THE FUND PROVIDES SPANISH TRANSLATIONS IN CONNECTION WITH THE PUBLIC OFFERING
AND SALE OF ITS SHARES. THE FOLLOWING IS A FAIR AND ACCURATE ENGLISH
TRANSLATION OF A SPANISH LANGUAGE PROSPECTUS FOR THE FUND.
/s/ Chad L. Norton
Chad L. Norton
Secretary
<PAGE>
The American Funds Logo
- --------------------------------------------------------------------------------
SMALLCAP
World Fund(R)
Prospectus
DECEMBER 1, 1998
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR
DISAPPROVED OF THESE SECURITIES. FURTHER, IT HAS NOT
DETERMINED THAT THIS PROSPECTUS IS TRUTHFUL OR COMPLETE.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
SMALLCAP WORLD FUND, INC.
333 South Hope Street
Los Angeles, CA 90071
TICKER SYMBOL: SMCWX NEWSPAPER ABBREV.: SmCp FUND NO.: 35
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<S> <C>
Risk/Return Summary 2
...................................................................................................................
Fees and Expenses of the Fund 5
...................................................................................................................
Investment Objective, Strategies and Risks 6
...................................................................................................................
Important Recent Developments 8
...................................................................................................................
Management and Organization 9
...................................................................................................................
Shareholder Information 11
...................................................................................................................
Purchase and Exchange of Shares 12
...................................................................................................................
Distribution Arrangements 15
...................................................................................................................
Financial Highlights 16
</TABLE>
- --------------------------------------------------------------------------------
35-010-1298/B SMALLCAP WORLD FUND / PROSPECTUS 1
<PAGE>
- --------------------------------------------------------------------------------
RISK/RETURN SUMMARY
The fund seeks to make your investment grow over time by investing in stocks of
smaller companies located around the world that typically have market
capitalizations of $50 million to $1.2 billion.
The fund is designed for investors seeking capital appreciation through stocks.
Investors in the fund should have a long-term perspective and be able to
tolerate potentially wide price fluctuations. An investment in the fund is
subject to risks, including the possibility that the fund may decline in value
in response to certain events, such as changes in markets or economies. In
addition, the prices of equity securities held by the fund may be affected by
events specifically involving the issuers of these securities.
Investing in smaller companies may pose additional risks as it is often more
difficult to obtain information about smaller companies and the prices of their
stocks may be more volatile than stocks of larger, more established companies.
Although all securities in the fund's portfolio, including U.S. securities, may
be adversely affected by currency fluctuations or world political, social and
economic instability, investments outside the U.S. may be affected to a greater
extent.
You may lose money by investing in the fund. The likelihood of loss is greater
if you invest for a shorter period of time. Your investment in the fund is not a
bank deposit and is not insured or guaranteed by the Federal Deposit Insurance
Corporation or any other government agency, entity or person.
2 SMALLCAP WORLD FUND / PROSPECTUS
<PAGE>
INVESTMENT RESULTS
The following information illustrates how the fund's results may vary:
Here are the fund's results calculated without a sales charge on a calendar
year basis. (If a sales charge were included, results would be lower.)
[BAR CHART]
1991 32.89
1992 6.69
1993 30.04
1994 -2.85
1995 22.70
1996 19.75
1997 11.83
The fund's year-to-date return for the nine months ended September 30, 1998 was
- -14.78%
The fund's highest/lowest quarterly results during this time period were:
X HIGHEST 16.74% (quarter ended March 31, 1991)
X LOWEST -6.95% (quarter ended December 31, 1997)
SMALLCAP WORLD FUND / PROSPECTUS 3
<PAGE>
For periods ended December 31, 1997:
<TABLE>
<CAPTION>
THE FUND
WITH
MAXIMUM
AVERAGE ANNUAL SALES CHARGE SALOMON BROTHERS
TOTAL RETURN(1) DEDUCTED(1) WORLD SMALLCAP INDEX(2) CPI(3)
- ------------------------------------------------------------------------------------
<S> <C> <C> <C>
One Year 5.41% 0.97% 1.70%
....................................................................................
Five Years 14.36% 11.44% 2.60%
....................................................................................
Lifetime(4) 13.65% 9.17% 2.97%
</TABLE>
(1) These fund results were calculated according to a standard formula which
requires that the maximum sales charge of 5.75% be deducted. Results would
be higher if they were calculated at net asset value.
(2) The Salomon Brothers World Smallcap Index tracks over 5,100 small-company
stocks traded around the world with a market capitalization between $100
million and $1.2 billion. This index is unmanaged and does not reflect sales
charges, commissions or expenses.
(3) The Consumer Price Index is a measure of inflation and is computed from data
supplied by the U.S. Department of Labor, Bureau of Labor Statistics.
(4) The fund began investment operations on April 30, 1990.
These results illustrate the potential fluctuations in the fund's results over
shorter periods of time. Past results are not an indication of future results.
4 SMALLCAP WORLD FUND / PROSPECTUS
<PAGE>
- --------------------------------------------------------------------------------
FEES AND EXPENSES OF THE FUND
The following describes the fees and expenses that you may pay if you buy and
hold shares of the fund.
SHAREHOLDER FEES
(fees paid directly from your investment)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Maximum sales charge imposed on purchases
(as a percentage of offering price) 5.75%(1)
................................................................................
Maximum sales charge imposed on reinvested dividends 0%
................................................................................
Maximum deferred sales charge 0%(2)
................................................................................
Redemption or exchange fees 0%
</TABLE>
(1) Sales charges are reduced or eliminated for larger purchases.
(2) A contingent deferred sales charge of 1% applies on certain redemptions made
within 12 months following any purchases you made without a sales charge.
ANNUAL FUND OPERATING EXPENSES
(expenses that are deducted from the fund assets)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Management Fees 0.67%
................................................................................
Service (12b-1) Fees 0.23%*
................................................................................
Other Expenses 0.16%
................................................................................
Total Annual Fund Operating Expenses 1.06%
</TABLE>
*12b-1 expenses may not exceed 0.30% of the fund's average net assets annually.
EXAMPLE
This Example is intended to help you compare the cost of investing in the fund
with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in the fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
Example also assumes that your investment has a 5% return each year and that the
fund's operating expenses remain the same. Although your actual costs may be
higher or lower, based on these assumptions your costs would be:
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
One year $ 677
................................................................................
Three years $ 893
................................................................................
Five years $1,126
................................................................................
Ten years $1,795
</TABLE>
SMALLCAP WORLD FUND / PROSPECTUS 5
<PAGE>
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE, STRATEGIES AND RISKS
The fund's investment objective is to provide you with long-term growth of
capital. It invests primarily in equity securities of companies with relatively
small market capitalizations located around the world. These companies will
typically have market capitalizations of $50 million to $1.2 billion.
The prices of equity securities held by the fund may decline in response to
certain events including those directly involving issuers of these securities,
adverse conditions affecting the general economy, or overall market declines.
The growth-oriented, equity-type securities generally purchased by the fund may
involve large price swings and potential for loss.
In addition, smaller capitalization stocks are often more difficult to value or
dispose of, more difficult to obtain information about, and more volatile than
stocks of larger, more established companies. Furthermore, the value of non-
U.S. securities can decline in response to various factors, including currency
fluctuations, political, social and economic instability, differing securities
regulations, and administrative difficulties such as delays in clearing and
settling portfolio transactions.
The fund may also invest in cash and cash equivalents, for example, in response
to abnormal market conditions. The extent of the fund's cash position will
depend on market conditions, fund purchases and redemptions, and other factors.
This may detract from achievement of the fund's objective over the short term or
it may protect the fund during a market downturn.
The fund relies on the professional judgment of its investment adviser, Capital
Research and Management Company, to make decisions about the fund's portfolio
securities. The basic investment philosophy of Capital Research and Management
Company is to seek undervalued securities that represent good long-term
investment opportunities.
6 SMALLCAP WORLD FUND / PROSPECTUS
<PAGE>
The following chart illustrates the industry mix of the fund's investment
portfolio as of the end of its fiscal year, September 30, 1998
LARGEST INDUSTRY HOLDINGS
[PIE CHART]
<TABLE>
<CAPTION>
Business
Leisure and Broadcasting
Health & & Cash & Other Public &
Personal Care Tourism Equivalents Industries Services Publishing Merchandising
<S> <C> <C> <C> <C> <C> <C>
4.75 4.22 13.17 45.86 15.91 10.42 5.67
</TABLE>
[END PIE CHART]
<TABLE>
<CAPTION>
PERCENT INVESTED BY PERCENT OF
COUNTRY NET ASSETS
- ----------------------------------
<S> <C>
The Americas 56.7%
United States 51.1
Canada 4.5
Mexico .5
Other Latin America .6
....................................
Europe 21.8%
United Kingdom 6.2
Sweden 3.7
France 2.5
Germany 1.6
Denmark 1.4
Finland .9
Spain .9
Netherlands .8
Ireland .7
Norway .7
Switzerland .5
Other Europe 1.9
....................................
Asia Pacific 7.0%
Australia 2.4
Hong Kong 1.1
Japan 1.1
Singapore .8
New Zealand .6
Other Asia 1.0
....................................
Other Countries 1.3%
....................................
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------
TEN LARGEST PERCENT OF
INDIVIDUAL HOLDINGS NET ASSETS
<S> <C>
ISS-International
Service System 1.17%
....................................
OM Gruppen 1.05
....................................
SkyTel Communications .95
....................................
HNC Software .91
....................................
Unibail .88
....................................
NTL .85
....................................
PMC-Sierra .85
....................................
Adelphia
Communications .70
....................................
Corporate Services
Group .70
....................................
CSC Holdings .68
....................................
</TABLE>
Because the fund is actively managed, its holdings will change from time to
time.
SMALLCAP WORLD FUND / PROSPECTUS 7
<PAGE>
- --------------------------------------------------------------------------------
IMPORTANT RECENT DEVELOPMENTS
YEAR 2000
The date-related computer issue known as the "Year 2000 problem" could have an
adverse impact on the quality of services provided to the fund and its
shareholders. However, the fund understands that its key service providers --
including the investment adviser and its affiliates -- are taking steps to
address the issue. In addition, the Year 2000 problem may adversely affect the
issuers in which the fund invests. For example, issuers may incur substantial
costs to address the problem. They may also suffer losses caused by corporate
and governmental data processing errors. The fund and its investment adviser
will continue to monitor developments relating to this issue.
EURO INTRODUCTION
On January 1, 1999, the European Union will introduce a single European
currency, the Euro. The first group of countries that will begin to convert
their currencies to the Euro include Austria, Belgium, Finland, France, Germany,
Ireland, Italy, Luxembourg, the Netherlands, Portugal, and Spain. The expected
introduction of the Euro presents unique uncertainties, including: whether the
payment and operational systems of banks and other financial institutions will
be ready by the scheduled launch date; the legal treatment of certain
outstanding financial contracts after January 1, 1999 that refer to existing
currencies rather than the Euro; and the creation of suitable clearing and
settlement payment systems for the new currency. These or other factors,
including political and economic risks, could cause market disruptions before or
after the introduction of the Euro. The fund understands that the investment
adviser and other key service providers are taking steps to address Euro-related
issues.
8 SMALLCAP WORLD FUND / PROSPECTUS
<PAGE>
- --------------------------------------------------------------------------------
MANAGEMENT AND ORGANIZATION
INVESTMENT ADVISER
Capital Research and Management Company, an experienced investment management
organization founded in 1931, serves as investment adviser to the fund and other
funds, including those in The American Funds Group. Capital Research and
Management Company, a wholly owned subsidiary of The Capital Group Companies,
Inc., is headquartered at 333 South Hope Street, Los Angeles, CA 90071. Capital
Research and Management Company manages the investment portfolio and business
affairs of the fund. The total management fee paid by the fund, as a percentage
of average net assets, for the previous fiscal year is indicated earlier under
"Fees and Expenses of the Fund."
Capital Research and Management Company and its affiliated companies have
adopted a personal investing policy that is consistent with the recommendations
contained in the May 9, 1994 report issued by the Investment Company Institute's
Advisory Group on Personal Investing. This policy has also been incorporated
into the fund's code of ethics.
MULTIPLE PORTFOLIO COUNSELOR SYSTEM
Capital Research and Management Company uses a system of multiple portfolio
counselors in managing mutual fund assets. Under this system the portfolio of a
fund is divided into segments which are managed by individual counselors.
Counselors decide how their respective segments will be invested (within the
limits provided by a fund's objective(s) and policies and by Capital Research
and Management Company's investment committee). In addition, Capital Research
and Management Company's research professionals may make investment decisions
with respect to a portion of a fund's portfolio. The primary individual
portfolio counselors for SMALLCAP World Fund are listed on the following page.
SMALLCAP WORLD FUND / PROSPECTUS 9
<PAGE>
<TABLE>
<CAPTION>
APPROXIMATE YEARS OF
EXPERIENCE AS AN INVESTMENT
PROFESSIONAL
(INCLUDING THE LAST FIVE YEARS)
.....................................
WITH CAPITAL
YEARS OF EXPERIENCE RESEARCH AND
PORTFOLIO COUNSELORS AS PORTFOLIO COUNSELOR FOR MANAGEMENT
FOR SMALLCAP SMALLCAP WORLD FUND COMPANY OR
WORLD FUND PRIMARY TITLE(S) (APPROXIMATE) AFFILIATES TOTAL YEARS
--------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
GORDON President and 9 years (since the fund 27 years 27 years
CRAWFORD Principal Executive began operations)
Officer of the fund;
Senior Vice
President and
Director, Capital
Research and
Management Company
--------------------------------------------------------------------------------------------------------
GREGORY W. WENDT Senior Vice 1 year (plus 8 years as a 11 years 11 years
President of the research professional
fund; Senior Vice prior to becoming a
President and portfolio counselor for
Director, Capital the fund)
Research Company*
--------------------------------------------------------------------------------------------------------
ROBERT W. Vice President of 5 years (plus 4 years as a 13 years 13 years
LOVELACE the fund; Executive research professional
Vice President and prior to becoming a
Director, Capital portfolio counselor for
Research Company* the fund)
--------------------------------------------------------------------------------------------------------
MARTIAL G. Senior Vice 1 year (plus 7 years as a 26 years 26 years
CHAILLET President, Capital research professional
Research Company* prior to becoming a
portfolio counselor for
the fund)
--------------------------------------------------------------------------------------------------------
MARK E. Director, Capital 7 years (plus 1 year as a 16 years 16 years
DENNING Research and research professional
Management Company prior to becoming a
portfolio counselor for
the fund)
--------------------------------------------------------------------------------------------------------
CLAUDIA P. Senior Vice 3 years (plus 4 years as a 21 years 23 years
HUNTINGTON President, Capital research professional
Research and prior to becoming a
Management Company portfolio counselor for
the fund)
--------------------------------------------------------------------------------------------------------
</TABLE>
The fund began investment operations on April 30, 1990.
* Company affiliated with Capital Research and Management Company.
10 SMALLCAP WORLD FUND / PROSPECTUS
<PAGE>
- --------------------------------------------------------------------------------
SHAREHOLDER INFORMATION
American Funds Service Company, the fund's transfer agent, offers you a wide
range of services you can use to alter your investment program should your needs
and circumstances change. These services are available only in states where they
may be legally offered and may be terminated or modified at any time upon 60
days' written notice. For your convenience, American Funds Service Company has
four service centers across the country.
AMERICAN FUNDS SERVICE COMPANY SERVICE AREAS
CALL TOLL-FREE FROM ANYWHERE IN THE U.S.
(8 A.M. TO 8 P.M. ET):
800/421-0180
[U.S. MAP]
<TABLE>
<S> <C> <C> <C>
WESTERN SERVICE WESTERN CENTRAL EASTERN CENTRAL EASTERN SERVICE
CENTER SERVICE CENTER SERVICE CENTER CENTER
American Funds American Funds American Funds American Funds
Service Company Service Company Service Company Service Company
P.O. Box 2205 P.O. Box 659522 P.O. Box 6007 P.O. Box 2280
Brea, California San Antonio, Indianapolis, Norfolk, Virginia
92822-2205 Texas Indiana 23501-2280
Fax: 714/671-7080 78265-9522 46206-6007 Fax: 757/670-4773
Fax: 210/474-4050 Fax: 317/735-6620
</TABLE>
A COMPLETE DESCRIPTION OF THE SERVICES WE OFFER IS DESCRIBED IN THE FUND'S
STATEMENT OF ADDITIONAL INFORMATION. In addition, an easy-to-read guide to
owning a fund in The American Funds Group titled "Welcome to the Family" is sent
to new shareholders and is available by writing or calling American Funds
Service Company.
You may invest in the fund through various retirement plans. However, some
retirement plans or accounts held by investment dealers may not offer certain
services. If you have any questions, please contact your plan administrator/
trustee or dealer.
SMALLCAP WORLD FUND / PROSPECTUS 11
<PAGE>
- --------------------------------------------------------------------------------
PURCHASE AND EXCHANGE OF SHARES
PURCHASE
Generally, you may open an account by contacting any investment dealer
authorized to sell the fund's shares. You may purchase additional shares using
various options described in the statement of additional information and
"Welcome to the Family."
EXCHANGE
You may exchange your shares into other funds in The American Funds Group
generally without a sales charge. Exchanges of shares from the money market
funds initially purchased without a sales charge generally will be subject to
the appropriate sales charge. Exchanges have the same tax consequences as
ordinary sales and purchases. See "Transactions by Telephone . . ." for
information regarding electronic exchanges.
THE FUND AND AMERICAN FUNDS DISTRIBUTORS, THE FUND'S PRINCIPAL UNDERWRITER,
RESERVE THE RIGHT TO REJECT ANY PURCHASE ORDER FOR ANY REASON. ALTHOUGH THERE IS
CURRENTLY NO SPECIFIC LIMIT ON THE NUMBER OF EXCHANGES YOU CAN MAKE IN A PERIOD
OF TIME, THE FUND AND AMERICAN FUNDS DISTRIBUTORS RESERVE THE RIGHT TO REJECT
ANY PURCHASE ORDER AND MAY TERMINATE THE EXCHANGE PRIVILEGE OF ANY INVESTOR
WHOSE PATTERN OF EXCHANGE ACTIVITY THEY HAVE DETERMINED INVOLVES ACTUAL OR
POTENTIAL HARM TO THE FUND.
INVESTMENT MINIMUMS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
To establish an account $1,000
For a retirement plan account $ 250
For a retirement plan account through payroll $ 25
deduction
To add to an account $ 50
For a retirement plan account through payroll $ 25
deduction
</TABLE>
SHARE PRICE
The fund calculates its share price, also called net asset value, as of 4:00
p.m. New York time, which is the normal close of trading on the New York Stock
Exchange, every day the Exchange is open. In calculating net asset value, market
prices are used when available. If a market price for a particular security is
not available, the fund will determine the appropriate price for the security.
Your shares will be purchased at the offering price, or sold at the net asset
value, next determined after American Funds Service Company receives and accepts
12 SMALLCAP WORLD FUND / PROSPECTUS
<PAGE>
your request. The offering price is the net asset value plus a sales charge, if
applicable.
SALES CHARGE
A sales charge may apply to your purchase. Your sales charge may be reduced for
larger purchases as indicated below.
<TABLE>
<CAPTION>
SALES CHARGE AS A PERCENTAGE OF
.................................
NET DEALER CONCESSION
OFFERING AMOUNT AS % OF
INVESTMENT PRICE INVESTED OFFERING PRICE
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
Less than $50,000 5.75% 6.10% 5.00%
........................................................................................
$50,000 but less than $100,000 4.50% 4.71% 3.75%
........................................................................................
$100,000 but less than $250,000 3.50% 3.63% 2.75%
........................................................................................
$250,000 but less than $500,000 2.50% 2.56% 2.00%
........................................................................................
$500,000 but less $1 million 2.00% 2.04% 1.60%
........................................................................................
$1 million or more and certain
other investments described
below see below see below see below
</TABLE>
PURCHASES NOT SUBJECT TO SALES CHARGE
Investments of $1 million or more and investments made by employer-sponsored
defined contribution-type plans with 100 or more eligible employees are sold
with no initial sales charge. A 1% CONTINGENT DEFERRED SALES CHARGE MAY BE
IMPOSED ON CERTAIN REDEMPTIONS BY ACCOUNTS THAT INVEST WITH NO INITIAL SALES
CHARGE (OTHER THAN EMPLOYER-SPONSORED PLANS), IF REDEMPTIONS ARE MADE WITHIN ONE
YEAR OF PURCHASE. A dealer concession of up to 1% may be paid by the fund under
its Plan of Distribution and/or by American Funds Distributors on investments
made with no initial sales charge.
REDUCING YOUR SALES CHARGE
You and your immediate family may combine investments to reduce your sales
charge. You must let your investment dealer or American Funds Service Company
know if you qualify for a reduction in your sales charge using one or any
combination of the methods described in the statement of additional information
and "Welcome to the Family."
PLAN OF DISTRIBUTION
The fund has a Plan of Distribution or "12b-1 Plan" under which it may finance
activities primarily intended to sell shares, provided the categories of
expenses are approved in advance by the fund's board of directors. Up to 0.25%
of average net assets is paid annually to qualified dealers for providing
certain services pursuant to the fund's Plan of Distribution. The 12b-1 fee, as
a
SMALLCAP WORLD FUND / PROSPECTUS 13
<PAGE>
percentage of average net assets, paid by the fund for the previous fiscal year
is indicated earlier under "Fees and Expenses of the Fund." Since these fees are
paid out of the fund's assets on an ongoing basis, over time they will increase
the cost of an investment and may cost you more than paying higher initial sales
charges.
OTHER COMPENSATION TO DEALERS
American Funds Distributors may provide additional compensation to, or sponsor
informational meetings for, dealers as described in the statement of additional
information.
HOW TO SELL SHARES
Once a sufficient period of time has passed to reasonably assure that checks or
drafts (including certified or cashiers' checks) for shares purchased have
cleared (normally 15 calendar days), you may sell (redeem) those shares in any
of the following ways:
THROUGH YOUR DEALER (CERTAIN CHARGES MAY APPLY)
- Shares held for you in your dealer's name must be sold through the dealer.
WRITING TO AMERICAN FUNDS SERVICE COMPANY
- Requests must be signed by the registered shareholder(s)
- A signature guarantee is required if the redemption is:
-- Over $50,000;
-- Made payable to someone other than the registered shareholder(s); or
-- Sent to an address other than the address of record, or an address of
record which has been changed within the last 10 days.
- Additional documentation may be required for sales of shares held in
corporate, partnership or fiduciary accounts.
TELEPHONING OR FAXING AMERICAN FUNDS SERVICE COMPANY, OR BY USING AMERICAN
FUNDSLINE(R) OR AMERICAN FUNDSLINE ONLINE(R):
- Redemptions by telephone or fax (including American FundsLine and American
FundsLine OnLine) are limited to $50,000 per shareholder each day
- Checks must be made payable to the registered shareholder
- Checks must be mailed to an address of record that has been used with the
account for at least 10 days.
14 SMALLCAP WORLD FUND / PROSPECTUS
<PAGE>
TRANSACTIONS BY TELEPHONE, FAX, AMERICAN FUNDSLINE, OR AMERICAN FUNDSLINE ONLINE
Generally, you are automatically eligible to use these services for redemptions
and exchanges unless you notify us in writing that you do not want any or all of
these services. You may reinstate these services at any time.
Unless you decide not to have telephone, fax, or computer services on your
account(s), you agree to hold the fund, American Funds Service Company, any of
its affiliates or mutual funds managed by such affiliates, and each of their
respective directors, trustees, officers, employees and agents harmless from any
losses, expenses, costs or liabilities (including attorney fees) which may be
incurred in connection with the exercise of these privileges, provided American
Funds Service Company employs reasonable procedures to confirm that the
instructions received from any person with appropriate account information are
genuine. If reasonable procedures are not employed, the fund may be liable for
losses due to unauthorized or fraudulent instructions.
- --------------------------------------------------------------------------------
DISTRIBUTION ARRANGEMENTS
DIVIDENDS AND DISTRIBUTIONS
The fund usually pays dividends, which may fluctuate, in June and December.
Capital gains, if any, are also usually distributed in December.
You may elect to reinvest dividends and/or capital gain distributions to
purchase additional shares of this fund or any other fund in The American Funds
Group or you may elect to receive them in cash.
TAX CONSEQUENCES
Dividends and capital gains are generally taxable whether they are reinvested or
received in cash -- unless you are exempt from taxation or entitled to tax
deferral. Capital gains may be taxed at different rates depending on the length
of time the fund holds its assets.
You must provide the fund with a certified correct taxpayer identification
number (generally your Social Security Number) and certify that you are not
subject to backup withholding. If you fail to do so, the IRS can require the
fund to withhold 31% of your taxable distributions and redemptions. Federal law
also requires the fund to withhold 30% of the applicable tax treaty rate from
dividends paid to certain non-resident alien, non-U.S. partnership and non-U.S.
corporation shareholder accounts.
Please see the statement of additional information, "Welcome to the Family," and
your tax adviser for further information.
SMALLCAP WORLD FUND / PROSPECTUS 15
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the fund's
results for the past five years. Certain information reflects financial results
for a single fund share. The total returns in the table represent the rate that
an investor would have earned or lost on an investment in the fund (assuming
reinvestment of all dividends and distributions). This information has been
audited by Deloitte & Touche LLP, whose report, along with the fund's financial
statements, are included in the statement of additional information, which is
available upon request.
<TABLE>
<CAPTION>
YEARS ENDED SEPTEMBER 30
..................................
1998 1997 1996 1995 1994
--------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $30.72 $26.92 $26.11 $23.61 $22.72
- -------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income .07 .10 .17 .22 .09
.................................................................................................
Net gains or losses on securities
(both realized and unrealized) (6.10) 6.17 3.32 3.79 1.83
- -------------------------------------------------------------------------------------------------
Total from investment operations (6.03) 6.27 3.49 4.01 1.92
- -------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends (from net
investment income) (.05) (.12) (.23) (.16) (.06)
.................................................................................................
Distributions (from capital gains) (2.50) (2.35) (2.45) (1.35) (.97)
- -------------------------------------------------------------------------------------------------
Total distributions (2.55) (2.47) (2.68) (1.51) (1.03)
.................................................................................................
Net Asset Value,
End of Period $22.14 $30.72 $26.92 $26.11 $23.61
- -------------------------------------------------------------------------------------------------
Total Return(1) (20.70)% 25.41% 15.21% 18.59% 8.60%
- -------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in
millions) $7,102 $9,256 $6,607 $4,625 $3,497
.................................................................................................
Ratio of expenses to
average net assets 1.06% 1.07% 1.09% 1.13% 1.12%
.................................................................................................
Ratio of net income
to average net assets .27% .40% .68% .97% .38%
.................................................................................................
Portfolio turnover rate 44.31% 42.21% 42.88% 45.63% 29.43%
</TABLE>
(1) Excludes maximum sales charge of 5.75%.
16 SMALLCAP WORLD FUND / PROSPECTUS
<PAGE>
- --------------------------------------------------------------------------------
NOTES
SMALLCAP WORLD FUND / PROSPECTUS 17
<PAGE>
- --------------------------------------------------------------------------------
NOTES
18 SMALLCAP WORLD FUND / PROSPECTUS
<PAGE>
- --------------------------------------------------------------------------------
NOTES
SMALLCAP WORLD FUND / PROSPECTUS 19
<PAGE>
- --------------------------------------------------------------------------------
NOTES
20 SMALLCAP WORLD FUND / PROSPECTUS
<PAGE>
- --------------------------------------------------------------------------------
NOTES
SMALLCAP WORLD FUND / PROSPECTUS 21
<PAGE>
<TABLE>
<S> <C> <C>
FOR SHAREHOLDER FOR RETIREMENT PLAN FOR DEALER
SERVICES SERVICES SERVICES
American Funds Call your employer American Funds
Service Company or Distributors
800/421-0180 plan administrator 800/421-9900 ext.11
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FOR 24-HOUR INFORMATION
American American Funds
FundsLine(R) Internet Web site
800/325-3590 http://www.americanfunds.com
Telephone conversations may be recorded or monitored for
verification, recordkeeping and quality assurance purposes.
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MULTIPLE TRANSLATIONS
This prospectus may be translated into other languages. In
the event of any inconsistencies or ambiguities, the English
text will prevail.
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OTHER FUND INFORMATION
ANNUAL/SEMI-ANNUAL REPORT TO SHAREHOLDERS
Contains additional information about the fund including
financial statements, investment results, portfolio
holdings, a statement from portfolio management discussing
market conditions and the fund's investment strategies, and
the independent accountants' report (in the annual report).
STATEMENT OF ADDITIONAL INFORMATION (SAI)
Contains more detailed information on all aspects of the
fund, including the fund's financial statements.
A current SAI has been filed with the Securities and
Exchange Commission ("SEC") and is incorporated by reference
into this prospectus. The SAI and other related materials
about the fund are available for review or to be copied at
the SEC's Public Reference Room (1-800-SEC-0330) or on the
SEC's Internet Web site at http://www.sec.gov.
CODE OF ETHICS
Includes a description of the fund's personal investing
policy.
To request a free copy of any of the documents above:
Call American Funds or Write to the Secretary of the fund
Service Company 333 South Hope Street
800/421-0180 ext.1 Los Angeles, CA 90071
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Investment Company File No. 811-5888
LOGO Printed on recycled paper
