The American Funds Group(r)
SMALLCAP WORLD FUND
[photograph of two men examining some equipment]
2000 ANNUAL REPORT for the year ended September 30
[photograph of two men looking at an airplane propeller]
A Decade of Research Around The World
[photograph of a man and a woman walking down a street]
SMALLCAP World Fund(r) is one of the 29 American Funds, the nation's
third-largest mutual fund family. For nearly seven decades, Capital Research
and Management Company, the American Funds adviser, has invested with a
long-term focus based on thorough research and attention to risk.
SMALLCAP seeks long-term growth of capital through investments in smaller
companies in the United States and around the world.
INVESTMENT HIGHLIGHTS
Total returns for periods ended September 30, 2000, with all distributions
reinvested
<TABLE>
<CAPTION>
SMALLCAP Salomon Smith S&P 500 MSCI
World Fund Barney World Index EAFE Index
Smallcap Index
<S> <C> <C> <C> <C>
Twelve months +38.4% +13.0% +13.2% +3.4%
Five years +124.3 +47.0 +166.3 +53.0
Ten years +437.3 +178.4 +488.3 +158.3
Since fund's inception +372.5 +148.3 +454.6 +125.1
on April 30, 1990
Average annual compound +16.1 +9.1 +17.9 +8.1
return since inception
</TABLE>
The Salomon Smith Barney World Smallcap Index tracks about 5,000 publicly
traded stocks in 23 countries with market capitalizations between $100 million
and $1.5 billion; this is essentially the same universe in which SMALLCAP World
Fund Invests. Standard & Poor's 500 Composite Index tracks 500 large, primarily
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.
OUR 10 MOST SUCCESSFUL HOLDINGS
For holdings owned throughout the fiscal year ended 9/30/00
<TABLE>
<CAPTION>
<S> <C>
VA Linux Systems (U.S.; computer software) +1,098.2%
CoSine Communications (U.S.;computer networking) +1,088.9
CIMA LABS (U.S.; drug delivery systems) +643.7
Protein Design Labs (U.S.; biotechnology) +567.1
COR Therapeutics (U.S.; biotechnology) +555.9
Micronic Laser Systems (Sweden; electronic equipment) +549.5
Vertex Pharmaceuticals (U.S.; biotechnology) +444.1
Baltimore Technologies (U.K.; computer security) +429.3
AVANT Immunotherapeutics (U.S.; biotechnology) +408.8
LifePoint Hospitals (U.S.; health care facilities) +308.6
</TABLE>
OUR 10 LEAST SUCCESSFUL HOLDINGS
For holdings owned throughout the fiscal year ended 9/30/00
<TABLE>
<CAPTION>
<S> <C>
Senshukai (Japan; catalog and Internet retailing) -66.5%
Shop At Home (U.S.; cable TV and Internet retailing) -72.9
FortuneCity.com (U.S.; Internet site operator) -75.4
Chapters Online (Canada; online retailer) -77.0
Profit Recovery Group (U.S.; collection services) -77.9
Scotia Holdings (U.K.; biotechnology) -86.9
CINAR (Canada; television programming) -90.1
Women First HealthCare (U.S.; health care products) -92.9
Miadora (U.S.; online jewelry retailer) -98.6
Kafus Industries (Canada; paper and forest products) -99.1
</TABLE>
Both lists measured by change in stock price during the fiscal year, excluding
dividends.
All market indexes cited in this report are unmanaged and include reinvestment
of all distributions. Fund results were computed for Class A shares at net
asset value (without a sales charge) unless otherwise indicated; please see
page 3 for Class A and B share results with relevant sales charges deducted.
Lipper rankings do not include the effect of sales charges.
FIGURES SHOWN ARE PAST RESULTS AND ARE NOT PREDICTIVE OF FUTURE RESULTS. SHARE
PRICE AND RETURN WILL VARY, SO YOU MAY LOSE MONEY. INVESTING FOR SHORT PERIODS
MAKES LOSSES MORE LIKELY. INVESTMENTS ARE NOT FDIC-INSURED NOR ARE THEY
DEPOSITS OF OR GUARANTEED BY A BANK OR ANY OTHER ENTITY. INVESTING OUTSIDE THE
UNITED STATES IS SUBJECT TO ADDITIONAL RISKS, SUCH AS CURRENCY FLUCTUATIONS AND
POLITICAL INSTABILITY, WHICH ARE DETAILED IN THE FUND'S PROSPECTUS.
FELLOW SHAREHOLDERS:
This report marks an anniversary of sorts - the end of SMALLCAP World Fund's
10th full fiscal year of operations. Of the years we've experienced over that
decade, this was surely among the most volatile. From September through early
March, technology, media and telecommunications stocks soared to unprecedented
heights. Since then, most have fallen back toward earth.
SMALLCAP's results for the fiscal year ended September 30 clearly reflect this
dichotomy. Up 56.3% in the first half, the fund fell 11.4% in the second half.
The full fiscal year saw a 38.4% positive total return if you reinvested the
dividend of 1.5 cents a share and capital gain distribution of 60.5 cents a
share paid last December.
[Begin Sidebar]
Where are SMALLCAP's holdings located?
Geographical distribution of net assets on September 30, 2000
<TABLE>
<CAPTION>
<S> <C> <C>
THE AMERICAS 53.1%
United States 47.5%
Canada 2.9
Brazil 1.6
Mexico .9
Other Latin America .2
EUROPE 21.0%
United Kingdom 6.6%
Sweden 3.2
Germany 2.5
France 2.3
Denmark 1.0
Ireland .8
Netherlands .7
Finland .6
Norway .5
Switzerland .5
Belgium .5
Other Europe 1.8
ASIA/PACIFIC 14.9%
Japan 6.1%
Singapore 2.3
Hong Kong 1.7
Australia 1.4
Taiwan 1.2
India .8
New Zealand .5
Other Asia .9
OTHER COUNTRIES 2.6%
CASH & EQUIVALENTS 8.4%
TOTAL 100.0%
</TABLE>
[End Sidebar]
Your fund's gain was well ahead of all relevant benchmarks, as shown in the
Investment Highlights table on the opposite page. In fact, it was almost triple
the results of our global small-company universe. Yet uncharacteristically, it
was also more volatile than these unmanaged indexes - up further through March,
down a bit more since then. Relative to other global small-company mutual funds
(Class A shares), results through September 30 were respectable - in the top
47% (six of 13) over the past 12 months, according to Lipper Inc. - though over
longer periods we've done much better. For five years, the fund was in the top
25% (two of eight), while over 10 years we were first among five similar funds.
Looking geographically, the U.S. stock market did substantially better than
most. Asia, in fact, was down for the year, while Europe was up marginally.
Israel, Canada, Finland and Brazil were the four strongest markets, although
the United States supplied eight of the fund's 10 best stocks; the Philippines,
Thailand, Greece and Indonesia were among the weakest.
REAP WHAT YOU HAVE SOWN
Our best stocks for the year - technology holdings, by and large - made their
mark in the first half. The fund has had substantial exposure to technology
over the past few years, so it reaped the year's early rewards. But then the
harvest wilted before our eyes. From March to May, as the Internet bubble
burst, it was not uncommon to see technology stocks drop 30% or more, with many
Internet firms - few of which we owned - cascading 80% to 90% lower. We had
sold some tech holdings before the deluge to take advantage of the high prices,
but we clearly didn't sell enough. Many of our technology holdings rebounded
strongly from May to August, but then headed down again in September and
October.
Another area that did exceptionally well for the fund was biotechnology,
placing four stocks among our 10 best. You may have read about the recent
completion of the first map of the human genome, the complex strands of DNA
that define who we are. While commercial applications are still years away,
some of our holdings benefited from the vast amounts of capital this work has
attracted. Other firms producing specialized medicines or treatments benefited
from significant clinical headway.
With oil prices rising, energy holdings were very strong as well. Early in the
year, we added a number of small U.S. and Canadian oil and gas producers to our
existing holdings. We didn't expect energy prices to turn so quickly, but we
were there when they did.
NOT EVERY DECISION WAS BRILLIANT
With a portfolio as large as ours, every year we are also reminded of decisions
that didn't work out quite so well. Last year at this time we wrote about our
move into Japanese technology stocks - a highly profitable move at first.
Unfortunately, the economy hasn't recovered as quickly as anticipated. More
discouraging, many promised economic reforms have languished. When the Japanese
market again headed south mid-year, we began reducing our exposure.
Elsewhere in Asia, the story was much the same. Fears that the economy might
relapse caused stock prices throughout the region to falter. While stock prices
again offer reasonable value, we would like to see a renewed commitment to
profitability, cost control and debt restructuring before diving in too deeply.
BOUGHT AND SOLD
We make investment decisions company by company, rather than industry by
industry or region by region. That often makes it difficult to generalize about
the actions we have taken on your behalf. During this period, though, our
strategy was fairly simple: We lightened our high exposure to technology
stocks, we moved money out of the U.S., and we raised cash levels moderately.
With growth slowing in certain technology sectors - signaled by earnings
disappointments at Intel and Ericsson, among others - we greatly reduced our
semiconductor and semiconductor-equipment holdings and sold a number of
telecommunications equipment stocks as well.
We've been putting this money to use in an eclectic group of reasonably valued
smaller companies, many of which are based outside the U.S. Some of these
stocks had fallen sharply in price and now appear to offer solid long-term
value; others have simply been overlooked in the technology gold rush.
[Begin Sidebar]
15 STOCKS THAT MADE A DIFFERENCE
<TABLE>
<CAPTION>
Stock Description Period Owned Annualized
Rate
of Return
<S> <C> <C> <C>
CoSine U.S.; computer 9/15/99 - 9/30/00 977%
Communications networking
VA Linux Systems U.S.; computer 6/18/99 - 9/30/00 641
software
EM.TV & Germany; media 3/20/98 - 7/30/99 616
Merchandising
Scient U.S.; Internet 6/5/98 - 9/30/00 395
services
Baltimore U.K.; computer 5/28/99 - 9/30/00 351
Technologies security
America Online U.S.; online 2/4/94 - 10/20/95 191
services
PMC-Sierra U.S.; 12/6/96 - 11/19/99 153
semiconductors
Liberty Media U.S.; cable 2/28/91 - 9/23/94 153
television
Newcourt Credit Group Canada; financial 1/5/96 - 1/23/98 115
services
Tellabs U.S.; telecom 5/11/90 - 3/3/95 73
products
Wisconsin Central U.S.; railroad 5/24/91 - 12/20/96 69
Infinity U.S.; radio 1/31/92 - 3/29/96 64
Broadcasting
Fairfax Financial Canada; financial 8/21/92 - 8/29/97 62
services
OM Gruppen Sweden; financial 5/31/95 - 9/30/00 50
services
Adelphia U.S.; cable 5/8/92 - 6/25/99 43
Communications television
</TABLE>
These stocks were (and in some cases still are) among the fund's largest
holdings and also experienced significant price changes. The annualized rate of
return shows the gain, on an annualized basis, over the full period of
ownership (or through September 30, 2000 if the fund still owned the stock),
taking into account purchases, sales and other transactions such as stock
splits.
[end sidebar]
We mentioned our purchases of small oil and gas exploration and production
companies earlier. We also bought insurance stocks, where the pricing cycle has
turned positive after nearly a decade of intense price competition, and a
smattering of specialty chemical, education and consumer companies. And,
strange as it may seem, we added a number of Internet companies whose stocks
had collapsed. To mitigate the risks, we bought a large basket of companies
which should have enough cash to see them through to profitability. Names you
might recognize include Ask Jeeves, GoTo.com and Travelocity.com.
LOOKING AHEAD
By the time you receive this report, a new American president will have been
elected. Quite often, the first year of a presidential cycle is a time of great
uncertainty in the financial markets. Add to that a backdrop of rising interest
rates, soaring energy prices and an unstable European currency, and you can
clearly see the next year could be a treacherous one. In addition, since the
March technology rout, investors have been desperately searching for new market
leadership. None has emerged, nor is likely to, for some time.
We say this not to unsettle you, but to remind you that the stock market is
simply a reflection of current beliefs about the future. That worldview has
been dominated in recent years by a small group of highly valued stocks, in
which many investors are now losing confidence. Yet the rest of the stock
market - including many small-company stocks - offers fairly good value.
The old story line - that consolidation would leave a few world-beating giants
who crush small companies in their wake -is being rewritten, as it has been
each time big companies threaten to dominate the world economy. Consolidation
has again progressed to the point where the best talent is leaving the largest
companies to start smaller competitors. So the cycle begins again, and this
time the resurgence of smaller companies is happening on a global scale.
It's all a matter of perspective, really. If you focus on what may happen next
year - as many investors do - the scenario may concern you. But if you look
five or 10 years out, as we do, you see instead the opportunities being created
in small offices, laboratories and garages around the world.
LOOKING BACK
Given the milestone we recently passed, it is only fitting to end our comments
with a review of the past decade. Ten years can encompass considerable change
in any business, but perhaps especially so in the investment business - because
we analyze virtually every industry throughout the world.
If you look at how SMALLCAP's portfolio has evolved over the years, it clearly
reflects those changes. Early on, cellular phones - today called "wireless
handsets" - were the most significant part of the portfolio. Then cable
television took the lead, followed by semiconductor stocks.
Another thread would show that the portfolio today is more global than ever.
When we introduced SMALLCAP in April 1990, we expected that at least 50% of the
portfolio would always be invested in the United States. We've been below that
level for over a year now, as stock exchanges like Japan's Jasdaq, Korea's
Kosdaq and Germany's Neuer Markt have paved the way for better access to
small-company stocks around the world. Private placements - investments made
before a company goes public - have also made a meaningful difference; indeed,
the two best stocks for the past year - VA Linux and CoSine - were both
originally venture capital investments.
Simplifying the investment landscape in this way helps us point out trends, but
it ultimately misses the point. We don't invest in industries or countries or
trends; we invest in businesses. Some of our best individual stocks don't fall
into any category we've mentioned, as you can see in the table on the opposite
page.
How do we find these companies? It's no secret. We hire bright, talented
analysts - many of whom have worked previously in the industries they cover -
and let them do what they do best. One aspect of this approach unique to
SMALLCAP World Fund is the Small Company Research Team. An article about this
talented group of individuals follows this letter. We hope it helps you
understand one of the most important factors in our success.
Cordially,
/s/ Gordon Crawford
Gordon Crawford
Chairman of the Board
/s/ Gregory W. Wendt
Gregory W. Wendt
President
November 16, 2000
[begin mountain chart]
THE VALUE OF A LONG-TERM PERSPECTIVE
This chart shows how a $10,000 investment in SMALLCAP World Fund's Class A
shares grew from April 30, 1990 - the fund's inception - through September 30,
2000, the end of the fund's latest fiscal year.
As you can see, that $10,000 would have grown to $44,532 even after deducting
the maximum 5.75% sales charge. (Sales charges are lower for accounts of
$25,000 or more.) This is significantly more than the $24,828 generated by the
unmanaged Salomon Smith Barney World Smallcap Index, which tracks about 5,000
small-company stocks around the world with market capitalizations (price per
share multiplied by number of shares outstanding) between $100 million and $1.5
billion. These are virtually the same parameters we use when selecting stocks
for the fund's portfolio.
THERE ARE TWO WAYS TO INVEST IN SMALLCAP WORLD FUND. CLASS A SHARES ARE SUBJECT
TO A 5.75% MAXIMUM UP-FRONT SALES CHARGE THAT DECLINES FOR ACCOUNTS OF $25,000
OR MORE. CLASS B SHARES, WHICH ARE NOT AVAILABLE FOR CERTAIN EMPLOYER-SPONSORED
RETIREMENT PLANS, HAVE NO UP-FRONT CHARGE. THEY ARE, HOWEVER, SUBJECT TO
ADDITIONAL EXPENSES OF APPROXIMATELY 0.75% A YEAR OVER THE FIRST EIGHT YEARS OF
OWNERSHIP. IF REDEEMED WITHIN SIX YEARS, THEY MAY ALSO BE SUBJECT TO A
CONTINGENT DEFERRED SALES CHARGE (5% MAXIMUM) THAT DECLINES OVER TIME.
$44,532(1)
SMALLCAP World Fund
$24,828
Salomon Smith Barney
World Smallcap Index
$13, 475.56(2)
Consumer Price Index
$10,000
original investment
<TABLE>
<CAPTION>
Year Ended SMALLCAP Salomon Smith Barney Consumer Price Original
September 30 World Fund World Smallcap Index Index (inflation) Investment
<S> <C> <C> <C> <C>
1990 # $8,288 $8,919 $10,295 $10,000
1991 $11,307 $11,210 $10,644 $10,000
1992 $11,640 $10,999 $10,962 $10,000
1993 $15,418 $14,336 $11,257 $10,000
1994 $16,744 $15,390 $11,590 $10,000
1995 $19,856 $16,888 $11,885 $10,000
1996 $22,877 $18,899 $12,242 $10,000
1997 $28,689 $21,443 $12,506 $10,000
1998 $22,749 $17,195 $12,692 $10,000
1999 $32,172 $21,965 $13,026 $10,000
2000 $44,532 $24,828 $13,476 $10,000
</TABLE>
# For the period April 30, 1990 (when the fund began operations) through
September 30, 1990.
(1) This figure, unlike those shown earlier in this report, reflects payment of
the maximum sales charge of 5.75% on the $10,000 investment. Thus, the net
amount invested was $9,425.
(2) Computed from data supplied by the U.S. Department of Labor, Bureau of
Labor Statistics.
AVERAGE ANNUAL COMPOUND RETURNS ON A $1,000 INVESTMENT (FOR PERIODS ENDED
SEPTEMBER 30, 2000)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
10 years 5 years 12 months
CLASS A SHARES
reflecting 5.75% maximum sales charge +17.61% +16.15% +30.48%
CLASS B SHARES*
reflecting 5% maximum contingent deferred - - -19.18%*
sales charge (payable only if shares are
sold)
not reflecting this charge - - -14.92%*
</TABLE>
Results assume reinvestment of all distributions. Past results are not
predictive of future results.
* Not offered before March 15, 2000, so figures shown are for the period March
15 to September 30, 2000. Results are not annualized.
[end mountain chart]
THE SMALL COMPANY RESEARCH TEAM:
A DECADE OF RESEARCH AROUND THE WORLD
[photograph of two men walking]
When we launched SMALLCAP World Fund in April 1990, we embarked on a
then-unproven quest - to successfully manage a large, global portfolio of
small-company stocks.
Most small-company mutual funds, as they grow larger, tend to own ever-bigger
stocks. We wanted to make sure that wouldn't happen, and indeed it hasn't:
SMALLCAP is now 20 times its original size, yet the average size of the fund's
holdings has remained remarkably consistent.
Accomplishing such a feat has taken a disciplined approach to selling. We've
also been helped by the unique management style practiced by all of the
American Funds: the multiple portfolio counselor system. Under this system, a
number of portfolio counselors - seven, in SMALLCAP's case - manage segments of
each fund independently. With SMALLCAP, you essentially own a portion of seven
separately managed portfolios.
PUTTING IDEAS INTO ACTION
Another characteristic of the multiple portfolio counselor system is that our
analysts also manage money. We have always believed that those closest to an
investment - analysts with in-depth knowledge and close relationships with
company management - should contribute to the decision-making process. We
accomplish this through the research portfolio, an eighth cooperatively managed
"slice," if you will, of the multiple portfolio counselor pie.
In SMALLCAP's case, the research portfolio represents 40% of fund assets -the
highest of any American Fund. This is partly because of the sheer number of
holdings needed in the portfolio. More significantly, it reflects the existence
of a special group of analysts we call the Small Company Research Team. Created
shortly after the fund's launch, this dedicated team of 11 analysts now spans
the globe. We thought it was time you met them.
[photograph of a man and a woman walking]
SIMPLE MATH
At American Funds, we tend to hold our stocks a long time. The consequence of
that approach for SMALLCAP is that each time we sell a successful long-term
holding, we have to find six to eight stocks to replace it.
Add to that equation the fact that the fund has grown from $670 million in
assets at the outset to over $14 billion today, and you begin to see the
challenge. Quite simply, we need to own lots of stocks; indeed, the portfolio
today includes well over 600.
To own that many stocks, we need to generate at least that many good investment
ideas. To do that, we need lots of decision-makers, with different viewpoints
and perspectives, operating in different parts of the world. In short, we need
a Small Company Research Team.
[photograph of two men looking at a computer screen]
SPECIALIZED FOCUS
If the Capital organization already has nearly 200 investment analysts
traveling the globe, why, you might wonder, would we need 11 more to follow
small companies? The answer to that question lies in the nature of traditional
investment analysis.
Most analysts specialize either by industry or by region. The problem with that
approach, for a small-company investor, is that many industries and regions are
so large that smaller competitors don't get the attention they deserve.
Analysts often don't have time to adequately explore all the possibilities.
A dedicated team can pick up where traditional analysis leaves off. If one of
our insurance analysts, for example, hears of an intriguing smaller company but
doesn't have time to follow up, the idea can be handed to a small-company
specialist. And if a small company is operating at the forefront of change -
where no established industry exists - we still have analysts on the hunt.
That's the beauty of the Small Company Research Team. Members of the team have
the full resources of the Capital organization at their disposal, yet the
freedom and flexibility to explore wherever their imagination and intellect
take them.
We followed five of the 11 team members as they made research visits over the
past few months. Read on for a closer look at the team in action.
UNITED KINGDOM
[illustrated map of the United Kingdom]
People often ask how we find so many exceptional smaller companies. Having lots
of people in the field is one answer, but there is another: "Capital is such a
big investor that these companies often find us," explains John Burke, a
London-based small-company analyst. "In that sense, you have to be willing to
shuck a lot of oysters to find the pearl. For every 20 companies I see, maybe
four or five are worth a closer look, and perhaps we'll invest in one or two."
Alphameric is such a company. Based in London, it makes sophisticated
point-of-sale software systems that help make retail operations more efficient,
such as those at the Chelsea Football Stadium. Linking sales, inventory,
accounts receivable and warehousing allows companies to know what they are
selling, to whom and when to reorder.
"They even link the systems to plasma-screen advertisements," notes John. "If
you sell out of ham sandwiches, the ad automatically changes to something
else."
Now Alphameric is leveraging its expertise into related areas. "Because they
help manage warehouses, they're now developing a system to track the opening of
doors on container trucks to deter theft," says John.
[photograph of John Burke and Rodney Hornstein]
[Begin Caption]
John Burke talks software with Alphameric Chairman Rodney Hornstein at London's
Chelsea Football Stadium complex, an Alphameric customer.
[End Caption]
[photograph of John Burke and Tage Johanssen]
[Begin Caption]
Trained as an engineer, John gets a lesson in injection-molding techniques from
Perlos CFO Tage Johanssen.
[End Caption]
FINLAND
[illustrated map of Finland]
Quite often, the companies SMALLCAP invests in operate behind the scenes,
supplying specialized parts or equipment to successful larger companies. In
Finland recently, John Burke visited two such firms - Perlos and JOT Automation
Group. You've probably never heard of either one, but their products are
crucial to cell-phone makers such as Nokia, Ericsson and Motorola.
Perlos, which began life making plastic cosmetic containers, syringes,
fasteners and gears, now turns out millions of cell-phone cases using
sophisticated injection-molding processes. Advanced robotics linked with
machine vision systems help to relentlessly reduce costs. Its plants run 24
hours a day with minimal staffing requirements.
JOT, for Just On Time, is based in tiny Oolu, Finland, 30 kilometers south of
the Arctic Circle. "People always think the travel is glamorous," says John.
"But at least in Europe, no company puts their industrial sites near a tourist
spot. So you end up in some out-of-the-way places. Strangely enough, though,
Oolu is the Silicon Valley of Finland."
Three years ago, it took several minutes to assemble a cell phone. JOT's latest
assembly line spits one out every six seconds. Selling for several million
dollars a pop, the assembly equipment is state-of-the-art and highly reliable.
"The companies can sell every phone they make," says John, "so if the
production line breaks down, that money is lost forever. The time pressure is
simply immense. It used to take several months to retool an assembly line for a
new model; now they do it over a weekend."
Though based in Finland, both companies now have operations near major
cell-phone factories around the world. "Ten years ago," John adds, "Finland's
economy was based on paper and pulp, not exactly engines of growth. Today,
they're at the forefront of the wireless revolution."
[two photographs of John Burke]
[Begin Caption]
Outside Dublin, John meets with executives of Cuisine de France at the
company's offices (left) and at a customer location (above).
[End Caption]
IRELAND
[illustrated map of Ireland]
Great ideas often surface in the oddest places. The Irish Agriculture and
Wholesale Society, for example, is a long-time fertilizer manufacturer. Then, a
number of years ago its managers financed a small but fast-growing bakery
operation - and changed the face of their company forever.
"This was an example of good businessmen knowing a good idea when they saw it,"
explains John. "When the original owner didn't have capital to expand, IAWS
stepped in. Now they own a rapidly growing international baked-goods business."
The company's products solve a dilemma for small food establishments that can't
afford a high-end bakery. "If you're sitting in a cafe in Dublin or London,"
notes John, "and you order a nice croissant, chances are it may have started
life in a Cuisine de France bakery. They start the baking process, then
flash-freeze the bread. Then, days or even weeks later, a hotel or cafe in
Europe will pop it in the oven. Voila, fresh-baked bread."
MEXICO CITY
[illustrated map of Mexico]
[photograph Paul White]
[Begin Caption]
At Nadro, analyst Paul White gets an inside look at a health care products
delivery facility.
[End Caption]
When you walk into your local drug store, you probably don't think much about
how the shelves got stocked. Nonetheless, it's a complicated process involving
meticulous planning and execution. Now imagine doing that successfully in
Mexico, a vast country with poor roads, congested traffic and high crime.
Nadro, which operates 15 distribution centers around Mexico, uses 400 trucks to
deliver 8,400 different products on a daily basis to over 15,000 independent
pharmacies and hospitals. "They've done an amazing job figuring out even the
smallest details," explains Paul White, a Los Angeles-based analyst following
steel companies in Latin America. "They've made stocking shelves a science."
Products are sorted by weight, usage and type, with high-turnover products
picked automatically and others picked by hand. Because of the valuable
merchandise and high crime rate, security precautions are extraordinary.
"It's a low-margin, high-volume business," notes Paul, "so if you are able to
squeeze out even small efficiencies, it can make a big difference on the bottom
line."
Sometimes wonderful companies can be found in industries that, on the surface,
don't appear attractive. Who would think a construction firm building
government-sponsored housing in Mexico could be such a find?
"At first glance, Consorcio Ara looks like a construction company," says Paul,
"and in one sense it is. But it is building homes by contract with the
government in a market where demand far exceeds supply. Moreover, the houses
are financed through a government-mandated savings program, so mortgage
defaults are rare. Far more important, then, is managing costs and logistics.
That's where most competitors have struggled."
The new Mexican government has called for a rapid acceleration of low-income
housing construction. "The opportunities for Ara are tremendous," adds Paul,
"but they want to be sure they can manage the growth effectively. I've been
impressed by their commitment to sticking with their game plan - offering a
quality product at an affordable price."
[two photographs of Paul White]
[Begin Caption]
Paul tours the Real de Bosque housing project on the outskirts of Mexico City
with Donald Forseck Orive of Consorcio Ara.
[End Caption]
[photograph of Winnie Kwan]
[Begin Caption]
Analyst Winnie Kwan reviews the latest cell-phone features with SmarTone store
manager Thompson Ngai.
[End Caption]
HONG KONG
[illustrated map of Hong Kong]
Strong management is essential to the success of smaller companies; verifying
what management says is just as critical to the success of small-company
investors.
"I visit retail cell-phone outlets regularly," notes Winnie Kwan, a Hong
Kong-based small-company analyst. "Price competition in the cellular phone
business is fierce, and I need to make sure that what managers tell me about
handset subsidies and dealer commissions is accurate. In the stores, they know
exactly what it takes to attract new customers."
One company Winnie has been following for some time is SmarTone
Telecommunications, Hong Kong's third-largest cellular operator. It has been
using enhanced customer service in an attempt to differentiate itself in an
increasingly crowded field.
"Now that Hong Kong residents have the right to switch phone providers
literally overnight," says Winnie, "you have to offer customers something
unique. SmarTone always has greeters at the door to give customers special
attention and make the shopping experience fun. But most importantly, they
bundle services to give customers what they want at a reasonable price. That
may give them a leg up over time."
[photograph of Winnie Kwan]
[Begin Caption]
Winnie and her Tokyo counterpart, retail analyst Hiromi Ishikawa, hear about
the latest fashion trends from Executive Director Jimmy Chan of Giordano.
[End Caption]
Reasonable prices and quality service have also helped Giordano International,
a clothing merchant similar to The Gap, become one of the fastest-growing
retail companies in Asia. "Their service is amazing," says Winnie. "I recently
bought two pairs of khakis for a trip and needed them hemmed. They had them
ready in two hours. I don't know many low-priced clothing stores willing to go
that far to make a sale."
Giordano is also an excellent example of a company that used the Asian downturn
in 1998 to strengthen its already dominant market position. "The crisis wiped
out many copy-cat competitors," explains Winnie, "while falling real estate
prices and rents allowed them to upgrade their locations."
A very different kind of company was on Winnie's agenda a few days later -
Hutchison Port Holdings, a division of Hutchison Whampoa, one of Asia's largest
conglomerates. Hutchison is far too large to be included in SMALLCAP's
portfolio, but a new subsidiary Winnie is investigating, called Ports and
Portals, is expected to be listed soon on the Hong Kong stock exchange.
"Shipping is all about logistics," explains Winnie. "Ports and Portals is
planning to use the Internet to allow shipping companies to track shipments
through Hutchison ports around the world. They will also be able to enhance
efficiency by coordinating with other shippers to reduce the amount of unused
cargo space. Today, many ships return half-empty from their destinations."
Even small improvements can make a big difference. Ten ships, some carrying as
many as 6,000 containers, are off-loaded by Hutchison in Hong Kong every day.
"Multiply that volume for every major port in the world and you begin to see
the potential," adds Winnie.
[two photographs of Winnie Kwan]
[Begin Caption]
Winnie visits Hutchison Port Holdings to learn about a new Internet-based
cargo-tracking system.
[End Caption]
ATLANTA
[illustrated map of the state of Georgia]
Most people think of California's Silicon Valley and Route 128 in Massachusetts
as the country's primary technology centers, yet today technology bright spots
are popping up all over. "I come to Atlanta a lot," says Eileen Silva, one of
the team's technology specialists. "With Georgia Tech nearby, it's easy to get
skilled workers inexpensively."
One intriguing company she's found is Radiant Systems, which creates the
software to run retail point-of-sale systems. "Two examples most people would
recognize," explains Eileen, "are the customized cash registers at Burger King
and the phone-in ticket machines at movie theaters."
The company's biggest customers are convenience stores and gas stations. "Their
systems not only track inventory and automatically order replacements, but they
also allow employees to track work schedules from home. They're now working on
an Internet-based product with Microsoft to serve the small-business market."
On a recent trip to Atlanta, Eileen viewed a next-generation gas pump - with a
television screen to watch news or check e-mail - with company management.
"From an analyst's viewpoint, following small companies has some distinct
advantages. You usually have direct access to management. Also, there aren't
hoards of other analysts to compete with, so you stand a good chance of
building a strong relationship."
[photograph of Eileen Silva and Erez Goren]
[Begin Caption]
Technology specialist Eileen Silva discusses Radiant Systems' latest product
with CEO Erez Goren.
[End Caption]
SALT LAKE CITY
[illustrated map of the state of Utah]
[photograph of Grant Cambridge]
[Begin Caption]
Airline analyst Grant Cambridge meets with SkyWest CFO Brad Rich at the Salt
Lake airport.
[End Caption]
The airline industry is one business where small companies generally have a
tough time surviving, let alone thriving. Southwest Airlines, a former fund
holding, did it by serving overlooked markets with a no-frills approach.
SkyWest, a current holding, does it by partnering with the large carriers with
which it might otherwise have to compete.
SkyWest flies small regional jets to rural markets, feeding passengers to
larger airlines' hubs. Yet, explains Grant Cambridge, who covers airlines,
insurance and software for the Small Company Research Team, "You probably won't
even know you've flown them. Your ticket would say United or Delta Connection,
and so would the gate and plane."
This unusual arrangement has resulted in strong, steady growth for SkyWest.
Because the larger airlines place so much value on maintaining regular flight
schedules to these smaller markets, they, rather than SkyWest, assume the risks
of rising fuel prices and falling demand. And because SkyWest serves both
United and Delta, it benefits from both companies' growth without either
airline getting the upper hand in contract negotiations.
"It's a fabulous business," says Grant. "It's just planes and pilots.
Everything else is provided by the partners. They can continue to grow for
years just by feeding Denver and Salt Lake" - the main Western hubs for United
and Delta.
[begin sidebar]
OTHER MEMBERS OF THE SMALL COMPANY RESEARCH TEAM
[photograph of Brady Enright]
Brady Enright
Location: San Francisco
Years with Capital: 3
Areas of coverage: Education, distribution technology service
[photograph of Kristian Stromsoe]
Kristian Stromsoe
Location: London
Years with Capital: 1
Areas of coverage: European small caps, emerging communications technologies
[photograph of Giles Eyre]
Giles Eyre
Location: Tokyo
Years with Capital: 1
Area of coverage: Japanese small caps
[photograph of Greg Wendt]
Greg Wendt
Location: San Francisco
Years with Capital: 13
Area of coverage: U.S. consumer small caps
[photograph of Blair Frank]
Blair Frank
Location: Los Angeles
Years with Capital: 6
Area of coverage: U.S. technology
[photograph of Tara Hoddy]
Tara Hoddy
Research associate
Location: San Francisco
Years with Capital: 4
THE TEAM'S FIRST RETIREMENT
[photograph of Edus Warren]
In 1993, Edus Warren - then a portfolio manager for Capital's institutional
business -decided to retire after more than 40 years in the investment
business. But then he heard about the formation of Capital's Small Company
Research Team. "The greatest stock of my career was McDonald's," says Edus,
"which I ran across in the late 1950s. I just couldn't pass up the opportunity
to find more small companies like that." This September, Edus finally hung up
his hat for good. "Small-company research," says Edus, "has always stimulated
me intellectually. Because the companies are newer and the managements less
seasoned, you have to analyze the firm to a depth that isn't required with
larger companies. I find that tremendously satisfying." In his retirement, Edus
plans to stay busy. He has started a private foundation to support reading
programs in rural Georgia, and he'll help his wife in her private investment
business. Says Edus, "If you've been in the investment business as long as I
have, it's in your blood."
[End Sidebar]
[zoomed in photograph of a globe]
WHAT MAKES THE AMERICAN FUNDS DIFFERENT?
[Begin Sidebar]
As a shareholder in SMALLCAP World Fund, you are also a member of The American
Funds Group(r), the nation's third-largest mutual fund family.
You won't find us advertised, yet thousands of financial advisers recommend the
American Funds for their clients' serious money - money set aside for
education, a home, retirement and other important dreams.
[photograph of a several country flags]
[End Sidebar]
What the 29 funds in our group have in common is a commitment to your best
interests and the proven approach of our investment adviser, Capital Research
and Management Company. In business since 1931, Capital's calling cards
include:
A LONG-TERM, VALUE-ORIENTED APPROACH:
Rather than follow short-term fads, we rely on our own intensive research to
find well-managed companies with reasonably priced securities and solid,
long-term potential. Despite our size, we offer relatively few funds compared
with many large fund families, allowing us to maintain a careful focus on our
objectives and enabling you to benefit from economies of scale.
AN UNPARALLELED GLOBAL RESEARCH EFFORT:
We opened our first overseas office in 1962, well before most mutual funds
began investing internationally. Today, the American Funds draw on one of the
industry's most globally integrated research networks. Capital Research spends
substantial resources getting to know companies and industries around the
world.
A MULTIPLE PORTFOLIO COUNSELOR SYSTEM:
More than 40 years ago, we developed a unique strategy for managing investments
that blends teamwork with individual accountability. Every American Fund is
divided among a number of portfolio counselors, each of whom manages his or her
portion independently, within each fund's objectives; in most cases, research
analysts manage a portion as well. Over time, this method has contributed to
consistency of results and continuity of management.
EXPERIENCED INVESTMENT PROFESSIONALS:
More than 75% of the portfolio counselors who serve the American Funds were in
the investment business before the sharp stock market decline in October 1987.
Long tenure and experience through a variety of market conditions mean we
aren't "practicing" with your money.
A COMMITMENT TO LOW OPERATING EXPENSES:
You can't control market returns, but you can control what you invest in and
how much you pay to own it. American Funds provide exceptional value for
shareholders, with operating expenses that are among the lowest in the mutual
fund industry. Our portfolio turnover rates are low as well, keeping
transaction costs and tax consequences contained.
A PORTFOLIO FOR EVERY INVESTOR
[photograph of several country flags]
Most financial advisers suggest that investors balance their portfolios by
investing across several types of investments. Which mix is right for you? That
depends on a number of things - including your risk tolerance, investment time
horizon and financial goals. The American Funds Group offers 29 funds with an
array of investment objectives to help you and your financial adviser build a
portfolio specifically tailored to your needs.
GROWTH FUNDS
Emphasis on long-term growth through stocks
AMCAP Fund(r)
EuroPacific Growth Fund(r)
The Growth Fund of America(r)
The New Economy Fund(r)
New Perspective Fund(r)
New World Fund(sm)
SMALLCAP World Fund(r)
GROWTH-AND-INCOME FUNDS
Emphasis on long-term growth and dividends through stocks
American Mutual Fund(r)
Capital World Growth and Income Fund(sm)
Fundamental Investors(sm)
The Investment Company of America(r)
Washington Mutual Investors Fund(sm)
EQUITY-INCOME FUNDS
Emphasis on above-average income and growth through stocks and/or bonds
Capital Income Builder(r)
The Income Fund of America(r)
BALANCED FUND
Emphasis on long-term growth and current income through stocks and bonds
American Balanced Fund(r)
INCOME FUNDS
Emphasis on current income through bonds
American High-Income Trust(sm)
The Bond Fund of America(sm)
Capital World Bond Fund(r)
Intermediate Bond Fund of America(r)
U.S. Government Securities Fund(sm)
TAX-EXEMPT INCOME FUNDS
Emphasis on tax-free current income through municipal bonds
American High-Income Municipal Bond Fund(r)
Limited Term Tax-Exempt Bond Fund of America(sm)
The Tax-Exempt Bond Fund of America(r)
State-specific tax-exempt funds:
The Tax-Exempt Fund of California(r)
The Tax-Exempt Fund of Maryland(r)
The Tax-Exempt Fund of Virginia(r)
MONEY MARKET FUNDS
Seek stable monthly income through money market instruments
The Cash Management Trust of America(r)
The Tax-Exempt Money Fund of America(sm)
The U.S. Treasury Money Fund of America(sm)
We also offer a full line of retirement plans and variable annuities.
For more complete information about any of the funds, including charges and
expenses, please obtain a prospectus from your financial adviser, download one
from our Web site at www.americanfunds.com, or phone the funds' transfer agent,
American Funds Service Company, at 800/421-0180. Please read the prospectus
carefully before you invest or send money. For more information, ask your
financial adviser for a copy of our brochure A Portfolio for Every Investor.
Smallcap World Fund
INVESTMENT PORTFOLIO SEPTEMBER 30, 2000
[begin pie chart]
<TABLE>
<S> <C>
Industry Diversification Percent of Net Assets
Media 9.19%
Software 7.22
Biotechnology 6.49
Electronic Equipment & Instruments 5.41
Semiconductor Equipment & Products 5.19
All Other Industries 58.11
Cash & Equivalents 8.39
</TABLE>
[end pie chart]
<TABLE>
<S> <C> <C> <C>
LARGEST EQUITY HOLDINGS Percent of Net Assets Percentage Price Change*
Baltimore Technologies 1.60% + 429.3%
Andrx 1.13 + 220.3
HNC Software 1.01 + 106.1
Arthur J. Gallagher 0.99 + 102.6#
Micrel 0.94 + 208.9
Newfield Exploration 0.91 + 41.7
Inhale Therapeutic Systems 0.88 + 271.2
OM Gruppen 0.82 + 280.4
CoSine Communications 0.8 + 1,088.9
UnitedGlobalCom 0.69 - 16.2
* For the months ended September 30, 2000.
# Since March 20, 2000, date of first purchase.
</TABLE>
<TABLE>
Shares or Market Percent
Principal Value of Net
Equity Securities (common and preferred stocks Amount (000) Assets
and convertible debentures)
<S> <C> <C> <C>
MEDIA - 9.19%
UnitedGlobalCom, Inc., Class A (USA) (1) 3,250,000 $97,500 .69%
Westwood One, Inc. (USA) (1) 3,356,800 71,961 .51
SMG PLC (formerly Scottish Media Group PLC) 14,481,600 60,335 .43
(United Kingdom) (1)
SBS Broadcasting SA (Luxembourg) (1,2) 1,457,000 58,007 .41
United Television, Inc. (USA) 350,000 51,450 .36
Fox Kids Europe NV (Netherlands) (1) 2,988,000 50,130 .35
Corporacion Interamericana de Entretenimiento, 8,153,679 39,499 .28
SA de CV, Class B (Mexico) (1)
Class Editori SpA, Class A (Italy) 2,082,000 33,396 .24
Nasionale Pers Beperk (South Africa) 4,000,000 32,698 .23
Ziff-Davis Inc. (USA) 4,000,000 32,500 .23
Highlight Communications AG, co-ownership 1,630,839 28,801 .20
shares (Switzerland) (1)
NRJ (France) (1) 624,402 24,590 .17
AVEX Inc. (Japan) 238,100 24,478 .17
Zenrin Co., Ltd. (Japan) 990,000 23,932 .17
MIH Ltd., Class A (South Africa) (1) 718,000 21,495 .15
Alliance Atlantis Communications Inc., 1,216,450 20,937 .15
nonvoting, Class B (Canada) (1)
HIT Entertainment PLC (United Kingdom) (3) 2,567,100 16,384 .15
HIT Entertainment PLC 700,000 4,468
Antenna TV SA (ADR) (Greece) (1) 900,000 19,800 .14
Key3Media Group, Inc. (USA) (1) 1,750,000 19,141 .14
Senator Entertainment AG (formerly 990,000 18,358 .13
Senator Film AG) (Germany) (1)
Photobition Group PLC (United Kingdom) (2) 3,700,000 13,051 .13
Photobition Group PLC (2,3) 1,500,000 5,291
Chrysalis Group PLC (United Kingdom) 3,465,500 17,408 .12
Groupe AB SA (ADR) (France) 1,008,900 16,647 .12
Kinowelt Medien AG (Germany) (1) 474,000 16,281 .11
APN News & Media Ltd. (Australia) 5,841,185 15,559 .11
CanWest Global Communications Corp. (Canada) 1,154,946 15,120 .11
CanWest Global Communications Corp., 14,321 190
nonvoting, Class A
Constantin Film AG (Germany) (1) 425,000 15,199 .11
Sportsworld Media Group PLC (United Kingdom) (1) 1,771,325 15,047 .11
Crown Media Holdings, Inc., Class A (USA) (1) 1,030,000 14,613 .10
Village Roadshow Ltd. (Australia) 11,701,596 9,776 .10
Village Roadshow Ltd., Class A, 5.50% preferred 6,940,468 4,556
Phoenix Satellite Television Holdings 55,250,000 13,961 .10
Ltd. (Hong Kong) (1)
MIH Holdings Ltd. (South Africa) (1) 2,627,700 13,507 .10
Scoot.com PLC (United Kingdom) (1) 7,000,000 12,669 .09
Information Holdings Inc. (USA) (1) 350,000 12,403 .09
Agora SA (GDR) (Poland) (1) 625,000 12,187 .09
BKN International AG (Germany) (1) 325,000 11,766 .09
IM Internationalmedia AG (Germany) (1) 300,000 11,391 .08
Cumulus Media Inc., Class A (USA) (1) 1,840,000 11,270 .08
SR Teleperformance SA (France) 310,736 11,126 .08
Rural Press Ltd. (Australia) 3,726,466 11,119 .08
Helkon Media AG (Germany) (1) 385,000 10,777 .08
Zee Telefilms Ltd. (India) 1,100,000 10,774 .08
Impresa SGPS, SA (Spain) (1) 1,100,000 10,461 .07
Corus Entertainment Inc., nonvoting, 350,000 10,001 .07
Class B (Canada) (1)
VCL Film + Medien AG (Germany) (1) 600,000 9,801 .07
LifeMinders, Inc. (USA) (1) 420,000 9,634 .07
ITE Group PLC (United Kingdom) 9,608,800 9,476 .07
Sanctuary Group PLC (United Kingdom) 8,609,854 9,286 .07
TV-Loonland AG (Germany) (1) 100,000 9,095 .06
P4 Radio Hele Norge ASA (Norway) (2) 1,648,000 9,081 .06
Modern Times Group MTG AB, Class B (ADR) 69,200 8,996 .06
(Sweden) (1)
VIVA Media AG (Germany) (1) 550,000 8,936 .06
Ten Network Holdings Ltd. (Australia) 6,500,000 8,925 .06
MDC Communications Corp., Class A (Canada) (1) 970,933 8,775 .06
Roularta Media Group NV (Belguim) 150,000 8,609 .06
Nelvana Ltd. (Canada) (1) 300,000 8,550 .06
NTV Broadcasting Co. (GDR) (Russia) (1,3,4) 812,520 8,000 .06
RTV Family Entertainment AG (Germany) (1) 460,000 7,636 .05
Future Network PLC (United Kingdom) (1) 750,000 6,371 .05
Primedia Ltd., units (South Africa) 7,718,508 6,042 .04
Pentamedia Graphics Ltd. (India) 650,000 6,004 .04
Media General, Inc., Class A (USA) 139,500 5,998 .04
NDS Group PLC, Class A (ADR) (United Kingdom) (1) 76,200 5,867 .04
InternetStudios.com, Inc. (USA) (1,2,3,4) 950,000 5,652 .04
Envoy Communications Group Inc. (Canada) (1,2,3) 996,000 5,394 .04
Mondo TV SpA (Italy) (1) 57,000 5,290 .04
Lions Gate Entertainment Corp. (Canada) (1,2) 998,300 2,587 .03
Lions Gate Entertainment Corp. (1,2,3) 885,834 2,296
Sky Network Television Ltd. (ADR) 351,000 4,875 .03
(New Zealand) (1,4)
SuperSport International Holdings Ltd. 6,219,800 4,869 .03
(South Africa)
Radio One, Inc., nonvoting, Class D (USA) (1) 400,000 2,825 .03
Radio One, Inc., Class A (1) 200,000 1,663
Gaumont SA (France) 81,974 3,981 .03
Alma Media Oyj (Finland) 107,400 3,300 .02
CINAR Corp. (formerly CINAR Films Inc.), 1,042,700 3,128 .02
Class B (Canada) (1)
TVA Group Inc., Class B (Canada) 243,600 3,076 .02
Kinepolis Group NV (Belgium) 89,485 2,833 .02
Music Choice (USA) (1,4) 1,096,296 2,624 .02
ARBOmedia.net AG (Germany) (1) 91,000 2,491 .02
United Broadcasting Corp. (Thailand) (1) 5,800,000 2,273 .02
RG Capital Radio Ltd. (Australia) (1,4) 2,000,000 2,170 .02
digital advertising AG (Germany) (1) 180,000 2,082 .01
THT Teleset (formerly TNT-Teleset) 287,324 2,000 .01
(GDR) (Russia) (1,3,4)
Modalis Research Technologies, Inc. (USA) (1,3,4) 966,793 1,875 .01
Television Eighteen Ltd. (India) (1) 170,000 1,746 .01
StoryFirst Communications Inc., convertible 4,022 1,709 .01
preferred, Class B (Russia) (1,3,4)
GTR Group Inc. (Canada) (1) 1,140,100 1,182 .01
DAS WERK AG (Germany) (1) 45,000 1,081 .01
Southern Star Group Ltd. (Australia) 3,290,000 910 .01
SOFTWARE - 7.22%
Baltimore Technologies PLC (United Kingdom) (1,2) 21,261,300 216,739 1.60
Baltimore Technologies PLC (ADR) (1,2) 500,000 9,875
HNC Software Inc. (USA) (1,2) 1,746,000 142,845 1.01
Documentum, Inc. (USA) (1,2) 1,145,000 92,960 .65
InterTrust Technologies Corp. (USA) (1) 3,740,000 45,114 .32
Infogrames Entertainment (France) (1) 1,622,500 38,539 .31
Infogrames Entertainment, 2.00% convertible $7,872 4,674
debentures 2002
Infogrames Entertainment, warrants, expire 2001 (1) 25,500 783
Telelogic AB (Sweden) (1) 4,708,000 37,644 .26
Ubizen (Belgium) (1) 1,068,000 32,535 .23
RadiSys Corp. (USA) (1) 605,000 30,590 .21
Think Tools AG (Switzerland) (1) 63,413 29,379 .21
Numerical Technologies, Inc. (USA) (1) 720,100 20,748 .15
NetIQ Corp. (USA) (1) 300,000 19,706 .14
VA Linux Systems, Inc. (USA) (1,3) 390,000 18,037 .13
SuSE Linux AG (Germany) (1,2,3,4) 37,813 17,660 .12
Witness Systems, Inc. (USA) (1) 977,100 17,649 .12
Versata, Inc. (USA) (1) 587,800 15,577 .11
Radiant Systems, Inc. (USA) (1) 722,850 15,451 .11
PCA Corp. (Japan) (1,2) 507,000 14,557 .10
Parsytec AG (Germany) (1) 76,000 13,086 .09
MMC AS (Norway) (1,3,4) 4,150,000 11,892 .08
Broadbase Software, Inc. (USA) (1) 820,000 11,121 .08
ParaRede SGPS, SA (Portugal) (1) 2,400,000 10,893 .08
RADWARE Ltd. (Israel) (1) 360,000 10,800 .08
TTI Team Telecom International Ltd. (Israel) (1) 529,250 10,783 .07
Take-Two Interactive Software, Inc. (USA) (1,3,4) 900,000 10,176 .07
diCarta, Series C, convertible preferred 1,650,165 10,000 .07
(USA) (1,2,3,4)
Industrial & Financial Systems, IFS AB, 713,866 9,563 .07
Class B (Sweden) (1)
Ubi Soft Entertainment SA (France) (1) 200,000 9,448 .07
AIT Group PLC (United Kingdom) 350,000 8,480 .06
Smart Force PLC (ADR) (Ireland) (1) 175,000 8,291 .06
Ci Technologies Group Ltd. (Australia) 2,425,784 7,962 .06
Technology Nexus AB (Sweden) (1) 837,500 7,740 .06
patsystems PLC (United Kingdom) (1) 3,540,193 7,283 .05
Aspen Technology, Inc. (USA) (1) 150,000 6,769 .05
Infoteria Inc. (Japan) (1,2,3,4) 167 6,241 .04
EXE Technologies, Inc. (USA) (1) 409,000 6,135 .04
@Comm Corp., (formerly Xiox Corp.), Series B, 230,000 5,980 .04
convertible preferred (USA) (1,3)
Woodland Corp. (Japan) 345,000 5,592 .04
Sherwood International PLC, (United Kingdom) 375,000 4,238 .03
BVRP Software SA (France) (1) 88,737 4,082 .03
Tecnomatix Technologies Ltd. (Israel) (1) 317,500 3,988 .03
Sapiens International Corp. NV (Israel) (1) 1,015,000 3,933 .03
OpenTV Corp., Class A (USA - Incorporated 115,900 3,854 .03
in British Virgin Islands) (1)
London Bridge Software Holdings PLC 246,000 2,689 .02
(United Kingdom)
Norman ASA (Norway) (1) 120,000 1,283 .01
BIOTECHNOLOGY - 6.49%
Vertex Pharmaceuticals Inc. (USA) (1) 1,130,000 95,485 .67
OSI Pharmaceuticals, Inc. (USA) (1,3) 561,000 39,270 .55
OSI Pharmaceuticals, Inc. (1) 550,000 38,500
ImClone Systems Inc. (USA) (1) 650,000 76,091 .54
Protein Design Labs, Inc. (USA) (1) 560,000 67,480 .48
Aviron (USA) (1) 1,005,000 58,604 .41
IDEXX Laboratories, Inc. (USA) (1,2) 2,181,300 58,350 .41
COR Therapeutics, Inc. (USA) (1) 743,000 46,298 .33
Myriad Genetics, Inc. (USA) (1) 400,000 34,550 .24
NeoRx Corp. (USA) (1,2,3) 700,000 17,150 .24
NeoRx Corp. (1,2,3,4) 750,000 16,537
Corixa Corp. (USA) (1) 600,000 30,150 .21
XOMA Ltd. (USA - Incorporated in Bermuda) (1,3) 2,000,000 28,875 .20
Digene Corp. (USA) (1) 800,000 28,800 .20
ILEX Oncology, Inc. (USA) (1) 885,000 26,661 .19
Matrix Pharmaceutical, Inc. (USA) (1,2,3) 1,500,000 23,344 .17
NexMed, Inc., units (USA) (1,3,4) 550,000 21,870 .15
Neurocrine Biosciences, Inc. (USA) (1) 450,000 20,250 .14
Exelixis, Inc. (USA) (1) 625,000 19,609 .14
Neose Technologies, Inc. (USA) (1) 400,000 19,350 .14
ViroPharma Inc. (USA) (1) 740,000 19,148 .14
Amylin Pharmaceuticals, Inc. (USA) (1,3) 1,772,933 19,059 .14
Vical Inc. (USA) (1) 665,000 17,207 .12
AVANT Immunotherapeutics, Inc. (USA) (1) 1,300,000 14,056 .11
AVANT Immunotherapeutics, Inc. (1,3) 200,000 2,162
Invitrogen Corp. (USA) (1) 160,000 11,380 .08
Genencor International, Inc. (USA) (1) 300,000 8,887 .06
Applied Molecular Evolution, Inc. (USA) (1) 218,200 8,755 .06
Avigen, Inc. (USA) (1) 200,400 7,966 .06
Neurobiological Technologies, Inc. (USA) (1,3) 900,000 7,425 .05
Illumina, Inc. (USA) (1) 157,500 7,147 .05
Aurora Biosciences Corp. (USA) (1) 100,000 6,800 .05
Versicor Inc. (USA) (1) 447,000 6,705 .05
Compugen Ltd. (Israel) (1) 452,600 6,223 .04
Forbes Medi-Tech Inc. (Canada) (1) 1,000,000 4,220 .03
Control Delivery Systems Inc., convertible 55,824 3,000 .02
preferred, Series A, (USA) (1,3,4)
Genetronics Biomedical Ltd. (1,2) 1,650,000 2,522 .02
ELECTRONIC EQUIPMENT & INSTRUMENTS - 5.41%
Venture Manufacturing (Singapore) Ltd (Singapore) 6,976,000 67,393 .66
Venture Manufacturing (Singapore) Ltd (3) 2,710,000 26,181
Flextronics International Ltd. (USA - 940,000 77,198 .54
Incorporated in Singapore) (1)
Black Box Corp. (USA) (1,2) 1,218,000 56,789 .40
Orbotech Ltd. (Israel) (1) 1,012,500 55,371 .39
DSP Group, Inc. (USA) (1) 1,211,000 45,261 .32
Dainippon Screen Mfg. Co., Ltd. (Japan) (1) 5,752,000 41,980 .30
ERG Ltd. (Australia) 8,678,340 41,666 .29
Yamatake Corp. (Japan) 3,535,000 39,944 .28
Micronic Laser Systems AB (Sweden) (1,2) 735,710 22,308 .26
Micronic Laser Systems AB (1,2,3) 466,666 14,150
Trimble Navigation Ltd. (USA) (1,2) 1,461,500 32,701 .23
Kokusai Electric Co., Ltd. (Japan) 3,000,000 30,425 .21
Elron Electronic Industries Ltd. (Israel) 660,000 24,107 .17
Hana Microelectronics PCL (Thailand) (2) 8,600,000 22,261 .16
Perlos Oyj (Finland) 757,300 19,994 .14
Omni Industries Ltd. (Singapore) 12,600,000 19,925 .14
Yamaichi Electronics Co., Ltd. (Japan) (2) 791,000 19,268 .14
Tohoku Pioneer Corp. (Japan) 436,000 19,182 .14
Keithley Instruments, Inc. (USA) 225,000 15,750 .11
Imax Corp. (Canada) (1) 879,000 14,888 .10
Sanmina Corp. (USA) (1) 150,000 14,044 .10
QPL International Holdings Ltd. (Hong Kong - 17,034,600 11,799 .08
Incorporated in Bermuda) (1)
Orad Hi-Tec Systems Ltd. (Israel) (1) 300,000 11,788 .08
Pan Jit International, Inc. (Taiwan) (1) 1,726,699 5,789 .04
Robotic Technology Systems PLC (United Kingdom) (1) 500,000 5,023 .04
vi[z]rt (formerly RT-SET Real Time Synthesized 420,000 4,784 .03
Entertainment Technology Ltd.) (Israel) (1)
AudioDev AB, Series B, Sweden (1) 532,150 3,868 .03
aeco NV (Netherlands) (1) 310,000 2,929 .02
Varitronix International Ltd. (Honk Kong - 823,300 1,146 .01
Incorporated in Bermuda)
BlueStar Battery Systems International Corp. 667,000 35 .00
(Canada) (1)
SEMICONDUCTOR EQUIPMENT & PRODUCTS - 5.19%
Micrel, Inc. (USA) (1) 1,994,000 133,598 .94
MMC Networks, Inc. (USA) (1) 435,000 55,027 .39
Exar Corp. (USA) (1) 403,400 48,811 .34
S.O.I.TEC SA (France) (1) 176,100 48,048 .34
TranSwitch Corp. (USA) (1) 750,000 47,813 .34
Semtech Corp. (USA) (1) 900,000 38,813 .27
ASM Pacific Technology Ltd. (Hong Kong) 16,537,000 37,652 .27
Ando Electric Co., Ltd. (Japan) (1,2) 1,700,000 26,656 .19
Varian Semiconductor Equipment Associates, 699,900 26,203 .18
Inc. (USA) (1)
QuickLogic Corp. (USA) (1,2) 1,435,000 23,678 .17
Sunplus Technology Co., Ltd. (Taiwan) 4,927,500 22,735 .16
O2Micro International Ltd. (USA) (1) 1,250,000 21,504 .15
Dallas Semiconductor Corp. (USA) 625,600 20,567 .15
ELMOS Semiconductor AG (Germany) 520,000 19,285 .14
Malaysian Pacific Industries Bhd. (Malaysia) 2,277,200 15,131 .11
Melexis NV (Belguim) (1) 1,000,000 13,245 .09
Galileo Technology Ltd. (Israel) (1) 350,000 11,112 .08
BE Semiconductor Industries, NV (Netherlands) (1) 1,139,100 11,064 .08
GlobeSpan, Inc. (USA) (1) 85,000 10,370 .07
ASAT Holdings Ltd. (Hong Kong) (1) 1,430,000 9,384 .07
Power Integrations, Inc. (USA) (1) 662,300 9,231 .07
GSI Lumonics Inc. (Canada) (1) 535,000 8,799 .06
Fujitsu Devices Inc. (Japan) 365,000 8,198 .06
Metalink Ltd. (Israel) (1) 400,000 7,400 .05
Procomp Informatics Ltd. (Taiwan) (1) 1,546,960 7,360 .05
Lasertec Corp. (Japan) (2) 325,000 7,104 .05
Tioga Technologies Ltd. (Israel) (1) 747,800 6,216 .04
ChipPac, Inc., Class A (USA) (1) 516,900 6,138 .04
PixelFusion Ltd. (United Kingdom) (1,3,4) 2,300,000 5,097 .04
Anam Semiconductor, Inc. (South Korea) (1) 776,040 4,942 .03
Power X Ltd. (United Kingdom) (1,3,4) 3,413,316 4,892 .03
Vxtel, Inc. (USA) (1,3,4) 560,225 4,000 .03
Kopin Corp. (USA) (1) 200,000 3,600 .03
Etron Technology, Inc. (Taiwan) (1) 1,066,000 2,978 .02
Metron Technology NV (USA - Incorporated 367,500 2,940 .02
in Netherlands) (1)
MegaChips Corp. (Japan) 60,000 2,417 .02
ARC International PLC (United Kingdom) (1) 400,000 2,393 .02
INTERNET SOFTWARE & SERVICES - 4.42%
GoTo. com, Inc. (USA) (1) 2,600,000 42,900 .30
Hotel Reservations Network, Inc., Class A (USA) (1) 1,050,000 38,456 .27
Embarcadero Technologies, Inc. (USA) (1) 710,000 36,476 .26
Avocent Corp. (formerly Apex Inc.) (USA) (1) 655,000 36,107 .25
Integra SA (France) (1,2) 2,860,085 31,316 .22
Interwoven, Inc. (USA) (1) 260,000 29,396 .21
LookSmart, Ltd. (USA) (1) 2,400,000 26,850 .19
Ask Jeeves, Inc. (USA) (1) 1,000,000 19,188 .14
I-D Media AG (Germany) (1) 406,420 18,662 .13
Parthus Technologies PLC (Ireland) (1) 4,546,000 17,932 .13
BridgeSpan, Inc. (formerly Muse Prime 1,770,000 17,558 .12
Software), convertible preferred,
Series B (USA) (1,2,3,4)
StepStone ASA (Norway) (1) 6,480,000 16,069 .11
Centillium Communications, Inc. (USA) (1) 165,000 15,840 .11
Ziff-Davis Inc.-ZDNet (USA) (1) 990,000 13,922 .10
WEB.DE AG (Germany) (1) 686,300 12,847 .09
Tumbleweed Communications Corp. (USA) (1) 250,000 12,750 .09
FI System SA (France) (1) 435,570 11,750 .09
FI System SA, warrants, expire 2002 (1) 72,595 545
Digex, Inc., Class A (USA) (1) 260,000 12,188 .09
webMethods, Inc. (USA) (1) 105,400 12,134 .09
Orbiscom Ltd. (Ireland) (1,3,4) 1,301,958 12,000 .08
Commtouch Software Ltd. (Israel) (1) 630,000 11,931 .08
Infosources (France) (1) 940,000 11,330 .08
Critical Path, Inc. (USA) (1) 164,892 10,017 .08
Critical Path, Inc., tranche 2 (1,3,4) 10,365 535
Critical Path, Inc., tranche 1 (1,3,4) 10,364 535
GFT Technologies AG (Germany) (1) 168,000 10,384 .07
WatchGuard Technologies, Inc. (USA) (1) 170,000 10,200 .07
VIA NET.WORKS, Inc. (USA) (1) 1,044,300 9,425 .07
Adcore AB (formerly Information Highway AB) 1,336,850 8,885 .06
(Sweden) (1)
SA Jet Multimedia (France) 115,600 8,345 .06
Day Interactive Holding AG (Switzerland) (1) 30,000 8,263 .06
InterCept Group, Inc. (USA) (1) 350,000 8,159 .06
Scandinavia Online AB (Sweden) (1) 712,500 8,138 .06
MeetChina.com, Series C, convertible preferred 389,416 7,300 .05
(USA) (1,3,4)
Travelocity.com Inc. (USA) (1) 487,400 6,915 .05
RADVision Ltd. (Israel) (1) 220,000 6,201 .04
Cross Systems SA (France) (1) 206,500 6,190 .04
INTERNOLIX AG (Germany) (1) 252,500 5,908 .04
OnVista AG (Germany) (1) 230,000 5,260 .04
EventSource.com, Inc., Series B, convertible 514,933 5,000 .04
preferred (USA) (1,3,4)
Uproar Ltd. (Austria) (1) 1,148,640 4,970 .03
Pixelpark AG (Germany) (1) 50,000 4,084 .03
Commerx, Inc. Series B, convertible 321,802 4,000 .03
preferred (USA) (1,3,4)
freenet.de AG (Germany) (1) 60,000 3,788 .03
M-Web Holdings Ltd. (South Africa) (1) 7,252,896 3,005 .02
secunet Security Networks AG (Germany) (1) 55,000 2,962 .02
Internet Gold-Golden Lines Ltd. (Israel) (1) 535,000 2,876 .02
Internet Pictures Corp. (USA) (1) 500,000 2,719 .02
Cyber Agent, Ltd. (Japan) (1) 364 2,225 .02
Launch Media, Inc. (USA) (1) 300,000 2,044 .01
Satama Interactive Oyj (Finland) (1) 516,500 1,733 .01
WWL Internet AG (Germany) (1) 120,000 1,515 .01
China.com Corp., Class A (Hong Kong) (1) 103,200 1,374 .01
SkillSoft Corp. (USA) (1) 72,800 1,338 .01
Freedomland-ITN SpA (Italy) (1) 31,974 1,244 .01
ricardo.de AG (Germany) (1) 45,000 1,061 .01
Fantastic Corp., co-ownership shares 190,600 961 .01
(Switzerland) (1)
MultiEmedia.com Ltd. (Australia) (1) 7,016,086 704 .00
FortuneCity. com Inc. (USA) (1) 155,192 373 .00
PopNet Internet AG (Germany) (1) 22,300 358 .00
Cybear Group (USA) (1) 256,108 336 .00
OIL & GAS - 4.22%
Newfield Exploration Co. (USA) (1,2) 2,750,000 128,391 .91
Louis Dreyfus Natural Gas Corp. (USA) (1) 2,000,000 79,250 .56
Mitchell Energy & Development Corp., Class A (USA) 1,300,000 60,612 .43
Crestar Energy Inc. (Canada) (1) 2,800,000 46,518 .33
Pogo Producing Co. (USA) 1,225,000 31,084 .22
Cairn Energy PLC (United Kingdom) (1,2) 11,000,000 30,878 .22
Ivanhoe Energy Inc. (Canada) (1,2) 6,490,400 29,976 .21
Paramount Resources Ltd. (Canada) (2) 3,250,000 29,913 .21
Fletcher Challenge Energy (New Zealand) 6,137,440 21,748 .15
Chieftain International, Inc. (Canada) (1,2) 970,000 20,067 .14
International Energy Group Ltd. 4,640,000 15,784 .11
(United Kingdom) (2)
Tullow Oil PLC (Ireland) (1,3) 9,142,857 9,725 .10
Tullow Oil PLC (1) 3,941,276 4,192
Encal Energy Ltd. (Canada) (1) 2,000,000 12,360 .09
Cabre Exploration Ltd. (Canada) (1,2) 1,099,000 11,320 .08
Oil Search Ltd. (Australia) (1) 8,000,000 6,857 .08
Oil Search Ltd., 9.00% convertible preferred (1) 55,555 3,240
Oil Search Ltd. (1,3) 1,150,000 986
Gulf Indonesia Resources Ltd. (Indonesia) (1) 1,000,000 10,875 .08
Ramco Energy PLC (United Kingdom) (1) 1,297,000 9,102 .06
Novus Petroleum Ltd. (Australia) (1) 7,969,508 7,350 .05
Cross Timbers Oil Co. (USA) 345,000 6,620 .05
HS Resources, Inc. (USA) (1) 190,000 6,389 .04
Paladin Resources NL (Australia) (1,2) 11,270,998 4,746 .03
Western Oil Sands Inc., units (Canada) (1,3,4) 1,100,000 3,655 .03
Western Oil Sands Inc., units (1,3,4) 110,000 548
Berkley Petroleum Corp. (Canada) (1) 510,400 2,900 .02
Bharat Petroleum Corp. Ltd. (India) 351,806 1,253 .01
Aminex PLC (Ireland) (1,3) 3,150,000 1,210 .01
SPECIALTY RETAIL - 4.03%
Michaels Stores, Inc. (USA) (1,2) 1,894,600 75,784 .53
Claire's Stores, Inc. (USA) 2,600,000 46,800 .33
KOMERI Co., Ltd. (Japan) 1,625,000 45,603 .32
Williams-Sonoma, Inc. (USA) (1) 1,293,198 44,939 .32
Payless ShoeSource, Inc. (USA) (1) 800,000 44,800 .32
JJB Sports PLC (United Kingdom) 5,725,000 43,306 .30
Consolidated Stores Corp. (USA) (1) 2,500,000 33,750 .24
Esprit Holdings Ltd. (Hong Kong - 39,801,392 32,674 .23
Incorporated in Bermuda)
Cost Plus, Inc. (USA) (1,2) 1,059,100 31,905 .22
Homac Corp. (Japan) 1,379,900 28,628 .20
Giordano International Ltd. (Hong Kong) 47,876,000 27,789 .20
Rent-Way, Inc. (USA) (1) 711,900 21,624 .15
Sunglass Hut International, Inc. (USA) (1,2) 3,200,000 20,900 .15
Too, Inc. (USA) (1) 800,000 19,000 .13
Sharper Image Corp. (USA) (1,2) 775,000 13,659 .10
Toys "R" Us - Japan, Ltd. (Japan) (1) 78,500 12,360 .09
United Rentals, Inc. (USA) (1) 400,000 9,650 .07
Jo-Ann Stores, Inc., Class A (USA) (1,2) 525,000 3,806 .05
Jo-Ann Stores, Inc., Class B (1,2) 525,000 3,380
Whitehall Jewellers, Inc. (USA) (1) 765,000 6,072 .04
Athlon Groep NV (Netherlands) 220,875 2,662 .02
Chapters Inc. (Canada) (1) 324,200 2,219 .02
Homeplace of America Inc. (USA) (1,4) 22,536 362 .00
Homeplace of America Inc., Series A, 112,679 0
warrants, expire 2004 (1,4)
COMMERCIAL SERVICES & SUPPLIES - 3.96%
ISS-International Service System A/S (Denmark) (1) 1,116,950 69,408 .49
Claims Direct PLC (United Kingdom) (1,2) 12,048,625 48,062 .34
Falck A/S (Denmark) 295,000 42,948 .30
Mosaic Group Inc. (Canada) (1) 2,873,300 31,696 .22
Career Education Corp. (USA) (1) 660,800 29,406 .21
PSD Group PLC (United Kingdom) (2) 1,628,000 28,381 .20
ChoicePoint Inc. (USA) (1) 600,000 27,525 .19
MCSi, Inc. (formerly Miami Computer 777,300 26,137 .18
Supply Corp.) (USA) (1,2)
Stericycle, Inc. (USA) (1) 950,000 23,275 .16
Corporate Services Group PLC (United 7,528,427 8,251 .15
Kingdom) (1,3)
Corporate Services Group PLC, 7.50% $6,000,000 6,471
convertible debentures 2005
Corporate Services Group PLC (1) 5,800,000 6,357
Dogan Yayin Holding SA (Turkey) (1) 1,779,142,330 20,354 .14
ProBusiness Services, Inc. (USA) (1) 633,900 19,175 .14
Ionics, Inc. (USA) (1) 787,000 16,773 .12
Tetra Tech, Inc. (USA) (1) 550,000 15,709 .11
DIS Deutscher Industrie Service AG (Germany) 340,000 15,596 .11
Robert Walters PLC (United Kingdom) (1) 3,500,000 12,462 .09
Gunnebo AB (Sweden) (1) 960,000 10,866 .08
Administaff, Inc. (USA) (1) 141,700 10,727 .08
Valtech SA (France) (1) 670,000 10,631 .08
Iron Mountain Inc. (USA) (1) 200,000 7,400 .05
GrandVision SA (France) 321,704 7,190 .05
GTS Duratek, Inc. (USA) (1) 891,100 6,906 .05
Proffice AB, Class B (Sweden) (1) 180,000 6,710 .05
Kanamoto Co., Ltd. (Japan) 1,086,000 6,679 .05
Trafficmaster PLC (United Kingdom) (1) 595,833 6,039 .04
POOLiA AB, Class B (Sweden) (1) 122,550 5,981 .04
MITIE Group PLC (United Kingdom) 1,100,000 5,688 .04
SNT Group NV (Netherlands) (1) 155,000 5,064 .04
Art'e SpA (Italy) (1) 120,000 4,565 .03
Nippon Kanzai (Japan) 308,800 4,516 .03
Bertrandt AG (Germany) 435,000 3,538 .03
Pre-Paid Legal Services, Inc. (USA) (1) 100,000 3,231 .02
ALTEN SA (France) (1) 23,500 2,905 .02
Profit Recovery Group International, Inc. (USA) (1) 291,400 2,877 .02
Lorien PLC (United Kingdom) 819,663 1,078 .01
INSURANCE - 3.25%
Arthur J. Gallagher & Co. (USA) (2) 2,370,400 140,150 .99
Independent Insurance Group PLC 13,940,000 72,700 .51
(United Kingdom) (2)
Fidelity National Financial, Inc. (USA) 1,700,000 42,075 .30
HCC Insurance Holdings, Inc. (USA) 2,000,000 40,625 .29
W.R. Berkley Corp. (USA) 1,014,100 35,050 .25
Annuity and Life Re (Holdings), Ltd. 1,223,200 29,510 .21
(USA - Incorporated in Bermuda)
Hilb, Rogal and Hamilton Co. (USA) 500,000 20,844 .15
Topdanmark A/S (Denmark) (1) 1,050,000 18,642 .13
E.W. Blanch Holdings, Inc. (USA) (2) 860,000 17,845 .13
Horace Mann Educators Corp. (USA) 1,000,000 16,375 .11
Zenith National Insurance Corp. (USA) 520,000 11,375 .08
RenaissanceRe Holdings Ltd. (USA) 161,800 10,345 .07
Clark/Bardes Holdings, Inc. (USA) (1) 456,300 4,648 .03
HOTELS RESTAURANTS & LEISURE - 3.22%
Extended Stay Amercia, Inc. (USA) (1,2) 6,190,000 82,018 .58
Cheesecake Factory Inc. (USA) (1,2) 1,808,250 78,207 .55
J D Wetherspoon PLC (United Kingdom) 8,404,935 38,246 .27
Vail Resorts, Inc. (USA) (1,2) 1,761,300 35,666 .25
Bally Total Fitness Holding Corp. (USA) (1,2) 1,360,500 34,012 .24
Mandarin Oriental International Ltd. (Singapore) 43,000,000 27,950 .20
Ruby Tuesday, Inc. (USA) 1,983,600 22,315 .16
Boca Resorts, Inc., Class A (USA) (1) 1,295,000 14,164 .16
Boca Resorts, Inc., Class A, 1997 Series (1,3) 500,000 5,469
Boca Resorts, Inc., Class A, 1999 Series (1,3) 231,730 2,535
American Classic Voyages Co. (USA) (1,2) 1,340,000 19,597 .14
Consolidated Products, Inc. (USA) (1,2) 1,718,750 13,750 .10
Luminar PLC (United Kingdom) 1,300,000 12,628 .09
Elior (France) (1) 1,000,000 11,470 .08
Mandalay Resort Group (USA) (1) 418,500 10,724 .07
Fitness First PLC (United Kingdom) (1) 530,000 8,907 .06
Scandic Hotels AB (Sweden) 822,600 8,542 .06
Morton's Restaurant Group, Inc. (USA) (1,2) 415,000 8,404 .06
PizzaExpress PLC (United Kingdom) 840,000 8,017 .06
NH Hoteles, SA (Spain) (1) 450,000 5,265 .04
Four Seasons Hotels Inc. (Canada) 60,500 4,495 .03
I T International Theatres Ltd. (Israel) (1) 375,000 3,525 .02
PHARMACEUTICALS - 3.17%
Andrx Group (USA) (1) 1,720,000 160,605 1.13
United Therapeutics Corp. (USA) (1,3) 780,000 68,152 .48
Medicis Pharmaceutical Corp., Class A (USA) (1) 925,000 56,888 .40
Dura Pharmaceuticals, Inc. (USA) (1) 1,350,000 47,756 .34
Pharmacyclics, Inc. (USA) (1,2,3) 580,000 28,783 .33
Pharmacyclics, Inc. (1,2) 350,000 17,369
CIMA LABS INC. (USA) (1,2) 617,200 32,133 .23
InterMune Pharmaceuticals, Inc. (USA) (1) 301,600 16,362 .12
Generex Biotechnology Corp., units (Canada) (3,4) 1,079,000 11,869 .08
SuperGen Inc., warrants, expire 2002 (USA) (1,3,4) 336,600 3,348 .04
SuperGen Inc., warrants, expire 2002 (1,4) 231,800 2,384
Hollis-Eden Pharmaceuticals, Inc. (USA) (1,3) 261,006 2,349 .02
Scotia Holdings PLC (United Kingdom) (1) 1,301,049 461 .00
COMMUNICATIONS EQUIPMENT - 3.08%
CoSine Communications Inc., Series D (USA) (1,3,4) 1,925,820 80,253 .80
CoSine Communications Inc., Series E (1,3,4) 797,098 33,217
Datacraft Asia Ltd (Singapore) 9,358,851 77,678 .55
Gilat Satellite Networks Ltd. (Israel) (1) 420,000 32,287 .23
VTech Holdings Ltd. (Hong Kong) (2) 12,903,208 32,275 .23
Himachal Futuristic Communications Ltd. (India) 1,000,000 29,608 .21
Netgem SA (France) (1) 380,000 17,582 .12
Nice Systems Ltd. (ADR) (Israel) (1) 230,000 16,560 .12
Tollgrade Communications, Inc. (USA) (1) 100,000 13,881 .10
Teligent AB (Sweden) (1) 830,000 11,894 .08
ITG Group PLC (Ireland) (1,2) 1,408,455 11,757 .08
Toyo Communication Equipment Co., Ltd. (Japan) 922,000 10,290 .07
Allgon AB, Class B (Sweden) 700,000 9,995 .07
ComROAD AG (Germany) (1) 170,000 9,157 .06
MCK Communications, Inc. (USA) (1) 350,000 7,919 .05
Sunrise Telecom, Inc. (USA) (1) 240,500 6,929 .05
Proxim, Inc. (USA) (1) 150,000 6,675 .05
Locus Co., Ltd. (South Korea) (1) 236,104 6,014 .04
Microelectronics Technology, Inc. (Taiwan) (1) 1,741,800 5,144 .04
New Focus, Inc. (USA) (1) 64,400 5,092 .04
Garnet Systems Co., Ltd (South Korea) (1) 877,722 3,983 .03
HighWave Optical Technologies (France) (1) 16,300 2,576 .02
Dynarc AB (Sweden) (1) 266,400 1,521 .02
Dynarc AB (1,3) 183,600 1,049
Sewon Telecom Co., Ltd. (South Korea) (1) 390,000 1,840 .01
RTX Telecom A/S (Denmark) (1) 30,000 1,396 .01
WIRELESS TELECOMMUNICATION SERVICES - 2.06%
Tele Celular Sul Participacoes SA, preferred 1,364,900 40,947 .39
nominative (ADR) (Brazil) (2)
Tele Celular Sul Participacoes SA, ordinary 6,260,000,000 14,613
nominative (2)
Tele Centro Oeste Celular Participacoes SA, 5,150,000 54,719 .39
preferred nominative (ADR) (Brazil)
Telemig Celular Participacoes SA, preferred 681,700 36,087 .25
nominative (ADR) (Brazil)
Tele Nordeste Celular Participacoes SA, 678,600 31,894 .22
preferred nominative (ADR) (Brazil)
Celular CRT SA, preferred nominative, 84,000,000 29,186 .21
Class A (Brazil) (1)
AirGate PCS, Inc. (USA) (1) 528,400 23,712 .17
GLOBE TELECOM, Inc., Class A (Philippines) (1,4) 1,334,000 23,150 .16
Tele Norte Celular Participacoes SA, 270,400 10,816 .08
preferred nominative (ADR) (Brazil)
Vimpel-Communications (ADR) (Russia) (1) 481,800 9,305 .07
iTouch PLC (United Kingdom) (1) 8,400,000 7,818 .05
M-Cell Ltd. (South Africa) 1,484,000 5,963 .04
WebLink Wireless, Inc. (USA) (1) 500,000 3,844 .03
Keppel Telecommunications & Transportation 750,000 781 .00
Ltd. (Singapore) (1)
COMPUTERS & PERIPHERALS - 2.00%
Sotec Co. Ltd. (Japan) (1,3,4) 4,297 57,508 .41
Acer Display Technology (Taiwan) (1,3) 35,475,000 56,070 .40
Universal Scientific Industrial Co., Ltd. (Taiwan) (1) 27,040,600 28,407 .20
Alphameric PLC (United Kingdom) (2) 5,262,009 23,245 .16
NatSteel Electronics Ltd. (Singapore) 8,860,000 22,927 .16
Electronics for Imaging, Inc. (USA) (1) 850,000 21,462 .15
Optoma Corp. (Taiwan) (1,2) 9,750,000 14,010 .10
Imagination Technologies Group PLC 2,100,000 12,410 .09
(United Kingdom) (1)
SecureNet Ltd. (Australia) (1) 2,372,259 11,848 .08
Tandberg Television AS (Norway) (1) 1,604,000 11,402 .08
Primax Electronics Ltd. (Taiwan) (1) 14,563,214 11,253 .08
Guillemot Corp. (France) (1) 160,000 7,629 .05
Trigem Computer Inc. (South Korea) 269,660 3,289 .02
Yuxing Info Tech Holdings (Hong Kong) 10,800,000 2,217 .02
DIVERSIFIED FINANCIALS - 1.89%
OM Gruppen AB (Sweden) 2,686,800 115,507 .82
Metris Companies Inc. (USA) 735,000 29,032 .20
Nissin Co., Ltd. (Japan) (2) 575,000 22,900 .16
Atle AB, Class A (Sweden) 1,590,000 21,960 .16
Mycal Card Inc. (Japan) 826,700 17,611 .12
American Capital Strategies, Ltd. (USA) 550,000 13,028 .09
bmp AG (Germany) (1) 1,582,000 8,423 .06
Federal Agricultural Mortgage Corp., 450,000 7,931 .06
Class C (USA) (1)
AB Novestra (Sweden) (1,2,3) 1,495,000 7,917 .06
Beeson Gregory Group PLC (United Kingdom) (1) 1,705,600 7,358 .05
Johnnic Holdings Ltd. (formerly Johnnies 374,797 4,866 .03
Industrial Corp. Ltd.) (South Africa)
Medallion Financial Corp. (USA) 275,000 4,623 .03
Grupo Financiero Galicia SA, Class B (ADR) 250,183 3,753 .03
(Argentina) (1)
Industrial Finance Corp. of Thailand 14,021,000 1,998 .01
(Thailand) (1)
Challenger International Ltd. (Australia) (1) 500,000 1,058 .01
Challenger International Ltd. (1) 50,000 98
BEVERAGES - 1.71%
Beringer Wine Estates Holdings, Inc., 708,000 39,338 .28
Class B (USA) (1)
BRL Hardy Ltd. (Australia) (2) 8,473,497 34,936 .25
Triarc Companies, Inc. (USA) (1) 950,000 23,394 .16
Robert Mondavi Corp., Class A (USA) (1) 500,000 20,437 .14
Montana Group Ltd. (New Zealand) (2) 13,950,000 17,898 .13
Coca-Cola West Japan Co. Ltd. (Japan) 536,200 17,878 .13
Chukyo Coca-Cola Bottling Co., Ltd. (Japan) 2,025,000 17,442 .12
Kinki Coca-Cola Bottling Co., Ltd. (Japan) 1,650,000 17,422 .12
Mikuni Coca-Cola Bottling Co., Ltd. (Japan) 1,500,000 16,671 .12
Hokkaido Coca-Cola Bottling Co., Ltd. (Japan) 1,400,000 11,411 .08
Quilmes Industrial SA, nonvoting preferred 1,000,000 10,500 .07
(ADR) (Argentina - Incorporated in Luxembourg)
Mikasa Coca-Cola Bottling Co., Ltd. (Japan) 815,000 5,963 .04
AL-Ahram Beverages Co. (GDR) (Egypt) (1) 240,000 3,432 .02
Petaluma Ltd. (Australia) (2) 1,219,950 2,780 .02
Vitasoy International Holdings Ltd. (Hong Kong) 9,000,000 1,374 .01
Vina Concha y Toro SA (ADR) (Chile) 29,000 1,073 .01
Simeon Wines Ltd. (Australia) 703,320 878 .01
HEALTH CARE EQUIPMENT & SUPPLIES - 1.65%
Inhale Therapeutics Systems, Inc. (USA) (1,2,3) 2,000,000 112,750 .88
Inhale Therapeutic Systems, Inc. (1,2) 203,292 11,460
Caliper Technologies Corp. (USA) (1) 260,000 15,064 .18
Caliper Technologies Corp. (1,3,4) 200,000 10,429
Nobel Biocare AB (Sweden) 840,500 20,947 .15
Coloplast A/S, Class B (Denmark) (1) 340,000 14,085 .10
Aspect Medical Systems, Inc. (USA) (1,2) 1,117,000 13,823 .10
Anesta Corp. (USA) (1) 376,800 8,666 .06
TriPath Imaging, Inc. (USA) (1) 886,242 6,204 .04
JEOL Ltd. (Japan) 800,000 5,683 .04
Computer Motion, Inc. (USA) (1) 434,900 4,131 .03
OrthoLogic Corp. (USA) (1) 1,160,700 3,482 .02
Mentor Corp. (USA) 180,000 2,835 .02
PolyMedica Corp. (USA) (1) 42,300 1,814 .01
Vision-Sciences, Inc. (USA) (1) 984,500 1,354 .01
HemaSure Inc. (USA) (1,3) 882,000 1,268 .01
HEALTH CARE PROVIDERS & SERVICES - 1.55%
AmeriSource Health Corp., Class A (USA) (1) 1,050,000 49,350 .35
Triad Hospitals, Inc. (USA) (1) 1,500,000 44,063 .31
Trigon Healthcare, Inc. (USA) (1) 525,700 27,632 .20
Rhon-Klinikum AG, nonvoting preferred (Germany) 561,300 27,507 .19
Service Corp. International (USA) 10,000,000 24,375 .17
LifePoint Hospitals, Inc. (USA) (1) 650,000 23,075 .16
Accredo Health, Inc. (USA) (1) 200,000 9,775 .07
ICON PLC (ADR) (Ireland) (1) 351,900 6,334 .04
Grupo Casa Saba, SA de CV (formerly 498,500 4,985 .04
Grupo Casa Autrey, SA de CV) (ADR) (Mexico) (1)
American Dental Partners, Inc. (USA) (1) 355,400 2,443 .02
Women First HealthCare, Inc. (USA) (1) 679,400 340 .00
CHEMICALS - 1.25%
Cambrex Corp. (USA) (2) 1,400,000 51,800 .37
OM Group, Inc. (USA) 1,050,000 45,806 .32
Ferro Corp. (USA) 1,000,000 19,062 .13
SPARTECH Corp. (USA) 1,000,000 15,563 .11
Arisawa Mfg. Co., Ltd. (Japan) 418,000 12,776 .09
Georgia Gulf Corp. (USA) 1,000,000 11,437 .08
Valspar Corp. (USA) 337,000 7,748 .06
RPM, Inc. (USA) 800,000 7,250 .05
Crompton Corp. (formerly CK Witco Corp.) (USA) 671,200 5,286 .04
IT CONSULTING & SERVICES - 1.24%
Enea Data AB (Sweden) (2) 10,021,000 57,753 .41
NEC Soft, Ltd. (Japan) 198,100 27,522 .19
eLoyalty Corp. (USA) (1) 1,543,200 19,676 .14
Aldata Solution Oyj (Finland) (1) 2,228,000 17,332 .12
SAVVIS Communications Corp. (USA) (1) 1,458,800 13,129 .09
MKC-STAT Corp. (Japan) (1) 560,000 11,203 .08
Scient Corp. (USA) (1,3) 467,322 9,785 .07
Plaut AG (Germany) (1) 510,000 9,687 .07
Brime Technologies, units (France) (1,4) 70,000 3,597 .02
Mogul.com Group AB (formerly Optosof AB) 403,000 2,427 .02
(Sweden) (1)
Razorfish, Inc., Class A (USA) (1) 230,000 2,376 .02
Kipling Holding AB (Sweden) (1) 78,000 826 .01
REAL ESTATE - 1.18%
Great Eagle Holdings Ltd. (Hong Kong) 24,386,901 37,850 .27
Corporacion Financiera Alba, SA (Spain) 1,070,694 27,086 .19
Newhall Land and Farming Co. (USA) 1,000,000 23,520 .16
Cadiz Inc. (USA) (1,2) 2,232,000 22,320 .16
Castellum AB (Sweden) 1,514,286 15,647 .11
Unibail (France) 94,000 13,845 .10
IRSA Inversiones y Representaciones SA (Argentina) 3,345,000 7,698 .10
IRSA Inversiones y Representaciones SA (GDR) 265,500 6,107
Keppel Land Ltd. (Singapore) 5,700,000 8,194 .06
Sponda Oyj (Finland) 1,330,000 4,721 .03
GESCO Corp. Ltd. (India) (1) 295 - .00
MACHINERY - 1.03%
Tubos de Acero de Mexico, SA (ADR) (Mexico) 2,735,747 45,824 .32
JOT Automation Group Oyj (Finland) 6,162,600 36,459 .26
Yushin Precision Equipment Co., Ltd. (Japan) 493,100 35,851 .25
Senior PLC (United Kingdom) 9,100,000 7,327 .05
Miura Co., Ltd. (Japan) 500,000 6,451 .05
Roper Industries, Inc. (USA) 150,000 4,978 .03
LTG Technologies PLC (United Kingdom) (1) 3,500,000 4,395 .03
AptarGroup, Inc. (USA) 100,000 2,394 .02
Chen Hsong Holdings Ltd. (Hong Kong - 8,038,000 1,237 .01
Incorporated in Bermuda)
THK Co., Ltd. (Japan) 27,000 1,050 .01
ELECTRICAL EQUIPMENT - 0.89%
CTS Corp. (USA) 960,000 48,600 .34
Littelfuse, Inc. (USA) (1) 1,000,000 29,688 .21
Eneserve Corp. (Japan) (1) 364,000 15,002 .11
Kingboard Chemical Holdings Ltd. (Hong Kong) (2) 27,720,000 12,089 .09
American Superconductor Corp. (USA) (1) 209,900 10,318 .07
Capstone Turbine Corp. (USA) (1) 77,400 5,360 .04
Integrated Production and Test Engineering 121,000 2,970 .02
(Belguim) (1)
Unicap Electronics Industrial Corp. (Taiwan) (1) 2,665,670 2,026 .01
Wus Printed Circuit Co., Ltd. (Taiwan) (1) 374 - .00
ENERGY EQUIPMENT & SERVICES - 0.89%
Rowan Companies, Inc. (USA) (1) 825,200 23,931 .17
Newpark Resources, Inc. (USA) (1) 2,010,000 18,592 .13
Patterson Energy, Inc. (USA) (1) 520,000 17,875 .13
Enerflex Systems Ltd. (Canada) 625,000 13,083 .09
Global Industries, Ltd. (USA) (1) 1,000,000 12,500 .09
Cal Dive International, Inc. (USA) (1) 151,100 8,641 .06
UTI Energy Corp. (USA) (1) 165,000 7,363 .05
Horizon Offshore, Inc. (USA) (1) 350,000 6,169 .05
Maverick Tube Corp. (USA) (1) 225,000 6,061 .04
Ensign Resource Service Group Inc. (Canada) 170,000 5,937 .04
Lone Star Technologies, Inc. (USA) (1) 125,000 5,769 .04
FOOD & DRUG RETAILING - 0.69%
Sundrug Co., Ltd. (Japan) 550,000 35,403 .25
Performance Food Group Co. (USA) (1) 550,000 20,694 .15
Jean Coutu Group (PJC) Inc., Class A (Canada) 1,270,400 16,167 .11
Migros Turk TAS (Turkey) 122,712,075 14,593 .10
Tsuruha Co., Ltd. (Japan) 396,000 8,435 .06
Fyffes PLC (Ireland) 3,943,000 2,681 .02
DIVERSIFIED TELECOMMUNICATION SERVICES - 0.62%
VersaTel Telecom International NV (Netherlands) (1) 772,500 17,803 .12
Intermedia Communications Inc. (USA) (1) 437,700 12,912 .09
Focal Communications Corp. (USA) (1) 720,800 11,127 .08
Flashcom, Inc., convertible preferred, 1,638,432 10,764 .08
Series B (USA) (1,3,4)
Flashcom, Inc. warrants (1,3,4) 1 -
CESKE RADIOKOMUNIKACE, AS (GDR) 208,300 7,811 .06
(Czech Republic) (1)
Enitel ASA (Norway) (1) 279,400 6,312 .05
Enitel ASA, warrants, expire 2004 (1,4) 46,250 85
CoreExpress, Inc., Series C, convertible 445,128 5,500 .04
preferred (USA) (1,3,4)
Cogent Communications, Inc., Series B, 1,098,901 5,000 .03
convertible preferred (USA) (1,3,4)
Highpoint Telecommunications Inc. (Canada) (1) 1,322,000 4,393 .03
Global Light Telecommunications Inc. (Canada) (1) 600,000 3,090 .02
Uecomm Ltd. (Australia) (1) 2,700,000 2,344 .02
HOUSEHOLD DURABLES - 0.44%
DFS Furniture Co. PLC (United Kingdom) (2) 5,682,700 27,244 .19
Fisher & Paykel Industries Ltd. (New Zealand) (2) 7,318,050 21,759 .16
Palm Harbor Homes, Inc. (USA) (1) 648,906 8,922 .06
Plasmon PLC (United Kingdom) (1) 950,000 3,677 .03
AUTO COMPONENTS - 0.43%
Toyoda Machine Works, Ltd. (Japan) 2,310,000 18,827 .13
Midas, Inc. (USA) (2) 1,050,000 14,700 .11
Exedy Corp. (Japan) 1,395,900 10,343 .07
Koito Manufacturing Co., Ltd. (Japan) 1,670,000 7,996 .06
Tower Automotive, Inc. (USA) (1) 805,400 7,551 .05
Ituran Group (Israel) (1) 49,445 1,195 .01
BANKS - 0.38%
Imperial Bancorp (USA) (1) 839,808 16,061 .11
Yapi ve Kredi Bankasi AS (Turkey) 2,173,600,000 15,705 .11
Fulton Financial Corp. (USA) 790,510 15,662 .11
JCG Holdings Ltd. (Hong Kong - Incorporated 7,990,000 4,510 .03
in Bermuda)
City National Corp. (USA) 64,473 2,490 .02
METALS & MINING - 0.36%
Arch Coal, Inc. (USA) (2) 2,000,000 20,000 .14
Minmet PLC (Ireland) (1,2,3) 23,810,527 11,960 .10
Minmet PLC (1,2) 5,350,000 2,687
Gabriel Resources Ltd. (Canada) (1,2) 4,700,000 10,776 .08
Arcon International Resources PLC (Ireland) (1) 11,798,000 1,917 .01
Bema Gold Corp. (Canada) (1,3) 4,400,000 1,790 .01
Bema Gold Corp., warrants, expire 2001 (1,3,4) 2,200,000 -
Thistle Mining Inc. (Canada) (1,2) 6,264,308 1,499 .01
Avocet Mining PLC (United Kingdom) (1,2,3) 2,750,000 731 .01
Avocet Mining PLC (1,2) 1,100,000 293
FOOD PRODUCTS - 0.36%
Hain Celestial Group, Inc. (formerly 670,450 23,550 .17
Celestial Seasonings) (USA) (1)
IAWS Group PLC (Ireland) 3,400,000 22,967 .16
PT Indofood Sukses Makmur Tbk (Indonesia) (1) 27,321,500 2,660 .02
Grupo Industrial Maseca, SA de CV, 420,000 1,995 .01
Class B (ADR) (Mexico)
MARINE - 0.35%
Stolt-Nielsen SA, Class B (ADR) (Multinational) 1,040,000 20,020 .14
Odfjell ASA, Class B (Norway) 445,000 6,474 .07
Odfjell ASA, Class A 214,320 3,189
Great Eastern Shipping Co. Ltd. (India) (2) 12,962,250 7,215 .06
Great Eastern Shipping Co. Ltd. (GDR) (2) 292,950 784
MIF Ltd. (Greece) (1,2) 682,903 6,172 .04
Knightsbridge Tankers Ltd. (Bermuda) 150,000 3,281 .02
Shipping Corp. of India Ltd. (India) 5,391,600 1,926 .01
Mosvold Shipping Ltd (Norway) (1) 1,962,000 936 .01
INTERNET & CATALOG RETAIL - 0.34%
School Specialty, Inc. (USA) (1,2) 1,130,000 24,083 .17
Senshukai Co., Ltd. (Japan) 1,786,600 11,500 .08
RedEnvelope, Inc., Series E, convertible 2,525,124 5,000 .04
preferred (USA) (1,2,3,4)
Webvan Group, Inc. (USA) (1,3) 2,151,900 4,976 .03
Shop At Home, Inc. (USA) (1) 580,000 1,414 .01
Chapters Online Inc. (Canada) (1) 330,000 768 .01
Miadora, Inc., preferred, Series B (USA) (1,2,3,4) 602,410 57 .00
Miadora, Inc., preferred, Series C (1,2,3,4) 448,431 43
TRANSPORTATION INFRASTRUCTURE - 0.29%
Grupo Aeroportuario del Sureste, SA de CV, 1,270,000 19,288 .14
Class B (ADR) (Mexico) (1)
Zhejiang Expressway Co. Ltd., Class H (China) 63,900,000 10,820 .08
International Container Terminal Services, $5,905,000 5,521 .04
Inc., 1.75% convertible debentures 2004 (Philippines)
New World Infrastructure Ltd. (Hong Kong) (1) 5,000,000 4,746 .03
AIRLINES - 0.26%
SkyWest, Inc. (USA) 625,000 32,032 .23
BRIT AIR Group (France) (2) 81,650 4,614 .03
CONSTRUCTION & ENGINEERING - 0.26%
Kyowa Exeo Corp. (Japan) 3,150,000 36,118 .26
Other Industries - 1.71%
Mercury Computer Systems, Inc. (USA) (1) 913,100 25,395 .18
Intertape Polymer Group Inc. (Canada) (2) 1,500,000 20,344 .14
Polaroid Corp. (USA) 1,500,000 20,156 .14
Bajaj Auto Ltd. (India) 2,697,500 19,617 .14
Bajaj Auto Ltd. (GDR) 75,000 525
MEDION AG (Germany) 187,200 19,587 .14
United Energy Ltd. (Australia) 9,200,000 16,271 .12
York International Corp. (USA) 650,000 16,169 .11
MSC Industrial Direct Co., Inc., Class A (USA) (1) 1,000,000 15,250 .11
Dillard's, Inc., Class A (USA) 1,090,000 11,581 .08
Mahindra & Mahindra Ltd. (GDR) (India) 1,795,948 6,735 .07
Mahindra & Mahindra Ltd. 804,052 3,234
Sixt AG (Germany) 331,136 6,374 .07
Sixt AG, nonvoting preferred 294,768 3,566
REMEC, Inc. (USA) (1) 285,000 8,390 .06
Puerto Rican Cement Co., Inc. (USA) 250,000 7,844 .06
Nadro, SA de CV, B Share (Mexico) 13,262,773 7,724 .05
Australian Gas Light Co. (Australia) 1,300,000 7,215 .05
Apasco, SA de CV (Mexico) 1,322,620 7,002 .05
China Merchants Holdings (International) Co., 8,912,000 6,802 .05
Ltd. (Hong Kong)
C. H. Robinson Worldwide, Inc. (USA) 100,000 5,636 .04
EUROBIKE AG (Germany) (2) 364,000 3,455 .02
PT Indah Kiat Pulp & Paper Corp. Tbk 20,707,000 2,775 .02
(Indonesia) (1)
Dickson Concepts (International) Ltd. 2,198,459 1,466 .01
(Hong Kong - Incorporated in Bermuda)
Kafus Industries Ltd. (Canada) (1) 473,400 38 .00
Miscellaneous - 4.93%
Other equity securities in intial period 699,090 4.93
of acquisition
TOTAL EQUITY SECURITIES (cost: $9,646,917,000) 12,981,042 91.61
Principal Market Percent
Amount Value of Net
SHORT-TERM SECURITIES (000) (000) Assets
Corporate Short-Term Notes - 6.91%
Asset Securitization Corp. 6.49%-6.70% $76,000 $75,428 .53%
due 10/2-11/16/2000 (3)
BMW US Capital Corp. 6.47%-6.48% due 64,000 63,881 .45
10/3-10/12/2000
Abbey National North America 6.50%-6.53% 60,000 59,789 .42
due 10/11/2000-1/16/2001
AB Spintab 6.52%-6.54% due 10/16/2000-1/18/2001 55,000 54,409 .38
Halifax Group PLC 6.46%-6.49% due 10/17-11/17/2000 53,000 52,660 .37
FCE Bank PLC 6.50%-6.51% due 10/6/2000 50,000 49,946 .36
Societe Generale North America Inc. 50,000 49,823 .35
6.52%-6.53% due 10/16-10/23/2000
Alcatel SA 6.52%-6.53% due 10/20/2000 (3) 50,000 49,818 .35
Toyota Motor Credit Corp. 6.47%-6.48% 50,000 49,813 .35
due 10/13-10/26/2000 (3)
Verizon Network Funding Corp. 6.48%-6.49% 50,000 49,798 .35
due 10/17-11/17/2000
Barclays U.S. Funding Corp. 6.48% due 10/23/2000 50,000 49,793 .35
DaimlerChrysler NA Holdings 6.49%-6.50% 50,000 49,777 .35
due10/24-10/26/2000
TOTAL FINA SA 6.48% due10-25-2000 (3) 50,000 49,775 .35
American Honda Finance Corp. 6.48%-6.50% 50,000 49,714 .35
due 10/27-11/20/2000
KfW International Finance Inc. 6.46%-6.52% 50,000 49,640 .35
due 10/16/2000-1/05/2001
Glaxo Wellcome PLC 6.48% due 11/14/2000 (3) 50,000 49,594 .35
Associates First Capital Finance BV 6.48% 27,000 26,951 .19
-6.49% due 10/10/2000
Panasonic Finance Inc. 6.51% due 10/2/2000 (3) 25,000 24,991 .18
Reseau Ferre de France 6.48% due 10/3/2000 25,000 24,986 .18
ANZ (Delaware) Inc. 6.47% due 10/13/2000 25,000 24,941 .18
Bank of Montreal 6.47% due 10/20/2000 25,000 24,910 .17
Federal Agency Discount Notes - 2.27%
Fannie Mae 6.38%-6.44% due 10/5/2000-1/22/2001 120,000 118,781 .84
Freddie Mac 6.39%-6.415% due 10/17-12/14/2000 107,000 106,009 .75
Federal Home Loan Banks 6.37%-6.44% 96,300 95,884 .68
due 10/4-12/27/2000
Non-U.S. Currency - 0.02%
New Taiwanese Dollar NT$81,535 2,603 .02
TOTAL SHORT-TERM SECURITIES (cost: $1,303,761,000) 1,303,714 9.20
TOTAL INVESTMENT SECURITIES (cost:$10,950,678,000) 14,284,756 100.81
Excess of payables over cash and receivables (114,055) .81
NET ASSETS $14,170,701 100.00%
(1) Non-income-producing security.
(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 establisehd
by the Board of Directors.
ADR = American Depositary Receipts
GDR = Global Depositary Receipts
See Notes to Financial Statements
</TABLE>
EQUITY SECURITIES APPEARING IN THE PORTFOLIO SINCE MARCH 31, 2000
Accredo Health
Administaff
aeco
AirGate
Allgon
American Superconductor
Annuity and Life Re
Applied Molecular Evolution
ARBOmedia.net
ARC International
Arch Coal
Art'e
Arthur J. Gallagher
ASAT Holdings
Ask Jeeves
Aspect Medical Systems
AudioDev
Aurora Biosciences
Avigen
BE Semiconductor Industries
bmp
Brime Technologies
Broadbase Software
Cal Dive Interntional
Capstone Turbine
Career Education
Celular CRT
Centillium Communications
Chieftain International
China Merchants Holdings
ChipPAC
Claims Direct
Cogent Communications
Coloplast
Commtouch Software
Compugen
ComROAD
Consolidated Stores
Control Delivery Systems
CoreExpress
Corixa
Crestar Energy
Critical Path
Cross Timbers Oil
Crown Media Holdings
Cumulus Media
Cybear Group
diCarta
Dillard's
Dogan Yayin
Dura Pharmaceuticals
E.W. Blanch Holdings
Elior
Embarcadero Technolgies
Enerflex Systems
Eneserve
Ensign Resource Service Group
Envoy Communications Group
EventSource.com
Exar
EXE Technologies
Exelixis
Ferro
Forbes Medi-Tech
Freedomland-ITN
Galileo Technology
Genencor International
Generex Biotechnology
Georgia Gulf
Global Industries
GLOBE TELECOM
GoTo.com
Great Eagle Holdings
Groupe
Grupo Aeroportuario del Sureste
Guillemot
Gulf Indonesia Resources
Gunnebo
Hana Microelectronics
HighWave Optical Technologies
Hilb, Rogal and Hamilton
Horace Mann Educators
Horizon Offshore
HS Resources
IAWS Group
Illumina
IM Internationalmedia
Impresa
Integrated Production and Test Engineering
InterMune Pharmaceuticals
Internet Pictures
Interwoven
Invitrogen
iTouch
JEOL
Keithley Instruments
Keppel Land
Keppel Telecommunications & Transportation
Key3Media Group
Kyowa Exeo
LifeMinders
Lone Star Technologies
LookSmart
LTG Technologies
Matrix Pharmaceutical
Maverick Tube
MCK Communications
MeetChina.com
Microelectronics Technology
MKC-STAT
MMC
Modalis Research Technologies
Mondo TV
Music Choice Europe
NEC Soft
Nelvana
NeoRx
Netgem
NetIQ
Neurobiological Technologies
New Focus
New World Infrastructure
NexMed
Numerical Technologies
O2Micro International
Orbiscom
Pan Jit International
Parthus Technologies
patsystems
Patterson Energy
Payless ShoeSource
PCA
Phoenix Satellite Television Holdings
Plasmon
Pogo Producing
Polaroid
POOLia
Power X
Proffice
Proxim
QuickLogic
RADVision
RADWARE
RedEnvelope
RenaissanceRe Holdings
RG Capital Radio
Robert Walters
Robotic Technology Systems
RPM
RTX Telecom
SA Jet Multimedia
Sanctuary Group
SAVVIS Communications
Scandinavia Online
SNT Group
SPARTECH
Sportsworld Media Group
Sunrise Telecom
SuSE Linux
Take-Two Interacitve Software
Tele Norte Celular Participacoes
Tetra Tech
Think Tools
Thistle Mining
Tioga Technoglies
Topdanmark
Toys "R" Us - Japan
Triarc
Tumblewood Communications
TV-Loonland
Uecomm
United Energy
UTI Energy
VCL Film + Medien
Versicor
Vimpel-Communications
VIVA Media
Vxtel
W.R.Berkley
webMethods
Woodland
Yamaichi Electronics
Zenith National Insurance
Zenrin
Ziff-Davis - ZDNet
EQUITY SECURITIES ELIMINATED FROM THE PORTFOLIO SINCE MARCH 31, 2000
Accrue Software
Acer Laboratories
Advanced Systems Automation
Aeroflex
Aether Systems
AHL Services
Alamosa PCS Holdingd
Alaska Air Group
Alloy Online
American National Can Group
AmSurg
Antena 3 de Television
Anzoil
APCOA Parking
Applied Materials
Applied Micro Circuits
Applied Optical Technologies
Apropos Technology
Artnet.com
Ashanti Goldfields
Atlantic Coast Airlines Holdings
ATMI
Banco de Galicia y Buenos Aires
Banco Rio de la Plata
Benor Tankers
BERU
Biodata Information Technology
BioMarin Pharmaceutical
Bombay
Boyds Collection
BPP Holdings
Brau und Brunnen
BreezeCOM
Bright Horizons Family Solutions
Bush Boake Allen
CacheFlow
Casella Waste Systems
Catena
CDL Hotels International
Centrais Eletricas de Santa Catarina
Cia.de Eletricidade do Estado do Rio de Janeiro
Classic Communications
Communication Network Interface
Computer Engineering & Consulting
Conexant Systems
Connecta
Crayfish
CuraGen
Cyber Com Consulting Group Scandinavia
Cymer
Data Communication System
DII Group
Diligentia
Disco
DuPont Photomasks
e4L
eBenX
eCollege.com
edel music
Efficient Networks
Effnet Group
Eimo Oyj
Elbit
Elcor
Elec & Eltek International
Emisphere Technologies
ENDEMOL Entertainment Holding
Espirito Santo Centrais Eletricas
eXchange Holdings
Extreme Networks
Filmes Lusomundo
Finisar
4M Technologies Holding
Framtidsfabriken
Frontline
Fuji Electronics
Futuris
Geest
GigaMedia
Global Tele-Systems
GP Strategies
Great Plains Software
Guinness Anchor
Haverty Furniture
HearMe.com
hi/fn
Honda Tsushin Kogyo
Hornbach Holding
Hutchison Telecommunications
IBA Technologies
Icon Medialiab International
InaCom
Industrial Credit and Investment
Inet Technologies
Integral Systems
interWAVE Communications International
iVillage
IXLA
JIT Holdings
Kaiser Aluminum
KCI Konecranes
Kiekert
Komatsu Electronic Metals
KorAm Bank
Kroll-O'Gara
Lands' End
Li & Fung
LibertyOne
Lindsey Morden Group
Livin' on the Edge
Macromedia
Mandamus
MarketWatch.com
MedQuist
National Computer Systems
NCO Group
Nocom
Norsk Lotteridrift
Northrock Resources
O'Reilly Automotive
P-Com
Paltek
Paramount Publishing Group
Park-Ohio Holdings
PETsMART
Philippine Gold
Photronics
Picvue Electronics
Piercing Pagoda
PILKOR Electronics
Pillar Property
PlanetRx.com
PMC-Sierra
Provident Bankshares
Quantum Effect Devices
Redstone Telecom
Regis
RemarQ Communities
Remedy
RHI
Sausage Software
SciQuest.com
Seminis
Shaw Industries
SIPEX
Solution 6 Holdings
Source Information Management
Spanish Broadcasting System
Stanley Furniture
Stewart Enterprises
Sylvan Learning Systems
Synstar
Talentum Oyj
Teekay Shipping
Thermedics
Thermo Fibertek
Tower Semiconductor
Transkaryotic Therapies
Travel24.com
Triton
Ugland International Holdings
UroCor
Varetis
Veeco Instruments
Ventana Medical Systems
Waterfront Shipping
WestPoint Stevens
Wolford Group
Xpedior
Zuken
<TABLE>
SMALLCAP WORLD FUND
FINANCIAL STATEMENTS
<S> <C> <C>
STATEMENT OF ASSETS AND LIABILITIES
at September 30, 2000
Assets:
Investment securities at market
Unaffiliated issuers (cost: $9,022,933) $ 11,488,416
Affiliated issuers (cost: $1,927,745) 2,796,340 $14,284,756
Cash 8,900
Receivables for --
Sales of investments 68,052
Sales of fund's shares 18,582
Dividends and interest 7,737 94,371
14,388,027
Liabilities:
Payables for --
Purchases of investments 175,205
Repurchases of fund's shares 29,576
Management services 7,707
Other expenses 4,838 217,326
Net Assets at September 30, 2000 $14,170,701
Total authorized capital stock--800,000,000 shares
Class A shares, $0.01 par value
Net Assets $14,098,083
Shares outstanding 350,311,077
Net asset value per share $40.24
Class B shares, $0.01 par value
Net Assets $72,618
Shares outstanding 1,811,847
Net asset value per share $40.08
STATEMENT OF OPERATIONS
for the year ended September 30, 2000
Investment Income:
Income:
Dividends (includes $13,366 from affiliates) $ 73,823
Interest 70,530 $ 144,353
Expenses:
Management services fee 87,004
Distribution expenses - Class A 35,699
Distribution expenses - Class B 213
Transfer agent fee - Class A 13,477
Transfer agent fee - Class B 27
Reports to shareholders 640
Registration statement and prospectus 656
Postage, stationery and supplies 2,681
Directors' fees 166
Auditing and legal fees 101
Custodian fee 3,522
Taxes other than federal income tax 215
Other expenses 351 144,752
Net investment loss (399)
Realized Gain and Unrealized Appreciation on Investments:
Net realized gain (including $616,157 net gain from affiliates) 2,020,774
Net increase in unrealized appreciation on investments:
Beginning of year 2,008,296
End of year 3,334,098
Net unrealized appreciation on investments 1,325,802
Net realized gain and unrealized appreciation on investments 3,346,576
Net Increase in Net Assets Resulting from Operations $ 3,346,177
STATEMENT OF CHANGES IN NET ASSETS
Year Ended
September 30,
2000 1999
Operations:
Net investment (loss) income $ (399) $ 9,655
Net realized gain on investments 2,020,774 157,055
Net unrealized appreciation on investments 1,325,802 2,567,219
Net increase in net assets resulting from operations 3,346,177 2,733,929
Dividends and Distributions Paid to Shareholders:
Dividends from net investment income:
Class A (4,625) (28,122)
Class B - -
Distributions from net realized gain on investments:
Class A (186,549) (403,091)
Class B - -
Total dividends and distributions (191,174) (431,213)
Capital Share Transactions:
Proceeds from shares sold 3,963,616 1,309,044
Proceeds from shares issued in reinvestment of net
investment income dividends and distributions of
net realized gain on investments 183,491 415,013
Cost of shares repurchased (2,113,947) (2,145,795)
Net increase (decrease) in net assets resulting from 2,033,160 (421,738)
capital share transactions
Total Increase in Net Assets 5,188,163 1,880,978
Net Assets:
Beginning of year 8,982,538 7,101,560
End of year (including distributions in excess of net
investment income and undistributed net investment
income: $(2,999) and $2,359, repsectively) $ 14,170,701 $ 8,982,538
See Notes to Financial Statements
</TABLE>
NOTES TO FINANCIAL STATEMENTS
SMALLCAP World Fund, Inc.
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION - SMALLCAP World Fund, Inc. (the "fund") is registered under the
Investment Company Act of 1940 as an open-end, diversified management
investment company. The fund seeks long-term growth of capital through
investments in smaller companies in the U.S. and around the world.
The fund offers Class A and Class B shares. Class A shares are sold with an
initial sales charge of up to 5.75%. Class B shares are sold without an
initial sales charge but subject to a contingent deferred sales charge paid
upon redemption. This charge declines from 5% to zero over a period of six
years. Class B shares have higher distribution expenses and transfer agent fees
than Class A shares. Class B shares are automatically converted to Class A
shares eight years after the date of purchase. Holders of both classes of
shares have equal pro rata rights to assets and identical voting, dividend,
liquidation and other rights, except that each class bears different
distribution and transfer agent expenses, and each class shall have exclusive
rights to vote on matters affecting only their class.
SIGNIFICANT ACCOUNTING POLICIES - The financial statements have been prepared
in conformity with accounting principles generally accepted in the United
States which require management to make estimates and assumptions that affect
the reported amounts and disclosures in the financial statements. Actual
results could differ from those estimates. The following is a summary of the
significant accounting policies consistently followed by the fund in the
preparation of its financial statements:
SECURITY VALUATION - 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. Short-term securities
maturing within 60 days are valued at amortized cost, which approximates market
value. Forward currency contracts are valued at the mean of their
representative quoted bid and asked prices. 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.
NON-U.S. CURRENCY TRANSLATION - Assets and liabilities initially expressed in
terms of non-U.S. 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 non-U.S. currency exchange rates on investment securities and other
assets and liabilities are included with the net realized and unrealized gain
or loss on investment securities.
SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME - Security transactions are
accounted for as of the trade date. Realized gains and losses from securities
transactions are determined based on specific identified cost. In the event
securities are purchased on a delayed delivery or "when-issued" basis, the fund
will instruct the custodian to segregate liquid assets sufficient to meet its
payment obligations in these transactions. Dividend income is recognized on
the ex-dividend date, and interest income is recognized on an accrual basis.
Market discounts, premiums, and original issue discounts on fixed-income
securities are amortized daily over the expected life of the security.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS - Dividends and distributions paid
to shareholders are recorded on the ex-dividend date.
FORWARD CURRENCY CONTRACTS - 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 manage 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. Purchases and sales of forward currency exchange
contracts having the same settlement date and broker are offset and presented
net in the statement of assets and liabilities.
ALLOCATIONS - Income, expenses (other than class-specific expenses) and
realized and unrealized gains and losses are allocated daily between Class A
and Class B based on their relative net asset values. Distribution expenses,
transfer agent fees and any other class-specific expenses are accrued daily and
charged to the applicable share class.
2. NON-U.S. INVESTMENTS
INVESTMENT RISK - Investments in securities of non-U.S. issuers in certain
countries involve special investment risks. These risks may include, but are
not limited to, investment and repatriation restrictions, revaluation of
currencies, adverse political, social, and economic developments, government
involvement in the private sector, limited and less reliable investor
information, lack of liquidity, certain local tax law considerations, and
limited regulation of the securities markets.
TAXATION - Dividend and interest income is recorded net of non-U.S. taxes paid.
For the year ended September 30, 2000, such non-U.S. taxes were $6,587,000.
Net realized gain of the fund derived in certain countries is subject to
certain non-U.S. taxes. The fund provides for such non-U.S. taxes on
investment income, net realized gain and net unrealized gain.
CURRENCY GAINS AND LOSSES - Net realized currency losses on dividends,
interest, sales of non-U.S. bonds and notes, forward contracts, and other
receivables and payables, on a book basis, were $2,483,000 for the year ended
September 30, 2000.
3. FEDERAL INCOME TAXATION
The fund complies with the requirements of the Internal Revenue Code applicable
to regulated investment companies and intends to distribute all of its net
taxable income and net capital gains for the fiscal year. As a regulated
investment company, the fund is not subject to income taxes if such
distributions are made. Required distributions are determined on a tax basis
and may differ from net investment income and net realized gains for financial
reporting purposes. In addition, the fiscal year in which amounts are
distributed may differ from the year in which the net investment income and net
realized gains are recorded by the fund.
As of September 30, 2000, net unrealized appreciation on investments for book
and federal income tax purposes aggregated $3,334,078,000; $4,698,694,000
related to appreciated securities and $1,364,616,000 related to depreciated
securities. During the year ended September 30, 2000, the fund realized, on a
tax basis, a net capital gain of $2,021,612,000 on securities transactions. In
addition, the fund has deferred for tax purposes, to fiscal year ending
September 30, 2001, the recognition of losses relating to non-U.S. currency
transactions totaling $2,345,000 which were realized during the period November
1, 1999 through September 30, 2000.
Net losses related to non-U.S. currency transactions of $655,000 were treated
as an adjustment to ordinary income for federal income tax purposes. The cost
of portfolio securities for book and federal income tax purposes was
$10,950,678,000 at September 30, 2000.
4. FEES AND TRANSACTIONS WITH RELATED PARTIES
INVESTMENT ADVISORY FEE - The fee of $87,004,000 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 Board of Directors approved an amended agreement effective December 1,
2000. Additional breakpoints were added for net assets in excess of $17
billion, and annual rates were decreased for assets in excess of $17 billion.
The Amended Investment Advisory and Service Agreement provides for monthly fees
accrued daily, based on the following rates and net asset levels:
<TABLE>
<CAPTION>
NET ASSET LEVEL (IN BILLIONS)
RATE IN EXCESS OF UP TO
<S> <C> <C>
0.800% $0 $1
0.700 1 2
0.670 2 3
0.650 3 5
0.635 5 8
0.625 8 13
0.615 13 17
0.605 17 21
0.600 21 27
0.595 27
</TABLE>
Distribution Expenses American Funds Distributors, Inc. (AFD), the principal
underwriter of the fund's shares, received $6,282,000 (after allowances to
dealers) as its portion of the sales charges paid by purchasers of the fund's
Class A shares during the year ended September 30, 2000. Such sales charges
are not an expense of the fund and, hence, are not reflected in the
accompanying Statement of Operations.
The fund has adopted plans of distribution under which it may finance
activities primarily intended to sell fund shares, provided the categories of
expense are approved in advance by the fund's Board of Directors. The plans
provide for aggregate annual expense limits of 0.30% of net assets for Class A
shares, and 1.00% of net assets for Class B shares.
For Class A shares, approved categories of expense include dealer service fees
of up to 0.25% of net assets. Also included are monthly reimbursements to AFD
for commissions paid during the prior 15-month period to dealers and
wholesalers in respect of certain shares sold without a sales charge. These
reimbursements are permitted only to the extent that the fund's overall 0.30%
annual expense limit is not exceeded. For the year ended September 30, 2000,
aggregate distribution expenses were $35,669,000, or 0.27% of net assets
attributable to Class A shares.
For Class B shares, approved categories of expense include fees of 0.75% per
annum payable to AFD. AFD sells the rights to receive such payments (as well
as any contingent deferred sales charges payable in respect of shares sold
during the period) in order to finance the payment of dealer commissions. Also
included are service fees of 0.25% per annum. These fees are paid to AFD to
compensate AFD for paying service fees to qualified dealers. For the year ended
September 30, 2000, aggregate distribution expenses were $213,000, or 1.00% of
net assets attributable to Class B shares.
As of September 30, 2000, accrued and unpaid distribution expenses payable to
AFD for Class A and Class B shares were $2,488,000 and $56,000, respectively.
TRANSFER AGENT FEE - A fee of $13,504,000 was incurred during the year ended
September 30, 2000 pursuant to an agreement with American Funds Service Company
(AFS), the transfer agent for the fund.
DEFERRED DIRECTORS' FEES - 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 September 30, 2000, aggregate deferred amounts and earnings
thereon since the deferred compensation plan's adoption (1993), net of any
payments to Directors, were $388,000.
AFFILIATED DIRECTORS' AND OFFICERS - CRMC is owned by The Capital Group
Companies, Inc. AFS and AFD are both wholly owned subsidiaries of CRMC.
Officers of the fund and certain Directors are or may be considered to be
affiliated with CRMC, AFS and AFD. No such persons received any remuneration
directly from the fund.
5. INVESTMENT TRANSACTIONS AND OTHER DISCLOSURES
The fund made purchases and sales of investment securities, excluding
short-term securities, of $8,677,077,000 and $7,563,569,000, respectively,
during the year ended September 30, 2000.
Pursuant to the custodian agreement, the fund receives credits against its
custodian fee for imputed interest on certain balances with the custodian bank.
During the year ended September 30, 2000, the custodian fee of $3,522,000
includes $215,000 that was paid by these credits rather than in cash.
The fund reclassified $334,000 from undistributed net investment income and
$2,146,000 from undistributed net realized gains to additional paid-in capital
for the year ended September 30, 2000, as a result of permanent differences
between book and tax.
Net assets consisted of the following:
<TABLE>
As of September 30, 2000, net assets consisted of the following:
<S> <C>
(dollars in thousands)
Capital paid in on shares of beneficial interest $ 8,850,355
Distributions in excess of net investment income (2,999)
Accumulated net realized gain 1,989,247
Net unrealized appreciation 3,334,098
Net Assets $ 14,170,701
</TABLE>
Capital share transactions in the fund were as follows:
<TABLE>
Year ended
September 30, 2000
Amount (000) Shares
<S> <C> <C>
Class A Shares:
Sold $ 3,888,554 93,925,074
Reinvestment of dividends and distributions 183,491 5,078,543
Repurchased (2,113,104) (52,446,774)
Net (decrease) increase in Class A 1,958,942 46,556,843
Class B Shares:
Sold 75,062 1,832,770
Reinvestment of dividends and distributions - -
Repurchased (843) (20,923)
Net increase in Class B 74,219 1,811,847
Total net increase (decrease) in fund $ 2,033,160 48,368,690
Year ended
September 30,1999
Amount (000) Shares
Class A Shares:
Sold $ 1,309,044 50,434,688
Reinvestment of dividends and distributions 415,013 17,698,049
Repurchased (2,145,795) (85,119,727)
Net (decrease) increase in Class A (421,738) (16,986,990)
Class B Shares:
Sold - -
Reinvestment of dividends and distributions - -
Repurchased - -
Net increase in Class B - -
Total net increase (decrease) in fund $ (421,738) (16,986,990)
</TABLE>
6. TRANSACTIONS WITH AFFILIATES
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 year ended September
30, 2000 is as follows:
<TABLE>
<S> <C> <C> <C>
Beginning
Company Shares Purchases Sales
Acer Laboratories(1) - 8,957,000 8,957,000
Alloy Online(1) - 930,000 930,000
Alphameric - 5,262,009 -
American Classic Voyages 600,000 740,000 -
American Dental Partners(1) 443,000 - 87,600
American Healthcorp(1) 522,000 - 522,000
AmSurg(1) 559,972 - 559,972
Ando Electric 484,000 1,216,000 -
Anesta(1) 740,000 - 363,200
Antena 3 de Television(1) 1,500 - 1,500
APCOA Parking(1) 120,800 1,888 122,688
Apex(1) 875,000 300,000 1,175,000
Arch Coal - 2,000,000 -
Arthur J. Gallagher - 2,370,400 -
Aspect Medical Systems - 1,117,000 -
Atlantic Coast Airlines Holdings(1) 1,268,000 - 1,268,000
Avocet Mining 3,850,000 - -
Bally Total Fitness Holding 1,160,500 200,000 -
Baltimore Technologies 1,910,000 19,851,300 -
Benor Tankers(1) 1,240,000 - 1,240,000
Black Box 878,000 405,000 65,000
BRIT AIR Group 29,500 52,150 -
BRL Hardy 7,216,826 1,256,671 -
Cabre Exploration 1,099,000 - -
Cadiz 2,232,000 - -
Cairn Energy 11,000,000 - -
Cambrex 1,400,000 - -
Castellum(1) 2,359,200 2,959,200 3,804,114
Cheesecake Factory 1,205,500 602,750 -
Chieftain International 860,000 970,000 860,000
CIMA LABS 617,200 - -
Claims Direct - 12,048,625 -
Communication Network Interface(1) - 1,060,000 1,060,000
Computer Engineering & Consulting(1) - 1,145,000 1,145,000
Computer Motion(1) 434,900 - -
Consolidated Products 1,562,500 156,250 -
Cost Plus 630,000 859,000 429,900
DFS Furniture 4,852,700 830,000 -
diCarta - 1,650,165 -
Digene(1) 800,000 - -
Documentum 1,095,000 770,000 720,000
Elbit(1) 50,000 1,082,500 1,132,500
Elec & Eltek International Holdings(1) 52,905,000 - 52,905,000
Enea Data - 12,381,400 2,360,400
Envoy Communications - 996,000 -
Etec Systems(1) 1,210,000 - 1,210,000
EUROBIKE 364,000 - -
E.W. Blanch Holdings - 860,000 -
Extended Stay America 4,000,000 2,190,000 -
Fidelity National Financial(1) - 1,700,000 -
Fisher & Paykel Industries 6,550,000 768,050 -
Fuji Electronics(1) - 688,000 688,000
Gabriel Resources - 7,700,000 3,000,000
Genetronics Biomedical 1,650,000 1,650,000 1,650,000
GESCO(1) - 4,353,300 4,353,005
Giordano International(1) 42,954,000 23,938,000 19,016,000
Great Eastern Shipping 14,728,000 325,500 1,798,300
Great Plains Software(1) 700,000 310,000 1,010,000
Hain Celestial Group(1) 530,000 - 530,000
Highpoint Telecommunications(1) 1,322,000 - -
HIT Entertainment(1) 1,053,420 4,213,680 2,000,000
HNC Software 1,675,198 436,302 365,500
Hollis-Eden Pharmaceuticals(1) 555,556 - 294,550
IDEXX Laboratories 825,000 1,356,300 -
Imax(1) 1,558,000 - 679,000
Independent Insurance Group 13,940,000 - -
Infoteria - 167 -
Inhale Therapeutic Systems 1,101,646 1,203,292 101,646
Integra 76,400 2,783,685 -
International Energy Group 4,640,000 - -
InternetStudios.com - 950,000 -
Intertape Polymer Group 1,500,000 - -
ITE Group(1) 9,608,800 - -
ITG Group - 1,408,455 -
Ivanhoe Energy - 16,490,400 10,000,000
Jo-Ann Stores 1,050,000 - -
Kingboard Chemical Holdings - 27,720,000 -
Kipling Holding(1) - 234,000 156,000
Kokusai Electric(1) 4,675,000 30,000 1,705,000
Lasertec 147,000 178,000 -
Lions Gate Entertainment 1,884,134 - -
Liquidation World(1) 450,000 - 450,000
Littelfuse(1) 1,000,000 - -
MarketWatch.com(1) - 772,500 772,500
Matrix Pharmaceutical - 1,500,000 -
MCSi - 777,300 -
Miadora 602,410 448,431 -
Michaels Stores 1,400,000 494,600 -
Micrel(1) 2,422,000 1,047,000 1,475,000
Micronic Laser Systems 466,666 735,710 -
Midas 700,000 350,000 -
MIF 682,903 - -
Minmet 25,235,027 5,350,000 1,424,500
MMC Networks(1) 1,460,600 599,400 1,625,000
Momentum Business Applications(1) 302,000 - 302,000
Montana Group 13,950,000 - -
Morton's Restaurant Group 415,000 - -
Muse Prime Software - 1,770,000 -
NeoPath(1) 1,121,400 - 1,121,400
NeoRx - 1,450,000 -
Newfield Exploration 2,200,000 950,000 400,000
Nice Systems(1) 625,000 - 395,000
Nissin 250,000 325,000 -
Nobel Biocare(1) 1,591,900 - 751,400
AB Novestra - 1,495,000 -
Novus Petroleum(1) 9,050,757 3,700,000 4,781,249
Optoma - 9,750,000 -
OrthoLogic(1) 1,620,000 - 459,300
P4 Radio Hele Norge 816,000 832,000 -
Paladin Resources 11,270,998 - -
Paramount Resources 638,100 2,710,100 98,200
PCA - 507,000 -
Petaluma Limited 689,950 530,000 -
Pharmacyclics 795,000 135,000 -
Philippine Gold(1) 4,953,700 59,000,000 63,953,700
Photobition Group 4,278,070 2,000,000 1,078,070
Picvue Electronics(1) 17,990,000 20,301,000 38,291,000
Piercing Pagoda(1) 502,500 - 502,500
PILKOR Electronics(1) - 700,000 700,000
PMC-Sierra1 3,270,000 - 3,270,000
Power Integrations(1) 833,900 1,022,500 1,194,100
PSD Group 978,000 650,000 -
QuickLogic - 1,679,800 244,800
RadiSys(1) 500,000 620,000 515,000
Ramco Energy(1) 1,297,000 - -
RedEnvelope - 2,525,124 -
Sapiens International(1) 1,015,000 - -
SBS Broadcasting 1,021,550 595,450 160,000
School Specialty 500,000 630,000 -
Senshukai(1) 1,195,000 1,900,000 1,308,400
Sharper Image 775,000 - -
Simeon Wines(1) 3,900,000 32,748 3,229,428
SIPEX(1) 1,160,000 - 1,160,000
Sunglass Hut International 3,200,000 - -
SuSE Linux - 37,813 -
Technology Nexus(1) - 1,005,000 167,500
Tele Celular Sul Participacoes 1,284,900 6,260,080,000 -
Thistle Mining - 6,264,308 -
Too(1) 1,775,000 108,100 1,083,100
Toyo Communication Equipment(1) - 3,063,000 2,141,000
Trimble Navigation 1,450,000 11,500 -
Ugland International Holdings(1) 7,342,000 1,366,500 8,708,500
Unicap Electronics Industrial(1) 18,037,505 5,118,655 20,490,490
United Therapeutics(1) - 1,200,000 420,000
UroCor(1) 600,000 - 600,000
Vail Resorts 1,571,300 190,000 -
ViroPharma(1) 740,000 - -
Vision-Sciences(1) 984,500 - -
VTech Holdings 10,500,000 2,403,208 -
Whitehall Jewellers(1) 510,000 405,000 150,000
Wolford Group(1) 324,000 - 324,000
Wus Printed Circuit(1) 22,083,750 2,208,374 24,291,750
Yamaichi Electronics - 791,000 -
Market Value
Dividend of Affiliates
Ending Income at 9/30/00
Shares (000) (000)
Acer Laboratories(1) - - -
Alloy Online(1) - - -
Alphameric 5,262,009 74 23,245
American Classic Voyages 1,340,000 - 19,597
American Dental Partners(1) 355,400 - -
American Healthcorp(1) - - -
AmSurg(1) - - -
Ando Electric 1,700,000 - 26,656
Anesta(1) 376,800 - -
Antena 3 de Television(1) - - -
APCOA Parking(1) - - -
Apex(1) - - -
Arch Coal 2,000,000 230 20,000
Arthur J. Gallagher 2,370,400 1,214 140,150
Aspect Medical Systems 1,117,000 - 13,823
Atlantic Coast Airlines Holdings(1) - - -
Avocet Mining 3,850,000 - 1,024
Bally Total Fitness Holding 1,360,500 - 34,012
Baltimore Technologies 21,761,300 - 226,614
Benor Tankers(1) - - -
Black Box 1,218,000 - 56,789
BRIT AIR Group 81,650 331 4,614
BRL Hardy 8,473,497 811 34,936
Cabre Exploration 1,099,000 - 11,320
Cadiz 2,232,000 - 22,320
Cairn Energy 11,000,000 - 30,878
Cambrex 1,400,000 168 51,800
Castellum(1) 1,514,286 - -
Cheesecake Factory 1,808,250 - 78,207
Chieftain International 970,000 - 20,067
CIMA LABS 617,200 - 32,133
Claims Direct 12,048,625 - 48,062
Communication Network Interface(1) - - -
Computer Engineering & Consulting(1) - - -
Computer Motion(1) 434,900 - -
Consolidated Products 1,718,750 - 13,750
Cost Plus 1,059,100 - 31,905
DFS Furniture 5,682,700 2,090 27,244
diCarta 1,650,165 - 10,000
Digene(1) 800,000 - -
Documentum 1,145,000 - 92,960
Elbit(1) - - -
Elec & Eltek International Holdings(1) - - -
Enea Data 10,021,000 47 57,753
Envoy Communications 996,000 - 5,394
Etec Systems(1) - - -
EUROBIKE 364,000 193 3,455
E.W. Blanch Holdings 860,000 158 17,845
Extended Stay America 6,190,000 - 82,018
Fidelity National Financial(1) 1,700,000 - -
Fisher & Paykel Industries 7,318,050 1,645 21,759
Fuji Electronics(1) - - -
Gabriel Resources 4,700,000 - 10,776
Genetronics Biomedical 1,650,000 - 2,522
GESCO(1) 295 - -
Giordano International(1) 47,876,000 - -
Great Eastern Shipping 13,255,200 495 7,999
Great Plains Software(1) - - -
Hain Celestial Group(1) - - -
Highpoint Telecommunications(1) 1,322,000 - -
HIT Entertainment(1) 3,267,100 - -
HNC Software 1,746,000 - 142,845
Hollis-Eden Pharmaceuticals(1) 261,006 - -
IDEXX Laboratories 2,181,300 - 58,350
Imax(1) 879,000 - -
Independent Insurance Group 13,940,000 1,079 72,700
Infoteria 167 - 6,241
Inhale Therapeutic Systems 2,203,292 - 124,210
Integra 2,860,085 - 31,316
International Energy Group 4,640,000 370 15,784
InternetStudios.com 950,000 - 5,652
Intertape Polymer Group 1,500,000 135 20,344
ITE Group(1) 9,608,800 - -
ITG Group 1,408,455 - 11,757
Ivanhoe Energy 6,490,400 - 29,976
Jo-Ann Stores 1,050,000 - 7,186
Kingboard Chemical Holdings 27,720,000 320 12,089
Kipling Holding(1) 78,000 - -
Kokusai Electric(1) 3,000,000 - -
Lasertec 325,000 52 7,104
Lions Gate Entertainment 1,884,134 - 4,883
Liquidation World(1) - - -
Littelfuse(1) 1,000,000 - -
MarketWatch.com(1) - - -
Matrix Pharmaceutical 1,500,000 - 23,344
MCSi 777,300 - 26,137
Miadora 1,050,841 - 100
Michaels Stores 1,894,600 - 75,784
Micrel(1) 1,994,000 - -
Micronic Laser Systems 1,202,376 - 36,458
Midas 1,050,000 77 14,700
MIF 682,903 - 6,172
Minmet 29,160,527 - 14,647
MMC Networks(1) 435,000 - -
Momentum Business Applications(1) - - -
Montana Group 13,950,000 452 17,898
Morton's Restaurant Group 415,000 - 8,404
Muse Prime Software 1,770,000 - 17,558
NeoPath(1) - - -
NeoRx 1,450,000 - 33,687
Newfield Exploration 2,750,000 - 128,391
Nice Systems(1) 230,000 - -
Nissin 575,000 207 22,900
Nobel Biocare(1) 840,500 - -
AB Novestra 1,495,000 - 7,917
Novus Petroleum(1) 7,969,508 - -
Optoma 9,750,000 - 14,010
OrthoLogic(1) 1,160,700 - -
P4 Radio Hele Norge 1,648,000 191 9,081
Paladin Resources 11,270,998 - 4,746
Paramount Resources 3,250,000 17 29,913
PCA 507,000 - 14,557
Petaluma Limited 1,219,950 80 2,780
Pharmacyclics 930,000 - 46,152
Philippine Gold(1) - - -
Photobition Group 5,200,000 100 18,342
Picvue Electronics(1) - - -
Piercing Pagoda(1) - - -
PILKOR Electronics(1) - - -
PMC-Sierra1 - - -
Power Integrations(1) 662,300 - -
PSD Group 1,628,000 316 28,381
QuickLogic 1,435,000 - 23,678
RadiSys(1) 605,000 - -
Ramco Energy(1) 1,297,000 - -
RedEnvelope 2,525,124 - 5,000
Sapiens International(1) 1,015,000 - -
SBS Broadcasting 1,457,000 - 58,007
School Specialty 1,130,000 - 24,083
Senshukai(1) 1,786,600 - -
Sharper Image 775,000 - 13,659
Simeon Wines(1) 703,320 - -
SIPEX(1) - - -
Sunglass Hut International 3,200,000 - 20,900
SuSE Linux 37,813 - 17,660
Technology Nexus(1) 837,500 - -
Tele Celular Sul Participacoes 6,261,364,900 257 55,560
Thistle Mining 6,264,308 - 1,499
Too(1) 800,000 - -
Toyo Communication Equipment(1) 922,000 - -
Trimble Navigation 1,461,500 - 32,701
Ugland International Holdings(1) - - -
Unicap Electronics Industrial(1) 2,665,670 - -
United Therapeutics(1) 780,000 - -
UroCor(1) - - -
Vail Resorts 1,761,300 - 35,666
ViroPharma(1) 740,000 - -
Vision-Sciences(1) 984,500 - -
VTech Holdings 12,903,208 2,213 32,275
Whitehall Jewellers(1) 765,000 - -
Wolford Group(1) - - -
Wus Printed Circuit(1) 374 - -
Yamaichi Electronics 791,000 44 19,268
Total $13,366 $2,796,340
(1) Unaffiliated issuer at 9/30/2000
</TABLE>
<TABLE>
PER-SHARE DATA AND RATIOS (1)
Net
Net asset gains/(losses)
value, Net on securities
beginning investment (both realized
Year ended of year income and unrealized)
<S> <C> <C> <C>
Class A:
2000 $29.57 $.00 (2) $11.29 (2)
1999 22.14 .03 8.78
1998 30.72 .07 (6.10)
1997 26.92 .10 6.17
1996 26.11 .17 3.32
Class B:
2000 47.11 (0.12) (2) (6.91) (2)
Dividends
Total from (from net Distributions
investment investment (from capital
Year ended operations income) gains)
Class A:
2000 $11.29 $(.02) $(.60)
1999 8.81 (.09) (1.29)
1998 (6.03) (.05) (2.50)
1997 6.27 (.12) (2.35)
1996 3.49 (.23) (2.45)
Class B:
2000 (7.03) - -
Net asset
Total value, end Total
Year ended distributions of year return
Class A:
2000 $(.62) $40.24 38.42%
1999 (1.38) 29.57 41.42
1998 (2.55) 22.14 (20.70)
1997 (2.47) 30.72 25.41
1996 (2.68) 26.92 15.21
Class B:
2000 - 40.08 (14.92)
Ratio of Ratio of
Net assets, expenses net income
end of year to average to average
Year ended (in millions) net assets net assets
Class A:
2000 $14,098 1.10% -
1999 8,983 1.09 0.12
1998 7,102 1.06 0.27
1997 9,256 1.07 0.40
1996 6,607 1.09 0.68
Class B:
2000 73 1.84 (3) - (3)
Portfolio
turnover
Year ended rate
Class A:
2000 62.71%(4)
1999 50.06
1998 44.31
1997 42.21
1996 42.88
Class B:
2000 62.71 (4)
(1) The periods 1996 through 2000 represent
fiscal years ended September 30. The period ended
2000 represents, for Class B shares, the
199-day period ended September 30, 2000.
Class B shares were not offered before
March 15, 2000. Total return for class B is based
on activity during the period and thus is not
representative of a full year. Total returns
exclude all sales charges, including contingent
deferred sales charges.
(2) Based on average shares outstanding.
(3) Annualized.
(4) Represents portfolio turnover rate
(equivalent for all share classes) for the year
ended Septmeber 30, 2000.
</TABLE>
Independent Auditors' Report
To the Board of Directors and Shareholders of
SMALLCAP World Fund, Inc.:
We have audited the accompanying statement of assets and liabilities of
SMALLCAP World Fund, Inc., including the investment portfolio, as of September
30,2000, and the related statement of operations for the year then ended, the
statement of changes in net assets for each of the two years in the period then
ended, and the per-share data and ratios for each of the five years in the
period then ended for Class A shares, and the period March 15, 2000 through
September 30, 2000, for Class B shares. These financial statements and the
per-share data and ratios are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and the
per-share data and ratios based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
and per-share data and ratios are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation
of securities owned at September 30, 2000 by correspondence with the custodian
and brokers; where replies were not received from brokers, we performed other
procedures. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and per-share data and ratios
referred to above present fairly, in all material respects, the financial
position of SMALLCAP World Fund, Inc. at September 30, 2000, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and the per-share data and ratios for
each of the five years in the period then ended for Class A shares, and the
period March 15, 2000 through September 30, 2000, for Class B shares, in
conformity with accounting principles generally accepted in the United States
of America.
DELOITTE & TOUCHE LLP
Los Angeles, California
October 31, 2000
SMALLCAP World Fund, Inc.
2000 Tax Information (unaudited)
We are required to advise you within 60 days of the fund's fiscal year-end
regarding the federal tax status of certain distributions received by
shareholders during such fiscal year.
During the fiscal year ended September 30, 2000, the fund paid a long-term
capital gain distribution of $186,549,000. The fund also designated as a
capital gain distribution a portion of earnings and profits paid to
shareholders in redemption of their shares.
Corporate shareholders may exclude up to 70% of qualifying dividends received
during the year. For purposes of computing this exclusion, all of the dividends
paid by the fund from net investment income represent qualifying dividends.
Dividends and distributions received by retirement plans such as IRAs,
Keogh-type plans and 403(b) plans need not be reported as taxable income.
However, many retirement plan trusts may need this information for their annual
information reporting.
SINCE THE AMOUNTS ABOVE ARE REPORTED FOR THE FUND'S FISCAL YEAR AND NOT THE
CALENDAR YEAR, SHAREHOLDERS SHOULD REFER TO THEIR FORM 1099-DIV OR OTHER TAX
INFORMATION WHICH WILL BE MAILED IN JANUARY 2001 TO DETERMINE THE CALENDAR YEAR
AMOUNTS TO BE INCLUDED ON THEIR 2000 TAX RETURNS. SHAREHOLDERS SHOULD CONSULT
THEIR TAX ADVISERS.
Results of Shareholders Meeting
held september 12, 2000/1/
<TABLE>
<CAPTION>
<S> <C> <C>
Class A Shares Outstanding on July 7, 2000 350,049,685
Class B Shares Outstanding on July 7, 2000 1,105,262
Total Shares Voting on June 20, 2000 190,182,805 (54.2%)
</TABLE>
/1/Consolidated results; votes were tabulated separately by Class.
Proposal 1
Election of Directors
<TABLE>
<CAPTION>
Percent of Percent of
Votes Shares Votes Shares
Director For Voting For Withheld Withheld
<S> <C> <C> <C> <C>
Joseph C. Berenato 187,084,250 98.4% 3,098,555 1.6%
Richard G. Capen, Jr. 186,871,571 98.3 3,311,234 1.7
H. Frederick Christie 187,033,056 98.3 3,149,749 1.7
Gordon Crawford 187,375,323 98.5 2,807,482 1.5
Alan Greenway 186,870,086 98.3 3,312,719 1.7
E. Graham Holloway 187,197,303 98.4 2,985,502 1.6
Leonade D. Jones 186,944,780 98.3 3,328,025 1.7
William H. Kling 187,280,254 98.5 2,902,551 1.5
Norman R. Weldon 187,209,632 98.4 2,973,173 1.6
Gregory W. Wendt 187,385,335 98.5 2,797,470 1.5
Patricia K. Woolf 187,208,424 98.4 2,974,381 1.6
</TABLE>
Proposal 2
Approval of the elimination or revision of certain of the Fund's fundamental
investment policies:
a) revise the restriction regarding lending activities
b) revise and reclassify the restriction regarding purchasing securities of
other investment companies
c) revise and reclassify the restriction regarding illiquid/restricted
securities
d) eliminate the restriction regarding pledging assets
e) eliminate the restriction regarding affiliated ownership
f) eliminate the restriction regarding unseasoned issuers
g) eliminate the restriction regarding oil, gas or mineral exploration
Proposal 3
Ratification of Accountants
Proposal 2
<TABLE>
<CAPTION>
Percent of Percent of Percent of
Votes Shares Votes Shares Abstentions Shares
For Voting For Against Voting Against Abstaining
<S> <C> <C> <C> <C> <C> <C>
a 132,167,915 89.3% 7,258,369 4.9% 8,605,610 5.8%
b 133,820,895 90.4 5,731,921 3.9 8,479,078 5.7
c 131,522,216 88.8 7,561,370 5.1 8,948,308 6.1
d 131,362,450 88.7 7,682,813 5.2 8,986,631 6.1
e 131,549,248 88.9 7,425,648 5.0 9,056,998 6.1
f 131,621,426 88.9 7,450,871 5.0 8,959,597 6.1
g 132,287,785 89.4 7,213,887 4.9 8,530,222 5.7
</TABLE>
(Broker Non-Votes = 42,150,911)
Proposal 3
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
183,166,684 96.3 1,634,555 .9 5,381,566 2.8
</TABLE>
The American Funds Group(r)
BOARD OF DIRECTORS
Joseph C. Berenato
Los Angeles, California
Chairman of the Board, President and
Chief Executive Officer, Ducommun Incorporated
Ambassador Richard G. Capen, Jr.
Rancho Santa Fe, California
Corporate director and author; former United
States Ambassador to Spain; former Vice
Chairman of the Board, Knight-Ridder, Inc.;
former Chairman of the Board and Publisher,
The Miami Herald
H. Frederick Christie
Rolling Hills Estates, California
Private investor; former President and Chief
Executive Officer, The Mission Group; former
President, Southern California Edison Company
Gordon Crawford
Los Angeles, California
Chairman of the Board of the fund
Senior Vice President and Director,
Capital Research and Management Company
E. Graham Holloway
Dallas, Texas
Former Chairman of the Board,
American Funds Distributors, Inc.
Leonade D. Jones
Burlingame, California
Chief Financial Officer and Secretary,
VentureThink, LLC; former Treasurer,
The Washington Post Company
William H. Kling
St. Paul, Minnesota
President, Minnesota Public Radio;
President, Greenspring Company;
former President, American Public Radio
(now Public Radio International)
Norman R. Weldon, Ph.D.
Evergreen, Colorado
Managing Director, Partisan
Management Group, Inc.;
former Chairman of the Board,
Novoste Corporation
Gregory W. Wendt
San Francisco, California
President of the fund
Senior Vice President,
Capital Research Company
Patricia K. Woolf, Ph.D.
Princeton, New Jersey
Private investor; corporate director;
lecturer, Department of Molecular Biology,
Princeton University
Alan Greenway, a founding Director of the fund, will be retiring from the Board
at the end of 2000. The Directors wish to thank him for his years of dedicated
service and numerous contributions to the fund.
OTHER OFFICERS
Vincent P. Corti
Los Angeles, California
Vice President of the fund
Vice President - Fund Business
Management Group,
Capital Research and Management Company
J. Blair Frank
Los Angeles, California
Vice President of the fund
Vice President, Capital Research Company
Jonathan Knowles, Ph.D.
London, England
Vice President of the fund
Vice President, Capital Research Company
Chad L. Norton
Los Angeles, California
Secretary of the fund
Vice President - Fund Business
Management Group,
Capital Research and Management Company
David A. Pritchett
Norfolk, Virginia
Treasurer of the fund
Vice President - Fund Business
Management Group,
Capital Research and Management Company
Sheryl F. Johnson
Norfolk, Virginia
Assistant Treasurer of the fund
Vice President - Fund Business
Management Group,
Capital Research and Management Company
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 92821-5823
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
State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02105-1713
COUNSEL
O'Melveny & Myers LLP
400 South Hope Street
Los Angeles, California 90071-2899
INDEPENDENT AUDITORS
Deloitte & Touche LLP
Two California Plaza
350 South Grand Avenue
Los Angeles, California 90071-3462
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, OR FOR A
PROSPECTUS FOR ANY OF THE AMERICAN FUNDS, PLEASE CONTACT YOUR FINANCIAL
ADVISER. YOU MAY ALSO CALL AMERICAN FUNDS SERVICE COMPANY, TOLL-FREE, AT
800/421-0180 OR VISIT US AT WWW.AMERICANFUNDS.COM ON THE WORLD WIDE WEB. PLEASE
READ THE PROSPECTUS CAREFULLY BEFORE YOU INVEST OR SEND MONEY.
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
December 31, 2000, 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 BDC/L/4884
Lit. No. SCWF-011-1100
