scwf485b.htm

SEC. File Nos.033-32785

811-05888

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

____________________

FORM N-1A

Registration Statement

Under

the Securities Act of 1933

Post-Effective Amendment No. 30

and

Registration Statement

Under

the Investment Company Act of 1940

Amendment No. 33

____________________

SMALLCAP WORLD FUND, INC.

(Exact Name of Registrant as Specified in Charter)

333 South Hope Street

Los Angeles, California 90071-1406

(Address of Principal Executive Offices)

Registrant's telephone number, including area code:

(213) 486-9200

____________________

Chad L. Norton

Capital Research and Management Company

333 South Hope Street

Los Angeles, California 90071-1406

(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, CA 94105-3493

(Counsel for the Registrant)

____________________

Approximate date of proposed public offering:

It is proposed that this filing become effective on July 30, 2008, pursuant to paragraph (b) of rule 485.

...

<PAGE>
[logo - American Funds (R)]

The right choice for the long term/(R)/

SMALLCAP
World Fund/(R)/

PROSPECTUS

July 30, 2008

TABLE OF CONTENTS

1 Risk/Return summary
5 Fees and expenses of the fund
7 Investment objective, strategies and risks
11 Management and organization
15 Shareholder information
16 Choosing a share class
18 Purchase and exchange of shares
23 Sales charges
26 Sales charge reductions and waivers
28 Rollovers from retirement plans to IRAs
29 Plans of distribution
29 Other compensation to dealers
30 How to sell shares
32 Distributions and taxes
33 Financial highlights

THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED OF
THESE SECURITIES. FURTHER, IT HAS NOT DETERMINED THAT THIS PROSPECTUS IS
ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.

<PAGE>

Risk/Return summary

The fund seeks to make your investment grow over time by investing primarily in
stocks of companies located around the world with small market capitalizations
measured at the time of purchase. The fund's investment adviser currently
defines "small market capitalization" companies to be companies with market
capitalizations of $3.5 billion or less. This definition is subject to change.

The fund is designed for investors seeking capital appreciation through stocks.
Investors in the fund should have a long-term perspective and, for example, be
able to tolerate potentially sharp, short-term declines in value. Your
investment in the fund is subject to risks, including the possibility that the
value of the fund's portfolio holdings may fluctuate in response to events
specific to the companies or markets in which the fund invests, as well as
economic, political or social events in the United States or abroad. Investing
in smaller companies may pose additional risks as it is often more difficult to
obtain information about smaller companies, and the prices of their stocks may
be more volatile than stocks of larger, more established companies.

Although all securities in the fund's portfolio may be adversely affected by
currency fluctuations or global economic, political or social instability,
securities issued by entities based outside the United States may be affected to
a greater extent.

Your investment in the fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency, entity or person.

YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE LIKELIHOOD OF LOSS MAY BE
GREATER IF YOU INVEST FOR A SHORTER PERIOD OF TIME.

SMALLCAP World Fund / Prospectus

<PAGE>

HISTORICAL INVESTMENT RESULTS

The bar chart below shows how the fund's investment results have varied from
year to year, and the Investment Results table on page 4 shows how the fund's
average annual total returns for various periods compare with a broad measure of
market performance. This information provides some indication of the risks of
investing in the fund. All fund results reflect the reinvestment of dividends
and capital gain distributions, if any. Unless otherwise noted, fund results
reflect any fee waivers and/or expense reimbursements in effect during the
period presented. Past results (before and after taxes) are not predictive of
future results.

CALENDAR YEAR TOTAL RETURNS FOR CLASS A SHARES
(Results do not include a sales charge; if a sales charge were included,
results would be lower.)

[begin bar chart]
1998 0.38%
1999 61.64
2000 -15.56
2001 -17.35
2002 -22.25
2003 50.40
2004 17.76
2005 16.53
2006 22.96
2007 17.15
[end bar chart]

Highest/Lowest quarterly results during this time period were:

HIGHEST 34.63% (quarter ended December 31, 1999)
LOWEST -25.22% (quarter ended September 30, 2001)

The fund's total return for the three months ended March 31, 2008, was -11.26%.

SMALLCAP World Fund / Prospectus
<PAGE>

Unlike the bar chart on the previous page, the Investment Results table on the
following page reflects, as required by Securities and Exchange Commission
rules, the fund's investment results with the following maximum initial or
contingent deferred sales charges imposed:

. Class A share results reflect the maximum initial sales charge of 5.75%. This
charge is reduced for purchases of $25,000 or more and eliminated for
purchases of $1 million or more.

. Class B share results reflect the applicable contingent deferred sales
charge. For example, results for the one-year period shown reflect a
contingent deferred sales charge of 5%. These charges begin to decline one
year after purchase and are eliminated six years after purchase.

. Class C share results for the one-year period shown reflect a contingent
deferred sales charge of 1%, which applies only if shares are sold within one
year of purchase.

. Class 529-E and Class F shares are sold without any initial or contingent
deferred sales charge.

Results would be higher if calculated without sales charges. The references
above to Class A, B, C or F sales charges also apply to the corresponding Class
529-A, 529-B, 529-C or 529-F-1 sales charges. Unless otherwise noted, references
in this prospectus to Class F shares refer to both Class F-1 and F-2 shares.

The Investment Results table shows the fund's results on both a pretax and
after-tax basis, as required by Securities and Exchange Commission rules.
After-tax returns are shown only for Class A shares; after-tax returns for other
share classes will vary. Total returns shown "after taxes on distributions"
reflect the effect of taxes on distributions (for example, dividends or capital
gain distributions) by the fund. Total returns shown "after taxes on
distributions and sale of fund shares" assume that you sold your fund shares at
the end of the particular time period and, as a result, reflect the effect of
both taxes on distributions by the fund and taxes on any gain or loss realized
upon the sale of the shares. After-tax returns are calculated using the highest
individual federal income tax rates in effect during each year of the periods
shown and do not reflect the impact of state and local taxes.

YOUR ACTUAL AFTER-TAX RETURNS DEPEND ON YOUR INDIVIDUAL TAX SITUATION AND LIKELY
WILL DIFFER FROM THE RESULTS SHOWN BELOW. IN ADDITION, AFTER-TAX RETURNS MAY NOT
BE RELEVANT IF YOU HOLD YOUR FUND SHARES THROUGH A TAX-DEFERRED ARRANGEMENT,
SUCH AS A 401(K) PLAN, INDIVIDUAL RETIREMENT ACCOUNT (IRA) OR 529 COLLEGE
SAVINGS PLAN.

Unlike the Investment Results table on page 4, the Additional Investment Results
table on page 9 reflects the fund's results calculated without sales charges.

SMALLCAP World Fund / Prospectus

<PAGE>

INVESTMENT RESULTS (WITH MAXIMUM SALES CHARGES)
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDED DECEMBER 31, 2007:

1 YEAR 5 YEARS 10 YEARS LIFETIME/1/
-------------------------------------------------------------------------------

CLASS A -- FIRST SOLD 4/30/90
Before taxes 10.42% 22.88% 9.45% 11.63%
After taxes on distributions 8.51 21.89 8.48 N/A
After taxes on distributions and 9.02 20.24 8.03 N/A
sale of fund shares

1 YEAR 5 YEARS LIFETIME/1/
--------------------------------------------------------------------

CLASS B -- FIRST SOLD 3/15/00
Before taxes 11.27% 23.24% 3.03%
CLASS C -- FIRST SOLD 3/15/01
Before taxes 15.19 23.35 11.96
CLASS F-1 -- FIRST SOLD 3/15/01
Before taxes 17.15 24.34 12.87
CLASS 529-A -- FIRST SOLD 2/19/02
Before taxes 10.31 22.85 15.27
CLASS 529-B -- FIRST SOLD 2/20/02
Before taxes 11.11 23.06 15.21
CLASS 529-C -- FIRST SOLD 2/20/02
Before taxes 15.11 23.25 15.31
CLASS 529-E -- FIRST SOLD 3/15/02
Before taxes 16.71 23.89 14.88
CLASS 529-F-1 -- FIRST SOLD 9/17/02
Before taxes 17.28 24.38 22.36

1 YEAR 5 YEARS 10 YEARS LIFETIME/2/
-------------------------------------------------------------------------------

INDEXES (BEFORE TAXES)
S&P/Citigroup Global/World 9.87% 24.64% 11.62% 10.56%
Indexes/3/
Lipper Global Small-Cap Funds 9.70 22.21 11.35 11.91
Average/4/
Consumer Price Index/5/ 4.08 3.03 2.68 2.80

1 Lifetime results for each share class are measured from the date the share
class was first sold.
2 Lifetime results for the index(es) shown are measured from the date Class A
shares were first sold. The funds or securities that compose each index may
vary over time.

3 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, have been used from May 2006 to 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 of
less than $1.5 billion and less than $1.2 billion, were used from 2000 to April
2004, and from 1990 to 1999, respectively. These indexes are unmanaged and
include reinvested dividends and/or distributions, but do not reflect sales
charges, commissions, expenses or taxes.
4 Lipper Global Small-Cap Funds Average is composed of funds that invest at
least 25% of their portfolios in securities with primary trading markets
outside the United States, and that limit at least 65% of their investments to
companies with market capitalizations of less than $1 billion at the time of
purchase. The results of the underlying funds in the average include the
reinvestment of dividends and capital gain distributions, as well as brokerage
commissions paid by the funds for portfolio transactions, but do not reflect
sales charges or taxes.
5 Consumer Price Index (CPI) is a measure of the average change over time in the
prices paid by urban consumers for a market basket of consumer goods and
services. Widely used as a measure of inflation, the CPI is computed by the
U.S. Department of Labor, Bureau of Labor Statistics.

SMALLCAP World Fund / Prospectus
<PAGE>

Fees and expenses of the fund

These tables describe the fees and expenses that you may pay if you buy and hold
shares of the fund.

SHAREHOLDER FEES (PAID DIRECTLY FROM YOUR INVESTMENT)\
CLASS A/1/ CLASS B/1/ CLASS C/1/ CLASS 529-E/2/ CLASS F/1,3/
--------------------------------------------------------------------------------------------

Maximum initial sales
charge on purchases 5.75%/4/ none none none none
(as a percentage of
offering price)
--------------------------------------------------------------------------------------------
Maximum sales charge none none none none none
on reinvested
dividends
--------------------------------------------------------------------------------------------
Maximum contingent none/5/ 5.00%/6/ 1.00%/7/ none none
deferred sales charge
--------------------------------------------------------------------------------------------
Redemption or none none none none none
exchange fees

ANNUAL FUND OPERATING EXPENSES (DEDUCTED FROM FUND ASSETS)

CLASS A CLASS B CLASS C CLASS F-1 CLASS F-2/13/
-------------------------------------------------------------------------------

Management fees/8/ 0.63% 0.63% 0.63% 0.63% 0.63%
-------------------------------------------------------------------------------
Distribution and/or 0.24 1.00 1.00 0.25 none
service (12b-1) fees/9/
-------------------------------------------------------------------------------
Other expenses/10/ 0.17 0.18 0.22 0.17 0.19
-------------------------------------------------------------------------------
Total annual fund 1.04 1.81 1.85 1.05 0.82
operating expenses/8/

CLASS CLASS CLASS CLASS CLASS
529-A 529-B 529-C 529-E 529-F-1
-------------------------------------------------------------------------------
Management fees/8/ 0.63% 0.63% 0.63% 0.63% 0.63%
-------------------------------------------------------------------------------
Distribution and/or 0.19 1.00 1.00 0.50 0.00
service (12b-1)
fees/11/
-------------------------------------------------------------------------------
Other 0.28 0.29 0.29 0.28 0.28
expenses/10,12/
-------------------------------------------------------------------------------
Total annual fund 1.10 1.92 1.92 1.41 0.91
operating expenses/8/

1 Includes corresponding 529 share class. Accounts holding these 529 shares are
subject to a $10 account setup fee and an annual $10 account maintenance fee,
which are not reflected in this table.
2 Available only to employer-sponsored 529 plans. Accounts holding these shares
are subject to a $10 account setup fee and an annual $10 account maintenance
fee, which are not reflected in this table.

3 Class F-1, F-2 and 529-F-1 shares are generally available only to fee-based
programs of investment dealers that have special agreements with the fund's
distributor and to certain registered investment advisers.
4 The initial sales charge is reduced for purchases of $25,000 or more and
eliminated for purchases of $1 million or more.
5 A contingent deferred sales charge of 1.00% applies on certain redemptions
made within one year following purchases of $1 million or more made without an
initial sales charge.
6 The contingent deferred sales charge is reduced one year after purchase and
eliminated six years after purchase.
7 The contingent deferred sales charge is eliminated one year after purchase.

8 The fund's investment adviser is currently waiving 10% of its management fee.
The waiver may be discontinued at any time, in consultation with the fund's
board, but it is expected to continue at this level until further review. The
fund's investment adviser and board intend to review the waiver as
circumstances warrant. Management fees and total annual fund operating expenses
in the table do not reflect any waiver. Information regarding the effect of any
waiver on total annual fund operating expenses can be found in the Financial
Highlights table in this prospectus and in the fund's annual report.
9 Class A and F-1 12b-1 fees may not exceed .30% and .50%, respectively, of each
class's average net assets annually. Class B and C 12b-1 fees may not exceed
1.00% of each class's average net assets annually.
10 Includes custodial, legal, transfer agent and subtransfer agent/recordkeeping
payments and various other expenses. Subtransfer agent/recordkeeping payments
may be made to third parties (including affiliates of the fund's investment
adviser) that provide subtransfer agent, recordkeeping and/or shareholder
services with respect to certain shareholder accounts in lieu of the transfer
agent providing such services. The amount paid for subtransfer
agent/recordkeeping services will vary depending on the share class and
services provided, and typically ranges from $3 to $19 per account.

11 Class 529-A and 529-F-1 12b-1 fees may not exceed .50% of each class's
average net assets annually. Class 529-B and 529-C 12b-1 fees may not exceed
1.00% of each class's average net assets annually. Class 529-E 12b-1 fees may
not exceed .75% of the class's average net assets annually.
12 Includes up to a maximum of .10% paid to a state or states for oversight and
administrative services.
13 Based on estimated amounts for the current fiscal year. Amounts for all other
share classes are based on amounts incurred in the fund's previous fiscal year.

SMALLCAP World Fund / Prospectus

<PAGE>

EXAMPLES

The examples below are intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The examples assume that
you invest $10,000 in the fund for the time periods indicated, that your
investment has a 5% return each year, that all dividends and capital gain
distributions are reinvested, and that the fund's operating expenses remain the
same as shown above. The examples do not reflect the impact of any fee waivers
or expense reimbursements. The examples assuming redemption do not reflect the
effect of any taxable gain or loss at the time of the redemption.

Although your actual costs may be higher or lower, based on these assumptions,
your cumulative estimated expenses would be:

1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------------------------------------------------------------------------------

Class A/1/ $675 $ 887 $1,116 $1,773
-------------------------------------------------------------------------------
Class B -- assuming redemption/2/ 684 969 1,180 1,924
-------------------------------------------------------------------------------
Class B -- assuming no redemption/3/ 184 569 980 1,924
-------------------------------------------------------------------------------
Class C -- assuming redemption/4/ 288 582 1,001 2,169
-------------------------------------------------------------------------------
Class C -- assuming no redemption 188 582 1,001 2,169
-------------------------------------------------------------------------------
Class F-1 -- excluding intermediary 107 334 579 1,283
fees/5/
-------------------------------------------------------------------------------
Class F-2 -- excluding intermediary 84 262 455 1,014
fees/5/
-------------------------------------------------------------------------------
Class 529-A/1,6/ 701 944 1,204 1,941
-------------------------------------------------------------------------------
Class 529-B -- assuming 715 1,042 1,293 2,129
redemption/2,6/
-------------------------------------------------------------------------------
Class 529-B -- assuming no 215 642 1,093 2,129
redemption/3,6/
-------------------------------------------------------------------------------
Class 529-C -- assuming 315 642 1,093 2,340
redemption/4,6/
-------------------------------------------------------------------------------
Class 529-C -- assuming no redemption/6/ 215 642 1,093 2,340
-------------------------------------------------------------------------------
Class 529-E/6/ 163 485 828 1,791
-------------------------------------------------------------------------------
Class 529-F-1 -- excluding intermediary 113 329 562 1,223
fees/5,6/

1 Reflects the maximum initial sales charge.

2 Reflects applicable contingent deferred sales charges through year six and
Class A or 529-A expenses for years nine and 10 because Class B and 529-B
shares automatically convert to Class A and 529-A shares, respectively, in the
month of the eight-year anniversary of the purchase date.
3 Reflects Class A or 529-A expenses for years nine and 10 because Class B and
529-B shares automatically convert to Class A and 529-A shares, respectively,
in the month of the eight-year anniversary of the purchase date.
4 Reflects a contingent deferred sales charge in the first year.
5 Does not include fees charged by financial intermediaries, which are
independent of fund expenses and will increase the overall cost of your
investment. Intermediary fees typically range from .75% to 1.50% of assets
annually depending on the services offered.
6 Reflects an initial $10 account setup fee and an annual $10 account
maintenance fee.

SMALLCAP World Fund / Prospectus
<PAGE>

Investment objective, strategies and risks

The fund's investment objective is to provide you with long-term growth of
capital. Normally, the fund invests at least 80% of its assets in equity
securities of companies located around the world with small market
capitalizations, measured at the time of purchase. However, the fund's holdings
of small capitalization stocks may fall below the 80% threshold due to
subsequent market action. This policy is subject to change only upon 60 days'
written notice to shareholders. The investment adviser currently defines "small
market capitalization" companies to be companies with market capitalizations of
$3.5 billion or less. The investment adviser has periodically re-evaluated and
adjusted this definition and may continue to do so in the future.

The prices of securities held by the fund may decline in response to certain
events, including those directly involving the companies whose securities are
owned by the fund; conditions affecting the general economy; overall market
changes; local, regional or global political, social or economic instability;
and currency, interest rate and commodity price fluctuations. The
growth-oriented, equity-type securities generally purchased by the fund may
involve large price swings and potential for loss, particularly in the case of
smaller capitalization stocks. Smaller capitalization stocks are often more
difficult to value or dispose of, more difficult to obtain information about and
more volatile than stocks of larger, more established companies.

Investments in securities issued by entities based outside the United States may
be subject to the risks described above to a greater extent and may also be
affected by currency controls; different accounting, auditing, financial
reporting, and legal standards and practices in some countries; expropriation;
changes in tax policy; greater market volatility; differing securities market
structures; higher transaction costs; and various administrative difficulties,
such as delays in clearing and settling portfolio transactions or in receiving
payment of dividends. These risks may be heightened in connection with
investments in developing countries.

Investing in countries with developing economies and/or markets may involve
risks in addition to and greater than those generally associated with investing
in developed countries. For instance, developing countries may have less
developed legal and accounting systems. The governments of these countries may
be more unstable and more likely to impose capital controls, nationalize a
company or industry, place restrictions on foreign ownership and on withdrawing
sale proceeds of securities from the country, and/or impose punitive taxes that
could adversely affect security prices. In addition, the economies of these
countries may be dependent on relatively few industries that are more
susceptible to local and global changes. Securities markets in these countries
are also relatively small and have substantially lower trading volumes. As a
result, securities issued in these countries may be more volatile and less
liquid than securities issued in countries with more developed economies or
markets.

SMALLCAP World Fund / Prospectus

<PAGE>

The fund may also hold cash or money market instruments. The percentage of the
fund invested in such holdings varies and depends on various factors, including
market conditions and purchases and redemptions of fund shares. A larger
percentage of such holdings could moderate the fund's investment results in a
period of rising market prices.

A larger percentage of cash or money market instruments could reduce the
magnitude of the fund's loss in a period of falling market prices and provide
liquidity to make additional investments or to meet redemptions.

The fund relies on the professional judgment of its investment adviser to make
decisions about the fund's portfolio investments. The basic investment
philosophy of the investment adviser is to seek to invest in attractively valued
companies that, in its opinion, represent above-average long-term investment
opportunities. The investment adviser believes that an important way to
accomplish this is through fundamental analysis, which may include meeting with
company executives and employees, suppliers, customers and competitors.
Securities may be sold when the investment adviser believes that they no longer
represent relatively attractive investment opportunities.

ADDITIONAL INVESTMENT RESULTS

Unlike the Investment Results table on page 4, the table below reflects the
fund's results calculated without sales charges.

SMALLCAP World Fund / Prospectus
<PAGE>

ADDITIONAL INVESTMENT RESULTS (WITHOUT SALES CHARGES)
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDED DECEMBER 31, 2007:

1 YEAR 5 YEARS 10 YEARS LIFETIME/1/
-------------------------------------------------------------------------------

CLASS A -- FIRST SOLD 4/30/90
Before taxes 17.15% 24.35% 10.10% 12.00%
After taxes on distributions 15.13 23.34 9.13 N/A
After taxes on distributions and 13.54 21.59 8.63 N/A
sale of fund shares
-------------------------------------------------------------------------------

1 YEAR 5 YEARS LIFETIME/1/
--------------------------------------------------------------------

CLASS B -- FIRST SOLD 3/15/00
Before taxes 16.27% 23.41% 3.03%
--------------------------------------------------------------------
CLASS C -- FIRST SOLD 3/15/01
Before taxes 16.19 23.35 11.96
--------------------------------------------------------------------
CLASS F-1 -- FIRST SOLD 3/15/01
Before taxes 17.15 24.34 12.87
--------------------------------------------------------------------
CLASS 529-A -- FIRST SOLD 2/19/02
Before taxes 17.06 24.32 16.44
--------------------------------------------------------------------
CLASS 529-B -- FIRST SOLD 2/20/02
Before taxes 16.11 23.23 15.30
--------------------------------------------------------------------
CLASS 529-C -- FIRST SOLD 2/20/02
Before taxes 16.11 23.25 15.31
--------------------------------------------------------------------
CLASS 529-E -- FIRST SOLD 3/15/02
Before taxes 16.71 23.89 14.88
--------------------------------------------------------------------
CLASS 529-F-1 -- FIRST SOLD 9/17/02
Before taxes 17.28 24.38 22.36
--------------------------------------------------------------------

1 YEAR 5 YEARS 10 YEARS LIFETIME/2/
-------------------------------------------------------------------------------

INDEXES (BEFORE TAXES)
S&P/Citigroup Global/World 9.87% 24.64% 11.62% 10.56%
Indexes/3/
Lipper Global Small-Cap Funds 9.70 22.21 11.35 11.91
Average/4/
Consumer Price Index/5/ 4.08 3.03 2.68 2.80

SMALLCAP World Fund / Prospectus

<PAGE>

LARGEST SECTOR HOLDINGS AS OF MARCH 31, 2008

[begin pie chart]

Consumer discretionary 17.41%
Industrials 17.28
Financials 11.41
Information technology 11.20
Health care 9.80
Bonds & notes 0.08
Other industries 23.14
Short-term securities & 9.68
other assets less
liabilities
[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
-------------------------------------------------------------------------------
Total 100.0%
-------------------------------------------------------------------------------

* Countries using the euro as a common currency are Austria, Belgium, Cyprus,
Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Malta, the
Netherlands, Portugal, Slovenia and Spain.

LARGEST EQUITY HOLDINGS PERCENT OF NET ASSETS

OPTI Canada 1.1%
---------------------------------------------------------------------
Kingboard Chemical Holdings .8
---------------------------------------------------------------------
Samsung Engineering .7
---------------------------------------------------------------------
Pusan Bank .7
---------------------------------------------------------------------
Advanced Metallurgical Group .7
---------------------------------------------------------------------
Jumbo .6
---------------------------------------------------------------------
Daegu Bank .6
---------------------------------------------------------------------
Oilexco .6
---------------------------------------------------------------------
Fourlis .6
---------------------------------------------------------------------
ResMed .6

Because the fund is actively managed, its holdings will change over time.

For updated information on the fund's portfolio holdings, please visit us at
americanfunds.com.

SMALLCAP World Fund / Prospectus
<PAGE>

Management and organization

INVESTMENT ADVISER

Capital Research and Management Company, an experienced investment management
organization founded in 1931, serves as investment adviser to the fund and other
funds, including the American Funds. Capital Research and Management Company is
a wholly owned subsidiary of The Capital Group Companies, Inc. and is located at
333 South Hope Street, Los Angeles, California 90071, and 6455 Irvine Center
Drive, Irvine, California 92618. Capital Research and Management Company manages
the investment portfolio and business affairs of the fund. The total management
fee paid by the fund, as a percentage of average net assets, for the previous
fiscal year appears in the Annual Fund Operating Expenses table under "Fees and
expenses of the fund." A discussion regarding the basis for the approval of the
fund's investment advisory and service agreement by the fund's board of
directors is contained in the fund's annual report to shareholders for the
fiscal year ended September 30, 2007.

Capital Research and Management Company manages equity assets through two
investment divisions, Capital World Investors and Capital Research Global
Investors, and manages fixed-income assets through its Fixed Income division.
Capital World Investors and Capital Research Global Investors make investment
decisions on an independent basis.

EXECUTION OF PORTFOLIO TRANSACTIONS

The investment adviser places orders with broker-dealers for the fund's
portfolio transactions. In selecting broker-dealers, the investment adviser
strives to obtain "best execution" (the most favorable total price reasonably
attainable under the circumstances) for the fund's portfolio transactions,
taking into account a variety of factors. Subject to best execution, the
investment adviser may consider investment research and/or brokerage services
provided to the adviser in placing orders for the fund's portfolio transactions.
The investment adviser may place orders for the fund's portfolio transactions
with broker-dealers who have sold shares of funds managed by the investment
adviser or its affiliated companies; however, it does not give consideration to
whether a broker-dealer has sold shares of the funds managed by the investment
adviser or its affiliated companies when placing any such orders for the fund's
portfolio transactions. A more detailed description of the investment adviser's
policies is included in the fund's statement of additional information.

PORTFOLIO HOLDINGS

Portfolio holdings information for the fund is available on the American Funds
website at americanfunds.com. To reach this information, access the lower
portion of the fund's details page on the website. A list of the fund's top 10
equity holdings, updated as of each month-end, is generally posted to this page
within 14 days after the end of the applicable month. A link to the fund's
complete list of publicly disclosed portfolio holdings, updated as of each

SMALLCAP World Fund / Prospectus

<PAGE>

calendar quarter-end, is generally posted to this page within 45 days after the
end of the applicable quarter. Both lists remain available on the website until
new information for the next month or quarter is posted. Portfolio holdings
information for the fund is also contained in reports filed with the Securities
and Exchange Commission.

A description of the fund's policies and procedures regarding disclosure of
information about its portfolio holdings is available in the statement of
additional information.

MULTIPLE PORTFOLIO COUNSELOR SYSTEM

Capital Research and Management Company uses a system of multiple portfolio
counselors in managing mutual fund assets. Under this approach, the portfolio of
a fund is divided into segments managed by individual counselors who decide how
their respective segments will be invested. In addition, Capital Research and
Management Company's investment analysts may make investment decisions with
respect to a portion of a fund's portfolio. Investment decisions are subject to
a fund's objective(s), policies and restrictions and the oversight of the
appropriate investment-related committees of Capital Research and Management
Company and its investment divisions.

The primary individual portfolio counselors for SMALLCAP World Fund are:

PRIMARY TITLE WITH PORTFOLIO
PORTFOLIO INVESTMENT ADVISER COUNSELOR'S
PORTFOLIO COUNSELOR/ COUNSELOR (OR AFFILIATE) ROLE IN
FUND TITLE EXPERIENCE AND INVESTMENT MANAGEMENT
(IF APPLICABLE) IN THIS FUND EXPERIENCE OF THE FUND
--------------------------------------------------------------------------------------------

GORDON CRAWFORD 18 years Senior Vice President Serves primarily as a
Vice Chairman of the - Capital Research global equity
Board Global Investors securities portfolio
counselor
Investment
professional for 37
years, all with
Capital Research and
Management Company or
affiliate
--------------------------------------------------------------------------------------------
BRADY L. ENRIGHT 3 years Senior Vice President Serves primarily as a
Senior Vice President (plus 8 years of - Capital World U.S. equity securities
prior experience Investors portfolio counselor
as an
investment analyst Investment
for the fund) professional for 17
years in total;
11 years with Capital
Research and
Management Company or
affiliate
--------------------------------------------------------------------------------------------
J. BLAIR FRANK 10 years Senior Vice President Serves primarily as a
Senior Vice President (plus 4 years of - Capital Research U.S. equity securities
prior experience Global Investors portfolio counselor
as an
investment analyst Investment
for the fund) professional for 15
years in total;
14 years with Capital
Research and
Management Company or
affiliate
--------------------------------------------------------------------------------------------
JONATHAN KNOWLES 9 years Senior Vice President Serves primarily as a
Senior Vice President (plus 5 years of - Capital World non-U.S. equity
prior experience Investors securities portfolio
as an counselor
investment analyst Investment
for the fund) professional for 16
years in total; all
with Capital Research
and Management
Company or affiliate
--------------------------------------------------------------------------------------------
NORIKO H. CHEN 3 years Vice President - Serves primarily as a
Vice President (plus 5 years of Capital World non-U.S. equity
prior experience Investors securities portfolio
as an counselor
investment analyst Investment
for the fund) professional for 18
years in total;
10 years with Capital
Research and
Management Company or
affiliate
--------------------------------------------------------------------------------------------
MARK E. DENNING 17 years Senior Vice President Serves primarily as a
(plus 1 year of - Capital Research non-U.S. equity
prior experience Global Investors securities portfolio
as an counselor
investment analyst Investment
for the fund) professional for 26
years, all with
Capital Research and
Management Company or
affiliate
--------------------------------------------------------------------------------------------
CLAUDIA P. HUNTINGTON 13 years Senior Vice President Serves primarily as a
(plus 5 years of - Capital Research global equity
prior experience Global Investors securities portfolio
as an counselor
investment analyst Investment
for the fund) professional for 35
years in total;
33 years with Capital
Research and
Management Company or
affiliate
--------------------------------------------------------------------------------------------
TERRANCE MCGUIRE 2 years Vice President - Serves primarily as a
(plus 7 years of Capital World U.S. equity securities
prior experience Investors portfolio counselor
as an
investment analyst Investment
for the fund) professional for 10
years; all with
Capital Research and
Management Company or
affiliate
--------------------------------------------------------------------------------------------

SMALLCAP World Fund / Prospectus
<PAGE>

SMALLCAP World Fund / Prospectus

<PAGE>

Information regarding the portfolio counselors' compensation, their ownership of
securities in the fund and other accounts they manage can be found in the
statement of additional information.

SMALLCAP World Fund / Prospectus
<PAGE>

Shareholder information

SHAREHOLDER SERVICES

American Funds Service Company/(R)/, the fund's transfer agent, offers a wide
range of services that you can use to alter your investment program should your
needs and circumstances change. These services may be terminated or modified at
any time upon 60 days' written notice. For your convenience, American Funds
Service Company has four service centers across the country.

AMERICAN FUNDS SERVICE COMPANY SERVICE AREAS
Call toll-free from anywhere in the United States
(8 a.m. to 8 p.m. ET): 800/421-0180
Access the American Funds website : americanfunds.com

[map of the United States]

Western Western Central Eastern Central Eastern
service center service center service center service center
American Funds American Funds American Funds American Funds
Service Company Service Company Service Company Service Company
P.O. Box 25065 P.O. Box 659522 P.O. Box 6007 P.O. Box 2280
Santa Ana, San Antonio, Texas Indianapolis, Indiana Norfolk, Virginia
California 78265-9522 46206-6007 23501-2280
92799-5065 Fax: 210/474-4352 Fax: 317/735-6636 Fax: 757/670-4761
Fax: 714/671-7133

A MORE DETAILED DESCRIPTION OF POLICIES AND SERVICES IS INCLUDED IN THE FUND'S
STATEMENT OF ADDITIONAL INFORMATION AND THE OWNER'S GUIDE SENT TO NEW AMERICAN
FUNDS SHAREHOLDERS ENTITLED WELCOME. CLASS 529 SHAREHOLDERS SHOULD ALSO REFER TO
THE APPLICABLE PROGRAM DESCRIPTION FOR INFORMATION ON POLICIES AND SERVICES
SPECIFICALLY RELATING TO THEIR ACCOUNT(S). These documents are available by
writing or calling American Funds Service Company. Certain privileges and/or
services described on the following pages of this prospectus and in the
statement of additional information may not be available to you depending on
your investment dealer. Please see your financial adviser or investment dealer
for more information.

SMALLCAP World Fund / Prospectus

<PAGE>

Choosing a share class

The fund offers different classes of shares through this prospectus. Class A, B,
C and F shares are available through various investment programs or accounts,
including certain types of retirement plans (see limitations below). The
services or share classes available to you may vary depending upon how you wish
to purchase shares of the fund.

Investors residing in any state may purchase Class 529 shares through an account
established with a 529 college savings plan managed by the American Funds
organization. Class 529-A, 529-B, 529-C and 529-F-1 shares are structured
similarly to the corresponding Class A, B, C and F-1 shares. For example, the
same initial sales charges apply to Class 529-A shares as to Class A shares.
Class 529-E shares are available only to investors participating through an
eligible employer plan.

Each share class represents an investment in the same portfolio of securities,
but each class has its own sales charge and expense structure, allowing you to
choose the class that best fits your situation. WHEN YOU PURCHASE SHARES OF THE
FUND, YOU SHOULD CHOOSE A SHARE CLASS. IF NONE IS CHOSEN, YOUR INVESTMENT WILL
BE MADE IN CLASS A SHARES OR, IN THE CASE OF A 529 PLAN INVESTMENT, CLASS 529-A
SHARES.

Factors you should consider in choosing a class of shares include:

. how long you expect to own the shares;

. how much you intend to invest;

. total expenses associated with owning shares of each class;

. whether you qualify for any reduction or waiver of sales charges (for
example, Class A or 529-A shares may be a less expensive option over time,
particularly if you qualify for a sales charge reduction or waiver);

. whether you plan to take any distributions in the near future (for example,
the contingent deferred sales charge will not be waived if you sell your Class
529-B or 529-C shares to cover higher education expenses); and

. availability of share classes:

-- Class B and C shares are not available to retirement plans that do not
currently invest in such shares and that are eligible to invest in Class R
shares, including employer-sponsored retirement plans such as defined benefit
plans, 401(k) plans, 457 plans, employer-sponsored 403(b) plans, and money
purchase pension and profit-sharing plans; and

-- Class F and 529-F-1 shares are generally available only to fee-based
programs of investment dealers that have special agreements with the fund's
distributor and to certain registered investment advisers.

EACH INVESTOR'S FINANCIAL CONSIDERATIONS ARE DIFFERENT. YOU SHOULD SPEAK WITH
YOUR FINANCIAL ADVISER TO HELP YOU DECIDE WHICH SHARE CLASS IS BEST FOR YOU.

UNLESS OTHERWISE NOTED, REFERENCES IN THE FOLLOWING PAGES TO CLASS A, B, C OR
F-1 SHARES ALSO REFER TO THE CORRESPONDING CLASS 529-A, 529-B, 529-C OR 529-F-1
SHARES.

SMALLCAP World Fund / Prospectus
<PAGE>

SUMMARY OF THE PRIMARY DIFFERENCES AMONG SHARE CLASSES

CLASS A SHARES
Initial sales charge up to 5.75% (reduced for purchases of $25,000 or more
and eliminated for purchases of $1 million or more)
Contingent deferred none (except that a charge of 1.00% applies to certain
sales charge redemptions made within one year following purchases
of $1 million or more without an initial sales charge)
12b-1 fees up to .30% annually (for Class 529-A shares, may not
exceed .50% annually)
Dividends generally higher than other classes due to lower
annual expenses, but may be lower than Class F-1
shares, depending on relative expenses, and lower than
Class F-2 shares due to higher 12b-1 fees
Purchase maximum none
Conversion none

CLASS B SHARES
Initial sales charge none
Contingent deferred starts at 5.00%, declining to 0% six years after
sales charge purchase
12b-1 fees up to 1.00% annually
Dividends generally lower than Class A and F shares due to
higher 12b-1 fees and other expenses, but higher than
Class C shares due to lower other expenses
Purchase maximum see the discussion regarding purchase minimums and
maximums in "Purchase and exchange of shares"
Conversion automatic conversion to Class A or 529-A shares in the
month of the eight-year anniversary of the purchase
date, reducing future annual expenses

CLASS C SHARES
Initial sales charge none
Contingent deferred 1.00% if shares are sold within one year after
sales charge purchase
12b-1 fees up to 1.00% annually
Dividends generally lower than other classes due to higher 12b-1
fees and other expenses
Purchase maximum see the discussion regarding purchase minimums and
maximums in "Purchase and exchange of shares"
Conversion automatic conversion to Class F-1 shares in the month
of the 10-year anniversary of the purchase date,
reducing future annual expenses (Class 529-C shares
will not convert to Class 529-F-1 shares)

CLASS 529-E SHARES
Initial sales charge none
Contingent deferred none
sales charge
12b-1 fees currently up to .50% annually (may not exceed .75%
annually)
Dividends generally higher than Class 529-B and 529-C shares due
to lower 12b-1 fees, but lower than Class 529-A and
529-F-1 shares due to higher 12b-1 fees
Purchase maximum none
Conversion none

CLASS F-1 SHARES
Initial sales charge none
Contingent deferred none
sales charge
12b-1 fees currently up to .25% annually (may not exceed .50%
annually)
Dividends generally higher than Class B and C shares due to
lower 12b-1 fees, and may be higher than Class A
shares, depending on relative expenses, and lower than
Class F-2 shares due to higher 12b-1 fees
Purchase maximum none
Conversion none

CLASS F-2 SHARES
Initial sales charge none
Contingent deferred none
sales charge
12b-1 fees none
Dividends generally higher than other classes due to absence of
12b-1 fees
Purchase maximum none
Conversion none

SMALLCAP World Fund / Prospectus

<PAGE>

Purchase and exchange of shares

THE FUND'S TRANSFER AGENT, ON BEHALF OF THE FUND AND AMERICAN FUNDS
DISTRIBUTORS,/(R)/ THE FUND'S DISTRIBUTOR, IS REQUIRED BY LAW TO OBTAIN CERTAIN
PERSONAL INFORMATION FROM YOU OR ANY OTHER PERSON(S) ACTING ON YOUR BEHALF IN
ORDER TO VERIFY YOUR OR SUCH PERSON'S IDENTITY. IF YOU DO NOT PROVIDE THE
INFORMATION, THE TRANSFER AGENT MAY NOT BE ABLE TO OPEN YOUR ACCOUNT. IF THE
TRANSFER AGENT IS UNABLE TO VERIFY YOUR IDENTITY OR THAT OF ANY OTHER PERSON(S)
AUTHORIZED TO ACT ON YOUR BEHALF, OR BELIEVES IT HAS IDENTIFIED POTENTIALLY
CRIMINAL ACTIVITY, THE FUND AND AMERICAN FUNDS DISTRIBUTORS RESERVE THE RIGHT TO
CLOSE YOUR ACCOUNT OR TAKE SUCH OTHER ACTION THEY DEEM REASONABLE OR REQUIRED BY
LAW.

When purchasing shares, you should designate the fund or funds in which you wish
to invest. If no fund is designated and the amount of your cash investment is
more than $5,000, your money will be held uninvested (without liability to the
transfer agent for loss of income or appreciation pending receipt of proper
instructions) until investment instructions are received, but for no more than
three business days. Your investment will be made at the net asset value (plus
any applicable sales charge in the case of Class A shares) next determined after
investment instructions are received and accepted by the transfer agent. If
investment instructions are not received, your money will be invested in Class A
shares of The Cash Management Trust of America on the third business day after
receipt of your investment.

If no fund is designated and the amount of your cash investment is $5,000 or
less, your money will be invested in the same proportion and in the same fund or
funds in which your last cash investment (excluding exchanges) was made,
provided such investment was made within the last 16 months. If no investment
was made within the last 16 months, your money will be held uninvested (without
liability to the transfer agent for loss of income or appreciation pending
receipt of proper instructions) until investment instructions are received, but
for no more than three business days. Your investment will be made at the net
asset value (plus any applicable sales charge in the case of Class A shares)
next determined after investment instructions are received and accepted by the
transfer agent. If investment instructions are not received, your money will be
invested in Class A shares of The Cash Management Trust of America on the third
business day after receipt of your investment.

SMALLCAP World Fund / Prospectus
<PAGE>

PURCHASE OF CLASS A, B AND C SHARES

You may generally open an account and purchase Class A, B and C shares by
contacting any financial adviser (who may impose transaction charges in addition
to those described in this prospectus) authorized to sell the fund's shares. You
may purchase additional shares in various ways, including through your financial
adviser and by mail, telephone, the Internet and bank wire.

PURCHASE OF CLASS F SHARES

You may generally open an account and purchase Class F shares only through
fee-based programs of investment dealers that have special agreements with the
fund's distributor and through certain registered investment advisers. These
dealers and advisers typically charge ongoing fees for services they provide.

PURCHASE OF CLASS 529 SHARES

Class 529 shares may be purchased only through an account established with a 529
college savings plan managed by the American Funds organization. You may open
this type of account and purchase 529 shares by contacting any financial adviser
(who may impose transaction charges in addition to those described in this
prospectus) authorized to sell such an account. You may purchase additional
shares in various ways, including through your financial adviser and by mail,
telephone, the Internet and bank wire.

Class 529-E shares may be purchased only by employees participating through an
eligible employer plan.

EXCHANGE

Generally, you may exchange your shares into shares of the same class of other
American Funds without a sales charge. Class A, C or F-1 shares may generally be
exchanged into the corresponding 529 share class without a sales charge. Class B
shares may not be exchanged into Class 529-B shares. EXCHANGES FROM CLASS A, C
OR F-1 SHARES TO THE CORRESPONDING 529 SHARE CLASS, PARTICULARLY IN THE CASE OF
UNIFORM GIFTS TO MINORS ACT OR UNIFORM TRANSFERS TO MINORS ACT CUSTODIAL
ACCOUNTS, MAY RESULT IN SIGNIFICANT LEGAL AND TAX CONSEQUENCES AS DESCRIBED IN
THE APPLICABLE PROGRAM DESCRIPTION. PLEASE CONSULT YOUR FINANCIAL ADVISER BEFORE
MAKING SUCH AN EXCHANGE.

Exchanges of shares from American Funds money market funds initially purchased
without a sales charge generally will be subject to the appropriate sales
charge. For purposes of computing the contingent deferred sales charge on Class
B and C shares, the length of time you have owned your shares will be measured
from the date of original purchase and will not be affected by any permitted
exchange.

Exchanges have the same tax consequences as ordinary sales and purchases. For
example, to the extent you exchange shares held in a taxable account that are
worth more now than

SMALLCAP World Fund / Prospectus

<PAGE>

what you paid for them, the gain will be subject to taxation. See "Transactions
by telephone, fax or the Internet" for information regarding electronic
exchanges.

FREQUENT TRADING OF FUND SHARES

The fund and American Funds Distributors reserve the right to reject any
purchase order for any reason. The fund is not designed to serve as a vehicle
for frequent trading. Frequent trading of fund shares may lead to increased
costs to the fund and less efficient management of the fund's portfolio,
potentially resulting in dilution of the value of the shares held by long-term
shareholders. Accordingly, purchases, including those that are part of exchange
activity that the fund or American Funds Distributors has determined could
involve actual or potential harm to the fund, may be rejected.

The fund, through its transfer agent, American Funds Service Company, maintains
surveillance procedures that are designed to detect frequent trading in fund
shares. Under these procedures, various analytics are used to evaluate factors
that may be indicative of frequent trading. For example, transactions in fund
shares that exceed certain monetary thresholds may be scrutinized. American
Funds Service Company also may review transactions that occur close in time to
other transactions in the same account or in multiple accounts under common
ownership or influence. Trading activity that is identified through these
procedures or as a result of any other information available to the fund will be
evaluated to determine whether such activity might constitute frequent trading.
These procedures may be modified from time to time as appropriate to improve the
detection of frequent trading, to facilitate monitoring for frequent trading in
particular retirement plans or other accounts, and to comply with applicable
laws.

In addition to the fund's broad ability to restrict potentially harmful trading
as described above, the fund's board of directors has adopted a "purchase
blocking policy" under which any shareholder redeeming shares (including
redemptions that are part of an exchange transaction) having a value of $5,000
or more from the fund will be precluded from investing in the fund (including
investments that are part of an exchange transaction) for 30 calendar days after
the redemption transaction. Under the fund's purchase blocking policy, certain
purchases will not be prevented and certain redemptions will not trigger a
purchase block, such as: systematic redemptions and purchases where the entity
maintaining the shareholder account is able to identify the transaction as a
systematic redemption or purchase; purchases and redemptions of shares having a
value of less than $5,000; transactions in Class 529 shares; purchases and
redemptions resulting from reallocations by American Funds Target Date
Retirement Series/(R)/; retirement plan contributions, loans and distributions
(including hardship withdrawals) identified as such on the retirement plan
recordkeeper's system; and purchase transactions involving transfers of assets,
rollovers, Roth IRA conversions and IRA recharacterizations, where the entity
maintaining the shareholder account is able to identify the transaction as one
of these types of transactions.

SMALLCAP World Fund / Prospectus
<PAGE>

The fund reserves the right to waive the purchase blocking policy with respect
to specific shareholder accounts in those instances where American Funds Service
Company determines that its surveillance procedures are adequate to detect
frequent trading in fund shares.

American Funds Service Company will work with certain intermediaries (such as
investment dealers holding shareholder accounts in street name, retirement plan
recordkeepers, insurance company separate accounts and bank trust companies) to
apply their own procedures, provided that American Funds Service Company
believes the intermediary's procedures are reasonably designed to enforce the
frequent trading policies of the fund. You should refer to disclosures provided
by the intermediaries with which you have an account to determine the specific
trading restrictions that apply to you.

If American Funds Service Company identifies any activity that may constitute
frequent trading, it reserves the right to contact the intermediary and request
that the intermediary either provide information regarding an account owner's
transactions or restrict the account owner's trading. If American Funds Service
Company is not satisfied that the intermediary has taken appropriate action,
American Funds Service Company may terminate the intermediary's ability to
transact in fund shares.

There is no guarantee that all instances of frequent trading in fund shares will
be prevented.

NOTWITHSTANDING THE FUND'S SURVEILLANCE PROCEDURES AND PURCHASE BLOCKING POLICY,
ALL TRANSACTIONS IN FUND SHARES REMAIN SUBJECT TO THE FUND'S AND AMERICAN FUNDS
DISTRIBUTORS' RIGHT TO RESTRICT POTENTIALLY ABUSIVE TRADING GENERALLY (INCLUDING
THE TYPES OF TRANSACTIONS DESCRIBED ABOVE THAT WILL NOT BE PREVENTED OR TRIGGER
A BLOCK UNDER THE PURCHASE BLOCKING POLICY). SEE THE STATEMENT OF ADDITIONAL
INFORMATION FOR MORE INFORMATION ABOUT HOW AMERICAN FUNDS SERVICE COMPANY MAY
ADDRESS OTHER POTENTIALLY ABUSIVE TRADING ACTIVITY IN THE AMERICAN FUNDS.

PURCHASE MINIMUMS AND MAXIMUMS

PURCHASE MINIMUMS FOR ALL CLASSES OF SHARES/1/
-------------------------------------------------------------------------------

To establish an account (including retirement plan and 529 $ 250/2/
accounts)
For a payroll deduction retirement plan account, payroll
deduction 25
savings plan account or employer-sponsored 529 account
To add to an account 50
For a payroll deduction retirement plan account, payroll 25
deduction
savings plan account or employer-sponsored 529 account
-------------------------------------------------------------------------------
PURCHASE MAXIMUM PER TRANSACTION FOR CLASS B SHARES 50,000
-------------------------------------------------------------------------------
PURCHASE MAXIMUM PER TRANSACTION FOR CLASS C SHARES 500,000

1 Purchase minimums may be waived in certain cases. Please see the statement of
additional information for details.
2 For accounts established with an automatic investment plan, the initial
purchase minimum of $250 may be waived if the purchases (including purchases
through exchanges from another fund) made under the plan are sufficient to
reach $250 within five months of account establishment.

SMALLCAP World Fund / Prospectus

<PAGE>

The effective purchase maximums for Class 529-A, 529-C, 529-E and 529-F-1 shares
will reflect the maximum applicable contribution limits under state law. See the
applicable program description for more information.

If you have significant American Funds holdings, you may not be eligible to
invest in Class B or C shares (or their corresponding 529 share classes).
Specifically, you may not purchase Class B or 529-B shares if you are eligible
to purchase Class A or 529-A shares at the $100,000 or higher sales charge
discount rate, and you may not purchase Class C or 529-C shares if you are
eligible to purchase Class A or 529-A shares at the $1 million or more sales
charge discount rate (i.e., at net asset value). See "Sales charge reductions
and waivers" in this prospectus and the statement of additional information for
more information regarding sales charge discounts.

VALUING SHARES

The net asset value of each share class of the fund is the value of a single
share. The fund calculates the net asset value each day the New York Stock
Exchange is open for trading as of approximately 4 p.m. New York time, the
normal close of regular trading. Assets are valued primarily on the basis of
market quotations. However, the fund has adopted procedures for making "fair
value" determinations if market quotations are not readily available or are not
considered reliable. For example, if events occur between the close of markets
outside the United States and the close of regular trading on the New York Stock
Exchange that, in the opinion of the investment adviser, materially affect the
value of any of the fund's securities that principally trade in those
international markets, those securities will be valued in accordance with fair
value procedures. Use of these procedures is intended to result in more
appropriate net asset values. In addition, such use will reduce, if not
eliminate, potential arbitrage opportunities otherwise available to short-term
investors.

Because the fund may hold securities that are primarily listed on foreign
exchanges that trade on weekends or days when the fund does not price its
shares, the value of securities held in the fund may change on days when you
will not be able to purchase or redeem fund shares.

Your shares will be purchased at the net asset value (plus any applicable sales
charge in the case of Class A shares) or sold at the net asset value next
determined after American Funds Service Company receives and accepts your
request. A contingent deferred sales charge may apply at the time you sell
certain Class A, B and C shares.

MOVING BETWEEN SHARE CLASSES AND ACCOUNTS

Please see the statement of additional information for details and limitations
on moving investments in certain share classes to different share classes, and
on moving investments held in certain accounts to different accounts.

SMALLCAP World Fund / Prospectus
<PAGE>

Sales charges

CLASS A SHARES

The initial sales charge you pay each time you buy Class A shares differs
depending upon the amount you invest and may be reduced or eliminated for larger
purchases as indicated below. The "offering price," the price you pay to buy
shares, includes any applicable sales charge, which will be deducted directly
from your investment. Shares acquired through reinvestment of dividends or
capital gain distributions are not subject to an initial sales charge.

SALES CHARGE AS A
PERCENTAGE OF:
DEALER
NET COMMISSION
OFFERING AMOUNT AS A PERCENTAGE
INVESTMENT PRICE INVESTED OF OFFERING PRICE
------------------------------------------------------------------------------

Less than $25,000 5.75% 6.10% 5.00%
------------------------------------------------------------------------------
$25,000 but less than $50,000 5.00 5.26 4.25
------------------------------------------------------------------------------
$50,000 but less than $100,000 4.50 4.71 3.75
------------------------------------------------------------------------------
$100,000 but less than $250,000 3.50 3.63 2.75
------------------------------------------------------------------------------
$250,000 but less than $500,000 2.50 2.56 2.00
------------------------------------------------------------------------------
$500,000 but less than $750,000 2.00 2.04 1.60
------------------------------------------------------------------------------
$750,000 but less than $1 million 1.50 1.52 1.20
------------------------------------------------------------------------------
$1 million or more and certain other none none see below
investments described below
------------------------------------------------------------------------------

The sales charge, expressed as a percentage of the offering price or the net
amount invested, may be higher or lower than the percentages described in the
table above due to rounding. This is because the dollar amount of the sales
charge is determined by subtracting the net asset value of the shares purchased
from the offering price, which is calculated to two decimal places using
standard rounding criteria. The impact of rounding will vary with the size of
the investment and the net asset value of the shares. Similarly, any contingent
deferred sales charge paid by you on investments in Class A shares may be higher
or lower than the 1% charge described below due to rounding.

EXCEPT AS PROVIDED BELOW, INVESTMENTS IN CLASS A SHARES OF $1 MILLION OR MORE
MAY BE SUBJECT TO A 1% CONTINGENT DEFERRED SALES CHARGE IF THE SHARES ARE SOLD
WITHIN ONE YEAR OF PURCHASE. The contingent deferred sales charge is based on
the original purchase cost or the current market value of the shares being sold,
whichever is less.

CLASS A PURCHASES NOT SUBJECT TO SALES CHARGES

The following investments are not subject to any initial or contingent deferred
sales charge if American Funds Service Company is properly notified of the
nature of the investment:

SMALLCAP World Fund / Prospectus

<PAGE>

. investments in Class A shares made by endowments or foundations with $50
million or more in assets;

. investments made by accounts that are part of certain qualified fee-based
programs and that purchased Class A shares before the discontinuation of your
investment dealer's load-waived Class A share program with the American Funds;
and

. certain rollover investments from retirement plans to IRAs (see "Rollovers
from retirement plans to IRAs" in this prospectus for more information).

The distributor may pay dealers up to 1% on investments made in Class A shares
with no initial sales charge. The fund may reimburse the distributor for these
payments through its plans of distribution (see "Plans of distribution" in this
prospectus).

Transfers from certain 529 plans to plans managed by the American Funds
organization will be made with no sales charge. No commission will be paid to
the dealer on such a transfer. Please see the statement of additional
information for more information.

Certain other investors may qualify to purchase shares without a sales charge,
such as employees of investment dealers and registered investment advisers
authorized to sell American Funds and employees of The Capital Group Companies.
Please see the statement of additional information for more information.

EMPLOYER-SPONSORED RETIREMENT PLANS

Many employer-sponsored retirement plans are eligible to purchase Class R
shares. Such eligible plans and Class R shares are described in more detail in
the fund's retirement plan prospectus.

Employer-sponsored retirement plans that are eligible to purchase Class R
shares may instead purchase Class A shares and pay the applicable Class A sales
charge, provided their recordkeepers can properly apply a sales charge on plan
investments. These plans are not eligible to make initial purchases of $1
million or more in Class A shares and thereby invest in Class A shares without
a sales charge, nor are they eligible to establish a statement of intention
that qualifies them to purchase Class A shares without a sales charge. More
information about statements of intention can be found under "Sales charge
reductions and waivers" in this prospectus. Plans investing in Class A shares
with a sales charge may purchase additional Class A shares in accordance with
the sales charge table in this prospectus.

Employer-sponsored retirement plans that invested in Class A shares without any
sales charge on or before March 31, 2004, and that continue to meet the
eligibility requirements in effect as of that date for purchasing Class A
shares at net asset value, may continue to purchase Class A shares without any
initial or contingent deferred sales charge.

SMALLCAP World Fund / Prospectus
<PAGE>

CLASS B AND C SHARES

Class B and C shares are sold without any initial sales charge. American Funds
Distributors pays 4% of the amount invested to dealers who sell Class B shares
and 1% to dealers who sell Class C shares.

For Class B shares, a contingent deferred sales charge may be applied to shares
you sell within six years of purchase, as shown in the table below.

CONTINGENT DEFERRED SALES CHARGE ON CLASS B SHARES

YEAR OF REDEMPTION: 1 2 3 4 5 6 7+
----------------------------------------------------------------------
CONTINGENT DEFERRED SALES CHARGE: 5% 4% 4% 3% 2% 1% 0%

For Class C shares, a contingent deferred sales charge of 1% applies if shares
are sold within one year of purchase.

Any contingent deferred sales charge paid by you on investments in Class B or C
shares, expressed as a percentage of the applicable redemption amount, may be
higher or lower than the percentages described above due to rounding.

Shares acquired through reinvestment of dividends or capital gain distributions
are not subject to a contingent deferred sales charge. In addition, the
contingent deferred sales charge may be waived in certain circumstances. See
"Contingent deferred sales charge waivers" in this prospectus. The contingent
deferred sales charge is based on the original purchase cost or the current
market value of the shares being sold, whichever is less. For purposes of
determining the contingent deferred sales charge, if you sell only some of your
shares, shares that are not subject to any contingent deferred sales charge will
be sold first, followed by shares that you have owned the longest.

See "Plans of distribution" in this prospectus for ongoing compensation paid to
your dealer or financial adviser for all share classes.

AUTOMATIC CONVERSION OF CLASS B AND C SHARES

Class B shares automatically convert to Class A shares in the month of the
eight-year anniversary of the purchase date. Class C shares automatically
convert to Class F-1 shares in the month of the 10-year anniversary of the
purchase date; however, Class 529-C shares will not convert to Class 529-F-1
shares. The Internal Revenue Service currently takes the position that these
automatic conversions are not taxable. Should its position change, the automatic
conversion feature may be suspended. If this happens, you would have the option
of converting your Class B, 529-B or C shares to the respective share classes at
the anniversary dates described above. This exchange would be based on the
relative net asset values of the two classes in question, without the imposition
of a sales charge or fee, but you might face certain tax consequences as a
result.

SMALLCAP World Fund / Prospectus

<PAGE>

CLASS 529-E AND CLASS F SHARES

Class 529-E and Class F shares are sold without any initial or contingent
deferred sales charge.

Sales charge reductions and waivers

TO RECEIVE A REDUCTION IN YOUR CLASS A INITIAL SALES CHARGE, YOU MUST LET YOUR
FINANCIAL ADVISER OR AMERICAN FUNDS SERVICE COMPANY KNOW AT THE TIME YOU
PURCHASE SHARES THAT YOU QUALIFY FOR SUCH A REDUCTION. IF YOU DO NOT LET YOUR
ADVISER OR AMERICAN FUNDS SERVICE COMPANY KNOW THAT YOU ARE ELIGIBLE FOR A
REDUCTION, YOU MAY NOT RECEIVE A SALES CHARGE DISCOUNT TO WHICH YOU ARE
OTHERWISE ENTITLED. In order to determine your eligibility to receive a sales
charge discount, it may be necessary for you to provide your adviser or American
Funds Service Company with information and records (including account
statements) of all relevant accounts invested in the American Funds. To have
your Class A, B or C contingent deferred sales charge waived, you must let your
adviser or American Funds Service Company know at the time you redeem shares
that you qualify for such a waiver.

IN ADDITION TO THE INFORMATION IN THIS PROSPECTUS, YOU MAY OBTAIN MORE
INFORMATION ABOUT SHARE CLASSES, SALES CHARGES AND SALES CHARGE REDUCTIONS AND
WAIVERS THROUGH A LINK ON THE HOME PAGE OF THE AMERICAN FUNDS WEBSITE AT
AMERICANFUNDS.COM, FROM THE STATEMENT OF ADDITIONAL INFORMATION OR FROM YOUR
FINANCIAL ADVISER.

REDUCING YOUR CLASS A INITIAL SALES CHARGE

Consistent with the policies described in this prospectus, you and your
"immediate family" (your spouse -- or equivalent if recognized under local law
-- and your children under the age of 21) may combine all of your American Funds
investments to reduce your Class A sales charge. Certain investments in the
American Funds Target Date Retirement Series may also be combined for this
purpose. Please see the American Funds Target Date Retirement Series prospectus
for further information. However, for this purpose, investments representing
direct purchases of American Funds money market funds are excluded. Following
are different ways that you may qualify for a reduced Class A sales charge:

AGGREGATING ACCOUNTS

To receive a reduced Class A sales charge, investments made by you and your
immediate family (see above) may be aggregated if made for your own account(s)
and/or certain other accounts, such as:

.trust accounts established by the above individuals (please see the statement
of additional information for details regarding aggregation of trust accounts
where the person(s) who established the trust is/are deceased);

SMALLCAP World Fund / Prospectus
<PAGE>

. solely controlled business accounts; and

. single-participant retirement plans.

CONCURRENT PURCHASES

You may combine simultaneous purchases (including, upon your request, purchases
for gifts) of any class of shares of two or more American Funds (excluding
American Funds money market funds) to qualify for a reduced Class A sales
charge.

RIGHTS OF ACCUMULATION

You may take into account your accumulated holdings in all share classes of the
American Funds (excluding American Funds money market funds) to determine the
initial sales charge you pay on each purchase of Class A shares. Subject to
your investment dealer's capabilities, your accumulated holdings will be
calculated as the higher of (a) the current value of your existing holdings or
(b) the amount you invested (excluding capital appreciation) less any
withdrawals. Please see the statement of additional information for details.
You should retain any records necessary to substantiate the historical amounts
you have invested.

If you make a gift of shares, upon your request you may purchase the shares at
the sales charge discount allowed under rights of accumulation of all of your
American Funds accounts.

STATEMENT OF INTENTION

You may reduce your Class A sales charge by establishing a statement of
intention. A statement of intention allows you to combine all purchases of all
share classes of the American Funds (excluding American Funds money market
funds) you intend to make over a 13-month period to determine the applicable
sales charge; however, purchases made under a right of reinvestment,
appreciation of your holdings, and reinvested dividends and capital gains do
not count as purchases made during the statement period. The market value of
your existing holdings eligible to be aggregated as of the day immediately
before the start of the statement period may be credited toward satisfying the
statement. A portion of your account may be held in escrow to cover additional
Class A sales charges that may be due if your total purchases over the
statement period do not qualify you for the applicable sales charge reduction.
Employer-sponsored retirement plans may be restricted from establishing
statements of intention. See "Sales charges" in this prospectus for more
information.

RIGHT OF REINVESTMENT

Please see "How to sell shares" in this prospectus for information on how to
reinvest proceeds from a redemption, dividend payment or capital gain
distribution without a sales charge.

SMALLCAP World Fund / Prospectus

<PAGE>

CONTINGENT DEFERRED SALES CHARGE WAIVERS

The contingent deferred sales charge on Class A, B and C shares may be waived in
the following cases:

. permitted exchanges of shares, except if shares acquired by exchange are then
redeemed within the period during which a contingent deferred sales charge
would apply to the initial shares purchased;

. tax-free returns of excess contributions to IRAs;

. redemptions due to death or postpurchase disability of the shareholder (this
generally excludes accounts registered in the names of trusts and other
entities);

. for 529 share classes only, redemptions due to a beneficiary's death,
postpurchase disability or receipt of a scholarship (to the extent of the
scholarship award);

. redemptions due to the complete termination of a trust upon the death of the
trustor/ grantor or beneficiary, but only if such termination is specifically
provided for in the trust document; and

. the following types of transactions, if together they do not exceed 12% of the
value of an account annually (see the statement of additional information for
more information about waivers regarding these types of transactions):

-- redemptions due to receiving required minimum distributions from retirement
accounts upon reaching age 70 1/2 (required minimum distributions that
continue to be taken by the beneficiary(ies) after the account owner is
deceased also qualify for a waiver); and

-- if you have established an automatic withdrawal plan, redemptions through
such a plan (including any dividends and/or capital gain distributions taken
in cash).

Rollovers from retirement plans to IRAs

Assets from retirement plans may be invested in Class A, B, C or F shares
through an IRA rollover. Rollovers invested in Class A shares from retirement
plans will be subject to applicable sales charges. The following rollovers to
Class A shares will be made without a sales charge:

. rollovers to IRAs from 403(b) plans with Capital Bank and Trust Company as
custodian; and

. rollovers to IRAs that are attributable to American Funds investments, if they
meet the following requirements:

-- the assets being rolled over were invested in American Funds at the time of
distribution; and

-- the rolled over assets are contributed to an American Funds IRA with Capital
Bank and Trust Company as custodian.

IRA rollover assets that roll over without a sales charge as described above
will not be subject to a contingent deferred sales charge and investment dealers
will be compensated

SMALLCAP World Fund / Prospectus
<PAGE>

solely with an annual service fee that begins to accrue immediately. IRA
rollover assets invested in Class A shares that are not attributable to American
Funds investments, as well as future contributions to the IRA, will be subject
to sales charges and the terms and conditions generally applicable to Class A
share investments as described in the prospectus and statement of additional
information.

Plans of distribution

The fund has plans of distribution or "12b-1 plans" under which it may finance
activities primarily intended to sell shares, provided the categories of
expenses are approved in advance by the fund's board of directors. The plans
provide for payments, based on annualized percentages of average daily net
assets, of up to .30% for Class A shares; up to .50% for Class 529-A shares; up
to 1.00% for Class B, 529-B, C and 529-C shares; up to .75% for Class 529-E
shares; and up to .50% for Class F-1 and 529-F-1 shares. For all share classes
indicated above, up to .25% of these expenses may be used to pay service fees to
qualified dealers for providing certain shareholder services. The amount
remaining for each share class may be used for distribution expenses.

The 12b-1 fees paid by the fund, as a percentage of average net assets, for the
previous fiscal year are indicated in the Annual Fund Operating Expenses table
under "Fees and expenses of the fund." Since these fees are paid out of the
fund's assets or income on an ongoing basis, over time they will increase the
cost and reduce the return of your investment. The higher fees for Class B and C
shares may cost you more over time than paying the initial sales charge for
Class A shares.

Other compensation to dealers

American Funds Distributors, at its expense, currently provides additional
compensation to investment dealers. These payments may be made, at the
discretion of American Funds Distributors, to the top 75 dealers (or their
affiliates) that have sold shares of the American Funds. The level of payments
made to a qualifying firm in any given year will vary and in no case would
exceed the sum of (a) .10% of the previous year's American Funds sales by that
dealer and (b) .02% of American Funds assets attributable to that dealer. For
calendar year 2007, aggregate payments made by American Funds Distributors to
dealers were less than .02% of the assets of the American Funds. Aggregate
payments may also change from year to year. A number of factors will be
considered in determining payments, including the qualifying dealer's sales,
assets and redemption rates, and the quality of the dealer's relationship with
American Funds Distributors. American Funds Distributors makes these payments to
help defray the costs incurred by qualifying dealers in connection with efforts
to educate financial advisers about the American Funds so that they can make
recommendations and provide services that are suitable and meet shareholder
needs.

SMALLCAP World Fund / Prospectus

<PAGE>

American Funds Distributors will, on an annual basis, determine the advisability
of continuing these payments. American Funds Distributors may also pay expenses
associated with meetings conducted by dealers outside the top 75 firms to
facilitate educating financial advisers and shareholders about the American
Funds. If investment advisers, distributors or other affiliates of mutual funds
pay additional compensation or other incentives in differing amounts, dealer
firms and their advisers may have financial incentives for recommending a
particular mutual fund over other mutual funds. You should consult with your
financial adviser and review carefully any disclosure by your financial
adviser's firm as to compensation received.

How to sell shares

You may sell (redeem) shares in any of the following ways:

THROUGH YOUR DEALER OR FINANCIAL ADVISER (CERTAIN CHARGES MAY APPLY)

. Shares held for you in your dealer's name must be sold through the dealer.

. Class F shares must be sold through your dealer or financial adviser.

WRITING TO AMERICAN FUNDS SERVICE COMPANY

. Requests must be signed by the registered shareholder(s).

. A signature guarantee is required if the redemption is:

-- more than $75,000;

-- made payable to someone other than the registered shareholder(s); or

-- sent to an address other than the address of record or to an address of
record that has been changed within the last 10 days.

. American Funds Service Company reserves the right to require signature
guarantee(s) on any redemptions.

. Additional documentation may be required for redemptions of shares held in
corporate, partnership or fiduciary accounts.

TELEPHONING OR FAXING AMERICAN FUNDS SERVICE COMPANY OR USING THE INTERNET

. Redemptions by telephone, fax or the Internet (including American
FundsLine/(R)/ and americanfunds.com) are limited to $75,000 per American
Funds shareholder each day.

. Checks must be made payable to the registered shareholder.

. Checks must be mailed to an address of record that has been used with the
account for at least 10 days.

If you recently purchased shares and subsequently request a redemption of those
shares, you will receive proceeds from the redemption once a sufficient period
of time has passed to reasonably ensure that checks or drafts (including
certified or cashier's checks) for the shares purchased have cleared (normally
10 business days).

SMALLCAP World Fund / Prospectus
<PAGE>

If you notify American Funds Service Company, you may reinvest proceeds from a
redemption, dividend payment or capital gain distribution without a sales charge
in the same fund or other American Funds provided that the reinvestment occurs
within 90 days after the date of the redemption or distribution and is made into
the same account from which you redeemed the shares or received the
distribution. If the account has been closed, you may reinvest without a sales
charge if the new receiving account has the same registration as the closed
account. Proceeds from a Class B share redemption made during the contingent
deferred sales charge period will be reinvested in Class A shares. If you redeem
Class B shares after the contingent deferred sales charge period, you may either
reinvest the proceeds in Class B shares or purchase Class A shares; if you
purchase Class A shares you are responsible for paying any applicable Class A
sales charges. Proceeds from any other type of redemption and all dividend
payments and capital gain distributions will be reinvested in the same share
class from which the original redemption or distribution was made. Any
contingent deferred sales charge on Class A or C shares will be credited to your
account. Redemption proceeds of Class A shares representing direct purchases in
American Funds money market funds that are reinvested in non-money market
American Funds will be subject to a sales charge. Proceeds will be reinvested at
the next calculated net asset value after your request is received and accepted
by American Funds Service Company. For purposes of this "right of reinvestment
policy," automatic transactions (including, for example, automatic purchases,
withdrawals and payroll deductions) and ongoing retirement plan contributions
are not eligible for investment without a sales charge. You may not reinvest
proceeds in the American Funds as described in this paragraph if such proceeds
are subject to a purchase block as described under "Frequent trading of fund
shares." This paragraph does not apply to certain rollover investments as
described under "Rollovers from retirement plans to IRAs."

TRANSACTIONS BY TELEPHONE, FAX OR THE INTERNET

Generally, you are automatically eligible to redeem or exchange shares by
telephone, fax or the Internet, unless you notify us in writing that you do not
want any or all of these services. You may reinstate these services at any time.

Unless you decide not to have telephone, fax or Internet services on your
account(s), you agree to hold the fund, American Funds Service Company, any of
its affiliates or mutual funds managed by such affiliates, and each of their
respective directors, trustees, officers, employees and agents harmless from any
losses, expenses, costs or liabilities (including attorney fees) that may be
incurred in connection with the exercise of these privileges, provided American
Funds Service Company employs reasonable procedures to confirm that the
instructions received from any person with appropriate account information are
genuine. If reasonable procedures are not employed, American Funds Service
Company and/or the fund may be liable for losses due to unauthorized or
fraudulent instructions.

SMALLCAP World Fund / Prospectus

<PAGE>

Distributions and taxes

DIVIDENDS AND DISTRIBUTIONS

The fund intends to distribute dividends to you, usually in December.

Capital gains, if any, are usually distributed in December. When a dividend or
capital gain is distributed, the net asset value per share is reduced by the
amount of the payment.

You may elect to reinvest dividends and/or capital gain distributions to
purchase additional shares of this fund or other American Funds, or you may
elect to receive them in cash. Most shareholders do not elect to take capital
gain distributions in cash because these distributions reduce principal value.
Dividends and capital gain distributions for 529 share classes will be
automatically reinvested.

TAXES ON DIVIDENDS AND DISTRIBUTIONS

Dividends and capital gain distributions you receive from the fund will be
subject to federal income tax and may also be subject to state or local taxes --
unless you are exempt from taxation.

For federal tax purposes, dividends and distributions of short-term capital
gains are taxable as ordinary income. Some or all of your dividends may be
eligible for a reduced tax rate if you meet a holding period requirement. The
fund's distributions of net long-term capital gains are taxable as long-term
capital gains. Any dividends or capital gain distributions you receive from the
fund will normally be taxable to you when made, regardless of whether you
reinvest dividends or capital gain distributions or receive them in cash.

TAXES ON TRANSACTIONS

Your redemptions, including exchanges, may result in a capital gain or loss for
federal tax purposes. A capital gain or loss on your investment is the
difference between the cost of your shares, including any sales charges, and the
amount you receive when you sell them.

SHAREHOLDER FEES

Fees borne directly by the fund normally have the effect of reducing a
shareholder's taxable income on distributions. By contrast, fees paid directly
to advisers by a fund shareholder for ongoing advice are deductible for income
tax purposes only to the extent that they (combined with certain other
qualifying expenses) exceed 2% of such shareholder's adjusted gross income.

PLEASE SEE YOUR TAX ADVISER FOR MORE INFORMATION. HOLDERS OF 529 SHARES SHOULD
REFER TO THE APPLICABLE PROGRAM DESCRIPTION FOR MORE INFORMATION REGARDING THE
TAX CONSEQUENCES OF SELLING 529 SHARES.

SMALLCAP World Fund / Prospectus
<PAGE>

Financial highlights/1/

The Financial Highlights table is intended to help you understand the fund's
results for the past five fiscal years. Certain information reflects financial
results for a single share of a particular class. A similar table will be shown
for Class F-2 shares beginning with the fund's first fiscal year ending after
the date the class is first offered. The total returns in the table represent
the rate that an investor would have earned or lost on an investment in the fund
(assuming reinvestment of all dividends and capital gain distributions). Where
indicated, figures in the table reflect the impact, if any, of certain
reimbursements/waivers from Capital Research and Management Company. For more
information about these reimbursements/waivers, see the footnotes to the Annual
Fund Operating Expenses table under "Fees and expenses of the fund" in this
prospectus and the fund's annual report. The information in the Financial
Highlights table has been audited by Deloitte & Touche LLP (except for the six
months ended March 31, 2008), whose report, along with the fund's financial
statements, is included in the statement of additional information, which is
available upon request. The information for the six-month period presented has
been derived from the fund's unaudited financial statements and includes all
adjustments that management considers necessary for a fair presentation of such
information for the period presented.

INCOME (LOSS) FROM INVESTMENT OPERATIONS/2/
Net
(losses)
gains on
securities
Net asset Net (both
value, investment realized Total from
beginning income and investment
of period (loss) unrealized) operations
----------------------------------------------------------------------------------------

CLASS A:
Six months ended 3/31/2008/5/ $47.43 $ .10 $(6.35) $(6.25)
Year ended 9/30/2007 38.87 .37 12.50 12.87
Year ended 9/30/2006 34.77 .25 4.94 5.19
Year ended 9/30/2005 27.82 .24 7.02 7.26
Year ended 9/30/2004 23.22 .02 4.61 4.63
Year ended 9/30/2003 17.53 (.01 ) 5.70 5.69
----------------------------------------------------------------------------------------
CLASS B:
Six months ended 3/31/2008/5/ 45.49 (.06 ) (6.08) (6.14)
Year ended 9/30/2007 37.41 .04 12.02 12.06
Year ended 9/30/2006 33.59 (.03 ) 4.78 4.75
Year ended 9/30/2005 26.90 --/4/ 6.79 6.79
Year ended 9/30/2004 22.60 (.18 ) 4.48 4.30
Year ended 9/30/2003 17.20 (.16 ) 5.56 5.40
----------------------------------------------------------------------------------------
CLASS C:
Six months ended 3/31/2008/5/ $45.18 $(.07 ) $(6.04) $(6.11)
Year ended 9/30/2007 37.21 .02 11.95 11.97
Year ended 9/30/2006 33.45 (.04 ) 4.74 4.70
Year ended 9/30/2005 26.82 (.02 ) 6.78 6.76
Year ended 9/30/2004 22.54 (.19 ) 4.47 4.28
Year ended 9/30/2003 17.15 (.16 ) 5.55 5.39
----------------------------------------------------------------------------------------
CLASS F-1:
Six months ended 3/31/2008/5/ 47.08 .10 (6.30) (6.20)
Year ended 9/30/2007 38.65 .36 12.41 12.77
Year ended 9/30/2006 34.58 .26 4.91 5.17
Year ended 9/30/2005 27.70 .23 6.98 7.21
Year ended 9/30/2004 23.16 .02 4.58 4.60
Year ended 9/30/2003 17.48 (.01 ) 5.69 5.68
----------------------------------------------------------------------------------------
CLASS 529-A:
Six months ended 3/31/2008/5/ 47.23 .09 (6.32) (6.23)
Year ended 9/30/2007 38.76 .34 12.44 12.78
Year ended 9/30/2006 34.68 .25 4.93 5.18
Year ended 9/30/2005 27.79 .22 7.00 7.22
Year ended 9/30/2004 23.24 .02 4.60 4.62
Year ended 9/30/2003 17.53 .01 5.70 5.71
----------------------------------------------------------------------------------------
CLASS 529-B:
Six months ended 3/31/2008/5/ 45.96 (.08 ) (6.16) (6.24)
Year ended 9/30/2007 37.77 (.01 ) 12.14 12.13
Year ended 9/30/2006 33.93 (.07 ) 4.82 4.75
Year ended 9/30/2005 27.20 (.05 ) 6.87 6.82
Year ended 9/30/2004 22.88 (.23 ) 4.55 4.32
Year ended 9/30/2003 17.43 (.19 ) 5.64 5.45
----------------------------------------------------------------------------------------
(The Financial Highlights table continues on the following page.)

CLASS 529-C:
Six months ended 3/31/2008/5/ $45.92 $(.08 ) $(6.16) $(6.24)
Year ended 9/30/2007 37.77 (.01 ) 12.13 12.12
Year ended 9/30/2006 33.94 (.07 ) 4.83 4.76
Year ended 9/30/2005 27.21 (.05 ) 6.87 6.82
Year ended 9/30/2004 22.89 (.22 ) 4.54 4.32
Year ended 9/30/2003 17.44 (.18 ) 5.63 5.45
----------------------------------------------------------------------------------------
CLASS 529-E:
Six months ended 3/31/2008/5/ 46.76 .02 (6.26) (6.24)
Year ended 9/30/2007 38.40 .21 12.33 12.54
Year ended 9/30/2006 34.42 .12 4.89 5.01
Year ended 9/30/2005 27.58 .12 6.96 7.08
Year ended 9/30/2004 23.09 (.08 ) 4.59 4.51
Year ended 9/30/2003 17.50 (.07 ) 5.66 5.59
----------------------------------------------------------------------------------------
CLASS 529-F-1:
Six months ended 3/31/2008/5/ 47.24 .13 (6.31) (6.18)
Year ended 9/30/2007 38.77 .42 12.44 12.86
Year ended 9/30/2006 34.64 .31 4.93 5.24
Year ended 9/30/2005 27.72 .23 6.99 7.22
Year ended 9/30/2004 23.20 (.01 ) 4.60 4.59
Year ended 9/30/2003 17.53 (.02 ) 5.69 5.67

DIVIDENDS AND DISTRIBUTIONS

Dividends Total Net asset
(from net Distributions dividends value,
investment (from and end of Total
income) capital gains) distributions period return/3,4/
----------------------------------------------------------------------------------------------------

CLASS A:
Six months ended 3/31/2008/5/ $(.76) $(4.17) $(4.93) $36.25 (14.36)%
Year ended 9/30/2007 (.70) (3.61) (4.31) 47.43 35.41
Year ended 9/30/2006 (.41) (.68) (1.09) 38.87 15.27
Year ended 9/30/2005 (.31) -- (.31) 34.77 26.28
Year ended 9/30/2004 (.03) -- (.03) 27.82 19.95
Year ended 9/30/2003 -- -- -- 23.22 32.46
----------------------------------------------------------------------------------------------------
CLASS B:
Six months ended 3/31/2008/5/ (.45) (4.17) (4.62) 34.73 (14.67)
Year ended 9/30/2007 (.37) (3.61) (3.98) 45.49 34.40
Year ended 9/30/2006 (.25) (.68) (.93) 37.41 14.39
Year ended 9/30/2005 (.10) -- (.10) 33.59 25.31
Year ended 9/30/2004 -- -- -- 26.90 19.03
Year ended 9/30/2003 -- -- -- 22.60 31.40
----------------------------------------------------------------------------------------------------
CLASS C:
Six months ended 3/31/2008/5/ $(.46) $(4.17) $(4.63) $34.44 (14.71)%
Year ended 9/30/2007 (.39) (3.61) (4.00) 45.18 34.35
Year ended 9/30/2006 (.26) (.68) (.94) 37.21 14.33
Year ended 9/30/2005 (.13) -- (.13) 33.45 25.27
Year ended 9/30/2004 -- -- -- 26.82 18.99
Year ended 9/30/2003 -- -- -- 22.54 31.43
----------------------------------------------------------------------------------------------------
CLASS F-1:
Six months ended 3/31/2008/5/ (.78) (4.17) (4.95) 35.93 (14.37)
Year ended 9/30/2007 (.73) (3.61) (4.34) 47.08 35.41
Year ended 9/30/2006 (.42) (.68) (1.10) 38.65 15.28
Year ended 9/30/2005 (.33) -- (.33) 34.58 26.23
Year ended 9/30/2004 (.06) -- (.06) 27.70 19.90
Year ended 9/30/2003 -- -- -- 23.16 32.49
----------------------------------------------------------------------------------------------------
CLASS 529-A:
Six months ended 3/31/2008/5/ (.75) (4.17) (4.92) 36.08 (14.38)
Year ended 9/30/2007 (.70) (3.61) (4.31) 47.23 35.33
Year ended 9/30/2006 (.42) (.68) (1.10) 38.76 15.25
Year ended 9/30/2005 (.33) -- (.33) 34.68 26.19
Year ended 9/30/2004 (.07) -- (.07) 27.79 19.90
Year ended 9/30/2003 -- -- -- 23.24 32.57
----------------------------------------------------------------------------------------------------
CLASS 529-B:
Six months ended 3/31/2008/5/ (.41) (4.17) (4.58) 35.14 (14.74)
Year ended 9/30/2007 (.33) (3.61) (3.94) 45.96 34.25
Year ended 9/30/2006 (.23) (.68) (.91) 37.77 14.24
Year ended 9/30/2005 (.09) -- (.09) 33.93 25.11
Year ended 9/30/2004 -- -- -- 27.20 18.88
Year ended 9/30/2003 -- -- -- 22.88 31.27
----------------------------------------------------------------------------------------------------
(The Financial Highlights table continues on the following page.)

CLASS 529-C:
Six months ended 3/31/2008/5/ $(.42) $(4.17) $(4.59) $35.09 (14.75)%
Year ended 9/30/2007 (.36) (3.61) (3.97) 45.92 34.23
Year ended 9/30/2006 (.25) (.68) (.93) 37.77 14.27
Year ended 9/30/2005 (.09) -- (.09) 33.94 25.13
Year ended 9/30/2004 -- -- -- 27.21 18.87
Year ended 9/30/2003 -- -- -- 22.89 31.25
----------------------------------------------------------------------------------------------------
CLASS 529-E:
Six months ended 3/31/2008/5/ (.62) (4.17) (4.79) 35.73 (14.51)
Year ended 9/30/2007 (.57) (3.61) (4.18) 46.76 34.93
Year ended 9/30/2006 (.35) (.68) (1.03) 38.40 14.86
Year ended 9/30/2005 (.24) -- (.24) 34.42 25.81
Year ended 9/30/2004 (.02) -- (.02) 27.58 19.52
Year ended 9/30/2003 -- -- -- 23.09 31.94
----------------------------------------------------------------------------------------------------
CLASS 529-F-1:
Six months ended 3/31/2008/5/ (.83) (4.17) (5.00) 36.06 (14.29)
Year ended 9/30/2007 (.78) (3.61) (4.39) 47.24 35.56
Year ended 9/30/2006 (.43) (.68) (1.11) 38.77 15.44
Year ended 9/30/2005 (.30) -- (.30) 34.64 26.22
Year ended 9/30/2004 (.07) -- (.07) 27.72 19.81
Year ended 9/30/2003 -- -- -- 23.20 32.34

Ratio of Ratio of
expenses expenses Ratio
to average to average of net
Net assets, net assets net assets income
end of before after (loss)
period reim- reim- to
(in bursements/ bursements/ average
millions) waivers waivers/4/ net assets/4/
-------------------------------------------------------------------------------------

CLASS A:
Six months ended 3/31/2008/5/ $17,560 1.05 %/6/ .99 %/6/ .46 %/6/
Year ended 9/30/2007 20,913 1.04 .98 .86
Year ended 9/30/2006 15,167 1.08 1.01 .68
Year ended 9/30/2005 12,544 1.09 1.04 .76
Year ended 9/30/2004 9,771 1.12 1.12 .06
Year ended 9/30/2003 7,833 1.19 1.19 (.07 )
-------------------------------------------------------------------------------------
CLASS B:
Six months ended 3/31/2008/5/ 682 1.82/6/ 1.75/6/ (.30 )/6/
Year ended 9/30/2007 815 1.81 1.74 .10
Year ended 9/30/2006 581 1.85 1.78 (.09 )
Year ended 9/30/2005 457 1.86 1.81 (.01 )
Year ended 9/30/2004 329 1.88 1.88 (.69 )
Year ended 9/30/2003 201 1.97 1.97 (.85 )
-------------------------------------------------------------------------------------
CLASS C:
Six months ended 3/31/2008/5/ $ 975 1.86 %/6/ 1.79 %/6/ (.33 )%/6/
Year ended 9/30/2007 1,107 1.85 1.79 .04
Year ended 9/30/2006 696 1.89 1.83 (.12 )
Year ended 9/30/2005 457 1.90 1.85 (.05 )
Year ended 9/30/2004 274 1.92 1.91 (.71 )
Year ended 9/30/2003 124 1.97 1.97 (.85 )
-------------------------------------------------------------------------------------
CLASS F-1:
Six months ended 3/31/2008/5/ 767 1.06/6/ 1.00/6/ .47/6/
Year ended 9/30/2007 815 1.05 .98 .84
Year ended 9/30/2006 446 1.08 1.01 .70
Year ended 9/30/2005 253 1.12 1.07 .72
Year ended 9/30/2004 128 1.15 1.14 .06
Year ended 9/30/2003 57 1.18 1.18 (.06 )
-------------------------------------------------------------------------------------
CLASS 529-A:
Six months ended 3/31/2008/5/ 449 1.11/6/ 1.05/6/ .42/6/
Year ended 9/30/2007 479 1.10 1.04 .79
Year ended 9/30/2006 284 1.11 1.05 .66
Year ended 9/30/2005 178 1.14 1.08 .71
Year ended 9/30/2004 97 1.14 1.14 .06
Year ended 9/30/2003 42 1.11 1.11 .03
-------------------------------------------------------------------------------------
CLASS 529-B:
Six months ended 3/31/2008/5/ 62 1.93/6/ 1.86/6/ (.41 )/6/
Year ended 9/30/2007 71 1.92 1.86 (.02 )
Year ended 9/30/2006 48 1.97 1.90 (.20 )
Year ended 9/30/2005 34 2.02 1.96 (.17 )
Year ended 9/30/2004 22 2.04 2.04 (.84 )
Year ended 9/30/2003 10 2.09 2.09 (.95 )
-------------------------------------------------------------------------------------
(The Financial Highlights table continues on the following page.)
CLASS 529-C:
Six months ended 3/31/2008/5/ $ 171 1.92 %/6/ 1.86 %/6/ (.40 )%/6/
Year ended 9/30/2007 188 1.92 1.86 (.02 )
Year ended 9/30/2006 115 1.96 1.90 (.19 )
Year ended 9/30/2005 77 2.00 1.95 (.16 )
Year ended 9/30/2004 43 2.03 2.03 (.83 )
Year ended 9/30/2003 20 2.07 2.07 (.94 )
-------------------------------------------------------------------------------------
CLASS 529-E:
Six months ended 3/31/2008/5/ 27 1.41/6/ 1.35/6/ .12/6/
Year ended 9/30/2007 30 1.41 1.35 .49
Year ended 9/30/2006 18 1.44 1.37 .34
Year ended 9/30/2005 12 1.47 1.42 .37
Year ended 9/30/2004 6 1.50 1.49 (.29 )
Year ended 9/30/2003 3 1.53 1.53 (.38 )
-------------------------------------------------------------------------------------
CLASS 529-F-1:
Six months ended 3/31/2008/5/ 33 .91/6/ .85/6/ .62/6/
Year ended 9/30/2007 35 .91 .85 .98
Year ended 9/30/2006 19 .94 .87 .83
Year ended 9/30/2005 12 1.11 1.06 .74
Year ended 9/30/2004 7 1.25 1.24 (.04 )
Year ended 9/30/2003 3 1.27 1.27 (.10 )

SMALLCAP World Fund / Prospectus

<PAGE>

[This page is intentionally left blank for this filing.]

SMALLCAP World Fund / Prospectus

<PAGE>

SIX MONTHS ENDED
MARCH 31 YEAR ENDED SEPTEMBER 30
2008/5/ 2007 2006 2005 2004 2003
----------------------------------------------------------------------------------------

PORTFOLIO TURNOVER
RATE FOR ALL CLASSES 27% 48% 45% 45% 48% 49%
OF SHARES

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 Capital Research and Management Company. During some of the periods shown,
Capital Research and Management Company reduced fees for investment advisory
services.
5 Unaudited.
6 Annualized.

SMALLCAP World Fund / Prospectus

<PAGE>

NOTES

SMALLCAP World Fund / Prospectus

<PAGE>

[logo - American Funds (R)]

The right choice for the long term/(R)/

FOR SHAREHOLDER American Funds Service Company
SERVICES 800/421-0180
FOR RETIREMENT PLAN Call your employer or plan
SERVICES administrator
FOR ADVISER American Funds Distributors
MARKETING 800/421-9900
FOR 529 PLANS American Funds Service Company
800 /421-0180, ext. 529
FOR 24 American FundsLine
-HOUR INFORMATION 800/325-3590
americanfunds.com

Telephone calls you have with the American Funds
organization may be monitored or recorded for quality
assurance, verification and/or recordkeeping purposes.
By speaking with us on the telephone, you are giving
your consent to such monitoring and recording.
-----------------------------------------------------------------------------------

MULTIPLE TRANSLATIONS This prospectus may be translated into other languages.
If there is any inconsistency or ambiguity in the meaning of any translated word
or phrase, the English text will prevail.

ANNUAL/SEMI-ANNUAL REPORT TO SHAREHOLDERS The shareholder reports contain
additional information about the fund, including financial statements,
investment results, portfolio holdings, a discussion of market conditions and
the fund's investment strategies and the independent registered public
accounting firm's report (in the annual report).

PROGRAM DESCRIPTION The program description for the CollegeAmerica 529 program
contains additional information about the policies and services related to 529
plan accounts.

STATEMENT OF ADDITIONAL INFORMATION (SAI) AND CODES OF ETHICS The current SAI,
as amended from time to time, contains more detailed information about the fund,
including the fund's financial statements, and is incorporated by reference into
this prospectus. This means that the current SAI, for legal purposes, is part of
this prospectus. The codes of ethics describe the personal investing policies
adopted by the fund, the fund's investment adviser and its affiliated companies.

The codes of ethics and current SAI are on file with the Securities and Exchange
Commission (SEC). These and other related materials about the fund are available
for review or to be copied at the SEC's Public Reference Room in Washington, DC
(202/551-8090) or on the EDGAR database on the SEC's website at sec.gov or,
after payment of a duplicating fee, via e-mail request to publicinfo@sec.gov or
by writing to the SEC's Public Reference Section, 100 F Street, NE, Washington,
DC 20549-0102. The codes of ethics, current SAI and shareholder reports are also
available, free of charge, on americanfunds.com.

E-DELIVERY AND HOUSEHOLD MAILINGS Each year you are automatically sent an
updated prospectus and annual and semi-annual reports for the fund. You may also
occasionally receive proxy statements for the fund. In order to reduce the
volume of mail you receive, when possible, only one copy of these documents will
be sent to shareholders who are part of the same family and share the same
household address. You may elect to receive these documents electronically in lieu of
paper form by enrolling in e-delivery on our website, americanfunds.com.

If you would like to opt out of household-based mailings or receive a
complimentary copy of the current SAI, codes of ethics, annual/semi-annual
report to shareholders or applicable program description, please call American
Funds Service Company at 800/421-0180 or write to the secretary of the fund at
333 South Hope Street, Los Angeles, California 90071.

SECURITIES INVESTOR PROTECTION CORPORATION (SIPC) Shareholders may obtain
information about SIPC on its website at sipc.org or by calling 202/371-8300.

Investment Company File No. 811-05888
MFGEPR-935-0708P Litho in USA CGD/B/8018
-------------------------------------------------------------------------------
THE CAPITAL GROUP COMPANIES

American Funds Capital Research and Management Capital International Capital Guardian Capital Bank and Trust

<PAGE>

SMALLCAP WORLD FUND, INC.

Part B
Statement of Additional Information

July 30, 2008

This document is not a prospectus but should be read in conjunction with the
current prospectus or retirement plan prospectus of SMALLCAP World Fund (the
"fund" or "SCWF") dated July 30, 2008. You may obtain a prospectus from your
financial adviser or by writing to the fund at the following address:

SMALLCAP World Fund, Inc.
Attention: Secretary
333 South Hope Street
Los Angeles, California 90071
213/486-9200

Certain privileges and/or services described below may not be available to all
shareholders (including shareholders who purchase shares at net asset value
through eligible retirement plans) depending on the shareholder's investment
dealer or retirement plan recordkeeper. Please see your financial adviser,
investment dealer, plan recordkeeper or employer for more information.

TABLE OF CONTENTS

Item Page no.
---- --------

Certain investment limitations and guidelines . . . . . . . . . . . 2
Description of certain securities and investment techniques . . . . 2
Fundamental policies and investment restrictions. . . . . . . . . . 8
Management of the fund . . . . . . . . . . . . . . . . . . . . . . 10
Execution of portfolio transactions . . . . . . . . . . . . . . . . 30
Disclosure of portfolio holdings. . . . . . . . . . . . . . . . . . 32
Price of shares . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Taxes and distributions . . . . . . . . . . . . . . . . . . . . . . 35
Purchase and exchange of shares . . . . . . . . . . . . . . . . . . 41
Sales charges . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Sales charge reductions and waivers . . . . . . . . . . . . . . . . 48
Selling shares. . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Shareholder account services and privileges . . . . . . . . . . . . 53
General information . . . . . . . . . . . . . . . . . . . . . . . . 55
Appendix. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Financial statements

SMALLCAP World Fund -- Page 1
<PAGE>

CERTAIN INVESTMENT LIMITATIONS AND GUIDELINES

The following limitations and guidelines are considered at the time of purchase,
under normal circumstances, and are based on a percentage of the fund's net
assets unless otherwise noted. This summary is not intended to reflect all of
the fund's investment limitations.

EQUITY SECURITIES - SMALL CAPITALIZATION ISSUERS

. Normally, the fund invests at least 80% of its assets in equity securities
of companies with small market capitalizations. The investment adviser
currently defines "small market capitalization" companies to be companies
with market capitalizations of $3.5 billion or less. The investment adviser
has periodically reevaluated and adjusted this definition and may continue
to do so in the future.

INVESTING OUTSIDE THE U.S.

. The fund may invest a significant portion of its assets in companies
located outside the United States, including companies located in
developing countries. (See "Investing in various countries" below for more
information.)

DEBT SECURITIES

. The fund may invest up to 10% of its assets in straight debt securities
rated Baa or below by Moody's Investors Service ("Moody's") and BBB or
below by Standard & Poor's Corporation ("S&P"), or unrated but determined
to be of equivalent quality.

* * * * * *

The fund may experience difficulty liquidating certain portfolio securities
during significant market declines or periods of heavy redemptions.

DESCRIPTION OF CERTAIN SECURITIES AND INVESTMENT TECHNIQUES

The descriptions below are intended to supplement the material in the prospectus
under "Investment objective, strategies and risks."

EQUITY SECURITIES -- Equity securities represent an ownership position in a
company. Equity securities held by the fund typically consist of common stocks.
The prices of equity securities fluctuate based on, among other things, events
specific to their issuers and market, economic and other conditions. For
example, prices of these securities can be affected by financial contracts held
by the issuer or third parties (such as derivatives) relating to the security or
other assets or indices.

There may be little trading in the secondary market for particular equity
securities, which may adversely affect the fund's ability to value accurately or
dispose of such equity securities. Adverse publicity and investor perceptions,
whether or not based on fundamental analysis, may decrease the value and/or
liquidity of equity securities.

The growth-oriented, equity-type securities generally purchased by the fund may
involve large price swings and potential for loss, particularly in the case of
smaller capitalization stocks.

SMALLCAP World Fund -- Page 2
<PAGE>

INVESTING IN SMALLER CAPITALIZATION STOCKS -- Investing in smaller
capitalization stocks can involve greater risk than is customarily associated
with investing in stocks of larger, more established companies. Transaction
costs in stocks of smaller capitalization companies may be higher than those of
larger capitalization companies. Because the fund emphasizes the stocks of
issuers with smaller market capitalizations (by U.S. standards), it can be
expected to have more difficulty obtaining information about the issuers or
valuing or disposing of its securities than it would if it were to concentrate
on more widely held stocks. The fund determines relative market capitalizations
using U.S. standards. Accordingly, the fund's investments in certain countries
outside the United States may have larger market capitalizations relative to
other companies within those countries.

Capital Research and Management Company (the "investment adviser") believes that
the issuers of smaller capitalization stocks often have sales and earnings
growth rates that exceed those of larger companies and that such growth rates
may in turn be reflected in more rapid share price appreciation. However,
investing in smaller capitalization stocks can involve greater risk than is
customarily associated with investing in stocks of larger, more established
companies. For example, smaller companies often have limited product lines,
limited operating histories, limited markets, and/or financial resources, may be
dependent on one or a few key persons for management, and can be more
susceptible to losses. Also, their securities may be thinly traded (and
therefore have to be sold at a discount from current prices or sold in small
lots over an extended period of time), may be followed by fewer investment
research analysts and may be subject to wider price swings, thus creating a
greater chance of loss than securities of larger capitalization companies.

INVESTING IN PRIVATE COMPANIES -- The fund may invest in companies that have not
publicly offered their securities. Investing in private companies can involve
greater risks than those associated with investing in publicly traded companies.
For example, the securities of a private company may be subject to the risk that
market conditions, developments within the company, investor perception, or
regulatory decisions may delay or prevent the company from ultimately offering
its securities to the public. Furthermore, these investments are generally
considered to be illiquid until a company's public offering and are often
subject to additional contractual restrictions on resale that would prevent the
fund from selling its company shares for a period of time following the public
offering.

Investments in private companies can offer the fund significant growth
opportunities at attractive prices. However these investments can pose greater
risk, and, consequently, there is no guarantee that positive results can be
achieved in the future.

DEBT SECURITIES -- Debt securities are used by issuers to borrow money.
Generally, issuers pay investors periodic interest and repay the amount borrowed
either periodically during the life of the security and/or at maturity. Some
debt securities, such as zero coupon bonds, do not pay current interest, but are
purchased at a discount from their face values and their values accrete over
time to face value at maturity. The market prices of debt securities fluctuate
depending on such factors as interest rates, credit quality and maturity. In
general, market prices of debt securities decline when interest rates rise and
increase when interest rates fall.

Lower rated debt securities, rated Ba or below by Moody's and/or BB or below
by S&P or unrated but determined to be of equivalent quality, are described by
the rating agencies as speculative and involve greater risk of default or price
changes due to changes in the issuer's creditworthiness than higher rated debt
securities, or they may already be in default. The market

SMALLCAP World Fund -- Page 3
<PAGE>

prices of these securities may fluctuate more than higher quality securities and
may decline significantly in periods of general economic difficulty. It may be
more difficult to dispose of, and to determine the value of, lower rated debt
securities.

Certain additional risk factors relating to debt securities are discussed below:

SENSITIVITY TO INTEREST RATE AND ECONOMIC CHANGES -- Debt securities may be
sensitive to economic changes, political and corporate developments, and
interest rate changes. In addition, during an economic downturn or
substantial period of rising interest rates, issuers that are highly
leveraged may experience increased financial stress that would adversely
affect their ability to meet projected business goals, to obtain additional
financing and to service their principal and interest payment obligations.
Periods of economic change and uncertainty also can be expected to result
in increased volatility of market prices and yields of certain debt
securities. For example, prices of these securities can be affected by
financial contracts held by the issuer or third parties (such as
derivatives) relating to the security or other assets or indices.

PAYMENT EXPECTATIONS -- Debt securities may contain redemption or call
provisions. If an issuer exercises these provisions in a lower interest
rate market, the fund would have to replace the security with a lower
yielding security, resulting in decreased income to investors. If the
issuer of a debt security defaults on its obligations to pay interest or
principal or is the subject of bankruptcy proceedings, the fund may incur
losses or expenses in seeking recovery of amounts owed to it.

LIQUIDITY AND VALUATION -- There may be little trading in the secondary
market for particular debt securities, which may affect adversely the
fund's ability to value accurately or dispose of such debt securities.
Adverse publicity and investor perceptions, whether or not based on
fundamental analysis, may decrease the value and/or liquidity of debt
securities.

The investment adviser attempts to reduce the risks described above through
diversification of the fund's portfolio and by credit analysis of each issuer,
as well as by monitoring broad economic trends and corporate and legislative
developments, but there can be no assurance that it will be successful in doing
so.

Credit ratings for debt securities provided by rating agencies reflect an
evaluation of the safety of principal and interest payments, not market value
risk. The rating of an issuer is a rating agency's view of past and future
potential developments related to the issuer and may not necessarily reflect
actual outcomes. There can be a lag between the time of developments relating to
an issuer and the time a rating is assigned and updated.

Bond rating agencies may assign modifiers (such as +/-) to ratings categories to
signify the relative position of a credit within the rating category. Investment
policies that are based on ratings categories should be read to include any
security within that category, without giving consideration to the modifier. See
the Appendix for more information about credit ratings.

SECURITIES WITH EQUITY AND DEBT CHARACTERISTICS -- The fund may invest in
securities that have a combination of equity and debt characteristics. These
securities may at times behave more like equity than debt or vice versa. Some
types of convertible bonds, preferred stocks or other preferred securities
automatically convert into common stocks or other securities at a stated

SMALLCAP World Fund -- Page 4
<PAGE>

conversion ratio and some may be subject to redemption at the option of the
issuer at a predetermined price. These securities, prior to conversion, may pay
a fixed rate of interest or a dividend. Because convertible securities have both
debt and equity characteristics, their values vary in response to many factors,
including the values of the securities into which they are convertible, general
market and economic conditions, and convertible market valuations, as well as
changes in interest rates, credit spreads and the credit quality of the issuer.

The prices and yields of nonconvertible preferred securities or preferred stocks
generally move with changes in interest rates and the issuer's credit quality,
similar to the factors affecting debt securities. Nonconvertible preferred
securities will be treated as debt for fund investment limit purposes.

INVESTING IN VARIOUS COUNTRIES -- Investing outside the United States may
involve additional risks caused by, among other things, currency controls and
fluctuating currency values; different accounting, auditing, financial reporting
and legal standards and practices in some countries; changing local, regional
and global economic, political and social conditions; expropriation; changes in
tax policy; greater market volatility; differing securities market structures;
higher transaction costs; and various administrative difficulties, such as
delays in clearing and settling portfolio transactions or in receiving payment
of dividends.

The risks described above may be heightened in connection with investments in
developing countries. Although there is no universally accepted definition, the
investment adviser generally considers a developing country as a country that is
in the earlier stages of its industrialization cycle with a low per capita gross
domestic product ("GDP") and a low market capitalization to GDP ratio relative
to those in the United States and the European Union. Historically, the markets
of developing countries have been more volatile than the markets of developed
countries, reflecting the greater uncertainties of investing in less established
markets and economies. In particular, developing countries may have less stable
governments, may present the risks of nationalization of businesses,
restrictions on foreign ownership and prohibitions on the repatriation of assets
and may have less protection of property rights than more developed countries.
The economies of developing countries may be reliant on only a few industries,
may be highly vulnerable to changes in local or global trade conditions and may
suffer from high and volatile debt burdens or inflation rates. Local securities
markets may trade a small number of securities and may be unable to respond
effectively to increases in trading volume, potentially making prompt
liquidation of holdings difficult or impossible at times.

Additional costs could be incurred in connection with the fund's investment
activities outside the United States. Brokerage commissions may be higher
outside the United States, and the fund will bear certain expenses in connection
with its currency transactions. Furthermore, increased custodian costs may be
associated with maintaining assets in certain jurisdictions.

RESTRICTED OR ILLIQUID SECURITIES -- The fund may purchase securities subject to
restrictions on resale. Restricted securities may only be sold pursuant to an
exemption from registration under the Securities Act of 1933 (the "1933 Act"),
or in a registered public offering. Where registration is required, the holder
of a registered security may be obligated to pay all or part of the registration
expense and a considerable period may elapse between the time it decides to seek
registration and the time it may be permitted to sell a security under an
effective registration statement. Difficulty in selling such securities may
result in a loss to the fund or cause it to incur additional administrative
costs.

SMALLCAP World Fund -- Page 5
<PAGE>

Securities (including restricted securities) not actively traded will be
considered illiquid unless they have been specifically determined to be liquid
under procedures adopted by the fund's board of directors, taking into account
factors such as the frequency and volume of trading, the commitment of dealers
to make markets and the availability of qualified investors, all of which can
change from time to time. The fund may incur certain additional costs in
disposing of illiquid securities.

CURRENCY TRANSACTIONS -- The fund may purchase and sell currencies to facilitate
securities transactions and enter into forward currency contracts to protect
against changes in currency exchange rates. A forward currency contract is an
obligation to purchase or sell a specific currency at a future date, which may
be any fixed number of days from the date of the contract agreed upon by the
parties, at a price set at the time of the contract. Forward currency contracts
entered into by the fund will involve the purchase or sale of one currency
against the U.S. dollar. While entering into forward currency transactions could
minimize the risk of loss due to a decline in the value of the hedged currency,
it could also limit any potential gain that may result from an increase in the
value of the currency. The fund will not generally attempt to protect against
all potential changes in exchange rates. The fund will segregate liquid assets
that will be marked to market daily to meet its forward contract commitments to
the extent required by the Securities and Exchange Commission.

Certain provisions of the Internal Revenue Code may affect the extent to which
the fund may enter into forward contracts. Such transactions also may affect the
character and timing of income, gain or loss recognized by the fund for U.S.
federal income tax purposes.

REPURCHASE AGREEMENTS -- The fund may enter into repurchase agreements under
which the fund buys a security and obtains a simultaneous commitment from the
seller to repurchase the security at a specified time and price. Repurchase
agreements permit the fund to maintain liquidity and earn income over periods of
time as short as overnight. The seller must maintain with the fund's custodian
collateral equal to at least 100% of the repurchase price, including accrued
interest, as monitored daily by the investment adviser. The fund will only enter
into repurchase agreements involving securities in which it could otherwise
invest and with selected banks and securities dealers whose financial condition
is monitored by the investment adviser. If the seller under the repurchase
agreement defaults, the fund may incur a loss if the value of the collateral
securing the repurchase agreement has declined and may incur disposition costs
in connection with liquidating the collateral. If bankruptcy proceedings are
commenced with respect to the seller, realization of the collateral by the fund
may be delayed or limited.

INVESTMENT COMPANIES -- The fund may invest up to 5% of its total assets in
shares of any one investment company, but may not acquire more than 3% of the
outstanding voting stock of any one investment company. In the aggregate, the
fund may invest up to 10% of its total assets in securities issued by investment
companies. In addition, all funds managed by the investment adviser may not, in
the aggregate, acquire more than 10% of the total outstanding voting stock of
any one registered closed-end investment company. If the fund invests in another
investment company, it would pay an investment advisory fee in addition to the
fee paid to the investment adviser.

U.S. GOVERNMENT OBLIGATIONS -- U.S. government obligations are securities backed
by the full faith and credit of the U.S. government. U.S. government obligations
include the following types of securities:

SMALLCAP World Fund -- Page 6
<PAGE>

U.S. TREASURY SECURITIES -- U.S. Treasury securities include direct
obligations of the U.S. Treasury, such as Treasury bills, notes and bonds.
For these securities, the payment of principal and interest is
unconditionally guaranteed by the U.S. government, and thus they are of the
highest possible credit quality. Such securities are subject to variations
in market value due to fluctuations in interest rates, but, if held to
maturity, will be paid in full.

FEDERAL AGENCY SECURITIES BACKED BY "FULL FAITH AND CREDIT" -- The
securities of certain U.S. government agencies and government-sponsored
entities are guaranteed as to the timely payment of principal and interest
by the full faith and credit of the U.S. government. Such agencies and
entities include the Government National Mortgage Association (Ginnie Mae),
the Veterans Administration (VA), the Federal Housing Administration (FHA),
the Export-Import Bank (Exim Bank), the Overseas Private Investment
Corporation (OPIC), the Commodity Credit Corporation (CCC) and the Small
Business Administration (SBA).

OTHER FEDERAL AGENCY OBLIGATIONS -- Additional federal agency securities are
neither direct obligations of, nor guaranteed by, the U.S. government. These
obligations include securities issued by certain U.S. government agencies and
government-sponsored entities. However, they generally involve some form of
federal sponsorship: some operate under a government charter; some are backed by
specific types of collateral; some are supported by the issuer's right to borrow
from the Treasury; and others are supported only by the credit of the issuing
government agency or entity. These agencies and entities include, but are not
limited to: Federal Home Loan Bank, Federal Home Loan Mortgage Corporation
(Freddie Mac), Federal National Mortgage Association (Fannie Mae), Tennessee
Valley Authority and Federal Farm Credit Bank System.

CASH AND CASH EQUIVALENTS -- The fund may hold cash or invest in cash
equivalents. Cash equivalents include (a) commercial paper (for example,
short-term notes with maturities typically up to 12 months in length issued by
corporations, governmental bodies or bank/corporation sponsored conduits
(asset-backed commercial paper)) (b) short-term bank obligations (for example,
certificates of deposit, bankers' acceptances (time drafts on a commercial bank
where the bank accepts an irrevocable obligation to pay at maturity)) or bank
notes, (c) savings association and savings bank obligations (for example, bank
notes and certificates of deposit issued by savings banks or savings
associations), (d) securities of the U.S. government, its agencies or
instrumentalities that mature, or may be redeemed, in one year or less, and (e)
corporate bonds and notes that mature, or that may be redeemed, in one year or
less.

FORWARD COMMITMENT, WHEN ISSUED AND DELAYED DELIVERY TRANSACTIONS -- The fund
may enter into commitments to purchase or sell securities at a future date. When
the fund agrees to purchase such securities, it assumes the risk of any decline
in value of the security from the date of the agreement. If the other party to
such a transaction fails to deliver or pay for the securities, the fund could
miss a favorable price or yield opportunity, or could experience a loss.

The fund will not use these transactions for the purpose of leveraging and will
segregate liquid assets that will be marked to market daily in an amount
sufficient to meet its payment obligations in these transactions. Although these
transactions will not be entered into for leveraging purposes, to the extent the
fund's aggregate commitments in connection with these transactions exceed its
segregated assets, the fund temporarily could be in a leveraged position
(because it may have an amount greater than its net assets subject to market
risk). Should market values of the fund's portfolio securities decline while the
fund is in a leveraged position, greater depreciation of its net assets would
likely occur than if it were not in such a position. The fund will

SMALLCAP World Fund -- Page 7
<PAGE>

not borrow money to settle these transactions and, therefore, will liquidate
other portfolio securities in advance of settlement if necessary to generate
additional cash to meet its obligations. After a transaction is entered into,
the fund may still dispose of or renegotiate the transaction. Additionally,
prior to receiving delivery of securities as part of a transaction, the fund may
sell such securities.

The fund may also enter into reverse repurchase agreements and "roll"
transactions. A reverse repurchase agreement involves the sale of a security by
a fund and its agreement to repurchase the security at a specified time and
price. A "roll" transaction involves the sale of mortgage-backed or other
securities together with a commitment to purchase similar, but not identical,
securities at a later date. The fund assumes the risk of price and yield
fluctuations during the time of the commitment. The fund will segregate liquid
assets that will be marked to market daily in an amount sufficient to meet its
payment obligations under "roll" transactions and reverse repurchase agreements
with broker-dealers (no collateral is required for reverse repurchase agreements
with banks).

* * * * * *

PORTFOLIO TURNOVER -- Portfolio changes will be made without regard to the
length of time particular investments may have been held. Short-term trading
profits are not the fund's objective, and changes in its investments are
generally accomplished gradually, though short-term transactions may
occasionally be made. High portfolio turnover involves correspondingly greater
transaction costs in the form of dealer spreads or brokerage commissions, and
may result in the realization of net capital gains, which are taxable when
distributed to shareholders.

The fund's portfolio turnover rates for the fiscal years ended September 30,
2007 and 2006 were 48% and 45%, respectively. The portfolio turnover rate would
equal 100% if each security in a fund's portfolio were replaced once per year.
See "Financial highlights" in the prospectus for the fund's annual portfolio
turnover rate for each of the last five fiscal years.

FUNDAMENTAL POLICIES AND INVESTMENT RESTRICTIONS

FUNDAMENTAL POLICIES -- The fund has adopted the following fundamental policies
and investment restrictions, which may not be changed without approval by
holders of a majority of its outstanding shares. Such majority is defined in the
Investment Company Act of 1940, as amended (the "1940 Act"), as the vote of the
lesser of (a) 67% or more of the outstanding voting securities present at a
shareholder meeting, if the holders of more than 50% of the outstanding voting
securities are present in person or by proxy, or (b) more than 50% of the
outstanding voting securities. All percentage limitations are considered at the
time securities are purchased and are based on the fund's net assets unless
otherwise indicated. None of the following investment restrictions involving a
maximum percentage of assets will be considered violated unless the excess
occurs immediately after, and is caused by, an acquisition by the fund.

The fund may not:

1. Invest in securities of an issuer (other than the U.S. government or its
agencies or instrumentalities), if immediately after and as a result of such
investment more than 5% of the value of its total assets would be invested in
the securities of such other issuer (except with respect to 25% of the value of
its total assets, the fund may exceed the 5% limitation with regard to
investments in the securities of any one foreign government);

SMALLCAP World Fund -- Page 8
<PAGE>

2. Invest in companies for the purpose of exercising control or management;

3. Invest 25% or more of the value of its total assets in the securities of
companies primarily engaged in any one industry;

4. Buy or sell real estate (including real estate limited partnerships) in
the ordinary course of its business; however, the fund may invest in securities
secured by real estate or interests therein or issued by companies, including
real estate investment trusts and funds, which invest in real estate or
interests therein;

5. Buy or sell commodities or commodity contracts in the ordinary course of
its business; provided, however, that entering into a currency forward or
futures contract shall not be prohibited by this restriction;

6. Lend any security or make any other loan if, as a result, more than 15% of
its total assets would be lent to third parties, but this limitation does not
apply to purchases of debt securities or to repurchase agreements;

7. Sell securities short except to the extent that the fund contemporaneously
owns or has the right to acquire, at no additional cost, securities identical to
those sold short;

8. Purchase securities on margin;

9. Borrow amounts in excess of 5% of the value of its total assets or issue
senior securities. In any event, the fund may borrow only as a temporary measure
for extraordinary or emergency purposes and not for investment in securities;
nor

10. Purchase or sell puts, calls, straddles or spreads, or combinations
thereof.

For purposes of investment restriction number 6, the fund does not currently
intend to lend portfolio securities.

NONFUNDAMENTAL POLICIES -- The following policies may be changed without
shareholder approval:

1. The fund may not invest in securities of an issuer if the investment would
cause the fund to own more than 10% of any class of securities of any one
issuer;

2. The fund may not invest in securities of other investment companies, except
as permitted by the 1940 Act;

3. The fund may not invest more than 15% of the value of its net assets in
illiquid securities.

4. The fund may not acquire securities of open-end investment companies or
unit investment trusts registered under the 1940 Act in reliance on Sections
12(d)(1)(F) or 12(d)(1)(G) of the 1940 Act.

SMALLCAP World Fund -- Page 9
<PAGE>

MANAGEMENT OF THE FUND

BOARD OF DIRECTORS AND OFFICERS

"INDEPENDENT" DIRECTORS/1/

NAME, AGE AND NUMBER OF
POSITION WITH FUND PORTFOLIOS/3/
(YEAR FIRST ELECTED PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS/4/ HELD
AS A DIRECTOR/2/) DURING PAST FIVE YEARS BY DIRECTOR BY DIRECTOR
--------------------------------------------------------------------------------------------------------------

Joseph C. Berenato, 62 Chairman and CEO, Ducommun 6 Ducommun Incorporated
Director (2000) Incorporated (aerospace
components manufacturer)

--------------------------------------------------------------------------------------------------------------
Ambassador Richard G. Corporate director and 15 Carnival Corporation
Capen, Jr., 74 author; former U.S.
Director (1993) Ambassador to Spain; former
Vice Chairman,
Knight-Ridder, Inc.
(communications company);
former Chairman and
Publisher, The Miami Herald
--------------------------------------------------------------------------------------------------------------
H. Frederick Christie, 75 Private investor; former 21 AECOM Technology Corporation;
Director (1990) President and CEO, The DineEquity, Inc.;
Mission Group (non-utility Ducommun Incorporated;
holding company, subsidiary Southwest Water Company
of Southern California
Edison Company)
--------------------------------------------------------------------------------------------------------------
Mary Anne Dolan, 61 Founder and President, 5 None
Director (2008) M.A.D., Inc. (communications
company); former
Editor-in-Chief, The Los
Angeles Herald Examiner

--------------------------------------------------------------------------------------------------------------
John G. Freund, 54 Founder and Managing 2 Hansen Medical, Inc.;
Director (2000) Director, Skyline Ventures MAP Pharmaceuticals, Inc.;
(venture capital investor in XenoPort, Inc.
health care companies)
--------------------------------------------------------------------------------------------------------------
R. Clark Hooper, 61 Private investor; former 18 JPMorgan Value Opportunities
Director (2006) President, Dumbarton Group Fund, Inc.;
LLC (securities industry The Swiss Helvetia Fund, Inc.
consulting); former
Executive Vice President -
Policy and Oversight, NASD
--------------------------------------------------------------------------------------------------------------
Leonade D. Jones, 60 Co-founder, VentureThink LLC 6 None
Director (1995) (developed and managed
e-commerce businesses) and
Versura Inc. (education loan
exchange); former Treasurer,
The Washington Post Company

--------------------------------------------------------------------------------------------------------------
William H. Kling,/5/ 66 President and CEO, American 7 Irwin Financial Corporation
Chairman of the Board Public Media Group
(Independent and
Non-Executive) (1990)
--------------------------------------------------------------------------------------------------------------
Christopher E. Stone, 51 Daniel and Florence 2 None
Director (2007) Guggenheim Professor of the
Practice of Criminal
Justice, John F. Kennedy
School of Government,
Harvard University;
President and Director, Vera
Institute of Justice
--------------------------------------------------------------------------------------------------------------
Patricia K. Woolf, Ph.D., Private investor; corporate 6 None
73 director; former Lecturer,
Director (1990) Department of Molecular
Biology, Princeton
University
--------------------------------------------------------------------------------------------------------------

SMALLCAP World Fund -- Page 10
<PAGE>

"INTERESTED" DIRECTORS/6,7/

PRINCIPAL OCCUPATION(S)
DURING PAST FIVE YEARS
NAME, AGE AND AND POSITIONS NUMBER OF
POSITION WITH FUND HELD WITH AFFILIATED ENTITIES PORTFOLIOS/3/
(YEAR FIRST ELECTED OR THE PRINCIPAL UNDERWRITER OVERSEEN OTHER DIRECTORSHIPS/4/ HELD
AS A DIRECTOR/OFFICER/2/) OF THE FUND BY DIRECTOR BY DIRECTOR
---------------------------------------------------------------------------------------------------------

Gordon Crawford, 61 Senior Vice President - 2 None
Vice Chairman of the Board Capital Research Global
(1992) Investors, Capital Research
and Management Company;
Director, The Capital Group
Companies, Inc.*
---------------------------------------------------------------------------------------------------------
Gregory W. Wendt, 46 Senior Vice President - 1 None
President (1992) Capital Research Global
Investors, Capital Research
Company*; Director, Capital
Research and Management
Company; Director, American
Funds Distributors, Inc.*;
Director, Capital
Management Services, Inc.*
---------------------------------------------------------------------------------------------------------

SMALLCAP World Fund -- Page 11
<PAGE>

OTHER OFFICERS/7/

NAME, AGE AND
POSITION WITH FUND PRINCIPAL OCCUPATION(S) DURING PAST FIVE YEARS
(YEAR FIRST ELECTED AND POSITIONS HELD WITH AFFILIATED ENTITIES
AS AN OFFICER/2/) OR THE PRINCIPAL UNDERWRITER OF THE FUND
-------------------------------------------------------------------------------

Paul F. Roye, 54 Senior Vice President - Fund Business Management
Executive Vice Group, Capital Research and Management Company;
President (2007) Director, American Funds Service Company*; former
Director of Investment Management, United States
Securities and Exchange Commission
-------------------------------------------------------------------------------
Brady L. Enright, 41 Senior Vice President - Capital World Investors,
Senior Vice Capital Research and Management Company
President (2004)
-------------------------------------------------------------------------------
J. Blair Frank, 42 Senior Vice President - Capital Research Global
Senior Vice Investors, Capital Research and Management Company
President (1999)
-------------------------------------------------------------------------------
Jonathan Knowles, Senior Vice President - Capital World Investors,
Ph.D., 47 Capital Research Company*
Senior Vice
President (2000)
-------------------------------------------------------------------------------
Walter R. Burkley, Vice President and Senior Counsel - Fund Business
42 Management Group, Capital Research and Management
Vice President Company
(2007)
-------------------------------------------------------------------------------
Grant L. Cambridge, Senior Vice President - Capital World Investors,
46 Capital Research Company*; Director, Capital Research
Vice President Company*
(2001)
-------------------------------------------------------------------------------
Noriko H. Chen, 41 Vice President - Capital World Investors, Capital
Vice President Research Company*; Director, Capital Research
(2006) Company*
-------------------------------------------------------------------------------
Bradford F. Freer, Vice President - Capital World Investors, Capital
39 Research Company*
Vice President
(2008)
-------------------------------------------------------------------------------
Winnie Kwan, 36 Vice President - Capital Research Global Investors,
Vice President Capital Research Company*
(2006)
-------------------------------------------------------------------------------
Lawrence Kymisis, 38 Vice President - Capital Research Global Investors,
Vice President Capital Research Company*; Director, Capital Research
(2008) Company*
-------------------------------------------------------------------------------
Kristian Stromsoe, Vice President - Capital Research Global Investors,
35 Capital Research Company*
Vice President
(2008)
-------------------------------------------------------------------------------
Chad L. Norton, 48 Vice President - Fund Business Management Group,
Secretary (1990) Capital Research and Management Company
-------------------------------------------------------------------------------
David A. Pritchett, Vice President - Fund Business Management Group,
41 Capital Research and Management Company
Treasurer (1999)
-------------------------------------------------------------------------------
Steven I. Koszalka, Assistant Vice President - Fund Business Management
44 Group, Capital Research and Management Company
Assistant Secretary
(2005)
-------------------------------------------------------------------------------

SMALLCAP World Fund -- Page 12
<PAGE>

* Company affiliated with Capital Research and Management Company.

1 The term "independent" director refers to a director who is not an "interested
person" of the fund within the meaning of the 1940 Act.

2 Directors and officers of the fund serve until their resignation, removal or
retirement.
3 Funds managed by Capital Research and Management Company, including the
American Funds; American Funds Insurance Series,(R) which is composed of 15
funds and serves as the underlying investment vehicle for certain variable
insurance contracts; American Funds Target Date Retirement Series,(R)/ /Inc.,
which is composed of nine funds and is available through tax-deferred
retirement plans and IRAs; and Endowments, which is composed of two portfolios
and is available to certain nonprofit organizations.
4 This includes all directorships (other than those in the American Funds or
other funds managed by Capital Research and Management Company) that are held
by each director as a director of a public company or a registered investment
company.
5 During the past two years, Karin Larson (President and Chairman of Capital
International Research, Inc., an affiliate of the investment adviser) has been
a trustee of Minnesota Public Radio, of which Mr. Kling is President. During
the past two years, Gordon Crawford (Senior Vice President, Capital Research
Global Investors, Capital Research and Management Company and Director, The
Capital Group Companies, Inc.) has been a trustee of Southern California Public
Radio, where Mr. Kling serves as a trustee and as Second Vice Chair. Neither
Ms. Larson nor Mr. Crawford participates in decisions directly related to Mr.
Kling's status or compensation.
6 "Interested persons" of the fund within the meaning of the 1940 Act, on the
basis of their affiliation with the fund's investment adviser, Capital Research
and Management Company, or affiliated entities (including the fund's principal
underwriter).
7 All of the officers listed are officers and/or directors/trustees of one or
more of the other funds for which Capital Research and Management Company
serves as investment adviser.

THE ADDRESS FOR ALL DIRECTORS AND OFFICERS OF THE FUND IS 333 SOUTH HOPE STREET,
55TH FLOOR, LOS ANGELES, CALIFORNIA 90071, ATTENTION: SECRETARY.

SMALLCAP World Fund -- Page 13
<PAGE>

FUND SHARES OWNED BY DIRECTORS AS OF DECEMBER 31, 2007

AGGREGATE DOLLAR RANGE/1/
OF SHARES
OWNED IN ALL FUNDS
IN THE AMERICAN FUNDS
DOLLAR RANGE/1/ OF FUND FAMILY OVERSEEN
NAME SHARES OWNED/2/ BY DIRECTOR
-------------------------------------------------------------------------------

"INDEPENDENT" DIRECTORS
-------------------------------------------------------------------------------
Joseph C. Berenato $10,001 - $50,000 Over $100,000
-------------------------------------------------------------------------------
Richard G. Capen, Jr. Over $100,000 Over $100,000
-------------------------------------------------------------------------------
H. Frederick Christie $50,001 - $100,000 Over $100,000
-------------------------------------------------------------------------------
Mary Anne Dolan/3/ None Over $100,000
-------------------------------------------------------------------------------
John G. Freund Over $100,000 Over $100,000
-------------------------------------------------------------------------------
R. Clark Hooper $10,001 - $50,000 Over $100,000
-------------------------------------------------------------------------------
Leonade D. Jones Over $100,000 Over $100,000
-------------------------------------------------------------------------------
William H. Kling Over $100,000 Over $100,000
-------------------------------------------------------------------------------
Christopher E. Stone $10,001 - $50,000 $10,001 - $50,000
-------------------------------------------------------------------------------
Patricia K. Woolf Over $100,000 Over $100,000
-------------------------------------------------------------------------------
"INTERESTED" DIRECTORS
-------------------------------------------------------------------------------
Gordon Crawford Over $100,000 Over $100,000
-------------------------------------------------------------------------------
Gregory W. Wendt Over $100,000 Over $100,000
-------------------------------------------------------------------------------

1 Ownership disclosure is made using the following ranges: None; $1 - $10,000;
$10,001 - $50,000; $50,001 - $100,000; and Over $100,000. The amounts listed
for "interested" directors include shares owned through The Capital Group
Companies, Inc. retirement plan and 401(k) plan.
2 An independent director may have exposure to the fund through an allocation of
some or all of his or her nonqualified deferred compensation account.

3 Ms. Dolan was elected director on March 12, 2008. She has been a board member
of funds within the American Funds family since 1993.

DIRECTOR COMPENSATION -- No compensation is paid by the fund to any officer or
director who is a director, officer or employee of the investment adviser or its
affiliates. The boards of funds advised by the investment adviser typically meet
either individually or jointly with the boards of one or more other such funds
with substantially overlapping board membership (in each case referred to as a
"board cluster"). The fund typically pays each independent director an annual
fee, which ranges from $16,000 to $34,000, based primarily on the total number
of board clusters on which that independent director serves.

In addition, the fund generally pays independent directors attendance and other
fees for meetings of the board and its committees. Board and committee chairs
receive additional fees for their services.

SMALLCAP World Fund -- Page 14
<PAGE>

Independent directors also receive attendance fees for certain special joint
meetings and information sessions with directors and trustees of other groupings
of funds advised by the investment adviser. The fund and the other funds served
by each independent director each pay an equal portion of these attendance fees.

No pension or retirement benefits are accrued as part of fund expenses.
Independent directors may elect, on a voluntary basis, to defer all or a portion
of their fees through a deferred compensation plan in effect for the fund. The
fund also reimburses certain expenses of the independent directors.

DIRECTOR COMPENSATION PAID DURING THE FISCAL YEAR ENDED SEPTEMBER 30, 2007

TOTAL COMPENSATION
AGGREGATE COMPENSATION (INCLUDING
(INCLUDING VOLUNTARILY VOLUNTARILY DEFERRED
DEFERRED COMPENSATION/1/) COMPENSATION/1/)
NAME FROM THE FUND FROM ALL FUNDS MANAGED BY
--------------------------------------------------------------------------------------------------------- CAPITAL RESEARCH AND
MANAGEMENT
COMPANY OR ITS
AFFILIATES/2/
---------------------------

Joseph C. Berenato/3/ $50,959 $283,875
------------------------------------------------------------------------------------------------------------------------------------
Richard G. Capen, Jr. 49,121 203,587
------------------------------------------------------------------------------------------------------------------------------------
H. Frederick Christie/3/ 41,467 418,760
------------------------------------------------------------------------------------------------------------------------------------
John G. Freund/3/ 50,875 102,750
------------------------------------------------------------------------------------------------------------------------------------
R. Clark Hooper 48,857 306,257
------------------------------------------------------------------------------------------------------------------------------------
Leonade D. Jones/3/ 49,541 331,875
------------------------------------------------------------------------------------------------------------------------------------
William H. Kling 62,689 320,500
------------------------------------------------------------------------------------------------------------------------------------
Christopher E. Stone/4/ None None
------------------------------------------------------------------------------------------------------------------------------------
Patricia K. Woolf/3/ 44,207 298,875
------------------------------------------------------------------------------------------------------------------------------------

1 Amounts may be deferred by eligible directors under a nonqualified deferred
compensation plan adopted by the fund in 1993. Deferred amounts accumulate at
an earnings rate determined by the total return of one or more American Funds
as designated by the directors. Compensation shown in this table for the fiscal
year ended September 30, 2007 does not include earnings on amounts deferred in
previous fiscal years. See footnote 3 to this table for more information.
2 Funds managed by Capital Research and Management Company, including the
American Funds; American Funds Insurance Series,(R) which is composed of 15
funds and serves as the underlying investment vehicle for certain variable
insurance contracts; American Funds Target Date Retirement Series,(R)/ /Inc.,
which is composed of nine funds and is available through tax-deferred
retirement plans and IRAs; and Endowments, which is composed of two portfolios
and is available to certain nonprofit organizations.

3 Since the deferred compensation plan's adoption, the total amount of deferred
compensation accrued by the fund (plus earnings thereon) through the 2007
fiscal year for participating directors is as follows: Joseph C. Berenato
($327,309), H. Frederick Christie ($297,382), John G. Freund ($410,435),
Leonade D. Jones ($409,539) and Patricia K. Woolf ($305,204). Amounts deferred
and accumulated earnings thereon are not funded and are general unsecured
liabilities of the fund until paid to the directors.
4 Mr. Stone was elected a director on September 19, 2007.

As of June 1, 2008, the officers and directors of the fund and their families,
as a group, owned beneficially or of record less than 1% of the outstanding
shares of the fund.

FUND ORGANIZATION AND THE BOARD OF DIRECTORS -- The fund, an open-end,
diversified management investment company, was organized as a Maryland
corporation on December 18, 1989. Although the board of directors has delegated
day-to-day oversight to the investment

SMALLCAP World Fund -- Page 15
<PAGE>

adviser, all fund operations are supervised by the fund's board, which meets
periodically and performs duties required by applicable state and federal laws.

Under Maryland law, the business affairs of a fund are managed under the
direction of the board of directors, and all powers of the fund are exercised by
or under the authority of the board except as reserved to the shareholders by
law or the fund's charter or by-laws. Maryland law requires each director to
perform his/her duties as a director, including his/her duties as a member of
any board committee on which he/she serves, in good faith, in a manner he/she
reasonably believes to be in the best interest of the fund, and with the care
that an ordinarily prudent person in a like position would use under similar
circumstances.

Independent board members are paid certain fees for services rendered to the
fund as described above. They may elect to defer all or a portion of these fees
through a deferred compensation plan in effect for the fund.

The fund has several different classes of shares. Shares of each class represent
an interest in the same investment portfolio. Each class has pro rata rights as
to voting, redemption, dividends and liquidation, except that each class bears
different distribution expenses and may bear different transfer agent fees and
other expenses properly attributable to the particular class as approved by the
board of directors and set forth in the fund's rule 18f-3 Plan. Each class'
shareholders have exclusive voting rights with respect to the respective class'
rule 12b-1 plans adopted in connection with the distribution of shares and on
other matters in which the interests of one class are different from interests
in another class. Shares of all classes of the fund vote together on matters
that affect all classes in substantially the same manner. Each class votes as a
class on matters that affect that class alone. Note that 529 college savings
plan account owners invested in Class 529 shares are not shareholders of the
fund and, accordingly, do not have the rights of a shareholder, such as the
right to vote proxies relating to fund shares. As the legal owner of the fund's
Class 529 shares, the Virginia College Savings Plan/SM/ will vote any proxies
relating to such fund shares.

The fund does not hold annual meetings of shareholders. However, significant
matters that require shareholder approval, such as certain elections of board
members or a change in a fundamental investment policy, will be presented to
shareholders at a meeting called for such purpose. Shareholders have one vote
per share owned. At the request of the holders of at least 10% of the shares,
the fund will hold a meeting at which any member of the board could be removed
by a majority vote.

The fund's articles of incorporation and by-laws as well as separate
indemnification agreements that the fund has entered into with independent
directors provide in effect that, subject to certain conditions, the fund will
indemnify its officers and directors against liabilities or expenses actually
and reasonably incurred by them relating to their service to the fund. However,
directors are not protected from liability by reason of their willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of their office.

COMMITTEES OF THE BOARD OF DIRECTORS -- The fund has an audit committee
comprised of Joseph C. Berenato; Richard G. Capen, Jr.; H. Frederick Christie;
R. Clark Hooper; Leonade D. Jones; and Christopher E. Stone, none of whom is an
"interested person" of the fund within the meaning of the 1940 Act. The
committee provides oversight regarding the fund's accounting and financial
reporting policies and practices, its internal controls and the internal
controls of the fund's principal service providers. The committee acts as a
liaison between the fund's

SMALLCAP World Fund -- Page 16
<PAGE>

independent registered public accounting firm and the full board of directors.
Six audit committee meetings were held during the 2007 fiscal year.

The fund has a contracts committee comprised of Joseph C. Berenato; Richard G.
Capen, Jr.; H. Frederick Christie; Mary Anne Dolan; John G. Freund; R. Clark
Hooper; Leonade D. Jones; William H. Kling; Christopher E. Stone; and Patricia
K. Woolf, none of whom is an "interested person" of the fund within the meaning
of the 1940 Act. The committee's principal function is to request, review and
consider the information deemed necessary to evaluate the terms of certain
agreements between the fund and its investment adviser or the investment
adviser's affiliates, such as the Investment Advisory and Service Agreement,
Principal Underwriting Agreement, Administrative Services Agreement and Plans of
Distribution adopted pursuant to rule 12b-1 under the 1940 Act, that the fund
may enter into, renew or continue, and to make its recommendations to the full
board of directors on these matters. One contracts committee meeting was held
during the 2007 fiscal year.

The fund has a committee on governance comprised of Joseph C. Berenato; Richard
G. Capen, Jr.; H. Frederick Christie; Mary Anne Dolan; John G. Freund; R. Clark
Hooper; Leonade D. Jones; William H. Kling; Christopher E. Stone; and Patricia
K. Woolf, none of whom is considered an "interested person" of the fund within
the meaning of the 1940 Act. The committee periodically reviews such issues as
the board's composition, responsibilities, committees and compensation and other
relevant issues, and recommends any appropriate changes to the full board of
directors. The committee also evaluates, selects and nominates independent
director candidates 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, c/o the fund'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. Four committee on governance
meetings were held during the 2007 fiscal year.

PROXY VOTING PROCEDURES AND PRINCIPLES -- The fund and its investment adviser
have adopted Proxy Voting Procedures and Principles (the "Principles") with
respect to voting proxies of securities held by the fund, other American Funds,
Endowments and American Funds Insurance Series. The complete text of these
principles is available on the American Funds website at americanfunds.com.
Certain American Funds have established separate proxy voting committees that
vote proxies or delegate to a voting officer the authority to vote on behalf of
those funds. Proxies for all other funds (including the fund) are voted by a
committee of the appropriate equity investment division of the investment
adviser under authority delegated by those funds' boards. Therefore, if more
than one fund invests in the same company, they may vote differently on the same
proposal.

All U.S. proxies are voted. Proxies for companies outside the U.S. also are
voted, provided there is sufficient time and information available. After a
proxy statement is received, the investment adviser prepares a summary of the
proposals contained in the proxy statement. A discussion of any potential
conflicts of interest also is included in the summary. For proxies of securities
managed by a particular investment division of the investment adviser, the
initial voting recommendation is made by one or more of the division's
investment analysts familiar with the company and industry. A second
recommendation is made by a proxy coordinator (an investment analyst with
experience in corporate governance and proxy voting matters) within the
appropriate investment division, based on knowledge of these Principles and
familiarity with proxy-related

SMALLCAP World Fund -- Page 17
<PAGE>

issues. The proxy summary and voting recommendations are made available to the
appropriate proxy voting committee for a final voting decision.

The analyst and proxy coordinator making voting recommendations are responsible
for noting any potential material conflicts of interest. One example might be
where a director of one or more American Funds is also a director of a company
whose proxy is being voted. In such instances, proxy voting committee members
are alerted to the potential conflict. The proxy voting committee may then elect
to vote the proxy or seek a third-party recommendation or vote of an ad hoc
group of committee members.

The Principles, which have been in effect in substantially their current form
for many years, provide an important framework for analysis and decision-making
by all funds. However, they are not exhaustive and do not address all potential
issues. The Principles provide a certain amount of flexibility so that all
relevant facts and circumstances can be considered in connection with every
vote. As a result, each proxy received is voted on a case-by-case basis
considering the specific circumstances of each proposal. The voting process
reflects the funds' understanding of the company's business, its management and
its relationship with shareholders over time.

Information regarding how the fund voted proxies relating to portfolio
securities during the 12-month period ended June 30 of each year will be
available on or about September 1 of each year (a) without charge, upon request
by calling American Funds Service Company at 800/421-0180, (b) on the American
Funds website and (c) on the SEC's website at sec.gov.

The following summary sets forth the general positions of the American Funds,
Endowments, American Funds Insurance Series and the investment adviser on
various proposals. A copy of the full Principles is available upon request, free
of charge, by calling American Funds Service Company or visiting the American
Funds website.

DIRECTOR MATTERS -- The election of a company's slate of nominees for
director generally is supported. Votes may be withheld for some or all of
the nominees if this is determined to be in the best interest of
shareholders. Separation of the chairman and CEO positions also may be
supported.

GOVERNANCE PROVISIONS -- Typically, proposals to declassify a board (elect
all directors annually) are supported based on the belief that this
increases the directors' sense of accountability to shareholders. Proposals
for cumulative voting generally are supported in order to promote
management and board accountability and an opportunity for leadership
change. Proposals designed to make director elections more meaningful,
either by requiring a majority vote or by requiring any director receiving
more withhold votes to tender his or her resignation, generally are
supported.

SHAREHOLDER RIGHTS -- Proposals to repeal an existing poison pill generally
are supported. (There may be certain circumstances, however, when a proxy
voting committee of a fund or an investment division of the investment
adviser believes that a company needs to maintain anti-takeover
protection.) Proposals to eliminate the right of shareholders to act by
written consent or to take away a shareholder's right to call a special
meeting typically are not supported.

COMPENSATION AND BENEFIT PLANS -- Option plans are complicated, and many
factors are considered in evaluating a plan. Each plan is evaluated based
on protecting share-

SMALLCAP World Fund -- Page 18
<PAGE>

holder interests and a knowledge of the company and its management.
Considerations include the pricing (or repricing) of options awarded under
the plan and the impact of dilution on existing shareholders from past and
future equity awards. Compensation packages should be structured to
attract, motivate and retain existing employees and qualified directors;
however, they should not be excessive.

ROUTINE MATTERS -- The ratification of auditors, procedural matters
relating to the annual meeting and changes to company name are examples of
items considered routine. Such items generally are voted in favor of
management's recommendations unless circumstances indicate otherwise.

PRINCIPAL FUND SHAREHOLDERS -- The following table identifies those investors
who own of record or are known by the fund to own beneficially 5% or more of any
class of its shares as of the opening of business on June 1, 2008. Unless
otherwise indicated, the ownership percentages below represent ownership of
record rather than beneficial ownership.

NAME AND ADDRESS OWNERSHIP PERCENTAGE
----------------------------------------------------------------------------

Edward D. Jones & Co. Class A 12.27%
Maryland Heights, MO Class B 6.03
----------------------------------------------------------------------------
A G Edwards and Sons Inc. Class A 6.48
Saint Louis, MO Class C 8.88
Class F-1 21.98
----------------------------------------------------------------------------
First Clearing LLC Class B 5.55
Glen Allen, VA
----------------------------------------------------------------------------
Citigroup Global Markets, Inc. Class C 11.78
New York, NY
----------------------------------------------------------------------------
Merrill Lynch Class C 8.99
Jacksonville, FL
----------------------------------------------------------------------------
Capital Group Companies Class R-5 20.99
Los Angeles, CA
----------------------------------------------------------------------------
American Funds 2020 Target Date Retirement Fund Class R-5 6.73
Norfolk, VA
----------------------------------------------------------------------------
American Funds 2025 Target Date Retirement Fund Class R-5 5.96
Norfolk, VA
----------------------------------------------------------------------------
UBS Financial Services, Inc. Class R-5 5.42
Chicago, IL
----------------------------------------------------------------------------

UNLESS OTHERWISE NOTED, REFERENCES IN THIS STATEMENT OF ADDITIONAL INFORMATION
TO CLASS F SHARES, CLASS R SHARES OR CLASS 529 SHARES REFER TO BOTH F SHARE
CLASSES, ALL R SHARE CLASSES OR ALL 529 SHARE CLASSES, RESPECTIVELY.

INVESTMENT ADVISER -- Capital Research and Management Company, the fund's
investment adviser, founded in 1931, maintains research facilities in the United
States and abroad (Los Angeles, San Francisco, New York, Washington, DC, London,
Geneva, Hong Kong, Singapore

SMALLCAP World Fund -- Page 19
<PAGE>

and Tokyo). These facilities are staffed with experienced investment
professionals. The investment adviser is located at 333 South Hope Street, Los
Angeles, CA 90071 and 6455 Irvine Center Drive, Irvine, CA 92618. It is a wholly
owned subsidiary of The Capital Group Companies, Inc., a holding company for
several investment management subsidiaries. Capital Research and Management
Company manages equity assets through two investment divisions, Capital World
Investors and Capital Research Global Investors, and manages fixed-income assets
through its Fixed Income division. Capital World Investors and Capital Research
Global Investors make investment decisions on an independent basis.

The investment adviser has adopted policies and procedures that address issues
that may arise as a result of an investment professional's management of the
fund and other funds and accounts. Potential issues could involve allocation of
investment opportunities and trades among funds and accounts, use of information
regarding the timing of fund trades, investment professional compensation and
voting relating to portfolio securities. The investment adviser believes that
its policies and procedures are reasonably designed to address these issues.

COMPENSATION OF INVESTMENT PROFESSIONALS -- As described in the prospectus, the
investment adviser uses a system of multiple portfolio counselors in managing
fund assets. In addition, Capital Research and Management Company's investment
analysts may make investment decisions with respect to a portion of a fund's
portfolio within their research coverage.

Portfolio counselors and investment analysts are paid competitive salaries by
Capital Research and Management Company. In addition, they may receive bonuses
based on their individual portfolio results. Investment professionals also may
participate in profit-sharing plans. The relative mix of compensation
represented by bonuses, salary and profit-sharing plans will vary depending on
the individual's portfolio results, contributions to the organization and other
factors.

To encourage a long-term focus, bonuses based on investment results are
calculated by comparing pretax total investment returns to relevant benchmarks
over the most recent year, a four-year rolling average and an eight-year rolling
average with much greater weight placed on the four-year and eight-year rolling
averages. For portfolio counselors, benchmarks may include measures of the
marketplaces in which the fund invests and measures of the results of comparable
mutual funds. For investment analysts, benchmarks may include relevant market
measures and appropriate industry or sector indexes reflecting their areas of
expertise. Capital Research and Management Company makes periodic subjective
assessments of analysts' contributions to the investment process and this is an
element of their overall compensation. The investment results of the fund's
portfolio counselors may be measured against one or more of the following
benchmarks, depending on his or her investment focus: S&P/Citigroup World
Smallcap Index; S&P/Citigroup World ex U.S. Smallcap Index; S&P/Citigroup U.S.
Smallcap Index; Lipper Small Cap Growth Funds Index; Lipper International Small
Cap Funds Index.

PORTFOLIO COUNSELOR FUND HOLDINGS AND OTHER MANAGED ACCOUNTS -- As described
below, portfolio counselors may personally own shares of the fund. In addition,
portfolio counselors may manage portions of other mutual funds or accounts
advised by Capital Research and Management Company or its affiliates.

SMALLCAP World Fund -- Page 20
<PAGE>

THE FOLLOWING TABLE REFLECTS INFORMATION AS OF SEPTEMBER 30, 2007:

NUMBER NUMBER
OF OTHER OF OTHER NUMBER
REGISTERED POOLED OF OTHER
INVESTMENT INVESTMENT ACCOUNTS
COMPANIES (RICS) VEHICLES (PIVS) IN WHICH
IN WHICH IN WHICH PORTFOLIO
PORTFOLIO PORTFOLIO COUNSELOR
DOLLAR RANGE COUNSELOR COUNSELOR IS A MANAGER
OF FUND IS A MANAGER IS A MANAGER (ASSETS OF
PORTFOLIO SHARES (ASSETS OF RICS (ASSETS OF PIVS OTHER ACCOUNTS
COUNSELOR OWNED/1/ IN BILLIONS)/2/ IN BILLIONS)/3/ IN BILLIONS)/4/
---------------------------------------------------------------------------------------------

Gordon Crawford Over 3 $314.2 None None
$1,000,000
----------------------------------------------------------------------------------------------
J. Blair Frank $100,001 - 2 $304.1 None None
$500,000
----------------------------------------------------------------------------------------------
Jonathan Knowles $100,001 - None None None
$500,000
----------------------------------------------------------------------------------------------
Brady L. Enright $100,001 - 2 $110.8 None None
$500,000
----------------------------------------------------------------------------------------------
Mark E. Denning $1 - 5 $365.4 1 $0.10 None
$10,000
----------------------------------------------------------------------------------------------
Claudia P. Over 3 $146.7 None None
Huntington $1,000,000
----------------------------------------------------------------------------------------------
Noriko H. Chen $10,001 - None None None
$50,000
----------------------------------------------------------------------------------------------
Terrance Mc Guire $100,001 - None None None
$500,000
----------------------------------------------------------------------------------------------

1 Ownership disclosure is made using the following ranges: None; $1 - $10,000;
$10,001 - $50,000; $50,001 - $100,000; $100,001 - $500,000; $500,001 -
$1,000,000; and Over $1,000,000. The amounts listed include shares owned
through The Capital Group Companies, Inc. retirement plan and 401(k) plan.
2 Indicates fund(s) where the portfolio counselor also has significant
responsibilities for the day to day management of the fund(s). Assets noted are
the total net assets of the registered investment companies and are not
indicative of the total assets managed by the individual, which is a
substantially lower amount. No fund has an advisory fee that is based on the
performance of the fund.
3 Represents funds advised or sub-advised by Capital Research and Management
Company and sold outside the United States and/ or fixed-income assets in
institutional accounts managed by investment adviser subsidiaries of Capital
Group International, Inc., an affiliate of Capital Research and Management
Company. Assets noted are the total net assets of the funds or accounts and are
not indicative of the total assets managed by the individual, which is a
substantially lower amount. No fund or account has an advisory fee that is
based on the performance of the fund or account.
4 Reflects other professionally managed accounts held at companies affiliated
with Capital Research and Management Company. Personal brokerage accounts of
portfolio counselors and their families are not reflected.

INVESTMENT ADVISORY AND SERVICE AGREEMENT -- The Investment Advisory and Service
Agreement (the "Agreement") between the fund and the investment adviser will
continue in effect until November 30, 2008, unless sooner terminated, and may be
renewed from year to year thereafter, provided that any such renewal has been
specifically approved at least annually by (a) the board of directors, or by the
vote of a majority (as defined in the 1940 Act) of the outstanding voting
securities of the fund, and (b) the vote of a majority of directors who are not

SMALLCAP World Fund -- Page 21
<PAGE>

parties to the Agreement or interested persons (as defined in the 1940 Act) of
any such party, cast in person at a meeting called for the purpose of voting on
such approval. The Agreement provides that the investment adviser has no
liability to the fund for its acts or omissions in the performance of its
obligations to the fund not involving willful misconduct, bad faith, gross
negligence or reckless disregard of its obligations under the Agreement. The
Agreement also provides that either party has the right to terminate it, without
penalty, upon 60 days' written notice to the other party, and that the Agreement
automatically terminates in the event of its assignment (as defined in the 1940
Act).

In addition to providing investment advisory services, the investment adviser
furnishes the services and pays the compensation and travel expenses of persons
to perform the fund's executive, administrative, clerical and bookkeeping
functions, and provides suitable office space, necessary small office equipment
and utilities, general purpose accounting forms, supplies and postage used at
the fund's offices. The fund pays all expenses not assumed by the investment
adviser, including, but not limited to: custodian, stock transfer and dividend
disbursing fees and expenses; shareholder recordkeeping and administrative
expenses; costs of the designing, printing and mailing of reports, prospectuses,
proxy statements and notices to its shareholders; taxes; expenses of the
issuance and redemption of fund shares (including stock certificates,
registration and qualification fees and expenses); expenses pursuant to the
fund's plans of distribution (described below); legal and auditing expenses;
compensation, fees and expenses paid to independent directors; association dues;
costs of stationery and forms prepared exclusively for the fund; and costs of
assembling and storing shareholder account data.

As compensation for its services, the investment adviser received a monthly fee
that is accrued daily, calculated at the annual rates of:

Net asset level

RATE IN EXCESS OF UP TO
------------------------------------------------------------------------------

0.800% $ 0 $ 1,000,000,000
------------------------------------------------------------------------------
0.700 1,000,000,000 2,000,000,000
------------------------------------------------------------------------------
0.670 2,000,000,000 3,000,000,000
------------------------------------------------------------------------------
0.650 3,000,000,000 5,000,000,000
------------------------------------------------------------------------------
0.635 5,000,000,000 8,000,000,000
------------------------------------------------------------------------------
0.625 8,000,000,000 13,000,000,000
------------------------------------------------------------------------------
0.615 13,000,000,000 17,000,000,000
------------------------------------------------------------------------------
0.605 17,000,000,000 21,000,000,000
------------------------------------------------------------------------------
0.600 21,000,000,000 27,000,000,000
------------------------------------------------------------------------------
0.595 27,000,000,000
------------------------------------------------------------------------------

The investment adviser has agreed that in the event the Class A expenses of the
fund (with the exclusion of interest, taxes, brokerage costs, distribution
expenses pursuant to a plan under rule 12b-1 and extraordinary expenses such as
litigation and acquisitions or other expenses excludable under applicable state
securities laws or regulations) for any fiscal year ending on a

SMALLCAP World Fund -- Page 22
<PAGE>

date on which the Agreement is in effect exceed the expense limitations, if any,
applicable to the fund pursuant to state securities laws or any related
regulations, it will reduce its fee by the extent of such excess and, if
required pursuant to any such laws or any regulations thereunder, will reimburse
the fund in the amount of such excess. To the extent the fund's management fee
must be waived due to Class A share expense ratios exceeding the above limit,
management fees will be reduced similarly for all classes of shares of the fund,
or other Class A fees will be waived in lieu of management fees.

For the fiscal years ended September 30, 2007, 2006 and 2005, the investment
adviser was entitled to receive from the fund management fees of $143,349,000,
$109,780,000 and $84,038,000, respectively. After giving effect to the
management fee waivers described below, the fund paid the investment adviser
management fees of $129,014,000 (a reduction of $14,335,000), $98,802,000 (a
reduction of $10,978,000) and $77,637,000 (a reduction of $6,401,000) for the
fiscal years ended September 30, 2007, 2006 and 2005, respectively.

For the period from September 1, 2004 through March 31, 2005, the investment
adviser agreed to waive 5% of the management fees that it was otherwise entitled
to receive under the Agreement. Beginning April 1, 2005, this waiver increased
to 10% of the management fees that the investment adviser is otherwise entitled
to receive, and this waiver is expected to continue at this level until further
review. As a result of this waiver, management fees are reduced similarly for
all classes of shares of the fund.

ADMINISTRATIVE SERVICES AGREEMENT -- The Administrative Services Agreement (the
"Administrative Agreement") between the fund and the investment adviser relating
to the fund's Class C, F, R and 529 shares will continue in effect until
November 30, 2008, unless sooner terminated, and may be renewed from year to
year thereafter, provided that any such renewal has been specifically approved
at least annually by the vote of a majority of directors who are not parties to
the Administrative Agreement or interested persons (as defined in the 1940 Act)
of any such party, cast in person at a meeting called for the purpose of voting
on such approval. The fund may terminate the Administrative Agreement at any
time by vote of a majority of independent directors. The investment adviser has
the right to terminate the Administrative Agreement upon 60 days' written notice
to the fund. The Administrative Agreement automatically terminates in the event
of its assignment (as defined in the 1940 Act).

Under the Administrative Agreement, the investment adviser provides certain
transfer agent and administrative services for shareholders of the fund's Class
C and F shares, and Class R and 529 shares. The investment adviser may contract
with third parties, including American Funds Service Company/(R)/, the fund's
Transfer Agent, to provide some of these services. Services include, but are not
limited to, shareholder account maintenance, transaction processing, tax
information reporting and shareholder and fund communications. In addition, the
investment adviser monitors, coordinates, oversees and assists with the
activities performed by third parties providing such services. For Class R-1 and
R-2 shares, the investment adviser has agreed to pay a portion of the fees
payable under the Administrative Agreement that would otherwise have been paid
by the fund. For the year ended September 30, 2007, the total fees paid by the
investment adviser were $515,000.

The investment adviser receives an administrative services fee at the annual
rate of up to 0.15% of the average daily net assets for Class C, F, R (excluding
Class R-5 shares) and 529 shares for administrative services provided to these
share classes. Administrative services fees are paid monthly and accrued daily.
The investment adviser uses a portion of this fee to compensate third

SMALLCAP World Fund -- Page 23
<PAGE>

parties for administrative services provided to the fund. Of the remainder, the
investment adviser does not retain more than 0.05% of the average daily net
assets for each applicable share class. For Class R-5 shares, the administrative
services fee is calculated at the annual rate of up to 0.10% of the average
daily net assets. The administrative services fee includes compensation for
transfer agent and shareholder services provided to the fund's Class C, F, R and
529 shares. In addition to making administrative service fee payments to
unaffiliated third parties, the investment adviser also makes payments from the
administrative services fee to American Funds Service Company according to a fee
schedule, based principally on the number of accounts serviced, contained in a
Shareholder Services Agreement between the fund and American Funds Service
Company.

During the 2007 fiscal year, administrative services fees, gross of any payments
made by the investment adviser, were:

ADMINISTRATIVE SERVICES FEE
--------------------------------------------------------------------------------

CLASS C $1,559,000
--------------------------------------------------------------------------------
CLASS F-1 777,000
--------------------------------------------------------------------------------
CLASS 529-A 494,000
--------------------------------------------------------------------------------
CLASS 529-B 85,000
--------------------------------------------------------------------------------
CLASS 529-C 215,000
--------------------------------------------------------------------------------
CLASS 529-E 31,000
--------------------------------------------------------------------------------
CLASS 529-F-1 35,000
--------------------------------------------------------------------------------
CLASS R-1 62,000
--------------------------------------------------------------------------------
CLASS R-2 2,775,000
--------------------------------------------------------------------------------
CLASS R-3 1,073,000
--------------------------------------------------------------------------------
CLASS R-4 271,000
--------------------------------------------------------------------------------
CLASS R-5 301,000
--------------------------------------------------------------------------------

PRINCIPAL UNDERWRITER AND PLANS OF DISTRIBUTION -- American Funds
Distributors/(R)/, Inc. (the "Principal Underwriter") is the principal
underwriter of the fund's shares. The Principal Underwriter is located at 333
South Hope Street, Los Angeles, CA 90071; 6455 Irvine Center Drive, Irvine, CA
92618; 3500 Wiseman Boulevard, San Antonio, TX 78251; 8332 Woodfield Crossing
Boulevard, Indianapolis, IN 46240; and 5300 Robin Hood Road, Norfolk, VA 23513.

The Principal Underwriter receives revenues relating to sales of the fund's
shares, as follows:

. For Class A and 529-A shares, the Principal Underwriter receives
commission revenue consisting of the balance of the Class A and 529-A
sales charge remaining after the allowances by the Principal
Underwriter to investment dealers.

. For Class B and 529-B shares, the Principal Underwriter sells its
rights to the 0.75% distribution-related portion of the 12b-1 fees
paid by the fund, as well as any contingent deferred sales charges, to
a third party. The Principal Underwriter

SMALLCAP World Fund -- Page 24
<PAGE>

compensates investment dealers for sales of Class B and 529-B shares
out of the proceeds of this sale and keeps any amounts remaining after
this compensation is paid.

. For Class C and 529-C shares, the Principal Underwriter receives any
contingent deferred sales charges that apply during the first year
after purchase.

In addition, the fund reimburses the Principal Underwriter for advancing
immediate service fees to qualified dealers and advisers upon the sale of Class
B, 529-B, C and 529-C shares. The fund also reimburses the Principal Underwriter
for service fees (and, in the case of Class 529-E shares, commissions) paid on a
quarterly basis to qualified dealers and advisers in connection with investments
in Class F-1, 529-F-1, 529-E, R-1, R-2, R-3 and R-4 shares.

Commissions, revenue or service fees retained by the Principal Underwriter after
allowances or compensation to dealers were:

COMMISSIONS, ALLOWANCE OR
REVENUE COMPENSATION
FISCAL YEAR/PERIOD OR FEES RETAINED TO DEALERS
-----------------------------------------------------------------------------------------------------

CLASS A 2007 $8,873,000 $38,772,000
2006 8,300,000 36,571,000
2005 5,658,000 25,057,000
-----------------------------------------------------------------------------------------------------
CLASS B 2007 483,000 9,911,000
2006 409,000 2,978,000
2005 354,000 2,397,000
-----------------------------------------------------------------------------------------------------
CLASS C 2007 41,000 2,565,000
2006 -- 2,219,000
2005 7,000 1,374,000
-----------------------------------------------------------------------------------------------------
CLASS 529-A 2007 531,000 2,393,000
2006 446,000 2,025,000
2005 313,000 1,440,000
-----------------------------------------------------------------------------------------------------
CLASS 529-B 2007 38,000 237,000
2006 37,000 233,000
2005 43,000 238,000
-----------------------------------------------------------------------------------------------------
CLASS 529-C 2007 $ -- $ 364,000
2006 -- 280,000
2005 358 211,000
-----------------------------------------------------------------------------------------------------

SMALLCAP World Fund -- Page 25
<PAGE>

Plans of distribution -- The fund has adopted plans of distribution (the
"Plans") pursuant to rule 12b-1 under the 1940 Act. The Plans permit the fund to
expend amounts to finance any activity primarily intended to result in the sale
of fund shares, provided the fund's board of directors has approved the category
of expenses for which payment is being made.

Each Plan is specific to a particular share class of the fund. As the fund has
not adopted a Plan for Class F-2 or Class R-5, no 12b-1 fees are paid from Class
F-2 or Class R-5 share assets and the following disclosure is not applicable to
these share classes.

Payments under the Plans may be made for service-related and/or
distribution-related expenses. Service-related expenses include paying service
fees to qualified dealers. Distribution-related expenses include commissions
paid to qualified dealers. The amounts actually paid under the Plans for the
past fiscal year, expressed as a percentage of the fund's average daily net
assets attributable to the applicable share class, are disclosed in the
prospectus under "Fees and expenses of the fund." Further information regarding
the amounts available under each Plan is in the "Plans of Distribution" section
of the prospectus.

Following is a brief description of the Plans:

CLASS A AND 529-A -- For Class A and 529-A shares, up to 0.25% of the
fund's average daily net assets attributable to such shares is reimbursed
to the Principal Underwriter for paying service-related expenses, and the
balance available under the applicable Plan may be paid to the Principal
Underwriter for distribution-related expenses. The fund may annually expend
up to 0.30% for Class A shares and up to 0.50% for Class 529-A shares under
the applicable Plan.

Distribution-related expenses for Class A and 529-A shares include dealer
commissions and wholesaler compensation paid on sales of shares of $1
million or more purchased without a sales charge. Commissions on these "no
load" purchases (which are described in further detail under the "Sales
Charges" section of this statement of additional information) in excess of
the Class A and 529-A Plan limitations and not reimbursed to the Principal
Underwriter during the most recent fiscal quarter are recoverable for five
quarters, provided that the reimbursement of such commissions does not
cause the fund to exceed the annual expense limit. After five quarters,
these commissions are not recoverable.

CLASS B AND 529-B -- The Plans for Class B and 529-B shares provide for
payments to the Principal Underwriter of up to 0.25% of the fund's average
daily net assets attributable

SMALLCAP World Fund -- Page 26
<PAGE>

to such shares for paying service-related expenses and 0.75% for
distribution-related expenses, which include the financing of commissions
paid to qualified dealers.

OTHER SHARE CLASSES (CLASS C, 529-C, F-1, 529-F-1, 529-E, R-1, R-2, R-3 AND
R-4) -- The Plans for each of the other share classes that have adopted
Plans provide for payments to the Principal Underwriter for paying
service-related and distribution-related expenses of up to the following
amounts of the fund's average daily net assets attributable to such shares:

TOTAL
SERVICE DISTRIBUTION ALLOWABLE
RELATED RELATED UNDER
SHARE CLASS PAYMENTS/1/ PAYMENTS/1/ THE PLANS/2/
-------------------------------------------------------------------------

Class C 0.25% 0.75% 1.00%
-------------------------------------------------------------------------
Class 529-C 0.25 0.75 1.00
-------------------------------------------------------------------------
Class F-1 0.25 -- 0.50
-------------------------------------------------------------------------
Class 529-F-1 0.25 -- 0.50
-------------------------------------------------------------------------
Class 529-E 0.25 0.25 0.75
-------------------------------------------------------------------------
Class R-1 0.25 0.75 1.00
-------------------------------------------------------------------------
Class R-2 0.25 0.50 1.00
-------------------------------------------------------------------------
Class R-3 0.25 0.25 0.75
-------------------------------------------------------------------------
Class R-4 0.25 -- 0.50
-------------------------------------------------------------------------

1Amounts in these columns represent the amounts approved by the board of
directors under the applicable Plan.
2The fund may annually expend the amounts set forth in this column under
the current Plans with the approval of the board of directors.

During the 2007 fiscal year, 12b-1 expenses accrued and paid, and if applicable,
unpaid, were:

12B-1 UNPAID LIABILITY
12B-1 EXPENSES OUTSTANDING
------------------------------------------------------------------------------

CLASS A $43,825,000 $3,472,000
------------------------------------------------------------------------------
CLASS B 7,052,000 651,000
------------------------------------------------------------------------------
CLASS C 9,012,000 890,000
------------------------------------------------------------------------------
CLASS F-1 1,561,000 188,000
------------------------------------------------------------------------------
CLASS 529-A 725,000 57,000
------------------------------------------------------------------------------
CLASS 529-B 595,000 58,000
------------------------------------------------------------------------------
CLASS 529-C 1,529,000 155,000
------------------------------------------------------------------------------
CLASS 529-E 121,000 12,000
------------------------------------------------------------------------------
CLASS 529-F-1 0 0
------------------------------------------------------------------------------
CLASS R-1 $ 298,000 $ 33,000
------------------------------------------------------------------------------
CLASS R-2 4,126,000 402,000
------------------------------------------------------------------------------
CLASS R-3 2,197,000 219,000
------------------------------------------------------------------------------
CLASS R-4 477,000 54,000
------------------------------------------------------------------------------

SMALLCAP World Fund -- Page 27
<PAGE>

Approval of the Plans -- As required by rule 12b-1 and the 1940 Act, the Plans
(together with the Principal Underwriting Agreement) have been approved by the
full board of directors and separately by a majority of the independent
directors of the fund who have no direct or indirect financial interest in the
operation of the Plans or the Principal Underwriting Agreement. In addition, the
selection and nomination of independent directors of the fund are committed to
the discretion of the independent directors during the existence of the Plans.

Potential benefits of the Plans to the fund include quality shareholder
services, savings to the fund in transfer agency costs, and benefits to the
investment process from growth or stability of assets. The Plans may not be
amended to materially increase the amount spent for distribution without
shareholder approval. Plan expenses are reviewed quarterly by the board of
directors and the Plans must be renewed annually by the board of directors.

OTHER COMPENSATION TO DEALERS -- As of July 2008, the top dealers (or their
affiliates) that American Funds Distributors anticipates will receive additional
compensation (as described in the prospectus) include:

AIG Advisors Group
Advantage Capital Corporation
AIG Financial Advisors, Inc.
American General Securities Incorporated
FSC Securities Corporation
Royal Alliance Associates, Inc.
AXA Advisors, LLC

Cadaret, Grant & Co., Inc.
Cambridge Investment Research, Inc.
Commonwealth Financial Network
Cuna Brokerage Services, Inc.
Deutsche Bank Securities Inc.
Edward Jones
Genworth Financial Securities Corporation
Hefren-Tillotson, Inc.
HTK / Janney Montgomery Group
Hornor, Townsend & Kent, Inc.
Janney Montgomery Scott LLC
ING Advisors Network Inc.
Bancnorth Investment Group, Inc.
Financial Network Investment Corporation
Guaranty Brokerage Services, Inc.
ING Financial Partners, Inc.
Multi-Financial Securities Corporation
Primevest Financial Services, Inc.

SMALLCAP World Fund -- Page 28
<PAGE>

Intersecurities / Transamerica
InterSecurities, Inc.
Transamerica Financial Advisors, Inc.
JJB Hilliard/PNC Bank
J.J.B. Hilliard, W.L. Lyons, Inc.
PNC Bank, National Association
PNC Investments LLC
Lincoln Financial Advisors Corporation
LPL Group
Associated Securities Corp.
LPL Financial Corporation
Mutual Service Corporation
Uvest Investment Services
Waterstone Financial Group, Inc.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Metlife Enterprises
Metlife Securities Inc.
New England Securities
Walnut Street Securities, Inc.
MML Investors Services, Inc.
Morgan Keegan & Company, Inc.
Morgan Stanley & Co., Incorporated
National Planning Holdings Inc.
Invest Financial Corporation
Investment Centers of America, Inc.
National Planning Corporation
SII Investments, Inc.
NFP Securities, Inc.
Northwestern Mutual Investment Services, LLC
Park Avenue Securities LLC
Princor Financial Services Corporation
Raymond James Group
Raymond James & Associates, Inc.
Raymond James Financial Services Inc.
RBC Dain Rauscher Inc.
Robert W. Baird & Co. Incorporated
Securian / C.R.I.
CRI Securities, LLC
Securian Financial Services, Inc.
Smith Barney
Legg Mason
U.S. Bancorp Investments, Inc.
UBS Financial Services Inc.
Wachovia Group
A. G. Edwards, a Division of Wachovia Securities, LLC
First Clearing LLC
Wachovia Securities Financial Network, LLC
Wachovia Securities Investment Services Group
Wachovia Securities Latin American Channel
Wachovia Securities Private Client Group
Wells Fargo Investments, LLC

SMALLCAP World Fund -- Page 29
<PAGE>

EXECUTION OF PORTFOLIO TRANSACTIONS

The investment adviser places orders with broker-dealers for the fund's
portfolio transactions. Purchases and sales of equity securities on a securities
exchange or an over-the-counter market are effected through broker-dealers who
receive commissions for their services. Generally, commissions relating to
securities traded on foreign exchanges will be higher than commissions relating
to securities traded on U.S. exchanges and may not be subject to negotiation.
Equity securities may also be purchased from underwriters at prices that include
underwriting fees. Purchases and sales of fixed-income securities are generally
made with an issuer or a primary market-maker acting as principal with no stated
brokerage commission. The price paid to an underwriter for fixed-income
securities includes underwriting fees. Prices for fixed-income securities in
secondary trades usually include undisclosed compensation to the market-maker
reflecting the spread between the bid and ask prices for the securities.

In selecting broker-dealers, the investment adviser strives to obtain "best
execution" (the most favorable total price reasonably attainable under the
circumstances) for the fund's portfolio transactions, taking into account a
variety of factors. These factors include the size and type of transaction, the
nature and character of the markets for the security to be purchased or sold,
the cost, quality and reliability of the executions and the broker-dealer's
ability to offer liquidity and anonymity. The investment adviser considers these
factors, which involve qualitative judgments, when selecting broker-dealers and
execution venues for fund portfolio transactions. The investment adviser views
best execution as a process that should be evaluated over time as part of an
overall relationship with particular broker-dealer firms rather than on a
trade-by-trade basis. The fund does not consider the investment adviser as
having an obligation to obtain the lowest commission rate available for a
portfolio transaction to the exclusion of price, service and qualitative
considerations.

The investment adviser may execute portfolio transactions with broker-dealers
who provide certain brokerage and/or investment research services to it, but
only when in the investment adviser's judgment the broker-dealer is capable of
providing best execution for that transaction. The receipt of these services
permits the investment adviser to supplement its own research and analysis and
makes available the views of, and information from, individuals and the research
staffs of other firms. Such views and information may be provided in the form of
written reports, telephone contacts and meetings with securities analysts. These
services may include, among other things, reports and other communications with
respect to individual companies, industries, countries and regions, economic,
political and legal developments, as well as scheduling meetings with corporate
executives and seminars and conferences related to relevant subject matters. The
investment adviser considers these services to be supplemental to its own
internal research efforts and therefore the receipt of investment research from
broker-dealers does not tend to reduce the expenses involved in the investment
adviser's research efforts. If broker-dealers were to discontinue providing such
services it is unlikely the investment adviser would attempt to replicate them
on its own, in part because they would then no longer provide an independent,
supplemental viewpoint. Nonetheless, if it were to attempt to do so, the
investment adviser would incur substantial additional costs. Research services
that the investment adviser receives from broker-dealers may be used by the
investment adviser in servicing the fund and other funds and accounts that it
advises; however, not all such services will necessarily benefit the fund.

The investment adviser may pay commissions in excess of what other
broker-dealers might have charged - including on an execution-only basis - for
certain portfolio transactions in recognition of

SMALLCAP World Fund -- Page 30
<PAGE>

brokerage and/or investment research services provided by a broker-dealer. In
this regard, the investment adviser has adopted a brokerage allocation procedure
consistent with the requirements of Section 28(e) of the U.S. Securities
Exchange Act of 1934. Section 28(e) permits an investment adviser to cause an
account to pay a higher commission to a broker-dealer that provides certain
brokerage and/or investment research services to the investment adviser, if the
investment adviser makes a good faith determination that such commissions are
reasonable in relation to the value of the services provided by such
broker-dealer to the investment adviser in terms of that particular transaction
or the investment adviser's overall responsibility to the fund and other
accounts that it advises. Certain brokerage and/or investment research services
may not necessarily benefit all accounts paying commissions to each such
broker-dealer; therefore, the investment adviser assesses the reasonableness of
commissions in light of the total brokerage and investment research services
provided by each particular broker-dealer.

In accordance with its internal brokerage allocation procedure, each equity
investment division of the investment adviser periodically assesses the
brokerage and investment research services provided by each broker-dealer from
which it receives such services. Using its judgment, each equity investment
division of the investment adviser then creates lists with suggested levels of
commissions for particular broker-dealers and provides those lists to its
trading desks. Neither the investment adviser nor the fund incurs any obligation
to any broker-dealer to pay for research by generating trading commissions. The
actual level of business received by any broker-dealer may be less than the
suggested level of commissions and can, and often does, exceed the suggested
level in the normal course of business. As part of its ongoing relationships
with broker-dealers, the investment adviser routinely meets with firms,
typically at the firm's request, to discuss the level and quality of the
brokerage and research services provided, as well as the perceived value and
cost of such services. In valuing the brokerage and investment research services
the investment adviser receives from broker-dealers for its good faith
determination of reasonableness, the investment adviser does not attribute a
dollar value to such services, but rather takes various factors into
consideration, including the quantity, quality and usefulness of the services to
the investment adviser.

The investment adviser seeks, on an ongoing basis, to determine what the
reasonable levels of commission rates are in the marketplace. The investment
adviser takes various considerations into account when evaluating such
reasonableness, including, (a) rates quoted by broker-dealers, (b) the size of a
particular transaction in terms of the number of shares and dollar amount, (c)
the complexity of a particular transaction, (d) the nature and character of the
markets on which a particular trade takes place, (e) the ability of a
broker-dealer to provide anonymity while executing trades, (f) the ability of a
broker-dealer to execute large trades while minimizing market impact, (g) the
extent to which a broker-dealer has put its own capital at risk, (h) the level
and type of business done with a particular broker-dealer over a period of time,
(i) historical commission rates, and (j) commission rates that other
institutional investors are paying.

When executing portfolio transactions in the same equity security for the funds
and accounts, or portions of funds and accounts, over which the investment
adviser, through its equity investment divisions, has investment discretion,
each of the investment divisions will normally aggregate its respective
purchases or sales and execute them as part of the same transaction or series of
transactions. When executing portfolio transactions in the same fixed-income
security for the fund and the other funds or accounts over which it or one of
its affiliated companies has investment discretion, the investment adviser will
normally aggregate such purchases or sales and execute them as part of the same
transaction or series of transactions. The objective of aggregating purchases
and sales of a security is to allocate executions in an equitable manner

SMALLCAP World Fund -- Page 31
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among the funds and other accounts that have concurrently authorized a
transaction in such security.

The investment adviser may place orders for the fund's portfolio transactions
with broker-dealers who have sold shares in the funds managed by the investment
adviser or its affiliated companies; however, it does not consider whether a
broker-dealer has sold shares of the funds managed by the investment adviser or
its affiliated companies when placing any such orders for the fund's portfolio
transactions.

Brokerage commissions paid on portfolio transactions for the fiscal years ended
September 30, 2007, 2006 and 2005 amounted to $31,848,000, $26,095,000 and
$18,826,000, respectively. The volume of trading activity increased during these years,
resulting in an increase in broker commissions paid on portfolio transactions.

The fund is required to disclose information regarding investments in the
securities of its "regular" broker-dealers (or parent companies of its regular
broker-dealers) that derive more than 15% of their revenue from broker-dealer,
underwriter or investment adviser activities. A regular broker-dealer is (a) one
of the 10 broker-dealers that received from the fund the largest amount of
brokerage commissions by participating, directly or indirectly, in the fund's
portfolio transactions during the fund's most recent fiscal year; (b) one of the
10 broker-dealers that engaged as principal in the largest dollar amount of
portfolio transactions of the fund during the fund's most recent fiscal year; or
(c) one of the 10 broker-dealers that sold the largest amount of securities of
the fund during the fund's most recent fiscal year. At the end of the fund's
most recent fiscal year, the fund had no investments in securities of its
regular broker-dealers.

DISCLOSURE OF PORTFOLIO HOLDINGS

The fund's investment adviser, on behalf of the fund, has adopted policies and
procedures with respect to the disclosure of information about fund portfolio
securities. These policies and procedures have been reviewed by the fund's board
of directors and compliance will be periodically assessed by the board in
connection with reporting from the fund's Chief Compliance Officer.

Under these policies and procedures, the fund's complete list of portfolio
holdings available for public disclosure, dated as of the end of each calendar
quarter, is permitted to be posted on the American Funds website no earlier than
the tenth day after such calendar quarter. In practice, the public portfolio
typically is posted on the website approximately 45 days after the end of the
calendar quarter. In addition, the fund's list of top 10 equity portfolio
holdings measured by percentage of net assets invested, dated as of the end of
each calendar month, is permitted to be posted on the American Funds website no
earlier than the tenth day after such month. Such portfolio holdings information
may then be disclosed to any person pursuant to an ongoing arrangement to
disclose portfolio holdings information to such person no earlier than one day
after the day on which the information is posted on the American Funds website.
The fund's custodian, outside counsel and auditor, each of which requires
portfolio holdings information for legitimate business and fund oversight
purposes, may receive the information earlier.

Affiliated persons of the fund as described above who receive portfolio holdings
information are subject to restrictions and limitations on the use and handling
of such information pursuant to applicable codes of ethics, including
requirements to maintain the confidentiality of such information, preclear
securities trades and report securities transactions activity, as applicable.

SMALLCAP World Fund -- Page 32
<PAGE>

Third party service providers of the fund receiving such information are subject
to confidentiality obligations. When portfolio holdings information is disclosed
other than through the American Funds website to persons not affiliated with the
fund (which, as described above, would typically occur no earlier than one day
after the day on which the information is posted on the American Funds website),
such persons may be bound by agreements (including confidentiality agreements)
that restrict and limit their use of the information to legitimate business uses
only. Neither the fund nor its investment adviser or any affiliate thereof
receives compensation or other consideration in connection with the disclosure
of information about portfolio securities.

Subject to board policies, the authority to disclose a fund's portfolio
holdings, and to establish policies with respect to such disclosure, resides
with the appropriate investment-related committees of the fund's investment
adviser. In exercising their authority, the committees determine whether
disclosure of information about the fund's portfolio securities is appropriate
and in the best interest of fund shareholders. The investment adviser has
implemented policies and procedures to address conflicts of interest that may
arise from the disclosure of fund holdings. For example, the investment
adviser's code of ethics specifically requires, among other things, the
safeguarding of information about fund holdings and contains prohibitions
designed to prevent the personal use of confidential, proprietary investment
information in a way that would conflict with fund transactions. In addition,
the investment adviser believes that its current policy of not selling portfolio
holdings information and not disclosing such information to unaffiliated third
parties until such holdings have been made public on the American Funds website
(other than to certain fund service providers for legitimate business and fund
oversight purposes) helps reduce potential conflicts of interest between fund
shareholders and the investment adviser and its affiliates.

PRICE OF SHARES

Shares are purchased at the offering price or sold at the net asset value price
next determined after the purchase or sell order is received and accepted by the
fund or the Transfer Agent; the offering or net asset value price is effective
for orders received prior to the time of determination of the net asset value
and, in the case of orders placed with dealers or their authorized designees,
accepted by the Principal Underwriter, the Transfer Agent, a dealer or any of
their designees. In the case of orders sent directly to the fund or the Transfer
Agent, an investment dealer should be indicated. The dealer is responsible for
promptly transmitting purchase and sell orders to the Principal Underwriter.

Orders received by the investment dealer or authorized designee, the Transfer
Agent or the fund after the time of the determination of the net asset value
will be entered at the next calculated offering price. Note that investment
dealers or other intermediaries may have their own rules about share
transactions and may have earlier cut-off times than those of the fund. For more
information about how to purchase through your intermediary, contact your
intermediary directly.

Prices that appear in the newspaper do not always indicate prices at which you
will be purchasing and redeeming shares of the fund, since such prices generally
reflect the previous day's closing price, while purchases and redemptions are
made at the next calculated price. The price you pay for shares, the offering
price, is based on the net asset value per share, which is calculated once daily
as of approximately 4 p.m. New York time, which is the normal close of trading
on the New York Stock Exchange, each day the Exchange is open. If, for example,
the Exchange closes at 1 p.m., the fund's share price would still be determined
as of 4 p.m. New York time. The New York Stock Exchange is currently closed on
weekends and on the following

SMALLCAP World Fund -- Page 33
<PAGE>

holidays: New Year's Day; Martin Luther King, Jr. Day; Presidents' Day; Good
Friday; Memorial Day; Independence Day; Labor Day; Thanksgiving; and Christmas
Day. Each share class of the fund has a separately calculated net asset value
(and share price).

All portfolio securities of funds managed by Capital Research and Management
Company (other than money market funds) are valued, and the net asset values per
share for each share class are determined, as indicated below. The fund follows
standard industry practice by typically reflecting changes in its holdings of
portfolio securities on the first business day following a portfolio trade.

1. Equity securities, including depositary receipts, 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 are valued at
prices obtained from an independent pricing service, when such prices are
available; however, in circumstances where the investment adviser deems it
appropriate to do so, 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. The pricing services base
bond prices on, among other things, an evaluation of the yield curve as of
approximately 3 p.m. New York time. The fund's investment adviser performs
certain checks on these prices prior to calculation of the fund's net asset
value.

Securities with both fixed-income and equity characteristics (e.g., convertible
bonds, preferred stocks, units comprised of more than one type of security,
etc.), 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.

Securities with original maturities of one year or less having 60 days or less
to maturity are amortized to maturity based on their cost if acquired within 60
days of maturity, or if already held on the 60th day, based on the value
determined on the 61st day. Forward currency contracts are valued at the mean of
representative quoted bid and asked prices.

Assets or liabilities initially expressed in terms of currencies other than U.S.
dollars are translated prior to the next determination of the net asset value of
the fund's shares into U.S. dollars at the prevailing market rates.

Securities and assets for which market quotations are not readily available or
are considered unreliable are valued at fair value as determined in good faith
under policies approved by the fund's board. Subject to board oversight, the
fund's board has delegated the obligation to make fair valuation determinations
to a valuation committee established by the fund's investment adviser. The board
receives regular reports describing fair-valued securities and the valuation
methods used.

The valuation committee has adopted guidelines and procedures (consistent with
SEC rules and guidance) to ensure that certain basic principles and factors are
considered when making all fair value determinations. As a general principle,
securities lacking readily available market quotations, or that have quotations
that are considered unreliable by the investment adviser, are valued in good
faith by the valuation committee based upon what the fund might reasonably

SMALLCAP World Fund -- Page 34
<PAGE>

expect to receive upon their current sale. The valuation committee considers all
indications of value available to it in determining the fair value to be
assigned to a particular security, including, without limitation, 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. The
valuation committee employs additional fair value procedures to address issues
related to equity holdings of applicable fund portfolios outside the United
States. Securities owned by these funds trade in markets that open and close at
different times, reflecting time zone differences. If significant events occur
after the close of a market (and before these fund's net asset values are next
determined) which affect the value of portfolio securities, appropriate
adjustments from closing market prices may be made to reflect these events.
Events of this type could include, for example, earthquakes and other natural
disasters or significant price changes in other markets (e.g., U.S. stock
markets).

2. Each class of shares represents interests in the same portfolio of
investments and is identical in all respects to each other class, except for
differences relating to distribution, service and other charges and expenses,
certain voting rights, differences relating to eligible investors, the
designation of each class of shares, conversion features and exchange
privileges. Expenses attributable to the fund, but not to a particular class of
shares, are borne by each class pro rata based on relative aggregate net assets
of the classes. Expenses directly attributable to a class of shares are borne by
that class of shares. Liabilities, including accruals of taxes and other expense
items attributable to particular share classes, are deducted from total assets
attributable to such share classes.

3. Net assets so obtained for each share class are then divided by the total
number of shares outstanding of that share class, and the result, rounded to the
nearest cent, is the net asset value per share for that share class.

TAXES AND DISTRIBUTIONS

FUND TAXATION -- The fund has elected to be treated as a regulated investment
company under Subchapter M of the Internal Revenue Code (the "Code"). A
regulated investment company qualifying under Subchapter M of the Code is
required to distribute to its shareholders at least 90% of its investment
company taxable income (including the excess of net short-term capital gain over
net long-term capital losses) and generally is not subject to federal income tax
to the extent that it distributes annually 100% of its investment company
taxable income and net realized capital gains in the manner required under the
Code. The fund intends to distribute annually all of its investment company
taxable income and net realized capital gains and therefore does not expect to
pay federal income tax, although in certain circumstances, the fund may
determine that it is in the interest of shareholders to distribute less than
that amount.

To be treated as a regulated investment company under Subchapter M of the Code,
the fund must also (a) derive at least 90% of its gross income from dividends,
interest, payments with respect to securities loans, net income from certain
publicly traded partnerships and gains from the sale or other disposition of
securities or foreign currencies, or other income (including, but not limited
to, gains from options, futures or forward contracts) derived with respect to
the business of investing in such securities or currencies, and (b) diversify
its holdings so that, at the end of each fiscal quarter, (i) at least 50% of the
market value of the fund's assets is represented by cash, U.S. government
securities and securities of other regulated investment companies, and

SMALLCAP World Fund -- Page 35
<PAGE>

other securities (for purposes of this calculation, generally limited in respect
of any one issuer, to an amount not greater than 5% of the market value of the
fund's assets and 10% of the outstanding voting securities of such issuer) and
(ii) not more than 25% of the value of its assets is invested in the securities
of (other than U.S. government securities or the securities of other regulated
investment companies) any one issuer; two or more issuers which the fund
controls and which are determined to be engaged in the same or similar trades or
businesses; or the securities of certain publicly traded partnerships.

Under the Code, a nondeductible excise tax of 4% is imposed on the excess of a
regulated investment company's "required distribution" for the calendar year
ending within the regulated investment company's taxable year over the
"distributed amount" for such calendar year. The term "required distribution"
means the sum of (a) 98% of ordinary income (generally net investment income)
for the calendar year, (b) 98% of capital gain (both long-term and short-term)
for the one-year period ending on October 31 (as though the one-year period
ending on October 31 were the regulated investment company's taxable year) and
(c) the sum of any untaxed, undistributed net investment income and net capital
gains of the regulated investment company for prior periods. The term
"distributed amount" generally means the sum of (a) amounts actually distributed
by the fund from its current year's ordinary income and capital gain net income
and (b) any amount on which the fund pays income tax during the periods
described above. Although the fund intends to distribute its net investment
income and net capital gains so as to avoid excise tax liability, the fund may
determine that it is in the interest of shareholders to distribute a lesser
amount.

The following information may not apply to you if you hold fund shares in a
tax-deferred account, such as a retirement plan or education savings account.
Please see your tax adviser for more information.

DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS -- Dividends and capital gain
distributions on fund shares will be reinvested in shares of the fund of the
same class, unless shareholders indicate in writing that they wish to receive
them in cash or in shares of the same class of other American Funds, as provided
in the prospectus. Dividends and capital gain distributions by 529 share classes
will be automatically reinvested.

Distributions of investment company taxable income and net realized capital
gains to shareholders will be taxable whether received in shares or in cash,
unless such shareholders are exempt from taxation. Shareholders electing to
receive distributions in the form of additional shares will have a cost basis
for federal income tax purposes in each share so received equal to the net asset
value of that share on the reinvestment date. Dividends and capital gain
distributions by the fund to a tax-deferred retirement plan account are not
taxable currently.

DIVIDENDS -- The fund intends to follow the practice of distributing
substantially all of its investment company taxable income. Investment
company taxable income generally includes dividends, interest, net
short-term capital gains in excess of net long-term capital losses, and
certain foreign currency gains, if any, less expenses and certain foreign
currency losses. To the extent the fund invests in stock of domestic and
certain foreign corporations and meets the applicable holding period
requirement, it may receive "qualified dividends". The fund will designate
the amount of "qualified dividends" to its shareholders in a notice sent
within 60 days of the close of its fiscal year and will report "qualified
dividends" to shareholders on Form 1099-DIV.

SMALLCAP World Fund -- Page 36
<PAGE>

Under the Code, gains or losses attributable to fluctuations in exchange
rates that occur between the time the fund accrues receivables or
liabilities denominated in a foreign currency and the time the fund
actually collects such receivables, or pays such liabilities, generally are
treated as ordinary income or ordinary loss. Similarly, on disposition of
debt securities denominated in a foreign currency and on disposition of
certain futures contracts, forward contracts and options, gains or losses
attributable to fluctuations in the value of foreign currency between the
date of acquisition of the security or contract and the date of disposition
are also treated as ordinary gain or loss. These gains or losses, referred
to under the Code as Section 988 gains or losses, may increase or decrease
the amount of the fund's investment company taxable income to be
distributed to its shareholders as ordinary income.

If the fund invests in stock of certain passive foreign investment
companies, the fund may be subject to U.S. federal income taxation on a
portion of any "excess distribution" with respect to, or gain from the
disposition of, such stock. The tax would be determined by allocating such
distribution or gain ratably to each day of the fund's holding period for
the stock. The distribution or gain so allocated to any taxable year of the
fund, other than the taxable year of the excess distribution or
disposition, would be taxed to the fund at the highest ordinary income rate
in effect for such year, and the tax would be further increased by an
interest charge to reflect the value of the tax deferral deemed to have
resulted from the ownership of the foreign company's stock. Any amount of
distribution or gain allocated to the taxable year of the distribution or
disposition would be included in the fund's investment company taxable
income and, accordingly, would not be taxable to the fund to the extent
distributed by the fund as a dividend to its shareholders.

To avoid such tax and interest, the fund intends to elect to treat these
securities as sold on the last day of its fiscal year and recognize any
gains for tax purposes at that time. Under this election, deductions for
losses are allowable only to the extent of any prior recognized gains, and
both gains and losses will be treated as ordinary income or loss. The fund
will be required to distribute any resulting income, even though it has not
sold the security and received cash to pay such distributions. Upon
disposition of these securities, any gain recognized is treated as ordinary
income and loss is treated as ordinary loss to the extent of any prior
recognized gain.

Dividends from domestic corporations are expected to comprise some portion
of the fund's gross income. To the extent that such dividends constitute
any of the fund's gross income, a portion of the income distributions of
the fund may be eligible for the deduction for dividends received by
corporations. Corporate shareholders will be informed of the portion of
dividends that so qualifies. The dividends-received deduction is reduced to
the extent that either the fund shares, or the underlying shares of stock
held by the fund, with respect to which dividends are received, are treated
as debt-financed under federal income tax law, and is eliminated if the
shares are deemed to have been held by the shareholder or the fund, as the
case may be, for less than 46 days during the 91-day period beginning on
the date that is 45 days before the date on which the shares become
ex-dividend. Capital gain distributions are not eligible for the
dividends-received deduction.

A portion of the difference between the issue price of zero coupon
securities and their face value (original issue discount) is considered to
be income to the fund each year, even though the fund will not receive cash
interest payments from these securities. This

SMALLCAP World Fund -- Page 37
<PAGE>

original issue discount (imputed income) will comprise a part of the
investment company taxable income of the fund that must be distributed to
shareholders in order to maintain the qualification of the fund as a
regulated investment company and to avoid federal income taxation at the
level of the fund.

The price of a bond purchased after its original issuance may reflect
market discount which, depending on the particular circumstances, may
affect the tax character and amount of income required to be recognized by
a fund holding the bond. In determining whether a bond is purchased with
market discount, certain de minimis rules apply.

Dividend and interest income received by the fund from sources outside the
United States may be subject to withholding and other taxes imposed by such
foreign jurisdictions. Tax conventions between certain countries and the
United States, however, may reduce or eliminate these foreign taxes. Some
foreign countries impose taxes on capital gains with respect to investments
by foreign investors.

CAPITAL GAIN DISTRIBUTIONS -- The fund also intends to follow the practice
of distributing the entire excess of net realized long-term capital gains
over net realized short-term capital losses. Net capital gains for a fiscal
year are computed by taking into account any capital loss carryforward of
the fund.

If any net long-term capital gains in excess of net short-term capital
losses are retained by the fund for reinvestment, requiring federal income
taxes to be paid thereon by the fund, the fund intends to elect to treat
such capital gains as having been distributed to shareholders. As a result,
each shareholder will report such capital gains as long-term capital gains
taxable to individual shareholders at a maximum 15% capital gains rate,
will be able to claim a pro rata share of federal income taxes paid by the
fund on such gains as a credit against personal federal income tax
liability, and will be entitled to increase the adjusted tax basis on fund
shares by the difference between a pro rata share of the retained gains and
such shareholder's related tax credit.

SHAREHOLDER TAXATION -- In January of each year, individual shareholders holding
fund shares in taxable accounts will receive a statement of the federal income
tax status of all distributions. Shareholders of the fund also may be subject to
state and local taxes on distributions received from the fund.

DIVIDENDS -- Fund dividends are taxable to shareholders as ordinary income.
All or a portion of a fund's dividend distribution may be a "qualified
dividend." If the fund meets the applicable holding period requirement, it
will distribute dividends derived from qualified corporation dividends to
shareholders as qualified dividends. Interest income from bonds and money
market instruments and nonqualified foreign dividends will be distributed
to shareholders as nonqualified fund dividends. The fund will report on
Form 1099-DIV the amount of each shareholder's dividend that may be treated
as a qualified dividend. If a shareholder other than a corporation meets
the requisite holding period requirement, qualified dividends are taxable
at a maximum rate of 15%.

CAPITAL GAINS -- Distributions of the excess of net long-term capital gains
over net short-term capital losses that the fund properly designates as
"capital gain dividends" generally will be taxable as long-term capital
gain. Regardless of the length of time the shares of the fund have been
held by a shareholder, a capital gain distribution by the fund is subject

SMALLCAP World Fund -- Page 38
<PAGE>

to a maximum tax rate of 15%. Any loss realized upon the redemption of
shares held at the time of redemption for six months or less from the date
of their purchase will be treated as a long-term capital loss to the extent
of any amounts treated as distributions of long-term capital gains during
such six-month period.

Distributions by the fund result in a reduction in the net asset value of the
fund's shares. Investors should consider the tax implications of buying shares
just prior to a distribution. The price of shares purchased at that time
includes the amount of the forthcoming distribution. Those purchasing just prior
to a distribution will subsequently receive a partial return of their investment
capital upon payment of the distribution, which will be taxable to them.

The fund may make the election permitted under Section 853 of the Code so that
shareholders may (subject to limitations) be able to claim a credit or deduction
on their federal income tax returns for, and will be required to treat as part
of the amounts distributed to them, their pro rata portion of qualified taxes
paid by the fund to foreign countries (such taxes relate primarily to investment
income). The fund may make an election under Section 853 of the Code, provided
that more than 50% of the value of the total assets of the fund at the close of
the taxable year consists of securities of foreign corporations. The foreign tax
credit available to shareholders is subject to certain limitations imposed by
the Code.

Redemptions of shares, including exchanges for shares of other American Funds,
may result in federal, state and local tax consequences (gain or loss) to the
shareholder.

If a shareholder exchanges or otherwise disposes of shares of the fund within 90
days of having acquired such shares, and if, as a result of having acquired
those shares, the shareholder subsequently pays a reduced sales charge for
shares of the fund, or of a different fund, the sales charge previously incurred
in acquiring the fund's shares will not be taken into account (to the extent
such previous sales charges do not exceed the reduction in sales charges) for
the purposes of determining the amount of gain or loss on the exchange, but will
be treated as having been incurred in the acquisition of such other fund(s).

Any loss realized on a redemption or exchange of shares of the fund will be
disallowed to the extent substantially identical shares are reacquired within
the 61-day period beginning 30 days before and ending 30 days after the shares
are disposed of. Any loss disallowed under this rule will be added to the
shareholder's tax basis in the new shares purchased.

The fund will be required to report to the IRS all distributions of investment
company taxable income and capital gains as well as gross proceeds from the
redemption or exchange of fund shares, except in the case of certain exempt
shareholders. Under the backup withholding provisions of Section 3406 of the
Code, distributions of investment company taxable income and capital gains and
proceeds from the redemption or exchange of a regulated investment company may
be subject to backup withholding of federal income tax in the case of non-exempt
U.S. shareholders who fail to furnish the investment company with their taxpayer
identification numbers and with required certifications regarding their status
under the federal income tax law. Withholding may also be required if the fund
is notified by the IRS or a broker that the taxpayer identification number
furnished by the shareholder is incorrect or that the shareholder has previously
failed to report interest or dividend income. If the withholding provisions are
applicable, any such distributions and proceeds, whether taken in cash or
reinvested in additional shares, will be reduced by the amounts required to be
withheld.

SMALLCAP World Fund -- Page 39
<PAGE>

The foregoing discussion of U.S. federal income tax law relates solely to the
application of that law to U.S. persons (i.e., U.S. citizens and residents and
U.S. corporations, partnerships, trusts and estates). Each shareholder who is
not a U.S. person should consider the U.S. and foreign tax consequences of
ownership of shares of the fund, including the possibility that such a
shareholder may be subject to a U.S. withholding tax at a rate of 30% (or a
lower rate under an applicable income tax treaty) on dividend income received by
the shareholder.

Shareholders should consult their tax advisers about the application of federal,
state and local tax law in light of their particular situation.

SMALLCAP World Fund -- Page 40
<PAGE>

UNLESS OTHERWISE NOTED, ALL REFERENCES IN THE FOLLOWING PAGES TO CLASS A, B, C
OR F-1 SHARES ALSO REFER TO THE CORRESPONDING CLASS 529-A, 529-B, 529-C OR
529-F-1 SHARES. CLASS 529 SHAREHOLDERS SHOULD ALSO REFER TO THE APPLICABLE
PROGRAM DESCRIPTION FOR INFORMATION ON POLICIES AND SERVICES SPECIFICALLY
RELATING TO THESE ACCOUNTS. SHAREHOLDERS HOLDING SHARES THROUGH AN ELIGIBLE
RETIREMENT PLAN SHOULD CONTACT THEIR PLAN'S ADMINISTRATOR OR RECORDKEEPER FOR
INFORMATION REGARDING PURCHASES, SALES AND EXCHANGES.

PURCHASE AND EXCHANGE OF SHARES

PURCHASES BY INDIVIDUALS -- As described in the prospectus, you may generally
open an account and purchase fund shares by contacting a financial adviser or
investment dealer authorized to sell the fund's shares. You may make investments
by any of the following means:

CONTACTING YOUR FINANCIAL ADVISER -- Deliver or mail a check to your
financial adviser.

BY MAIL -- for initial investments, you may mail a check, made payable to
the fund, directly to the address indicated on the account application.
Please indicate an investment dealer on the account application. You may
make additional investments by filling out the "Account Additions" form at
the bottom of a recent account statement and mailing the form, along with a
check made payable to the fund, using the envelope provided with your
account statement.

The amount of time it takes for us to receive regular U.S. postal mail may
vary and there is no assurance that we will receive such mail on the day
you expect. Mailing addresses for regular U.S. postal mail can be found in
the prospectus. To send investments or correspondence to us via overnight
mail or courier service, use any of the following addresses:

American Funds
8332 Woodfield Crossing Blvd.
Indianapolis, IN 46240-2482

American Funds
3500 Wiseman Blvd.
San Antonio, TX 78251-4321

American Funds
5300 Robin Hood Rd.
Norfolk, VA 23513-2407

BY TELEPHONE -- using the American FundsLine. Please see the "Shareholder
account services and privileges" section of this statement of additional
information for more information regarding this service.

BY INTERNET -- using americanfunds.com. Please see the "Shareholder account
services and privileges" section of this statement of additional
information for more information regarding this service.

SMALLCAP World Fund -- Page 41
<PAGE>

BY WIRE -- If you are making a wire transfer, instruct your bank to wire
funds to:

Wells Fargo Bank
ABA Routing No. 121000248
Account No. 4600-076178

Your bank should include the following information when wiring funds:

For credit to the account of:
American Funds Service Company
(fund's name)

For further credit to:
(shareholder's fund account number)
(shareholder's name)

You may contact American Funds Service Company at 800/421-0180 if you have
questions about making wire transfers.

OTHER PURCHASE INFORMATION -- The Principal Underwriter will not knowingly sell
shares of the fund directly or indirectly to any person or entity, where, after
the sale, such person or entity would own beneficially directly or indirectly
more than 4.5% of the outstanding shares of the fund without the consent of a
majority of the fund's board.

Class 529 shares may be purchased only through CollegeAmerica by investors
establishing qualified higher education savings accounts. Class 529-E shares may
be purchased only by investors participating in CollegeAmerica through an
eligible employer plan. Class R-5 shares are also available to clients of the
Personal Investment Management group of Capital Guardian Trust Company who do
not have an intermediary associated with their accounts and without regard to
the $1 million purchase minimum. In addition, the American Funds state
tax-exempt funds are qualified for sale only in certain jurisdictions, and
tax-exempt funds in general should not serve as retirement plan investments. The
fund and the Principal Underwriter reserve the right to reject any purchase
order.

PURCHASE MINIMUMS AND MAXIMUMS -- All investments are subject to the purchase
minimums and maximums described in the prospectus. As noted in the prospectus,
purchase minimums may be waived or reduced in certain cases.

In the case of American Funds non-tax-exempt funds, the initial purchase minimum
of $25 may be waived for the following account types:

. Payroll deduction retirement plan accounts (such as, but not limited
to, 403(b), 401(k), SIMPLE IRA, SARSEP and deferred compensation plan
accounts); and

. Employer-sponsored CollegeAmerica accounts.

The following account types may be established without meeting the initial
purchase minimum:

. Retirement accounts that are funded with employer contributions; and

. Accounts that are funded with monies set by court decree.

SMALLCAP World Fund -- Page 42
<PAGE>

The following account types may be established without meeting the initial
purchase minimum, but shareholders wishing to invest in two or more funds must
meet the normal initial purchase minimum of each fund:

. Accounts that are funded with (a) transfers of assets, (b) rollovers
from retirement plans, (c) rollovers from 529 college savings plans or
(d) required minimum distribution automatic exchanges; and

. American Funds money market fund accounts registered in the name of
clients of Capital Guardian Trust Company's Personal Investment
Management group.

Certain accounts held on the fund's books, known as omnibus accounts, contain
multiple underlying accounts that are invested in shares of the fund. These
underlying accounts are maintained by entities such as financial intermediaries
and are subject to the applicable initial purchase minimums as described in the
prospectus and this statement of additional information.

EXCHANGES -- You may only exchange shares into other American Funds within the
same share class. However, exchanges from Class A shares of The Cash Management
Trust of America may be made to Class B or C shares of other American Funds for
dollar cost averaging purposes. Exchanges are not permitted from Class A shares
of The Cash Management Trust of America to Class B or C shares of Intermediate
Bond Fund of America, Limited Term Tax-Exempt Bond Fund of America and
Short-Term Bond Fund of America. Exchange purchases are subject to the minimum
investment requirements of the fund purchased and no sales charge generally
applies. However, exchanges of shares from American Funds money market funds are
subject to applicable sales charges on the fund being purchased, unless the
money market fund shares were acquired by an exchange from a fund having a sales
charge, or by reinvestment or cross-reinvestment of dividends or capital gain
distributions. Exchanges of Class F shares generally may only be made through
fee-based programs of investment firms that have special agreements with the
fund's distributor and certain registered investment advisers.

You may exchange shares of other classes by contacting the Transfer Agent, by
contacting your investment dealer or financial adviser, by using American
FundsLine or americanfunds.com, or by telephoning 800/421-0180 toll-free, or
faxing (see "American Funds Service Company service areas" in the prospectus for
the appropriate fax numbers) the Transfer Agent. For more information, see
"Shareholder account services and privileges" in this statement of additional
information. THESE TRANSACTIONS HAVE THE SAME TAX CONSEQUENCES AS ORDINARY SALES
AND PURCHASES.

Shares held in employer-sponsored retirement plans may be exchanged into other
American Funds by contacting your plan administrator or recordkeeper. Exchange
redemptions and purchases are processed simultaneously at the share prices next
determined after the exchange order is received (see "Price of shares" in this
statement of additional information).

FREQUENT TRADING OF FUND SHARES -- As noted in the prospectus, certain
redemptions may trigger a purchase block lasting 30 calendar days under the
fund's "purchase blocking policy." Under this policy, systematic redemptions
will not trigger a purchase block and systematic purchases will not be
prevented. For purposes of this policy, systematic redemptions include, for
example, regular periodic automatic redemptions and statement of intention
escrow share redemptions. Systematic purchases include, for example, regular
periodic automatic purchases and automatic reinvestments of dividends and
capital gain distributions.

SMALLCAP World Fund -- Page 43
<PAGE>

OTHER POTENTIALLY ABUSIVE ACTIVITY -- In addition to implementing purchase
blocks, American Funds Service Company will monitor for other types of activity
that could potentially be harmful to the American Funds - for example,
short-term trading activity in multiple funds. When identified, American Funds
Service Company will request that the shareholder discontinue the activity. If
the activity continues, American Funds Service Company will freeze the
shareholder account to prevent all activity other than redemptions of fund
shares.

MOVING BETWEEN SHARE CLASSES

If you wish to "move" your investment between share classes (within the
same fund or between different funds), we generally will process your
request as an exchange of the shares you currently hold for shares in the
new class or fund. Below is more information about how sales charges are
handled for various scenarios.

EXCHANGING CLASS B SHARES FOR CLASS A SHARES -- If you exchange Class B
shares for Class A shares during the contingent deferred sales charge
period you are responsible for paying any applicable deferred sales charges
attributable to those Class B shares, but you will not be required to pay a
Class A sales charge. If, however, you exchange your Class B shares for
Class A shares after the contingent deferred sales charge period, you are
responsible for paying any applicable Class A sales charges.

EXCHANGING CLASS C SHARES FOR CLASS A SHARES -- If you exchange Class C
shares for Class A shares, you are still responsible for paying any Class C
contingent deferred sales charges and applicable Class A sales charges.

EXCHANGING CLASS C SHARES FOR CLASS F SHARES -- If you are part of a
qualified fee-based program and you wish to exchange your Class C shares
for Class F shares to be held in the program, you are still responsible for
paying any applicable Class C contingent deferred sales charges.

EXCHANGING CLASS F SHARES FOR CLASS A SHARES -- You can exchange Class F
shares held in a qualified fee-based program for Class A shares without
paying an initial Class A sales charge if all of the following requirements
are met: (a) you are leaving or have left the fee-based program, (b) you
have held the Class F shares in the program for at least one year, and (c)
you notify American Funds Service Company of your request. If you have
already redeemed your Class F shares, the foregoing requirements apply and
you must purchase Class A shares within 90 days after redeeming your Class
F shares to receive the Class A shares without paying an initial Class A
sales charge.

In addition, you may redeem Class F-1 shares held in a fee-based brokerage
account/ program for less than one year and with the redemption proceeds
purchase Class A shares without a sales charge if the redemption is
necessary to comply with the repeal of SEC Rule 202 under the Investment
Advisers Act of 1940 and the transaction occurs prior to October 1, 2007,
or such other date as determined by rule, regulation or court order.

EXCHANGING CLASS A SHARES FOR CLASS F SHARES -- If you are part of a
qualified fee-based program and you wish to exchange your Class A shares
for Class F shares to be held in the program, any Class A sales charges
(including contingent deferred sales charges) that you paid or are payable
will not be credited back to your account.

SMALLCAP World Fund -- Page 44
<PAGE>

EXCHANGING CLASS A SHARES FOR CLASS R SHARES -- Provided it is eligible to
invest in Class R shares, a retirement plan currently invested in Class A
shares may exchange its shares for Class R shares. Any Class A sales
charges that the retirement plan previously paid will not be credited back
to the plan's account.

EXCHANGING CLASS F-1 SHARES FOR CLASS F-2 SHARES -- If you are part of a
qualified fee-based program that offers Class F-2 shares, you may exchange
your Class F-1 shares for Class F-2 shares to be held in the program.

MOVING BETWEEN OTHER SHARE CLASSES -- If you desire to move your investment
between share classes and the particular scenario is not described in this
statement of additional information, please contact American Funds Service
Company at 800/421-0180 for more information.

NON-REPORTABLE TRANSACTIONS -- Automatic conversions described in the
prospectus will be non-reportable for tax purposes. In addition, except in
the case of a movement between a 529 share class and a non-529 share class,
an exchange of shares from one share class of a fund to another share class
of the same fund will be treated as a non-reportable exchange for tax
purposes, provided that the exchange request is received in writing by
American Funds Service Company and processed as a single transaction.

SALES CHARGES

CLASS A PURCHASES

PURCHASES BY CERTAIN 403(B) PLANS

Individual 403(b) plans may be treated similarly to employer-sponsored
plans for Class A sales charge purposes (i.e., individual participant
accounts are eligible to be aggregated together) if: (a) the American Funds
are principal investment options; (b) the employer facilitates the
enrollment process by, for example, allowing for onsite group enrollment
meetings held during working hours; and (c) there is only one dealer firm
assigned to the plans.

PURCHASES BY SEP PLANS AND SIMPLE IRA PLANS

Participant accounts in a Simplified Employee Pension (SEP) plan or a
Savings Incentive Match Plan for Employees of Small Employers IRA (SIMPLE
IRA) plan will be aggregated together for Class A sales charge purposes if
the SEP plan or SIMPLE IRA plan was established after November 15, 2004 by
an employer adopting a prototype plan produced by American Funds
Distributors, Inc. In the case where the employer adopts any other plan
(including, but not limited to, an IRS model agreement), each participant's
account in the plan will be aggregated with the participant's own personal
investments that qualify under the aggregation policy. A SEP plan or SIMPLE
IRA plan with a certain method of aggregating participant accounts as of
November 15, 2004 may continue with that method so long as the employer has
not modified the plan document since that date.

SMALLCAP World Fund -- Page 45
<PAGE>

OTHER PURCHASES

Pursuant to a determination of eligibility by a vice president or more
senior officer of the Capital Research and Management Company Fund
Administration Unit, or by his or her designee, Class A shares of the
American Funds stock, stock/bond and bond funds may be sold at net asset
value to:

(1) current or retired directors, trustees, officers and advisory board
members of, and certain lawyers who provide services to, the funds
managed by Capital Research and Management Company, current or retired
employees of Washington Management Corporation, current or retired
employees and partners of The Capital Group Companies, Inc. and its
affiliated companies, certain family members of the above persons, and
trusts or plans primarily for such persons;

(2) currently registered representatives and assistants directly employed
by such representatives, retired registered representatives with
respect to accounts established while active, or full-time employees
(collectively, "Eligible Persons") (and their (a) spouses or
equivalents if recognized under local law, (b) parents and children,
including parents and children in step and adoptive relationships,
sons-in-law and daughters-in-law, and (c) parents-in-law, if the
Eligible Persons or the spouses, children or parents of the Eligible
Persons are listed in the account registration with the
parents-in-law) of dealers who have sales agreements with the
Principal Underwriter (or who clear transactions through such
dealers), plans for the dealers, and plans that include as
participants only the Eligible Persons, their spouses, parents and/or
children;

(3) currently registered investment advisers ("RIAs") and assistants
directly employed by such RIAs, retired RIAs with respect to accounts
established while active, or full-time employees (collectively,
"Eligible Persons") (and their (a) spouses or equivalents if
recognized under local law, (b) parents and children, including
parents and children in step and adoptive relationships, sons-in-law
and daughters-in-law and (c) parents-in-law, if the Eligible Persons
or the spouses, children or parents of the Eligible Persons are listed
in the account registration with the parents-in-law) of RIA firms that
are authorized to sell shares of the funds, plans for the RIA firms,
and plans that include as participants only the Eligible Persons,
their spouses, parents and/or children;

(4) companies exchanging securities with the fund through a merger,
acquisition or exchange offer;

(5) insurance company separate accounts;

(6) accounts managed by subsidiaries of The Capital Group Companies, Inc.;

(7) The Capital Group Companies, Inc., its affiliated companies and
Washington Management Corporation;

(8) an individual or entity with a substantial business relationship with
The Capital Group Companies, Inc. or its affiliates, or an individual
or entity related or relating to such individual or entity;

(9) wholesalers and full-time employees directly supporting wholesalers
involved in the distribution of insurance company separate accounts
whose underlying

SMALLCAP World Fund -- Page 46
<PAGE>

investments are managed by any affiliate of The Capital Group
Companies, Inc.; and

(10) full-time employees of banks that have sales agreements with the
Principal Underwriter, who are solely dedicated to directly supporting
the sale of mutual funds.

Shares are offered at net asset value to these persons and organizations
due to anticipated economies in sales effort and expense. Once an account
is established under this net asset value privilege, additional investments
can be made at net asset value for the life of the account.

TRANSFERS TO COLLEGEAMERICA -- A transfer from the Virginia Prepaid
Education Program/SM/ or the Virginia Education Savings Trust/SM/ to a
CollegeAmerica account will be made with no sales charge. No commission
will be paid to the dealer on such a transfer.

MOVING BETWEEN ACCOUNTS -- Investments in certain account types may be moved to
other account types without incurring additional Class A sales charges. These
transactions include, for example:

. redemption proceeds from a non-retirement account (for example, a
joint tenant account) used to purchase fund shares in an IRA or other
individual-type retirement account;

. required minimum distributions from an IRA or other individual-type
retirement account used to purchase fund shares in a non-retirement
account; and

. death distributions paid to a beneficiary's account that are used by
the beneficiary to purchase fund shares in a different account.

LOAN REPAYMENTS -- Repayments on loans taken from a retirement plan or an
individual-type retirement account are not subject to sales charges if American
Funds Service Company is notified of the repayment.

DEALER COMMISSIONS AND COMPENSATION -- Commissions (up to 1.00%) are paid to
dealers who initiate and are responsible for certain Class A share purchases not
subject to initial sales charges. These purchases consist of purchases of $1
million or more, purchases by employer-sponsored defined contribution-type
retirement plans investing $1 million or more or with 100 or more eligible
employees, and purchases made at net asset value by certain retirement plans,
endowments and foundations with assets of $50 million or more. Commissions on
such investments (other than IRA rollover assets that roll over at no sales
charge under the fund's IRA rollover policy as described in the prospectus) are
paid to dealers at the following rates: 1.00% on amounts of less than $4
million, 0.50% on amounts of at least $4 million but less than $10 million and
0.25% on amounts of at least $10 million. Commissions are based on cumulative
investments over the life of the account with no adjustment for redemptions,
transfers, or market declines. For example, if a shareholder has accumulated
investments in excess of $4 million (but less than $10 million) and subsequently
redeems all or a portion of the account(s), purchases following the redemption
will generate a dealer commission of 0.50%.

SMALLCAP World Fund -- Page 47
<PAGE>

A dealer concession of up to 1% may be paid by the fund under its Class A plan
of distribution to reimburse the Principal Underwriter in connection with dealer
and wholesaler compensation paid by it with respect to investments made with no
initial sales charge.

SALES CHARGE REDUCTIONS AND WAIVERS

REDUCING YOUR CLASS A SALES CHARGE -- As described in the prospectus, there are
various ways to reduce your sales charge when purchasing Class A shares.
Additional information about Class A sales charge reductions is provided below.

STATEMENT OF INTENTION -- By establishing a statement of intention (the
"Statement"), you enter into a nonbinding commitment to purchase shares of
the American Funds (excluding money market funds) over a 13-month period
and receive the same sales charge (expressed as a percentage of your
purchases) as if all shares had been purchased at once.

The Statement period starts on the date on which your first purchase made
toward satisfying the Statement is processed. The market value of your
existing holdings eligible to be aggregated (see below) as of the day
immediately before the start of the Statement period may be credited toward
satisfying the Statement.

The Statement may be revised upward at any time during the Statement
period, and such a revision will be treated as a new Statement, except that
the Statement period during which the purchases must be made will remain
unchanged. Purchases made from the date of revision will receive the
reduced sales charge, if any, resulting from the revised Statement.

The Statement will be considered completed if the shareholder dies within
the 13-month Statement period. Commissions to dealers will not be adjusted
or paid on the difference between the Statement amount and the amount
actually invested before the shareholder's death.

When a shareholder elects to use a Statement, shares equal to 5% of the
dollar amount specified in the Statement may be held in escrow in the
shareholder's account out of the initial purchase (or subsequent purchases,
if necessary) by the Transfer Agent. All dividends and any capital gain
distributions on shares held in escrow will be credited to the
shareholder's account in shares (or paid in cash, if requested). If the
intended investment is not completed within the specified Statement period,
the purchaser may be required to remit to the Principal Underwriter the
difference between the sales charge actually paid and the sales charge
which would have been paid if the total of such purchases had been made at
a single time. Any dealers assigned to the shareholder's account at the
time a purchase was made during the Statement period will receive a
corresponding commission adjustment if appropriate. If the difference is
not paid by the close of the Statement period, the appropriate number of
shares held in escrow will be redeemed to pay such difference. If the
proceeds from this redemption are inadequate, the purchaser may be liable
to the Principal Underwriter for the balance still outstanding.

Certain payroll deduction retirement plans purchasing Class A shares under
a Statement on or before November 12, 2006, may continue to purchase Class
A shares at the sales charge determined by that particular Statement until
the plans' values reach the amounts

SMALLCAP World Fund -- Page 48
<PAGE>

specified in their Statements. Upon reaching such amounts, the Statements
for these plans will be deemed completed and will terminate. After such
termination, these plans are eligible for additional sales charge
reductions by meeting the criteria under the fund's rights of accumulation
policy.

In addition, if you currently have individual holdings in American Legacy
variable annuity contracts or variable life insurance policies that were
established on or before March 31, 2007, you may continue to apply
purchases under such contracts and policies to a Statement.

Shareholders purchasing shares at a reduced sales charge under a Statement
indicate their acceptance of these terms and those in the prospectus with
their first purchase.

AGGREGATION -- Qualifying investments for aggregation include those made by
you and your "immediate family" as defined in the prospectus, if all
parties are purchasing shares for their own accounts and/or:

. individual-type employee benefit plans, such as an IRA, individual
403(b) plan (see exception in "Purchases by certain 403(b) plans"
under "Sales charges") or single-participant Keogh-type plan;

. SEP plans and SIMPLE IRA plans established after November 15, 2004 by
an employer adopting any plan document other than a prototype plan
produced by American Funds Distributors, Inc.;

. business accounts solely controlled by you or your immediate family
(for example, you own the entire business);

. trust accounts established by you or your immediate family (for trusts
with only one primary beneficiary, upon the trustor's death the trust
account may be aggregated with such beneficiary's own accounts; for
trusts with multiple primary beneficiaries, upon the trustor's death
the trustees of the trust may instruct American Funds Service Company
to establish separate trust accounts for each primary beneficiary;
each primary beneficiary's separate trust account may then be
aggregated with such beneficiary's own accounts);

. endowments or foundations established and controlled by you or your
immediate family; or

. 529 accounts, which will be aggregated at the account owner level
(Class 529-E accounts may only be aggregated with an eligible employer
plan).

Individual purchases by a trustee(s) or other fiduciary(ies) may also be
aggregated if the investments are:

. for a single trust estate or fiduciary account, including employee
benefit plans other than the individual-type employee benefit plans
described above;

. made for two or more employee benefit plans of a single employer or of
affiliated employers as defined in the 1940 Act, excluding the
individual-type employee benefit plans described above;

. for a diversified common trust fund or other diversified pooled
account not specifically formed for the purpose of accumulating fund
shares;

SMALLCAP World Fund -- Page 49
<PAGE>

. for nonprofit, charitable or educational organizations, or any
endowments or foundations established and controlled by such
organizations, or any employer-sponsored retirement plans established
for the benefit of the employees of such organizations, their
endowments, or their foundations;

. for individually established participant accounts of a 403(b) plan
that is treated similarly to an employer-sponsored plan for sales
charge purposes (see "Purchases by certain 403(b) plans" under "Sales
charges" above), or made for two or more such 403(b) plans that are
treated similarly to employer-sponsored plans for sales charge
purposes, in each case of a single employer or affiliated employers as
defined in the 1940 Act; or

. for a SEP or SIMPLE IRA plan established after November 15, 2004 by an
employer adopting a prototype plan produced by American Funds
Distributors, Inc.

Purchases made for nominee or street name accounts (securities held in the
name of an investment dealer or another nominee such as a bank trust
department instead of the customer) may not be aggregated with those made
for other accounts and may not be aggregated with other nominee or street
name accounts unless otherwise qualified as described above.

CONCURRENT PURCHASES -- As described in the prospectus, you may reduce your
Class A sales charge by combining purchases of all classes of shares in the
American Funds, as well as holdings in Endowments and applicable holdings
in the American Funds Target Date Retirement Series. Shares of money market
funds purchased through an exchange, reinvestment or cross-reinvestment
from a fund having a sales charge also qualify. However, direct purchases
of American Funds money market funds are excluded. If you currently have
individual holdings in American Legacy variable annuity contracts or
variable life insurance policies that were established on or before March
31, 2007, you may continue to combine purchases made under such contracts
and policies to reduce your Class A sales charge.

RIGHTS OF ACCUMULATION -- Subject to the limitations described in the
aggregation policy, you may take into account your accumulated holdings in
all share classes of the American Funds, as well as your holdings in
Endowments and applicable holdings in the American Funds Target Date
Retirement Series, to determine your sales charge on investments in
accounts eligible to be aggregated. Direct purchases of American Funds
money market funds are excluded. Subject to your investment dealer's or
recordkeeper's capabilities, your accumulated holdings will be calculated
as the higher of (a) the current value of your existing holdings (the
"market value") or (b) the amount you invested (including reinvested
dividends and capital gains, but excluding capital appreciation) less any
withdrawals (the "cost value"). Depending on the entity on whose books your
account is held, the value of your holdings in that account may not be
eligible for calculation at cost value. For example, accounts held in
nominee or street name may not be eligible for calculation at cost value
and instead may be calculated at market value for purposes of rights of
accumulation.

The value of all of your holdings in accounts established in calendar year
2005 or earlier will be assigned an initial cost value equal to the market
value of those holdings as of the last business day of 2005. Thereafter,
the cost value of such accounts will increase or

SMALLCAP World Fund -- Page 50
<PAGE>

decrease according to actual investments or withdrawals. You must contact
your financial adviser or American Funds Service Company if you have
additional information that is relevant to the calculation of the value of
your holdings.

When determining your American Funds Class A sales charge, if your
investment is not in an employer-sponsored retirement plan, you may also
continue to take into account the market value (as of the day prior to your
American Funds investment) of your individual holdings in various American
Legacy variable annuity contracts and variable life insurance policies that
were established on or before March 31, 2007. An employer-sponsored
retirement plan may also continue to take into account the market value of
its investments in American Legacy Retirement Investment Plans that were
established on or before March 31, 2007.

You may not purchase Class B or 529-B shares if your combined American
Funds and applicable American Legacy holdings cause you to be eligible to
purchase Class A or 529-A shares at the $100,000 or higher sales charge
discount rate. In addition, you may not purchase Class C or 529-C shares if
such combined holdings cause you to be eligible to purchase Class A or
529-A shares at the $1 million or more sales charge discount rate (i.e. at
net asset value).

If you make a gift of American Funds Class A shares, upon your request, you
may purchase the shares at the sales charge discount allowed under rights
of accumulation of all of your American Funds and applicable American
Legacy accounts.

CDSC WAIVERS FOR CLASS A, B AND C SHARES -- As noted in the prospectus, a
contingent deferred sales charge ("CDSC") may be waived for redemptions due to
death or postpurchase disability of a shareholder (this generally excludes
accounts registered in the names of trusts and other entities). In the case of
joint tenant accounts, if one joint tenant dies, a surviving joint tenant, at
the time he or she notifies the Transfer Agent of the other joint tenant's death
and removes the decedent's name from the account, may redeem shares from the
account without incurring a CDSC. Redemptions made after the Transfer Agent is
notified of the death of a joint tenant will be subject to a CDSC.

In addition, a CDSC may be waived for the following types of transactions, if
together they do not exceed 12% of the value of an "account" (defined below)
annually (the "12% limit"):

. Required minimum distributions taken from retirement accounts upon the
shareholder's attainment of age 70-1/2 (required minimum distributions
that continue to be taken by the beneficiary(ies) after the account
owner is deceased also qualify for a waiver).

. Redemptions through an automatic withdrawal plan ("AWP") (see
"Automatic withdrawals" under "Shareholder account services and
privileges" in this statement of additional information). For each AWP
payment, assets that are not subject to a CDSC, such as appreciation
on shares and shares acquired through reinvestment of dividends and/or
capital gain distributions, will be redeemed first and will count
toward the 12% limit. If there is an insufficient amount of assets not
subject to a CDSC to cover a particular AWP payment, shares subject to
the lowest CDSC will be redeemed next until the 12% limit is reached.
Any dividends and/or capital gain distributions taken in cash by a
shareholder who receives

SMALLCAP World Fund -- Page 51
<PAGE>

payments through an AWP will also count toward the 12% limit. In the
case of an AWP, the 12% limit is calculated at the time an automatic
redemption is first made, and is recalculated at the time each
additional automatic redemption is made. Shareholders who establish an
AWP should be aware that the amount of a payment not subject to a CDSC
may vary over time depending on fluctuations in the value of their
accounts. This privilege may be revised or terminated at any time.

For purposes of this paragraph, "account" means:

. in the case of Class A shares, your investment in Class A shares of
all American Funds (investments representing direct purchases of
American Funds money market funds are excluded);

. in the case of Class B shares, your investment in Class B shares of
the particular fund from which you are making the redemption; and

. in the case of Class C shares, your investment in Class C shares of
the particular fund from which you are making the redemption.

CDSC waivers are allowed only in the cases listed here and in the prospectus.
For example, CDSC waivers will not be allowed on redemptions of Class 529-B and
529-C shares due to termination of CollegeAmerica; a determination by the
Internal Revenue Service that CollegeAmerica does not qualify as a qualified
tuition program under the Code; proposal or enactment of law that eliminates or
limits the tax-favored status of CollegeAmerica; or elimination of the fund by
the Virginia College Savings Plan as an option for additional investment within
CollegeAmerica.

SELLING SHARES

The methods for selling (redeeming) shares are described more fully in the
prospectus. If you wish to sell your shares by contacting American Funds Service
Company directly, any such request must be signed by the registered
shareholders. To contact American Funds Service Company via overnight mail or
courier service, see "Purchase and exchange of shares."

A signature guarantee may be required for certain redemptions. In such an event,
your signature may be guaranteed by a domestic stock exchange or the Financial
Industry Regulatory Authority, bank, savings association or credit union that is
an eligible guarantor institution. The Transfer Agent reserves the right to
require a signature guarantee on any redemptions.

Additional documentation may be required for sales of shares held in corporate,
partnership or fiduciary accounts. You must include with your written request
any shares you wish to sell that are in certificate form.

If you sell Class A, B or C shares and request a specific dollar amount to be
sold, we will sell sufficient shares so that the sale proceeds, after deducting
any applicable CDSC, equals the dollar amount requested.

Redemption proceeds will not be mailed until sufficient time has passed to
provide reasonable assurance that checks or drafts (including certified or
cashier's checks) for shares purchased have cleared (which may take up to 10
business days from the purchase date). Except for delays relating to clearance
of checks for share purchases or in extraordinary circumstances (and as

SMALLCAP World Fund -- Page 52
<PAGE>

permissible under the 1940 Act), sale proceeds will be paid on or before the
seventh day following receipt and acceptance of an order. Interest will not
accrue or be paid on amounts that represent uncashed distribution or redemption
checks.

You may request that redemption proceeds of $1,000 or more from money market
funds be wired to your bank by writing American Funds Service Company. A
signature guarantee is required on all requests to wire funds.

SHAREHOLDER ACCOUNT SERVICES AND PRIVILEGES

The following services and privileges are generally available to all
shareholders. However, certain services and privileges may not be available for
Class 529 shareholders or if your account is held with an investment dealer or
through an employer-sponsored retirement plan.

AUTOMATIC INVESTMENT PLAN -- An automatic investment plan enables you to make
monthly or quarterly investments in the American Funds through automatic debits
from your bank account. To set up a plan, you must fill out an account
application and specify the amount that you would like to invest and the date on
which you would like your investments to occur. The plan will begin within 30
days after your account application is received. Your bank account will be
debited on the day or a few days before your investment is made, depending on
the bank's capabilities. The Transfer Agent will then invest your money into the
fund you specified on or around the date you specified. If the date you
specified falls on a weekend or holiday, your money will be invested on the
following business day. However, if the following business day falls in the next
month, your money will be invested on the business day immediately preceding the
weekend or holiday. If your bank account cannot be debited due to insufficient
funds, a stop-payment or the closing of the account, the plan may be terminated
and the related investment reversed. You may change the amount of the investment
or discontinue the plan at any time by contacting the Transfer Agent.

AUTOMATIC REINVESTMENT -- Dividends and capital gain distributions are
reinvested in additional shares of the same class and fund at net asset value
unless you indicate otherwise on the account application. You also may elect to
have dividends and/or capital gain distributions paid in cash by informing the
fund, the Transfer Agent or your investment dealer. Dividends and capital gain
distributions paid to retirement plan shareholders or shareholders of the 529
share classes will be automatically reinvested.

If you have elected to receive dividends and/or capital gain distributions in
cash, and the postal or other delivery service is unable to deliver checks to
your address of record, or you do not respond to mailings from American Funds
Service Company with regard to uncashed distribution checks, your distribution
option will automatically be converted to having all dividends and other
distributions reinvested in additional shares.

CROSS-REINVESTMENT OF DIVIDENDS AND DISTRIBUTIONS -- For all share classes,
except the 529 classes of shares, you may cross-reinvest dividends and capital
gains (distributions) into other American Funds in the same share class at net
asset value, subject to the following conditions:

(1) the aggregate value of your account(s) in the fund(s) paying distributions
equals or exceeds $5,000 (this is waived if the value of the account in the fund
receiving the distributions equals or exceeds that fund's minimum initial
investment requirement);

SMALLCAP World Fund -- Page 53
<PAGE>

(2) if the value of the account of the fund receiving distributions is below
the minimum initial investment requirement, distributions must be automatically
reinvested; and

(3) if you discontinue the cross-reinvestment of distributions, the value of
the account of the fund receiving distributions must equal or exceed the minimum
initial investment requirement. If you do not meet this requirement within 90
days of notification, the fund has the right to automatically redeem the
account.

AUTOMATIC EXCHANGES -- For all share classes, you may automatically exchange
shares of the same class in amounts of $50 or more among any of the American
Funds on any day (or preceding business day if the day falls on a nonbusiness
day) of each month you designate.

AUTOMATIC WITHDRAWALS -- For all share classes, except the R and 529 classes of
shares, you may automatically withdraw shares from any of the American Funds.
You can make automatic withdrawals of $50 or more. You can designate the day of
each period for withdrawals and request that checks be sent to you or someone
else. Withdrawals may also be electronically deposited to your bank account. The
Transfer Agent will withdraw your money from the fund you specify on or around
the date you specify. If the date you specified falls on a weekend or holiday,
the redemption will take place on the previous business day. However, if the
previous business day falls in the preceding month, the redemption will take
place on the following business day after the weekend or holiday.

Withdrawal payments are not to be considered as dividends, yield or income.
Generally, automatic investments may not be made into a shareholder account from
which there are automatic withdrawals. Withdrawals of amounts exceeding
reinvested dividends and distributions and increases in share value would reduce
the aggregate value of the shareholder's account. The Transfer Agent arranges
for the redemption by the fund of sufficient shares, deposited by the
shareholder with the Transfer Agent, to provide the withdrawal payment
specified.

Redemption proceeds from an automatic withdrawal plan are not eligible for
reinvestment without a sales charge.

ACCOUNT STATEMENTS -- Your account is opened in accordance with your
registration instructions. Transactions in the account, such as additional
investments, will be reflected on regular confirmation statements from the
Transfer Agent. Dividend and capital gain reinvestments, purchases through
automatic investment plans and certain retirement plans, as well as automatic
exchanges and withdrawals will be confirmed at least quarterly.

AMERICAN FUNDSLINE AND AMERICANFUNDS.COM -- You may check your share balance,
the price of your shares or your most recent account transaction; redeem shares
(up to $75,000 per American Funds shareholder each day) from nonretirement plan
accounts; or exchange shares around the clock with American FundsLine or using
americanfunds.com. To use American FundsLine, call 800/325-3590 from a
TouchTone(TM) telephone. Redemptions and exchanges through American FundsLine
and americanfunds.com are subject to the conditions noted above and in
"Telephone and Internet purchases, redemptions and exchanges" below. You will
need your fund number (see the list of the American Funds under "General
information -- fund numbers"), personal identification number (generally the
last four digits of your Social Security number or other tax identification
number associated with your account) and account number.

SMALLCAP World Fund -- Page 54
<PAGE>

Generally, all shareholders are automatically eligible to use these services.
However, if you are not currently authorized to do so, you may complete an
American FundsLink Authorization Form. Once you establish this privilege, you,
your financial adviser or any person with your account information may use these
services.

TELEPHONE AND INTERNET PURCHASES, REDEMPTIONS AND EXCHANGES -- By using the
telephone (including American FundsLine) or the Internet (including
americanfunds.com), or fax purchase, redemption and/or exchange options, you
agree to hold the fund, the Transfer Agent, any of its affiliates or mutual
funds managed by such affiliates, and each of their respective directors,
trustees, officers, employees and agents harmless from any losses, expenses,
costs or liabilities (including attorney fees) that may be incurred in
connection with the exercise of these privileges. Generally, all shareholders
are automatically eligible to use these services. However, you may elect to opt
out of these services by writing the Transfer Agent (you may also reinstate them
at any time by writing the Transfer Agent). If the Transfer Agent does not
employ reasonable procedures to confirm that the instructions received from any
person with appropriate account information are genuine, it and/or the fund may
be liable for losses due to unauthorized or fraudulent instructions. In the
event that shareholders are unable to reach the fund by telephone because of
technical difficulties, market conditions or a natural disaster, redemption and
exchange requests may be made in writing only.

CHECKWRITING -- You may establish check writing privileges for Class A shares
(but not Class 529-A shares) of American Funds money market funds upon meeting
the fund's initial purchase minimum of $1,000. This can be done by using an
account application. If you request check writing privileges, you will be
provided with checks that you may use to draw against your account. These checks
may be made payable to anyone you designate and must be signed by the authorized
number of registered shareholders exactly as indicated on your account
application.

REDEMPTION OF SHARES -- The fund's articles of incorporation permit the fund to
direct the Transfer Agent to redeem the shares of any shareholder for their then
current net asset value per share if at such time the shareholder of record owns
shares having an aggregate net asset value of less than the minimum initial
investment amount required of new shareholders as set forth in the fund's
current registration statement under the 1940 Act, and subject to such further
terms and conditions as the board of directors of the fund may from time to time
adopt.

While payment of redemptions normally will be in cash, the fund's articles of
incorporation permit payment of the redemption price wholly or partly in
securities or other property included in the assets belonging to the fund if, in
the opinion of the fund's board of directors, conditions exist which make
payment wholly in cash unwise or undesirable.

SHARE CERTIFICATES -- Shares are credited to your account and certificates are
not issued unless you request them by contacting the Transfer Agent.
Certificates are not available for the 529 or R share classes.

GENERAL INFORMATION

CUSTODIAN OF ASSETS -- Securities and cash owned by the fund, including proceeds
from the sale of shares of the fund and of securities in the fund's portfolio,
are held by State Street Bank and Trust Company, One Lincoln Street, Boston, MA
02111, as Custodian. If the fund holds

SMALLCAP World Fund -- Page 55
<PAGE>

securities of issuers outside the U.S., the Custodian may hold these securities
pursuant to subcustodial arrangements in banks outside the U.S. or branches of
U.S. banks outside the U.S.

TRANSFER AGENT -- American Funds Service Company, a wholly owned subsidiary of
the investment adviser, maintains the records of shareholder accounts, processes
purchases and redemptions of the fund's shares, acts as dividend and capital
gain distribution disbursing agent, and performs other related shareholder
service functions. The principal office of American Funds Service Company is
located at 6455 Irvine Center Drive, Irvine, CA 92618. American Funds Service
Company was paid a fee of $22,295,000 for Class A shares and $886,000 for Class
B shares for the 2007 fiscal year. American Funds Service Company is also
compensated for certain transfer agency services provided to all other share
classes from the administrative services fees paid to Capital Research and
Management Company, as described under "Administrative services agreement."

In the case of certain shareholder accounts, third parties who may be
unaffiliated with the investment adviser provide transfer agency and shareholder
services in place of American Funds Service Company. These services are rendered
under agreements with American Funds Service Company or its affiliates and the
third parties receive compensation according to such agreements. Compensation
for transfer agency and shareholder services, whether paid to American Funds
Service Company or such third parties, is ultimately paid from fund assets and
is reflected in the expenses of the fund as disclosed in the prospectus.

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM -- Deloitte & Touche LLP, 695 Town
Center Drive, Costa Mesa, California 92626, serves as the fund's independent
registered public accounting firm, providing audit services, preparation of tax
returns and review of certain documents to be filed with the Securities and
Exchange Commission. The financial statements included in this statement of
additional information from the annual report, have been audited by Deloitte &
Touche LLP, an independent registered public accounting firm, as stated in their
report appearing herein. Such financial statements have been so included in
reliance upon the report of such firm given upon their authority as experts in
accounting and auditing. The selection of the fund's independent registered
public accounting firm is reviewed and determined annually by the board of
directors.

INDEPENDENT LEGAL COUNSEL -- Kirkpatrick & Lockhart Preston Gates Ellis LLP, 55
Second Street, Suite 1700, San Francisco, CA 94105, serves as independent legal
counsel ("counsel") for the fund and for independent directors in their
capacities as such. Counsel does not provide legal services to the fund's
investment adviser, but provides an insignificant amount of legal services
unrelated to the operations of the fund to an investment adviser affiliate. A
determination with respect to the independence of the fund's counsel will be
made at least annually by the independent directors of the fund, as prescribed
by the 1940 Act and related rules.

PROSPECTUSES, REPORTS TO SHAREHOLDERS AND PROXY STATEMENTS -- The fund's fiscal
year ends on September 30. Shareholders are provided updated prospectuses
annually and at least semiannually with reports showing the fund's investment
portfolio or summary investment portfolio, financial statements and other
information. The fund's annual financial statements are audited by the fund's
independent registered public accounting firm, Deloitte & Touche LLP. In
addition, shareholders may also receive proxy statements for the fund. In an
effort to reduce the volume of mail shareholders receive from the fund when a
household owns more than one account, the Transfer Agent has taken steps to
eliminate duplicate mailings of prospectuses,

SMALLCAP World Fund -- Page 56
<PAGE>

shareholder reports and proxy statements. To receive additional copies of a
prospectus, report or proxy statement, shareholders should contact the Transfer
Agent.

Shareholders may also elect to receive updated prospectuses, annual reports and
semi-annual reports electronically by signing up for electronic delivery on our
website, americanfunds.com. Upon opting in to the electronic delivery of updated
prospectuses and other reports, a shareholder will no longer automatically
receive such documents in paper form by mail. A shareholder who elects
electronic delivery is able to cancel this service at any time and return to
receiving updated prospectuses and other reports in paper form by mail.

Prospectuses, annual reports and semi-annual reports that are mailed to
shareholders by the American Funds organization are printed with ink containing
soy and/or vegetable oil on paper containing recycled fibers.

CODES OF ETHICS -- The fund and Capital Research and Management Company and its
affiliated companies, including the fund's Principal Underwriter, have adopted
codes of ethics that allow for personal investments, including securities in
which the fund may invest from time to time. These codes include a ban on
acquisitions of securities pursuant to an initial public offering; restrictions
on acquisitions of private placement securities; preclearance and reporting
requirements; review of duplicate confirmation statements; annual
recertification of compliance with codes of ethics; blackout periods on personal
investing for certain investment personnel; ban on short-term trading profits
for investment personnel; limitations on service as a director of publicly
traded companies; and disclosure of personal securities transactions.

LEGAL PROCEEDINGS -- On February 16, 2005, the NASD (now the Financial Industry
Regulatory Authority, or FINRA) filed an administrative complaint against the
Principal Underwriter. The complaint alleges violations of certain NASD rules by
the Principal Underwriter with respect to the selection of broker-dealer firms
that buy and sell securities for mutual fund investment portfolios. The
complaint seeks sanctions, restitution and disgorgement. On August 30, 2006, a
FINRA Hearing Panel ruled against the Principal Underwriter and imposed a $5
million fine. On April 30, 2008, FINRA's National Adjudicatory Council affirmed
the decision by FINRA's Hearing Panel. The Principal Underwriter has appealed
this decision to the Securities and Exchange Commission.

The investment adviser and Principal Underwriter believe that the likelihood
that this matter could have a material adverse effect on the fund or on the
ability of the investment adviser or Principal Underwriter to perform their
contracts with the fund is remote. In addition, class action lawsuits have been
filed in the U.S. District Court, Central District of California, relating to
this and other matters. The investment adviser believes that these suits are
without merit and will defend itself vigorously.

DETERMINATION OF NET ASSET VALUE, REDEMPTION PRICE AND MAXIMUM OFFERING PRICE
PER SHARE FOR CLASS A SHARES -- MARCH 31, 2008

Net asset value and redemption price per share
(Net assets divided by shares outstanding). . $36.25
Maximum offering price per share
(100/94.25 of net asset value per share,
which takes into account the fund's current maximum
sales charge). . . . . . . . . . . . . . . . $38.46

SMALLCAP World Fund -- Page 57
<PAGE>

OTHER INFORMATION -- The fund reserves the right to modify the privileges
described in this statement of additional information at any time.

The financial statements, including the investment portfolio and the report of
the fund's independent registered public accounting firm contained in the annual
report, are included in this statement of additional information. The following
information on fund numbers is not included in the annual report:

SMALLCAP World Fund -- Page 58
<PAGE>

FUND NUMBERS -- Here are the fund numbers for use with our automated telephone
line, American FundsLine/(R)/, or when making share transactions:

FUND NUMBERS
-------------------------------------------------
FUND CLASS A CLASS B CLASS C CLASS F-1 CLASS F-2
-------------------------------------------------------------------------------

STOCK AND STOCK/BOND FUNDS
AMCAP Fund/(R)/ . . . . . . 002 202 302 402 602
American Balanced Fund/(R)/ 011 211 311 411 611
American Mutual Fund/(R)/ . 003 203 303 403 603
Capital Income Builder/(R)/ 012 212 312 412 612
Capital World Growth and
Income Fund/SM/ . . . . . . 033 233 333 433 633
EuroPacific Growth Fund/(R)/ 016 216 316 416 616
Fundamental Investors/SM/ . 010 210 310 410 610
The Growth Fund of
America/(R)/. . . . . . . . 005 205 305 405 605
The Income Fund of
America/(R)/. . . . . . . . 006 206 306 406 606
The Investment Company of
America/(R)/. . . . . . . . 004 204 304 404 604
The New Economy Fund/(R)/ . 014 214 314 414 614
New Perspective Fund/(R)/ . 007 207 307 407 607
New World Fund/SM/ . . . . 036 236 336 436 636
SMALLCAP World Fund/(R)/ . 035 235 335 435 635
Washington Mutual Investors
Fund/SM/ . . . . . . . . . 001 201 301 401 601
BOND FUNDS
American High-Income
Municipal Bond Fund/(R)/ . 040 240 340 440 640
American High-Income
Trust/SM/ . . . . . . . . . 021 221 321 421 621
The Bond Fund of America/SM/ 008 208 308 408 608
Capital World Bond Fund/(R)/ 031 231 331 431 631
Intermediate Bond Fund of
America/SM/ . . . . . . . . 023 223 323 423 623
Limited Term Tax-Exempt Bond
Fund of America/SM/ . . . . 043 243 343 443 643
Short-Term Bond Fund of
America/SM/ . . . . . . . . 048 248 348 448 648
The Tax-Exempt Bond Fund of
America/(R)/. . . . . . . . 019 219 319 419 619
The Tax-Exempt Fund of
California/(R)/*. . . . . . 020 220 320 420 620
The Tax-Exempt Fund of
Maryland/(R)/*. . . . . . . 024 224 324 424 624
The Tax-Exempt Fund of
Virginia/(R)/*. . . . . . . 025 225 325 425 625
U.S. Government Securities
Fund/SM/. . . . . . . . . . 022 222 322 422 622
MONEY MARKET FUNDS
The Cash Management Trust of
America/(R)/. . . . . . . . 009 209 309 409 609
The Tax-Exempt Money Fund of
America/SM/ . . . . . . . . 039 N/A N/A N/A N/A
The U.S. Treasury Money Fund
of America/SM/ . . . . . . 049 N/A N/A N/A N/A
___________
*Qualified for sale only in certain jurisdictions.

SMALLCAP World Fund -- Page 59
<PAGE>

FUND NUMBERS
----------------------------------------------
CLASS CLASS CLASS CLASS CLASS
FUND 529-A 529-B 529-C 529-E 529-F-1
-------------------------------------------------------------------------------

STOCK AND STOCK/BOND FUNDS
AMCAP Fund . . . . . . . . . . 1002 1202 1302 1502 1402
American Balanced Fund . . . . 1011 1211 1311 1511 1411
American Mutual Fund . . . . . 1003 1203 1303 1503 1403
Capital Income Builder . . . . 1012 1212 1312 1512 1412
Capital World Growth and Income
Fund . . . . . . . . . . . . . 1033 1233 1333 1533 1433
EuroPacific Growth Fund . . . 1016 1216 1316 1516 1416
Fundamental Investors . . . . 1010 1210 1310 1510 1410
The Growth Fund of America . . 1005 1205 1305 1505 1405
The Income Fund of America . . 1006 1206 1306 1506 1406
The Investment Company of
America. . . . . . . . . . . . 1004 1204 1304 1504 1404
The New Economy Fund . . . . . 1014 1214 1314 1514 1414
New Perspective Fund . . . . . 1007 1207 1307 1507 1407
New World Fund . . . . . . . . 1036 1236 1336 1536 1436
SMALLCAP World Fund . . . . . 1035 1235 1335 1535 1435
Washington Mutual Investors
Fund . . . . . . . . . . . . . 1001 1201 1301 1501 1401
BOND FUNDS
American High-Income Trust . . 1021 1221 1321 1521 1421
The Bond Fund of America . . . 1008 1208 1308 1508 1408
Capital World Bond Fund . . . 1031 1231 1331 1531 1431
Intermediate Bond Fund of
America. . . . . . . . . . . . 1023 1223 1323 1523 1423
Short-Term Bond Fund of America 1048 1248 1348 1548 1448
U.S. Government Securities Fund 1022 1222 1322 1522 1422
MONEY MARKET FUND
The Cash Management Trust of
America. . . . . . . . . . . . 1009 1209 1309 1509 1409

FUND NUMBERS
----------------------------------------
CLASS CLASS CLASS CLASS CLASS
FUND R-1 R-2 R-3 R-4 R-5
-------------------------------------------------------------------------------

STOCK AND STOCK/BOND FUNDS
AMCAP Fund . . . . . . . . . . . . . 2102 2202 2302 2402 2502
American Balanced Fund . . . . . . . 2111 2211 2311 2411 2511
American Mutual Fund . . . . . . . . 2103 2203 2303 2403 2503
Capital Income Builder . . . . . . . 2112 2212 2312 2412 2512
Capital World Growth and Income Fund 2133 2233 2333 2433 2533
EuroPacific Growth Fund . . . . . . 2116 2216 2316 2416 2516
Fundamental Investors . . . . . . . 2110 2210 2310 2410 2510
The Growth Fund of America . . . . . 2105 2205 2305 2405 2505
The Income Fund of America . . . . . 2106 2206 2306 2406 2506
The Investment Company of America . 2104 2204 2304 2404 2504
The New Economy Fund . . . . . . . . 2114 2214 2314 2414 2514
New Perspective Fund . . . . . . . . 2107 2207 2307 2407 2507
New World Fund . . . . . . . . . . . 2136 2236 2336 2436 2536
SMALLCAP World Fund . . . . . . . . 2135 2235 2335 2435 2535
Washington Mutual Investors Fund . . 2101 2201 2301 2401 2501
BOND FUNDS
American High-Income Municipal Bond
Fund . . . . . . . . . . . . . . . . N/A N/A N/A N/A 2540
American High-Income Trust . . . . . 2121 2221 2321 2421 2521
The Bond Fund of America . . . . . . 2108 2208 2308 2408 2508
Capital World Bond Fund . . . . . . 2131 2231 2331 2431 2531
Intermediate Bond Fund of America . 2123 2223 2323 2423 2523
Limited Term Tax-Exempt Bond Fund of
America. . . . . . . . . . . . . . . N/A N/A N/A N/A 2543
Short-Term Bond Fund of America. . . 2148 2248 2348 2448 2548
The Tax-Exempt Bond Fund of America N/A N/A N/A N/A 2519
The Tax-Exempt Fund of California* . N/A N/A N/A N/A 2520
The Tax-Exempt Fund of Maryland* . . N/A N/A N/A N/A 2524
The Tax-Exempt Fund of Virginia* . . N/A N/A N/A N/A 2525
U.S. Government Securities Fund . . 2122 2222 2322 2422 2522
MONEY MARKET FUNDS
The Cash Management Trust of America 2109 2209 2309 2409 2509
The Tax-Exempt Money Fund of America N/A N/A N/A N/A 2539
The U.S. Treasury Money Fund of
America . . . . . . . . . . . . . . 2149 2249 2349 2449 2549
___________
*Qualified for sale only in certain
jurisdictions.

SMALLCAP World Fund -- Page 60
<PAGE>

FUND NUMBERS
--------------------------------------------
CLASS CLASS CLASS CLASS CLASS
FUND CLASS A R-1 R-2 R-3 R-4 R-5
-------------------------------------------------------------------------------

AMERICAN FUNDS TARGET DATE RETIREMENT SERIES/(R)/
American Funds 2050 Target Date
Retirement Fund/(R)/ . . . . . . 069 2169 2269 2369 2469 2569
American Funds 2045 Target Date
Retirement Fund/(R)/ . . . . . . 068 2168 2268 2368 2468 2568
American Funds 2040 Target Date
Retirement Fund/(R)/ . . . . . . 067 2167 2267 2367 2467 2567
American Funds 2035 Target Date
Retirement Fund/(R)/ . . . . . . 066 2166 2266 2366 2466 2566
American Funds 2030 Target Date
Retirement Fund/(R)/ . . . . . . 065 2165 2265 2365 2465 2565
American Funds 2025 Target Date
Retirement Fund/(R)/ . . . . . . 064 2164 2264 2364 2464 2564
American Funds 2020 Target Date
Retirement Fund/(R)/ . . . . . . 063 2163 2263 2363 2463 2563
American Funds 2015 Target Date
Retirement Fund/(R)/ . . . . . . 062 2162 2262 2362 2462 2562
American Funds 2010 Target Date
Retirement Fund/(R)/ . . . . . . 061 2161 2261 2361 2461 2561

SMALLCAP World Fund -- Page 61
<PAGE>

APPENDIX

The following descriptions of debt security ratings are based on information
provided by Moody's Investors Service and Standard & Poor's Corporation.

DESCRIPTION OF BOND RATINGS

MOODY'S
LONG-TERM RATING DEFINITIONS

Aaa
Obligations rated Aaa are judged to be of the highest quality, with minimal
credit risk.

Aa
Obligations rated Aa are judged to be of high quality and are subject to very
low credit risk.

A
Obligations rated A are considered upper-medium grade and are subject to low
credit risk.

Baa
Obligations rated Baa are subject to moderate credit risk. They are considered
medium-grade and as such may possess certain speculative characteristics.

Ba
Obligations rated Ba are judged to have speculative elements and are subject to
substantial credit risk.

B
Obligations rated B are considered speculative and are subject to high credit
risk.

Caa
Obligations rated Caa are judged to be of poor standing and are subject to very
high credit risk.

Ca
Obligations rated Ca are highly speculative and are likely in, or very near,
default, with some prospect of recovery of principal and interest.

C
Obligations rated C are the lowest rated class of bonds and are typically in
default, with little prospect for recovery of principal or interest.

NOTE: Moody's appends numerical modifiers 1, 2, and 3 to each generic rating
classification from Aa through Caa. The modifier 1 indicates that the obligation
ranks in the higher end of its generic rating category; the modifier 2 indicates
a mid-range ranking; and the modifier 3 indicates a ranking in the lower end of
that generic rating category.

SMALLCAP World Fund -- Page 62
<PAGE>

STANDARD & POOR'S
LONG-TERM ISSUE CREDIT RATINGS

AAA
An obligation rated AAA has the highest rating assigned by Standard & Poor's.
The obligor's capacity to meet its financial commitment on the obligation is
extremely strong.

AA
An obligation rated AA differs from the highest-rated obligations only in small
degree. The obligor's capacity to meet its financial commitment on the
obligation is very strong.

A
An obligation rated A is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than obligations in
higher-rated categories. However, the obligor's capacity to meet its financial
commitment on the obligation is still strong.

BBB
An obligation rated BBB exhibits adequate protection parameters. However,
adverse economic conditions or changing circumstances are more likely to lead to
a weakened capacity of the obligor to meet its financial commitment on the
obligation.

BB, B, CCC, CC, AND C
Obligations rated BB, B, CCC, CC, and C are regarded as having significant
speculative characteristics. BB indicates the least degree of speculation and C
the highest. While such obligations will likely have some quality and protective
characteristics, these may be outweighed by large uncertainties or major
exposures to adverse conditions.

BB
An obligation rated BB is less vulnerable to nonpayment than other speculative
issues. However, it faces major ongoing uncertainties or exposure to adverse
business, financial, or economic conditions which could lead to the obligor's
inadequate capacity to meet its financial commitment on the obligation.

B
An obligation rated B is more vulnerable to nonpayment than obligations rated
BB, but the obligor currently has the capacity to meet its financial commitment
on the obligation. Adverse business, financial, or economic conditions will
likely impair the obligor's capacity or willingness to meet its financial
commitment on the obligation.

CCC
An obligation rated CCC is currently vulnerable to nonpayment and is dependent
upon favorable business, financial, and economic conditions for the obligor to
meet its financial commitment on the obligation. In the event of adverse
business, financial, or economic conditions, the obligor is not likely to have
the capacity to meet its financial commitment on the obligation.

CC
An obligation rated CC is currently highly vulnerable to nonpayment.

SMALLCAP World Fund -- Page 63
<PAGE>

C
The C rating may be used to cover a situation where a bankruptcy petition has
been filed or similar action has been taken, but payments on this obligation are
being continued.

D
An obligation rated D is in payment default. The D rating category is used when
payments on an obligation are not made on the date due even if the applicable
grace period has not expired, unless Standard & Poor's believes that such
payments will be made during such grace period. The D rating also will be used
upon the filing of a bankruptcy petition or the taking of a similar action if
payments on an obligation are jeopardized.

PLUS (+) OR MINUS (-)
The ratings from AA to CCC may be modified by the addition of a plus or minus
sign to show relative standing within the major rating categories.

SMALLCAP World Fund -- Page 64

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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

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
Share class	Distribution services	Transfer agent 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

[logo – American Funds ®]

SMALLCAP World Fund®

Investment portfolio

September 30, 2007

		Market value
Common stocks — 91.94%	Shares	(000)

CONSUMER DISCRETIONARY — 18.15%
Jumbo SA1	4,844,956	$165,687
Schibsted ASA	3,138,000	165,274
Fourlis1	4,074,000	153,034
Central European Media Enterprises Ltd., Class A2	1,328,500	121,837
Lojas Renner SA	5,950,000	119,325
Praktiker Bau- und Heimwerkermärkte Holding AG	2,748,983	102,908
Cyrela Brazil Realty SA, ordinary nominative	7,271,000	99,291
Scientific Games Corp., Class A2	2,600,000	97,760
Blue Nile, Inc.1,2	1,037,940	97,691
Pantaloon Retail (India) Ltd.	6,643,120	90,474
Cheil Industries Inc.	1,300,000	86,970
Saks Inc.	5,032,500	86,307
AB Lindex1	5,118,000	84,688
Toyoda Gosei Co., Ltd.	2,250,000	81,554
Lions Gate Entertainment Corp.1,2	7,728,500	79,681
Galaxy Entertainment Group Ltd.2	70,475,000	78,091
Billabong International Ltd.	5,845,000	77,638
CarMax, Inc.2	3,800,000	77,254
Aristocrat Leisure Ltd.	6,075,304	74,879
Korea Kumho Petrochemical Co., Ltd.	909,332	70,079
Arbitron Inc.1	1,496,760	67,863
Nitori Co., Ltd.	1,428,600	67,590
Jackson Hewitt Tax Service Inc.1	2,396,000	66,992
Rightmove PLC	6,209,450	65,621
Banyan Tree Holdings Ltd.1	45,405,000	65,428
GOME Electrical Appliances Holding Ltd.	31,663,000	62,183
Chipotle Mexican Grill, Inc., Class B2	288,000	30,816
Chipotle Mexican Grill, Inc., Class A2	255,000	30,123
Crocs, Inc.2	900,000	60,525
Pinnacle Entertainment, Inc.2	2,153,700	58,645
Life Time Fitness, Inc.2	940,000	57,660
Tupperware Brands Corp.	1,800,000	56,682
Truworths International Ltd.	11,675,000	53,836
Hürriyet Gazetecilik ve Matbaacilik AS2	16,735,985	53,082
American Axle & Manufacturing Holdings, Inc.	2,080,000	52,520
Honeys Co., Ltd.1	1,725,000	51,403
GEOX SpA	2,346,080	50,353
Nishimatsuya Chain Co., Ltd.1	3,855,500	48,945
Lifestyle International Holdings Ltd.3	17,260,000	48,646
CTC Media, Inc.2	2,200,000	48,312
Bob Evans Farms, Inc.	1,600,000	48,288
Ekornes ASA1	2,237,598	47,721
Café de Coral Holdings Ltd.	23,750,000	44,503
Tokai Rika Co., Ltd.	1,568,100	43,722
Hankook Tire Co., Ltd.	2,080,000	42,632
Polaris Industries Inc.	900,000	39,258
IBT Education Ltd.1	21,727,690	38,436
Fleetwood Enterprises, Inc.1,2	4,405,000	37,663
Quiksilver, Inc.2	2,600,000	37,180
Amtek Auto Ltd.	4,020,000	36,636
CKE Restaurants, Inc.	2,200,000	35,662
Nien Made Enterprise Co., Ltd.1	28,170,012	35,007
Hana Tour Service Inc.	338,200	34,012
RNB Retail and Brands AB	2,655,000	33,207
Gafisa SA, ordinary nominative	1,900,000	32,030
Keihin Corp.	1,610,000	30,651
Halfords Group PLC	4,200,000	30,435
Debenhams PLC	15,780,000	30,401
Peet’s Coffee & Tea, Inc.1,2	1,015,000	28,329
Tractor Supply Co.2	593,700	27,364
Hemtex AB	1,435,000	26,755
XM Satellite Radio Holdings Inc., Class A2	1,800,000	25,506
Zumiez Inc.2	570,000	25,291
PETsMART, Inc.	750,000	23,925
Restaurant Group PLC	4,323,678	23,885
Williams-Sonoma, Inc.	730,000	23,813
Seloger.com2	415,000	23,732
P.F. Chang’s China Bistro, Inc.2	800,000	23,680
Getty Images, Inc.2	850,000	23,664
Bijou Brigitte modische Accessoires AG	127,000	23,644
Dolan Media Co.2	963,000	23,401
Shuffle Master, Inc.2	1,550,224	23,176
Fontainebleau Resorts LLC, Class A, non-voting units2,3,4	1,900,000	22,800
1-800-FLOWERS.COM, Inc., Class A2	1,947,834	22,575
PetMed Express, Inc.1,2	1,500,000	21,015
Kuoni Reisen Holding AG, Class B	43,309	20,464
Entertainment Rights PLC1,2	42,500,000	19,112
Talbots, Inc.	1,049,875	18,898
Agora SA	952,000	18,486
Trigano SA	402,250	18,185
Asahi India Glass Ltd.	6,721,886	18,140
Denny’s Corp.2	4,500,000	18,000
Austar United Communications Ltd.2	11,671,576	17,594
PartyGaming PLC2	30,750,000	17,285
Blyth, Inc.	816,000	16,687
YBM Sisa.com Inc.1	824,930	16,683
Bloomsbury Publishing PLC1	5,405,000	16,324
Stockmann Oyj, Class B	336,481	16,234
Musashi Seimitsu Industry Co., Ltd.	491,700	15,637
ElringKlinger AG	135,000	15,306
Chuang’s China Investments Ltd.1	95,968,000	14,821
DeVry Inc.	400,000	14,804
Urban Outfitters, Inc.2	675,000	14,715
ValueVision Media, Inc., Class A1,2	1,930,000	14,301
JJB Sports PLC	4,390,500	13,821
TAKKT AG	801,778	13,607
TOD’S SpA	162,000	13,605
Land & Houses PCL	50,000,000	12,691
BJ’s Restaurants Inc.2	590,000	12,419
Prime Success International Group Ltd.	15,200,000	12,324
Cedar Fair, L.P.	500,000	11,925
Cabela’s Inc.2	500,000	11,825
Pumpkin Patch Ltd.	4,970,107	11,689
Texwinca Holdings Ltd.	13,330,000	11,065
Advance Auto Parts, Inc.	325,000	10,907
Rambler Media Ltd.2	277,360	10,759
Valassis Communications, Inc.2	1,110,481	9,905
Audible, Inc.2	750,000	9,750
Children’s Place Retail Stores, Inc.2	400,000	9,712
Haseko Corp.2	3,950,000	9,465
New Oriental Education & Technology Group Inc. (ADR)2	127,329	8,475
Boyd Gaming Corp.	185,800	7,961
OSIM International Ltd.	18,750,000	7,575
Largan Precision Co., Ltd.	688,500	7,491
Cosi, Inc.2	2,000,000	6,920
Next Media Ltd.	22,100,000	6,257
Gaming VC Holdings SA1	2,023,800	6,174
Spot Runner, Inc.2,3,4	1,313,877	6,123
Formosa International Hotels Corp.	755,756	5,952
TVN SA	666,005	5,496
Restoration Hardware, Inc.2	1,200,000	3,948
Sharper Image Corp.1,2	950,000	3,923
Nien Hsing Textile Co., Ltd.	3,000,000	2,115
Triarc Companies, Inc., Class A	160,200	1,969
Fisher & Paykel Appliances Holdings Ltd.	536,064	1,443
Handsome Co. Ltd.	61,580	942
Hi-Lex Corp.	3,200	49
		4,787,604

INDUSTRIALS — 17.79%
Samsung Engineering Co., Ltd.1	2,437,640	327,754
Container Corp. of India Ltd.	2,891,794	153,560
Murray & Roberts Holdings Ltd.	11,545,000	151,340
BayWa AG1	1,892,790	108,647
MSC Industrial Direct Co., Inc., Class A	2,125,000	107,504
Klöckner & Co AG	1,372,000	94,837
Aalberts Industries NV	3,971,000	94,686
JetBlue Airways Corp.1,2	9,950,000	91,739
Downer EDI Ltd.	15,773,919	87,557
KBR, Inc.2	2,248,000	87,155
A-TEC Industries AG1	436,800	83,409
Boart Longyear Ltd.2,4	33,000,000	69,641
Boart Longyear Ltd.2	4,730,926	9,984
GS Engineering & Construction Corp.	448,627	77,975
TaeWoong Co., Ltd.	635,000	75,523
Michael Page International PLC	8,771,190	73,958
Actuant Corp., Class A	1,125,000	73,091
Samsung Techwin Co., Ltd.	932,660	71,061
Corrections Corporation of America2	2,650,000	69,351
Mine Safety Appliances Co.	1,428,200	67,283
Daelim Industrial Co., Ltd.	357,820	66,299
LS Industrial Systems Co., Ltd.	917,338	65,481
Danieli & C. Officine Meccaniche SpA1	2,592,500	64,700
Pyeong San Co., Ltd.1	1,220,032	64,282
UAP Holding Corp.	2,020,300	63,357
Singapore Post Private Ltd.	76,571,664	62,903
Koninklijke BAM Groep NV	2,315,000	61,704
Genesis Lease Ltd. (ADR)1	2,415,000	60,085
Hyundai Mipo Dockyard Co., Ltd.	174,370	60,042
TK Corp.1	1,580,000	57,514
Watsco, Inc.	1,133,400	52,624
Michaniki SA1	4,314,400	40,977
Michaniki SA, preference shares1	1,626,276	11,364
GfK AG	1,280,500	51,789
IVRCL Infrastructures & Projects Ltd.	4,840,000	51,714
ELLINIKI TECHNODOMIKI TEB SA	3,810,000	50,966
Chart Industries, Inc.1,2	1,555,274	50,018
IJM Corp. Bhd.	20,840,000	48,657
United Stationers Inc.2	868,700	48,230
Hopewell Holdings Ltd.	9,750,000	46,552
Shenzhen Expressway Co. Ltd., Class H	42,916,000	44,571
Northgate PLC	2,230,000	42,165
MISUMI Group Inc.	2,462,000	41,831
Bradken Ltd.	4,389,221	41,332
Graco Inc.	1,000,000	39,110
Acuity Brands, Inc.	727,000	36,699
Emeco Holdings Ltd.	28,710,000	36,531
Grontmij NV, depository receipts	790,000	36,052
ChoicePoint Inc.2	950,000	36,024
Grupo Aeroportuario del Pacífico, SAB de CV, Class B (ADR)	659,300	35,998
ALL – América Latina Logística, units	2,500,000	35,656
Wilh. Wilhelmsen ASA, Class A	799,600	35,070
Dore Holdings Ltd.1	78,934,000	33,624
Continental Airlines, Inc., Class B2	1,000,000	33,030
Kaba Holding AG2	107,000	32,265
Altra Holdings, Inc.1,2	1,905,548	31,765
Pentair, Inc.	950,000	31,521
URS Corp.2	550,000	31,048
Hyunjin Materials Co., Ltd.	622,100	30,874
JVM Co., Ltd.1	506,000	29,814
Delachaux SA	304,000	28,691
Goodpack Ltd.	19,678,000	27,693
Jain Irrigation Systems Ltd.	2,008,662	27,650
Beacon Roofing Supply, Inc.1,2	2,695,400	27,547
G&K Services, Inc., Class A	650,000	26,130
Corporate Executive Board Co.	350,000	25,984
Trakya Cam Sanayii AS	6,873,293	25,795
TransDigm Group Inc.2	550,000	25,141
Uponor Oyj	790,000	24,526
AirAsia Bhd.2	45,143,800	24,262
Kingspan Group PLC	1,020,000	22,401
Federal Signal Corp.	1,425,000	21,888
KCC Corp.	35,800	21,876
EnerSys2	1,200,000	21,324
Aboitiz Equity Ventures, Inc.	134,250,000	20,814
Cpl Resources PLC1	2,784,000	20,447
Chen Hsong Holdings Ltd.	26,778,000	19,747
InnerWorkings, Inc.2	1,100,000	18,953
Georg Fischer Ltd2	25,850	17,800
Halla Engineering & Construction Corp.1	626,000	16,697
AeroVironment, Inc.2	719,650	16,559
Kelly Services, Inc., Class A	800,000	15,848
Permasteelisa SpA	615,000	15,826
Ballast Nedam NV, depository receipts	337,495	15,527
I. Kloukinas - I. Lappas SA	1,080,000	15,063
Havell’s India Ltd.	1,150,335	14,638
American Reprographics Co.2	780,000	14,602
Grupo Aeroportuario del Centro Norte, SAB de CV, Series B (ADR)	500,000	14,400
Hubbell Inc., Class B	250,000	14,280
Santos-Brasil SA, units	1,000,000	14,098
Melco International Development Ltd.	7,500,000	14,015
Hong Kong Aircraft Engineering Co. Ltd.	600,000	13,582
Intertek Group PLC	700,000	13,550
Krones AG	165,000	13,347
Rollins, Inc.	500,000	13,345
Aker American Shipping ASA2	544,600	12,827
Curtiss-Wright Corp.	268,600	12,759
Spirax-Sarco Engineering PLC	605,000	12,627
Nexans SA	75,000	12,338
PRONEXUS INC.	1,627,000	12,220
Herman Miller, Inc.	437,500	11,874
Gehl Co.2	500,000	11,165
Max India Ltd.2	1,795,000	11,012
Houston Wire & Cable Co.	600,000	10,866
Briggs & Stratton Corp.	425,000	10,702
Norfolk Group Ltd.1,2	6,500,000	10,605
G-Shank Enterprise Co., Ltd.	5,884,320	10,459
Prosegur Compañía de Seguridad, SA	282,000	10,255
Geberit AG	74,000	9,682
Latécoère SA	323,626	9,369
Taiwan Secom Co., Ltd.	5,515,900	9,128
Wabash National Corp.	800,000	9,032
Vedior NV	385,000	8,472
Korea Electric Terminal Co., Ltd.	350,000	8,264
BELIMO Holding AG	6,300	7,556
Grafton Group PLC, units	575,000	6,440
NEPES Corp.2	701,634	6,381
Heijmans NV, depository receipts	135,000	6,236
Ansaldo STS SpA2	390,000	5,444
Silitech Technology Corp.	269,383	1,346
Imagelinx PLC1,2	21,385,714	721
ZOOTS1,2,3,4	25,173	234
		4,692,353

INFORMATION TECHNOLOGY — 11.60%
Kingboard Chemical Holdings Ltd.1	49,934,200	318,101
Novell, Inc.1,2	17,978,000	137,352
Tripod Technology Corp.1	28,477,108	116,073
NAVTEQ Corp.2	1,400,000	109,158
SEEK Ltd.	12,276,012	99,164
CNET Networks, Inc.1,2	10,655,000	79,380
Venture Corp. Ltd.	5,969,600	66,324
Mentor Graphics Corp.2	4,315,500	65,164
Cree, Inc.2	1,950,000	60,645
SINA Corp.2	1,248,200	59,726
SkillSoft PLC (ADR)1,2	6,450,000	57,986
Diebold, Inc.	1,130,300	51,338
NCsoft Corp.2	577,000	51,216
TradeDoubler AB1	1,820,000	51,182
Echelon Corp.1,2	2,000,000	50,020
Konami Corp.	1,832,400	49,973
Fairchild Semiconductor International, Inc.2	2,665,000	49,782
Kingboard Laminates Holdings Ltd.	54,686,236	48,772
SRA International, Inc., Class A2	1,500,000	42,120
Xchanging PLC2	7,293,160	41,891
Net 1 UEPS Technologies, Inc.2	1,532,000	41,624
Unisteel Technology Ltd.1	28,607,000	41,415
Applied Micro Circuits Corp.2	12,525,000	39,579
Gartner, Inc.2	1,600,000	39,136
SFA Engineering Corp.1	592,140	35,213
Wacom Co., Ltd.	16,844	34,930
ASM Pacific Technology Ltd.	3,840,000	33,976
MoneyGram International, Inc.	1,500,000	33,885
Semtech Corp.2	1,650,000	33,792
MacDonald, Dettwiler and Associates Ltd.2	700,000	32,151
Hutchinson Technology Inc.2	1,286,035	31,636
Internet Capital Group, Inc.1,2	2,600,000	31,200
Veeco Instruments Inc.1,2	1,598,523	30,979
Heartland Payment Systems, Inc.	1,200,000	30,840
Red Hat, Inc.2	1,550,000	30,799
Vishay Intertechnology, Inc.2	2,350,000	30,621
Littelfuse, Inc.2	850,000	30,337
austriamicrosystems AG, non-registered shares1,2	575,000	30,232
Tessera Technologies, Inc.2	800,000	30,000
Arm Holdings PLC	9,395,000	29,575
Hana Microelectronics PCL	40,425,000	29,014
Solera Holdings, Inc.2	1,556,800	28,007
Varian Semiconductor Equipment Associates, Inc.2	487,500	26,091
Spansion Inc., Class A2	3,074,500	25,980
Digital River, Inc.2	580,000	25,955
National Instruments Corp.	725,000	24,889
Rogers Corp.2	600,000	24,714
Orbotech Ltd.2	1,128,317	23,729
Compal Electronics, Inc.	20,100,000	22,730
InfoSpace.com, Inc.2	1,294,100	22,724
Euronet Worldwide, Inc.2	552,400	16,445
Euronet Worldwide, Inc.2,4	200,000	5,954
TIBCO Software Inc.2	2,862,500	21,154
Infotech Enterprises Ltd.1	3,000,000	20,236
Verifone Holdings, Inc.2	425,000	18,840
Wintek Corp.	13,917,273	18,596
Chicony Electronics Co., Ltd.	8,338,850	18,375
McAfee, Inc.2	500,000	17,435
Sanmina-SCI Corp.2	8,000,000	16,960
CDNetworks Co., Ltd.1,2	685,615	16,114
i2 Technologies, Inc.2	1,001,500	15,273
SupportSoft, Inc.1,2	2,554,400	14,918
Integrated Device Technology, Inc.2	960,000	14,861
LoopNet, Inc.2	722,300	14,836
Stratasys, Inc.2	532,000	14,662
DTS, Inc.2	482,300	14,647
Wistron Corp.	8,081,737	14,613
SEZ Holding AG, Class A	612,000	14,248
ORBCOMM Inc.2	1,881,838	14,170
Cogent, Inc.2	900,000	14,112
Celestica Inc.2	2,250,000	13,747
Funcom NV2	2,628,750	12,675
Advantech Co., Ltd.	4,165,314	12,344
Ono Sokki Co., Ltd.1	1,609,000	12,015
THQ Inc.2	470,000	11,741
Simmtech Co., Ltd.	1,020,000	11,484
Chartered Semiconductor Manufacturing Ltd2	15,021,000	11,025
Intermec, Inc.2	400,000	10,448
Vaisala Oyj, Class A	172,987	9,954
Renishaw PLC	725,474	9,876
Spark Networks Inc.1,2	2,392,200	9,425
PMC-Sierra, Inc.2	1,100,000	9,229
Techwell, Inc.2	825,000	8,761
Sanken Electric Co., Ltd.	1,625,000	7,971
O2Micro International Ltd. (ADR)2	500,000	7,735
Taiflex Scientific Co., Ltd.	4,792,854	7,491
Coretronic Corp.	3,723,000	5,728
Ichia Technologies, Inc.	6,427,974	5,339
Redline Communications Inc.1,2	3,150,000	5,293
livedoor holdings Co., Ltd.2,3	75,320	5,250
PDF Solutions, Inc.2	500,000	4,940
Advanced Semiconductor Manufacturing Corp. Ltd., Class H2	67,744,000	4,621
Oakton Ltd.	740,000	4,455
Phoenix PDE Co., Ltd.1	1,500,000	3,788
Marchex, Inc., Class B	250,000	2,377
KEC Holdings Co. Ltd.2	781,249	2,020
DK UIL Co., Ltd.2	140,000	1,139
Avid Technology, Inc.2	33,400	904
Infoteria Corp.2,3	2,577	678
Orbiscom Ltd.2,3,4	3,905,874	156
PixelFusion PLC2,3,4	2,300,000	82
KEC Corp.2	20,000	28
MMC AS2,3,4	4,150,000	—
		3,060,288

FINANCIALS — 11.04%
Pusan Bank1	11,726,500	215,353
Daegu Bank, Ltd.1	10,570,000	195,848
Indiabulls Real Estate Ltd.2	8,069,292	139,427
Kotak Mahindra Bank Ltd.	5,493,262	127,765
Orco Property Group SA1	710,454	107,437
HDFC Bank Ltd.	2,835,000	102,646
Dolphin Capital Investors Ltd.1,2	32,021,860	93,491
Indiabulls Financial Services Ltd.	6,193,648	93,436
MCB Bank Ltd.	13,099,742	71,984
Greek Postal Savings Bank SA	3,136,144	68,876
Banco Sofisa SA, preferred nominative2	7,680,600	66,313
Challenger Financial Services Group Ltd.	11,576,353	63,642
Jammu and Kashmir Bank Ltd.1	3,149,500	62,164
National Bank of Pakistan	13,437,060	54,103
Downey Financial Corp.	875,000	50,575
Unitech Corporate Parks PLC1,2	23,399,700	49,027
Central Pattana PCL	56,461,000	45,712
Banco de Oro-EPCI, Inc.	34,600,000	45,214
Union Bank of the Philippines1	35,823,500	43,639
Globe Trade Center SA2	2,350,000	42,216
Bank of Georgia (GDR)2	1,161,850	41,827
Banco Macro SA, Class B (ADR)	1,365,800	40,168
Topdanmark A/S2	235,700	38,784
IndyMac Bancorp, Inc.	1,635,000	38,602
Azimut Holding SpA	2,390,000	36,811
Interhyp AG1	454,850	34,379
Ascendas Real Estate Investment Trust	18,336,550	33,707
China Banking Corp.2	1,713,750	33,402
First Pacific Co. Ltd.	44,300,000	33,067
JSE Ltd.	2,745,000	32,035
Mercury General Corp.	582,724	31,426
BOK Financial Corp.	600,000	30,846
Northwest Bancorp, Inc.	1,080,000	30,737
Hyundai Securities Co., Ltd.	1,305,000	30,457
Cathay Real Estate Development Co. Ltd.	56,037,000	27,735
Oslo Børs Holding ASA	1,002,335	26,582
Paraná Banco SA, preferred nominative2	3,454,720	24,523
Daishin Securities Co., Ltd.	732,000	24,245
eHealth, Inc.2	866,400	23,999
East West Bancorp, Inc.	661,628	23,792
Gruppo MutuiOnline SpA1,2	3,160,000	23,280
Eastern Property Holdings Ltd.1	219,978	23,098
Federal Agricultural Mortgage Corp., Class C	777,000	22,813
Banco Cruzeiro do Sol SA, preferred nominative	2,631,100	22,717
Banco Daycoval SA, preferred nominative2	2,314,300	22,574
AEON Mall Co., Ltd.	706,800	21,616
Wilmington Trust Corp.	500,000	19,450
Hung Poo Real Estate Development Corp.1	19,101,120	18,908
Russian Real Estate Investment Co. AB, Series B2	419,840	17,939
Brascan Residential Properties SA, ordinary nominative	2,364,000	17,827
P/F Føroya Banki2	398,850	17,552
Solomon Mutual Savings Bank1	1,062,023	16,718
PT Bank Niaga Tbk	169,092,000	16,095
Union Bank of India	3,750,000	15,449
Banner Corp.	448,100	15,410
Megaworld Corp.	198,860,000	15,195
Robinsons Land Corp., Class B	41,188,300	15,052
First Community Bancorp	250,000	13,678
AmericanWest Bancorporation	687,200	13,476
CastlePoint Holdings, Ltd.	1,070,200	12,307
Verwaltungs- und Privat-Bank AG	50,000	12,113
Amata Corp. PCL	26,800,000	12,041
SpareBank 1 SR-Bank	380,000	11,628
Kiatnakin Bank PCL	12,200,000	10,945
Centennial Bank Holdings, Inc.2	1,661,700	10,635
City National Corp.	150,000	10,427
Naim Cendera Holdings Bhd.	6,000,000	10,308
Conseco, Inc.2	600,000	9,600
TICON Property Fund1	30,400,000	9,579
Cyrela Commercial Properties SA, ordinary nominative2	7,271,000	9,258
Sparebanken Midt-Norge	700,227	9,090
VastNed Retail NV	97,000	7,809
First Niagara Financial Group, Inc.	550,000	7,783
Sumitomo Real Estate Sales Co., Ltd.	100,000	7,772
St. Joe Co.	197,420	6,635
TICON Industrial Connection PCL	11,298,800	6,527
CapitaCommercial Trust Management Ltd.	3,317,000	6,343
Eurobancshares, Inc.2	800,000	6,160
Home Federal Bancorp, Inc.	380,000	5,058
Public Financial Holdings Ltd.	5,205,000	3,477
Heritage Financial Corp.	79,509	1,753
		2,912,087

HEALTH CARE — 10.24%
Kyphon Inc.2	1,841,300	128,891
Beckman Coulter, Inc.	1,575,000	116,172
Medicis Pharmaceutical Corp., Class A1	3,545,000	108,158
ResMed Inc2	1,692,000	72,536
ResMed Inc (CDI)2	1,500,000	6,517
ArthroCare Corp.1,2	1,394,000	77,911
Grifols, SA	3,387,600	77,780
Gerresheimer AG, non-registered shares2	1,435,000	77,765
Integra LifeSciences Holdings Corp.1,2	1,578,000	76,659
China Medical Technologies, Inc. (ADR)1	1,686,606	72,170
Sirona Dental Systems, Inc.2	2,019,951	72,052
Cochlear Ltd.	918,610	63,501
American Medical Systems Holdings, Inc.1,2	3,725,000	63,139
FoxHollow Technologies, Inc.1,2	2,176,400	57,457
Mentor Corp.	1,223,300	56,333
Laboratorios Almirall, SA2	2,435,000	53,164
Rhön-Klinikum AG	1,410,400	45,155
Vital Signs, Inc.1	859,690	44,824
Insulet Corp.1,2	2,012,680	43,776
Hikma Pharmaceuticals PLC	5,069,153	43,520
Exelixis, Inc.2	4,075,000	43,154
BioMarin Pharmaceutical Inc.2	1,725,901	42,975
Apollo Hospitals Enterprise Ltd.1	3,275,000	40,089
Volcano Corp.1,2	2,436,800	40,061
NuVasive, Inc.2	1,034,561	37,172
Respironics, Inc.2	760,600	36,532
Greatbatch, Inc.1,2	1,359,700	36,154
Applera Corp., Celera group2	2,537,000	35,670
Haemonetics Corp.2	721,000	35,632
STERIS Corp.	1,250,000	34,162
Intuitive Surgical, Inc.2	141,934	32,645
DiaSorin SpA2	1,754,300	31,823
Valeant Pharmaceuticals International2	2,050,000	31,734
Fisher & Paykel Healthcare Corp. Ltd.	12,600,000	31,443
I-Flow Corp.1,2	1,658,800	30,837
Arpida Ltd.1,2	1,231,509	30,682
Adams Respiratory Therapeutics, Inc.2	787,410	30,347
Ipca Laboratories Ltd.1	1,794,000	29,871
AMAG Pharmaceuticals, Inc.2	500,000	28,600
Nakanishi Inc.	219,800	28,325
Bumrungrad Hospital PCL	20,655,300	26,968
United Laboratories International Holdings Ltd.2	36,000,000	26,733
Amplifon SpA	3,325,980	26,348
Varian, Inc.2	400,000	25,444
A&D Pharma Holdings NV (GDR)	958,000	24,592
Cardiome Pharma Corp.2	2,550,000	24,072
Invacare Corp.	935,000	21,860
ev3 Inc.2	1,295,000	21,264
Vital Images, Inc.1,2	1,023,000	19,969
Alexion Pharmaceuticals, Inc.2	300,000	19,545
AngioDynamics, Inc.2	1,022,000	19,265
Hythiam, Inc.1,2	2,475,000	18,414
Eclipsys Corp.2	775,000	18,073
Gentium SpA (ADR)1,2,4	750,000	17,227
MGI PHARMA, Inc.2	600,000	16,668
United Therapeutics Corp.2	250,000	16,635
ICU Medical, Inc.2	401,200	15,546
Top Glove Corp. Bhd.	8,220,500	15,210
EGIS NYRT	107,000	14,006
Array BioPharma Inc.2	1,237,000	13,891
Tecan Group Ltd.	215,586	13,891
Acorda Therapeutics, Inc.2	742,600	13,627
Northstar Neuroscience, Inc.2	1,215,500	13,565
Kendle International Inc.2	325,000	13,497
Kensey Nash Corp.2	500,000	13,055
Theravance, Inc.2	500,000	13,045
Biosensors International Group, Ltd.2	27,650,000	13,033
Senomyx, Inc.2	1,024,400	12,549
Recordati SpA	1,300,000	12,291
Advanced Medical Optics, Inc.2	400,000	12,236
LifeCycle Pharma A/S2	1,300,000	11,691
Allscripts Healthcare Solutions, Inc.2	425,000	11,488
Introgen Therapeutics, Inc.1,2	2,677,100	11,163
Vical Inc.1,2	2,250,279	11,004
IDEXX Laboratories, Inc.2	100,000	10,959
Sigma Pharmaceuticals Ltd.	7,500,000	9,743
Tong Ren Tang Technologies Co., Ltd., Class H	3,090,000	6,999
Dade Behring Holdings, Inc.	87,500	6,681
ZymoGenetics, Inc.2	500,000	6,525
BIOLASE Technology, Inc.2	800,000	5,472
MWI Veterinary Supply, Inc.2	125,000	4,719
Apria Healthcare Group Inc.2	180,000	4,682
Krka, dd, Novo mesto	27,820	4,576
Vision-Sciences, Inc.1,2	2,096,733	4,256
Cytokinetics, Inc.2	676,500	3,464
Labopharm Inc.2	2,000,000	3,380
Arcadia Resources, Inc.2,4	3,749,999	3,112
SonoSite, Inc.2	93,819	2,863
Allied Medical Ltd.2,3	147,030	34
		2,700,718

MATERIALS — 5.90%
Inmet Mining Corp.	1,700,000	$ 170,805
Cleveland-Cliffs Inc	1,855,000	163,184
Sino-Forest Corp.2	5,440,000	123,178
Dongkuk Steel Mill Co., Ltd.	2,245,000	118,532
Major Drilling Group International Inc.1,2	1,637,500	87,549
AMG Advanced Metallurgical Group NV1,2	1,456,000	79,526
Croda International PLC	3,565,000	46,638
AptarGroup, Inc.	1,200,000	45,444
Taiwan Cement Corp.	27,023,326	44,224
Kenmare Resources PLC1,2	39,316,000	43,197
Peter Hambro Mining PLC2	1,690,000	42,767
Kemira Oyj	1,705,000	39,828
Symrise AG2	1,210,000	32,096
Asian Paints Ltd.	1,270,200	31,662
SSCP Co., Ltd.2	890,000	29,187
Yamana Gold Inc.	2,400,000	28,405
Lynas Corp. Ltd.2	24,621,611	28,054
Minerals Technologies Inc.	380,000	25,460
Eastern Platinum Ltd.2	8,061,700	18,351
Eastern Platinum Ltd.2,4	2,500,000	5,691
Nikanor PLC2	2,112,945	22,675
Banro Corp.2,4	1,744,600	21,966
Central African Mining & Exploration Co. PLC2	39,546,569	21,220
Mineral Deposits Ltd.2	16,220,000	21,213
Cementerie del Tirreno S.p.A.	2,058,948	20,818
James Hardie Industries NV	3,000,000	18,967
Samling Global Ltd.2	53,410,000	17,665
Gem Diamonds Ltd.2	800,000	17,334
Macarthur Coal Ltd.	2,870,000	17,305
PT Semen Gresik	27,150,000	15,743
European Minerals Corp. (GBP denominated)2	6,880,000	10,266
European Minerals Corp.2	3,300,000	4,986
PT Indocement Tunggal Prakarsa Tbk	21,125,000	14,099
Shree Cement Ltd.	350,000	13,446
Peak Gold Ltd.2,4	12,500,000	8,813
Peak Gold Ltd.2	6,000,000	4,230
European Goldfields Ltd.2	1,996,000	11,873
Oxus Gold PLC2	10,915,000	11,658
Nihon Parkerizing Co., Ltd.	925,000	11,017
Ta Ann Holdings Bhd.	4,300,000	9,661
Oriel Resources PLC2,4	7,787,500	9,233
Hung Hing Printing Group Ltd.	17,199,000	8,987
Valspar Corp.	300,000	8,163
Zoloto Resources Ltd.1,2,3	5,425,000	7,938
Bowater Inc.	500,000	7,460
Mwana Africa PLC2,4	5,980,000	6,479
Gammon Gold Inc.2	539,200	6,447
Energem Resources Inc.1,2	8,002,500	3,224
Energem Resources Inc.1,2,4	2,200,000	886
		1,557,550

ENERGY — 5.81%
OPTI Canada Inc.1,2	12,051,600	226,028
OPTI Canada Inc.1,2,4	420,000	7,877
Quicksilver Resources Inc.2	3,820,750	179,766
Oilexco Inc.2	6,808,600	98,686
Oilexco Inc. (GBP denominated)2,4	2,900,000	42,029
Oilexco Inc.2,4	520,000	7,537
Banpu PCL	8,391,400	85,199
Banpu PCL, nonvoting depositary receipt	1,240,000	12,590
Oceaneering International, Inc.2	1,000,000	75,800
First Calgary Petroleums Ltd.1,2	9,048,000	44,018
First Calgary Petroleums Ltd. (GBP denominated)1,2	4,800,000	23,058
WorleyParsons Ltd.	1,705,556	64,137
Denison Mines Corp.2	5,500,000	61,770
Denbury Resources Inc.2	1,270,000	56,756
Delta Petroleum Corp.2	2,625,000	47,119
Paladin Resources Ltd (CAD denominated)2	6,000,000	41,580
Paladin Resources Ltd2	718,074	4,928
Bill Barrett Corp.2	1,155,000	45,519
FMC Technologies, Inc.2	700,000	40,362
Expro International Group PLC	2,000,000	40,187
BA Energy Inc.1,2,3,4	5,661,692	39,919
Warren Resources, Inc.2	2,750,000	34,485
Wellstream Holdings PLC2	1,957,562	32,632
Synenco Energy Inc., Class A1,2	2,050,000	23,189
Synenco Energy Inc., Class A1,2,4	800,000	9,049
Concho Resources Inc.2	2,161,240	32,008
Uranium One Inc.2	2,250,000	29,802
Regal Petroleum PLC1,2	7,817,000	29,481
Centennial Coal Co. Ltd.	5,927,391	19,604
China Oilfield Services Ltd., Class H	7,730,000	17,807
Core Laboratories NV2	100,000	12,739
VeraSun Energy Corp.2	1,060,000	11,660
Sterling Energy PLC2	37,700,000	8,862
Bankers Petroleum Ltd.2	13,703,800	6,695
Bankers Petroleum Ltd.2,4	2,200,000	1,075
Petro Rubiales Energy Corp.2,3,4	8,000,000	5,825
Mart Resources, Inc.2,4	6,459,375	2,863
Mart Resources, Inc.2,3,4	6,000,000	2,390
High Arctic Energy Services Inc.	1,923,000	3,506
Verenium Corp.2	592,472	3,128
Caspian Energy Inc. (GBP denominated)1,2	3,450,000	1,552
Caspian Energy Inc.1,2	2,450,000	1,085
		1,534,302

CONSUMER STAPLES — 3.10%
Lindt & Sprüngli AG, participation certificate	19,166	66,669
Lindt & Sprüngli AG	1,694	64,209
China Mengniu Dairy Co.	15,398,000	67,079
Coca-Cola Icecek AS, Class C	7,623,603	63,931
Olam International Ltd.	28,265,000	59,762
Bare Escentuals, Inc.2	2,124,300	52,831
AMOREPACIFIC Corp.	67,864	50,668
Fresh Del Monte Produce Inc.	1,732,500	49,809
Andersons, Inc.1	1,000,000	48,020
Hain Celestial Group, Inc.2	1,380,000	44,339
Anadolu Efes Biracilik ve Malt Sanayii AS	3,587,982	37,536
Poslovni sistem Mercator, dd	69,933	36,899
BJ’s Wholesale Club, Inc.2	948,000	31,436
Hite Brewery Co., Ltd.	210,000	29,383
IAWS Group PLC	952,000	21,166
Universal Robina Corp.	51,235,000	18,440
China Milk Products Group Ltd.	19,600,000	17,157
Central Garden & Pet Co., Class A2	1,250,000	11,225
PT Astra Agro Lestari Tbk	7,950,000	14,613
Massmart Holdings Limited	1,120,000	13,623
Emmi AG	95,800	13,415
Green Mountain Coffee Roasters, Inc.2	149,346	4,957
		817,167

TELECOMMUNICATION SERVICES — 1.70%
Time Warner Telecom Inc., Class A2	4,100,000	90,077
LG Telecom Ltd.2	6,370,000	64,201
Manitoba Telecom Services Inc.	1,070,000	52,163
NTELOS Holdings Corp.	1,604,175	47,259
NeuStar, Inc., Class A2	1,125,040	38,578
Partner Communications Co. Ltd.3	2,035,000	34,006
Partner Communications Co. Ltd. (ADR)	125,000	2,070
Telemig Celular Participações SA, preferred nominative	524,843	15,389
Telemig Celular Participações SA, preferred nominative (ADR)	163,000	9,552
Total Access Communication PCL2	17,046,000	22,842
True Corp. PCL2	107,000,000	20,916
DiGi.Com Bhd.	2,927,500	18,485
GLOBE TELECOM, Inc.	526,867	17,154
QSC AG2	1,969,863	10,450
Unwired Group Ltd.2	12,400,000	5,278
		448,420

UTILITIES — 1.61%
Xinao Gas Holdings Ltd.1	56,438,000	115,196
GVK Power & Infrastructure Ltd.1	3,357,464	55,646
First Gen Corp.	29,779,000	41,882
Glow Energy PCL	37,970,000	38,773
CESC Ltd.	2,559,000	31,615
PNOC Energy Development Corp.	208,263,000	29,521
Northumbrian Water Group PLC	3,425,000	23,856
Electricity Generating PCL	6,535,500	22,119
AES Tietê SA, preferred nominative	600,000,000	20,918
Tata Power Co. Ltd.	579,151	12,478
Energen Corp.	200,000	11,424
Manila Water Co., Inc.	35,000,000	10,853
Ratchaburi Electricity Generating Holding PCL	7,560,000	10,422
		424,703

MISCELLANEOUS — 5.00%
Other common stocks in initial period of acquisition		1,318,553


Total common stocks (cost: $16,654,218,000)		24,253,745





Preferred stocks — 0.06%	Shares	Market value (000)

CONSUMER DISCRETIONARY — 0.06%
HUGO BOSS AG	215,000	$14,586


Total preferred stocks (cost: $8,833,000)		14,586




Rights & warrants — 0.07%

MATERIALS — 0.05%
Kenmare Resources PLC, warrants, expire 20091,2	5,775,000	4,101
European Minerals Corp., warrants, expire 20102	3,440,000	2,460
European Minerals Corp., warrants, expire 20112	1,650,000	1,163
Eastern Platinum Ltd., warrants, expire 20092	1,750,000	1,675
Eastern Platinum Ltd., warrants, expire 20082	2,043,750	1,606
Peak Gold Ltd., warrants, expire 20122,4	6,250,000	1,826
Oriel Resources PLC, warrants, expire 20102,4	2,500,000	1,022
Energem Resources Inc., warrants, expire 20091,2,3,4	2,200,000	207
Energem Resources Inc., warrants, expire 20081,2,3	1,200,000	4
		14,064

ENERGY — 0.01%
OPTI Canada Inc., warrants, expire 20081,2,3,4	105,000	1,206
Petro Rubiales Energy Corp., warrants, expire 20122,3,4	4,000,000	930
Bankers Petroleum Ltd., warrants, expire 20122,4	1,100,000	172
Mart Resources, Inc., warrants, expire 20082,3,4	3,229,687	91
		2,399

HEALTH CARE — 0.01%
Gentium SpA (ADR), warrants, expire 20111,2,3,4	90,000	1,001


FINANCIALS — 0.00%
TICON Property Fund, rights, expire 20071,2,3	6,175,000	27
TICON Property Fund, rights, expire 20071,2,3	1,425,000	6
		33

MISCELLANEOUS — 0.00%
Other rights & warrants in initial period of acquisition		1,250


Total rights & warrants (cost: $3,150,000)		18,747




Convertible securities — 0.08%	Shares or principal amount

INFORMATION TECHNOLOGY — 0.04%
Fluidigm Corp., Series E, convertible preferred2,3,4	2,225,000	8,900
HowStuffWorks Inc., Series B, convertible preferred2,3,4	39,333	3,041
Socratic Technologies, Inc., Series A, convertible preferred2,3,4	375,000	—
		11,941

CONSUMER DISCRETIONARY — 0.03%
Spot Runner, Inc., Series C, convertible preferred2,3,4	1,626,016	$ 7,577


TELECOMMUNICATION SERVICES — 0.01%
Time Warner Telecom Inc. 2.375% convertible debentures 2026	$1,600,000	2,150


Total convertible securities (cost: $21,416,000)		21,668




Bonds & notes — 0.06%	Principal amount (000)

CONSUMER DISCRETIONARY — 0.06%
XM Satellite Radio Inc. and XM Satellite Radio Holdings Inc. 9.75% 2014	16,600	16,725


Total bonds & notes (cost: $15,703,000)		16,725




Short-term securities — 7.78%

Federal Home Loan Bank 4.71%–5.13% due 10/5–12/14/2007	246,847	245,715
AstraZeneca PLC 4.90%–5.49% due 10/12–12/4/20075	112,600	112,026
Nestlé Capital Corp. 5.26%–5.30% due 10/16–10/26/20075	105,500	105,148
Freddie Mac 4.83%–5.115% due 10/19–11/5/2007	99,900	99,481
American Honda Finance Corp. 5.23%–5.26% due 10/3–11/28/2007	85,550	85,060
Unilever Capital Corp. 5.25% due 11/20–12/3/20075	85,200	84,501
Depfa Bank PLC 5.24% due 10/23/20075	77,800	77,536
ING (U.S.) Funding LLC 5.24% due 10/4/2007	51,800	51,771
Mont Blanc Capital Corp. 5.20% due 11/15/20075	12,900	12,814
UBS Finance (Delaware) LLC 4.75%–5.36% due 10/1–11/19/2007	64,700	64,257
Total Capital SA 5.25%–5.43% due 10/1–11/16/20075	61,200	60,944
Société Générale North America, Inc. 5.80% due 10/1/2007	39,000	38,994
Barton Capital LLC 5.17% due 10/17/20075	20,000	19,951
Statoil ASA 5.05%–5.13% due 11/15–11/19/20075	55,000	54,609
BASF AG 5.25%–5.30% due 10/4/20075	53,496	53,465
Stadshypotek Delaware Inc. 5.24% due 10/15/20075	52,000	51,885
Barclays U.S. Funding Corp. 5.47% due 10/29/2007	51,800	51,576
Allied Irish Banks N.A. Inc. 5.24% due 10/19/20075	50,000	49,863
Toyota Credit de Puerto Rico Corp. 5.24% due 10/17/2007	25,000	24,939
Toyota Motor Credit Corp. 4.75% due 12/4/2007	25,000	24,766
Royal Bank of Scotland PLC 5.535% due 11/15/2007	50,000	49,653
Swedish Export Credit Corp. 5.35% due 10/15/2007	47,700	47,594
Liberty Street Funding Corp. 6.30% due 10/2/20075	42,300	42,285
Old Line Funding, LLC 5.20% due 10/22/20075	20,600	20,535
Thunder Bay Funding, LLC 5.65% due 10/18/20075	20,000	19,943
DaimlerChrysler Revolving Auto Conduit LLC 6.25% due 10/16/2007	25,000	24,930
DaimlerChrysler Revolving Auto Conduit LLC II 5.60% due 10/23/2007	15,000	14,946
General Electric Capital Corp. 5.24% due 12/12/2007	32,900	32,554
Danske Corp. 5.63% due 10/11/20075	31,600	31,546
Jupiter Securitization Co., LLC 6.30% due 10/16/20075	31,500	31,412
Swedbank Mortgage AB 5.10% due 10/4–11/21/2007	27,800	27,613
Fannie Mae 5.145% due 11/7/2007	26,900	26,764
Variable Funding Capital Corp. 6.10% due 10/4/20075	25,900	25,882
KfW International Finance Inc. 5.20% due 10/15/20075	25,000	24,946
National Australia Funding (Delaware) Inc. 5.34% due 10/17/20075	25,000	24,937
Electricité de France 5.30% due 11/7/2007	25,000	24,853
Shell International Finance BV 4.74% due 11/27/20075	25,000	24,809
Toronto-Dominion Holdings USA Inc. 5.085% due 11/30/20075	25,000	24,781
Westpac Banking Corp. 5.54% due 12/13/20075	25,000	24,734
BMW U.S. Capital LLC 4.95% due 10/18/20075	22,400	22,345
Bank of Ireland 5.27% due 10/11/20075	21,300	21,266
GlaxoSmithKline Finance PLC 4.77%–5.20% due 10/12–12/18/20075	21,200	20,984
Siemens Capital Co. LLC 5.03% due 10/15/20075	18,828	18,788
IBM Corp. 5.13% due 10/31/20075	17,900	17,821
BP Capital Markets America Inc. 4.75%–4.76% due 10/25–11/26/20075	16,251	16,142
Ranger Funding Co. LLC 6.20% due 10/18/20075	10,000	9,969
Procter & Gamble International Funding S.C.A. 5.03% due 11/16/20075	10,000	9,929


Total short-term securities (cost: $2,051,195,000)		2,051,262


Total investment securities (cost: $18,754,515,000)		26,376,733
Other assets less liabilities		3,778

Net assets		$26,380,511

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

1Represents an affiliated company as defined under the Investment Company Act of 1940.

2 Security did not produce income during the last 12 months.

3Valued under fair value procedures adopted by authority of the board of directors. The total value of all such securities, including those in "Miscellaneous," was $216,014,000.

4Security purchased in transactions exempt from registration under the Securities Act of 1933. These securities 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	$69,641	.27%
Oilexco Inc. (GBP denominated)	12/15/2005	9,456	42,029	.16
Oilexco Inc.	3/7/2007	3,454	7,537	.03
BA Energy Inc.	8/25/2005–9/1/2006	33,229	39,919	.15
Fontainebleau Resorts LLC, Class A, non-voting units	10/5/2005–6/1/2007	21,500	22,800	.09
Banro Corp.	7/26/2005	7,447	21,966	.08
Gentium SpA (ADR)	5/31/2006–2/7/2007	11,177	17,227	.07
Gentium SpA (ADR), warrants, expire 2011	5/31/2006	—	1,001	.00
Spot Runner, Inc., Series C, convertible preferred	10/25/2006	6,000	7,577	.03
Spot Runner, Inc.	10/25/2006–5/21/2007	5,071	6,123	.02
Peak Gold Ltd.	3/21/2007	6,709	8,813	.03
Peak Gold Ltd., warrants, expire 2012	3/21/2007	1,386	1,826	.01
Oriel Resources PLC	2/8/2005–6/1/2007	8,016	9,233	.04
Oriel Resources PLC, warrants, expire 2010	2/8/2005	—	1,022	.00
OPTI Canada Inc.	6/1/2005	4,610	7,877	.03
OPTI Canada Inc., warrants, expire 2008	6/1/2005	355	1,206	.01
Synenco Energy Inc., Class A	11/4/2005	11,818	9,049	.04
Fluidigm Corp., Series E, convertible preferred	12/21/2006–3/30/2007	8,900	8,900	.03
Petro Rubiales Energy Corp.	7/9/2007	5,551	5,825	.02
Petro Rubiales Energy Corp., warrants, expire 2012	7/9/2007	932	930	.00
Mwana Africa PLC	12/7/2005	5,032	6,479	.03
Euronet Worldwide, Inc.	3/8/2007	5,000	5,954	.02
Eastern Platinum Ltd.	4/3/2007	4,100	5,691	.02
Mart Resources, Inc.	1/16/2007	3,316	2,863	.01
Mart Resources, Inc.	9/7/2007	2,278	2,390	.01
Mart Resources, Inc., warrants, expire 2008	1/16/2007	—	91	.00
Arcadia Resources, Inc.	12/29/2006	7,500	3,112	.01
HowStuffWorks Inc., Series B, convertible preferred	1/18/2007	3,041	3,041	.01
Bankers Petroleum Ltd.	2/22/2007	1,328	1,075	.01
Bankers Petroleum Ltd., warrants, expire 2012	2/22/2007	—	172	.00
Energem Resources Inc.	3/6/2007	1,035	886	.00
Energem Resources Inc., warrants, expire 2009	3/6/2007	367	207	.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	82	.00
MMC AS	4/18/2000	12,218	—	—
Socratic Technologies, Inc., Series A, convertible preferred	6/9/2000	1,875	—	—

Total restricted securities		$267,828	$322,934	1.23%

5Security purchased in transactions exempt from registration under the Securities Act of 1933. These securities 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 $1,115,796,000, which represented 4.23% of the net assets of the fund.

ADR = American Depositary Receipts

CDI = CREST Depository Interest

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 a financial professional and should be read carefully before investing.

MFGEFP-935-1107O-S10916

Summary investment portfolio

September 30, 2007

The following summary investment portfolio is designed to streamline the report and help investors better focus on a fund’s principal holdings. For details on how to obtain a complete schedule of portfolio holdings, please see the inside back cover.

Industry sector diversification (percent of net assets)

[begin pie chart]

Consumer discretionary	18.15	%
Industrials	17.79
Information technology	11.60
Financials	11.04
Health care	10.24
Other industries	23.39
Short-term securities & other assets less liabilities	7.79

[end pie chart]

Country diversification (percent of net assets)


United States	32.3	%
Euro zone *	10.2
South Korea	8.2
Canada	4.9
India	4.8
United Kingdom	4.2
Australia	3.6
Hong Kong	3.4
Japan	2.6
Singapore	2.0
Brazil	2.0
Other countries	14.0
Short-term securities & other assets less liabilities	7.8
Total	100.0	%


* Countries using the euro as a common currency; those represented in the fund's portfolio are Austria, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Netherlands, Slovenia and Spain.

	Shares		Market		Percent
			value		of net
Common stocks - 91.94%				(000)	assets

Consumer discretionary - 18.15%
Jumbo SA (1)		4,844,956	$	165,687		.63	%
Schibsted ASA		3,138,000		165,274		.63
Fourlis (1)		4,074,000		153,034		.58
Central European Media Enterprises Ltd., Class A (2)		1,328,500		121,837		.46
Lojas Renner SA		5,950,000		119,325		.45
Praktiker Bau- und Heimwerkermärkte Holding AG		2,748,983		102,908		.39
Cyrela Brazil Realty SA, ordinary nominative		7,271,000		99,291		.38
Scientific Games Corp., Class A (2)		2,600,000		97,760		.37
Blue Nile, Inc. (1) (2)		1,037,940		97,691		.37
Pantaloon Retail (India) Ltd.		6,643,120		90,474		.34
Cheil Industries Inc.		1,300,000		86,970		.33
Saks Inc. (2)		5,032,500		86,307		.33
AB Lindex (1)		5,118,000		84,688		.32
Toyoda Gosei Co., Ltd.		2,250,000		81,554		.31
Lions Gate Entertainment Corp. (1) (2)		7,728,500		79,681		.30
Galaxy Entertainment Group Ltd. (2)		70,475,000		78,091		.30
Billabong International Ltd.		5,845,000		77,638		.29
CarMax, Inc. (2)		3,800,000		77,254		.29
Other securities				2,922,140		11.08
				4,787,604		18.15

Industrials - 17.79%
Samsung Engineering Co., Ltd. (1)		2,437,640		327,754		1.24
Container Corp. of India Ltd.		2,891,794		153,560		.58
Murray & Roberts Holdings Ltd.		11,545,000		151,340		.57
BayWa AG (1)		1,892,790		108,647		.41
MSC Industrial Direct Co., Inc., Class A		2,125,000		107,504		.41
Klöckner & Co AG		1,372,000		94,837		.36
Aalberts Industries NV		3,971,000		94,686		.36
JetBlue Airways Corp. (1) (2)		9,950,000		91,739		.35
Downer EDI Ltd.		15,773,919		87,557		.33
KBR, Inc. (2)		2,248,000		87,155		.33
A-TEC Industries AG (1)		436,800		83,409		.32
Boart Longyear Ltd. (2) (3)		33,000,000		69,641
Boart Longyear Ltd. (2)		4,730,926		9,984		.30
GS Engineering & Construction Corp.		448,627		77,975		.30
Other securities				3,146,565		11.93
				4,692,353		17.79

Information technology - 11.60%
Kingboard Chemical Holdings Ltd. (1)		49,934,200		318,101		1.21
Novell, Inc. (1) (2)		17,978,000		137,352		.52
Tripod Technology Corp. (1)		28,477,108		116,073		.44
NAVTEQ Corp. (2)		1,400,000		109,158		.41
SEEK Ltd.		12,276,012		99,164		.38
CNET Networks, Inc. (1) (2)		10,655,000		79,380		.30
Other securities				2,201,060		8.34
				3,060,288		11.60

Financials - 11.04%
Pusan Bank (1)		11,726,500		215,353		.82
Daegu Bank, Ltd. (1)		10,570,000		195,848		.74
Indiabulls Real Estate Ltd. (2)		8,069,292		139,427		.53
Kotak Mahindra Bank Ltd.		5,493,262		127,765		.48
Orco Property Group SA (1)		710,454		107,437		.41
HDFC Bank Ltd.		2,835,000		102,646		.39
Dolphin Capital Investors Ltd. (1) (2)		32,021,860		93,491		.36
Indiabulls Financial Services Ltd.		6,193,648		93,436		.35
Other securities				1,836,684		6.96
				2,912,087		11.04

Health care - 10.24%
Kyphon Inc. (2)		1,841,300		128,891		.49
Beckman Coulter, Inc.		1,575,000		116,172		.44
Medicis Pharmaceutical Corp., Class A (1)		3,545,000		108,158		.41
ResMed Inc (2)		1,692,000		72,536
ResMed Inc (CDI) (2)		1,500,000		6,517		.30
ArthroCare Corp. (1) (2)		1,394,000		77,911		.30
Grifols, SA		3,387,600		77,780		.30
Gerresheimer AG, non-registered shares (2)		1,435,000		77,765		.29
Other securities				2,034,988		7.71
				2,700,718		10.24

Materials - 5.90%
Inmet Mining Corp.		1,700,000		170,805		.65
Cleveland-Cliffs Inc		1,855,000		163,184		.62
Sino-Forest Corp. (2)		5,440,000		123,178		.46
Dongkuk Steel Mill Co., Ltd.		2,245,000		118,532		.45
Major Drilling Group International Inc. (1) (2)		1,637,500		87,549		.33
AMG Advanced Metallurgical Group NV (1) (2)		1,456,000		79,526		.30
Other securities				814,776		3.09
				1,557,550		5.90

Energy - 5.81%
OPTI Canada Inc. (1) (2)		12,051,600		226,028
OPTI Canada Inc. (1) (2) (3)		420,000		7,877		.89
Quicksilver Resources Inc. (2)		3,820,750		179,766		.68
Oilexco Inc. (2)		6,808,600		98,686
Oilexco Inc. (GBP denominated) (2) (3)		2,900,000		42,029
Oilexco Inc. (2) (3)		520,000		7,537		.56
Banpu PCL		8,391,400		85,199		.32
Other securities				887,180		3.36
				1,534,302		5.81

Consumer staples - 3.10%
Other securities				817,167		3.10


Telecommunication services - 1.70%
Time Warner Telecom Inc., Class A (2)		4,100,000		90,077		.34
Other securities				358,343		1.36
				448,420		1.70

Utilities - 1.61%
Xinao Gas Holdings Ltd. (1)		56,438,000		115,196		.44
Other securities				309,507		1.17
				424,703		1.61


MISCELLANEOUS - 5.00%
Other common stocks in initial period of acquisition				1,318,553		5.00


Total common stocks (cost: $16,654,218,000)				24,253,745		91.94





Preferred stocks - 0.06%

Other - 0.06%
Other securities				14,586		.06


Total preferred stocks (cost: $8,833,000)				14,586		.06





Rights & warrants - 0.07%

Other - 0.07%
Other securities				17,497		.07


MISCELLANEOUS - 0.00%
Other rights & warrants in initial period of acquisition				1,250		.00


Total rights & warrants (cost: $3,150,000)				18,747		.07





Convertible securities - 0.08%

Other - 0.08%
Other securities				21,668		.08


Total convertible securities (cost: $21,416,000)				21,668		.08





Bonds & notes - 0.06%

Other - 0.06%
Other securities				16,725		.06


Total bonds & notes (cost: $15,703,000)				16,725		.06



	Principal
	amount
Short-term securities - 7.78%		(000)

Federal Home Loan Bank 4.71%-5.13% due 10/5-12/14/2007	$	246,847		245,715		.93
AstraZeneca PLC 4.90%-5.49% due 10/12-12/4/2007 (4)		112,600		112,026		.43
Nestlé Capital Corp. 5.26%-5.30% due 10/16-10/26/2007 (4)		105,500		105,148		.40
Freddie Mac 4.83%-5.115% due 10/19-11/5/2007		99,900		99,481		.38
American Honda Finance Corp. 5.23%-5.26% due 10/3-11/28/2007		85,550		85,060		.32
Unilever Capital Corp. 5.25% due 11/20-12/3/2007 (4)		85,200		84,501		.32
Depfa Bank PLC 5.24% due 10/23/2007 (4)		77,800		77,536		.29
Other securities				1,241,795		4.71
				2,051,262		7.78


Total short-term securities (cost: $2,051,195,000)				2,051,262		7.78


Total investment securities (cost: $18,754,515,000)				26,376,733		99.99
Other assets less liabilities				3,778		.01

Net assets			$	26,380,511		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 year ended September 30, 2007, appear below.

	Beginning shares	Additions	Reductions	Ending shares	Dividend income (000)	Market value of affiliates at 9/30/07 (000)

Samsung Engineering Co., Ltd.	2,587,640	-	150,000	2,437,640	$ 1,858	$ 327,754
Kingboard Chemical Holdings Ltd.	45,946,000	3,988,200	-	49,934,200	9,489	318,101
Kingboard Chemical Holdings Ltd., warrants, expire 2006	3,988,200	-	3,988,200	-	-	-
OPTI Canada Inc. (2)	10,409,600	1,642,000	-	12,051,600	-	226,028
OPTI Canada Inc. (2) (3)	420,000	-	-	420,000	-	7,877
OPTI Canada Inc., warrants, expire 2008 (2) (3) (5)	105,000	-	-	105,000	-	1,206
Pusan Bank	11,477,500	249,000	-	11,726,500	4,421	215,353
Daegu Bank, Ltd.	10,399,890	170,110	-	10,570,000	5,354	195,848
Jumbo SA	4,164,956	680,000	-	4,844,956	1,454	165,687
Fourlis	3,310,000	764,000	-	4,074,000	993	153,034
Novell, Inc. (2)	5,394,100	12,583,900	-	17,978,000	-	137,352
Tripod Technology Corp.	21,391,920	7,085,188	-	28,477,108	1,016	116,073
Xinao Gas Holdings Ltd.	56,438,000	-	-	56,438,000	559	115,196
BayWa AG	-	1,892,790	-	1,892,790	542	108,647
Medicis Pharmaceutical Corp., Class A	3,695,000	75,000	225,000	3,545,000	428	108,158
Orco Property Group SA	346,107	364,347	-	710,454	671	107,437
Blue Nile, Inc. (2)	860,375	309,565	132,000	1,037,940	-	97,691
Dolphin Capital Investors Ltd. (2)	-	32,021,860	-	32,021,860	-	93,491
JetBlue Airways Corp. (2)	7,654,023	4,045,977	1,750,000	9,950,000	-	91,739
Major Drilling Group International Inc. (2)	-	1,637,500	-	1,637,500	-	87,549
AB Lindex (6)	1,703,700	3,414,300	-	5,118,000	3,186	84,688
A-TEC Industries AG	-	453,250	16,450	436,800	1,477	83,409
Lions Gate Entertainment Corp. (2)	7,728,500	-	-	7,728,500	-	79,681
AMG Advanced Metallurgical Group NV (2)	-	1,456,000	-	1,456,000	-	79,526
CNET Networks, Inc. (2)	10,655,000	-	-	10,655,000	-	79,380
ArthroCare Corp. (2)	1,431,700	60,000	97,700	1,394,000	-	77,911
Integra LifeSciences Holdings Corp. (2)	2,189,500	50,500	662,000	1,578,000	-	76,659
China Medical Technologies, Inc. (ADR)	-	1,686,606	-	1,686,606	558	72,170
Arbitron Inc.	1,496,760	-	-	1,496,760	599	67,863
First Calgary Petroleums Ltd. (2)	3,146,000	5,902,000	-	9,048,000	-	44,018
First Calgary Petroleums Ltd. (GBP denominated) (2)	4,800,000	-	-	4,800,000	-	23,058
Jackson Hewitt Tax Service Inc.	200,000	2,196,000	-	2,396,000	1,118	66,992
Banyan Tree Holdings Ltd.	33,769,000	20,114,000	8,478,000	45,405,000	627	65,428
Danieli & C. Officine Meccaniche SpA	-	2,592,500	-	2,592,500	-	64,700
Pyeong San Co., Ltd. (6)	41,468	1,178,564	-	1,220,032	60	64,282
American Medical Systems Holdings, Inc. (2)	700,000	3,025,000	-	3,725,000	-	63,139
Jammu and Kashmir Bank Ltd.	-	3,149,500	-	3,149,500	740	62,164
Genesis Lease Ltd. (ADR)	-	2,415,000	-	2,415,000	2,177	60,085
SkillSoft PLC (ADR) (2)	1,696,800	4,753,200	-	6,450,000	-	57,986
TK Corp.	-	1,580,000	-	1,580,000	91	57,514
FoxHollow Technologies, Inc. (2)	1,994,900	181,500	-	2,176,400	-	57,457
GVK Power & Infrastructure Ltd.	-	3,357,464	-	3,357,464	-	55,646
Michaniki SA	3,935,000	415,000	35,600	4,314,400	819	40,977
Michaniki SA, preference shares	-	1,687,900	61,624	1,626,276	318	11,364
Honeys Co., Ltd.	-	1,755,000	30,000	1,725,000	282	51,403
TradeDoubler AB	-	1,820,000	-	1,820,000	-	51,182
Echelon Corp. (2)	2,000,000	-	-	2,000,000	-	50,020
Chart Industries, Inc. (2)	1,613,500	-	58,226	1,555,274	-	50,018
Unitech Corporate Parks PLC (2)	-	23,399,700	-	23,399,700	-	49,027
Nishimatsuya Chain Co., Ltd.	1,092,000	2,763,500	-	3,855,500	223	48,945
Andersons, Inc.	-	1,000,000	-	1,000,000	152	48,020
Ekornes ASA	2,237,598	-	-	2,237,598	2,353	47,721
Kenmare Resources PLC (2)	39,316,000	-	-	39,316,000	-	43,197
Kenmare Resources PLC, warrants, expire 2009 (2)	5,775,000	-	-	5,775,000	-	4,101
Vital Signs, Inc.	580,000	279,690	-	859,690	273	44,824
Insulet Corp. (2)	-	2,012,680	-	2,012,680	-	43,776
UnionBank of the Philippines	-	35,823,500	-	35,823,500	712	43,639
Unisteel Technology Ltd.	9,655,000	18,952,000	-	28,607,000	1,447	41,415
Apollo Hospitals Enterprise Ltd.	3,275,000	-	-	3,275,000	390	40,089
Volcano Corp. (2)	2,303,900	263,000	130,100	2,436,800	-	40,061
BA Energy Inc. (2) (3) (5)	5,661,692	-	-	5,661,692	-	39,919
BA Energy Inc., warrants, expire 2006	947,400	-	947,400	-	-	-
IBT Education Ltd.	21,727,690	-	-	21,727,690	1,667	38,436
Fleetwood Enterprises, Inc. (2)	-	4,405,000	-	4,405,000	-	37,663
Greatbatch, Inc. (2)	1,744,400	-	384,700	1,359,700	-	36,154
SFA Engineering Corp.	553,700	38,440	-	592,140	596	35,213
Nien Made Enterprise Co., Ltd.	26,156,000	2,014,012	-	28,170,012	1,276	35,007
Interhyp AG	298,903	155,947	-	454,850	831	34,379
Dore Holdings Ltd.	-	78,934,000	-	78,934,000	146	33,624
Synenco Energy Inc., Class A (2)	1,815,000	886,000	651,000	2,050,000	-	23,189
Synenco Energy Inc., Class A (2) (3)	1,100,000	-	300,000	800,000	-	9,049
Altra Holdings, Inc. (2)	-	1,905,548	-	1,905,548	-	31,765
Internet Capital Group, Inc. (2)	2,100,000	500,000	-	2,600,000	-	31,200
Veeco Instruments Inc. (2)	1,598,523	-	-	1,598,523	-	30,979
I-Flow Corp. (2)	1,100,000	619,000	60,200	1,658,800	-	30,837
Arpida Ltd. (2)	-	1,231,509	-	1,231,509	-	30,682
austriamicrosystems AG, non-registered shares (2)	257,455	317,545	-	575,000	-	30,232
Ipca Laboratories Ltd.	-	1,794,000	-	1,794,000	-	29,871
JVM Co., Ltd.	-	506,000	-	506,000	-	29,814
Regal Petroleum PLC (2)	7,817,000	-	-	7,817,000	-	29,481
Peet's Coffee & Tea, Inc. (2)	-	1,015,000	-	1,015,000	-	28,329
Beacon Roofing Supply, Inc. (2)	-	2,695,400	-	2,695,400	-	27,547
Gruppo MutuiOnline SpA (2)	-	3,160,000	-	3,160,000	-	23,280
Eastern Property Holdings Ltd.	-	219,978	-	219,978	385	23,098
PetMed Express, Inc. (2)	-	1,500,000	-	1,500,000	-	21,015
Cpl Resources PLC	-	2,784,000	-	2,784,000	87	20,447
Infotech Enterprises Ltd.	-	3,000,000	-	3,000,000	11	20,236
Vital Images, Inc. (2)	-	1,023,000	-	1,023,000	-	19,969
Entertainment Rights PLC (2)	-	42,500,000	-	42,500,000	-	19,112
Hung Poo Real Estate Development Corp.	16,367,000	2,734,120	-	19,101,120	964	18,908
Hythiam, Inc. (2)	2,425,000	475,000	425,000	2,475,000	-	18,414
Gentium SpA (ADR) (2) (3)	450,000	300,000	-	750,000	-	17,227
Gentium SpA (ADR), warrants, expire 2011 (2) (3) (5)	90,000	-	-	90,000	-	1,001
Solomon Mutual Savings Bank	-	1,062,023	-	1,062,023	127	16,718
Solomon Mutual Savings Bank, rights, expire 2007	-	133,023	133,023	-	-	-
Halla Engineering & Construction Corp.	626,000	-	-	626,000	281	16,697
YBM Sisa.com Inc.	624,449	200,481	-	824,930	181	16,683
Bloomsbury Publishing PLC	5,405,000	-	-	5,405,000	388	16,324
CDNetworks Co., Ltd. (2)	251,876	433,739	-	685,615	-	16,114
SupportSoft, Inc. (2)	2,554,400	-	-	2,554,400	-	14,918
Chuang's China Investments Ltd.	-	95,968,000	-	95,968,000	105	14,821
ValueVision Media, Inc., Class A (2)	2,400,000	-	470,000	1,930,000	-	14,301
Ono Sokki Co., Ltd.	162,000	1,447,000	-	1,609,000	174	12,015
Introgen Therapeutics, Inc. (2)	-	2,677,100	-	2,677,100	-	11,163
Vical Inc. (2)	2,075,279	175,000	-	2,250,279	-	11,004
Norfolk Group Ltd. (2)	-	6,500,000	-	6,500,000	-	10,605
TICON Property Fund	24,700,000	5,700,000	-	30,400,000	883	9,579
TICON Property Fund, rights, expire 2007 (2) (5)	-	6,175,000	-	6,175,000	-	27
TICON Property Fund, rights, expire 2007 (2) (5)	-	1,425,000	-	1,425,000	-	6
Spark Networks PLC (ADR) (2)	1,103,000	1,300,000	10,800	2,392,200	-	9,425
Spark Networks PLC (GDR)	1,300,000	-	1,300,000	-	-	-
Zoloto Resources Ltd. (2) (5)	-	5,425,000	-	5,425,000	-	7,938
Gaming VC Holdings SA	2,023,800	-	-	2,023,800	869	6,174
Redline Communications Inc. (2)	-	3,150,000	-	3,150,000	-	5,293
Energem Resources Inc. (2)	8,002,500	-	-	8,002,500	-	3,224
Energem Resources Inc. (2) (3)	-	2,200,000	-	2,200,000	-	886
Energem Resources Inc., warrants, expire 2009 (2) (3) (5)	-	2,200,000	-	2,200,000	-	207
Energem Resources Inc., warrants, expire 2008 (2) (5)	1,200,000	-	-	1,200,000	-	4
Vision-Sciences, Inc. (2)	1,884,500	212,233	-	2,096,733	-	4,256
Sharper Image Corp. (2)	950,000	-	-	950,000	-	3,923
Phoenix PDE Co., Ltd.	1,500,000	-	-	1,500,000	135	3,788
Caspian Energy Inc. (GBP denominated) (2)	3,450,000	-	-	3,450,000	-	1,552
Caspian Energy Inc. (2)	2,450,000	-	-	2,450,000	-	1,085
Imagelinx PLC (2)	17,785,714	3,600,000	-	21,385,714	-	721
ZOOTS (2) (3) (5)	25,173	-	-	25,173	-	234
AMAG Pharmaceuticals, Inc. (2) (6) (7)	128,314	746,686	375,000	500,000	-	-
American Axle & Manufacturing Holdings, Inc. (7)	2,850,000	-	770,000	2,080,000	1,595	-
Applied Micro Circuits Corp. (2) (7)	-	16,525,000	4,000,000	12,525,000	-	-
Aventine Renewable Energy, Inc. (7)	2,200,000	100,000	2,300,000	-	-	-
Ballarat Goldfields NL (7)	53,355,000	-	53,355,000	-	-	-
Ballarat Goldfields NL (7)	10,250,000	-	10,250,000	-	-	-
Ballast Nedam NV, depository receipts (7)	628,753	33,742	325,000	337,495	518	-
Bankrate, Inc. (7)	-	1,175,000	1,175,000	-	-	-
Billing Services Group Ltd. (7)	16,548,800	-	16,548,800	-	-	-
CARBO Ceramics Inc. (7)	1,473,240	-	1,473,240	-	177	-
Career Technology (MFG.) Co., Ltd. (7)	14,957,559	-	14,957,559	-	-	-
Centennial Bank Holdings, Inc. (7)	2,700,000	-	2,700,000	-	-	-
Centennial Bank Holdings, Inc. (2) (7)	1,515,000	1,100,000	953,300	1,661,700	-	-
CESC Ltd. (7)	5,829,000	-	3,270,000	2,559,000	505	-
Citi Trends, Inc. (7)	1,073,916	15,584	1,089,500	-	-	-
CKE Restaurants, Inc. (7)	1,384,179	2,340,821	1,525,000	2,200,000	731	-
Delta Petroleum Corp. (2) (7)	2,829,000	1,330,000	1,534,000	2,625,000	-	-
Dongkuk Steel Mill Co., Ltd. (7)	3,355,000	-	1,110,000	2,245,000	2,259	-
Downer EDI Ltd. (7)	18,641,198	8,946,040	11,813,319	15,773,919	1,479	-
FirstAfrica Oil PLC (7)	172,338,000	-	172,338,000	-	-	-
Funcom NV (2) (7)	2,245,895	504,105	121,250	2,628,750	-	-
GES International (7)	42,700,000	-	42,700,000	-	-	-
Hemtex AB (7)	1,175,000	260,000	-	1,435,000	861	-
High Arctic Energy Services Inc. (7)	-	1,923,000	-	1,923,000	-	-
Ichia Technologies, Inc. (7)	16,995,177	613,797	11,181,000	6,427,974	448	-
IndyMac Bancorp, Inc. (7)	1,299,200	2,810,800	2,475,000	1,635,000	7,112	-
Infoteria Corp. (2) (5) (7)	2,577	-	-	2,577	-	-
Interflex Co., Ltd. (7)	799,000	-	799,000	-	-	-
Jamba, Inc. (7)	-	3,075,000	3,075,000	-	-	-
KEC Corp. (2) (7)	3,926,550	-	3,906,550	20,000	-	-
KEC Holdings Co. Ltd. (2) (7)	1,308,849	-	527,600	781,249	-	-
Knot, Inc. (7)	670,000	-	670,000	-	-	-
Knot, Inc. (7)	1,200,000	-	1,200,000	-	-	-
Korea Kumho Petrochemical Co., Ltd. (7)	1,810,940	-	901,608	909,332	1,138	-
Kyeryong Construction Industrial Co., Ltd. (7)	493,190	66,060	559,250	-	427	-
Kyphon Inc. (2) (7)	3,145,600	424,647	1,728,947	1,841,300	-	-
Levitt Corp., Class A (7)	1,000,000	-	1,000,000	-	37	-
Lojas Renner SA (7)	1,330,000	5,320,000	700,000	5,950,000	1,211	-
LS Industrial Systems Co., Ltd. (7)	1,950,000	147,338	1,180,000	917,338	1,313	-
Marchex, Inc., Class B (7)	2,125,000	-	1,875,000	250,000	87	-
Mentor Graphics Corp. (2) (7)	3,000,000	2,078,000	762,500	4,315,500	-	-
Mineral Deposits Ltd. (2) (7)	16,220,000	-	-	16,220,000	-	-
MKS Instruments, Inc. (7)	2,849,944	-	2,849,944	-	-	-
Myogen, Inc. (7)	2,315,000	-	2,315,000	-	-	-
Nabi Biopharmaceuticals (7)	3,050,000	-	3,050,000	-	-	-
Nireus Aquaculture SA (7)	-	2,593,750	2,593,750	-	223	-
Nireus Aquaculture SA, rights, expire 2007 (7)	-	2,075,000	2,075,000	-	-	-
Nireus Aquaculture SA, rights, expire 2007 (7)	-	2,075,000	2,075,000	-	-	-
NuVasive, Inc. (2) (7)	1,709,000	100,961	775,400	1,034,561	-	-
O2Micro International Ltd. (ADR) (2) (7)	3,055,000	-	2,555,000	500,000	-	-
ORBCOMM Inc. (2) (7)	-	2,456,000	574,162	1,881,838	-	-
PGG Wrightson Ltd. (7)	16,195,000	-	16,195,000	-	329	-
Plantynet Co., Ltd. (7)	537,600	-	537,600	-	-	-
PMC-Sierra, Inc. (2) (7)	11,500,000	850,000	11,250,000	1,100,000	-	-
Progressive Gaming International Corp. (7)	2,600,000	173,000	2,773,000	-	-	-
Quicksilver Resources Inc. (2) (7)	4,999,150	-	1,178,400	3,820,750	-	-
Restaurant Group PLC (7)	12,499,555	-	8,175,877	4,323,678	1,020	-
Sanctuary Group PLC (7)	14,412,733	-	14,412,733	-	-	-
SEEK Ltd. (7)	14,768,997	-	2,492,985	12,276,012	1,457	-
Semtech Corp. (2) (7)	5,900,000	-	4,250,000	1,650,000	-	-
Silitech Technology Corp. (7)	10,515,798	1,219,383	11,465,798	269,383	274	-
Sino-Forest Corp. (2) (7)	9,422,800	-	3,982,800	5,440,000	-	-
Thanachart Capital PCL (7)	86,650,000	-	86,650,000	-	1,439	-
Transmile Group Bhd. (7)	-	17,550,000	17,550,000	-	-	-
Tupperware Brands Corp. (7)	2,500,000	800,000	1,500,000	1,800,000	2,508	-
Unibet Group PLC (SDR) (7)	1,778,470	-	1,778,470	-	-	-
Veda Advantage Ltd. (7)	13,885,000	-	13,885,000	-	-	-
Warren Resources, Inc. (2) (7)	3,255,000	1,000,000	1,505,000	2,750,000	-	-
WD-40 Co. (7)	900,000	-	900,000	-	648	-
webMethods, Inc. (7)	-	4,105,000	4,105,000	-	-	-
Wright Medical Group, Inc. (7)	2,742,800	-	2,742,800	-	-	-
					$ 81,289	$ 5,953,518

The following footnotes apply to either the individual securities noted or one or more of the securities aggregated and listed as a single line item.

(1) Represents an affiliated company as defined under the Investment Act of 1940.

(2) Security did not produce income during the last 12 months.

(3) Security purchased in transactions exempt from registration under the Securities Act of 1933. These securities may be subject to legal or contractual restrictions on resale. Further details on these holdings appear below.

	Acquisition date	Cost (000)		Market value (000)		Percent of net assets

Boart Longyear Ltd.	4/4/2007	$	49,573	$	69,641		.27	%
Oilexco Inc. (GBP denominated)	12/15/2005		9,456		42,029		.16
Oilexco Inc.	3/7/2007		3,454		7,537		.03
OPTI Canada Inc.	6/1/2005		4,610		7,877		.03

Other restricted securities			200,735		195,850		.74

Total restricted securities		$	267,828	$	322,934		1.23	%

(4) Security purchased in transactions exempt from registration under the Securities Act of 1933. These securities 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" in the summary investment portfolio, was $1,115,796,000, which represented 4.23% of the net assets of the fund.

(5) 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 $216,014,000.

(6) This security was in its initial period of acquisition at 9/30/2006 and was not publicly disclosed.

(7) Unaffiliated issuer at 9/30/2007.

ADR = American Depositary Receipts

CDI = CREST Depository Interest

GDR = Global Depositary Receipts

SDR = Swedish Depositary Receipts

The descriptions of the companies shown in the summary investment portfolio are supplemental. These descriptions and the industry classifications were obtained from published reports and other sources believed to be reliable, and are not covered by the Report of Independent Registered Public Accounting Firm.

See Notes to Financial Statements

Financial statements

Statement of assets and liabilities
at September 30, 2007	(dollars and shares in thousands, except per-share amounts)

Assets:
Investment securities at market:
Unaffiliated issuers (cost: $14,686,539)			$	20,423,215
Affiliated issuers (cost: $4,067,976)				5,953,518		$	26,376,733
Cash denominated in non-U.S. currencies
(cost: $32,511)							32,606
Cash							174
Receivables for:
Sales of investments				124,919
Sales of fund's shares				60,944
Dividends and interest				18,762			204,625
							26,614,138
Liabilities:
Payables for:
Purchases of investments				169,965
Repurchases of fund's shares				33,882
Investment advisory services				11,823
Services provided by affiliates				8,819
Directors' deferred compensation				1,649
Other				7,489			233,627
Net assets at September 30, 2007						$	26,380,511

Net assets consist of:
Capital paid in on shares of capital stock						$	16,916,230
Distributions in excess of net investment income							(104,765	)
Undistributed net realized gain							1,953,493
Net unrealized appreciation							7,615,553
Net assets at September 30, 2007						$	26,380,511

Total authorized capital stock - 800,000 shares, $.01 par value (559,066 total shares outstanding)
	Net assets		Shares outstanding			Net asset value per share*

Class A	$	20,913,246		440,951		$	47.43
Class B		814,941		17,913			45.49
Class C		1,106,853		24,501			45.18
Class F		815,299		17,316			47.08
Class 529-A		479,021		10,141			47.23
Class 529-B		70,756		1,540			45.96
Class 529-C		187,743		4,089			45.92
Class 529-E		29,697		636			46.76
Class 529-F		34,958		740			47.24
Class R-1		37,763		820			46.04
Class R-2		673,279		14,596			46.13
Class R-3		555,228		11,893			46.68
Class R-4		259,030		5,488			47.20
Class R-5		402,697		8,442			47.70
(*) 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 $50.32 and $50.11, respectively.


See Notes to Financial Statements


Statement of operations
for the year ended September 30, 2007			(dollars in thousands)

Investment income:
Income:
Dividends (net of non-U.S.
taxes of $23,395; also includes
$81,289 from affiliates)			$	320,631
Interest				95,000		$	415,631

Fees and expenses*:
Investment advisory services				143,349
Distribution services				71,518
Transfer agent services				23,181
Administrative services				8,325
Reports to shareholders				741
Registration statement and prospectus				942
Postage, stationery and supplies				2,461
Directors' compensation				736
Auditing and legal				200
Custodian				4,641
State and local taxes				358
Other				249
Total fees and expenses before reimbursements/waivers				256,701
Less reimbursements/waivers of fees and expenses:
Investment advisory services				14,335
Administrative services				515
Total fees and expenses after reimbursements/waivers							241,851
Net investment income							173,780

Net realized gain and unrealized appreciation on investments and non-U.S. currency:
Net realized gain on:
Investments (including $81,549 net gain from affiliates)				2,498,917
Non-U.S. currency transactions				5,448			2,504,365
Net unrealized appreciation on:
Investments				3,981,448
Non-U.S. currency translations				373			3,981,821
Net realized gain and
unrealized appreciation
on investments and non-U.S. currency							6,486,186

Net increase in net assets resulting from operations						$	6,659,966

* 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)

			Year ended September 30, 2007			Year ended September 30, 2006
Operations:
Net investment income			$	173,780		$	102,369
Net realized gain on investments and
non-U.S. currency transactions				2,504,365			1,699,125
Net unrealized appreciation
on investments and non-U.S. currency translations				3,981,821			471,852
Net increase in net assets
resulting from operations				6,659,966			2,273,346

Dividends and distributions paid to shareholders:
Dividends from net investment income and non-U.S. currency gain				(318,872	)		(171,204	)
Distributions from net realized gain
on investments				(1,736,095	)		(293,825	)
Total dividends and distributions paid
to shareholders				(2,054,967	)		(465,029	)

Net capital share transactions				3,305,969			1,970,025

Total increase in net assets				7,910,968			3,778,342

Net assets:
Beginning of year				18,469,543			14,691,201
End of year (including distributions in excess of
net investment income: $104,765 and $88,583, respectively)			$	26,380,511		$	18,469,543


See Notes to Financial Statements

Notes to financial statements

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 utilized 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

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 non-U.S. securities) 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.

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

Non-U.S. currency translation– Assets and liabilities, including investment securities, denominated in non-U.S. currencies 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 non-U.S. 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 non-U.S. currencies are disclosed separately.

2.	Non-U.S. investments

Investment risk – The risks of investing in securities of non-U.S. issuers 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 year ended September 30, 2007, non-U.S. taxes paid on realized gains were $609,000. As of September 30, 2007, non-U.S. taxes provided on unrealized gains were $6,849,000.

3. Federal income taxation and distributions

The fund adopted the provisions of Financial Accounting Standards Board Interpretation No. 48 (“FIN 48”), Accounting for Uncertainty in Income Taxes, on June 29, 2007. The implementation of FIN 48 resulted in no material liability for unrecognized tax benefits and no material change to the beginning net asset value of the fund.

As of and during the period ended September 30, 2007, 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 non-U.S. tax authorities 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 non-U.S. 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 non-U.S. securities; 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 fund may also designate a portion of the amount paid to redeeming shareholders as a distribution for tax purposes.

During the year ended September 30, 2007, the fund reclassified $143,833,000 from undistributed net realized gain to distributions in excess of net investment income; and reclassified $14,923,000 from distribution in excess of net investment income and $110,143,000 from undistributed net realized gain to capital paid in on shares of capital stock to align financial reporting with tax reporting.

As of September 30, 2007, the tax basis components of distributable earnings, unrealized appreciation (depreciation) and cost of investment securities were as follows:

	(dollars in thousands)
Undistributed ordinary income		350,623
Undistributed long-term capital gain		1,954,164
Gross unrealized appreciation on investment securities		8,093,160
Gross unrealized depreciation on investment securities		(925,252)
Net unrealized appreciation on investment securities		7,167,908
Cost of investment securities		19,208,825

The tax character of distributions paid to shareholders was as follows (dollars in thousands):

	Year ended September 30, 2007						Year ended September 30, 2006
	Ordinary income		Long-term capital gains		Total distributions paid		Ordinary income		Long-term capital gains		Total distributions paid
Share class
Class A	$	408,840	$	1,271,426	$	1,680,266	$	149,401	$	247,786	$	397,187
Class B		11,225		51,014		62,239		3,425		9,479		12,904
Class C		14,213		62,804		77,017		3,828		9,872		13,700
Class F		13,503		40,771		54,274		3,420		5,484		8,904
Class 529-A		8,151		25,160		33,311		2,333		3,813		6,146
Class 529-B		882		4,194		5,076		238		714		952
Class 529-C		2,285		10,443		12,728		599		1,653		2,252
Class 529-E		464		1,635		2,099		129		249		378
Class 529-F		588		1,702		2,290		167		267		434
Class R-1		476		2,004		2,480		115		273		388
Class R-2		8,616		37,175		45,791		2,333		5,629		7,962
Class R-3		7,972		28,485		36,457		2,104		4,041		6,145
Class R-4		3,801		11,572		15,373		961		1,515		2,476
Class R-5		6,796		18,770		25,566		2,151		3,050		5,201
Total	$	487,812	$	1,567,155	$	2,054,967	$	171,204	$	293,825	$	465,029

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 SM ("AFS"), the fund’s transfer agent, and American Funds Distributors, SM 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 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 year ended September 30, 2007, total investment advisory services fees waived by CRMC were $14,335,000. As a result, the fee shown on the accompanying financial statements of $143,349,000, which was equivalent to an annualized rate of 0.634%, was reduced to $129,014,000, or 0.571% of average daily net assets.

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 September 30, 2007, 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 year ended September 30, 2007, the total administrative services fees paid by CRMC were $4,000 and $511,000 for Class R-1 and R-2, respectively. 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 above for the year ended September 30, 2007, were as follows (dollars in thousands):

Share class	Distribution services	Transfer agent services	Administrative services
Share class	Distribution services	Transfer agent services	CRMC administrative services	Transfer agent services	Commonwealth of Virginia administrative services
Class A	$43,825	$22,295	Not applicable	Not applicable	Not applicable
Class B	7,052	886	Not applicable	Not applicable	Not applicable
Class C	9,012	Included in administrative services	$1,340	$219	Not applicable
Class F	1,561		633	144	Not applicable
Class 529-A	725		428	66	$ 383
Class 529-B	595		66	19	60
Class 529-C	1,529		171	44	153
Class 529-E	121		27	4	24
Class 529-F	-		30	5	27
Class R-1	298		36	26	Not applicable
Class R-2	4,126		795	1,980	Not applicable
Class R-3	2,197		617	456	Not applicable
Class R-4	477		253	18	Not applicable
Class R-5	Not applicable		292	9	Not applicable
Total	$71,518	$23,181	$4,688	$2,990	$647

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 $736,000, shown on the accompanying financial statements, includes $413,000 in current fees (either paid in cash or deferred) and a net increase of $323,000 in the value of the deferred amounts.

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
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

Year ended September 30, 2006
Class A	$	2,685,423		71,453	$	381,591		10,807	$	(1,974,783	)		(52,904	)	$	1,092,231		29,356
Class B		122,373		3,363		12,552		367		(65,243	)		(1,807	)		69,682		1,923
Class C		265,083		7,319		13,251		390		(96,579	)		(2,688	)		181,755		5,021
Class F		226,333		6,037		7,921		225		(76,064	)		(2,044	)		158,190		4,218
Class 529-A		88,290		2,366		6,144		175		(13,640	)		(365	)		80,794		2,176
Class 529-B		9,920		271		952		28		(1,623	)		(44	)		9,249		255
Class 529-C		33,944		929		2,252		65		(7,790	)		(213	)		28,406		781
Class 529-E		5,862		159		378		11		(1,047	)		(28	)		5,193		142
Class 529-F		6,354		171		434		12		(1,707	)		(46	)		5,081		137
Class R-1		11,607		318		387		11		(4,858	)		(134	)		7,136		195
Class R-2		195,251		5,318		7,956		229		(80,898	)		(2,203	)		122,309		3,344
Class R-3		169,804		4,569		6,115		175		(69,063	)		(1,871	)		106,856		2,873
Class R-4		68,594		1,847		2,476		71		(21,588	)		(576	)		49,482		1,342
Class R-5		74,700		1,998		4,905		138		(25,944	)		(687	)		53,661		1,449
Total net increase
(decrease)	$	3,963,538		106,118	$	447,314		12,704	$	(2,440,827	)		(65,610	)	$	1,970,025		53,212

(*) 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 $11,005,681,000 and $9,926,837,000, respectively, during the year ended September 30, 2007.

Financial highlights


			Income from investment operations(1)									Dividends and distributions

	Net asset value, beginning of year		Net investment income (loss)					Net 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 year		Total return (2) (3)			Net assets, end of year (in millions)		Ratio of expenses to average net assets before reimbursements/ waivers			Ratio of expenses to average net assets after reimbursements/ waivers (3)			Ratio of net income (loss) to average net assets (3)
Class A:
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:
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		-		(4	)		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:
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:
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:
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:
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:
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:
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:
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:
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:
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:
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:
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		-		(4	)		5.69		5.69		-			-			-			23.22		32.46			10		1.17			1.16			(.02	)
Class R-5:
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

	Year ended September 30
	2007			2006			2005			2004			2003

Portfolio turnover rate for all classes of shares		48	%		45	%		45	%		48	%		49	%


(1) Based on average shares outstanding.
(2) Total returns exclude all sales charges, including contingent deferred sales charges.
(3) This column reflects the impact, if any, of certain reimbursements/waivers from CRMC. During some of the years shown, CRMC reduced fees for investment advisory services. In addition, during some of the years shown, CRMC paid a portion of the fund's transfer agent fees for certain retirement plan share classes.
(4) Amount less than $.01.

See Notes to Financial Statements

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and Board of Directors of

SMALLCAP World Fund, Inc.:

We have audited the accompanying statement of assets and liabilities of SMALLCAP World Fund, Inc., (the “Fund”), including the investment portfolio, as of September 30, 2007, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the periods presented. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of September 30, 2007, by correspondence with the custodian and brokers; where replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of SMALLCAP World Fund, Inc. as of September 30, 2007, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the periods presented, in conformity with accounting principles generally accepted in the United States of America.

DELOITTE & TOUCHE LLP

Costa Mesa, California

November 7, 2007

Tax information

unaudited

We are required to advise you within 60 days of the fund’s fiscal year-end regarding the federal tax status of certain distributions received by shareholders during such fiscal year. The fund hereby designates the following amounts for the fund’s fiscal year ended September 30, 2007:

Long-term capital gains	$1,567,155,000
Foreign taxes	21,390,000
Foreign source income	363,548,000
Qualified dividend income	256,946,000
Corporate dividends received deduction	63,833,000
U.S. government income that may be exempt from state taxation	2,719,000

Individual shareholders should refer to their Form 1099 or other tax information, which will be mailed in January 2008, to determine the calendar year amounts to be included on their 2007 tax returns. Shareholders should consult their tax advisers.

SMALLCAP World Fund, Inc.

Part C

Other Information

Item 23. Exhibits for Registration Statement (1940 Act No. 811-05888 and 1933 Act. No. 033-32785)

(a-1)

Articles of Incorporation – Articles of Incorporation effective as of 12/18/89 – previously filed (see Post-Effective (“P/E”) Amendment No. 13 filed 11/26/97); Articles of Amendment effective as of 12/21/89 – previously filed (see P/E Amendment No. 13 filed 11/26/97); Articles of Amendment effective as of 1/24/90 – previously filed (see P/E Amendment No. 13 filed 11/26/97); Articles Supplementary effective as of 6/2/94 – previously filed (see P/E Amendment No. 13 filed 11/26/97); Articles Supplementary effective as of 1/13/00 – previously filed (see P/E Amendment No. 17 filed 3/10/00); Articles Supplementary effective as of 1/24/01 – previously filed (see P/E Amendment No. 20 filed 3/12/01); Articles Supplementary effective as of 1/18/02 – previously filed (see P/E Amendment No. 22 filed 2/15/02)

(a-2)

Articles Supplementary effective as of 6/15/00

(a-3)

Articles Supplementary effective as of 5/23/08

(b)	By-laws – By-laws as amended 6/14/07 – previously filed (see P/E Amendment No. 29 filed 11/30/07)

(c)	Instruments Defining Rights of Security Holders – Form of share certificate - previously filed (see P/E Amendment No. 20 filed 3/12/01)

(d)	Investment Advisory Contracts – Amended Investment Advisory and Service Agreement – previously filed (see P/E Amendment No. 19 filed 11/27/00)

(e-1)

Underwriting Contracts – Form of Selling Group Agreements – previously filed (see P/E Amendment No. 23 filed 5/14/02); Form of Amendment to Selling Group Agreement effective 11/1/06 – previously filed (see P/E Amendment No. 28 filed 11/30/06); Form of Institutional Selling Group Agreement (see P/E Amendment No. 26 filed 11/30/04); Form of Amendment to Selling Group Agreement – effective 2/1/07 and Form of Amendment to Institutional Selling Group Agreement effective 2/1/07 – previously filed (see P/E Amendment No. 29 filed 11/30/07)

(e-2)

Form of Amended and Restated Principal Underwriting Agreement dated 6/16/08

(f)	Bonus or Profit Sharing Contracts - Deferred Compensation Plan – as amended 1/1/08

(g)	Custodian Agreements – Form of Global Custody Agreement dated 12/14/06 – previously filed (see P/E Amendment No. 29 filed 11/30/07)

(h-1)

Other Material Contracts - Form of Amended Shareholder Services Agreement dated 4/1/03 - previously filed (see P/E Amendment No. 26 filed 11/30/04); Form of Indemnification Agreement dated 7/1/04 - previously filed (see P/E Amendment No. 26 filed 11/30/04); and Form of Amendment to Shareholder Services Agreement dated 11/1/06 – previously filed (see P/E Amendment No. 29 filed 11/30/07)

(h-2)

Form of Amended and Restated Administrative Services Agreement dated 6/16/08

(i-1)

Legal Opinion – Legal Opinion – previously filed (see P/E Amendment No. 13 filed 11/26/97; P/E Amendment No. 17 filed 3/8/00; P/E Amendment No. 20 filed 3/12/01; P/E Amendment No. 22 filed 2/14/02; and P/E Amendment No. 23 filed 5/10/02)

(i-2)

Legal Opinion

(j)	Other Opinions – Consent of Independent Registered Public Accounting Firm

(k)	Omitted Financial Statements – None

(l)	Initial Capital Agreements – None

(m-1)

Rule 12b-1 Plan – Class A Plan of Distribution – previously filed (see P/E Amendment No. 13 filed 11/26/97); Form of Class 529-A Plan of Distribution – previously filed (see P/E Amendment No. 22 filed 2/14/02); and Forms of Amended Plans of Distribution for Classes B, C, F, 529-B, 529-C, 529-E, 529-F and R-1, R-2, R-3 and R-4 – previously filed (see P/E Amendment No. 27 filed 11/30/05)

(m-2)

Forms of Amendment to Plan of Distribution for Class F-1 and Class 529-F-1 dated 6/16/08

(n)	Rule 18f-3 Plan – Form of Amended and Restated Multiple Class Plan dated 6/16/08

(o)

Reserved

(p)	Code of Ethics – Code of Ethics for The Capital Group Companies dated June 2008; and Code of Ethics for Registrant dated December 2005

Item 24. Persons Controlled by or Under Common Control with the Fund

None

Item 25. Indemnification

The Registrant is a joint-insured under Investment Adviser/Mutual Fund Errors and Omissions Policies, which insure its officers and directors against certain liabilities. However, in no event will Registrant maintain insurance to indemnify any such person for any act for which Registrant itself is not permitted to indemnify the individual.

Article VIII of the Registrant's Articles of Incorporation and Article V of the Registrant’s By-Laws as well as the indemnification agreements that the Registrant has entered into with each of its directors who is not an “interested person” of the Registrant (as defined under the Investment Company Act of 1940, as amended), provide in effect that the Registrant will indemnify its officers and directors against any liability or expenses actually and reasonably incurred by such person in any proceeding arising out of or in connection with his or her service to the Registrant, to the fullest extent permitted by applicable law, subject to certain conditions. In accordance with Section 17(h) and 17(i) of the Investment Company Act of 1940, as amended, and their respective terms, these provisions do not protect any person against any liability to the Registrant or its shareholders to which such person would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence, or reckless disregard of the duties involved in the conduct of his or her office.

Insofar as indemnification for liability arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the U.S. Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

Registrant will comply with the indemnification requirements contained in the Investment Company Act of 1940, as amended, and Release Nos. 7221 (June 9, 1972) and 11330 (September 4, 1980).

Item 26. Business and Other Connections of the Investment Adviser

None

Item 27.Principal Underwriters

(a) American Funds Distributors, Inc. is also the Principal Underwriter of shares of: AMCAP Fund, Inc., American Balanced Fund, Inc., The American Funds Income Series, American Funds Target Date Retirement Series, Inc., The American Funds Tax-Exempt Series I, The American Funds Tax-Exempt Series II, American High-Income Municipal Bond Fund, Inc., American High-Income Trust, American Mutual Fund, Inc., The Bond Fund of America, Inc., Capital Income Builder, Inc., Capital World Bond Fund, Inc., Capital World Growth and Income Fund, Inc., The Cash Management Trust of America, Endowments, EuroPacific Growth Fund, Fundamental Investors, Inc., The Growth Fund of America, Inc., The Income Fund of America, Inc., The Investment Company of America, Intermediate Bond Fund of America, Limited Term Tax-Exempt Bond Fund of America, The New Economy Fund, New Perspective Fund, Inc., New World Fund, Inc., Short-Term Bond Fund of America, Inc., The Tax-Exempt Bond Fund of America, Inc., The Tax-Exempt Money Fund of America, The U.S. Treasury Money Fund of America and Washington Mutual Investors Fund, Inc.

(b)

	(1) Name and Principal Business Address	(2) Positions and Offices with Underwriter	(3) Positions and Offices with Registrant
LAO	E. Grant Abramson	Vice President	None
LAO	David L. Abzug	Vice President	None
LAO	William C. Anderson	Regional Vice President	None
LAO	Robert B. Aprison	Senior Vice President	None
LAO	T. Patrick Bardsley	Regional Vice President	None
LAO	Shakeel A. Barkat	Vice President	None
LAO	Steven L. Barnes	Senior Vice President	None
LAO	Thomas M. Bartow	Senior Vice President	None
IRV	Carl R. Bauer	Vice President	None
LAO	Michelle A. Bergeron	Senior Vice President	None
LAO	J. Walter Best, Jr.	Vice President	None
LAO	Roger J. Bianco, Jr.	Regional Vice President	None
LAO	John A. Blanchard	Senior Vice President	None
LAO	Randall L. Blanchetti	Regional Vice President	None
LAO	Gerard M. Bockstie, Jr.	Regional Vice President	None
LAO	Jonathan W. Botts	Regional Vice President	None
LAO	Bill Brady	Regional Vice President	None
LAO	Mick L. Brethower	Senior Vice President	None
LAO	C. Alan Brown	Vice President	None
IRV	William H. Bryan	Regional Vice President	None
LAO	Sheryl M. Burford	Assistant Vice President	None
IRV	J. Peter Burns	Vice President	None
LAO	Steven Calabria	Vice President	None
SNO	Kathleen D. Campbell	Vice President	None
LAO	Matthew C. Carlisle	Vice President	None
LAO	Jason S. Carlough	Regional Vice President	None
LAO	Damian F. Carroll	Vice President	None
LAO	James D. Carter	Regional Vice President	None
LAO	Brian C. Casey	Senior Vice President	None
LAO	Victor C. Cassato	Senior Vice President	None
LAO	Christopher J. Cassin	Senior Vice President	None
LAO	Denise M. Cassin	Director, Senior Vice President	None
LAO	David D. Charlton	Director, Senior Vice President	None
LAO	Thomas M. Charon	Regional Vice President	None
LAO	Wellington Choi	Vice President	None
LAO	Paul A. Cieslik	Vice President	None
LAO	Kevin G. Clifford	Director, President and Co-Chief Executive Officer	None
HRO	Cheri Coleman	Vice President	None
LAO	Ruth M. Collier	Director, Senior Vice President	None
SNO	David Coolbaugh	Vice President	None
LAO	Carlo O. Cordasco	Regional Vice President	None
LAO	Charles H. Cote	Regional Vice President	None
LAO	Thomas E. Cournoyer	Vice President	None
LAO	Michael D. Cravotta	Assistant Vice President	None
LAO	Joseph G. Cronin	Vice President	None
LAO	D. Erick Crowdus	Regional Vice President	None
LAO	William F. Daugherty	Vice President	None
LAO	Peter J. Deavan	Regional Vice President	None
LAO	Guy E. Decker	Vice President	None
LAO	Daniel J. Delianedis	Senior Vice President	None
LAO	James W. DeLouise	Assistant Vice President	None
LAO	Jeffrey C. Denny	Regional Vice President	None
	James A. DePerno, Jr. 19 Hamlin Ave East Aurora, NY 14052	Senior Vice President	None
LAO	Bruce L. DePriester	Director, Senior Vice President, Treasurer and Controller	None
LAO	Lori A. Deuberry	Regional Vice President	None
LAO	Dianne M. Dexter	Assistant Vice President	None
LAO	Thomas J. Dickson	Vice President	None
LAO	Michael A. DiLella	Senior Vice President	None
NYO	Dean M. Dolan	Vice President	None
LAO	Hedy B. Donahue	Assistant Vice President	None
LAO	Michael J. Downer	Director	None
LAO	Craig A. Duglin	Regional Vice President	None
LAO	Michael J. Dullaghan	Vice President	None
IND	Lloyd G. Edwards	Senior Vice President	None
LAO	Timothy L. Ellis	Senior Vice President	None
LAO	Kristopher A. Feldmeyer	Regional Vice President	None
LAO	Lorna Fitzgerald	Vice President	None
LAO	William F. Flannery	Vice President	None
LAO	John R. Fodor	Senior Vice President	None
LAO	Charles L. Freadhoff	Vice President	None
LAO	Daniel B. Frick	Vice President	None
LAO	Linda S. Gardner	Vice President	None
LAO	Keith R. George	Regional Vice President	None
IRV	Lori A. Giacomini	Assistant Vice President	None
LAO	J. Christopher Gies	Senior Vice President	None
LAO	David M. Givner	Secretary	None
IRV	Evelyn K. Glassford	Vice President	None
LAO	Jack E. Goldin	Regional Vice President	None
LAO	Earl C. Gottschalk	Vice President	None
LAO	Jeffrey J. Greiner	Senior Vice President	None
LAO	Eric M. Grey	Vice President	None
IRV	Steven Guida	Senior Vice President	None
IRV	Mariellen Hamann	Vice President	None
LAO	Derek S. Hansen	Vice President	None
LAO	David E. Harper	Senior Vice President	None
LAO	Calvin L. Harrelson, III	Vice President	None
LAO	Robert J. Hartig, Jr.	Vice President	None
LAO	Craig W. Hartigan	Regional Vice President	None
LAO	Linda M. Hines	Vice President	None
LAO	Steven J. Hipsley	Regional Vice President	None
LAO	Russell K. Holliday	Vice President	None
LAO	Heidi Horwitz	Regional Vice President	None
LAO	Kevin B. Hughes	Vice President	None
LAO	Ronald R. Hulsey	Senior Vice President	None
LAO	Marc Ialeggio	Vice President	None
LAO	Robert S. Irish	Senior Vice President	None
IND	David K. Jacocks	Assistant Vice President	None
LAO	Linda Johnson	Assistant Vice President	None
GVO-1	Joanna F. Jonsson	Director	None
IRV	Damien M. Jordan	Senior Vice President	None
LAO	Marc J. Kaplan	Vice President	None
LAO	John P. Keating	Senior Vice President	None
LAO	Brian G. Kelly	Regional Vice President	None
LAO	Ryan C. Kidwell	Regional Vice President	None
LAO	Andrew J. Kilbride	Vice President	None
NYO	Dorothy Klock	Vice President	None
LAO	Dianne L. Koske	Vice President	None
IRV	Elizabeth K. Koster	Vice President	None
LAO	Christopher F. Lanzafame	Regional Vice President	None
LAO	Patricia D. Lathrop	Regional Vice President	None
	R. Andrew LeBlanc 78 Eton Road Garden City, NY 11530	Vice President	None
LAO	T. Blake Liberty	Vice President	None
LAO	Mark J. Lien	Vice President	None
LAO	Lorin E. Liesy	Vice President	None
LAO	Louis K. Linquata	Vice President	None
HRO	Maria M. Lockard	Assistant Vice President	None
LAO	William J. Maguire	Regional Vice President	None
	Brendan T. Mahoney 1 Union Avenue, Suite One Sudbury, MA 01776	Vice President	None
LAO	Nathan G. Mains	Regional Vice President	None
	Stephen A. Malbasa 13405 Lake Shore Blvd. Cleveland, OH 44110	Director, Senior Vice President	None
LAO	Paul R. Mayeda	Assistant Vice President	None
LAO	Eleanor P. Maynard	Vice President	None
LAO	Christopher McCarthy	Vice President	None
LAO	James R. McCrary	Vice President	None
LAO	Joseph A. McCreesh, III	Regional Vice President	None
LAO	Will McKenna	Vice President	None
SNO	John V. McLaughlin	Senior Vice President	None
LAO	Terry W. McNabb	Senior Vice President	None
LAO	Katharine McRoskey	Vice President	None
LAO	Scott M. Meade	Senior Vice President	None
LAO	William T. Mills	Regional Vice President	None
LAO	James R. Mitchell III	Regional Vice President	None
LAO	Charles L. Mitsakos	Regional Vice President	None
LAO	Monty L. Moncrief	Vice President	None
LAO	David H. Morrison	Regional Vice President	None
LAO	Andrew J. Moscardini	Vice President	None
LAO	Brian D. Munson	Regional Vice President	None
LAO	Jack Nitowitz	Assistant Vice President	None
LAO	William E. Noe	Senior Vice President	None
LAO	Eric P. Olson	Senior Vice President	None
LAO	Jeffrey A. Olson	Vice President	None
LAO	Thomas A. O’Neil	Regional Vice President	None
LAO	Michael W. Pak	Regional Vice President	None
LAO	W. Burke Patterson, Jr.	Vice President	None
LAO	Gary A. Peace	Senior Vice President	None
LAO	Samuel W. Perry	Vice President	None
LAO	Raleigh G. Peters	Regional Vice President	None
LAO	David K. Petzke	Senior Vice President	None
IRV	John H. Phelan, Jr.	Director	None
LAO	Fredric Phillips	Senior Vice President	None
LAO	John Pinto	Regional Vice President	None
LAO	Carl S. Platou	Senior Vice President	None
LAO	Charles R. Porcher	Regional Vice President	None
LAO	Julie K. Prather	Vice President	None
SNO	Richard P. Prior	Vice President	None
LAO	Steven J. Quagrello	Regional Vice President	None
LAO	Mike Quinn	Vice President	None
LAO	John W. Rankin	Regional Vice President	None
LAO	Jennifer D. Rasner	Regional Vice President	None
LAO	James P. Rayburn	Regional Vice President	None
LAO	Rene M. Reincke	Vice President	None
LAO	Mark S. Reischmann	Regional Vice President	None
LAO	Steven J. Reitman	Senior Vice President	None
LAO	Brian A. Roberts	Vice President	None
LAO	Jeffrey Robinson	Regional Vice President	None
LAO	Suzette M. Rothberg	Regional Vice President	None
LAO	James F. Rothenberg	Director	None
LAO	Romolo D. Rottura	Vice President	None
LAO	Douglas F. Rowe	Senior Vice President	None
LAO	William M. Ryan	Regional Vice President	None
LAO	Dean B. Rydquist	Director, Senior Vice President, Chief Compliance Officer	None
LAO	Richard A. Sabec, Jr.	Vice President	None
IRV	Cathy Sackett	Vice President	None
LAO	Richard R. Samson	Senior Vice President	None
HRO	Diane Sawyer	Senior Vice President	None
LAO	Joseph D. Scarpitti	Senior Vice President	None
LAO	Shane D. Schofield	Vice President	None
LAO	David L. Schroeder	Assistant Vice President	None
LAO	Mark A. Seaman	Vice President	None
SNO	Sherrie L. Senft	Vice President	None
LAO	James J. Sewell III	Regional Vice President	None
LAO	Arthur M. Sgroi	Vice President	None
LAO	R. Michael Shanahan	Director	None
LAO	Michael J. Sheldon	Vice President	None
LAO	Frederic J. Shipp	Regional Vice President	None
LAO	Daniel S. Shore	Vice President	None
LAO	Brad Short	Vice President	None
LAO	David W. Short	Chairman of the Board and Co-Chief Executive Officer	None
LAO	Nathan W. Simmons	Regional Vice President	None
LAO	William P. Simon, Jr.	Director, Senior Vice President	None
LAO	Connie F. Sjursen	Vice President	None
LAO	Jerry L. Slater	Senior Vice President	None
LAO-W	John H. Smet	Director	None
LAO	Rodney G. Smith	Senior Vice President	None
SNO	Stacy D. Smolka	Assistant Vice President	None
LAO	J. Eric Snively	Regional Vice President	None
LAO	Anthony L. Soave	Vice President	None
LAO	Therese L. Soullier	Vice President	None
LAO	Nicholas D. Spadaccini	Senior Vice President	None
LAO	Kristen J. Spazafumo	Vice President	None
LAO	Mark D. Steburg	Regional Vice President	None
LAO	Michael P. Stern	Regional Vice President	None
LAO	Brad Stillwagon	Vice President	None
LAO	Thomas A. Stout	Vice President	None
LAO	Craig R. Strauser	Senior Vice President	None
LAO	Libby J. Syth	Vice President	None
LAO	Drew W. Taylor	Vice President	None
LAO	Larry I. Thatt	Assistant Vice President	None
LAO	Gary J. Thoma	Vice President	None
LAO	Cynthia M. Thompson	Vice President	None
LAO	Mark R. Threlfall	Regional Vice President	None
LAO	David Tippets	Regional Vice President	None
IND	James P. Toomey	Vice President	None
IND	Christopher E. Trede	Vice President	None
LAO	Scott W. Ursin-Smith	Senior Vice President	None
SNO	Cindy Vaquiax	Vice President	None
LAO	Srinkanth Vemuri	Regional Vice President	None
LAO	J. David Viale	Senior Vice President	None
DCO	Bradley J. Vogt	Director	None
LAO	Sherrie S. Walling	Assistant Vice President	None
SNO	Chris L. Wammack	Assistant Vice President	None
LAO	Thomas E. Warren	Senior Vice President	None
LAO	Gregory J. Weimer	Senior Vice President	None
SFO	Gregory W. Wendt	Director	President and Director
LAO	George J. Wenzel	Vice President	None
LAO	Jason M. Weybrecht	Regional Vice President	None
LAO	Brian E. Whalen	Vice President	None
LAO	William C. Whittington	Regional Vice President	None
LAO	N. Dexter Williams, Jr.	Senior Vice President	None
LAO	Alan J. Wilson	Director	None
LAO	Andrew L. Wilson	Vice President	None
LAO	Steven C. Wilson	Regional Vice President	None
LAO	Timothy J. Wilson	Senior Vice President	None
LAO	Kurt A. Wuestenberg	Vice President	None
	William R. Yost 9463 Olympia Drive Eden Prairie, MN 55347	Senior Vice President	None
LAO	Jason P. Young	Vice President	None
LAO	Jonathan A. Young	Regional Vice President	None
LAO	Scott D. Zambon	Regional Vice President	None

__________

DCO	Business Address, 3000 K Street N.W., Suite 230, Washington, DC 20007-5140
GVO-1	Business Address, 3 Place des Bergues, 1201 Geneva, Switzerland
HRO	Business Address, 5300 Robin Hood Road, Norfolk, VA 23513
IND	Business Address, 8332 Woodfield Crossing Blvd., Indianapolis, IN 46240
IRV	Business Address, 6455 Irvine Center Drive, Irvine, CA 92618
LAO	Business Address, 333 South Hope Street, Los Angeles, CA 90071
LAO-W	Business Address, 11100 Santa Monica Blvd., 15th Floor, Los Angeles, CA 90025
NYO	Business Address, 630 Fifth Avenue, 36th Floor, New York, NY 10111
SFO	Business Address, One Market, Steuart Tower, Suite 1800, San Francisco, CA 94105-1016
SNO	Business Address, 3500 Wiseman Boulevard, San Antonio, TX 78251

(c)None

Item 28. Location of Accounts and Records

Accounts, books and other records required by Rules 31a-1 and 31a-2 under the Investment Company Act of 1940, as amended, are maintained and held in the offices of the Registrant’s investment adviser, Capital Research and Management Company, 333 South Hope Street, Los Angeles, California 90071, 6455 Irvine Center Drive, Irvine, California 92618, and/or 5300 Robin Hood Road, Norfolk, Virginia 23513.

Registrant's records covering shareholder accounts are maintained and kept by its transfer agent, American Funds Service Company, 6455 Irvine Center Drive, Irvine, California 92618; 8332 Woodfield Crossing Boulevard, Indianapolis, Indiana 46240; 10001 North 92nd Street, Suite 100, Scottsdale, Arizona 85258; 3500 Wiseman Boulevard, San Antonio, Texas 78251; and 5300 Robin Hood Road, Norfolk, Virginia 23513.

Registrant's records covering portfolio transactions are maintained and kept by its custodian, State Street Bank and Trust Company, One Lincoln Street, Boston, Massachusetts 02111.

Item 29. Management Services

None

Item 30. Undertakings

n/a

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant certifies that it meets all of the requirements for effectiveness of this registration statement under Rule 485(b) under the Securities Act of 1933 and has duly caused this registration statement to be signed on its behalf by the undersigned, duly authorized, in the City of Los Angeles, and State of California, on the 27th day of June, 2008.

SMALLCAP World Fund, Inc.

By:	/s/ Gregory W. Wendt
	Gregory W. Wendt, President

Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed below on June 27, 2008, by the following persons in the capacities indicated.

	Signature	Title
(1)	Principal Executive Officer:

	/s/ Paul F. Roye	Executive Vice President
	Paul F. Roye

(2)	Principal Financial Officer and
	Principal Accounting Officer:

	/s/ David A. Pritchett	Treasurer
	David A. Pritchett

(3)	Directors:
	Joseph C. Berenato*	Director
	Richard G. Capen, Jr.*	Director
	H. Frederick Christie*	Director

	/s/ Gordon Crawford
	Gordon Crawford	Vice Chairman

	Mary Anne Dolan*	Director
	John G. Freund*	Director
	R. Clark Hooper*	Director
	Leonade D. Jones*	Director
	William H. Kling*	Chairman of the Board (Independent and Non-Executive)
	Christopher E. Stone*	Director
	/s/ Gregory W. Wendt
	Gregory W. Wendt	President and Director

	Patricia K. Woolf*	Director

*By	/s/ Chad L. Norton
	Chad L. Norton	(pursuant to a power of attorney filed herewith)

Counsel represents that this amendment does not contain disclosures that would make the amendment ineligible for effectiveness under the provisions of rule 485(b).

/s/ Timothy W. McHale

Timothy W. McHale

POWER OF ATTORNEY

I, Joseph C. Berenato, the undersigned Board member of the following registered investment companies (collectively, the “Funds”):

Capital Income Builder, Inc. (File No. 033-12967, File No. 811-05085)

Capital World Growth and Income Fund, Inc. (File No. 033-54444, File No. 811-07338)

Fundamental Investors, Inc. (File No. 002-10760, File No. 811-00032)

The Growth Fund of America, Inc. (File No. 002-14728, File No. 811-00862)

The New Economy Fund (File No. 002-83848, File No. 811-03735)

SMALLCAP World Fund, Inc. (File No. 033-32785, File No. 811-05888)

hereby revoke all previous powers of attorney I have signed and otherwise act in my name and behalf in matters involving the Funds and do hereby constitute and appoint

Vincent P. Corti

Chad L. Norton

Patrick F. Quan

Kimberly S. Verdick

Steven I. Koszalka

Tanya Schneider

Courtney R. Taylor

Sheryl F. Johnson

David A. Pritchett

Jeffrey P. Regal

each of them singularly, my true and lawful attorneys-in-fact, with full power of substitution, and with full power to each of them, to sign for me and in my name in the appropriate capacities, all Registration Statements of the Funds on Form N-1A, any and all subsequent Amendments, or Post-Effective Amendments to said Registration Statement on Form N-1A or any successor thereto, and any supplements or other instruments in connection therewith, and generally to do all such things in my name and behalf in connection therewith as said attorneys-in-fact deem necessary or appropriate, to comply with the provisions of the Securities Act of 1933 and the Investment Company Act of 1940 as amended, and all related requirements of the U. S. Securities and Exchange Commission. I hereby ratify and confirm all that said attorneys-in-fact or their substitutes may do or cause to be done by virtue hereof.

EXECUTED at Rolling Hills, CA, this 9th day of July, 2007.

(City, State)

/s/ Joseph C. Berenato

Joseph C. Berenato, Board member

POWER OF ATTORNEY

I, Richard G. Capen, Jr., the undersigned Board member of the following registered investment companies (collectively, the “Funds”):

The American Funds Income Series – U.S. Government Securities Fund (File No. 002-98199, File No. 811-04318)

The American Funds Tax-Exempt Series II – The Tax-Exempt Fund of California (File No. 033-06180, File No. 811-04694)

American High-Income Municipal Bond Fund, Inc. (File No. 033-80630, File No. 811-08576)

American High-Income Trust (File No. 033-17917, File No. 811-05364)

The Bond Fund of America, Inc. (File No. 002-50700, File No. 811-02444)

Capital World Bond Fund, Inc. (File No. 033-12447, File No. 811-05104)

The Cash Management Trust of America (File No. 002-47940, File No. 811-02380)

Intermediate Bond Fund of America (File No. 033-19514, File No. 811-05446)

Limited Term Tax-Exempt Bond Fund of America (File No. 033-66214, File No. 811-07888)

The New Economy Fund (File No. 002-83848, File No. 811-03735)

Short-Term Bond Fund of America, Inc. (File No. 333-135770, File No. 811-21928)

SMALLCAP World Fund, Inc. (File No. 033-32785, File No. 811-05888)

The Tax-Exempt Bond Fund of America, Inc. (File No. 002-49291, File No. 811-02421)

The Tax-Exempt Money Fund of America (File No. 033-26431, File No. 811-05750)

The U.S. Treasury Money Fund of America (File No. 033-38475, File No. 811-06235)

hereby revoke all previous powers of attorney I have signed and otherwise act in my name and behalf in matters involving the Funds and do hereby constitute and appoint

Vincent P. Corti

Chad L. Norton

Patrick F. Quan

Kimberly S. Verdick

Steven I. Koszalka

Tanya Schneider

Courtney R. Taylor

Sharon G. Moseley

David A. Pritchett

Ari M. Vinocor

EXECUTED at Rancho Santa Fe, CA, this 3rd day of July, 2007.

(City, State)

/s/ Richard G. Capen, Jr.

Richard G. Capen, Jr., Board member

POWER OF ATTORNEY

I, H. Frederick Christie, the undersigned Board member of the following registered investment companies (collectively, the “Funds”):

AMCAP Fund, Inc. (File No. 002-26516, File No. 811-01435)

The American Funds Income Series – U.S. Government Securities Fund (File No. 002-98199, File No. 811-04318)

American Funds Insurance Series (File No. 002-86838, File No. 811-03857)

American Funds Target Date Retirement Series, Inc. (File No. 333-138648, File No. 811-21981)

The American Funds Tax-Exempt Series II – The Tax-Exempt Fund of California (File No. 033-06180, File No. 811-04694)

American High-Income Municipal Bond Fund, Inc. (File No. 033-80630, File No. 811-08576)

American High-Income Trust (File No. 033-17917, File No. 811-05364)

American Mutual Fund, Inc. (File No. 002-10607, File No. 811-00572)