[The American Funds Group(r)]
SMALLCAP WORLD FUND
[photos: business meeting, portion of globe of world, portion of clock]
1998 Semi-Annual Report
for the six months ended March 31
SMALLCAP World Fund(r) seeks long-term growth of capital through investments in
smaller companies in the U.S. and around the world.
SMALLCAP is one of the 28 mutual funds in The American Funds Group,(r) managed
by Capital Research and Management Company. Since 1931, Capital has invested
with a long-term focus based on thorough research and attention to risk.
INVESTMENT HIGHLIGHTS
Total returns for periods ended March 31, 1998 with all distributions
reinvested
<TABLE>
<CAPTION>
Salomon Brothers MSCI
SMALLCAP World S&P 500 EAFE
World Fund Smallcap Index Index Index
<S> <C> <C> <C> <C>
Six months +3.4% +2.9% +17.2% +5.9%
Twelve months +28.8 +17.5 +47.9 +18.9
Five years +119.4 +76.0 +174.2 +78.2
Since fund's inception
on April 30, 1990 +214.9 +120.6 +312.0 +90.9
Average annual compound
return since fund's inception +15.6 +10.5 +19.6 +8.5
</TABLE>
All market indexes cited in this report are unmanaged and include reinvestment
of all distributions. The Salomon Brothers World Smallcap Index tracks more
than 5,100 publicly traded stocks in 22 countries with market capitalizations
between $100 million and $1.2 billion. 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 markets outside North America.
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, 1998,
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 +196.75% +14.73%
April 30, 1990
Five years +106.75 +15.63
Twelve months +21.37 -
</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:
Shakespeare doesn't come up often in our investment discussions, but he came up
several times in our review of the first half of SMALLCAP World Fund's 1998
fiscal year. No one seems to have captured the essence of the period better
than Macbeth: It was "full of sound and fury, signifying nothing." Or at least,
very little. A sharp decline of 6.9% in the final quarter of 1997 was followed
by a dramatic rebound of 11.2% in the first three months of 1998, netting to a
modest 3.4% gain for the six months.*
SMALLCAP's primary benchmark, the Salomon Brothers World Smallcap Index, saw a
similarly small increase of 2.9%, as did the average global small-company
mutual fund (up 3.1% according to Lipper Analytical Services, a mutual fund
tracking service). Large-company stocks again did better, especially in the
United States. Standard & Poor's 500 Composite Index rose 17.2%, while the
Morgan Stanley Capital International EAFE (Europe, Australasia, Far East)
Index, which measures large-cap stocks outside North America, gained 5.9%.
Looking back 12 months, SMALLCAP is up a solid 28.8%, versus 17.5% for the
Salomon Brothers World Smallcap Index and 20.5% for the average global
small-company mutual fund. While healthy, these returns look anemic compared to
U.S. large caps, which soared an astounding 47.9% as measured by the S&P 500.
Large-company stocks continue to benefit from the trend toward indexing as well
as record-breaking merger and acquisition activity and, more recently, a
"flight to quality" in the wake of Asian market turmoil.
NEVER-NEVER LAND
The first quarter of 1998 was one of the strongest periods ever, with many
world markets seeing a better-than-average one-year gain compressed into just
three months. The huge contrast from the previous quarter can probably be
attributed to a collective sigh of relief that the so-called "Asian contagion"
had not spread to other regions.
* This return assumes reinvestment of a 5-cents-a-share dividend and
$2.50-a-share capital gain distribution paid in December 1997.
To get a feel for how unusual these gains are, the first quarter of 1998 marked
the 13th consecutive quarter of positive returns for the U.S. market, after
three consecutive annual gains of 20% or better. The S&P 500 has never before
risen 20% or more three calendar years in a row, and only once has the market
risen for as many quarters in a row.
While the global spread of capitalism - described by some as a Cold War peace
dividend - may justify some level of exuberance, it does not comfort us that
the last time the U.S. market experienced such a run occurred in the years
leading up to the 1929 crash. We're certainly not predicting another
apocalypse, but it does suggest that caution is in order. It also makes it
clear how unrealistic many investors' expectations have become.
YIN YANG
As strong as U.S. stocks were in the first quarter, European stocks soared even
higher. Whether this marks a true change in leadership from U.S. to non-U.S.
stocks is not yet clear, but it does demonstrate why having the ability to own
stocks in other markets should help your fund's returns over time.
In Europe, preparations for a single European currency, scheduled to be
introduced next January 1, sparked lower interest rates and inflation, as well
as soaring stock prices. The fund's most rewarding European investments during
the period were innovative retailers and well-positioned technology firms, and
our most fertile hunting ground continued to be the United Kingdom. Going
forward, many companies will undoubtedly benefit from the monetary union, but
others will suffer from the increased competition that will result. Our
research over the next few years will be focused on sorting that out.
Europe and Asia could not present a starker contrast. Where one region is
booming, the other is picking up the pieces of its broken dreams. Asia
continues to constitute the biggest potential risk to the mostly benign global
economic environment. While South Korea and Thailand have taken decisive action
to address their problems, Japan and Indonesia are resisting steps needed for
recovery. And it is unclear how much China and Hong Kong will be affected.
Because of these uncertainties, the fund hasn't been buying much in Asia
despite the dramatic stock market free-fall. We invested in a few relatively
large exporters whose stocks, after 50% to 80% declines, were attractively
priced. But in general, the currency declines were so swift and severe that the
repercussions are still being felt; moreover, the operating environment for
companies has deteriorated just as fast. In particular, the ability to raise
capital has been greatly restricted, so even if there are opportunities,
companies often can't find the money to take advantage of them.
WHERE THE MONEY IS
One area where we have been buying is Latin America. Economies throughout the
region showed great resilience in the face of speculative currency attacks
following the crisis in Asia. Local stock markets didn't fare quite as well,
however, as money flowed out of developing markets to the U.S. and Europe and,
more recently, back toward Asia. As a result, many stocks in the region appear
to offer good value.
Overall, there have been no dramatic changes in the fund's geographic
diversification of its investments, and what did occur over the past six months
can be explained mainly by stock market action. The percentage of our holdings
represented by companies in Europe and the U.S. rose slightly as a result of
market gains, while our holdings in Asia decreased slightly (from the already
low levels we've held for several years) as a result of lower stock prices and
currency values. Another generalization worth making is that, as a result of
our research focus on individual companies, we owned many more stocks in
markets that did well than in markets that fared poorly.
THE NEW ECONOMY
The stocks that helped the fund the most during the period share a common
thread: The products or services they provide meet the needs of a 21st century
customer. Media stocks were strong, especially cable television, which
comprised nearly a quarter of our 25 best holdings. Selected technology,
specialty retailing and financial services stocks were very strong. Another
area of strength was the relatively new field of "outsourcing" - providing
temporary employees, services or manufacturing facilities to companies seeking
to better manage costs.
Stocks that fared poorly include metals, mining and raw materials producers,
which were hit by the economic slowdown in Asia, as well as certain technology
stocks. The fact that technology appears on lists of both our best and worst
holdings demonstrates the great potential and the extreme volatility typical of
the sector. We took advantage of that volatility to invest in a number of
semiconductor equipment companies and software makers whose stocks seem to
offer good value after recent declines.
The fund's investments now encompass more than 550 companies in 39 industries
in 44 countries.
[Begin table]
WHERE ARE SMALLCAP'S PORTFOLIO
COMPANIES LOCATED?
Geographical distribution of net assets
on March 31, 1998
THE AMERICAS 62.7%
United States 57.1%
Canada 4.3
Mexico .7
Other Latin America .6
EUROPE 20.8%
United Kingdom 6.7%
Sweden 3.6
France 1.7
Norway 1.4
Ireland 1.1
Denmark .9
Finland .9
Spain .8
Germany .7
Netherlands .6
Turkey .5
Other Europe 1.9
ASIA/PACIFIC 7.5%
Australia 2.4%
Hong Kong 1.1
New Zealand 1.1
Japan .9
Taiwan .5
Other Asia/Pacific 1.5
OTHER COUNTRIES 1.7%
CASH & EQUIVALENTS 7.3%
TOTAL 100.0%
[End table]
HEADING INTO THE WIND
Since the fund's introduction in April 1990, large-company stocks have
repeatedly outpaced the stocks of smaller companies, as we've documented in
these reports. Since smaller firms take more time to research, both because
there are more of them and because information is not as readily available, one
may reasonably ask if investing in smaller companies is worthwhile. While
recent history suggests one answer, a longer term perspective shows that the
endeavor is indeed valuable. Small companies have historically grown faster
than larger ones, and they continue to do so. What's more, in today's highly
valued markets, we are finding better values in the relatively neglected
small-company arena than among large-company stocks. Over meaningful periods of
time, the combination of faster earnings growth and more reasonable stock
prices sooner or later should be reflected in superior stock market returns.
Over SMALLCAP's lifetime, it has paid to be invested in big companies in the
U.S., while the fund has invested in small companies on a global scale. That
headwind has not hurt us as much as one might expect. Perhaps the best evidence
of SMALLCAP's success in a less-than-ideal market environment is its
performance relative to similar funds. Over its lifetime, SMALLCAP ranks first
of six global small-company funds, according to Lipper Analytical Services.
Over five years, it ranks third of 12 funds, and over the past year it ranks
fifth of 32 such funds. (Lipper rankings are based on total return and do not
reflect sales charges.)
We will do our best to see that this success continues.
Cordially,
[/s/ William R. Grimsley] [/s/ Gordon Crawford]
William R. Grimsley Gordon Crawford
Chairman of the Board President
May 15, 1998
On January 2, 1998, Robert B. Egelston retired as chairman of the board of
directors, a position he has held since the fund's inception in April 1990. The
directors wish to thank him for his many contributions to the fund and,
particularly, for being instrumental in guiding the fund during its formative
years.
<TABLE>
SMALLCAP World Fund
PORTFOLIO SUMMARY March 31, 1998
Unaudited
<S> <C> <C> <C>
Industry Diversification
Business & Public Services 15.7%
Broadcasting & Publishing 10.3%
Merchandising 6.3%
Health & Personal Care 6.1%
Leisure & Tourism 4.5%
Other Industries 49.8%
Cash & Equivalents 7.3%
Percentage
Percent price change
of for the six
Net months ended
Assets 3/31/98
Largest Equity Holdings
Cablevision Systems 1.25% +109.6%
Mobile Telecommunication Technologies .82 +38.2
OM Gruppen .81 +56.8
ISS-International Service System .80 +49.0
CBT Group .78 +29.0
Fletcher Challenge Energy .73 -23.9
PMC-Sierra .67 +49.0
NTL .65 +64.0
Westwood One .63 -2.4
HNC Software .63 -5.3
Percent
Shares or Market of
EQUITY SECURITIES Principal Value Net
(common and preferred stocks and convertible debentures) Amount (000) Assets
Business & Public Services - 15.71%
ISS-International Service System A/S, Class B (Denmark) /1/ 1,605,241 $76,658 .80%
CBT Group PLC (American Depositary Receipts) (Ireland) /1/ 1,450,000 75,037 .78
Primark Corp. (USA) /1, 2/ 1,350,000 57,713 .60
ABR Information Services, Inc. (USA) /1, 2/ 1,780,000 50,063 .52
Corporate Services Group PLC (United Kingdom) /2, 3/ 9,060,398 36,362
Corporate Services Group PLC /2/ 1,600,000 6,421 .45
MSC Industrial Direct Co., Inc., Class A (USA) /1/ 760,500 41,210 .43
Snyder Communications, Inc. (USA) /1/ 775,200 36,338 .38
Vanstar Corp. (USA) /1, 2/ 2,300,000 28,750
Vanstar Financing Trust, 6.75% convertible preferred /2,3/ 175,000 6,869 .37
Platinum Software Corp. (USA) /1/ 1,475,000 34,294 .36
Protection One, Inc. (USA) /1/ 2,500,000 33,438 .35
Franklin Covey Co. (USA) /1,2/ 1,350,000 32,822 .34
Allied Waste Industries, Inc. (USA) /1/ 1,256,700 31,378 .33
Enator AB (Sweden) /1/ 1,299,550 30,586 .32
Universal Health Services, Inc., Class B (USA) /1/ 500,000 28,875 .30
Borg-Warner Security Corp. (USA) /1,2/ 1,200,000 23,625 .25
Rental Service Corp. (USA) /1/ 1,000,000 23,250 .24
Banta Corp. (USA) 750,000 23,203 .24
Renaissance Worldwide Inc. (USA) /1/ 835,800 22,932 .24
Black Box Corp. (USA) /1/ 614,000 22,641 .24
Vincam Group, Inc. (USA) /1,2/ 777,750 22,555 .24
Midas, Inc. (USA) /1/ 1,091,000 22,502 .23
Bally Total Fitness Holding Corp. (USA) /1/ 710,500 22,381 .23
MemberWorks Inc. (USA) /1/ 733,000 21,898 .23
ChoicePoint Inc. (USA) /1/ 400,000 21,775 .23
SITEL Corp (USA) /1/ 1,600,000 20,400 .21
Dr Solomon's Group PLC (American Depositary 635,000 20,082 .21
Receipts) (United Kingdom) /1/
G&K Services, Inc., Class A (USA) 433,100 19,002 .20
Budget Group, Inc., Class A (USA) /1/ 500,000 18,750 .20
Pinkerton's, Inc. (USA) /1,2/ 810,000 18,681 .19
Concord EFS, Inc. (USA) /1/ 529,400 18,297 .19
CCC Information Services Group Inc. (USA) /1/ 637,800 17,540 .18
Brunel International NV (Netherlands) /1/ 590,000 17,539 .18
Rhon-Klinikum AG, preferred shares (Germany) 168,000 17,428 .18
Saskatchewan Wheat Pool, non-voting shares, Class B (Canada) 1,125,000 17,130 .18
Cerner Corp. (USA) /1/ 775,000 16,614 .17
Pittston Brink's Group (USA) 400,000 15,250 .16
Healthcare Recoveries, Inc. (USA) /1, 2/ 650,000 15,112 .16
Administaff, Inc. (USA) /1/ 340,500 14,663 .15
CKS Group, Inc. (USA) /1/ 729,400 13,722 .14
APAC TeleServices, Inc. (USA) /1/ 1,032,900 13,363 .14
Sapient Corp. (USA) /1/ 278,000 13,170 .14
SCB Computer Technology, Inc. (USA) /1,2/ 562,350 12,934 .13
Lernout & Hauspie Speech Products NV (Belgium) /1/ 142,000 12,407 .13
Precision Response Corp. (USA) /1,2/ 1,346,700 12,289 .13
National Surgery Centers, Inc. (USA) /1/ 454,500 11,618 .12
Strategic Distribution, Inc. (USA) /1,2/ 1,890,000 11,340 .12
American Disposal Services, Inc. (USA) /1/ 300,000 11,325 .12
Medicis Pharmaceutical Corp., Class A (USA) /1/ 250,000 10,906 .11
Superior Consultant Holdings Corp. (USA) /1/ 300,000 10,762 .11
Lorien PLC (United Kingdom) 819,663 10,417 .11
DeVry Inc. (USA) /1/ 300,000 10,256 .11
GTS Duratek, Inc. (USA) /1/ 811,100 10,139 .11
Australian Hospital Care Ltd. (Australia) 8,040,000 9,952 .10
Prosolvia AB, Class B (Sweden) /3/ 210,100 9,588 .10
APCOA Parking AG (Germany) /2/ 120,800 9,529 .10
HealthPlan Services Corp. (USA) 350,000 9,209 .10
More Group PLC (United Kingdom) 475,000 9,198 .10
Flughafen Wien AG (Austria) 200,000 9,029 .09
Photobition Group PLC (United Kingdom) /3/ 1,799,670 8,878 .09
Data Processing Resources Corp., 5.25% convertible debentures 2005 (USA) /3/ $7,600,000 8,246 .09
NCO Group, Inc. (USA) /1/ 325,000 8,125 .08
JLK Direct Distribution Inc., Class A (USA) /1/ 211,300 8,069 .08
Coinmach Laundry Corp., Class A (USA) /1/ 369,500 7,806 .08
PSS World Medical, Inc. (formerly Physician Sales & Service, Inc.) (USA) /1/ 325,700 7,654 .08
Advanced Health Corp. (USA) /1,2/ 590,000 7,559 .08
Iron Mountain Inc. (USA) /1/ 201,000 7,538 .08
PRT Corp. of America (USA) /1,3/ 761,960 7,477 .08
American Management Systems, Inc. (USA) /1/ 270,000 7,425 .08
Pricer AB, Class B (Sweden) 788,750 7,386 .08
TeleTech Holdings, Inc. (USA) /1/ 500,000 7,250 .08
InaCom Corp. (USA) /1/ 250,000 6,906 .07
CompuCom Systems, Inc. (USA) /1/ 800,000 6,600 .07
Rural/Metro Corp. (USA) /1/ 200,000 6,575 .07
Freepages Group PLC (United Kingdom) 11,250,000 6,490 .07
Filofax Group PLC (United Kingdom) /2/ 1,956,000 6,378 .07
Lason, Inc. (USA) /1/ 167,900 6,338 .07
Four Media Co. (USA) /1,2/ 620,000 5,812 .06
Monro Muffler Brake, Inc. (USA) /1/ 331,275 5,507 .06
Kanamoto Co., Ltd. (Japan) 1,086,000 5,422 .06
American Healthcorp, Inc. (USA) /1,2/ 522,000 5,089 .05
International Container Terminal Services, Inc., 1.75% convertible
debentures 2004 (Philippines) $5,905,000 4,990 .05
Alternative Resources Corp. (USA) /1/ 219,500 4,623 .05
Mastering Inc. (USA) /1/ 383,600 4,316 .05
MicroAge, Inc. (USA) /1/ 333,300 4,208 .04
Dialog Corp. PLC (United Kingdom) /3/ 1,500,000 4,139 .04
IntelliQuest Information Group, Inc. (USA) /1/ 360,500 4,101 .04
MDC Communications Corp., Class A (formerly MDC Corp.) (Canada) /1/ 433,333 4,047 .04
Sylvan Learning Systems, Inc. (USA) /1/ 79,900 3,765 .04
UroCor, Inc. (USA) /1/ 500,000 3,609 .04
Thomas Group, Inc. (USA) /1,2/ 388,500 3,497 .04
Bell & Howell Co. (USA) /1/ 125,000 3,430 .04
AmSurg Corp., Class B (USA) /1,2/ 309,972 2,790
AmSurg Corp., Class A /1,2/ 48,110 427 .03
Newalta Corp. (Canada) 288,600 1,434 .01
Triple P NV (Netherlands) /1/ 167,500 408 .00
Broadcasting & Publishing - 10.26%
Cablevision Systems Corp., Class A (USA) /1/ 1,820,000 119,665 1.25
NTL Inc. (United Kingdom - Incorporated in USA) /1/ 1,450,000 62,712 .65
Westwood One, Inc. (USA) /1/ 1,943,100 60,236 .63
United Video Satellite Group, Inc., Class A (USA) /1/ 1,225,000 52,063 .54
Scottish Media Group PLC (United Kingdom) 3,280,000 41,026 .43
BET Holdings, Inc., Class A (USA) /1/ 662,100 40,471 .42
Antena 3 de Radio, SA (Global Depositary Receipts) (Spain) /1,2,3,4/ 1,500 39,207 .41
Adelphia Communications Corp., Class A (USA) /1/ 1,271,000 37,653 .39
FLEXTECH PLC (United Kingdom) /1/ 3,979,600 35,869 .37
Jones Intercable, Inc., Class A (USA) /1/ 1,705,000 31,116 .33
CanWest Global Communications Corp. (Canada) 1,554,946 29,869 .31
Scandinavian Broadcasting System SA 887,900 29,301 .31
(Denmark - Incorporated in Luxembourg) /1,2/
Young Broadcasting Inc., Class A (USA) /1/ 557,000 27,850 .29
United Television, Inc. (USA) 250,000 27,094 .28
Emmis Broadcasting Corp., Class A (USA) /1/ 476,100 25,114 .26
Century Communications Corp., Class A (USA) /1/ 1,940,000 24,856 .26
Chrysalis Group PLC (United Kingdom) /2/ 1,824,000 22,571 .24
Central European Media Enterprises Ltd., Class A
(USA - Incorporated in Bermuda) /1/ 755,000 21,989 .23
United International Holdings, Inc., Class A (USA) /1/ 1,295,000 21,691 .23
Ascent Entertainment Group, Inc.(USA) /1,2/ 1,930,000 19,903 .21
Ackerley Group, Inc. (USA) 968,900 19,802 .21
Tidnings AB Marieberg (Sweden) 585,000 17,749 .19
Scholastic Corp. (USA) /1/ 408,800 17,272 .18
Shaw Communications Inc., Class B (Canada) 1,050,000 15,655 .16
CD Radio Inc. (USA) /1/ 600,000 13,125 .14
Data Broadcasting Corp. (USA) /1,2/ 2,000,000 11,500 .12
Primedia Ltd., units (South Africa) 1,650,000 10,814 .11
Australian Provincial Newspapers Holdings Ltd. (Australia) 5,402,537 9,870 .10
@Entertainment Inc. (USA) /1/ 635,000 9,049 .09
NRJ SA (France) 47,284 8,161 .09
Media General, Inc., Class A (USA) 139,500 6,862 .07
Matav-Cable Systems Media Ltd. (American 320,000 6,720 .07
Depositary Receipts) (Israel)
American Radio Systems Corp., Class A (USA) /1/ 96,600 6,128 .06
Grupo Radio Centro, SA de CV (American Depositary 420,000 5,959 .06
Receipts) (Mexico)
TCI Music, Inc., Series A (USA) /1/ 742,500 5,824 .06
Story First Communications, convertible preferred, Class B (Russia) /1,3,4/ 4,022 5,751 .06
Prime Television Ltd. (Australia) 2,192,227 5,572 .06
Aamulehti Corp. Ltd. (Finland) 126,400 5,182 .05
HIT Entertainment PLC (United Kingdom) /3/ 700,000 4,565 .05
Schibsted ASA (Norway) 252,800 4,470 .05
Nasionale Pers Beperk (South Africa) 534,900 4,409 .05
Rural Press Ltd. (Australia) 1,309,840 4,162 .04
Investec - Consultoria Internacional, SA (Portugal) 99,000 3,997 .04
Modern Times Group MTG AB, Class B (American Depositary Receipts) (Sweden) 69,200 3,165 .03
Southern Star Group Ltd. (Australia) 2,870,000 3,096 .03
ValueVision International, Inc., Class A (USA) /1/ 734,900 2,434 .03
Dorling Kindersley Holdings PLC (United Kingdom) 261,900 990 .01
Pacific Media PLC (United Kingdom) /1/ 66,249,124 775 .01
Merchandising - 6.28%
Zale Corp. (USA) /1,2/ 1,950,000 56,306 .59
Claire's Stores, Inc. (USA) 1,900,000 43,581 .45
Gymboree Corp. (USA) /1,2/ 1,435,600 37,146 .39
Brylane Inc. (USA) /1/ 636,600 35,689 .37
Hanover Direct, Inc. (USA) /1/ 6,280,440 21,589
Hanover Direct, Inc. /1,3,4/ 3,700,000 11,447 .34
PETsMART, Inc. (USA) /1/ 3,000,000 32,063 .33
Fabri-Centers of America, Inc., Class A (USA) /1,2/ 525,000 16,341
Fabri-Centers of America, Inc., non-voting shares, Class B /1,2/ 525,000 14,044 .32
AnnTaylor, Inc. (USA) /1,2/ 1,535,900 25,246 .26
Michaels Stores, Inc. (USA) /1/ 674,700 25,217 .26
GrandVision SA (France) 648,673 23,940 .25
DFS Furniture Co. PLC (United Kingdom) 3,392,700 19,686 .20
Garden Ridge Corp. (USA) /1/ 795,000 17,192 .18
Rent-Way, Inc. (USA) /1,2/ 655,000 15,556 .16
Williams-Sonoma, Inc. (USA) /1/ 125,000 7,234
Williams-Sonoma, Inc., 5.25% convertible debentures 2003 /3/ $3,500,000 7,927 .16
Cost Plus, Inc. (USA) /1,2/ 450,000 14,302 .15
Bilia AB, Class A (Sweden) 1,010,800 13,883 .14
Talbots, Inc. (USA) 675,300 13,211 .14
Controladora Comercial Mexicana, SA de CV, units (Mexico) 10,737,000 13,114 .14
Migros Turk TAS (Turkey) 13,634,675 12,064 .13
Aldeasa SA (Spain) 338,579 11,984 .12
Hornbach Holding AG, preferred shares (Germany) 142,650 11,168 .12
Piercing Pagoda, Inc. (USA) /1,2/ 335,000 10,469 .11
Mobel Walther AG, non-voting, preferred shares (Germany) 260,000 7,797
Mobel Walther AG 88,000 2,615 .11
Haverty Furniture Companies, Inc. (USA) 545,000 10,219 .11
Marks Bros. Jewelers, Inc. (USA) /1,2/ 510,000 10,104 .11
Sunglass Hut International, Inc. (USA) /1/ 800,000 8,400 .09
Hibbett Sporting Goods, Inc. (USA) /1/ 300,000 8,325 .09
Dickson Concepts (International) Ltd. (Hong 4,575,699 7,972 .08
Kong - Incorporated in Bermuda)
Chapters Inc. (Canada) 305,200 6,852
Chapters Inc., warrants, expire 1998 19,000 427 .08
Sixt AG (Germany) 33,712 4,353
Sixt AG, non-voting, preferred shares /1/ 12,256 1,358 .06
Homac Corp. (Japan) 663,000 5,027 .05
Disco SA (American Depositary Receipts) (Argentina) /1/ 110,000 4,428 .05
Tandy Brands Accessories, Inc. (USA) /1/ 221,625 4,225 .04
Liquidation World Inc. (Canada) 186,000 3,979 .04
Cash Converters International Ltd., units (Australia) /2/ 9,417,563 2,520 .03
Homeplace Holding Inc., 7.00% convertible preferred (USA) /1,4/ 30,200 2,001 .02
PT Modern Photo Film Co. (Indonesia) 5,320,000 1,175 .01
Health & Personal Care - 6.12%
Orthodontic Centers of America, Inc. (USA) /1/ 1,920,000 41,640 .43
Cytyc Corp. (USA) /1,2/ 933,700 23,343 .24
Vertex Pharmaceuticals Inc. (USA) /1/ 730,000 23,314 .24
Scotia Holdings PLC (United Kingdom) /2/ 5,062,200 22,432 .23
Pharmacyclics, Inc. (USA) /1,2,3/ 580,000 16,893
Pharmacyclics, Inc. /1,2/ 185,000 5,388 .23
Mentor Corp. (USA) 800,000 22,100 .23
Thermedics Inc. (USA) /1/ 1,200,000 21,375 .22
GelTex Pharmaceuticals, Inc. (USA) /1,2/ 750,000 20,250 .21
Protein Design Labs, Inc. (USA) /1/ 500,000 19,625 .20
Andrx Corp. (USA) /1,3,4/ 730,000 19,331 .20
Scios Nova Inc. (USA) /1/ 1,550,000 18,891 .20
Gilead Sciences, Inc. (USA) /1/ 500,000 18,000 .19
Acuson Corp. (USA) /1/ 950,000 17,219 .18
Cyberonics, Inc. (USA) /1,3/ 494,000 15,746 .16
Zonagen, Inc. (USA) /1,2/ 700,000 15,400 .16
SEQUUS Pharmaceuticals, Inc. (USA) /1/ 1,330,832 14,057 .15
Gedeon Richter Ltd. (Global Depositary Receipts) (Hungary) 110,000 12,032 .13
COR Therapeutics, Inc. (USA) /1/ 947,300 11,723 .12
Aviron (USA) /1/ 500,000 11,562 .12
i-STAT Corp. (USA) /1,2/ 727,000 9,724
i-STAT Corp. /1,2,3/ 125,000 1,672 .12
Vical Inc. (USA) /1/ 700,000 11,025 .11
Chr. Hansen Holding A/S, Class B (Denmark) 80,000 10,543 .11
Nobel Biocare AB (Sweden) 940,000 10,446 .11
Anesta Corp. (USA) /1,2/ 550,000 10,244 .11
Perkin-Elmer Corp., Class G, warrants, expire 2003 (formerly 131,850 9,534
PerSeptive Biosystems, Inc.) (USA) /1/
Perkin-Elmer Corp. /1/ 5,419 26 .10
Martek Biosciences Corp. (USA) /1/ 600,000 9,113 .10
NeoPath, Inc. (USA) /1/ 640,500 8,807 .09
OrthoLogic Corp. (USA) /1/ 1,250,000 8,750 .09
Genelabs Technologies, Inc. (USA) /1,3/ 2,085,000 8,340 .09
ImClone Systems Inc. (USA) /1/ 1,000,000 8,312 .09
Kos Pharmaceuticals, Inc. (USA) /1/ 800,000 7,500 .08
Alkermes, Inc. (USA) /1/ 300,000 7,462 .08
Grupo Casa Autrey, SA de CV (American 500,000 7,375 .08
Depositary Receipts) (Mexico)
Digene Corp. (USA) /1,2/ 800,000 7,100 .07
Technical Chemicals and Products, Inc. (USA) /1,2/ 600,000 6,375 .07
KeraVision, Inc. (USA) /1,2/ 795,000 6,360 .07
Intercardia, Inc. (USA) /1/ 300,000 6,112 .06
Creative BioMolecules, Inc. (USA) /1/ 700,000 5,775 .06
Neose Technologies, Inc. (USA) /1/ 400,000 5,450 .06
Physio-Control International Corp. (USA) /1/ 310,000 5,425 .06
Immune Response Corp. (USA) /1/ 500,000 4,906 .05
Gensia Sicor Inc. (USA) /1/ 964,000 4,820 .05
Millennium Pharmaceuticals, Inc. (USA) /1/ 250,000 4,656 .05
T Cell Sciences, Inc. (USA) /1,3/ 800,000 2,350
T Cell Sciences, Inc. /1/ 500,000 1,469
T Cell Sciences, Inc. /1,3,4/ 200,000 511 .05
Virbac SA (France) 47,300 4,234 .04
Cardiovascular Diagnostics, Inc. (USA) /1,2/ 412,500 3,712 .04
CIMA LABS INC. (USA) /1,2/ 565,500 2,810 .03
NPS Pharmaceuticals, Inc. (USA) /1/ 300,000 2,213 .02
SIBIA Neurosciences, Inc. (USA) /1/ 410,000 2,153 .02
Ethical Holdings PLC (American Depositary 675,000 2,025 .02
Receipts)(United Kingdom) /1/
Neurocrine Biosciences, Inc. (USA) /1/ 249,000 2,023 .02
InSite Vision Inc. (USA) /1/ 350,000 1,181
InSite Vision Inc. /1,3/ 200,000 675
InSite Vision Inc., warrants, expire 2001 /1,3,4/ 50,000 6 .02
Alpha-Beta Technology, Inc. (USA) /1/ 695,000 1,477 .02
ImmuLogic Pharmaceutical Corp. (USA) /1/ 750,000 1,242 .01
Applied Imaging Corp. (USA) /1/ 335,000 1,047 .01
Vision-Sciences, Inc. (USA) /1/ 484,500 727 .01
Life Medical Sciences, Inc. (USA) /1/ 295,000 498 .01
Leisure & Tourism - 4.52%
Imax Corp. (Canada) /1,2/ 1,558,000 44,208 .46
Florida Panthers Holdings, Inc., Class A (USA) /1/ 1,175,000 26,144
Florida Panthers Holdings, Inc., Class A /1,3/ 500,000 11,125 .39
Village Roadshow Ltd. (Australia) 8,201,596 21,367
Village Roadshow Ltd., 5.50% preferred shares, Class A 5,722,143 11,817 .35
J D Wetherspoon PLC (United Kingdom) 5,204,935 29,941 .31
Cheesecake Factory Inc. (USA) /1,2/ 837,000 27,883 .29
Rio Hotel & Casino, Inc. (USA) /1/ 1,050,000 27,234 .28
Ticketmaster Group, Inc. (USA) /1/ 834,000 25,124 .26
Consolidated Products, Inc. (USA) /1,2/ 1,250,000 24,063 .25
Vail Resorts, Inc. (USA) /1/ 800,000 23,400 .24
Four Seasons Hotels Inc. (Canada) 599,307 20,659 .22
Alliance Communications Corp., non-voting shares, 738,000 13,786
Class B (Canada) /1,2/
Alliance Communications Corp., Class A /1,2/ 322,700 5,971 .21
CINAR Films Inc., Class B (Canada) /1/ 415,300 17,702 .19
Hoyts Cinemas Ltd., units (Australia) 10,280,430 17,692 .19
Spelling Entertainment Group Inc. (USA) /1/ 1,500,000 13,500 .14
Penske Motorsports, Inc. (USA) /1/ 300,000 9,675 .10
Morton's Restaurant Group, Inc. (USA) /1,2/ 415,000 9,571 .10
Championship Auto Racing Teams, Inc. (USA) /1/ 466,000 8,621 .09
Gaumont SA (France) 94,835 6,402 .07
Lions Gate Entertainment Corp. (Canada) 2,075,000 5,558
Lions Gate Entertainment Corp., warrants, expire 4/30/98 691,666 .06
Capital Corp. PLC (United Kingdom) 2,900,000 5,431 .06
Mandarin Oriental Hotel Group Ltd. (Hong Kong) 6,540,217 5,232 .05
Silicon Gaming, Inc. (USA) /1,3,4/ 426,666 4,160 .04
Filmes Lusomundo, SA, preferred shares (Portugal) 292,500 4,151 .04
Norsk Lotteridrift ASA (Norway) /2/ 965,000 3,729 .04
Mainframe Entertainment, Inc. (Canada) 506,500 3,124 .03
Harry Ramsden's PLC (United Kingdom) 495,115 2,525 .03
Beyond International Ltd. (Australia) 2,026,000 2,240 .02
Golden Harvest Entertainment (Holdings) Ltd. (Hong Kong) /1/ 10,400,000 805 .01
Electronic Components - 3.63%
PMC-Sierra, Inc. (USA) /1,2/ 1,700,000 64,600 .67
Micrel, Inc. (USA) /1,2/ 1,000,000 37,937 .39
Level One Communications, Inc. (USA) /1/ 1,200,000 28,200 .29
Littelfuse, Inc. (USA) /1/ 800,000 20,800 .22
Pioneer-Standard Electronics, Inc. (USA) /2/ 1,660,000 20,335 .21
Alliance Semiconductor Corp. (USA) /1,2/ 2,545,000 19,087 .20
NatSteel Electronics Ltd. (Singapore) 8,680,000 16,882 .18
Stoneridge, Inc. (USA) /1/ 806,400 16,128 .17
Rogers Corp. (USA) /1/ 370,000 15,355 .16
Flextronics International Ltd. (USA-Incorporated in Singapore) /1,2/ 325,000 14,036 .15
Cymer, Inc. (USA) /1/ 600,000 12,112 .13
Wus Printed Circuit Co., Ltd. (Taiwan) 3,120,000 10,226 .11
Lite-On Technology Corp. (Taiwan) /1/ 4,518,000 9,504 .10
ITI Technologies, Inc. (USA) /1/ 342,600 8,908 .09
Komag, Inc. (USA) /1/ 600,000 8,700 .09
Read-Rite Corp. (USA) /1/ 600,000 8,288 .09
ANADIGICS, Inc. (USA) /1/ 600,000 7,837 .08
Elcoteq Network Corp., Class A (Finland) 573,000 6,894 .07
Accton Technology Corp. (Global Depositary Receipts) (Taiwan) /1/ 1,274,900 6,884 .07
S3 Inc. (USA) /1/ 844,000 5,961 .06
QPL International Holdings Ltd. (Hong Kong-Incorporated in Bermuda) 11,010,000 5,471 .06
Sanmina Corp. (USA) /1/ 51,000 3,567 .04
First Pacific Networks, Inc. (USA) /1/ 850,000 4
First Pacific Networks, Inc., warrants, expire 2000 /1,4/ 250,000
First Pacific Networks, Inc., convertible preferred, 1,000 .00
Series H /1,3,4/
Energy Sources - 3.49%
Fletcher Challenge Energy (New Zealand) 20,245,075 69,647 .73
Ranger Oil Ltd. (Canada) /1,2/ 7,018,915 45,623 .48
Oil Search Ltd. (Australia) 13,740,000 24,282
Oil Search Ltd. /3/ 2,300,000 4,065 .30
Hardy Oil & Gas PLC (United Kingdom) 6,037,900 27,766 .29
QCT Resources Ltd. (Australia) 27,043,028 22,017 .23
Premier Oil PLC (United Kingdom) 32,861,684 21,442 .22
Forcenergy Inc (USA) /1/ 776,300 20,572 .21
Ramco Energy PLC (United Kingdom) /2/ 1,597,000 18,426 .19
Encal Energy Ltd. (Canada) 4,335,000 15,890 .17
Cabre Exploration Ltd. (Canada) /1,2/ 993,400 11,064 .12
Paramount Resources Ltd. (Canada) 826,300 7,747 .08
Blue Range Resource Corp., Class A (Canada) /1/ 1,300,000 7,377 .08
Novus Petroleum Ltd. (Australia) 2,855,082 6,992 .07
Louis Dreyfus Natural Gas Corp. (USA) /1/ 360,000 6,570 .07
Abacan Resource Corp. (Canada) /1/ 3,709,400 5,387 .06
Arcon International Resources PLC (Ireland) 11,798,000 4,932 .05
Pentex Energy PLC (United Kingdom) 16,548,571 3,597 .04
Aminex PLC (Ireland) /2,3/ 3,250,000 3,369 .03
Rubis & Cie (France) 107,000 2,969 .03
Black Sea Energy Ltd. (Canada) 1,950,000 1,856 .02
Cultus Petroleum NL (Australia) /3/ 580,000 814
Cultus Petroleum NL 210,000 295 .01
Chauvco Resources Ltd. (Canada) /2/ 3,061,300 604 .01
Anzoil NL (Australia) /1,2/ 2,730,000 398 .00
Providence Resources PLC (Ireland) 9,895,500 369 .00
Banking - 2.97%
Keystone Financial, Inc. (USA) 787,500 32,287 .34
Citizens Banking Corp. (USA) 700,000 24,981 .26
FirstMerit Corp. (USA) 680,000 22,823 .24
Provident Bankshares Corp. (USA) 567,000 20,058 .21
UST Inc. (USA) 700,000 19,862 .21
Yapi ve Kredi Bankasi AS (Turkey) 552,522,220 19,100 .20
Fulton Financial Corp. (USA) 547,540 17,932 .19
Banco de Galicia y Buenos Aires SA, Class B
(American Depositary Receipts)
(Argentina) 652,982 15,998 .17
Bank Handlowy w Warszawie SA (Global Depositary Receipts) (Poland) /1/ 950,000 15,912 .16
AMCORE Financial, Inc. (USA) 524,400 14,159 .15
Commerce Bancorp, Inc. (USA) 244,550 13,466 .14
Carolina First Corp. (USA) 528,400 13,408 .14
Washington Federal Savings and Loan Assn. (USA) 471,072 13,072 .13
Imperial Bancorp (USA) /1/ 300,000 9,675 .10
First Midwest Bancorp, Inc. (USA) 200,000 8,700 .09
Bank United, Class A (USA) /1/ 620,000 8,680 .09
Dah Sing Financial Holdings Ltd. (Hong Kong) 2,170,000 5,713 .06
International Bank of Asia Ltd. (Hong Kong) 16,495,285 5,429 .05
Sterling Financial Corp. (USA) /1/ 138,000 3,588 .04
Chemicals - 2.74%
Valspar Corp. (USA) 1,281,000 50,279 .52
OM Group, Inc. (USA) 1,050,000 44,231 .46
Airgas, Inc. (USA) /1/ 2,185,900 37,707 .39
Cambrex Corp. (USA) /2/ 700,000 35,262 .37
Kalon Group PLC (United Kingdom) 9,030,000 27,935 .29
McWhorter Technologies, Inc. (USA) /1,2/ 706,000 17,871 .19
Mycogen Corp. (USA) /1/ 900,000 16,369 .17
Georgia Gulf Corp. (USA) 450,300 12,214 .13
Gurit-Heberlein AG (Switzerland) 3,000 10,357 .11
Landec Corp. (USA) /1,2/ 690,000 5,347 .06
NuCo2 Inc. (USA) /1/ 330,000 4,373 .05
Epicore Networks Inc. (Canada) /2/ 1,405,000 446 .00
Electronic Instruments - 2.55%
Plantronics, Inc. (USA) /1,2/ 951,500 38,952 .41
Etec Systems, Inc. (USA) /1/ 660,000 38,940 .40
Tokyo Seimitsu Co., Ltd. (Japan) 894,000 22,686 .24
LoJack Corp. (USA) /1,2/ 1,347,000 19,363 .20
ThermoQuest Corp. (USA) /1/ 1,010,000 18,180 .19
Trimble Navigation Ltd. (USA) /1/ 1,000,000 17,812 .18
Disco Corp. (Japan) 709,000 17,033 .18
Milltronics Ltd. - Milltronics Ltee (Canada) /2/ 900,000 10,849 .11
ASM Pacific Technology Ltd. (Hong Kong) 13,969,000 10,276 .11
Horiba, Ltd. (Japan) 890,000 9,622 .10
Vivid Technologies, Inc. (USA) /1,2/ 600,000 9,000 .09
ANTEC Corp. (USA) /1/ 570,000 8,550 .09
Lumonics Inc. (Canada) /1/ 460,000 7,458 .08
CIDCO Inc. (USA) /1,2/ 783,000 7,390 .08
Harmonic Lightwaves, Inc. (USA) /1/ 300,000 4,837 .05
Micronic Laser Systems AB (Sweden) /3,4/ 400,000 1,898 .02
Voice Control Systems, Inc. (USA) /1/ 247,000 1,729 .02
Industrial Components - 2.21%
Federal-Mogul Corp. (USA) 945,000 50,262 .53
Superior TeleCom Inc. (USA) 750,000 31,313 .33
Senior Engineering Group PLC (United Kingdom) 10,100,000 31,245 .33
BREED Technologies, Inc. (USA) 1,000,000 23,313 .24
Tower Automotive, Inc. (USA) /1/ 402,700 18,121 .19
BTI Capital Trust, 6.50% convertible preferred (USA) /3/ 250,000 13,625 .14
Material Sciences Corp. (USA) /1,2/ 1,000,000 10,938 .11
Applied Industrial Technologies, Inc.(USA) 300,000 8,081 .08
Hayes Lemmerz International, Inc. (USA) /1/ 210,000 6,930 .07
Koito Manufacturing Co., Ltd. (Japan) 1,670,000 6,896 .07
Kolbenschmidt AG (Germany) 178,500 4,620 .05
Innovative International (Holdings) Ltd. (Hong Kong) 18,807,104 4,029
Innovative International (Holdings) Ltd., warrants, expire 1999 /1/ 1,836,170 22 .04
Standard Products Co. (USA) 75,000 2,470 .03
Data Processing & Reproduction - 1.99%
HNC Software Inc. (USA) /1,2/ 1,595,000 60,012 .63
Rambus Inc. (USA) /1/ 500,000 21,875 .23
Edify Corp. (USA) /1,2/ 1,055,000 21,298 .22
Datacraft Asia Ltd (Singapore) 4,489,000 14,544 .15
Indus Group, Inc. (USA) /1/ 1,235,000 12,659 .13
PictureTel Corp. (USA) /1/ 1,500,000 10,125 .10
Primax Electronics Ltd. (Taiwan) 3,100,000 9,546 .10
Mercury Computer Systems, Inc. (USA) /1/ 490,000 8,452 .09
ARIS Corp. (USA) /1/ 281,000 8,360 .09
Prokom Software SA (Global Depositary Receipts) (Poland) /1/ 367,000 6,790 .07
Eidos PLC (United Kingdom) 360,000 6,381 .07
Mentor Graphics Corp. (USA) /1/ 450,000 4,416 .05
Macromedia, Inc. (USA) /1/ 230,000 3,421 .03
Larscom Inc., Class A (USA) /1/ 350,000 2,898 .03
SoftQuad International Inc. (Canada) /1/ 145,000 72 .00
Food & Household Products - 1.94%
Metro-Richelieu Inc., Class A (Canada) 3,190,000 37,778 .39
Geest PLC (United Kingdom) 2,250,000 18,699 .20
Smithfield Foods, Inc. (USA) /1/ 500,000 17,250 .18
Nutreco Holding NV (Netherlands) 520,000 17,203 .18
Grupo Industrial Maseca, SA de CV, Class B 1,272,500 14,634 .15
(American Depositary Receipts) (Mexico)
Devro International PLC (United Kingdom) 1,700,000 14,413 .15
Tingyi (Cayman Islands) Holding Corp. (China - Incorporated in the
Cayman Islands) 65,600,000 7,789
Tingyi (Cayman Islands) Holding Corp., 1.625% $8,000,000 5,920 .14
convertible debentures 2002
Fyffes PLC (Ireland) 4,600,000 11,421 .12
Celestial Seasonings, Inc. (USA) /1,2/ 260,000 10,660 .11
Fresh Del Monte Produce Inc. (USA) /1/ 604,600 9,296 .10
Karlshamns AB (Sweden) 616,000 8,768 .09
Ben & Jerry's Homemade, Inc., Class A (USA) /1/ 400,000 7,250 .08
Sadia Concordia SAIC, preferred shares (Brazil) 6,800,000 5,024 .05
Machinery & Engineering - 1.89%
KCI Konecranes International Corp. (Finland) /2/ 911,700 41,923 .44
Svedala Industri AB (Sweden) 1,418,000 28,505 .30
Thermo Fibertek Inc. (USA) /1/ 1,600,000 20,000
Thermo Fibertek Inc., 4.50% convertible debentures 2004 /3/ $4,000,000 4,360 .25
Crompton & Knowles Corp. (USA) 678,400 19,631 .21
SIG Swiss Industrial Co. Holding Ltd. (Switzerland) 5,900 18,359 .19
Hussmann International, Inc. (USA) 912,500 17,109 .18
Powerscreen International PLC (United Kingdom) 4,000,000 15,451 .16
Thermo Power Corp. (USA) /1,2/ 620,000 7,053 .07
Miura Co., Ltd. (Japan) 500,000 4,918 .05
UMW Holdings Bhd. (Malaysia) 3,166,000 3,427 .04
Telecommunications - 1.81%
Mobile Telecommunication Technologies Corp. (USA) /1,2/ 3,525,000 78,872 .82
COLT Telecom Group PLC (United Kingdom) 2,318,200 54,833 .57
Globalstar Telecommunications Ltd. (USA) /1/ 200,000 12,675 .13
Nera ASA (Norway) /2/ 3,287,500 11,971 .12
Global TeleSystems Group, Inc. (USA) /1/ 175,000 8,181 .09
Cellular Communications, Inc., 6.00% convertible debentures 2005 (USA) /3/ $5,000,000 6,350 .07
Pilipino Telephone Corp. (Philippines) /1/ 3,125,000 530 .01
Transportation: Shipping - 1.71%
ICB Shipping AB, Class B (Sweden) 1,969,000 20,897 .22
Stolt-Nielsen SA, Class B (American 1,040,000 20,670 .22
Depositary Receipts) (Multinational)
The Great Eastern Shipping Co. Ltd. (India) 12,622,500 12,565
The Great Eastern Shipping Co. Ltd. (Global Depositary Receipts) 325,500 2,157 .15
Bona Shipholding Ltd. (Norway) 1,370,000 14,357 .15
Ugland International Holdings PLC (United Kingdom) /2/ 7,342,000 13,505 .14
N & T Argonaut AB, Class B (formerly Nordstrom 7,703,790 13,274 .14
& Thulin AB)(Sweden)
Nordic American Tanker Shipping Ltd.(Bermuda) /2/ 762,000 12,192 .13
MIF Ltd. (Greece) /2/ 668,202 10,503 .11
Odfjell ASA, Class B (formerly Skibsaksjeselskapet Storli) (Norway) 445,000 6,470
Odfjell ASA, Class A 214,320 3,116 .10
Benor Tankers Ltd. (Norway) /2/ 1,240,000 6,660 .07
Knightsbridge Tankers Ltd. (Bermuda) 212,500 6,056 .06
Orient Overseas (International) Ltd. 13,900,000 5,651 .06
(Hong Kong - Incorporated in Bermuda)
London & Overseas Freighters Ltd. (Bermuda) /2/ 4,833,000 4,445 .05
Wah Kwong Shipping Holdings Ltd. (Hong Kong) 5,713,000 3,871 .04
Mosvold Shipping Ltd (Norway) 2,580,000 3,380 .03
IMC Holdings Ltd. (Hong Kong) 8,198,000 1,883 .02
Waterfront Shipping ASA (Norway) /1/ 3,411,000 1,787 .02
Real Estate - 1.59%
Unibail (France) 459,000 57,454 .60
Cadiz Land Co., Inc. (USA) /1,2/ 1,850,000 22,085
Cadiz Land Co., Inc. /1,2,3/ 250,000 2,984 .26
Castellum AB (Sweden) /1/ 2,375,000 24,761 .26
TBI PLC (United Kingdom) 9,718,400 15,601 .16
Newhall Land and Farming Co. (USA) 463,600 14,835 .16
Diligentia AB (Sweden) 800,000 7,791 .08
Wiggins Group PLC (United Kingdom) 30,868,000 7,162 .07
Financial Services - 1.54%
OM Gruppen AB (Sweden) /2/ 4,329,300 77,299 .81
CB Commercial Real Estate Services Group, Inc. (USA) /1,2/ 1,042,800 41,712 .43
MoneyGram Payment Systems, Inc. (USA) /1,2/ 878,600 13,289 .14
Insignia Financial Group, Inc., Class A (USA) /1/ 300,000 7,500 .08
Medallion Financial Corp. (USA) 275,000 7,459 .08
Insurance - 1.51%
Independent Insurance Group PLC (United Kingdom) 1,630,000 46,201 .48
HCC Insurance Holdings, Inc. (USA) 1,248,100 28,706 .30
Mutual Risk Management Ltd. (USA-Incorporated in Bermuda) 800,000 27,100 .28
Harleysville Group Inc. (USA) 750,000 19,500 .20
Selective Insurance Group, Inc. (USA) 390,000 10,481 .11
Cia. Assicuratrice Unipol SpA (Italy) 2,220,000 7,771 .08
HIH Winterthur International Holdings Ltd. (Australia) 1,884,859 3,718 .04
Liberty Corp. (USA) 31,026 1,582 .02
Miscellaneous Materials & Commodities - 1.47%
DEKALB Genetics Corp., Class B (USA) 750,000 50,156 .52
Intertape Polymer Group Inc. (Canada) /2/ 1,500,000 34,688 .36
Hoganas AB, Class B (Sweden) 500,000 17,792 .19
Carbide/Graphite Group, Inc. (USA) /1,2/ 511,800 15,354 .16
Sinocan Holdings Ltd. (Hong Kong - Incorporated in Bermuda) 36,608,000 6,567 .07
Ashton Mining Ltd. (Australia - Incorporated in Bermuda) 7,600,000 6,288 .07
Arisawa Manufacturing Co. (Japan) 622,000 5,977 .06
PT PP London Sumatra Indonesia (Indonesia) 6,486,400 2,055 .02
PT Mulia Industrindo (Indonesia) 15,060,000 1,401 .01
New Indigo Resources Inc. (Canada) 600,000 1,058 .01
Beverages & Tobacco - 1.32%
Oy Hartwall AB, Class A (Finland) 270,000 31,761 .33
Beringer Wine Estates Holdings, Inc., Class B (USA) /1/ 600,000 30,975 .32
Robert Mondavi Corp., Class A (USA) /1/ 500,000 20,625 .22
Corporate Investments Ltd. (New Zealand) /2/ 27,900,000 14,174 .15
Guinness Anchor Bhd. (Malaysia) 4,830,000 7,962 .08
Pepsi-Gemex, SA de CV (Global Depositary Receipts) (Mexico) 497,400 6,311
Pepsi-Gemex, SA de CV 600,000 1,261 .08
Quilmes Industrial SA, preferred shares
(American Depositary Receipts) Argentina) 600,000 6,862 .07
AL-Ahram Beverages Co. (Global Depositary Receipts) (Egypt) 120,000 3,702 .04
San Miguel Brewery Hong Kong Ltd. (Hong Kong) 11,600,000 2,036 .02
Pete's Brewing Co. (USA) /1/ 255,400 1,069 .01
Energy Equipment - 1.23%
Smedvig ASA, Class A (Norway) 1,340,000 28,084
Smedvig ASA, non-voting shares, Class B 662,500 13,277 .43
Camco International, Inc. (USA) 623,100 37,698 .39
Shaw Industries Ltd., Class A (Canada) 595,000 20,615 .22
Petroleum Geo-Services ASA (American Depositary 314,500 18,673 .19
Receipts) (Norway) /1/
Recreation & Other Consumer Products - 1.13%
WMS Industries Inc. (USA) /1/ 925,000 28,964 .30
ACTIVISION, Inc. (USA) /1,2/ 645,000 6,934
ACTIVISION, Inc. /1,2,3/ 570,000 6,127 .14
Movado Group, Inc. (USA) 440,000 12,705 .13
Acclaim Entertainment, Inc. (USA) /1/ 1,860,000 12,322 .13
Infogrames Entertainment (France) 255,000 10,028
Infogrames Entertainment, 2.00% convertible debentures 2002 $9,000 1,875 .12
Midway Games Inc. (USA) /1/ 485,500 11,136 .12
Galoob Toys, Inc. (USA) /1/ 850,000 8,447 .09
Safety 1st, Inc. (USA) /1,2/ 400,000 3,350 .03
China - Hongkong Photo Products Holdings Ltd.
(Hong Kong - Incorporated in Bermuda) 12,060,000 2,677 .03
Yue Yuen Industrial (Holdings) Ltd. (Hong Kong-Incorporated in Bermuda) 1,092,240 2,129 .02
Crystal Dynamics, Inc., convertible preferred, 533,334 2,000 .02
Series D (USA) /1,3,4/
Electrical & Electronics - 1.04%
Digital Microwave Corp. (USA) /1/ 1,900,000 28,025 .29
Tandberg Television AS (Norway) 1,061,500 15,017 .16
Elsag Bailey Process Automation NV (Netherlands) /1/ 730,000 13,961 .15
Johnson Electric Holdings Ltd. (Hong Kong - 2,544,000 10,868 .11
Incorporated in Bermuda)
Astec (BSR) PLC (United Kingdom) 5,500,000 10,853 .11
ERG Ltd. (Australia) 9,014,840 7,518 .08
Munters AB (Sweden) /1/ 600,000 6,218 .06
Gilat Satellite Networks Ltd. (Israel) /1/ 100,000 3,650 .04
Celeritek, Inc. (USA) /1/ 158,000 1,787 .02
Powerwave Technologies, Inc. (USA) /1/ 120,000 1,590 .02
Textiles & Apparel - 0.98%
St. John Knits, Inc. (USA) 435,000 20,554 .22
Wolford Group (Austria) /2/ 324,000 20,295 .21
Hartmarx Corp. (USA) /1,2/ 1,787,900 14,862 .16
Esprit Asia Holdings Ltd. (Hong Kong) 37,496,000 13,671 .14
Culp, Inc. (USA) 575,000 11,788 .12
Saha-Union Corp. Ltd. (Thailand) 8,950,000 8,676 .09
PT Indo-Rama Synthetics (Indonesia) 7,952,700 2,635 .03
Gargoyles, Inc. (USA) /1/ 348,000 1,240 .01
Transportation: Rail & Road - 0.83%
Swift Transportation Co., Inc. (USA) /1/ 1,425,000 34,200 .36
Werner Enterprises, Inc. (USA) 800,000 20,400 .21
Tranz Rail Holdings Ltd.(American Depositary 1,051,200 11,169 .12
Receipts) (New Zealand)
M.S. Carriers, Inc. (USA) /1/ 262,700 8,899 .09
Simon Transportation Services Inc., Class A (USA) /1/ 300,000 4,631 .05
Wholesale & International Trade - 0.70%
Brightpoint, Inc. (USA) /1,2/ 2,732,500 46,965 .49
Daewoo Corp. (South Korea) 1,400,000 5,412
Daewoo Corp., 0.50% convertible debentures 2007 $5,000,000 3,975 .10
Lazare Kaplan International Inc. (USA) /1,2/ 550,000 6,016 .06
Kamei Corp. (Japan) 693,000 4,807 .05
Metals: Nonferrous - 0.68%
Kaiser Aluminum Corp. (USA) /1/ 1,850,000 18,615 .19
Century Aluminum Co. (USA) 955,000 14,325 .15
ERAMET (France) /3/ 226,910 9,106
ERAMET 61,802 2,480 .12
Gencor Ltd. (South Africa) 4,000,000 8,183 .08
Capral Aluminium Ltd. (Australia) 2,966,508 6,480 .07
QNI Ltd. (Australia) 9,011,900 5,607 .06
International Precious Metals Corp. (Canada) /1,2/ 1,155,000 650 .01
Building Materials & Components - 0.57%
Puerto Rican Cement Co., Inc. (USA) /2/ 371,000 18,944 .20
Futuris Corp. Ltd. (Australia) 10,553,316 12,643 .13
Radex-Heraklith Industriebeteiligungs AG (Austria) 225,000 9,484 .10
Apasco, SA de CV (Mexico) 1,322,620 8,015 .08
Cia. Cimento Portland Itau, preferred shares (Brazil) 23,200,000 5,469 .06
Utilities: Electric & Gas - 0.55%
Australian Gas Light Co. (Australia) 3,895,920 31,589 .33
Energen Corp. (USA) 587,400 12,923 .14
Cia. de Eletricidade do Estado da Bahia-COELBA (Brazil) 92,000,000 5,826 .06
Capex SA, Class A (Global Depositary Receipts)(Argentina) 193,785 2,156 .02
Appliances & Household Durables - 0.52%
Pittway Corp., Class A (USA) 458,000 32,976 .34
Gemstar International Group Ltd. (USA) /1/ 571,000 17,130 .18
Construction & Housing - 0.49%
Societe Generale (France) 815,000 28,922 .30
Palm Harbor Homes, Inc. (USA) /1/ 483,281 17,821 .19
Multi-Industry - 0.44%
Corporacion Financiera Alba, SA (Spain) 178,449 24,220 .25
Industriforvaltnings AB Kinnevik, Class B (Sweden) 346,000 8,057 .09
Aboitiz Equity Ventures (Philippines) 86,063,940 4,967 .05
SA D'Ieteren NV (Belgium) 8,200 2,664 .03
Guinness Peat Group PLC (United Kingdom) 3,990,461 2,226 .02
Forest Products & Paper - 0.38%
Caraustar Industries, Inc. (USA) 810,000 26,730 .28
Deltic Timber Corp. (USA) 334,857 10,025 .10
Transportation: Airlines - 0.35%
America West Holdings Corp., Class B (USA) /1/ 600,000 15,375 .16
Eagle USA Airfreight, Inc. (USA) /1/ 500,000 13,500 .14
Philippine Airlines Inc. (Philippines) /4/ 64,494,643 4,269 .04
PR Holdings, Inc., subscription rights (Philippines) /1,3,4 / 1,730,000 759 .01
Equity Common Trusts - 0.32%
Atle AB, Class A (Sweden) 1,590,000 30,573 .32
Aerospace & Military Technology - 0.17%
Alvis PLC (United Kingdom) /2/ 4,831,250 11,957 .12
Orbital Sciences Corp., 5.00% convertible debentures 2002 (USA) /3/ $2,500,000 4,350 .05
Metals: Steel - 0.09%
Tubos de Acero de Mexico, SA (American 335,547 6,271 .07
Depositary Receipts) (Mexico) /1/
Ispat Industries Ltd., 3.00% convertible debentures $4,700,000 2,209 .02
2001 (India)
Gold Mines - 0.09%
Ashanti Goldfields Co. Ltd. (Ghana) 400,000 3,720 .04
Avocet Mining PLC (United Kingdom) /2,3/ 1,500,000 1,379
Avocet Mining PLC /2/ 600,000 552 .02
Philippine Gold PLC (Philippines) /2/ 4,953,700 1,657 .02
Navan Resources PLC (Ireland) 850,000 910 .01
Automobiles - 0.06%
Mahindra & Mahindra Ltd. (India) 550,000 3,761
Mahindra & Mahindra Ltd. (Global Depositary Receipts) 250,000 2,094 .06
Miscellaneous - 4.79%
Other equity securities in initial period of acquisition 459,258 4.79
----------- ------------
TOTAL EQUITY SECURITIES (cost: $7,159,076,000) 8,881,003 92.66
----------- ------------
Principal Market Percent
Amount Value of Net
SHORT-TERM SECURITIES (000) (000) Assets
Corporate Short-Term Notes - 7.21%
Abbey National North America 5.425%-5.43% due 4/16-5/6/98 $57,500 $57,269 .60%
Lloyds Bank PLC 5.41%-5.48% due 4/14-6/11/98 57,100 56,625 .59
Svenska Handelsbanken Group 5.48%-5.56% due 4/7-6/19/98 56,200 55,801 .58
Halifax Building Society 5.44%-5.53% due 4/6-4/29/98 54,700 54,572 .57
Barclays U.S. Funding Corp. 5.415% due 4/27/98 50,000 49,795 .52
Societe Generale 5.40%-5.505% due 4/15-5/18/98 46,400 46,213 .48
Daimler-Benz North America Corp. 5.46%-5.48% due 4/23-6/16/98 46,000 45,664 .48
General Electric Capital Corp. 5.56%-6.125% due 4/1-4/22/98 45,000 44,942 .47
Canada Bills 5.40%-5.48% due 4/30-5/20/98 43,000 42,699 .44
Rank Xerox Capital (Europe) PLC 5.45%-5.52% due 4/21-5/5/98 41,000 40,824 .43
Monsanto Co. 5.42% due 4/20/98 40,000 39,879 .42
American Express Credit Corp. 5.49%-5.51% due 4/30-5/19/98 35,500 35,314 .37
Toronto-Dominion Holdings Inc. 5.44%-5.50% due 4/13-5/6/98 34,800 34,709 .36
Sweden (Kingdom of) 5.415%-5.43% due 5/4-7/6/98 32,500 32,170 .33
France Telecom 5.45%-5.50% due 4/9-5/12/98 31,997 31,826 .33
British Columbia (Province of) 5.41% due 5/1/98 22,800 22,691 .24
Certificates of Deposit - 0.27%
ABN AMRO Bank NV 5.56%-5.62% due 4/6-6/19/98 26,000 25,999 .27
Non-U.S. Currency - 0.04%
New Taiwanese Dollar NT$137,800 4,201 .04
----------- --------
TOTAL SHORT-TERM SECURITIES (cost: $722,040,000) 721,193 7.52
----------- --------
TOTAL INVESTMENT SECURITIES (cost: $7,881,116,000) 9,602,196 100.18
Excess of payables over cash and receivables 17,913 .18
----------- --------
NET ASSETS $9,584,283 100.00%
=========== ========
/1/ Non-income-producing securities.
/2/ Represents an affiliated company as defined under the
Investment Company Act of 1940.
/3/ Purchased in a private placement transaction; resale to
the public may require registration or sale only
to qualified institutional buyers.
/4/ Valued under procedures established by the fund's
Board of Directors.
</TABLE>
<TABLE>
SMALLCAP World Fund
FINANCIAL STATEMENTS Unaudited
- ---------------------------------------- ------------ ------------
Statement of Assets and Liabilities
at March 31, 1998 (dollars in thousands)
- ---------------------------------------- ------------ ------------
<S> <C> <C>
Assets:
Investment securities at market
Unaffiliated issuers (cost: $6,263,205) $7,602,921
Affiliated issuers (cost: $1,617,911) 1,999,275 $9,602,196
Cash 1,548
Receivables for -
Sales of investments 24,291
Sales of fund's shares 11,535
Dividends and accrued interest 10,570 46,396
------------ ------------
9,650,140
Liabilities:
Payables for -
Purchases of investments 46,300
Repurchases of fund's shares 12,146
Forward currency contracts 78
Management services 5,283
Accrued expenses 2,050 65,857
------------ ------------
Net Assets at March 31, 1998 -
Equivalent to $28.88 per share on
331,913,015 shares of $0.01 par value
capital stock outstanding (authorized
capital stock - 400,000,000 shares) $9,584,283
============
Statement of Operations
for the six months ended March 31, 1998 (dollars in thousands)
- ---------------------------------------- ------------ ------------
Investment Income:
Income:
Dividends (includes $6,601 from affiliates) $ 29,986
Interest 23,164 $ 53,150
------------
Expenses:
Management services fee 29,658
Distribution expenses 10,497
Transfer agent fee 3,667
Reports to shareholders 425
Registration statement and
prospectus 789
Postage, stationery and supplies 952
Directors' fees 73
Auditing and legal fees 73
Custodian fee 827
Taxes other than federal income tax 197
Other expenses 174 47,332
------------ ------------
Net investment income 5,818
------------
Realized Gain and Unrealized
Depreciation on Investments:
Net realized gain
(includes $59,574 net gain from affiliates) 446,340
Net change in unrealized appreciation
on investments (144,333)
Net change in unrealized depreciation on
open forward currency contracts (78)
------------
Net unrealized depreciation on investments (144,411)
------------
Net realized gain and unrealized depreciation
on investments 301,929
------------
Net Increase in Net Assets Resulting
from Operations $ 307,747
============
Statement of Changes in Net
Assets (dollars in thousands)
- ---------------------------------------- ------------- -------------
Six months Year ended
ended
3/31/98 * 9/30/97
------------ ------------
Operations:
Net investment income $ 5,818 $ 30,264
Net realized gain on investments 446,340 756,663
Net unrealized appreciation
(depreciation) on investments (144,411) 1,029,222
------------ ------------
Net increase in net assets
resulting from operations 307,747 1,816,149
------------ ------------
Dividends and Distributions Paid
to Shareholders:
Dividends from net
investment income (15,213) (32,129)
Distributions from net realized
gain on investments (760,632) (591,521)
------------ ------------
Total dividends and
distributions (775,845) (623,650)
------------ ------------
Capital Share Transactions:
Proceeds from shares sold:
28,615,821 and 76,906,660
shares, respectively 801,682 2,051,195
Proceeds from shares issued in
reinvestment of net investment
income dividends and
distributions of net realized
gain on investments:
29,239,317 and 23,876,950
shares, respectively 743,523 597,206
Cost of shares repurchased:
27,203,854 and 44,913,003
shares, respectively (748,976) (1,191,845)
------------ ------------
Net increase in net assets
resulting from capital share
transactions 796,229 1,456,556
------------ ------------
Total Increase in Net Assets 328,131 2,649,055
Net Assets:
Beginning of period 9,256,152 6,607,097
------------ ------------
End of period (including undistributed
net investment income: $5,354 and
$14,749, respectively) $9,584,283 $9,256,152
============ ============
* 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 securities, including depositary receipts, are valued at the last
reported sale price on the exchange or market on which such securities are
traded, as of the close of business on the day the securities are being valued
or, lacking any sales, at the last available bid price. In cases where equity
securities are traded on more than one exchange, the securities are valued on
the exchange or market determined by the investment adviser to be the broadest
and most representative market, which may be either a securities exchange or
the over-the-counter market. Securities with original maturities of one year or
less having 60 days or less to maturity are amortized to maturity based on
their cost if acquired within 60 days of maturity or, if already held on the
60/th/ day, based on the value determined on the 61/st/ day. Forward currency
contracts are valued at the mean of their representative quoted bid and asked
prices. Assets or liabilities initially expressed in terms of foreign
currencies are translated into U.S. dollars at the prevailing market rates at
the end of the reporting period. Purchases and sales of securities and income
and expenses are translated into U.S. dollars at the prevailing market rates on
the dates of such transactions. 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. Securities and assets for
which representative market quotations are not readily available are valued at
fair value as determined in good faith by a committee appointed by the Board of
Directors.
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 and premiums on
securities purchased are amortized. Dividends and distributions paid to
shareholders are recorded on the ex-dividend date.
The fund may enter into forward currency contracts, which represent
agreements to exchange currencies of different countries at specified future
dates at specified rates. The fund enters into these contracts to reduce its
exposure to fluctuations in foreign exchange rates arising from investments
denominated in non-U.S. currencies. The fund's use of forward currency
contracts involves market risk in excess of the amount recognized in the
statement of assets and liabilities. The contracts are recorded in the
statement of assets and liabilities at their net unrealized value. The fund
records realized gains or losses at the time the forward contract is closed or
offset by a matching contract. The face or contract amount in U.S. dollars
reflects the total exposure the fund has in that particular contract. Risks may
arise upon entering these contracts from the potential inability of
counterparties to meet the terms of their contracts and from possible movements
in non-U.S. exchange rates and securities values underlying these instruments.
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, 1998, net unrealized appreciation on investments, excluding
forward currency contracts, for book and federal income tax purposes aggregated
$1,721,002,000, of which $2,447,602,000 related to appreciated securities and
$726,600,000 related to depreciated securities. There was no difference between
book and tax realized gains on securities transactions for the six months ended
March 31, 1998. Net losses of $177,000 related to non-U.S. currency
transactions were treated as ordinary income for federal income tax purposes.
The cost of portfolio securities, excluding forward currency contracts, for
book and federal income tax purposes was $7,881,116,000 at March 31, 1998.
3. The fee of $29,658,000 for management services was incurred 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,
1998, distribution expenses under the Plan were $10,497,000. As of March 31,
1998, accrued and unpaid distribution expenses were $1,630,000.
American Funds Service Company (AFS), the transfer agent for the fund, was
paid a fee of $3,667,000. American Funds Distributors, Inc. (AFD), the
principal underwriter of the fund's shares, received $2,496,000 (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, 1998,
aggregate amounts deferred and earnings thereon were $171,000.
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, 1998, accumulated undistributed net realized gain on
investments was $407,457,000 and additional paid-in capital was $7,447,348,000.
The fund made purchases and sales of investment securities, excluding
short-term securities, of $2,074,242,000 and $1,804,162,000, respectively,
during the six months ended March 31, 1998.
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 $827,000 includes $53,000 that was paid by these credits
rather than in cash
Dividend and interest income is recorded net of non-U.S. taxes paid. For the
year six months ended March 31, 1998, such non-U.S. taxes were $2,274,000. Net
realized currency losses on dividends, interest, and withholding taxes
reclaimable, on a book basis, were $177,000 for the six months ended March 31,
1998.
At March 31, 1998, the fund had outstanding forward currency contracts to
sell non-U.S. currencies as follows:
INSERT TABLE
5. Affiliated issuers, as defined under the Investment Company Act of 1940,
are those in which the fund's holdings of an issuer represent 5% or more of the
outstanding voting securities of the issuer. A summary of the fund's
transactions in the securities of these issuers during the six months ended
March 31, 1998 is as follows:
INSERT TABLE
<TABLE>
U.S. Valuation
Non-U.S. Currency Sale ContrContract Amount at 3/31/98
-------------- -------- ---------
Unrealized
Non-U.S. U.S. Amount Depreciation
-------------- ------- ------- ----------
<S> <C> <C> <C> <C>
Brazilian Real
expiring 10/6/98 R$ 3,750,0$ 3,000,00$ 2,922,000$ 78,000
</TABLE>
<TABLE>
Beginning
Company Shares Purchases Sales
<S> <C> <C> <C>
AAPC 38,680,311 38,680,311
Abacan Resource /1/ 5,709,400 2,000,000
ABR Information Services 1,550,000 230,000
ACTIVISION 900,000 315,000
Advanced Health 295,100 294,900
Alliance Communications 841,700 219,000
Alliance Semiconductor 2,510,000 35,000
Alvis 2,850,000 1,981,250
American Healthcorp 522,000
Aminex 3,250,000
AmSurg 358,083
Anesta 550,000
AnnTaylor 955,900 580,000
Antena 3 de Radio 1,500
Anzoil 40,600,000 14,000,000 51,870,000
APCOA Parking 120,800
Ascent Entertainment Group 1,930,000
Avocet Mining 2,100,000
Benor Tankers 1,240,000
Borg-Warner Security 1,000,000 200,000
Brightpoint 1,566,250 1,366,250 200,000
Cabre Exploration 993,400
Cadiz Land 1,915,000 185,000
Cambrex 550,000 150,000
Capral Aluminium /1/ 12,237,825 9,271,317
Carbide/Graphite Group 511,800
Cardiovascular Diagnostics 412,500
Cash Converters International 9,417,563
CB Commercial Real Estate Services Group 500,000 542,800
Celestial Seasonings 260,000
Chauvco Resources 2,061,300 3,061,300 2,061,300
Cheesecake Factory 450,000 387,000
Chrysalis Group 1,824,000
CIDCO 913,000 130,000
CIMA LABS 565,500
Consolidated Products 1,000,000 250,000
COR Therapeutics /1/ 1,150,000 200,000 402,700
Corporate Investments 25,500,000 2,400,000
Corporate Services Group 10,060,398 600,000
Cost Plus 450,000
Cyberonics /1/ 864,800 370,800
Cytyc 933,700
Data Broadcasting 2,000,000
Digene 500,000 300,000
Edify 1,055,000
ELAN Energy 3,212,000 3,212,000
Epicore Networks 1,405,000
Fabri-Centers of America 1,050,000
Filofax Group 1,956,000
Flextronics International /1/ 825,000 500,000
Four Media 620,000 15,000 15,000
Franklin Covey 1,350,000
GelTex Pharmaceuticals 750,000
Gymboree 1,535,600 100,000
Hartmarx 1,287,400 500,500
Healthcare Recoveries 650,000
HNC Software 1,145,000 450,000
i-STAT 852,000
Imax 1,558,000
International Precious Metals 1,155,000
Intertape Polymer Group 1,500,000
KCI Konecranes International 975,000 63,300
KeraVision 795,000
Knightsbridge Tankers /1/ 1,105,000 892,500
Landec 690,000
Lazare Kaplan International 500,000 50,000
LoJack 1,347,000
London & Overseas Freighters 4,833,000
Marks Bros. Jewelers 510,000
Material Sciences 1,000,000
McWhorter Technologies 706,000
Micrel 1,000,000
MIF 668,202
Milltronics 900,000
Mobile Telecommunication Technologies 3,525,000
MoneyGram Payment Systems 878,600
Morton's Restaurant Group 415,000
Nera 3,287,500
Nordic American Tanker Shipping 762,000
Norsk Lotteridrift 965,000
Novus Petroleum /1/ 5,670,461 2,815,379
OM Gruppen 1,443,100 2,886,200
Orbit Oil & Gas 2,681,000 2,681,000
Pacific Media /1/ 88,249,124 22,000,000
Paragon Trade Brands 787,700 787,700
Paramount Resources /1/ 2,493,000 1,666,700
PathoGenesis 1,035,000 1,035,000
Pharmacyclics 580,000 185,000
Philippine Gold 2,453,700 2,500,000
Piercing Pagoda 335,000
Pinkerton's 810,000
Pioneer-Standard Electronics 1,660,000
Plantronics 1,000,000 48,500
PMC-Sierra 890,700 809,300
Precision Response 1,398,000 51,300
Premier Oil /1/ 51,251,227 18,389,543
Primark 1,350,000
Protection One /1/ 920,000 1,580,000
PRT Corp. of America /1/ 76,196
Puerto Rican Cement 371,000
Ramco Energy 1,597,000
Ranger Oil 4,350,000 2,668,915
Rent-Way 330,000 325,000
Rio Hotel & Casino /1/ 1,382,700 332,700
Safety 1st 400,000
Sano 600,000 600,000
Scandinavian Broadcasting System 887,900
SCB Computer Technology 562,350
Scotia Holdings 5,062,200
SONUS Pharmaceuticals 550,000 550,000
Strategic Distribution 1,890,000
Suburban Ostomy Supply 563,000 563,000
T Cell Sciences /1/ 1,300,000 200,000
Technical Chemicals and Products 600,000
Thermo Power 620,000
Thomas Group 388,500
Ticketmaster Group /1/ 1,600,000 766,000
Trident Microsystems 825,000 825,000
Ugland International Holdings 5,000,000 2,342,000
Vanstar 2,375,000 100,000
Vincam Group 203,100 599,250 24,600
Vivid Technologies 600,000
WHG Resorts & Casinos 380,000 380,000
Wolford Group 324,000
Zale 1,950,000
Zonagen 590,800 109,200
Total
Ending Dividend Market
Shares Income Value
(000) (000)
AAPC $ $
Abacan Resource /1/ 3,709,400
ABR Information Services 1,780,000 50,063
ACTIVISION 1,215,000 13,061
Advanced Health 590,000 7,559
Alliance Communications 1,060,700 19,757
Alliance Semiconductor 2,545,000 19,087
Alvis 4,831,250 181 11,957
American Healthcorp 522,000 5,089
Aminex 3,250,000 3,369
AmSurg 358,083 3,217
Anesta 550,000 10,244
AnnTaylor 1,535,900 25,246
Antena 3 de Radio 1,500 39,207
Anzoil 2,730,000 398
APCOA Parking 120,800 9,529
Ascent Entertainment Group 1,930,000 19,903
Avocet Mining 2,100,000 1,931
Benor Tankers 1,240,000 6,660
Borg-Warner Security 1,200,000 23,625
Brightpoint 2,732,500 46,965
Cabre Exploration 993,400 11,064
Cadiz Land 2,100,000 25,069
Cambrex 700,000 70 35,262
Capral Aluminium /1/ 2,966,508 495
Carbide/Graphite Group 511,800 15,354
Cardiovascular Diagnostics 412,500 3,712
Cash Converters International 9,417,563 160 2,520
CB Commercial Real Estate Services Group 1,042,800 41,712
Celestial Seasonings 260,000 10,660
Chauvco Resources 3,061,300 604
Cheesecake Factory 837,000 27,883
Chrysalis Group 1,824,000 88 22,571
CIDCO 783,000 7,390
CIMA LABS 565,500 2,810
Consolidated Products 1,250,000 24,063
COR Therapeutics /1/ 947,300
Corporate Investments 27,900,000 14,174
Corporate Services Group 10,660,398 570 42,783
Cost Plus 450,000 14,302
Cyberonics /1/ 494,000
Cytyc 933,700 23,343
Data Broadcasting 2,000,000 11,500
Digene 800,000 7,100
Edify 1,055,000 21,298
ELAN Energy
Epicore Networks 1,405,000 446
Fabri-Centers of America 1,050,000 30,385
Filofax Group 1,956,000 56 6,378
Flextronics International /1/ 325,000
Four Media 620,000 5,812
Franklin Covey 1,350,000 32,822
GelTex Pharmaceuticals 750,000 20,250
Gymboree 1,435,600 37,146
Hartmarx 1,787,900 14,862
Healthcare Recoveries 650,000 15,112
HNC Software 1,595,000 60,012
i-STAT 852,000 11,396
Imax 1,558,000 44,208
International Precious Metals 1,155,000 650
Intertape Polymer Group 1,500,000 117 34,688
KCI Konecranes International 911,700 524 41,923
KeraVision 795,000 6,360
Knightsbridge Tankers /1/ 212,500 1,005
Landec 690,000 5,347
Lazare Kaplan International 550,000 6,016
LoJack 1,347,000 19,363
London & Overseas Freighters 4,833,000 4,445
Marks Bros. Jewelers 510,000 10,104
Material Sciences 1,000,000 10,938
McWhorter Technologies 706,000 17,871
Micrel 1,000,000 37,937
MIF 668,202 10,503
Milltronics 900,000 10,849
Mobile Telecommunication Technologies 3,525,000 78,872
MoneyGram Payment Systems 878,600 13,289
Morton's Restaurant Group 415,000 9,571
Nera 3,287,500 11,971
Nordic American Tanker Shipping 762,000 533 12,192
Norsk Lotteridrift 965,000 3,729
Novus Petroleum /1/ 2,855,082
OM Gruppen 4,329,300 1,839 77,299
Orbit Oil & Gas
Pacific Media /1/ 66,249,124
Paragon Trade Brands
Paramount Resources /1/ 826,300 77
PathoGenesis
Pharmacyclics 765,000 22,281
Philippine Gold 4,953,700 1,657
Piercing Pagoda 335,000 10,469
Pinkerton's 810,000 18,681
Pioneer-Standard Electronics 1,660,000 100 20,335
Plantronics 951,500 38,952
PMC-Sierra 1,700,000 64,600
Precision Response 1,346,700 12,289
Premier Oil /1/ 32,861,684 370
Primark 1,350,000 57,713
Protection One /1/ 2,500,000
PRT Corp. of America /1/ 128
Puerto Rican Cement 371,000 127 18,944
Ramco Energy 1,597,000 18,426
Ranger Oil 7,018,915 45,623
Rent-Way 655,000 15,556
Rio Hotel & Casino /1/ 1,050,000
Safety 1st 400,000 3,350
Sano
Scandinavian Broadcasting System 887,900 29,301
SCB Computer Technology 562,350 12,934
Scotia Holdings 5,062,200 22,432
SONUS Pharmaceuticals
Strategic Distribution 1,890,000 11,340
Suburban Ostomy Supply
T Cell Sciences /1/ 1,500,000
Technical Chemicals and Products 600,000 6,375
Thermo Power 620,000 7,053
Thomas Group 388,500 3,497
Ticketmaster Group /1/ 834,000
Trident Microsystems
Ugland International Holdings 7,342,000 161 13,505
Vanstar 2,475,000 35,619
Vincam Group 777,750 22,555
Vivid Technologies 600,000 9,000
WHG Resorts & Casinos
Wolford Group 324,000 20,295
Zale 1,950,000 56,306
Zonagen 700,000 15,400
Total $ 6,601 $ 1,999,275
/1/ Represents an unaffiliated company at 3/31/98.
</TABLE>
<TABLE>
PER-SHARE DATA AND
RATIOS
Six monthYear endedSeptember 30
ended -------- -------- -------- -------- --------
3/31/98 / 1997 1996 1995 1994 1993
- ----------------------- --------- -------- --------- ------------------ ---------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of
Period $30.72 $26.92 $26.11 $23.61 $22.72 $18.01
------------------ --------- ------------------ ---------
Income from Investment
Operations:
Net investment income .02 .10 .17 .22 .09 .06
Net realized and
unrealized gain
on investments .69 6.17 3.32 3.79 1.83 5.56
------------------ --------- ------------------ ---------
Total income from
investment
operations .71 6.27 3.49 4.01 1.92 5.62
------------------ --------- ------------------ ---------
Less Distributions:
Dividends from
net investment
income (.05) (.12) (.23) (.16) (.06) (.08)
Distributions
from net
realized gains (2.50) (2.35) (2.45) (1.35) (.97) (.83)
------------------ --------- ------------------ ---------
Total distributions (2.55) (2.47) (2.68) (1.51) (1.03) (.91)
------------------ --------- ------------------ ---------
Net Asset Value, End
of Period $28.88 $30.72 $26.92 $26.11 $23.61 $22.72
================== ========= ================== =========
Total Return /2/ 3.44% /3/ 25.41% 15.21% 18.59% 8.60% 32.46%
Ratios/Supplemental
Data:
Net assets, end
of period (in
millions) $9,584 $9,256 $6,607 $4,625 $3,497 $2,247
Ratio of expenses
to average net
assets .53% /3/ 1.07% 1.09% 1.13% 1.12% 1.15%
Ratio of net income
to average net
assets .06% /3/ .40% .68% .97% .38% .33%
Average commissions
paid per share /4/ .2 .2 1.4 1.0 1.2 1.55c
Portfolio turnover
rate 22.06% /3 42.21% 42.88% 45.63% 29.43% 25.00%
/1/ Unaudited
/2/ Excludes maximum sales
charge of 5.75%.
/3/ Based on operations for
the period shown and,
accordingly, not
representative of a full
year.
/4/ Brokerage commissions
paid on portfolio
transactions increase the
cost of securities
purchased or reduce the
proceeds of securities sold
and are not separately reflected
in the fund's statement of
operations. Shares traded
on a principal basis (without
commissions), 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 transaction amount
because of the lower per-share
prices of many non-U.S. securities.
</TABLE>
[The American Funds Group(r)]
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
American Funds Service Company
(Please write to the address nearest you.)
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, 1998, this report must be accompanied by an American Funds Group
Statistical Update for the most recently completed calendar quarter.
Printed on recycled paper
Litho in USA BDA/FS/3765
Lit. No. SCWF-013-0598
