Short-Term Bond Fund of America (Form: N-1A/A, Received: 09/26/2006 15:23:00)

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

Short-Term Bond
Fund of America/SM/

PROSPECTUS

October 2, 2006

TABLE OF CONTENTS

1 Risk/Return summary
2 Fees and expenses of the fund
4 Investment objective, strategies and risks
6 Management and organization
8 Shareholder information
9 Choosing a share class
11 Purchase and exchange of shares
15 Sales charges
18 Sales charge reductions and waivers
20 Rollovers from retirement plans to IRAs
21 Plans of distribution
22 Other compensation to dealers
23 How to sell shares
25 Distributions and taxes

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

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Risk/Return summary
The fund seeks to provide you with current income while preserving your
investment by maintaining a portfolio having a dollar-weighted average effective
maturity no greater than three years and consisting primarily of debt securities
with quality ratings of AA or Aa or better and unrated securities determined to
be of equivalent quality.

The fund is designed for investors seeking income, higher credit quality and
capital preservation over the long term.
The fund primarily invests in short-term debt securities, including securities
issued and guaranteed by the U.S. government, mortgage- and asset-backed
securities. The fund may invest in debt securities and mortgage-backed
securities issued by federal agencies and instrumentalities that are not backed
by the full faith and credit of the U.S. government. Examples of such securities
are mortgage-backed securities issued by the Federal National Mortgage
Association ("Fannie Mae") and the Federal Home Loan Mortgage Corporation
("Freddie Mac"). These securities are neither issued nor guaranteed by the U.S.
Treasury.

Your investment in the fund is subject to risks, including the possibility that
the fund's income and the value of its portfolio holdings may fluctuate in
response to economic, political or social events in the United States or abroad.
The values of, and the income generated by, debt securities owned by the fund
may be affected by changing interest rates and credit risk assessments, as well
as by events specifically involving the issuers of those securities.

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

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

Short-Term Bond Fund of America / Prospectus
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Fees and expenses of the fund

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

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

Maximum initial sales
charge on purchases 2.50%/4/ none none none none
(as a percentage of
offering price)
--------------------------------------------------------------------------------------------
Maximum sales charge none none none none none
on reinvested
dividends
--------------------------------------------------------------------------------------------
Maximum contingent none/5/ 5.00%/6/ 1.00%/7/ none none
deferred sales charge
--------------------------------------------------------------------------------------------
Redemption or none none none none none
exchange fees

ANNUAL FUND OPERATING EXPENSES (DEDUCTED FROM FUND ASSETS)/8/

CLASS A CLASS B CLASS C CLASS F
-------------------------------------------------------------------------------

Management fees/9/ 0.36% 0.36% 0.36% 0.36%
-------------------------------------------------------------------------------
Distribution and/or service 0.25 1.00 1.00 0.25
(12b-1) fees/10/
-------------------------------------------------------------------------------
Other expenses/11/ 0.15 0.15 0.19 0.14
-------------------------------------------------------------------------------
Total annual fund operating 0.76 1.51 1.55 0.75
expenses/9/

CLASS CLASS CLASS CLASS CLASS
529-A 529-B 529-C 529-E 529-F
-------------------------------------------------------------------------------
Management fees/9/ 0.36% 0.36% 0.36% 0.36% 0.36%
-------------------------------------------------------------------------------
Distribution and/or service 0.25 1.00 1.00 0.50 0.00
(12b-1) fees/12/
-------------------------------------------------------------------------------
Other expenses/11,13/ 0.26 0.28 0.27 0.25 0.24
-------------------------------------------------------------------------------
Total annual fund operating 0.87 1.64 1.63 1.11 0.60
expenses/9/

1 Includes corresponding 529 share class. Accounts holding these 529 shares are
subject to a $10 account setup fee and an annual $10 account maintenance fee,
which are not reflected in this table.
2 Available only to employer-sponsored 529 plans. Accounts holding these shares
are subject to a $10 account setup fee and an annual $10 account maintenance
fee, which are not reflected in this table.
3 Class F and 529-F shares are generally available only to fee-based programs of
investment dealers that have special agreements with the fund's distributor and
to certain registered investment advisers.
4 The initial sales charge is reduced for purchases of $500,000 or more and
eliminated for purchases of $1 million or more.
5 A contingent deferred sales charge of 1.00% applies on certain redemptions
made within one year following purchases of $1 million or more made without an
initial sales charge.
6 The contingent deferred sales charge is reduced one year after purchase and
eliminated six years after purchase.
7 The contingent deferred sales charge is eliminated one year after purchase.
8 Based on estimated amounts for the current fiscal year.
9 The fund's investment adviser is currently waiving 10% of its management fee
(.036%). The waiver may be discontinued at any time, but is expected to
continue at this level until further review. The fund's investment adviser and
board intend to review the waiver as circumstances dictate. Estimated expenses
shown above do not reflect any waiver.
10 Class A 12b-1 fees are currently up to .25% and may not exceed .30% of the
class' average net assets annually. Class F 12b-1 fees may not exceed .50% of
the class' average net assets annually. Class B and C 12b-1 fees are up to
1.00% of each class' average net assets annually.

11 Includes custodial, legal, transfer agent and subtransfer agent/recordkeeping
payments and various other expenses. Subtransfer agent/recordkeeping payments
may be made to third parties (including affiliates of the fund's investment
adviser) that provide subtransfer agent, recordkeeping and/or shareholder
services with respect to certain shareholder accounts in lieu of the transfer
agent providing such services. The amount paid for subtransfer
agent/recordkeeping services will vary depending on the share class and
services provided, and typically ranges from $3 to $19 per account.
12 Class 529-A and 529-F 12b-1 fees may not exceed .50% of each class' average
net assets annually. Class 529-B and 529-C 12b-1 fees may not exceed 1.00% of
each class' average net assets annually. Class 529-E 12b-1 fees may not exceed
.75% of the class' average net assets annually.

13 Includes .10% paid to a state or states for oversight and administrative
services.

Short-Term Bond Fund of America / Prospectus

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EXAMPLES

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

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

1 YEAR 3 YEARS
----------------------------------------------------------------------

Class A/1/ $326 $487
----------------------------------------------------------------------
Class B -- assuming redemption/2/ 654 877
----------------------------------------------------------------------
Class B -- assuming no redemption 154 477
----------------------------------------------------------------------
Class C -- assuming redemption/3/ 258 490
----------------------------------------------------------------------
Class C -- assuming no redemption 158 490
----------------------------------------------------------------------
Class F -- excludes intermediary fees/4/ 77 240
----------------------------------------------------------------------
Class 529-A/1,5/ 356 560
----------------------------------------------------------------------
Class 529-B -- assuming redemption/3,5/ 687 956
----------------------------------------------------------------------
Class 529-B -- assuming no redemption/5/ 187 556
----------------------------------------------------------------------
Class 529-C -- assuming redemption/3,5/ 285 553
----------------------------------------------------------------------
Class 529-C -- assuming no redemption/5/ 185 553
----------------------------------------------------------------------
Class 529-E/5/ 133 392
----------------------------------------------------------------------
Class 529-F -- excludes intermediary fees/4,5/ 81 232

1 Reflects the maximum initial sales charge in the first year.
2 Reflects contingent deferred sales charges which may apply through year six.

3 Reflects a contingent deferred sales charge in the first year.
4 Does not include fees charged by financial intermediaries, which are
independent of fund expenses and will increase the overall cost of your
investment. Intermediary fees typically range from .75% to 1.50% of assets
annually depending on the services offered.
5 Reflects an initial $10 account setup fee and an annual $10 account
maintenance fee.

Short-Term Bond Fund of America / Prospectus
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Investment objective, strategies and risks
The fund's investment objective is to provide you with current income consistent
with its stated maturity and quality standards and preservation of capital. It
invests primarily in short-term debt securities with quality ratings of AA or Aa
or better (by a Nationally Recognized Statistical Rating Organization) and in
unrated securities determined by the fund's investment adviser to be of
equivalent quality. The fund may invest up to 10% of its assets in A-rated debt
securities or in unrated securities determined by the fund's investment adviser
to be of equivalent quality. The fund may invest significantly in securities
issued and guaranteed by the U.S. government and securities backed by mortgages
or other assets. The fund's aggregate portfolio will have a dollar-weighted
average effective maturity no greater than three years.

The values of, and the income generated by, most debt securities held by the
fund may be affected by changing interest rates and by changes in the effective
maturities and credit ratings of these securities. For example, the values of
debt securities in the fund's portfolio generally will decline when interest
rates rise and increase when interest rates fall. In addition, falling interest
rates may cause an issuer to redeem or "call" a security before its stated
maturity, which may result in the fund having to reinvest the proceeds in lower
yielding securities. Debt securities are also subject to credit risk, which is
the possibility that the credit strength of an issuer will weaken and/or an
issuer of a debt security will fail to make timely payments of principal or
interest and the security will go into default.

A bond's effective maturity is the market's trading assessment of its maturity
and represents an estimate of the most likely time period during which an
investor in that bond will receive payment of principal. For example, as market
interest rates decline, issuers may exercise call provisions that shorten the
bond's effective maturity. Conversely, if interest rates rise, effective
maturities tend to lengthen. The dollar-weighted average effective maturity of
the fund's portfolio is the market-weighted average (i.e., more weight is given
to larger holdings) of all effective maturities in the portfolio.

A security backed by the U.S. Treasury or the full faith and credit of the U.S.
government is guaranteed only as to the timely payment of interest and principal
when held to maturity. Accordingly, the current market prices for these
securities will fluctuate with changes in interest rates.

Many types of debt securities, including mortgage-related securities, are
subject to prepayment risk. For example, when interest rates fall, homeowners
are more likely to refinance their home mortgages and "prepay" their principal
earlier than expected. The fund must then reinvest the prepaid principal in new
securities when interest rates on new mortgage investments are falling, thus
reducing the fund's income. The fund may also invest in asset-backed securities
(securities backed by assets such as auto loans, credit card receivables or
other providers of credit). The loans underlying these securities are subject to
prepayments that can decrease maturities and returns. In addition, the values of
the securities ultimately depend upon payment of the underlying loans by
individuals.

Short-Term Bond Fund of America / Prospectus

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To lessen the effect of failures by individuals to make payments on these loans,
the securities may provide guarantees or other types of credit support up to a
certain amount.
The fund's investment adviser attempts to reduce the risks described above
through diversification of the portfolio and with ongoing credit analysis of
each issuer, as well as by monitoring economic and legislative developments, but
there can be no assurance that it will be successful at doing so.

The fund may also hold cash or money market instruments. The percentage of the
fund invested in such holdings varies and depends on various factors, including
market conditions. A larger percentage of such holdings could moderate the
fund's investment results in a period of rising market prices; conversely,
consistent with the fund's preservation of capital objective, it could reduce
the magnitude of the fund's loss in the event of falling market prices and
provide liquidity to make additional investments or to meet redemptions.

The fund relies on the professional judgment of its investment adviser to make
decisions about the fund's portfolio investments. The basic investment
philosophy of the investment adviser is to seek to invest in attractively priced
securities that, in its opinion, represent above-average investment
opportunities. The investment adviser seeks to accomplish this by analyzing
various factors, which may include the credit strength of the issuer, prices of
similar securities issued by comparable issuers and anticipated changes in
interest rates, general market conditions and other factors pertinent to the
particular security being evaluated. Securities may be sold when the investment
adviser believes that they no longer represent relatively attractive investment
opportunities.

Short-Term Bond Fund of America / Prospectus
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Management and organization

INVESTMENT ADVISER

Capital Research and Management Company, an experienced investment management
organization founded in 1931, serves as investment adviser to the fund and other
funds, including the American Funds. Capital Research and Management Company is
a wholly owned subsidiary of The Capital Group Companies, Inc. and is located at
333 South Hope Street, Los Angeles, California 90071, and 135 South State
College Boulevard, Brea, California 92821. Capital Research and Management
Company manages the investment portfolio and business affairs of the fund. The
estimated total management fee paid by the fund, as a percentage of average net
assets, appears in the Annual Fund Operating Expenses table under "Fees and
expenses of the fund."

EXECUTION OF PORTFOLIO TRANSACTIONS

The investment adviser places orders with broker-dealers for the fund's
portfolio transactions. The investment adviser strives to obtain best execution
for the fund's portfolio transactions, taking into account a variety of factors
to produce the most favorable total price reasonably attainable under the
circumstances. These factors include the size and type of transaction, the cost
and quality of executions, and the broker-dealer's ability to offer liquidity
and anonymity. Subject to the considerations outlined above, the investment
adviser may place orders for the fund's portfolio transactions with
broker-dealers who have sold shares of funds managed by the investment adviser,
or who have provided investment research, statistical or other related services
to the investment adviser. In placing orders for the fund's portfolio
transactions, the investment adviser does not commit to any specific amount of
business with any particular broker-dealer. Subject to best execution, the
investment adviser may consider investment research, statistical or other
related services provided to the adviser in placing orders for the fund's
portfolio transactions. However, when the investment adviser places orders for
the fund's portfolio transactions, it does not give any consideration to whether
a broker-dealer has sold shares of the funds managed by the investment adviser.

PORTFOLIO HOLDINGS
Portfolio holdings information for the fund is available on the American Funds
website at americanfunds.com. To reach this information, access the lower
portion of the fund's details page on the website. A link to the fund's complete
list of publicly disclosed portfolio holdings, updated as of each calendar
quarter-end, is generally posted to this page within 45 days after the end of
the applicable quarter. This information is available on the website until new
information for the next quarter is posted. Portfolio holdings information for
the fund is also contained in reports filed with the Securities and Exchange
Commission.

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

Short-Term Bond Fund of America / Prospectus

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MULTIPLE PORTFOLIO COUNSELOR SYSTEM

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

The primary individual portfolio counselors for Short-Term Bond Fund of America
are:

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

DAVID A. HOAG Less than 1 year Senior Vice President, Serves as a
President (since the fund's Capital Research Company fixed-income
inception) portfolio counselor
Investment professional for
17 years in total; 14 years
with Capital Research and
Management Company or
affiliate
------------------------------------------------------------------------------------------------
MARK R. MACDONALD Less than 1 year Senior Vice President and Serves as a
Senior Vice President (since the fund's Director, Capital Research fixed-income
inception) and Management Company portfolio counselor

Investment professional for
21 years in total; 12 years
with Capital Research and
Management Company or
affiliate
------------------------------------------------------------------------------------------------

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

Short-Term Bond Fund of America / Prospectus
<PAGE>

Shareholder information

SHAREHOLDER SERVICES

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

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

[map of the United States]

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

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

Short-Term Bond Fund of America / Prospectus

<PAGE>

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

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

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

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

. how long you expect to own the shares;

. how much you intend to invest;

. total expenses associated with owning shares of each class;

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

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

. availability of share classes:
-- Class B, 529-B, C and 529-C shares may be acquired only by exchanging from
Class B, 529-B, C or 529-C shares of other American Funds (see "Purchase and
exchange of shares" below);

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

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

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

Short-Term Bond Fund of America / Prospectus
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UNLESS OTHERWISE NOTED, REFERENCES IN THE FOLLOWING PAGES TO CLASS A, B, C OR F
SHARES ALSO REFER TO THE CORRESPONDING CLASS 529-A, 529-B, 529-C OR 529-F
SHARES.

SUMMARY OF THE PRIMARY DIFFERENCES AMONG SHARE CLASSES

CLASS A SHARES

Initial sales charge up to 2.50% (reduced for purchases of $500,000 or more
and eliminated for purchases of $1 million or more)
Contingent deferred none (except that a charge of 1.00% applies to certain
sales charge redemptions made within one year following purchases
of $1 million or more without an initial sales charge)
12b-1 fees currently up to .25% annually (may not exceed .30% for
Class A shares and .50% for Class 529-A shares
annually)
Dividends generally higher than other classes due to lower
annual expenses
Purchase maximum none
Conversion none

CLASS B SHARES
Initial sales charge none
Contingent deferred starts at 5.00%, declining to 0% six years after
sales charge purchase
12b-1 fees up to 1.00% annually
Dividends generally lower than A and F shares due to higher
12b-1 fees and other expenses, but higher than C
shares due to lower other expenses
Purchase maximum direct purchases of B shares are not permitted
Conversion automatic conversion to A or 529-A shares after eight
years, reducing future annual expenses

CLASS C SHARES
Initial sales charge none
Contingent deferred 1.00% if shares are sold within one year after
sales charge purchase
12b-1 fees up to 1.00% annually
Dividends generally lower than other classes due to higher 12b-1
fees and other expenses
Purchase maximum direct purchases of C shares are not permitted
Conversion automatic conversion to F shares after 10 years,
reducing future annual expenses (529-C shares will not
convert to 529-F shares)

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

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

Short-Term Bond Fund of America / Prospectus

<PAGE>

Purchase and exchange of shares

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

PURCHASE OF CLASS A, B AND C SHARES

You may generally open an account and purchase Class A shares by contacting any
investment dealer (who may impose transaction charges in addition to those
described in this prospectus) authorized to sell the fund's shares. You may
purchase additional shares in various ways, including through your investment
dealer and by mail, telephone, the Internet and bank wire. Class B and C shares
of the fund may be acquired only by exchanging from Class B and C shares of
other American Funds. Direct purchases of Class B and C shares of the fund are
not permitted.

PURCHASE OF CLASS F SHARES

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

PURCHASE OF CLASS 529 SHARES

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

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

EXCHANGE

Generally, you may exchange your shares into shares of the same class of other
American Funds without a sales charge. Class A, C or F shares may generally be
exchanged into the

Short-Term Bond Fund of America / Prospectus
<PAGE>

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

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

Exchanges have the same tax consequences as ordinary sales and purchases. For
example, to the extent you exchange shares held in a taxable account that are
worth more now than what you paid for them, the gain will be subject to
taxation. See "Transactions by telephone, fax or the Internet" for information
regarding electronic exchanges.

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

In addition to the fund's broad ability to restrict potentially harmful trading
as described above, the fund's board of directors has also adopted certain
policies and procedures with respect to frequent purchases and redemptions of
fund shares. Under the fund's "purchase blocking policy," any shareholder
redeeming shares (including redemptions that are part of an exchange
transaction) having a value of $5,000 or more from the fund will be precluded
from investing in the fund (including investments that are part of an exchange
transaction) for 30 calendar days after the redemption transaction. This
prohibition will not apply to redemptions by shareholders whose shares are held
on the books of third-party intermediaries that have not adopted procedures to
implement this policy. American Funds Service Company will work with
intermediaries to develop such procedures or other procedures that American
Funds Service Company determines are reasonably designed to achieve the
objective of the purchase blocking policy. At the time the intermediaries adopt
these procedures, shareholders whose accounts are on the books of such
intermediaries will be subject to this purchase blocking policy or another
frequent trading policy that is reasonably designed to achieve the objective of
the purchase blocking policy. There is no guarantee that all instances of
frequent trading in fund shares will be prevented.

Short-Term Bond Fund of America / Prospectus

<PAGE>

Under the fund's purchase blocking policy, certain purchases will not be
prevented and certain redemptions will not trigger a purchase block, such as:
systematic redemptions and purchases where the entity maintaining the
shareholder account is able to identify the transaction as a systematic
redemption or purchase; purchases and redemptions of shares having a value of
less than $5,000; retirement plan contributions, loans and distributions
(including hardship withdrawals) identified as such on the retirement plan
recordkeeper's system; and purchase transactions involving transfers of assets,
rollovers, Roth IRA conversions and IRA recharacterizations, where the entity
maintaining the shareholder account is able to identify the transaction as one
of these types of transactions.

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

PURCHASE MINIMUMS AND MAXIMUMS

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

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

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

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

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

Short-Term Bond Fund of America / Prospectus
<PAGE>

VALUING SHARES
The net asset value of each share class of the fund is the value of a single
share. The fund calculates the net asset value each day the New York Stock
Exchange is open for trading as of approximately 4:00 p.m. New York time, the
normal close of regular trading. Assets are valued primarily on the basis of
market quotations. However, the fund has adopted procedures for making "fair
value" determinations if market quotations are not readily available or are not
considered reliable. For example, fair value procedures may be used if a
security defaults and there is no market for the security. Use of these
procedures is intended to result in more appropriate net asset values.

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

MOVING BETWEEN SHARE CLASSES

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

Short-Term Bond Fund of America / Prospectus

<PAGE>

Sales charges

CLASS A SHARES

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

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

Less than $500,000 2.50% 2.56% 2.00%
-------------------------------------------------------------------------------
$500,000 but less than $750,000 2.00 2.04 1.60
-------------------------------------------------------------------------------
$750,000 but less than $1 million 1.50 1.52 1.20
-------------------------------------------------------------------------------
$1 million or more and certain other none none see below
investments described below
-------------------------------------------------------------------------------

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

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

CLASS A PURCHASES NOT SUBJECT TO SALES CHARGES

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

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

. investments made by accounts that are part of certain qualified fee-based
programs and that purchased Class A shares before March 15, 2001; and

Short-Term Bond Fund of America / Prospectus
<PAGE>

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

The distributor may pay dealers up to 1% on investments made in Class A shares
with no initial sales charge. The fund may reimburse the distributor for these
payments through its plans of distribution (see "Plans of distribution" below).
Transfers from certain 529 plans to plans managed by the American Funds
organization will be made with no sales charge. No commission will be paid to
the dealer on such a transfer. Please see the statement of additional
information for more information.

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

EMPLOYER-SPONSORED RETIREMENT PLANS

Employer-sponsored retirement plans not currently invested in Class A shares
and wishing to invest without a sales charge are not eligible to purchase Class
A shares. Such plans may invest only in Class R shares, which are described in
more detail in the fund's retirement plan prospectus.

Provided that the plan's recordkeeper can properly apply a sales charge on the
plan's investments, an employer-sponsored retirement plan not currently
invested in Class A shares and wishing to invest less than $1 million may
invest in Class A shares, but the purchase of these shares will be subject to
the applicable sales charge. An employer-sponsored retirement plan that
purchases Class A shares with a sales charge will be eligible to purchase
additional Class A shares in accordance with the sales charge table above. If
the recordkeeper cannot properly apply a sales charge on the plan's
investments, then the plan may invest only in Class R shares.

Employer-sponsored retirement plans not currently invested in Class A shares,
or that are currently investing in Class A shares with a sales charge, are not
eligible to establish a statement of intention that qualifies them to purchase
Class A shares without a sales charge. More information about statements of
intention can be found under "Sales charge reductions and waivers."

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

Short-Term Bond Fund of America / Prospectus

<PAGE>

CLASS B AND C SHARES

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

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

CONTINGENT DEFERRED SALES CHARGE ON CLASS B SHARES

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

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

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

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

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

AUTOMATIC CONVERSION OF CLASS B AND C SHARES

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

Short-Term Bond Fund of America / Prospectus
<PAGE>

CLASS 529-E AND CLASS F SHARES

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

Sales charge reductions and waivers

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

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

REDUCING YOUR CLASS A INITIAL SALES CHARGE

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

AGGREGATING ACCOUNTS

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

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

. solely controlled business accounts; and

. single-participant retirement plans.

Short-Term Bond Fund of America / Prospectus

<PAGE>

CONCURRENT PURCHASES

You may combine simultaneous purchases (including, upon your request, purchases
for gifts) of any class of shares of two or more American Funds, as well as
individual holdings in various American Legacy variable annuity contracts and
variable life insurance policies, to qualify for a reduced Class A sales
charge.

RIGHTS OF ACCUMULATION

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

In addition, you may also take into account the current value of your
individual holdings in various American Legacy variable annuity contracts and
variable life insurance policies to determine your Class A sales charge. If you
make a gift of shares, upon your request, you may purchase the shares at the
sales charge discount allowed under rights of accumulation of all of your
American Funds and American Legacy accounts.

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

RIGHT OF REINVESTMENT

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

Short-Term Bond Fund of America / Prospectus
<PAGE>

CONTINGENT DEFERRED SALES CHARGE WAIVERS

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

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

. tax-free returns of excess contributions to IRAs;

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

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

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

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

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

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

Rollovers from retirement plans to IRAs

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

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

. rollovers to IRAs that are attributable to American Funds investments, if they
meet all of the following three requirements:
-- the retirement plan from which assets are being rolled over is part of an
American Funds proprietary retirement plan program (such as PlanPremier,/(R)/
Recordkeeper Direct/(R)/ or Recordkeeper Connect/(R)/) or is a plan whose
participant subaccounts are serviced by American Funds Service Company;

-- the plan's assets were invested in American Funds at the time of
distribution; and

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

Short-Term Bond Fund of America / Prospectus

<PAGE>

IRA rollover assets that roll over without a sales charge as described above
will not be subject to a contingent deferred sales charge and investment dealers
will be compensated solely with an annual service fee that begins to accrue
immediately. IRA rollover assets that are not attributable to American Funds
investments, as well as future contributions to the IRA, will be subject to
sales charges and the terms and conditions generally applicable to Class A share
investments as described in the prospectus and statement of additional
information if invested in Class A shares.

TRANSFERS TO IRAS

Transfers to IRAs that are attributable to American Funds investments held in
SIMPLE IRAs, SEPs or SARSEPs will not be subject to a sales charge if invested
in Class A shares.

Plans of distribution

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

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

Short-Term Bond Fund of America / Prospectus
<PAGE>

Other compensation to dealers

American Funds Distributors, at its expense, currently provides additional
compensation to investment dealers. These payments may be made, at the
discretion of American Funds Distributors, to the top 75 dealers (or their
affiliates) who have sold shares of the American Funds. The level of payments
made to a qualifying firm in any given year will vary and in no case would
exceed the sum of (a) .10% of the previous year's American Funds sales by that
dealer and (b) .02% of American Funds assets attributable to that dealer. For
calendar year 2005, aggregate payments made by American Funds Distributors to
dealers were less than .02% of the assets of the American Funds. Aggregate
payments may also change from year to year. A number of factors will be
considered in determining payments, including the qualifying dealer's sales,
assets and redemption rates, and the quality of the dealer's relationship with
American Funds Distributors. American Funds Distributors makes these payments to
help defray the costs incurred by qualifying dealers in connection with efforts
to educate financial advisers about the American Funds so that they can make
recommendations and provide services that are suitable and meet shareholder
needs. American Funds Distributors will, on an annual basis, determine the
advisability of continuing these payments. American Funds Distributors may also
pay expenses associated with meetings conducted by dealers outside the top 75
firms to facilitate educating financial advisers and shareholders about the
American Funds.

Short-Term Bond Fund of America / Prospectus

<PAGE>

How to sell shares

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

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

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

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

WRITING TO AMERICAN FUNDS SERVICE COMPANY

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

. A signature guarantee is required if the redemption is:

-- over $75,000;

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

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

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

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

TELEPHONING OR FAXING AMERICAN FUNDS SERVICE COMPANY OR USING THE INTERNET

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

. Checks must be made payable to the registered shareholder.

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

If you recently purchased shares and subsequently request a redemption of those
shares, you will receive proceeds from the redemption once a sufficient period
of time has passed to reasonably assure that checks or drafts (including
certified or cashier's checks) for the shares purchased have cleared (normally
10 business days).
If you notify American Funds Service Company, you may reinvest proceeds from a
redemption, dividend payment or capital gain distribution without a sales charge
in the same fund or other American Funds within 90 days after the date of the
redemption or distribution. Proceeds from a Class B share redemption made during
the contingent deferred sales charge period will be reinvested in Class A
shares. Proceeds from any other type of redemption and all dividend payments and
capital gain distributions will be reinvested in the same share class from which
the original redemption or distribution was made. Any contingent deferred sales
charge on Class A or C shares will be credited to your account. Redemption
proceeds of Class A shares representing direct purchases in American Funds money
market funds that are reinvested in non-money market American Funds will be
subject to a sales charge. Proceeds will be reinvested at the next calculated

Short-Term Bond Fund of America / Prospectus
<PAGE>

net asset value after your request is received and accepted by American Funds
Service Company. You may not reinvest proceeds in the American Funds as
described in this paragraph if such proceeds are subject to a purchase block as
described under "Frequent trading of fund shares." This paragraph does not apply
to rollover investments as described under "Rollovers from retirement plans to
IRAs."

TRANSACTIONS BY TELEPHONE, FAX OR THE INTERNET

Generally, you are automatically eligible to use these services for redemptions
and exchanges unless you notify us in writing that you do not want any or all of
these services. You may reinstate these services at any time.

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

Short-Term Bond Fund of America / Prospectus

<PAGE>

Distributions and taxes

DIVIDENDS AND DISTRIBUTIONS

The fund declares daily dividends from net investment income and distributes the
accrued dividends, which may fluctuate, to shareholders each month. Dividends
begin accruing one day after payment for shares is received by the fund or
American Funds Service Company.

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

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

TAXES ON DIVIDENDS AND DISTRIBUTIONS

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

For federal tax purposes, dividends and distributions of short-term capital
gains are taxable as ordinary income. The fund's distributions of net long-term
capital gains are taxable as long-term capital gains. Any dividends or capital
gain distributions you receive from the fund will normally be taxable to you
when made, regardless of whether you reinvest dividends or capital gain
distributions or receive them in cash.

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

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

Short-Term Bond Fund of America / Prospectus
<PAGE>

NOTES

Short-Term Bond Fund of America / Prospectus

<PAGE>

NOTES

Short-Term Bond Fund of America / Prospectus

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

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

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

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

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

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

PROGRAM DESCRIPTIONS Program descriptions for 529 programs managed by the
American Funds organization contain additional information about the policies
and services related to 529 plan accounts.

STATEMENT OF ADDITIONAL INFORMATION (SAI) AND CODES OF ETHICS The current SAI,
as amended from time to time, contains more detailed information on all aspects
of the fund, including the fund's financial statements, and is incorporated by
reference into this prospectus. This means that the current SAI, for legal
purposes, is part of this prospectus. The codes of ethics describe the personal
investing policies adopted by the fund, the fund's investment adviser and its
affiliated companies.
The codes of ethics and current SAI are on file with the Securities and Exchange
Commission (SEC). These and other related materials about the fund are available
for review or to be copied at the SEC's Public Reference Room in Washington, DC
(202/551-8090) or on the EDGAR database on the SEC's website at sec.gov or,
after payment of a duplicating fee, via e-mail request to publicinfo@sec.gov or
by writing to the SEC's Public Reference Section, 100 F Street, NE, Washington,
DC 20549. The current SAI and shareholder reports are also available, free of
charge, on americanfunds.com

HOUSEHOLD MAILINGS Each year you are automatically sent an updated prospectus
and annual and semi-annual reports for the fund. You may also occasionally
receive proxy statements for the fund. In order to reduce the volume of mail you
receive, when possible, only one copy of these documents will be sent to
shareholders who are part of the same family and share the same household
address.

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

[LOGO - recycled bug]

Printed on recycled paper
MFGEPR-948-1006P Litho in USA Investment Company File No. 811-21928
CGD/B/8011
-------------------------------------------------------------------------------
THE CAPITAL GROUP COMPANIES

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

<PAGE>

[logo - American Funds (r)]

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

Short-Term Bond
Fund of America/SM/

PROSPECTUS
ADDENDUM

October 2, 2006

<PAGE>

Class R-5 shares of Short-Term Bond Fund of America are available to certain
clients of the Personal Investment Management group of Capital Guardian Trust
Company./SM// /Accordingly, for these shareholders, the following information
should be read in conjunction with the prospectus for this fund.

Fees and expenses of the fund -- pages 2-3

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

SHAREHOLDER FEES (PAID DIRECTLY FROM YOUR INVESTMENT)
CLASS R-5
-------------------------------------------------------------------------------

Maximum initial sales charge on purchases (as a percentage of none
offering price)
-------------------------------------------------------------------------------
Maximum sales charge on reinvested dividends none
-------------------------------------------------------------------------------
Maximum contingent deferred sales charge none
-------------------------------------------------------------------------------
Redemption or exchange fees none

ANNUAL FUND OPERATING EXPENSES (DEDUCTED FROM FUND ASSETS)/1/
CLASS R-5
------------------------------------------------------------------

Management fees/2/ 0.36%
------------------------------------------------------------------
Distribution and/or service (12b-1) fees none
------------------------------------------------------------------
Other expenses/3/ 0.12
------------------------------------------------------------------
Total annual fund operating expenses/2/ 0.48

1 Based on estimated amounts for the current fiscal year.
2 The fund's investment adviser is currently waiving 10% of its management fee
(.036%). The waiver may be discontinued at any time, but is expected to
continue at this level until further review. The fund's investment adviser and
board intend to review the waiver as circumstances dictate. Estimated expenses
shown above do not reflect any waiver.

3 A portion of the fund's expenses may be used to pay third parties (including
affiliates of the fund's investment adviser) that provide recordkeeping
services to retirement plans invested in the fund.

EXAMPLE

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

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

1 YEAR 3 YEARS
-----------------------------------------------------------

Class R-5 $49 $154
-----------------------------------------------------------

<PAGE>

Purchase and exchange of shares -- pages 11-14

PURCHASE OF CLASS R-5 SHARES

Class R-5 shares of the fund are available to certain clients of the Personal
Investment Management group of Capital Guardian Trust Company. Please contact
Capital Guardian Trust Company if you wish to purchase Class R-5 shares of the
fund.

Sales charges -- pages 15-18

CLASS R-5 SHARES

Class R-5 shares are sold without any initial or contingent deferred sales
charge. In addition, no compensation is paid to investment dealers on sales of
Class R-5 shares.

<PAGE>

SHORT-TERM BOND FUND OF AMERICA

Part B
Statement of Additional Information
October 2, 2006

This document is not a prospectus but should be read in conjunction with the
current prospectus or retirement plan prospectus of Short-Term Bond Fund of
America (the "fund" or "STBF") dated October 2, 2006. You may obtain a
prospectus from your financial adviser or by writing to the fund at the
following address:

Short-Term Bond Fund of America
Attention: Secretary
333 South Hope Street
Los Angeles, California 90071
213/486-9200

Shareholders who purchase shares at net asset value through eligible retirement
plans should note that not all of the services or features described below may
be available to them. They should contact their employers for details.

TABLE OF CONTENTS

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

Certain investment limitations and guidelines . . . . . . . . . . . 2
Description of certain securities and investment techniques . . . . 2
Fundamental policies and investment restrictions. . . . . . . . . . 8
Management of the fund . . . . . . . . . . . . . . . . . . . . . . 10
Execution of portfolio transactions . . . . . . . . . . . . . . . . 23
Disclosure of portfolio holdings. . . . . . . . . . . . . . . . . . 24
Price of shares . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Taxes and distributions . . . . . . . . . . . . . . . . . . . . . . 27
Purchase and exchange of shares . . . . . . . . . . . . . . . . . . 31
Sales charges . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Sales charge reductions and waivers . . . . . . . . . . . . . . . . 37
Selling shares. . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Shareholder account services and privileges . . . . . . . . . . . . 41
General information . . . . . . . . . . . . . . . . . . . . . . . . 44
Appendix. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

Short-Term Bond Fund of America -- Page 1
<PAGE>

CERTAIN INVESTMENT LIMITATIONS AND GUIDELINES

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

DEBT SECURITIES

. The fund will invest at least 80% of its assets in bonds (bonds include any
debt instrument and cash equivalents).
. The fund will invest at least 90% of its assets in debt securities rated AA
or Aa or better (or in the case of short-term securities, those rated in
the highest quality category) by a Nationally Recognized Statistical Rating
Organization ("NRSRO") or that are unrated but determined to be of
equivalent quality.

. The fund may invest up to 10% of its assets in debt securities rated A by a
NRSRO or that are unrated but determined to be of equivalent quality.

MATURITY

. The fund's dollar-weighted average effective maturity will be no greater
than three years.

* * * * * *

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

DESCRIPTION OF CERTAIN SECURITIES AND INVESTMENT TECHNIQUES

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

DEBT SECURITIES -- Debt securities are used by issuers to borrow money.
Generally, issuers pay investors periodic interest and repay the amount borrowed
either periodically during the life of the security and/or at maturity. Some
debt securities, such as zero coupon bonds, do not pay current interest, but are
purchased at a discount from their face values and accrue interest at the
applicable coupon rate over a specified time period. 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.

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

SENSITIVITY TO INTEREST RATE AND ECONOMIC CHANGES -- Debt securities may be
sensitive to economic changes, political and corporate developments, and
interest rate changes. In addition, during an economic downturn or
substantial period of rising interest rates, issuers that are highly
leveraged may experience increased financial stress that would adversely
affect their ability to meet projected business goals, to obtain additional
financing and to service their principal and interest payment obligations.
Periods of

Short-Term Bond Fund of America -- Page 2
<PAGE>

economic change and uncertainty also can be expected to result in increased
volatility of market prices and yields of certain debt securities.

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

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

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

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

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

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

PASS-THROUGH SECURITIES -- The fund may invest in various debt obligations
backed by pools of mortgages or other assets including, but not limited to,
loans on single family residences, home equity loans, mortgages on commercial
buildings, credit card receivables and leases on airplanes or other equipment.
Principal and interest payments made on the underlying asset pools backing these
obligations are typically passed through to investors, net of any fees paid to

Short-Term Bond Fund of America -- Page 3
<PAGE>

the investor guarantor on the securities. Pass-through securities may have
either fixed or adjustable coupons. These securities include:

"MORTGAGE-BACKED SECURITIES" -- These securities may be issued by U.S.
government agencies and government-sponsored entities, such as Ginnie Mae,
Fannie Mae and Freddie Mac, and by private entities. The payment of
interest and principal on mortgage-backed obligations issued by U.S.
government agencies may be guaranteed by the full faith and credit of the
U.S. government (in the case of Ginnie Mae), or may be guaranteed by the
issuer (in the case of Fannie Mae and Freddie Mac). However, these
guarantees do not apply to the market prices and yields of these
securities, which vary with changes in interest rates.
Mortgage-backed securities issued by private entities are structured
similarly to those issued by U.S. government agencies. However, these
securities and the underlying mortgages are not guaranteed by any
government agencies. These securities generally are structured with one or
more types of credit enhancement such as insurance or letters of credit
issued by private companies. Mortgage-backed securities generally permit
borrowers to prepay their underlying mortgages. Prepayments can alter the
effective maturity of these instruments.

COLLATERALIZED MORTGAGE OBLIGATIONS (CMOS) -- CMOs are also backed by a
pool of mortgages or mortgage loans, which are divided into two or more
separate bond issues. CMOs issued by U.S. government agencies are backed by
agency mortgages, while privately issued CMOs may be backed by either
government agency mortgages or private mortgages. Payments of principal and
interest are passed through to each bond issue at varying schedules
resulting in bonds with different coupons, effective maturities and
sensitivities to interest rates. Some CMOs may be structured in a way that
when interest rates change, the impact of changing prepayment rates on the
effective maturities of certain issues of these securities is magnified.
CMOs may be less liquid or may exhibit greater price volatility than other
types of mortgage or asset-backed securities.

COMMERCIAL MORTGAGE-BACKED SECURITIES -- These securities are backed by
mortgages on commercial property, such as hotels, office buildings, retail
stores, hospitals and other commercial buildings. These securities may have
a lower prepayment uncertainty than other mortgage-related securities
because commercial mortgage loans generally prohibit or impose penalties on
prepayments of principal. In addition, commercial mortgage-related
securities often are structured with some form of credit enhancement to
protect against potential losses on the underlying mortgage loans. Many of
the risks of investing in commercial mortgage-backed securities reflect the
risks of investing in the real estate securing the underlying mortgage
loans, including the effects of local and other economic conditions on real
estate markets, the ability of tenants to make rental payments and the
ability of a property to attract and retain tenants. Commercial
mortgage-backed securities may be less liquid or exhibit greater price
volatility than other types of mortgage or asset-backed securities.

ASSET-BACKED SECURITIES -- These securities are backed by other assets such
as credit card, automobile or consumer loan receivables, retail installment
loans, or participations in pools of leases. Credit support for these
securities may be based on the underlying assets and/or provided through
credit enhancements by a third party. The values of these securities are
sensitive to changes in the credit quality of the underlying collateral,
the

Short-Term Bond Fund of America -- Page 4
<PAGE>

credit strength of the credit enhancement, changes in interest rates and at
times the financial condition of the issuer. Some asset-backed securities
also may receive prepayments that can change their effective maturities.

INFLATION-INDEXED BONDS -- The fund may invest in inflation-indexed bonds issued
by governments, their agencies or instrumentalities and corporations. The
principal value of this type of bond is adjusted in response to changes in the
level of the consumer price index. The interest rate is fixed at issuance as a
percentage of this adjustable principal. The actual interest income may
therefore both rise and fall as the level of the consumer price index rises and
falls. In particular, in a period of deflation the interest income would fall.
While the interest income may adjust upward or downward without limit in
response to changes in the consumer price index, the principal has a floor at
par, meaning that the investor receives at least the par value at redemption.

Repayment of the original bond principal upon maturity (as adjusted for
inflation) is guaranteed in the case of U.S. Treasury inflation-indexed bonds,
even during a period of deflation. However, the current market value of the
bonds is not guaranteed and will fluctuate.

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

WHEN ISSUED, DELAYED DELIVERY AND FORWARD COMMITMENT 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. When the fund agrees to
sell such securities, it does not participate in further gains or losses with
respect to the securities beginning on the date of the agreement. If the other
party to such a transaction fails to deliver or pay for the securities, the fund
could miss a favorable price or yield opportunity, or could experience a loss.

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

Short-Term Bond Fund of America -- Page 5
<PAGE>

obligations. The fund may dispose of or renegotiate any transaction offer it is
entered into, and may sell such securities before they are delivered.

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

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

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

INVESTING IN VARIOUS COUNTRIES -- Investing outside the United States involves
special risks, caused by, among other things: fluctuating local currency values;
different accounting, auditing, and financial reporting regulations and
practices in some countries; changing local and regional economic, political,
and social conditions; expropriation or confiscatory taxation and greater market
volatility. However, in the opinion of the fund's investment adviser, investing
outside the United States also can reduce certain portfolio risks due to greater
diversification opportunities.

The risks described above may be heightened in connection with investments in
developing countries. Although there is no universally accepted definition, the
investment adviser generally considers a developing country as a country that is
in the earlier stages of its industrialization cycle with a low per capita gross
domestic product ("GDP") and a low market capitalization to GDP ratio relative
to those in the United States and the European Union. Historically, the markets
of developing countries have been more volatile than the markets of developed
countries.

CASH AND CASH EQUIVALENTS -- These include (a) commercial paper (for example,
short-term notes with maturities typically up to 12 months in length issued by
corporations, governmental bodies or bank/corporation sponsored conduits
(asset-backed commercial paper)) (b) short-term bank obligations (for example,
certificates of deposit, bankers' acceptances (time drafts on a commercial bank
where the bank accepts an irrevocable obligation to pay at maturity)) or bank
notes, (c) savings association and savings bank obligations (for example, bank
notes and certificates of deposit issued by savings banks or savings
associations), (d) securities of the U.S.

Short-Term Bond Fund of America -- Page 6
<PAGE>

government, its agencies or instrumentalities that mature, or may be redeemed,
in one year or less, and (e) corporate bonds and notes that mature, or that may
be redeemed, in one year or less.

VARIABLE AND FLOATING RATE OBLIGATIONS -- The interest rates payable on certain
securities in which the fund may invest may not be fixed but may fluctuate based
upon changes in market rates or credit ratings. Variable and floating rate
obligations bear coupon rates that are adjusted at designated intervals, based
on the then current market rates of interest or credit ratings. The rate
adjustment features tend to limit the extent to which the market value of the
obligations will fluctuate.

MATURITY -- The investment adviser seeks to anticipate movements in interest
rates and may adjust the maturity distribution of the fund's portfolio
accordingly. Keeping in mind the fund's objective, the investment adviser may
increase the fund's exposure to price volatility when it appears likely to
increase current income without undue risk of capital losses.

Under normal market conditions, the fund's dollar-weighted average effective
maturity will be no greater than three years. The investment adviser will
consider the impact on effective maturity of potential changes in the financial
condition of issuers and in market interest rates in making investment
selections for the fund.

LOANS OF PORTFOLIO SECURITIES -- The fund is authorized to lend portfolio
securities to selected securities dealers or other institutional investors whose
financial condition is monitored by the investment adviser. The borrower must
maintain with the fund's custodian collateral consisting of cash, cash
equivalents or U.S. government securities equal to at least 100% of the value of
the borrowed securities, plus any accrued interest. The investment adviser will
monitor the adequacy of the collateral on a daily basis. The fund may at any
time call a loan of its portfolio securities and obtain the return of the loaned
securities. The fund will receive any interest paid on the loaned securities and
a fee or a portion of the interest earned on the collateral. The fund will limit
its loans of portfolio securities to an aggregate of 33-1/3% of the value of its
total assets, measured at the time any such loan is made.

* * * * * *

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

Fixed-income securities are generally traded on a net basis and usually neither
brokerage commissions nor transfer taxes are involved. Transaction costs are
usually reflected in the spread between the bid and asked price.

A fund's portfolio turnover rate would equal 100% if each security in the fund's
portfolio were replaced once per year.

Short-Term Bond Fund of America -- Page 7
<PAGE>

FUNDAMENTAL POLICIES AND INVESTMENT RESTRICTIONS

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

1. The fund may not with respect to 75% of its total assets, invest more than
5% of its assets in securities of any one issuer or acquire more than 10% of the
voting securities of any one issuer. These limitations do not apply to
securities issued or guaranteed by the U.S. government, its agencies or
instrumentalities.

2. The fund may not borrow money or securities, except for temporary or
emergency purposes in an amount not exceeding 33-1/3% of its total assets.
3. The fund may not make loans if, as a result, more than 33-1/3% of its total
assets would be lent to other parties (this limitation does not apply to
purchases of debt securities, repurchase agreements or loans of portfolio
securities).

4. The fund may not invest 25% or more of its assets in securities of issuers
in any one industry (other than securities issued or guaranteed by the U.S.
government, its agencies or instrumentalities).
5. The fund may not purchase or sell real estate unless acquired as a result
of ownership of securities or other instruments (this limitation does not
prevent the fund from investing in securities or other instruments backed by
real estate or securities of companies engaged in the real estate business, such
as real estate investment trusts).

6. The fund may not purchase or sell physical commodities unless acquired as a
result of ownership of securities or other instruments (this limitation does not
prevent the fund from purchasing or selling options and futures contracts or
from investing in securities or other instruments backed by physical
commodities).

7. The fund may not engage in the business of underwriting securities of other
issuers, except to the extent that the purchase or disposal of an investment
position may technically constitute the fund as an underwriter as that term is
defined under the Securities Act of 1933.

8. The fund may not issue senior securities, except as permitted under the
Investment Company Act of 1940.

With respect to fundamental investment restrictions 2 and 3, the fund does not
currently intend to borrow money or securities or make loans (this does not
apply to purchases of debt securities or loans of portfolio securities).

Short-Term Bond Fund of America -- Page 8
<PAGE>

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

1. The fund may not invest more than 15% of its net assets in securities which
are not readily marketable.
2. The fund may not purchase securities on margin, except for such short-term
credits as are necessary for the clearance of transactions, and except that the
fund may make margin payments in connection with purchases or sales of futures
contracts or of options on futures contracts.

3. The fund may not engage in short sales, except to the extent it owns or has
the right to obtain securities equivalent in kind and amount to those sold
short.

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

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

Short-Term Bond Fund of America -- Page 9
<PAGE>

MANAGEMENT OF THE FUND

BOARD OF DIRECTORS AND OFFICERS
"INDEPENDENT" DIRECTORS/1/

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

Richard G. Capen, Jr., 72 Corporate director and 15 Carnival Corporation
Director (2006) author; former U.S.
Ambassador to Spain; former
Vice Chairman, Knight-Ridder,
Inc. (communications
company); former Chairman and
Publisher, The Miami Herald
----------------
--------------------------------------------------------------------------------------------------------------
H. Frederick Christie, 73 Private investor; former 20 Ducommun Incorporated;
Director (2006) President and CEO, The IHOP Corporation;
Mission Group (non-utility Southwest Water Company
holding company, subsidiary
of Southern California Edison
Company)
--------------------------------------------------------------------------------------------------------------
Diane C. Creel, 57 Chairman of the Board, 13 Allegheny Technologies;
Director (2006) President and CEO, Ecovation, BF Goodrich;
Inc. (organic waste Foster Wheeler Ltd.
management); former President
and CEO, The Earth Technology
Corporation (international
consulting engineering)

--------------------------------------------------------------------------------------------------------------
Martin Fenton, 71 Chairman of the Board, Senior 17 None
Chairman of the Board Resource Group LLC
(Independent and (development and management
Non-Executive) (2006) of senior living communities)

--------------------------------------------------------------------------------------------------------------
Leonard R. Fuller, 60 President and CEO, Fuller 15 None
Director (2006) Consulting (financial
management consulting firm)
--------------------------------------------------------------------------------------------------------------
R. Clark Hooper, 60 President, Dumbarton Group 18 JPMorgan Value Opportunities
Director (2006) LLC (consulting); Fund
former Executive
Vice President - Policy and
Oversight, NASD
--------------------------------------------------------------------------------------------------------------
Richard G. Newman, 71 Chairman of the Board, AECOM 14 Sempra Energy;
Director (2006) Technology Corporation Southwest Water Company
(engineering, consulting and
professional technical
services)
--------------------------------------------------------------------------------------------------------------
Frank M. Sanchez, 62 Principal, The Sanchez Family 13 None
Director (2006) Corporation dba McDonald's
Restaurants (McDonald's
licensee)
--------------------------------------------------------------------------------------------------------------

Short-Term Bond Fund of America -- Page 10
<PAGE>

"INTERESTED" DIRECTORS/5,6/

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

Paul G. Haaga, Jr., 57 Vice Chairman of the Board, 17 None
Vice Chairman and Capital Research and
Director (2006) Management Company;
Director, The Capital Group
Companies, Inc.*
------------------------------------------------------------------------------------------------------
Abner D. Goldstine, 76 Senior Vice President and 13 None
Vice Chairman and Director, Capital Research
Director (2006) and Management Company
------------------------------------------------------------------------------------------------------

Short-Term Bond Fund of America -- Page 11
<PAGE>

OTHER OFFICERS/6/

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

David A. Hoag, 41 Senior Vice President, Capital Research Company*
President (2006)
-------------------------------------------------------------------------------
Mark R. Macdonald, Senior Vice President and Director, Capital Research
46 and Management Company
Senior Vice
President (2006)
-------------------------------------------------------------------------------
Kristine M. Vice President and Counsel - Fund Business Management
Nishiyama, 36 Group, Capital Research and Management Company; Vice
Vice President President and Counsel, Capital Bank and Trust
(2006) Company*
-------------------------------------------------------------------------------
Kimberly S. Verdick, Vice President - Fund Business Management Group,
41 Capital Research and Management Company
Secretary (2006)
-------------------------------------------------------------------------------
Ari M. Vinocor, 31 Vice President - Fund Business Management Group,
Treasurer (2006) Capital Research and Management Company
-------------------------------------------------------------------------------
Sharon G. Moseley, Vice President - Fund Business Management Group,
38 Capital Research and Management Company
Assistant Treasurer
(2006)
-------------------------------------------------------------------------------

* Company affiliated with Capital Research and Management Company.
1 An "independent" director refers to a director who is not an "interested
person" within the meaning of the 1940 Act.
2 Directors and officers of the fund serve until their resignation, removal or
retirement.
3 Funds managed by Capital Research and Management Company, including the
American Funds, American Funds Insurance Series,(R) which serves as the
underlying investment vehicle for certain variable insurance contracts, and
Endowments, whose shareholders are limited to certain nonprofit organizations.

4 This includes all directorships (other than those in the American Funds) that
are held by each director as a director of a public company or a registered
investment company.
5 "Interested persons," within the meaning of the 1940 Act, on the basis of
their affiliation with the fund's investment adviser, Capital Research and
Management Company, or affiliated entities (including the fund's principal
underwriter).
6 All of the officers listed are officers and/or directors/trustees of one or
more of the other funds for which Capital Research and Management Company
serves as investment adviser.

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

Short-Term Bond Fund of America -- Page 12
<PAGE>

DIRECTOR COMPENSATION -- No compensation is paid by the fund to any officer or
director who is a director, officer or employee of the investment adviser or its
affiliates. The fund typically pays each independent director an annual fee of
$1,500. If the aggregate annual fees paid to an independent director by all
funds advised by the investment adviser is less than $50,000, that independent
director would be eligible for a $50,000 alternative fee. This alternative fee
is paid by those funds for which the independent director serves as a director
on a pro-rata basis according to each fund's relative share of the annual fees
that it would typically pay. The alternative fee reflects the significant time
and labor commitment required for a director to oversee even one fund. An
independent director who is chairman of the board (an "independent chair") also
receives an additional annual fee of $25,000, paid in equal portions by the fund
and the other funds whose boards and committees typically meet jointly with
those of the fund. The fund pays to its independent chair an attendance fee (as
described below) for each meeting of a committee of the board of directors
attended as a non-voting ex-officio member.

In addition, the fund generally pays to independent directors a pro-rata portion
of fees of: (a) $3,600 for each board of directors meeting attended; (b) $1,500
for each meeting attended as a member of the nominating and governance
committee; (c) $3,000 for each meeting attended as a member of the contracts
committee; and (d) an annual fee of $6,160 for attending all audit committee
meetings.

Independent directors also receive attendance fees of (a) $2,500 for each
director seminar or information session organized by the investment adviser, (b)
$1,500 for each joint audit committee meeting with all other audit committees of
funds advised by the investment adviser and (c) $500 for each meeting of the
board or committee chairs of other funds advised by the investment adviser. The
fund and the other funds served by each independent director each pay an equal
portion of these attendance fees.

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

FUND ORGANIZATION AND THE BOARD OF DIRECTORS -- The fund, an open-end,
diversified management investment company, was organized as a Maryland
corporation on July 12, 2006. 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.

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.

Members of the board who are not employed by the investment adviser or its
affiliates 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.

Short-Term Bond Fund of America -- Page 13
<PAGE>

The fund has several different classes of shares, including Class A, B, C, F,
529-A, 529-B, 529-C, 529-E, 529-F, R-1, R-2, R-3, R-4 and R-5 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 CollegeAmerica/(R)/ account owners invested in Class 529 shares are
not shareholders of the fund and, accordingly, do not have the rights of a
shareholder, such as the right to vote proxies relating to fund shares. As the
legal owner of the fund's Class 529 shares, the Virginia College Savings
Plan/SM/ will vote any proxies relating to such fund shares.

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

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

COMMITTEES OF THE BOARD OF DIRECTORS -- The fund has an audit committee
comprised of Diane C. Creel, Martin Fenton, Richard G. Newman and Frank M.
Sanchez, none of whom is an "interested person" of the fund within the meaning
of the 1940 Act. The committee provides oversight regarding the fund's
accounting and financial reporting policies and practices, its internal controls
and the internal controls of the fund's principal service providers. The
committee acts as a liaison between the fund's independent registered public
accounting firm and the full board of directors.

The fund has a contracts committee comprised of Richard G. Capen, Jr., H.
Frederick Christie, Diane C. Creel, Martin Fenton, Leonard R. Fuller, R. Clark
Hooper, Richard G. Newman and Frank M. Sanchez, none of whom is an "interested
person" of the fund within the meaning of the 1940 Act. The committee's
principal function is to request, review and consider the information deemed
necessary to evaluate the terms of certain agreements between the fund and its
investment adviser or the investment adviser's affiliates, such as the
Investment Advisory and Service Agreement, Principal Underwriting Agreement,
Administrative Services Agreement and Plans of Distribution adopted pursuant to
rule 12b-1 under the 1940 Act, that the fund may enter into, renew or continue,
and to make its recommendations to the full board of directors on these matters.

Short-Term Bond Fund of America -- Page 14
<PAGE>

The fund has a nominating and governance committee comprised of Richard G.
Capen, Jr., H. Frederick Christie, Diane C. Creel, Martin Fenton, Leonard R.
Fuller, R. Clark Hooper, Richard G. Newman and Frank M. Sanchez, none of whom is
an "interested person" of the fund within the meaning of the 1940 Act. The
committee periodically reviews such issues as the board's composition,
responsibilities, committees, compensation and other relevant issues, and
recommends any appropriate changes to the full board of directors. The committee
also evaluates, selects and nominates independent director candidates to the
full board of directors. While the committee normally is able to identify from
its own 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.

PROXY VOTING PROCEDURES AND GUIDELINES -- The fund and its investment adviser
have adopted Proxy Voting Guidelines (the "Guidelines") with respect to voting
proxies of securities held by the fund, other American Funds, Endowments and
American Funds Insurance Series. Certain American Funds have established
separate proxy committees that vote proxies or delegate to a voting officer the
authority to vote on behalf of those funds. Proxies for all other funds are
voted by a committee of the investment adviser under authority delegated by
those funds' boards. Therefore, if more than one fund invests in the same
company, they may vote differently on the same proposal.

All U.S. proxies are voted. Non-U.S. proxies also are voted, provided there is
sufficient time and information available. After a proxy is received, the
investment adviser prepares a summary of the proposals in the proxy. A
discussion of any potential conflicts of interest is also included in the
summary. After reviewing the summary, one or more research analysts familiar
with the company and industry make a voting recommendation on the proxy
proposals. A second recommendation is made by a proxy coordinator (a senior
investment professional) based on the individual's knowledge of the Guidelines
and familiarity with proxy-related issues. The proxy summary and voting
recommendations are then sent to the appropriate proxy voting committee for the
final voting decision.

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

The Guidelines, 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 Guidelines 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.

Short-Term Bond Fund of America -- Page 15
<PAGE>

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

The following summary sets forth the general positions of the American Funds,
Endowments, American Funds Insurance Series and the investment adviser on
various proposals. A copy of the full Guidelines is available upon request, free
of charge, by calling American Funds Service Company at 800/421-0180 or visiting
the American Funds website.

DIRECTOR MATTERS -- The election of a company's slate of nominees for
director is generally supported. Votes may be withheld for some or all of
the nominees if this is determined to be in the best interest of
shareholders. Separation of the chairman and CEO positions may also be
supported. Typically, proposals to declassify the board (elect all
directors annually) are supported based on the belief that this increases
the directors' sense of accountability to shareholders.

SHAREHOLDER RIGHTS -- Proposals to repeal an existing poison pill, to
provide for confidential voting and to provide for cumulative voting are
usually supported. 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 are not typically 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 are generally voted in favor of
management's recommendations unless circumstances indicate otherwise.
INVESTMENT ADVISER -- Capital Research and Management Company, the fund's
investment adviser, founded in 1931, maintains research facilities in the United
States and abroad (Los Angeles, San Francisco, New York, Washington, DC, London,
Geneva, Hong Kong, Singapore and Tokyo). These facilities are staffed with
experienced investment professionals. The investment adviser is located at 333
South Hope Street, Los Angeles, CA 90071 and 135 South State College Boulevard,
Brea, CA 92821. It is a wholly owned subsidiary of The Capital Group Companies,
Inc., a holding company for several investment management subsidiaries. The
investment adviser manages equity assets for the American Funds through two
divisions. These divisions generally function separately from each other with
respect to investment research activities and they make investment decisions for
the funds on a separate basis.

POTENTIAL CONFLICTS OF INTEREST -- The investment adviser has adopted policies
and procedures that address conflicts of interest that may arise between a
portfolio counselor's management of the fund and his or her management of other
funds and accounts. Potential areas of conflict

Short-Term Bond Fund of America -- Page 16
<PAGE>

could involve allocation of investment opportunities and trades among funds and
accounts, use of information regarding the timing of fund trades, personal
investing activities, portfolio counselor compensation and voting relating to
portfolio securities. The investment adviser has adopted policies and procedures
that it believes are reasonably designed to address these conflicts. However,
there is no guarantee that such policies and procedures will be effective or
that the investment adviser will anticipate all potential conflicts of interest.

COMPENSATION OF INVESTMENT PROFESSIONALS -- As described in the prospectus, the
investment adviser uses a system of multiple portfolio counselors in managing
fund assets. In addition, Capital Research and Management Company's investment
analysts may make investment decisions with respect to portions of a fund's
portfolio within their research coverage. Portfolio counselors and investment
analysts may also make investment decisions for other mutual funds advised by
Capital Research and Management Company. The investment adviser's investment
analysts do not currently manage a research portfolio in the fund.

Portfolio counselors and investment analysts are paid competitive salaries by
Capital Research and Management Company. In addition, they may receive bonuses
based on their individual portfolio results. Investment professionals also may
participate in profit-sharing plans. The relative mix of compensation
represented by bonuses, salary and profit-sharing will vary depending on the
individual's portfolio results, contributions to the organization and other
factors. In order to encourage a long-term focus, bonuses based on investment
results are principally determined by comparing pretax total returns to relevant
benchmarks over both the most recent year and a four-year rolling average, with
the greater weight placed on the four-year rolling average. For portfolio
counselors, benchmarks may include measures of the marketplaces in which the
relevant 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 also separately compensates analysts for
the quality of their research efforts. The benchmark against which Short-Term
Bond Fund of America portfolio counselors is measured include: Lehman Brothers
U.S. Government/Credit 1-3 Years (excl. BBB/Baa) Index.

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

Short-Term Bond Fund of America -- Page 17
<PAGE>

THE FOLLOWING TABLE REFLECTS INFORMATION AS OF AUGUST 31, 2006:

NUMBER NUMBER
OF OTHER OF OTHER NUMBER
REGISTERED POOLED OF OTHER
INVESTMENT INVESTMENT ACCOUNTS
COMPANIES (RICS) VEHICLES (PIVS) THAT
THAT THAT PORTFOLIO
PORTFOLIO PORTFOLIO COUNSELOR
DOLLAR RANGE COUNSELOR COUNSELOR MANAGES AND
OF FUND MANAGES AND MANAGES AND ASSETS OF
PORTFOLIO SHARES ASSETS OF RICS ASSETS OF PIVS OTHER ACCOUNTS
COUNSELOR OWNED/1/ IN BILLIONS/2/ IN BILLIONS/3/ IN BILLIONS/4/
-------------------------------------------------------------------------------------------
<C
David A. Hoag not 2 $ 76.8 None None
applicable
--------------------------------------------------------------------------------------------
Mark R. not 3 $167.4 None None
Macdonald applicable
--------------------------------------------------------------------------------------------

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

4 Reflects other professionally managed accounts held at companies affiliated
with Capital Research and Management Company. Personal brokerage accounts of
portfolio counselors and their families are not reflected.

INVESTMENT ADVISORY AND SERVICE AGREEMENT -- The Investment Advisory and Service
Agreement (the "Agreement") between the fund and the investment adviser will
continue in effect until October 31, 2007, 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, cast in person at a meeting called for the purpose of voting on
such approval. The Agreement provides that the investment adviser has no
liability to the fund for its acts or omissions in the performance of its
obligations to the fund not involving willful misconduct, bad faith, gross
negligence or reckless disregard of its obligations under the Agreement. The
Agreement also provides that either party has the right to terminate it, without
penalty, upon 60 days' written notice to the other party, and that the Agreement
automatically terminates in the event of its assignment (as defined in the 1940
Act).

In addition to providing investment advisory services, the investment adviser
furnishes the services and pays the compensation and travel expenses of persons
to perform the fund's executive, administrative, clerical and bookkeeping
functions, and provides suitable office space, necessary small office equipment
and utilities, general purpose accounting forms, supplies and postage used at
the fund's offices. The fund pays all expenses not assumed by the investment
adviser, including, but not limited to, custodian, stock transfer and dividend
disbursing fees and expenses; shareholder recordkeeping and administrative
expenses; costs of the designing,

Short-Term Bond Fund of America -- Page 18
<PAGE>

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 management fee is based on the following annualized rates and daily net
asset levels:

Net asset level

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

0.36% $ 0 $ 500,000,000
------------------------------------------------------------------------------
0.33% 500,000,000 1,000,000,000
------------------------------------------------------------------------------
0.30% 1,000,000,000 1,500,000,000
------------------------------------------------------------------------------
0.28% 1,500,000,000 2,500,000,000
------------------------------------------------------------------------------
0.26% 2,500,000,000 --
------------------------------------------------------------------------------

The investment adviser has agreed to waive 10% of the management fees that it is
otherwise entitled to receive under the Agreement and is expected to continue
its waiver at this level until further review. As a result of this waiver,
management fees will be reduced similarly for all classes of shares of the fund.

ADMINISTRATIVE SERVICES AGREEMENT -- The Administrative Services Agreement (the
"Administrative Agreement") between the fund and the investment adviser relating
to the fund's Class C, F, R and 529 shares will continue in effect until October
31, 2007, unless sooner terminated, and may be renewed from year to year
thereafter, provided that any such renewal has been specifically approved at
least annually by the vote of a majority of directors who are not parties to the
Administrative Agreement or interested persons (as defined in the 1940 Act) of
any such party, cast in person at a meeting called for the purpose of voting on
such approval. The fund may terminate the Administrative Agreement at any time
by vote of a majority of independent directors. The investment adviser has the
right to terminate the Administrative Agreement upon 60 days' written notice to
the fund. The Administrative Agreement automatically terminates in the event of
its assignment (as defined in the 1940 Act).

Under the Administrative Agreement, the investment adviser provides certain
transfer agent and administrative services for shareholders of the fund's Class
C and F shares, and all Class R and 529 shares. The investment adviser contracts
with third parties, including American Funds Service Company, the fund's
Transfer Agent, to provide these services. Services include, but are not limited
to, shareholder account maintenance, transaction processing, tax information
reporting and shareholder and fund communications. In addition, the investment
adviser monitors, coordinates and oversees the activities performed by third
parties providing such services. For Class R-1, Class R-2 and Class R-3 shares,
the investment adviser has agreed to pay a portion of the fees payable under the
Administrative Agreement that would otherwise have been paid by the fund.

Short-Term Bond Fund of America -- Page 19
<PAGE>

As compensation for its services, the investment adviser receives transfer agent
fees for transfer agent services provided to the fund's Class C, F, R and 529
shares. Transfer agent fees are paid monthly according to a fee schedule
contained in a Shareholder Services Agreement between the fund and American
Funds Service Company. The investment adviser also receives an administrative
services fee at the annual rate of up to 0.15% of the average daily net assets
for Class C, F, R (excluding Class R-5 shares) and 529 shares for administrative
services provided to these share classes. Administrative services fees are paid
monthly and accrued daily. The investment adviser uses a portion of this fee to
compensate third parties for administrative services provided to the fund. Of
the remainder, the investment adviser does not retain more than 0.05% of the
average daily net assets for each applicable share class. For Class R-5 shares,
the administrative services fee is calculated at the annual rate of up to 0.10%
of the average daily net assets. This fee is subject to the same uses and
limitations described above.

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; 135 South State College Boulevard, Brea, CA 92821; 3500
Wiseman Boulevard, San Antonio, TX 78251; 8332 Woodfield Crossing Boulevard,
Indianapolis, IN 46240; and 5300 Robin Hood Road, Norfolk, VA 23513.

The Principal Underwriter receives revenues from sales of the fund's shares. For
Class A and 529-A shares, the Principal Underwriter receives commission revenue
consisting of that portion of the Class A and 529-A sales charge remaining after
the allowances by the Principal Underwriter to investment dealers. For Class B
and 529-B shares, the Principal Underwriter sells the rights to the 12b-1 fees
paid by the fund for distribution expenses to a third party and receives the
revenue remaining after compensating investment dealers for sales of Class B and
529-B shares. The fund also pays the Principal Underwriter for advancing the
immediate service fees paid to qualified dealers of Class B and 529-B shares.
For Class C and 529-C shares, the Principal Underwriter receives any contingent
deferred sales charges that apply during the first year after purchase. The fund
pays the Principal Underwriter for advancing the immediate service fees and
commissions paid to qualified dealers of Class C and 529-C shares. For Class
529-E shares, the fund pays the Principal Underwriter for advancing the
immediate service fees and commissions paid to qualified dealers. For Class F
and 529-F shares, the fund pays the Principal Underwriter for advancing the
immediate service fees paid to qualified dealers and advisers who sell Class F
and 529-F shares. For Class R-1, R-2, R-3 and R-4 shares, the fund pays the
Principal Underwriter for advancing the immediate service fees paid to qualified
dealers and advisers who sell Class R-1, R-2, R-3 and R-4 shares.

The fund has adopted plans of distribution (the "Plans") pursuant to rule 12b-1
under the 1940 Act. The Principal Underwriter receives amounts payable pursuant
to the Plans (see below). 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 and who have no direct or indirect financial interest in
the operation of the Plans or the Principal Underwriting Agreement. Potential
benefits of the Plans to the fund include quality shareholder services; savings
to the fund in transfer agency costs; and benefits to the investment process
from growth or stability of assets. The selection and nomination of independent
directors are committed to the discretion of the independent directors during
the existence of the Plans. The Plans may not be amended to increase materially
the amount spent for distribution without shareholder approval. Plan expenses
are reviewed quarterly and the Plans must be renewed annually by the board of
directors.

Short-Term Bond Fund of America -- Page 20
<PAGE>

Under the Plans, the fund may annually expend the following 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: (a) for Class A shares, up to 0.30% of the average daily
net assets attributable to Class A shares (Class A 12b-1 fees currently may not
exceed 0.25% of average daily net assets attributable to Class A shares without
approval of the fund's board of directors.); (b) for Class 529-A shares, up to
0.50% of the average daily net assets attributable to Class 529-A shares; (c)
for Class B and 529-B shares, up to 1.00% of the average daily net assets
attributable to Class B and 529-B shares, respectively; (d) for Class C and
529-C shares, up to 1.00% of the average daily net assets attributable to Class
C and 529-C shares, respectively; (e) for Class 529-E shares, up to 0.75% of the
average daily net assets attributable to Class 529-E shares; (f) for Class F and
529-F shares, up to 0.50% of the average daily net assets attributable to Class
F and 529-F shares, respectively; (g) for Class R-1 shares, up to 1.00% of the
average daily net assets attributable to Class R-1 shares; (h) for Class R-2
shares, up to 1.00% of the average daily net assets attributable to Class R-2
shares; (i) for Class R-3 shares, up to 0.75% of the average daily net assets
attributable to Class R-3 shares; and (j) for Class R-4 shares, up to 0.50% of
the average daily net assets attributable to Class R-4 shares. The fund has not
adopted a Plan for Class R-5 shares; accordingly, no 12b-1 fees are paid from
Class R-5 share assets.

For Class A and 529-A shares: currently (a) up to 0.25% is reimbursed to the
Principal Underwriter for paying service-related expenses, including paying
service fees to qualified dealers, and (b) up to the amount allowable under
the fund's Class A and 529-A 12b-1 limit is reimbursed to the Principal
Underwriter for paying distribution-related expenses, including for Class A
and 529-A shares dealer commissions and wholesaler compensation paid on sales
of shares of $1 million or more purchased without a sales charge (including
purchases by employer-sponsored defined contribution-type retirement plans
investing $1 million or more or with 100 or more eligible employees, and
retirement plans, endowments and foundations with $50 million or more in
assets -- "no load purchases"). Commissions on no load purchases of Class A
and 529-A shares in excess of the Class A and 529-A plan limitations not
reimbursed to the Principal Underwriter during the most recent fiscal
quarter are recoverable for five quarters, provided that such commissions
do not exceed the annual expense limit. After five quarters, these
commissions are not recoverable.

For Class B and 529-B shares: (a) up to 0.25% is paid to the Principal
Underwriter for paying service-related expenses, including paying service fees
to qualified dealers, and (b) 0.75% is paid to the Principal Underwriter for
distribution-related expenses, including the financing of commissions paid to
qualified dealers.

For Class C and 529-C shares: (a) up to 0.25% is paid to the Principal
Underwriter for paying service-related expenses, including paying service fees
to qualified dealers, and (b) up to 0.75% is paid to the Principal Underwriter
for paying distribution-related expenses, including commissions paid to
qualified dealers.

For Class 529-E shares: currently (a) up to 0.25% is paid to the Principal
Underwriter for paying service-related expenses, including paying service fees
to qualified dealers, and (b) up to 0.25% is paid to the Principal Underwriter
for paying distribution-related expenses, including commissions paid to
qualified dealers.

For Class F and 529-F shares: currently up to 0.25% is paid to the Principal
Underwriter for paying service-related expenses, including paying service fees
to qualified dealers or advisers.

Short-Term Bond Fund of America -- Page 21
<PAGE>

For Class R-1 shares: (a) up to 0.25% is paid to the Principal Underwriter for
paying service-related expenses, including paying service fees to qualified
dealers, and (b) up to 0.75% is paid to the Principal Underwriter for
distribution-related expenses, including commissions paid to qualified dealers.

For Class R-2 shares: currently (a) up to 0.25% is paid to the Principal
Underwriter for paying service-related expenses, including paying service fees
to qualified dealers, and (b) up to 0.50% is paid to the Principal Underwriter
for paying distribution-related expenses, including commissions paid to
qualified dealers.

For Class R-3 shares: currently (a) up to 0.25% is paid to the Principal
Underwriter for paying service-related expenses, including paying service fees
to qualified dealers, and (b) up to 0.25% is paid to the Principal Underwriter
for paying distribution-related expenses, including commissions paid to
qualified dealers.

For Class R-4 shares: currently up to 0.25% is paid to the Principal Underwriter
for paying service-related expenses, including paying service fees to qualified
dealers or advisers.

OTHER COMPENSATION TO DEALERS -- As of January 2006, the top dealers (or their
affiliates) that American Funds Distributors anticipates will receive additional
compensation (as described in the prospectus) include:

A. G. Edwards & Sons, Inc.
AIG Advisors Group:
Advantage Capital
AIG Financial Advisors
FSC
Royal Alliance
American General Securities Inc.
Ameritas Investment Corp.
AXA Advisors, LLC
Cadaret, Grant & Co., Inc.
Cambridge Investment Research, Inc.
Capital Analysts, Inc.
Commonwealth Financial Network
Cuna Brokerage Services, Inc.
Deutsche Bank Securities Inc.
Edward Jones
Ferris, Baker Watts, Inc.
Genworth Financial Securities Corp.
Hefren-Tillotson, Inc.
Hornor, Townsend & Kent, Inc.
ING Advisors Network Inc.:
Bancnorth Investment Group
Financial Network
ING Financial Advisors
ING Financial Partners
Multi - Financial
Primevest
InterSecurities, Inc./Transamerica Financial Advisors, Inc.

Short-Term Bond Fund of America -- Page 22
<PAGE>

Investacorp, Inc.
Janney Montgomery Scott LLC
Jefferson Pilot Securities Corporation
JJB Hilliard, WL Lyons, Inc./PNC Bank
Legg Mason Wood Walker, Inc.
Lincoln Financial Advisors Corporation
McDonald Investments Inc./Society National Bank
Merrill Lynch, Pierce, Fenner & Smith Inc.
Metlife Enterprises
MML Investors Services, Inc.
Morgan Keegan & Company, Inc.
Morgan Stanley DW
NatCity Investment, Inc.
National Planning Holdings Inc.:
Invest
Investment Centers of America
National Planning Corp
SII Investments
NFP Securities, Inc.
Northwestern Mutual Investment Services, LLC.
Pacific Select Group, LLC:
Associated Securities
Contemporary Financial
Mutual Service Corporation
United Planners
Waterstone
Park Avenue Securities LLC
Piper Jaffray & Co.
Princor Financial Services
ProEquities, Inc.
Raymond James Financial Services/Raymond James & Associates
RBC Dain Rauscher Inc.
Robert W. Baird & Co. Inc.
Securian Financial Services/C.R.I. Securities Inc.
Securities Service Network Inc.
Signator Investors, Inc.
Smith Barney
Stifel, Nicolaus & Company, Inc.
The O.N. Equity Sales Company
UBS Financial Services Inc.
US Bancorp Investments, Inc.
Wachovia Securities

EXECUTION OF PORTFOLIO TRANSACTIONS

As described in the prospectus, the investment adviser places orders with
broker-dealers for the fund's portfolio transactions. Portfolio transactions for
the fund may be executed as part of concurrent authorizations to purchase or
sell the same security for other funds served by the investment adviser, or for
trusts or other accounts served by affiliated companies of the

Short-Term Bond Fund of America -- Page 23
<PAGE>

investment adviser. When such concurrent authorizations occur, the objective is
to allocate the executions in an equitable manner.

The fund is required to disclose information regarding investments in the
securities of its "regular" broker-dealers (or parent companies of its regular
broker-dealers) that derive more than 15% of their revenue from broker-dealer,
underwriter or investment adviser activities. A regular broker-dealer is (a) one
of the 10 broker-dealers that received from the fund the largest amount of
brokerage commissions by participating, directly or indirectly, in the fund's
portfolio transactions during the fund's most recent fiscal year; (b) one of the
10 broker-dealers that engaged as principal in the largest dollar amount of
portfolio transactions of the fund during the fund's most recent fiscal year; or
(c) one of the 10 broker-dealers that sold the largest amount of securities of
the fund during the fund's most recent fiscal year.

DISCLOSURE OF PORTFOLIO HOLDINGS

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

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

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

Subject to board policies, the authority to disclose a fund's portfolio
holdings, and to establish policies with respect to such disclosure, resides
with the appropriate investment-related committees of the fund's investment
adviser. In exercising their authority, the committees determine whether
disclosure of information about the fund's portfolio securities is appropriate
and in the best interest of fund shareholders. The investment adviser has
implemented policies

Short-Term Bond Fund of America -- Page 24
<PAGE>

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

PRICE OF SHARES

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

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

Prices that appear in the newspaper do not always indicate prices at which you
will be purchasing and redeeming shares of the fund, since such prices generally
reflect the previous day's closing price, while purchases and redemptions are
made at the next calculated price. The price you pay for shares, the offering
price, is based on the net asset value per share, which is calculated once daily
as of approximately 4:00 p.m. New York time, which is the normal close of
trading on the New York Stock Exchange, each day the Exchange is open. If, for
example, the Exchange closes at 1:00 p.m., the fund's share price would still be
determined as of 4:00 p.m. New York time. 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;
Independence Day; Labor Day; Thanksgiving; and Christmas Day. Each share class
of the fund has a separately calculated net asset value (and share price).

All portfolio securities of funds managed by Capital Research and Management
Company (other than money market funds) are valued, and the net asset values per
share for each share class are determined, as follows:

1. Equity securities, including depositary receipts, are valued at the
official closing price of, or the last reported sale price on, the exchange or
market on which such securities are traded, as of the close of business on the
day the securities are being valued or, lacking any sales, at the last available
bid price. Prices for each security are taken from the principal exchange or
market in which the security trades. Fixed-income securities are valued at
prices obtained from an independent pricing service, when such prices are
available; however, in circumstances where the

Short-Term Bond Fund of America -- Page 25
<PAGE>

investment adviser deems it appropriate to do so, such securities will be valued
at the mean quoted bid and asked prices (or bid prices, if asked prices are not
available) or at prices for securities of comparable maturity, quality and type.
The pricing services base bond prices on, among other things, an evaluation of
the yield curve as of approximately 3:00 p.m. New York time. The fund's
investment adviser performs certain checks on these prices prior to calculation
of the fund's net asset value.

Securities with both fixed-income and equity characteristics (e.g., convertible
bonds, preferred stocks, units comprised of more than one type of security,
etc.), or equity securities traded principally among fixed-income dealers, are
valued in the manner described above for either equity or fixed-income
securities, depending on which method is deemed most appropriate by the
investment adviser.

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

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

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

The valuation committee has adopted guidelines and procedures (consistent with
SEC rules and guidance) to ensure that certain basic principles and factors are
considered when making all fair value determinations. As a general principle,
securities lacking readily available market quotations, or that have quotations
that are considered unreliable by the investment adviser, are valued in good
faith by the valuation committee based upon what the fund might reasonably
expect to receive upon their current sale. The valuation committee considers all
indications of value available to it in determining the fair value to be
assigned to a particular security, including, without limitation, the type and
cost of the security, contractual or legal restrictions on resale of the
security, relevant financial or business developments of the issuer, actively
traded similar or related securities, conversion or exchange rights on the
security, related corporate actions, significant events occurring after the
close of trading in the security and changes in overall market conditions. The
fund follows standard industry practice by typically reflecting changes in its
holdings of portfolio securities on the first business day following a portfolio
trade.

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

Short-Term Bond Fund of America -- Page 26
<PAGE>

expense items attributable to particular share classes, are deducted from total
assets attributable to such share classes.

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

TAXES AND DISTRIBUTIONS

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

To be treated as a regulated investment company under Subchapter M of the Code,
the fund must also (a) derive at least 90% of its gross income from dividends,
interest, payments with respect to securities loans, net income from certain
publicly traded partnerships and gains from the sale or other disposition of
securities or foreign currencies, or other income (including, but not limited
to, gains from options, futures or forward contracts) derived with respect to
the business of investing in such securities or currencies, and (b) diversify
its holdings so that, at the end of each fiscal quarter, (i) at least 50% of the
market value of the fund's assets is represented by cash, U.S. government
securities and securities of other regulated investment companies, and other
securities (for purposes of this calculation, generally limited in respect of
any one issuer, to an amount not greater than 5% of the market value of the
fund's assets and 10% of the outstanding voting securities of such issuer) and
(ii) not more than 25% of the value of its assets is invested in the securities
of (other than U.S. government securities or the securities of other regulated
investment companies) any one issuer; two or more issuers which the fund
controls and which are determined to be engaged in the same or similar trades or
businesses; or the securities of certain publicly traded partnerships.

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

Short-Term Bond Fund of America -- Page 27
<PAGE>

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

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

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

DIVIDENDS -- The fund intends to follow the practice of distributing
substantially all of its investment company taxable income. Investment
company taxable income generally includes dividends, interest, net
short-term capital gains in excess of net long-term capital losses, and
certain foreign currency gains, if any, less expenses and certain foreign
currency losses.
Under the Code, gains or losses attributable to fluctuations in exchange
rates that occur between the time the fund accrues receivables or
liabilities denominated in a foreign currency and the time the fund
actually collects such receivables, or pays such liabilities, generally are
treated as ordinary income or ordinary loss. Similarly, on disposition of
debt securities denominated in a foreign currency and on disposition of
certain futures contracts, forward contracts and options, gains or losses
attributable to fluctuations in the value of foreign currency between the
date of acquisition of the security or contract and the date of disposition
are also treated as ordinary gain or loss. These gains or losses, referred
to under the Code as Section 988 gains or losses, may increase or decrease
the amount of the fund's investment company taxable income to be
distributed to its shareholders as ordinary income.

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

To avoid such tax and interest, the fund intends to elect to treat these
securities as sold on the last day of its fiscal year and recognize any
gains for tax purposes at that time.

Short-Term Bond Fund of America -- Page 28
<PAGE>

Under this election, deductions for losses are allowable only to the extent
of any prior recognized gains, and both gains and losses will be treated as
ordinary income or loss. The fund will be required to distribute any
resulting income, even though it has not sold the security and received
cash to pay such distributions. Upon disposition of these securities, any
gain recognized is treated as ordinary income and loss is treated as
ordinary loss to the extent of any prior recognized gain.

Dividends from domestic corporations may comprise some portion of the
fund's gross income. To the extent that such dividends constitute any of
the fund's gross income, a portion of the income distributions of the fund
may be eligible for the deduction for dividends received by corporations.
Corporate shareholders will be informed of the portion of dividends that so
qualifies. The dividends-received deduction is reduced to the extent that
either the fund shares, or the underlying shares of stock held by the fund,
with respect to which dividends are received, are treated as debt-financed
under federal income tax law, and is eliminated if the shares are deemed to
have been held by the shareholder or the fund, as the case may be, for less
than 46 days during the 90-day period beginning on the date that is 45 days
before the date on which the shares become ex-dividend. Capital gain
distributions are not eligible for the dividends-received deduction.

A portion of the difference between the issue price of zero coupon
securities and their face value (original issue discount) is considered to
be income to the fund each year, even though the fund will not receive cash
interest payments from these securities. This original issue discount
(imputed income) will comprise a part of the investment company taxable
income of the fund that must be distributed to shareholders in order to
maintain the qualification of the fund as a regulated investment company
and to avoid federal income taxation at the level of the fund.

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

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

CAPITAL GAIN DISTRIBUTIONS -- The fund also intends to follow the practice
of distributing the entire excess of net realized long-term capital gains
over net realized short-term capital losses. Net capital gains for a fiscal
year are computed by taking into account any capital loss carry forward of
the fund.
If any net long-term capital gains in excess of net short-term capital
losses are retained by the fund for reinvestment, requiring federal income
taxes to be paid thereon by the fund, the fund intends to elect to treat
such capital gains as having been distributed to shareholders. As a result,
each shareholder will report such capital gains as long-term capital gains
taxable to individual shareholders at a maximum 15% capital gains rate,
will be able to claim a pro rata share of federal income taxes paid by the
fund on such gains

Short-Term Bond Fund of America -- Page 29
<PAGE>

as a credit against personal federal income tax liability, and will be
entitled to increase the adjusted tax basis on fund shares by the
difference between a pro rata share of the retained gains and such
shareholder's related tax credit.

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

DIVIDENDS -- Fund dividends are taxable to shareholders as ordinary income.
Under the 2003 Tax Act, all or a portion of a fund's dividend distribution
may be a "qualified dividend." If the fund meets the applicable holding
period requirement, it will distribute dividends derived from qualified
corporation dividends to shareholders as qualified dividends. Interest
income from bonds and money market instruments and nonqualified foreign
dividends will be distributed to shareholders as nonqualified fund
dividends. The fund will report on Form 1099-DIV the amount of each
shareholder's dividend that may be treated as a qualified dividend. If a
shareholder meets the requisite holding period requirement, qualified
dividends are taxable at a maximum rate of 15%.

CAPITAL GAINS -- Distributions of the excess of net long-term capital gains
over net short-term capital losses that the fund properly designates as
"capital gain dividends" generally will be taxable as long-term capital
gain. Regardless of the length of time the shares of the fund have been
held by a shareholder, a capital gain distribution by the fund is subject
to a maximum tax rate of 15%. Any loss realized upon the redemption of
shares held at the time of redemption for six months or less from the date
of their purchase will be treated as a long-term capital loss to the extent
of any amounts treated as distributions of long-term capital gains during
such six-month period.

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

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. However, conversion from one class to another class in the same
fund should not be a taxable event.

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

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

Short-Term Bond Fund of America -- Page 30
<PAGE>

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

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

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

UNLESS OTHERWISE NOTED, ALL REFERENCES IN THE FOLLOWING PAGES TO CLASS A, B, C
OR F SHARES ALSO REFER TO THE CORRESPONDING CLASS 529-A, 529-B, 529-C 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 adviser or
investment dealer authorized to sell the fund's shares. You may make investments
by any of the following means:

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

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

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

Short-Term Bond Fund of America -- Page 31
<PAGE>

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

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

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

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

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

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

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

Your bank should include the following information when wiring funds:

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

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

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

The Principal Underwriter will not knowingly sell shares of the fund directly or
indirectly to any person or entity, where, after the sale, such person or entity
would own beneficially directly or indirectly more than 4.5% of the outstanding
shares of the fund.

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. The R share classes are generally available only to
employer-sponsored retirement plans. Class R-5 shares are also available to
clients of the Personal Investment Management group of Capital Guardian Trust
Company who do not have an intermediary associated with their accounts and
without regard to the $1 million purchase minimum. In addition, the American
Funds state tax-exempt funds are qualified for sale only in certain
jurisdictions, and tax-exempt funds in general should not serve as

Short-Term Bond Fund of America -- Page 32
<PAGE>

retirement plan investments. The fund and the Principal Underwriter reserve the
right to reject any purchase order.

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

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

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

. Employer-sponsored CollegeAmerica accounts.

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

. Retirement accounts that are funded with employer contributions; and

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

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

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

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

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

EXCHANGES -- You may only exchange shares into other American Funds within the
same share class. However, exchanges from Class A shares of The Cash Management
Trust of America may be made to Class B or C shares of other American Funds,
except Intermediate Bond Fund of America, Limited Term Tax-Exempt Bond Fund of
America and Short-Term Bond Fund of America, 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 money market funds are subject to applicable sales
charges on the fund being purchased, unless the money market fund shares were
acquired by an exchange from a fund having a sales charge, or by reinvestment or
cross-reinvestment of dividends or capital gain distributions. Exchanges of
Class F shares generally may only be made

Short-Term Bond Fund of America -- Page 33
<PAGE>

through fee-based programs of investment firms that have special agreements with
the fund's distributor and certain registered investment advisers.

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

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

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

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

MOVING BETWEEN SHARE CLASSES

AUTOMATIC CONVERSIONS -- As described more fully in the prospectus, Class
B, 529-B and C shares automatically convert to Class A, 529-A and F shares,
respectively, after a certain period from the purchase date.

MOVING FROM CLASS B TO CLASS A SHARES -- Under the right of reinvestment
policy as described in the prospectus, if you redeem Class B shares during
the contingent deferred sales charge period, you may reinvest the proceeds
in Class A shares without paying a Class A sales charge if you notify
American Funds Service Company and the reinvestment occurs within 90 days
after the date of redemption. If you redeem your Class B shares after the
contingent deferred sales charge period and with the redemption proceeds
you purchase Class A shares, you are still responsible for paying any
applicable Class A sales charges.

MOVING FROM CLASS C TO CLASS A SHARES -- If you redeem Class C shares and
with the redemption proceeds purchase Class A shares, you are still
responsible for paying any Class C contingent deferred sales charges and
applicable Class A sales charges.

Short-Term Bond Fund of America -- Page 34
<PAGE>

MOVING FROM CLASS F TO CLASS A SHARES -- You can redeem Class F shares held
in a qualified fee-based program and with the redemption proceeds purchase
Class A shares without paying an initial Class A sales charge if all of the
following are met: (a) you are leaving or have left the fee-based program,
(b) you have held the Class F shares in the program for at least one year,
and (c) you notify American Funds Service Company and purchase the Class A
shares within 90 days after redeeming the Class F shares.

MOVING FROM CLASS A TO CLASS F SHARES -- If you are part of a qualified
fee-based program and you wish to redeem your Class A shares and with the
redemption proceeds purchase Class F shares for the program, any Class A
sales charges (including contingent deferred sales charges) that you paid
or are payable will not be credited back to your account.

SALES CHARGES

CLASS A PURCHASES

PURCHASES BY CERTAIN 403(B) PLANS

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

OTHER PURCHASES

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

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

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

Short-Term Bond Fund of America -- Page 35
<PAGE>

for the dealers, and plans that include as participants only the
Eligible Persons, their spouses, parents and/or children;

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

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

(5) insurance company separate accounts;

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

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

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

(9) wholesalers and full-time employees directly supporting wholesalers
involved in the distribution of insurance company separate accounts
whose underlying investments are managed by any affiliate of The
Capital Group Companies, Inc.; and

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

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

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

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 sales charges. These purchases consist of purchases of $1 million or
more, purchases by employer-sponsored defined contribution-type retirement plans
investing $1 million or more or with 100 or more eligible employees, and
purchases made at net asset value by certain retirement plans, endowments and
foundations with assets of $50 million or more. Commissions on such investments
(other than IRA rollover assets that roll over at no sales charge under the
fund's IRA rollover policy as described in the prospectus) are paid to dealers
at the following rates: 1.00% on

Short-Term Bond Fund of America -- Page 36
<PAGE>

amounts to $4 million, 0.50% on amounts over $4 million to $10 million and 0.25%
on amounts over $10 million. Commissions are based on cumulative investments and
are not annually reset.

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

SALES CHARGE REDUCTIONS AND WAIVERS

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

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

The market value of your existing holdings eligible to be aggregated (see
below) as of the day immediately before the start of the Statement period
may be credited toward satisfying the Statement.

The Statement may be revised upward at any time during the Statement
period, and such a revision will be treated as a new Statement, except that
the Statement period during which the purchases must be made will remain
unchanged. Purchases made from the date of revision will receive the
reduced sales charge, if any, resulting from the revised Statement.
The Statement will be considered completed if the shareholder dies within
the 13-month Statement period. Commissions to dealers will not be adjusted
or paid on the difference between the Statement amount and the amount
actually invested before the shareholder's death.

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

When the trustees of certain retirement plans purchase shares by payroll
deduction, the sales charge for the investments made during the Statement
period will be handled as

Short-Term Bond Fund of America -- Page 37
<PAGE>

follows: the total monthly investment will be multiplied by 13 and then
multiplied by 1.5. The market value of existing American Funds investments
(other than shares representing direct purchases of money market funds) as
of the day immediately before the start of the Statement period, and any
rollovers or transfers reasonably anticipated to be invested in non-money
market American Funds during the Statement period, are added to the figure
determined above. The sum is the Statement amount and applicable breakpoint
level. On the first investment and all other investments made pursuant to
the Statement, a sales charge will be assessed according to the sales
charge breakpoint thus determined. There will be no retroactive adjustments
in sales charges on investments made during the Statement period.

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

AGGREGATION -- Qualifying investments for aggregation include those made by
you and your "immediate family" as defined in the prospectus, if all
parties are purchasing shares for their own accounts and/or:
. individual-type employee benefit plans, such as an IRA, individual
403(b) plan (see exception in "Purchases by certain 403(b) plans"
under "Sales charges") or single-participant Keogh-type plan;

. 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--

Short-Term Bond Fund of America -- Page 38
<PAGE>

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

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

CONCURRENT PURCHASES -- As described in the prospectus, you may reduce your
Class A sales charge by combining purchases of all classes of shares in the
American Funds, as well as individual holdings in Endowments, American
Legacy variable annuity contracts and variable life insurance policies.
Shares of money market funds purchased through an exchange, reinvestment or
cross-reinvestment from a fund having a sales charge also qualify. However,
direct purchases of American Funds money market funds are excluded.

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

When determining your American Funds Class A sales charge, if your
investment is not in an employer-sponsored retirement plan, you may also
take into account the market value (as of the end of the week prior to your
American Funds investment) of your individual holdings in various American
Legacy variable annuity contracts and variable life insurance policies. An
employer-sponsored retirement plan may also take into account the market
value of its investments in American Legacy Retirement Investment Plans.
Direct purchases of American Funds money market funds are excluded. If you
make a gift

Short-Term Bond Fund of America -- Page 39
<PAGE>

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 American Legacy accounts.

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

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

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

. Redemptions through a systematic withdrawal plan (SWP) (see "Automatic
withdrawals" under "Shareholder account services and privileges"
below). For each SWP payment, assets that are not subject to a CDSC,
such as appreciation on shares and shares acquired through
reinvestment of dividends and/or capital gain distributions, will be
redeemed first and will count toward the 12% limit. If there is an
insufficient amount of assets not subject to a CDSC to cover a
particular SWP 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 a SWP will also count toward the 12% limit. In the
case of a SWP, the 12% limit is calculated at the time a systematic
redemption is first made, and is recalculated at the time each
additional systematic redemption is made. Shareholders who establish a
SWP should be aware that the amount of a payment not subject to a CDSC
may vary over time depending on fluctuations in the value of their
accounts. This privilege may be revised or terminated at any time.

For purposes of this paragraph, "account" means:

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

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

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

CDSC waivers are allowed only in the cases listed here and in the prospectus.
For example, CDSC waivers will not be allowed on redemptions of Class 529-B and
529-C shares due to termination of CollegeAmerica; a determination by the
Internal Revenue Service that CollegeAmerica

Short-Term Bond Fund of America -- Page 40
<PAGE>

does not qualify as a qualified tuition program under the Code; proposal or
enactment of law that eliminates or limits the tax-favored status of
CollegeAmerica; or elimination of the fund by the Virginia College Savings Plan
as an option for additional investment within CollegeAmerica.

SELLING SHARES

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

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

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

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

Redemption proceeds will not be mailed until sufficient time has passed to
provide reasonable assurance that checks or drafts (including certified or
cashier's checks) for shares purchased have cleared (which may take up to 10
business days from the purchase date). Except for delays relating to clearance
of checks for share purchases or in extraordinary circumstances (and as
permissible under the 1940 Act), sale proceeds will be paid on or before the
seventh day following receipt and acceptance of an order. Interest will not
accrue or be paid on amounts that represent uncashed distribution or redemption
checks.

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

SHAREHOLDER ACCOUNT SERVICES AND PRIVILEGES

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

AUTOMATIC INVESTMENT PLAN -- An automatic investment plan enables you to make
monthly or quarterly investments in the American Funds through automatic debits
from your bank account. To set up a plan, you must fill out an account
application and specify the amount that you would like to invest ($50 minimum
per fund; $25 minimum per fund in the case of employer-sponsored 529 accounts)
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

Short-Term Bond Fund of America -- Page 41
<PAGE>

you specified. If the date you specified falls on a weekend or holiday, your
money will be invested on the following business day. However, if the following
business day falls in the next month, your money will be invested on the
business day immediately preceding the weekend or holiday. If your bank account
cannot be debited due to insufficient funds, a stop-payment or the closing of
the account, the plan may be terminated and the related investment reversed. You
may change the amount of the investment or discontinue the plan at any time by
contacting the Transfer Agent.

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

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

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

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

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

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

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

AUTOMATIC WITHDRAWALS -- For all share classes, except the R and 529 classes of
shares, you may automatically withdraw shares from any of the American Funds.
You can make automatic withdrawals of $50 or more as often as you wish if your
account is worth at least $10,000, or up to four times a year for an account
worth at least $5,000. 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

Short-Term Bond Fund of America -- Page 42
<PAGE>

previous business day falls in the preceding month, the redemption will take
place on the following business day after the weekend or holiday.

Withdrawal payments are not to be considered as dividends, yield or income.
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.

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

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

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

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

CHECKWRITING -- You may establish check writing privileges for Class A shares
(but not Class 529-A shares) of American Funds money market funds. This can be
done by using an account application. If you request check writing privileges,
you will be provided with checks that you may

Short-Term Bond Fund of America -- Page 43
<PAGE>

use to draw against your account. These checks may be made payable to anyone you
designate and must be signed by the authorized number of registered shareholders
exactly as indicated on your account application.

REDEMPTION OF SHARES -- The fund's Articles of Incorporation permits 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.

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

GENERAL INFORMATION
CUSTODIAN OF ASSETS -- Securities and cash owned by the fund, including proceeds
from the sale of shares of the fund and of securities in the fund's portfolio,
are held by JPMorgan Chase Bank, 270 Park Avenue, New York, NY 10017-2070, as
Custodian. If the fund holds non-U.S. securities, the Custodian may hold these
securities pursuant to subcustodial arrangements in non-U.S. banks or non-U.S.
branches of U.S. banks.

TRANSFER AGENT -- American Funds Service Company, a wholly owned subsidiary of
the investment adviser, maintains the records of shareholder accounts, processes
purchases and redemptions of the fund's shares, acts as dividend and capital
gain distribution disbursing agent, and performs other related shareholder
service functions. The principal office of American Funds Service Company is
located at 135 South State College Boulevard, Brea, CA 92821-5823. American
Funds Service Company is also compensated for certain transfer agency services
provided to all other share classes from the administrative services fees paid
to Capital Research and Management Company, as described under "Administrative
services agreement."

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

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM -- PricewaterhouseCoopers LLP, 350
South Grand Avenue, Los Angeles, CA 90071, serves as the fund's independent
registered public accounting firm, providing audit services, preparation of tax
returns and review of certain documents to be filed with the Securities and
Exchange Commission. The financial statements included in this statement of
additional information from the annual report have been so included in reliance
on the report of PricewaterhouseCoopers LLP, independent registered public
accounting firm, given on the authority of said firm 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.

Short-Term Bond Fund of America -- Page 44
<PAGE>

INDEPENDENT LEGAL COUNSEL -- Paul, Hastings, Janofsky & Walker LLP, 515 South
Flower Street, Los Angeles, CA 90071, serves as counsel for the fund and for
independent directors in their capacities as such. Counsel does not provide
legal services to the fund's investment adviser or any of its affiliated
companies. A determination with respect to the independence of the fund's
"independent legal counsel" will be made at least annually by the independent
directors of the fund, as prescribed by the 1940 Act and related rules.

PROSPECTUSES, REPORTS TO SHAREHOLDERS AND PROXY STATEMENTS -- The fund's fiscal
year ends on August 31. Shareholders are provided updated prospectuses annually
and at least semiannually with reports showing the fund's investment portfolio
or summary investment portfolio, financial statements and other information. The
fund's annual financial statements are audited by the fund's independent
registered public accounting firm, PricewaterhouseCoopers LLP. In addition,
shareholders may also receive proxy statements for the fund. In an effort to
reduce the volume of mail shareholders receive from the fund when a household
owns more than one account, the Transfer Agent has taken steps to eliminate
duplicate mailings of prospectuses, shareholder reports and proxy statements. To
receive additional copies of a prospectus, report or proxy statement,
shareholders should contact the Transfer Agent.

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

LEGAL PROCEEDINGS -- On February 16, 2005, the NASD filed an administrative
complaint against the Principal Underwriter. The complaint alleges violations of
certain NASD rules by the Principal Underwriter with respect to the selection of
broker-dealer firms that buy and sell securities for mutual fund investment
portfolios. The complaint seeks sanctions, restitution and disgorgement. On
August 30, 2006, the NASD Hearing Panel ruled against Principal Underwriter and
imposed a $5 million fine. The Principal Underwriter plans to appeal this
decision to the NASD's National Adjudicatory Council.

On March 24, 2005, the investment adviser and Principal Underwriter filed a
complaint against the Attorney General of the State of California in Los Angeles
County Superior Court. The complaint alleged that the Attorney General
threatened to take enforcement actions against the investment adviser and
Principal Underwriter that are without merit and preempted by federal law. On
the same day, following the filing of the investment adviser's and Principal
Underwriter's complaint, the Attorney General of the State of California filed a
complaint against the Principal Underwriter and investment adviser. Filed in Los
Angeles County Superior Court, the Attorney General's complaint alleged
violations of certain sections of the California Corporations Code with respect
to so-called "revenue sharing" disclosures in mutual fund prospectuses and
statements of additional information. On November 22, 2005, the Los Angeles
Superior Court dismissed the Attorney General's complaint. The Attorney General
is appealing the Superior Court's decision to California's Court of Appeal for
the Second Appellate District.

Short-Term Bond Fund of America -- Page 45
<PAGE>

The investment adviser and Principal Underwriter believe that the likelihood
that these matters could have a material adverse effect on the fund or on the
ability of the investment adviser or Principal Underwriter to perform their
contracts with the fund is remote. The SEC is conducting a related investigation
as of the date of this statement of additional information. The investment
adviser and Principal Underwriter are cooperating fully. In addition, a class
action lawsuit has been filed in the U.S. District Court, Central District of
California, relating to these matters. Although most of the claims in the suit
were dismissed with prejudice, an amended complaint relating to management fees
has been filed. The investment adviser believes that this suit is without merit
and will defend itself vigorously. Further updates on these issues will be
available on the American Funds website (americanfunds.com) under "American
Funds regulatory matters."

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

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

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

*Qualified for sale only in certain jurisdictions.

Short-Term Bond Fund of America -- Page 46
<PAGE>

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

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

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

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

*Qualified for sale only in certain
jurisdictions.

Short-Term Bond Fund of America -- Page 47
<PAGE>

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

Short-Term Bond Fund of America -- Page 48
<PAGE>

APPENDIX

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

DESCRIPTION OF BOND RATINGS

MOODY'S
LONG-TERM RATING DEFINITIONS

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

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

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

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

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

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

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

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

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

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

Short-Term Bond Fund of America -- Page 49
<PAGE>

STANDARD & POOR'S
LONG-TERM ISSUE CREDIT RATINGS

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

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

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

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

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

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

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

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

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

Short-Term Bond Fund of America -- Page 50
<PAGE>

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

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

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

FITCH
LONG-TERM CREDIT RATINGS

AAA
Highest credit quality. 'AAA' ratings denote the lowest expectation of credit
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 credit
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 credit 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 there is currently expectations
of low credit risk. 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. This is the lowest investment grade
category.

BB
Speculative. 'BB' ratings indicate that there is a possibility of credit risk
developing, particularly as the result of adverse economic change over time;
however, business or financial alternatives may be available to allow financial
commitments to be met. Securities rated in this category are not investment
grade.

Short-Term Bond Fund of America -- Page 51
<PAGE>

B
Highly speculative.
. For issuers and performing obligations, 'B' ratings indicate that
significant credit risk is present, but a limited margin of safety remains.
Financial commitments are currently being met; however, capacity for
continued payment is contingent upon a sustained, favorable business and
economic environment.
. For individual obligations, may indicate distressed or defaulted
obligations with potential for extremely high recoveries. Such obligations
would possess a Recovery Rating of 'R1' (outstanding).

CCC
. For issuers and performing obligations, default is a real possibility.
Capacity for meeting financial commitments is solely reliant upon
sustained, favorable business or economic conditions.
. For individual obligations, may indicate distressed or defaulted
obligations with potential for average to superior levels of recovery.
Differences in credit quality may be denoted by plus/minus distinctions.
Such obligations typically would possess a Recovery Rating of 'R2'
(superior), or 'R3' (good) or 'R4' (average).

CC
. For issuers and performing obligations, default of some kind appears
probable.
. For individual obligations, may indicate distressed or defaulted
obligations with a Recovery Rating of 'R4' (average) or 'R5' (below
average).

C
. For issuers and performing obligations, default is imminent.
. For individual obligations, may indicate distressed or defaulted
obligations with potential for below-average to poor recoveries. Such
obligations would possess a Recovery Rating of 'R6' (poor).

RD
Indicates an entity that has failed to make due payments (within the applicable
grace period) on some but not all material financial obligations, but continues
to honor other classes of obligations.

D
Indicates an entity or sovereign that has defaulted on all of its financial
obligations. Default generally is defined as the following:

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, to categories below 'CCC', or to
Short-term ratings other than 'F1'. (The +/- modifiers are only used to
denote issues within the CCC category, whereas issuers are only rated CCC
without the use of modifiers.

Short-Term Bond Fund of America -- Page 52
<PAGE>

DESCRIPTION OF COMMERCIAL PAPER RATINGS

MOODY'S
COMMERCIAL PAPER RATINGS (HIGHEST THREE RATINGS)

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.

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.

Short-Term Bond Fund of America -- Page 53

<PAGE>

[logo - American Funds (r)]



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




Short-Term Bond
Fund of America/SM/



 RETIREMENT PLAN
 PROSPECTUS




 October 2, 2006









TABLE OF CONTENTS

 1    Risk/Return summary
 2    Fees and expenses of the fund
 4    Investment objective, strategies and risks
 6    Management and organization
 8    Purchase, exchange and sale of shares
11    Sales charges
13    Sales charge reductions
14    Rollovers from retirement plans to IRAs
15    Plans of distribution
15    Other compensation to dealers
16    Distributions and taxes






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



<PAGE>

Risk/Return summary
The fund seeks to provide you with current income while preserving your
investment by maintaining a portfolio having a dollar-weighted average effective
maturity no greater than three years and consisting primarily of debt securities
with quality ratings of AA or Aa or better and unrated securities determined to
be of equivalent quality.

The fund is designed for investors seeking income, higher credit quality and
capital preservation over the long term.
The fund primarily invests in short-term debt securities, including securities
issued and guaranteed by the U.S. government, mortgage- and asset-backed
securities. The fund may invest in debt securities and mortgage-backed
securities issued by federal agencies and instrumentalities that are not backed
by the full faith and credit of the U.S. government. Examples of such securities
are mortgage-backed securities issued by the Federal National Mortgage
Association ("Fannie Mae") and the Federal Home Loan Mortgage Corporation
("Freddie Mac"). These securities are neither issued nor guaranteed by the U.S.
Treasury.

Your investment in the fund is subject to risks, including the possibility that
the fund's income and the value of its portfolio holdings may fluctuate in
response to economic, political or social events in the United States or abroad.
The values of, and the income generated by, debt securities owned by the fund
may be affected by changing interest rates and credit risk assessments, as well
as by events specifically involving the issuers of those securities.

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

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


                                       1

                                   Short-Term Bond Fund of America / Prospectus
<PAGE>

Fees and expenses of the fund

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





 SHAREHOLDER FEES (PAID DIRECTLY FROM YOUR INVESTMENT)

                                               CLASS A    ALL R SHARE CLASSES
------------------------------------------------------------------------------

 Maximum initial sales charge on purchases      2.50%/1/         none
 (as a percentage of offering price)
------------------------------------------------------------------------------
 Maximum sales charge on reinvested dividends    none            none
------------------------------------------------------------------------------
 Maximum contingent deferred sales charge        none            none
------------------------------------------------------------------------------
 Redemption or exchange fees                     none            none









 ANNUAL FUND OPERATING EXPENSES (DEDUCTED FROM FUND ASSETS)/2/

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

 Management fees/3/                 0.36%   0.36%  0.36%  0.36%  0.36%   0.36%
-------------------------------------------------------------------------------
 Distribution and/or service        0.25    1.00   0.75   0.50   0.25    none
 (12b-1) fees/4/
-------------------------------------------------------------------------------
 Other expenses/5/                  0.15    0.66   0.90   0.36   0.20    0.12
-------------------------------------------------------------------------------
 Total annual fund operating        0.76    2.02   2.01   1.22   0.81    0.48
 expenses/3/
-------------------------------------------------------------------------------



1 The initial sales charge is reduced for purchases of $500,000 or more and
 eliminated for purchases of $1 million or more.
2 Based on estimated amounts for the current fiscal year.
3 The fund's investment adviser is currently waiving 10% of its management fee
 (.036%). The waiver may be discontinued at any time, but is expected to
 continue at this level until further review. The fund's investment adviser and
 board intend to review the waiver as circumstances dictate. Estimated expenses
 shown above do not reflect any waiver.
4 Class A 12b-1 fees are currently up to .25% and may not exceed .30% of the
 class' average net assets annually. Class R-1, R-2, R-3 and R-4 12b-1 fees may
 not exceed 1.00%, 1.00%, .75% and .50%, respectively, of the class' average net
 assets annually.
5 The fund's investment adviser intends to pay a portion of the fees relating to
 transfer agent services. The estimated reimbursements are .45%, .47%, .07% and
 .02% for Class R-1, R-2, R-3 and R-4, respectively. Estimated total annual fund
 operating expenses do not reflect any reimbursement.


                                       2

Short-Term Bond Fund of America / Prospectus


<PAGE>

OTHER EXPENSES

The "Other expenses" items in the table above include custodial, legal, transfer
agent and subtransfer agent/recordkeeping payments, as well as various other
expenses. Subtransfer agent/recordkeeping payments may be made to the fund's
investment adviser, affiliates of the adviser and unaffiliated third parties for
providing recordkeeping and other administrative services to retirement plans
invested in the fund in lieu of the transfer agent providing such services. The
amount paid for subtransfer agent/recordkeeping services will vary depending on
the share class selected and the entity receiving the payments. The table below
shows the maximum payments to entities providing services to retirement plans.





             PAYMENTS TO AFFILIATED ENTITIES       PAYMENTS TO UNAFFILIATED
-----------------------------------------------            ENTITIES
                                               --------------------------------

 Class A            .05% of assets or                  .05% of assets or
             $12 per participant position/1/    $12 per participant position/1/
-------------------------------------------------------------------------------
 Class R-1           .10% of assets                     .10% of assets
-------------------------------------------------------------------------------
 Class R-2    $27 per participant position              .25% of assets
            plus .15% of assets/2/ or .35% of
                        assets/3/
-------------------------------------------------------------------------------
 Class R-3    $12 per participant position              .15% of assets
            plus .10% of assets/2/ or .19% of
                        assets/3/
-------------------------------------------------------------------------------
 Class R-4           .10% of assets                     .10% of assets
-------------------------------------------------------------------------------
 Class R-5           .05% of assets                     .05% of assets
-------------------------------------------------------------------------------




1 Payment amount depends on the date upon which services commenced.
2 Payment with respect to Recordkeeper Direct/(R)/ program.
3 Payment with respect to PlanPremier/(R)/ program.

EXAMPLES

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

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






                                         1 YEAR   3 YEARS
----------------------------------------------------------

 Class A/*/                               $326     $487
----------------------------------------------------------
 Class R-1                                 205      634
----------------------------------------------------------
 Class R-2                                 204      630
----------------------------------------------------------
 Class R-3                                 124      387
----------------------------------------------------------
 Class R-4                                  83      259
----------------------------------------------------------
 Class R-5                                  49      154
----------------------------------------------------------




* Reflects the maximum initial sales charge in the first year.


                                       3

                                   Short-Term Bond Fund of America / Prospectus
<PAGE>

Investment objective, strategies and risks
The fund's investment objective is to provide you with current income consistent
with its stated maturity and quality standards and preservation of capital. It
invests primarily in short-term debt securities with quality ratings of AA or Aa
or better (by a Nationally Recognized Statistical Rating Organization) and in
unrated securities determined by the fund's investment adviser to be of
equivalent quality. The fund may invest up to 10% of its assets in A-rated debt
securities or in unrated securities determined by the fund's investment adviser
to be of equivalent quality. The fund may invest significantly in securities
issued and guaranteed by the U.S. government and securities backed by mortgages
or other assets. The fund's aggregate portfolio will have a dollar-weighted
average effective maturity no greater than three years.

The values of, and the income generated by, most debt securities held by the
fund may be affected by changing interest rates and by changes in the effective
maturities and credit ratings of these securities. For example, the values of
debt securities in the fund's portfolio generally will decline when interest
rates rise and increase when interest rates fall. In addition, falling interest
rates may cause an issuer to redeem or "call" a security before its stated
maturity, which may result in the fund having to reinvest the proceeds in lower
yielding securities. Debt securities are also subject to credit risk, which is
the possibility that the credit strength of an issuer will weaken and/or an
issuer of a debt security will fail to make timely payments of principal or
interest and the security will go into default.

A bond's effective maturity is the market's trading assessment of its maturity
and represents an estimate of the most likely time period during which an
investor in that bond will receive payment of principal. For example, as market
interest rates decline, issuers may exercise call provisions that shorten the
bond's effective maturity. Conversely, if interest rates rise, effective
maturities tend to lengthen. The dollar-weighted average effective maturity of
the fund's portfolio is the market-weighted average (i.e., more weight is given
to larger holdings) of all effective maturities in the portfolio.

A security backed by the U.S. Treasury or the full faith and credit of the U.S.
government is guaranteed only as to the timely payment of interest and principal
when held to maturity. Accordingly, the current market prices for these
securities will fluctuate with changes in interest rates.

Many types of debt securities, including mortgage-related securities, are
subject to prepayment risk. For example, when interest rates fall, homeowners
are more likely to refinance their home mortgages and "prepay" their principal
earlier than expected. The fund must then reinvest the prepaid principal in new
securities when interest rates on new mortgage investments are falling, thus
reducing the fund's income. The fund may also invest in asset-backed securities
(securities backed by assets such as auto loans, credit card receivables or
other providers of credit). The loans underlying these securities are subject to
prepayments that can decrease maturities and returns. In addition, the values of


                                       4

Short-Term Bond Fund of America / Prospectus


<PAGE>

the securities ultimately depend upon payment of the underlying loans by
individuals. To lessen the effect of failures by individuals to make payments on
these loans, the securities may provide guarantees or other types of credit
support up to a certain amount.
The fund's investment adviser attempts to reduce the risks described above
through diversification of the portfolio and with ongoing credit analysis of
each issuer, as well as by monitoring economic and legislative developments, but
there can be no assurance that it will be successful at doing so.

The fund may also hold cash or money market instruments. The percentage of the
fund invested in such holdings varies and depends on various factors, including
market conditions. A larger percentage of such holdings could moderate the
fund's investment results in a period of rising market prices; conversely,
consistent with the fund's preservation of capital objective, it could reduce
the magnitude of the fund's loss in the event of falling market prices and
provide liquidity to make additional investments or to meet redemptions.

The fund relies on the professional judgment of its investment adviser to make
decisions about the fund's portfolio investments. The basic investment
philosophy of the investment adviser is to seek to invest in attractively priced
securities that, in its opinion, represent above-average investment
opportunities. The investment adviser seeks to accomplish this by analyzing
various factors, which may include the credit strength of the issuer, prices of
similar securities issued by comparable issuers and anticipated changes in
interest rates, general market conditions and other factors pertinent to the
particular security being evaluated. Securities may be sold when the investment
adviser believes that they no longer represent relatively attractive investment
opportunities.


                                       5

                                   Short-Term Bond Fund of America / Prospectus
<PAGE>

Management and organization

INVESTMENT ADVISER

Capital Research and Management Company, an experienced investment management
organization founded in 1931, serves as investment adviser to the fund and other
funds, including the American Funds. Capital Research and Management Company is
a wholly owned subsidiary of The Capital Group Companies, Inc. and is located at
333 South Hope Street, Los Angeles, California 90071, and 135 South State
College Boulevard, Brea, California 92821. Capital Research and Management
Company manages the investment portfolio and business affairs of the fund. The
estimated total management fee paid by the fund, as a percentage of average net
assets, appears in the Annual Fund Operating Expenses table under "Fees and
expenses of the fund."

EXECUTION OF PORTFOLIO TRANSACTIONS

The investment adviser places orders with broker-dealers for the fund's
portfolio transactions. The investment adviser strives to obtain best execution
for the fund's portfolio transactions, taking into account a variety of factors
to produce the most favorable total price reasonably attainable under the
circumstances. These factors include the size and type of transaction, the cost
and quality of executions, and the broker-dealer's ability to offer liquidity
and anonymity. Subject to the considerations outlined above, the investment
adviser may place orders for the fund's portfolio transactions with
broker-dealers who have sold shares of funds managed by the investment adviser,
or who have provided investment research, statistical or other related services
to the investment adviser. In placing orders for the fund's portfolio
transactions, the investment adviser does not commit to any specific amount of
business with any particular broker-dealer. Subject to best execution, the
investment adviser may consider investment research, statistical or other
related services provided to the adviser in placing orders for the fund's
portfolio transactions. However, when the investment adviser places orders for
the fund's portfolio transactions, it does not give any consideration to whether
a broker-dealer has sold shares of the funds managed by the investment adviser.

PORTFOLIO HOLDINGS
Portfolio holdings information for the fund is available on the American Funds
website at americanfunds.com. To reach this information, access the lower
portion of the fund's details page on the website. A link to the fund's complete
list of publicly disclosed portfolio holdings, updated as of each calendar
quarter-end, is generally posted to this page within 45 days after the end of
the applicable quarter. This information is available on the website until new
information for the next quarter is posted. Portfolio holdings information for
the fund is also contained in reports filed with the Securities and Exchange
Commission.


                                       6

Short-Term Bond Fund of America / Prospectus


<PAGE>

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

MULTIPLE PORTFOLIO COUNSELOR SYSTEM

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

The primary individual portfolio counselors for Short-Term Bond Fund of America
are:




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

 DAVID A. HOAG           Less than 1 year    Senior Vice President,         Serves as a
 President              (since the fund's    Capital Research Company       fixed-income
                            inception)                                      portfolio counselor
                                             Investment professional for
                                             17 years in total; 14 years
                                             with Capital Research and
                                             Management Company or
                                             affiliate
------------------------------------------------------------------------------------------------
 MARK R. MACDONALD       Less than 1 year    Senior Vice President and      Serves as a
 Senior Vice President  (since the fund's    Director, Capital Research     fixed-income
                            inception)       and Management Company         portfolio counselor

                                             Investment professional for
                                             21 years in total; 12 years
                                             with Capital Research and
                                             Management Company or
                                             affiliate
------------------------------------------------------------------------------------------------





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

CERTAIN PRIVILEGES AND/OR SERVICES DESCRIBED ON THE FOLLOWING PAGES OF THIS
PROSPECTUS AND IN THE STATEMENT OF ADDITIONAL INFORMATION MAY NOT BE AVAILABLE
TO YOU DEPENDING ON YOUR INVESTMENT DEALER OR RETIREMENT PLAN RECORDKEEPER.
PLEASE SEE YOUR FINANCIAL ADVISER, INVESTMENT DEALER OR PLAN RECORDKEEPER FOR
MORE INFORMATION.


                                       7

                                   Short-Term Bond Fund of America / Prospectus
<PAGE>

Purchase, exchange and sale of shares

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

PURCHASES AND EXCHANGES

Eligible retirement plans generally may open an account and purchase Class A or
R shares by contacting any investment dealer (who may impose transaction charges
in addition to those described in this prospectus) authorized to sell the fund's
shares. Some or all R share classes may not be available through certain
investment dealers. Additional shares may be purchased through a plan's
administrator or recordkeeper.

Class A shares are generally not available for retirement plans using the
PlanPremier or Recordkeeper Direct recordkeeping programs.

Class R shares generally are available only to 401(k) plans, 457 plans,
employer-sponsored 403(b) plans, profit-sharing and money purchase pension
plans, defined benefit plans and nonqualified deferred compensation plans. Class
R shares also are generally available only to retirement plans where plan level
or omnibus accounts are held on the books of the fund. In addition, Class R-5
shares generally are available only to retirement plans with $1 million or more
in plan assets. Class R shares generally are not available to retail
nonretirement accounts, Traditional and Roth Individual Retirement Accounts
(IRAs), Coverdell Education Savings Accounts, SEPs, SARSEPs, SIMPLE IRAs,
individual 403(b) plans and 529 college savings plans.

Shares of the fund offered through this prospectus generally may be exchanged
into shares of the same class of other American Funds. Exchanges of Class A
shares from American Funds money market funds purchased without a sales charge
generally will be subject to the appropriate sales charge.

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


                                       8

Short-Term Bond Fund of America / Prospectus


<PAGE>

In addition to the fund's broad ability to restrict potentially harmful trading
as described above, the fund's board of directors has also adopted certain
policies and procedures with respect to frequent purchases and redemptions of
fund shares. Under the fund's "purchase blocking policy," any shareholder
redeeming shares (including redemptions that are part of an exchange
transaction) having a value of $5,000 or more from the fund will be precluded
from investing in the fund (including investments that are part of an exchange
transaction) for 30 calendar days after the redemption transaction. This
prohibition will not apply to redemptions by shareholders whose shares are held
on the books of third-party intermediaries that have not adopted procedures to
implement this policy. American Funds Service Company will work with
intermediaries to develop such procedures or other procedures that American
Funds Service Company determines are reasonably designed to achieve the
objective of the purchase blocking policy. At the time the intermediaries adopt
these procedures, shareholders whose accounts are on the books of such
intermediaries will be subject to this purchase blocking policy or another
frequent trading policy that is reasonably designed to achieve the objective of
the purchase blocking policy. There is no guarantee that all instances of
frequent trading in fund shares will be prevented.

Under the fund's purchase blocking policy, certain purchases will not be
prevented and certain redemptions will not trigger a purchase block, such as:
systematic redemptions and purchases where the entity maintaining the
shareholder account is able to identify the transaction as a systematic
redemption or purchase; purchases and redemptions of shares having a value of
less than $5,000; retirement plan contributions, loans and distributions
(including hardship withdrawals) identified as such on the retirement plan
recordkeeper's system; and purchase transactions involving transfers of assets,
rollovers, Roth IRA conversions and IRA recharacterizations, where the entity
maintaining the shareholder account is able to identify the transaction as one
of these types of transactions.

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

SALES

Please contact your plan administrator or recordkeeper in order to sell shares
from your retirement plan.

If you notify American Funds Service Company, you may reinvest proceeds from a
redemption, dividend payment or capital gain distribution without a sales charge
in the same fund or other American Funds within 90 days after the date of the
redemption or distribution. Proceeds will be reinvested in the same share class
from which the original redemption or distribution was made. Redemption proceeds
of Class A shares representing direct purchases in American Funds money market
funds that are reinvested in non-money


                                       9

                                   Short-Term Bond Fund of America / Prospectus
<PAGE>

market American Funds will be subject to a sales charge. Proceeds will be
reinvested at the next calculated net asset value after your request is received
and accepted by American Funds Service Company. You may not reinvest proceeds in
the American Funds as described in this paragraph if such proceeds are subject
to a purchase block as described under "Frequent trading of fund shares." This
paragraph does not apply to rollover investments as described under "Rollovers
from retirement plans to IRAs."

VALUING SHARES
The net asset value of each share class of the fund is the value of a single
share. The fund calculates the net asset value each day the New York Stock
Exchange is open for trading as of approximately 4:00 p.m. New York time, the
normal close of regular trading. Assets are valued primarily on the basis of
market quotations. However, the fund has adopted procedures for making "fair
value" determinations if market quotations are not readily available or are not
considered reliable. For example, fair value procedures may be used if a
security defaults and there is no market for the security. Use of these
procedures is intended to result in more appropriate net asset values.

Your shares will be purchased at the net asset value (plus any applicable sales
charge in the case of Class A shares) or sold at the net asset value next
determined after American Funds Service Company receives and accepts your
request.


                                       10

Short-Term Bond Fund of America / Prospectus


<PAGE>

Sales charges

CLASS A SHARES

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





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

 Less than $500,000                      2.50%     2.56%           2.00%
-------------------------------------------------------------------------------
 $500,000 but less than $750,000         2.00      2.04            1.60
-------------------------------------------------------------------------------
 $750,000 but less than $1 million       1.50      1.52            1.20
-------------------------------------------------------------------------------
 $1 million or more and certain other    none      none      see below
 investments described below
-------------------------------------------------------------------------------



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

CLASS A PURCHASES NOT SUBJECT TO SALES CHARGES

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

. investments made by accounts that are part of certain qualified fee-based
 programs and that purchased Class A shares before March 15, 2001; and

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

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


                                       11

                                   Short-Term Bond Fund of America / Prospectus
<PAGE>

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

 EMPLOYER-SPONSORED RETIREMENT PLANS

 Employer-sponsored retirement plans not currently invested in Class A shares
 and wishing to invest without a sales charge are not eligible to purchase Class
 A shares. Such plans may invest only in Class R shares.

 Provided that the plan's recordkeeper can properly apply a sales charge on the
 plan's investments, an employer-sponsored retirement plan not currently
 invested in Class A shares and wishing to invest less than $1 million may
 invest in Class A shares, but the purchase of these shares will be subject to
 the applicable sales charge. An employer-sponsored retirement plan that
 purchases Class A shares with a sales charge will be eligible to purchase
 additional Class A shares in accordance with the sales charge table above. If
 the recordkeeper cannot properly apply a sales charge on the plan's
 investments, then the plan may invest only in Class R shares.

 Employer-sponsored retirement plans not currently invested in Class A shares,
 or that are currently investing in Class A shares with a sales charge, are not
 eligible to establish a statement of intention that qualifies them to purchase
 Class A shares without a sales charge. More information about statements of
 intention can be found under "Sales charge reductions."

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

CLASS R SHARES

Class R shares are sold without any initial or contingent deferred sales charge.
The distributor will pay dealers annually an asset-based compensation of up to
1.00% for sales of Class R-1 shares, up to .75% for Class R-2 shares, up to .50%
for Class R-3 shares and up to .25% for Class R-4 shares. No dealer compensation
is paid on sales of Class R-5 shares. The fund may reimburse the distributor for
these payments through its plans of distribution (see "Plans of distribution"
below).


                                       12

Short-Term Bond Fund of America / Prospectus


<PAGE>

Sales charge reductions

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

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

REDUCING YOUR CLASS A INITIAL SALES CHARGE

Consistent with the policies described in this prospectus, two or more
retirement plans of an employer or employer's affiliates may combine all of
their American Funds investments to reduce their Class A sales charge. However,
for this purpose, investments representing direct purchases of American Funds
money market funds are excluded. Following are some different ways that you may
qualify for a reduced Class A sales charge:

 CONCURRENT PURCHASES

 Simultaneous purchases of any class of shares of two or more American Funds may
 be combined to qualify for a reduced Class A sales charge.

 RIGHTS OF ACCUMULATION

 You may take into account your accumulated holdings in all share classes of the
 American Funds to determine the initial sales charge you pay on each purchase
 of Class A shares. 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 or (b) the amount you invested
 (excluding capital appreciation) less any withdrawals. Please see the statement
 of additional information for details. You should retain any records necessary
 to substantiate the historical amounts you have invested. The current value of
 existing investments in an American Legacy/(R)/ Retirement Investment Plan may
 also be taken into account to determine your Class A sales charge.

 STATEMENT OF INTENTION
 You may reduce your Class A sales charge by establishing a statement of
 intention. A statement of intention allows you to combine all purchases of all
 share classes of American Funds non-money market funds you intend to make over
 a 13-month period to determine the applicable sales charge; however, purchases
 made under a right of


                                       13

                                   Short-Term Bond Fund of America / Prospectus
<PAGE>

 reinvestment, appreciation of your holdings, and reinvested dividends and
 capital gains do not count as purchases made during the statement period. The
 market value of your existing holdings eligible to be aggregated as of the day
 immediately before the start of the statement period may be credited toward
 satisfying the statement. A portion of your account may be held in escrow to
 cover additional Class A sales charges that may be due if your total purchases
 over the statement period do not qualify you for the applicable sales charge
 reduction. Employer-sponsored retirement plans may be restricted from
 establishing statements of intention. See "Sales charges" above for more
 information.

RIGHT OF REINVESTMENT

Please see the "Sales" section of "Purchase, exchange and sale of shares" above
for information on how to reinvest proceeds from a redemption, dividend payment
or capital gain distribution without a sales charge.

Rollovers from retirement plans to IRAs

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

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

. rollovers to IRAs that are attributable to American Funds investments, if they
 meet all of the following three requirements:
 -- the retirement plan from which assets are being rolled over is part of an
   American Funds proprietary retirement plan program (such as PlanPremier,
   Recordkeeper Direct or Recordkeeper Connect/(R)/) or is a plan whose
   participant subaccounts are serviced by American Funds Service Company;

 -- the plan's assets were invested in American Funds at the time of
   distribution; and

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

IRA rollover assets that roll over without a sales charge as described above
will not be subject to a contingent deferred sales charge and investment dealers
will be compensated solely with an annual service fee that begins to accrue
immediately. IRA rollover assets that are not attributable to American Funds
investments, as well as future contributions to the IRA, will be subject to
sales charges and the terms and conditions generally applicable to Class A share
investments as described in the prospectus and statement of additional
information if invested in Class A shares.


                                       14

Short-Term Bond Fund of America / Prospectus


<PAGE>

TRANSFERS TO IRAS

Transfers to IRAs that are attributable to American Funds investments held in
SIMPLE IRAs, SEPs or SARSEPs will not be subject to a sales charge if invested
in Class A shares.

Plans of distribution

The fund has plans of distribution or "12b-1 plans" under which it may finance
activities primarily intended to sell shares, provided the categories of
expenses are approved in advance by the fund's board of directors. The plans
provide for payments, based on annualized percentages of average daily net
assets, of up to .30% for Class A shares, up to 1.00% for Class R-1 and R-2
shares, up to .75% for Class R-3 shares and up to .50% for Class R-4 shares. For
all share classes, up to .25% of these expenses may be used to pay service fees
to qualified dealers for providing certain shareholder services. The amount
remaining for each share class may be used for distribution expenses.

The estimated 12b-1 fees paid by the fund, as a percentage of average net
assets, are indicated in the Annual Fund Operating Expenses table under "Fees
and expenses of the fund." Since these fees are paid out of the fund's assets or
income on an ongoing basis, over time they will increase the cost and reduce the
return of your investment.

Other compensation to dealers

American Funds Distributors, at its expense, currently provides additional
compensation to investment dealers. These payments may be made, at the
discretion of American Funds Distributors, to the top 75 dealers (or their
affiliates) who have sold shares of the American Funds. The level of payments
made to a qualifying firm in any given year will vary and in no case would
exceed the sum of (a) .10% of the previous year's American Funds sales by that
dealer and (b) .02% of American Funds assets attributable to that dealer. For
calendar year 2005, aggregate payments made by American Funds Distributors to
dealers were less than .02% of the assets of the American Funds. Aggregate
payments may also change from year to year. A number of factors will be
considered in determining payments, including the qualifying dealer's sales,
assets and redemption rates, and the quality of the dealer's relationship with
American Funds Distributors. American Funds Distributors makes these payments to
help defray the costs incurred by qualifying dealers in connection with efforts
to educate financial advisers about the American Funds so that they can make
recommendations and provide services that are suitable and meet shareholder
needs. American Funds Distributors will, on an annual basis, determine the
advisability of continuing these payments. American Funds Distributors may also
pay expenses associated with meetings conducted by dealers outside the top 75
firms to facilitate educating financial advisers and shareholders about the
American Funds.


                                       15

                                   Short-Term Bond Fund of America / Prospectus
<PAGE>

Distributions and taxes

DIVIDENDS AND DISTRIBUTIONS

The fund declares daily dividends from net investment income and distributes the
accrued dividends, which may fluctuate, to shareholders each month. Dividends
begin accruing one day after payment for shares is received by the fund or
American Funds Service Company.

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

All dividends and capital gain distributions paid to retirement plan
shareholders will be automatically reinvested.

TAXES ON DIVIDENDS AND DISTRIBUTIONS

Dividends and capital gains distributed by the fund to tax-deferred retirement
plan accounts are not taxable currently.

TAXES ON TRANSACTIONS

Exchanges within a tax-deferred retirement plan account will not result in a
capital gain or loss for federal or state income tax purposes. With limited
exceptions, distributions from a retirement plan account are taxable as ordinary
income.

PLEASE SEE YOUR TAX ADVISER FOR MORE INFORMATION.


                                       16

Short-Term Bond Fund of America / Prospectus


<PAGE>

NOTES


                                       17

                                   Short-Term Bond Fund of America / Prospectus
<PAGE>

NOTES


                                       18

Short-Term Bond Fund of America / Prospectus


<PAGE>

NOTES




                                       19

                                   Short-Term Bond Fund of America / Prospectus

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


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







          FOR SHAREHOLDER          American Funds Service Company
          SERVICES                 800/421-0180
          FOR RETIREMENT PLAN      Call your employer or plan
          SERVICES                 administrator
          FOR DEALER SERVICES      American Funds Distributors
                                   800/421-9900
                                   americanfunds.com
          FOR 24                   For Class R share information,
          -HOUR INFORMATION        visit
                                   AmericanFundsRetirement.com


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



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

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

STATEMENT OF ADDITIONAL INFORMATION (SAI) AND CODES OF ETHICS The current SAI,
as amended from time to time, contains more detailed information on all aspects
of the fund, including the fund's financial statements, and is incorporated by
reference into this prospectus. This means that the current SAI, for legal
purposes, is part of this prospectus. The codes of ethics describe the personal
investing policies adopted by the fund, the fund's investment adviser and its
affiliated companies.
The codes of ethics and current SAI are on file with the Securities and Exchange
Commission (SEC). These and other related materials about the fund are available
for review or to be copied at the SEC's Public Reference Room in Washington, DC
(202/551-8090) or on the EDGAR database on the SEC's website at sec.gov or,
after payment of a duplicating fee, via e-mail request to publicinfo@sec.gov or
by writing to the SEC's Public Reference Section, 100 F Street, NE, Washington,
DC 20549. The current SAI and shareholder reports are also available, free of
charge, on americanfunds.com

HOUSEHOLD MAILINGS Each year you are automatically sent an updated prospectus
and annual and semi-annual reports for the fund. You may also occasionally
receive proxy statements for the fund. In order to reduce the volume of mail you
receive, when possible, only one copy of these documents will be sent to
shareholders who are part of the same family and share the same household
address.

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


[LOGO - recycled bug]









Printed on recycled paper
RPGEPR-948-1006P Litho in USA             Investment Company File No. 811-21928
CGD/B/8011
-------------------------------------------------------------------------------
THE CAPITAL GROUP COMPANIES
American Funds      Capital Research and Management     Capital International      Capital Guardian      Capital Bank and Trust





THE FUND PROVIDES SPANISH TRANSLATION IN CONNECTION WITH THE
PUBLIC OFFERING AND SALE OF ITS SHARES. THE FOLLOWING IS A FAIR
AND ACCURATE ENGLISH TRANSLATION OF A SPANISH LANGUAGE PROSPECTUS
FOR THE FUND.

/s/ KIMBERLY S. VERDICK
    KIMBERLY S. VERDICK
    SECRETARY

<PAGE>

[logo - American Funds (r)]



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




Short-Term Bond
Fund of America/SM/



 RETIREMENT PLAN
 PROSPECTUS




 October 2, 2006









TABLE OF CONTENTS

 1    Risk/Return summary
 2    Fees and expenses of the fund
 4    Investment objective, strategies and risks
 6    Management and organization
 8    Purchase, exchange and sale of shares
11    Sales charges
13    Sales charge reductions
14    Rollovers from retirement plans to IRAs
15    Plans of distribution
15    Other compensation to dealers
16    Distributions and taxes






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



<PAGE>

Risk/Return summary
The fund seeks to provide you with current income while preserving your
investment by maintaining a portfolio having a dollar-weighted average effective
maturity no greater than three years and consisting primarily of debt securities
with quality ratings of AA or Aa or better and unrated securities determined to
be of equivalent quality.

The fund is designed for investors seeking income, higher credit quality and
capital preservation over the long term.
The fund primarily invests in short-term debt securities, including securities
issued and guaranteed by the U.S. government, mortgage- and asset-backed
securities. The fund may invest in debt securities and mortgage-backed
securities issued by federal agencies and instrumentalities that are not backed
by the full faith and credit of the U.S. government. Examples of such securities
are mortgage-backed securities issued by the Federal National Mortgage
Association ("Fannie Mae") and the Federal Home Loan Mortgage Corporation
("Freddie Mac"). These securities are neither issued nor guaranteed by the U.S.
Treasury.

Your investment in the fund is subject to risks, including the possibility that
the fund's income and the value of its portfolio holdings may fluctuate in
response to economic, political or social events in the United States or abroad.
The values of, and the income generated by, debt securities owned by the fund
may be affected by changing interest rates and credit risk assessments, as well
as by events specifically involving the issuers of those securities.

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

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


                                       1

                                   Short-Term Bond Fund of America / Prospectus
<PAGE>

Fees and expenses of the fund

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





 SHAREHOLDER FEES (PAID DIRECTLY FROM YOUR INVESTMENT)

                                               CLASS A    ALL R SHARE CLASSES
------------------------------------------------------------------------------

 Maximum initial sales charge on purchases      2.50%/1/         none
 (as a percentage of offering price)
------------------------------------------------------------------------------
 Maximum sales charge on reinvested dividends    none            none
------------------------------------------------------------------------------
 Maximum contingent deferred sales charge        none            none
------------------------------------------------------------------------------
 Redemption or exchange fees                     none            none









 ANNUAL FUND OPERATING EXPENSES (DEDUCTED FROM FUND ASSETS)/2/

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

 Management fees/3/                 0.36%   0.36%  0.36%  0.36%  0.36%   0.36%
-------------------------------------------------------------------------------
 Distribution and/or service        0.25    1.00   0.75   0.50   0.25    none
 (12b-1) fees/4/
-------------------------------------------------------------------------------
 Other expenses/5/                  0.15    0.66   0.90   0.36   0.20    0.12
-------------------------------------------------------------------------------
 Total annual fund operating        0.76    2.02   2.01   1.22   0.81    0.48
 expenses/3/
-------------------------------------------------------------------------------



1 The initial sales charge is reduced for purchases of $500,000 or more and
 eliminated for purchases of $1 million or more.
2 Based on estimated amounts for the current fiscal year.
3 The fund's investment adviser is currently waiving 10% of its management fee
 (.036%). The waiver may be discontinued at any time, but is expected to
 continue at this level until further review. The fund's investment adviser and
 board intend to review the waiver as circumstances dictate. Estimated expenses
 shown above do not reflect any waiver.
4 Class A 12b-1 fees are currently up to .25% and may not exceed .30% of the
 class' average net assets annually. Class R-1, R-2, R-3 and R-4 12b-1 fees may
 not exceed 1.00%, 1.00%, .75% and .50%, respectively, of the class' average net
 assets annually.
5 The fund's investment adviser intends to pay a portion of the fees relating to
 transfer agent services. The estimated reimbursements are .45%, .47%, .07% and
 .02% for Class R-1, R-2, R-3 and R-4, respectively. Estimated total annual fund
 operating expenses do not reflect any reimbursement.


                                       2

Short-Term Bond Fund of America / Prospectus


<PAGE>

OTHER EXPENSES

The "Other expenses" items in the table above include custodial, legal, transfer
agent and subtransfer agent/recordkeeping payments, as well as various other
expenses. Subtransfer agent/recordkeeping payments may be made to the fund's
investment adviser, affiliates of the adviser and unaffiliated third parties for
providing recordkeeping and other administrative services to retirement plans
invested in the fund in lieu of the transfer agent providing such services. The
amount paid for subtransfer agent/recordkeeping services will vary depending on
the share class selected and the entity receiving the payments. The table below
shows the maximum payments to entities providing services to retirement plans.





             PAYMENTS TO AFFILIATED ENTITIES       PAYMENTS TO UNAFFILIATED
-----------------------------------------------            ENTITIES
                                               --------------------------------

 Class A            .05% of assets or                  .05% of assets or
             $12 per participant position/1/    $12 per participant position/1/
-------------------------------------------------------------------------------
 Class R-1           .10% of assets                     .10% of assets
-------------------------------------------------------------------------------
 Class R-2    $27 per participant position              .25% of assets
            plus .15% of assets/2/ or .35% of
                        assets/3/
-------------------------------------------------------------------------------
 Class R-3    $12 per participant position              .15% of assets
            plus .10% of assets/2/ or .19% of
                        assets/3/
-------------------------------------------------------------------------------
 Class R-4           .10% of assets                     .10% of assets
-------------------------------------------------------------------------------
 Class R-5           .05% of assets                     .05% of assets
-------------------------------------------------------------------------------




1 Payment amount depends on the date upon which services commenced.
2 Payment with respect to Recordkeeper Direct/(R)/ program.
3 Payment with respect to PlanPremier/(R)/ program.

EXAMPLES

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

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






                                         1 YEAR   3 YEARS
----------------------------------------------------------

 Class A/*/                               $326     $487
----------------------------------------------------------
 Class R-1                                 205      634
----------------------------------------------------------
 Class R-2                                 204      630
----------------------------------------------------------
 Class R-3                                 124      387
----------------------------------------------------------
 Class R-4                                  83      259
----------------------------------------------------------
 Class R-5                                  49      154
----------------------------------------------------------




* Reflects the maximum initial sales charge in the first year.


                                       3

                                   Short-Term Bond Fund of America / Prospectus
<PAGE>

Investment objective, strategies and risks
The fund's investment objective is to provide you with current income consistent
with its stated maturity and quality standards and preservation of capital. It
invests primarily in short-term debt securities with quality ratings of AA or Aa
or better (by a Nationally Recognized Statistical Rating Organization) and in
unrated securities determined by the fund's investment adviser to be of
equivalent quality. The fund may invest up to 10% of its assets in A-rated debt
securities or in unrated securities determined by the fund's investment adviser
to be of equivalent quality. The fund may invest significantly in securities
issued and guaranteed by the U.S. government and securities backed by mortgages
or other assets. The fund's aggregate portfolio will have a dollar-weighted
average effective maturity no greater than three years.

The values of, and the income generated by, most debt securities held by the
fund may be affected by changing interest rates and by changes in the effective
maturities and credit ratings of these securities. For example, the values of
debt securities in the fund's portfolio generally will decline when interest
rates rise and increase when interest rates fall. In addition, falling interest
rates may cause an issuer to redeem or "call" a security before its stated
maturity, which may result in the fund having to reinvest the proceeds in lower
yielding securities. Debt securities are also subject to credit risk, which is
the possibility that the credit strength of an issuer will weaken and/or an
issuer of a debt security will fail to make timely payments of principal or
interest and the security will go into default.

A bond's effective maturity is the market's trading assessment of its maturity
and represents an estimate of the most likely time period during which an
investor in that bond will receive payment of principal. For example, as market
interest rates decline, issuers may exercise call provisions that shorten the
bond's effective maturity. Conversely, if interest rates rise, effective
maturities tend to lengthen. The dollar-weighted average effective maturity of
the fund's portfolio is the market-weighted average (i.e., more weight is given
to larger holdings) of all effective maturities in the portfolio.

A security backed by the U.S. Treasury or the full faith and credit of the U.S.
government is guaranteed only as to the timely payment of interest and principal
when held to maturity. Accordingly, the current market prices for these
securities will fluctuate with changes in interest rates.

Many types of debt securities, including mortgage-related securities, are
subject to prepayment risk. For example, when interest rates fall, homeowners
are more likely to refinance their home mortgages and "prepay" their principal
earlier than expected. The fund must then reinvest the prepaid principal in new
securities when interest rates on new mortgage investments are falling, thus
reducing the fund's income. The fund may also invest in asset-backed securities
(securities backed by assets such as auto loans, credit card receivables or
other providers of credit). The loans underlying these securities are subject to
prepayments that can decrease maturities and returns. In addition, the values of


                                       4

Short-Term Bond Fund of America / Prospectus


<PAGE>

the securities ultimately depend upon payment of the underlying loans by
individuals. To lessen the effect of failures by individuals to make payments on
these loans, the securities may provide guarantees or other types of credit
support up to a certain amount.
The fund's investment adviser attempts to reduce the risks described above
through diversification of the portfolio and with ongoing credit analysis of
each issuer, as well as by monitoring economic and legislative developments, but
there can be no assurance that it will be successful at doing so.

The fund may also hold cash or money market instruments. The percentage of the
fund invested in such holdings varies and depends on various factors, including
market conditions. A larger percentage of such holdings could moderate the
fund's investment results in a period of rising market prices; conversely,
consistent with the fund's preservation of capital objective, it could reduce
the magnitude of the fund's loss in the event of falling market prices and
provide liquidity to make additional investments or to meet redemptions.

The fund relies on the professional judgment of its investment adviser to make
decisions about the fund's portfolio investments. The basic investment
philosophy of the investment adviser is to seek to invest in attractively priced
securities that, in its opinion, represent above-average investment
opportunities. The investment adviser seeks to accomplish this by analyzing
various factors, which may include the credit strength of the issuer, prices of
similar securities issued by comparable issuers and anticipated changes in
interest rates, general market conditions and other factors pertinent to the
particular security being evaluated. Securities may be sold when the investment
adviser believes that they no longer represent relatively attractive investment
opportunities.


                                       5

                                   Short-Term Bond Fund of America / Prospectus
<PAGE>

Management and organization

INVESTMENT ADVISER

Capital Research and Management Company, an experienced investment management
organization founded in 1931, serves as investment adviser to the fund and other
funds, including the American Funds. Capital Research and Management Company is
a wholly owned subsidiary of The Capital Group Companies, Inc. and is located at
333 South Hope Street, Los Angeles, California 90071, and 135 South State
College Boulevard, Brea, California 92821. Capital Research and Management
Company manages the investment portfolio and business affairs of the fund. The
estimated total management fee paid by the fund, as a percentage of average net
assets, appears in the Annual Fund Operating Expenses table under "Fees and
expenses of the fund."

EXECUTION OF PORTFOLIO TRANSACTIONS

The investment adviser places orders with broker-dealers for the fund's
portfolio transactions. The investment adviser strives to obtain best execution
for the fund's portfolio transactions, taking into account a variety of factors
to produce the most favorable total price reasonably attainable under the
circumstances. These factors include the size and type of transaction, the cost
and quality of executions, and the broker-dealer's ability to offer liquidity
and anonymity. Subject to the considerations outlined above, the investment
adviser may place orders for the fund's portfolio transactions with
broker-dealers who have sold shares of funds managed by the investment adviser,
or who have provided investment research, statistical or other related services
to the investment adviser. In placing orders for the fund's portfolio
transactions, the investment adviser does not commit to any specific amount of
business with any particular broker-dealer. Subject to best execution, the
investment adviser may consider investment research, statistical or other
related services provided to the adviser in placing orders for the fund's
portfolio transactions. However, when the investment adviser places orders for
the fund's portfolio transactions, it does not give any consideration to whether
a broker-dealer has sold shares of the funds managed by the investment adviser.

PORTFOLIO HOLDINGS
Portfolio holdings information for the fund is available on the American Funds
website at americanfunds.com. To reach this information, access the lower
portion of the fund's details page on the website. A link to the fund's complete
list of publicly disclosed portfolio holdings, updated as of each calendar
quarter-end, is generally posted to this page within 45 days after the end of
the applicable quarter. This information is available on the website until new
information for the next quarter is posted. Portfolio holdings information for
the fund is also contained in reports filed with the Securities and Exchange
Commission.


                                       6

Short-Term Bond Fund of America / Prospectus


<PAGE>

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

MULTIPLE PORTFOLIO COUNSELOR SYSTEM

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

The primary individual portfolio counselors for Short-Term Bond Fund of America
are:




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

 DAVID A. HOAG           Less than 1 year    Senior Vice President,         Serves as a
 President              (since the fund's    Capital Research Company       fixed-income
                            inception)                                      portfolio counselor
                                             Investment professional for
                                             17 years in total; 14 years
                                             with Capital Research and
                                             Management Company or
                                             affiliate
------------------------------------------------------------------------------------------------
 MARK R. MACDONALD       Less than 1 year    Senior Vice President and      Serves as a
 Senior Vice President  (since the fund's    Director, Capital Research     fixed-income
                            inception)       and Management Company         portfolio counselor

                                             Investment professional for
                                             21 years in total; 12 years
                                             with Capital Research and
                                             Management Company or
                                             affiliate
------------------------------------------------------------------------------------------------





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

CERTAIN PRIVILEGES AND/OR SERVICES DESCRIBED ON THE FOLLOWING PAGES OF THIS
PROSPECTUS AND IN THE STATEMENT OF ADDITIONAL INFORMATION MAY NOT BE AVAILABLE
TO YOU DEPENDING ON YOUR INVESTMENT DEALER OR RETIREMENT PLAN RECORDKEEPER.
PLEASE SEE YOUR FINANCIAL ADVISER, INVESTMENT DEALER OR PLAN RECORDKEEPER FOR
MORE INFORMATION.


                                       7

                                   Short-Term Bond Fund of America / Prospectus
<PAGE>

Purchase, exchange and sale of shares

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

PURCHASES AND EXCHANGES

Eligible retirement plans generally may open an account and purchase Class A or
R shares by contacting any investment dealer (who may impose transaction charges
in addition to those described in this prospectus) authorized to sell the fund's
shares. Some or all R share classes may not be available through certain
investment dealers. Additional shares may be purchased through a plan's
administrator or recordkeeper.

Class A shares are generally not available for retirement plans using the
PlanPremier or Recordkeeper Direct recordkeeping programs.

Class R shares generally are available only to 401(k) plans, 457 plans,
employer-sponsored 403(b) plans, profit-sharing and money purchase pension
plans, defined benefit plans and nonqualified deferred compensation plans. Class
R shares also are generally available only to retirement plans where plan level
or omnibus accounts are held on the books of the fund. In addition, Class R-5
shares generally are available only to retirement plans with $1 million or more
in plan assets. Class R shares generally are not available to retail
nonretirement accounts, Traditional and Roth Individual Retirement Accounts
(IRAs), Coverdell Education Savings Accounts, SEPs, SARSEPs, SIMPLE IRAs,
individual 403(b) plans and 529 college savings plans.

Shares of the fund offered through this prospectus generally may be exchanged
into shares of the same class of other American Funds. Exchanges of Class A
shares from American Funds money market funds purchased without a sales charge
generally will be subject to the appropriate sales charge.

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


                                       8

Short-Term Bond Fund of America / Prospectus


<PAGE>

In addition to the fund's broad ability to restrict potentially harmful trading
as described above, the fund's board of directors has also adopted certain
policies and procedures with respect to frequent purchases and redemptions of
fund shares. Under the fund's "purchase blocking policy," any shareholder
redeeming shares (including redemptions that are part of an exchange
transaction) having a value of $5,000 or more from the fund will be precluded
from investing in the fund (including investments that are part of an exchange
transaction) for 30 calendar days after the redemption transaction. This
prohibition will not apply to redemptions by shareholders whose shares are held
on the books of third-party intermediaries that have not adopted procedures to
implement this policy. American Funds Service Company will work with
intermediaries to develop such procedures or other procedures that American
Funds Service Company determines are reasonably designed to achieve the
objective of the purchase blocking policy. At the time the intermediaries adopt
these procedures, shareholders whose accounts are on the books of such
intermediaries will be subject to this purchase blocking policy or another
frequent trading policy that is reasonably designed to achieve the objective of
the purchase blocking policy. There is no guarantee that all instances of
frequent trading in fund shares will be prevented.

Under the fund's purchase blocking policy, certain purchases will not be
prevented and certain redemptions will not trigger a purchase block, such as:
systematic redemptions and purchases where the entity maintaining the
shareholder account is able to identify the transaction as a systematic
redemption or purchase; purchases and redemptions of shares having a value of
less than $5,000; retirement plan contributions, loans and distributions
(including hardship withdrawals) identified as such on the retirement plan
recordkeeper's system; and purchase transactions involving transfers of assets,
rollovers, Roth IRA conversions and IRA recharacterizations, where the entity
maintaining the shareholder account is able to identify the transaction as one
of these types of transactions.

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

SALES

Please contact your plan administrator or recordkeeper in order to sell shares
from your retirement plan.

If you notify American Funds Service Company, you may reinvest proceeds from a
redemption, dividend payment or capital gain distribution without a sales charge
in the same fund or other American Funds within 90 days after the date of the
redemption or distribution. Proceeds will be reinvested in the same share class
from which the original redemption or distribution was made. Redemption proceeds
of Class A shares representing direct purchases in American Funds money market
funds that are reinvested in non-money


                                       9

                                   Short-Term Bond Fund of America / Prospectus
<PAGE>

market American Funds will be subject to a sales charge. Proceeds will be
reinvested at the next calculated net asset value after your request is received
and accepted by American Funds Service Company. You may not reinvest proceeds in
the American Funds as described in this paragraph if such proceeds are subject
to a purchase block as described under "Frequent trading of fund shares." This
paragraph does not apply to rollover investments as described under "Rollovers
from retirement plans to IRAs."

VALUING SHARES
The net asset value of each share class of the fund is the value of a single
share. The fund calculates the net asset value each day the New York Stock
Exchange is open for trading as of approximately 4:00 p.m. New York time, the
normal close of regular trading. Assets are valued primarily on the basis of
market quotations. However, the fund has adopted procedures for making "fair
value" determinations if market quotations are not readily available or are not
considered reliable. For example, fair value procedures may be used if a
security defaults and there is no market for the security. Use of these
procedures is intended to result in more appropriate net asset values.

Your shares will be purchased at the net asset value (plus any applicable sales
charge in the case of Class A shares) or sold at the net asset value next
determined after American Funds Service Company receives and accepts your
request.


                                       10

Short-Term Bond Fund of America / Prospectus


<PAGE>

Sales charges

CLASS A SHARES

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





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

 Less than $500,000                      2.50%     2.56%           2.00%
-------------------------------------------------------------------------------
 $500,000 but less than $750,000         2.00      2.04            1.60
-------------------------------------------------------------------------------
 $750,000 but less than $1 million       1.50      1.52            1.20
-------------------------------------------------------------------------------
 $1 million or more and certain other    none      none      see below
 investments described below
-------------------------------------------------------------------------------



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

CLASS A PURCHASES NOT SUBJECT TO SALES CHARGES

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

. investments made by accounts that are part of certain qualified fee-based
 programs and that purchased Class A shares before March 15, 2001; and

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

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


                                       11

                                   Short-Term Bond Fund of America / Prospectus
<PAGE>

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

 EMPLOYER-SPONSORED RETIREMENT PLANS

 Employer-sponsored retirement plans not currently invested in Class A shares
 and wishing to invest without a sales charge are not eligible to purchase Class
 A shares. Such plans may invest only in Class R shares.

 Provided that the plan's recordkeeper can properly apply a sales charge on the
 plan's investments, an employer-sponsored retirement plan not currently
 invested in Class A shares and wishing to invest less than $1 million may
 invest in Class A shares, but the purchase of these shares will be subject to
 the applicable sales charge. An employer-sponsored retirement plan that
 purchases Class A shares with a sales charge will be eligible to purchase
 additional Class A shares in accordance with the sales charge table above. If
 the recordkeeper cannot properly apply a sales charge on the plan's
 investments, then the plan may invest only in Class R shares.

 Employer-sponsored retirement plans not currently invested in Class A shares,
 or that are currently investing in Class A shares with a sales charge, are not
 eligible to establish a statement of intention that qualifies them to purchase
 Class A shares without a sales charge. More information about statements of
 intention can be found under "Sales charge reductions."

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

CLASS R SHARES

Class R shares are sold without any initial or contingent deferred sales charge.
The distributor will pay dealers annually an asset-based compensation of up to
1.00% for sales of Class R-1 shares, up to .75% for Class R-2 shares, up to .50%
for Class R-3 shares and up to .25% for Class R-4 shares. No dealer compensation
is paid on sales of Class R-5 shares. The fund may reimburse the distributor for
these payments through its plans of distribution (see "Plans of distribution"
below).


                                       12

Short-Term Bond Fund of America / Prospectus


<PAGE>

Sales charge reductions

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

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

REDUCING YOUR CLASS A INITIAL SALES CHARGE

Consistent with the policies described in this prospectus, two or more
retirement plans of an employer or employer's affiliates may combine all of
their American Funds investments to reduce their Class A sales charge. However,
for this purpose, investments representing direct purchases of American Funds
money market funds are excluded. Following are some different ways that you may
qualify for a reduced Class A sales charge:

 CONCURRENT PURCHASES

 Simultaneous purchases of any class of shares of two or more American Funds may
 be combined to qualify for a reduced Class A sales charge.

 RIGHTS OF ACCUMULATION

 You may take into account your accumulated holdings in all share classes of the
 American Funds to determine the initial sales charge you pay on each purchase
 of Class A shares. 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 or (b) the amount you invested
 (excluding capital appreciation) less any withdrawals. Please see the statement
 of additional information for details. You should retain any records necessary
 to substantiate the historical amounts you have invested. The current value of
 existing investments in an American Legacy/(R)/ Retirement Investment Plan may
 also be taken into account to determine your Class A sales charge.

 STATEMENT OF INTENTION
 You may reduce your Class A sales charge by establishing a statement of
 intention. A statement of intention allows you to combine all purchases of all
 share classes of American Funds non-money market funds you intend to make over
 a 13-month period to determine the applicable sales charge; however, purchases
 made under a right of


                                       13

                                   Short-Term Bond Fund of America / Prospectus
<PAGE>

 reinvestment, appreciation of your holdings, and reinvested dividends and
 capital gains do not count as purchases made during the statement period. The
 market value of your existing holdings eligible to be aggregated as of the day
 immediately before the start of the statement period may be credited toward
 satisfying the statement. A portion of your account may be held in escrow to
 cover additional Class A sales charges that may be due if your total purchases
 over the statement period do not qualify you for the applicable sales charge
 reduction. Employer-sponsored retirement plans may be restricted from
 establishing statements of intention. See "Sales charges" above for more
 information.

RIGHT OF REINVESTMENT

Please see the "Sales" section of "Purchase, exchange and sale of shares" above
for information on how to reinvest proceeds from a redemption, dividend payment
or capital gain distribution without a sales charge.

Rollovers from retirement plans to IRAs

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

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

. rollovers to IRAs that are attributable to American Funds investments, if they
 meet all of the following three requirements:
 -- the retirement plan from which assets are being rolled over is part of an
   American Funds proprietary retirement plan program (such as PlanPremier,
   Recordkeeper Direct or Recordkeeper Connect/(R)/) or is a plan whose
   participant subaccounts are serviced by American Funds Service Company;

 -- the plan's assets were invested in American Funds at the time of
   distribution; and

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

IRA rollover assets that roll over without a sales charge as described above
will not be subject to a contingent deferred sales charge and investment dealers
will be compensated solely with an annual service fee that begins to accrue
immediately. IRA rollover assets that are not attributable to American Funds
investments, as well as future contributions to the IRA, will be subject to
sales charges and the terms and conditions generally applicable to Class A share
investments as described in the prospectus and statement of additional
information if invested in Class A shares.


                                       14

Short-Term Bond Fund of America / Prospectus


<PAGE>

TRANSFERS TO IRAS

Transfers to IRAs that are attributable to American Funds investments held in
SIMPLE IRAs, SEPs or SARSEPs will not be subject to a sales charge if invested
in Class A shares.

Plans of distribution

The fund has plans of distribution or "12b-1 plans" under which it may finance
activities primarily intended to sell shares, provided the categories of
expenses are approved in advance by the fund's board of directors. The plans
provide for payments, based on annualized percentages of average daily net
assets, of up to .30% for Class A shares, up to 1.00% for Class R-1 and R-2
shares, up to .75% for Class R-3 shares and up to .50% for Class R-4 shares. For
all share classes, up to .25% of these expenses may be used to pay service fees
to qualified dealers for providing certain shareholder services. The amount
remaining for each share class may be used for distribution expenses.

The estimated 12b-1 fees paid by the fund, as a percentage of average net
assets, are indicated in the Annual Fund Operating Expenses table under "Fees
and expenses of the fund." Since these fees are paid out of the fund's assets or
income on an ongoing basis, over time they will increase the cost and reduce the
return of your investment.

Other compensation to dealers

American Funds Distributors, at its expense, currently provides additional
compensation to investment dealers. These payments may be made, at the
discretion of American Funds Distributors, to the top 75 dealers (or their
affiliates) who have sold shares of the American Funds. The level of payments
made to a qualifying firm in any given year will vary and in no case would
exceed the sum of (a) .10% of the previous year's American Funds sales by that
dealer and (b) .02% of American Funds assets attributable to that dealer. For
calendar year 2005, aggregate payments made by American Funds Distributors to
dealers were less than .02% of the assets of the American Funds. Aggregate
payments may also change from year to year. A number of factors will be
considered in determining payments, including the qualifying dealer's sales,
assets and redemption rates, and the quality of the dealer's relationship with
American Funds Distributors. American Funds Distributors makes these payments to
help defray the costs incurred by qualifying dealers in connection with efforts
to educate financial advisers about the American Funds so that they can make
recommendations and provide services that are suitable and meet shareholder
needs. American Funds Distributors will, on an annual basis, determine the
advisability of continuing these payments. American Funds Distributors may also
pay expenses associated with meetings conducted by dealers outside the top 75
firms to facilitate educating financial advisers and shareholders about the
American Funds.


                                       15

                                   Short-Term Bond Fund of America / Prospectus
<PAGE>

Distributions and taxes

DIVIDENDS AND DISTRIBUTIONS

The fund declares daily dividends from net investment income and distributes the
accrued dividends, which may fluctuate, to shareholders each month. Dividends
begin accruing one day after payment for shares is received by the fund or
American Funds Service Company.

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

All dividends and capital gain distributions paid to retirement plan
shareholders will be automatically reinvested.

TAXES ON DIVIDENDS AND DISTRIBUTIONS

Dividends and capital gains distributed by the fund to tax-deferred retirement
plan accounts are not taxable currently.

TAXES ON TRANSACTIONS

Exchanges within a tax-deferred retirement plan account will not result in a
capital gain or loss for federal or state income tax purposes. With limited
exceptions, distributions from a retirement plan account are taxable as ordinary
income.

PLEASE SEE YOUR TAX ADVISER FOR MORE INFORMATION.


                                       16

Short-Term Bond Fund of America / Prospectus


<PAGE>

NOTES


                                       17

                                   Short-Term Bond Fund of America / Prospectus
<PAGE>

NOTES


                                       18

Short-Term Bond Fund of America / Prospectus


<PAGE>

NOTES




                                       19

                                   Short-Term Bond Fund of America / Prospectus

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


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







          FOR SHAREHOLDER          American Funds Service Company
          SERVICES                 800/421-0180
          FOR RETIREMENT PLAN      Call your employer or plan
          SERVICES                 administrator
          FOR DEALER SERVICES      American Funds Distributors
                                   800/421-9900
                                   americanfunds.com
          FOR 24                   For Class R share information,
          -HOUR INFORMATION        visit
                                   AmericanFundsRetirement.com


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



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

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

STATEMENT OF ADDITIONAL INFORMATION (SAI) AND CODES OF ETHICS The current SAI,
as amended from time to time, contains more detailed information on all aspects
of the fund, including the fund's financial statements, and is incorporated by
reference into this prospectus. This means that the current SAI, for legal
purposes, is part of this prospectus. The codes of ethics describe the personal
investing policies adopted by the fund, the fund's investment adviser and its
affiliated companies.
The codes of ethics and current SAI are on file with the Securities and Exchange
Commission (SEC). These and other related materials about the fund are available
for review or to be copied at the SEC's Public Reference Room in Washington, DC
(202/551-8090) or on the EDGAR database on the SEC's website at sec.gov or,
after payment of a duplicating fee, via e-mail request to publicinfo@sec.gov or
by writing to the SEC's Public Reference Section, 100 F Street, NE, Washington,
DC 20549. The current SAI and shareholder reports are also available, free of
charge, on americanfunds.com

HOUSEHOLD MAILINGS Each year you are automatically sent an updated prospectus
and annual and semi-annual reports for the fund. You may also occasionally
receive proxy statements for the fund. In order to reduce the volume of mail you
receive, when possible, only one copy of these documents will be sent to
shareholders who are part of the same family and share the same household
address.

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


[LOGO - recycled bug]









Printed on recycled paper
RPGEPR-948-1006P Litho in USA             Investment Company File No. 811-21928
CGD/B/8011
-------------------------------------------------------------------------------
THE CAPITAL GROUP COMPANIES
American Funds      Capital Research and Management     Capital International      Capital Guardian      Capital Bank and Trust

Short-Term Bond Fund of America, Inc.

Part C

Other Information

Item 23. Exhibits for Registration Statement (1940 Act No. 811-21928 and 1933 Act No. 333-135770)

(a)	Articles of Incorporation of Registrant - previously filed (see Pre-effective filing dated 7/14/06); Articles of Amendment and Certificate of Correction

(b)	By-laws of Registrant - previously filed (see Pre-effective filing dated 7/14/06)

(c)	Form of Share Certificate

(d)	Form of Investment Advisory and Service Agreement between the Registrant and Capital Research and Management Company

(e)	Form of Principal Underwriting Agreement and Selling Group Agreements

(f)	Bonus or Profit Sharing Contracts - Deferred Compensation Plan

(g)	Form of Global Custody Agreement

(h-1)

Other material contracts - Form of Administrative Services Agreement

(h-2)

Shareholder Services Agreement

(h-3)

Form of Indemnification Agreement

(i)	Legal opinion

(j)	Consent of Independent Registered Public Accounting Firm

(k)	Omitted financial statements - none

(l)	Initial capital agreements

(m)	Forms of Plans of Distribution

(n)	Form of Multiple Class Plan

(o)

Reserved

(p)	Code of Ethics for The Capital Group Companies and Registrant

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

None

Item 25. Indemnification

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

Subsection (b) of Section 2-418 of the General Corporation Law of Maryland empowers a corporation to indemnify any person who was or is party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that he is or was a director, officer, employee or agent of the corporation or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation or enterprise, against reasonable expenses (including attorneys' fees), judgments, penalties, fines and amounts paid in settlement actually incurred by him in connection with such action, suit or proceeding unless it is established that: (i) the act or omission of the person was material to the matter giving rise to the proceeding and was committed in bad faith or was the result of active and deliberate dishonesty; (ii) the person actually received an improper personal benefit of money, property or services; or (iii) with respect to any criminal action or proceeding, the person had reasonable cause to believe his act or omission was unlawful.

Indemnification under subsection (b) of Section 2-418 may not be made by a corporation unless authorized for a specific proceeding after a determination has been made that indemnification is permissible in the circumstances because the party to be indemnified has met the standard of conduct set forth in subsection (b). This determination shall be made (i) by the Board of Directors by a majority vote of a quorum consisting of directors not, at the time, parties to the proceeding, or, if such quorum cannot be obtained, then by a majority vote of a committee of the Board consisting solely of two or more directors not, at the time, parties to such proceeding and who were duly designated to act in the matter by a majority vote of the full Board in which the designated directors who are parties may participate; (ii) by special legal counsel selected by the Board of Directors of a committee of the Board by vote as set forth in subparagraph (i), or, if the requisite quorum of the full Board cannot be obtained therefor and the committee cannot be established, by a majority vote of the full Board in which any director who is a party may participate; or (iii) by the stockholders (except that shares held by any party to the specific proceeding may not be voted). A court of appropriate jurisdiction may also order indemnification if the court determines that a person seeking indemnification is entitled to reimbursement under subsection (b).

Section 2-418 further provides that indemnification provided for by Section 2-418 shall not be deemed exclusive of any rights to which the indemnified party may be entitled; that the scope of indemnification extends to directors, officers, employees or agents of a constituent corporation absorbed in a consolidation or merger and persons serving in that capacity at the request of the constituent corporation for another; and empowers the corporation to purchase and maintain insurance on behalf of a director, officer, employee or agent of the corporation against any liability asserted against or incurred by such person in any such capacity or arising out of such person's status as such whether or not the corporation would have the power to indemnify such person against such liabilities under Section 2-418.

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

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

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

Item 26. Business and Other Connections of the Investment Adviser

None

Item 27. Principal Underwriters

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

(b)

	(1) Name and Principal Business Address	(2) Positions and Offices with Underwriter	(3) Positions and Offices with Registrant
	David L. Abzug P.O. Box 2248 Agoura Hills, CA 91376	Vice President	None
	William C. Anderson 7780 Boylston Court Dublin, OH 43016	Regional Vice President	None
	Robert B. Aprison 2983 Bryn Wood Drive Madison, WI 53711	Senior Vice President	None
	T. Patrick Bardsley 36 East Woodward Blvd. Tulsa, OK 74114	Regional Vice President	None
	Shakeel A. Barkat 982 Wayson Way Davidsonville, MD 21035	Regional Vice President	None
	Steven L. Barnes 7490 Clubhouse Road Suite 100 Boulder, CO 80301	Senior Vice President	None
	Thomas M. Bartow 20 Cerchio Alto Henderson, NV 89011	Vice President	None
B	Carl R. Bauer	Vice President	None
	Michelle A. Bergeron 4160 Gateswalk Drive Smyrna, GA 30080	Senior Vice President	None
	J. Walter Best, Jr. 7003 Chadwick Drive, Suite 355 Brentwood, TN 37027	Vice President	None
	John A. Blanchard 576 Somerset Lane Northfield, IL 60093	Senior Vice President	None
	Ian B. Bodell 7003 Chadwick Drive, Suite 355 Brentwood, TN 37027	Senior Vice President	None
	Jonathan W. Botts 2231 Garden View Lane Weddington, NC 28104	Regional Vice President	None
	Dana Boyd 4444 Riverside Drive, Suite 110 Burbank, CA 91505-4048	Regional Vice President	None
	Bill Brady 646 Somerset Drive Indianapolis, IN 46260	Regional Vice President	None
	Mick L. Brethower 601 E. Whitestone Blvd. Building 6, Suite 115 Cedar Park, TX 78613	Senior Vice President	None
	C. Alan Brown 7424 Somerset Avenue St. Louis, MO 63105	Vice President	None
L	Sheryl M. Burford	Assistant Vice President	None
B	J. Peter Burns	Vice President	None
	Steven Calabria 161 Bay Avenue Huntington Bay, NY 11743	Regional Vice President	None
S	Kathleen D. Campbell	Assistant Vice President	None
	Matthew C. Carlisle 100 Oakmont Lane, #409 Belleair, FL 33756	Vice President	None
	Damian F. Carroll 40 Ten Acre Road New Britain, CT 06052	Vice President	None
	James D. Carter 560 Valley Hill Lane Knoxville, TN 37922	Regional Vice President	None
	Brian C. Casey 8002 Greentree Road Bethesda, MD 20817	Senior Vice President	None
	Victor C. Cassato 999 Green Oaks Drive Greenwood Village, CO 80121	Senior Vice President	None
	Christopher J. Cassin 120 E. Ogden Ave., Suite 106 Hinsdale, IL 60521	Senior Vice President	None
L	Denise M. Cassin	Director, Senior Vice President	None
L	David D. Charlton	Director, Senior Vice President	None
	Thomas M. Charon N27 W23960 Paul Road Suite 204 Pewaukee, WI 53072	Regional Vice President	None
L	Wellington Choi	Assistant Vice President	None
	Paul A. Cieslik 90 Northington Drive Avon, CT 06001	Regional Vice President	None
L	Larry P. Clemmensen	Director	None
L	Kevin G. Clifford	Director, President and Co-Chief Executive Officer	None
H	Cheri Coleman	Vice President	None
	Ruth M. Collier 106 Central Park South, #10K New York, NY 10019	Senior Vice President	None
S	David Coolbaugh	Vice President	None
	Carlo O. Cordasco 4036 Ambassador Circle Williamsburg, VA 23188	Regional Vice President	None
B	Josie Cortez	Assistant Vice President	None
	Charles H. Cote 305 Edgeworth Lane Sewickley, PA 15143	Regional Vice President	None
	Thomas E. Cournoyer 2333 Granada Blvd. Coral Gables, FL 33134	Vice President	None
L	Michael D. Cravotta	Assistant Vice President	None
	Joseph G. Cronin 1281 Fiore Drive Lake Forest, IL 60045	Vice President	None
	William F. Daugherty 1213 Redwood Hills Circle Carlisle, PA 17015	Vice President	None
	Guy E. Decker 2990 Topaz Lane Carmel, IN 46032	Vice President	None
	Daniel J. Delianedis Edina Executive Plaza 5200 Willson Road, Suite 150 Edina, MN 55424	Senior Vice President	None
L	James W. DeLouise	Assistant Vice President	None
	James A. DePerno, Jr. 1 Nehercrest Lane Orchard Park, NY 14127	Vice President	None
L	Bruce L. DePriester	Director, Senior Vice President, Treasurer and Controller	None
	Lori A. Deuberry 130 Aurora Street Hudson, OH 44236	Regional Vice President	None
L	Dianne M. Dexter	Assistant Vice President	None
	Thomas J. Dickson 108 Wilmington Court Southlake, TX 76092	Vice President	None
	Michael A. DiLella 22 Turner’s Lake Drive Mahwah, NJ 07430	Senior Vice President	None
	G. Michael Dill 505 E. Main Street Jenks, OK 74037	Senior Vice President	None
N	Dean M. Dolan	Vice President	None
L	Hedy B. Donahue	Assistant Vice President	None
L	Michael J. Downer	Director	None
	Craig A. Duglin 4170 Vanetta Drive Studio City, CA 91604	Regional Vice President	None
	Michael J. Dullaghan 5040 Plantation Grove Lane Roanoke, VA 24012	Regional Vice President	None
I	Lloyd G. Edwards	Senior Vice President	None
	Timothy L. Ellis 1700 Lelia Drive, Suite 105 Jackson, MS 39216	Senior Vice President	None
	Kristopher A. Feldmeyer 787 Jackson Road Greenwood, IN 46142	Regional Vice President	None
L	Lorna Fitzgerald	Vice President	None
	William F. Flannery 29 Overlook Road Hopkinton, MA 01748	Regional Vice President	None
	John R. Fodor 15 Latisquama Road Southborough, MA 01772	Senior Vice President	None
L	Charles L. Freadhoff	Vice President	None
	Daniel B. Frick 845 Western Avenue Glen Ellyn, IL 60137	Vice President	None
L	Linda S. Gardner	Vice President	None
	Keith R. George 3835 East Turtle Hatch Road Springfield, MO 65809	Regional Vice President	None
L	J. Christopher Gies	Senior Vice President	None
B	Lori A. Giacomini	Assistant Vice President	None
L	David M. Givner	Secretary	None
B	Evelyn K. Glassford	Vice President	None
	Jack E. Goldin 3424 Belmont Terrace Davie, FL 33328	Regional Vice President	None
L	Earl C. Gottschalk	Vice President	None
	Jeffrey J. Greiner 8250-A Estates Parkway Plain City, OH 43064	Senior Vice President	None
	Eric M. Grey 601 Fisher Road N. Dartmouth, MA 02747	Regional Vice President	None
B	Mariellen Hamann	Vice President	None
	Derek S. Hansen 13033 Ridgedale Drive, #147 Minnetonka, MN 55305	Vice President	None
	David E. Harper 5400 Russell Cave Road Lexington, KY 40511	Senior Vice President	None
	Calvin L. Harrelson, III 2048 Kings Manor Drive Weddington, NC 28104	Regional Vice President	None
	Robert J. Hartig, Jr. 13563 Marjac Way McCordsville, IN 46055	Vice President	None
L	Linda M. Hines	Vice President	None
	Steven J. Hipsley 44 Tyler Drive Saratoga Springs, NY 12866	Regional Vice President	None
L	Russell K. Holliday	Vice President	None
	Heidi Horwitz 5 Christopher Hill Road Weston, CT 06883	Regional Vice President	None
L	Kevin B. Hughes	Vice President	None
	Ronald R. Hulsey 6202 Llano Dallas, TX 75214	Senior Vice President	None
	Marc Ialeggio 13 Prince Royal Passage Corte Madera, CA 94925	Regional Vice President	None
	Robert S. Irish 1225 Vista Del Mar Drive Delray Beach, FL 33483	Senior Vice President	None
L	Linda Johnson	Assistant Vice President	None
G1	Joanna F. Jonsson	Director	None
B	Damien M. Jordan	Senior Vice President	None
L	Marc J. Kaplan	Assistant Vice President	None
	John P. Keating 1576 Sandy Springs Dr. Orange Park, FL 32003	Vice President	None
	Brian G. Kelly 76 Daybreak Road Southport, CT 06890	Regional Vice President	None
	Andrew J. Kilbride 3080 Tuscany Court Ann Arbor, MI 48103	Regional Vice President	None
N	Dorothy Klock	Vice President	None
	Dianne L. Koske 6 Black Oak Court Poquoson, VA 23662	Assistant Vice President	None
B	Elizabeth K. Koster	Vice President	None
	Christopher F. Lanzafame 19365 Lovall Valley Court Sonoma, CA 95476	Regional Vice President	None
	Patricia D. Lathrop 822 Monterey Blvd., NE St. Petersburg, FL 33704	Regional Vice President	None
	R. Andrew LeBlanc 78 Eton Road Garden City, NY 11530	Vice President	None
	T. Blake Liberty 5506 East Mineral Lane Littleton, CO 80122	Vice President	None
	Mark J. Lien 1103 Tulip Tree Lane West Des Moines, IA 50266	Vice President	None
L	Lorin E. Liesy	Vice President	None
I	Kelle Lindenberg	Assistant Vice President	None
	Louis K. Linquata 5214 Cass Street Omaha, NE 68132	Vice President	None
	Brendan T. Mahoney 1 Union Avenue, Suite One Sudbury, MA 01776	Vice President	None
	Nathan G. Mains 2200 Market Street Apt. #638, Mailbox #207 Denver, CO 80205	Regional Vice President	None
	Stephen A. Malbasa 13405 Lake Shore Blvd. Cleveland, OH 44110	Director, Senior Vice President	None
	Steven M. Markel 5241 South Race Street Greenwood Village, CO 80121	Senior Vice President	None
L	Paul R. Mayeda	Assistant Vice President	None
L	Eleanor P. Maynard	Vice President	None
L	Christopher McCarthy	Vice President	None
	James R. McCrary 28812 Crestridge Rancho Palos Verdes, CA 90275	Vice President	None
L	Will McKenna	Vice President	None
S	John V. McLaughlin	Senior Vice President	None
	Terry W. McNabb 2002 Barrett Station Road St. Louis, MO 63131	Senior Vice President	None
L	Katharine McRoskey	Assistant Vice President	None
	Scott M. Meade 370 Central Road Rye Beach, NH 03870	Vice President	None
	Charles L. Mitsakos 3017 11 ^th Avenue West Seattle, WA 98119	Regional Vice President	None
	Monty L. Moncrief 55 Chandler Creek Court The Woodlands, TX 77381	Regional Vice President	None
	David H. Morrison 7021 North Stratton Court Peoria, IL 61615	Regional Vice President	None
	Andrew J. Moscardini 832 Coldwater Creek Circle Niceville, FL 32578	Regional Vice President	None
	William E. Noe 3600 Knollwood Road Nashville, TN 37215	Senior Vice President	None
L	Heidi J. Novaes	Vice President	None
	Eric P. Olson 27 Main Street, Suite 200 Topsfield, MA 01983	Senior Vice President	None
	Jeffrey A. Olson 2708 88 ^th St. Court, NW Gig Harbor, WA 98332	Regional Vice President	None
	Thomas A. O’Neil 4 Hillcrest Avenue Eastborough, KS 67208	Regional Vice President	None
	Michael W. Pak 13929 SE 92 ^nd Street Newcastle, WA 98059	Regional Vice President	None
	W. Burke Patterson, Jr. 1643 Richland Avenue Baton Rouge, LA 70808	Regional Vice President	None
	Gary A. Peace 291 Kaanapali Drive Napa, CA 94558	Vice President	None
	Samuel W. Perry 4340 East Indian School Road Suite 21 Phoenix, AZ 85018	Regional Vice President	None
	Raleigh G. Peters 1439 Byrd Drive Berwyn, PA 19312	Regional Vice President	None
	David K. Petzke 4016 Saint Lucia Street Boulder, CO 80301	Vice President	None
	Fredric Phillips 175 Highland Avenue, 4th Floor Needham, MA 02494	Senior Vice President	None
	John Pinto 226 Country Club Drive Lansdale, PA 19446	Regional Vice President	None
	Carl S. Platou 7455 80th Place, S.E. Mercer Island, WA 98040	Senior Vice President	None
	Charles R. Porcher One Glenlake Pkwy., Suite 700 Atlanta, GA 30328	Regional Vice President	None
S	Richard P. Prior	Vice President	None
	Mike Quinn 1035 Vintage Club Drive Duluth, GA 30097	Regional Vice President	None
	John W. Rankin 1725 Centennial Club Drive Conway, AR 72034	Regional Vice President	None
	Jennifer D. Rasner 11940 Baypoint Drive Burnsville, MN 55337	Regional Vice President	None
	James P. Rayburn 3108 Roxbury Road Homewood, AL 35209	Regional Vice President	None
	Mark S. Reischmann 4125 Hermitage Drive Colorado Springs, CO 80906	Regional Vice President	None
	Steven J. Reitman 212 The Lane Hinsdale, IL 60521	Senior Vice President	None
	Brian A. Roberts 209-A 60 ^th Street Virginia Beach, VA 23451	Vice President	None
	Jeffrey Robinson 7 Waterville Lane Shrewsbury, MA 01545	Regional Vice President	None
L	James F. Rothenberg	Director	None
	Romolo D. Rottura 233 Glenhaven Court Swedesboro, NJ 08085	Vice President	None
	Douglas F. Rowe 414 Logan Ranch Road Georgetown, TX 78628	Vice President	None
	William M. Ryan 1408 Cortland Drive Manasquan, NJ 08736	Regional Vice President	None
L	Dean B. Rydquist	Director, Senior Vice President, Chief Compliance Officer	None
	Richard A. Sabec, Jr. 6868 Meadow Glen Drive Westerville, OH 43082	Regional Vice President	None
	Richard R. Samson 4604 Glencoe Avenue, #4 Marina del Rey, CA 90292	Senior Vice President	None
	Paul V. Santoro 28 State Street, Suite 1100 Boston, MA 02109	Vice President	None
H	Diane Sawyer	Senior Vice President	None
	Joseph D. Scarpitti 31465 St. Andrews Westlake, OH 44145	Senior Vice President	None
	Shane D. Schofield 201 McIver Street Greenville, SC 29601	Vice President	None
	Mark A. Seaman 645 Baltimore Annapolis Blvd Suite 220 Severna Park, MD 21146	Vice President	None
S	Sherrie L. Senft	Vice President	None
	James J. Sewell III 415 East Holyoke Place Claremont, CA 91711	Regional Vice President	None
	Arthur M. Sgroi 76 Fields End Drive Glenmont, NY 12077	Regional Vice President	None
L	R. Michael Shanahan	Director	None
L	Michael J. Sheldon	Vice President	None
	Frederic J. Shipp 1352 Sanjo Farms Drive Chesapeake, VA 23320	Regional Vice President	None
	Daniel S. Shore 3734 North Greenview Avenue Chicago, IL 60613	Vice President	None
	Brad Short 1601 Seal Way Seal Beach, CA 90740	Vice President	None
	David W. Short 1000 RIDC Plaza, Suite 212 Pittsburgh, PA 15238	Chairman of the Board and Co-Chief Executive Officer	None
	Nathan W. Simmons 496 Dogwood Trail Quincy, FL 32352	Regional Vice President	None
	William P. Simon, Jr. 237 Lancaster Avenue, Suite 207 Devon, PA 19333	Director, Senior Vice President	None
L	Connie F. Sjursen	Vice President	None
	Jerry L. Slater 1820 38 ^th Ave. E Seattle, WA 98112	Senior Vice President	None
LW	John H. Smet	Director	None
	Rodney G. Smith 15851 Dallas Parkway, Suite 500 Addison, TX 75001-6016	Senior Vice President	None
	J. Eric Snively 2548 Violet Street Glenview, IL 60025	Regional Vice President	None
	Anthony L. Soave 3780 Foxglove Court NE Grand Rapids, MI 49525	Vice President	None
L	Therese L. Soullier	Vice President	None
	Nicholas D. Spadaccini 855 Markley Woods Way Cincinnati, OH 45230	Senior Vice President	None
L	Kristen J. Spazafumo	Vice President	None
	Mark D. Steburg 12508 160 ^th Avenue Southeast Renton, WA 98059	Regional Vice President	None
	Michael P. Stern 213 Aptos Place Danville, CA 94526	Regional Vice President	None
	Brad Stillwagon 2438 Broadmeade Road Louisville, KY 40205	Vice President	None
	Thomas A. Stout 1004 Ditchley Road Virginia Beach, VA 23451	Vice President	None
	Craig R. Strauser 175 Berwick Lake Oswego, OR 97034	Senior Vice President	None
L	Libby J. Syth	Vice President	None
L	Drew W. Taylor	Assistant Vice President	None
L	Larry I. Thatt	Assistant Vice President	None
	Gary J. Thoma 401 Desnoyer Kaukauna, WI 54130	Regional Vice President	None
	Cynthia M. Thompson 4 Franklin Way Ladera Ranch, CA 92694	Regional Vice President	None
	David Tippets 15 Player Green Place The Woodlands, TX 77382	Regional Vice President	None
L	James P. Toomey	Vice President	None
I	Christopher E. Trede	Vice President	None
	George F. Truesdail 400 Abbotsford Court Charlotte, NC 28270	Senior Vice President	None
	Scott W. Ursin-Smith 103 E. Blithedale Avenue, Suite 1 Mill Valley, CA 94941	Senior Vice President	None
S	Cindy Vaquiax	Assistant Vice President	None
	J. David Viale 39 Old Course Drive Newport Beach, CA 92660	Vice President	None
D	Bradley J. Vogt	Director	None
	Gerald J. Voss 1009 Ridge Road Sioux Falls, SD 57105	Regional Vice President	None
L	A. Jordan Wallens 1501 Maple Avenue, #602 Evanston, IL 60201	Regional Vice President	None
	Thomas E. Warren 119 Faubel St. Sarasota, FL 34242	Vice President	None
L	J. Kelly Webb	Senior Vice President	None
	Gregory J. Weimer 206 Hardwood Drive Venetia, PA 15367	Director, Senior Vice President	None
B	Timothy W. Weiss	Director	None
SF	Gregory W. Wendt	Director	None
	George J. Wenzel 261 Barden Road Bloomfield Hills, MI 48304	Vice President	None
	Brian E. Whalen 4072 Yellow Ginger Glen Norcross, GA 30092	Regional Vice President	None
L	N. Dexter Williams, Jr.	Senior Vice President	None
L	Alan J. Wilson	Director	None
	Andrew L. Wilson 11163 Rich Meadow Drive Great Falls, VA 22066	Vice President	None
	Steven C. Wilson 7529 Summit Ridge Road Middleton, WI 53562	Regional Vice President	None
	Timothy J. Wilson 501 Valley Brook Road, Suite 204 McMurray, PA 15317	Vice President	None
B	Laura L. Wimberly	Vice President	None
	Marshall D. Wingo Promenade Two, 25 ^th Floor 1230 Peachtree Street, N.E. Atlanta, GA 30309	Director, Senior Vice President	None
	Kurt A. Wuestenberg 975 Arboretum Drive Saline, MI 48176	Vice President	None
	William R. Yost 9463 Olympia Drive Eden Prairie, MN 55347	Senior Vice President	None
	Jason P. Young 11141 Whitetail Lane Olathe, KS 66061	Regional Vice President	None
	Jonathan A. Young 2145 Hickory Forrest Chesapeake, VA 23322	Regional Vice President	None
	Scott D. Zambon 2178 Pieper Lane Tustin, CA 92782	Regional Vice President	None

__________

L	Business Address, 333 South Hope Street, Los Angeles, CA 90071
LW	Business Address, 11100 Santa Monica Blvd., 15th Floor, Los Angeles, CA 90025
B	Business Address, 135 South State College Boulevard, Brea, CA 92821
S	Business Address, 3500 Wiseman Boulevard, San Antonio, TX 78251
SF	Business Address, One Market, Steuart Tower, Suite 1800, San Francisco, CA 94105-1016
H	Business Address, 5300 Robin Hood Road, Norfolk, VA 23513
I	Business Address, 8332 Woodfield Crossing Blvd., Indianapolis, IN 46240
N	Business Address, 630 Fifth Avenue, 36 ^th Floor, New York, NY10111
D	Business Address, 3000 K Street N.W., Suite 230, Washington, DC 20007-5140
G1	Business Address, 3 Place des Bergues, 1201 Geneva, Switzerland

Item 28. Location of Accounts and Records

Accounts, books and other records required by Rules 31a-1 and 31a-2 under the Investment Company Act of 1940, as amended, are maintained and held in the offices of the Registrant’s investment adviser, Capital Research and Management Company, 333 South Hope Street, Los Angeles, California 90071, and/or 135 South State College Boulevard, Brea, California 92821.

Registrant's records covering shareholder accounts are maintained and kept by its transfer agent, American Funds Service Company, 135 South State College Boulevard, Brea, California 92821; 8332 Woodfield Crossing Boulevard, Indianapolis, Indiana 46240; 10001 North 92 ^nd Street, Suite 100, Scottsdale, Arizona 85258; 3500 Wiseman Boulevard, San Antonio, Texas 78251; and 5300 Robin Hood Road, Norfolk, Virginia 23513.

Registrant's records covering portfolio transactions are maintained and kept by its custodian, JPMorgan Chase Bank.

Item 29. Management Services

None

Item 30. Undertakings

n/a

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the Investment Company Act of 1940 the Registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City and County of Los Angeles, and State of California on the 25 ^th day of September, 2006.

SHORT-TERM BOND FUND OF AMERICA, INC.

/s/ Paul G. Haaga, Jr.

Paul G. Haaga, Jr., Vice Chairman of the Board

Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below on September 25, 2006 by the following persons in the capacities indicated.

	Signature	Title
(1)	Principal Executive Officer
	/s/ David A. Hoag	President
	(David A. Hoag)
(2)	Principal Financial Officer and Principal Accounting Officer:
	/s/ Ari M. Vinocor	Treasurer
	(Ari M. Vinocor)
(3)	Directors:
	Richard G. Capen, Jr.*	Director
	H. Frederick Christie*	Director
	Diane C. Creel*	Director
	Martin Fenton*	Chairman of the Board (Independent and Non-Executive)
	Leonard R. Fuller*	Director
	/s/ Abner D. Goldstine	Vice Chairman and Director
	(Abner D. Goldstine)
	/s/ Paul G. Haaga, Jr.	Vice Chairman and Director
	(Paul G. Haaga, Jr.)
	R. Clark Hooper*	Director
	Richard G. Newman*	Director
	Frank M. Sanchez*	Director
	*By: /s/ Kimberly S. Verdick
	(Kimberly S. Verdick, pursuant to a power of attorney filed herewith)

Pursuant to the requirements of the Securities Act, this registration statement has been signed below by the following persons in the capacities and on the date(s) indicated.

/s/ Kristine M. Nishiyama	Vice President	September 25, 2006
(Signature)	(Title)	(Date)

POWER OF ATTORNEY

I, Richard G. Capen, Jr., the undersigned Board member of the following registered investment companies (collectively, the “Funds”):

- The American Funds Income Series - U.S. Government Securities Fund (File No. 002-98199,File No. 811-04318)

- The American Funds Tax-Exempt Series II - The Tax-Exempt Fund of California (File No. 033-06180, File No. 811-04694)

- American High-Income Municipal Bond Fund, Inc. (File No. 033-80630, File No. 811-08576)

- American High-Income Trust (File No. 033-17917, File No. 811-05364)

- The Bond Fund of America, Inc. (File No. 002-50700, File No. 811-02444)

- Capital World Bond Fund, Inc. (File No. 033-12447, File No. 811-05104)

- The Cash Management Trust of America (File No. 002-47940, File No. 811-02380)

- Intermediate Bond Fund of America (File No. 033-19514, File No. 811-05446)

- Limited Term Tax-Exempt Bond Fund of America (File No. 033-66214, File No. 811-07888)

- The New Economy Fund (File No. 002-83848, File No. 811-03735)

- Short-Term Bond Fund of America, Inc. (File No. 333-135770, File No. 811-21928)

- SMALLCAP World Fund, Inc. (File No. 033-32785, File No. 811-05888)

- The Tax-Exempt Bond Fund of America, Inc. (File No. 002-49291, File No. 811-02421)

- The Tax-Exempt Money Fund of America (File No. 033-26431, File No. 811-05750)

- The U.S. Treasury Money Fund of America (File No. 033-38475, File No. 811-06235)

hereby revoke all previous powers of attorney I have signed and otherwise act in my name and behalf in matters involving the Funds and do hereby constitute and appoint

Vincent P. Corti

Chad L. Norton

Patrick F. Quan

Kimberly S. Verdick

Steven I. Koszalka

Sharon G. Moseley

David A. Pritchett

Susi M. Silverman

Ari M. Vinocor

each of them singularly, my true and lawful attorneys-in-fact, with full power of substitution, and with full power to each of them, to sign for me and in my name in the appropriate capacities, all Registration Statements of the Funds on Form N-1A, any and all subsequent Amendments, or Post-Effective Amendments to said Registration Statement on Form N-1A or any successor thereto, and any supplements or other instruments in connection therewith, and generally to do all such things in my name and behalf in connection therewith as said attorneys-in-fact deem necessary or appropriate, to comply with the provisions of the Securities Act of 1933 and the Investment Company Act of 1940 as amended, and all related requirements of the U. S. Securities and Exchange Commission. I hereby ratify and confirm all that said attorneys-in-fact or their substitutes may do or cause to be done by virtue hereof.

EXECUTED at Los Angeles, CA this 21 ^st day of September , 2006.

(City, State)

/s/ Richard G. Capen, Jr.

Richard G. Capen, Jr., Board member

POWER OF ATTORNEY

I, H. Frederick Christie, the undersigned Board member of the following registered investment companies (collectively, the “Funds”):

- AMCAP Fund, Inc. (File No. 002-26516, File No. 811-01435)

- The American Funds Income Series - U.S. Government Securities Fund (File No. 002-98199, File No. 811-04318)

- American Funds Insurance Series (File No. 002-86838, File No. 811-03857)

- The American Funds Tax-Exempt Series II - The Tax-Exempt Fund of California (File No. 033-06180, File No. 811-04694)

- American High-Income Municipal Bond Fund, Inc. (File No. 033-80630, File No. 811-08576)

- American High-Income Trust (File No. 033-17917, File No. 811-05364)

- American Mutual Fund, Inc. (File No. 002-10607, File No. 811-00572)

- The Bond Fund of America, Inc. (File No. 002-50700, File No. 811-02444)

- Capital Income Builder, Inc. (File No. 033-12967, File No. 811-05085)

- Capital World Bond Fund, Inc. (File No. 033-12447, File No. 811-05104)

- Capital World Growth and Income Fund, Inc. (File No. 033-54444, File No. 811-07338)