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>
SMALLCAPWorld Fund/(R)/
Prospectus
DECEMBER 1, 1999
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED
OR DISAPPROVED OF THESE SECURITIES. FURTHER, IT HAS NOT DETERMINED THAT THIS
PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
<PAGE>
<PAGE>
---------------------------------------------------------
SMALLCAP WORLD FUND, INC.
333 South Hope Street
Los Angeles, CA 90071
<TABLE>
<CAPTION>
<S> <C> <C>
TICKER SYMBOL: SMCWX NEWSPAPER ABBREV: SmCp FUND NO: 35
</TABLE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
-------------------------------------------------------
<S> <C>
Risk/Return Summary 2
-------------------------------------------------------
Fees and Expenses of the Fund 5
-------------------------------------------------------
Investment Objective, Strategies and Risks 6
-------------------------------------------------------
Year 2000 8
-------------------------------------------------------
Management and Organization 9
-------------------------------------------------------
Shareholder Information 11
-------------------------------------------------------
Purchase and Exchange of Shares 12
-------------------------------------------------------
Distribution Arrangements 17
-------------------------------------------------------
Financial Highlights 18
-------------------------------------------------------
</TABLE>
1
35-010-1299/MC
SMALLCAP WORLD FUND / PROSPECTUS
<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 $1.5 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 economic, political or social events in the U.S. or abroad. The
prices of equity securities owned by the fund may be affected by events
specifically involving the companies issuing those 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 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.
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.
You may lose money by investing in the fund. The likelihood of loss is greater
if you invest for a shorter period of time.
2
SMALLCAP WORLD FUND / PROSPECTUS
<PAGE>
INVESTMENT RESULTS
The following information illustrates how the fund's results fluctuate. Past
results are not an indication of future results.
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%
1998 0.38%
[end bar chart]
The fund's year-to-date return for the nine months ended September 30, 1999
was 20.06%.
------------------------------------------------------------------------------
The fund's highest/lowest quarterly results during this time period were:
<TABLE>
<CAPTION>
<S> <C> <C>
Highest 17.79% (quarter ended December 31, 1998)
Lowest -19.90% (quarter ended September 30, 1998)
</TABLE>
3
SMALLCAP WORLD FUND / PROSPECTUS
<PAGE>
For periods ended December 31, 1998:
<TABLE>
<CAPTION>
THE FUND WITH
AVERAGE ANNUAL MAXIMUM SALES SALOMON SMITH BARNEY
TOTAL RETURN CHARGE DEDUCTED/1/ WORLD SMALLCAP INDEX/2/ CPI/3/
<S> <C> <C> <C>
One Year -5.37% 0.61% 1.61%
--------------------------------------------------------------------------
Five Years 8.59% 6.39% 2.37%
--------------------------------------------------------------------------
Lifetime/4/ 12.04% 8.15% 2.81%
--------------------------------------------------------------------------
</TABLE>
1 These fund results were calculated according to a formula which requires that
the maximum sales charge of 5.75% be deducted and include the reinvestment of
dividend and capital gain distributions. Results would be higher if they were
calculated at net asset value.
2 The Salomon Smith Barney World Smallcap Index tracks over 5,100 small-company
stocks traded around the world with market capitalizations 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.
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.
<TABLE>
<CAPTION>
SHAREHOLDER FEES
(fees paid directly from your investment)
----------------------------------------------------------------
<S> <C>
Maximum sales charge imposed on purchases 5.75%/1/
(as a percentage of offering price)
----------------------------------------------------------------
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 purchases of $1 million or more made without a
sales charge.
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
(expenses that are deducted from fund assets)
----------------------------------------------------------
<S> <C>
Management Fees 0.67%
Service (12b-1) Fees 0.25%*
Other Expenses 0.17%
Total Annual Fund Operating Expenses 1.09%
</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 cumulative expenses would
be:
<TABLE>
<CAPTION>
<S> <C>
One year $ 680
-----------------------------------------------------------
Three years $ 902
-----------------------------------------------------------
Five years $1,141
-----------------------------------------------------------
Ten years $1,827
</TABLE>
5
SMALLCAP WORLD FUND / PROSPECTUS
<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 $1.5
billion.
The prices of equity securities held by the fund will decline in response to
certain events, including those directly involving the companies whose
securities are owned in the fund, adverse conditions affecting the general
economy, overall market declines, world political, social and economic
instability, and currency fluctuations. The growth-oriented, equity-type
securities generally purchased by the fund may involve large price swings and
potential for loss, particularly in the case of smaller capitalization stocks.
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. Investments outside the U.S. may be
affected by these events to a greater extent and may also be affected by
differing securities regulations, higher transaction costs, and administrative
difficulties such as delays in clearing and settling portfolio transactions.
The fund may also hold cash or money market instruments. The size of the fund's
cash position will vary and will depend on various factors, including market
conditions and purchases and redemptions of fund shares. A larger cash position
could detract from the achievement of the fund's objective, but it also
provides greater liquidity to meet redemptions or to make additional
investments, and it would reduce the fund's exposure in the event of 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 the investment adviser is to
seek undervalued securities that represent good long-term investment
opportunities. Securities may be sold when the investment adviser believes they
no longer represent good long-term value.
6
SMALLCAP WORLD FUND / PROSPECTUS
<PAGE>
The following chart illustrates the industry mix of the fund's investment
portfolio as of the end of the fund's fiscal year, September 30, 1999.
Largest Industry Holdings
[pie chart]
Business Services 12.96%
Electronic Components 12.01%
Broadcasting & Publishing 8.96%
Merchandising 6.66%
Health & Personal Care 5.28%
Other Industries 48.96%
Cash & Cash Equivalents 5.17%
[end pie chart]
<TABLE>
<CAPTION>
PERCENT OF PERCENT OF
Percent Invested by Country NET ASSETS Ten Largest Individual Holdings NET ASSETS
----------------------------------------- ---------------------------------------------
<S> <C> <C> <C> <C>
The Americas 54.2% PMC- Sierra 3.37%
---------------------------------------------
United States 48.2 United GlobalCom 1.30
---------------------------------------------
Canada 4.1 Micrel 1.17
---------------------------------------------
Brazil .9 Disco .98
---------------------------------------------
Mexico .7 Venture Marketing .94
---------------------------------------------
Other Latin America .3 Scient .87
----------------------------------------- ---------------------------------------------
Asia Pacific 19.6% Westwood One .85
---------------------------------------------
Japan 7.0 Andrx .82
---------------------------------------------
Australia 2.8 Newfield Exploration .81
---------------------------------------------
Singapore 2.5 Flextech .77
---------------------------------------------
Hong Kong 2.4
Taiwan 1.3
New Zealand .9
Indonesia .7
South Korea .5
India .5
Other Asia 1.0
-----------------------------------------
Europe 17.9%
United Kingdom 6.5
Germany 1.9
Sweden 1.6
France 1.3
Denmark 1.1
Finland .8
Spain .8
Ireland .7
Netherlands .5
Luxembourg .5
Other Europe 2.2
-----------------------------------------
Other Countries 3.1%
-----------------------------------------
</TABLE>
Because the fund is actively managed, its holdings will change from time to
time.
7
SMALLCAP WORLD FUND / PROSPECTUS
<PAGE>
---------------------------------------------------------
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 - have updated all of their
computer systems to process date-related information properly following the
turn of the century. 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. These risks may be
particularly acute in certain countries outside the U.S. in which the fund may
invest and may adversely affect the fund's net asset value and total return.
The fund and its investment adviser will continue to monitor developments
relating to this issue.
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 discussed 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 approach 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.
9
SMALLCAP WORLD FUND / PROSPECTUS
<PAGE>
<TABLE>
<CAPTION>
APPROXIMATE YEARS OF EXPERIENCE
AS AN INVESTMENT PROFESSIONAL
YEARS OF EXPERIENCE (INCLUDNG THE LAST FIVE YEARS)
AS PORTFOLIO COUNSELOR -----------------------------------
PORTFOLIO (AND RESEARCH PROFESSIONAL, WITH CAPITAL
COUNSELORS FOR IF APPLICABLE) FOR RESEARCH AND
SMALLCAP WORLD SMALLCAP WORLD FUND MANAGEMENT
FUND PRIMARY TITLE(S) (APPROXIMATE) COMPANY
------------------------------------------------------------------------- OR AFFILIATES TOTAL YEARS
-----------------------------------
<S> <C> <C> <C> <C>
GORDON CRAWFORD Chairman and Principal 10 years (since the fund 28 years 28 years
Executive Officer of the began operations)
fund. Senior Vice
President and Director,
Capital Research and
Management Company
------------------------------------------------------------------------------------------------------------
GREGORY W. President of the fund. 2 years (plus 8 years as a 12 years 12 years
WENDT Senior Vice President and research professional prior
Director, Capital to becoming a portfolio
Research Company* counselor for the fund)
-----------------------------------
-------------------------------------------------------------------------
J. BLAIR Vice President of the 1 year (plus 4 years as a 6 years 6 years
FRANK fund. Vice President, research professional prior
Capital Research Company to becoming a portfolio
counselor for the fund)
-----------------------------------
-------------------------------------------------------------------------
MARTIAL G. Senior Vice President and 2 years (plus 8 years as a 27 years 27 years
CHAILLET Director, Capital research professional prior
Research Company* to becoming a portfolio
counselor for the fund)
-----------------------------------
-------------------------------------------------------------------------
MARK E. DENNING Director, Capital 8 years (plus 2 years as a 17 years 17 years
Research and Management research professional prior
Company to becoming a portfolio
counselor for the fund)
------------------------------------------------------------------------------------------------------------
CLAUDIA P. Senior Vice President, 4 years (plus 5 years as a 25 years 27 years
HUNTINGTON Capital Research and research professional prior
Management Company to becoming a portfolio
counselor for the fund)
The fund began investment operations on April 30, 1990.
* Company affiliated with Capital Research and Management Company.
------------------------------------------------------------------------------------------------------------------------
</TABLE>
10
SMALLCAP WORLD FUND / PROSPECTUS
<PAGE>
---------------------------------------------------------
SHAREHOLDER INFORMATION
SHAREHOLDER SERVICES
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
[map]
A COMPLETE DESCRIPTION OF THE SERVICES WE OFFER IS INCLUDED 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.
11
SMALLCAP WORLD FUND / PROSPECTUS
<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.
<TABLE>
<CAPTION>
INVESTMENT MINIMUMS
<S> <C>
To establish an account $1,000
For a retirement plan account $ 250
For a retirement plan account through payroll deduction $ 25
To add to an account $ 50
For a retirement plan account through payroll deduction $ 25
</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.
12
SMALLCAP WORLD FUND / PROSPECTUS
<PAGE>
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 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
----------------------------------
DEALER
NET COMMISSION
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 4.50% 4.71% 3.75%
$100,000
------------------------------------------------------------------------------
$100,000 but less than 3.50% 3.63% 2.75%
$250,000
------------------------------------------------------------------------------
$250,000 but less than 2.50% 2.56% 2.00%
$500,000
------------------------------------------------------------------------------
$500,000 but less than $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 are sold with no initial sales charge.
HOWEVER A 1% CONTINGENT DEFERRED SALES CHARGE MAY BE IMPOSED IF REDEMPTIONS
ARE MADE WITHIN ONE YEAR OF PURCHASE. Employer-sponsored defined
contribution-type plans investing $1 million or more, or with 100 or more
eligible employees, may invest with no sales charge and are not subject to
a contingent deferred sales charge. Investments made by retirement plans,
endowments or foundations with $50 million or more in assets may also be made
with no sales charge and are not subject to a contingent deferred sales charge.
The fund may pay a dealer concession of up to 1% under its Plan of Distribution
on investments made with no initial sales charge.
13
SMALLCAP WORLD FUND / PROSPECTUS
<PAGE>
REDUCING YOUR SALES CHARGE
You and your "immediate family" (your spouse and your children under the age of
21) 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 below and in the statement of additional information and "Welcome to
the Family."
AGGREGATING ACCOUNTS
To receive a reduced sales charge, investments made by you and your immediate
family (see above) may be aggregated if made for their own account(s) and/or:
- trust accounts established by the above individuals. However, if the
person(s) who established the trust is deceased, the trust account may be
aggregated with accounts of the person who is the primary beneficiary of
the trust.
- solely controlled business accounts.
- single-participant retirement plans.
Other types of accounts may also be aggregated. You should check with your
financial adviser or consult the statement of additional information or
"Welcome to the Family" for more information.
CONCURRENT PURCHASES
You may combine simultaneous purchases of two or more American Funds, as well
as individual holdings in various American Legacy variable annuities or
variable life insurance policies, to qualify for a reduced sales charge. Direct
purchases of money market funds are excluded.
RIGHTS OF ACCUMULATION
You may take into account the current value of your existing holdings in The
American Funds Group, as well as individual holdings in various American Legacy
variable annuities or variable life insurance policies, to determine your sales
charge. Direct purchases of money market funds are excluded.
STATEMENT OF INTENTION
You may establish a Statement of Intention (SOI) that allows you to combine the
purchases you intend to make over a 13-month period in any non-money market
fund or individual American Legacy variable annuity or variable life insurance
policy. At your request purchases made during the previous 90 days may be
included; however, capital appreciation and reinvested dividends and
14
SMALLCAP WORLD FUND / PROSPECTUS
<PAGE>
capital gains do not apply toward these combined purchases. An SOI allows you
to take immediate advantage of the maximum quantity discount available. A
portion of your account may be held in escrow to cover additional sales charges
which may be due if your total investments over the 13-month period do not
qualify for the applicable sales charge reduction.
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 shareholder services. The 12b-1 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." Since these fees are paid out of the fund's
assets or income on an ongoing basis, over time they will increase the cost and
reduce the return 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.
15
SMALLCAP WORLD FUND / PROSPECTUS
<PAGE>
- 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.
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.
16
SMALLCAP WORLD FUND / PROSPECTUS
<PAGE>
---------------------------------------------------------
DISTRIBUTION ARRANGEMENTS
DIVIDENDS AND DISTRIBUTIONS
The fund intends to distribute dividends to you, usually in December. Capital
gains, if any, are usually distributed in December. When a capital gain is
distributed, the net asset value per share is reduced by the amount of the
payment.
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. Most shareholders do not elect
to take capital gain distributions in cash because these distributions reduce
principal value.
TAXES ON DISTRIBUTIONS
Distributions you receive from the fund may be subject to income tax and may
also be subject to state or local taxes - unless you are exempt from taxation.
For federal tax purposes, any taxable dividends and distributions of short-term
capital gains are treated as ordinary income. The fund's distributions of
long-term capital gains are taxable to you as long-term capital gains. Any
taxable distributions you receive from the fund will normally be taxable to you
when made, regardless of whether you reinvest distributions or receive them in
cash.</r
TAXES ON TRANSACTIONS
Your redemptions, including exchanges, may result in a capital gain or loss for
federal tax purposes. A capital gain or loss on your investment in the fund is
the difference between the cost of your shares, including any sales charges,
and the price you receive when you sell them.
Please see the statement of additional information, the "Welcome to the Family"
guide, and your tax adviser for further information.
17
SMALLCAP WORLD FUND / PROSPECTUS
<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, is included in the statement of additional information, which is
available upon request.
<TABLE>
<CAPTION>
YEARS ENDED SEPTEMBER 30
----------------------------
1999 1998 1997 1996 1995
----------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, $22.14 $30.72 $26.92 $26.11 $23.61
Beginning of Year
------------------------------------------------------------------------------
Income (Loss) From Investment
Operations:
Net investment income .03 .07 .10 .17 .22
Net gains or losses on
securities (both 8.78 (6.10) 6.17 3.32 3.79
realized and unrealized)
------------------------------------------------------------------------------
Total from investment 8.81 (6.03) 6.27 3.49 4.01
operations
------------------------------------------------------------------------------
Less Distributions:
Dividends (from net
investment income) (.09) (.05) (.12) (.23) (.16)
Distributions (from capital (1.29) (2.50) (2.35) (2.45) (1.35)
gains)
------------------------------------------------------------------------------
Total distributions (1.38) (2.55) (2.47) (2.68) (1.51)
------------------------------------------------------------------------------
Net Asset Value, $29.57 $22.14 $30.72 $26.92 $26.11
End of Year
------------------------------------------------------------------------------
Total return* 41.42% (20.70)% 25.41% 15.21% 18.59%
------------------------------------------------------------------------------
Ratios/Supplemental Data:
Net assets, end of year (in $8,983 $7,102 $9,256 $6,607 $4,625
millions)
------------------------------------------------------------------------------
Ratio of expenses to 1.09% 1.06% 1.07% 1.09% 1.13%
average net assets
------------------------------------------------------------------------------
Ratio of net income .12% .27% .40% .68% .97%
to average net assets
------------------------------------------------------------------------------
Portfolio Turnover Rate 50.06% 44.31% 42.21% 42.88% 45.63%
* Excludes maximum sales charge of 5.75%.
</TABLE>
18
SMALLCAP WORLD FUND / PROSPECTUS
<PAGE>
---------------------------------------------------------
NOTES
19
SMALLCAP WORLD FUND / PROSPECTUS
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NOTES
20
SMALLCAP WORLD FUND / PROSPECTUS
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NOTES
21
SMALLCAP WORLD FUND / PROSPECTUS
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FOR SHAREHOLDER FOR RETIREMENT PLAN FOR DEALER
SERVICES SERVICES SERVICES
American Funds Call your employer or American Funds
Service Company plan administrator Distributors
800/421-0180 800/421-9900 ext. 11
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FOR 24-HOUR INFORMATION
American FundsLine(R) American FundsLine OnLine(R)
800/325-3590 http://www.americanfunds.com
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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. If there is any
inconsistency or ambiguity as to the meaning of any word or phrase in a
translation, 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 auditors' 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.
CODE OF ETHICS
Includes a description of the fund's personal investing policy.
The fund's code of ethics and current SAI has been filed with the Securities
and Exchange Commission ("SEC"). The SAI is incorporated by reference into
this prospectus. These and other related materials about the fund are available
for review or to be copied at the SEC's Public Reference Room in Washington,
D.C. (1-800-SEC-0330) or on the SEC's Internet Web site at http://www.sec.gov.
To request a free copy of any of the documents above:
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Call American Funds Write to the Secretary of the fund
Service Company or 333 South Hope StreetLos Angeles, CA
800/421-0180 ext. 1 90071
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Investment Company File No. 811-5888
Printed on recycled paper
