Fees and Expenses of the Fund
|
|
Shareholder fees (fees paid
directly from your investment)
|
Maximum sales charge (load) imposed on
purchases
|
NONE
|
|
|
Maximum deferred sales charge (load)
|
NONE
|
|
|
Redemption fee
|
NONE
|
|
|
Maximum account fee
|
$20
a
|
Annual fund operating expenses
(expenses that you pay each year
as a
percentage of the value of your investment)
|
Management fees
|
0.38%
|
|
|
Distribution and service (12b-1) fees
|
0.00%
|
|
|
Other expenses
|
0.23%
b
|
|
|
Total annual fund operating expenses
|
0.61%
|
|
|
Fee waiver/expense reimbursement
|
0.26%
c
|
|
|
Total annual fund operating expenses after fee waiver/expense reimbursement
|
0.35%
c
|
a
Subject to certain exceptions,
accounts with a balance of less than $10,000 are charged an annual $20 fee.
b
Other
expenses are estimated.
c
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 funds ratio of expenses to average net assets to exceed 0.35%. Termination of the agreement
would require approval by the funds 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
funds 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).
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 funds
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:
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.
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 funds dollar-weighted average effective maturity will
be 1.5 years or less.
Investment decisions reflect the portfolio managers 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 funds 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 portfolios 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.
Investment Adviser
T. Rowe
Price Associates, Inc. (T. Rowe Price)
|
|
|
|
Portfolio
Manager
|
Title
|
Managed Fund Since
|
Joined Investment
Adviser
|
Joseph K. Lynagh
|
Chairman of Investment
Advisory Committee
|
2012
|
1990
|
Purchase
and Sale of Fund Shares
The funds investment minimums generally are as follows (if you hold shares through
a financial intermediary, the intermediary may impose different investment minimums):
|
|
|
Type of Account
|
Minimum
initial purchase
|
Minimum subsequent
purchase
|
Individual
retirement accounts, small business retirement plan accounts, and Uniform Gifts to Minors Act or Uniform
Transfers to Minors Act accounts
|
$1,000
|
$100
|
|
|
|
All other accounts
|
2,500
|
100
|
You may purchase, redeem, or exchange shares of the fund on any
day the New York Stock Exchange is open for business by accessing your account online at troweprice.com,
by calling 1-800-225-5132, or by written request. If you hold shares through a financial intermediary,
you must purchase, redeem, and exchange shares through your intermediary.
Tax Information
The
fund declares dividends daily and pays them on the first business day of each month. Any capital gains
are declared and paid annually, usually in December. Distributions by the fund, whether or not you reinvest
these amounts in additional fund shares, may be taxed as ordinary income or capital gains unless you
invest through a tax-deferred account. A redemption or exchange of fund shares may be taxable.
Payments
to Broker-Dealers and Other Financial Intermediaries
If you purchase shares of the fund through a
broker-dealer or other financial intermediary, the fund and its related companies may pay the intermediary
for the performance of administrative services. These payments may create a conflict of interest by influencing
the broker-dealer or other intermediary and your salesperson to recommend the fund over another investment.
Ask your salesperson or visit your financial intermediarys website for more information on these
payments.
|
|
T. Rowe Price
Associates, Inc.
100 East Pratt Street
Baltimore, MD 21202
|
F188-045
12/3/12
|