SMALLCAP World Fund,® Inc.

Part B
Statement of Additional Information

December 1, 2021

This document is not a prospectus but should be read in conjunction with the current prospectus of SMALLCAP World Fund (the “fund”) dated December 1, 2021. You may obtain a prospectus from your financial professional, by calling American Funds Service Company® at (800) 421-4225 or by writing to the fund at the following address:

SMALLCAP World Fund, Inc.
Attention: Secretary

6455 Irvine Center Drive
Irvine, California 92618

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 professional, investment dealer, plan recordkeeper or employer for more information.

           

Class A

SMCWX

Class 529-A

CSPAX

Class R-1

RSLAX

Class C

SCWCX

Class 529-C

CSPCX

Class R-2

RSLBX

Class T

TSFFX

Class 529-E

CSPEX

Class R-2E

RSEBX

Class F-1

SCWFX

Class 529-T

TWSFX

Class R-3

RSLCX

Class F-2

SMCFX

Class 529-F-1

CSPFX

Class R-4

RSLEX

Class F-3

SFCWX

Class 529-F-2

FSWFX

Class R-5E

RSLDX

   

Class 529-F-3

FSFWX

Class R-5

RSLFX

   

 

 

 

 

Class R-6

RLLGX

Table of Contents

   

Item

Page no.

   

Certain investment limitations and guidelines

2

Description of certain securities, investment techniques and risks

3

Fund policies

23

Management of the fund

25

Execution of portfolio transactions

59

Disclosure of portfolio holdings

63

Price of shares

65

Taxes and distributions

68

Purchase and exchange of shares

71

Sales charges

76

Sales charge reductions and waivers

79

Selling shares

84

Shareholder account services and privileges

85

General information

88

Appendix

98

Investment portfolio
Financial statements

SMALLCAP World Fund — Page 1


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 (excluding, for the avoidance of doubt, collateral held in connection with securities lending activities) 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 net assets in growth-oriented common stocks and other equity-type securities (such as preferred stocks, convertible preferred stocks and convertible bonds) of companies with small market capitalizations. The investment adviser currently defines “small market capitalization” companies to be companies with market capitalizations of $6.0 billion or less. The investment adviser has periodically re-evaluated and adjusted this definition and may continue to do so in the future. The fund may continue to hold securities of a portfolio company that subsequently appreciates above the small market capitalization threshold. Because of this, the fund may have less than 80% of its net assets in small market capitalization stocks at any given time.

Investing outside the U.S.

· Under normal circumstances, the fund will invest a significant portion of its assets outside the United States, including in emerging markets. (See “Investing outside the U.S.” below for more information.)

· In determining the domicile of an issuer, the fund’s investment adviser will consider the domicile determination of a leading provider of global indexes, such as Morgan Stanley Capital International, and may also take into account such factors as where the issuer’s securities are listed and where the issuer is legally organized, maintains principal corporate offices, conducts its principal operations and/or generates revenues.

Debt instruments

· The fund may invest up to 10% of its assets in straight debt securities rated Baa1 or below and BBB+ or below by Nationally Recognized Statistical Rating Organizations designated by the fund’s investment adviser, or unrated but determined to be of equivalent quality. The fund currently intends to look to the ratings from Moody’s Investors Service, Standard & Poor’s Ratings Services and Fitch Ratings. If rating agencies differ, securities will be considered to have received the highest of these ratings, consistent with the fund's investment policies.

* * * * * *

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

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Description of certain securities, investment techniques and risks

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

Market conditions – The value of, and the income generated by, the securities in which the fund invests may decline, sometimes rapidly or unpredictably, due to factors affecting certain issuers, particular industries or sectors, or the overall markets. Rapid or unexpected changes in market conditions could cause the fund to liquidate its holdings at inopportune times or at a loss or depressed value. The value of a particular holding may decrease due to developments related to that issuer, but also due to general market conditions, including real or perceived economic developments such as changes in interest rates, credit quality, inflation, or currency rates, or generally adverse investor sentiment. The value of a holding may also decline due to factors that negatively affect a particular industry or sector, such as labor shortages, increased production costs, or competitive conditions.

Global economies and financial markets are highly interconnected, and conditions and events in one country, region or financial market may adversely impact issuers in a different country, region or financial market. Furthermore, local, regional and global events such as war, acts of terrorism, social unrest, natural disasters, the spread of infectious illness or other public health threats could also adversely impact issuers, markets and economies, including in ways that cannot necessarily be foreseen. The fund could be negatively impacted if the value of a portfolio holding were harmed by such conditions or events.

Significant market disruptions, such as those caused by pandemics, natural or environmental disasters, war, acts of terrorism, or other events, can adversely affect local and global markets and normal market operations. Market disruptions may exacerbate political, social, and economic risks. Additionally, market disruptions may result in increased market volatility; regulatory trading halts; closure of domestic or foreign exchanges, markets, or governments; or market participants operating pursuant to business continuity plans for indeterminate periods of time. Such events can be highly disruptive to economies and markets and significantly impact individual companies, sectors, industries, markets, currencies, interest and inflation rates, credit ratings, investor sentiment, and other factors affecting the value of the fund’s investments and operation of the fund. These events could disrupt businesses that are integral to the fund’s operations or impair the ability of employees of fund service providers to perform essential tasks on behalf of the fund.

Governmental and quasi-governmental authorities may take a number of actions designed to support local and global economies and the financial markets in response to economic disruptions. Such actions may include a variety of significant fiscal and monetary policy changes, including, for example, direct capital infusions into companies, new monetary programs and significantly lower interest rates. These actions may result in significant expansion of public debt and may result in greater market risk. Additionally, an unexpected or quick reversal of these policies, or the ineffectiveness of these policies, could negatively impact overall investor sentiment and further increase volatility in securities markets.

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. Holders of equity securities are not creditors of the issuer. If an issuer liquidates, holders of equity securities are entitled to their pro rata share of the issuer’s assets, if any, after creditors (including the holders of fixed income securities and senior equity securities) are paid.

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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.

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 companies 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 less liquid or illiquid (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 instruments — Debt securities, also known as “fixed income securities,” are used by issuers to borrow money. Bonds, notes, debentures, asset-backed securities (including those backed by mortgages), and loan participations and assignments are common types of debt securities. 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. Some debt securities bear interest at rates that are not fixed, but that vary with changes in specified market rates or indices. 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. These fluctuations

SMALLCAP World Fund — Page 4


will generally be greater for longer-term debt securities than for shorter-term debt securities. Prices of these securities can also be affected by financial contracts held by the issuer or third parties (such as derivatives) relating to the security or other assets or indices. Borrowers that are in bankruptcy or restructuring may never pay off their indebtedness, or they may pay only a small fraction of the amount owed. Direct indebtedness of countries, particularly developing countries, also involves a risk that the governmental entities responsible for the repayment of the debt may be unable, or unwilling, to pay interest and repay principal when due.

Lower rated debt securities, rated Ba1/BB+ or below by Nationally Recognized Statistical Rating Organizations, 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. Such securities are sometimes referred to as “junk bonds” or high yield bonds. The market 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. Investment grade bonds in the ratings categories A or Baa/BBB also may be more susceptible to changes in market or economic conditions than bonds rated in the highest rating categories.

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 a period of rising interest rates, issuers that are highly leveraged may experience increased financial stress that could 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 and derivative instruments. As discussed under “Market conditions” above in this statement of additional information, governments and quasi-governmental authorities may take actions to support local and global economies and financial markets during periods of economic crisis, including direct capital infusions into companies, new monetary programs and significantly lower interest rates. Such actions may expose fixed income markets to heightened volatility and may reduce liquidity for certain investments, which could cause the value of the fund’s portfolio to decline.

Payment expectations — Debt securities may contain redemption or call provisions. If an issuer exercises these provisions in a lower interest rate market, the fund may 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.

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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. The investment adviser considers these ratings of securities as one of many criteria in making its investment decisions.

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 except where otherwise provided. See the Appendix to this statement of additional information for more information about credit ratings.

Securities with equity and debt characteristics — Certain securities have a combination of equity and debt characteristics. Such securities may at times behave more like equity than debt or vice versa.

Preferred stock — Preferred stock represents an equity interest in an issuer that generally entitles the holder to receive, in preference to common stockholders and the holders of certain other stocks, dividends and a fixed share of the proceeds resulting from a liquidation of the issuer. Preferred stocks may pay fixed or adjustable rates of return, and preferred stock dividends may be cumulative or non-cumulative and participating or non-participating. Cumulative dividend provisions require all or a portion of prior unpaid dividends to be paid before dividends can be paid to the issuer’s common stockholders, while prior unpaid dividends on non-cumulative preferred stock are forfeited. Participating preferred stock may be entitled to a dividend exceeding the issuer’s declared dividend in certain cases, while non-participating preferred stock is entitled only to the stipulated dividend. Preferred stock is subject to issuer-specific and market risks applicable generally to equity securities. As with debt securities, the prices and yields of preferred stocks often move with changes in interest rates and the issuer’s credit quality. Additionally, a company’s preferred stock typically pays dividends only after the company makes required payments to holders of its bonds and other debt. Accordingly, the price of preferred stock will usually react more strongly than bonds and other debt to actual or perceived changes in the issuing company’s financial condition or prospects. Preferred stock of smaller companies may be more vulnerable to adverse developments than preferred stock of larger companies.

Convertible securities — A convertible security is a debt obligation, preferred stock or other security that may be converted, within a specified period of time and at a stated conversion rate, into common stock or other equity securities of the same or a different issuer. The conversion may occur automatically upon the occurrence of a predetermined event or at the option of either the issuer or the security holder. Under certain circumstances, a convertible security may also be called for redemption or conversion by the issuer after a particular date and at predetermined price specified upon issue. If a convertible security held by the fund is called for redemption or conversion, the fund could be required to tender the security for redemption, convert it into the underlying common stock, or sell it to a third party.

The holder of a convertible security is generally entitled to participate in the capital appreciation resulting from a market price increase in the issuer’s common stock and to receive interest paid or accrued until the convertible security matures or is redeemed, converted or exchanged. Before conversion, convertible securities have characteristics similar to non-convertible debt or preferred securities, as applicable. Convertible securities rank senior to common stock in an issuer’s capital structure and, therefore, normally entail less risk than the issuer’s common stock. However, convertible securities may also be subordinate to any senior debt obligations of the issuer, and, therefore, an issuer’s convertible securities may entail more risk than such senior debt obligations. Convertible securities usually offer lower

SMALLCAP World Fund — Page 6


interest or dividend yields than non-convertible debt securities of similar credit quality because of the potential for capital appreciation. In addition, convertible securities are often lower-rated securities.

Because of the conversion feature, the price of a convertible security will normally fluctuate in some proportion to changes in the price of the underlying asset, and, accordingly, convertible securities are subject to risks relating to the activities of the issuer and/or general market and economic conditions. The income component of a convertible security may cushion the security against declines in the price of the underlying asset but may also cause the price of the security to fluctuate based upon changes in interest rates and the credit quality of the issuer. As with a straight fixed income security, the price of a convertible security tends to increase when interest rates decline and decrease when interest rates rise. Like the price of a common stock, the price of a convertible security also tends to increase as the price of the underlying stock rises and to decrease as the price of the underlying stock declines.

Hybrid securities — A hybrid security is a type of security that also has equity and debt characteristics. Like equities, which have no final maturity, a hybrid security may be perpetual. On the other hand, like debt securities, a hybrid security may be callable at the option of the issuer on a date specified at issue. Additionally, like common equities, which may stop paying dividends at virtually any time without violating any contractual terms or conditions, hybrids typically allow for issuers to withhold payment of interest until a later date or to suspend coupon payments entirely without triggering an event of default. Hybrid securities are normally at the bottom of an issuer’s debt capital structure because holders of an issuer’s hybrid securities are structurally subordinated to the issuer’s senior creditors. In bankruptcy, hybrid security holders should only get paid after all senior creditors of the issuer have been paid but before any disbursements are made to the issuer’s equity holders. Accordingly, hybrid securities may be more sensitive to economic changes than more senior debt securities. Such securities may also be viewed as more equity-like by the market when the issuer or its parent company experiences financial difficulties.

Contingent convertible securities, which are also known as contingent capital securities, are a form of hybrid security that are intended to either convert into equity or have their principal written down upon the occurrence of certain trigger events. One type of contingent convertible security has characteristics designed to absorb losses, by providing that the liquidation value of the security may be adjusted downward to below the original par value or written off entirely under certain circumstances. For instance, if losses have eroded the issuer’s capital level below a specified threshold, the liquidation value of the security may be reduced in whole or in part. The write-down of the security’s par value may occur automatically and would not entitle holders to institute bankruptcy proceedings against the issuer. In addition, an automatic write-down could result in a reduced income rate if the dividend or interest payment associated with the security is based on the security’s par value. Such securities may, but are not required to, provide for circumstances under which the liquidation value of the security may be adjusted back up to par, such as an improvement in capitalization or earnings. Another type of contingent convertible security provides for mandatory conversion of the security into common shares of the issuer under certain circumstances. The mandatory conversion might relate, for example, to the issuer’s failure to maintain a capital minimum. Since the common stock of the issuer may not pay a dividend, investors in such instruments could experience reduced yields (or no yields at all) and conversion would deepen the subordination of the investor, effectively worsening the investor’s standing in the case of the issuer’s insolvency. An automatic write-down or conversion event with respect to a contingent convertible security will typically be triggered by a reduction in the issuer’s capital level, but may also be triggered by regulatory actions, such as a change in regulatory capital requirements, or by other factors.

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Investing outside the U.S. — Securities of issuers domiciled outside the United States, or with significant operations or revenues outside the United States, may lose value because of adverse political, social, economic or market developments (including social instability, regional conflicts, terrorism and war) in the countries or regions in which the issuers are domiciled, operate or generate revenue. These issuers may also be more susceptible to actions of foreign governments such as the imposition of price controls or punitive taxes that could adversely impact the value of these securities. To the extent the fund invests in securities that are denominated in currencies other than the U.S. dollar, these securities may also lose value due to changes in foreign currency exchange rates against the U.S. dollar and/or currencies of other countries. Securities markets in certain countries may be more volatile or less liquid than those in the United States. Investments outside the United States may also be subject to different accounting practices and different regulatory, legal and reporting standards, and may be more difficult to value, than those in the United States. In addition, the value of investments outside the United States may be reduced by foreign taxes, including foreign withholding taxes on interest and dividends. Further, there may be increased risks of delayed settlement of securities purchased or sold by the fund. The risks of investing outside the United States may be heightened in connection with investments in emerging markets.

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.

Investing in emerging markets — Investing in emerging markets may involve risks in addition to and greater than those generally associated with investing in the securities markets of developed countries. For instance, emerging market countries tend to have less developed political, economic and legal systems and accounting and auditing practices and standards than those in developed countries. Accordingly, the governments of these countries may be less stable and more likely to intervene in the market economy, for example, by imposing capital controls, nationalizing a company or industry, placing restrictions on foreign ownership and on withdrawing sale proceeds of securities from the country, and/or imposing punitive taxes that could adversely affect the prices of securities. Information regarding issuers in emerging markets may be limited, incomplete or inaccurate, and there may be fewer rights and remedies available to the fund and its shareholders. In addition, the economies of these countries may be dependent on relatively few industries and may be more susceptible to changes in local and global trade conditions and downturns in the world economy. Securities markets in these countries can also be relatively small and have substantially lower trading volumes. As a result, securities issued in these countries may be more volatile and less liquid, and may be more difficult to value, than securities issued in countries with more developed economies and/or markets. Less certainty with respect to security valuations may lead to additional challenges and risks in calculating the fund’s net asset value. Additionally, emerging markets are more likely to experience problems with the clearing and settling of trades and the holding of securities by banks, agents and depositories that are less established than those in developed countries.

In countries where direct foreign investment is limited or prohibited, the fund may invest in operating companies based in such countries through an offshore intermediary entity that, based on contractual agreements, seeks to replicate the rights and obligations of direct equity ownership in such operating business. Because the contractual arrangements do not in fact bestow the fund with actual equity ownership in the operating company, these investment structures may limit the fund’s rights as an investor and create significant additional risks. For example, local government authorities may determine that such structures do not comply with applicable laws and regulations, including those relating to restrictions on foreign ownership. In such event, the intermediary entity and/or the operating business may be subject to penalties, revocation of business and operating licenses or forfeiture of foreign ownership interests, and the fund’s economic interests in the underlying operating business and its rights as an investor may not be recognized, resulting in a loss to the fund and its shareholders. In addition, exerting control through contractual arrangements may be less effective

SMALLCAP World Fund — Page 8


than direct equity ownership, and a company may incur substantial costs to enforce the terms of such arrangements, including those relating to the distribution of the funds among the entities. These special investment structures may also be disregarded for tax purposes by local tax authorities, resulting in increased tax liabilities, and the fund’s control over – and distributions due from – such structures may be jeopardized if the individuals who hold the equity interest in such structures breach the terms of the agreements. While these structures may be widely used to circumvent limits on foreign ownership in certain jurisdictions, there is no assurance that they will be upheld by local regulatory authorities or that disputes regarding the same will be resolved consistently.

Although there is no universally accepted definition, the investment adviser generally considers an emerging market to be a market 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, and would include markets commonly referred to as “frontier markets.”

Certain risk factors related to emerging markets

Currency fluctuations — Certain emerging markets’ currencies have experienced and in the future may experience significant declines against the U.S. dollar. For example, if the U.S. dollar appreciates against foreign currencies, the value of the fund’s emerging markets securities holdings would generally depreciate and vice versa. Further, the fund may lose money due to losses and other expenses incurred in converting various currencies to purchase and sell securities valued in currencies other than the U.S. dollar, as well as from currency restrictions, exchange control regulation and currency devaluations.

Government regulation — Certain developing countries lack uniform accounting, auditing and financial reporting and disclosure standards, have less governmental supervision of financial markets than in the United States, and may not honor legal rights or protections enjoyed by investors in the United States. Certain governments may be more unstable and present greater risks of nationalization or restrictions on foreign ownership of local companies. Repatriation of investment income, capital and the proceeds of sales by foreign investors may require governmental registration and/or approval in some developing countries. While the fund will only invest in markets where these restrictions are considered acceptable by the investment adviser, a country could impose new or additional repatriation restrictions after the fund’s investment. If this happened, the fund’s response might include, among other things, applying to the appropriate authorities for a waiver of the restrictions or engaging in transactions in other markets designed to offset the risks of decline in that country. Such restrictions will be considered in relation to the fund’s liquidity needs and other factors. Further, some attractive equity securities may not be available to the fund if foreign shareholders already hold the maximum amount legally permissible.

While government involvement in the private sector varies in degree among developing countries, such involvement may in some cases include government ownership of companies in certain sectors, wage and price controls or imposition of trade barriers and other protectionist measures. With respect to any developing country, there is no guarantee that some future economic or political crisis will not lead to price controls, forced mergers of companies, expropriation, or creation of government monopolies to the possible detriment of the fund’s investments.

Fluctuations in inflation rates — Rapid fluctuations in inflation rates may have negative impacts on the economies and securities markets of certain emerging market countries.

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Less developed securities markets — Emerging markets may be less well-developed and regulated than other markets. These markets have lower trading volumes than the securities markets of more developed countries and may be unable to respond effectively to increases in trading volume. Consequently, these markets may be substantially less liquid than those of more developed countries, and the securities of issuers located in these markets may have limited marketability. These factors may make prompt liquidation of substantial portfolio holdings difficult or impossible at times.

Settlement risks — Settlement systems in developing countries are generally less well organized than those of developed markets. Supervisory authorities may also be unable to apply standards comparable to those in developed markets. Thus, there may be risks that settlement may be delayed and that cash or securities belonging to the fund may be in jeopardy because of failures of or defects in the systems. In particular, market practice may require that payment be made before receipt of the security being purchased or that delivery of a security be made before payment is received. In such cases, default by a broker or bank (the “counterparty”) through whom the transaction is effected might cause the fund to suffer a loss. The fund will seek, where possible, to use counterparties whose financial status is such that this risk is reduced. However, there can be no certainty that the fund will be successful in eliminating this risk, particularly as counterparties operating in developing countries frequently lack the standing or financial resources of those in developed countries. There may also be a danger that, because of uncertainties in the operation of settlement systems in individual markets, competing claims may arise with respect to securities held by or to be transferred to the fund.

Limited market information — The fund may encounter problems assessing investment opportunities in certain emerging markets in light of limitations on available information and different accounting, auditing and financial reporting standards. For example, due to jurisdictional limitations, the Public Company Accounting Oversight Board (“PCAOB”) may be unable to inspect the audit work and practices of PCAOB-registered auditing firms in certain developing countries that audit U.S. reporting companies with operations in those countries. As a result, there is greater risk that financial records and information relating to an issuer’s operations in developing countries will be incomplete or misleading, which may negatively impact the fund’s investments in such company. When faced with limited market information, the fund’s investment adviser will seek alternative sources of information, and to the extent the investment adviser is not satisfied with the sufficiency or accuracy of the information obtained with respect to a particular market or security, the fund will not invest in such market or security.

Taxation — Taxation of dividends, interest and capital gains received by the fund varies among developing countries and, in some cases, is comparatively high. In addition, developing countries typically have less well-defined tax laws and procedures and such laws may permit retroactive taxation so that the fund could become subject in the future to local tax liability that it had not reasonably anticipated in conducting its investment activities or valuing its assets.

Fraudulent securities — Securities purchased by the fund may subsequently be found to be fraudulent or counterfeit, resulting in a loss to the fund.

Remedies — Developing countries may offer less protection to investors than U.S. markets and, in the event of investor harm, there may be substantially less recourse available to the fund and its shareholders. In addition, as a matter of law or practicality, the fund and its shareholders - as well as U.S. regulators - may encounter substantial difficulties in obtaining and enforcing judgments and other actions against non-U.S. individuals and companies.

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Investing through Stock Connect — The fund may invest in China A-shares of certain Chinese companies listed and traded on the Shanghai Stock Exchange and on the Shenzhen Stock Exchange (together, the “Exchanges”) through the Shanghai-Hong Kong Stock Connect Program and the Shenzhen-Hong Kong Stock Connect Program, respectively (together, “Stock Connect”). Stock Connect is a securities trading and clearing program developed by the Exchange of Hong Kong, the Exchanges and the China Securities Depository and Clearing Corporation Limited. Stock Connect facilitates foreign investment in the People’s Republic of China (“PRC”) via brokers in Hong Kong. Persons investing through Stock Connect are subject to PRC regulations and Exchange listing rules, among others. These could include limitations on or suspension of trading. These regulations are relatively new and subject to changes which could adversely impact the fund’s rights with respect to the securities. For example, a stock may be recalled from the scope of eligible SSE Securities or SZSE Securities for trading via Stock Connect for various reasons, and in such event the stock can be sold but is restricted from being bought.  In such event, the investment adviser’s ability to implement the fund’s investment strategies may be adversely affected. As Stock Connect is still relatively new, investments made through Stock Connect are subject to relatively new trading, clearance and settlement procedures and there are no assurances that the necessary systems to run the program will function properly. In addition, Stock Connect is subject to aggregate and daily quota limitations on purchases and permitted price fluctuations.  As a result, the fund may experience delays in transacting via Stock Connect and there can be no assurance that a liquid market on the Exchanges will exist. Since Stock Connect only operates on days when both the Chinese and Hong Kong markets are open for trading, and banking services are available in both markets on the corresponding settlement days, the fund’s ownership interest in securities traded through Stock Connect may not be reflected directly and the fund may be subject to the risk of price fluctuations in China A-shares when Stock Connect is not open to trading. Changes in Chinese tax rules may also adversely affect the fund’s performance. The fund’s shares are held in an omnibus account and registered in nominee name. Please also see the sections on risks relating to investing outside the U.S. and investing in emerging markets.

Synthetic local access instruments — Participation notes, market access warrants and other similar structured investment vehicles (collectively, “synthetic local access instruments”) are instruments used by investors to obtain exposure to equity investments in local markets where direct ownership by foreign investors is not permitted or is otherwise restricted by local law. Synthetic local access instruments, which are generally structured and sold over-the-counter by a local branch of a bank or broker-dealer that is permitted to purchase equity securities in the local market, are designed to replicate exposure to one or more underlying equity securities. The price and performance of a synthetic local access instrument are normally intended to track the price and performance of the underlying equity assets as closely as possible. However, there can be no assurance that the results of synthetic local access instruments will replicate exactly the performance of the underlying securities due to transaction costs, taxes and other fees and expenses. The holder of a synthetic local access instrument may also be entitled to receive any dividends paid in connection with the underlying equity assets, but usually does not receive voting rights as it would if such holder directly owned the underlying assets.

Investments in synthetic local access instruments involve the same risks associated with a direct investment in the shares of the companies the instruments seek to replicate, including, in particular, the risks associated with investing outside the United States. Synthetic local access instruments also involve risks that are in addition to the risks normally associated with a direct investment in the underlying equity securities. For instance, synthetic local access instruments represent unsecured, unsubordinated contractual obligations of the banks or broker-dealers that issue them. Consequently, a purchaser of a synthetic local access instrument relies on the creditworthiness of such a bank or broker-dealer counterparty and has no rights under the instrument against the issuer of the underlying equity securities. Additionally, there is no guarantee that a liquid market for a synthetic local access instrument will exist or that the issuer of the instrument will be willing to repurchase the instrument when an investor wishes to sell it.

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Depositary receipts — Depositary receipts are securities that evidence ownership interests in, and represent the right to receive, a security or a pool of securities that have been deposited with a bank or trust depository. The fund may invest in American Depositary Receipts (“ADRs”), European Depositary Receipts (“EDRs”), Global Depositary Receipts (“GDRs”), and other similar securities. For ADRs, the depository is typically a U.S. financial institution and the underlying securities are issued by a non-U.S. entity. For other depositary receipts, the depository may be a non-U.S. or a U.S. entity, and the underlying securities may be issued by a non-U.S. or a U.S. entity. Depositary receipts will not necessarily be denominated in the same currency as their underlying securities. Generally, ADRs are issued in registered form, denominated in U.S. dollars, and designed for use in the U.S. securities markets. Other depositary receipts, such as EDRs and GDRs, may be issued in bearer form, may be denominated in either U.S. dollars or in non-U.S. currencies, and are primarily designed for use in securities markets outside the United States. ADRs, EDRs and GDRs can be sponsored by the issuing bank or trust company or the issuer of the underlying securities. Although the issuing bank or trust company may impose charges for the collection of dividends and the conversion of such securities into the underlying securities, generally no fees are imposed on the purchase or sale of these securities other than transaction fees ordinarily involved with trading stock. Such securities may be less liquid or may trade at a lower price than the underlying securities of the issuer. Additionally, the issuers of securities underlying depositary receipts may not be obligated to timely disclose information that is considered material under the securities laws of the United States. Therefore, less information may be available regarding these issuers than about the issuers of other securities and there may not be a correlation between such information and the market value of the depositary receipts.

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, as amended (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.

Some fund holdings (including some restricted securities) may be deemed illiquid if the fund expects that a reasonable portion of the holding cannot be sold in seven calendar days or less without the sale significantly changing the market value of the investment. The determination of whether a holding is considered illiquid is made by the fund’s adviser under a liquidity risk management program adopted by the fund’s board and administered by the fund’s adviser. The fund may incur significant additional costs in disposing of illiquid securities.

Loan assignments and participations — The fund may invest in loans or other forms of indebtedness that represent interests in amounts owed by corporations or other borrowers (collectively “borrowers”). Loans may be originated by the borrower in order to address its working capital needs, as a result of a reorganization of the borrower’s assets and liabilities (recapitalizations), to merge with or acquire another company (mergers and acquisitions), to take control of another company (leveraged buy-outs), to provide temporary financing (bridge loans), or for other corporate purposes. Most corporate loans are variable or floating rate obligations.

Some loans may be secured in whole or in part by assets or other collateral. In other cases, loans may be unsecured or may become undersecured by declines in the value of assets or other collateral securing such loan. The greater the value of the assets securing the loan the more the lender is protected against loss in the case of nonpayment of principal or interest. Loans made to highly leveraged borrowers may be especially vulnerable to adverse changes in economic or market conditions and may involve a greater risk of default.

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Some loans may represent revolving credit facilities or delayed funding loans, in which a lender agrees to make loans up to a maximum amount upon demand by the borrower during a specified term. These commitments may have the effect of requiring the fund to increase its investment in a company at a time when it might not otherwise decide to do so (including at a time when the company’s financial condition makes it unlikely that such amounts will be repaid). To the extent that the fund is committed to advance additional funds, the fund will segregate assets determined to be liquid in an amount sufficient to meet such commitments.

Some loans may represent debtor-in-possession financings (commonly known as “DIP financings”). DIP financings are arranged when an entity seeks the protections of the bankruptcy court under Chapter 11 of the U.S. Bankruptcy Code. These financings allow the entity to continue its business operations while reorganizing under Chapter 11. Such financings constitute senior liens on unencumbered collateral (i.e., collateral not subject to other creditors’ claims). There is a risk that the entity will not emerge from Chapter 11 and will be forced to liquidate its assets under Chapter 7 of the U.S. Bankruptcy Code. In the event of liquidation, the fund’s only recourse will be against the collateral securing the DIP financing.

The investment adviser generally makes investment decisions based on publicly available information, but may rely on non-public information if necessary. Borrowers may offer to provide lenders with material, non-public information regarding a specific loan or the borrower in general. The investment adviser generally chooses not to receive this information. As a result, the investment adviser may be at a disadvantage compared to other investors that may receive such information. The investment adviser’s decision not to receive material, non-public information may impact the investment adviser’s ability to assess a borrower’s requests for amendments or waivers of provisions in the loan agreement. However, the investment adviser may on a case-by-case basis decide to receive such information when it deems prudent. In these situations the investment adviser may be restricted from trading the loan or buying or selling other debt and equity securities of the borrower while it is in possession of such material, non-public information, even if such loan or other security is declining in value.

The fund normally acquires loan obligations through an assignment from another lender, but also may acquire loan obligations by purchasing participation interests from lenders or other holders of the interests. When the fund purchases assignments, it acquires direct contractual rights against the borrower on the loan. The fund acquires the right to receive principal and interest payments directly from the borrower and to enforce its rights as a lender directly against the borrower. However, because assignments are arranged through private negotiations between potential assignees and potential assignors, the rights and obligations acquired by a fund as the purchaser of an assignment may differ from, and be more limited than, those held by the assigning lender. Loan assignments are often administered by a financial institution that acts as agent for the holders of the loan, and the fund may be required to receive approval from the agent and/or borrower prior to the purchase of a loan. Risks may also arise due to the inability of the agent to meet its obligations under the loan agreement.

Loan participations are loans or other direct debt instruments that are interests in amounts owed by the borrower to another party. They may represent amounts owed to lenders or lending syndicates, to suppliers of goods or services, or to other parties. The fund will have the right to receive payments of principal, interest and any fees to which it is entitled only from the lender selling the participation and only upon receipt by the lender of the payments from the borrower. In connection with purchasing participations, the fund generally will have no right to enforce compliance by the borrower with the terms of the loan agreement relating to the loan, nor any rights of set-off against the borrower. In addition, the fund may not directly benefit from any collateral supporting the loan in which it has purchased the participation and the fund will have to rely on the agent bank or other financial intermediary to apply appropriate credit remedies. As a result, the fund will be subject to the credit risk of both the borrower and the lender that is selling the participation. In the event of the insolvency of the lender selling a participation, a fund may be treated as a general creditor of the lender and may not benefit from any set-off between the lender and the borrower.

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Loan assignments and participations are generally subject to legal or contractual restrictions on resale and are not currently listed on any securities exchange or automatic quotation system. Risks may arise due to delayed settlements of loan assignments and participations. The investment adviser expects that most loan assignments and participations purchased for the fund will trade on a secondary market. However, although secondary markets for investments in loans are growing among institutional investors, a limited number of investors may be interested in a specific loan. It is possible that loan participations, in particular, could be sold only to a limited number of institutional investors. If there is no active secondary market for a particular loan, it may be difficult for the investment adviser to sell the fund’s interest in such loan at a price that is acceptable to it and to obtain pricing information on such loan.

Investments in loan participations and assignments present the possibility that the fund could be held liable as a co-lender under emerging legal theories of lender liability. In addition, if the loan is foreclosed, the fund could be part owner of any collateral and could bear the costs and liabilities of owning and disposing of the collateral. In addition, some loan participations and assignments may not be rated by major rating agencies and may not be protected by securities laws.

Warrants and rights — Warrants and rights may be acquired by the fund in connection with other securities or separately. Warrants generally entitle, but do not obligate, their holder to purchase other equity or fixed income securities at a specified price at a later date. Rights are similar to warrants but typically have a shorter duration and are issued by a company to existing holders of its stock to provide those holders the right to purchase additional shares of stock at a later date. Warrants and rights do not carry with them the right to dividends or voting rights with respect to the securities that they entitle their holder to purchase, and they do not represent any rights in the assets of the issuing company. Additionally, a warrant or right ceases to have value if it is not exercised prior to its expiration date. As a result, warrants and rights may be considered more speculative than certain other types of investments. Changes in the value of a warrant or right do not necessarily correspond to changes in the value of its underlying security. The price of a warrant or right may be more volatile than the price of its underlying security, and they therefore present greater potential for capital appreciation and capital loss. The effective price paid for warrants or rights added to the subscription price of the related security may exceed the value of the subscribed security’s market price, such as when there is no movement in the price of the underlying security. The market for warrants or rights may be very limited and it may be difficult to sell them promptly at an acceptable price.

Real estate investment trusts — Real estate investment trusts ("REITs"), which primarily invest in real estate or real estate-related loans, may issue equity or debt securities. Equity REITs own real estate properties, while mortgage REITs hold construction, development and/or long-term mortgage loans. The values of REITs may be affected by changes in the value of the underlying property of the trusts, the creditworthiness of the issuer, property taxes, interest rates, tax laws and regulatory requirements, such as those relating to the environment. Both types of REITs are dependent upon management skill and the cash flows generated by their holdings, the real estate market in general and the possibility of failing to qualify for any applicable pass-through tax treatment or failing to maintain any applicable exemptive status afforded under relevant laws.

Currency transactions — The fund may enter into currency transactions on a spot (i.e., cash) basis at the prevailing rate in the currency exchange market to provide for the purchase or sale of a currency needed to purchase a security denominated in such currency. In addition, the fund may enter into forward currency contracts to protect against changes in currency exchange rates, to increase exposure to a particular foreign currency, to shift exposure to currency fluctuations from one currency to another or to seek to increase returns. 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. Some forward currency contracts, called non-deliverable forwards or NDFs, do not call for physical delivery of the currency and are instead settled through cash payments. Forward currency contracts are typically privately

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negotiated and traded in the interbank market between large commercial banks (or other currency traders) and their customers. Although forward contracts entered into by the fund will typically involve the purchase or sale of a currency against the U.S. dollar, the fund also may purchase or sell a non-U.S. currency against another non-U.S. currency.

Currency exchange rates generally are determined by forces of supply and demand in the foreign exchange markets and the relative merits of investment in different countries as viewed from an international perspective. Currency exchange rates, as well as foreign currency transactions, can also be affected unpredictably by intervention by U.S. or foreign governments or central banks or by currency controls or political developments in the United States or abroad. Such intervention or other events could prevent the fund from entering into foreign currency transactions, force the fund to exit such transactions at an unfavorable time or price or result in penalties to the fund, any of which may result in losses to the fund.

Generally, the fund will not attempt to protect against all potential changes in exchange rates and the use of forward contracts does not eliminate the risk of fluctuations in the prices of the underlying securities. If the value of the underlying securities declines or the amount of the fund’s commitment increases because of changes in exchange rates, the fund may need to provide additional cash or securities to satisfy its commitment under the forward contract. The fund is also subject to the risk that it may be delayed or prevented from obtaining payments owed to it under the forward contract as a result of the insolvency or bankruptcy of the counterparty with which it entered into the forward contract or the failure of the counterparty to comply with the terms of the contract.

The realization of gains or losses on foreign currency transactions will usually be a function of the investment adviser’s ability to accurately estimate currency market movements. Entering into forward currency transactions may change the fund’s exposure to currency exchange rates and could result in losses to the fund if currencies do not perform as expected by the fund’s investment adviser. For example, if the fund’s investment adviser increases the fund’s exposure to a foreign currency using forward contracts and that foreign currency’s value declines, the fund may incur a loss. In addition, 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.

Forward currency contracts may give rise to leverage, or exposure to potential gains and losses in excess of the initial amount invested. Leverage magnifies gains and losses and could cause the fund to be subject to more volatility than if it had not been leveraged, thereby resulting in a heightened risk of loss. Under current regulatory requirements, 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 U.S. Securities and Exchange Commission.

In October 2020, the SEC adopted a new rule applicable to the fund’s use of derivatives. The new rule, among other things, generally requires a fund to adopt a derivatives risk management program, appoint a derivatives risk manager and comply with an outer limit on fund leverage risk based on value at risk, or “VaR”. However, subject to certain conditions, if a fund uses derivatives only in a limited manner, it may be deemed a limited derivatives user and would not be subject to the full requirements of the new rule. The SEC also eliminated the asset segregation and cover framework, described above, arising from prior SEC guidance for covering derivatives and certain financial instruments effective at the time that a fund complies with the new rule. Compliance with the new rule will be required in August 2022. The implementation of these requirements may limit the ability of the fund to use derivatives as part of its investment strategy.

Forward currency transactions also may affect the character and timing of income, gain, or loss recognized by the fund for U.S. tax purposes. The use of forward currency contracts could result in the

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application of the mark-to-market provisions of the Internal Revenue Code of 1986 as amended (the "Code") and may cause an increase (or decrease) in the amount of taxable dividends paid by the fund.

Indirect exposure to cryptocurrencies – Cryptocurrencies are currencies which exist in a digital form and may act as a store of wealth, a medium of exchange or an investment asset. There are thousands of cryptocurrencies, such as bitcoin. Although the fund has no current intention of directly investing in cryptocurrencies, some issuers have begun to accept cryptocurrency for payment of services, use cryptocurrencies as reserve assets or invest in cryptocurrencies, and the fund may invest in securities of such issuers. The fund may also invest in securities of issuers which provide cryptocurrency-related services.

Cryptocurrencies are subject to fluctuations in value. Cryptocurrencies are not backed by any government, corporation, or other identified body. Rather, the value of a cryptocurrency is determined by other factors, such as the perceived future prospects or the supply and demand for such cryptocurrency in the global market for the trading of cryptocurrency. Such trading markets are unregulated and may be more exposed to operational or technical issues as well as fraud or manipulation in comparison to established, regulated exchanges for securities, derivatives and traditional currencies. The value of a cryptocurrency may decline precipitously (including to zero) for a variety of reasons, including, but not limited to, regulatory changes, a loss of confidence in its network or a change in user preference to other cryptocurrencies. An issuer that owns cryptocurrencies may experience custody issues, and may lose its cryptocurrency holdings through theft, hacking, and technical glitches in the applicable blockchain. The fund may experience losses as a result of the decline in value of its securities of issuers that own cryptocurrencies or which provide cryptocurrency-related services. If an issuer that owns cryptocurrencies intends to pay a dividend using such holdings or to otherwise make a distribution of such holdings to its stockholders, such dividends or distributions may face regulatory, operational and technical issues.

Factors affecting the further development of cryptocurrency include, but are not limited to: continued worldwide growth of, or possible cessation of or reversal in, the adoption and use of cryptocurrencies and other digital assets; the developing regulatory environment relating to cryptocurrencies, including the characterization of cryptocurrencies as currencies, commodities, or securities, the tax treatment of cryptocurrencies, and government and quasi-government regulation or restrictions on, or regulation of access to and operation of, cryptocurrency networks and the exchanges on which cryptocurrencies trade, including anti-money laundering regulations and requirements; perceptions regarding the environmental impact of a cryptocurrency; changes in consumer demographics and public preferences; general economic conditions; maintenance and development of open-source software protocols; the availability and popularity of other forms or methods of buying and selling goods and services; the use of the networks supporting digital assets, such as those for developing smart contracts and distributed applications; and general risks tied to the use of information technologies, including cyber risks. A hack or failure of one cryptocurrency may lead to a loss in confidence in, and thus decreased usage and/or value of, other cryptocurrencies.

Repurchase agreements — The fund may enter into repurchase agreements, or “repos”, 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. Because the security purchased constitutes collateral for the repurchase obligation, a repo may be considered a loan by the fund that is collateralized by the security purchased. Repos permit the fund to maintain liquidity and earn income over periods of time as short as overnight.

The seller must maintain with a custodian collateral equal to at least the repurchase price, including accrued interest. In tri-party repos, a third party custodian, called a clearing bank, facilitates repo clearing and settlement, including by providing collateral management services. However, as an alternative to tri-party repos, the fund could enter into bilateral repos, where the parties themselves are responsible for settling transactions.

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The fund will only enter into repos involving securities of the type in which it could otherwise invest. If the seller under the repo defaults, the fund may incur a loss if the value of the collateral securing the repo has declined and may incur disposition costs and delays 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.

Obligations backed by the “full faith and credit” of the U.S. government — U.S. government obligations include the following types of securities:

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 high credit quality. Such securities are subject to variations in market value due to fluctuations in interest rates and in government policies, but, if held to maturity, are expected to be paid in full (either at maturity or thereafter).

Federal agency securities — 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, but are not limited to, the Federal Financing Bank (“FFB”), the Government National Mortgage Association (“Ginnie Mae”), the U.S. Department of Veterans Affairs (“VA”), the Federal Housing Administration (“FHA”), the Export-Import Bank of the United States (“Exim Bank”), the U.S. International Development Finance Corporation (“DFC”), the Commodity Credit Corporation (“CCC”) and the U.S. 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 congressional charter; some are backed by collateral consisting of “full faith and credit” obligations as described above; 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: the Federal Home Loan Banks, the Federal Home Loan Mortgage Corporation (“Freddie Mac”), the Federal National Mortgage Association (“Fannie Mae”), the Tennessee Valley Authority and the Federal Farm Credit Bank System.

In 2008, Freddie Mac and Fannie Mae were placed into conservatorship by their new regulator, the Federal Housing Finance Agency (“FHFA”). Simultaneously, the U.S. Treasury made a commitment of indefinite duration to maintain the positive net worth of both firms. As conservator, the FHFA has the authority to repudiate any contract either firm has entered into prior to the FHFA’s appointment as conservator (or receiver should either firm go into default) if the FHFA, in its sole discretion determines that performance of the contract is burdensome and repudiation would promote the orderly administration of Fannie Mae’s or Freddie Mac’s affairs. While the FHFA has indicated that it does not intend to repudiate the guaranty obligations of either entity, doing so could adversely affect holders of their mortgage-backed securities. For example, if a contract were repudiated, the liability for any direct compensatory damages would accrue to the entity’s conservatorship estate and could only be satisfied to the extent the estate had available assets. As a result, if interest payments on Fannie Mae or Freddie Mac mortgage-backed securities held by the fund were reduced because underlying borrowers failed to make payments or such payments were not advanced by a loan servicer, the fund’s only recourse might be against the conservatorship estate, which might not have sufficient assets to offset any shortfalls.

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The FHFA, in its capacity as conservator, has the power to transfer or sell any asset or liability of Fannie Mae or Freddie Mac. The FHFA has indicated it has no current intention to do this; however, should it do so a holder of a Fannie Mae or Freddie Mac mortgage-backed security would have to rely on another party for satisfaction of the guaranty obligations and would be exposed to the credit risk of that party.

Certain rights provided to holders of mortgage-backed securities issued by Fannie Mae or Freddie Mac under their operative documents may not be enforceable against the FHFA, or enforcement may be delayed during the course of the conservatorship or any future receivership. For example, the operative documents may provide that upon the occurrence of an event of default by Fannie Mae or Freddie Mac, holders of a requisite percentage of the mortgage-backed security may replace the entity as trustee. However, under the Federal Housing Finance Regulatory Reform Act of 2008, holders may not enforce this right if the event of default arises solely because a conservator or receiver has been appointed.

Cash and cash equivalents — The fund may hold cash or invest in cash equivalents. Cash equivalents include, but are not limited to: (a) shares of money market or similar funds managed by the investment adviser or its affiliates; (b) shares of other money market funds; (c) commercial paper; (d) 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; (e) savings association and savings bank obligations (for example, bank notes and certificates of deposit issued by savings banks or savings associations); (f) securities of the U.S. government, its agencies or instrumentalities that mature, or that may be redeemed, in one year or less; and (g) higher quality corporate bonds and notes that mature, or that may be redeemed, in one year or less.

Commercial paper — The fund may purchase commercial paper. Commercial paper refers to short-term promissory notes issued by a corporation to finance its current operations. Such securities normally have maturities of thirteen months or less and, though commercial paper is often unsecured, commercial paper may be supported by letters of credit, surety bonds or other forms of collateral. Maturing commercial paper issuances are usually repaid by the issuer from the proceeds of new commercial paper issuances. As a result, investment in commercial paper is subject to rollover risk, or the risk that the issuer cannot issue enough new commercial paper to satisfy its outstanding commercial paper. Like all fixed income securities, commercial paper prices are susceptible to fluctuations in interest rates. If interest rates rise, commercial paper prices will decline and vice versa. However, the short-term nature of a commercial paper investment makes it less susceptible to volatility than many other fixed income securities because interest rate risk typically increases as maturity lengths increase. Commercial paper tends to yield smaller returns than longer-term corporate debt because securities with shorter maturities typically have lower effective yields than those with longer maturities. As with all fixed income securities, there is a chance that the issuer will default on its commercial paper obligations and commercial paper may become illiquid or suffer from reduced liquidity in these or other situations.

Commercial paper in which the fund may invest includes commercial paper issued in reliance on the exemption from registration afforded by Section 4(a)(2) of the 1933 Act. Section 4(a)(2) commercial paper has substantially the same price and liquidity characteristics as commercial paper generally, except that the resale of Section 4(a)(2) commercial paper is limited to institutional investors who agree that they are purchasing the paper for investment purposes and not with a view to public distribution. Technically, such a restriction on resale renders Section 4(a)(2) commercial paper a restricted security under the 1933 Act. In practice, however, Section 4(a)(2) commercial paper typically can be resold as easily as any other unrestricted security held by the fund. Accordingly, Section 4(a)(2) commercial paper has been generally determined to be liquid under procedures adopted by the fund’s board of directors.

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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 may enter into roll transactions, such as a mortgage dollar roll where the fund sells mortgage-backed securities for delivery in the current month and simultaneously contracts to repurchase substantially similar (same type, coupon, and maturity) securities on a specified future date, at a pre-determined price. During the period between the sale and repurchase (the “roll period”), the fund forgoes principal and interest paid on the mortgage-backed securities. The fund is compensated by the difference between the current sales price and the lower forward price for the future purchase (often referred to as the “drop”), if any, as well as by the interest earned on the cash proceeds of the initial sale. The fund could suffer a loss if the contracting party fails to perform the future transaction and the fund is therefore unable to buy back the mortgage-backed securities it initially sold. The fund also takes the risk that the mortgage-backed securities that it repurchases at a later date will have less favorable market characteristics than the securities originally sold (e.g., greater prepayment risk). These transactions are accounted for as purchase and sale transactions, which contribute to the fund’s portfolio turnover rate.

With to be announced (TBA) transactions, the particular securities (i.e., specified mortgage pools) to be delivered or received are not identified at the trade date, but are “to be announced” at a later settlement date. However, securities to be delivered must meet specified criteria, including face value, coupon rate and maturity, and be within industry-accepted “good delivery” standards.

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 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.

Cybersecurity risks — With the increased use of technologies such as the Internet to conduct business, the fund has become potentially more susceptible to operational and information security risks through breaches in cybersecurity. In general, a breach in cybersecurity can result from either a deliberate attack or an unintentional event. Cybersecurity breaches may involve, among other things, infection by computer viruses or other malicious software code or unauthorized access to digital information systems, networks or devices used directly or indirectly by the fund or its service providers through “hacking” or other means, in each case for the purpose of misappropriating assets or sensitive information (including, for example, personal shareholder information), corrupting data or causing operational disruption or failures in the physical infrastructure or operating systems that support the fund. Cybersecurity risks also include the risk of losses of service resulting from external attacks that do not require unauthorized access to the fund’s systems, networks or devices. For example, denial-of-service attacks on the investment adviser’s or an affiliate’s website could effectively render the fund’s network services unavailable to fund shareholders and other intended end-users. Any such cybersecurity breaches or losses of service may cause the fund to lose proprietary information, suffer data corruption or lose operational capacity or may result in unauthorized release or other misuse of confidential information. These, in turn, could cause the fund to incur regulatory penalties, reputational

SMALLCAP World Fund — Page 19


damage, additional compliance costs associated with corrective measures and/or financial loss. While the fund and its investment adviser have established business continuity plans and risk management systems designed to prevent or reduce the impact of cybersecurity attacks, there are inherent limitations in such plans and systems due in part to the ever-changing nature of technology and cybersecurity attack tactics, and there is a possibility that certain risks have not been adequately identified or prepared for.

In addition, cybersecurity failures by or breaches of the fund’s third-party service providers (including, but not limited to, the fund’s investment adviser, transfer agent, custodian, administrators and other financial intermediaries) may disrupt the business operations of the service providers and of the fund, potentially resulting in financial losses, the inability of fund shareholders to transact business with the fund and of the fund to process transactions, the inability of the fund to calculate its net asset value, violations of applicable privacy and other laws, rules and regulations, regulatory fines, penalties, reputational damage, reimbursement or other compensatory costs and/or additional compliance costs associated with implementation of any corrective measures. The fund and its shareholders could be negatively impacted as a result of any such cybersecurity breaches, and there can be no assurance that the fund will not suffer losses relating to cybersecurity attacks or other informational security breaches affecting the fund’s third-party service providers in the future, particularly as the fund cannot control any cybersecurity plans or systems implemented by such service providers.

Cybersecurity risks may also impact issuers of securities in which the fund invests, which may cause the fund’s investments in such issuers to lose value.

Interfund borrowing and lending — Pursuant to an exemptive order issued by the U.S. Securities and Exchange Commission, the fund may lend money to, and borrow money from, other funds advised by Capital Research and Management Company or its affiliates. The fund will borrow through the program only when the costs are equal to or lower than the costs of bank loans. The fund will lend through the program only when the returns are higher than those available from an investment in repurchase agreements. Interfund loans and borrowings normally extend overnight, but can have a maximum duration of seven days. Loans may be called on one day's notice. The fund may have to borrow from a bank at a higher interest rate if an interfund loan is called or not renewed. Any delay in repayment to a lending fund could result in a lost investment opportunity or additional borrowing costs.

Affiliated investment companies — The fund may purchase shares of another investment company managed by the investment adviser or its affiliates. The risks of owning another investment company are similar to the risks of investing directly in the securities in which that investment company invests. When investing in another investment company, the fund bears its proportionate share of the expenses of any investment company in which it invests but does not bear additional management fees through its investment in such investment company. Investments in other investment companies could allow the fund to obtain the benefits of a more diversified portfolio than might otherwise be available through direct investments in a particular asset class, and will subject the fund to the risks associated with the particular asset class or asset classes in which an underlying fund invests. However, an investment company may not achieve its investment objective or execute its investment strategy effectively, which may adversely affect the fund’s performance. Any investment in another investment company will be consistent with the fund’s objective(s) and applicable regulatory limitations.

In October 2020, the U.S. Securities and Exchange Commission adopted certain regulatory changes and took other actions related to the ability of registered investment companies to invest in other registered investment companies. These changes include, among other things, the adoption of Rule 12d1-4 under the 1940 Act, the rescission of Rule 12d1-2 under the 1940 Act, and the withdrawal of certain related exemptive relief and no-action assurances. Such changes could adversely impact the investment strategies and operations of the fund, to the extent that it invests in such other investment companies.

SMALLCAP World Fund — Page 20


Securities lending activities – The fund may lend portfolio securities to brokers, dealers or other institutions that provide cash or U.S. Treasury securities as collateral in an amount at least equal to the value of the securities loaned. While portfolio securities are on loan, the fund will continue to receive the equivalent of the interest and the dividends or other distributions paid by the issuer on the securities, as well as a portion of the interest on the investment of the collateral. Additionally, although the fund will not have the right to vote on securities while they are on loan, the fund has a right to consent on corporate actions and a right to recall each loan to vote on proposals, including proposals involving material events affecting securities loaned. The fund has delegated the decision to lend portfolio securities to the investment adviser. The adviser also has the discretion to consent on corporate actions and to recall securities on loan to vote. In the event the adviser deems a corporate action or proxy vote material, as determined by the adviser based on factors relevant to the fund, it will use reasonable efforts to recall the securities and consent to or vote on the matter.  

Securities lending involves risks, including the risk that the loaned securities may not be returned in a timely manner or at all and/or the risk of a loss of rights in the collateral if a borrower or the lending agent defaults. These risks could be greater for non-U.S. securities. Additionally, the fund may lose money from the reinvestment of collateral received on loaned securities in investments that decline in value, default or do not perform as expected. The fund will make loans only to parties deemed by the fund’s adviser to be in good standing and when, in the adviser’s judgment, the income earned would justify the risks.

JPMorgan Chase Bank, N.A. (“JPMorgan”) serves as securities lending agent for the fund. As the securities lending agent, JPMorgan administers the fund’s securities lending program pursuant to the terms of a securities lending agent agreement entered into between the fund and JPMorgan. Under the terms of the agreement, JPMorgan is responsible for making available to approved borrowers securities from the fund’s portfolio. JPMorgan is also responsible for the administration and management of the fund’s securities lending program, including the preparation and execution of an agreement with each borrower governing the terms and conditions of any securities loan, ensuring that securities loans are properly coordinated and documented, ensuring that loaned securities are valued daily and that the corresponding required collateral is delivered by the borrowers, arranging for the investment of collateral received from borrowers, and arranging for the return of loaned securities to the fund in accordance with the fund’s instructions or at loan termination. As compensation for its services, JPMorgan receives a portion of the amount earned by the fund for lending securities.

The following table sets forth, for the fund’s most recently completed fiscal year, the fund’s dollar amount of income and fees and/or other compensation related to its securities lending activities. Net income from securities lending activities may differ from the amount reported in the fund’s annual report, which reflects estimated accruals.

   

Gross income from securities lending activities

$25,807,776

Fees paid to securities lending agent from a revenue split

1,289,983

Fees paid for any cash collateral management service (including fees deducted from a pooled cash collateral reinvestment vehicle) not included in the revenue split

Administrative fees not included in the revenue split

Indemnification fees not included in the revenue split

Rebates (paid to borrower)

6,701

Other fees not included in the revenue split

Aggregate fees/compensation for securities lending activities

1,296,684

Net income from securities lending activities

24,511,092

SMALLCAP World Fund — Page 21


* * * * * *

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. Higher portfolio turnover may involve correspondingly greater transaction costs in the form of dealer spreads or brokerage commissions. It may also result in the realization of net capital gains, which are taxable when distributed to shareholders, unless the shareholder is exempt from taxation or his or her account is tax-favored.

The fund’s portfolio turnover rates for the fiscal years ended September 30, 2021 and 2020 were 30% and 38%, respectively. The decrease in turnover was due to decreased trading activity during the period. 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.

SMALLCAP World Fund — Page 22


Fund policies

All percentage limitations in the following fund policies are considered at the time securities are purchased and are based on the fund’s net assets (excluding, for the avoidance of doubt, collateral held in connection with securities lending activities) unless otherwise indicated. None of the following policies 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. In managing the fund, the fund’s investment adviser may apply more restrictive policies than those listed below.

Fundamental policies — The fund has adopted the following policies, which may not be changed without approval by holders of a majority of its outstanding shares. Such majority is currently 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 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.

1. Except as permitted by (i) the 1940 Act and the rules and regulations thereunder, or other successor law governing the regulation of registered investment companies, or interpretations or modifications thereof by the U.S. Securities and Exchange Commission (“SEC”), SEC staff or other authority of competent jurisdiction, or (ii) exemptive or other relief or permission from the SEC, SEC staff or other authority of competent jurisdiction, the fund may not:

a. Borrow money;

b. Issue senior securities;

c. Underwrite the securities of other issuers;

d. Purchase or sell real estate or commodities;

e. Make loans; or

f. Purchase the securities of any issuer if, as a result of such purchase, the fund’s investments would be concentrated in any particular industry.

2. The fund may not invest in companies for the purpose of exercising control or management.

Nonfundamental policies — The following policy may be changed without shareholder approval:

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 23


Additional information about the fund’s policies — The information below is not part of the fund’s fundamental or nonfundamental policies. This information is intended to provide a summary of what is currently required or permitted by the 1940 Act and the rules and regulations thereunder, or by the interpretive guidance thereof by the SEC or SEC staff, for particular fundamental policies of the fund. Information is also provided regarding the fund’s current intention with respect to certain investment practices permitted by the 1940 Act.

For purposes of fundamental policy 1a, the fund may borrow money in amounts of up to 33-1/3% of its total assets from banks for any purpose. Additionally, the fund may borrow up to 5% of its total assets from banks or other lenders for temporary purposes (a loan is presumed to be for temporary purposes if it is repaid within 60 days and is not extended or renewed). The percentage limitations in this policy are considered at the time of borrowing and thereafter.

For purposes of fundamental policies 1a and 1e, the fund may borrow money from, or loan money to, other funds managed by Capital Research and Management Company or its affiliates to the extent permitted by applicable law and an exemptive order issued by the SEC.

For purposes of fundamental policy 1b, a senior security does not include any promissory note or evidence of indebtedness if such loan is for temporary purposes only and in an amount not exceeding 5% of the value of the total assets of the fund at the time the loan is made (a loan is presumed to be for temporary purposes if it is repaid within 60 days and is not extended or renewed). Further, to the extent the fund covers its commitments under certain types of agreements and transactions, including mortgage-dollar-roll transactions, sale-buybacks, when-issued, delayed-delivery, or forward commitment transactions, and other similar trading practices, by segregating or earmarking liquid assets equal in value to the amount of the fund’s commitment (in accordance with applicable SEC or SEC staff guidance), such agreement or transaction will not be considered a senior security by the fund.

For purposes of fundamental policy 1c, the policy will not apply to the fund to the extent the fund may be deemed an underwriter within the meaning of the 1933 Act in connection with the purchase and sale of fund portfolio securities in the ordinary course of pursuing its investment objectives and strategies.

For purposes of fundamental policy 1e, the fund may not lend more than 33-1/3% of its total assets, provided that this limitation shall not apply to the fund’s purchase of debt obligations.

For purposes of fundamental policy 1f, the fund may not invest more than 25% of its total assets in the securities of issuers in a particular industry. This policy does not apply to investments in securities of the U.S. government, its agencies or government sponsored enterprises or repurchase agreements with respect thereto.

SMALLCAP World Fund — Page 24


Management of the fund

Board of directors and officers

Independent directors1

The fund’s nominating and governance committee and board select independent directors with a view toward constituting a board that, as a body, possesses the qualifications, skills, attributes and experience to appropriately oversee the actions of the fund’s service providers, decide upon matters of general policy and represent the long-term interests of fund shareholders. In doing so, they consider the qualifications, skills, attributes and experience of the current board members, with a view toward maintaining a board that is diverse in viewpoint, experience, education and skills.

The fund seeks independent directors who have high ethical standards and the highest levels of integrity and commitment, who have inquiring and independent minds, mature judgment, good communication skills, and other complementary personal qualifications and skills that enable them to function effectively in the context of the fund’s board and committee structure and who have the ability and willingness to dedicate sufficient time to effectively fulfill their duties and responsibilities.

Each independent director has a significant record of accomplishments in governance, business, not-for-profit organizations, government service, academia, law, accounting or other professions. Although no single list could identify all experience upon which the fund’s independent directors draw in connection with their service, the following table summarizes key experience for each independent director. These references to the qualifications, attributes and skills of the directors are pursuant to the disclosure requirements of the SEC, and shall not be deemed to impose any greater responsibility or liability on any director or the board as a whole. Notwithstanding the accomplishments listed below, none of the independent directors is considered an “expert” within the meaning of the federal securities laws with respect to information in the fund’s registration statement.

SMALLCAP World Fund — Page 25


         

Name, year of birth and position with fund (year first elected as a director2)

Principal
occupation(s)
during the
past five years

Number of
portfolios in fund complex
overseen
by
director3

Other directorships4 held
by director during the past five years

Other relevant experience

Joseph C. Berenato, 1946
Director (2000)

Retired

15

Former director of Ducommun Incorporated (until 2017)

· Service as chairman and chief executive officer, aerospace components manufacturer

· Senior corporate management experience, corporate banking

· Corporate board experience

· Service as director, Los Angeles Branch of the Federal Reserve Bank of San Francisco

· Service on trustee board for educational organizations

· MBA, finance, MA, English, BS, engineering

Joseph J. Bonner, 1955
Director (2019)

President and CEO, Solana Beach Capital LLC (real estate advisory); Global Head of Real Estate, Board Member, The Interlink Group (private merchant bank)

3

Extra Space Storage

Former director of USAA Real Estate Company (until 2018)

· Advisory board service for real estate investment management firm

· Board service for educational and nonprofit organizations

· MBA

· MS, Civil Engineering, BArch, Architecture

Mary Anne Dolan, 1947
Chair of the Board (Independent and Non-Executive) (2008)

Founder and President, MAD Ink (communications company)

10

None

· Senior management and editorial experience with multiple newspaper publishers and news service organizations

· Service as director of writers conference

SMALLCAP World Fund — Page 26


         

Name, year of birth and position with fund (year first elected as a director2)

Principal
occupation(s)
during the
past five years

Number of
portfolios in fund complex
overseen
by
director3

Other directorships4 held
by director during the past five years

Other relevant experience

John G. Freund, MD 1953
Director (2000)

Founder and Managing Director, Skyline Ventures (a venture capital investor in health care companies)

6

Collegium Pharmaceutical, Inc.; SI – Bone, Inc.; Sutro Biopharma, Inc.


Former director of XenoPort, Inc. (until 2016); Proteon Therapeutics, Inc. (until 2020); Tetraphase Pharmaceuticals, Inc. (until 2020)

· Experience in investment banking, and senior management at multiple venture capital firms and a medical device company

· Corporate board experience

· MD, MBA

Yvonne L. Greenstreet, 1962
Director (2019)

President and Chief Operating Officer, Alnylam Pharmaceuticals Inc.; Founder and former Managing Director, Highgate LLC (consulting)

3

Pacira, Inc. (pharmaceuticals)

Former director of Advanced Accelerator Applications (pharmaceuticals) (until 2017); Moelis & Company (investment banking) (until 2018); Indivior PLC (pharmaceuticals) (until 2019)

· Senior management experience in the global pharmaceutical industry, including research and development, strategy and commercial development

· Board service for philanthropic, educational and nonprofit organizations

· MBA, MBChB

SMALLCAP World Fund — Page 27


         

Name, year of birth and position with fund (year first elected as a director2)

Principal
occupation(s)
during the
past five years

Number of
portfolios in fund complex
overseen
by
director3

Other directorships4 held
by director during the past five years

Other relevant experience

Linda Griego, 1947


Director (2015)

Former President and CEO, Griego Enterprises, Inc. (business management company)

7

ViacomCBS Inc.

Former Director of AECOM (until 2019)

· Former Deputy Mayor, City of Los Angeles

· Service in numerous federal, state and city commission appointments focused on, among other areas, economic development

· Service as a chief executive officer, real estate and hospitality businesses

· Service as a Los Angeles director, Federal Reserve Bank of San Francisco

· Corporate board experience

· Board service for hospitals, and philanthropic, educational and nonprofit organizations

SMALLCAP World Fund — Page 28


         

Name, year of birth and position with fund (year first elected as a director2)

Principal
occupation(s)
during the
past five years

Number of
portfolios in fund complex
overseen
by
director3

Other directorships4 held
by director during the past five years

Other relevant experience

Leonade D. Jones, 1947
Director (1995)

Retired

10

None

· Service as treasurer of a diversified media and education company

· Founder of e-commerce and educational loan exchange businesses

· Corporate board and investment advisory committee experience

· Service on advisory and trustee boards for charitable, educational, public and nonprofit organizations

· Service on the Governing Council of the Independent Directors Council

· JD, MBA

SMALLCAP World Fund — Page 29


         

Name, year of birth and position with fund (year first elected as a director2)

Principal
occupation(s)
during the
past five years

Number of
portfolios in fund complex
overseen
by
director3

Other directorships4 held
by director during the past five years

Other relevant experience

Martin E. Koehler, 1957
Director (2021)

Independent management consultant

6

Former director of Deutsche Lufthansa AG (until 2020)

· Senior management experience

· Corporate board experience

· Service on advisory and trustee boards for charitable and nonprofit organizations

· MBA

· MS, industrial engineering

Sharon I. Meers, 1965
Director (2017)

Co-Founder, Plenish Health (a women’s telehealth company); former Senior Director, Head of Strategic Partnerships, eBay Enterprise

7

None

· Service as head of strategic partnerships, ecommerce company

· Experience in investment banking and senior management experience in business development, operations and investment management

· Service on trustee boards for nonprofit organizations

· MA, economics

SMALLCAP World Fund — Page 30


         

Name, year of birth and position with fund (year first elected as a director2)

Principal
occupation(s)
during the
past five years

Number of
portfolios in fund complex
overseen
by
director3

Other directorships4 held
by director during the past five years

Other relevant experience

Kenneth M. Simril, 1965
Director (2016)

President and CEO, SCI Ingredients Holdings, Inc. (food manufacturing)

7

Bunge Limited (agricultural business and food company)

Former director of At Home Group Inc. (until 2021)

· Service as operating executive in various private equity-owned companies

· Experience in international business affairs, capital markets and risk management

· Independent trustee and advisor for city and county public pension plans

· MBA, finance, BS, engineering

Christopher E. Stone, 1956
Director (2007)

Professor of Practice of Public Integrity, University of Oxford, Blavatnik School of Government; former President, Open Society Foundations

9

None

· Service on advisory and trustee boards for charitable, international jurisprudence and nonprofit organizations

· Former professor, practice of criminal justice

· JD, MPhil, criminology

SMALLCAP World Fund — Page 31


Interested director(s)5,6

Interested directors have similar qualifications, skills and attributes as the independent directors. Interested directors are senior executive officers and/or directors of Capital Research and Management Company or its affiliates. Such management roles with the fund’s service providers also permit the interested directors to make a significant contribution to the fund’s board.

       

Name, year of birth
and position with fund
(year first elected
as a director/officer2)

Principal occupation(s)
during the
past five years
and positions
held with affiliated
entities or the
Principal Underwriter
of the fund

Number of
portfolios in fund complex
overseen
by director3

Other directorships4
held by director
during the
past five years

Brady L. Enright, 1967
Senior Vice President and Director (2004)

Partner – Capital World Investors, Capital Research and Management Company; Partner – Capital World Investors, Capital Bank and Trust Company*

3

None

Anne-Marie Peterson, 1972
Director (2019)

Partner – Capital World Investors, Capital Research and Management Company

3

None

Other officers6

   

Name, year of birth
and position with fund
(year first elected
as an officer2)

Principal occupation(s) during the past five years
and positions held with affiliated entities
or the Principal Underwriter of the fund

Julian N. Abdey, 1972
Co-President (2014)

Partner – Capital International Investors, Capital Research and Management Company

Jonathan Knowles, PhD, 1961
Co-President (2000)

Partner – Capital World Investors, Capital International, Inc.*

Gregory W. Wendt, 1961
Co-President (1992)

Partner – Capital Research Global Investors, Capital Research and Management Company

Walt Burkley, 1966
Principal Executive Officer (2007)

Senior Vice President and Senior Counsel – Fund Business Management Group, Capital Research and Management Company; Director, Capital Research Company*; Director, Capital Research and Management Company

Michael W. Stockton, 1967
Executive Vice President (2014)

Senior Vice President — Fund Business Management Group, Capital Research and Management Company

Peter T. Eliot, 1971
Senior Vice President (2018)

Partner – Capital International Investors, Capital Research and Management Company

Bradford F. Freer, 1969
Senior Vice President (2008)

Partner – Capital Research Global Investors, Capital Research and Management Company; Director, The Capital Group Companies, Inc.*

Leo Hee, 1971
Senior Vice President (2019)

Partner – Capital World Investors, Capital International, Inc.*

Roz Hongsaranagon, 1979
Senior Vice President (2018)

Partner – Capital World Investors, Capital Research and Management Company

SMALLCAP World Fund — Page 32


   

Name, year of birth
and position with fund
(year first elected
as an officer2)

Principal occupation(s) during the past five years
and positions held with affiliated entities
or the Principal Underwriter of the fund

Harold H. La, 1970
Senior Vice President (2019)

Partner – Capital Research Global Investors, Capital International, Inc.*

Dimitrije M. Mitrinovic, 1977
Senior Vice President (2019)

Partner – Capital World Investors, Capital Research and Management Company

Aidan O’Connell, 1968
Senior Vice President (2017)

Partner – Capital Research Global Investors, Capital Research and Management Company

Samir Parekh, 1974
Senior Vice President (2020)

Partner – Capital International Investors, Capital International, Inc.*

Andraz Razen, 1975
Senior Vice President (2019)

Partner – Capital World Investors, Capital Research Company*

Renaud H. Samyn, 1974
Senior Vice President (2020)

Partner – Capital Research Global Investors, Capital International, Inc.*

Arun Swaminathan, 1983
Senior Vice President (2020)

Partner – Capital World Investors, Capital International, Inc.*

Thatcher Thompson, 1969
Senior Vice President (2021)

Partner – Capital World Investors, Capital Research and Management Company

Michael Beckwith, 1971
Vice President (2019)

Vice President – Capital Research Global Investors, Capital Research and Management Company

Shlok Melwani, 1981
Vice President (2021)

Vice President – Capital Research Global Investors, Capital Research Company*

Julie E. Lawton, 1973
Secretary (2010)

Assistant Vice President – Fund Business Management Group, Capital Research and Management Company; Secretary, Capital Research Company*

Hong T. Le, 1978
Treasurer (2018)

Vice President – Investment Operations, Capital Research and Management Company

Zarouhi M. Chavdarian, 1993
Assistant Secretary (2021)

Associate – Fund Business Management Group, Capital Research and Management Company

SMALLCAP World Fund — Page 33


   

Name, year of birth
and position with fund
(year first elected
as an officer2)

Principal occupation(s) during the past five years
and positions held with affiliated entities
or the Principal Underwriter of the fund

Sandra Chuon, 1972
Assistant Treasurer (2019)

Assistant Vice President – Investment Operations, Capital Research and Management Company

Brian C. Janssen, 1972
Assistant Treasurer (2016-2018; 2020)

Senior Vice President – Investment Operations, Capital Research and Management Company

* 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 or its affiliates.

4 This includes all directorships/trusteeships (other than those in the American Funds or other funds managed by Capital Research and Management Company or its affiliates) that are held by each director as a director/trustee of a public company or a registered investment company. Unless otherwise noted, all directorships/trusteeships are current.

5 The term interested director refers to a director who is an “interested person” of the fund within the meaning of the 1940 Act, on the basis of his or her affiliation with the fund’s investment adviser, Capital Research and Management Company, or affiliated entities (including the fund’s principal underwriter).

6 All of the directors and/or officers listed, with the exception of Michael Beckwith, Rosalyn Hongsaranagon, Dimitrije M. Mitrinovic, and Samir Parekh 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 6455 Irvine Center Drive, Irvine, California 92618, Attention: Secretary.

SMALLCAP World Fund — Page 34


Fund shares owned by directors as of December 31, 2020:

         

Name

Dollar range1,2
of fund
shares owned

Aggregate
dollar range1
of shares
owned in
all funds
in the
American Funds
family overseen
by director

Dollar
range1,2 of
independent
directors
deferred compensation3 allocated
to fund

Aggregate
dollar
range1,2 of
independent
directors
deferred
compensation3 allocated to
all funds
within
American Funds
family overseen
by director

Independent directors

Joseph C. Berenato

Over $100,000

Over $100,000

N/A

N/A

Joseph J. Bonner

$1 – $10,0004

$1 – $10,0004

$10,001 – $50,000

$50,001 – $100,000

Mary Anne Dolan

$50,001 – $100,000

Over $100,000

N/A

N/A

John G. Freund

Over $100,000

Over $100,000

Over $100,000

Over $100,000

Yvonne L. Greenstreet

$1 – $10,000

$10,001 – $50,000

Over $100,000

Over $100,000

Linda Griego

Over $100,000

Over $100,000

N/A

N/A

Leonade D. Jones

Over $100,000

Over $100,000

Over $100,000

Over $100,000

Martin E. Koehler5

N/A

Over $100,000

N/A

Over $100,000

Sharon I. Meers

$10,001 – $50,000

Over $100,000

$50,001 – $100,000

Over $100,000

Kenneth M. Simril

$50,001 – $100,000

Over $100,000

N/A

N/A

Christopher E. Stone

Over $100,000

Over $100,000

N/A

Over $100,000

     

Name

Dollar range1,2
of fund
shares owned

Aggregate
dollar range1
of shares
owned in
all funds
in the
American Funds
family overseen
by director

Interested directors

Brady L. Enright

Over $100,000

Over $100,000

Anne-Marie Peterson

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 N/A indicates that the listed individual, as of December 31, 2020, was not a director of a particular fund, did not allocate deferred compensation to the fund or did not participate in the deferred compensation plan.

3 Eligible directors may defer their compensation under a nonqualified deferred compensation plan. Amounts deferred by the director accumulate at an earnings rate determined by the total return of one or more American Funds as designated by the director.

4 Information is as of January 5, 2021.

5 Mr. Koehler was elected to the board effective September 1, 2021.

SMALLCAP World Fund — Page 35


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. Except for the independent directors listed in the “Board of directors and officers — Independent directors” table under the “Management of the fund” section in this statement of additional information, all other officers and directors of the fund are directors, officers or employees 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 retainer fee 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.

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 a 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.

SMALLCAP World Fund — Page 36


Director compensation earned during the fiscal year ended September 30, 2021:

       

Name

Aggregate compensation
(including voluntarily
deferred compensation1)
from the fund

Total compensation (including
voluntarily deferred
compensation1)
from all funds managed by
Capital Research and
Management
Company or its affiliates

Joseph C. Berenato2

$22,272

$442,625

Joseph J. Bonner2

31,646

222,875

Mary Anne Dolan

27,105

441,926

John G. Freund2

21,810

311,750

Yvonne L. Greenstreet2

31,702

223,500

Linda Griego

22,604

335,875

Leonade D. Jones2

17,353

388,301

Martin E. Koehler
(service began September 1, 2021)

3,140

241,583

Sharon I. Meers2

23,476

295,000

Kenneth M. Simril

20,877

312,125

Christopher E. Stone2

18,718

362,751

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, 2021 does not include earnings on amounts deferred in previous fiscal years. See footnote 2 to this table for more information.

2 Since the deferred compensation plan’s adoption, the total amount of deferred compensation accrued by the fund (plus earnings thereon) through the end of the 2021 fiscal year for participating directors is as follows: Joseph C. Berenato ($254,267), Joseph J. Bonner ($20,583), John G. Freund ($3,106,498), Yvonne L. Greenstreet ($164,936), Leonade D. Jones ($816,998), Sharon I. Meers ($194,646) and Christopher E. Stone ($148,518). Amounts deferred and accumulated earnings thereon are not funded and are general unsecured liabilities of the fund until paid to the directors.

SMALLCAP World Fund — Page 37


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

At a meeting of the fund’s shareholders on November 24, 2009, shareholders approved the reorganization of the fund to a Delaware statutory trust. The reorganization may be completed in the next year; however, the fund reserves the right to delay the implementation. A summary comparison of the governing documents and state laws affecting the Delaware statutory trust and the current form of organization of the fund can be found in a joint proxy statement available on the SEC’s website at sec.gov.

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, Virginia College Savings PlanSM (Virginia529SM) will vote any proxies relating to the fund’s Class 529 shares. In addition, the directors have the authority to establish new series and classes of shares, and to split or combine outstanding shares into a greater or lesser number, without shareholder approval.

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 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

SMALLCAP World Fund — Page 38


misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of their office.

Removal of directors by shareholders — At any meeting of shareholders, duly called and at which a quorum is present, shareholders may, by the affirmative vote of the holders of a majority of the votes entitled to be cast, remove any director from office and may elect a successor or successors to fill any resulting vacancies for the unexpired terms of removed directors. In addition, the directors of the fund will promptly call a meeting of shareholders for the purpose of voting upon the removal of any directors when requested in writing to do so by the record holders of at least 10% of the outstanding shares.

Leadership structure — The board’s chair is currently an independent director who is not an “interested person” of the fund within the meaning of the 1940 Act. The board has determined that an independent chair facilitates oversight and enhances the effectiveness of the board. The independent chair’s duties include, without limitation, generally presiding at meetings of the board, approving board meeting schedules and agendas, leading meetings of the independent directors in executive session, facilitating communication with committee chairs, and serving as the principal independent director contact for fund management and counsel to the independent directors and the fund.

Risk oversight — Day-to-day management of the fund, including risk management, is the responsibility of the fund’s contractual service providers, including the fund’s investment adviser, principal underwriter/distributor and transfer agent. Each of these entities is responsible for specific portions of the fund’s operations, including the processes and associated risks relating to the fund’s investments, integrity of cash movements, financial reporting, operations and compliance. The board of directors oversees the service providers’ discharge of their responsibilities, including the processes they use to manage relevant risks. In that regard, the board receives reports regarding the operations of the fund’s service providers, including risks. For example, the board receives reports from investment professionals regarding risks related to the fund’s investments and trading. The board also receives compliance reports from the fund’s and the investment adviser’s chief compliance officers addressing certain areas of risk.

Committees of the fund’s board, which are comprised of independent board members, none of whom is an “interested person” of the fund within the meaning of the 1940 Act, as well as joint committees of independent board members of funds managed by Capital Research and Management Company, also explore risk management procedures in particular areas and then report back to the full board. For example, the fund’s audit committee oversees the processes and certain attendant risks relating to financial reporting, valuation of fund assets, and related controls. Similarly, a joint review and advisory committee oversees certain risk controls relating to the fund’s transfer agency services.

Not all risks that may affect the fund can be identified or processes and controls developed to eliminate or mitigate their effect. Moreover, it is necessary to bear certain risks (such as investment-related risks) to achieve the fund’s objectives. As a result of the foregoing and other factors, the ability of the fund’s service providers to eliminate or mitigate risks is subject to limitations.

Committees of the board of directors — The fund has an audit committee comprised of Joseph J. Bonner, Linda Griego, Sharon I. Meers and Christopher E. Stone. 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 independent registered public accounting firm and the full board of directors. The audit committee held five meetings during the 2021 fiscal year.

The fund has a contracts committee comprised of all of its independent board members. The committee’s principal function is to request, review and consider the information deemed necessary to

SMALLCAP World Fund — Page 39


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. The contracts committee held one meeting during the 2021 fiscal year.

The fund has a nominating and governance committee comprised of Joseph C. Berenato, John G. Freund, Yvonne L. Greenstreet, Leonade D. Jones, Martin E. Koehler and Kenneth M. Simril. The committee periodically reviews such issues as the board’s composition, responsibilities, committees, compensation and other relevant issues, and recommends any appropriate changes to the full board of directors. The committee also coordinates annual self-assessments of the board and evaluates, selects and nominates independent director candidates to the full board of directors. While the committee normally is able to identify from its own and other 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 nominating and governance committee of the fund, addressed to 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. The nominating and governance committee held three meetings during the 2021 fiscal year.

Proxy voting procedures and principles — The fund’s investment adviser, in consultation with the fund’s board, has adopted Proxy Voting Procedures and Principles (the “Principles”) with respect to voting proxies of securities held by the fund, other American Funds and American Funds Insurance Series. The complete text of these principles is available at capitalgroup.com. Proxies are voted by a committee of the appropriate equity investment division of the investment adviser under authority delegated by the funds’ boards. The boards of American Funds have established a Joint Proxy Committee (“JPC”) composed of independent board members from each American Funds board. The JPC’s role is to facilitate appropriate oversight of the proxy voting process and provide valuable input on corporate governance and related matters.

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.

The investment adviser seeks to vote all U.S. proxies; however, in certain circumstances it may be impracticable or impossible to do so. Proxies for companies outside the U.S. also are voted, provided there is sufficient time and information available. Certain regulators have granted investment limit relief to the investment adviser and its affiliates, conditioned upon limiting its voting power to specific voting ceilings. To comply with these voting ceilings, the investment adviser will scale back its votes across all funds and clients on a pro-rata basis based on assets. After a proxy statement is received, the investment adviser prepares a summary of the proposals contained in the proxy statement. A notation of any potential conflicts of interest also is included in the summary (see below for a description of Capital Research and Management Company’s special review procedures).

For proxies of securities managed by a particular equity 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 or other individual with experience in corporate governance and proxy voting matters) within the appropriate investment division, based on knowledge of these Principles and

SMALLCAP World Fund — Page 40


familiarity with proxy-related issues. The proxy summary and voting recommendations are made available to the appropriate proxy voting committee for a final voting decision. In cases where a fund is co-managed and a security is held by more than one of the investment adviser’s equity investment divisions, the divisions may develop different voting recommendations for individual ballot proposals. If this occurs, and if permitted by local market conventions, the fund’s position will generally be voted proportionally by divisional holding, according to their respective decisions. Otherwise, the outcome will be determined by the equity investment division or divisions with the larger position in the security as of the record date for the shareholder meeting.

In addition to its proprietary proxy voting, governance and executive compensation research, Capital Research and Management Company may utilize research provided by Institutional Shareholder Services, Glass-Lewis & Co. or other third-party advisory firms on a case-by-case basis. It does not, as a policy, follow the voting recommendations provided by these firms. It periodically assesses the information provided by the advisory firms and reports to the JPC, as appropriate.

From time to time the investment adviser may vote proxies issued by, or on proposals sponsored or publicly supported by (a) a client with substantial assets managed by the investment adviser or its affiliates, (b) an entity with a significant business relationship with Capital Group, or (c) a company with a director of an American Fund on its board (each referred to as an “Interested Party”). Other persons or entities may also be deemed an Interested Party if facts or circumstances appear to give rise to a potential conflict. The investment adviser analyzes these proxies and proposals on their merits and does not consider these relationships when casting its vote.

The investment adviser has developed procedures to identify and address instances where a vote could appear to be influenced by such a relationship. Under the procedures, prior to a final vote being cast by the investment adviser, the relevant proxy committees’ voting results for proxies issued by Interested Parties are reviewed by a Special Review Committee (“SRC”) of the investment division voting the proxy if the vote was in favor of the Interested Party.

If a potential conflict is identified according to the procedure above, the SRC will be provided with a summary of any relevant communications with the Interested Party, the rationale for the voting decision, information on the organization’s relationship with the party and any other pertinent information. The SRC will evaluate the information and determine whether the decision was in the best interest of fund shareholders. It will then accept or override the voting decision or determine alternative action. The SRC includes senior investment professionals and legal and compliance professionals.

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 such year (a) without charge, upon request by calling American Funds Service Company at (800) 421-4225, (b) on the Capital Group website and (c) on the SEC’s website at sec.gov.

The following summary sets forth the general positions of American Funds, 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 Capital Group 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 or if, in the opinion of the investment adviser, such nominee has not fulfilled his or her fiduciary duty. Separation of the chairman and CEO positions also may be supported.

SMALLCAP World Fund — Page 41


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 than affirmative 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 shareholder 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.

SMALLCAP World Fund — Page 42


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 November 1, 2021. Unless otherwise indicated, the ownership percentages below represent ownership of record rather than beneficial ownership.

       

NAME AND ADDRESS

OWNERSHIP

OWNERSHIP PERCENTAGE

EDWARD D JONES & CO
FOR THE BENEFIT OF CUSTOMERS
OMNIBUS ACCOUNT
SAINT LOUIS MO

RECORD

CLASS A

40.64%

 

CLASS C

8.06

 

CLASS F-3

49.15

 

CLASS 529-A

14.01

 

CLASS 529-C

5.98

       

PERSHING LLC
OMNIBUS ACCOUNT
JERSEY CITY NJ

RECORD

CLASS A

5.80

 

CLASS C

9.61

 

CLASS F-1

9.17

 

CLASS F-2

12.37

 

CLASS F-3

16.10

 

CLASS 529-F-2

5.97

       

WELLS FARGO CLEARING SERVICES LLC
SPECIAL CUSTODY ACCT FOR THE
EXCLUSIVE BENEFIT OF CUSTOMER
SAINT LOUIS MO

RECORD

CLASS A

5.38

 

CLASS C

9.43

 

CLASS F-1

9.28

 

CLASS F-2

6.14

       

RAYMOND JAMES
OMNIBUS FOR MUTUAL FUNDS
HOUSE ACCOUNT
ST PETERSBURG FL

RECORD

CLASS C

6.50

 

CLASS F-2

12.74

 

CLASS 529-C

7.02

 

CLASS 529-F-2

5.06

       

NATIONAL FINANCIAL SERVICES LLC
FOR EXCLUSIVE BENEFIT OF OUR CUSTOMERS
OMNIBUS ACCOUNT
JERSEY CITY NJ

RECORD

CLASS C

5.83

 

CLASS F-1

12.66

 

CLASS F-2

14.70

 

CLASS F-3

12.49

       

CHARLES SCHWAB & CO INC
SPECIAL CUSTODY ACCT FOR EXCLUSIVE
BENEFIT OF CUSTOMERS - RIA ACCT #1
SAN FRANCISCO CA

RECORD

CLASS F-1

13.00

     
     
     

TD AMERITRADE INC FOR THE
EXCLUSIVE BENEFIT OF OUR CLIENTS
OMNIBUS ACCOUNT
OMAHA NE

RECORD

CLASS F-1

6.20

     
     
     

LPL FINANCIAL
--OMNIBUS CUSTOMER ACCOUNT--
SAN DIEGO CA

RECORD

CLASS F-1

5.03

 

CLASS F-2

22.28

     

CHARLES SCHWAB & CO INC
OMNIBUS ACCOUNT #2
SAN FRANCISCO CA

RECORD

CLASS F-3

8.73

     
     

SMALLCAP World Fund — Page 43


       

NAME AND ADDRESS

OWNERSHIP

OWNERSHIP PERCENTAGE

MORGAN STANLEY SMITH BARNEY LLC
FOR THE BENEFIT OF ITS CUSTOMERS
OMNIBUS ACCOUNT
NEW YORK NY

RECORD

CLASS 529-A

8.33

 

CLASS 529-C

10.00

 

CLASS 529-E

6.91

     

CAPITAL RESEARCH & MANAGEMENT COMPANY
CORPORATE ACCOUNT
LOS ANGELES CA

RECORD

CLASS 529-F-1

100.00

 

CLASS 529-F-3

100.00

     

ADP ACCESS PRODUCT
401K PLAN
BOSTON MA

RECORD
BENEFICIAL

CLASS R-2E

5.02

   
     

JOHN HANCOCK LIFE INS CO USA
ACCOUNT
BOSTON MA

RECORD

CLASS R-5

22.71

     
     

NATIONAL FINANCIAL SERVICES LLC
401K PLAN
JERSEY CITY NJ

RECORD
BENEFICIAL

CLASS R-5

6.67

   
     

TRADER JOE'S COMPANY
401K PLAN
ENGLEWOOD CO

RECORD
BENEFICIAL

CLASS R-5E

27.36

   
     

AMERICAN FUNDS GROWTH PORTFOLIO
OMNIBUS ACCOUNT
NORFOLK VA

RECORD

CLASS R-6

11.78

     
     

AMERICAN FUNDS 2040 TARGET DATE
RETIREMENT FUND
NORFOLK VA

RECORD

CLASS R-6

9.87

     
     

AMERICAN FUNDS 2045 TARGET DATE
RETIREMENT FUND
NORFOLK VA

RECORD

CLASS R-6

8.97

     
     

AMERICAN FUNDS 2035 TARGET DATE
RETIREMENT FUND
NORFOLK VA

RECORD

CLASS R-6

8.85

     
     

AMERICAN FUNDS 2050 TARGET DATE
RETIREMENT FUND
NORFOLK VA

RECORD

CLASS R-6

8.80

     
     

AMERICAN FUNDS 2030 TARGET DATE
RETIREMENT FUND
NORFOLK VA

RECORD

CLASS R-6

6.54

     
     

SMALLCAP World Fund — Page 44


       

NAME AND ADDRESS

OWNERSHIP

OWNERSHIP PERCENTAGE

AMERICAN FUNDS GROWTH &
INCOME PORTFOLIO
OMNIBUS ACCOUNT
NORFOLK VA

RECORD

CLASS R-6

6.02

     
     
     

AMERICAN FUNDS TARGET DATE 2055
RETIREMENT FUND
NORFOLK VA

RECORD

CLASS R-6

5.97

     
     

Because Class T and Class 529-T shares are not currently offered to the public, Capital Research and Management Company, the fund’s investment adviser, owns 100% of the fund‘s outstanding Class T and Class 529-T shares.

As of November 1, 2021, the officers and directors of the fund, as a group, owned beneficially or of record less than 1% of the outstanding shares of the fund.

Unless otherwise noted, references in this statement of additional information to Class F shares, Class R shares or Class 529 shares refer to all 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 (Beijing, Geneva, Hong Kong, London, Los Angeles, Mumbai, New York, San Francisco, Singapore, Tokyo and Washington, D.C.). These facilities are staffed with experienced investment professionals. The investment adviser is located at 333 South Hope Street, Los Angeles, CA 90071. 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 three equity investment divisions and fixed income assets through its fixed income investment division, Capital Fixed Income Investors. The three equity investment divisions — Capital World Investors, Capital Research Global Investors and Capital International Investors — make investment decisions independently of one another. Portfolio managers in Capital International Investors rely on a research team that also provides investment services to institutional clients and other accounts advised by affiliates of Capital Research and Management Company. The investment adviser, which is deemed under the Commodity Exchange Act (the “CEA”) to be the operator of the fund, has claimed an exclusion from the definition of the term commodity pool operator under the CEA with respect to the fund and, therefore, is not subject to registration or regulation as such under the CEA with respect to the fund.

SMALLCAP World Fund — Page 45


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 managers 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 managers 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 one-, three-, five- and eight-year periods, with increasing weight placed on each succeeding measurement period. For portfolio managers, 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 each of the fund’s portfolio managers may be measured against one or more benchmarks, depending on his or her investment focus, such as MSCI USA Small Cap Index, MSCI All Country World ex USA Small Cap Index and a custom average consisting of funds that disclose investment objectives and strategies comparable to those of the fund. From time to time, Capital Research and Management Company may adjust or customize these benchmarks to better reflect the universe of comparably managed funds of competitive investment management firms.

Portfolio manager fund holdings and other managed accounts — As described below, portfolio managers may personally own shares of the fund. In addition, portfolio managers may manage portions of other mutual funds or accounts advised by Capital Research and Management Company or its affiliates.

SMALLCAP World Fund — Page 46


The following table reflects information as of September 30, 2021:

                   

Portfolio
manager

Dollar range
of fund
shares
owned1

Number
of other
registered
investment
companies (RICs)
for which
portfolio
manager
is a manager
(assets of RICs
in billions)2

Number
of other
pooled
investment
vehicles (PIVs)
for which
portfolio
manager
is a manager
(assets of PIVs
in billions)2

Number
of other
accounts
for which
portfolio
manager
is a manager
(assets of
other accounts
in billions)2,3

Brady L. Enright

Over $1,000,000

4

$432.0

4

$19.33

None

Julian N. Abdey

Over $1,000,000

2

$405.9

2

$3.46

None

Jonathan Knowles

$500,001 – $1,000,000

5

$404.2

4

$20.38

None

Gregory W. Wendt

Over $1,000,000

2

$93.4

2

$0.86

None

Peter Eliot

Over $1,000,000

1

$31.8

None

None

Bradford F. Freer

$500,001 – $1,000,000

4

$94.1

1

$0.51

None

Leo Hee

$100,001 – $500,000

4

$140.7

4

$12.26

None

Roz Hongsaranagon

$100,001 – $500,000

1

$9.2

None

None

Harold H. La

Over $1,000,000

2

$39.0

2

$0.97

1

$0.09

Dimitrije Mitrinovic

Over $1,000,000

None

None

None

Aidan O’Connell

Over $1,000,000

2

$93.4

2

$0.86

None

Samir Parekh

$100,001 – $500,000

None

None

None

Andraz Razen

$100,001 – $500,000

3

$461.6

3

$20.52

None

Renaud H. Samyn

Over $1,000,000

2

$14.7

None

None

Arun Swaminathan

$100,001 – $500,000

None

None

None

Thatcher Thompson

$100,001 – $500,000

None

None

None

Michael Beckwith

Over $1,000,000

1

$5.0

None

None

Shlok Melwani

$100,001 – $500,000

None

None

None

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 other RIC(s), PIV(s) or other accounts managed by Capital Research and Management Company or its affiliates for which the portfolio manager also has significant day to day management responsibilities. Assets noted are the total net assets of the RIC(s), PIV(s) or other accounts and are not the total assets managed by the individual, which is a substantially lower amount. No RIC, PIV or other account has an advisory fee that is based on the performance of the RIC, PIV or other account, unless otherwise noted.

3 Personal brokerage accounts of portfolio managers and their families are not reflected.

SMALLCAP World Fund — Page 47


The fund’s investment adviser has adopted policies and procedures to mitigate material conflicts of interest that may arise in connection with a portfolio manager’s management of the fund, on the one hand, and investments in the other pooled investment vehicles and other accounts, on the other hand, such as material conflicts relating to the allocation of investment opportunities that may be suitable for both the fund and such other accounts.

SMALLCAP World Fund — Page 48


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, 2022, 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 parties to the Agreement or interested persons (as defined in the 1940 Act) of any such party, as required by applicable law. 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, the Agreement provides that the investment adviser may delegate all, or a portion of, its investment management responsibilities to one or more subsidiary advisers approved by the fund’s board, pursuant to an agreement between the investment adviser and such subsidiary. Any such subsidiary adviser will be paid solely by the investment adviser out of its fees.

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.

The investment adviser is currently reimbursing a portion of the expenses of Class 529-F-3 shares of the fund. This reimbursement will be in effect through at least December 1, 2022. The adviser may elect at its discretion to extend, modify or terminate the reimbursement at that time. For the fiscal year ended September 30, 2021, the total expenses reimbursed by the investment adviser were less than $1,000.

SMALLCAP World Fund — Page 49


Under the Agreement, the investment adviser receives a management fee based on the following annualized rates and daily net asset levels:

       

Rate

Net asset level

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

34,000,000,000

0.592

34,000,000,000

44,000,000,000

0.589

44,000,000,000

55,000,000,000

0.587

55,000,000,000

71,000,000,000

0.585

71,000,000,000

 

Management fees are paid monthly and accrued daily.

For the fiscal years ended September 30, 2021, 2020 and 2019, the investment adviser earned from the fund management fees of $436,726,000, $290,494,000 and $259,375,000, respectively. The fund's board of directors approved an amended Investment Advisory and Service Agreement, pursuant to which the annualized rate payable to the investment adviser on daily net assets in excess of certain levels would be decreased. The investment adviser voluntarily waived management fees to give effect to the approved rates in advance of the effective date of the amended Agreement. Accordingly, after giving effect to the voluntary fee waiver described above, the fund paid the investment adviser management fees of $436,291,000 (a reduction of $435,000) for the fiscal year ended September 30, 2021.

SMALLCAP World Fund — Page 50


Administrative services — The investment adviser and its affiliates provide certain administrative services for shareholders of the fund’s Class A, C, T, F, R and 529 shares. Administrative services are provided by the investment adviser and its affiliates to help assist third parties providing non-distribution services to fund shareholders. These services include providing in-depth information on the fund and market developments that impact fund investments. Administrative services also include, but are not limited to, coordinating, monitoring and overseeing third parties that provide services to fund shareholders.

These services are provided pursuant to an Administrative Services Agreement (the “Administrative Agreement”) between the fund and the investment adviser relating to the fund’s Class A, C, T, F, R and 529 shares. The Administrative Agreement will continue in effect until November 30, 2022, unless sooner renewed or terminated, and may be renewed from year to year thereafter, provided that any such renewal has been specifically approved by the vote of a majority of the members of the fund’s board who are not parties to the Administrative Agreement or interested persons (as defined in the 1940 Act) of any such party. The fund may terminate the Administrative Agreement at any time by vote of a majority of independent board members. 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).

The Administrative Services Agreement between the fund and the investment adviser provides the fund the ability to charge an administrative services fee of .05% for all share classes. The fund’s investment adviser receives an administrative services fee at the annual rate of .03% of the average daily net assets of the fund attributable to each of the share classes (which could be increased as noted above) for its provision of administrative services. Administrative services fees are paid monthly and accrued daily.

During the 2021 fiscal year, administrative services fees were:

   
 

Administrative services fee

Class A

$10,629,000

Class C

209,000

Class T

—*

Class F-1

249,000

Class F-2

2,799,000

Class F-3

1,335,000

Class 529-A

632,000

Class 529-C

28,000

Class 529-E

23,000

Class 529-T

—*

Class 529-F-1

5,000

Class 529-F-2

68,000

Class 529-F-3

—*

Class R-1

10,000

Class R-2

210,000

Class R-2E

14,000

Class R-3

290,000

Class R-4

300,000

Class R-5E

41,000

Class R-5

148,000

Class R-6

4,670,000

* Amount less than $1,000.

SMALLCAP World Fund — Page 51


Principal Underwriter and plans of distribution — American Funds Distributors, 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; and 12811 North Meridian Street, Carmel, IN 46032.

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 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 financial professionals upon the sale of Class 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 intermediaries, such as qualified dealers or financial professionals, in connection with investments in Class T, F-1, 529-E, 529-T, 529-F-1, R-1, R-2, R-2E, R-3 and R-4 shares.

SMALLCAP World Fund — Page 52


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

       
 

Fiscal year

Commissions,
revenue
or fees retained

Allowance or
compensation
to dealers

Class A

2021

$7,345,000

$31,295,000

 

2020

4,956,000

21,226,000

 

2019

5,576,000

23,706,000

Class C

2021

988,000

 

2020

99,000

588,000

 

2019

141,000

669,000

Class 529-A

2021

456,000

1,724,000

 

2020

343,000

1,494,000

 

2019

381,000

1,695,000

Class 529-C

2021

5,000

108,000

 

2020

28,000

108,000

 

2019

28,000

137,000

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, F-3, 529-F-2, 529-F-3, R-5E, R-5 or R-6, no 12b-1 fees are paid from Class F-2, F-3, 529-F-2, 529-F-3, R-5E, R-5 or R-6 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.

SMALLCAP World Fund — Page 53


Following is a brief description of the Plans:

Class A and 529-A — For Class A and 529-A shares, up to .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 .30% for Class A shares and up to .50% for Class 529-A shares under the applicable Plan; however, for Class 529-A shares, the board of trustees has approved payments to the Principal Underwriter of up to .30% of the fund’s average daily net assets, in the aggregate, for paying service- and distribution-related expenses.

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 15 months, provided that the reimbursement of such commissions does not cause the fund to exceed the annual expense limit. After 15 months, these commissions are not recoverable.

Class T and 529-T — For Class T and 529-T shares, the fund may annually expend up to .50% under the applicable Plan; however, the fund’s board of trustees has approved payments to the Principal Underwriter of up to .25% of the fund’s average daily net assets attributable to Class T and 529-T shares for paying service-related expenses.

Other share classes — 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:

       

Share class

Service
related
payments1

Distribution
related
payments1

Total
allowable
under
the Plans2

Class C

0.25%

0.75%

1.00%

Class F-1

0.25

0.50

Class 529-C

0.25

0.75

1.00

Class 529-E

0.25

0.25

0.75

Class 529-F-1

0.25

0.50

Class R-1

0.25

0.75

1.00

Class R-2

0.25

0.50

1.00

Class R-2E

0.25

0.35

0.85

Class R-3

0.25

0.25

0.75

Class R-4

0.25

0.50

1 Amounts in these columns represent the amounts approved by the board of directors under the applicable Plan.

2 The fund may annually expend the amounts set forth in this column under the current Plans with the approval of the board of directors.

Payment of service fees — For purchases of less than $1 million, payment of service fees to investment dealers generally begins accruing immediately after establishment of an account in Class A, C, 529-A or 529-C shares. For purchases of $1 million or more, payment of service fees to investment dealers generally begins accruing 12 months after establishment of an account in Class A or 529-A shares. Service fees are not paid on certain investments made at net asset value including accounts

SMALLCAP World Fund — Page 54


established by registered representatives and their family members as described in the “Sales charges” section of the prospectus.

During the 2021 fiscal year, 12b-1 expenses accrued and paid, and if applicable, unpaid, were:

     
 

12b-1 expenses

12b-1 unpaid liability
outstanding

Class A

$91,522,000

$8,095,000

Class C

6,898,000

693,000

Class T

Class F-1

2,073,000

244,000

Class 529-A

4,815,000

431,000

Class 529-C

925,000

87,000

Class 529-E

388,000

36,000

Class 529-T

Class 529-F-1

—*

—*

Class R-1

338,000

34,000

Class R-2

5,261,000

1,237,000

Class R-2E

270,000

25,000

Class R-3

4,839,000

966,000

Class R-4

2,496,000

377,000

* Amount less than $1,000.

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 and its shareholders include enabling shareholders to obtain advice and other services from a financial professional at a reasonable cost, the likelihood that the Plans will stimulate sales of the fund benefiting the investment process through growth or stability of assets and the ability of shareholders to choose among various alternatives in paying for sales and service. 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.

A portion of the fund’s 12b-1 expense is paid to financial professionals to compensate them for providing ongoing services. If you have questions regarding your investment in the fund or need assistance with your account, please contact your financial professional. If you need a financial professional, please call American Funds Distributors at (800) 421-4120 for assistance.

SMALLCAP World Fund — Page 55


Fee to Virginia529 — Class 529 shares are offered to certain American Funds by Virginia529 through CollegeAmerica and Class ABLE shares are offered to certain American Funds by Virginia529 through ABLEAmerica, a tax-advantaged savings program for individuals with disabilities. As compensation for its oversight and administration of the CollegeAmerica and ABLEAmerica savings plans, Virginia529 is entitled to receive a quarterly fee based on the combined net assets invested in Class 529 shares and Class ABLE shares across all American Funds. The quarterly fee is accrued daily and calculated at the annual rate of .09% on the first $20 billion of net assets invested in American Funds Class 529 shares and Class ABLE shares, .05% on net assets between $20 billion and $100 billion and .03% on net assets over $100 billion. The fee for any given calendar quarter is accrued and calculated on the basis of average net assets of American Funds Class 529 and Class ABLE shares for the last month of the prior calendar quarter. Virginia529 is currently waiving that portion of its fee attributable to Class ABLE shares. Such waiver is expected to remain in effect until the earlier of (a) the date on which total net assets invested in Class ABLE shares reach $300 million and (b) June 30, 2023.

SMALLCAP World Fund — Page 56


Other compensation to dealers — As of February 2021, the top dealers (or their affiliates) that American Funds Distributors anticipates will receive additional compensation (as described in the prospectus) include:

   

Advisor Group

 

FSC Securities Corporation

 

Investacorp, Inc.

 

KMS Financial Services, Inc.

 

Ladenburg, Thalmann & Co., Inc.

 

Ladenburg Thalmann Asset Management Inc.

 

Royal Alliance Associates, Inc.

 

SagePoint Financial, Inc.

 

Securities America, Inc.

 

Securities Service Network Inc.

 

Triad Advisors LLC

 

Woodbury Financial Services, Inc.

 

American Portfolios Financial Services, Inc.

 

Ameriprise

 

Ameriprise Financial Services, Inc.

 

Cambridge

 

Cambridge Investment Research Advisors, Inc.

 

Cambridge Investment Research, Inc.

 

Cetera Financial Group

 

Cetera Advisor Networks LLC

 

Cetera Advisors LLC

 

Cetera Financial Specialists LLC

 

Cetera Investment Services LLC

 

First Allied Securities Inc.

 

Charles Schwab Network

 

Charles Schwab & Co., Inc.

 

Charles Schwab Trust Bank

 

Commonwealth

 

Commonwealth Financial Network

 

D.A. Davidson & Co.

 

Edward Jones

 

Equitable Advisors

 

Equitable Advisors LLC

 

Fidelity

 

Fidelity Investments

 

Fidelity Retirement Network

 

National Financial Services LLC

 

Hefren-Tillotson

 

Hefren-Tillotson, Inc.

 

HTK

 

Hornor, Townsend & Kent, LLC

 

J.P. Morgan Chase Banc One

 

J.P. Morgan Securities LLC

 

JP Morgan Chase Bank, N.A.

 

Janney Montgomery Scott

 

Janney Montgomery Scott LLC

 

SMALLCAP World Fund — Page 57


   

Kestra Securities

 

H. Beck, Inc.

 

Kestra Investment Services LLC

 

NFP Advisor Services LLC

 

Lincoln Network

 

Lincoln Financial Advisors Corporation

 

Lincoln Financial Securities Corporation

 

LPL Group

 

LPL Financial LLC

 

Private Advisor Group, LLC

 

Merrill

 

Bank of America, NA

 

Bank of America Private Bank

 

Merrill Lynch, Pierce, Fenner & Smith Incorporated

 

MML Investors Services

 

MassMutual Trust Company FSB

 

MML Distributors LLC

 

MML Investors Services, LLC

 

The MassMutual Trust Company FSB

 

Morgan Stanley Wealth Management

 

Northwestern Mutual

 

Northwestern Mutual Investment Services, LLC

 

Park Avenue Securities LLC

 

Raymond James Group

 

Raymond James & Associates, Inc.

 

Raymond James Financial Services Inc.

 

RBC

 

RBC Capital Markets LLC

 

Robert W. Baird

 

Robert W. Baird & Co, Incorporated

 

Stifel, Nicolaus & Co

 

Stifel, Nicolaus & Company, Incorporated

 

U.S. Bancorp Investments, Inc.

 

U.S. Bancorp Investments, Inc.

 

US Bank NA

 

UBS

 

UBS Financial Services, Inc.

 

UBS Securities, LLC

 

Voya Financial

 

Voya Financial Advisors, Inc.

 

Wells Fargo Network

 

Wells Fargo Advisors Financial Network, LLC

 

Wells Fargo Advisors Latin American Channel

 

Wells Fargo Advisors LLC (WBS)

 

Wells Fargo Advisors Private Client Group

 

Wells Fargo Bank, N.A.

 

Wells Fargo Clearing Services LLC

 

Wells Fargo Securities, LLC

 

SMALLCAP World Fund — Page 58


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, likely speed and reliability of execution and settlement, the broker-dealer’s or execution venue’s ability to offer liquidity and anonymity and the trade-off between market impact and opportunity costs. 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. The investment adviser and its affiliates negotiate commission rates with broker-dealers based on what they believe is reasonably necessary to obtain best execution. They seek, on an ongoing basis, to determine what the reasonable levels of commission rates for execution services are in the marketplace, taking various considerations into account, including the extent to which a broker-dealer has put its own capital at risk, historical commission rates and commission rates that other institutional investors are paying. 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. Brokerage commissions are only a small part of total execution costs and other factors, such as market impact and speed of execution, contribute significantly to overall transaction costs.

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 investment adviser makes decisions for procurement of research separately and distinctly from decisions on the choice of brokerage and execution services. The receipt of these research 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. 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 bears the cost of all third-party investment research services for all client accounts it advises. However, in order to compensate certain U.S. broker-dealers for research consumed, and valued, by the investment adviser’s investment professionals, the investment adviser continues to operate a limited commission sharing arrangement with commissions on equity trades for certain registered investment companies it advises. The

SMALLCAP World Fund — Page 59


investment adviser voluntarily reimburses such registered investment companies for all amounts collected into the commission sharing arrangement. In order to operate the commission sharing arrangement, the investment adviser may cause such registered investment companies to pay commissions in excess of what other broker-dealers might have charged for certain portfolio transactions in recognition of brokerage and/or investment research services. 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 the investment adviser and its affiliates to cause an account to pay a higher commission to a broker-dealer to compensate the broker-dealer or another service provider for certain brokerage and/or investment research services provided to the investment adviser and its affiliates, if the investment adviser and each affiliate 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 and its affiliates 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 and its affiliates assess the reasonableness of commissions in light of the total brokerage and investment research services provided to the investment adviser and its affiliates. Further, investment research services may be used by all investment associates of the investment adviser and its affiliates, regardless of whether they advise accounts with trading activity that generates eligible commissions.

In accordance with their internal brokerage allocation procedure, the investment adviser and its affiliates periodically assess the brokerage and investment research services provided by each broker-dealer and each other service provider from which they receive such services. As part of its ongoing relationships, the investment adviser and its affiliates routinely meet with firms to discuss the level and quality of the brokerage and research services provided, as well as the value and cost of such services. In valuing the brokerage and investment research services the investment adviser and its affiliates receive from broker-dealers and other research providers in connection with its good faith determination of reasonableness, the investment adviser and its affiliates take various factors into consideration, including the quantity, quality and usefulness of the services to the investment adviser and its affiliates. Based on this information and applying their judgment, the investment adviser and its affiliates set an annual research budget.

Research analysts and portfolio managers periodically participate in a research poll to determine the usefulness and value of the research provided by individual broker-dealers and research providers. Based on the results of this research poll, the investment adviser and its affiliates may, through commission sharing arrangements with certain broker-dealers, direct a portion of commissions paid to a broker-dealer by the fund and other registered investment companies managed by the investment adviser or its affiliates to be used to compensate the broker-dealer and/or other research providers for research services they provide. While the investment adviser and its affiliates may negotiate commission rates and enter into commission sharing arrangements with certain broker-dealers with the expectation that such broker-dealers will be providing brokerage and research services, none of the investment adviser, any of its affiliates or any of their clients incurs any obligation to any broker-dealer to pay for research by generating trading commissions. The investment adviser and its affiliates negotiate prices for certain research that may be paid through commission sharing arrangements or by themselves with cash.

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 investment division within the adviser and its affiliates normally aggregates its respective purchases or sales and executes 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 normally aggregates such purchases or sales and executes them as part of the same transaction or series of transactions. The objective of aggregating

SMALLCAP World Fund — Page 60


purchases and sales of a security is to allocate executions in an equitable manner among the funds and other accounts that have concurrently authorized a transaction in such security. The investment adviser and its affiliates serve as investment adviser for certain accounts that are designed to be substantially similar to another account. This type of account will often generate a large number of relatively small trades when it is rebalanced to its reference fund due to differing cash flows or when the account is initially started up. The investment adviser may not aggregate program trades or electronic list trades executed as part of this process. Non-aggregated trades performed for these accounts will be allocated entirely to that account. This is done only when the investment adviser believes doing so will not have a material impact on the price or quality of other transactions.

The investment adviser currently owns an interest in IEX Group and Luminex Trading and Analytics. The investment adviser may place orders on these or other exchanges or alternative trading systems in which it, or one of its affiliates, has an ownership interest, provided such ownership interest is less than five percent of the total ownership interests in the entity. The investment adviser is subject to the same best execution obligations when trading on any such exchange or alternative trading system.

Purchase and sale transactions may be effected directly among and between certain funds or accounts advised by the investment adviser or its affiliates, including the fund. The investment adviser maintains cross-trade policies and procedures and places a cross-trade only when such a trade is in the best interest of all participating clients and is not prohibited by the participating funds’ or accounts’ investment management agreement or applicable law.

The investment adviser may place orders for the fund’s portfolio transactions with broker-dealers who have sold shares of 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.

Forward currency contracts are traded directly between currency traders (usually large commercial banks) and their customers. The cost to the fund of engaging in such contracts varies with factors such as the currency involved, the length of the contract period and the market conditions then prevailing. Because such contracts are entered into on a principal basis, their prices usually include undisclosed compensation to the market maker reflecting the spread between the bid and ask prices for the contracts. The fund may incur additional fees in connection with the purchase or sale of certain contracts.

Brokerage commissions (net of any reimbursements described below) borne by the fund for the fiscal years ended September 30, 2021, 2020 and 2019 amounted to $21,696,000, $18,052,000 and $18,411,000, respectively. The investment adviser is reimbursing the fund for all amounts collected into the commission sharing arrangement. For the fiscal years ended September 30, 2021, 2020 and 2019, the investment adviser reimbursed the fund $1,261,000, $916,000 and $1,279,000, respectively, for commissions paid to broker-dealers through a commission sharing arrangement to compensate such broker-dealers for research services. Increases (or decreases) in the dollar amount of brokerage commissions borne by the fund over the last three fiscal years resulted from increases (or decreases) in the volume of trading activity and/or the amount of commissions used to pay for research services through a commission sharing arrangement.

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 recently completed 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 recently

SMALLCAP World Fund — Page 61


completed 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 recently completed fiscal year.

At the end of the fund’s most recently completed fiscal year, the fund did not hold securities of any of its regular broker-dealers.

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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 Capital Group website no earlier than the 10th day after such calendar quarter. In practice, the publicly disclosed portfolio is typically posted on the Capital Group website within 30 days after the end of the calendar quarter. The publicly disclosed portfolio may exclude certain securities when deemed to be in the best interest of the fund as permitted by applicable regulations. In addition, the fund’s list of top 10 equity portfolio holdings measured by percentage of net assets, dated as of the end of each calendar month, is permitted to be posted on the Capital Group website no earlier than the 10th day after such month. Such portfolio holdings information may 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 Capital Group website.

Certain intermediaries are provided additional information about the fund’s management team, including information on the fund’s portfolio securities they have selected. This information is provided to larger intermediaries that require the information to make the fund available for investment on the firm’s platform. Intermediaries receiving the information are required to keep it confidential and use it only to analyze the fund.

The fund’s custodian, outside counsel, auditor, financial printers, proxy voting service providers, pricing information vendors, consultants or agents operating under a contract with the investment adviser or its affiliates, co-litigants (such as in connection with a bankruptcy proceeding related to a fund holding) and certain other third parties described below, each of which requires portfolio holdings information for legitimate business and fund oversight purposes, may receive fund portfolio holdings information earlier. See the “General information” section in this statement of additional information for further information about the fund’s custodian, outside counsel and auditor.

The fund‘s portfolio holdings, dated as of the end of each calendar month, are made available to up to 20 key broker-dealer relationships with research departments to help them evaluate the fund for eligibility on approved lists or in model portfolios. These firms include certain of those listed under the “Other compensation to dealers” section of this statement of additional information and certain broker-dealer firms that offer trading platforms for registered investment advisers. Monthly holdings may be provided to these intermediaries no earlier than the 10th day after the end of the calendar month. In practice, monthly holdings are provided within 30 days after the end of the calendar month. Holdings may also be disclosed more frequently to certain statistical and data collection agencies including Morningstar, Lipper, Inc., Value Line, Vickers Stock Research, Bloomberg and Thomson Financial Research.

Affiliated persons of the fund, including officers of the fund and employees of the investment adviser and its affiliates, 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 not to trade in securities based on confidential and proprietary investment information, to maintain the confidentiality of such information, and to pre-clear securities trades and report securities transactions activity, as applicable. For more information on these restrictions and limitations, please see the “Code of ethics” section in this statement of additional information and the Code of Ethics. Third-party service providers of the fund and other entities, as described in this statement of additional information, receiving such information are subject to confidentiality

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obligations and obligations that would prohibit them from trading in securities based on such information. When portfolio holdings information is disclosed other than through the Capital Group website to persons not affiliated with the fund, such persons will be bound by agreements (including confidentiality agreements) or fiduciary or other obligations that restrict and limit their use of the information to legitimate business uses only. None of the fund, its investment adviser or any of their affiliates 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 Capital Group website (other than to certain fund service providers and other third parties for legitimate business and fund oversight purposes) helps reduce potential conflicts of interest between fund shareholders and the investment adviser and its affiliates.

The fund’s investment adviser and its affiliates provide investment advice to clients other than the fund that have investment objectives that may be substantially similar to those of the fund. These clients also may have portfolios consisting of holdings substantially similar to those of the fund and generally have access to current portfolio holdings information for their accounts. These clients do not owe the fund’s investment adviser or the fund a duty of confidentiality with respect to disclosure of their portfolio holdings.

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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 by the fund or the Transfer Agent provided that your request contains all information and legal documentation necessary to process the transaction. The Transfer Agent may accept written orders for the sale of fund shares on a future date. These orders are subject to the Transfer Agent’s policies, which generally allow shareholders to provide a written request to sell shares at the net asset value on a specified date no more than five business days after receipt of the order by the Transfer Agent. Any request to sell shares on a future date will be rejected if the request is not in writing, if the requested transaction date is more than five business days after the Transfer Agent receives the request or if the request does not contain all information and legal documentation necessary to process the transaction.

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.

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 the close of regular trading on the New York Stock Exchange, normally 4 p.m. New York time, each day the New York Stock Exchange is open. If the New York Stock Exchange makes a scheduled (e.g. the day after Thanksgiving) or an unscheduled close prior to 4 p.m. New York time, the net asset value of the fund will be determined at approximately the time the New York Stock Exchange closes on that day. If on such a day market quotations and prices from third-party pricing services are not based as of the time of the early close of the New York Stock Exchange but are as of a later time (up to approximately 4 p.m. New York time), for example because the market remains open after the close of the New York Stock Exchange, those later market quotations and prices will be used in determining the fund’s net asset value.

Orders in good order received after the New York Stock Exchange closes (scheduled or unscheduled) will be processed at the net asset value (plus any applicable sales charge) calculated on the following business day. The New York Stock Exchange is currently closed on weekends and on the following holidays: New Year’s Day; Martin Luther King Jr. Day; Presidents’ Day; Good Friday; Memorial Day; Juneteenth National Independence Day; Independence Day; Labor Day; Thanksgiving Day; and Christmas Day. Each share class of the fund has a separately calculated net asset value (and share price).

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.

All portfolio securities of funds managed by Capital Research and Management Company (other than American Funds U.S. Government Money Market Fund) 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.

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Equity securities, including depositary receipts, are generally 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 on which the security trades.

Fixed income securities, including short-term securities, are generally valued at prices obtained from one or more pricing vendors. The pricing vendors base prices on, among other things, benchmark yields, transactions, bids, offers, quotations from dealers and trading systems, new issues, underlying equity of the issuer, interest rate volatilities, spreads and other relationships observed in the markets among comparable securities and proprietary pricing models such as yield measures calculated using factors such as cash flows, prepayment information, default rates, delinquency and loss assumptions, financial or collateral characteristics or performance, credit enhancements, liquidation value calculations, specific deal information and other reference data. The fund’s investment adviser performs certain checks on vendor prices prior to calculation of the fund’s net asset value. When the investment adviser deems it appropriate to do so (such as when vendor prices are unavailable or not deemed to be representative), fixed income securities will be valued in good faith at the mean quoted bid and ask prices that are reasonably and timely available (or bid prices, if ask prices are not available) or at prices for securities of comparable maturity, quality and type.

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 generally 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.

Forward currency contracts are valued at the mean of representative quoted bid and ask prices, generally based on prices supplied by one or more pricing vendors.

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 other assets for which representative market quotations are not readily available or are considered unreliable by the investment adviser are valued at fair value as determined in good faith under fair value guidelines adopted by authority of the fund’s board. Subject to board oversight, the fund’s board has appointed the fund’s investment adviser to make fair valuation determinations, which are directed by 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 consider certain relevant principles and factors when making 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 expect to receive upon their current sale. Fair valuations and valuations of investments that are not actively trading involve judgment and may differ materially from valuations that would have been used had greater market activity occurred. The valuation committee considers relevant indications of value that are reasonably and timely available to it in determining the fair value to be assigned to a particular security, such as 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

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value procedures to address issues related to equity securities that trade principally in markets outside the United States. Such securities may 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 the fund’s net asset values are next determined) which affect the value of equity securities held in the fund’s portfolio, 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).

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 attributable to particular share classes, such as liabilities for repurchase of fund shares, are deducted from total assets attributable to such share classes.

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 class.

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Taxes and distributions

Disclaimer: Some of the following information may not apply to certain shareholders, including those holding fund shares in a tax-favored account, such as a retirement plan or education savings account. Shareholders should consult their tax advisors about the application of federal, state and local tax law in light of their particular situation.

Taxation as a regulated investment company — The fund intends to qualify each year as a “regulated investment company” under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”), so that it will not be liable for federal tax on income and capital gains distributed to shareholders. In order to qualify as a regulated investment company, and avoid being subject to federal income taxes, the fund intends to distribute substantially all of its net investment income and realized net capital gains on a fiscal year basis, and intends to comply with other tests applicable to regulated investment companies under Subchapter M.

The Code includes savings provisions allowing the fund to cure inadvertent failures of certain qualification tests required under Subchapter M. However, should the fund fail to qualify under Subchapter M, the fund would be subject to federal, and possibly state, corporate taxes on its taxable income and gains.

Amounts not distributed by the fund on a timely basis in accordance with a calendar year distribution requirement may be subject to a nondeductible 4% excise tax. Unless an applicable exception applies, to avoid the tax, the fund must distribute during each calendar year an amount equal to the sum of (a) at least 98% of its ordinary income (not taking into account any capital gains or losses) for the calendar year, (b) at least 98.2% of its capital gains in excess of its capital losses for the twelve month period ending on October 31, and (c) all ordinary income and capital gains for previous years that were not distributed during such years and on which the fund paid no U.S. federal income tax.

Dividends paid by the fund from ordinary income or from an excess of net short-term capital gain over net long-term capital loss are taxable to shareholders as ordinary income dividends. Shareholders of the fund that are individuals and meet certain holding period requirements with respect to their fund shares may be eligible for reduced tax rates on “qualified dividend income,” if any, distributed by the fund to such shareholders.

The fund may declare a capital gain distribution consisting of the 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.

The fund may retain a portion of net capital gain for reinvestment and may elect to treat such capital gain as having been distributed to shareholders of the fund. Shareholders may receive a credit for the tax that the fund paid on such undistributed net capital gain and would increase the basis in their shares of the fund by the difference between the amount of includible gains and the tax deemed paid by the shareholder.

Distributions of net capital gain that the fund properly reports as a capital gain distribution 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. 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 capital gain distributions (including any undistributed amounts treated as distributed capital gains, as described above) during such six-month period.

Capital gain 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 capital gain distribution.

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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.

Certain distributions reported by the fund as section 163(j) interest dividends may be treated as interest income by shareholders for purposes of the tax rules applicable to interest expense limitations under Section 163(j) of the Code. Such treatment by the shareholder is generally subject to holding period requirements and other potential limitations, although the holding period requirements are generally not applicable to dividends declared by money market funds and certain other funds that declare dividends daily and pay such dividends on a monthly or more frequent basis. The amount that the fund is eligible to report as a Section 163(j) dividend for a tax year is generally limited to the excess of the fund’s business interest income over the sum of the fund’s (i) business interest expense and (ii) other deductions properly allocable to the fund’s business interest income.

Individuals (and certain other non-corporate entities) are generally eligible for a 20% deduction with respect to taxable ordinary REIT dividends. Applicable Treasury regulations allow the fund to pass through to its shareholders such taxable ordinary REIT dividends. Accordingly, individual (and certain other non-corporate) shareholders of the fund that have received such taxable ordinary REIT dividends may be able to take advantage of this 20% deduction with respect to any such amounts passed through.

Redemptions and exchanges of fund shares — 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.

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.

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 or no sales charge for shares of the fund, or of a different fund acquired before January 31st of the year following the year the shareholder exchanged or otherwise disposed of the original fund shares, 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).

Tax consequences of investing in non-U.S. securities — 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.

If 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 fund may elect to pass through to shareholders the foreign taxes paid by the fund. If such an election is made, shareholders may 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. The application of the foreign tax credit depends upon the particular circumstances of each shareholder.

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Foreign currency gains and losses, including the portion of gain or loss on the sale of debt securities attributable to fluctuations in foreign exchange rates, are generally taxable as ordinary income or loss. These gains or losses may increase or decrease the amount of dividends payable by the fund to shareholders. A fund may elect to treat gain and loss on certain foreign currency contracts as capital gain and loss instead of ordinary income or loss.

If the fund invests in stock of certain passive foreign investment companies (PFICs), the fund intends to mark-to-market these securities and recognize any gains at the end of its fiscal and excise tax years. Deductions for losses are allowable only to the extent of any previously recognized gains. Both gains and losses will be treated as ordinary income or loss, and the fund is required to distribute any resulting income. If the fund is unable to identify an investment as a PFIC security and thus does not make a timely mark-to-market election, the fund may be subject to adverse tax consequences.

Other tax considerations — After the end of each calendar 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.

For fund shares acquired on or after January 1, 2012, the fund is required to report cost basis information for redemptions, including exchanges, to both shareholders and the IRS.

Shareholders may obtain more information about cost basis online at capitalgroup.com/costbasis.

Under the backup withholding provisions of the Code, the fund generally will be required to withhold federal income tax on all payments made to a shareholder if the shareholder either does not furnish the fund with the shareholder’s correct taxpayer identification number or fails to certify that the shareholder is not subject to backup withholding. Backup withholding also applies if the IRS notifies the shareholder or the fund that the taxpayer identification number provided by the shareholder is incorrect or that the shareholder has previously failed to properly report interest or dividend income.

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 legal 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 U.S. withholding taxes.

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Unless otherwise noted, all references in the following pages to Class A, C, T or F shares also refer to the corresponding Class 529-A, 529-C, 529-T or 529-F 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 professional or investment dealer authorized to sell the fund’s shares. You may make investments by any of the following means:

Contacting your financial professional — Deliver or mail a check to your financial professional.

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 transaction confirmation and mailing the form, along with a check made payable to the fund, using the envelope provided with your confirmation.

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 either of the following addresses:

American Funds

12711 North Meridian Street

Carmel, IN 46032-9181

American Funds

5300 Robin Hood Road

Norfolk, VA 23513-2407

By telephone — Calling American Funds Service Company. Please see the “Shareholder account services and privileges” section of this statement of additional information for more information regarding this service.

By Internet — Using capitalgroup.com. Please see the “Shareholder account services and privileges” section of this statement of additional information for more information regarding this service.

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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) 421-4225 if you have questions about making wire transfers.

Other purchase information — 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. 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. In addition, the fund and the Principal Underwriter reserve the right to reject any purchase order.

Class R-5 and R-6 shares may be made available to certain charitable foundations organized and maintained by The Capital Group Companies, Inc. or its affiliates. Class R-6 shares are also available to corporate investment accounts established by The Capital Group Companies, Inc. and its affiliates.

Class R-5 and R-6 shares may also be made available to Virginia529 for use in the Virginia Education Savings Trust and the Virginia Prepaid Education Program and other registered investment companies approved by the fund’s investment adviser or distributor. Class R-6 shares are also available to other post employment benefits plans.

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.

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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.

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 U.S. Government Money Market Fund accounts registered in the name of clients of Capital Group Private Client Services.

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. However, in the case where the entity maintaining these accounts aggregates the accounts’ purchase orders for fund shares, such accounts are not required to meet the fund’s minimum amount for subsequent purchases.

Exchanges — With the exception of Class T shares, for which rights of exchange are not generally available, you may only exchange shares without a sales charge into other American Funds within the same share class; however, Class A, C, T or F shares may also generally be exchanged without a sales charge for the corresponding 529 share class. Clients of Capital Group Private Client Services may exchange the shares of the fund for those of any other fund(s) managed by Capital Research and Management Company or its affiliates.

Notwithstanding the above, exchanges from Class A shares of American Funds U.S. Government Money Market Fund may be made to Class C shares of other American Funds for dollar cost averaging purposes.

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 U.S. Government Money Market Fund are subject to applicable sales charges, unless the American Funds U.S. Government 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 advisors.

You may exchange shares of other classes by contacting your financial professional by calling American Funds Service Company at (800) 421-4225 or using capitalgroup.com, 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

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processed simultaneously at the share prices next determined after the exchange order is received (see “Price of shares” in this statement of additional information).

Conversion — Class C shares of the fund automatically convert to Class A shares in the month of the 8-year anniversary of the purchase date. Class 529-C shares of the fund automatically convert to Class 529-A shares in the month of the 5-year anniversary of the purchase date.

Frequent trading of fund shares — As noted in the prospectus, certain redemptions may trigger a restriction under the fund’s “frequent trading policy.” Under this policy, systematic redemptions will not trigger a restriction and systematic purchases will not be prevented if the entity maintaining the shareholder account is able to identify the transaction as a systematic redemption or purchase. 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. Generally, purchases and redemptions will not be considered “systematic” unless the transaction is prescheduled for a specific date.

Potentially abusive activity — American Funds Service Company will monitor for the 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 C shares for Class A or Class T shares — If you exchange Class C shares for Class A or Class T shares, you are still responsible for paying any Class C contingent deferred sales charges and applicable Class A or Class T sales charges.

Exchanging Class C shares for Class F shares — If you are part of a qualified fee-based program or approved self-directed platform 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 you are leaving or have left the fee-based program. Your financial intermediary can also convert Class F-1 shares to Class A shares without a sales charge if they are held in a brokerage account and they were initially transferred to the account or converted from Class C shares. You can exchange Class F shares received in a conversion from Class C shares for Class A shares at any time without paying an initial Class A sales charge if you notify American Funds Service Company of the conversion when you make 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.

Exchanging Class A or Class T shares for Class F shares — If you are part of a qualified fee-based program or approved self-directed platform and you wish to exchange your Class A or

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Class T shares for Class F shares to be held in the program, any Class A or Class T sales charges (including contingent deferred sales charges) that you paid or are payable will not be credited back to your account.

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. No contingent deferred sales charge will be assessed as part of the share class conversion.

Moving between Class F shares — If you are part of a qualified fee-based program that offers Class F shares, you may exchange your Class F shares for any other Class F shares to be held in the program. For example, if you hold Class F-2 shares, you may exchange your shares for Class F-1 or Class F-3 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) 421-4225 for more information.

Non-reportable transactions — Automatic conversions described in the prospectus will be non-reportable for tax purposes. In addition, 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. However, a movement between a 529 share class and a non-529 share class of the same fund will be reportable.

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Sales charges

Class A purchases

Purchases by certain 403(b) plans

A 403(b) plan may not invest in American Funds Class A or C shares unless such plan was invested in Class A or C shares before January 1, 2009.

Participant accounts of a 403(b) plan that invested in American Funds Class A or C shares and were treated as an individual-type plan for sales charge purposes before January 1, 2009, may continue to be treated as accounts of an individual-type plan for sales charge purposes. Participant accounts of a 403(b) plan that invested in American Funds Class A or C shares and were treated as an employer-sponsored plan for sales charge purposes before January 1, 2009, may continue to be treated as accounts of an employer-sponsored plan for sales charge purposes. Participant accounts of a 403(b) plan that was established on or after January 1, 2009, are treated as accounts of an employer-sponsored plan for sales charge purposes.

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) will be aggregated at the plan level for Class A sales charge purposes if an employer adopts a prototype plan produced by American Funds Distributors, Inc. or (a) the employer or plan sponsor submits all contributions for all participating employees in a single contribution transmittal or the contributions are identified as related to the same plan; (b) each transmittal is accompanied by checks or wire transfers and generally must be submitted through the transfer agent’s automated contribution system if held on the fund’s books; and (c) if the fund is expected to carry separate accounts in the name of each plan participant and (i) the employer or plan sponsor notifies the funds’ transfer agent or the intermediary holding the account that the separate accounts of all plan participants should be linked and (ii) all new participant accounts are established by submitting the appropriate documentation on behalf of each new participant. Participant accounts in a SEP or SIMPLE plan that are eligible to aggregate their assets at the plan level may not also aggregate the assets with their individual accounts.

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Other purchases

In addition, American Funds Class A and Class 529-A shares may be offered at net asset value to companies exchanging securities with the fund through a merger, acquisition or exchange offer and to certain individuals meeting the criteria described above who invested in Class A and Class 529-A shares before Class F-2 and Class 529-F-2 shares were made available under this privilege.

Transfers to CollegeAmerica — A transfer from the Virginia Prepaid Education ProgramSM or the Virginia Education Savings TrustSM to a CollegeAmerica account will be made with no sales charge. No commission will be paid to the dealer on such a transfer. Investment dealers will be compensated solely with an annual service fee that begins to accrue immediately.

Class F-2 and Class 529-F-2 purchases

If requested, American Funds Class F-2 and Class 529-F-2 shares will be sold 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 The Capital Group Companies, Inc. and its affiliated companies, certain family members of the above persons, and trusts or plans primarily for such persons; and

 

(2)

The Capital Group Companies, Inc. and its affiliated companies.

Once an account in Class F-2 or Class 529-F-2 is established under this privilege, additional investments can be made in Class F-2 or Class 529-F-2 for the life of the account. Depending on the financial intermediary holding your account, these privileges may be unavailable. Investors should consult their financial intermediary for further information.

Moving between accounts — American Funds investments by certain account types may be moved to other account types without incurring additional Class A sales charges. These transactions include:

· 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.

Investors may not move investments from a Capital Bank & Trust Company SIMPLE IRA Plus to a Capital Bank & Trust Company SIMPLE IRA unless it is part of a plan transfer or to a current employer’s Capital Bank & Trust Company SIMPLE IRA plan.

These privileges are generally available only if your account is held directly with the fund’s transfer agent or if the financial intermediary holding your account has the systems, policies and procedures to support providing the privileges on its systems. Investors should consult their financial intermediary for further information.

Loan repayments — Repayments on loans taken from a retirement plan are not subject to sales charges if American Funds Service Company is notified of the repayment.

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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 a) purchases of $1 million or more, and b) purchases by employer-sponsored defined contribution-type retirement plans investing $1 million or more or with 100 or more eligible employees. 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 $10 million, .50% on amounts of at least $10 million but less than $25 million and .25% on amounts of at least $25 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 $10 million (but less than $25 million) and subsequently redeems all or a portion of the account(s), purchases following the redemption will generate a dealer commission of .50%.

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.

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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 American Funds (excluding American Funds U.S. Government Money Market Fund) 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, unless the Statement is upgraded as described below.

The Statement period starts on the date on which your first purchase made toward satisfying the Statement is processed. Your accumulated holdings (as described in the paragraph below titled “Rights of accumulation”) eligible to be aggregated as of the day immediately before the start of the Statement period may be credited toward satisfying the Statement.

You may revise the commitment you have made in your Statement upward at any time during the Statement period. If your prior commitment has not been met by the time of the revision, the Statement period during which purchases must be made will remain unchanged. Purchases made from the date of the revision will receive the reduced sales charge, if any, resulting from the revised Statement. If your prior commitment has been met by the time of the revision, your original Statement will be considered met and a new Statement will be established.

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 investments made during the statement period will be adjusted to reflect 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.

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.

The Statement period may be extended in cases where the fund’s distributor determines it is appropriate to do so; for example in periods when there are extenuating circumstances such as a natural disaster that may limit an individual’s ability to meet the investment required under the Statement.

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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, single-participant Keogh-type plan, or a participant account of a 403(b) plan that is treated as an individual-type plan for sales charge purposes (see “Purchases by certain 403(b) plans” under “Sales charges” in this statement of additional information);

· 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;

· 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 participant accounts of a 403(b) plan that is treated as an employer-sponsored plan for sales charge purposes (see “Purchases by certain 403(b) plans” under “Sales charges” in this statement of additional information), or made for participant accounts of two or more such plans, 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

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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.

Joint accounts may be aggregated with other accounts belonging to the primary owner and/or his or her immediate family. The primary owner of a joint account is the individual responsible for taxes on the account.

Concurrent purchases — As described in the prospectus, you may reduce your Class A sales charge by combining purchases of all classes of shares in American Funds. Shares of American Funds U.S. Government Money Market Fund purchased through an exchange, reinvestment or cross-reinvestment from a fund having a sales charge also qualify. However, direct purchases of American Funds U.S. Government Money Market Fund Class A shares 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 American Funds to determine your sales charge on investments in accounts eligible to be aggregated. Direct purchases of American Funds U.S. Government Money Market Fund Class A shares 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”) as of the day prior to your American Funds investment 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 decrease according to actual investments or withdrawals. You must contact your financial professional or American Funds Service Company if you have additional information that is relevant to the calculation of the value of your holdings.

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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 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.

Reducing your Class T sales charge — As described in the prospectus, the initial sales charge you pay each time you buy Class T shares may differ depending upon the amount you invest and may be reduced for larger purchases. Additionally, Class T shares acquired through reinvestment of dividends or capital gain distributions are not subject to an initial sales charge. Sales charges on Class T shares are applied on a transaction-by-transaction basis, and, accordingly, Class T shares are not eligible for any other sales charge waivers or reductions, including through the aggregation of Class T shares concurrently purchased by other related accounts or in other American Funds. The sales charge applicable to Class T shares may not be reduced by establishing a statement of intention, and rights of accumulation are not available for Class T shares.

CDSC waivers for Class A and C shares — As noted in the prospectus, a contingent deferred sales charge (“CDSC”) will be waived for redemptions due to death or post-purchase 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 will be waived for the following types of transactions, if they do not exceed 12% of the value of an “account” (defined below) annually (the “12% limit”):

· Required minimum distributions taken from retirement accounts in accordance with IRS regulations.

· 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 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 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.

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For purposes of this paragraph, “account” means your investment in the applicable class of shares of the particular fund from which you are making the redemption.

The CDSC on American Funds Class A shares may be waived in cases where the fund’s transfer agent determines the benefit to the fund of collecting the CDSC would be outweighed by the cost of applying it.

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-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 Virginia529 as an option for additional investment within CollegeAmerica.

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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 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.

If you hold multiple American Funds and a CDSC applies to the shares you are redeeming, the CDSC will be calculated based on the applicable class of shares of the particular fund from which you are making the redemption.

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 (normally seven business days from the purchase date). Except for delays relating to clearance of checks for share purchases or in extraordinary circumstances (and as permissible under the 1940 Act), the fund typically expects to pay redemption proceeds one business day following receipt and acceptance of a redemption 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 American Funds U.S. Government Money Market Fund be wired to your bank by writing American Funds Service Company. A signature guarantee is required on all requests to wire funds and you may be subject to a fee for the transaction.

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Shareholder account services and privileges

The following services and privileges are generally available to all shareholders. However, certain services and privileges described in the prospectus and this statement of additional information 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 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 may be automatically converted to having all dividends and other distributions reinvested in additional shares.

Cross-reinvestment of dividends and distributions — For all share classes, except Class T shares and 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);

(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.

Depending on the financial intermediary holding your account, your reinvestment privileges may be unavailable or differ from those described in this statement of additional information. Investors should consult their financial intermediary for further information.

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Automatic exchanges — For all share classes other than Class T shares, you may automatically exchange shares of the same class in amounts of $50 or more among any American Funds on any day (or preceding business day if the day falls on a nonbusiness day) of each month you designate.

Automatic withdrawals — Depending on the type of account, for all share classes except R 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. You should consult with your financial professional or intermediary to determine if your account is eligible for automatic withdrawals.

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 Funds Service Company and capitalgroup.com — You may check your share balance, the price of your shares or your most recent account transaction; redeem shares (up to $125,000 per American Funds shareholder each day); or exchange shares by calling American Funds Service Company at (800) 421-4225 or using capitalgroup.com. Redemptions and exchanges through American Funds Service Company and capitalgroup.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 American Funds under the “General information — fund numbers” section in this statement of additional information), 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.

Generally, all shareholders are automatically eligible to use these services. However, if you are not currently authorized to do so, please contact American Funds Service Company for assistance. Once you establish this privilege, you, your financial professional or any person with your account information may use these services.

Telephone and Internet purchases, redemptions and exchanges — By using the telephone or the Internet (including capitalgroup.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

SMALLCAP World Fund — Page 86


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.

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 with portfolio securities or other fund assets under conditions and circumstances determined by the fund’s board of directors. For example, redemptions could be made in this manner if the board determined that making payments wholly in cash over a particular period would be unfair and/or harmful to other fund shareholders.

Share certificates — Shares are credited to your account. The fund does not issue share certificates.

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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 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 services — 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. Transfer agent fees are paid according to a fee schedule, based on the number of accounts serviced or a percentage of fund assets, contained in a Shareholder Services Agreement between the fund and American Funds Service Company.

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.

During the 2021 fiscal year, transfer agent fees, gross of any payments made by American Funds Service Company to third parties, were:

   
 

Transfer agent fee

Class A

$37,823,000

Class C

746,000

Class T

—*

Class F-1

1,216,000

Class F-2

9,861,000

Class F-3

168,000

Class 529-A

2,087,000

Class 529-C

96,000

Class 529-E

33,000

Class 529-T

—*

Class 529-F-1

12,000

Class 529-F-2

197,000

Class 529-F-3

—*

Class R-1

34,000

Class R-2

2,413,000

Class R-2E

91,000

Class R-3

1,449,000

Class R-4

996,000

Class R-5E

196,000

Class R-5

250,000

Class R-6

112,000

* Amount less than $1,000.

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Independent registered public accounting firm — Deloitte & Touche LLP, 695 Town Center Drive, Costa Mesa, CA 92626, serves as the fund’s independent registered public accounting firm, providing audit services and review of certain documents to be filed with the SEC. Deloitte Tax LLP prepares tax returns for the fund. The financial statements included in this statement of additional information that are from the fund's 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 — Dechert LLP, One Bush Street, Suite 1600, San Francisco, CA 94104, serves as independent legal counsel (“counsel”) for the fund and for independent directors in their capacities as such. 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 applicable 1940 Act rules.

Prospectuses, reports to shareholders and proxy statements — The fund’s fiscal year ends on September 30. Shareholders are provided updated summary prospectuses annually and at least semi-annually with reports showing the fund’s investment portfolio or summary investment portfolio, financial statements and other information. Shareholders may request a copy of the fund’s current prospectus at no cost by calling (800) 421-4225 or by sending an email request to [email protected]. Shareholders may also access the fund’s current summary prospectus, prospectus, statement of additional information and shareholder reports at capitalgroup.com/prospectus. 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 summary prospectuses, shareholder reports and proxy statements. To receive additional copies of a summary prospectus, report or proxy statement, shareholders should contact the Transfer Agent.

Shareholders may also elect to receive updated summary prospectuses, annual reports and semi-annual reports electronically by signing up for electronic delivery on our website, capitalgroup.com. Shareholders who elect to receive documents electronically will receive such documents in electronic form and will not receive 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 summary prospectuses and other reports in paper form by mail.

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

SMALLCAP World Fund — Page 89


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; disclosure of personal securities transactions; and policies regarding political contributions.

Credit facility — The fund, together with other U.S. registered investment funds managed by Capital Research and Management Company, has entered into a committed line of credit facility pursuant to which the funds may borrow up to $1.5 billion as a source of temporary liquidity on a first-come, first-served basis. Under the credit facility, loans are generally unsecured; however, a borrowing fund must collateralize any borrowings under the facility on an equivalent basis if it has certain other collateralized borrowings.

Determination of net asset value, redemption price and maximum offering price per share for Class A shares — September 30, 2021

   

Net asset value and redemption price per share
(Net assets divided by shares outstanding)  

$88.19

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)  

$93.57

Other information — The fund reserves the right to modify the privileges described in this statement of additional information at any time.

The fund’s 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.

SMALLCAP World Fund — Page 90


Fund numbers — Here are the fund numbers for use when making share transactions:

             
 

Fund numbers

Fund

Class A

Class C

Class T

Class F-1

Class F-2

Class F-3

Stock and stock/fixed income funds

           

AMCAP Fund® 

002

302

43002

402

602

702

American Balanced Fund® 

011

311

43011

411

611

711

American Funds Developing World Growth and Income FundSM 

30100

33100

43100

34100

36100

37100

American Funds Global Balanced FundSM 

037

337

43037

437

637

737

American Funds Global Insight FundSM 

30122

33122

43122

34122

36122

37122

American Funds International Vantage FundSM 

30123

33123

43123

34123

36123

37123

American Mutual Fund® 

003

303

43003

403

603

703

Capital Income Builder® 

012

312

43012

412

612

712

Capital World Growth and Income Fund® 

033

333

43033

433

633

733

EuroPacific Growth Fund® 

016

316

43016

416

616

716

Fundamental Investors® 

010

310

43010

410

610

710

The Growth Fund of America® 

005

305

43005

405

605

705

The Income Fund of America® 

006

306

43006

406

606

706

International Growth and Income FundSM 

034

334

43034

434

634

734

The Investment Company of America® 

004

304

43004

404

604

704

The New Economy Fund® 

014

314

43014

414

614

714

New Perspective Fund® 

007

307

43007

407

607

707

New World Fund® 

036

336

43036

436

636

736

SMALLCAP World Fund® 

035

335

43035

435

635

735

Washington Mutual Investors FundSM 

001

301

43001

401

601

701

Fixed income funds

           

American Funds Emerging Markets Bond Fund ® 

30114

33114

43114

34114

36114

37114

American Funds Corporate Bond Fund ® 

032

332

43032

432

632

732

American Funds Inflation Linked Bond Fund® 

060

360

43060

460

660

760

American Funds Mortgage Fund® 

042

342

43042

442

642

742

American Funds Multi-Sector Income FundSM 

30126

33126

43126

34126

36126

37126

American Funds Short-Term Tax-Exempt
Bond Fund® 

039

N/A

43039

439

639

739

American Funds Strategic Bond FundSM 

30112

33112

43112

34112

36112

37112

American Funds Tax-Exempt Fund of
New York® 

041

341

43041

441

641

741

American High-Income Municipal Bond Fund®

040

340

43040

440

640

740

American High-Income Trust® 

021

321

43021

421

621

721

The Bond Fund of America® 

008

308

43008

408

608

708

Capital World Bond Fund® 

031

331

43031

431

631

731

Intermediate Bond Fund of America® 

023

323

43023

423

623

723

Limited Term Tax-Exempt Bond Fund
of America® 

043

343

43043

443

643

743

Short-Term Bond Fund of America® 

048

348

43048

448

648

748

The Tax-Exempt Bond Fund of America® 

019

319

43019

419

619

719

The Tax-Exempt Fund of California® 

020

320

43020

420

620

720

U.S. Government Securities Fund® 

022

322

43022

422

622

722

Money market fund

           

American Funds U.S. Government
Money Market FundSM 

059

359

43059

459

659

759

SMALLCAP World Fund — Page 91


                   
 

Fund numbers

Fund

Class
529-A

Class
529-C

Class
529-E

Class
529-T

Class
529-F-1

Class
529-F-2

Class
529-F-3

Class
ABLE-A

Class
ABLE-F-2

Stock and stock/fixed income funds

                 

AMCAP Fund 

1002

1302

1502

46002

1402

1602

1702

N/A

N/A

American Balanced Fund 

1011

1311

1511

46011

1411

1611

1711

N/A

N/A

American Funds Developing World Growth and Income Fund 

10100

13100

15100

46100

14100

16100

17100

N/A

N/A

American Funds Global Balanced Fund 

1037

1337

1537

46037

1437

1637

1737

N/A

N/A

American Funds Global Insight Fund 

10122

13122

15122

46122

14122

16122

17122

N/A

N/A

American Funds International Vantage Fund 

10123

13123

15123

46123

14123

16123

17123

N/A

N/A

American Mutual Fund 

1003

1303

1503

46003

1403

1603

1703

N/A

N/A

Capital Income Builder 

1012

1312

1512

46012

1412

1612

1712

N/A

N/A

Capital World Growth and Income Fund 

1033

1333

1533

46033

1433

1633

1733

N/A

N/A

EuroPacific Growth Fund 

1016

1316

1516

46016

1416

1616

1716

N/A

N/A

Fundamental Investors 

1010

1310

1510

46010

1410

1610

1710

N/A

N/A

The Growth Fund of America 

1005

1305

1505

46005

1405

1605

1705

N/A

N/A

The Income Fund of America 

1006

1306

1506

46006

1406

1606

1706

N/A

N/A

International Growth and Income Fund 

1034

1334

1534

46034

1434

1634

1734

N/A

N/A

The Investment Company of America 

1004

1304

1504

46004

1404

1604

1704

N/A

N/A

The New Economy Fund 

1014

1314

1514

46014

1414

1614

1714

N/A

N/A

New Perspective Fund 

1007

1307

1507

46007

1407

1607

1707

N/A

N/A

New World Fund 

1036

1336

1536

46036

1436

1636

1736

N/A

N/A

SMALLCAP World Fund 

1035

1335

1535

46035

1435

1635

1735

N/A

N/A

Washington Mutual Investors Fund 

1001

1301

1501

46001

1401

1601

1701

N/A

N/A

Fixed income funds

                 

American Funds Emerging Markets Bond Fund  

10114

13114

15114

46114

14114

16114

17114

N/A

N/A

American Funds Corporate Bond Fund  

1032

1332

1532

46032

1432

1632

1732

N/A

N/A

American Funds Inflation Linked Bond Fund 

1060

1360

1560

46060

1460

1660

1760

N/A

N/A

American Funds Mortgage Fund 

1042

1342

1542

46042

1442

1642

1742

N/A

N/A

American Funds Multi-Sector Income Fund 

10126

13126

15126

46126

14126

16126

17126

N/A

N/A

American Funds Strategic Bond Fund 

10112

13112

15112

46112

14112

16112

17112

N/A

N/A

American High-Income Trust 

1021

1321

1521

46021

1421

1621

1721

N/A

N/A

The Bond Fund of America 

1008

1308

1508

46008

1408

1608

1708

N/A

N/A

Capital World Bond Fund 

1031

1331

1531

46031

1431

1631

1731

N/A

N/A

Intermediate Bond Fund of America 

1023

1323

1523

46023

1423

1623

1723

N/A

N/A

Short-Term Bond Fund of America 

1048

1348

1548

46048

1448

1648

1748

N/A

N/A

U.S. Government Securities Fund 

1022

1322

1522

46022

1422

1622

1722

N/A

N/A

Money market fund

   

 

           

American Funds U.S. Government
Money Market Fund 

1059

1359

1559

46059

1459

1659

1759

48059

60059

SMALLCAP World Fund — Page 92


                 
 

Fund numbers

Fund

Class
R-1

Class
R-2

Class
R-2E

Class
R-3

Class
R-4

Class
R-5E

Class
R-5

Class
R-6

Stock and stock/fixed income funds

               

AMCAP Fund 

2102

2202

4102

2302

2402

2702

2502

2602

American Balanced Fund 

2111

2211

4111

2311

2411

2711

2511

2611

American Funds Developing World Growth and Income Fund 

21100

22100

41100

23100

24100

27100

25100

26100

American Funds Global Balanced Fund 

2137

2237

4137

2337

2437

2737

2537

2637

American Funds Global Insight Fund

21122

22122

41122

23122

24122

27122

25122

26122

American Funds International Vantage Fund 

21123

22123

41123

23123

24123

27123

25123

26123

American Mutual Fund 

2103

2203

4103

2303

2403

2703

2503

2603

Capital Income Builder 

2112

2212

4112

2312

2412

2712

2512

2612

Capital World Growth and Income Fund

2133

2233

4133

2333

2433

2733

2533

2633

EuroPacific Growth Fund 

2116

2216

4116

2316

2416

2716

2516

2616

Fundamental Investors 

2110

2210

4110

2310

2410

2710

2510

2610

The Growth Fund of America 

2105

2205

4105

2305

2405

2705

2505

2605

The Income Fund of America 

2106

2206

4106

2306

2406

2706

2506

2606

International Growth and Income Fund 

2134

2234

41034

2334

2434

27034

2534

2634

The Investment Company of America

2104

2204

4104

2304

2404

2704

2504

2604

The New Economy Fund 

2114

2214

4114

2314

2414

2714

2514

2614

New Perspective Fund 

2107

2207

4107

2307

2407

2707

2507

2607

New World Fund 

2136

2236

4136

2336

2436

2736

2536

2636

SMALLCAP World Fund 

2135

2235

4135

2335

2435

2735

2535

2635

Washington Mutual Investors Fund 

2101

2201

4101

2301

2401

2701

2501

2601

Fixed income funds

               

American Funds Emerging Markets Bond Fund 

21114

22114

41114

23114

24114

27114

25114

26114

American Funds Corporate Bond Fund 

2132

2232

4132

2332

2432

2732

2532

2632

American Funds Inflation Linked Bond Fund 

2160

2260

4160

2360

2460

2760

2560

2660

American Funds Mortgage Fund 

2142

2242

4142

2342

2442

2742

2542

2642

American Funds Multi-Sector Income Fund 

21126

22126

41126

23126

24126

27126

25126

26126

American Funds Strategic Bond Fund 

21112

22112

41112

23112

24112

27112

25112

26112

American High-Income Trust 

2121

2221

4121

2321

2421

2721

2521

2621

The Bond Fund of America 

2108

2208

4108

2308

2408

2708

2508

2608

Capital World Bond Fund 

2131

2231

4131

2331

2431

2731

2531

2631

Intermediate Bond Fund of America

2123

2223

4123

2323

2423

2723

2523

2623

Short-Term Bond Fund of America 

2148

2248

4148

2348

2448

2748

2548

2648

U.S. Government Securities Fund 

2122

2222

4122

2322

2422

2722

2522

2622

Money market fund

               

American Funds U.S. Government
Money Market Fund 

2159

2259

4159

2359

2459

2759

2559

2659

SMALLCAP World Fund — Page 93


             
 

Fund numbers

Fund

Class A

Class C

Class T

Class F-1

Class F-2

Class F-3

American Funds Target Date Retirement Series®

           

American Funds 2065 Target Date Retirement FundSM

30185

33185

43185

34185

36185

37185

American Funds 2060 Target Date Retirement Fund®

083

383

43083

483

683

783

American Funds 2055 Target Date Retirement Fund®

082

382

43082

482

682

782

American Funds 2050 Target Date Retirement Fund®

069

369

43069

469

669

769

American Funds 2045 Target Date Retirement Fund®

068

368

43068

468

668

768

American Funds 2040 Target Date Retirement Fund®

067

367

43067

467

667

767

American Funds 2035 Target Date Retirement Fund®

066

366

43066

466

36066

766

American Funds 2030 Target Date Retirement Fund®

065

365

43065

465

665

765

American Funds 2025 Target Date Retirement Fund®

064

364

43064

464

664

764

American Funds 2020 Target Date Retirement Fund®

063

363

43063

463

663

763

American Funds 2015 Target Date Retirement Fund®

062

362

43062

462

662

762

American Funds 2010 Target Date Retirement Fund®

061

361

43061

461

661

761

                 
 

Fund numbers

Fund

Class
R-1

Class
R-2

Class
R-2E

Class
R-3

Class
R-4

Class
R-5E

Class
R-5

Class
R-6

American Funds Target Date Retirement Series®

               

American Funds 2065
Target Date Retirement FundSM

21185

22185

41185

23185

24185

27185

25185

26185

American Funds 2060
Target Date Retirement Fund®

2183

2283

4183

2383

2483

2783

2583

2683

American Funds 2055
Target Date Retirement Fund®

2182

2282

4182

2382

2482

2782

2582

2682

American Funds 2050
Target Date Retirement Fund®

2169

2269

4169

2369

2469

2769

2569

2669

American Funds 2045
Target Date Retirement Fund®

2168

2268

4168

2368

2468

2768

2568

2668

American Funds 2040
Target Date Retirement Fund®

2167

2267

4167

2367

2467

2767

2567

2667

American Funds 2035
Target Date Retirement Fund®

2166

2266

4166

2366

2466

2766

2566

2666

American Funds 2030
Target Date Retirement Fund®

2165

2265

4165

2365

2465

2765

2565

2665

American Funds 2025
Target Date Retirement Fund®

2164

2264

4164

2364

2464

2764

2564

2664

American Funds 2020
Target Date Retirement Fund®

2163

2263

4163

2363

2463

2763

2563

2663

American Funds 2015
Target Date Retirement Fund®

2162

2262

4162

2362

2462

2762

2562

2662

American Funds 2010
Target Date Retirement Fund®

2161

2261

4161

2361

2461

2761

2561

2661

SMALLCAP World Fund — Page 94


               
 

Fund numbers

Fund

Class
529-A

Class
529-C

Class
529-E

Class
529-T

Class
529-F-1

Class
529-F-2

Class
529-F-3

American Funds College Target Date Series®

             

American Funds College 2039 FundSM 

10136

13136

15136

46136

14136

16136

17136

American Funds College 2036 FundSM 

10125

13125

15125

46125

14125

16125

17125

American Funds College 2033 Fund® 

10103

13103

15103

46103

14103

16103

17103

American Funds College 2030 Fund® 

1094

1394

1594

46094

1494

1694

1794

American Funds College 2027 Fund® 

1093

1393

1593

46093

1493

1693

1793

American Funds College 2024 Fund® 

1092

1392

1592

46092

1492

1692

1792

American Funds College Enrollment Fund® 

1088

1388

1588

46088

1488

1688

1788

SMALLCAP World Fund — Page 95


             
 

Fund numbers

Fund

Class A

Class C

Class T

Class F-1

Class F-2

Class F-3

American Funds Portfolio SeriesSM

           

American Funds Global Growth PortfolioSM 

055

355

43055

455

655

755

American Funds Growth PortfolioSM 

053

353

43053

453

653

753

American Funds Growth and Income PortfolioSM 

051

351

43051

451

651

751

American Funds Moderate Growth and Income PortfolioSM 

050

350

43050

450

650

750

American Funds Conservative Growth and Income PortfolioSM 

047

347

43047

447

647

747

American Funds Tax-Aware Conservative
Growth and Income PortfolioSM 

046

346

43046

446

646

746

American Funds Preservation PortfolioSM 

045

345

43045

445

645

745

American Funds Tax-Exempt Preservation PortfolioSM

044

344

43044

444

644

744

                   
 

Fund numbers

Fund

Class
529-A

Class
529-C

Class
529-E

Class
529-T

Class
529-F-1

Class
529-F-2

Class
529-F-3

Class
ABLE-A

Class
ABLE-F-2

American Funds Global Growth Portfolio 

1055

1355

1555

46055

1455

1655

1755

48055

60055

American Funds Growth Portfolio 

1053

1353

1553

46053

1453

1653

1753

48053

60053

American Funds Growth and Income Portfolio 

1051

1351

1551

46051

1451

1651

1751

48051

60051

American Funds Moderate Growth and Income Portfolio 

1050

1350

1550

46050

1450

1650

1750

48050

60050

American Funds Conservative Growth and Income Portfolio 

1047

1347

1547

46047

1447

1647

1747

48047

60047

American Funds Tax-Aware Conservative Growth and Income Portfolio 

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

American Funds Preservation Portfolio 

1045

1345

1545

46045

1445

1645

1745

48045

60045

American Funds Tax-Exempt Preservation Portfolio 

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

                 
 

Fund numbers

Fund

Class
R-1

Class
R-2

Class
R-2E

Class
R-3

Class
R-4

Class
R-5E

Class
R-5

Class
R-6

American Funds Global Growth Portfolio 

2155

2255

4155

2355

2455

2755

2555

2655

American Funds Growth Portfolio 

2153

2253

4153

2353

2453

2753

2553

2653

American Funds Growth and Income Portfolio 

2151

2251

4151

2351

2451

2751

2551

2651

American Funds Moderate Growth and Income Portfolio 

2150

2250

4150

2350

2450

2750

2550

2650

American Funds Conservative Growth and Income Portfolio 

2147

2247

4147

2347

2447

2747

2547

2647

American Funds Tax-Aware Conservative
Growth and Income Portfolio 

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

American Funds Preservation Portfolio 

2145

2245

4145

2345

2445

2745

2545

2645

American Funds Tax-Exempt Preservation Portfolio

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

SMALLCAP World Fund — Page 96


             
 

Fund numbers

Fund

Class A

Class C

Class T

Class F-1

Class F-2

Class F-3

American Funds Retirement Income Portfolio SeriesSM

           

American Funds Retirement Income Portfolio – ConservativeSM 

30109

33109

43109

34109

36109

37109

American Funds Retirement Income Portfolio – ModerateSM 

30110

33110

43110

34110

36110

37110

American Funds Retirement Income Portfolio – EnhancedSM 

30111

33111

43111

34111

36111

37111

                 
 

Fund numbers

Fund

Class
R-1

Class
R-2

Class
R-2E

Class
R-3

Class
R-4

Class
R-5E

Class
R-5

Class
R-6

American Funds Retirement Income Portfolio – Conservative 

21109

22109

41109

23109

24109

27109

25109

26109

American Funds Retirement Income Portfolio – Moderate 

21110

22110

41110

23110

24110

27110

25110

26110

American Funds Retirement Income Portfolio – Enhanced 

21111

22111

41111

23111

24111

27111

25111

26111

SMALLCAP World Fund — Page 97


Appendix

The following descriptions of debt security ratings are based on information provided by Moody’s Investors Service, Standard & Poor’s Ratings Services and Fitch Ratings, Inc.

Description of bond ratings

Moody’s
Long-term rating scale

Aaa
Obligations rated Aaa are judged to be of the highest quality, subject to the lowest level of 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 judged to be medium-grade and subject to moderate credit risk and as such may possess certain speculative characteristics.

Ba
Obligations rated Ba are judged to be speculative 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 speculative and 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 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. Additionally, a “(hyb)” indicator is appended to all ratings of hybrid securities issued by banks, insurers, finance companies and securities firms.

SMALLCAP World Fund — Page 98


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 to a 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. The CC rating is used when a default has not occurred, but Standard & Poor’s expects default to be a virtual certainty, regardless of the anticipated time to default.

SMALLCAP World Fund — Page 99


C
An obligation rated C is currently highly vulnerable to nonpayment, and the obligation is expected to have lower relative seniority or lower ultimate recovery compared to obligations that are rated higher.

D
An obligation rated D is in default or in breach of an imputed promise. For non-hybrid capital instruments, the D rating category is used when payments on an obligation are not made on the date due, unless Standard & Poor’s believes that such payments will be made within five business days in the absence of a stated grace period or within the earlier of the stated grace period or 30 calendar days. The D rating also will be used upon the filing of a bankruptcy petition or the taking of similar action and where default on an obligation is a virtual certainty, for example due to automatic stay provisions. An obligation’s rating is lowered to D if it is subject to a distressed exchange offer.

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.

NR

This indicates that no rating has been requested, that there is insufficient information on which to base a rating, or that Standard & Poor’s does not rate a particular obligation as a matter of policy.

SMALLCAP World Fund — Page 100


Fitch Ratings, Inc.
Long-term credit ratings

AAA
Highest credit quality. AAA ratings denote the lowest expectation of default risk. They are assigned only in case of exceptionally strong capacity for payment of financial commitments. This capacity is highly unlikely to be adversely affected by foreseeable events.

AA
Very high credit quality. AA ratings denote expectations of very low default risk. They indicate very strong capacity for payment of financial commitments. This capacity is not significantly vulnerable to foreseeable events.

A
High credit quality. A ratings denote expectations of low default risk. The capacity for payment of financial commitments is considered strong. This capacity may, nevertheless, be more vulnerable to changes in circumstances or in economic conditions than is the case for higher ratings.

BBB
Good credit quality. BBB ratings indicate that expectations of default risk are low. The capacity for payment of financial commitments is considered adequate but adverse changes in circumstances and economic conditions are more likely to impair this capacity.

BB
Speculative. BB ratings indicate an elevated vulnerability to default risk, particularly in the event of adverse changes in business or economic conditions over time; however, business or financial flexibility exists which supports the servicing of financial commitments.

B
Highly speculative. B ratings indicate that material default risk is present, but a limited margin of safety remains. Financial commitments are currently being met; however, capacity for continued payment is vulnerable to deterioration in the business and economic environment.

CCC
Substantial credit risk. Default is a real possibility.

CC
Very high levels of credit risk. Default of some kind appears probable.

C
Exceptionally high levels of credit risk. Default is imminent or inevitable, or the issuer is in standstill. Conditions that are indicative of a C category rating for an issuer include:

· The issuer has entered into a grace or cure period following nonpayment of a material financial obligation;

· The issuer has entered into a temporary negotiated waiver or standstill agreement following a payment default on a material financial obligation; or

· Fitch Ratings otherwise believes a condition of RD or D to be imminent or inevitable, including through the formal announcement of a distressed debt exchange.

SMALLCAP World Fund — Page 101


RD
Restricted default. RD ratings indicate an issuer that in Fitch Ratings’ opinion has experienced an uncured payment default on a bond, loan or other material financial obligation but which has not entered into bankruptcy filings, administration, receivership, liquidation or other formal winding up procedure, and which has not otherwise ceased operating. This would include:

· The selective payment default on a specific class or currency of debt;

· The uncured expiry of any applicable grace period, cure period or default forbearance period following a payment default on a bank loan, capital markets security or other material financial obligation;

· The extension of multiple waivers or forbearance periods upon a payment default on one or more material financial obligations, either in series or in parallel; or

· Execution of a distressed debt exchange on one or more material financial obligations.

D
Default. D ratings indicate an issuer that in Fitch Ratings’ opinion has entered into bankruptcy filings, administration, receivership, liquidation or other formal winding up procedure, or which has otherwise ceased business.

Default ratings are not assigned prospectively to entities or their obligations; within this context, nonpayment on an instrument that contains a deferral feature or grace period will generally not be considered a default until after the expiration of the deferral or grace period, unless a default is otherwise driven by bankruptcy or other similar circumstance, or by a distressed debt exchange.

Imminent default typically refers to the occasion where a payment default has been intimated by the issuer, and is all but inevitable. This may, for example, be where an issuer has missed a scheduled payment, but (as is typical) has a grace period during which it may cure the payment default. Another alternative would be where an issuer has formally announced a distressed debt exchange, but the date of the exchange still lies several days or weeks in the immediate future.

In all cases, the assignment of a default rating reflects the agency’s opinion as to the most appropriate rating category consistent with the rest of its universe of ratings, and may differ from the definition of default under the terms of an issuer’s financial obligations or local commercial practice.

Note: The modifiers “+” or “–” may be appended to a rating to denote relative status within major rating categories. Such suffixes are not added to the AAA long-term rating category, or to categories below B.

SMALLCAP World Fund — Page 102


Description of commercial paper ratings

Moody’s

Global short-term rating scale

P-1

Issuers (or supporting institutions) rated Prime-1 have a superior ability to repay short-term debt obligations.

P-2

Issuers (or supporting institutions) rated Prime-2 have a strong ability to repay short-term debt obligations.

P-3

Issuers (or supporting institutions) rated Prime-3 have an acceptable ability to repay short-term obligations.

NP

Issuers (or supporting institutions) rated Not Prime do not fall within any of the Prime rating categories.

Standard & Poor’s

Commercial paper ratings (highest three ratings)

A-1

A short-term obligation rated A-1 is rated in the highest category by Standard & Poor’s. The obligor’s capacity to meet its financial commitment on the obligation is strong. Within this category, certain obligations are designated with a plus sign (+). This indicates that the obligor’s capacity to meet its financial commitment on these obligations is extremely strong.

A-2

A short-term obligation rated A-2 is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than obligations in higher rating categories. However, the obligor’s capacity to meet its financial commitment on the obligation is satisfactory.

A-3

A short-term obligation rated A-3 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.

SMALLCAP World Fund — Page 103


 

 

 

 

 

 

Investment portfolio September 30, 2021  
   
Industry sector diversification Percent of net assets

 

 

Country diversification by domicile   Percent of
net assets
United States     44.47 %
Eurozone*     7.18  
United Kingdom     7.14  
Sweden     6.92  
Japan     6.28  
India     4.88  
China     3.93  
Switzerland     2.69  
Canada     2.41  
Other countries     9.30  
Short-term securities & other assets less liabilities     4.80  
* Countries using the euro as a common currency; those represented in the fund’s portfolio are Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, the Netherlands, Slovenia and Spain.

 

Common stocks 93.48%   Shares     Value
(000)
 
Information technology 21.09%                
MongoDB, Inc., Class A1     1,906,121     $ 898,755  
RingCentral, Inc., Class A1     3,550,555       772,246  
Sinch AB1,2     25,109,900       483,878  
Cree, Inc.1     5,287,678       426,874  
eMemory Technology, Inc.2,3     6,073,334       425,376  
Smartsheet, Inc., Class A1     6,141,805       422,679  
Ceridian HCM Holding, Inc.1     2,851,343       321,118  
Netcompany Group AS, non-registered shares2,3     2,711,200       311,683  
Globant SA1     1,093,567       307,303  
Nordic Semiconductor ASA1,2     9,497,115       284,185  
SHIFT, Inc.1,2,3     1,328,300       281,192  
Kulicke and Soffa Industries, Inc.3     4,762,414       277,553  
EPAM Systems, Inc.1     439,983       251,002  
Silergy Corp.2     1,693,456       248,688  
Keywords Studios PLC1,2,3     6,039,907       237,154  
Paycom Software, Inc.1     476,750       236,349  
Money Forward, Inc.1,2,3,4     3,308,304       235,170  
Net One Systems Co., Ltd.2,3     6,879,958       226,584  
ALTEN SA, non-registered shares2     1,496,996       218,256  
Network International Holdings PLC1,2,3     43,999,813       215,255  
Lightspeed Commerce, Inc. SV, subordinate voting shares1     1,597,219       154,020  
Lightspeed Commerce, Inc. SV, subordinate voting shares (CAD denominated)1     580,600       56,025  
VisEra Technologies Co., Ltd.1,2,5,6     11,090,000       146,885  
VisEra Technologies Co., Ltd.1,2     2,993,000       47,193  
Asana, Inc., Class A1     1,858,335       192,970  
Teradata Corp.1     3,291,774       188,783  
Alteryx, Inc., Class A1     2,410,993       176,244  
Endava PLC, Class A (ADR)1     1,287,631       174,925  
Softcat PLC2     6,259,035       170,299  
Nuvei Corp., subordinate voting shares1     1,400,000       161,728  
Kingdee International Software Group Co., Ltd.1,2     46,106,093       152,640  
Rapid7, Inc.1     1,345,069       152,020  
MKS Instruments, Inc.     964,988       145,626  
Nagarro SE1,2,3,4     823,468       144,449  
Marvell Technology, Inc.     2,368,818       142,863  
SUMCO Corp.2,4     7,001,074       140,566  
Bottomline Technologies (de), Inc.1,3     3,574,300       140,399  
Okta, Inc., Class A1     581,800       138,084  
Jamf Holding Corp.1     3,482,000       134,127  
Megaport, Ltd.1,2,3     11,040,000       132,815  
Computer Age Management Services, Ltd.2,3     3,163,383       128,344  
GB Group PLC2,3     10,893,800       125,523  
BE Semiconductor Industries NV2     1,588,880       125,436  

 

6 SMALLCAP World Fund
 
Common stocks (continued)   Shares     Value
(000)
 
Information technology (continued)                
PAR Technology Corp.1,3,4     2,039,163     $ 125,429  
Qorvo, Inc.1     741,404       123,955  
Global Unichip Corp.2,3     6,965,000       122,936  
Vitec Software Group AB, Class B2     2,228,800       121,713  
Dye & Durham, Ltd.3     3,731,197       121,192  
Euronet Worldwide, Inc.1     939,416       119,569  
CDW Corp.     650,000       118,313  
Olo, Inc., Class A1,4     3,870,830       116,241  
Tanla Platforms, Ltd.2,3     9,190,777       112,334  
Fabrinet, non-registered shares1     1,095,031       112,252  
Novanta, Inc.1     709,983       109,692  
Viavi Solutions, Inc.1     6,642,608       104,555  
Appfolio, Inc., Class A1     832,156       100,192  
EVERTEC, Inc.     2,131,730       97,463  
Bentley Systems, Inc., Class B4     1,586,700       96,217  
Halma PLC2     2,521,862       96,198  
Elastic NV, non-registered shares1     618,500       92,150  
Coforge, Ltd.2     1,297,186       91,431  
Justsystems Corp.2     1,617,921       91,297  
MACOM Technology Solutions Holdings, Inc.1     1,387,000       89,975  
Ideagen PLC2,3     20,183,901       86,794  
Comet Holding AG2     245,477       84,996  
LEM Holding SA2     36,500       84,124  
Appier Group, Inc.1,2,3,4     6,334,800       81,454  
Bytes Technology Group PLC1,2     11,798,581       80,157  
Hamamatsu Photonics KK2     1,289,450       79,990  
Avalara, Inc.1     451,914       78,981  
Concentrix Corp.1     428,914       75,918  
SimCorp AS2     641,250       75,529  
ON Semiconductor Corp.1     1,645,700       75,324  
Unimicron Technology Corp.2     16,174,000       75,290  
Crayon Group Holding ASA1,2     4,018,713       75,090  
Alarm.Com Holdings, Inc.1     951,000       74,359  
INFICON Holding AG2     61,865       72,462  
Repay Holdings Corp., Class A1     3,089,000       71,140  
Vanguard International Semiconductor Corp.2     13,107,394       70,519  
BlackLine, Inc.1     595,000       70,246  
Kainos Group PLC2     2,765,592       69,010  
Pegasystems, Inc.     542,025       68,891  
Advanced Energy Industries, Inc.     780,511       68,490  
Duck Creek Technologies, Inc.1     1,468,897       64,984  
Cognex Corp.     800,000       64,176  
Computer Services, Inc.     1,084,411       63,980  
TeamViewer AG1,2     2,163,770       63,802  
Paymentus Holdings, Inc., Class A1,4     2,587,864       63,765  
Dexerials Corp.2,3     3,231,400       63,639  
Semtech Corp.1     798,100       62,228  
Reply SpA2     337,320       62,141  
AIXTRON SE2     2,434,518       61,283  
Fortnox AB2     1,012,800       60,918  
Nayax, Ltd.1,2     15,122,000       59,877  
Zuken, Inc.2,3     1,625,000       59,358  
Hennge KK1,2,3,4     1,059,000       56,060  
Boku, Inc.1,2,3,4,7     20,461,639       53,644  
Avaya Holdings Corp.1     2,705,000       53,532  
Extreme Networks, Inc.1     5,323,397       52,435  
Cherry AG1,2,3     1,409,348       52,280  
Topicus.com, Inc., subordinate voting shares1     493,448       51,811  
IronNet, Inc., Class A1,2     3,130,000       51,766  
Thoughtworks Holding, Inc.1,2,7     1,975,505       51,612  
Flex, Ltd.1     2,917,808       51,587  
Aspen Technology, Inc.1     417,000       51,208  
Unifiedpost Group SA1,2,3     2,470,158       50,611  
CMC Materials, Inc.     371,355       45,762  
Silicon Laboratories, Inc.1     324,000       45,412  
NCR Corp.1     1,160,000       44,962  
Agora, Inc. (ADR)1,4     1,542,000       44,718  
LPKF Laser & Electronics AG, non-registered shares2,3,4     1,959,515       44,674  
Trimble, Inc.1     530,000       43,592  

 

SMALLCAP World Fund 7
 
Common stocks (continued)   Shares     Value
(000)
 
Information technology (continued)                
Bechtle AG, non-registered shares2     617,463     $ 42,362  
Paylocity Holding Corp.1     150,000       42,060  
Clear Secure, Inc., Class A1     982,666       40,338  
Pexip Holding ASA1,2     4,932,034       39,686  
SINBON Electronics Co., Ltd.2     4,594,000       38,699  
ams AG, non-registered shares1,2     2,096,900       38,283  
Plaid, Inc.1,2,4     1,432,350       37,772  
Disco Corp.2     131,500       36,809  
Anaplan, Inc.1     564,740       34,387  
SmartCraft ASA, Class A1,2,3     13,349,780       34,172  
Smaregi, Inc.1,2,3,4     1,129,200       34,016  
Insight Enterprises, Inc.1     373,300       33,627  
Maruwa Co., Ltd.2     323,400       33,036  
NHN KCP Corp.1,2     746,757       32,655  
Oneconnect Financial Technology Co., Ltd. (ADR)1,4     7,885,634       32,331  
Zendesk, Inc.1     273,000       31,774  
eCloudvalley Digital Technology Co., Ltd.2     2,519,174       30,937  
BigCommerce Holdings, Inc., Series 11,4     610,000       30,890  
Yeahka, Ltd.1,2,4     9,490,030       30,449  
Cloudflare, Inc., Class A1     264,395       29,784  
FDM Group (Holdings) PLC2     1,760,000       29,586  
EcoOnline Holding AS1,2,3,4     10,000,000       29,071  
Alkami Technology, Inc.1     1,167,053       28,803  
Vontier Corp.     850,000       28,560  
DoubleVerify Holdings, Inc.1,4     811,900       27,735  
Dock, Ltd.1,2,3,5,6     4,318,937       27,080  
BTRS Holdings, Inc., Class A1     2,480,000       26,387  
Nemetschek SE2     249,687       26,243  
SpiderPlus & Co.1,2,4     1,342,000       25,833  
Linklogis, Inc., Class B1,2,4     23,970,500       24,460  
Digital Turbine, Inc.1     350,000       24,062  
Pushpay Holdings, Ltd.1,2     17,654,124       22,413  
GlobalWafers Co., Ltd.2     777,000       21,949  
CCC Intelligent Solutions Holdings, Inc.1,4     2,048,595       21,531  
Blend Labs, Inc., Class A1,4     1,491,941       20,111  
WuXi Xinje Electric Co., Ltd., Class A2     2,755,858       19,588  
Lime Technologies AB2     500,526       19,557  
GMO Payment Gateway, Inc.2     153,000       19,384  
Renishaw PLC2     305,400       19,367  
LiveRamp Holdings, Inc.1     399,362       18,862  
Avast PLC2     2,458,818       18,802  
Zebra Technologies Corp., Class A1     36,300       18,710  
CDK Global, Inc.     423,077       18,002  
Venustech Group, Inc., Class A2     4,107,547       17,551  
Tokai Carbon Korea Co., Ltd.2     170,000       16,550  
CS Disco, Inc.1,4     334,240       16,023  
Adesso SE, non-registered shares2     76,300       15,447  
SiTime Corp.1     73,312       14,968  
BasWare OYJ1,2     380,200       14,232  
Coupa Software, Inc.1     61,500       13,480  
AAC Technologies Holdings, Inc.2,4     2,629,000       12,481  
SailPoint Technologies Holdings, Inc.1     286,700       12,294  
Similarweb, Ltd.1,4     571,900       11,970  
Fair Isaac Corp.1     29,100       11,580  
Patreon, Inc., Class B1,2,5,6     189,951       10,637  
Appen, Ltd.2     1,600,000       10,270  
LandMark Optoelectronics Corp.2     1,168,000       9,425  
NCC Group PLC2     2,721,218       9,393  
Accton Technology Corp. (Taiwan)2     803,000       7,550  
Atea ASA1,2     426,027       7,358  
Mensch und Maschine Software SE2     96,000       6,485  
Foursquare Labs, Inc., Series A1,2,5,6,7     1,970,385       6,423  
Jfrog, Ltd.1     178,400       5,976  
nCino, Inc.1     83,750       5,949  
BASE, Inc.1,2,4     589,700       5,771  
Yotpo, Ltd.1,2,5,6,7     2,620,102       5,763  
908 Devices, Inc.1,4     112,500       3,658  

 

8 SMALLCAP World Fund
 
Common stocks (continued)   Shares     Value
(000)
 
Information technology (continued)                
Maxlinear, Inc.1     69,308     $ 3,413  
Clearwater Analytics Holdings, Inc., Class A1     88,920       2,277  
91APP Inc.1,2     132,000       1,012  
              17,129,048  
                 
Industrials 17.79%                
IMCD NV2,3     3,519,136       668,138  
BayCurrent Consulting, Inc.2,3     1,243,200       624,379  
NIBE Industrier AB, Class B2     40,800,276       512,486  
Diploma PLC2,3     9,962,226       374,585  
VAT Group AG2     929,754       366,289  
Saia, Inc.1,3     1,466,641       349,105  
Rexnord Corp.     4,878,500       313,639  
Wizz Air Holdings PLC1,2     3,902,224       259,859  
Nihon M&A Center Holdings, Inc.2     8,812,160       259,672  
Interpump Group SpA2     3,880,325       251,341  
BELIMO Holding AG2     459,465       243,263  
Boyd Group Services, Inc.3,4     1,278,114       237,086  
Meggitt PLC1,2     22,994,288       228,314  
Nolato AB, Class B2     18,617,196       220,781  
Marel hf.2     31,700,083       219,671  
Spirax-Sarco Engineering PLC2     1,035,200       208,043  
Armstrong World Industries, Inc.     2,156,841       205,914  
Havells India, Ltd.2     11,010,155       203,284  
Stericycle, Inc.1     2,889,903       196,427  
Japan Airport Terminal Co., Ltd.2     3,834,400       189,109  
Visional, Inc.1,2,3     2,912,800       186,716  
Carel Industries SpA2,3     6,904,814       186,704  
Arcosa, Inc.3     3,515,410       176,368  
International Container Terminal Services, Inc.2     44,009,076       168,141  
MonotaRO Co., Ltd.2     7,408,200       167,168  
Japan Elevator Service Holdings Co., Ltd.2,3     7,100,154       163,396  
ManpowerGroup, Inc.     1,500,000       162,420  
Matson, Inc.     1,974,000       159,322  
Instalco AB2,3     3,457,000       158,007  
Harmonic Drive Systems, Inc.2,4     3,105,050       149,749  
Comfort Systems USA, Inc.3     1,921,479       137,040  
Chart Industries, Inc.1     710,000       135,688  
Willscot Mobile Mini Holdings Corp., Class A1     4,261,988       135,190  
Alfen NV1,2,3     1,280,554       134,619  
Generac Holdings, Inc.1     316,141       129,197  
Vicor Corp., Class A1     930,305       124,810  
TFI International, Inc. (CAD denominated)     1,130,000       115,605  
TFI International, Inc.     68,200       6,969  
TransDigm Group, Inc.1     190,000       118,668  
Kadant, Inc.     567,165       115,758  
Lifco AB, Class B2     4,195,000       112,288  
Sun Country Airlines Holdings, Inc.1,3     3,129,018       104,947  
Montana Aerospace AG1,2,3     2,772,283       98,830  
Atlas Corp.4     6,500,000       98,735  
Haitian International Holdings, Ltd.2     31,373,000       97,440  
Graco, Inc.     1,374,000       96,139  
Montrose Environmental Group, Inc.1,3     1,549,946       95,694  
Kajaria Ceramics, Ltd.2     5,664,940       90,696  
Masco Corp.     1,625,000       90,269  
Rocket Lab USA, Inc., Class A1,2,7     5,500,000       87,828  
DL E&C Co., Ltd.1,2     785,299       87,567  
Aalberts NV, non-registered shares2     1,518,000       86,688  
Cleanaway Waste Management, Ltd.2     42,502,998       84,646  
Medmix AG1,2     1,757,089       84,065  
IDEX Corp.     402,700       83,339  
TechnoPro Holdings, Inc.2     2,750,000       81,693  
Ceres Power Holdings PLC1,2     5,625,195       81,551  
Sweco AB, Class B, non-registered shares2     5,093,702       80,074  
Johns Lyng Group, Ltd.2,3,4     17,952,060       79,441  
Watsco, Inc.     300,000       79,386  
Shoals Technologies Group, Inc., Class A1     2,794,994       77,924  
Woodward, Inc.     649,000       73,467  

 

SMALLCAP World Fund 9
 
Common stocks (continued)   Shares     Value
(000)
 
Industrials (continued)                
EnPro Industries, Inc.     830,134     $ 72,321  
Quess Corp., Ltd.1,2     5,880,859       72,214  
Waste Connections, Inc.     570,000       71,780  
Kingspan Group PLC2     724,000       71,616  
Interface, Inc.3     4,721,060       71,524  
BWX Technologies, Inc.     1,311,500       70,637  
Marlowe PLC1,2,3     6,169,901       69,724  
ITM Power PLC1,2,4     11,964,657       69,195  
Sulzer AG2     724,289       68,586  
Trinity Industries, Inc.     2,513,238       68,285  
Hefei Meyer Optoelectronic Technology, Inc., Class A2     11,400,472       67,111  
Granite Construction, Inc.     1,677,000       66,325  
Fasadgruppen Group AB2,3     3,610,300       66,194  
Kratos Defense & Security Solutions, Inc.1     2,959,051       66,016  
Melrose Industries PLC2     27,747,591       64,208  
DO & CO AG, non-registered shares1,2,3     779,520       63,241  
Resideo Technologies, Inc.1     2,527,864       62,666  
easyJet PLC1,2     6,905,475       61,514  
IR Japan Holdings, Ltd.2     561,900       61,321  
Midac Holdings Co., Ltd.1,2,4     1,245,600       58,547  
Cargotec OYJ, Class B, non-registered shares2     1,132,500       57,450  
Zhejiang Weixing New Building Materials Co., Ltd., Class A2     21,260,009       55,145  
Addtech AB, Class B2     3,093,403       54,757  
Textron, Inc.     780,000       54,452  
RWS Holdings PLC2     6,400,000       53,936  
John Bean Technologies Corp.     382,223       53,721  
ACV Auctions, Inc., Class A1     2,992,920       53,543  
CSW Industrials, Inc.     415,719       53,087  
Pegasus Hava Tasimaciligi AS1,2,3     6,057,223       52,880  
FTI Consulting, Inc.1     390,600       52,614  
Astral, Ltd.2     1,784,112       51,733  
Centre Testing International Group Co., Ltd.2     12,715,436       49,885  
Howden Joinery Group PLC2     4,143,379       49,574  
Guangzhou Baiyun International Airport Co., Ltd., Class A2     29,547,628       48,988  
AFRY AB, Class B2     1,553,500       47,371  
Barrett Business Services, Inc.3     610,765       46,577  
Indutrade AB2     1,653,822       45,938  
MDA, Ltd.1,4     3,426,600       44,016  
LIXIL Corp.2,4     1,483,100       43,097  
CoStar Group, Inc.1     500,000       43,030  
First Advantage Corp.1     2,250,000       42,863  
Driven Brands Holdings, Inc.1     1,430,000       41,313  
XP Power, Ltd.2     583,458       40,465  
Cummins India, Ltd.2     3,000,000       39,922  
Avon Protection PLC2     1,528,500       39,895  
Builders FirstSource, Inc.1     760,228       39,334  
Copa Holdings, SA, Class A1     482,000       39,225  
Controladora Vuela Compañía de Aviación, SAB de CV, ordinary participation certificates, Class A (ADR)1     1,785,000       38,931  
ESCO Technologies, Inc.     490,796       37,791  
Volution Group PLC2     5,658,600       37,413  
Voltronic Power Technology Corp.2     610,000       37,031  
G R Infraprojects, Ltd.1,2     1,461,700       36,585  
Upwork Inc.1     777,246       34,999  
Advanced Drainage Systems, Inc.     323,056       34,945  
Rumo SA1     10,443,335       32,198  
The AZEK Co., Inc., Class A1     864,400       31,577  
CAE, Inc.1     1,052,600       31,447  
Simpson Manufacturing Co., Inc.     270,449       28,930  
Troax Group AB2     747,300       28,555  
Sterling Check Corp.1     1,085,000       28,167  
IAA, Inc.1     491,500       26,821  
Grafton Group PLC2     1,437,900       24,468  
Momentus, Inc., Class A1,7     2,225,000       23,585  
Air Lease Corp., Class A     569,300       22,396  
Sdiptech AB, Class B1,2     444,849       21,581  
Froy ASA1,2,4     3,581,100       21,234  
Azelio AB1,2,3,4     5,786,000       20,939  
Lilium NV, Class A1,4     1,960,000       20,600  

 

10 SMALLCAP World Fund
 
Common stocks (continued)   Shares     Value
(000)
 
Industrials (continued)                
UFP Industries, Inc.     301,905     $ 20,524  
INVISIO AB2     950,000       18,797  
Munters Group AB2     2,272,660       18,610  
AirTAC International Group2     594,000       18,591  
Oshkosh Corp.     150,000       15,356  
Green Landscaping Group AB1,2,4     1,644,000       14,670  
Sitowise Group PLC1,2     1,530,182       13,990  
Nitto Boseki Co., Ltd.2     414,000       13,817  
Coor Service Management Holding AB2     1,450,000       13,744  
Einride AB1,2,3,5,6     391,089       13,640  
Otonomo Technologies Ltd.1,7     2,800,000       13,384  
Mersen SA2     337,489       12,466  
Imperial Logistics, Ltd.2     3,026,714       12,262  
Fluidra, SA, non-registered shares2     295,000       11,656  
Boa Vista Servicos SA     4,991,700       11,641  
Interroll Holding AG2     2,650       11,216  
Hexagon Purus ASA1,2,4     3,162,601       10,427  
JELD-WEN Holding, Inc.1     415,000       10,387  
Pyrum Innovations AG1,2     128,340       8,514  
ICF International, Inc.     60,182       5,374  
Kornit Digital Ltd.1     19,800       2,866  
              14,445,588  
                 
Consumer discretionary 17.35%                
Evolution AB2     7,916,558       1,203,384  
YETI Holdings, Inc.1,3     6,054,875       518,842  
Floor & Decor Holdings, Inc., Class A1     4,124,900       498,247  
Helen of Troy, Ltd.1,3     1,927,702       433,116  
TopBuild Corp.1,3     2,011,168       411,907  
IDP Education, Ltd.2     11,816,861       290,688  
Tube Investments of India, Ltd.2,3     15,422,242       288,934  
Thor Industries, Inc.     2,315,800       284,288  
zooplus AG, non-registered shares1,2,3     466,734       263,323  
Entain PLC1,2     8,978,173       257,009  
Wyndham Hotels & Resorts, Inc.     3,000,601       231,616  
Dollarama, Inc.4     5,010,000       217,314  
Kindred Group PLC (SDR)2,3     14,068,409       211,253  
Momo.com, Inc.2     3,587,717       208,334  
Food & Life Companies, Ltd.2     4,332,900       199,775  
DraftKings, Inc., Class A1,4     4,106,126       197,751  
Coursera, Inc.1     5,566,364       176,175  
Everi Holdings, Inc.1,3     7,048,606       170,435  
Jiumaojiu International Holdings, Ltd.2     56,428,000       170,335  
Pool Corp.     391,999       170,288  
Scientific Games Corp.1     2,004,204       166,489  
Red Rock Resorts, Inc., Class A1     3,142,436       160,956  
Watches of Switzerland Group PLC1,2,3     12,127,044       153,430  
Auction Technology Group PLC1,2,3     8,335,148       148,698  
BHG Group AB1,2,3     9,905,000       143,245  
Five Below, Inc.1     804,402       142,226  
Domino’s Pizza Group PLC2,3     24,475,815       129,598  
Shop Apotheke Europe NV, non-registered shares1,2,4     870,557       128,744  
Six Flags Entertainment Corp.1     2,986,240       126,915  
Bajaj Electricals, Ltd.1,2,3     7,218,607       126,568  
Bafang Electric (Suzhou) Co., Ltd., Class A2     3,058,340       123,490  
Moncler SpA2     2,015,000       123,239  
WH Smith PLC1,2     5,274,000       120,874  
Williams-Sonoma, Inc.     658,000       116,683  
Leslie’s, Inc.1     5,614,721       115,326  
KB Home     2,957,918       115,122  
Adient PLC1     2,752,000       114,070  
MIPS AB2     1,130,500       113,373  
Porch Group, Inc.1,3,4     6,412,252       113,369  
Inchcape PLC2     10,268,000       111,506  
SSP Group PLC1,2     30,015,488       110,967  
Frontdoor, Inc.1     2,566,763       107,547  
Wayfair, Inc., Class A1,4     416,000       106,292  
Mercari, Inc.1,2,4     1,930,000       106,250  

 

SMALLCAP World Fund 11
 
Common stocks (continued)   Shares     Value
(000)
 
Consumer discretionary (continued)                
Mattel, Inc.1     5,700,000     $ 105,792  
Lennar Corp., Class A     1,058,458       99,156  
Lennar Corp., Class B     21,169       1,643  
Kontoor Brands, Inc.     1,910,000       95,405  
Bright Horizons Family Solutions, Inc.1     678,549       94,603  
Norwegian Cruise Line Holdings, Ltd.1,4     3,397,628       90,751  
Bike24 Holding AG1,2,3     3,379,940       90,361  
Traeger, Inc.1,4     4,314,170       90,296  
Basic-Fit NV1,2,4     1,895,318       86,810  
Musti Group OYJ2,3     2,428,879       86,680  
Salvatore Ferragamo SpA1,2,4     4,163,958       84,775  
Domino’s Pizza, Inc.     176,500       84,183  
Hilton Grand Vacations, Inc.1     1,744,923       83,006  
Games Workshop Group PLC2     600,400       82,534  
Purple Innovation, Inc., Class A1,3     3,848,000       80,885  
Cary Group AB1,2,3     7,857,142       79,878  
Jumbo SA2     4,771,161       77,596  
Asbury Automotive Group, Inc.1     393,402       77,398  
Etsy, Inc.1     366,850       76,290  
Levi Strauss & Co., Class A     2,950,000       72,305  
Thule Group AB2     1,445,800       72,286  
Tongcheng-Elong Holdings, Ltd.1,2,4     30,072,200       71,872  
Nien Made Enterprise Co., Ltd.2     4,920,000       69,548  
Dr. Martens PLC1,2     13,072,600       69,163  
DESCENTE, Ltd.1,2     1,964,400       69,064  
Skechers USA, Inc., Class A1     1,550,000       65,286  
Strategic Education, Inc.     916,199       64,592  
ASOS PLC1,2     1,607,415       64,178  
Arco Platform, Ltd., Class A1,4     2,821,157       61,219  
Vroom, Inc.1,4     2,760,700       60,929  
B&M European Value Retail SA2     7,408,252       58,815  
MADE.com Group PLC1,2,3,4     31,119,580       58,379  
Polaris, Inc.     485,000       58,035  
Cairn Homes PLC2,3     43,970,000       57,942  
ThredUp Inc., Class A1,4     2,666,043       57,826  
Toll Brothers, Inc.     1,043,184       57,678  
Century Communities, Inc.     911,000       55,981  
Golden Entertainment, Inc.1     1,126,208       55,286  
OneSpaWorld Holdings, Ltd.1,3,4     5,353,108       53,370  
Flutter Entertainment PLC (EUR denominated)1,2     259,095       50,863  
China MeiDong Auto Holdings, Ltd.2     10,088,000       50,497  
Gourmet Master Co., Ltd.2,3     9,503,000       49,381  
M.D.C. Holdings, Inc.     1,044,930       48,819  
POYA International Co., Ltd.2     2,879,392       48,714  
RVRC Holding AB1,2,3     6,034,800       48,538  
Powerschool Holdings, Inc., Class A1,4     1,972,300       48,538  
Brunello Cucinelli SpA1,2     864,000       47,389  
Just Eat Takeaway (EUR denominated)1,2     638,400       46,520  
Darden Restaurants, Inc.     303,300       45,941  
Caesars Entertainment, Inc.1     400,000       44,912  
Lojas Quero-Quero SA3     14,974,560       44,684  
Westwing Group AG, non-registered shares1,2,3     1,179,296       44,293  
Grand Canyon Education, Inc.1     500,000       43,980  
Pets at Home Group PLC2     6,752,000       43,482  
Trainline PLC1,2     9,163,000       43,326  
Macy’s, Inc.     1,900,000       42,940  
D.R. Horton, Inc.     490,000       41,145  
Xometry, Inc., Class A1,4     703,250       40,556  
Cavco Industries, Inc.1     170,870       40,452  
AcadeMedia AB2,3     5,658,097       38,581  
Patrick Industries, Inc.     457,070       38,074  
MakeMyTrip, Ltd., non-registered shares1     1,284,769       34,933  
Cie. Plastic Omnium SA2     1,348,533       34,448  
Alpen Co., Ltd.2,4     1,130,000       31,227  
Countryside Properties PLC1,2     4,604,600       31,168  
JOANN, Inc.3,4     2,729,250       30,404  
Graham Holdings Co., Class B     50,000       29,458  
Elior Group SA1,2     3,719,000       29,366  
Melco International Development, Ltd.1,2,4     25,076,000       29,299  

 

12 SMALLCAP World Fund
 
Common stocks (continued)   Shares     Value
(000)
 
Consumer discretionary (continued)                
Beazer Homes USA, Inc.1,3     1,659,813     $ 28,632  
International Game Technology PLC1     1,082,000       28,478  
Mazda Motor Corp.1,2     3,264,000       28,423  
Nokian Renkaat OYJ2     738,000       26,185  
MGM China Holdings, Ltd.1,2     41,858,248       25,927  
LGI Homes, Inc.1     175,856       24,956  
Roland Corp.2     530,600       24,071  
Vail Resorts, Inc.1     71,000       23,718  
Americanas SA, ordinary nominative shares1     3,985,121       22,627  
Jamna Auto Industries, Ltd.2     17,988,741       21,529  
Central Automotive Products, Ltd.2     787,200       21,440  
Del Taco Restaurants, Inc.3     2,402,550       20,974  
Installed Building Products, Inc.     189,361       20,290  
Nordstrom, Inc.1     760,000       20,102  
Shoei Co., Ltd.2     434,400       19,567  
Smartfit Escola de Ginástica e Dança SA1     4,100,000       19,274  
Desenio Group AB1,2     5,669,027       19,095  
Leifheit AG, non-registered shares2,4     472,000       19,046  
Zhongsheng Group Holdings, Ltd.2     2,121,500       17,051  
The Original BARK Co.1,4     2,350,000       16,121  
Westlife Development, Ltd.1,2     1,928,968       14,706  
StockX, Inc.1,2,5,6     161,790       14,561  
Paltac Corp.2     313,300       14,161  
Relaxo Footwears, Ltd.2     890,000       13,607  
Playtech PLC1,2     1,933,410       12,267  
Aramark     356,556       11,716  
Puuilo OYJ1,2     1,271,372       11,181  
Goodyear Tire & Rubber Co. (USA)1     558,712       9,889  
Dutch Bros., Inc., Class A1     213,211       9,236  
Fox Factory Holding Corp.1     61,853       8,940  
Aston Martin Lagonda Global Holdings PLC1,2,4     331,981       8,450  
Royal Caribbean Cruises, Ltd.1     78,017       6,940  
Ace Hardware Indonesia Tbk PT2     69,376,900       6,123  
Bloomberry Resorts Corp.1,2     33,894,100       3,940  
Detsky Mir PJSC2     2,136,130       3,823  
OneWater Marine, Inc., Class A     34,641       1,393  
China Zenix Auto International, Ltd. (ADR)1     2,152,000       1,184  
Lojas Americanas SA, ordinary nominative shares     1,232,000       998  
BNN Technology PLC1,2,3,5     19,007,000       8
              14,092,336  
                 
Health care 17.26%                
Insulet Corp.1     2,884,282       819,799  
Molina Healthcare, Inc.1     2,407,600       653,206  
Biohaven Pharmaceutical Holding Co., Ltd.1     3,190,163       443,146  
NovoCure, Ltd.1     3,621,597       420,721  
Allakos, Inc.1,3     3,788,618       401,101  
CanSino Biologics, Inc., Class H1,2,4     10,124,804       356,605  
Agilon Health, Inc.1,2,7     13,114,300       329,977  
PolyPeptide Group AG1,2,3     2,408,747       306,892  
DexCom, Inc.1     552,500       302,140  
Notre Dame Intermédica Participações SA     21,680,129       297,031  
Amplifon SpA2     5,286,500       251,926  
Pacific Biosciences of California, Inc.1     9,754,575       249,229  
Vitrolife AB2     4,669,000       244,891  
Pharmaron Beijing Co., Ltd., Class H2     9,308,000       221,183  
AddLife AB, Class B2     5,990,168       217,359  
Centene Corp.1     3,437,674       214,201  
Cortexyme, Inc.1,3,4     2,242,561       205,553  
BICO Group AB, Class B1,2,4     3,233,528       192,639  
Ultragenyx Pharmaceutical, Inc.1     2,070,251       186,716  
Legend Biotech Corp. (ADR)1,4     3,689,400       186,536  
Bachem Holding AG, Class B2     242,844       184,809  
Max Healthcare Institute, Ltd.1,2     36,974,348       176,975  
GVS SpA2,3     12,299,081       174,811  
Nevro Corp.1     1,341,464       156,120  
Genus PLC2     2,108,000       154,518  
Silk Road Medical, Inc.1,3     2,774,630       152,688  

 

SMALLCAP World Fund 13
 
Common stocks (continued)   Shares     Value
(000)
 
Health care (continued)                
Integra LifeSciences Holdings Corp.1     2,128,347     $ 145,749  
Penumbra, Inc.1     508,744       135,580  
AbCellera Biologics, Inc.1,4     6,514,332       130,547  
Metropolis Healthcare, Ltd.2,3     3,491,571       126,134  
Revance Therapeutics, Inc.1,3,4     4,512,630       125,722  
Shockwave Medical, Inc.1     585,000       120,440  
Globus Medical, Inc., Class A1     1,531,007       117,306  
CONMED Corp.     875,287       114,514  
Zai Lab, Ltd. (ADR)1     1,071,005       112,873  
Health Catalyst, Inc.1     2,193,600       109,702  
ICON PLC1     411,406       107,797  
Arjo AB, Class B2     8,533,027       105,274  
Mani, Inc.2,3     5,367,004       102,420  
Laurus Labs, Ltd.2     12,245,000       100,895  
Pulmonx Corp.1,3,4     2,754,500       99,107  
Gland Pharma, Ltd.1,2     1,970,452       97,363  
Tandem Diabetes Care, Inc.1     778,500       92,937  
Vir Biotechnology, Inc.1     2,106,538       91,677  
Surgical Science Sweden AB1,2,3     3,271,137       89,512  
Ocumension Therapeutics1,2,3,4     37,102,000       88,719  
Novavax, Inc.1     411,000       85,204  
Exact Sciences Corp.1     890,000       84,950  
TG Therapeutics, Inc.1     2,450,200       81,543  
Warby Parker, Inc., Class A1     1,484,922       78,775  
CompuGroup Medical SE & Co. KGaA2     922,800       75,988  
Brii Biosciences, Ltd.1,2,7     12,989,542       59,974  
Brii Biosciences, Ltd.1,2     3,225,000       16,010  
Cano Health, Inc.1     5,979,714       75,823  
Alignment Healthcare, Inc.1,4     4,737,200       75,700  
Twist Bioscience Corp.1     704,000       75,307  
Addus HomeCare Corp.1,3     938,900       74,877  
Natera, Inc.1     643,000       71,656  
Carl Zeiss Meditec AG, non-registered shares2     368,406       70,818  
Zealand Pharma A/S1,2,3     2,414,836       69,352  
Amvis Holdings, Inc.2,4     960,900       68,450  
Hutchmed China, Ltd. (ADR)1     1,350,035       49,425  
Hutchmed China, Ltd.1,2,4     2,554,000       18,532  
Antares Vision SpA1,2,3,4     5,278,008       67,179  
Shandong Pharmaceutical Glass Co., Ltd., Class A2     14,613,776       67,149  
New Frontier Health Corp., Class A1,4     5,888,650       66,130  
Allogene Therapeutics, Inc.1     2,501,703       64,294  
Definitive Healthcare Corp., Class A1,4     1,500,000       64,245  
Medlive Technology Co., Ltd.1,2     12,905,000       61,612  
Inari Medical, Inc.1     757,410       61,426  
New Horizon Health, Ltd.1,2,4     13,361,335       58,291  
Poly Medicure, Ltd.2     4,511,022       56,170  
CRISPR Therapeutics AG1     495,405       55,451  
Fisher & Paykel Healthcare Corp., Ltd.2     2,510,000       55,190  
Oak Street Health, Inc.1,4     1,293,500       55,013  
Rubius Therapeutics, Inc.1     3,067,396       54,845  
Editas Medicine, Inc.1     1,300,000       53,404  
Nakanishi, Inc.2     2,255,800       51,499  
Guardant Health, Inc.1     409,500       51,192  
Revenio Group OYJ, non-registered shares2     792,790       50,282  
Hikma Pharmaceuticals PLC2     1,521,400       50,051  
Precision BioSciences, Inc.1,3     4,269,000       49,264  
Phreesia, Inc.1     795,384       49,075  
Adaptive Biotechnologies Corp.1     1,407,980       47,857  
Amedisys, Inc.1     317,400       47,324  
Seer, Inc., Class A1,4     1,370,000       47,306  
NuVasive, Inc.1     766,000       45,845  
Angelalign Technology, Inc.1,2     1,072,400       45,586  
Zentalis Pharmaceuticals, Inc.1     683,000       45,515  
Applied Molecular Transport, Inc.1,4     1,712,980       44,315  
Jacobio Pharmaceuticals Group Co., Ltd.1,2,4     18,436,500       44,028  
KRKA, dd, Novo mesto2     335,262       43,236  
Cellectis SA (ADR)1,3,4     2,214,336       27,923  
Cellectis SA, non-registered shares1,2,3     1,181,240       15,170  
Fagron NV2     2,126,554       41,424  

 

14 SMALLCAP World Fund
 
Common stocks (continued)   Shares     Value
(000)
 
Health care (continued)                
Adaptimmune Therapeutics PLC (ADR)1,3,4     8,002,700     $ 41,374  
Sosei Group Corp.1,2,4     2,359,600       40,224  
Inhibrx, Inc.1,4     1,200,000       39,972  
FIGS, Inc., Class A1,4     1,000,000       37,140  
Glaukos Corp.1     750,322       36,143  
Hypera SA, ordinary nominative shares     5,957,283       35,159  
CellaVision AB, non-registered shares2     789,300       35,088  
Haemonetics Corp.1     496,400       35,041  
Genetron Holdings, Ltd. (ADR)1     2,472,191       34,240  
Genomma Lab Internacional, SAB de CV, Series B1     35,953,000       34,121  
Medacta Group SA1,2     216,959       33,785  
Revolution Medicines, Inc.1     1,228,000       33,782  
Hikal, Ltd.2     4,140,000       33,297  
Encompass Health Corp.     443,400       33,273  
Menicon Co., Ltd.2,4     842,000       32,801  
Incyte Corp.1     474,000       32,602  
Ambu AS, Class B, non-registered shares2     1,070,500       31,621  
Syneos Health, Inc., Class A1     353,500       30,924  
Guangzhou Kingmed Diagnostics Group Co., Ltd., Class A2     1,949,981       30,881  
Xenon Pharmaceuticals, Inc.1,4     2,019,226       30,854  
Classys, Inc.2     1,829,323       30,726  
Hangzhou Tigermed Consulting Co., Ltd., Class A2     1,090,535       29,223  
Teladoc Health, Inc.1     230,000       29,166  
Olink Holding AB (ADR)1,4     1,177,156       28,546  
Cue Health, Inc.1,4     2,375,000       28,049  
Acerta Pharma BV1,2,5,6     195,556,815       27,730  
Sysmex Corp.2     220,300       27,214  
Creo Medical Group PLC1,2,3,4     11,533,623       26,954  
Asahi Intecc Co., Ltd.2     962,400       26,404  
Alnylam Pharmaceuticals, Inc.1     137,700       25,999  
Nordhealth AS, Class A1,2,3     5,120,000       25,989  
Dechra Pharmaceuticals PLC2     398,000       25,926  
Privia Health Group, Inc.1     1,098,000       25,869  
Strides Pharma Science, Ltd.1,2     2,980,558       23,528  
CM Hospitalar SA1     5,671,671       23,444  
Oncoclinicas do Brasil Servicos Medicos SA1     9,252,000       22,885  
Fleury SA, ordinary nominative shares     5,540,900       22,506  
OdontoPrev SA, ordinary nominative shares     6,925,700       20,933  
Quantum-SI, Inc., Class A1     2,500,000       20,850  
Chemed Corp.     42,000       19,535  
Autolus Therapeutics PLC (ADR)1,4     2,955,806       19,361  
Gracell Biotechnologies, Inc., Class A (ADR)1,4     1,388,988       19,265  
Signify Health, Inc., Class A1,4     1,000,000       17,870  
Adagene, Inc. (ADR)1,4     1,137,532       16,494  
Scholar Rock Holding Corp.1,4     475,000       15,684  
Acutus Medical, Inc.1,4     1,600,000       14,144  
Diagnósticos da América SA     1,728,463       13,813  
HBM Holdings, Ltd.1,2     15,992,000       13,732  
Certara, Inc.1     397,595       13,160  
Schrodinger, Inc.1     232,084       12,690  
Kronos Bio, Inc.1,4     600,000       12,576  
WIN-Partners Co., Ltd.2     1,402,700       12,330  
Global Blood Therapeutics, Inc.1     467,520       11,912  
Aveanna Healthcare Holdings, Inc.1     1,246,000       9,993  
Karuna Therapeutics, Inc.1     78,600       9,615  
Sana Biotechnology, Inc.1,4     426,000       9,593  
Pacific Edge, Ltd.1,2     8,703,703       9,313  
Deciphera Pharmaceuticals, Inc.1     270,000       9,175  
Cronos Group, Inc.1,4     1,585,000       8,947  
KRY International AB, Series A1,2,5,6     19,744       8,565  
Implantica AG, Class A (SDR)1,2     700,000       7,323  
Galapagos NV1,2     139,195       7,304  
Intervacc AB1,2,4     850,000       6,377  
Xvivo Perfusion AB1,2     135,500       5,952  
Talkspace, Inc., Class A1     1,554,641       5,674  
Bausch Health Companies, Inc.1     200,000       5,570  
IN8bio, Inc.1     800,000       5,520  
Innovage Holding Corp.1     825,300       5,455  
Bonesupport Holding AB1,2     1,200,000       5,432  

 

SMALLCAP World Fund 15
 
Common stocks (continued)   Shares     Value
(000)
 
Health care (continued)                
PetIQ, Inc., Class A1,4     181,500     $ 4,532  
Black Diamond Therapeutics, Inc.1,4     525,000       4,441  
Nanoform Finland PLC1,2     351,000       3,294  
Berkeley Lights, Inc.1     124,831       2,442  
Eargo, Inc.1,4     135,000       909  
              14,016,970  
                 
Financials 9.00%                
SVB Financial Group1     606,500       392,333  
Ares Management Corp., Class A     5,174,776       382,054  
Janus Henderson Group PLC     6,819,041       281,831  
Bridgepoint Group PLC1,2     37,280,545       254,040  
Trupanion, Inc.1,3     3,111,062       241,636  
East West Bancorp, Inc.     3,044,577       236,077  
Marqeta, Inc., Class B1,2,7     11,068,797       235,048  
First Republic Bank     1,141,825       220,235  
Aavas Financiers, Ltd.1,2,3     6,280,980       213,203  
Goosehead Insurance, Inc., Class A     1,310,968       199,647  
Essent Group, Ltd.     4,480,800       197,200  
AU Small Finance Bank, Ltd.1,2     11,857,100       183,848  
Independent Bank Group, Inc.3     2,213,646       157,257  
SouthState Corp.     2,099,211       156,748  
Capitec Bank Holdings, Ltd.2     1,242,943       150,193  
RenaissanceRe Holdings, Ltd.     1,058,600       147,569  
Enstar Group, Ltd.1     619,500       145,415  
Seacoast Banking Corporation of Florida3     4,106,901       138,854  
Focus Financial Partners, Inc., Class A1     2,640,931       138,306  
Cholamandalam Investment and Finance Co., Ltd.2     17,582,421       132,587  
TCS Group Holding PLC (GDR)2     1,407,625       128,162  
TCS Group Holding PLC (GDR)2,7     31,700       2,886  
Upstart Holdings, Inc.1     402,465       127,356  
Bajaj Finance, Ltd.2     1,202,961       123,494  
Eurobank Ergasias Services and Holdings SA1,2     130,196,554       121,913  
Western Alliance Bancorporation     1,100,128       119,716  
Radian Group, Inc.     4,910,751       111,572  
Live Oak Bancshares, Inc.     1,634,993       104,035  
Stifel Financial Corp.     1,477,350       100,401  
AJ Bell PLC2     18,325,000       98,351  
IIFL Wealth Management, Ltd.2     4,379,654       92,451  
Patria Investments, Ltd., Class A3     5,603,834       91,511  
Indian Energy Exchange, Ltd.2     10,468,727       90,165  
StepStone Group, Inc., Class A     1,853,600       79,038  
TMX Group, Ltd.     699,000       75,380  
Euronext NV2     585,333       66,052  
Banca Generali SpA1,2     1,416,423       62,119  
Valley National Bancorp     4,567,000       60,787  
Multi Commodity Exchange of India, Ltd.2     2,540,000       56,350  
SiriusPoint, Ltd.1     6,022,900       55,772  
PacWest Bancorp     1,220,000       55,290  
The Bank of N.T. Butterfield & Son, Ltd.     1,550,000       55,040  
NMI Holdings, Inc.1     2,147,927       48,565  
Uzabase, Inc.1,2,3     2,145,100       46,409  
MGIC Investment Corp.     3,101,550       46,399  
VZ Holding AG2     465,000       46,096  
Webster Financial Corp.     843,652       45,945  
Moelis & Co., Class A     719,000       44,485  
Korea Investment Holdings Co., Ltd.2     590,280       42,372  
City Union Bank, Ltd.2     19,531,129       41,253  
Antin Infrastructure Partners SA1,2     1,210,502       40,804  
Nova Ljubljanska Banka dd (GDR)2     2,360,226       39,733  
Hamilton Lane Inc., Class A     442,970       37,573  
Pine Labs Pte., Ltd.1,2,5,6     76,998       37,311  
Bolsa Mexicana de Valores, SAB de CV, Series A     19,002,880       36,567  
Umpqua Holdings Corp.     1,785,500       36,156  
EFG International AG2     4,814,800       34,893  
Artisan Partners Asset Management, Inc., Class A     705,000       34,489  
ICICI Securities, Ltd.2     3,293,062       33,576  
AssetMark Financial Holdings, Inc.1     1,350,000       33,575  

 

16 SMALLCAP World Fund
 
Common stocks (continued)   Shares     Value
(000)
 
Financials (continued)                
Funding Circle Holdings PLC1,2     14,713,073     $ 30,796  
Victory Capital Holdings, Inc., Class A4     812,000       28,428  
eGuarantee, Inc.2     1,268,348       28,201  
Alpha Services and Holdings SA1,2     22,170,967       27,786  
Hilltop Holdings, Inc.     850,000       27,770  
Archer Aviation, Inc., Class A1,2     3,134,336       26,163  
Linc AB1,2     2,358,208       24,001  
IIFL Finance Ltd.2     6,110,207       23,507  
Kinsale Capital Group, Inc.     144,120       23,304  
Hiscox, Ltd.2     2,060,606       23,166  
PT Bank Rakyat Indonesia Agroniaga Tbk1,2     147,804,400       22,887  
The Tel Aviv Stock Exchange, Ltd.2     4,312,024       22,856  
BOK Financial Corp.     250,368       22,420  
Aptus Value Housing Finance India, Ltd.1,2     5,246,052       22,365  
Qualitas Controladora, SAB de CV     4,600,000       21,080  
Open Lending Corp.1     575,641       20,763  
Regional, SAB de CV, Series A     3,522,159       20,271  
Close Brothers Group PLC2     881,900       18,223  
Silvergate Capital Corp., Class A1     137,900       15,927  
Hellenic Exchanges-Athens Stock Exchange SA2,3     3,500,000       13,967  
HDFC Asset Management Co., Ltd.2     319,780       12,489  
SBI Holdings, Inc.2     505,000       12,459  
Discovery, Ltd.1,2     899,883       8,177  
MJ Hudson Group PLC1,2     4,837,363       3,273  
              7,308,402  
                 
Consumer staples 3.28%                
Emmi AG2,3     318,222       328,323  
Ocado Group PLC1,2     10,398,813       231,284  
Simply Good Foods Co., Class A1,3     6,651,000       229,393  
Freshpet, Inc.1     1,169,632       166,895  
Monde Nissin Corp.1,2     450,277,767       165,531  
Fevertree Drinks PLC2     4,196,369       133,828  
Grocery Outlet Holding Corp.1,3     5,913,486       127,554  
Raia Drogasil SA, ordinary nominative shares     28,750,000       123,378  
Milbon Co., Ltd.2,3     1,828,900       112,067  
Kotobuki Spirits Co., Ltd.2     1,483,200       101,684  
BJ’s Wholesale Club Holdings, Inc.1     1,455,608       79,942  
AAK AB2     3,563,609       76,622  
COSMOS Pharmaceutical Corp.2     412,300       70,315  
Dole PLC1,4     3,721,980       63,125  
United Spirits, Ltd.1,2     4,506,665       51,352  
Zur Rose Group AG1,2     127,980       50,792  
Vector Group, Ltd.     3,971,496       50,637  
Hilton Food Group PLC2     3,062,967       48,255  
Sovos Brands, Inc.1,4     3,333,400       46,501  
Nu Skin Enterprises, Inc., Class A     1,100,000       44,517  
Performance Food Group Co.1     928,000       43,115  
Bakkafrost P/F2     517,500       42,606  
Varun Beverages, Ltd.2     2,973,313       35,895  
Sok Marketler Ticaret AS, non-registered shares2     27,025,951       35,839  
BidCorp, Ltd.1,2     1,640,857       35,288  
Fresh Del Monte Produce, Inc.     1,028,000       33,122  
Jonjee Hi-Tech Industrial and Commercial Holding Co., Ltd., Class A2     6,624,986       32,289  
Avenue Supermarts, Ltd.1,2     417,313       23,771  
PZ Cussons PLC2     6,017,310       18,200  
Hostess Brands, Inc., Class A1     1,010,000       17,544  
Nomad Foods, Ltd.1     500,000       13,780  
Century Pacific Food, Inc.2     25,901,000       13,528  
Icelandic Salmon AS1,2,4     515,000       8,379  
Beyond Meat, Inc.1,4     73,395       7,726  
              2,663,077  
                 
Communication services 2.36%                
Iridium Communications, Inc.1     4,256,695       169,629  
Iridium Communications, Inc.1,7     636,132       25,350  
New York Times Co., Class A     3,865,100       190,433  
Bandwidth, Inc., Class A1     1,687,700       152,366  

 

SMALLCAP World Fund 17
 
Common stocks (continued)   Shares     Value
(000)
 
Communication services (continued)                
JCDecaux SA1,2     5,744,911     $ 151,710  
Nordic Entertainment Group AB, Class B1,2     2,663,433       143,069  
Yandex NV, Class A1     1,530,000       121,926  
JOYY Inc., Class A (ADR)     1,782,000       97,707  
DIP Corp.2     2,401,400       91,426  
Daily Mail and General Trust PLC, Class A, nonvoting shares2     5,273,803       76,008  
YouGov PLC2     3,518,294       59,962  
Direct Marketing MIX, Inc.2,3     1,312,000       50,358  
Trustpilot AS1,2     9,251,489       48,066  
Future PLC1,2     945,924       46,379  
Zillow Group, Inc., Class C, nonvoting shares1     525,000       46,273  
Cable One, Inc.     25,321       45,910  
CTS Eventim AG & Co. KGaA1,2     471,400       35,669  
4imprint Group PLC2     866,001       34,979  
Zee Entertainment Enterprises, Ltd.2     7,932,200       32,370  
Tata Communications, Ltd.2     1,725,254       32,157  
Ascential PLC1,2     5,561,296       30,690  
Huuuge, Inc.1,2     2,977,596       30,545  
Pebble Group PLC1,2,3     13,396,071       28,975  
Paradox Interactive AB2     1,473,435       23,616  
Vimeo, Inc.1     786,700       23,105  
Playstudios, Inc., Class A1     4,500,000       20,520  
Hemnet Group AB1,2     886,257       17,117  
Capcom Co., Ltd.2     543,719       15,102  
Bambuser AB1,2     6,920,149       14,608  
Bengo4.com, Inc.1,2,4     241,100       13,876  
MTN Group, Ltd.1,2     1,458,066       13,684  
Boat Rocker Media, Inc.1,4     2,103,504       12,456  
Frontier Communications Parent, Inc.1     439,057       12,237  
Indus Towers, Ltd.2     2,202,579       9,063  
Skillz, Inc., Class A1,2,7     156,976       1,434  
              1,918,775  
                 
Materials 2.34%                
Navin Fluorine International, Ltd.2,3     3,654,309       180,182  
APL Apollo Tubes, Ltd.2,3     14,384,000       159,233  
CCL Industries, Inc., Class B, nonvoting shares     2,262,200       117,164  
Nanofilm Technologies International, Ltd.2,3     34,696,300       105,677  
PI Industries, Ltd.2     2,223,929       95,001  
JCU Corp.2,3,4     2,174,900       86,616  
MMG, Ltd.1,2     190,768,000       78,782  
LANXESS AG2     1,118,084       76,030  
SK Materials Co., Ltd.2     210,918       72,971  
Diversey Holdings, Ltd.1     4,199,000       67,352  
Alcoa Corp.1     1,260,000       61,664  
Re:NewCell AB1,2,3,4     2,462,272       61,257  
Lundin Mining Corp.     8,514,400       61,240  
Summit Materials, Inc., Class A1     1,853,320       59,251  
H.B. Fuller Co.     866,200       55,922  
Vidrala, SA, non-registered shares2     478,335       52,186  
Tronox Holdings PLC, Class A     2,068,000       50,976  
Aluflexpack AG1,2,3     1,309,666       45,884  
ACC, Ltd.2     1,377,000       41,761  
SSR Mining, Inc.     2,445,000       35,575  
Yamana Gold, Inc.4     8,881,000       35,169  
Allegheny Technologies, Inc.1     2,098,602       34,900  
Danimer Scientific, Inc., Class A1,4     2,074,887       33,904  
Croda International PLC2     267,795       30,581  
Berger Paints India, Ltd.1,2     2,500,993       27,252  
Arkema SA2     197,500       26,126  
Venator Materials PLC1,3     8,519,540       24,281  
Indigo Paints, Ltd.1,2     696,004       23,967  
Sandstorm Gold, Ltd.1     3,577,197       20,605  
Vinati Organics, Ltd.2     784,886       20,469  
Origin Materials, Inc., Class A1     2,500,000       17,025  
Gulf Oil Lubricants India, Ltd.2     1,476,661       11,620  

 

18 SMALLCAP World Fund
 
Common stocks (continued)   Shares     Value
(000)
 
Materials (continued)                
Fuso Chemical Co., Ltd.2     253,100     $ 11,470  
Gerdau SA (ADR)     2,011,500       9,897  
Shandong Sinocera Functional Material Co., Ltd., Class A2     949,821       6,050  
              1,898,040  
                 
Real estate 1.54%                
Altus Group, Ltd.3     3,539,988       172,723  
DigitalBridge Group, Inc. REIT, Class A1,4     24,048,774       145,014  
CIFI Ever Sunshine Services Group, Ltd.2,4     69,614,000       138,355  
Embassy Office Parks REIT2     22,010,000       100,196  
SRE Holdings Corp.1,2,3     1,162,500       82,123  
K-Fast Holding AB, Class B1,2,3,4     9,796,068       81,175  
Concentradora Fibra Danhos REIT, SA de CV     57,554,482       70,962  
MGM Growth Properties LLC REIT, Class A     1,767,000       67,676  
Real Matters, Inc.1,3     6,373,367       50,520  
JHSF Participações SA3     46,022,472       50,030  
Samhallsbyggnadsbolaget i Norden AB, Class B2     7,264,000       40,057  
Mindspace Business Parks REIT2     9,000,000       37,191  
FirstService Corp.     200,000       36,160  
Shimao Services Holdings, Ltd.2     16,829,000       34,555  
Redwood Trust, Inc. REIT     2,562,000       33,024  
Macrotech Developers, Ltd.1,2     2,331,038       32,877  
Douglas Emmett, Inc. REIT     910,000       28,765  
Genova Property Group AB1,2,3     2,126,731       28,296  
Americold Realty Trust REIT     217,800       6,327  
Park Hotels & Resorts, Inc. REIT1     270,400       5,175  
BR Malls Participacoes SA, ordinary nominative shares1     3,357,560       4,982  
Pebblebrook Hotel Trust REIT     219,000       4,908  
              1,251,091  
                 
Energy 1.19%                
Cimarex Energy Co.     1,971,000       171,871  
Pioneer Natural Resources Company     629,255       104,777  
Northern Oil and Gas, Inc.3,4     4,875,000       104,325  
New Fortress Energy, Inc., Class A4     2,340,000       64,935  
Denbury, Inc.1,4     855,000       60,064  
Vine Energy, Inc., Class A1,4     3,282,000       54,055  
APA Corp.     2,478,500       53,114  
Chesapeake Energy Corp.     817,500       50,350  
Cactus, Inc., Class A     1,300,791       49,066  
Renewable Energy Group, Inc.1     900,000       45,180  
Worley, Ltd.2     5,701,172       40,108  
Viper Energy Partners LP     1,455,000       31,792  
Magnolia Oil & Gas Corp., Class A     1,632,000       29,033  
Equitrans Midstream Corp.     2,736,742       27,751  
Venture Global LNG, Inc., Series C1,2,5,6,7     4,240       20,346  
Helmerich & Payne, Inc.     690,600       18,929  
Aegis Logistics, Ltd.2     5,285,594       16,057  
Savannah Energy PLC1,2,3,5     64,599,102       15,998  
Diamondback Energy, Inc.     50,000       4,733  
Petronet LNG, Ltd.2     1,384,229       4,421  
              966,905  
                 
Utilities 0.28%                
AC Energy Corp.2     567,933,920       125,420  
ENN Energy Holdings, Ltd.2     3,166,000       51,846  
Black Hills Corp.     379,000       23,786  
Neoenergia SA     5,959,000       16,753  
Hawaiian Electric Industries, Inc.     220,859       9,018  
Mytrah Energy, Ltd.1,2,3,5     10,418,000       140  
              226,963  
                 
Total common stocks (cost: $42,315,310,000)             75,917,195  

 

SMALLCAP World Fund 19
 
Preferred securities 1.47%   Shares     Value
(000)
 
Information technology 0.45%                
Avidxchange Holdings, Inc., Series F, preferred shares1,2,3,5,6     2,159,548     $ 141,386  
Patreon, Inc., Series E, preferred shares1,2,5,6     698,208       39,100  
Patreon, Inc., Series Seed, preferred shares1,2,5,6     163,096       9,133  
Outreach Corp., Series G, preferred shares1,2,5,6     1,554,053       45,483  
Gitlab, Inc., Series E, preferred shares1,2,5,6     1,044,048       42,378  
PsiQuantum, Corp., Series D, preferred shares1,2,5,6     1,334,542       35,000  
Credo Technology Group Holding, Ltd., Series D, 8.00% noncumulative preferred shares1,2,5,6   4,005,527       23,253  
Credo Technology Group Holding, Ltd., Series D+, 8.00% noncumulative preferred shares1,2,5,6     744,555       4,322  
Yotpo, Ltd., Series F, preferred shares1,2,5,6,7     8,332,809       18,329  
Yotpo, Ltd., Series B, preferred shares1,2,5,6,7     1,111,347       2,444  
Yotpo, Ltd., Series C, preferred shares1,2,5,6,7     1,057,985       2,327  
Yotpo, Ltd., Series A-1, preferred shares1,2,5,6,7     709,592       1,561  
Yotpo, Ltd., Series A, preferred shares1,2,5,6,7     345,899       761  
Yotpo, Ltd., Series C-1, preferred shares1,2,5,6,7     293,302       645  
Yotpo, Ltd., Series D, preferred shares1,2,5,6,7     163,552       360  
Yotpo, Ltd., Series B-1, preferred shares1,2,5,6,7     130,625       287  
              366,769  
                 
Industrials 0.41%                
Azul SA, preferred nominative shares (ADR)1     7,105,974       142,546  
Azul SA, preferred nominative shares1     771,000       5,155  
Relativity Space, Inc., Series D, preferred shares1,2,3,5,6     2,143,751       48,953  
Relativity Space, Inc., Series E, preferred shares1,2,3,5,6     464,197       10,600  
Einride AB, Series B, preferred shares1,2,3,5,6     1,334,588       46,547  
ABL Space Systems Co., Series B, preferred shares1,2,5,6     777,162       40,249  
WorkRise Technologies, Inc., Series E, preferred shares1,2,5,6     95,423       40,194  
              334,244  
                 
Health care 0.41%                
Sartorius AG, nonvoting non-registered preferred shares2     306,600       195,257  
Laronde, Inc., Series B, 6.00% preferred shares1,2,5,6     1,785,714       50,000  
KRY International AB, Series E, preferred shares1,2,5,6     114,059       49,478  
Bluestar Genomics, Inc., Series C, noncumulative preferred shares, 5.00% 20221,2,3,5,6     1,531,102       15,101  
PACT Pharma, Inc., Series C, 8.00% noncumulative preferred shares1,2,5,6     4,397,107       12,347  
Artiva Biotherapeutics, Inc., Series B, preferred shares1,2,5,6     636,364       7,000  
              329,183  
                 
Financials 0.10%                
PPRO Holding GMBS, Series B, 8.00% preferred shares1,2,3,5,6     13,618       54,312  
Pine Labs Pte., Ltd., Series J, cumulative preferred shares1,2,5,6     57,100       27,669  
              81,981  
                 
Consumer discretionary 0.10%                
Grove Collaborative, Inc., Series E, preferred shares1,2,5,6     2,611,018       27,311  
Cava Group, Inc., Series F, preferred shares1,2,5,6,7     664,364       26,395  
StockX, Inc., Series E-1, preferred shares1,2,5,6     222,222       20,000  
StockX, Inc., Series AA, preferred shares1,2,5,6     57,338       5,160  
StockX, Inc., Series B, preferred shares1,2,5,6     3,094       279  
              79,145  
                 
Total preferred securities (cost: $808,869,000)             1,191,322  
                 
Rights & warrants 0.18%                
Information technology 0.15%                
OPT Machine Vision Tech Co., Ltd., Class A, warrants, expire 20231,2,7     2,119,100       122,669  
Foursquare Labs, Inc., warrants, expire 20331,2,5,6     1,163,990       788  
              123,457  
                 
Consumer staples 0.02%                
Qingdao Richen Food Co., Ltd., Class A, warrants, expire 20221,2,7     2,415,300       15,743  
                 
Industrials 0.01%                
Momentus, Inc., warrants, expire 20261     2,225,000       5,930  
                 
Total rights & warrants (cost: $133,610,000)             145,130  
   
20 SMALLCAP World Fund
 
Convertible stocks 0.07%   Shares     Value
(000)
 
Communication services 0.05%                
Nextdoor, Inc., Series H, convertible preferred shares2,5,6,7     1,512,513     $ 39,680  
                 
Information technology 0.02%                
RealSelf, Inc., Series C, convertible preferred shares1,2,3,5,6     3,468,862       19,495  
                 
Total convertible stocks (cost: $49,833,000)             59,175  
                 
Short-term securities 5.99%                
Money market investments 5.18%                
Capital Group Central Cash Fund 0.06%3,9     42,099,081       4,210,329  
                 
Money market investments purchased with collateral from securities on loan 0.81%                
Capital Group Central Cash Fund 0.06%3,9,10     1,881,202       188,139  
Goldman Sachs Financial Square Government Fund, Institutional Shares 0.03%9,10     110,000,000       110,000  
Invesco Short-Term Investments Trust – Government & Agency Portfolio, Institutional Class 0.03%9,10   100,303,559       100,304  
BlackRock Liquidity Funds – FedFund, Institutional Shares 0.03%9,10     90,000,000       90,000  
Morgan Stanley Institutional Liquidity Funds – Government Portfolio, Institutional Class 0.03%9,10     50,000,000       50,000  
Fidelity Investments Money Market Government Portfolio, Class I 0.01%9,10     45,000,000       45,000  
State Street Institutional U.S. Government Money Market Fund, Premier Class 0.03%9,10     44,000,000       44,000  
RBC Funds Trust – U.S. Government Money Market Fund, RBC Institutional Class 1 0.03%9,10     27,000,000       27,000  
              654,443  
                 
Total short-term securities (cost: $4,864,428,000)             4,864,772  
Total investment securities 101.19% (cost: $48,172,050,000)             82,177,594  
Other assets less liabilities (1.19)%             (963,402 )
                 
Net assets 100.00%           $ 81,214,192  

 

Investments in affiliates3

 

    Value of
affiliates at
10/1/2020
(000)
    Additions
(000)
    Reductions
(000)
    Net
realized
gain (loss)
(000)
    Net
unrealized
appreciation
(depreciation)
(000)
    Value of
affiliates at
9/30/2021
(000)
    Dividend
income
(000)
 
Common stocks 21.48%                                                        
Information technology 4.97%                                                        
eMemory Technology, Inc.2   $ 71,353     $ 67,425     $ 327     $ 24     $ 286,901     $ 425,376     $ 1,634  
Netcompany Group AS, non-registered shares2     261,807       12,613       57,415       27,312       67,366       311,683       443  
SHIFT, Inc.1,2     149,519       58,714       26,227       17,426       81,760       281,192        
Kulicke and Soffa Industries, Inc.           243,679                   33,874       277,553       1,405  
Keywords Studios PLC1,2     53,740       161,461       12,201       (926 )     35,080       237,154        
Money Forward, Inc.1,2,4     71,443       112,753       15,559       8,096       58,437       235,170        
Net One Systems Co., Ltd.2     313,706       13,177       16,497       5,906       (89,708 )     226,584       4,716  
Network International Holdings PLC1,2     102,957       57,526       1,139       (98 )     56,009       215,255        
Nagarro SE1,2,4           90,960       14,512       5,292       62,709       144,449        
Bottomline Technologies (de), Inc.1     146,392       4,527                   (10,520 )     140,399        
Megaport, Ltd.1,2     139,672             11,403       8,522       (3,976 )     132,815        
Computer Age Management Services, Ltd.2     10,130       57,807                   60,407       128,344       1,232  
GB Group PLC2     96,159       2,979                   26,385       125,523       948  
PAR Technology Corp.1,4     39,764       69,755                   15,910       125,429        
Global Unichip Corp.2     41,928       31,303                   49,705       122,936       1,257  
   
SMALLCAP World Fund 21
 

Investments in affiliates3 (continued)

 

    Value of
affiliates at
10/1/2020
(000)
    Additions
(000)
    Reductions
(000)
    Net
realized
gain (loss)
(000)
    Net
unrealized
appreciation
(depreciation)
(000)
    Value of
affiliates at
9/30/2021
(000)
    Dividend
income
(000)
 
Dye & Durham, Ltd.   $ 23,232     $ 88,819     $ 9,922     $     $ 19,063     $ 121,192     $ 120  
Tanla Platforms, Ltd.2           59,312                   53,022       112,334       125  
Ideagen PLC2           79,031                   7,763       86,794       22  
Appier Group, Inc.1,2,4           99,220                   (17,766 )     81,454        
Dexerials Corp.2     18,537       24,099                   21,003       63,639       1,551  
Zuken, Inc.2     3,746       44,416                   11,196       59,358       295  
Hennge KK1,2,4           56,580       4,323       (6,524 )     10,327       56,060        
Boku, Inc.1,2,4,7           48,584                   5,060       53,644        
Cherry AG1,2           53,736                   (1,456 )     52,280        
Unifiedpost Group SA1,2     51,564       11,545                   (12,498 )     50,611        
LPKF Laser & Electronics AG, non-registered shares2,4     42,521       10,070                   (7,917 )     44,674       240  
SmartCraft ASA, Class A1,2           53,700       25,766             6,238       34,172        
Smaregi, Inc.1,2,4     14,647       4,476                   14,893       34,016        
EcoOnline Holding AS1,2,4           58,832       29,416             (345 )     29,071        
Dock, Ltd.1,2,5,6,11           26,000                   1,080       27,080        
CANCOM SE, non-registered shares1,2,12     148,833             143,317       1,835       (7,351 )            
Clear Secure, Inc., Class A1,12           34,844                   5,494              
Fortnox AB2,12     143,848             193,905       132,383       (21,408 )           285  
Nuvei Corp., subordinate voting shares1,7,12     83,460             58,727       7,331       (32,064 )            
Paya Holdings Inc., Class A1,12           26,378       25,583       (795 )                  
Paya Holdings Inc., Class A1,2,7,12           50,000       60,997       10,997                    
SimCorp AS2,12     287,448       10,103       213,130       69,337       (78,229 )           1,311  
Smartsheet, Inc., Class A1,12     339,768       7,161       62,402       27,654       110,498              
Tokai Carbon Korea Co., Ltd.2,12           141,455       83,145       (43,995 )     2,235             172  
Yext, Inc.1,12     107,110             126,131       34,785       (15,764 )            
                                              4,036,241          
Industrials 5.15%                                                        
IMCD NV2     419,005                         249,133       668,138       4,280  
BayCurrent Consulting, Inc.2     57,697       188,918       6,253       356       383,661       624,379       2,139  
Diploma PLC2     217,621       107,080       30,520             80,404       374,585       5,219  
Saia, Inc.1     134,364       79,240                   135,501       349,105        
Boyd Group Services, Inc.4     166,456       44,268       9,727       1,817       34,272       237,086       515  
Visional, Inc.1,2           137,690                   49,026       186,716        
Carel Industries SpA2     165,092       4,432       22,670       10,169       29,681       186,704       983  
Arcosa, Inc.     108,252       101,923       34,633       (10,073 )     10,899       176,368       648  
Japan Elevator Service Holdings Co., Ltd.2     97,944       33,586                   31,866       163,396       611  
Instalco AB2     71,427       12,304       4,253       1,115       77,414       158,007       1,107  
Comfort Systems USA, Inc.           134,795                   2,245       137,040       561  
Alfen NV1,2     81,133       15,756       9,497       3,387       43,840       134,619        
Sun Country Airlines Holdings, Inc.1           111,119       27,382       5,563       15,647       104,947        
Montana Aerospace AG1,2           157,364       78,682             20,148       98,830        
Montrose Environmental Group, Inc.1     18,794       40,090                   36,810       95,694        
Johns Lyng Group, Ltd.2,4           78,148                   1,293       79,441       364  
Interface, Inc.     9,547       43,730                   18,247       71,524       126  
Marlowe PLC1,2           106,481       45,941             9,184       69,724        
Fasadgruppen Group AB2           51,266       25,107             40,035       66,194       262  
DO & CO AG, non-registered shares1,2     8,882       42,909                   11,450       63,241        
Pegasus Hava Tasimaciligi AS1,2           59,540                   (6,660 )     52,880        
Barrett Business Services, Inc.     21,658       12,319                   12,600       46,577       733  
Azelio AB1,2,4     6,443       22,032                   (7,536 )     20,939        
   
22 SMALLCAP World Fund
 

Investments in affiliates3 (continued)

 

    Value of
affiliates at
10/1/2020
(000)
    Additions
(000)
    Reductions
(000)
    Net
realized
gain (loss)
(000)
    Net
unrealized
appreciation
(depreciation)
(000)
    Value of
affiliates at
9/30/2021
(000)
    Dividend
income
(000)
 
Einride AB1,2,5,6   $     $ 8,938     $     $     $ 4,702     $ 13,640     $  
Avon Protection PLC2,11,12     130,603       19,916       41,360       5,035       (74,299 )           947  
Bingo Industries Ltd.2,12     85,378             130,282       63,062       (18,158 )           566  
Grace Technology, Inc.12     50,981       6,989       39,750       (9,930 )     (8,290 )           168  
Granite Construction, Inc.12     40,979       12,088       48,572       9,421       52,409             1,190  
Greaves Cotton Ltd.1,2,12     13,291             13,277       (13,401 )     13,387              
Matson, Inc.12     87,156             13,713       5,815       80,064             2,046  
Meggitt PLC1,2,12     147,363       144,186       455,603       240,699       151,669              
                                              4,179,774          
Consumer discretionary 4.83%                                                        
YETI Holdings, Inc.1     226,417       74,713       9,137       3,309       223,540       518,842        
Helen of Troy, Ltd.1     126,272       269,374                   37,470       433,116        
TopBuild Corp.1     403,067       15,183       95,957       73,128       16,486       411,907        
Tube Investments of India, Ltd.2     50,583       122,873                   115,478       288,934       630  
zooplus AG, non-registered shares1,2     106,273       120       55,670       41,239       171,361       263,323        
Kindred Group PLC (SDR)2     52,539       95,433                   63,281       211,253       2,467  
Everi Holdings, Inc.1     39,528       30,141                   100,766       170,435        
Watches of Switzerland Group PLC1,2           120,138                   33,292       153,430        
Auction Technology Group PLC1,2           133,177       33,704             49,225       148,698        
BHG Group AB1,2     120,598       42,183       14,095       9,369       (14,810 )     143,245        
Domino’s Pizza Group PLC2     124,794             9,746       792       13,758       129,598       4,077  
Bajaj Electricals, Ltd.1,2     46,868       5,497                   74,203       126,568        
Porch Group, Inc.1,4           112,359                   1,010       113,369        
Bike24 Holding AG1,2           112,963       51,872             29,270       90,361        
Musti Group OYJ2     54,475       25,781       22,119       10,499       18,044       86,680       1,181  
Purple Innovation, Inc., Class A1     59,739       44,680                   (23,534 )     80,885        
Cary Group AB1,2           63,752                   16,126       79,878        
MADE.com Group PLC1,2,4           139,697       69,324             (11,994 )     58,379        
Cairn Homes PLC2     46,064             8,373       (2,130 )     22,381       57,942       1,377  
OneSpaWorld Holdings, Ltd.1,4     24,501       32,624       16,565       (10,301 )     23,111       53,370        
Gourmet Master Co., Ltd.2     20,424       21,835                   7,122       49,381       1,217  
RVRC Holding AB1,2           55,520                   (6,982 )     48,538        
Lojas Quero-Quero SA     22,356       21,171                   1,157       44,684       168  
Westwing Group AG, non-registered shares1,2     21,793       10,688                   11,812       44,293        
AcadeMedia AB2     65,102             22,134       10,191       (14,578 )     38,581       1,389  
JOANN, Inc.4           33,949                   (3,545 )     30,404       513  
Beazer Homes USA, Inc.1     21,910                         6,722       28,632        
Del Taco Restaurants, Inc.     11,793       10,803                   (1,622 )     20,974       250  
BNN Technology PLC1,2,5     8                        8      8       
Desenio Group AB1,2,12           105,620       31,544       (24,737 )     (30,244 )            
Evolution AB2,11,12     653,356       53,424       396,511       316,028       577,087             7,326  
GoCo Group PLC1,2,12     30,969             40,352       15,947       (6,564 )            
IDP Education, Ltd.2,12     194,977       8,493       84,771       24,857       98,786             918  
Shop Apotheke Europe NV, non-registered shares1,2,4,12     152,474       88,185       60,651       (27,534 )     (23,730 )            
Six Flags Entertainment Corp.1,12     80,059       23,016       62,655       8,716       77,779              
Strategic Education, Inc.12     138,028       36,129       81,784       (40,756 )     12,975             2,752  
Trainline PLC1,2,12     132,167             81,416       (12,636 )     5,211              
                                              3,925,700          
   
SMALLCAP World Fund 23
 

Investments in affiliates3 (continued)

 

    Value of
affiliates at
10/1/2020
(000)
    Additions
(000)
    Reductions
(000)
    Net
realized
gain (loss)
(000)
    Net
unrealized
appreciation
(depreciation)
(000)
    Value of
affiliates at
9/30/2021
(000)
    Dividend
income
(000)
 
Health care 2.80%                                                        
Allakos, Inc.1   $ 311,345     $ 36,487     $ 46,566     $ 7,586     $ 92,249     $ 401,101     $  
PolyPeptide Group AG1,2           190,386                   116,506       306,892        
Cortexyme, Inc.1,4     117,669       13,857       14,651       741       87,937       205,553        
GVS SpA2     160,421       46,987       40,835             8,238       174,811       1,876  
Silk Road Medical, Inc.1     166,923       39,040       21,490       3,002       (34,787 )     152,688        
Metropolis Healthcare, Ltd.2     94,292       1,049       15,897       8,689       38,001       126,134       426  
Revance Therapeutics, Inc.1,4     82,758       32,627                   10,337       125,722        
Mani, Inc.2     169,994             19,562       (3,044 )     (44,968 )     102,420       1,202  
Pulmonx Corp.1,4           117,526       19,010       5,905       (5,314 )     99,107        
Surgical Science Sweden AB1,2           69,733                   19,779       89,512        
Ocumension Therapeutics1,2,4     32,004       107,602       12,410             (38,477 )     88,719        
Addus HomeCare Corp.1     58,738       32,578                   (16,439 )     74,877        
Zealand Pharma A/S1,2     30,806       52,087                   (13,541 )     69,352        
Antares Vision SpA1,2,4     68       73,812                   (6,701 )     67,179        
Precision BioSciences, Inc.1     25,022       1,876                   22,366       49,264        
Cellectis SA (ADR)1,4     40,965                         (13,042 )     27,923        
Cellectis SA, non-registered shares1,2     21,878                         (6,708 )     15,170        
Adaptimmune Therapeutics PLC (ADR)1,4     74,405             5,007       (12,886 )     (15,138 )     41,374        
Creo Medical Group PLC1,2,4     8,578       19,019                   (643 )     26,954        
Nordhealth AS, Class A1,2           24,956                   1,033       25,989        
Acutus Medical, Inc.1,4,12     30,871       19,616       7,472       (5,340 )     (23,531 )            
Applied Molecular Transport, Inc.1,4,12     80,251       22,738       39,799       2,319       (21,194 )            
Autolus Therapeutics PLC (ADR)1,4,12     48,638       7,350       13,601       (32,392 )     9,366              
CellaVision AB, non-registered shares2,12     62,142             27,091       8,784       (8,747 )           71  
Fagron NV2,12     138,130       21,497       93,522       (4,052 )     (20,629 )           766  
Flexion Therapeutics, Inc.1,12     39,797             40,975       (10,331 )     11,509              
GW Pharmaceuticals PLC (ADR)1,12     175,171       4,916       394,059       227,741       (13,769 )            
Haemonetics Corp.1,12     313,334       65,100       238,230       (122,089 )     16,926              
Health Catalyst, Inc.1,12     120,624       11,597       67,889       26,453       18,917              
Kronos Bio, Inc.1,4,12           60,433       57,960       8,927       1,176              
Neovasc Inc.1,12     2,476             1,017       (2,520 )     1,061              
New Frontier Health Corp., Class A1,4,12     71,060       266,425       302,893       2,223       29,315              
NuCana PLC (ADR)1,12     18,948             9,694       (39,183 )     29,929              
Pacific Biosciences of California, Inc.1,12     135,169       23,064       189,339       165,435       114,900              
Revenio Group OYJ, non-registered shares2,12     63,690             28,336       16,542       (1,614 )           304  
WIN-Partners Co., Ltd.2,12     19,422             5,007       (1,536 )     (549 )           614  
Xenon Pharmaceuticals, Inc.1,4,12     22,353                         8,501              
                                              2,270,741          
Financials 1.11%                                                        
Trupanion, Inc.1     220,565       143,904       100,035       80,038       (102,836 )     241,636        
Aavas Financiers, Ltd.1,2     95,244       48,789       4,655       (680 )     74,505       213,203        
Independent Bank Group, Inc.     19,262       118,783                   19,212       157,257       2,018  
Seacoast Banking Corporation of Florida     64,582       15,185                   59,087       138,854       1,016  
Patria Investments, Ltd., Class A           111,188       18,078       (1,386 )     (213 )     91,511       590  
Uzabase, Inc.1,2     69,504       7,691                   (30,786 )     46,409        
Hellenic Exchanges-Athens Stock Exchange SA2           17,185                   (3,218 )     13,967       406  
Greenhill & Co., Inc.12     13,276             12,953       (25,173 )     24,850             58  
Cannae Holdings, Inc.1,12     273,210             276,285       110,828       (107,753 )            
                                              902,837          
   
24 SMALLCAP World Fund
 

Investments in affiliates3 (continued)

 

    Value of
affiliates at
10/1/2020
(000)
    Additions
(000)
    Reductions
(000)
    Net
realized
gain (loss)
(000)
    Net
unrealized
appreciation
(depreciation)
(000)
    Value of
affiliates at
9/30/2021
(000)
    Dividend
income
(000)
 
Consumer staples 0.98%                                                        
Emmi AG2   $ 315,972     $ 8,871     $ 7,740     $ 44     $ 11,176     $ 328,323     $ 4,601  
Simply Good Foods Co., Class A1     146,655                         82,738       229,393        
Grocery Outlet Holding Corp.1     181,783       123,172       60,973       (15,630 )     (100,798 )     127,554        
Milbon Co., Ltd.2     54,206       48,289                   9,572       112,067       748  
Hotel Chocolat Group PLC1,12     34,294             37,776       375       3,107              
                                              797,337          
Communication services 0.10%                                                        
Direct Marketing MIX, Inc.2     23,937       10,307                   16,114       50,358       60  
Pebble Group PLC1,2     13,569                         15,406       28,975        
Bambuser AB1,2,12           22,945       8,473       (1,545 )     1,681              
Iridium Communications, Inc.1,12     178,010             125,131       98,661       18,089              
Iridium Communications, Inc.1,7,12     16,272                         9,078              
Kamakura Shinsho, Ltd.12     20,275             23,020       (7,071 )     9,816             22  
                                              79,333          
Materials 0.82%                                                        
Navin Fluorine International, Ltd.2     105,113       16,629       16,081       9,460       65,061       180,182       552  
APL Apollo Tubes, Ltd.2           120,426       19,165       (240 )     58,212       159,233        
Nanofilm Technologies International Ltd.2           123,406       46,027       (2,732 )     31,030       105,677       256  
JCU Corp.2,4     60,133       23,050       10,223       3,780       9,876       86,616       1,012  
Re:NewCell AB1,2,4           35,361       7,374             33,270       61,257        
Aluflexpack AG1,2     23,928       24,678       9,353       2,111       4,520       45,884        
Venator Materials PLC1     15,195       1,275       79       (58 )     7,948       24,281        
Excelsior Mining Corp.1,12     6,572             6,037       (3,961 )     3,426              
Gulf Oil Lubricants India, Ltd.2,12     21,229       1,290       9,821       (3,513 )     2,435             440  
                                              663,130          
Real estate 0.57%                                                        
Altus Group, Ltd.     134,523       14,537                   23,663       172,723       1,590  
SRE Holdings Corp.1,2           43,823                   38,300       82,123        
K-Fast Holding AB, Class B1,2,4     43,130                         38,045       81,175        
Real Matters, Inc.1           84,569                   (34,049 )     50,520        
JHSF Participações SA     49,903       8,262                   (8,135 )     50,030       1,956  
Genova Property Group AB1,2     11,154       10,475                   6,667       28,296        
Cyrela Commercial Properties SA, ordinary nominative12     19,160             22,430       (17,375 )     20,645             944  
Foxtons Group PLC1,2,12     8,532             7,924       (3,692 )     3,084              
Mitre Realty Empreendimentos e Participações SA12     14,522             14,315       (14,172 )     13,965             523  
WHA Corp. PCL12     75,192             76,517       3,221       (1,896 )           759  
                                              464,867          
Energy 0.15%                                                        
Northern Oil and Gas, Inc.4           53,104                   51,221       104,325       360  
Savannah Energy PLC1,2,5     8,759                         7,239       15,998        
                                              120,323          
Utilities 0.00%                                                        
Mytrah Energy, Ltd.1,2,5     135                         5       140        
Total common stocks                                             17,440,423          
Preferred securities 0.39%                                                        
Information technology 0.17%                                                        
Avidxchange Holdings, Inc., Series F, preferred shares1,2,5,6,11     105,844                         35,542       141,386        
   
SMALLCAP World Fund 25
 

Investments in affiliates3 (continued)

 

    Value of
affiliates at
10/1/2020
(000)
    Additions
(000)
    Reductions
(000)
    Net
realized
gain (loss)
(000)
    Net
unrealized
appreciation
(depreciation)
(000)
    Value of
affiliates at
9/30/2021
(000)
    Dividend
income
(000)
 
Industrials 0.13%                                                        
Relativity Space, Inc., Series D, preferred shares1,2,5,6   $     $ 32,000     $     $     $ 16,953     $ 48,953     $  
Relativity Space, Inc., Series E, preferred shares1,2,5,6           10,600                         10,600        
Einride AB, Series B, preferred shares1,2,5,6           18,753                   27,794       46,547        
                                              106,100          
Health care 0.02%                                                        
Bluestar Genomics, Inc., Series C, noncumulative preferred shares, 5.00% 20221,2,5,6           15,101                         15,101        
Financials 0.07%                                                        
PPRO Holding GMBS, Series B, 8.00% preferred shares1,2,5,6           48,695                   5,617       54,312        
Consumer discretionary 0.00%                                                        
Made.com Design, Ltd., Series C-4, preferred shares1,2,12     46,537             41,328             (5,209 )            
Total preferred securities                                             316,899          
Rights & warrants 0.00%                                                        
Health care 0.00%                                                        
Neovasc Inc., warrants, expire 20251,2,12     47             1       1       (47 )            
Convertible stocks 0.02%                                                        
Information technology 0.02%                                                        
RealSelf, Inc., Series C, convertible preferred shares1,2,5,6     13,945                         5,550       19,495        
Short-term securities 5.41%                                                        
Money market investments 5.18%                                                        
Capital Group Central Cash Fund 0.06%9     1,519,845       11,057,082       8,366,573       (76 )     51       4,210,329       2,736  
Money market investments purchased with collateral from securities on loan 0.23%                                                        
Capital Group Central Cash Fund 0.06%9,10           188,13913                               188,139       14 
Total short-term securities                                             4,398,468          
Total 27.30%                           $ 1,475,767     $ 4,775,772     $ 22,175,285     $ 88,392  
   
1 Security did not produce income during the last 12 months.
2 Valued under fair value procedures adopted by authority of the board of directors. The total value of all such securities was $37,664,008,000, which represented 46.38% of the net assets of the fund. This amount includes $35,326,054,000 related to certain securities trading outside the U.S. whose values were adjusted as a result of significant market movements following the close of local trading.
3 Affiliate of the fund or part of the same “group of investment companies” as the fund, as defined under the Investment Company Act of 1940, as amended.
4 All or a portion of this security was on loan. The total value of all such securities was $1,104,669,000, which represented 1.36% of the net assets of the fund. Refer to Note 5 for more information on securities lending.
5 Value determined using significant unobservable inputs.
6 Acquired through a private placement 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 on the following page.
7 Acquired in a transaction exempt from registration under Rule 144A of the Securities Act of 1933. May be resold in the U.S. in transactions exempt from registration, normally to qualified institutional buyers. The total value of all such securities was $1,148,455,000, which represented 1.41% of the net assets of the fund.
8 Amount less than one thousand.
9 Rate represents the seven-day yield at 9/30/2021.
10 Security purchased with cash collateral from securities on loan. Refer to Note 5 for more information on securities lending.
11 This security changed its name during the reporting period.
12 Unaffiliated issuer at 9/30/2021.
13 Represents net activity. Refer to Note 5 for more information on securities lending.
14  Dividend income is included with securities lending income in the fund’s statement of operations and is not shown in this table.
   
26 SMALLCAP World Fund
 
Private placement securities   Acquisition
date(s)
  Cost
(000)
    Value
(000)
    Percent
of net
assets
 
VisEra Technologies Co., Ltd.   3/9/2021   $ 93,821     $ 146,885       .18 %
Avidxchange Holdings, Inc., Series F, preferred shares   12/26/2019     105,844       141,386       .17  
Pine Labs Pte., Ltd.   5/12/2021     28,710       37,311       .05  
Pine Labs Pte., Ltd., Series J, cumulative preferred shares   5/12/2021     21,290       27,669       .03  
Einride AB, Series B, preferred shares   3/23/2021-5/6/2021     18,753       46,547       .06  
Einride AB   7/16/2021-8/17/2021     8,938       13,640       .02  
Relativity Space, Inc., Series D, preferred shares   11/20/2020     32,000       48,953       .06  
Relativity Space, Inc., Series E, preferred shares   5/27/2021     10,600       10,600       .01  
Patreon, Inc., Series E, preferred shares   9/1/2020     11,944       39,100       .05  
Patreon, Inc., Class B   10/26/2020-10/27/2020     3,255       10,637       .01  
Patreon, Inc., Series Seed, preferred shares   9/16/2020     2,790       9,133       .01  
KRY International AB, Series E, preferred shares   5/13/2021     51,891       49,478       .06  
KRY International AB, Series A   5/13/2021     8,533       8,565       .01  
PPRO Holding GMBS, Series B, 8.00% preferred shares   1/28/2021     48,694       54,312       .07  
Laronde, Inc., Series B, 6.00% preferred shares   8/10/2021     50,000       50,000       .06  
Outreach Corp., Series G, preferred shares   5/27/2021     45,483       45,483       .06  
Gitlab, Inc., Series E, preferred shares   9/11/2019     19,450       42,378       .05  
ABL Space Systems Co., Series B, preferred shares   3/24/2021     35,000       40,249       .05  
WorkRise Technologies, Inc., Series E, preferred shares   3/8/2021     40,000       40,194       .05  
StockX, Inc., Series E-1, preferred shares   4/15/2021     20,000       20,000       .03  
StockX, Inc.   4/5/2021     14,682       14,561       .02  
StockX, Inc., Series AA, preferred shares   4/5/2021     5,203       5,160       .01  
StockX, Inc., Series B, preferred shares   4/5/2021     281       279       .00  
Nextdoor, Inc., Series H, convertible preferred shares   5/8/2019     30,833       39,680       .05  
PsiQuantum, Corp., Series D, preferred shares   5/28/2021     35,000       35,000       .04  
Yotpo, Ltd., Series F, preferred shares   2/25/2021     18,329       18,329       .02  
Yotpo, Ltd.   3/16/2021     5,475       5,763       .01  
Yotpo, Ltd., Series B, preferred shares   3/16/2021     2,322       2,444       .00  
Yotpo, Ltd., Series C, preferred shares   3/16/2021     2,211       2,327       .00  
Yotpo, Ltd., Series A-1, preferred shares   3/16/2021     1,483       1,561       .00  
Yotpo, Ltd., Series A, preferred shares   3/16/2021     723       761       .00  
Yotpo, Ltd., Series C-1, preferred shares   3/16/2021     613       645       .00  
Yotpo, Ltd., Series D, preferred shares   3/16/2021     342       360       .00  
Yotpo, Ltd., Series B-1, preferred shares   3/16/2021     273       287       .00  
Acerta Pharma BV   5/7/2014     11,250       27,730       .03  
Credo Technology Group Holding, Ltd., Series D, 8.00% noncumulative preferred shares   3/20/2020     20,000       23,253       .03  
Credo Technology Group Holding, Ltd., Series D+, 8.00% noncumulative preferred shares   12/22/2020-5/6/2021     4,322       4,322       .01  
Grove Collaborative, Inc., Series E, preferred shares   11/3/2020     26,000       27,311       .03  
Dock, Ltd.   10/19/2020     26,000       27,080       .03  
Cava Group, Inc., Series F, preferred shares   3/26/2021     25,000       26,395       .03  
Venture Global LNG, Inc., Series C   5/1/2015     12,720       20,346       .03  
RealSelf, Inc., Series C, convertible preferred shares   4/18/2018     19,000       19,495       .02  
Bluestar Genomics, Inc., Series C, noncumulative preferred shares, 5.00% 2022   4/26/2021     15,101       15,101       .02  
PACT Pharma, Inc., Series C, 8.00% noncumulative preferred shares   2/7/2020     9,000       12,347       .02  
Foursquare Labs, Inc., Series A   12/3/2013     20,000       6,423       .01  
Foursquare Labs, Inc., warrants, expire 2033   12/3/2013           788       .00  
Artiva Biotherapeutics, Inc., Series B, preferred shares   2/24/2021     7,000       7,000       .01  
Total private placement securities       $ 970,159     $ 1,227,268       1.51 %
   
SMALLCAP World Fund 27
 

Key to abbreviations

ADR = American Depositary Receipts
CAD = Canadian dollars
EUR = Euros
GDR = Global Depositary Receipts
SDR = Swedish Depositary Receipts

 

See notes to financial statements.

 

28 SMALLCAP World Fund
 

Financial statements

 

Statement of assets and liabilities
at September 30, 2021 
(dollars in thousands)

 

Assets:            
Investment securities, at value (includes $1,104,669 of investment securities on loan):                
Unaffiliated issuers (cost: $32,629,279)   $ 60,002,309          
Affiliated issuers (cost: $15,542,771)     22,175,285     $ 82,177,594  
Cash             19,367  
Cash denominated in currencies other than U.S. dollars (cost: $3,708)             3,707  
Receivables for:                
Sales of investments     148,929          
Sales of fund’s shares     97,173          
Dividends     31,131          
Securities lending income     40          
Other     709       277,982  
              82,478,650  
Liabilities:                
Collateral for securities on loan             654,443  
Payables for:                
Purchases of investments     279,924          
Repurchases of fund’s shares     47,713          
Investment advisory services     41,955          
Services provided by related parties     19,281          
Directors’ deferred compensation     5,478          
Non-U.S. taxes     213,829          
Other     1,835       610,015  
Net assets at September 30, 2021           $ 81,214,192  
                 
Net assets consist of:                
Capital paid in on shares of capital stock           $ 41,212,643  
Total distributable earnings             40,001,549  
Net assets at September 30, 2021           $ 81,214,192  

 

See notes to financial statements.

 

SMALLCAP World Fund 29
 

Financial statements (continued) 

 

Statement of assets and liabilities
at September 30, 2021 (continued)
(dollars and shares in thousands, except per-share amounts)

 

Total authorized capital stock — 2,000,000 shares,
$.01 par value (913,861 total shares outstanding)

 

    Net assets     Shares
outstanding
    Net asset value
per share
 
Class A   $ 38,094,972       431,966     $ 88.19  
Class C     712,857       9,652       73.86  
Class T     18       *     89.14  
Class F-1     791,139       9,102       86.92  
Class F-2     10,659,498       117,916       90.40  
Class F-3     5,381,628       59,929       89.80  
Class 529-A     2,227,358       25,630       86.91  
Class 529-C     89,535       1,189       75.34  
Class 529-E     80,719       967       83.48  
Class 529-T     21       *     88.95  
Class 529-F-1     13       *     88.82  
Class 529-F-2     274,426       3,105       88.37  
Class 529-F-3     14       *     88.45  
Class R-1     35,809       467       76.62  
Class R-2     719,007       9,374       76.71  
Class R-2E     47,688       555       85.92  
Class R-3     978,394       11,766       83.16  
Class R-4     986,867       11,284       87.46  
Class R-5E     187,731       2,111       88.94  
Class R-5     509,739       5,538       92.04  
Class R-6     19,436,759       213,310       91.12  

 

* Amount less than one thousand.

 

See notes to financial statements.

 

30 SMALLCAP World Fund
 

Financial statements (continued)

 

Statement of operations
for the year ended September 30, 2021
(dollars in thousands)

 

Investment income:                
Income:                
Dividends (net of non-U.S. taxes of $29,445; also includes $88,392 from affiliates)   $ 394,540          
Securities lending income (net of fees)     24,413          
Interest     660     $ 419,613  
Fees and expenses*:                
Investment advisory services     436,726          
Distribution services     119,825          
Transfer agent services     57,759          
Administrative services     21,660          
Reports to shareholders     2,185          
Registration statement and prospectus     1,794          
Directors’ compensation     1,497          
Auditing and legal     331          
Custodian     9,162          
State and local taxes     1          
Other     2,469          
Total fees and expenses before waiver/reimbursement     653,409          
Less waiver/reimbursement of fees and expenses:                
Investment advisory services waiver     435          
Transfer agent services reimbursement     †         
Total fees and expenses after waiver/reimbursement             652,974  
Net investment loss             (233,361 )
                 
Net realized gain and unrealized appreciation:                
Net realized gain (loss) on:                
Investments (net of non-U.S. taxes of $23,301):                
Unaffiliated issuers     6,207,995          
Affiliated issuers     1,475,767          
Currency transactions     (2,829 )     7,680,933  
Net unrealized appreciation on:                
Investments (net of non-U.S. taxes of $212,332):                
Unaffiliated issuers     7,269,612          
Affiliated issuers     4,775,772          
Currency translations     1,189       12,046,573  
Net realized gain and unrealized appreciation             19,727,506  
Net increase in net assets resulting from operations           $ 19,494,145  

 

* Additional information related to class-specific fees and expenses is included in the notes to financial statements.
Amount less than one thousand.

 

See notes to financial statements.

 

SMALLCAP World Fund 31
 

Financial statements (continued)

 

Statements of changes in net assets
  (dollars in thousands)

 

    Year ended September 30,  
    2021       2020  
Operations:                
Net investment loss   $ (233,361 )   $ (69,462 )
Net realized gain     7,680,933       598,854  
Net unrealized appreciation     12,046,573       10,439,314  
Net increase in net assets resulting from operations     19,494,145       10,968,706  
                 
Distributions paid to shareholders     (1,036,458 )     (1,983,014 )
                 
Net capital share transactions     8,057,307       1,758,107  
                 
Total increase in net assets     26,514,994       10,743,799  
                 
Net assets:                
Beginning of year     54,699,198       43,955,399  
End of year   $ 81,214,192     $ 54,699,198  

 

See notes to financial statements.

 

32 SMALLCAP World Fund
 

Notes to financial statements

 

1. Organization

 

SMALLCAP World Fund, Inc. (the “fund”) is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end, diversified management investment company. The fund seeks to provide long-term growth of capital. Shareholders approved a proposal to reorganize the fund from a Maryland corporation to a Delaware statutory trust. The reorganization may be completed in the next year; however, the fund reserves the right to delay the implementation.

 

The fund has 21 share classes consisting of six retail share classes (Classes A, C, T, F-1, F-2 and F-3), seven 529 college savings plan share classes (Classes 529-A, 529-C, 529-E, 529-T, 529-F-1, 529-F-2 and 529-F-3) and eight retirement plan share classes (Classes R-1, R-2, R-2E, R-3, R-4, R-5E, R-5 and R-6). The 529 college savings plan share classes can be used to save for college education. The retirement plan share classes are generally offered only through eligible employer-sponsored retirement plans. The fund’s share classes are described further in the following table:

 

Share class   Initial sales charge   Contingent deferred sales
charge upon redemption
  Conversion feature
Classes A and 529-A   Up to 5.75% for Class A; up to 3.50% for Class 529-A   None (except 1.00% for certain redemptions within 18 months of purchase without an initial sales charge)   None
Classes C and 529-C   None   1.00% for redemptions within one year of purchase   Class C converts to Class A after eight years and Class 529-C converts to Class 529-A after five years
Class 529-E   None   None   None
Classes T and 529-T*   Up to 2.50%   None   None
Classes F-1, F-2, F-3, 529-F-1, 529-F-2 and 529-F-3   None   None   None
Classes R-1, R-2, R-2E, R-3, R-4, R-5E, R-5 and R-6   None   None   None
* Class T and 529-T shares are not available for purchase.

 

Holders of all share classes have equal pro rata rights to the assets, dividends and liquidation proceeds of the fund. 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, transfer agent and administrative 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 share class.

 

2. Significant accounting policies

 

The fund is an investment company that applies the accounting and reporting guidance issued in Topic 946 by the U.S. Financial Accounting Standards Board. The fund’s financial statements have been prepared to comply with U.S. generally accepted accounting principles (“U.S. GAAP”). These principles require the fund’s investment adviser to make estimates and assumptions that affect reported amounts and disclosures. Actual results could differ from those estimates. Subsequent events, if any, have been evaluated through the date of issuance in the preparation of the financial statements. The fund follows the significant accounting policies described in this section, as well as the valuation policies described in the next section on valuation.

 

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. In the event a security is purchased with a delayed payment date, the fund will segregate liquid assets sufficient to meet its payment obligations. 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), realized gains and losses and unrealized appreciation and depreciation are allocated daily among the various share classes based on their relative net assets. Class-specific fees and expenses, such as distribution, transfer agent and administrative services, are charged directly to the respective share class.

 

Distributions paid to shareholders — Income dividends and capital gain distributions are recorded on the ex-dividend date.

 

SMALLCAP World Fund 33
 

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 supplied by one or more pricing vendors 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. 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 in the fund’s statement of operations. 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.

 

3. Valuation

 

Capital Research and Management Company (“CRMC”), the fund’s investment adviser, values the fund’s investments at fair value as defined by U.S. GAAP. The net asset value per share is calculated once daily as of the close of regular trading on the New York Stock Exchange, normally 4 p.m. New York time, each day the New York Stock Exchange is open.

 

Methods and inputs — The fund’s investment adviser uses the following methods and inputs to establish the fair value of the fund’s assets and liabilities. Use of particular methods and inputs may vary over time based on availability and relevance as market and economic conditions evolve.

 

Equity securities are generally 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 on which the security trades.

 

Fixed-income securities, including short-term securities, are generally valued at prices obtained from one or more pricing vendors. Vendors value such securities based on one or more of the inputs described in the following table. The table provides examples of inputs that are commonly relevant for valuing particular classes of fixed-income securities in which the fund is authorized to invest. However, these classifications are not exclusive, and any of the inputs may be used to value any other class of fixed-income security.

 

Fixed-income class   Examples of standard inputs
All   Benchmark yields, transactions, bids, offers, quotations from dealers and trading systems, new issues, spreads and other relationships observed in the markets among comparable securities; and proprietary pricing models such as yield measures calculated using factors such as cash flows, financial or collateral performance and other reference data (collectively referred to as “standard inputs”)
Corporate bonds, notes & loans; convertible securities   Standard inputs and underlying equity of the issuer
Bonds & notes of governments & government agencies   Standard inputs and interest rate volatilities
Mortgage-backed; asset-backed obligations   Standard inputs and cash flows, prepayment information, default rates, delinquency and loss assumptions, collateral characteristics, credit enhancements and specific deal information

 

When the fund’s investment adviser deems it appropriate to do so (such as when vendor prices are unavailable or deemed to be not representative), fixed-income securities will be valued in good faith at the mean quoted bid and ask prices that are reasonably and timely available (or bid prices, if ask 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 generally valued in the manner described for either equity or fixed-income securities, depending on which method is deemed most appropriate by the fund’s investment adviser. The Capital Group Central Cash Fund (“CCF”), a fund within the Capital Group Central Fund Series (“Central Funds”), is valued based upon a floating net asset value, which fluctuates with changes in the value of CCF’s portfolio securities. The underlying securities are valued based on the policies and procedures in CCF’s statement of additional information.

 

Securities and other assets for which representative market quotations are not readily available or are considered unreliable by the fund’s investment adviser are fair valued as determined in good faith under fair valuation guidelines adopted by authority of the fund’s board of directors as further described. The investment adviser follows fair valuation guidelines, consistent with U.S. Securities and Exchange Commission rules and guidance, to consider relevant principles and factors when making fair value determinations. The investment adviser considers relevant indications of value that are reasonably and timely available to it in determining the fair value to be assigned to a particular security, such as 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. In addition, the closing prices of equity securities that trade in markets outside U.S. time zones may be adjusted to reflect significant events that occur after the close of local trading but before the net asset value of each share class of the fund is determined. Fair valuations and

 

34 SMALLCAP World Fund
 

valuations of investments that are not actively trading involve judgment and may differ materially from valuations that would have been used had greater market activity occurred.

 

Processes and structure — The fund’s board of directors has delegated authority to the fund’s investment adviser to make fair value determinations, subject to board oversight. The investment adviser has established a Joint Fair Valuation Committee (the “Fair Valuation Committee”) to administer, implement and oversee the fair valuation process, and to make fair value decisions. The Fair Valuation Committee regularly reviews its own fair value decisions, as well as decisions made under its standing instructions to the investment adviser’s valuation teams. The Fair Valuation Committee reviews changes in fair value measurements from period to period and may, as deemed appropriate, update the fair valuation guidelines to better reflect the results of back testing and address new or evolving issues. The Fair Valuation Committee reports any changes to the fair valuation guidelines to the board of directors. The fund’s board and audit committee also regularly review reports that describe fair value determinations and methods.

 

The fund’s investment adviser has also established a Fixed-Income Pricing Review Group to administer and oversee the fixed-income valuation process, including the use of fixed-income pricing vendors. This group regularly reviews pricing vendor information and market data. Pricing decisions, processes and controls over security valuation are also subject to additional internal reviews facilitated by the investment adviser’s global risk management group.

 

Classifications — The fund’s investment adviser classifies the fund’s assets and liabilities into three levels based on the inputs used to value the assets or liabilities. Level 1 values are based on quoted prices in active markets for identical securities. Level 2 values are based on significant observable market inputs, such as quoted prices for similar securities and quoted prices in inactive markets. Certain securities trading outside the U.S. may transfer between Level 1 and Level 2 due to valuation adjustments resulting from significant market movements following the close of local trading. Level 3 values are based on significant unobservable inputs that reflect the investment adviser’s determination of assumptions that market participants might reasonably use in valuing the securities. The valuation levels are not necessarily an indication of the risk or liquidity associated with the underlying investment. For example, U.S. government securities are reflected as Level 2 because the inputs used to determine fair value may not always be quoted prices in an active market. The following table presents the fund’s valuation levels as of September 30, 2021 (dollars in thousands):

 

    Investment securities  
    Level 1     Level 2     Level 3     Total  
Assets:                                
Common stocks:                                
Information technology   $ 9,395,931     $ 7,536,329     $ 196,788     $ 17,129,048  
Industrials     5,204,354       9,227,594       13,640       14,445,588  
Consumer discretionary     7,187,193       6,890,582       14,561       14,092,336  
Health care     8,847,064       5,133,611       36,295       14,016,970  
Financials     4,614,777       2,656,314       37,311       7,308,402  
Consumer staples     1,047,229       1,615,848             2,663,077  
Communication services     917,912       1,000,863             1,918,775  
Materials     684,925       1,213,115             1,898,040  
Real estate     676,266       574,825             1,251,091  
Energy     869,975       60,586       36,344       966,905  
Utilities     49,557       177,266       140       226,963  
Preferred securities     147,701       195,257       848,364       1,191,322  
Rights & warrants     5,930       138,412       788       145,130  
Convertible stocks                 59,175       59,175  
Short-term securities     4,864,772                   4,864,772  
Total   $ 44,513,586     $ 36,420,602     $ 1,243,406     $ 82,177,594  

 

The following table reconciles the valuation of the fund’s Level 3 investment securities and related transactions for the year ended September 30, 2021 (dollars in thousands):

 

    Beginning
value at
10/1/2020
    Transfers
into
Level 3*
      Purchases       Sales     Net
realized
loss
     Unrealized
appreciation
    Transfers
out of
Level 3*
    Ending
value at
9/30/2021
 
Investment securities   $ 706,252     $ 15,160     $ 850,698     $ (368,186 )   $ (55,118 )   $ 121,407     $ (26,807 )   $ 1,243,406  
Net unrealized appreciation during the year on Level 3 investment securities held at September 30, 2021   $ 241,291  

 

* Transfers into or out of Level 3 are based on the beginning market value of the quarter in which they occurred. These transfers are the result of changes in the availability of pricing sources and/or in the observability of significant inputs used in valuing the securities.
Net realized loss and unrealized appreciation are included in the related amounts on investments in the fund’s statement of operations.

 

SMALLCAP World Fund 35
 

Unobservable inputs — Valuation of the fund’s Level 3 securities is based on significant unobservable inputs that reflect the investment adviser’s determination of assumptions that market participants might reasonably use in valuing the securities. The following table provides additional information used by the fund’s investment adviser to fair value the fund’s Level 3 securities (dollars in thousands):

 

    Value at
9/30/2021
  Valuation
techniques
  Unobservable
inputs
  Range
(if applicable)
  Weighted
average*
  Impact to
valuation from
an increase in
input
        Liquidation value   N/A   N/A   N/A   N/A
        Transaction price   N/A   N/A   N/A   N/A
        Recent market
information
  Quoted price   N/A   N/A   N/A
    DLOM   5%-16%   15%   Decrease
        Expected proceeds   Discount rate   10%   10%   Decrease
    Expected proceeds   N/A   N/A   N/A
Common stocks   $ 335,079   Market comparable
companies
  Price/Cash flow multiple   9.2x   9.2x   Increase
            EV/Sales multiple   9.3x - 16.6x   14.4x   Increase
            Premium to EV/Sales multiple   20%   20%   Increase
            Discount to EV/Sales multiple   25% - 50%   45%   Decrease
            DLOM   25% - 30%   26%   Decrease
            $ per one billion Btu   $2.25   $2.25   Increase
            MMTPA   10 MMTPA   10 MMTPA   Increase
          Transaction price   N/A   N/A   N/A   N/A
            Premium to transaction price   15%   15%   Increase
          Market comparable
companies
  Price/Sales multiple   15.6x-19.3x   16.6x   Increase
            Discount to Price/Sales multiple   15%-53%   26%   Decrease
            EV/Sales multiple   2.4x - 21.1x   12.1x   Increase
Preferred securities     848,364     Adjustment based on market movement of comparables (increase)   2%   2%   Increase
            Premium to EV/Sales multiple   20%   20%   Increase
            Discount to EV/Sales multiple   54%   54%   Decrease
            Revenue growth rate   86%   86%   Increase
            DLOM   15%   15%   Decrease
Rights & warrants     788   Black-Scholes   Underlying common share price   N/A   N/A   N/A
    Implied volatility   30%   30%   Increase
Convertible stocks     59,175   Market comparable
companies
  EV/Sales multiple   16.2x   16.2x   Increase
    Discount to EV/Sales multiple   30%   30%   Decrease
    DLOM   21%   21%   Decrease
          Expected proceeds   Expected merger consideration   N/A   N/A   N/A
    DLOM   17%   17%   Decrease
    $ 1,243,406                    

 

* Weighted average is by relative fair value.
This column represents the directional change in fair value of the Level 3 securities that would result in an increase from the corresponding input. A decrease to the unobservable input would have the opposite effect. Significant increases and decreases in these inputs in isolation could result in significantly higher or lower fair value measurements.

 

Key to abbreviations

Btu = British thermal unit

DLOM = Discount for lack of marketability

EV = Enterprise value

MMTPA = Million metric tonnes per annum

 

4. Risk factors

 

Investing in the fund may involve certain risks including, but not limited to, those described below.

 

Market conditions — The prices of, and the income generated by, the securities held by the fund may decline – sometimes rapidly or unpredictably – due to various factors, including events or conditions affecting the general economy or particular industries; overall market changes; local, regional or global political, social or economic instability; governmental, governmental agency or central bank responses to economic conditions; and currency exchange rate, interest rate and commodity price fluctuations.

 

Economies and financial markets throughout the world are highly interconnected. Economic, financial or political events, trading and tariff arrangements, wars, terrorism, cybersecurity events, natural disasters, public health emergencies (such as the spread of infectious disease) and other circumstances in one country or region, including actions taken by governmental or quasi-governmental authorities in

 

36 SMALLCAP World Fund
 

response to any of the foregoing, could have impacts on global economies or markets. As a result, whether or not the fund invests in securities of issuers located in or with significant exposure to the countries affected, the value and liquidity of the fund’s investments may be negatively affected by developments in other countries and regions.

 

Issuer risks — The prices of, and the income generated by, securities held by the fund may decline in response to various factors directly related to the issuers of such securities, including reduced demand for an issuer’s goods or services, poor management performance, major litigation, investigations or other controversies related to the issuer, changes in government regulations affecting the issuer or its competitive environment and strategic initiatives such as mergers, acquisitions or dispositions and the market response to any such initiatives.

 

Investing in growth-oriented stocks — Growth-oriented common stocks and other equity-type securities (such as preferred stocks, convertible preferred stocks and convertible bonds) may involve larger price swings and greater potential for loss than other types of investments. These risks may be even greater in the case of smaller capitalization stocks.

 

Investing in small companies — Investing in smaller companies may pose additional risks. For example, it is often more difficult to value or dispose of small company stocks and more difficult to obtain information about smaller companies than about larger companies. Furthermore, smaller companies often have limited product lines, operating histories, markets and/or financial resources, may be dependent on one or a few key persons for management, and can be more susceptible to losses. Moreover, the prices of their stocks may be more volatile than stocks of larger, more established companies, particularly during times of market turmoil.

 

Investing outside the U.S. — Securities of issuers domiciled outside the U.S., or with significant operations or revenues outside the U.S., may lose value because of adverse political, social, economic or market developments (including social instability, regional conflicts, terrorism and war) in the countries or regions in which the issuers operate or generate revenue. These securities may also lose value due to changes in foreign currency exchange rates against the U.S. dollar and/or currencies of other countries. Issuers of these securities may be more susceptible to actions of foreign governments, such as nationalization, currency blockage or the imposition of price controls or punitive taxes, each of which could adversely impact the value of these securities. Securities markets in certain countries may be more volatile and/or less liquid than those in the U.S. Investments outside the U.S. may also be subject to different accounting and auditing practices and standards and different regulatory, legal and reporting requirements, and may be more difficult to value, than those in the U.S. In addition, the value of investments outside the U.S. may be reduced by foreign taxes, including foreign withholding taxes on interest and dividends. Further, there may be increased risks of delayed settlement of securities purchased or sold by the fund. The risks of investing outside the U.S. may be heightened in connection with investments in emerging markets.

 

Investing in emerging markets — Investing in emerging markets may involve risks in addition to and greater than those generally associated with investing in the securities markets of developed countries. For instance, emerging market countries tend to have less developed political, economic and legal systems and accounting and auditing practices and standards than those in developed countries. Accordingly, the governments of these countries may be less stable and more likely to intervene in the market economy, for example, by imposing capital controls, nationalizing a company or industry, placing restrictions on foreign ownership and on withdrawing sale proceeds of securities from the country, and/or imposing punitive taxes that could adversely affect the prices of securities. Information regarding issuers in emerging markets may be limited, incomplete or inaccurate, and there may be fewer rights and remedies available to the fund and its shareholders. In addition, the economies of these countries may be dependent on relatively few industries and may be more susceptible to changes in local and global trade conditions and downturns in the world economy. Securities markets in these countries can also be relatively small and have substantially lower trading volumes. As a result, securities issued in these countries may be more volatile and less liquid, and may be more difficult to value, than securities issued in countries with more developed economies and/or markets. Less certainty with respect to security valuations may lead to additional challenges and risks in calculating the fund’s net asset value. Additionally, emerging markets are more likely to experience problems with the clearing and settling of trades and the holding of securities by banks, agents and depositories that are less established than those in developed countries.

 

Liquidity risk — Certain fund holdings may be or may become difficult or impossible to sell, particularly during times of market turmoil. Liquidity may be impacted by the lack of an active market for a holding, legal or contractual restrictions on resale, or the reduced number and capacity of market participants to make a market in such holding. Market prices for less liquid or illiquid holdings may be volatile, and reduced liquidity may have an adverse impact on the market price of such holdings. Additionally, the sale of less liquid or illiquid holdings may involve substantial delays (including delays in settlement) and additional costs and the fund may be unable to sell such holdings when necessary to meet its liquidity needs or may be forced to sell at a loss.

 

Management — The investment adviser to the fund actively manages the fund’s investments. Consequently, the fund is subject to the risk that the methods and analyses, including models, tools and data, employed by the investment adviser in this process may be flawed or incorrect and may not produce the desired results. This could cause the fund to lose value or its investment results to lag relevant benchmarks or other funds with similar objectives.

 

SMALLCAP World Fund 37
 

5. Certain investment techniques

 

Securities lending — The fund has entered into securities lending transactions in which the fund earns income by lending investment securities to brokers, dealers or other institutions. Each transaction involves three parties: the fund, acting as the lender of the securities, a borrower, and a lending agent that acts as an intermediary.

 

Securities lending transactions are entered into by the fund under a securities lending agent agreement with the lending agent. The lending agent facilitates the exchange of securities between the fund and approved borrowers, ensures that securities loans are properly coordinated and documented, marks-to-market the value of collateral daily, secures additional collateral from a borrower if it falls below preset terms, and may reinvest cash collateral on behalf of the fund according to agreed parameters. The lending agent provides indemnification to the fund against losses resulting from a borrower default. Although risk is mitigated by the collateral and indemnification, the fund could experience a delay in recovering its securities and a potential loss of income or value if a borrower fails to return securities, collateral investments decline in value or the lending agent fails to perform.

 

The borrower is required to post highly liquid assets, such as cash or U.S. government securities, as collateral for the loan in an amount at least equal to the value of the securities loaned. Investments made with cash collateral are recognized as assets in the fund’s investment portfolio. The same amount is recorded as a liability in the fund’s statement of assets and liabilities. While securities are on loan, the fund will continue to receive the equivalent of the interest, dividends or other distributions paid by the issuer, as well as a portion of the interest on the investment of the collateral. Additionally, although the fund does not have the right to vote on securities while they are on loan, the fund has a right to consent on corporate actions and a right to recall loaned securities to vote. A borrower is obligated to return loaned securities at the conclusion of a loan or, during the pendency of a loan, on demand from the fund.

 

As of September 30, 2021, the total value of securities on loan was $1,104,669,000, and the total value of collateral received was $1,171,705,000. Collateral received includes cash of $654,443,000 and U.S. government securities of $517,262,000. Investment securities purchased from cash collateral are disclosed in the fund’s investment portfolio as short-term securities. Securities received as collateral are not recognized as fund assets. The contractual maturity of cash collateral received under the securities lending agreement is classified as overnight and continuous.

 

Collateral — The fund receives highly liquid assets, such as cash or U.S. government securities, as collateral in exchange for lending investment securities. The purpose of the collateral is to cover potential losses that could occur in the event the borrower cannot meet its contractual obligation. The lending agent may reinvest cash collateral from securities lending transactions according to agreed parameters. Cash collateral reinvested by the lending agent, if any, is disclosed in the fund’s investment portfolio.

 

6. Taxation and distributions

 

Federal income taxation — 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 year ended September 30, 2021, 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 significant interest or penalties.

 

The fund’s tax returns are generally not subject to examination by federal, state and, if applicable, non-U.S. tax authorities after the expiration of each jurisdiction’s statute of limitations, which is typically three years after the date of filing but can be extended in certain jurisdictions.

 

Non-U.S. taxation — Dividend and interest income are recorded net of non-U.S. taxes paid. The fund may file withholding tax reclaims in certain jurisdictions to recover a portion of amounts previously withheld. As a result of rulings from European courts, the fund filed for additional reclaims related to prior years. These reclaims are recorded when the amount is known and there are no significant uncertainties on collectability. During the year ended September 30, 2021, the fund recognized $2,485,000 in reclaims (net of the effect of realized gain or loss from currency translations) and $270,000 in interest related to European court rulings, which is included in dividend income and interest income, respectively, in the fund’s statement of operations. Gains realized by the fund on the sale of securities in certain countries, if any, may be subject to non-U.S. taxes. If applicable, the fund records an estimated deferred tax liability based on unrealized gains to provide for potential non-U.S. taxes payable upon the sale of these securities.

 

38 SMALLCAP World Fund
 

Distributions — Distributions determined on a tax basis may differ from net investment income and net realized gains for financial reporting purposes. These differences are due primarily to different 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.; cost of investments sold; 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 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, 2021, the fund reclassified $315,587,000 from total distributable earnings to capital paid in on shares of capital stock to align financial reporting with tax reporting.

 

As of September 30, 2021, the tax basis components of distributable earnings, unrealized appreciation (depreciation) and cost of investments were as follows (dollars in thousands):

 

Undistributed long-term capital gains   $ 6,524,802  
Gross unrealized appreciation on investments     35,256,750  
Gross unrealized depreciation on investments     (1,562,901 )
Net unrealized appreciation on investments     33,693,849  
Cost of investments     48,483,745  

 

Tax-basis distributions paid to shareholders from long-term capital gains were as follows (dollars in thousands):

 

    Year ended September 30  
Share class     2021       2020  
Class A   $ 533,184     $ 1,041,215  
Class C     12,765       33,474  
Class T     *     1  
Class F-1     14,136       31,740  
Class F-2     127,813       220,843  
Class F-3     60,263       99,063  
Class 529-A     32,362       60,724  
Class 529-C     1,788       9,039  
Class 529-E     1,256       2,675  
Class 529-T     *     1  
Class 529-F-1     *     6,564  
Class 529-F-2     3,561          
Class 529-F-3     *        
Class R-1     596       1,181  
Class R-2     12,517       26,644  
Class R-2E     671       1,329  
Class R-3     16,023       34,779  
Class R-4     15,839       34,471  
Class R-5E     1,654       2,101  
Class R-5     7,260       16,041  
Class R-6     194,770       361,129  
Total   $ 1,036,458     $ 1,983,014  

 

* Amount less than one thousand.
Class 529-F-2 and 529-F-3 shares began investment operations on October 30, 2020.

 

7. Fees and transactions with related parties

 

CRMC, the fund’s investment adviser, is the parent company of American Funds Distributors®, Inc. (“AFD”), the principal underwriter of the fund’s shares, and American Funds Service Company® (“AFS”), the fund’s transfer agent. CRMC, AFD and AFS are considered related parties to the fund.

 

Investment advisory services — The fund has an investment advisory and service agreement with CRMC that provides for monthly fees accrued daily. These fees are based on a series of decreasing annual rates beginning with 0.800% on the first $1 billion of daily net assets and decreasing to 0.589% on such assets in excess of $44 billion. On September 14, 2021, the fund’s board of directors approved an amended investment advisory and service agreement effective December 1, 2021, decreasing the annual rate to 0.587% and 0.585% on

 

SMALLCAP World Fund 39
 

daily net assets in excess of $55 billion and $71 billion, respectively. CRMC waived investment advisory services fees of $435,000 in advance of the amended investment advisory agreement. CRMC does not intend to recoup this waiver. As a result, the fees shown on the fund’s statement of operations of $436,726,000, which were equivalent to an annualized rate of 0.605% of average daily net assets, were reduced to $436,291,000, which were equivalent to an annualized rate of 0.604% 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 further described below:

 

Distribution services — The fund has plans of distribution for all share classes, except Class F-2, F-3, 529-F-2, 529-F-3, R-5E, R-5 and R-6 shares. 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 in this section. 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 with a plan 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.

 

Share class   Currently approved limits   Plan limits
Class A     0.30 %     0.30 %
Class 529-A     0.30       0.50  
Classes C, 529-C and R-1     1.00       1.00  
Class R-2     0.75       1.00  
Class R-2E     0.60       0.85  
Classes 529-E and R-3     0.50       0.75  
Classes T, F-1, 529-T, 529-F-1 and R-4     0.25       0.50  

 

For Class A and 529-A shares, distribution-related expenses include the reimbursement of dealer and wholesaler commissions paid by AFD for certain shares sold without a sales charge. These share classes reimburse AFD for amounts billed within the prior 15 months but only to the extent that the overall annual expense limits are not exceeded. As of September 30, 2021, there were no unreimbursed expenses subject to reimbursement for Class A or 529-A shares.

 

Transfer agent services — The fund has a shareholder services agreement with AFS under which the fund compensates AFS for providing transfer agent services to each of the fund’s share classes. These services include recordkeeping, shareholder communications and transaction processing. In addition, the fund reimburses AFS for amounts paid to third parties for performing transfer agent services on behalf of fund shareholders. For the year ended September 30, 2021, CRMC reimbursed transfer agent services fees of less than $1,000 for Class 529-F-3 shares. CRMC does not intend to recoup this reimbursement.

 

Administrative services — The fund has an administrative services agreement with CRMC under which the fund compensates CRMC for providing administrative services to all share classes. Administrative services are provided by CRMC and its affiliates to help assist third parties providing non-distribution services to fund shareholders. These services include providing in-depth information on the fund and market developments that impact fund investments. Administrative services also include, but are not limited to, coordinating, monitoring and overseeing third parties that provide services to fund shareholders. The agreement provides the fund the ability to charge an administrative services fee at the annual rate of 0.05% of the average daily net assets attributable to each share class of the fund. Currently the fund pays CRMC an administrative services fee at the annual rate of 0.03% of the average daily net assets attributable to each share class of the fund for CRMC’s provision of administrative services.

 

529 plan services — Each 529 share class is subject to service fees to compensate the Virginia College Savings Plan (“Virginia529”) for its oversight and administration of the CollegeAmerica 529 college savings plan. The fee is based on the combined net assets invested in Class 529 and ABLE shares of the American Funds. Class ABLE shares are offered on other American Funds by Virginia529 through ABLEAmerica®, a tax-advantaged savings program for individuals with disabilities. The quarterly fee is based on a series of decreasing annual rates beginning with 0.09% on the first $20 billion of the combined net assets invested in the American Funds and decreasing to 0.03% on such assets in excess of $100 billion. The fee for any given calendar quarter is accrued and calculated on the basis of the average net assets of Class 529 and ABLE shares of the American Funds for the last month of the prior calendar quarter. The fee is included in other expenses in the fund’s statement of operations. Virginia529 is not considered a related party to the fund.

 

40 SMALLCAP World Fund
 

For the year ended September 30, 2021, class-specific expenses under the agreements were as follows (dollars in thousands):

 

Share class   Distribution
services
  Transfer agent
services
  Administrative
services
  529 plan
services
 
Class A   $91,522   $37,823   $10,629   Not applicable  
Class C   6,898   746   209   Not applicable  
Class T     * * Not applicable  
Class F-1   2,073   1,216   249   Not applicable  
Class F-2   Not applicable   9,861   2,799   Not applicable  
Class F-3   Not applicable   147   1,335   Not applicable  
Class 529-A   4,815   2,087   632   $1,258  
Class 529-C   925   96   28   56  
Class 529-E   388   33   23   46  
Class 529-T     * * *
Class 529-F-1   * 12   5   10  
Class 529-F-2   Not applicable   197   68   136  
Class 529-F-3   Not applicable   * * *
Class R-1   338   34   10   Not applicable  
Class R-2   5,261   2,413   210   Not applicable  
Class R-2E   270   91   14   Not applicable  
Class R-3   4,839   1,449   290   Not applicable  
Class R-4   2,496   996   300   Not applicable  
Class R-5E   Not applicable   196   41   Not applicable  
Class R-5   Not applicable   250   148   Not applicable  
Class R-6   Not applicable   112   4,670   Not applicable  
Total class-specific expenses   $119,825   $57,759   $21,660   $1,506  

 

* Amount less than one thousand.
Class 529-F-2 and 529-F-3 shares began investment operations on October 30, 2020.

 

Directors’ deferred compensation — 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 $1,497,000 in the fund’s statement of operations reflects $229,000 in current fees (either paid in cash or deferred) and a net increase of $1,268,000 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, AFD and AFS. No affiliated officers or directors received any compensation directly from the fund.

 

Investment in CCF — The fund holds shares of CCF, an institutional prime money market fund managed by CRMC. CCF invests in high-quality, short-term money market instruments. CCF is used as the primary investment vehicle for the fund’s short-term instruments. CCF shares are only available for purchase by CRMC, its affiliates, and other funds managed by CRMC or its affiliates, and are not available to the public. CRMC does not receive an investment advisory services fee from CCF.

 

Security transactions with related funds — The fund purchased securities from, and sold securities to, other funds managed by CRMC (or funds managed by certain affiliates of CRMC) under procedures adopted by the fund’s board of directors. The funds involved in such transactions are considered related by virtue of having a common investment adviser (or affiliated investment advisers), common directors and/or common officers. Each transaction was executed at the current market price of the security and no brokerage commissions or fees were paid in accordance with Rule 17a-7 of the 1940 Act. During the year ended September 30, 2021, the fund engaged in such purchase and sale transactions with related funds in the amounts of $232,905,000 and $1,066,578,000, respectively, which generated $738,433,000 of net realized gains from such sales.

 

Interfund lending — Pursuant to an exemptive order issued by the SEC, the fund, along with other CRMC-managed funds (or funds managed by certain affiliates of CRMC), may participate in an interfund lending program. The program provides an alternate credit facility that permits the funds to lend or borrow cash for temporary purposes directly to or from one another, subject to the conditions of the exemptive order. The fund did not lend or borrow cash through the interfund lending program at any time during the year ended September 30, 2021.

 

SMALLCAP World Fund 41
 

8. Committed line of credit

 

The fund participates with other funds managed by CRMC (or funds managed by certain affiliates of CRMC) in a $1.5 billion credit facility (the “line of credit”) to be utilized for temporary purposes to support shareholder redemptions. The fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which are reflected in other expenses in the fund’s statement of operations. The fund did not borrow on this line of credit at any time during the year ended September 30, 2021.

 

9. Indemnifications

 

The fund’s organizational documents provide board members and officers with indemnification against certain liabilities or expenses in connection with the performance of their duties to the fund. In the normal course of business, the fund may also enter into contracts that provide general indemnifications. The fund’s maximum exposure under these arrangements is unknown since it is dependent on future claims that may be made against the fund. The risk of material loss from such claims is considered remote. Insurance policies are also available to the fund’s board members and officers.

 

10. Capital share transactions

 

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

 

    Sales1     Reinvestments of
distributions
    Repurchases1     Net increase
(decrease)
 
Share class   Amount     Shares     Amount     Shares     Amount     Shares     Amount     Shares  
                                                                 
Year ended September 30, 2021
                                                                 
Class A   $ 4,132,944       49,749     $ 526,551       6,720     $ (3,620,822 )     (43,973 )   $ 1,038,673       12,496  
Class C     130,503       1,871       12,733       193       (185,707 )     (2,669 )     (42,471 )     (605 )
Class T                                                
Class F-1     95,711       1,180       13,924       180       (285,356 )     (3,459 )     (175,721 )     (2,099 )
Class F-2     4,160,688       48,348       124,564       1,554       (2,566,109 )     (29,607 )     1,719,143       20,295  
Class F-3     2,002,876       23,569       60,027       755       (842,469 )     (10,024 )     1,220,434       14,300  
Class 529-A     256,517       3,151       32,349       419       (276,976 )     (3,397 )     11,890       173  
Class 529-C     15,803       225       1,788       27       (39,574 )     (561 )     (21,983 )     (309 )
Class 529-E     8,495       109       1,255       17       (11,995 )     (152 )     (2,245 )     (26 )
Class 529-T                 2      2                  2      2 
Class 529-F-1     4,003       58       2      2      (183,036 )     (2,779 )     (179,033 )     (2,721 )
Class 529-F-23     242,879       3,498       3,555       45       (36,630 )     (438 )     209,804       3,105  
Class 529-F-33     10       2      2      2                  10       2 
Class R-1     6,407       88       585       8       (7,729 )     (108 )     (737 )     (12 )
Class R-2     125,085       1,739       12,506       182       (188,756 )     (2,655 )     (51,165 )     (734 )
Class R-2E     12,544       155       671       9       (12,306 )     (153 )     909       11  
Class R-3     186,463       2,407       16,007       216       (288,123 )     (3,710 )     (85,653 )     (1,087 )
Class R-4     163,088       2,006       15,838       204       (299,064 )     (3,635 )     (120,138 )     (1,425 )
Class R-5E     101,918       1,189       1,653       21       (30,191 )     (361 )     73,380       849  
Class R-5     73,282       854       7,258       89       (110,242 )     (1,307 )     (29,702 )     (364 )
Class R-6     6,274,542       71,646       193,850       2,401       (1,976,480 )     (24,589 )     4,491,912       49,458  
Total net increase (decrease)   $ 17,993,758       211,842     $ 1,025,114       13,040     $ (10,961,565 )     (133,577 )   $ 8,057,307       91,305  

 

See end of table for footnotes.

 

42 SMALLCAP World Fund
 
    Sales1     Reinvestments of
distributions
    Repurchases1     Net increase
(decrease)
 
Share class   Amount     Shares     Amount     Shares     Amount     Shares     Amount     Shares  
                                                                 
Year ended September 30, 2020
                                                                 
Class A   $ 2,336,768       40,761     $ 1,027,576       17,535     $ (3,286,935 )     (58,851 )   $ 77,409       (555 )
Class C     74,964       1,548       33,326       668       (304,344 )     (6,158 )     (196,054 )     (3,942 )
Class T                                                
Class F-1     103,668       1,857       31,344       542       (229,459 )     (4,094 )     (94,447 )     (1,695 )
Class F-2     1,931,436       32,933       214,340       3,587       (1,472,587 )     (26,146 )     673,189       10,374  
Class F-3     931,464       15,970       98,775       1,666       (602,510 )     (10,586 )     427,729       7,050  
Class 529-A     243,478       4,160       60,720       1,051       (245,122 )     (4,290 )     59,076       921  
Class 529-C     16,043       324       9,036       178       (147,381 )     (2,822 )     (122,302 )     (2,320 )
Class 529-E     4,605       85       2,675       48       (13,135 )     (240 )     (5,855 )     (107 )
Class 529-T                 1       2                  1       2 
Class 529-F-1     29,821       514       6,562       112       (31,702 )     (548 )     4,681       78  
Class R-1     3,771       75       1,174       23       (5,519 )     (111 )     (574 )     (13 )
Class R-2     98,714       1,965       26,618       514       (170,182 )     (3,415 )     (44,850 )     (936 )
Class R-2E     7,926       142       1,329       23       (8,057 )     (146 )     1,198       19  
Class R-3     128,172       2,383       34,736       625       (243,937 )     (4,559 )     (81,029 )     (1,551 )
Class R-4     114,432       2,030       34,458       593       (242,163 )     (4,348 )     (93,273 )     (1,725 )
Class R-5E     43,355       781       2,100       36       (14,803 )     (257 )     30,652       560  
Class R-5     49,372       835       16,026       264       (104,908 )     (1,776 )     (39,510 )     (677 )
Class R-6     2,104,180       37,740       361,112       6,007       (1,303,226 )     (21,874 )     1,162,066       21,873  
Total net increase (decrease)   $ 8,222,169       144,103     $ 1,961,908       33,472     $ (8,425,970 )     (150,221 )   $ 1,758,107       27,354  

 

1 Includes exchanges between share classes of the fund.
2 Amount less than one thousand.
3 Class 529-F-2 and 529-F-3 shares began investment operations on October 30, 2020.

 

11. Investment transactions

 

The fund made purchases and sales of investment securities, excluding short-term securities and U.S. government obligations, if any, of $26,108,548,000 and $20,687,955,000, respectively, during the year ended September 30, 2021.

 

SMALLCAP World Fund 43
 

Financial highlights

 

          Income (loss) from
investment operations1
    Dividends and distributions                                      
                Net gains                                               Ratio of     Ratio of        
                (losses) on                                               expenses to     expenses to     Ratio of  
    Net asset     Net     securities           Dividends           Total     Net asset                 average net     average net     net (loss)  
    value,     investment     (both     Total from     (from net     Distributions     dividends     value,           Net assets,     assets before     assets after     income  
    beginning     (loss)     realized and     investment     investment     (from capital     and     end           end of period     reimburse-     reimburse-     to average  
Period ended   of period     income     unrealized)     operations     income)     gains)     distributions     of period     Total return2,3     (in millions)     ments4     ments3,4     net assets3  
Class A:                                                                                                        
9/30/2021   $ 66.23     $ (.37 )   $ 23.60     $ 23.23     $     $ (1.27 )   $ (1.27 )   $ 88.19       35.35 %   $ 38,095       1.02 %     1.02 %     (.44 )%
9/30/2020     55.24       (.15 )     13.63       13.48             (2.49 )     (2.49 )     66.23       24.98       27,781       1.06       1.06       (.25 )
9/30/2019     60.19       .05       (1.69 )     (1.64 )           (3.31 )     (3.31 )     55.24       (1.37 )     23,203       1.06       1.06       .09  
9/30/2018     55.60       .04       7.05       7.09             (2.50 )     (2.50 )     60.19       13.13       24,203       1.04       1.04       .06  
9/30/2017     47.24       .07       8.45       8.52       (.16 )           (.16 )     55.60       18.11       21,383       1.07       1.07       .14  
Class C:                                                                                                        
9/30/2021     56.04       (.82 )     19.91       19.09             (1.27 )     (1.27 )     73.86       34.36       713       1.75       1.75       (1.18 )
9/30/2020     47.42       (.48 )     11.59       11.11             (2.49 )     (2.49 )     56.04       24.07       575       1.79       1.79       (.97 )
9/30/2019     52.63       (.32 )     (1.58 )     (1.90 )           (3.31 )     (3.31 )     47.42       (2.13 )     673       1.82       1.82       (.68 )
9/30/2018     49.30       (.38 )     6.21       5.83             (2.50 )     (2.50 )     52.63       12.23       807       1.83       1.83       (.74 )
9/30/2017     42.08       (.29 )     7.51       7.22                         49.30       17.16       810       1.87       1.87       (.66 )
Class T:                                                                                                        
9/30/2021     66.78       (.18 )     23.81       23.63             (1.27 )     (1.27 )     89.14       35.64 5      6      .79 5      .79 5      (.21 )5 
9/30/2020     55.54       7      13.73       13.73             (2.49 )     (2.49 )     66.78       25.30 5      6      .81 5      .81 5      5,8 
9/30/2019     60.35       .18       (1.68 )     (1.50 )           (3.31 )     (3.31 )     55.54       (1.14 )5      6      .82 5      .82 5      .33 5 
9/30/2018     55.64       .15       7.06       7.21             (2.50 )     (2.50 )     60.35       13.36 5      6      .85 5      .85 5      .25 5 
9/30/20179,10      49.61       .13       5.90       6.03                         55.64       12.15 5,11      6      .42 5,11      .42 5,11      .25 5,11 
Class F-1:                                                                                                        
9/30/2021     65.31       (.39 )     23.27       22.88             (1.27 )     (1.27 )     86.92       35.31       791       1.05       1.05       (.48 )
9/30/2020     54.51       (.15 )     13.44       13.29             (2.49 )     (2.49 )     65.31       24.96       731       1.08       1.08       (.26 )
9/30/2019     59.47       .03       (1.68 )     (1.65 )           (3.31 )     (3.31 )     54.51       (1.43 )     703       1.10       1.10       .05  
9/30/2018     55.00       7      6.97       6.97             (2.50 )     (2.50 )     59.47       13.06       770       1.09       1.09       .01  
9/30/2017     46.74       .05       8.36       8.41       (.15 )           (.15 )     55.00       18.06       792       1.10       1.10       .11  
Class F-2:                                                                                                        
9/30/2021     67.69       (.15 )     24.13       23.98             (1.27 )     (1.27 )     90.40       35.69       10,659       .76       .76       (.18 )
9/30/2020     56.26       .01       13.91       13.92             (2.49 )     (2.49 )     67.69       25.32       6,608       .79       .79       .02  
9/30/2019     61.07       .20       (1.70 )     (1.50 )           (3.31 )     (3.31 )     56.26       (1.12 )     4,909       .80       .80       .36  
9/30/2018     56.24       .20       7.13       7.33             (2.50 )     (2.50 )     61.07       13.41       4,459       .78       .78       .34  
9/30/2017     47.80       .19       8.54       8.73       (.29 )           (.29 )     56.24       18.40       2,894       .82       .82       .38  
Class F-3:                                                                                                        
9/30/2021     67.18       (.07 )     23.96       23.89             (1.27 )     (1.27 )     89.80       35.83       5,382       .66       .66       (.08 )
9/30/2020     55.80       .07       13.80       13.87             (2.49 )     (2.49 )     67.18       25.44       3,065       .68       .68       .12  
9/30/2019     60.54       .25       (1.68 )     (1.43 )           (3.31 )     (3.31 )     55.80       (1.02 )     2,153       .70       .70       .46  
9/30/2018     55.74       .24       7.06       7.30             (2.50 )     (2.50 )     60.54       13.49       1,856       .71       .71       .41  
9/30/20179,12      47.93       .25       7.56       7.81                         55.74       16.30 11      1,221       .71 13      .71 13      .70 13 
Class 529-A:                                                                                                        
9/30/2021     65.29       (.38 )     23.27       22.89             (1.27 )     (1.27 )     86.91       35.31       2,227       1.04       1.04       (.47 )
9/30/2020     54.51       (.16 )     13.43       13.27             (2.49 )     (2.49 )     65.29       24.95       1,662       1.09       1.09       (.28 )
9/30/2019     59.47       .02       (1.67 )     (1.65 )           (3.31 )     (3.31 )     54.51       (1.43 )     1,337       1.12       1.12       .03  
9/30/2018     55.01       7      6.96       6.96             (2.50 )     (2.50 )     59.47       13.05       1,430       1.11       1.11       8 
9/30/2017     46.74       .04       8.36       8.40       (.13 )           (.13 )     55.01       18.03       1,195       1.13       1.13       .08  

 

See end of table for footnotes.

 

44 SMALLCAP World Fund
 

Financial highlights (continued)

 

          Income (loss) from
investment operations1
    Dividends and distributions                                      
                Net gains                                               Ratio of     Ratio of        
                (losses) on                                               expenses to     expenses to     Ratio of  
    Net asset     Net     securities           Dividends           Total     Net asset                 average net     average net     net (loss)  
    value,     investment     (both     Total from     (from net     Distributions     dividends     value,           Net assets,     assets before     assets after     income  
    beginning     (loss)     realized and     investment     investment     (from capital     and     end           end of period     reimburse-     reimburse-     to average  
Period ended   of period     income     unrealized)     operations     income)     gains)     distributions     of period     Total return2,3     (in millions)     ments4     ments3,4     net assets3  
Class 529-C:                                                                                                        
9/30/2021   $ 57.17     $ (.86 )   $ 20.30     $ 19.44     $     $ (1.27 )   $ (1.27 )   $ 75.34       34.30 %   $ 89       1.79 %     1.79 %     (1.22 )%
9/30/2020     48.35       (.49 )     11.80       11.31             (2.49 )     (2.49 )     57.17       24.02       86       1.84       1.84       (.99 )
9/30/2019     53.60       (.34 )     (1.60 )     (1.94 )           (3.31 )     (3.31 )     48.35       (2.17 )     185       1.86       1.86       (.72 )
9/30/2018     50.18       (.42 )     6.34       5.92             (2.50 )     (2.50 )     53.60       12.19       230       1.88       1.88       (.81 )
9/30/2017     42.85       (.32 )     7.65       7.33                         50.18       17.11       314       1.91       1.91       (.70 )
Class 529-E:                                                                                                        
9/30/2021     62.89       (.53 )     22.39       21.86             (1.27 )     (1.27 )     83.48       35.04       81       1.26       1.26       (.68 )
9/30/2020     52.68       (.26 )     12.96       12.70             (2.49 )     (2.49 )     62.89       24.70       62       1.28       1.28       (.47 )
9/30/2019     57.73       (.09 )     (1.65 )     (1.74 )           (3.31 )     (3.31 )     52.68       (1.64 )     58       1.31       1.31       (.17 )
9/30/2018     53.57       (.12 )     6.78       6.66             (2.50 )     (2.50 )     57.73       12.82       64       1.32       1.32       (.22 )
9/30/2017     45.53       (.06 )     8.14       8.08       (.04 )           (.04 )     53.57       17.77       59       1.35       1.35       (.13 )
Class 529-T:                                                                                                        
9/30/2021     66.67       (.22 )     23.77       23.55             (1.27 )     (1.27 )     88.95       35.60 5      6      .84 5      .84 5      (.26 )5 
9/30/2020     55.49       (.03 )     13.70       13.67             (2.49 )     (2.49 )     66.67       25.21 5      6      .85 5      .85 5      (.05 )5 
9/30/2019     60.32       .15       (1.67 )     (1.52 )           (3.31 )     (3.31 )     55.49       (1.17 )5      6      .87 5      .87 5      .28 5 
9/30/2018     55.63       .13       7.06       7.19             (2.50 )     (2.50 )     60.32       13.30 5      6      .88 5      .88 5      .22 5 
9/30/20179,10      49.61       .12       5.90       6.02                         55.63       12.13 5,11      6      .45 5,11      .45 5,11      .22 5,11 
Class 529-F-1:                                                                                                        
9/30/2021     66.57       (.29 )     23.81       23.52             (1.27 )     (1.27 )     88.82       35.60 5      6      .80 5      .80 5      (.42 )5 
9/30/2020     55.41       (.03 )     13.68       13.65             (2.49 )     (2.49 )     66.57       25.21       181       .86       .86       (.05 )
9/30/2019     60.26       .15       (1.69 )     (1.54 )           (3.31 )     (3.31 )     55.41       (1.22 )     146       .88       .88       .27  
9/30/2018     55.58       .13       7.05       7.18             (2.50 )     (2.50 )     60.26       13.31       136       .89       .89       .22  
9/30/2017     47.23       .15       8.43       8.58       (.23 )           (.23 )     55.58       18.26       113       .92       .92       .30  
Class 529-F-2:                                                                                                        
9/30/20219,14      65.50       (.16 )     24.30       24.14             (1.27 )     (1.27 )     88.37       37.11 11      274       .80 13      .80 13      (.21 )13 
Class 529-F-3:                                                                                                        
9/30/20219,14      65.50       (.09 )     24.31       24.22             (1.27 )     (1.27 )     88.45       37.23 11      6      .76 13      .71 13      (.12 )13 
Class R-1:                                                                                                        
9/30/2021     58.09       (.85 )     20.65       19.80             (1.27 )     (1.27 )     76.62       34.35       36       1.75       1.75       (1.18 )
9/30/2020     49.08       (.50 )     12.00       11.50             (2.49 )     (2.49 )     58.09       24.07       28       1.79       1.79       (.98 )
9/30/2019     54.32       (.33 )     (1.60 )     (1.93 )           (3.31 )     (3.31 )     49.08       (2.12 )     24       1.82       1.82       (.68 )
9/30/2018     50.79       (.38 )     6.41       6.03             (2.50 )     (2.50 )     54.32       12.26       30       1.81       1.81       (.72 )
9/30/2017     43.34       (.29 )     7.74       7.45                         50.79       17.19       30       1.83       1.83       (.63 )

 

See end of table for footnotes.

 

SMALLCAP World Fund 45
 

Financial highlights (continued)

 

          Income (loss) from
investment operations1
    Dividends and distributions                                      
                Net gains                                               Ratio of     Ratio of        
                (losses) on                                               expenses to     expenses to     Ratio of  
    Net asset     Net     securities           Dividends           Total     Net asset                 average net     average net     net (loss)  
    value,     investment     (both     Total from     (from net     Distributions     dividends     value,           Net assets,     assets before     assets after     income  
    beginning     (loss)     realized and     investment     investment     (from capital     and     end           end of period     reimburse-     reimburse-     to average  
Period ended   of period     income     unrealized)     operations     income)     gains)     distributions     of period     Total return2,3     (in millions)     ments4     ments3,4     net assets3  
Class R-2:                                                                                                        
9/30/2021   $ 58.16     $ (.85 )   $ 20.67     $ 19.82     $     $ (1.27 )   $ (1.27 )   $ 76.71       34.37 %   $ 719       1.75 %     1.75 %     (1.17 )%
9/30/2020     49.12       (.49 )     12.02       11.53             (2.49 )     (2.49 )     58.16       24.09       588       1.78       1.78       (.97 )
9/30/2019     54.36       (.31 )     (1.62 )     (1.93 )           (3.31 )     (3.31 )     49.12       (2.12 )     542       1.79       1.79       (.65 )
9/30/2018     50.82       (.37 )     6.41       6.04             (2.50 )     (2.50 )     54.36       12.28       619       1.79       1.79       (.70 )
9/30/2017     43.35       (.27 )     7.74       7.47                         50.82       17.23       628       1.80       1.80       (.60 )
Class R-2E:                                                                                                        
9/30/2021     64.83       (.71 )     23.07       22.36             (1.27 )     (1.27 )     85.92       34.76       48       1.46       1.46       (.88 )
9/30/2020     54.34       (.38 )     13.36       12.98             (2.49 )     (2.49 )     64.83       24.46       35       1.48       1.48       (.67 )
9/30/2019     59.52       (.18 )     (1.69 )     (1.87 )           (3.31 )     (3.31 )     54.34       (1.82 )     28       1.50       1.50       (.34 )
9/30/2018     55.26       (.22 )     6.98       6.76             (2.50 )     (2.50 )     59.52       12.61       24       1.50       1.50       (.38 )
9/30/2017     47.07       (.14 )     8.40       8.26       (.07 )           (.07 )     55.26       17.57       16       1.51       1.51       (.27 )
Class R-3:                                                                                                        
9/30/2021     62.68       (.57 )     22.32       21.75             (1.27 )     (1.27 )     83.16       34.95       978       1.31       1.31       (.73 )
9/30/2020     52.54       (.28 )     12.91       12.63             (2.49 )     (2.49 )     62.68       24.65       806       1.33       1.33       (.52 )
9/30/2019     57.60       (.10 )     (1.65 )     (1.75 )           (3.31 )     (3.31 )     52.54       (1.67 )     757       1.34       1.34       (.20 )
9/30/2018     53.47       (.14 )     6.77       6.63             (2.50 )     (2.50 )     57.60       12.79       852       1.35       1.35       (.25 )
9/30/2017     45.45       (.07 )     8.13       8.06       (.04 )           (.04 )     53.47       17.74       844       1.35       1.35       (.14 )
Class R-4:                                                                                                        
9/30/2021     65.68       (.35 )     23.40       23.05             (1.27 )     (1.27 )     87.46       35.37       987       1.01       1.01       (.43 )
9/30/2020     54.78       (.12 )     13.51       13.39             (2.49 )     (2.49 )     65.68       25.03       835       1.02       1.02       (.21 )
9/30/2019     59.71       .06       (1.68 )     (1.62 )           (3.31 )     (3.31 )     54.78       (1.37 )     791       1.04       1.04       .11  
9/30/2018     55.18       .03       7.00       7.03             (2.50 )     (2.50 )     59.71       13.13       894       1.04       1.04       .05  
9/30/2017     46.89       .08       8.38       8.46       (.17 )           (.17 )     55.18       18.12       865       1.05       1.05       .17  
Class R-5E:                                                                                                        
9/30/2021     66.64       (.19 )     23.76       23.57             (1.27 )     (1.27 )     88.94       35.63       188       .80       .80       (.22 )
9/30/2020     55.44       (.01 )     13.70       13.69             (2.49 )     (2.49 )     66.64       25.28       84       .82       .82       (.02 )
9/30/2019     60.26       .18       (1.69 )     (1.51 )           (3.31 )     (3.31 )     55.44       (1.16 )     39       .84       .84       .32  
9/30/2018     55.55       .18       7.03       7.21             (2.50 )     (2.50 )     60.26       13.38       28       .84       .84       .31  
9/30/2017     47.30       .18       8.42       8.60       (.35 )           (.35 )     55.55       18.33       12       .84       .84       .36  
Class R-5:                                                                                                        
9/30/2021     68.86       (.11 )     24.56       24.45             (1.27 )     (1.27 )     92.04       35.77       510       .71       .71       (.13 )
9/30/2020     57.16       .06       14.13       14.19             (2.49 )     (2.49 )     68.86       25.40       406       .72       .72       .09  
9/30/2019     61.94       .22       (1.69 )     (1.47 )           (3.31 )     (3.31 )     57.16       (1.06 )     376       .74       .74       .40  
9/30/2018     56.99       .21       7.24       7.45             (2.50 )     (2.50 )     61.94       13.46       436       .75       .75       .36  
9/30/2017     48.40       .24       8.64       8.88       (.29 )           (.29 )     56.99       18.48       424       .75       .75       .47  
Class R-6:                                                                                                        
9/30/2021     68.15       (.06 )     24.30       24.24             (1.27 )     (1.27 )     91.12       35.84       19,437       .66       .66       (.07 )
9/30/2020     56.56       .08       14.00       14.08             (2.49 )     (2.49 )     68.15       25.47       11,166       .67       .67       .14  
9/30/2019     61.31       .26       (1.70 )     (1.44 )           (3.31 )     (3.31 )     56.56       (1.02 )     8,031       .69       .69       .47  
9/30/2018     56.40       .25       7.16       7.41             (2.50 )     (2.50 )     61.31       13.53       7,039       .69       .69       .42  
9/30/2017     47.93       .26       8.54       8.80       (.33 )           (.33 )     56.40       18.51       5,289       .70       .70       .51  

 

See end of table for footnotes.

 

46 SMALLCAP World Fund
 

Financial highlights (continued)

 

    Year ended September 30,
    2021   2020   2019   2018   2017
Portfolio turnover rate for all share classes15    30%   38%   39%   35%   32%

 

1  Based on average shares outstanding.
2  Total returns exclude any applicable sales charges, including contingent deferred sales charges.
3  This column reflects the impact, if any, of certain reimbursements from CRMC. During the period shown, CRMC reimbursed a portion of transfer agent services fees for Class 529-F-3 shares.
4  Ratios do not include expenses of any Central Funds. The fund indirectly bears its proportionate share of the expenses of any Central Funds.
5  All or a significant portion of assets in this class consisted of seed capital invested by CRMC and/or its affiliates. Fees for distribution services are not charged or accrued on these seed capital assets. If such fees were paid by the fund on seed capital assets, fund expenses would have been higher and net income and total return would have been lower.
6  Amount less than $1 million.
7  Amount less than $.01.
8  Amount less than .01%.
9  Based on operations for a period that is less than a full year.
10  Class T and 529-T shares began investment operations on April 7, 2017.
11  Not annualized.
12  Class F-3 shares began investment operations on January 27, 2017.
13  Annualized.
14  Class 529-F-2 and 529-F-3 shares began investment operations on October 30, 2020.
15  Rates do not include the fund’s portfolio activity with respect to any Central Funds.

 

See notes to financial statements.

 

SMALLCAP World Fund 47
 

Report of Independent Registered Public Accounting Firm

 

To the Shareholders and Board of Directors of SMALLCAP World Fund, Inc.:

 

Opinion on the Financial Statements and Financial Highlights

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, 2021, 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, the financial highlights for each of the five years in the period then ended, and the related notes. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of the Fund as of September 30, 2021, and 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 five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.

 

Basis for Opinion

These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements and financial highlights based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 

We conducted our audits in accordance with the standards of the PCAOB. 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, whether due to error or fraud. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting 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.

 

Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. Our procedures included confirmation of securities owned as of September 30, 2021, by correspondence with the custodian and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.

 

Deloitte & Touche LLP

 

Costa Mesa, California

November 9, 2021

 

We have served as the auditor of one or more American Funds investment companies since 1956.