0000731890 2011-12-04 2012-12-03 0000731890 trpstbfi2:S000039055Member trpstbfi2:C000119983Member 2011-12-04 2012-12-03 0000731890 trpstbfi2:S000039055Member 2011-12-04 2012-12-03 pure iso4217:USD 485BPOS 2012-11-19 T. Rowe Price Short-Term Bond Fund, Inc. 0000731890 false 2012-11-19 2012-11-21 2012-12-03 0 0 20 0.0038 0 0.0023 0.0061 0.0035 36 118 <div style="font-family: sans-serif; font-size: 15pt; margin-left: 0pt; ">T. Rowe Price</div> <div style="color: rgb(0, 79, 124); font-family: sans-serif; font-size: 24pt; margin-left: 0pt; ">Ultra Short-Term Bond Fund</div> <div style="font-size: 13px; background-color: rgb(255, 255, 255); ">SUMMARY Investment Objective The fund seeks a high level of income consistent with minimal fluctuations in principal value and liquidity. Fees and Expenses This table describes the fees and expenses that you may pay if you buy and hold shares of the fund. Fees and Expenses of the Fund <center>Shareholder fees (fees paid directly from your investment)</center> <center>Annual fund operating expenses (expenses that you pay each year as a percentage of the value of your investment)</center> Portfolio Turnover The fund pays transaction costs, such as commissions, when it buys and sells securities (or turns over its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, affect the funds performance. Example This example 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 and then redeem all of your shares at the end of those periods. The example also assumes that your investment has a 5% return each year, the fund’s operating expenses remain the same, and the expense limitation currently in place is not renewed. Although your actual costs may be higher or lower, based on these assumptions your costs would be: Investments, Risks, and Performance Principal Investment Strategies The fund invests in a diversified portfolio of shorter-term investment-grade corporate and government securities, including mortgage-backed securities, money market securities and bank obligations. Normally, the fund will invest at least 80% of its net assets (including any borrowings for investment purposes) in bonds and all of the securities purchased by the fund will be rated investment-grade (AAA, AA, A, BBB, or an equivalent rating) at the time of purchase by at least one of the major credit rating agencies or, if unrated, deemed to be investment-grade quality by T. Rowe Price. While the fund may purchase an individual security with a maturity of up to 5 years, under normal conditions the fund’s dollar-weighted average effective maturity will be 1.5 years or less.Investment decisions reflect the portfolio manager’s outlook for interest rates and the economy, as well as the prices, yields, and credit quality of various securities in which the fund may invest. For example, if interest rates are expected to fall, the fund may purchase longer-term securities (to the extent consistent with the fund’s investment program) in an attempt to seek higher yields and/or capital appreciation. Conversely, if interest rates are expected to rise, the fund may seek securities with shorter maturities.The fund may sell holdings for a variety of reasons, such as to adjust the portfolio’s average maturity, duration, or overall credit quality, or to shift assets into and out of higher-yielding or lower-yielding securities or certain sectors. Principal Risks As with any mutual fund, there is no guarantee that the fund will achieve its objective. The funds share price fluctuates, which means you could lose money by investing in the fund. The principal risks of investing in this fund are summarized as follows:Active management risk The fund is subject to the risk that the investment advisers judgments about the attractiveness, value, or potential appreciation of the funds investments may prove to be incorrect. If the securities selected and strategies employed by the fund fail to produce the intended results, the fund could underperform other funds with similar objectives and investment strategies.Interest rate risk This is the risk that a rise in interest rates will cause the price of a fixed rate debt security to fall. Prices fall because the bonds and notes in the funds portfolio become less attractive to other investors when securities with higher yields become available. Generally, securities with longer maturities and funds with longer weighted average maturities carry greater interest rate risk. During periods of extremely low or negative interest rates, the fund may not be able to maintain a positive yield or yields on par with historical levels.Credit risk This is the risk that an issuer of a debt security could suffer an adverse change in financial condition that results in a payment default, security downgrade, or inability to meet a financial obligation.Liquidity risk This is the risk that the fund may not be able to sell a holding in a timely manner at a desired price.Prepayment risk and extension risk Prepayment risk is the risk that the principal on mortgage-backed securities, other asset-backed securities or any debt security with an embedded call option may be prepaid at any time, which could reduce yield and market value. The rate of prepayments tends to increase as interest rates fall, which could cause the average maturity of the portfolio to shorten. Extension risk may result from a rise in interest rates, which tends to make mortgage-backed securities, asset-backed securities, and other callable debt securities more volatile. Performance Because the fund commenced operations in 2012, there is no historical performance information shown here. Performance history will be presented after the fund has been in operation for one full calendar year. Current performance information may be obtained through troweprice.com or by calling 1-800-225-5132. Other expenses are estimated. The funds share price fluctuates, which means you could lose money by investing in the fund. 1-800-225-5132 troweprice.com Because the fund commenced operations in 2012, there is no historical performance information shown here. Performance history will be presented after the fund has been in operation for one full calendar year. <div style="display:none">~ http://www.troweprice.com/role/ScheduleAnnualFundOperatingExpensesT.RowePriceUltraShort-TermBondFund column period compact * ~</div> <div style="display:none">~ http://www.troweprice.com/role/ScheduleExpenseExampleTransposedT.RowePriceUltraShort-TermBondFund column period compact * ~</div> -0.0026 September 30, 2015~ http://www.troweprice.com/role/ScheduleShareholderFeesT.RowePriceUltraShort-TermBondFund column period compact * ~</div> Subject to certain exceptions, accounts with a balance of less than $10,000 are charged an annual $20 fee. Other expenses are estimated. T. Rowe Price Associates, Inc. has agreed (through September 30, 2015) to waive its fees and/or bear any expenses (excluding interest, taxes, brokerage, extraordinary expenses, and acquired fund fees) that would cause the fund's ratio of expenses to average net assets to exceed 0.35%. Termination of the agreement would require approval by the fund's Board of Directors. Fees waived and expenses paid under this agreement are subject to reimbursement to T. Rowe Price Associates, Inc. by the fund whenever the fund's expense ratio is below 0.35%. However, no reimbursement will be made more than three years after the waiver or payment, or if it would result in the expense ratio exceeding 0.35% (excluding interest, taxes, brokerage, extraordinary expenses, and acquired fund fees).