldman Sachs, tracks the smallest stocks (the bottom 25%)
in 28 world markets; Standard & Poor's 500 Composite Index tracks the 500
largest U.S. stocks; the Morgan Stanley Capital International EAFE(r) (Europe,
Australasia, Far East) Index tracks large-company stocks in all major non-U.S.
markets.
Fund results in this report were computed without a sales charge unless
otherwise indicated. Here are the total returns and average annual compound
returns with all distributions reinvested for periods ended March 31, 1997,
assuming payment of the 5.75% maximum sales charge at the beginning of the
stated periods (sales charges are lower for accounts of $50,000 or more):
<TABLE>
<CAPTION>
Average Annual
Total Return Compound Return
<S> <C> <C>
Since inception on April 30, +130.41% +12.82%
1990
5 years +76.87% +12.08%
12 months +0.27% -
</TABLE>
THE FIGURES IN THIS REPORT REFLECT PAST RESULTS AND ARE NOT PREDICTIVE OF
FUTURE RESULTS. SHARE PRICE AND RETURN WILL VARY, SO YOU MAY LOSE MONEY BY
INVESTING IN THE FUND. THE SHORTER THE TIME PERIOD OF YOUR INVESTMENT, THE
GREATER THE POSSIBILITY OF LOSS. FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS
OF, OR INSURED OR GUARANTEED BY, THE U.S. GOVERNMENT, ANY FINANCIAL
INSTITUTION, THE FEDERAL DEPOSIT INSURANCE CORPORATION, OR ANY OTHER AGENCY,
ENTITY OR PERSON.
FELLOW SHAREHOLDERS:
For the first time in more than six years, the U.S. stock market flirted with a
10% correction toward the end of SMALLCAP World Fund's semi-annual reporting
period. For your fund, the decline effectively erased an otherwise strong gain
for the six months ended March 31, resulting in a total return of 0.7% for
shareholders who reinvested the 7-cent per-share dividend and $2.35 per-share
capital gain distribution paid in December. This meager return masked
substantial volatility in individual stocks; indeed, 103 of the 454 holdings we
held throughout the period rose in price by more than 20%, while 127 fell 20%
or more.
As the table at left shows, SMALLCAP's results were in a range similar to those
registered by the fund's primary benchmark, the FT/S&P-Actuaries Medium-Small
Cap World Index, and by major non-U.S. markets as measured by the Morgan
Stanley Capital International EAFE(r) (Europe, Australasia, Far East) Index.
They fell far short of returns by larger U.S. companies, as represented by
Standard & Poor's 500 Composite Index.
BIGGER WAS BETTER
For most of the past three years, we have been in an environment in which the
stocks of smaller companies did well - both in the United States and around the
world - but not nearly as well as the stocks of larger companies. During the
past six months, this pursuit of "bigness" took on near-manic proportions.
Incredibly, the 25 largest stocks in the S&P 500 accounted for almost half of
the index's 20% total return for the 12 months ending March 31. Clearly
reminiscent of the "Nifty Fifty" mania of the early 1970s, this penchant for
the very largest stocks created a two-tier market in which the stocks of the
largest companies thrived while most others lagged far behind. When stock
market leadership is that concentrated, it typically signals difficulties ahead
- - and that's exactly what we've seen.
The correction that began in mid-March took U.S. stock prices down 9.8% through
April 11 as measured by the Dow Jones Industrial Average, just shy of the magic
10% level that unofficially defines a "correction." We think many investors
will consider 0.2% a distinction without a difference given that many stocks -
especially those of smaller companies - experienced significantly greater
declines. A Wall Street Journal article on April 2 noted that the Dow Jones
Industrial Average - which is composed of 30 of the largest U.S. stocks - was
down 6.7% at that point from its high. But 30% of the stocks in the S&P 500
were off 20% or more from their high. And 55% of the stocks in the NASDAQ
Industrials, a widely used measure of small- to mid-size U.S. stocks, had
fallen at least 20%, while a stunning 30% were down 40% or more.
The largest stocks not only held up better on the way down, they led the way
back up. Within four weeks of touching bottom, the Dow Jones Industrials were
again at new highs by May 5. Most smaller stocks, though, had yet to bounce all
the way back.
GOOD VALUE IN SMALL COMPANIES
SMALLCAP has done very well with the wind in its face, posting substantially
higher returns over its lifetime than its benchmark index, most international
indexes and most similar funds. It has done this partly by having a relatively
high percentage of U.S. stocks but mostly through superior stock selection. We
continue to be very active buyers, adding 133 companies to the portfolio during
the six months. We also eliminated 80 holdings, including many technology
companies that had soared in price, and several long-term Scandinavian holdings
that had also done quite well. As the market swooned, we put this money quickly
back to work. As a result, your fund currently has one of the lowest cash
positions it has ever had: 9.7%.
In stark contrast to the sharp stock market swings, we continue to see solid
earnings growth from most companies in the portfolio and a generally positive
business environment around the world. During the period, there was broad
strength in European stocks, although returns for U.S. investors were dampened
somewhat by the strong dollar. Exporting companies across the continent have
become more competitive as weak currencies create pricing advantages. The one
exception to this trend was the United Kingdom, where stocks were weak as a
result of the exceptional strength of the pound. We took advantage of this
weakness to initiate or add to positions in a number of smaller U.K.-based
growth companies, including: Dr Solomon's Group, which makes detection systems
for computer viruses; Ramco Energy, which produces oil and gas in the Caspian
Sea; and DFS, one of the world's most profitable furniture retailers. This odd
assortment of well-run companies with no common theme typifies our
company-by-company approach to investing.
On the other side of the world, things have been quite different. Most Asian
economies are slowing down, although from very high rates. Certain countries,
notably South Korea and Thailand, are having a hard time adapting to slower
growth. Rising wages are reducing competitiveness, and years of neglect of
basic infrastructure - roads, housing and technology - are making adjustments
difficult. Moreover, banking industries geared toward growth are sagging as
loan losses mount. The "Asian miracle," it appears, does have its limits. Until
recently stock markets remained high throughout Asia; consequently, our
exposure has been light. With six-month declines among smaller companies of 15%
in the Philippines, 25% in Japan and 52% in Thailand, however, and recent
declines elsewhere, we are taking another look at the region.
RESEARCH IS THE KEY
One advantage of the spotlight shining on large companies today is that our
analysts continue to find, in their shadows, lots of solid values among smaller
companies. Unlike most investment organizations, Capital regards research as a
career and not as a steppingstone to portfolio management. Many of our analysts
have been following the same companies and establishing meaningful business
relationships for a decade or more.
We also believe analysts should invest in the stocks they follow - and be
compensated based on their investment results. Analysts know the companies
best. That's why our investment management process includes what we call a
"research portfolio," a compilation of our analysts' best ideas. For SMALLCAP,
this commitment isn't insignificant: More than one-third of the fund's assets
are managed in the research portfolio. This is the largest commitment in any of
the American Funds and reflects the unique nature of the small companies in
which SMALLCAP invests, which typically take more effort to find and
understand. All told, more than 40 analysts are involved in making decisions
affecting the fund's portfolio.
This approach has served the fund well. SMALLCAP ranks first over its lifetime
among the seven global small-company funds tracked over that period by Lipper
Analytical Services, and first over five years out of nine funds. (Over the
past year, we fell near the middle of the pack, 16th of 27.) We will do our
best to see that this superior long-term performance continues.
We look forward to reporting to you again in six months. In the meantime, if
recent stock market action is any indication, you may want to keep your seat
belts fastened and your eyes firmly on the horizon.
Cordially,
[/s/ Robert B. Egelston] [/s/ Gordon Crawford]
Robert B. Egelston Gordon Crawford
Chairman of the Board President
May 16, 1997
WHERE ARE SMALLCAP'S PORTFOLIO COMPANIES LOCATED?
Geographical distribution based on total net assets for the period ending March
31, 1997
THE AMERICAS 57.7%
United States 48.0%
Canada 8.1
Mexico .8
Argentina .6
Brazil .2
EUROPE 19.5%
United Kingdom 6.4%
Sweden 3.5
Norway 1.7
Germany 1.3
Austria 1.2
Spain 1.1
Ireland .9
France .8
Finland .6
Luxembourg .5
Netherlands .4
Other Europe 1.1
ASIA/PACIFIC 11.0%
Australia 4.6%
Hong Kong 1.5
New Zealand 1.2
Malaysia .9
Japan .8
India .5
Indonesia .5
Philippines .4
Other Asia .6
OTHER COUNTRIES 2.1%
CASH & EQUIVALENTS 9.7%
TOTAL 100.0%
<TABLE>
<S> <C> <C> <C>
SMALLCAP World Fund
INVESTMENT PORTFOLIO March 31, 1997
Industry Diversification
Broadcasting & Publishing 9.10%
Business & Public Services 7.71%
Health & Personal Care 6.97%
Energy Sources 6.18%
Merchandising 5.89%
Other Industries 54.50%
Cash & Equivalents 9.65%
Percent
of
Net
Assets
Largest Equity-Type Holdings
Camco International .98%
Newcourt Credit Group .85
Fairfax Financial Holdings .83
Fletcher Challenge Energy .80
Smedvig .75
Hoganas Eldfast .68
OM Gruppen .67
Capral Aluminium .63
Village Roadshow .60
Delta and Pine Land .60
Percent
Shares or Market of
EQUITY-TYPE SECURITIES Principal Value Net
(common and preferred stocks and convertible debentures) Amount (000) Assets
Broadcasting & Publishing - 9.10%
FLEXTECH PLC (United Kingdom) 1 3,979,600 $41,079 .58%
Antena 3 de Radio, SA (Global Depositary Receipts) (Spain) 1 2 3 1,500 39,207 .55
CanWest Global Communications Corp. (Canada) 2,449,793 36,117 .51
International Family Entertainment, Inc., Class B (USA)1 1,768,750 36,038 .51
Westwood One, Inc. (USA) 1 1,905,000 35,243 .50
Central European Media Enterprises Ltd., Class A (USA - Incorporated in
Bermuda) 1 915,000 30,424 .43
Gaylord Entertainment Co., Class A (USA) 1,411,200 30,341 .43
New Straits Times Press (Malaysia) Bhd. (Malaysia) 3,900,000 23,932 .34
United Television, Inc. (USA) 225,000 19,716 .28
BET Holdings, Inc., Class A (USA) 1 662,100 19,615 .28
Cablevision Systems Corp., Class A (USA) 1 630,000 18,742 .26
Chrysalis Group PLC (United Kingdom) 2 1,600,000 18,672 .26
HSN, Inc. (formerly Silver King Communications, Inc.) (USA) 1 673,000 17,077 .24
Scottish Television PLC (United Kingdom) 1,400,000 15,878 .22
Emmis Broadcasting Corp., Class A (USA) 1 400,000 15,475 .22
Ackerley Communications, Inc. (USA) 1,160,000 15,225 .21
Young Broadcasting Inc., Class A (USA) 1 557,000 13,438 .19
Comcast UK Cable Partners Ltd., Class A (United Kingdom - Incorporated
in Bermuda) 1 1,150,000 12,794 .18
Scandinavian Broadcasting System SA (Denmark - Incorporated in Luxembourg) 1 2 681,900 12,274 .17
United International Holdings, Inc., Class A (USA) 1 1,195,000 11,353 .16
SFX Broadcasting, Inc., Class A (USA) 1 400,000 11,300 .16
Data Broadcasting Corp. (USA)1 2 2,000,000 10,750 .15
Primedia Ltd. (South Africa) 1,650,000 9,484 .13
Australian Provincial Newspapers Holdings Ltd. (Australia) 5,402,537 9,065 .13
Wegener NV (Netherlands) 86,600 8,678 .12
Sinclair Broadcast Group, Inc., Class A (USA) 1 300,000 7,875 .11
Ascent Entertainment Group, Inc.(USA) 1 700,000 7,437 .11
Austereo Ltd. (Australia) 3,787,304 7,305 .10
MIH Holdings Ltd. (South Africa) 1,686,500 6,984 .10
Capital Radio PLC (United Kingdom) 735,000 6,802 .10
Baton Broadcasting Inc. (Canada) 940,000 6,793 .10
Groupe AB (American Depositary Receipts) (France) 1 700,000 6,738 .10
NRJ SA (France) 47,284 6,496 .09
Shaw Communications Inc., Class B (Canada) 900,000 6,342 .09
ValueVision International, Inc., Class A (USA) 1 1,370,000 6,079 .09
Chancellor Broadcasting Co., Class A (USA) 1 220,000 5,830 .08
Jones Intercable, Inc., Class A (USA) 1 610,000 5,795 .08
Nasionale Pers Beperk-N (South Africa) 534,900 5,568 .08
Schibsted ASA (Norway) 252,800 5,136 .07
Matav-Cable Systems Media Ltd. (American Depositary Receipts) (Israel) 1 320,000 4,800 .07
DMX Inc. (USA) 1 2,570,000 4,417 .06
Pacific Media PLC (United Kingdom) 1 2 88,249,124 4,352 .06
Southern Starr Group Ltd. (Australia) 2,870,000 3,938 .06
Prime Television Ltd. (Australia) 1,980,000 3,726 .05
Grupo Radio Centro, SA de CV (American Depositary Receipts) (Mexico) 420,000 3,623 .05
Investec - Consultoria Internacional, SA (Portugal) 99,000 3,578 .05
ENDEMOL Entertainment (Netherlands) 100,000 3,369 .05
Century Communications Corp., Class A (USA) 1 724,064 3,349 .05
Adelphia Communications Corp., Class A (USA) 1 525,000 2,822 .04
Premiere Radio Networks, Inc., Class A (USA) 1 135,000 2,177 .03
Dorling Kindersley Holdings PLC (United Kingdom) 361,900 1,618 .02
Business & Public Services - 7.71%
Banta Corp. (USA) 1,425,000 36,337 .51
CBT Group PLC (American Depositary Receipts) (Ireland) 1 675,000 33,666 .48
Primark Corp. (USA) 1 1,350,000 32,062 .45
Franklin Quest Co. (USA) 1 2 1,350,000 28,519 .40
Vivra Inc. (USA) 1 1,050,000 28,350 .40
Flughafen Wien AG (Austria) 570,600 26,012 .37
Vanstar Corp. (USA) 1 2 2,200,000 18,150
Vanstar Financing Trust, 6.75% convertible preferred 2 4 132,000 4,290
Vanstar Financing Trust, 6.75% convertible preferred 2 12,600 409 .32
BDM International, Inc. (USA) 1 1,000,000 22,000 .31
MSC Industrial Direct Co., Inc., Class A (USA) 1 714,800 20,819 .29
Corporate Services Group PLC (United Kingdom) 4 5,760,398 19,079 .27
Rhon-Klinikum AG, preferred shares (Germany) 154,000 18,460 .26
Pricer AB, Class B (Sweden) 525,000 17,258
Pricer AB, Class B, rights, expire 4/4/97 525,000 557 .25
Saskatchewan Wheat Pool, non-voting shares, Class B (Canada) 1,125,000 13,863 .20
Universal Health Services, Inc., Class B (USA) 1 407,200 13,387 .19
APCOA Parking AG (Germany) 2 120,800 12,380 .18
Henry Schein, Inc. (USA) 1 415,000 12,035 .17
ISS-International Service System A/S, Class B (Denmark) 391,741 11,399 .16
ENVOY Corp. (USA) 1 471,500 11,021 .16
Pittston Brink's Group (USA) 400,000 10,100 .14
Kanamoto Co., Ltd. (Japan) 1,088,000 8,976 .13
Strategic Distribution, Inc. (USA) 1 2 1,890,000 8,623 .12
Freepages Group PLC (United Kingdom) 11,250,000 8,414 .12
Dr Solomon's Group PLC (American Depositary Receipts) (United Kingdom) 1 380,000 8,360 .12
United Waste Systems, Inc. (USA) 1 200,000 7,450 .11
National Surgery Centers, Inc. (USA) 1 238,000 6,902 .10
SCB Computer Technology, Inc. (USA) 1 2 374,900 5,998 .09
Eagle River Interactive, Inc. (USA) 1 553,500 5,950 .08
International Container Terminal Services, Inc., 1.75% convertible
debentures 2004 (Philippines) $5,905,000 5,875 .08
Registry, Inc. (USA) 1 160,000 5,680 .08
American Disposal Services, Inc. (USA) 1 300,000 5,325 .08
Newalta Corp. (Canada) 1,000,000 5,240 .07
Bell & Howell Co. (USA) 1 250,000 5,219 .07
Physician Sales & Service, Inc. (USA) 1 400,000 5,050 .07
PRT Corp. of America (USA) 1 2 3 4 48,631 3,191
PRT Corp. of America, 4.00% convertible preferred 1 2 3 4 27,565 1,809 .07
UNC Inc. (USA) 1 350,000 4,987 .07
More Group PLC (United Kingdom) 475,000 4,934 .07
UroCor, Inc. (USA) 1 500,000 4,625 .07
Alternative Resources Corp. (USA) 1 300,000 4,537 .07
Vincam Group, Inc. (USA) 1 165,000 4,517 .06
Filofax Group PLC (United Kingdom) 2 1,956,000 4,340 .06
Thomas Group, Inc. (USA) 1 2 388,500 3,788 .05
MDC Corp., Class A (Canada) 1 433,333 3,727 .05
InteliData Technologies Corp. (USA) 1 670,000 3,350 .05
Sapient Corp. (USA) 1 100,000 3,200 .05
Air & Water Technologies Corp., Class A (USA) 1 619,500 3,097 .04
AccuStaff Inc. (USA) 1 183,600 3,075 .04
Katz Media Group, Inc. (USA) 1 482,300 3,075 .04
Triple P NV (Netherlands) 1 985,000 2,955 .04
Staff Builders, Inc., Class A (USA) 1 1,180,000 2,766 .04
NETCOM On-Line Communication Services, Inc. (USA) 1 101,900 981 .01
Health & Personal Care - 6.97%
Scotia Holdings PLC (United Kingdom) 2 5,062,200 37,443 .53
Orthodontic Centers of America, Inc. (USA) 1 1,970,000 26,595 .38
PathoGenesis Corp. (USA) 1 2 1,035,000 25,875 .37
Vertex Pharmaceuticals Inc. (USA) 1 630,000 25,515 .36
IDEC Pharmaceuticals Corp. (USA) 1 2 920,000 21,908 .31
Acuson Corp. (USA) 1 850,000 19,869 .28
Ranbaxy Laboratories Ltd. (Global Depositary Receipts)(India) 553,500 13,007
Ranbaxy Laboratories Ltd. 241,235 4,310 .24
Mentor Corp. (USA) 800,000 17,300 .24
Cytyc Corp. (USA) 1 758,200 14,216 .20
Thermedics Inc. (USA) 1 870,500 13,602 .19
Paragon Trade Brands, Inc. (USA) 1 2 787,700 13,194 .19
SONUS Pharmaceuticals, Inc. (USA) 1 2 3 4 442,500 9,920 .18
SONUS Pharmaceuticals, Inc. 1 2 107,500 2,835
Gilead Sciences, Inc. (USA) 1 500,000 11,438 .16
Australian Hospital Care Ltd. (Australia) 1 6,200,000 11,133 .16
Martek Biosciences Corp. (USA) 1 600,000 10,500 .15
Physio-Control International Corp. (USA) 1 750,000 10,406 .15
Vical Inc. (USA) 1 700,000 10,150 .14
i-STAT Corp. (USA) 1 2 727,000 9,633 .14
Anesta Corp. (USA) 1 2 550,000 9,487 .13
Pharmacyclics, Inc. (USA) 1 2 4 580,000 9,208 .13
Genelabs Technologies, Inc. (USA) 1 2 4 2,085,000 9,122 .13
COR Therapeutics, Inc. (USA) 1 900,000 8,550 .12
NeoPath, Inc. (USA) 1 600,000 8,250 .12
KeraVision, Inc. (USA) 1 2 795,000 8,049 .11
Protein Design Labs, Inc. (USA) 1 250,000 7,500 .11
Alpha-Beta Technology, Inc. (USA) 1 695,000 7,384 .10
Kos Pharmaceuticals, Inc. (USA) 1 350,000 7,000 .10
Gedeon Richter Ltd. (Global Depositary Receipts) (Hungary) 110,000 6,710 .09
Intercardia, Inc. (USA) 1 300,000 6,675 .09
SEQUUS Pharmaceuticals, Inc. (USA) 1 800,000 6,100
SEQUUS Pharmaceuticals, Inc., warrants, expire 1998 1 80,832 20 .09
ImClone Systems Inc. (USA) 1 1,000,000 5,750 .08
Digene Corp. (USA) 1 500,000 5,688 .08
Neose Technologies, Inc. (USA) 1 400,000 5,500 .08
PerSeptive Biosystems, Inc. (USA) 1 684,581 5,391
PerSeptive Biosystems, Inc., warrants, expire 2003 1 5,419 13 .08
Creative BioMolecules, Inc. (USA) 1 700,000 5,250 .07
Virbac SA (France) 47,300 4,983 .07
Technical Chemicals and Products, Inc. (USA) 1 2 600,000 4,950 .07
Millennium Pharmaceuticals, Inc. (USA) 1 350,000 4,769 .07
Neurogen Corp. (USA) 1 250,000 4,750 .07
OrthoLogic Corp. (USA) 1 1,000,000 4,750 .07
Cyberonics, Inc. (USA) 1 2 3 4 494,000 2,532
Cyberonics, Inc. 1 2 370,800 1,900 .06
AutoImmune Inc. (USA) 1 4 394,000 4,334 .06
CIMA LABS INC. (USA) 1 2 565,500 3,393 .05
SIBIA Neurosciences, Inc. (USA) 1 410,000 3,383 .05
Ethical Holdings PLC (American Depositary Receipts)(United Kingdom) 1 675,000 3,375 .05
ImmuLogic Pharmaceutical Corp. (USA) 1 750,000 3,281 .05
Cambridge NeuroScience, Inc. (USA) 1 300,000 3,187 .04
Gensia Pharmaceuticals, Inc. (USA) 1 780,000 3,120 .04
InSite Vision Inc. (USA) 1 350,000 1,509
InSite Vision Inc. 1 4 200,000 863
InSite Vision Inc., warrants, expire 2001 1 4 50,000 53 .03
InnerDyne, Inc. (USA) 1 1,000,000 2,375 .03
Cardiovascular Diagnostics, Inc. (USA) 1 2 412,500 2,063 .03
T Cell Sciences, Inc. (USA) 1 2 4 800,000 1,250
T Cell Sciences, Inc. 1 2 500,000 781 .03
HemaSure Inc. (USA) 1 217,500 870 .01
Vision-Sciences, Inc. (USA) 1 484,500 606 .01
Avigen, Inc. (USA) 1 70,000 297 .00
Energy Sources - 6.18%
Fletcher Challenge Energy (New Zealand) 21,000,000 56,629 .80
Ranger Oil Ltd. (Canada) 3,700,000 34,895 .49
Oil Search Ltd. (Australia) 13,740,000 29,089
Oil Search Ltd. 4 2,300,000 4,869 .48
Abacan Resource Corp. (Canada) 1 4,209,400 33,275 .47
QCT Resources Ltd. (Australia) 24,917,928 32,238 .46
Premier Oil PLC (United Kingdom) 50,472,549 29,866 .42
Hardy Oil & Gas PLC (United Kingdom) 2 6,037,900 28,980 .41
Ramco Energy PLC (United Kingdom) 2 1,597,000 27,825 .39
Chauvco Resources Ltd., Class A (Canada) 2,061,300 24,953 .35
ELAN Energy Inc. (Canada) 1 2 3,056,100 23,412 .33
Paramount Resources Ltd. (Canada) 2 831,000 14,894 .21
Cabre Exploration Ltd. (Canada) 1 2 993,400 14,718 .21
Northstar Energy Corp. (Canada) 1,423,500 14,557 .21
Novus Petroleum Ltd. (Australia) 2 5,620,501 14,190 .20
Encal Energy Ltd. (Canada) 4,335,000 12,532 .18
Arcon International Resources PLC (Ireland) 11,798,000 9,308 .13
Dana Petroleum PLC (Ireland) 18,400,000 6,654 .09
Rubis & Cie (France) 214,000 5,979 .08
Falcon Drilling Co., Inc. (USA) 1 150,000 5,550 .08
Cimarron Petroleum Ltd. (Canada) 1 322,500 4,428 .06
World Fuel Services Corp. (USA) 219,800 3,901 .06
Anzoil NL (Australia) 1 2 40,600,000 2,897 .04
Orbit Oil & Gas Ltd. (Canada) 2 2,681,000 2,034 .03
Merchandising - 5.89%
Gymboree Corp. (USA) 1 2 1,535,600 41,269 .58
Consolidated Stores Corp. (USA) 1 1,156,250 40,758 .58
Zale Corp. (USA) 1 2 1,900,000 34,913 .49
Sports Authority, Inc. (USA) 1 1,233,300 22,970
Sports Authority, Inc., 5.25% convertible debentures 2001 4 $11,000,000 9,955 .46
AnnTaylor, Inc. (USA) 1 1,230,000 25,061 .35
Williams-Sonoma, Inc. (USA) 1 550,000 15,813
Williams-Sonoma, Inc., 5.25% convertible debentures 2003 4 $3,500,000 4,392 .29
Dickson Concepts (International) Ltd. (Hong Kong - Incorporated in Bermuda) 5,477,199 19,793 .28
Fabri-Centers of America, Inc., Class A (USA) 1 2 525,000 9,778
Fabri-Centers of America, Inc., non-voting shares, Class B 1 2 525,000 9,516 .27
DFS Furniture Co. PLC (United Kingdom) 2,097,700 19,136 .27
Mobel Walther AG, non-voting, preferred shares (Germany) 260,000 14,025
Mobel Walther AG 88,000 4,589 .26
Catena Corp., Class A (Japan) 1,085,000 14,022 .20
Michaels Stores, Inc. (USA) 1 610,000 11,209 .16
Hornbach Holding AG, preferred shares (Germany) 142,650 9,362 .13
Giordano Holdings Ltd. (Hong Kong) 15,260,000 9,257 .13
PT Modern Photo Film Co. (Indonesia) 2,660,000 8,922 .13
Talbots, Inc. (USA) 272,700 8,624 .12
Homac Corp. (Japan) 663,000 8,312 .12
Homeplace Holdings, 7.00% convertible preferred (USA) 1 3 30,200 8,003 .11
Controladora Comercial Mexicana, SA de CV (Mexico) 10,737,000 7,730 .11
Garden Ridge Corp. (USA) 1 795,000 7,354 .10
Migros Turk TAS (Turkey) 6,973,100 7,241 .10
Duty Free International, Inc. (USA) 466,500 6,823 .10
Marks Bros. Jewelers, Inc. (USA) 1 2 510,000 5,992 .08
Haverty Furniture Companies, Inc. (USA) 470,000 5,405 .08
Suburban Ostomy Supply Co., Inc. (USA) 1 2 563,000 5,348 .08
Hibbett Sporting Goods, Inc. (USA) 1 263,000 4,471 .06
APS Holding Corp., Class A (USA) 1 500,000 4,281 .06
Hanover Direct, Inc. (USA) 1 5,955,440 4,094 .06
United Auto Group, Inc. (USA) 1 119,300 2,311 .03
Tandy Brands Accessories, Inc. (USA) 1 221,625 1,912 .03
Colruyt NV (Belgium) 4,335 1,776 .03
DAIKI Co. Ltd., 1.50% convertible debentures 2004 (Japan) Y245,000,000 1,714 .02
Garden Botanika, Inc. (USA) 1 163,500 1,124 .02
Leisure & Tourism - 4.02%
Village Roadshow Ltd. (Australia) 8,201,596 27,331
Village Roadshow Ltd., 5.50% preferred shares, Class A 5,722,143 15,434 .60
Four Seasons Hotels Inc. (Canada) 1,062,149 24,756 .35
Imax Corp. (Canada) 1 2 707,000 24,038 .34
AAPC Ltd. (Australia) 2 38,365,926 23,164
AAPC Ltd. 2 4 61,573 37 .33
J D Wetherspoon PLC (United Kingdom) 1,040,987 20,191 .29
Rio Hotel & Casino, Inc. (USA) 1 2 1,382,700 19,358 .27
Ticketmaster Group, Inc. (USA) 1 2 1,352,200 17,240 .24
CINAR Films Inc., Class B (Canada) 1 549,500 13,463 .19
Florida Panthers Holdings, Inc., Class A (USA) 1 3 4 500,000 12,206 .17
Capital Corp. PLC (United Kingdom) 3,000,000 10,257 .15
Trump Hotels & Casino Resorts, Inc. (USA) 1 1,050,000 9,450 .13
Station Casinos, Inc. (USA) 1 1,005,000 8,166 .12
Alliance Communications Corp., non-voting shares, Class B (Canada) 1 519,000 4,688
Alliance Communications Corp., Class A 1 2 322,700 2,799 .11
Midway Games Inc. (USA) 1 440,500 7,323 .10
Silicon Gaming, Inc. (USA) 1 3 4 426,666 7,040 .10
Consolidated Products, Inc. (USA) 1 450,000 7,031 .10
Spelling Entertainment Group Inc. (USA) 1 1,000,000 5,750 .08
Morton's Restaurant Group, Inc. (USA) 1 315,000 5,316 .08
Mandarin Oriental International Ltd. (Singapore) 4,040,217 4,969 .07
Gaumont SA (France) 69,410 4,941 .07
All American Communications, Inc., Class B (USA) 1 370,000 3,931 .06
Filmes Lusomundo, SA, preferred shares (Portugal) 292,500 2,232 .03
Golden Harvest Entertainment (Holdings) Ltd. (Hong Kong) 10,400,000 1,745 .02
MovieFone, Inc., Class A (USA) 1 360,000 1,620 .02
Banking - 3.33%
First Financial Corp. (USA) 1,250,000 32,656 .46
Associated Banc-Corp (USA) 605,340 22,246 .31
Safra Republic Holdings SA (Luxembourg) 112,000 21,840 .31
Keystone Financial, Inc. (USA) 787,500 19,884 .28
Central Fidelity Banks, Inc. (USA) 551,250 15,297 .22
Hibernia Corp., Class A (USA) 1,100,000 14,438 .20
FirstMerit Corp. (USA) 340,000 14,153 .20
Banco de Galicia y Buenos Aires SA, Class B (American Depositary Receipts)
(Argentina) 555,730 13,546 .19
Provident Bankshares Corp. (USA) 270,000 10,395 .15
Yapi ve Kredi Bankasi AS (Turkey) 225,000,000 10,052 .14
Washington Federal Savings and Loan Assn. (USA) 428,248 9,743 .14
Jefferson BankShares, Inc. (USA) 325,100 8,940 .13
Dah Sing Financial Holdings Ltd. (Hong Kong) 2,170,000 8,458 .12
First Midwest Bancorp, Inc. (USA) 252,000 7,497 .11
UST Inc. (USA) 321,700 6,474 .09
International Bank of Asia Ltd. (Hong Kong) 10,497,000 6,435 .09
Commerce Bancorp, Inc. (USA) 232,905 6,405 .09
Citizens Banking Corp. (USA) 156,200 5,155 .07
Sterling Financial Corp. (USA) 1 138,000 2,363 .03
Miscellaneous Materials & Commodities - 3.03%
Hoganas Eldfast AB, Class B (Sweden) 1,515,000 47,794 .68
Delta and Pine Land Co. (USA) 2 1,366,800 42,371 .60
Intertape Polymer Group Inc. (Canada) 2 1,500,000 30,562 .43
Sealed Air Corp. (USA) 1 400,000 16,450 .23
PT Mulia Industrindo (Indonesia) 23,124,000 15,657 .22
SGL Carbon AG (Germany) 100,000 13,725 .19
Ashton Mining Ltd. (Australia - Incorporated in Bermuda) 7,600,000 13,051 .19
Carbide/Graphite Group, Inc. (USA) 1 2 511,800 11,515 .16
PT PP London Sumatra (Indonesia) 1 3,136,000 7,905 .11
Penn Engineering & Manufacturing Corp., non-voting shares (USA) 400,000 7,750 .11
Sinocan Holdings Ltd. (Hong Kong - Incorporated in Bermuda) 20,500,000 7,739 .11
Chemicals - 2.92%
Valspar Corp. (USA) 1,281,000 36,829 .52
Airgas, Inc. (USA) 1 1,844,200 31,121 .44
OM Group, Inc. (USA) 700,000 19,688 .28
Mycogen Corp. (USA) 1 800,000 18,600 .26
Polymer Group, Inc. (USA) 1 1,285,000 17,026 .24
Kalon Group PLC (United Kingdom) 8,030,000 16,499 .23
Cambrex Corp. (USA) 464,000 15,544 .22
McWhorter Technologies, Inc. (USA) 1 2 706,000 14,738 .21
Holliday Chemical Holdings PLC (United Kingdom) 4,912,500 11,143 .16
Ferro Corp. (USA) 350,000 10,500 .15
RPM, Inc. (USA) 412,500 6,858 .09
NuCo2 Inc. (USA) 1 330,000 4,042 .06
Landec Corp. (USA) 1 2 690,000 3,622 .05
Epicore Network Inc. (Canada) 2 1,405,000 863 .01
Electronic Instruments - 2.69%
Plantronics, Inc. (USA) 1 2 500,000 21,500 .30
ANTEC Corp. (USA) 1 2 1,971,950 15,529 .22
ThermoQuest Corp. (USA) 1 1,000,000 14,000 .20
LoJack Corp. (USA) 1 2 1,322,000 13,055 .19
CIDCO Inc. (USA) 1 2 913,000 13,010 .18
Milltronics Ltd. - Milltronics Ltee (Canada) 2 450,000 12,358 .18
Trimble Navigation Ltd. (USA) 1 1,000,000 11,750 .17
Etec Systems, Inc. (USA) 1 300,000 9,487 .13
Credence Systems Corp. (USA) 1 450,000 8,775 .12
ASM Pacific Technology Ltd. (Hong Kong) 11,969,000 8,110 .11
Lumonics Inc. (Canada) 1 435,000 7,985 .11
ASM International NV, non-voting shares (Netherlands) 1 600,000 6,900 .10
C-COR Electronics, Inc. (USA) 1 2 559,000 6,778 .10
Pinnacle Systems, Inc. (USA) 1 2 485,000 6,608 .09
Trikon Technologies Inc. (USA) 1 570,000 6,555 .09
Vivid Technologies, Inc. (USA) 1 400,000 6,400 .09
Horiba, Ltd. (Japan) 650,000 5,941 .08
Discreet Logic Inc. (Canada) 1 923,200 5,424 .08
Fluke Corp. (USA) 107,600 4,775 .07
Harmonic Lightwaves, Inc. (USA) 1 300,000 4,125 .06
Voice Control Systems, Inc. (USA) 1 247,000 1,451 .02
Machinery & Engineering - 2.69%
KCI Konecranes International Corp. (Finland) 2 975,000 38,278 .54
UMW Holdings Bhd. (Malaysia) 4,655,000 25,746 .36
Crompton & Knowles Corp. (USA) 1,278,400 24,929 .35
Svedala Industri AB (Sweden) 1,300,000 24,813 .35
AGCO Corp. (USA) 600,000 16,575 .23
Thermo Fibertek Inc. (USA)1 1,600,000 14,500 .21
Kalmar Industries AB (American Depositary Receipts)(Sweden) 2 4 625,600 10,279
Kalmar Industries AB 2 206,000 3,400 .19
Greenfield Industries, Inc. (USA) 511,900 11,198 .16
APV PLC (United Kingdom) 10,052,078 10,946 .16
Miura Co., Ltd. (Japan) 500,000 5,985 .09
Thermo Power Corp. (USA)1 620,000 3,797 .05
Stevens International, Inc., Class A, warrants, expire 10/97 (USA) 1 3 8,333
Energy Equipment - 2.61%
Camco International, Inc. (USA) 2 1,575,000 69,300 .98
Smedvig ASA, Class A (Norway) 1,340,000 33,322
Smedvig ASA, non-voting shares, Class B 812,500 19,712 .75
Reading & Bates Corp. (USA) 1 1,040,700 23,546 .33
Petroleum Geo-Services ASA (American Depositary Receipts) (Norway) 1 314,500 13,523 .19
Shaw Industries Ltd., Class A (Canada) 595,000 12,685 .18
Babcock International Group PLC (United Kingdom) 5,672,285 5,967 .08
Dreco Energy Services Ltd., Class A (Canada) 120,000 4,076 .06
COFLEXIP SA (American Depositary Receipts)(France) 1 87,600 2,694 .04
Electronic Components - 2.31%
Wyle Electronics (USA) 632,000 21,251 .30
Pioneer-Standard Electronics, Inc. (USA) 2 1,660,000 21,165 .30
Littelfuse, Inc. (USA) 1 456,200 21,099 .30
Flextronics International Ltd. (USA-Incorporated in Singapore) 1 2 825,000 16,397 .23
ANADIGICS, Inc. (USA) 1 446,000 12,042 .17
Micrel, Inc. (USA) 1 379,800 11,014 .16
Cypress Semiconductor Corp. (USA) 1 800,000 10,000 .14
Level One Communications, Inc. (USA) 1 300,000 8,250 .12
TriQuint Semiconductor, Inc. (USA) 1 337,200 8,051 .11
Integrated Process Equipment Corp. (USA) 1 480,000 8,040 .11
Accton Technologies (Global Depositary Receipts) (Taiwan) 1 4 950,000 7,552 .11
BE Semiconductor Industries, NV (Netherlands) 1 400,000 5,100 .07
Microchip Technology Inc. (USA) 1 162,000 4,860 .07
Park Electrochemical Corp. (USA) 171,900 3,932 .06
Rogers Corp. (USA) 1 140,000 3,885 .05
First Pacific Networks, Inc., convertible preferred, Series H (USA) 1 3 4 1,000 1,000
First Pacific Networks, Inc. 1 850,000 9 .01
First Pacific Networks, Inc., warrants, expire 2000 1 3 250,000
Transportation: Shipping - 2.24%
Knightsbridge Tankers Ltd. (Bermuda) 1 2 975,000 23,644 .33
Skibsaksjeselskapet Storli, Class A (Norway) 540,000 10,890
Skibsaksjeselskapet Storli, Class B 455,000 9,176 .28
Stolt-Nielsen SA, Class B (American Depositary Receipts) (Multinational) 1,040,000 18,362 .26
ICB Shipping AB, Class B (Sweden) 1,667,000 16,793 .24
Orient Overseas (International) Ltd. (Hong Kong - Incorporated in Bermuda) 21,715,000 11,561 .16
MIF Ltd. (Multinational) 2 595,100 10,287 .14
Bona Shipholding Ltd. (Norway) 880,200 8,942 .13
Nordstrom & Thulin AB, Class B (Sweden) 1 3,618,300 8,585 .12
Benor Tankers Ltd. (Norway) 1 2 1,240,000 8,273 .12
Wah Kwong Shipping Holdings Ltd. (Hong Kong) 5,713,000 6,820 .10
London & Overseas Freighters Ltd. (Bermuda) 2 4,833,000 6,196 .09
Ugland International Holdings PLC (United Kingdom) 4 5,000,000 5,589 .08
IMC Holdings Ltd. (Hong Kong) 8,198,000 3,756 .05
Tschudi & Eitzen Shipping ASA (Norway) 1 3,340,000 3,342 .05
Nordic American Tanker Shipping Ltd., warrants, expire 9/30/97 (Bermuda) 1 762,000 3,286 .05
Irish Continental Group PLC (Ireland) 190,000 1,657 .02
William, Gothong & Aboitiz Inc. (Philippines) 1 13,183,000 1,452 .02
Industrial Components - 2.03%
Federal-Mogul Corp. (USA) 1,375,000 33,859 .48
Applied Industrial Technology, Inc. (formerly Bearings, Inc.) (USA) 600,000 21,000 .30
Kolbenschmidt AG (Germany) 1 1,145,900 19,917 .28
Material Sciences Corp. (USA) 1 2 1,000,000 16,875 .24
Superior TeleCom Inc. (USA) 1 600,000 12,450 .17
Standard Products Co. (USA) 507,600 11,802 .17
Koito Manufacturing Co., Ltd. (Japan) 1,670,000 10,711 .15
Innovative International (Holdings) Ltd. (Hong Kong) 18,361,707 7,287 .10
Finnveden Invest AB, Class B (Sweden) 300,000 5,766 .08
Semperit Aktiengesellschaft Holding, Class B (Austria) 68,000 4,266 .06
Metals: Nonferrous - 1.97%
Capral Aluminium Ltd. (Australia) 2 12,001,654 44,417 .63
Kaiser Aluminum Corp. (USA) 1 1,850,000 20,350 .29
Asturiana de Zinc, SA (Spain) 1 1,500,000 19,720 .28
QNI Ltd. (Australia) 9,011,900 17,171 .24
Century Aluminum Co. (USA) 955,000 16,116 .23
ERAMET (France)4 226,910 11,509
ERAMET 61,802 3,135 .21
International Precious Metals Corp. (Canada) 1 812,400 6,804 .09
Insurance - 1.89%
Fairfax Financial Holdings Ltd. (Canada) 1 217,700 47,042
Fairfax Financial Holdings Ltd. 1 4 55,000 11,885 .83
Transatlantic Holdings, Inc. (USA) 225,000 18,900 .27
Harleysville Group Inc. (USA) 375,000 12,187 .17
Irish Life PLC (Ireland) 2,117,060 11,066 .16
Liberty Corp. (USA) 200,000 8,400 .12
Selective Insurance Group, Inc. (USA) 195,000 8,092 .11
Executive Risk Inc. (USA) 150,000 6,956 .10
Nelson Hurst PLC (United Kingdom) 2,270,000 4,739 .07
Unipol Priv (Italy) 2,220,000 4,646 .06
Food & Household Products - 1.87%
Metro-Richelieu Inc., Class A (Canada) 3,010,000 30,998 .44
Smithfield Foods, Inc. (USA) 1 600,000 25,350 .36
Tingyi (Cayman Islands) Holding Corp. (China - Incorporated in the
Cayman Islands) 65,600,000 14,308 .20
Hazlewood Foods PLC (United Kingdom) 7,500,000 14,177 .20
Geest PLC (United Kingdom) 2,250,000 9,431 .13
Rykoff-Sexton, Inc. (USA) 450,000 7,931 .11
Berisford International PLC (United Kingdom) 3,000,000 6,410 .09
Lindt & Sprungli AG (Switzerland) 3,162 5,474 .08
Celestial Seasonings, Inc. (USA) 1 2 250,000 5,375 .08
Ben & Jerry's Homemade, Inc., Class A (USA) 1 400,000 5,150 .07
Sadia Concordia SAIC, preferred shares (Brazil) 6,800,000 5,009 .07
Cultor Ltd. (Finland) 44,370 2,671 .04
Transportation: Rail & Road - 1.72%
USFreightways Corp. (USA) 2 1,350,000 34,931 .49
Swift Transportation Co., Inc. (USA) 1 950,000 24,225 .34
Werner Enterprises, Inc. (USA) 1,275,000 23,906 .34
Tranz Rail Holdings Ltd.(American Depositary Receipts) (New Zealand) 951,200 17,241 .24
M.S. Carriers, Inc. (USA) 1 2 837,000 14,177 .20
Simon Transportation Services Inc., Class A (USA) 1 300,000 5,100 .07
Nippon Konpo Unyu Soko Co., Ltd. (Japan) 439,000 2,485 .04
Financial Services - 1.59%
Newcourt Credit Group Inc. (Canada) 1,515,000 60,329 .85
OM Gruppen AB (Sweden) 2 1,443,100 47,438 .67
Echelon International Corp. (USA) 1 254,892 4,620 .07
Beverages & Tobacco - 1.53%
Matthew Clark PLC (United Kingdom) 4,199,759 22,297 .31
Canandaigua Wine Co., Inc., Class A (USA) 1 784,000 20,580 .29
Brau-Union Goss-Reininghaus-Osterreichische Brau AG (Austria) 283,800 16,554 .23
BBAG Oesterreichische Brau-Beteiligungs-AG (Austria) 195,770 12,332 .17
Corporate Investments Ltd. (New Zealand) 2 25,500,000 11,697 .17
Guinness Anchor Bhd. (Malaysia) 4,830,000 11,115 .16
Quilmes Industrial SA, preferred shares (American Depositary Receipts)
(Argentina) 600,000 6,825 .10
San Miguel Brewery Hong Kong Ltd. (Hong Kong) 11,600,000 4,978 .07
Al-Ahram Beverages (Global Depositary Receipts) (Egypt) 1 120,000 2,334 .03
Data Processing & Reproduction - 1.53%
Avid Technology, Inc. (USA) 1 2 1,325,000 17,473 .25
Altron Inc. (USA) 1 2 985,000 16,622 .23
PictureTel Corp. (USA) 1 1,050,000 12,469 .18
Edify Corp. (USA) 1 2 990,000 10,766 .15
Cerner Corp. (USA) 1 775,000 10,172 .14
Cylink Corp. (USA) 1 1,115,000 9,199 .13
Mentor Graphics Corp. (USA) 1 1,050,000 8,794 .12
Indus Group, Inc. (USA) 1 563,200 8,166 .12
Verity, Inc. (USA) 1 2 698,800 5,416 .08
Macromedia, Inc. (USA) 1 555,000 5,030 .07
Nets Inc., convertible preferred, Class B (USA) 1 3 4 175,000 3,500 .05
SoftQuad International Inc. (Canada) 1 270,000 675 .01
Global Village Communications, Inc. (USA) 1 195,300 320 .00
Telecommunications - 1.26%
Mobile Telecommunication Technologies Corp. (USA) 1 2 3,525,000 22,031 .31
NTL Inc. (formerly International CableTel Inc.) (USA)1 969,466 20,844 .29
Octel Communications Corp. (USA) 1 1,000,000 15,875 .22
Brooks Fiber Properties, Inc. (USA) 1 580,000 10,367 .15
M-CELL (South Africa) 4,300,400 5,401 .08
McLeod, Inc., Class A (USA) 1 218,000 3,870 .05
ICG Holdings (Canada), Inc. (Canada) 1 308,600 3,510 .05
Centennial Cellular Corp. (USA) 1 300,000 3,112 .04
MIDCOM Communications Inc. (USA) 1 312,700 2,502 .04
Pilipino Telephone Corp. (Philippines) 1 3,125,000 1,869 .03
Digicall Group Ltd. (Australia) 1 3 6,925,000
Multi-Industry - 1.06%
Industriforvaltnings AB Kinnevik, Class B (Sweden) 884,000 24,314
Industriforvaltnings AB Kinnevik, Class A 203,440 5,474 .42
SA D'Ieteren NV (Belgium) 115,275 21,598 .31
Corporacion Financiera Alba, SA (Spain) 178,449 17,693 .25
Aboitiz Equity Ventures (Philippines) 64,063,940 5,983 .08
Recreation & Other Consumer Products - 1.04%
WMS Industries Inc. (USA) 1 900,000 16,875 .24
Galoob Toys, Inc. (USA) 1 600,000 11,100 .16
ACTIVISION, Inc. (USA) 1 2 4 570,000 6,413
ACTIVISION, Inc. 1 2 330,000 3,712 .14
Acclaim Entertainment, Inc. (USA) 1 1,860,000 8,835 .13
Infogrames Entertainment (France) 51,000 7,334 .10
Mattel, Inc. (USA) 244,380 5,865 .08
Crystal Dynamics, Inc., convertible preferred, Series D (USA) 1 3 4 533,334 4,000 .06
Koei Co., Ltd. (Japan) 234,900 3,686 .05
China - Hongkong Photo Products Holdings Ltd. (Hong Kong - Incorporated
in Bermuda) 12,060,000 3,580 .05
Maxis, Inc. (USA) 1 265,000 1,954 .03
Utilities: Electric & Gas - 0.88%
Australian Gas Light Co. (Australia) 3,895,920 22,147 .31
California Energy Co., Inc. (USA) 1 500,000 17,000 .24
Energen Corp. (USA) 514,900 15,383 .22
Capex SA, Class A (Global Depositary Receipts)(Argentina) 4 384,200 8,068 .11
Building Materials & Components - 0.74%
Futuris Corp. Ltd. (Australia) 10,553,316 14,812 .21
Puerto Rican Cement Co., Inc. (USA) 2 371,000 10,620 .15
Lafarge Corp. (USA) 402,800 9,164 .13
Apasco, SA de CV (Mexico) 1,322,620 8,921 .13
Cia. Cimento Portland Itau, preferred shares (Brazil) 23,200,000 8,653 .12
Electrical & Electronics - 0.70%
ERG Ltd. (Australia) 2 11,179,474 15,077 .21
Tri Gem Computer (South Korea) 400,000 9,854 .14
TANDBERG Television AS (Norway) 720,000 7,315 .10
Johnson Electric Holdings Ltd. (Hong Kong - Incorporated in Bermuda) 2,120,000 5,390 .08
SR Telecom Inc. (Canada) 1,200,000 5,204 .07
Gilat Satellite Networks Ltd. (Israel) 1 100,000 3,025 .04
Powerwave Technologies, Inc. (USA) 1 120,000 2,145 .03
Celeritek, Inc. (USA) 1 158,000 1,738 .03
Forest Products & Paper - 0.52%
Caraustar Industries, Inc. (USA) 810,000 20,149 .28
Deltic Timber Corp. (USA) 592,857 16,822 .24
Textiles & Apparel - 0.51%
Wolford Group (Austria) 220,000 24,620 .35
PT Indo-Rama Synthetics (Indonesia) 7,952,700 6,296 .09
Saha-Union Corp. Ltd. (Thailand) 6,660,000 5,394 .07
Wholesale & International Trade - 0.51%
Brightpoint, Inc. (USA) 1 2 1,331,250 21,633 .31
Lazare Kaplan International Inc. (USA) 1 2 500,000 7,625 .11
Kamei Corp. (Japan) 693,000 6,614 .09
Metals: Steel - 0.47%
Tubos de Acero de Mexico, SA (American Depositary Receipts) (Mexico) 1 1,000,000 17,125 .24
Siderca SAIC (Argentina) 6,400,000 13,506 .19
Ispat Industries Ltd., 3.00% convertible debentures 2001
(formerly Nippon Denro Ispat Ltd.) (India) $4,700,000 2,726 .04
Real Estate - 0.44%
Fabege AB Co., Class B (Sweden) 1 2 69,000,000 13,353 .19
Cadiz Land Co., Inc. (USA) 1 2 1,165,000 5,807
Cadiz Land Co., Inc. 1 2 4 250,000 1,246 .10
Unibail (France) 55,000 5,794 .08
Santa Anita Realty Enterprises, Inc. (USA) 179,000 4,878 .07
Construction & Housing - 0.34%
Ryland Group, Inc. (USA) 739,700 8,692 .12
Corporacion Geo, SA de CV, Class B (Mexico) 1,751,568 8,407 .12
Palm Harbor Homes, Inc. (USA) 1 326,625 7,002 .10
Appliances & Household Durables - 0.33%
Gemstar International Group Ltd. (USA) 1 1,171,800 14,354 .20
Protection One, Inc. (USA) 1 2 870,000 9,135 .13
Aerospace & Military Technology - 0.31%
Thiokol Corp. (USA) 400,000 22,100 .31
Transportation: Airlines - 0.20%
Philippine Airlines Inc. 25% Paid (Philippines) 3 64,494,643 12,243 .17
PR Holdings, Inc., subscription rights (Philippines) 1 3 4 1,730,000 2,176 .03
Automobiles - 0.17%
Mahindra & Mahindra Ltd., 5.00% convertible debentures 2001 (India) $3,718,000 3,941
Mahindra & Mahindra Ltd. (Global Depositary Receipts) 250,000 2,937
Mahindra & Mahindra Ltd. 55,350 488 .11
Qingling Motors Co., Ltd., 3.50% convertible debentures 2002 (China) 4 $4,500,000 4,433 .06
Gold Mines - 0.15%
Ashanti Goldfields Co. Ltd. (Ghana) 400,000 5,900 .08
Philippine Gold PLC (United Kingdom) 2 2,453,700 4,638 .07
Miscellaneous - 4.90%
Other equity-type securities in initial period of acquisition 347,222 4.90
----- -----
TOTAL EQUITY-TYPE SECURITIES (cost: $5,888,190,000) 6,400,610 90.35
----- -----
Principal
Amount
SHORT-TERM SECURITIES (000)
Corporate Short-Term Notes - 7.69%
Halifax Building Society 5.32%-5.65% due 4/29-6/13/97 $66,400 65,799 .93
Glaxo Wellcome PLC 5.26%-5.32% due 4/23-5/19/97 4 60,500 60,218 .85
Ford Motor Credit Co. 5.32%-5.56% due 4/8-5/20/97 42,200 41,983 .59
Abbey National North America 5.27% due 4/23/97 40,000 39,865 .56
Siemens Capital Corp. 5.27%-5.35% due 5/15-6/3/97 36,300 35,975 .51
Commerzbank U.S. Finance Inc. 5.33% due 4/22/97 35,000 34,887 .49
General Electric Capital Corp. 5.34%-5.48% due 4/17-5/13/97 33,250 33,076 .47
Daimler-Benz North America Corp. 5.27%-5.45% due 4/21-6/9/97 30,000 29,810 .42
Ritz American Holdings 5.32%-5.60% due 4/2-5/27/97 4 28,500 28,406 .40
Toyota Motor Credit Corp. 5.25%-5.29% due 4/11-5/22/97 28,200 28,028 .40
International Lease Finance Corp. 5.30% due 5/14/97 24,200 24,041 .34
Deutsche Bank Financial Inc. 5.24% due 4/25/97 20,500 20,425 .29
Svenska Handelsbanken 5.35%-5.39% due 4/30-6/18/97 18,000 17,842 .25
Bank of Montreal 5.27% due 4/29/97 16,900 16,827 .24
ANZ (Delaware) Inc. 5.31% due 4/7/97 16,400 16,383 .23
Bayer AG 5.42% due 4/1/97 4 15,000 14,998 .21
National Australia Funding (Delaware) Inc. 5.29% due 5/12/97 15,000 14,907 .21
American Express Credit Corp. 5.31%-5.32%% due 4/2-5/8/97 12,600 12,557 .18
Canada Bills 5.21% due 5/7/97 8,900 8,852 .12
Certificates of Deposit - 1.22%
Canadian Imperial Bank 5.30%-5.40% due 4/18-4/28/97 40,000 40,000 .57
National Westminster Bank PLC 5.46% due 4/14/97 25,000 25,004 .35
Deutsche Bank AG 5.36%-5.43% due 5/12-6/16/97 21,500 21,495 .30
Federal Agency Discount Notes - 0.90%
Federal Home Loan Mortgage Corp. 5.25%-5.32% due 4/10-5/9/97 50,400 50,259 .71
Federal National Mortgage Assn. 5.26%-5.51% due 5/7-6/19/97 13,900 13,737 .19
----- -----
TOTAL SHORT-TERM SECURITIES (cost: $695,433,000) 695,374 9.81
----- -----
TOTAL INVESTMENT SECURITIES (cost: $6,583,623,000) 7,095,984 100.16
Excess of payables over cash and receivables 11,501 .16
----- -----
NET ASSETS $7,084,483 100.00
===== =====
1 Non-income-producing securities.
2 The fund owns the following
percentages (5% or more) of the
outstanding voting securities of the
following companies and thus is
considered an affiliate as defined
in the Investment Company Act of 1940:
M.S. Carriers 6.97
Franklin Quest 6.84
McWhorter Technologies 6.75
Puerto Rican Cement Co. 6.71
Pinnacle Systems 6.69
Thomas Group 6.62
APCOA Parking 6.57
Scotia Holdings 6.57
London & Overseas Freighters 6.56
Camco International 6.55
Rio Hotel & Casino 6.53
Philippine Gold 6.51
Alliance Communications 6.50
Kalmar Industries 6.50
KCI Konecranes International 6.50
Paragon Trade Brands 6.50
PathoGenesis 6.50
Pioneer-Standard Electronics 6.49
Capral Aluminium 6.48
Filofax Group 6.48
i-STAT 6.48
Delta and Pine Land 6.47
Altron 6.46
Cyberonics 6.45
Material Sciences 6.45
Pacific Media 6.45
SONUS Pharmaceuticals 6.45
AAPC 6.43
Landec 6.41
MIF 6.41
CIDCO 6.40
KeraVision 6.40
Strategic Distribution 6.40
ACTIVISION 6.39
Cadiz Land Co. 6.37
Pharmacyclics 6.34
Protection One 6.34
Mobile Telecommunication Technologies 6.32
Cardiovascular Diagnostics 6.30
Orbit Oil & Gas 6.29
Ramco Energy 6.26
Avid Technology 6.22
Verity 6.22
Intertape Polymer Group 6.18
Celestial Seasonings 6.17
ERG 6.17
Edify 6.15
Plantronics 6.15
OM Gruppen 6.13
Anzoil 6.10
Gymboree 6.08
Flextronics International 6.07
Brightpoint 6.04
Data Broadcasting 6.03
Technical Chemicals and Products 6.02
CIMA LABS 6.01
Antena 3 de Radio 6.00
Carbide/Graphite Group 5.97
Lazare Kaplan International 5.95
Chrysalis Group 5.94
Corporate Investments 5.94
Anesta 5.85
C-COR Electronics 5.81
Cabre Exploration 5.79
Fabege 5.78
Benor Tankers 5.76
Milltronics 5.74
ELAN Energy 5.70
Fabri-Centers of America 5.70
Knightsbridge Tankers 5.70
LoJack 5.66
PRT Corp. of America 5.50
Ticketmaster Group 5.47
Zale 5.43
Suburban Ostomy Supply Co. 5.41
Epicore Network 5.39
Genelabs Technologies 5.37
USFreightways 5.35
T Cell Sciences 5.21
Marks Bros. Jewelers 5.20
Novus Petroleum 5.18
Hardy Oil & Gas 5.13
Vanstar 5.12
Imax 5.07
Paramount Resources 5.07
Scandinavian Broadcasting System 5.06
IDEC Pharmaceuticals 5.04
ANTEC 5.03
SCB Computer Technology 5.01
3 Valued under procedures established by the Board of Directors.
4 Purchased in a private placement transaction; resale to the public may
require registration or sale only to qualified institutional buyers.
See Notes to Financial Statements
EQUITY-TYPE SECURITIES APPEARING IN THE
PORTFOLIO SINCE SEPTEMBER 30, 1996
Accton Technologies
AccuStaff
Al-Ahram Beverages
Alternative Resources
ANADIGICS
Antena 3 de Radio
APV
Ashanti Goldfields
ASM International
Australian Hospital Care
Avigen
Baton Broadcasting
BE Semiconductor Industries
Ben & Jerry's Homemade
Cambridge NeuroScience
Capital Radio
Catena
CBT Group
Celeritek
Celestial Seasonings
Chancellor Broadcasting
China - Hongkong Photo Products
Citizens Banking
Comcast UK Cable Partners
Commerce Bancorp
Consolidated Products
Controladora Comercial Mexicana
Corporate Investments
Creative BioMolecules
Credence Systems
Cytyc
Dana Petroleum
Deltic Timber
Digene
Dorling Kindersley
Dr Solomon's Group
Dreco Energy Services
Eagle River Interactive
Echelon International
Emmis Broadcasting
Encal Energy
ENDEMOL Entertainment
Energen
ENVOY
Executive Risk
Fabege
Falcon Drilling
First Midwest Bancorp
Fletcher Challenge Energy
Florida Panthers Holdings
Freepages Group
Gedeon Richter
Groupe
Harmonic Lightwaves
Haverty Furniture Companies
Hibbett Sporting Goods
Indus Group
InnerDyne
Integrated Process Equipment
InteliData Technologies
International Precious Metals
ISS-International Service System
Kaiser Aluminum
Knightsbridge Tankers
Koito Manufacturing
Kos Pharmaceuticals
Lazare Kaplan International
Lindt & Sprungli
London & Overseas Freighters
Marks Bros. Jewelers
Matav-Cable Systems Media
Mattel
Midway Games
MIF
Millennium Pharmaceuticals
More Group
National Surgery Centers
Neose Technologies
Nets
Newalta
Northstar Energy
OrthoLogic
Palm Harbor Homes
Petroleum Geo-Services
Pharmacyclics
Philippine Gold
Physician Sales & Service
Pioneer-Standard Electronics
Powerwave Technologies
Pricer
Prime Television
Primedia
Protein Design Labs
Provident Bankshares
PRT Corp. of America
Qingling Motors
Quilmes Industrial
Ranger Oil
Rubis & Cie
Sadia Concordia
Santa Anita Realty Enterprises
Sapient
Semperit Aktiengesellschaft Holding
SFX Broadcasting
Shaw Communications
SIBIA Neurosciences
Silicon Gaming
Simon Transportation Services
Sinclair Broadcast Group
SoftQuad International
SONUS Pharmaceuticals
Stevens International
Suburban Ostomy Supply Co.
Superior Telecom
Talbots
TANDBERG Television
Ticketmaster Group
Tingyi (Cayman Islands) Holding
Tri Gem Computer
Trikon Technologies
TriQuint Semiconductor
Tschudi & Eitzen Shipping
Ugland International Holdings
Unibail
Unipol Priv
United Auto Group
Universal Health Services
UST
Verity
Vivid Technologies
World Fuel Services
Yapi ve Kredi Bankasi
Young Broadcasting
EQUITY-TYPE SECURITIES ELIMINATED FROM
THE PORTFOLIO SINCE SEPTEMBER 30, 1996
Abacus Direct
Allied Products
Amalgamated Holdings
American Residential Services
Ameristar Casinos
Architel Systems
Aristocrat Leisure
Armor All Products
Atwood Oceanics
Barnett
Biomatrix
Body Shop International
CAE Industries
Cardo
Clyde Petroleum
Collective Bancorp
Datalogix International
DII Group
Eastbay
Elsag Bailey Process Automation
Ensign Resource Service Group
Espoon Sahko Oy
Falcon Building Products
Finning
Forsheda
GelTex Pharmaceuticals
GNI Group
Golden Shamrock Mines
Goldsborough Healthcare
Grammy Entertainment
Heritage Media
Hub Power
Innovus
Intelligroup
Lattice Semiconductor
Lear Seating
Leslie's Poolmart
M-Net
Mac Frugal's Bargins * Close-outs
MagneTek
Metropole Television
Micro Linear
Microwave Power Devices
NAC Re
National TechTeam
Omni Media
Outdoor Systems
OzEmail
Pacific Concord Holding
PDT
Phillips-Van Heusen
plettac
Precision Drilling
Quantum
Radius
Rawlings Sporting Goods
ROSS Technology
Savoy Pictures Entertainment
Silja Oy
Sociedad Espanola de Carburos Metalicos
Spine-Tech
Stampeder Exploration
Tee-Comm Electronics
Thompson PBE
TNT
Toolex Alpha
TSX
United TransNet
US Order
Valmont Industries
Vanguard Cellular Systems
Varco International
VISX
VIVUS
VLSI Technology
Weatherford Enterra
Western Digital
WIC Western International Communications
Wisconsin Central Transportation
Wonderware
</TABLE>
<TABLE>
<S> <C> <C>
SMALLCAP World Fund
FINANCIAL STATEMENTS Unaudited
- ---------------------------------------- -------- --------
Statement of Assets and Liabilities
at March 31, 1997 (dollars in thousands)
- ---------------------------------------- -------- --------
Assets:
Investment securities at market
(cost: $6,583,623) $7,095,984
Cash 4,452
Receivables for -
Sales of investments $22,153
Sales of fund's shares 17,692
Dividends and accrued interest 9,199 49,044
-------- --------
7,149,480
Liabilities:
Payables for -
Purchases of investments 44,069
Repurchases of fund's shares 14,817
Management services 4,169
Accrued expenses 1,942 64,997
-------- --------
Net Assets at March 31, 1997 -
Equivalent to $24.72 per share on
286,547,722 shares of $0.01 par value
capital stock outstanding (authorized
capital stock - 400,000,000 shares) $7,084,483
============
Statement of Operations
for the six months ended March 31, 1997 (dollars in thousands)
- ---------------------------------------- -------- --------
Investment Income:
Income:
Dividends $ 23,499
Interest 22,441 $ 45,940
--------
Expenses:
Management services fee 23,723
Distribution expenses 8,030
Transfer agent fee 3,544
Reports to shareholders 330
Registration statement and
prospectus 747
Postage, stationery and supplies 727
Directors' fees 68
Auditing and legal fees 61
Custodian fee 848
Taxes other than federal income tax 146
Other expenses 80 38,304
-------- --------
Net investment income 7,636
--------
Realized Gain and Unrealized
Depreciation on Investments:
Net realized gain 351,940
Net change in unrealized appreciation
on investments:
Beginning of period 835,994
End of period 512,364
--------
Net unrealized depreciation on investments (323,630)
--------
Net realized gain and unrealized depreciation
on investments 28,310
--------
Net Increase in Net Assets Resulting
from Operations $ 35,946
============
Statement of Changes in Net
Assets (dollars in thousands)
- ---------------------------------------- -------- --------
Six months Year ended
ended
3/31/97 * 9/30/96
-------- --------
Operations:
Net investment income $ 7,636 $ 37,294
Net realized gain on investments 351,940 595,514
Net unrealized appreciation
(depreciation) on investments (323,630) 132,107
-------- --------
Net increase in net assets
resulting from operations 35,946 764,915
-------- --------
Dividends and Distributions Paid
to Shareholders:
Dividends from net
investment income (17,620) (43,854)
Distributions from net realized
gain on investments (591,522) (441,715)
-------- --------
Total dividends and
distributions (609,142) (485,569)
-------- --------
Capital Share Transactions:
Proceeds from shares sold:
40,853,693 and 86,216,034
shares, respectively 1,068,522 2,214,661
Proceeds from shares issued in
reinvestment of net investment
income dividends and
distributions of net realized
gain on investments:
23,350,371 and 20,219,912
shares, respectively 583,455 462,452
Cost of shares repurchased:
23,047,466 and 38,162,440
shares, respectively (601,395) (974,760)
-------- --------
Net increase in net assets
resulting from capital share
transactions 1,050,582 1,702,353
-------- --------
Total Increase in Net Assets 477,386 1,981,699
Net Assets:
Beginning of period 6,607,097 4,625,398
-------- --------
End of period (including undistributed
net investment income: $6,705 and
$16,689, respectively) $7,084,483 $6,607,097
============ ============
* Unaudited
See Notes to Financial Statements
</TABLE>
SMALLCAP WORLD FUND
NOTES TO FINANCIAL STATEMENTS
1. 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 following paragraphs summarize
the significant accounting policies consistently followed by the fund in the
preparation of its financial statements:
Equity-type securities traded on a national securities exchange (or reported
on the NASDAQ national market) and securities traded in the over-the-counter
market are stated at the last reported sales price on the day of valuation;
other securities, and securities for which no sale was reported on that date,
are stated at the last quoted bid price. Short-term securities with original
or remaining maturities in excess of 60 days are valued at the mean of their
quoted bid and asked prices. Short-term securities with 60 days or less to
maturity are valued at amortized cost, which approximates market value.
Securities for which market quotations are not readily available are valued at
fair value by the Board of Directors or a committee thereof.
As is customary in the mutual fund industry, securities transactions are
accounted for on the date the securities are purchased or sold. In the event
the fund purchases securities on a delayed delivery or "when issued" basis, it
will segregate with its custodian liquid assets in an amount sufficient to meet
its payment obligations in these transactions. Realized gains and losses from
securities transactions are reported on an identified cost basis. Dividend and
interest income is reported on the accrual basis. Discounts on securities
purchased are amortized over the life of the respective securities. Dividends
and distributions paid to shareholders are recorded on the ex-dividend date.
Investment securities and other assets and liabilities denominated in
non-U.S. currencies are recorded in the financial statements after translation
into U.S. dollars utilizing rates of exchange on the last business day of the
period. Purchases and sales of investment securities, income and expenses are
calculated using the prevailing exchange rate as accrued. The effects of
changes in foreign currency exchange rates on investment securities are
included with the net realized and unrealized gain or loss on investment
securities.
Pursuant to the custodian agreement, the fund receives credits against its
custodian fee for imputed interest on certain balances with the custodian bank.
The custodian fee of $848,000 includes $63,000 that was paid by these credits
rather than in cash.
2. It is the fund's policy to continue to comply with the requirements of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its net taxable income, including any net realized gain on
investments, to its shareholders. Therefore, no federal income tax provision
is required.
As of March 31, 1997, net unrealized appreciation on investments for book and
federal income tax purposes aggregated $512,361,000, of which $1,272,707,000
related to appreciated securities and $760,346,000 related to depreciated
securities. There was no difference between book and tax realized gains on
securities transactions for the six months ended March 31, 1997. The cost of
portfolio securities for book and federal income tax purposes was
$6,583,623,000 at March 31, 1997.
3. The fee of $23,723,000 for management services was paid pursuant to an
agreement with Capital Research and Management Company (CRMC), with which
certain officers and Directors of the fund are affiliated. The Investment
Advisory and Service Agreement provides for monthly fees, accrued daily, based
on an annual rate of 0.80% of the first $1 billion of average net assets; 0.70%
of such assets in excess of $1 billion but not exceeding $2 billion; 0.67% of
such assets in excess of $2 billion but not exceeding $3 billion; 0.65% of such
assets in excess of $3 billion but not exceeding $5 billion; 0.635% of such
assets in excess of $5 billion but not exceeding $8 billion; and 0.625% of such
assets in excess of $8 billion.
Pursuant to a Plan of Distribution, the fund may expend up to 0.30% of its
average net assets annually for any activities primarily intended to result in
sales of fund shares, provided the categories of expenses for which
reimbursement is made are approved by the fund's Board of Directors. Fund
expenses under the Plan include payments to dealers to compensate them for
their selling and servicing efforts. During the six months ended March 31,
1997, distribution expenses under the Plan were $8,030,000. As of March 31,
1997, accrued and unpaid distribution expenses were $1,521,000.
American Funds Service Company (AFS), the transfer agent for the fund, was
paid a fee of $3,544,000. American Funds Distributors, Inc. (AFD), the
principal underwriter of the fund's shares, received $3,370,000 (after
allowances to dealers) as its portion of the sales charges paid by purchasers
of the fund's shares. Such sales charges are not an expense of the fund and,
hence, are not reflected in the accompanying statement of operations.
Directors who are unaffiliated with CRMC may elect to defer part or all of
the fees earned for services as members of the Board. Amounts deferred are not
funded and are general unsecured liabilities of the fund. As of March 31, 1997,
aggregate amounts deferred and earnings thereon were $113,000.
CRMC is owned by The Capital Group Companies, Inc. AFS and AFD are both
wholly owned subsidiaries of CRMC. Certain Directors and officers of the fund
are or may be considered to be affiliated with CRMC, AFS and AFD. No such
persons received any remuneration directly from the fund.
4. As of March 31, 1997, accumulated undistributed net realized gain on
investments was $316,950,000 and additional paid-in capital was $6,245,599,000.
The fund made purchases and sales of investment securities, excluding
short-term securities, of $1,970,724,000 and $1,280,960,000, respectively,
during the six months ended March 31, 1997.
Dividend and interest income is recorded net of non-U.S. taxes paid. For the
six months ended March 31, 1997, such non-U.S. taxes were $1,960,000. Net
realized currency losses on dividends, interest, withholding taxes reclaimable,
and sales of non-U.S. bonds and notes were $393,000 for the six months ended
March 31, 1997.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
PER-SHARE DATA AND
RATIOS
Six months Year ended September 30
ended -------- -------- -------- -------- --------
3/31/97 /1/ 1996 1995 1994 1993 1992
- ----------------------- --------- --------- --------- --------- --------- ---------
Net Asset Value,
Beginning of
Period $ 26.92 $ 26.11 $ 23.61 $ 22.72 $ 18.01 $ 17.60
--------- --------- --------- --------- --------- ---------
Income From Investment
Operations:
Net investment income 0.0254 0.17 0.22 0.09 0.06 0.14
Net realized and
unrealized gain
on investments 0.1946 3.32 3.79 1.83 5.56 0.38
--------- --------- --------- --------- --------- ---------
Total income from
investment
operations 0.22 3.49 4.01 1.92 5.62 0.52
--------- --------- --------- --------- --------- ---------
Less Distributions:
Dividends from
net investment
income (0.07) (0.23) (0.16) (0.06) (0.08) (0.11)
Distributions
from net
realized gains (2.35) (2.45) (1.35) (0.97) (0.83) -
--------- --------- --------- --------- --------- ---------
Total distributions (2.42) (2.68) (1.51) (1.03) (0.91) (0.11)
--------- --------- --------- --------- --------- ---------
Net Asset Value, End
of Period $ 24.72 $ 26.92 $ 26.11 $ 23.61 $ 22.72 $ 18.01
========= ========= ========= ========= ========= =========
Total Return /2/ .72%/3/ 15.21% 18.59% 8.60% 32.46% 2.95%
Ratios/Supplemental
Data:
Net assets, end
of period (in
millions) $7,084 $6,607 $4,625 $3,497 $2,247 $1,255
Ratio of expenses
to average net
assets .55% /3/ 1.09% 1.13% 1.12% 1.15% 1.21%
Ratio of net income
to average net
assets .11% /3/ .68% .97% .38% .33% .85%
Average commissions
paid per share /4/ .53 cent 1.41 cents 1.00 cents 1.25 cents 1.55 cents 2.36 cents
Portfolio turnover
rate 20.64% /3/ 42.88% 45.63% 29.43% 25.00% 23.10%
/1/ Unaudited
/2/ Calculated without
deducting a sales charge.
The maximum sales
charge is 5.75% of the
fund's offering price.
/3/ Based on operations for
the period shown and,
accordingly, not
representative of a full
year's operations.
/4/ Brokerage commissions
paid on portfolio
transactions increase the
cost of securities
purchased or reduce the
proceeds of securities sold
and are not reflected in the
fund's statement of
operations. Shares traded
on a principal basis, such as most
over-the-counter and fixed-income
transactions, are excluded.
Generally, non-U.S. commissions
are lower than U.S. commissions
when expressed as cents per share
but higher when expressed as a
percentage of transactions
because of the lower per-share
prices of many non-U.S. securities.
</TABLE>
American Funds Group(r) Shareholder Services
ARE YOU AWARE OF YOUR RIGHTS?
Did you know you may be eligible for a sales charge discount when you buy
shares of most American Funds? The discounts begin when your investments total
$25,000 for bond funds or $50,000 for stock and stock/bond funds-and the good
news is you don't have to invest the whole amount at one time.
Through your right of accumulation, when you purchase additional shares
you can add the purchase amount to the value of shares you already own-in any
of our eligible funds*-in order to qualify for a sales charge discount on the
new investment.
Sales charges are reduced on a sliding scale as your investments increase.
You'll find a detailed breakdown of all discounts in your fund's prospectus,
which you can obtain from your financial adviser or by calling a Shareholder
Services Representative.
OTHER WAYS TO REDUCE SALES CHARGES
You can establish a statement of intention that allows you to invest at a
reduced sales charge immediately, based on purchases you intend to make over a
13-month period.* Or you can aggregate accounts by adding your purchase amount
to the total value of accounts you, your spouse and your minor children have
with The American Funds Group. Call a Shareholder Services Representative for
details and restrictions.
Whether you accumulate, aggregate or establish a statement of intention,
it all adds up - to more purchasing power for you.
INVESTING WITH STYLE
Our many free services are designed to help you meet your needs quickly,
effortlessly and efficiently.
AMERICAN FUNDSLINE(R) AND FUNDSLINE ONLINE(sm)-Handle transactions using your
computer or phone 24 hours a day. Just call 800/325-3590 or visit our Web site
at www.americanfunds.com to obtain current prices and investment returns,
exchange shares between funds, redeem shares, check your share balances,
confirm your most recent transaction, request duplicate statements and order
checks (phone only). All on your timetable.
AMERICAN FUNDSLINK(sm)-Link your American Funds accounts with your bank
account. You can have fund dividends or automatic fund withdrawals deposited
directly into your bank account. Or you can invest money directly from your
bank account into your fund account on either a systematic or on-demand basis.
OTHER AUTOMATIC TRANSACTIONS-You can reinvest dividends into the same fund or
another fund, make withdrawals, and exchange shares between funds-quarterly,
monthly or during the months you specify.
DIVIDEND AND CAPITAL GAIN OPTIONS-Use your dividend and capital gain
distributions to meet your changing needs. You may:
- - Automatically reinvest distributions back into the fund at no sales charge.
- - Cross-reinvest dividends into another fund at no sales charge. (Certain
restrictions apply.)
- - Have dividends mailed or sent electronically to you or to someone else.
EXCHANGE PRIVILEGES-When you and your investment adviser feel it's time to
adjust your portfolio to meet your changing investment goals, you can easily
exchange shares from one American Fund to another - without paying a sales
charge.* If you are opening an account in a different fund, you must meet that
fund's minimum investment requirement. An exchange generally constitutes a sale
and purchase for tax purposes.
OTHER SERVICES-Stay on top of your investments with account statements that
keep you abreast of the activity in your account, consolidated quarterly
statements to reduce paperwork if you have multiple accounts and year-end tax
reports that show the dividends and capital gain distributions paid to you
during the year.
*Investments in our money market funds - The Cash Management Trust of America,
The Tax-Exempt Money Fund of America and The U.S. Treasury Money Fund of
America - which are purchased without a sales charge, generally do not apply
when determining your sales charges unless the shares were originally purchased
in another American Fund that required a sales charge, then later exchanged
into our money market funds.
For more complete information about these services or about any of the American
Funds, including charges and expenses, please obtain a prospectus from your
financial adviser or American Funds Service Company and read it carefully
before you invest or send money. These services are subject to change or
termination.
SMALLCAP WORLD FUND
OFFICES OF THE FUND AND
OF THE INVESTMENT ADVISER,
CAPITAL RESEARCH AND
MANAGEMENT COMPANY
333 South Hope Street
Los Angeles, California 90071-1443
135 South State College Boulevard
Brea, California 92821-5804
TRANSFER AGENT FOR
SHAREHOLDER ACCOUNTS
(Please write to the address nearest you.)
American Funds Service Company
P.O. Box 2205
Brea, California 92822-2205
P.O. Box 659522
San Antonio, Texas 78265-9522
P.O. Box 6007
Indianapolis, Indiana 46206-6007
P.O. Box 2280
Norfolk, Virginia 23501-2280
CUSTODIAN OF ASSETS
The Chase Manhattan Bank
One Chase Manhattan Plaza
New York, New York 10081-0001
COUNSEL
O'Melveny & Myers LLP
400 South Hope Street
Los Angeles, California 90071-2899
PRINCIPAL UNDERWRITER
American Funds Distributors, Inc.
333 South Hope Street
Los Angeles, California 90071-1462
FOR INFORMATION ABOUT YOUR ACCOUNT OR ANY OF THE FUND'S SERVICES, PLEASE
CONTACT YOUR FINANCIAL ADVISER. YOU MAY ALSO CALL AMERICAN FUNDS SERVICE
COMPANY, TOLL FREE, AT 800/421-0180, OR VISIT WWW.AMERICANFUNDS.COM ON THE
WORLD WIDE WEB.
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, 1997, this report must be accompanied by an American Funds Group
Statistical Update for the most recently completed calendar quarter.
Litho in USA BDA/FS/3419
Lit. No. SCWF-013-0597
Printed on recycled paper
[The American Funds Group(r)]
