N-CSRS 1 scwf_ncsr.htm N-CSR scwf_ncsr.htm
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549



FORM N-CSR
Certified Shareholder Report of
Registered Management Investment Companies

Investment Company Act File Number: 811-05888



SMALLCAP World Fund, Inc.
(Exact Name of Registrant as Specified in Charter)

333 South Hope Street
Los Angeles, California 90071
(Address of Principal Executive Offices)




Registrant's telephone number, including area code: (213) 486-9200

Date of fiscal year end: September 30

Date of reporting period: March 31, 2008





Chad L. Norton
Capital Research and Management Company
333 South Hope Street
Los Angeles, California 90071
(Name and Address of Agent for Service)


Copies to:
Mark D. Perlow
Kirkpatrick & Lockhart Preston Gates Ellis LLP
55 Second Street, Suite 1700
San Francisco, California  94105
(Counsel for the Registrant)


 
 
 

ITEM 1 – Reports to Stockholders
 
[logo - American Funds®]

The right choice for the long term®

SMALLCAP World Fund
 
[photo – rows of globes]
 
Semi-annual report for the six months ended March 31, 2008

SMALLCAP World Fund® seeks long-term growth of capital through investments in smaller companies in the United States and around the world.

This fund is one of the 30 American Funds. American Funds is one of the nation’s largest mutual fund families. For more than 75 years, Capital Research and Management Company,SM the American Funds adviser, has invested with a long-term focus based on thorough research and attention to risk.

Fund results shown in this report, unless otherwise indicated, are for Class A shares at net asset value. If a sales charge (maximum 5.75%) had been deducted, the results would have been lower. Results are for past periods and are not predictive of results for future periods. Current and future results may be lower or higher than those shown. Share prices and returns will vary, so investors 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. For current information and month-end results, visit americanfunds.com.

Here are the average annual total returns on a $1,000 investment with all distributions reinvested for periods ended March 31, 2008:

Class A shares
  
1 year
    
5 years
    
10 years
  
                   
Reflecting 5.75% maximum sales charge
     –7.35 %     21.24 %     7.01 %

The total annual fund operating expense ratio for Class A shares as of the most recent fiscal year-end was 1.04%. This figure does not reflect a fee waiver currently in effect; therefore, the actual expense ratio is lower.

The fund’s investment adviser waived 5% of its management fees from September 1, 2004, through March 31, 2005, and increased the waiver to 10% on April 1, 2005. Fund results shown reflect actual expenses, with the waiver applied. Fund results would have been lower without the waiver. Please see the Financial Highlights table on pages 26 to 29 for details.

Results for other share classes can be found on page 32.

Investing outside the United States may be subject to additional risks, such as currency fluctuations and political instability, which are detailed in the fund’s prospectus. Investing in small-capitalization stocks can involve greater risk than is customarily associated with investing in stocks of larger, more established companies.
 
 
Fellow shareholders:
 
[photo – rows of globes]

SMALLCAP World Fund suffered amid turbulent markets in the United States and around the world during the first six months of its fiscal year. In a global downturn that battered most equity markets, the fund was down 14.4% for the six months ended March 31, 2008. The fund’s result includes a reinvested dividend of $0.76 per share and capital gain distribution of $4.17 per share. For the year ended March 31, 2008, the fund’s result was –1.7%, comparing favorably to the –7.3% return of the Lipper Global Small-Cap Funds Average and the –5.1% return of the unmanaged S&P/Citigroup Global Index over the same period, as shown in the table below.

[Begin Sidebar]
Results at a glance
For periods ended March 31, 2008, with all distributions reinvested

   
Total returns
    
Average annual total returns
  
                           
Lifetime
  
                           
(since
  
   
6 months
    
1 year
    
5 years
    
10 years
    
4/30/90)
  
                               
SMALLCAP World Fund
                              
(Class A shares)
     –14.4 %     –1.7 %     22.7 %     7.6 %     11.1 %
                                         
S&P/Citigroup
                                        
Global/World Indexes
     –12.6       –5.1       23.2       9.3       9.9  
                                         
Lipper Global Small-Cap
                                        
Funds Average
     –14.5       –7.3       20.6       8.7       11.0  

All market indexes cited in this report are unmanaged and their results include reinvestment of all distributions. Returns for the S&P/Citigroup Global/World Indexes reflect a combination of two S&P/Citigroup Global indexes and two S&P/Citigroup World indexes that corresponds to the market capitalization ranges used by the fund during comparable periods. The S&P/Citigroup Global indexes, which track publicly traded stocks around the world with market capitalizations less than $3 billion and less than $2 billion, were used from May 2006 to the present and May 2004 to April 2006, respectively. These indexes better reflect the fund’s investments in developing countries during this period. The S&P/Citigroup World indexes, which only include stocks in developed countries and reflect market capitalizations less than $1.5 billion and less than $1.2 billion, were used from 2000 to April 2004 and from 1990 to 1999, respectively.
[End Sidebar]

Continued volatility

As we cautioned in our last few reports, markets are cyclical in nature. After several years of strong returns for SMALLCAP World Fund, the fund’s holdings were not immune from recent sharp market gyrations. It was not only small-cap companies that suffered; credit difficulties in global markets hurt most asset classes, from municipal bonds to small-cap equities. The negative returns reflected investor fears of a U.S. recession that could spread to impact global growth, concerns about rising inflation driven by higher commodity and energy costs, and worries over the unfolding global credit crunch.

After a brief positive start to the fund’s fiscal year in October, the market struggled for the duration of the six-month period. The rapidly developing liquidity crunch, which had been sparked by the subprime mortgage crisis, continued to impact financial markets. Stocks pulled back dramatically as the full extent of losses at financial companies and the possibility of further economic weakness came into focus. The Federal Reserve stepped in aggressively to bolster market liquidity — lowering interest rates and dramatically expanding its lending facilities. The Fed reduced the benchmark federal funds rate five times in the six-month period, cutting the rate from 4.75% to 2.25%. The softening of the economy and pressure on credit was further exacerbated by a simultaneous weakening of the U.S. dollar.

Portfolio review

Most sectors felt the pain; in fact, nine out of the fund’s largest 10 holdings fell. The financial and consumer discretionary industries had a particularly difficult period. Banks, which made up more than 6.4% of the fund, suffered, including the fund’s fourth-largest holding, Pusan Bank (–31.7%), and its seventh-largest holding, Daegu Bank (–27.4%), both based in South Korea; as well as Indiabulls Financial Services (–30.3%) and Kotak Mahindra Bank (–32.3%), both based in India. Other financial sectors, including mortgage finance companies, fared poorly as well. The consumer discretionary industry, which was SMALLCAP’s largest group at 17.4% of the fund, was weak. This included the fund’s sixth-largest holding, Greek toy retailer Jumbo (–11.9%); ninth-largest holding, Greek household goods seller Fourlis (–12.9%); and U.S.-based sportswear maker lululemon athletica (–32.4%).

[Begin Sidebar]
Where are SMALLCAP’s holdings located?
 
[begin pie chart]
As of March 31, 2008
  
Percent of net assets
  
       
United States
     31.3 %
Asia & Pacific Basin
     30.6  
Europe
     21.0  
Other (including Canada & Latin America)
     7.4  
Short-term securities & other assets less liabilities
     9.7  
[end pie chart]
 
[begin pie chart]
As of September 30, 2007
  
Percent of net assets
  
       
United States
     32.3 %
Asia & Pacific Basin
     32.0  
Europe
     19.4  
Other (including Canada & Latin America)
     8.5  
Short-term securities & other assets less liabilities
     7.8  
[end pie chart]
[End Sidebar]

A few sectors escaped the downturn, including energy, which made up 5.9% of the fund. Oil production company Concho Resources (+73.1%) and oil and gas producer Quicksilver Resources (+55.3%), both U.S.-based, were some of the highlights. Pacific Rubiales Energy, a Canadian-based crude oil producer, rose 99.2% (albeit a smaller holding in the fund). Not all energy stocks did well; that was the case for Canada’s OPTI Canada (–10.2%), the fund’s largest holding, and Oilexco (–9.7%), the fund’s eighth-largest holding. The metals and mining industry was also a bright spot. Advanced Metallurgical Group, the Netherlands-based specialty metals company that was the fund’s fifth-largest holding, rose 47.6% in the six months. Canada’s Eastern Platinum, which mines platinum in South Africa, was up 38.6%, and Central African Mining & Exploration, a cobalt producer headquartered in London, rose 99.7%. We ended the period with nearly 10% of the fund’s net assets in cash, so the fund could be in a good position when the right opportunities surface.

Looking ahead

We do not yet know the full scope of the market downturn, and we believe it will take time for all the ramifications of the credit crisis to work through the global financial system. However, we maintain a long-term focus despite short-term market troubles. Although the issues plaguing the market today will likely continue to have implications in the years ahead, we believe these issues also have created significant opportunities. Many small-cap companies with strong business models and excellent financials are now trading at attractive valuation levels. We believe the current environment should prove to be fertile ground for the patient, long-term investor.

We continue to use a disciplined, long-term strategy for the fund, and we urge you to keep a long-term view of your investments as well in these difficult market times.

Cordially,
 
/s/ Gordon Crawford
Gordon Crawford
Vice Chairman
 
/s/ Gregory W. Wendt
Gregory W. Wendt
President
 
May 8, 2008

For current information about the fund, visit americanfunds.com.
 

 
Summary investment portfolio March 31, 2008
unaudited
 

[begin pie chart]
Industry sector diversification
  
Percent of net assets
  
Consumer discretionary
     17.41 %
Industrials
     17.28  
Financials
     11.41  
Information technology
     11.20  
Health care
     9.80  
Other industries
     23.14  
Short-term securities & other assets less liabilities
     9.68  
Bonds & notes
     0.08  
[end pie chart]
 
Country diversification (percent of net assets)
      
       
United States
     31.3 %
Euro zone (*)
     11.2  
South Korea
     5.4  
United Kingdom
     5.1  
India
     4.2  
Canada
     4.1  
Hong Kong
     3.6  
Australia
     3.5  
Japan
     3.0  
Singapore
     2.5  
Other countries
     16.4  
Short-term securities & other assets less liabilities
     9.7  
         
         
(*)Countries using the euro as a common currency; those represendted in the fund's portfolio are Austria, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Slovenia and Spain.
  

   
Shares
    
Market
    
Percent
  
         
value
    
of net
  
Common stocks  - 90.05%
           (000 )  
assets
  
                     
Consumer discretionary  - 17.41%
                    
Jumbo SA (1)  (2)
     4,844,956     $ 145,897       .65 %
Fourlis (1)  (2)
     4,074,000       133,304       .59  
Schibsted ASA (1)  (2)
     4,234,850       127,225       .56  
Nitori Co., Ltd. (1)
     2,184,600       124,372       .55  
Central European Media Enterprises Ltd., Class A (3)
     1,403,500       119,620       .53  
Lojas Renner SA, ordinary nominative
     5,950,000       112,476       .50  
lululemon athletica inc. (2)  (3)
     3,668,414       104,293       .46  
Praktiker Bau- und Heimwerkermärkte Holding AG (1)  (2)
     3,843,883       102,670       .45  
Kuoni Reisen Holding AG, Class B (1)  (2)
     165,134       91,681       .40  
Saks Inc. (3)
     6,507,500       81,149       .36  
Lions Gate Entertainment Corp.  (2) (3)
     8,250,000       80,437       .36  
Rightmove PLC (1)  (2)
     7,757,657       75,305       .33  
Billabong International Ltd. (1)
     6,263,500       74,789       .33  
CarMax, Inc. (3)
     3,800,000       73,796       .33  
Nishimatsuya Chain Co., Ltd. (1)  (2)
     5,562,000       67,126       .30  
Cyrela Brazil Realty SA, ordinary nominative
     5,000,000       65,677       .29  
Cheil Industries Inc. (1)
     1,300,000       63,363       .28  
Other securities
             2,290,047       10.14  
              3,933,227       17.41  
                         
Industrials  - 17.28%
                        
Samsung Engineering Co., Ltd. (1)
     1,812,640       168,622       .75  
Downer EDI Ltd. (1)  (2)
     22,074,889       127,105       .56  
Container Corp. of India Ltd. (1)
     2,891,794       124,814       .55  
BayWa AG (1)  (2)
     1,849,985       109,953       .49  
Michael Page International PLC (1)  (2)
     17,941,190       107,589       .48  
MSC Industrial Direct Co., Inc., Class A
     2,106,000       88,978       .39  
Kaba Holding AG (1)  (2)
     250,800       84,667       .37  
SIA Engineering Co. Ltd. (1)
     28,405,000       81,580       .36  
Aalberts Industries NV (1)
     3,651,000       78,047       .35  
ELLINIKI TECHNODOMIKI TEB SA (1)
     6,153,000       75,482       .33  
LS Industrial Systems Co., Ltd. (1)
     1,149,660       71,636       .32  
IVRCL Infrastructures & Projects Ltd. (1)
     6,629,316       67,772       .30  
Murray & Roberts Holdings Ltd. (1)
     5,660,746       66,681       .30  
Actuant Corp., Class A
     2,150,000       64,951       .29  
Boart Longyear Ltd. (1)  (4)
     33,000,000       55,371          
Boart Longyear Ltd. (1)
     4,730,926       7,938       .28  
Other securities
             2,523,043       11.16  
              3,904,229       17.28  
                         
Financials  - 11.41%
                        
Pusan Bank (1)  (2)
     11,726,500       147,095       .65  
Daegu Bank, Ltd. (1)  (2)
     10,570,000       142,142       .63  
Indiabulls Real Estate Ltd. (1)  (3)
     7,209,778       88,495       .39  
MCB Bank Ltd. (1)
     13,099,742       86,984       .39  
Kotak Mahindra Bank Ltd. (1)
     5,493,262       86,465       .38  
Dolphin Capital Investors Ltd.  (1)  (2)  (3)
     31,123,920       81,821       .36  
Dah Sing Financial Holdings Ltd. (1)
     11,174,600       73,776       .33  
Other securities
             1,870,601       8.28  
              2,577,379       11.41  
                         
Information technology  - 11.20%
                        
Kingboard Chemical Holdings Ltd. (1)  (2)
     49,934,200       178,035       .79  
Tripod Technology Corp. (1)  (2)
     34,375,108       117,028       .52  
Novell, Inc. (2)  (3)
     17,978,000       113,082       .50  
SkillSoft PLC (ADR) (2) (3)
     7,225,000       75,646       .33  
Other securities
             2,045,931       9.06  
              2,529,722       11.20  
                         
Health care  - 9.80%
                        
ResMed Inc (3)
     2,983,200       125,831          
ResMed Inc (CDI) (1) (3)
     1,500,000       6,223       .58  
Integra LifeSciences Holdings Corp. (2)  (3)
     2,065,377       89,782       .40  
American Medical Systems Holdings, Inc. (2)  (3)
     5,370,000       76,200       .34  
Gerresheimer AG, non-registered shares (1)  (3)
     1,435,000       72,211       .32  
Grifols, SA (1)
     2,706,125       71,235       .31  
ArthroCare Corp. (2)  (3)
     2,070,000       69,035       .31  
Beckman Coulter, Inc.
     997,500       64,389       .28  
Hikma Pharmaceuticals PLC (1)
     6,769,153       63,356       .28  
Other securities
             1,576,348       6.98  
              2,214,610       9.80  
                         
Energy  - 5.85%
                        
OPTI Canada Inc. (2)  (3)
     14,849,000       250,061          
OPTI Canada Inc. (2)  (3)  (4)
     420,000       7,073       1.14  
Oilexco Inc. (3)
     6,808,600       89,009          
Oilexco Inc. (GBP denominated) (1)  (3)  (4)
     2,900,000       38,067          
Oilexco Inc. (3)  (4)
     520,000       6,798       .59  
Concho Resources Inc. (2)  (3)
     4,929,120       126,383       .56  
Quicksilver Resources Inc. (3)
     3,011,500       110,010       .48  
Banpu PCL (1)
     6,951,700       92,744       .41  
Straits Asia Resources Ltd. (1)
     37,066,000       88,029       .39  
Heritage Oil Corp. (2)  (3)
     1,564,900       78,572       .35  
Other securities
             435,908       1.93  
              1,322,654       5.85  
                         
Materials  - 5.01%
                        
AMG Advanced Metallurgical Group NV  (1)  (2)  (3)
     1,823,000       147,004       .65  
Peter Hambro Mining PLC (1)  (3)
     2,676,000       68,493       .30  
Other securities
             917,069       4.06  
              1,132,566       5.01  
                         
Consumer staples  - 3.57%
                        
Bare Escentuals, Inc. (2)  (3)
     4,744,400       111,114       .49  
Lindt & Sprüngli AG, participation certificate (1)
     19,166       63,706       .28  
Other securities
             631,222       2.80  
              806,042       3.57  
                         
Telecommunication services  - 1.85%
                        
Partner Communications Co. Ltd. (1)
     2,835,000       63,223          
Partner Communications Co. Ltd. (ADR)
     125,000       2,806       .29  
Time Warner Telecom Inc., Class A (3)
     4,100,000       63,509       .28  
Other securities
             288,645       1.28  
              418,183       1.85  
                         
Utilities  - 1.70%
                        
Xinao Gas Holdings Ltd. (1)  (2)
     51,038,000       92,256       .41  
Other securities
             292,484       1.29  
              384,740       1.70  
                         
Miscellaneous  -  4.97%
                        
Other common stocks in initial period of acquisition
             1,122,148       4.97  
                         
                         
Total common stocks (cost: $18,283,785,000)
             20,345,500       90.05  
                         
                         
                         
Rights & warrants  - 0.06%
                        
                         
Materials  - 0.03%
                        
Other securities
             7,190       .03  
                         
                         
Energy  - 0.02%
                        
OPTI Canada Inc., warrants, expire 2008 (1) (2) (3)  (4)
     105,000       769       .00  
Other securities
             3,812       .02  
              4,581       .02  
                         
Miscellaneous  -  0.01%
                        
Other rights & warrants in initial period of acquisition
             2,301       .01  
                         
                         
Total rights & warrants (cost: $5,520,000)
             14,072       .06  
                         
                         
                         
Convertible securities  - 0.13%
                        
                         
Other - 0.13%
                        
Other securities
             28,951       .13  
                         
Total convertible securities (cost: $25,115,000)
             28,951       .13  
                         
                         
                         
Bonds & notes  - 0.08%
                        
                         
Other - 0.08%
                        
Other securities
             17,546       .08  
                         
Total bonds & notes (cost: $17,187,000)
             17,546       .08  
                         
                         
                         
   
Principal
                  
   
amount
                  
Short-term securities  - 9.64%
     (000 )                
                         
                         
Federal Home Loan Bank 2.07%-2.68% due 4/16-6/18/2008
   $ 239,600       238,813       1.06  
CBA (Delaware) Finance Inc. 2.88%-3.05% due 4/7-5/30/2008
     173,000       172,358       .76  
BASF AG 2.20%-3.315% due 4/4-6/26/2008 (5)
     137,200       136,721       .61  
Westpac Banking Corp. 2.70%-4.40% due 4/9-6/5/2008 (5)
     133,800       133,405       .59  
ANZ National (International) Ltd. 2.52%-3.16% due 5/1-6/12/2008 (5)
     122,300       121,911       .54  
Danske Corp. 3.81% due 4/16/2008 (5)
     100,000       99,864       .44  
HSBC USA Inc. 2.73%-3.73% due 4/22-5/28/2008
     97,100       96,814       .43  
ING (U.S.) Funding LLC 2.77%-3.00% due 4/14-6/12/2008
     94,300       93,957       .42  
Eksportfinans ASA 2.80%-2.85% due 5/13-5/14/2008 (5)
     92,200       91,889       .41  
American Honda Finance Corp. 2.80%-2.90% due 4/16/-4/23/2008
     90,300       90,155       .40  
Calyon North America Inc. 3.035%-4.44% due 4/3-4/29/2008
     84,700       84,547       .37  
Swedish Export Credit Corp. 2.13%-2.78% due 4/25-6/19/2008
     82,600       82,200       .36  
Allied Irish Banks North America Inc. 4.38% due 4/7/2008 (5)
     77,800       77,753       .34  
Royal Bank of Scotland PLC 2.96%-4.52% due 4/28-5/8/2008
     73,500       73,307       .33  
Other securities
             583,873       2.58  
                         
                         
Total short-term securities (cost: $2,177,306,000)
             2,177,567       9.64  
                         
                         
Total investment securities (cost: $20,508,913,000)
             22,583,636       99.96  
Other assets less liabilities
             8,381       .04  
                         
Net assets
           $ 22,592,017       100.00 %
                         
                         
"Miscellaneous" securities include holdings in their initial period of acquisition that have not previously been publicly disclosed.
          
“Other securities” includes all issues that are not disclosed separately in the summary investment portfolio.
          

Investments in affiliates
 
A company is considered to be an affiliate of the fund under the Investment Company Act of 1940 if the
fund's holdings in that company represent 5% or more of the outstanding voting shares of that company.
The fund's affiliated holdings listed below are either shown in the preceding summary investment portfolio
or included in the market value of "Other securities" under their respective industry sectors. Further
details on these holdings and related transactions during the six months ended March 31, 2008, appear below.


   
Beginning shares
    
Additions
    
Reductions
    
Ending shares
    
Dividend
 income
 (000)
    
Market value of affiliates at 3/31/08 (000)
  
                                     
                                     
OPTI Canada Inc.(3)
     12,051,600       2,797,400       -       14,849,000     $ -     $ 250,061  
OPTI Canada Inc.(3) (4)
     420,000       -       -       420,000       -       7,073  
OPTI Canada Inc., warrants, expire 2008 (1) (3) (4)
     105,000       -       -       105,000       -       769  
Kingboard Chemical Holdings Ltd. (1)
     49,934,200       -       -       49,934,200       -       178,035  
Pusan Bank (1)
     11,726,500       -       -       11,726,500       5,937       147,095  
AMG Advanced Metallurgical Group NV (1)  (3)
     1,456,000       367,000       -       1,823,000       -       147,004  
Jumbo SA (1)
     4,844,956       -       -       4,844,956       2,225       145,897  
Daegu Bank, Ltd. (1)
     10,570,000       -       -       10,570,000       5,634       142,142  
Fourlis (1)
     4,074,000       -       -       4,074,000       -       133,304  
Schibsted ASA (1)
     3,138,000       1,096,850       -       4,234,850       -       127,225  
Downer EDI Ltd. (1)
     15,773,919       6,300,970       -       22,074,889       2,410       127,105  
Concho Resources Inc.(3)
     2,161,240       2,767,880       -       4,929,120       -       126,383  
Tripod Technology Corp. (1)
     28,477,108       5,898,000       -       34,375,108       -       117,028  
Novell, Inc.(3)
     17,978,000       -       -       17,978,000       -       113,082  
Bare Escentuals, Inc.(3)
     2,124,300       3,055,000       434,900       4,744,400       -       111,114  
BayWa AG (1)
     1,892,790       331,744       374,549       1,849,985       -       109,953  
Michael Page International PLC (1)
     8,771,190       9,170,000       -       17,941,190       -       107,589  
lululemon athletica inc.(3)   (6)
     2,698,000       970,414       -       3,668,414       -       104,293  
Praktiker Bau- und Heimwerkermärkte Holding AG (1)
     2,748,983       1,094,900       -       3,843,883       -       102,670  
Xinao Gas Holdings Ltd. (1)
     56,438,000       -       5,400,000       51,038,000       -       92,256  
Kuoni Reisen Holding AG, Class B (1)
     43,309       121,825       -       165,134       -       91,681  
Integra LifeSciences Holdings Corp.(3)
     1,578,000       645,000       157,623       2,065,377       -       89,782  
Kaba Holding AG (1)
     107,000       143,800       -       250,800       758       84,667  
Dolphin Capital Investors Ltd. (1) (3)
     32,021,860       1,935,000       2,832,940       31,123,920       -       81,821  
Lions Gate Entertainment Corp.(3)
     7,728,500       521,500       -       8,250,000       -       80,437  
Heritage Oil Corp.(3)
     -       1,564,900       -       1,564,900       -       78,572  
American Medical Systems Holdings, Inc.(3)
     3,725,000       1,645,000       -       5,370,000       -       76,200  
SkillSoft PLC (ADR)(3)
     6,450,000       775,000       -       7,225,000       -       75,646  
Rightmove PLC (1)
     6,209,450       2,398,207       850,000       7,757,657       -       75,305  
ArthroCare Corp.(3)
     1,394,000       676,000       -       2,070,000       -       69,035  
Nishimatsuya Chain Co., Ltd. (1)
     3,855,500       1,706,500       -       5,562,000       383       67,126  
Heartland Payment Systems, Inc.
     1,200,000       1,495,000       -       2,695,000       333       62,012  
Café de Coral Holdings Ltd. (1)
     23,750,000       7,800,000       -       31,550,000       457       60,543  
Medicis Pharmaceutical Corp., Class A
     3,545,000       600,000       1,125,000       3,020,000       193       59,464  
Blue Nile, Inc.(3)
     1,037,940       -       -       1,037,940       -       56,204  
Andersons, Inc.
     1,000,000       247,000       -       1,247,000       193       55,629  
Jammu and Kashmir Bank Ltd. (1)
     3,149,500       -       -       3,149,500       -       53,868  
Vital Signs, Inc.
     859,690       200,000       -       1,059,690       210       53,673  
Ekornes ASA (1)
     2,237,598       700,000       -       2,937,598       -       53,453  
ACI Worldwide, Inc.(3)
     -       2,584,000       -       2,584,000       -       51,473  
TK Corp. (1) (3)
     1,580,000       79,000       -       1,659,000       -       50,665  
Nakanishi Inc. (1)
     219,800       271,300       -       491,100       258       50,569  
Resources Connection, Inc.(3)   (6)
     900,000       1,857,500       -       2,757,500       -       49,277  
Northgate PLC (1)
     2,230,000       1,884,822       -       4,114,822       752       46,412  
Grontmij NV, depository receipts (1)
     790,000       399,213       -       1,189,213       -       44,518  
Pyeong San Co., Ltd. (1)
     1,220,032       -       145,032       1,075,000       57       43,861  
TradeDoubler AB (1)
     1,820,000       300,000       -       2,120,000       -       43,731  
Manila Water Co., Inc. (1)
     35,000,000       66,175,600       -       101,175,600       -       43,604  
First Calgary Petroleums Ltd.(3)
     9,048,000       1,798,000       -       10,846,000       -       30,512  
First Calgary Petroleums Ltd. (GBP denominated) (1) (3)
     4,800,000       -       -       4,800,000       -       12,808  
Apollo Hospitals Enterprise Ltd. (1)
     3,275,000       -       -       3,275,000       -       42,046  
Genesis Lease Ltd. (ADR)
     2,415,000       469,000       -       2,884,000       2,632       41,962  
Banyan Tree Holdings Ltd. (1)
     45,405,000       4,236,000       8,712,000       40,929,000       -       40,990  
Interhyp AG (1)
     454,850       73,000       -       527,850       -       40,333  
Kenmare Resources PLC (1) (3)
     39,316,000       5,775,000       -       45,091,000       -       40,170  
Kenmare Resources PLC, warrants, expire 2009
     5,775,000       -       5,775,000       -       -       -  
Honeys Co., Ltd. (1)
     1,725,000       493,000       -       2,218,000       -       37,880  
SonoSite, Inc.(3)
     93,819       1,237,281       -       1,331,100       -       37,843  
Trinity Ltd. (1) (3)  (4)
     -       82,337,500       -       82,337,500       -       37,559  
Navitas Ltd. (1)
     21,727,690       -       -       21,727,690       914       36,170  
Veeco Instruments Inc.(3)
     1,598,523       508,648       -       2,107,171       -       35,042  
Michaniki SA (1)
     4,314,400       -       379,400       3,935,000       -       30,026  
Michaniki SA, preference shares (1)
     1,626,276       -       754,376       871,900       -       4,541  
Volcano Corp.(3)
     2,436,800       308,700       -       2,745,500       -       34,319  
Downey Financial Corp.
     875,000       1,350,000       400,000       1,825,000       372       33,544  
Unitech Corporate Parks PLC (1)  (3)
     23,399,700       -       4,533,900       18,865,800       -       32,948  
Allscripts Healthcare Solutions, Inc.(3)
     425,000       2,575,000       -       3,000,000       -       30,960  
UnionBank of the Philippines (1)
     35,823,500       -       -       35,823,500       -       30,382  
Unisteel Technology Ltd. (1)
     28,607,000       3,224,000       -       31,831,000       -       30,360  
Emeco Holdings Ltd. (1)
     28,710,000       12,317,381       -       41,027,381       768       30,215  
Internet Capital Group, Inc.(3)
     2,600,000       269,000       -       2,869,000       -       30,038  
Hung Poo Real Estate Development Corp. (1)
     19,101,120       -       2,329,000       16,772,120       -       29,868  
eHealth, Inc. (3)
     866,400       405,000       -       1,271,400       -       28,060  
InfoSpace.com, Inc.
     1,294,100       1,127,100       -       2,421,200       2,835       28,013  
Ipca Laboratories Ltd. (1)
     1,794,000       -       -       1,794,000       160       27,672  
Jackson Hewitt Tax Service Inc.
     2,396,000       -       -       2,396,000       863       27,482  
Winnebago Industries, Inc.
     -       1,623,000       -       1,623,000       161       27,429  
austriamicrosystems AG, non-registered shares (1) (3)
     575,000       140,000       -       715,000       -       27,373  
Abaxis, Inc.(3)
     -       1,168,828       -       1,168,828       -       27,082  
Beacon Roofing Supply, Inc.(3)
     2,695,400       -       -       2,695,400       -       26,954  
Houston Wire & Cable Co.
     600,000       1,078,900       -       1,678,900       269       26,896  
Hutchinson Technology Inc.(3)
     1,286,035       400,000       -       1,686,035       -       26,825  
Altra Holdings, Inc.(3)
     1,905,548       -       -       1,905,548       -       25,630  
Regal Petroleum PLC (1) (3)
     7,817,000       2,500,000       -       10,317,000       -       24,975  
Peet's Coffee & Tea, Inc.(3)
     1,015,000       -       -       1,015,000       -       23,863  
JVM Co., Ltd. (1)
     506,000       -       -       506,000       135       23,002  
I-Flow Corp.(3)
     1,658,800       -       86,800       1,572,000       -       22,055  
Halla Engineering & Construction Corp. (1)
     626,000       -       -       626,000       278       21,398  
Cougar Biotechnology, Inc. (3) (4)
     -       1,000,000       -       1,000,000       -       21,000  
Infotech Enterprises Ltd. (1)
     3,000,000       -       -       3,000,000       -       20,998  
Mineral Deposits Ltd. (1) (3)
     16,220,000       -       -       16,220,000       -       14,828  
Mineral Deposits Ltd. (CAD denominated) (1) (3)
     -       6,300,000       -       6,300,000               5,759  
Thinkware Systems Corp. (1) (3)
     -       626,120       -       626,120       -       20,556  
Gruppo MutuiOnline SpA (1) (3)
     3,160,000       -       -       3,160,000       -       20,463  
Cascal NV(3)
     -       1,693,800       -       1,693,800       -       20,326  
Vital Images, Inc.(3)
     1,023,000       589,000       250,000       1,362,000       -       20,185  
FirstFed Financial Corp.(3)
     -       735,000       -       735,000       -       19,955  
Lonrho PLC (1) (3)
     -       26,350,000       -       26,350,000       -       19,608  
Funcom NV (1) (3)
     2,628,750       371,250       -       3,000,000       -       18,765  
Bloomsbury Publishing PLC (1)
     5,405,000       -       -       5,405,000       78       17,691  
Arpida Ltd.(1)   (3)
     1,231,509       -       -       1,231,509       -       17,298  
G-Shank Enterprise Co., Ltd. (1)
     5,884,320       9,150,000       -       15,034,320       -       16,812  
PetMed Express, Inc.(3)
     1,500,000       -       -       1,500,000       -       16,635  
Home Federal Bancorp, Inc.
     380,000       1,030,751       26,502       1,384,249       76       16,597  
Cpl Resources PLC (1)
     2,784,000       -       186,502       2,597,498       96       16,406  
Domino's Pizza Enterprises Ltd. (1)
     -       4,498,000       -       4,498,000       170       13,378  
Trigon Agri A/S(1)   (3)
     -       3,875,000       -       3,875,000       -       12,492  
Dore Holdings Ltd. (1)
     78,934,000       15,888,368       -       94,822,368       619       12,433  
ValueVision Media, Inc., Class A (3)
     1,930,000       -       30,000       1,900,000       -       10,526  
TICON Property Fund (1)
     30,400,000       -       -       30,400,000       206       10,466  
TICON Property Fund, rights, expire 2007
     6,175,000       -       6,175,000       -       -       -  
TICON Property Fund, rights, expire 2007
     1,425,000       -       1,425,000       -       -       -  
Solomon Mutual Savings Bank (1)
     1,062,023       -       -       1,062,023       -       10,404  
SourceForge, Inc.(3)  (6)
     1,000       4,699,000       -       4,700,000       -       9,353  
AtriCure, Inc.(3)  (6)
     87,257       643,243       -       730,500       -       9,307  
Chuang's China Investments Ltd. (1)
     95,968,000       24,027,000       -       119,995,000       77       9,101  
Entertainment Rights PLC (1) (3)
     42,500,000       -       -       42,500,000       -       8,643  
Norfolk Group Ltd.(1)   (3)
     6,500,000       -       -       6,500,000       -       8,378  
Introgen Therapeutics, Inc.(3)
     2,677,100       -       -       2,677,100       -       8,326  
Spark Networks, Inc.(3)
     2,392,200       -       456,900       1,935,300       -       8,283  
YBM Sisa.com Inc. (1)
     824,930       -       -       824,930       440       8,097  
Hyflux Water Trust (1) (3)
     -       19,500,000       -       19,500,000       -       8,008  
Ono Sokki Co., Ltd. (1)
     1,609,000       -       -       1,609,000       131       7,960  
Vical Inc.(3)
     2,250,279       -       -       2,250,279       -       7,921  
MEMSIC, Inc.(3)
     -       1,200,000       -       1,200,000       -       7,212  
Vision-Sciences, Inc.(3)
     2,096,733       103,267       -       2,200,000       -       7,194  
Gaming VC Holdings SA (1)
     2,023,800       -       -       2,023,800       486       6,703  
CEC Unet PLC (1) (3)
     -       35,100,775       -       35,100,775       -       3,483  
Zoloto Resources Ltd.(3)
     5,425,000       -       -       5,425,000       -       3,168  
Phoenix PDE Co., Ltd. (1) (3)
     1,500,000       -       -       1,500,000       -       2,842  
Energem Resources Inc.(3)
     8,002,500       -       500,000       7,502,500       -       1,680  
Energem Resources Inc. (3)  (4)
     2,200,000       -       -       2,200,000       -       492  
Energem Resources Inc., warrants, expire 2009 (1) (3)  (4)
     2,200,000       -       -       2,200,000       -       27  
Energem Resources Inc., warrants, expire 2008 (1) (3)
     1,200,000       -       -       1,200,000       -       -  
Redline Communications Group Inc.(3)
     -       787,500       89,000       698,500       -       700  
Redline Communications Inc.
     3,150,000       -       3,150,000       -       -       -  
Imagelinx PLC (1) (3)
     21,385,714       -       -       21,385,714       -       318  
ZOOTS (1) (3) (4)
     25,173       -       -       25,173       -       234  
AB Lindex (7)
     5,118,000       -       5,118,000       -       -       -  
Arbitron Inc. (7)
     1,496,760       -       185,000       1,311,760       299       -  
A-TEC Industries AG (1) (7)
     436,800       35,000       172,250       299,550       -       -  
BA Energy Inc. (7)
     5,661,692       -       5,661,692       -       -       -  
Caspian Energy Inc. (GBP denominated) (7)
     3,450,000       -       3,450,000       -       -       -  
Caspian Energy Inc. (7)
     2,450,000       -       2,450,000       -       -       -  
CDNetworks Co., Ltd.  (1) (3) (7)
     685,615       -       30,114       655,501       -       -  
Chart Industries, Inc. (7)
     1,555,274       -       1,555,274       -       -       -  
China Medical Technologies, Inc. (ADR) (7)
     1,686,606       -       1,086,606       600,000       -       -  
CNET Networks, Inc. (3)  (7)
     10,655,000       -       8,000,000       2,655,000       -       -  
Eastern Property Holdings Ltd. (7)
     219,978       -       219,978       -       -       -  
Eastern Property Holdings Ltd., rights, expire 2007 (7)
     -       202,797       202,797       -       -       -  
Echelon Corp. (3)  (7)
     2,000,000       -       -       2,000,000       -       -  
Fleetwood Enterprises, Inc. (3)  (7)
     4,405,000       -       3,801,600       603,400       -       -  
FoxHollow Technologies, Inc. (7)
     2,176,400       -       2,176,400       -       -       -  
Gentium SpA (ADR)  (7)
     750,000       90,000       840,000       -       -       -  
Gentium SpA (ADR), warrants, expire 2011 (7)
     90,000       -       90,000       -       -       -  
Greatbatch, Inc. (3)  (7)
     1,359,700       -       369,300       990,400       -       -  
GVK Power & Infrastructure Ltd. (1)  (3) (7)
     3,357,464       30,217,176       -       33,574,640       -       -  
Hythiam, Inc. (3)  (7)
     2,475,000       225,000       -       2,700,000       -       -  
Insulet Corp. (3)  (7)
     2,012,680       -       1,002,680       1,010,000       -       -  
JetBlue Airways Corp. (3)   (7)
     9,950,000       -       5,950,000       4,000,000       -       -  
Major Drilling Group International Inc. (3)   (7)
     1,637,500       -       837,500       800,000       -       -  
Nien Made Enterprise Co. Ltd. (7)
     28,170,012       -       28,170,012       -       -       -  
Orco Property Group SA  (1)  (7)
     710,454       -       633,524       76,930       -       -  
Samsung Engineering Co., Ltd. (1) (7)
     2,437,640       -       625,000       1,812,640       1,985       -  
SFA Engineering Corp. (7)
     592,140       -       592,140       -       -       -  
Sharper Image Corp. (7)
     950,000       -       950,000       -       -       -  
SupportSoft, Inc. (3)  (7)
     2,554,400       -       1,819,400       735,000       -       -  
Synenco Energy Inc., Class A (7)
     800,000       -       800,000       -       -       -  
Synenco Energy Inc., Class A (3)   (7)
     2,050,000       -       -       2,050,000       -       -  
                                                 
                                    $ 33,850     $ 5,805,542  

The following footnotes apply to either the individual securities noted or one or more of the securities aggregared as a single line item.
         
(1)Valued under fair value procedures adopted by authority of the board of directors. The total value of all such securities, including those in “Miscellaneous” and “Other securities,” was $11,802,000,000, which represented 52.24% of the net assets of the fund.
(2) Represents an affiliated company as defined under the Investment Company Act of 1940.
(3) Security did not produce income during the last 12 months.
    
(4) Purchased in a transaction exempt from registration under the Securities Act of 1933. May be subject to legal or contractual restrictions on resale.  Further details on these holdings appear below.

 
 
  Acquisition
 date(s)
    
Cost
 (000)
    
Market
 value
 (000)
    
Percent
of net
 assets
  
                     
Boart Longyear Ltd.
4/4/2007
   $ 49,573     $ 55,371       .25 %
Oilexco Inc. (GBP denominated)
12/15/2005
     9,456       38,067       .17  
Oilexco Inc.
3/7/2007
     3,454       6,798       .03  
Trinity Ltd.
12/6/2007
     37,508       37,559       .17  
Value Creation Inc.
8/25/2005-9/1/2006
     33,229       33,364       .15  
Cougar Biotechnology, Inc.
12/17/2007
     29,000       21,000       .09  
OPTI Canada Inc.
6/1/2005
     4,610       7,073       .03  
OPTI Canada Inc., warrants, expire 2008
6/1/2005
     355       769       .00  
Energem Resources Inc.
3/6/2007
     1,035       492       .00  
Energem Resources Inc., warrants, expire 2009
3/6/2007
     367       27       .00  
ZOOTS
1/30/2001-4/3/2001
     8,167       234       .00  
Other restricted securities
       140,481       149,074       .66  
                           
Total restricted securities
     $ 317,235     $ 349,828       1.55 %
         
(5) Purchased in a transaction exempt from registration under the Securities Act of 1933. May be resold in the United States in transactions exempt from registration, normally to qualified institutional buyers. The total value of all such securities, including those in "Other securities,"  was $846,858,000, which represented 3.75% of the net assets of the fund.
(6) This security was in its intial period of acquisition at 9/30/2007 and was not publicly disclosed.
(7) Unaffiliated issuer at 3/31/2008.
        
         
         
ADR = American Depositary Receipts
        
CAD = Canadian Dollar
        
CDI = CREST Depository Interest
        
GBP = British Pound
        
 
See Notes to Financial Statements
                        
 
Financial statements
unaudited
 
Statement of assets and liabilities
        
 
  
at March 31, 2008
  
(dollars and shares in thousands, except per-share amounts)
  
             
Assets:
            
 Investment securities at market:
            
  Unaffiliated issuers (cost: $15,128,279)
   $ 16,778,094        
  Affiliated issuers (cost: $5,380,634)
     5,805,542     $ 22,583,636  
 Cash denominated in currencies other than U.S. dollars (cost: $12,825)
             12,797  
 Cash
             151  
 Receivables for:
                
  Sales of investments
     53,114          
  Sales of fund's shares
     34,070          
  Dividends and interest
     51,475          
  Other
     257       138,916  
              22,735,500  
Liabilities:
                
 Payables for:
                
  Purchases of investments
     92,142          
  Repurchases of fund's shares
     29,704          
  Investment advisory services
     10,821          
  Services provided by affiliates
     8,635          
  Directors' deferred compensation
     1,603          
  Other
     578       143,483  
Net assets at March 31, 2008
           $ 22,592,017  
                 
Net assets consist of:
                
 Capital paid in on shares of capital stock
           $ 19,726,308  
 Distributions in excess of net investment income
             (467,449 )
 Undistributed net realized gain
             1,259,504  
 Net unrealized appreciation
             2,073,654  
Net assets at March 31, 2008
           $ 22,592,017  
 
Total authorized capital stock - 800,000 shares, $.01 par value (626,683 total shares outstanding)
              
   
Net assets
    
Shares outstanding
    
Net asset value per share*
  
                     
Class A
   $ 17,560,323       484,440     $ 36.25  
Class B
     682,140       19,643       34.73  
Class C
     974,623       28,300       34.44  
Class F
     767,409       21,356       35.93  
Class 529-A
     448,613       12,434       36.08  
Class 529-B
     62,128       1,768       35.14  
Class 529-C
     171,310       4,882       35.09  
Class 529-E
     27,123       759       35.73  
Class 529-F
     33,245       922       36.06  
Class R-1
     35,543       1,011       35.17  
Class R-2
     602,827       17,100       35.25  
Class R-3
     527,620       14,798       35.66  
Class R-4
     263,570       7,314       36.04  
Class R-5
     435,543       11,956       36.43  
(*) Maximum offering price and redemption price per share were equal to the net asset value per share for all share classes, except for Class A and 529-A, for which the maximum offering prices per share were $38.46 and $38.28, respectively.
  
                         
See Notes to Financial Statements
                        
 
Statement of operations
        
unaudited
  
for the six months ended March 31, 2008
  
(dollars in thousands)
  
             
Investment income:
            
 Income:
            
  Dividends (net of non-U.S. taxes of $11,592; also includes $33,850 from affiliates)
   $ 121,594        
  Interest
     58,182     $ 179,776  
                 
 Fees and expenses*:
                
  Investment advisory services
     78,040          
  Distribution services
     39,392          
  Transfer agent services
     13,525          
  Administrative services
     5,107          
  Reports to shareholders
     724          
  Registration statement and prospectus
     514          
  Postage, stationery and supplies
     1,424          
  Directors' compensation
     119          
  Auditing and legal
     26          
  Custodian
     2,541          
  State and local taxes
     460          
  Other
     172          
  Total fees and expenses before reimbursements/waivers
     142,044          
 Less reimbursements/waivers of fees and expenses:
                
  Investment advisory services
     7,804          
  Administrative services
     96          
  Total fees and expenses after reimbursements/waivers
             134,144  
 Net investment income
             45,632  
                 
Net realized gain and unrealized depreciation on investments and currency:
                
 Net realized gain (loss) on:
                
  Investments (including $103,171 net gain from affiliates)
     1,666,626          
  Currency transactions
     (5,424 )     1,661,202  
 Net unrealized depreciation on:
                
  Investments
     (5,540,646 )        
  Currency translations
     (1,253 )     (5,541,899 )
   Net realized gain and unrealized depreciation on investments and currency
             (3,880,697 )
Net decrease in net assets resulting from operations
           $ (3,835,065 )
                 
* Additional information related to class-specific fees and expenses is included in the Notes to Financial Statements.
                
                 
See Notes to Financial Statements
                
                 
                 
                 
Statements of changes in net assets
  
(dollars in thousands)
  
                 
   
Six months
    
Year ended
  
   
ended March 31,
    
September 30,
  
     
2008*
    
2007
  
Operations:
                
 Net investment income
   $ 45,632     $ 173,780  
 Net realized gain on investments and currency transactions
     1,661,202       2,504,365  
 Net unrealized (depreciation) appreciation on investments and currency translations
     (5,541,899 )     3,981,821  
  Net (decrease) increase in net assets resulting from operations
     (3,835,065 )     6,659,966  
                 
Dividends and distributions paid to shareholders:
                
 Dividends from net investment income and currency gain
     (408,316 )     (318,872 )
 Distributions from net realized gain on investments
     (2,355,191 )     (1,736,095 )
   Total dividends and distributions paid to shareholders
     (2,763,507 )     (2,054,967 )
                 
Net capital share transactions
     2,810,078       3,305,969  
                 
Total (decrease) increase in net assets
     (3,788,494 )     7,910,968  
                 
Net assets:
                
 Beginning of period
     26,380,511       18,469,543  
 End of period (including distributions in excess of net investment income: $(467,449) and $(104,765), respectively)
   $ 22,592,017     $ 26,380,511  
                 
*Unaudited.
                
                 
See Notes to Financial Statements
                

 
Notes to financial statements      
                                                                                                               unaudited
 
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 14 share classes consisting of four retail share classes, five 529 college savings plan share classes and five retirement plan share classes. The 529 college savings plan share classes (529-A, 529-B, 529-C, 529-E and 529-F) can be used to save for college education. The five retirement plan share classes (R-1, R-2, R-3, R-4 and R-5) are sold without any sales charges and do not carry any conversion rights. The fund’s share classes are described below:

Share class
Initial sales charge
Contingent deferred sales charge upon redemption
Conversion feature
Class A and 529-A
Up to 5.75%
None (except 1% for certain redemptions within one year of purchase without an initial sales charge)
None
Class B and 529-B
None
Declines from 5% to 0% for redemptions within six years of purchase
Class B and 529-B convert to Class A and 529-A, respectively, after eight years
Class C
None
1% for redemptions within one year of purchase
Class C converts to Class F after 10 years
Class 529-C
None
1% for redemptions within one year of purchase
None
Class 529-E
None
None
None
Class F and 529-F
None
None
None
Class R-1, R-2, R-3, R-4 and R-5
None
None
None
 

Holders of all share classes have equal pro rata rights to assets, dividends and liquidation proceeds. Each share class has identical voting rights, except for the exclusive right to vote on matters affecting only its class. Share classes have different fees and expenses ("class-specific fees and expenses"), primarily due to different arrangements for distribution, administrative and shareholder services. Differences in class-specific fees and expenses will result in differences in net investment income and, therefore, the payment of different per-share dividends by each class.

Significant accounting policies – The financial statements have been prepared to comply with accounting principles generally accepted in the United States of America. These principles require management to make estimates and assumptions that affect reported amounts and disclosures. Actual results could differ from those estimates. The following is a summary of the significant accounting policies followed by the fund:


Security valuation – Equity securities are valued at the official closing price of, or 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. Prices for each security are taken from the principal exchange or market in which the security trades. Fixed-income securities, including short-term securities purchased with more than 60 days left to maturity, are valued at prices obtained from an independent pricing service when such prices are available. However, where the investment adviser deems it appropriate, such securities will be valued at the mean quoted bid and asked prices (or bid prices, if asked prices are not available) or at prices for securities of comparable maturity, quality and type. Securities with both fixed-income and equity characteristics, or equity securities traded principally among fixed-income dealers, are valued in the manner described above for either equity or fixed-income securities, depending on which method is deemed most appropriate by the investment adviser. Short-term securities purchased within 60 days to maturity are valued at amortized cost, which approximates market value. The value of short-term securities originally purchased with maturities greater than 60 days is determined based on an amortized value to par when they reach 60 days or less remaining to maturity. The ability of the issuers of the debt securities held by the fund to meet their obligations may be affected by economic developments in a specific industry, state or region.

Securities and other assets for which representative market quotations are not readily available or are considered unreliable by the investment adviser are fair valued as determined in good faith under procedures adopted by authority of the fund's board of directors. Market quotations may be considered unreliable if events occur that materially affect the value of securities (particularly securities outside the U.S.) between the close of trading in those securities and the close of regular trading on the New York Stock Exchange.  Various factors may be reviewed in order to make a good faith determination of a security’s fair value. These factors include, but are not limited to, the type and cost of the security; contractual or legal restrictions on resale of the security; relevant financial or business developments of the issuer; actively traded similar or related securities; conversion or exchange rights on the security; related corporate actions; significant events occurring after the close of trading in the security; and changes in overall market conditions.

Security transactions and related investment income – Security transactions are recorded by the fund as of the date the trades are executed with brokers. Realized gains and losses from security transactions are determined based on the specific identified cost of the securities. 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.

Class allocations – Income, fees and expenses (other than class-specific fees and expenses) and realized and unrealized gains and losses are allocated daily among the various share classes based on their relative net assets. Class-specific fees and expenses, such as distribution, administrative and shareholder services, are charged directly to the respective share class.

Dividends and distributions to shareholders – Dividends and distributions paid to shareholders are recorded on the ex-dividend date.

Currency translation – Assets and liabilities, including investment securities, denominated in currencies other than U.S. dollars are translated into U.S. dollars at the exchange rates in effect on the valuation date. Purchases and sales of investment securities and income and expenses are translated into U.S. dollars at the exchange rates on the dates of such transactions. On the accompanying financial statements, the effects of changes in exchange rates on investment securities are included with the net realized gain or loss and net unrealized appreciation or depreciation on investments. The realized gain or loss and unrealized appreciation or depreciation resulting from all other transactions denominated in currencies other than U.S. dollars are disclosed separately.
 
2. Investments outside the U.S.
 
Investment risk – The risks of investing in securities of issuers outside the U.S. 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. Gains realized by the fund on the sale of securities in certain countries are subject to non-U.S. taxes. The fund records a liability based on unrealized gains to provide for potential non-U.S. taxes payable upon the sale of these securities. For the six months ended March 31, 2008, non-U.S. taxes paid on realized gains were $5,384,000. As of March 31, 2008, there were no non-U.S. taxes provided on unrealized gains.

3. Federal income taxation and distributions                                                                                                                                

The fund complies with the requirements under Subchapter M of the Internal Revenue Code applicable to mutual funds and intends to distribute substantially all of its net taxable income and net capital gains each year. The fund is not subject to income taxes to the extent such distributions are made. Therefore, no federal income tax provision is required.

As of and during the period ended March 31, 2008, the fund did not have a liability for any unrecognized tax benefits. The fund recognizes interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the statement of operations. During the period, the fund did not incur any interest or penalties.

The fund is not subject to examination by U.S. federal tax authorities for tax years before 2003, by state tax authorities for tax years before 2002 and by tax authorities outside the U.S. for tax years before 2000.

Distributions – Distributions paid to shareholders are based on net investment income and net realized gains determined on a tax basis, which may differ from net investment income and net realized gains for financial reporting purposes. These differences are due primarily to differing treatment for items such as currency gains and losses; short-term capital gains and losses; capital losses related to sales of certain securities within 30 days of purchase; unrealized appreciation of certain investments in securities outside the U.S.; non-U.S. taxes on capital gains; and income on certain investments. 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 for financial reporting purposes.

The components of distributable earnings on a tax basis are reported as of the fund’s most recent year-end. As of September 30, 2007, the fund had tax basis undistributed ordinary income of $350,623,000 and undistributed long-term capital gains of $1,954,164,000.


As of March 31, 2008, the tax basis unrealized appreciation (depreciation) and cost of investment securities were as follows:

  (dollars in thousands)  
Gross unrealized appreciation on investment securities
   $ 4,232,111  
Gross unrealized depreciation on investment securities
     (2,659,843 )
Net unrealized appreciation on investment securities
     1,572,268  
Cost of investment securities
     21,011,368  

The tax character of distributions paid to shareholders was as follows (dollars in thousands):
 
   
Six months ended March 31, 2008
    
Year ended September 30, 2007
  
   
Ordinary income
    
Long-term capital gains
    
Total distributions paid
    
Ordinary income
    
Long-term capital gains
    
Total distributions paid
  
Share class
                                    
Class A
   $ 334,613     $ 1,839,490     $ 2,174,103     $ 408,840     $ 1,271,426     $ 1,680,266  
Class B
     8,096       75,117       83,213       11,225       51,014       62,239  
Class C
     11,674       105,862       117,536       14,213       62,804       77,017  
Class F
     14,518       77,790       92,308       13,503       40,771       54,274  
Class 529-A
     7,942       44,192       52,134       8,151       25,160       33,311  
Class 529-B
     637       6,527       7,164       882       4,194       5,076  
Class 529-C
     1,785       17,598       19,383       2,285       10,443       12,728  
Class 529-E
     408       2,737       3,145       464       1,635       2,099  
Class 529-F
     643       3,239       3,882       588       1,702       2,290  
Class R-1
     412       3,688       4,100       476       2,004       2,480  
Class R-2
     6,744       62,474       69,218       8,616       37,175       45,791  
Class R-3
     7,952       52,541       60,493       7,972       28,485       36,457  
Class R-4
     4,695       25,247       29,942       3,801       11,572       15,373  
Class R-5
     8,197       38,689       46,886       6,796       18,770       25,566  
Total
   $ 408,316     $ 2,355,191     $ 2,763,507     $ 487,812     $ 1,567,155     $ 2,054,967  
 
4. Fees and transactions with related parties

Capital Research and Management Company ("CRMC"), the fund’s investment adviser, is the parent company of American Funds Service Company ® ("AFS"), the fund’s transfer agent, and American Funds Distributors, ® Inc. ("AFD"), the principal underwriter of the fund’s shares.

Investment advisory services - The Investment Advisory and Service Agreement with CRMC provides for monthly fees accrued daily. These fees are based on a declining series of annual rates beginning with 0.800% on the first billion dollars of daily net assets and decreasing to 0.595% on such assets in excess of $27 billion. CRMC is currently waiving 10% of investment advisory services fees. During the six months ended March 31, 2008, total investment advisory services fees waived by CRMC were $7,804,000. As a result, the fee shown on the accompanying financial statements of $78,040,000, which was equivalent to an annualized rate of 0.632%, was reduced to $70,236,000, or 0.568% of average daily net assets.

Class-specific fees and expenses – Expenses that are specific to individual share classes are accrued directly to the respective share class. The principal class-specific fees and expenses are described below:

Distribution services – The fund has adopted plans of distribution for all share classes, except Class R-5. Under the plans, the board of directors approves certain categories of expenses that are used to finance activities primarily intended to sell fund shares and service existing accounts. The plans provide for payments, based on an annualized percentage of average daily net assets, ranging from 0.30% to 1.00% as noted on the following page. In some cases, the board of directors has limited the amounts that may be paid to less than the maximum allowed by the plans. All share classes may use up to 0.25% of average daily net assets to pay service fees, or to compensate AFD for paying service fees, to firms that have entered into agreements with AFD to provide certain shareholder services. The remaining amounts available to be paid under each plan are paid to dealers to compensate them for their sales activities.

For Class A and 529-A, the board of directors has also approved the reimbursement of dealer and wholesaler commissions paid by AFD for certain shares sold without a sales charge. These classes reimburse AFD for amounts billed within the prior 15 months but only to the extent that the overall annual expense limit of 0.30% is not exceeded. As of March 31, 2008, there were no unreimbursed expenses subject to reimbursement for Class A or 529-A.

Share class
Currently approved limits
Plan limits
Class A
0.30%
0.30%
Class 529-A
0.30
0.50
Class B and 529-B
1.00
1.00
Class C, 529-C and R-1
1.00
1.00
Class R-2
0.75
1.00
Class 529-E and R-3
0.50
0.75
Class F, 529-F and R-4
0.25
0.50

Transfer agent services – The fund has a transfer agent agreement with AFS for Class A and B. Under this agreement, these share classes compensate AFS for transfer agent services including shareholder recordkeeping, communications and transaction processing. AFS is also compensated for certain transfer agent services provided to all other share classes from the administrative services fees paid to CRMC described below.

Administrative services – The fund has an administrative services agreement with CRMC to provide transfer agent and other related shareholder services for all share classes other than Class A and B. Each relevant share class pays CRMC annual fees up to 0.15% (0.10% for Class R-5) based on its respective average daily net assets. Each relevant share class also pays AFS additional amounts for certain transfer agent services. CRMC and AFS may use these fees to compensate third parties for performing these services. CRMC has agreed to pay AFS on the fund's behalf for a portion of the transfer agent services fees for some of the retirement plan share classes. For the six months ended March 31, 2008, the total administrative services fees paid by CRMC were $96,000 for Class R-2. Administrative services fees are presented gross of any payments made by CRMC. Each 529 share class is subject to an additional annual administrative services fee of 0.10% of its respective average daily net assets; this fee is payable to the Commonwealth of Virginia for the maintenance of the 529 college savings plan. Although these amounts are included with administrative services fees on the accompanying financial statements, the Commonwealth of Virginia is not considered a related party.

Expenses under the agreements described on the previous pages for the six months ended March 31, 2008, were as follows (dollars in thousands):

Share class
Distribution services
Transfer agent services
Administrative services
CRMC administrative services
Transfer agent services
Commonwealth of Virginia administrative services
Class A
$23,227
$13,014
Not applicable
Not applicable
Not applicable
Class B
 3,789
 511
Not applicable
Not applicable
Not applicable
Class C
 5,291
 
 
 
 
 
 
Included
in
administrative services
$785
$141
Not applicable
Class F
 1,010
 466
 95
Not applicable
Class 529-A
 462
 260
 44
$ 234
Class 529-B
 335
 37
 12
 34
Class 529-C
 904
 101
 29
 90
Class 529-E
 72
 16
 3
 14
Class 529-F
-
 19
 3
 17
Class R-1
187
 19
 16
Not applicable
Class R-2
 2,406
 461
 1,146
Not applicable
Class R-3
 1,375
 390
 287
Not applicable
Class R-4
 334
 182
 11
Not applicable
Class R-5
Not applicable
 190
 5
Not applicable
Total
$39,392
$13,525
$2,926
$1,792
$389


Directors’ deferred compensation – Since the adoption of the deferred compensation plan in 1993, directors who are unaffiliated with CRMC may elect to defer the cash payment of part or all of their compensation. These deferred amounts, which remain as liabilities of the fund, are treated as if invested in shares of the fund or other American Funds. These amounts represent general, unsecured liabilities of the fund and vary according to the total returns of the selected funds. Directors’ compensation of $119,000, shown on the accompanying financial statements, includes $213,000 in current fees (either paid in cash or deferred) and a net decrease of $94,000 in the value of the deferred amounts.

Affiliated officers and directors – Officers and certain directors of the fund are or may be considered to be affiliated with CRMC, AFS and AFD. No affiliated officers or directors received any compensation directly from the fund.
 
5. Capital share transactions

Capital share transactions in the fund were as follows (dollars and shares in thousands):

 
Share class
  
Sales*
    
Reinvestments of dividends and distributions
    
Repurchases*
    
Net increase
  
   
Amount
    
Shares
    
Amount
    
Shares
    
Amount
    
Shares
    
Amount
    
Shares
  
Six months ended March 31, 2008
                                            
Class A
   $ 1,380,872       33,053     $ 2,089,917       51,123     $ (1,654,782 )     (40,687 )   $ 1,816,007       43,489  
Class B
     50,758       1,258       80,744       2,057       (60,784 )     (1,585 )     70,718       1,730  
Class C
     142,907       3,559       113,932       2,927       (102,375 )     (2,687 )     154,464       3,799  
Class F
     228,114       5,544       83,622       2,063       (140,015 )     (3,567 )     171,721       4,040  
Class 529-A
     61,245       1,481       52,125       1,281       (19,001 )     (469 )     94,369       2,293  
Class 529-B
     4,724       117       7,161       180       (2,716 )     (69 )     9,169       228  
Class 529-C
     22,420       557       19,380       489       (10,110 )     (253 )     31,690       793  
Class 529-E
     3,094       75       3,145       78       (1,176 )     (30 )     5,063       123  
Class 529-F
     5,618       136       3,882       95       (2,028 )     (49 )     7,472       182  
Class R-1
     10,369       257       4,081       103       (6,536 )     (169 )     7,914       191  
Class R-2
     135,119       3,391       69,130       1,735       (103,313 )     (2,622 )     100,936       2,504  
Class R-3
     153,011       3,726       60,439       1,502       (93,355 )     (2,323 )     120,095       2,905  
Class R-4
     94,132       2,265       29,940       738       (47,200 )     (1,177 )     76,872       1,826  
Class R-5
     127,954       3,152       46,062       1,122       (30,428 )     (760 )     143,588       3,514  
Total net increase
                                                                
   (decrease)
   $ 2,420,337       58,571     $ 2,663,560       65,493     $ (2,273,819 )     (56,447 )   $ 2,810,078       67,617  
                                                                 
Year ended September 30, 2007
                                                          
Class A
   $ 2,930,661       68,561     $ 1,616,206       41,314     $ (2,518,024 )     (59,080 )   $ 2,028,843       50,795  
Class B
     115,985       2,822       60,457       1,602       (83,699 )     (2,044 )     92,743       2,380  
Class C
     290,599       7,105       74,749       1,993       (134,061 )     (3,289 )     231,287       5,809  
Class F
     329,353       7,708       48,959       1,261       (135,080 )     (3,177 )     243,232       5,792  
Class 529-A
     108,306       2,552       33,308       854       (24,578 )     (575 )     117,036       2,831  
Class 529-B
     9,795       236       5,074       133       (3,527 )     (85 )     11,342       284  
Class 529-C
     42,098       1,018       12,727       334       (12,831 )     (308 )     41,994       1,044  
Class 529-E
     6,392       152       2,099       54       (1,951 )     (46 )     6,540       160  
Class 529-F
     10,353       244       2,290       59       (2,530 )     (59 )     10,113       244  
Class R-1
     18,702       449       2,465       64       (10,488 )     (251 )     10,679       262  
Class R-2
     254,368       6,115       45,744       1,195       (152,206 )     (3,636 )     147,906       3,674  
Class R-3
     241,982       5,753       36,433       943       (131,973 )     (3,131 )     146,442       3,565  
Class R-4
     130,964       3,088       15,370       395       (53,194 )     (1,256 )     93,140       2,227  
Class R-5
     143,393       3,282       24,707       629       (43,428 )     (996 )     124,672       2,915  
Total net increase
                                                                
   (decrease)
   $ 4,632,951       109,085     $ 1,980,588       50,830     $ (3,307,570 )     (77,933 )   $ 3,305,969       81,982  
                                                                 
* Includes exchanges between share classes of the fund.
                                          
 
6. Investment transactions

The fund made purchases and sales of investment securities, excluding short-term securities, of $6,138,902,000 and $6,129,703,000, respectively, during the six months ended March 31, 2008.
 
 
Financial highlights (1)

               
(Loss) income from investment operations(2)
    
Dividends and distributions
                                      
         
Net asset value, beginning of period
    
Net investment income (loss)
    
Net (losses) gains on securities (both realized and unrealized)
    
Total from investment operations
    
Dividends (from net investment income)
    
Distributions (from capital gains)
    
Total dividends and distributions
    
Net asset value, end of period
    
Total return (3) (4)
    
Net assets, end of period (in millions)
    
Ratio of expenses to average net assets before reimbursements
/waivers
    
Ratio of expenses to average net assets after reimbursements
/waivers (4)
    
Ratio of net income (loss) to average net assets (4)
  
Class A:
                                                                                                                  
 Six months ended 3/31/2008
     (5 )   $ 47.43     $ .10           $ (6.35 )   $ (6.25 )   $ (.76 )         $ (4.17 )   $ (4.93 )   $ 36.25       (14.36 %)   $ 17,560       1.05 %     (6 )     .99 %     (6 )     .46 %     (6 )
 Year ended 9/30/2007
             38.87       .37             12.50       12.87       (.70 )           (3.61 )     (4.31 )     47.43       35.41       20,913       1.04               .98               .86          
Year ended 9/30/2006
       34.77       .25             4.94       5.19       (.41 )           (.68 )     (1.09 )     38.87       15.27       15,167       1.08               1.01               .68          
Year ended 9/30/2005
       27.82       .24             7.02       7.26       (.31 )           -       (.31 )     34.77       26.28       12,544       1.09               1.04               .76          
Year ended 9/30/2004
       23.22       .02             4.61       4.63       (.03 )           -       (.03 )     27.82       19.95       9,771       1.12               1.12               .06          
Year ended 9/30/2003
       17.53       (.01 )           5.70       5.69       -             -       -       23.22       32.46       7,833       1.19               1.19               (.07 )        
Class B:
                                                                                                                                                    
 Six months ended 3/31/2008
     (5 )     45.49       (.06 )           (6.08 )     (6.14 )     (.45 )           (4.17 )     (4.62 )     34.73       (14.67 )     682       1.82       (6 )     1.75       (6 )     (.30 )     (6 )
 Year ended 9/30/2007
             37.41       .04             12.02       12.06       (.37 )           (3.61 )     (3.98 )     45.49       34.40       815       1.81               1.74               .10          
Year ended 9/30/2006
       33.59       (.03 )           4.78       4.75       (.25 )           (.68 )     (.93 )     37.41       14.39       581       1.85               1.78               (.09 )        
Year ended 9/30/2005
       26.90       -       (7 )     6.79       6.79       (.10 )           -       (.10 )     33.59       25.31       457       1.86               1.81               (.01 )        
Year ended 9/30/2004
       22.60       (.18 )             4.48       4.30       -       -       -       26.90       19.03       329       1.88               1.88               (.69 )        
Year ended 9/30/2003
       17.20       (.16 )             5.56       5.40       -       -       -       22.60       31.40       201       1.97               1.97               (.85 )        
Class C:
                                                                                                                                                        
 Six months ended 3/31/2008
     (5 )     45.18       (.07 )             (6.04 )     (6.11 )     (.46 )             (4.17 )     (4.63 )     34.44       (14.71 )     975       1.86       (6 )     1.79       (6 )     (.33 )     (6 )
 Year ended 9/30/2007
             37.21       .02               11.95       11.97       (.39 )             (3.61 )     (4.00 )     45.18       34.35       1,107       1.85               1.79               .04          
 Year ended 9/30/2006
             33.45       (.04 )             4.74       4.70       (.26 )             (.68 )     (.94 )     37.21       14.33       696       1.89               1.83               (.12 )        
Year ended 9/30/2005
       26.82       (.02 )             6.78       6.76       (.13 )             -       (.13 )     33.45       25.27       457       1.90               1.85               (.05 )        
Year ended 9/30/2004
       22.54       (.19 )             4.47       4.28       -       -       -       26.82       18.99       274       1.92               1.91               (.71 )        
 Year ended 9/30/2003
             17.15       (.16 )             5.55       5.39       -               -       -       22.54       31.43       124       1.97               1.97               (.85 )        
Class F:
                                                                                                                                                        
 Six months ended 3/31/2008
     (5 )     47.08       .10               (6.30 )     (6.20 )     (.78 )             (4.17 )     (4.95 )     35.93       (14.37 )     767       1.06       (6 )     1.00       (6 )     .47       (6 )
 Year ended 9/30/2007
             38.65       .36               12.41       12.77       (.73 )             (3.61 )     (4.34 )     47.08       35.41       815       1.05               .98               .84          
 Year ended 9/30/2006
             34.58       .26               4.91       5.17       (.42 )             (.68 )     (1.10 )     38.65       15.28       446       1.08               1.01               .70          
Year ended 9/30/2005
       27.70       .23               6.98       7.21       (.33 )             -       (.33 )     34.58       26.23       253       1.12               1.07               .72          
Year ended 9/30/2004
       23.16       .02               4.58       4.60       (.06 )             -       (.06 )     27.70       19.90       128       1.15               1.14               .06          
 Year ended 9/30/2003
             17.48       (.01 )             5.69       5.68       -               -       -       23.16       32.49       57       1.18               1.18               (.06 )        
Class 529-A:
                                                                                                                                                        
 Six months ended 3/31/2008
     (5 )     47.23       .09               (6.32 )     (6.23 )     (.75 )             (4.17 )     (4.92 )     36.08       (14.38 )     449       1.11       (6 )     1.05       (6 )     .42       (6 )
 Year ended 9/30/2007
             38.76       .34               12.44       12.78       (.70 )             (3.61 )     (4.31 )     47.23       35.33       479       1.10               1.04               .79          
 Year ended 9/30/2006
             34.68       .25               4.93       5.18       (.42 )             (.68 )     (1.10 )     38.76       15.25       284       1.11               1.05               .66          
Year ended 9/30/2005
       27.79       .22               7.00       7.22       (.33 )             -       (.33 )     34.68       26.19       178       1.14               1.08               .71          
Year ended 9/30/2004
       23.24       .02               4.60       4.62       (.07 )             -       (.07 )     27.79       19.90       97       1.14               1.14               .06          
Year ended 9/30/2003
       17.53       .01               5.70       5.71       -       -       -       23.24       32.57       42       1.11               1.11               .03          
Class 529-B:
                                                                                                                                                        
 Six months ended 3/31/2008
     (5 )     45.96       (.08 )             (6.16 )     (6.24 )     (.41 )             (4.17 )     (4.58 )     35.14       (14.74 )     62       1.93       (6 )     1.86       (6 )     (.41 )     (6 )
 Year ended 9/30/2007
             37.77       (.01 )             12.14       12.13       (.33 )             (3.61 )     (3.94 )     45.96       34.25       71       1.92               1.86               (.02 )        
 Year ended 9/30/2006
             33.93       (.07 )             4.82       4.75       (.23 )             (.68 )     (.91 )     37.77       14.24       48       1.97               1.90               (.20 )        
Year ended 9/30/2005
       27.20       (.05 )             6.87       6.82       (.09 )             -       (.09 )     33.93       25.11       34       2.02               1.96               (.17 )        
Year ended 9/30/2004
       22.88       (.23 )             4.55       4.32       -       -       -       27.20       18.88       22       2.04               2.04               (.84 )        
Year ended 9/30/2003
       17.43       (.19 )             5.64       5.45       -       -       -       22.88       31.27       10       2.09               2.09               (.95 )        
Class 529-C:
                                                                                                                                                        
 Six months ended 3/31/2008
     (5 )     45.92       (.08 )             (6.16 )     (6.24 )     (.42 )             (4.17 )     (4.59 )     35.09       (14.75 )     171       1.92       (6 )     1.86       (6 )     (.40 )     (6 )
 Year ended 9/30/2007
             37.77       (.01 )             12.13       12.12       (.36 )             (3.61 )     (3.97 )     45.92       34.23       188       1.92               1.86               (.02 )        
 Year ended 9/30/2006
             33.94       (.07 )             4.83       4.76       (.25 )             (.68 )     (.93 )     37.77       14.27       115       1.96               1.90               (.19 )        
Year ended 9/30/2005
       27.21       (.05 )             6.87       6.82       (.09 )             -       (.09 )     33.94       25.13       77       2.00               1.95               (.16 )        
Year ended 9/30/2004
       22.89       (.22 )             4.54       4.32       -       -       -       27.21       18.87       43       2.03               2.03               (.83 )        
Year ended 9/30/2003
       17.44       (.18 )             5.63       5.45       -       -       -       22.89       31.25       20       2.07               2.07               (.94 )        
Class 529-E:
                                                                                                                                                        
 Six months ended 3/31/2008
     (5 )     46.76       .02               (6.26 )     (6.24 )     (.62 )             (4.17 )     (4.79 )     35.73       (14.51 )     27       1.41       (6 )     1.35       (6 )     .12       (6 )
 Year ended 9/30/2007
             38.40       .21               12.33       12.54       (.57 )             (3.61 )     (4.18 )     46.76       34.93       30       1.41               1.35               .49          
 Year ended 9/30/2006
             34.42       .12               4.89       5.01       (.35 )             (.68 )     (1.03 )     38.40       14.86       18       1.44               1.37               .34          
Year ended 9/30/2005
       27.58       .12               6.96       7.08       (.24 )             -       (.24 )     34.42       25.81       12       1.47               1.42               .37          
Year ended 9/30/2004
       23.09       (.08 )             4.59       4.51       (.02 )             -       (.02 )     27.58       19.52       6       1.50               1.49               (.29 )        
Year ended 9/30/2003
       17.50       (.07 )             5.66       5.59       -       -       -       23.09       31.94       3       1.53               1.53               (.38 )        
                                                                                                                                                         
Class 529-F:
                                                                                                                                                        
 Six months ended 3/31/2008
     (5 )   $ 47.24     $ .13             $ (6.31 )   $ (6.18 )   $ (.83 )             (4.17 )   $ (5.00 )   $ 36.06       (14.29 %)   $ 33       .91 %     (6 )     .85 %     (6 )     .62 %     (6 )
 Year ended 9/30/2007
             38.77       .42               12.44       12.86       (.78 )             (3.61 )     (4.39 )     47.24       35.56       35       .91               .85               .98          
 Year ended 9/30/2006
             34.64       .31               4.93       5.24       (.43 )             (.68 )     (1.11 )     38.77       15.44       19       .94               .87               .83          
Year ended 9/30/2005
       27.72       .23               6.99       7.22       (.30 )             -       (.30 )     34.64       26.22       12       1.11               1.06               .74          
Year ended 9/30/2004
       23.20       (.01 )             4.60       4.59       (.07 )             -       (.07 )     27.72       19.81       7       1.25               1.24               (.04 )        
Year ended 9/30/2003
       17.53       (.02 )             5.69       5.67       -       -       -       23.20       32.34       3       1.27               1.27               (.10 )        
Class R-1:
                                                                                                                                                        
 Six months ended 3/31/2008
     (5 )     46.04       (.07 )             (6.16 )     (6.23 )     (.47 )             (4.17 )     (4.64 )     35.17       (14.71 )     36       1.86       (6 )     1.80       (6 )     (.33 )     (6 )
 Year ended 9/30/2007
             37.89       .01               12.17       12.18       (.42 )             (3.61 )     (4.03 )     46.04       34.32       38       1.88               1.80               .03          
 Year ended 9/30/2006
             34.07       (.04 )             4.83       4.79       (.29 )             (.68 )     (.97 )     37.89       14.31       21       1.92               1.82               (.11 )        
Year ended 9/30/2005
       27.34       (.01 )             6.90       6.89       (.16 )             -       (.16 )     34.07       25.27       12       1.97               1.85               (.05 )        
Year ended 9/30/2004
       23.00       (.19 )             4.55       4.36       (.02 )             -       (.02 )     27.34       18.98       6       2.01               1.91               (.71 )        
Year ended 9/30/2003
       17.49       (.16 )             5.67       5.51       -       -       -       23.00       31.50       2       2.43               1.93               (.78 )        
Class R-2:
                                                                                                                                                        
 Six months ended 3/31/2008
     (5 )     46.13       (.07 )             (6.19 )     (6.26 )     (.45 )             (4.17 )     (4.62 )     35.25       (14.73 )     603       1.92       (6 )     1.83       (6 )     (.37 )     (6 )
 Year ended 9/30/2007
             37.93       .03               12.18       12.21       (.40 )             (3.61 )     (4.01 )     46.13       34.36       673       1.93               1.77               .06          
 Year ended 9/30/2006
             34.09       (.03 )             4.83       4.80       (.28 )             (.68 )     (.96 )     37.93       14.35       414       2.06               1.80               (.09 )        
Year ended 9/30/2005
       27.36       (.01 )             6.90       6.89       (.16 )             -       (.16 )     34.09       25.28       258       2.17               1.82               (.03 )        
Year ended 9/30/2004
       23.00       (.18 )             4.56       4.38       (.02 )             -       (.02 )     27.36       19.05       131       2.30               1.88               (.67 )        
Year ended 9/30/2003
       17.49       (.15 )             5.66       5.51       -       -       -       23.00       31.50       46       2.59               1.89               (.75 )        
Class R-3:
                                                                                                                                                        
 Six months ended 3/31/2008
     (5 )     46.68       .02               (6.24 )     (6.22 )     (.63 )             (4.17 )     (4.80 )     35.66       (14.50 )     528       1.42       (6 )     1.36       (6 )     .11       (6 )
 Year ended 9/30/2007
             38.34       .20               12.31       12.51       (.56 )             (3.61 )     (4.17 )     46.68       34.88       555       1.42               1.35               .47          
 Year ended 9/30/2006
             34.39       .11               4.87       4.98       (.35 )             (.68 )     (1.03 )     38.34       14.82       319       1.49               1.42               .30          
Year ended 9/30/2005
       27.58       .11               6.96       7.07       (.26 )             -       (.26 )     34.39       25.75       188       1.51               1.44               .36          
Year ended 9/30/2004
       23.12       (.08 )             4.59       4.51       (.05 )             -       (.05 )     27.58       19.52       85       1.55               1.49               (.28 )        
Year ended 9/30/2003
       17.51       (.07 )             5.68       5.61       -       -       -       23.12       32.04       30       1.67               1.51               (.37 )        
Class R-4:
                                                                                                                                                        
 Six months ended 3/31/2008
     (5 )     47.20       .10               (6.32 )     (6.22 )     (.77 )             (4.17 )     (4.94 )     36.04       (14.39 )     264       1.07       (6 )     1.00       (6 )     .47       (6 )
 Year ended 9/30/2007
             38.73       .35               12.45       12.80       (.72 )             (3.61 )     (4.33 )     47.20       35.41       259       1.06               1.00               .82          
 Year ended 9/30/2006
             34.68       .25               4.91       5.16       (.43 )             (.68 )     (1.11 )     38.73       15.20       126       1.11               1.04               .67          
Year ended 9/30/2005
       27.79       .23               7.01       7.24       (.35 )             -       (.35 )     34.68       26.25       67       1.12               1.06               .74          
Year ended 9/30/2004
       23.22       .02               4.61       4.63       (.06 )             -       (.06 )     27.79       19.95       20       1.13               1.13               .07          
Year ended 9/30/2003
       17.53       -       (7 )     5.69       5.69       -       -       -       23.22       32.46       10       1.17               1.16               (.02 )        
Class R-5:
                                                                                                                                                        
 Six months ended 3/31/2008
     (5 )     47.70       .16               (6.38 )     (6.22 )     (.88 )             (4.17 )     (5.05 )     36.43       (14.23 )     435       .77       (6 )     .71       (6 )     .78       (6 )
 Year ended 9/30/2007
             39.10       .48               12.56       13.04       (.83 )             (3.61 )     (4.44 )     47.70       35.77       403       .77               .71               1.11          
 Year ended 9/30/2006
             34.93       .36               4.97       5.33       (.48 )             (.68 )     (1.16 )     39.10       15.60       216       .80               .74               .97          
Year ended 9/30/2005
       27.97       .33               7.05       7.38       (.42 )             -       (.42 )     34.93       26.62       142       .81               .76               1.04          
Year ended 9/30/2004
       23.33       .10               4.64       4.74       (.10 )             -       (.10 )     27.97       20.34       105       .82               .81               .36          
Year ended 9/30/2003
       17.55       .05               5.73       5.78       -       -       -       23.33       32.93       72       .83               .83               .28          


 
Six months ended
  
Year ended September 30
  
 
March 31,
2008(5)
  
2007
    
2006
    
2005
    
2004
    
2003
  
                                     
Portfolio turnover rate for all classes of shares
     27 %     48 %     45 %     45 %     48 %     49 %

(1) Based on operations for the periods shown (unless otherwise noted) and, accordingly, may not be representative of a full year.
(2) Based on average shares outstanding.
(3) Total returns exclude any applicable sales charges, including contingent deferred sales charges.
(4) This column reflects the impact, if any, of certain reimbursements/waivers from CRMC. During some of the periods shown, CRMC reduced fees for investment advisory services. In addition, during some of the periods shown, CRMC paid a portion of the fund's transfer agent fees for certain retirement plan share classes.
(5) Unaudited.
(6) Annualized.
(7) Amount less than $.01.
 
See Notes to Financial Statements
 
 
 
Expense example
unaudited
 
 
As a shareholder of the fund, you incur two types of costs: (1) transaction costs such as initial sales charges on purchase payments and contingent deferred sales charges on redemptions (loads); and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the fund so you can compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (October 1, 2007, through March 31, 2008).
 
Actual expenses:
 
The first line of each share class in the table on the next page provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled "Expenses paid during period" to estimate the expenses you paid on your account during this period.
 
Hypothetical example for comparison purposes:
 
The second line of each share class in the table on the next page provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio for the share class and an assumed rate of return of 5.00% per year before expenses, which is not the actual return of the share class. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the fund and other funds. To do so, compare this 5.00% hypothetical example with the 5.00% hypothetical examples that appear in the shareholder reports of the other funds.
 
Notes:
 
There are some account fees that are charged to certain types of accounts, such as individual retirement accounts and 529 college savings plan accounts  (generally, a $10 fee is charged to set up the account and an additional $10 fee is charged to the account annually) that would increase the amount of expenses paid on your account. In addition, retirement plan participants may be subject to certain fees charged by the plan sponsor, and Class F and 529-F shareholders may be subject to fees charged by financial intermediaries, typically ranging from 0.75% to 1.50% of assets annually depending on services offered. You can estimate the impact of these fees by adding the amount of the fees to the total estimated expenses you paid on your account during the period as calculated above. In addition, your ending account value would also be lower by the amount of these fees.
 
 
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads). Therefore, the second line of each share class in the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
 
   
Beginning account value 10/1/2007
    
Ending account value 3/31/2008
    
Expenses paid during period*
    
Annualized expense ratio
  
                         
Class A -- actual return
   $ 1,000.00     $ 856.37     $ 4.59       .99 %
Class A -- assumed 5% return
     1,000.00       1,020.05       5.00       .99  
Class B -- actual return
     1,000.00       853.28       8.11       1.75  
Class B -- assumed 5% return
     1,000.00       1,016.25       8.82       1.75  
Class C -- actual return
     1,000.00       852.91       8.29       1.79  
Class C -- assumed 5% return
     1,000.00       1,016.05       9.02       1.79  
Class F -- actual return
     1,000.00       856.28       4.64       1.00  
Class F -- assumed 5% return
     1,000.00       1,020.00       5.05       1.00  
Class 529-A -- actual return
     1,000.00       856.21       4.87       1.05  
Class 529-A -- assumed 5% return
     1,000.00       1,019.75       5.30       1.05  
Class 529-B -- actual return
     1,000.00       852.64       8.61       1.86  
Class 529-B -- assumed 5% return
     1,000.00       1,015.70       9.37       1.86  
Class 529-C -- actual return
     1,000.00       852.55       8.61       1.86  
Class 529-C -- assumed 5% return
     1,000.00       1,015.70       9.37       1.86  
Class 529-E -- actual return
     1,000.00       854.88       6.26       1.35  
Class 529-E -- assumed 5% return
     1,000.00       1,018.25       6.81       1.35  
Class 529-F -- actual return
     1,000.00       857.15       3.95       .85  
Class 529-F -- assumed 5% return
     1,000.00       1,020.75       4.29       .85  
Class R-1 -- actual return
     1,000.00       852.91       8.34       1.80  
Class R-1 -- assumed 5% return
     1,000.00       1,016.00       9.07       1.80  
Class R-2 -- actual return
     1,000.00       852.70       8.48       1.83  
Class R-2 -- assumed 5% return
     1,000.00       1,015.85       9.22       1.83  
Class R-3 -- actual return
     1,000.00       854.98       6.31       1.36  
Class R-3 -- assumed 5% return
     1,000.00       1,018.20       6.86       1.36  
Class R-4 -- actual return
     1,000.00       856.14       4.64       1.00  
Class R-4 -- assumed 5% return
     1,000.00       1,020.00       5.05       1.00  
Class R-5 -- actual return
     1,000.00       857.67       3.30       .71  
Class R-5 -- assumed 5% return
     1,000.00       1,021.45       3.59       .71  
 
*The “expenses paid during period” are equal to the “annualized expense ratio,” multiplied by the average account value over the period, multiplied by the number of days in the period (183), and divided by 366 (to reflect the one-half year period).
 
 
 
Other share class results
unaudited

Class B, Class C, Class F and Class 529

Fund results shown are for past periods and are not predictive of results for future periods. Current and future results may be lower or higher than those shown. Share prices and returns will vary, so investors may lose money. For current information and month-end results, visit americanfunds.com.

Average annual total returns for periods ended March 31, 2008:
                  
                   
   
1 year
    
5 years
    
Life of class
  
                   
Class B shares — first sold 3/15/00
                  
Reflecting applicable contingent deferred sales
                  
charge (CDSC), maximum of 5%, payable only if
                  
shares are sold within six years of purchase
     –6.79 %     21.57 %     1.40 %
Not reflecting CDSC
     –2.43       21.75       1.40  
                         
Class C shares — first sold 3/15/01
                        
Reflecting CDSC, maximum of 1%, payable only if
                        
shares are sold within one year of purchase
     –3.34       21.70       9.61  
Not reflecting CDSC
     –2.47       21.70       9.61  
                         
Class F shares* — first sold 3/15/01
                        
Not reflecting annual asset-based fee charged by
                        
sponsoring firm
     –1.72       22.67       10.49  
                         
Class 529-A shares† — first sold 2/19/02
                        
Reflecting 5.75% maximum sales charge
     –7.40       21.19       12.39  
Not reflecting maximum sales charge
     –1.76       22.63       13.48  
                         
Class 529-B shares† — first sold 2/20/02
                        
Reflecting applicable CDSC, maximum of 5%, payable
                        
only if shares are sold within six years of purchase
     –6.92       21.40       12.38  
Not reflecting CDSC
     –2.55       21.58       12.38  
                         
Class 529-C shares† — first sold 2/20/02
                        
Reflecting CDSC, maximum of 1%, payable only if
                        
shares are sold within one year of purchase
     –3.44       21.58       12.39  
Not reflecting CDSC
     –2.57       21.58       12.39  
                         
Class 529-E shares*† — first sold 3/15/02
     –2.05       22.23       11.98  
                         
Class 529-F shares*† — first sold 9/17/02
                        
Not reflecting annual asset-based fee charged by
                        
sponsoring firm
     –1.56       22.72       18.68  
                         
*These shares are sold without any initial or contingent deferred sales charge.
                        
† Results shown do not reflect the $10 initial account setup fee and an annual $10 account maintenance fee.
                        
 
The fund’s investment adviser waived 5% of its management fees from September 1, 2004, through March 31, 2005, and increased the waiver to 10% on April 1, 2005. Fund results shown reflect the waiver, without which they would have been lower. Please see the Financial Highlights table on pages 26 to 29 for details.

For information regarding the differences among the various share classes, please refer to the fund’s prospectus.
 
 

Offices

Offices of the fund and of the
investment adviser
Capital Research and Management Company
333 South Hope Street
Los Angeles, CA 90071-1406

6455 Irvine Center Drive
Irvine, CA 92618

Transfer agent for shareholder accounts
American Funds Service Company
(Please write to the address nearest you.)

P.O. Box 25065
Santa Ana, CA 92799-5065

P.O. Box 659522
San Antonio, TX 78265-9522

P.O. Box 6007
Indianapolis, IN 46206-6007

P.O. Box 2280
Norfolk, VA 23501-2280

Custodian of assets
State Street Bank and Trust Company
One Lincoln Street
Boston, MA 02111

Counsel
Kirkpatrick & Lockhart Preston Gates Ellis LLP
55 Second Street, Suite 1700
San Francisco, CA 94105

Independent registered public accounting firm
Deloitte & Touche LLP
695 Town Center Drive
Suite 1200
Costa Mesa, CA 92626-7188

Principal underwriter
American Funds Distributors, Inc.
333 South Hope Street
Los Angeles, CA 90071-1406

Investors should carefully consider the investment objectives, risks, charges and expenses of the American Funds. This and other important information is contained in the fund’s prospectus, which can be obtained from your financial professional and should be read carefully before investing. You may also call American Funds Service Company (AFS) at 800/421-0180 or visit the American Funds website at americanfunds.com.

“American Funds Proxy Voting Guidelines” — which describes how we vote proxies relating to portfolio securities — is available free of charge on the U.S. Securities and Exchange Commission (SEC) website at sec.gov, on the American Funds website or upon request by calling AFS. The fund files its proxy voting record with the SEC for the 12 months ended June 30 by August 31. The report also is available on the SEC and American Funds websites.

A complete March 31, 2008, portfolio of SMALLCAP World Fund’s investments is available free of charge by calling AFS or visiting the SEC website (where it is part of Form N-CSR).

SMALLCAP World Fund files a complete list of its portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. This filing is available free of charge on the SEC website. You may also review or, for a fee, copy this filing at the SEC’s Public Reference Room in Washington, D.C. (800/SEC-0330). Additionally, the list of portfolio holdings also is available by calling AFS.

This report is for the information of shareholders of SMALLCAP World Fund, but it also may be used as sales literature when preceded or accompanied by the current prospectus, which gives details about charges, expenses, investment objectives and operating policies of the fund. If used as sales material after June 30, 2008, this report must be accompanied by an American Funds statistical update for the most recently completed calendar quarter.
 
 
[logo - American Funds®]

The right choice for the long term®

What makes American Funds different?

For more than 75 years, we have followed a consistent philosophy to benefit our investors. Our 30 carefully conceived, broadly diversified funds, in addition to the target date retirement series, offer opportunities that have attracted over 50 million shareholder accounts.

Our unique combination of strengths includes these five factors:

 
•A long-term, value-oriented approach
 
We seek to buy securities at reasonable prices relative to their prospects and hold them for the long term.

 
•An extensive global research effort
 
Our investment professionals travel the world to find the best investment opportunities and gain a comprehensive understanding of companies and markets.

 
•The multiple portfolio counselor system
 
Our unique method of portfolio management, developed 50 years ago, blends teamwork with individual accountability and has provided American Funds with a sustainable method of achieving fund objectives.

 
•Experienced investment professionals
 
American Funds portfolio counselors have an average of 26 years of investment experience, providing a wealth of knowledge and experience that few organizations have.

 
•A commitment to low operating expenses
 
The American Funds provide exceptional value for shareholders, with operating expenses that are among the lowest in the mutual fund industry.
 
 
American Funds span a range of investment objectives

 
•Growth funds
 
AMCAP Fund®
 
EuroPacific Growth Fund®
 
The Growth Fund of America®
 
The New Economy Fund®
 
New Perspective Fund®
 
New World FundSM
 
>SMALLCAP World Fund®

 
•Growth-and-income funds
 
American Mutual Fund®
 
Capital World Growth and Income FundSM
 
Fundamental InvestorsSM
 
The Investment Company of America®
 
Washington Mutual Investors FundSM

 
•Equity-income funds
 
Capital Income Builder®
 
The Income Fund of America®
 
 
•Balanced fund
 
American Balanced Fund®

 
•Bond funds
 
American High-Income TrustSM
 
The Bond Fund of AmericaSM
 
Capital World Bond Fund®
 
Intermediate Bond Fund of America®
Short-Term Bond Fund of AmericaSM
 
U.S. Government Securities FundSM

 
•Tax-exempt bond funds
 
American High-Income Municipal Bond Fund®
 
Limited Term Tax-Exempt Bond Fund of AmericaSM
 
The Tax-Exempt Bond Fund of America®
 
State-specific tax-exempt funds
 
The Tax-Exempt Fund of California®
 
The Tax-Exempt Fund of Maryland®
 
The Tax-Exempt Fund of Virginia®

 
•Money market funds
 
The Cash Management Trust of America®
 
The Tax-Exempt Money Fund of AmericaSM
 
The U.S. Treasury Money Fund of AmericaSM

 
•American Funds Target Date Retirement Series®


The Capital Group Companies
 
American Funds    Capital Research and Management    Capital International    Capital Guardian    Capital Bank and Trust

 
 
Lit. No. MFGESR-935-0508P
 
Litho in USA BBC/AL/8094-S10072
 
10% post-consumer waste
 
Printed with inks containing soy and/or vegetable oil
 
 
ITEM 2 – Code of Ethics

Not applicable for filing of semi-annual reports to shareholders.


ITEM 3 – Audit Committee Financial Expert

Not applicable for filing of semi-annual reports to shareholders.


ITEM 4 – Principal Accountant Fees and Services

Not applicable for filing of semi-annual reports to shareholders.


ITEM 5 – Audit Committee of Listed Registrants

Not applicable to this Registrant, insofar as the Registrant is not a listed issuer as defined in Rule 10A-3 under the Securities Exchange Act of 1934.


ITEM 6 – Schedule of Investments
 
[logo – American Funds®]
 

SMALLCAP World Fund®
Investment portfolio

March 31, 2008
 unaudited
 
Common stocks — 90.05%
  
Shares
    
Market value
(000)
  
             
CONSUMER DISCRETIONARY — 17.41%
            
Jumbo SA1,2
     4,844,956     $ 145,897  
Fourlis1,2
     4,074,000       133,304  
Schibsted ASA1,2
     4,234,850       127,225  
Nitori Co., Ltd.1
     2,184,600       124,372  
Central European Media Enterprises Ltd., Class A3
     1,403,500       119,620  
Lojas Renner SA, ordinary nominative
     5,950,000       112,476  
lululemon athletica inc.2,3
     3,668,414       104,293  
Praktiker Bau- und Heimwerkermärkte Holding AG1,2
     3,843,883       102,670  
Kuoni Reisen Holding AG, Class B1,2
     165,134       91,681  
Saks Inc.3
     6,507,500       81,149  
Lions Gate Entertainment Corp.2,3
     8,250,000       80,437  
Rightmove PLC1,2
     7,757,657       75,305  
Billabong International Ltd.1
     6,263,500       74,789  
CarMax, Inc.3
     3,800,000       73,796  
Nishimatsuya Chain Co., Ltd.1,2
     5,562,000       67,126  
Cyrela Brazil Realty SA, ordinary nominative
     5,000,000       65,677  
Cheil Industries Inc.1
     1,300,000       63,363  
GOME Electrical Appliances Holding Ltd.1
     27,163,000       62,365  
CTC Media, Inc.3
     2,200,000       61,050  
Café de Coral Holdings Ltd.1,2
     31,550,000       60,543  
Pantaloon Retail (India) Ltd.1
     5,500,000       59,107  
Chipotle Mexican Grill, Inc., Class A3
     255,000       28,925  
Chipotle Mexican Grill, Inc., Class B3
     288,000       27,962  
Arbitron Inc.
     1,311,760       56,616  
Blue Nile, Inc.2,3
     1,037,940       56,204  
Ekornes ASA1,2
     2,937,598       53,453  
Aristocrat Leisure Ltd.1
     6,075,304       53,448  
Hotai Motor Co., Ltd.1
     17,003,415       49,789  
Scientific Games Corp., Class A3
     2,300,000       48,553  
Live Nation, Inc.3
     3,475,000       42,152  
Tokai Rika Co., Ltd.1
     1,568,100       41,090  
Banyan Tree Holdings Ltd.1,2
     40,929,000       40,990  
Honeys Co., Ltd.1,2
     2,218,000       37,880  
Timberland Co., Class A3
     2,737,000       37,579  
Trinity Ltd.1,2,3,4
     82,337,500       37,559  
ElringKlinger AG1
     334,000       37,333  
Quiksilver, Inc.3
     3,800,000       37,278  
Life Time Fitness, Inc.3
     1,183,100       36,925  
Polaris Industries Inc.
     900,000       36,909  
GEOX SpA1
     2,346,080       36,377  
Navitas Ltd.1,2
     21,727,690       36,170  
Korea Kumho Petrochemical Co., Ltd.1
     610,940       35,448  
American Axle & Manufacturing Holdings, Inc.
     1,632,300       33,462  
Hankook Tire Co., Ltd.1
     2,080,000       33,324  
NVR, Inc.3
     55,000       32,862  
Galaxy Entertainment Group Ltd.1,3
     41,245,000       30,831  
SeLoger.com1,3
     580,000       30,706  
Pinnacle Entertainment, Inc.3
     2,300,000       29,440  
Keihin Corp.1
     2,019,000       29,264  
Jackson Hewitt Tax Service Inc.2
     2,396,000       27,482  
Winnebago Industries, Inc.2
     1,623,000       27,429  
Tractor Supply Co.3
     688,700       27,217  
Toyoda Gosei Co., Ltd.1
     706,000       26,955  
Hürriyet Gazetecilik ve Matbaacilik AS1,3
     16,906,958       25,933  
Amtek Auto Ltd.1
     4,020,000       25,930  
Williams-Sonoma, Inc.
     1,055,000       25,573  
PETsMART, Inc.
     1,250,000       25,550  
CKE Restaurants, Inc.
     2,200,000       24,684  
Peet’s Coffee & Tea, Inc.2,3
     1,015,000       23,863  
Halfords Group PLC1
     4,200,000       23,625  
Brunswick Corp.
     1,460,000       23,316  
Fontainebleau Resorts LLC, Class A, non-voting units1,3,4
     1,900,000       22,800  
P.F. Chang’s China Bistro, Inc.3
     800,000       22,752  
Urban Outfitters, Inc.3
     675,000       21,161  
ASICS Corporation1
     1,805,000       21,013  
Crocs, Inc.3
     1,200,000       20,964  
XM Satellite Radio Holdings Inc., Class A3
     1,800,000       20,916  
Bijou Brigitte modische Accessoires AG1
     127,000       20,059  
TAKKT AG1
     1,071,778       19,275  
Spot Runner, Inc.1,3,4
     2,980,544       17,883  
Debenhams PLC1
     15,780,000       17,767  
Bloomsbury Publishing PLC1,2
     5,405,000       17,691  
Hana Tour Service Inc.1
     338,200       17,169  
DeVry Inc.
     400,000       16,736  
Dolan Media Co.3
     829,014       16,671  
PetMed Express, Inc.2,3
     1,500,000       16,635  
Pool Corp.
     810,000       15,301  
Gafisa SA, ordinary nominative
     900,000       14,911  
Talbots, Inc.
     1,349,875       14,552  
Cabela’s Inc.3
     1,000,000       14,160  
Boyd Gaming Corp.
     700,000       14,000  
Denny’s Corp.3
     4,500,000       13,410  
Domino’s Pizza Enterprises Ltd.1,2
     4,498,000       13,378  
Bob Evans Farms, Inc.
     475,000       13,105  
American Public Education, Inc.3
     425,000       12,907  
PartyGaming PLC1,3
     30,750,000       12,660  
Jo-Ann Stores, Inc.3
     770,000       11,342  
Asahi India Glass Ltd.1,3
     6,721,886       11,302  
HUGO BOSS AG1
     215,000       10,875  
ValueVision Media, Inc., Class A2,3
     1,900,000       10,526  
C C Land Holdings Ltd.1
     10,418,000       10,085  
TOD’S SpA1
     162,000       9,964  
CKX, Inc.3
     1,000,000       9,520  
JJB Sports PLC1
     4,390,500       9,496  
Chuang’s China Investments Ltd.1,2
     119,995,000       9,101  
Formosa International Hotels Corp.1
     540,756       8,762  
Next Media Ltd.1
     22,100,000       8,656  
Entertainment Rights PLC1,2,3
     42,500,000       8,643  
1-800-FLOWERS.COM, Inc., Class A3
     1,000,000       8,510  
Shuffle Master, Inc.3
     1,550,224       8,294  
Prime Success International Group Ltd.1
     15,200,000       8,190  
YBM Sisa.com Inc.1,2
     824,930       8,097  
Largan Precision Co., Ltd.1
     688,500       7,111  
TVN SA1
     666,005       6,879  
Gaming VC Holdings SA1,2
     2,023,800       6,703  
Getty Images, Inc.3
     200,000       6,400  
Rambler Media Ltd.1,3
     246,066       6,115  
Haseko Corp.1
     3,950,000       5,952  
Cosi, Inc.3
     2,000,000       5,740  
Agora SA1
     299,900       5,735  
Riken Corp.1
     1,075,000       5,053  
Restaurant Group PLC1
     1,590,000       4,858  
OSIM International Ltd.1
     18,750,000       4,783  
CEC Unet PLC1,2,3
     35,100,775       3,483  
Fleetwood Enterprises, Inc.3
     603,400       2,776  
Hi-Lex Corp.1
     3,200       45  
Mobile Travel Guide, Inc.1,3,4
     96,033       24  
              3,933,227  
                 
                 
INDUSTRIALS — 17.28%
                
Samsung Engineering Co., Ltd.1
     1,812,640       168,622  
Downer EDI Ltd.1,2
     22,074,889       127,105  
Container Corp. of India Ltd.1
     2,891,794       124,814  
BayWa AG1,2
     1,849,985       109,953  
Michael Page International PLC1,2
     17,941,190       107,589  
MSC Industrial Direct Co., Inc., Class A
     2,106,000       88,978  
Kaba Holding AG1,2
     250,800       84,667  
SIA Engineering Co. Ltd.1
     28,405,000       81,580  
Aalberts Industries NV1
     3,651,000       78,047  
ELLINIKI TECHNODOMIKI TEB SA1
     6,153,000       75,482  
LS Industrial Systems Co., Ltd.1
     1,149,660       71,636  
IVRCL Infrastructures & Projects Ltd.1
     6,629,316       67,772  
Murray & Roberts Holdings Ltd.1
     5,660,746       66,681  
Actuant Corp., Class A
     2,150,000       64,951  
Boart Longyear Ltd.1,4
     33,000,000       55,371  
Boart Longyear Ltd.1
     4,730,926       7,938  
Watsco, Inc.
     1,519,000       62,917  
Danieli & C. Officine Meccaniche SpA1
     2,592,500       61,501  
GfK AG1
     1,365,500       53,996  
Delachaux SA1
     636,423       52,772  
IJM Corp. Bhd.1
     27,340,000       52,285  
Mine Safety Appliances Co.
     1,249,800       51,479  
TK Corp.1,2,3
     1,659,000       50,665  
KBR, Inc.
     1,798,000       49,859  
Resources Connection, Inc.2
     2,757,500       49,277  
Singapore Post Private Ltd.1
     57,475,000       48,106  
Hopewell Holdings Ltd.1
     12,229,000       46,712  
Northgate PLC1,2
     4,114,822       46,412  
Koninklijke BAM Groep NV1
     1,940,000       45,711  
Grontmij NV, depository receipts1,2
     1,189,213       44,518  
Graco Inc.
     1,215,000       44,056  
Pyeong San Co., Ltd.1,2
     1,075,000       43,861  
MISUMI Group Inc.1
     2,462,000       43,766  
Uponor Oyj1
     1,839,000       43,263  
Genesis Lease Ltd. (ADR)2
     2,884,000       41,962  
MITIE Group PLC1
     8,700,000       41,773  
United Stationers Inc.3
     868,700       41,437  
Corrections Corporation of America3
     1,500,000       41,280  
Samsung Techwin Co., Ltd.1
     743,700       40,642  
Nabtesco Corp.1
     2,778,000       38,133  
GS Engineering & Construction Corp.1
     247,127       36,307  
Corporate Executive Board Co.
     867,700       35,124  
Sintex Industries Ltd.1
     3,918,684       35,051  
Michaniki SA1,2
     3,935,000       30,026  
Michaniki SA, preference shares1,2
     871,900       4,541  
Nagarjuna Construction Co. Ltd.1
     6,404,543       34,412  
Shenzhen Expressway Co. Ltd., Class H1,3
     42,916,000       33,043  
Emeco Holdings Ltd.1,2
     41,027,381       30,215  
Grupo Aeroportuario del Pacífico, SAB de CV, Class B (ADR)
     659,300       29,668  
TaeWoong Co., Ltd.1
     369,000       28,777  
EnerSys3
     1,200,000       28,704  
Beacon Roofing Supply, Inc.2,3
     2,695,400       26,954  
Houston Wire & Cable Co.2
     1,678,900       26,896  
Wilh. Wilhelmsen ASA, Class A1
     799,600       26,743  
Altra Holdings, Inc.2,3
     1,905,548       25,630  
STX Engine Co., Ltd.1
     544,140       25,351  
Continental Airlines, Inc., Class B3
     1,310,000       25,191  
Advisory Board Co.3
     455,000       24,998  
A-TEC Industries AG1
     299,550       24,841  
Melco International Development Ltd.1
     17,210,000       24,152  
JetBlue Airways Corp.3
     4,000,000       23,200  
JVM Co., Ltd.1,2
     506,000       23,002  
Goodpack Ltd.1
     19,678,000       22,720  
Trakya Cam Sanayii AS1
     17,552,622       22,193  
AirAsia Bhd.1,3
     51,221,900       21,998  
Halla Engineering & Construction Corp.1,2
     626,000       21,398  
URS Corp.3
     650,000       21,248  
Aboitiz Equity Ventures, Inc.1
     134,250,000       20,771  
Federal Signal Corp.
     1,425,000       19,893  
Lonrho PLC1,2,3
     26,350,000       19,608  
Acuity Brands, Inc.
     445,300       19,126  
Jain Irrigation Systems Ltd.1
     1,248,000       18,583  
ALL - América Latina Logística, units
     1,750,000       17,690  
G-Shank Enterprise Co., Ltd.1,2
     15,034,320       16,812  
Kelly Services, Inc., Class A
     800,000       16,448  
Cpl Resources PLC1,2
     2,597,498       16,406  
Daelim Industrial Co., Ltd.1
     127,000       16,275  
Pentair, Inc.
     500,000       15,950  
InnerWorkings, Inc.3
     1,125,000       15,784  
AeroVironment, Inc.3
     744,650       15,228  
Herman Miller, Inc.
     567,444       13,942  
Kingspan Group PLC1
     1,020,000       13,624  
Krones AG1
     165,000       13,460  
Chen Hsong Holdings Ltd.1
     27,746,000       13,328  
PRONEXUS INC.1
     1,627,000       13,149  
Chung-Hsin Electric and Machinery Manufacturing Corp.1
     15,000,000       13,147  
Georg Fischer Ltd1,3
     25,850       12,825  
NCI Building Systems, Inc.3
     520,000       12,584  
Dore Holdings Ltd.1,2
     94,822,368       12,433  
Spirax-Sarco Engineering PLC1
     605,000       12,328  
Crane Group Ltd.1
     871,573       12,183  
Ennis, Inc.
     720,000       12,082  
Prosegur Compañía de Seguridad, SA1
     282,000       11,832  
Permasteelisa SpA1
     615,000       11,748  
Havell’s India Ltd.1
     1,000,000       11,694  
Copa Holdings, SA, Class A
     300,000       11,433  
ESCO Technologies Inc.3
     285,700       11,348  
Pacer International, Inc.
     685,000       11,255  
Curtiss-Wright Corp.
     268,600       11,142  
Geberit AG1
     74,000       11,028  
Hyunjin Materials Co., Ltd.1
     322,100       10,949  
Hubbell Inc., Class B
     250,000       10,922  
Aker American Shipping ASA1,3
     544,600       10,496  
KCC Corp.1
     22,480       10,315  
Seobu Truck Terminal Co., Ltd.1,3
     562,200       9,941  
SThree PLC1
     2,550,000       9,874  
S1 Corp.1
     179,000       9,336  
I. Kloukinas – I. Lappas SA1
     1,080,000       8,668  
Intertek Group PLC1
     415,000       8,497  
Gehl Co.3
     500,000       8,470  
Norfolk Group Ltd.1,2,3
     6,500,000       8,378  
Hyflux Water Trust1,2,3
     19,500,000       8,008  
Rollins, Inc.
     445,500       7,881  
Wabash National Corp.
     800,000       7,192  
BELIMO Holding AG1
     6,300       6,853  
Korea Electric Terminal Co., Ltd.1
     350,000       6,826  
Hopewell Highway Infrastructure Ltd.1
     8,774,600       6,756  
Max India Ltd.1,3
     1,795,000       6,703  
Latécoère SA1
     323,626       6,694  
sia Abrasives Holding AG1
     16,479       6,606  
Hong Kong Aircraft Engineering Co. Ltd.1
     355,600       5,862  
Ansaldo STS SpA1,3
     390,000       5,483  
Grafton Group PLC, units1
     575,000       5,295  
NEPES Corp.1,3
     701,634       4,743  
CoStar Group, Inc.3
     100,000       4,300  
Aker Philadelphia Shipyard ASA1,3,4
     346,000       3,538  
Imagelinx PLC1,2,3
     21,385,714       318  
ZOOTS1,2,3,4
     25,173       234  
              3,904,229  
                 
                 
FINANCIALS — 11.41%
                
Pusan Bank1,2
     11,726,500       147,095  
Daegu Bank, Ltd.1,2
     10,570,000       142,142  
Indiabulls Real Estate Ltd.1,3
     7,209,778       88,495  
MCB Bank Ltd.1
     13,099,742       86,984  
Kotak Mahindra Bank Ltd.1
     5,493,262       86,465  
Dolphin Capital Investors Ltd.1,2,3
     31,123,920       81,821  
Dah Sing Financial Holdings Ltd.1
     11,174,600       73,776  
Indiabulls Securities Ltd.1,3
     6,193,648       58,733  
Jammu and Kashmir Bank Ltd.1,2
     3,149,500       53,868  
Redwood Trust, Inc.
     1,440,000       52,344  
Central Pattana PCL1
     56,461,000       50,912  
Hargreaves Lansdown PLC1
     14,244,718       50,518  
East West Bancorp, Inc.
     2,801,628       49,729  
Indiabulls Financial Services Ltd.1
     4,285,135       45,046  
Banco de Oro-EPCI, Inc.1
     34,600,000       43,518  
Assured Guaranty Ltd.
     1,800,000       42,732  
Banco Sofisa SA, preferred nominative
     8,116,400       40,559  
Interhyp AG1,2
     527,850       40,333  
Mercury General Corp.
     902,724       40,000  
Topdanmark A/S1,3
     235,700       39,630  
Industrial and Commercial Bank of China (Asia) Ltd.1
     15,275,000       38,065  
Banco Macro SA, Class B (ADR)
     1,365,800       34,623  
Downey Financial Corp.2
     1,825,000       33,544  
Unitech Corporate Parks PLC1,2,3
     18,865,800       32,948  
National Bank of Pakistan1
     8,793,774       32,736  
Ascendas Real Estate Investment Trust1
     18,336,550       31,928  
BOK Financial Corp.
     601,791       31,432  
China Banking Corp.1
     2,142,187       31,269  
Northwest Bancorp, Inc.
     1,130,000       30,883  
UnionBank of the Philippines1,2
     35,823,500       30,382  
Hung Poo Real Estate Development Corp.1,2
     16,772,120       29,868  
First Pacific Co. Ltd.1
     44,300,000       29,366  
eHealth, Inc.2,3
     1,271,400       28,060  
Farglory Land Development Co., Ltd.1
     7,681,000       27,798  
Azimut Holding SpA1
     2,630,000       27,357  
Oslo Børs VPS Holding ASA1
     1,002,335       27,005  
Megaworld Corp.1
     444,400,000       26,506  
IG Group Holdings PLC1
     3,861,000       25,068  
Challenger Financial Services Group Ltd.1
     14,886,353       24,944  
Bank of Georgia (GDR)1,3
     675,000       17,217  
Bank of Georgia (GDR)1,3,5
     300,000       7,652  
Wing Tai Holdings Ltd.1
     15,286,000       24,468  
Alm. Brand A/S1,3
     385,000       24,188  
Allied Bank Ltd. 1
     12,060,000       23,242  
JSE Ltd.1
     2,745,000       22,005  
Cathay General Bancorp, Inc.
     1,000,000       20,730  
Gruppo MutuiOnline SpA1,2,3
     3,160,000       20,463  
Montréal Exchange Inc.3
     630,000       20,287  
Federal Agricultural Mortgage Corp., Class C
     777,000       20,280  
FirstFed Financial Corp.2,3
     735,000       19,955  
AEON Mall Co., Ltd.1
     706,800       19,836  
Asya Katilim Bankasi AS, Class B1,3
     2,912,760       18,306  
PT Bank Niaga Tbk1
     222,354,000       18,261  
Paraná Banco SA, preferred nominative
     3,554,720       18,068  
CapitaRetail China Trust1,3
     18,780,100       17,844  
Banco ABC Brasil SA, preferred nominative
     3,060,700       16,781  
Home Federal Bancorp, Inc.2
     1,384,249       16,597  
Banner Corp.
     710,000       16,358  
S P Setia Bhd.1
     13,950,000       16,330  
Banco Daycoval SA, preferred nominative
     2,539,300       15,822  
Cathay Real Estate Development Co. Ltd.1
     17,400,000       15,631  
Greek Postal Savings Bank SA1
     849,030       15,602  
Wilmington Trust Corp.
     500,000       15,550  
Amata Corp. PCL1
     26,800,000       14,490  
UCBH Holdings, Inc.
     1,800,000       13,968  
Union Bank of India1
     3,750,000       13,270  
First State Bancorporation
     952,800       12,758  
CastlePoint Holdings, Ltd.
     1,295,000       12,600  
Banco Cruzeiro do Sol SA, preferred nominative
     2,863,100       12,345  
Brascan Residential Properties SA, ordinary nominative
     2,364,000       11,678  
Gladstone Capital Corp.
     619,000       11,581  
P/F Føroya Banki1
     354,760       11,265  
Kiatnakin Bank PCL1
     12,200,000       11,204  
TICON Property Fund1,2
     30,400,000       10,466  
Solomon Mutual Savings Bank1,2
     1,062,023       10,404  
VastNed Retail NV1
     97,000       10,320  
Robinsons Land Corp., Class B1
     41,188,300       10,207  
SpareBank 1 SR-Bank1
     961,333       9,974  
City National Corp.
     200,000       9,892  
Banco Patagonia SA, Class B (BDR)3
     559,000       9,127  
First Niagara Financial Group, Inc.
     550,000       7,475  
TICON Industrial Connection PCL1
     11,298,800       6,921  
Orco Property Group SA1
     76,930       6,894  
AmericanWest Bancorporation
     790,200       6,891  
Cyrela Commercial Properties SA, ordinary nominative3
     1,000,000       5,511  
Sparebanken Midt-Norge1
     463,700       4,651  
Eurobancshares, Inc.3
     800,000       4,256  
Sumitomo Real Estate Sales Co., Ltd.1
     100,000       3,406  
Chimera Investment Corp.
     267,500       3,290  
MGIC Investment Corp.
     220,350       2,320  
CitySpring Infrastructure Trust1
     500,000       260  
              2,577,379  
                 
                 
INFORMATION TECHNOLOGY — 11.20%
                
Kingboard Chemical Holdings Ltd.1,2
     49,934,200       178,035  
Tripod Technology Corp.1,2
     34,375,108       117,028  
Novell, Inc.2,3
     17,978,000       113,082  
SkillSoft PLC (ADR)2,3
     7,225,000       75,646  
Heartland Payment Systems, Inc.2
     2,695,000       62,012  
Moneysupermarket.com Group PLC1
     23,905,000       59,225  
THQ Inc.3
     2,621,000       57,138  
Konami Corp.1
     1,412,600       53,684  
ACI Worldwide, Inc.2,3
     2,584,000       51,473  
Digital River, Inc.3
     1,500,000       46,455  
Venture Corp. Ltd.1
     5,969,600       45,998  
TradeDoubler AB1,2
     2,120,000       43,731  
Verifone Holdings, Inc.3
     2,676,500       42,476  
SEEK Ltd.1
     8,640,810       41,923  
Xchanging PLC1,3
     7,293,160       40,516  
Euronet Worldwide, Inc.3
     1,814,500       34,947  
Euronet Worldwide, Inc.3,4
     200,000       3,852  
Mentor Graphics Corp.3
     4,315,500       38,106  
TIBCO Software Inc.3
     5,281,200       37,708  
Wacom Co., Ltd.1
     17,312       36,774  
SRA International, Inc., Class A3
     1,500,000       36,465  
Veeco Instruments Inc.2,3
     2,107,171       35,042  
Kingboard Laminates Holdings Ltd.1
     54,686,236       32,165  
Avid Technology, Inc.3
     1,315,700       32,024  
MacDonald, Dettwiler and Associates Ltd.3
     700,000       31,678  
Solera Holdings, Inc.3
     1,250,000       30,450  
Unisteel Technology Ltd.1,2
     31,831,000       30,360  
ValueClick, Inc.3
     1,750,000       30,187  
Internet Capital Group, Inc.2,3
     2,869,000       30,038  
Semtech Corp.3
     2,076,053       29,750  
Littelfuse, Inc.3
     850,000       29,724  
Tessera Technologies, Inc.3
     1,400,000       29,120  
Red Hat, Inc.3
     1,550,000       28,505  
Concur Technologies, Inc.3
     914,750       28,403  
InfoSpace.com, Inc.2
     2,421,200       28,013  
ASM Pacific Technology Ltd.1
     3,840,000       27,879  
Chartered Semiconductor Manufacturing Ltd1,3
     52,236,000       27,499  
austriamicrosystems AG, non-registered shares1,2,3
     715,000       27,373  
Echelon Corp.3
     2,000,000       27,000  
Intersil Corp., Class A
     1,050,000       26,953  
Hutchinson Technology Inc.2,3
     1,686,035       26,825  
Polycom, Inc.3
     1,100,000       24,794  
Hana Microelectronics PCL1
     40,425,000       23,893  
Dice Holdings, Inc.3
     2,477,600       22,075  
Infotech Enterprises Ltd.1,2
     3,000,000       20,998  
Orbotech Ltd.3
     1,128,317       20,693  
Thinkware Systems Corp.1,2,3
     626,120       20,556  
NCsoft Corp.1
     428,400       19,974  
Gartner, Inc.3
     1,002,475       19,388  
Compal Electronics, Inc.1
     20,100,000       19,323  
CNET Networks, Inc.3
     2,655,000       18,851  
Diebold, Inc.
     500,000       18,775  
Funcom NV1,2,3
     3,000,000       18,765  
Halma PLC1
     4,745,000       18,240  
Net 1 UEPS Technologies, Inc.3
     805,143       18,156  
Intermec, Inc.3
     816,700       18,123  
Finisar Corp.3
     13,280,000       16,998  
Kapsch TrafficCom AG1,3
     335,989       16,918  
McAfee, Inc.3
     500,000       16,545  
Applied Micro Circuits Corp.3
     2,250,000       16,155  
Standard Microsystems Corp.3
     550,000       16,049  
National Instruments Corp.
     600,000       15,684  
Advantech Co., Ltd.1
     6,432,314       15,222  
Varian Semiconductor Equipment Associates, Inc.3
     487,500       13,723  
Verigy Ltd.3
     700,000       13,188  
Renishaw PLC1
     970,000       13,116  
Sanmina-SCI Corp.3
     8,000,000       12,960  
LoopNet, Inc.3
     1,001,500       12,719  
Wintek Corp.1
     13,917,273       12,696  
Chicony Electronics Co., Ltd.1
     7,048,850       12,551  
SINA Corp.3
     355,000       12,514  
Wistron Corp.1
     7,586,737       11,989  
DTS, Inc.3
     482,300       11,575  
i2 Technologies, Inc.3
     1,001,500       11,277  
Internet Brands, Inc., Class A3
     1,504,395       11,087  
VistaPrint Ltd.3
     311,900       10,901  
CDNetworks Co., Ltd.1,3
     655,501       10,507  
Cadence Design Systems, Inc.3
     915,000       9,772  
Global Unichip Corp.1
     1,400,000       9,478  
Stratasys, Inc.3
     532,000       9,470  
SourceForge, Inc.2,3
     4,700,000       9,353  
SMARTRAC NV1,3
     187,214       9,059  
Techwell, Inc.3
     825,000       8,943  
Cogent, Inc.3
     900,000       8,487  
Spark Networks, Inc.2,3
     1,935,300       8,283  
Delta Electronics (Thailand) PCL1
     12,150,000       8,178  
Ono Sokki Co., Ltd.1,2
     1,609,000       7,960  
Rogers Corp.3
     225,968       7,550  
MEMSIC, Inc.2,3
     1,200,000       7,212  
Simmtech Co., Ltd.1
     1,020,000       6,363  
Oakton Ltd.1
     1,520,000       5,067  
ORBCOMM Inc.3
     1,000,000       4,960  
HSW International, Inc.1,3,4
     1,109,908       3,995  
Phoenix PDE Co., Ltd.1,2,3
     1,500,000       2,842  
SupportSoft, Inc.3
     735,000       2,426  
PDF Solutions, Inc.3
     357,900       1,972  
Spansion Inc., Class A3
     574,500       1,580  
KEC Holdings Co. Ltd.1
     781,249       1,402  
DK UIL Co., Ltd.1,3
     140,000       928  
Advanced Semiconductor Manufacturing Corp. Ltd., Class H1,3
     24,250,000       787  
Redline Communications Group Inc.2,3
     698,500       700  
Infoteria Corp.1,3
     2,577       502  
Orbiscom Ltd.1,3,4
     3,905,874       156  
PixelFusion PLC1,3,4
     2,300,000       31  
KEC Corp.1,3
     20,000       26  
              2,529,722  
                 
                 
HEALTH CARE — 9.80%
                
ResMed Inc3
     2,983,200       125,831  
ResMed Inc (CDI)1,3
     1,500,000       6,223  
Integra LifeSciences Holdings Corp.2,3
     2,065,377       89,782  
American Medical Systems Holdings, Inc.2,3
     5,370,000       76,200  
Gerresheimer AG, non-registered shares1,3
     1,435,000       72,211  
Grifols, SA1
     2,706,125       71,235  
ArthroCare Corp.2,3
     2,070,000       69,035  
Beckman Coulter, Inc.
     997,500       64,389  
Hikma Pharmaceuticals PLC1
     6,769,153       63,356  
Medicis Pharmaceutical Corp., Class A2
     3,020,000       59,464  
Vital Signs, Inc.2
     1,059,690       53,673  
Nakanishi Inc.1,2
     491,100       50,569  
Laboratorios Almirall, SA1,3
     2,423,300       49,434  
BioMarin Pharmaceutical Inc.3
     1,350,000       47,750  
Cochlear Ltd.1
     918,610       46,144  
Haemonetics Corp.3
     721,000       42,957  
Apollo Hospitals Enterprise Ltd.1,2
     3,275,000       42,046  
Rhön-Klinikum AG, non-registered shares1
     1,410,400       41,773  
Fisher & Paykel Healthcare Corp. Ltd.1
     16,600,000       38,411  
SonoSite, Inc.2,3
     1,331,100       37,843  
Applera Corp., Celera group3
     2,537,000       37,294  
Sirona Dental Systems, Inc.3
     1,345,000       36,275  
NuVasive, Inc.3
     1,042,829       35,988  
DiaSorin SpA1,3
     1,754,300       35,921  
Volcano Corp.2,3
     2,745,500       34,319  
Mentor Corp.
     1,250,700       32,168  
Intuitive Surgical, Inc.3
     96,934       31,441  
Allscripts Healthcare Solutions, Inc.2,3
     3,000,000       30,960  
ev3 Inc.3
     3,588,258       29,208  
Masimo Corp.3
     1,066,000       27,716  
Ipca Laboratories Ltd.1,2
     1,794,000       27,672  
Abaxis, Inc.2,3
     1,168,828       27,082  
China Medical Technologies, Inc. (ADR)
     600,000       24,654  
Bumrungrad Hospital PCL1
     20,655,300       22,501  
Acorda Therapeutics, Inc.3
     1,250,000       22,438  
United Laboratories International Holdings Ltd.1,3
     58,260,000       22,377  
I-Flow Corp.2,3
     1,572,000       22,055  
Hisamitsu Pharmaceutical Co., Inc.1
     600,000       21,847  
United Therapeutics Corp.3
     250,000       21,675  
Cougar Biotechnology, Inc.2,3,4
     1,000,000       21,000  
Invacare Corp.
     935,000       20,832  
AMAG Pharmaceuticals, Inc.3
     500,000       20,215  
Vital Images, Inc.2,3
     1,362,000       20,185  
Savient Pharmaceuticals, Inc.3
     1,000,000       20,000  
ICU Medical, Inc.3
     654,000       18,816  
Greatbatch, Inc.3
     990,400       18,233  
Arpida Ltd.1,2,3
     1,231,509       17,298  
Auxilium Pharmaceuticals, Inc.3
     600,000       16,044  
Kendle International Inc.3
     357,000       16,036  
Eclipsys Corp.3
     775,000       15,198  
Biosensors International Group, Ltd.1,3
     27,650,000       14,846  
Insulet Corp.3
     1,010,000       14,544  
Kensey Nash Corp.3
     500,000       14,475  
Orion Oyj, Class B1
     655,000       14,190  
ABIOMED, Inc.3
     1,030,000       13,534  
Tecan Group AG1
     215,586       12,987  
Cardiome Pharma Corp.3
     1,500,000       12,600  
PSS World Medical, Inc.3
     750,000       12,495  
Exelixis, Inc.3
     1,775,000       12,336  
Alexion Pharmaceuticals, Inc.3
     200,000       11,860  
EGIS NYRT1
     107,000       11,616  
Amplifon SpA1
     3,325,980       11,297  
Array BioPharma Inc.3
     1,520,000       10,655  
A&D Pharma Holdings NV (GDR)1
     958,000       10,590  
Advanced Medical Optics, Inc.3
     520,000       10,556  
Phase Forward Inc.3
     615,000       10,504  
Top Glove Corp. Bhd.1
     8,220,500       10,097  
Clínica Baviera, SA1,3
     420,000       9,935  
Recordati SpA1
     1,300,000       9,706  
AngioDynamics, Inc.3
     800,000       9,248  
Newron Pharmaceuticals SpA1,3
     257,000       8,890  
Introgen Therapeutics, Inc.2,3
     2,677,100       8,326  
Simcere Pharmaceutical Group (ADR)3
     770,000       8,054  
Vical Inc.2,3
     2,250,279       7,921  
Sigma Pharmaceuticals Ltd.1
     6,805,898       7,772  
Vision-Sciences, Inc.2,3
     2,200,000       7,194  
LifeCycle Pharma A/S1,3
     1,300,000       6,620  
Senomyx, Inc.3
     1,024,400       6,044  
AS ONE Corp.1
     253,000       5,776  
Krka, dd, Novo mesto1
     27,820       4,086  
Apria Healthcare Group Inc.3
     180,000       3,555  
Hythiam, Inc.3
     2,700,000       3,267  
Arcadia Resources, Inc.3,4
     3,749,999       3,225  
Allied Medical Ltd.1,3
     147,030       35  
              2,214,610  
                 
                 
ENERGY — 5.85%
                
OPTI Canada Inc.2,3
     14,849,000       250,061  
OPTI Canada Inc.2,3,4
     420,000       7,073  
Oilexco Inc.3
     6,808,600       89,009  
Oilexco Inc. (GBP denominated)1,3,4
     2,900,000       38,067  
Oilexco Inc.3,4
     520,000       6,798  
Concho Resources Inc.2,3
     4,929,120       126,383  
Quicksilver Resources Inc.3
     3,011,500       110,010  
Banpu PCL1
     6,951,700       92,744  
Straits Asia Resources Ltd.1
     37,066,000       88,029  
Heritage Oil Corp.2,3
     1,564,900       78,572  
KNM Group Bhd.1
     32,013,600       53,293  
First Calgary Petroleums Ltd.2,3
     10,846,000       30,512  
First Calgary Petroleums Ltd. (GBP denominated)1,2,3
     4,800,000       12,808  
FMC Technologies, Inc.3
     700,000       39,823  
Expro International Group PLC1
     1,500,000       34,641  
Value Creation Inc.1,3,4,6
     4,727,512       33,364  
Bill Barrett Corp.3
     700,000       33,075  
WorleyParsons Ltd.1
     889,556       27,313  
Bankers Petroleum Ltd.3
     13,703,800       22,411  
Bankers Petroleum Ltd.3,4
     2,200,000       3,598  
Regal Petroleum PLC1,2,3
     10,317,000       24,975  
Centennial Coal Co. Ltd.1
     5,927,391       22,040  
Synenco Energy Inc., Class A3
     2,050,000       14,467  
Denbury Resources Inc.3
     500,000       14,275  
Core Laboratories NV3
     100,000       11,930  
Pacific Rubiales Energy Corp.3,4
     8,000,000       11,603  
VeraSun Energy Corp.3
     1,168,030       8,585  
Zhaikmunai LP (GDR)3,5
     790,000       8,271  
Alpha Natural Resources, Inc.3
     190,000       8,254  
Uranium One Inc.3
     2,250,000       7,403  
Sterling Energy PLC1,3
     37,700,000       5,985  
Mart Resources, Inc.3,4
     12,459,375       5,822  
High Arctic Energy Services Inc.3
     1,923,000       1,460  
              1,322,654  
                 
                 
MATERIALS — 5.01%
                
AMG Advanced Metallurgical Group NV1,2,3
     1,823,000       147,004  
Peter Hambro Mining PLC1,3
     2,676,000       68,493  
AptarGroup, Inc.
     1,464,000       56,993  
Croda International PLC1
     3,860,000       50,778  
James Hardie Industries NV1
     8,750,000       50,145  
Central African Mining & Exploration Co. PLC1,3
     39,546,569       42,377  
Major Drilling Group International Inc.3
     800,000       41,663  
Kenmare Resources PLC1,2,3
     45,091,000       40,170  
KazakhGold Group Ltd. (GDR)1,3,5
     948,000       23,340  
KazakhGold Group Ltd. (GDR)1,3
     611,907       15,065  
Kemira Oyj1
     2,445,000       37,445  
Macarthur Coal Ltd.1
     2,870,000       34,417  
Symrise AG1,3
     1,325,000       34,207  
Eastern Platinum Ltd.3
     8,061,700       25,426  
Eastern Platinum Ltd.3,4
     2,500,000       7,885  
Valspar Corp.
     1,600,000       31,744  
Lynas Corp. Ltd.1,3
     24,865,969       29,453  
Taiwan Cement Corp.1
     14,000,000       27,502  
Minerals Technologies Inc.
     395,000       24,806  
Mineral Deposits Ltd.1,2,3
     16,220,000       14,828  
Mineral Deposits Ltd. (CAD denominated)1,2,3
     6,300,000       5,759  
Asian Paints Ltd.1
     670,200       20,171  
SSCP Co., Ltd.1,3
     890,000       20,157  
FUCHS PETROLUB AG1
     212,200       20,141  
United Phosphorus Ltd.1,3
     3,070,000       20,125  
Yamana Gold Inc.
     1,200,000       17,592  
LANXESS AG1
     425,000       17,057  
Peak Gold Ltd.3,4
     19,166,667       12,687  
Peak Gold Ltd.3
     6,000,000       3,972  
PT Indocement Tunggal Prakarsa Tbk1
     21,125,000       16,276  
Northern Iron Ltd.1,3
     5,155,000       15,659  
Cementir Holding SpA1
     1,600,000       14,913  
PT Semen Gresik1
     27,150,000       14,857  
Sidenor Steel Products Manufacturing Co. SA1
     1,108,036       14,023  
Sino-Forest Corp.3
     900,000       14,017  
Gem Diamonds Ltd.1,3
     800,000       13,951  
Banro Corp.3,4
     1,700,300       13,919  
Ta Ann Holdings Bhd.1
     5,300,000       11,327  
Nihon Parkerizing Co., Ltd.1
     820,000       11,003  
Cleveland-Cliffs Inc
     83,516       10,007  
Shree Cement Ltd.1,3
     350,000       9,609  
Samling Global Ltd.1
     53,410,000       7,545  
Oxus Gold PLC1,3
     15,915,000       6,236  
Hung Hing Printing Group Ltd.1
     17,199,000       5,745  
Mwana Africa PLC1,3,4
     5,980,000       4,866  
Zoloto Resources Ltd.2,3
     5,425,000       3,168  
Energem Resources Inc.2,3
     7,502,500       1,680  
Energem Resources Inc.2,3,4
     2,200,000       492  
Georgia Gulf Corp.
     270,000       1,871  
              1,132,566  
                 
                 
CONSUMER STAPLES — 3.57%
                
Lindt & Sprüngli AG, participation certificate1
     19,166       63,706  
Lindt & Sprüngli AG1
     1,694       60,015  
Bare Escentuals, Inc.2,3
     4,744,400       111,114  
Andersons, Inc.2
     1,247,000       55,629  
Olam International Ltd.1
     31,856,000       50,190  
Hain Celestial Group, Inc.3
     1,480,000       43,660  
China Mengniu Dairy Co.1
     14,313,000       42,075  
Coca-Cola Icecek AS, Class C1
     5,076,380       40,486  
MARR SpA1
     3,202,500       35,982  
China Yurun Food Group Ltd.1
     26,020,000       33,052  
Poslovni sistem Mercator, dd1
     69,933       32,142  
Origin Enterprises PLC1,3
     3,213,300       26,385  
Hite Brewery Co., Ltd.1
     210,000       23,672  
IAWS Group PLC1
     952,000       22,253  
AMOREPACIFIC Corp.1
     36,702       19,857  
Anadolu Efes Biracilik ve Malt Sanayii AS1
     2,140,000       19,166  
Universal Robina Corp.1
     51,235,000       17,378  
Emmi AG1
     95,800       13,787  
Trigon Agri A/S1,2,3
     3,875,000       12,492  
Fresh Del Monte Produce Inc.3
     324,500       11,812  
Synear Food Holdings Ltd.1
     26,500,000       10,985  
China Milk Products Group Ltd.1
     22,200,000       10,550  
PrimeAg Australia Ltd.1,3
     7,000,000       10,532  
Asiatic Development Bhd.1
     3,740,000       9,860  
PT Indofood Sukses Makmur Tbk1
     34,000,000       8,659  
Central Garden & Pet Co., Class A3
     1,250,000       5,550  
Central Garden & Pet Co.3
     500,000       2,305  
PT Astra Agro Lestari Tbk1
     2,420,000       6,857  
China Huiyuan Juice Group Ltd.1,3
     7,843,500       5,891  
              806,042  
                 
                 
TELECOMMUNICATION SERVICES — 1.85%
                
Partner Communications Co. Ltd.1
     2,835,000       63,223  
Partner Communications Co. Ltd. (ADR)
     125,000       2,806  
Time Warner Telecom Inc., Class A3
     4,100,000       63,509  
LG Telecom Ltd.1
     6,370,000       50,516  
Cellcom Israel Ltd.
     950,000       29,858  
Cellcom Israel Ltd.1
     350,000       11,802  
Manitoba Telecom Services Inc.
     1,070,000       40,788  
NTELOS Holdings Corp.
     1,604,175       38,821  
Telemig Celular Participações SA, preferred nominative
     524,843       15,047  
Telemig Celular Participações SA, preferred nominative (ADR)
     163,000       9,236  
DiGi.Com Bhd.1
     2,927,500       22,383  
Total Access Communication PCL1,3
     17,046,000       21,047  
Globe Telecom, Inc.1
     526,867       19,252  
True Corp. PCL1,3
     107,000,000       17,465  
StarHub Ltd1
     3,246,840       7,178  
QSC AG1,3
     1,969,863       5,252  
              418,183  
                 
                 
UTILITIES — 1.70%
                
Xinao Gas Holdings Ltd.1,2
     51,038,000       92,256  
Manila Water Co., Inc.1,2
     101,175,600       43,604  
Glow Energy PCL1
     37,970,000       38,856  
GVK Power & Infrastructure Ltd.1,3
     33,574,640       33,858  
PNOC Energy Development Corp.1
     208,263,000       29,667  
Northumbrian Water Group PLC1
     4,170,000       28,896  
First Gen Corp.1
     28,463,300       27,517  
Cascal NV2,3
     1,693,800       20,326  
AES Tietê SA, preferred nominative
     600,000,000       20,011  
Energen Corp.
     200,000       12,460  
Ratchaburi Electricity Generating Holding PCL1
     7,560,000       11,155  
Empire District Electric Co.
     430,000       8,708  
Electricity Generating PCL1
     2,285,000       6,998  
CESC Ltd.1
     630,000       6,540  
EDF Energies Nouvelles SA1
     63,400       3,888  
              384,740  
                 
MISCELLANEOUS — 4.97%
                
Other common stocks in initial period of acquisition
             1,122,148  
                 
                 
Total common stocks (cost: $18,283,785,000)
             20,345,500  
                 
                 
           
Market value
  
Rights & warrants — 0.06%
  
Shares
       (000 )
                 
MATERIALS — 0.03%
                
Eastern Platinum Ltd., warrants, expire 20093
     1,750,000     $ 2,709  
Eastern Platinum Ltd., warrants, expire 20083
     2,043,750       2,347  
Peak Gold Ltd., warrants, expire 20123,4
     3,333,333       1,103  
Peak Gold Ltd., warrants, expire 20123,4
     6,250,000       1,004  
Energem Resources Inc., warrants, expire 20091,2,3,4
     2,200,000       27  
Energem Resources Inc., warrants, expire 20081,2,3
     1,200,000       —  
              7,190  
                 
                 
ENERGY — 0.02%
                
Pacific Rubiales Energy Corp., warrants, expire 20123,4
     4,000,000       2,687  
Bankers Petroleum Ltd., warrants, expire 20123,4
     1,100,000       1,125  
OPTI Canada Inc., warrants, expire 20081,2,3,4
     105,000       769  
              4,581  
                 
                 
MISCELLANEOUS — 0.01%
                
Other rights & warrants in initial period of acquisition
             2,301  
                 
                 
Total rights & warrants (cost: $5,520,000)
             14,072  
                 
                 
                 
                 
   
Shares or
          
Convertible securities — 0.13%
  
principal amount
          
                 
INFORMATION TECHNOLOGY — 0.08%
                
Fluidigm Corp., Series E, convertible preferred1,3,4
     4,378,695       17,515  
                 
                 
CONSUMER DISCRETIONARY — 0.04%
                
Spot Runner, Inc., Series C, convertible preferred1,3,4
     1,626,016       9,756  
                 
                 
TELECOMMUNICATION SERVICES — 0.01%
                
Time Warner Telecom Inc. 2.375% convertible debentures 2026
   $ 1,600,000       1,680  
                 
                 
Total convertible securities (cost: $25,115,000)
             28,951  
                 
                 
                 
                 
   
Principal amount
          
Bonds & notes — 0.08%
     (000 )        
                 
CONSUMER DISCRETIONARY — 0.07%
                
XM Satellite Radio Inc. and XM Satellite Radio Holdings Inc. 9.75% 2014
   $ 16,600       16,102  
                 
                 
ENERGY — 0.01%
                
International Coal Group, Inc. 10.25% 2014
     1,500       1,444  
                 
                 
Total bonds & notes (cost: $17,187,000)
             17,546  
                 
                 
   
Principal amount
    
Market value
  
Short-term securities — 9.64%
     (000 )     (000 )
                 
Federal Home Loan Bank 2.07%–2.68% due 4/16–6/18/2008
   $ 239,600     $ 238,813  
CBA (Delaware) Finance Inc. 2.88%–3.05% due 4/7–5/30/2008
     173,000       172,358  
BASF AG 2.20%–3.315% due 4/4–6/26/20085
     137,200       136,721  
Westpac Banking Corp. 2.70%–4.40% due 4/9–6/5/20085
     133,800       133,405  
ANZ National (International) Ltd. 2.52%–3.16% due 5/1–6/12/20085
     122,300       121,911  
Danske Corp. 3.81% due 4/16/20085
     100,000       99,864  
HSBC USA Inc. 2.73%–3.73% due 4/22–5/28/2008
     97,100       96,814  
ING (U.S.) Funding LLC 2.77%–3.00% due 4/14–6/12/2008
     94,300       93,957  
Eksportfinans ASA 2.80%–2.85% due 5/13–5/14/20085
     92,200       91,889  
American Honda Finance Corp. 2.80%–2.90% due 4/16–4/23/2008
     90,300       90,155  
Calyon North America Inc. 3.035%–4.44% due 4/3–4/29/2008
     84,700       84,547  
Swedish Export Credit Corp. 2.13%–2.78% due 4/25–6/19/2008
     82,600       82,200  
Allied Irish Banks North America Inc. 4.38% due 4/7/20085
     77,800       77,753  
Royal Bank of Scotland PLC 2.96%–4.52% due 4/28–5/8/2008
     73,500       73,307  
Nestlé Finance International Ltd. 2.25% due 6/17–7/18/2008
     44,225       43,933  
Alcon Capital Corp. 2.39% due 4/1/20085
     10,000       9,999  
U.S. Treasury Bills 2.21% due 5/22/2008
     50,000       49,977  
Svenska Handelsbanken Inc. 3.75% due 4/17/2008
     50,000       49,928  
Barclays U.S. Funding Corp. 3.765% due 4/18/2008
     50,000       49,924  
BNP Paribas Finance Inc. 2.65% due 5/28/2008
     50,000       49,782  
Canadian Imperial Holdings Inc. 2.55% due 5/19/2008
     48,400       48,230  
Siemens Capital Co. LLC 2.83% due 5/5/20085
     42,300       42,176  
Bank of Scotland PLC 4.30% due 4/8/2008
     35,000       34,976  
BMW U.S. Capital LLC 2.90% due 4/1/20085
     33,800       33,797  
Lloyds Bank PLC 2.66% due 5/15/2008
     30,500       30,394  
Toronto-Dominion Holdings USA Inc. 2.48% due 5/6/20085
     26,700       26,634  
Old Line Funding, LLC 3.23% due 4/11/20085
     25,000       24,975  
Freddie Mac 2.42% due 6/2/2008
     23,600       23,509  
Bank of Nova Scotia 2.61% due 5/27/2008
     20,800       20,712  
UBS Finance (Delaware) LLC 3.82% due 4/14/2008
     18,800       18,778  
Société Générale North America, Inc. 4.05% due 4/15/2008
     17,700       17,678  
National Australia Funding (Delaware) Inc. 2.32% due 5/23/20085
     8,500       8,471  
                 
                 
Total short-term securities (cost: $2,177,306,000)
             2,177,567  
                 
                 
Total investment securities (cost: $20,508,913,000)
             22,583,636  
Other assets less liabilities
             8,381  
                 
Net assets
           $ 22,592,017  


“Miscellaneous” securities include holdings in their initial period of acquisition that have not previously been publicly disclosed.


 
1Valued under fair value procedures adopted by authority of the board of directors. The total value of all such securities, including those in "Miscellaneous,"
 
was $11,802,000,000, which represented 52.24% of the net assets of the fund.
 
2Represents an affiliated company as defined under the Investment Company Act of 1940.
 
3Security did not produce income during the last 12 months.
4Purchased in a transaction exempt from registration under the Securities Act of 1933. May be subject to legal or contractual restrictions on resale.
 
 Further details on these holdings appear below and on the following page.

 

 
 
Acquisition
date(s)
  
Cost
(000)
    
Market value
 (000)
    
Percent of
net assets
  
                     
Boart Longyear Ltd.
4/4/2007
   $ 49,573     $ 55,371       .25 %
Oilexco Inc.  (GBP denominated)
12/15/2005
     9,456       38,067       .17  
Oilexco Inc.
3/7/2007
     3,454       6,798       .03  
Trinity Ltd.
12/6/2007
     37,508       37,559       .17  
Value Creation Inc.
8/25/2005–9/1/2006
     33,229       33,364       .15  
Spot Runner, Inc.
10/25/2006­–3/20/2008
     15,071       17,883       .08  
Spot Runner, Inc., Series C, convertible preferred
10/25/2006
     6,000       9,756       .04  
Fontainebleau Resorts LLC, Class A, non-voting units
10/5/2005–6/1/2007
     21,500       22,800       .10  
Cougar Biotechnology, Inc.
12/17/2007
     29,000       21,000       .09  
Fluidigm Corp., Series E, convertible preferred
12/21/2006–10/24/2007
     17,515       17,515       .08  
Peak Gold Ltd.
3/21/2007–11/26/2007
     11,434       12,687       .06  
Peak Gold Ltd., warrants, expire 2012
11/26/2007
     336       1,103       .00  
Peak Gold Ltd., warrants, expire 2012
3/21/2007
     1,386       1,004       .00  
Pacific Rubiales Energy Corp.
7/9/2007
     5,551       11,603       .05  
Pacific Rubiales Energy Corp., warrants, expire 2012
7/9/2007
     932       2,687       .01  
Banro Corp.
7/26/2005
     7,258       13,919       .06  
Eastern Platinum Ltd.
4/30/2007
     4,100       7,885       .03  
OPTI Canada Inc.
6/1/2005
     4,610       7,073       .03  
OPTI Canada Inc., warrants, expire 2008
6/1/2005
     355       769       .00  
Mart Resources, Inc.
1/16/2007–9/07/2007
     5,594       5,822       .03  
Mwana Africa PLC
12/7/2005
     5,032       4,866       .03  
Bankers Petroleum Ltd.
2/22/2007
     1,328       3,598       .02  
Bankers Petroleum Ltd., warrants, expire 2012
2/22/2007
     —       1,125       .00  
HSW International, Inc.
10/2/2007–12/17/2007
     3,907       3,995       .02  
Euronet Worldwide, Inc.
3/8/2007
     5,000       3,852       .02  
Aker Philadelphia Shipyard ASA
12/5/2007
     3,626       3,538       .02  
Arcadia Resources, Inc.
12/29/2006
     7,500       3,225       .01  
Energem Resources Inc.
3/6/2007
     1,035       492       .00  
Energem Resources Inc., warrants, expire 2009
3/6/2007
     367       27       .00  
ZOOTS
1/30/2001–4/3/2001
     8,167       234       .00  
Orbiscom Ltd.
9/28/2000
     12,144       156       .00  
PixelFusion PLC
6/2/2000
     5,243       31       .00  
Mobil Travel Guide, Inc.
12/17/2007
     24       24       .00  
                           
Total restricted securities
     $ 317,235     $ 349,828       1.55 %

5Purchased in a transaction exempt from registration under the Securities Act of 1933. May be resold in the United States in transactions exempt from
 registration, normally to qualified institutional buyers. The total value of all such securities was $846,858,000, which represented 3.75% of the net
 assets of the fund.
6Share balance estimated based on acquisition of BA Energy Inc. by Value Creation Inc. effective 2/26/2008. Estimated exchange ratio based on the best
 information available as of 3/31/2008 was 0.835 shares of Value Creation Inc. for every one share of BA Energy Inc. Value Creation Inc. will announce the
 final exchange ratio on or before June 20, 2008 within a range of 0.67 to 0.87.


ADR = American Depositary Receipts
CDI = CREST Depository Interest
BDR = Brazilian Depositary Receipts
GBP = British Pound
CAD = Canadian Dollar
GDR = Global Depositary Receipts



Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so you may lose money.

Investors should carefully consider the investment objectives, risks, charges and expenses of the American Funds. This and other important information
is contained in each fund’s prospectus, which can be obtained from your financial professional and should be read carefully before investing.
 
 
 
 
 
MFGEFP-935-0508O-S10857
 
 
ITEM 7 – Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies

Not applicable to this Registrant, insofar as the Registrant is not a closed-end management investment company.


ITEM 8 – Portfolio Managers of Closed-End Management Investment Companies

Not applicable to this Registrant, insofar as the Registrant is not a closed-end management investment company.


ITEM 9 – Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers

Not applicable to this Registrant, insofar as the Registrant is not a closed-end management investment company.


ITEM 10 – Submission of Matters to a Vote of Security Holders

There have been no material changes to the procedures by which shareholders may recommend nominees to the Registrant’s board of directors since the Registrant last submitted a proxy statement to its shareholders.  The procedures are as follows.  The Registrant has a committee on governance comprised solely of persons who are not considered ‘‘interested persons’’ of the Registrant within the meaning of the Investment Company Act of 1940, as amended. The committee periodically reviews such issues as the board’s composition, responsibilities, committees, compensation and other relevant issues, and recommends any appropriate changes to the full board of directors. While the committee normally is able to identify from its own resources an ample number of qualified candidates, it will consider shareholder suggestions of persons to be considered as nominees to fill future vacancies on the board. Such suggestions must be sent in writing to the committee on governance of the Registrant, c/o the Registrant’s Secretary, and must be accompanied by complete biographical and occupational data on the prospective nominee, along with a written consent of the prospective nominee for consideration of his or her name by the committee on governance.


ITEM 11 – Controls and Procedures

(a)
The Registrant’s Principal Executive Officer and Principal Financial Officer have concluded, based on their evaluation of the Registrant’s disclosure controls and procedures (as such term is defined in Rule 30a-3 under the Investment Company Act of 1940), that such controls and procedures are adequate and reasonably designed to achieve the purposes described in paragraph (c) of such rule.
   
(b)
There were no changes in the Registrant’s internal controls over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) that occurred during the Registrant’s second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting.


ITEM 12 – Exhibits

(a)(1)
Not applicable for filing of semi-annual reports to shareholders.
   
(a)(2)
The certifications required by Rule 30a-2 of the Investment Company Act of 1940, as amended, and Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 are attached as exhibits hereto.


 
 
 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 
SMALLCAP WORLD FUND, INC.
   
 
By /s/ Paul F. Roye
 
Paul F. Roye, Executive Vice President and
Principal Executive Officer
   
 
Date: June 6, 2008



Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.


By /s/ Paul F. Roye
Paul F. Roye, Executive Vice President and
Principal Executive Officer
 
Date: June 6, 2008



By /s/ David A. Pritchett
David A. Pritchett, Treasurer and
Principal Financial Officer
 
Date: June 6, 2008