T. Rowe Price Short Term Bond Fund (PRWBX) N-CSR Certified annual shareholder report (management investment company)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED

MANAGEMENT INVESTMENT COMPANIES

Investment Company Act File Number: 811-03894

T. Rowe Price Short-Term Bond Fund, Inc.

(Exact name of registrant as specified in charter)

100 East Pratt Street, Baltimore, MD 21202

(Address of principal executive offices)

David Oestreicher

100 East Pratt Street, Baltimore, MD 21202

(Name and address of agent for service)

Registrant’s telephone number, including area code: (410) 345-2000

Date of fiscal year end: May 31    

Date of reporting period: May 31, 2023

Item 1. Reports to Shareholders

(a) Report pursuant to Rule 30e-1

Highlights

and

Market

Commentary

Management’s

Discussion

of

Fund

Performance

Performance

and

Expenses

Financial

Highlights

Portfolio

of

Investments

Financial

Statements

and

Notes

Additional

Fund

Information

May

31,

2023

Annual

Report

For

more

insights

from

T.

Rowe

Price

investment

professionals,

go

to

troweprice.com

.

T.

ROWE

PRICE

TRBUX

Ultra

Short-Term

Bond

Fund

–

.

TRSTX

Ultra

Short-Term

Bond

Fund–

.

I  Class

TRZWX

Ultra

Short-Term

Bond

Fund–

.

Z Class

T.

ROWE

PRICE

Ultra

Short-Term

Bond

Fund

HIGHLIGHTS

The

fund

modestly

outperformed

its

benchmark

but

underperformed

its

Lipper

peer

group

average

over

the

12-month

period

ended

May

31,

2023.

Short-term

fixed

income

markets

remained

volatile

over

the

past

12

months

as

market

participants

struggled

to

balance

a

resilient

economy

against

considerable

tightening

from

the

Federal

Reserve.

From

a

credit

risk

standpoint,

the

fund

remained

defensively

positioned

with

credit

exposure

below

long-term

averages.

However,

we

opportunistically

added

to

investment-grade

corporate

exposure

in

the

first

quarter

of

2023

when

credit

spreads

prematurely

reflected

a

more

recessionary

outlook,

in

our

view.

Front-end

volatility

is

likely

to

persist

in

both

yields

and

credit

spreads,

which

should

offer

opportunities

for

the

fund

to

supplement

the

already

healthy

yield

embedded

in

the

portfolio.

Log

in

to

your

account

at

troweprice.com

for

more

information.

*

Certain

mutual

fund

accounts

that

are

assessed

an

annual

account

service

fee

can

also

save

money

by

switching

to

e-delivery.

T.

ROWE

PRICE

Ultra

Short-Term

Bond

Fund

Market

Commentary

1

Dear

Shareholder

Major

global

stock

and

bond

indexes

produced

mixed

returns

during

your

fund’s

fiscal

year,

the

12-month

period

ended

May

31,

2023.

Rising

interest

rates

weighed

on

returns

in

the

first

half

of

the

period,

but

many

sectors

rebounded

over

the

past

six

months

as

growth

remained

positive

in

the

major

economies

and

corporate

earnings

results

came

in

stronger

than

expected.

For

the

12-month

period,

growth

stocks

outperformed

value

shares,

and

developed

market

shares

generally

outpaced

their

emerging

market

counterparts.

In

the

U.S.,

the

Russell

1000

Growth

Index

and

Nasdaq

Composite

Index

performed

the

best.

Most

currencies

weakened

versus

the

U.S.

dollar

over

the

period,

which

weighed

on

returns

for

U.S.

investors

in

international

securities.

Within

the

S&P

500

Index,

the

information

technology

sector

had,

by

far,

the

strongest

returns.

Big

tech

companies

rebounded

strongly

at

the

start

of

2023,

helped

in

part

by

growing

investor

enthusiasm

for

artificial

intelligence

applications.

Meanwhile,

falling

prices

for

various

commodities

weighed

on

returns

for

the

materials

and

energy

sectors,

and

turmoil

in

the

banking

sector,

which

included

the

failure

of

three

large

regional

banks,

hurt

the

financials

segment.

Real

estate

stocks

also

came

under

pressure

amid

concerns

about

the

ability

of

some

commercial

property

owners

to

refinance

their

debt.

Cheaper

oil

contributed

to

slowing

inflation

during

the

period,

although

core

inflation

readings—which

exclude

volatile

food

and

energy

prices—remained

stubbornly

high.

April’s

consumer

price

index

data

(the

latest

available

in

our

reporting

period)

showed

a

headline

inflation

rate

of

4.9%

on

a

12-month

basis,

down

from

more

than

8%

at

the

start

of

the

period

but

still

well

above

the

Fed’s

long-term

2%

inflation

target.

In

response

to

persistent

inflation,

the

Fed

raised

its

short-term

lending

benchmark

rate

from

around

1.00%

at

the

start

of

the

period

to

a

range

of

5.00%

to

5.25%

by

the

end

of

May,

the

highest

level

since

2007.

However,

Fed

officials

have

recently

suggested

that

they

might

soon

be

ready

to

pause

additional

rate

hikes

as

they

wait

to

see

how

the

economy

is

progressing.

Bond

yields

increased

considerably

across

the

U.S.

Treasury

yield

curve

as

the

Fed

tightened

monetary

policy,

with

the

yield

on

the

benchmark

10-year

note

climbing

from

2.85%

at

the

start

of

the

period

to

3.64%

at

the

end

of

May.

Significant

inversions

in

the

yield

curve,

which

are

often

considered

a

warning

sign

of

a

coming

recession,

occurred

during

the

period

as

shorter-maturity

Treasuries

experienced

the

largest

yield

increases.

At

the

end

of

May,

the

yield

T.

ROWE

PRICE

Ultra

Short-Term

Bond

Fund

2

on

the

three-month

Treasury

bill

was

188

basis

points

(1.88

percentage

point)

higher

than

the

yield

on

the

10-year

Treasury

note.

Increasing

yields

led

to

weak

results

across

most

of

the

fixed

income

market,

although

high

yield

bonds,

which

are

less

sensitive

to

rising

rates,

held

up

relatively

well.

Global

economies

and

markets

showed

surprising

resilience

in

recent

months,

but,

moving

into

the

second

half

of

2023,

we

believe

investors

could

face

potential

challenges.

The

economic

impact

of

the

Fed’s

rate

hikes

has

yet

to

be

fully

felt

in

the

economy,

and

while

the

regional

banking

turmoil

appears

to

have

been

contained

by

the

swift

actions

of

regulators,

it

could

continue

to

have

an

impact

on

credit

conditions.

Moreover,

the

market

consensus

still

seems

to

forecast

a

global

recession

starting

later

this

year

or

in

early

2024,

although

it

could

be

a

mild

downturn.

We

believe

this

environment

makes

skilled

active

management

a

critical

tool

for

identifying

risks

and

opportunities,

and

our

investment

teams

will

continue

to

use

fundamental

research

to

identify

securities

that

can

add

value

to

your

portfolio

over

the

long

term.

Thank

you

for

your

continued

confidence

in

T.

Rowe

Price.

Sincerely, 

Robert

Sharps

CEO

and

President

T.

ROWE

PRICE

Ultra

Short-Term

Bond

Fund

Management’s

Discussion

of

Fund

Performance

3

INVESTMENT

OBJECTIVE 

The

fund

seeks

a

high

level

of

income

consistent

with

minimal

fluctuation

in

principal

value

and

liquidity.

FUND

COMMENTARY

How

did

the

fund

perform

in

the

past 12

months?

The

fund

returned

2.73%

in

the

12-month

period

ended

May

31,

2023.

The

fund

outperformed

its

benchmark,

the

Bloomberg

Short-Term

Government/

Corporate

Index,

but

underperformed

its

Lipper

peer

group

average.

(Returns

for

I

and

Z

Class

shares

will

vary,

reflecting

their

different

fee

structures.

Past

performance

cannot

guarantee

future

results

.)

What

factors

influenced

the

fund’s

performance?

Short-term

fixed

income

markets

remained

volatile

over

the

past

12

months

as

market

participants

struggled

to

balance

a

resilient

economy

against

considerable

tightening

from

the

Federal

Reserve

(Fed).

During

the

reporting

period,

shifts

in

market

expectations

for

monetary

policy

contributed

to

notable

volatility

in

Treasury

yields.

The

two-year

Treasury

note

yield

began

the

period

at

2.53%,

reached

an

intraperiod

high

of

over

5%

in

March

2023,

and

moderated

to

end

the

period

at

4.40%.

The

high

end

of

this

range

was

driven

by

market

expectations

for

the

Fed’s

terminal

rate

rising

to

nearly

6%

amid

hawkish

rhetoric,

which

uncovered

solvency

concerns

within

the

banking

sector

and

abruptly

pushed

Treasury

yields

lower.

PERFORMANCE

COMPARISON

Total

Return

Periods

Ended

5/31/23

6

Months

12

Months

Ultra

Short-Term

Bond

Fund

–

.

2.90‌%

2.73‌%

Ultra

Short-Term

Bond

Fund–

.

I  Class

2.96‌

2.86‌

Ultra

Short-Term

Bond

Fund–

.

Z  Class

3.05‌

3.05‌

Bloomberg

Short-Term

Government/Corporate

Index

2.20‌

2.63‌

Lipper

Ultra-Short

Obligations

Funds

Average

2.53‌

2.99‌

T.

ROWE

PRICE

Ultra

Short-Term

Bond

Fund

4

Alongside

the

banking

sector

turmoil

that

surfaced

in

March

2023,

credit

spreads

on

one-

to

three-year

corporate

bonds

more

than

doubled

and

peaked

just

above

130

basis

points

(bps)

as

the

financials

sector

priced

in

a

recessionary

environment.

Credit

spreads

subsequently

tightened

but

still

ended

the

period

approximately

15

bps

wider

than

12

months

prior.

(Credit

spreads

are

a

measure

of

the

additional

yield

offered

by

bonds

that

have

credit

risk

compared

with

U.S.

Treasuries

with

similar

maturities.)

Despite

both

Treasury

rates

and

credit

spreads

ending

the

period

higher

than

they

started,

the

Ultra

Short-Term

Bond

Fund

delivered

a

positive

total

return,

as

the

higher

yields

offered

by

securities

within

the

portfolio

provided

a

considerable

cushion

against

negative

market

impacts.

Security

selection

within

investment-grade

corporate

bonds

aided

relative

performance.

Cyclical

exposures

within

European

banks

and

automotive

bonds

were

among

the

strongest

contributors.

Relative

performance

was

also

supported

by

our

incremental

additions

to

U.S.

corporates

during

the

volatility

surrounding

U.S.

regional

banks

in

March

2023.

Interest

rate

management

contributed

in

aggregate,

led

upward

by

constructive

positioning

across

key

rates.

In

particular,

a

slight

underweight

to

the

six-

month

key

rate

and

a

modest

overweight

to

the

two-year

key

rate

helped

relative

performance

as

the

yield

on

the

six-month

Treasury

bill

increased

more

than

the

yield

on

the

two-year

Treasury

note.

Conversely,

the

fund’s

modestly

longer-than-benchmark

average

duration

profile

detracted

as

Treasury

yields

rose

broadly

across

the

yield

curve.

Sector

allocations

contributed

to

the

fund’s

relative

performance

in

aggregate.

An

overweight

to

investment-grade

corporate

bonds

and

a

corresponding

underweight

to

U.S.

Treasuries

helped

relative

performance

as

generally

supportive

corporate

earnings

and

hopes

for

a

dovish

pivot

from

the

Fed

led

to

bouts

of

improved

risk

sentiment.

An

out-of-benchmark

allocation

to

asset-backed

securities

(ABS)

was

also

constructive

as

attractive

relative

valuations

at

the

start

of

2023,

healthy

liquidity,

and

low

levels

of

issuance

all

contributed

to

the

sector’s

outperformance.

Conversely,

out-of-benchmark

allocations

to

residential

mortgage-backed

securities

(RMBS)—and,

to

a

lesser

extent,

commercial

mortgage-backed

securities

(CMBS)—hindered

relative

performance.

CMBS

were

dragged

down

by

concerns

about

the

health

of

the

commercial

real

estate

market,

and

the

interest

rate-sensitive

RMBS

sector

traded

lower

amid

rising

rates

and

periods

of

thin

liquidity.

T.

ROWE

PRICE

Ultra

Short-Term

Bond

Fund

5

In

addition,

while

we

are

primarily

a

cash

bond

manager,

we

employ

the

limited

use

of

derivatives

in

our

strategy

for

hedging

purposes.

Derivatives

may

include

futures

and

options,

as

well

as

credit

default

and

interest

rate

swaps.

During

the

reporting

period,

our

use

of

derivatives—particularly

Treasury

futures—contributed

to

absolute

performance.

How

is

the

fund

positioned?

Duration

fell

below

the

low

end

of

the

fund’s

usual

half-

to

one-year

target

range

early

in

the

period

and

remained

there

through

the

first

half

of

the

reporting

period.

The

fund

then

added

duration

as

interest

rates

increased

during

early

2023,

and

duration

slowly

but

steadily

rose

through

the

end

of

the

period.

This

decision

to

modestly

extend

duration

was

in

line

with

our

view

that

the

risks

around

Treasury

yields

became

slightly

more

balanced

following

the

one-way

trade

of

rising

rates

in

2022.

However,

overall

duration

positioning

stayed

below

long-term

averages

since

inflation

did

not

decline

to

a

level

that

would

precipitate

cuts

to

the

policy

rate.

From

a

credit

risk

standpoint,

the

fund

remained

defensively

positioned

with

credit

exposure

below

long-term

averages.

However,

we

opportunistically

added

to

investment-grade

corporate

exposure

when

credit

spreads

prematurely

reflected

a

more

recessionary

outlook,

in

our

view.

The

spread

volatility

seen

over

the

period

presented

many

opportunities

for

our

research

team

to

identify

bonds

where

credit

spreads

were

divorced

from

fundamentals,

which

incrementally

pushed

credit

risk

higher.

Non-commercial

paper

investment-grade

corporate

bonds

continued

to

be

the

largest

exposure

for

the

fund,

representing

approximately

58%

of

the

fund’s

net

assets

at

period-end.

We

continued

to

hold

out-of-benchmark

positions

in

ABS,

CMBS,

and

RMBS

to

provide

diversified

sources

of

what

we

believe

to

be

high-quality

yield.

However,

our

allocation

to

RMBS

trended

lower

and

now

sits

at

about

half

of

its

peak

level

seen

in

2021.

This

move

lower

was

through

a

combination

of

bond

amortization

and

actively

selling

bonds.

ABS

continued

to

be

a

steady

allocation

as

our

analyst

team

identified

a

variety

of

opportunities

within

automotive

and

industrial

equipment

securities.

Nearly

half

of

the

fund’s

holdings

continued

to

be

in

the

zero

to

one-year

maturity

bucket,

reflecting

the

higher

yields

of

an

inverted

interest

rate

curve

and

our

expectation

that

the

Fed

would

continue

to

tighten

monetary

policy

as

inflation

and

growth

continued

to

exceed

expectations.

T.

ROWE

PRICE

Ultra

Short-Term

Bond

Fund

6

What

is

portfolio

management’s

outlook?

The

U.S.

economy

continues

to

outperform

expectations

despite

weathering

an

inflationary

backdrop

and

regional

banking

turmoil.

Some

signs

of

concern

have

appeared

on

the

edges,

such

as

negative

profit

growth

and

softening

in

labor

market

surveys,

but

growth

remains

resilient,

which

implies

the

economy

is

more

likely

to

steadily

slow

to

trend

levels

of

growth.

Somewhat

contrary

to

this

view,

credit

spreads

are

pricing

in

a

material

chance

of

an

economic

slowdown,

which

continues

to

present

opportunities

to

incrementally

add

credit

risk,

but

within

the

context

of

a

below-average

level

versus

the

fund’s

long-term

range.

Inflation

remains

too

far

above

tolerance

levels,

and

it’s

unclear

if

the

current

level

of

monetary

policy

is

restrictive

enough

to

bring

2%

inflation

into

the

conversation.

This

will

keep

the

Fed

in

play

and

prevent

the

market

from

confidently

saying

the

peak

in

yields

for

this

cycle

has

been

reached.

While

it’s

true

rising

yields

were

a

factor

behind

the

banking

turmoil

in

March,

the

weaker

players

have

been

addressed,

and

the

sector

has

a

variety

of

tools

at

its

disposal

to

help

weather

a

less-than-ideal

operating

environment.

Putting

all

this

together,

front-end

volatility

is

likely

to

persist

in

both

yields

and

credit

spreads,

which

should

offer

opportunities

for

the

fund

to

supplement

the

already

healthy

yield

embedded

in

the

portfolio.

In

the

current

environment

of

heightened

volatility,

active

management

can

play

an

even

more

instrumental

part

in

achieving

investor

objectives.

Our

continued

goal

Sources:

Credit

ratings

for

the

securities

held

in

the

fund

are

provided

by

Moody’s,

Standard

&

Poor’s,

and

Fitch

and

are

converted

to

the

Standard

&

Poor’s

nomenclature.

A

rating

of

AAA

represents

the

highest-

rated

securities,

and

a

rating

of

D

represents

the

lowest-

rated

securities.

If

the

rating

agencies

differ,

the

highest

rating

is

applied

to

the

security.

If

a

rating

is

not

available,

the

security

is

classified

as

Not

Rated.

T.

Rowe

Price

uses

the

rating

of

the

underlying

investment

vehicle

to

determine

the

creditworthiness

of

credit

default

swaps.

The

fund

is

not

rated

by

any

agency.

Securities

that

have

not

been

rated

by

any

rating

agency

totaled

0.19%

of

the

portfolio

at

the

end

of

the

reporting

period.

*

U.S.

Treasury

securities

are

issued

by

the

U.S.

Treasury

and

are

backed

by

the

full

faith

and

credit

of

the

U.S.

government.

The

ratings

of

U.S.

Treasury

securities

are

derived

from

the

ratings

on

the

U.S.

government.

CREDIT

QUALITY

DIVERSIFICATION

Ultra

Short-Term

Bond

Fund

T.

ROWE

PRICE

Ultra

Short-Term

Bond

Fund

7

is

to

provide

high-quality,

consistent

yield

and

income

appropriate

for

an

ultra

short-term

bond

strategy

with

modest

credit

and

duration

risk.

Using

the

breadth

and

depth

of

our

global

research

platform,

we

will

look

to

selectively

add

to

high-conviction

positions

as

volatility

creates

attractive

entry

points.

The

views

expressed

reflect

the

opinions

of

T.

Rowe

Price

as

of

the

date

of

this

report

and

are

subject

to

change

based

on

changes

in

market,

economic,

or

other

conditions.

These

views

are

not

intended

to

be

a

forecast

of

future

events

and

are

no

guarantee

of

future

results.

T.

ROWE

PRICE

Ultra

Short-Term

Bond

Fund

8

RISKS

OF

BOND

INVESTING

The

value

of

the

fund’s

investments

may

decrease,

sometimes

rapidly

or

unexpectedly,

due

to

factors

affecting

an

issuer

held

by

the

fund,

particular

industries,

or

the

overall

securities

markets.

The

prices

of,

and

the

income

generated

by,

debt

instruments

held

by

the

fund

may

be

affected

by

changes

in

interest

rates.

The

fund

is

subject

to

prepayment

risks

because

the

principal

on

mortgage-backed

securities,

other

asset-backed

securities,

or

any

debt

instrument

with

an

embedded

call

option

may

be

prepaid

at

any

time,

which

could

reduce

the

security’s

yield

and

market

value.

An

issuer

of

a

debt

instrument

could

suffer

an

adverse

change

in

financial

condition

that

results

in

a

payment

default

(failure

to

make

scheduled

interest

or

principal

payments),

rating

downgrade,

or

inability

to

meet

a

financial

obligation.

BENCHMARK

INFORMATION

Note:

Bloomberg

®

and Bloomberg

Short-Term

Government/Corporate

Index

are

service

marks

of

Bloomberg

Finance

L.P.

and

its

affiliates,

including

Bloomberg

Index

Services

Limited

(“BISL”),

the

administrator

of

the

index

(collectively,

“Bloomberg”)

and

have

been

licensed

for

use

for

certain

purposes

by

T.

Rowe

Price.

Bloomberg

is

not

affiliated

with

T.

Rowe

Price,

and

Bloomberg

does

not

approve,

endorse,

review,

or

recommend

its

products.

Bloomberg

does

not

guarantee

the

timeliness,

accurateness,

or

completeness

of

any

data

or

information

relating

to

its

products.

Note:

Copyright

©

2023

Fitch

Ratings,

Inc.,

Fitch

Ratings

Ltd.

and

its

subsidiaries.

Note:

Portions

of

the

mutual

fund

information

contained

in

this

report

was

supplied

by

Lipper,

a

Refinitiv

Company,

subject

to

the

following:

Copyright

2023

©

Refinitiv.

All

rights

reserved.

Any

copying,

republication

or

redistribution

of

Lipper

content

is

expressly

prohibited

without

the

prior

written

consent

of

Lipper.

Lipper

shall

not

be

liable

for

any

errors

or

delays

in

the

content,

or

for

any

actions

taken

in

reliance

thereon.

Note:

©

2023,

Moody’s

Corporation, Moody’s

Investors

Service,

Inc.,

Moody’s

Analytics,

Inc.

and/or

their

licensors

and

affiliates

(collectively,

“Moody’s”).

All

rights

reserved.

Moody’s

ratings

and

other

information

(“Moody’s

Information”)

are

proprietary

to

Moody’s

and/or

its

licensors

and

are

protected

by

copyright

and

other

intellectual

property

laws.

Moody’s

Information

is

licensed

to

Client

by

Moody’s.

MOODY’S

INFORMATION

MAY

NOT

BE

COPIED

OR

OTHERWISE

REPRODUCED,

REPACKAGED,

FURTHER

TRANSMITTED,

TRANSFERRED,

DISSEMINATED,

REDISTRIBUTED

T.

ROWE

PRICE

Ultra

Short-Term

Bond

Fund

9

OR

RESOLD,

OR

STORED

FOR

SUBSEQUENT

USE

FOR

ANY

SUCH

PURPOSE,

IN

WHOLE

OR

IN

PART,

IN

ANY

FORM

OR

MANNER

OR

BY

ANY

MEANS

WHATSOEVER,

BY

ANY

PERSON

WITHOUT

MOODY’S

PRIOR

WRITTEN

CONSENT.

Moody's

®

is

a

registered

trademark.

Note:

Copyright

©

2023,

S&P

Global

Market

Intelligence

(and

its

affiliates,

as

applicable).

Reproduction

of

any

information,

data

or

material,

including

ratings

(“Content”)

in

any

form

is

prohibited

except

with

the

prior

written

permission

of

the

relevant

party. Such

party,

its

affiliates

and

suppliers

(“Content

Providers”)  do

not

guarantee

the

accuracy,

adequacy,

completeness,

timeliness

or

availability

of

any

Content

and

are

not

responsible

for

any

errors

or

omissions

(negligent

or

otherwise),

regardless

of

the

cause,

or

for

the

results

obtained

from

the

use

of

such

Content.

In

no

event

shall

Content

Providers

be

liable

for

any

damages,

costs,

expenses,

legal

fees,

or

losses

(including

lost

income

or

lost

profit

and

opportunity

costs)

in

connection

with

any

use

of

the

Content.

A

reference

to

a

particular

investment

or

security,

a

rating

or

any

observation

concerning

an

investment

that

is

part

of

the

Content

is

not

a

recommendation

to

buy,

sell

or

hold

such

investment

or

security,

does

not

address

the

appropriateness

of

an

investment

or

security

and

should

not

be

relied

on

as

investment

advice.

Credit

ratings

are

statements

of

opinions

and

are

not

statements

of

fact.

BENCHMARK

INFORMATION

(continued)

T.

ROWE

PRICE

Ultra

Short-Term

Bond

Fund

10

GROWTH

OF

$10,000 

This

chart

shows

the

value

of

a

hypothetical

$10,000

investment

in

the

fund

over

the

past

10

fiscal

year

periods

or

since

inception

(for funds

lacking

10-year

records).

The

result

is

compared

with

benchmarks,

which

include

a

broad-based

market

index

and

may

also

include

a

peer

group

average

or

index.

Market

indexes

do

not

include

expenses,

which

are

deducted

from

fund returns

as

well

as

mutual fund

averages

and

indexes.

ULTRA

SHORT-TERM

BOND

FUND 

Note:

Performance

for

the I

and

Z Class

shares

will

vary

due

to

their

differing

fee

structures.

See

the

Average

Annual

Compound

Total

Return

table. 

T.

ROWE

PRICE

Ultra

Short-Term

Bond

Fund

11

AVERAGE

ANNUAL

COMPOUND

TOTAL

RETURN

Periods

Ended

5/31/23

1

Year

5

Years

10

Years

Since

Inception

Inception

Date

Ultra

Short-Term

Bond

Fund

–

.

2.73‌%

1.90‌%

1.48‌%

–‌

–

Ultra

Short-Term

Bond

Fund–

.

I  Class

2.86‌

2.03‌

–‌

1.98‌%

7/6/17

Ultra

Short-Term

Bond

Fund–

.

Z  Class

3.05‌

–‌

–‌

0.99‌

2/22/21

This

table

shows

how

the

fund

would

have

performed

each

year

if

its

actual

(or

cumulative)

returns

for

the

periods

shown

had

been

earned

at

a

constant

rate.

Returns

do

not

reflect

taxes

that

the

shareholder

may

pay

on

fund

distributions

or

the

redemption

of

fund

shares.

Past

performance

cannot

guarantee

future

results.

T.

ROWE

PRICE

Ultra

Short-Term

Bond

Fund

12

EXPENSE

RATIO

FUND

EXPENSE

EXAMPLE

As

a

mutual

fund

shareholder,

you

may

incur

two

types

of

costs:

(1)

transaction

costs,

such

as

redemption

fees

or

sales

loads,

and

(2)

ongoing

costs,

including

management

fees,

distribution

and

service

(12b-1)

fees,

and

other

fund

expenses.

The

following

example

is

intended

to

help

you

understand

your

ongoing

costs

(in

dollars)

of

investing

in

the

fund

and

to

compare

these

costs

with

the

ongoing

costs

of

investing

in

other

mutual

funds.

The

example

is

based

on

an

investment

of

$1,000

invested

at

the

beginning

of

the

most

recent

six-month

period

and

held

for

the

entire

period.

Please

note

that

the

fund

has

three

share

classes:

The

original

share

class

(Investor

Class)

charges

no

distribution

and

service

(12b-1)

fee,

I

Class

shares

are

also

available

to

institutionally

oriented

clients

and

impose

no

12b-1

or

administrative

fee

payment,

and

Z

Class

shares

are

offered

only

to

funds

advised

by

T.

Rowe

Price

and

other

advisory

clients

of

T.

Rowe

Price

or

its

affiliates

that

are

subject

to

a

contractual

fee

for

investment

management

services

and

impose

no

12b-1

fee

or

administrative

fee

payment.

Each

share

class

is

presented

separately

in

the

table.

Actual

Expenses

The

first

line

of

the

following

table

(Actual)

provides

information

about

actual

account

values

and

expenses

based

on

the

fund’s

actual

returns.

You

may

use

the

information

on

this

line,

together

with

your

account

balance,

to

estimate

the

expenses

that

you

paid

over

the

period.

Simply

divide

your

account

value

by

$1,000

(for

example,

an

$8,600

account

value

divided

by

$1,000

=

8.6),

then

multiply

the

result

by

the

number

on

the

first

line

under

the

heading

“Expenses

Paid

During

Period”

to

estimate

the

expenses

you

paid

on

your

account

during

this

period.

Hypothetical

Example

for

Comparison

Purposes

The

information

on

the

second

line

of

the

table

(Hypothetical)

is

based

on

hypothetical

account

values

and

expenses

derived

from

the

fund’s

actual

expense

ratio

and

an

assumed

5%

per

year

rate

of

return

before

expenses

(not

the

fund’s

actual

return).

You

may

compare

the

ongoing

costs

of

investing

in

the

fund

with

other

funds

by

contrasting

this

5%

hypothetical

example

and

the

5%

hypothetical

examples

that

appear

in

the

shareholder

reports

of

the

other

funds.

The

hypothetical

account

values

and

expenses

may

not

be

used

to

estimate

the

actual

ending

account

balance

or

expenses

you

paid

for

the

period.

Ultra

Short-Term

Bond

Fund

0.31‌%

Ultra

Short-Term

Bond

Fund–I

Class

0.18‌ 

Ultra

Short-Term

Bond

Fund–Z

Class

0.20‌ 

The

expense

ratio

shown

is

as

of

the

fund’s

most

recent

prospectus.

This

number

may

vary

from

the

expense

ratio

shown

elsewhere

in

this

report

because

it

is

based

on

a

different

time

period

and,

if

applicable,

includes

acquired

fund

fees

and

expenses

but

does

not

include

fee

or

expense

waivers.

T.

ROWE

PRICE

Ultra

Short-Term

Bond

Fund

13

Note:

T.

Rowe

Price

charges

an

annual

account

service

fee

of

$20,

generally

for

accounts

with

less

than

$10,000.

The

fee

is

waived

for

any

investor

whose

T.

Rowe

Price

mutual

fund

accounts

total

$50,000

or

more;

accounts

electing

to

receive

electronic

delivery

of

account

statements,

transaction

confirmations,

prospectuses,

and

shareholder

reports;

or

accounts

of

an

investor

who

is

a

T.

Rowe

Price

Personal

Services

or

Enhanced

Personal

Services

client

(enrollment

in

these

programs

generally

requires

T.

Rowe

Price

assets

of

at

least

$250,000).

This

fee

is

not

included

in

the

accompanying

table.

If

you

are

subject

to

the

fee,

keep

it

in

mind

when

you

are

estimating

the

ongoing

expenses

of

investing

in

the

fund

and

when

comparing

the

expenses

of

this

fund

with

other

funds.

You

should

also

be

aware

that

the

expenses

shown

in

the

table

highlight

only

your

ongoing

costs

and

do

not

reflect

any

transaction

costs,

such

as

redemption

fees

or

sales

loads.

Therefore,

the

second

line

of

the

table

is

useful

in

comparing

ongoing

costs

only

and

will

not

help

you

determine

the

relative

total

costs

of

owning

different

funds.

To

the

extent

a

fund

charges

transaction

costs,

however,

the

total

cost

of

owning

that

fund

is

higher.

ULTRA

SHORT-TERM

BOND

FUND

Beginning

Account

Value

12/1/22

Ending

Account

Value

5/31/23

Expenses

Paid

During

Period*

12/1/22

to

5/31/23

Investor

Class

Actual

$1,000.00

$1,029.00

$1.57

Hypothetical

(assumes

5%

return

before

expenses)

 1,000.00

  1,023.39

  1.56

I

Class

Actual

  1,000.00

  1,029.60

  0.96

Hypothetical

(assumes

5%

return

before

expenses)

 1,000.00

  1,023.98

  0.96

Z

Class

Actual

  1,000.00

  1,030.50

  0.00

Hypothetical

(assumes

5%

return

before

expenses)

 1,000.00

  1,024.93

  0.00

*

Expenses

are

equal

to

the

fund’s

annualized

expense

ratio

for

the

6-month

period,

multiplied

by

the

average

account

value

over

the

period,

multiplied

by

the

number

of

days

in

the

most

recent

fiscal

half

year

(182),

and

divided

by

the

days

in

the

year

(365)

to

reflect

the

half-year

period.

The

annualized

expense

ratio

of

the

1

Investor

Class

was

0.31%,

the

2

I Class

was

0.19%,

and

the

3

Z Class

was

0.00%.

FUND

EXPENSE

EXAMPLE

(CONTINUED)

T.

ROWE

PRICE

Ultra

Short-Term

Bond

Fund

14

QUARTER-END

RETURNS

Periods

Ended

3/31/23

1

Year

5

Years

10

Years

Since

Inception

Inception

Date

Ultra

Short-Term

Bond

Fund

–

.

1.46‌%

1.81‌%

1.40‌%

–‌

–

Ultra

Short-Term

Bond

Fund–

.

I  Class

1.58‌ 

1.90‌ 

–‌

1.85‌%

7/6/17

Ultra

Short-Term

Bond

Fund–

.

Z  Class

1.77‌ 

–‌

–‌

0.55‌ 

2/22/21

The

fund’s

performance

information

represents

only

past

performance

and

is

not

necessarily

an

indication

of

future

results.

Current

performance

may

be

lower

or

higher

than

the

performance

data

cited.

Share

price,

principal

value,

and

return

will

vary,

and

you

may

have

a

gain

or

loss

when

you

sell

your

shares.

For

the

most

recent

month-end

performance,

please

visit

our

website

(troweprice.com)

or

contact

a

T.

Rowe

Price

representative

at

1

-

800

-

225

-

5132

or,

for

2

I

and

3

Z

Class

shares,

1-800-638-8790

.

This

table

provides

returns

through

the

most

recent

calendar

quarter-end

rather

than

through

the

end

of

the

fund’s

fiscal

period.

It

shows

how

the

fund

would

have

performed

each

year

if

its

actual

(or

cumulative)

returns

for

the

periods

shown

had

been

earned

at

a

constant

rate.

Average

annual

total

return

figures

include

changes

in

principal

value,

reinvested

dividends,

and

capital

gain

distributions.

Returns

do

not

reflect

taxes

that

the

shareholder

may

pay

on

fund

distributions

or

the

redemption

of

fund

shares.

When

assessing

performance,

investors

should

consider

both

short-

and

long-term

returns.

T.

ROWE

PRICE

Ultra

Short-Term

Bond

Fund

Financial

Highlights

15

For

a

share

outstanding

throughout

each

period

Investor

Class

..

Year

..

..

Ended

.

5/31/23

5/31/22

5/31/21

5/31/20

5/31/19

NET

ASSET

VALUE

Beginning

of

period

$

4.96‌

$

5.09‌

$

5.02‌

$

5.03‌

$

5.01‌

Investment

activities

Net

investment

income

(1)(2)

0.13‌

0.04‌

0.06‌

0.12‌

0.14‌

Net

realized

and

unrealized

gain/

loss

0.01‌

(3)

(0.11‌)

0.08‌

(0.01‌)

0.02‌

Total

from

investment

activities

0.14‌

(0.07‌)

0.14‌

0.11‌

0.16‌

Distributions

Net

investment

income

(0.14‌)

(0.04‌)

(0.06‌)

(0.12‌)

(0.14‌)

Net

realized

gain

(0.02‌)

(0.02‌)

(0.01‌)

—‌

—‌

Total

distributions

(0.16‌)

(0.06‌)

(0.07‌)

(0.12‌)

(0.14‌)

NET

ASSET

VALUE

End

of

period

$

4.94‌

$

4.96‌

$

5.09‌

$

5.02‌

$

5.03‌

T.

ROWE

PRICE

Ultra

Short-Term

Bond

Fund

Financial

Highlights

16

For

a

share

outstanding

throughout

each

period

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

Investor

Class

..

Year

..

..

Ended

.

5/31/23

5/31/22

5/31/21

5/31/20

5/31/19

Ratios/Supplemental

Data

Total

return

(2)(4)

2.73‌%

(1.41‌)%

2.75‌%

2.21‌%

3.27‌%

Ratios

to

average

net

assets:

(2)

Gross

expenses

before

waivers/

payments

by

Price

Associates

(5)

0.33‌%

0.36‌%

0.45‌%

0.44‌%

0.42‌%

Net

expenses

after

waivers/

payments

by

Price

Associates

0.31‌%

0.33‌%

0.35‌%

0.35‌%

0.35‌%

Net

investment

income

2.61‌%

0.72‌%

1.12‌%

2.34‌%

2.79‌%

Portfolio

turnover

rate

38.5‌%

56.2‌%

45.8‌%

69.8‌%

40.1‌%

Net

assets,

end

of

period

(in

millions)

$1,459

$2,409

$4,169

$1,869

$1,164

0‌%

0‌%

0‌%

0‌%

0‌%

(1)

Per

share

amounts

calculated

using

average

shares

outstanding

method.

(2)

See

Note

6

for

details

of

expense-related

arrangements

with

Price

Associates.

(3)

The

amount

presented

is

inconsistent

with

the

fund's

aggregate

gains

and

losses

because

of

the

timing

of

sales

and

redemptions

of

fund

shares

in

relation

to

fluctuating

market

values

for

the

investment

portfolio.

(4)

Total

return

reflects

the

rate

that

an

investor

would

have

earned

on

an

investment

in

the

fund

during

each

period,

assuming

reinvestment

of

all

distributions,

and

payment

of

no

redemption

or

account

fees,

if

applicable.

(5)

See

Note

6.

Prior

to

5/31/20,

the

gross

expense

ratios

presented

are

net

of

a

management

fee

waiver

in

effect

during

the

period,

as

applicable.

T.

ROWE

PRICE

Ultra

Short-Term

Bond

Fund

Financial

Highlights

17

For

a

share

outstanding

throughout

each

period

I

Class

..

Year

..

..

Ended

.

5/31/23

5/31/22

5/31/21

5/31/20

5/31/19

NET

ASSET

VALUE

Beginning

of

period

$

4.97‌

$

5.10‌

$

5.03‌

$

5.04‌

$

5.01‌

Investment

activities

Net

investment

income

(1)(2)

0.14‌

0.04‌

0.06‌

0.12‌

0.14‌

Net

realized

and

unrealized

gain/

loss

—‌

(3)

(0.11‌)

0.09‌

(0.01‌)

0.03‌

Total

from

investment

activities

0.14‌

(0.07‌)

0.15‌

0.11‌

0.17‌

Distributions

Net

investment

income

(0.14‌)

(0.04‌)

(0.07‌)

(0.12‌)

(0.14‌)

Net

realized

gain

(0.02‌)

(0.02‌)

(0.01‌)

—‌

—‌

Total

distributions

(0.16‌)

(0.06‌)

(0.08‌)

(0.12‌)

(0.14‌)

NET

ASSET

VALUE

End

of

period

$

4.95‌

$

4.97‌

$

5.10‌

$

5.03‌

$

5.04‌

T.

ROWE

PRICE

Ultra

Short-Term

Bond

Fund

Financial

Highlights

18

For

a

share

outstanding

throughout

each

period

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

I

Class

..

Year

..

..

Ended

.

5/31/23

5/31/22

5/31/21

5/31/20

5/31/19

Ratios/Supplemental

Data

Total

return

(2)(4)

2.86‌%

(1.27‌)%

2.88‌%

2.31‌%

3.47‌%

Ratios

to

average

net

assets:

(2)

Gross

expenses

before

waivers/

payments

by

Price

Associates

(5)

0.19‌%

0.22‌%

0.32‌%

0.33‌%

0.35‌%

Net

expenses

after

waivers/

payments

by

Price

Associates

0.19‌%

0.19‌%

0.23‌%

0.25‌%

0.35‌%

Net

investment

income

2.74‌%

0.87‌%

1.20‌%

2.47‌%

2.79‌%

Portfolio

turnover

rate

38.5‌%

56.2‌%

45.8‌%

69.8‌%

40.1‌%

Net

assets,

end

of

period

(in

thousands)

$932,780

$1,288,432

$855,064

$263,120

$165,192

0‌%

0‌%

0‌%

0‌%

0‌%

(1)

Per

share

amounts

calculated

using

average

shares

outstanding

method.

(2)

See

Note

6

for

details

of

expense-related

arrangements

with

Price

Associates.

(3)

Amounts

round

to

less

than

$0.01

per

share.

(4)

Total

return

reflects

the

rate

that

an

investor

would

have

earned

on

an

investment

in

the

fund

during

each

period,

assuming

reinvestment

of

all

distributions,

and

payment

of

no

redemption

or

account

fees,

if

applicable.

(5)

See

Note

6.

Prior

to

5/31/20,

the

gross

expense

ratios

presented

are

net

of

a

management

fee

waiver

in

effect

during

the

period,

as

applicable.

T.

ROWE

PRICE

Ultra

Short-Term

Bond

Fund

Financial

Highlights

19

For

a

share

outstanding

throughout

each

period

Z

Class

(1)

..

Year

..

..

Ended

.

2/22/21

(1)

Through

5/31/21

5/31/23

5/31/22

NET

ASSET

VALUE

Beginning

of

period

$

4.97‌

$

5.09‌

$

5.10‌

Investment

activities

Net

investment

income

(2)(3)

0.15‌

0.05‌

0.02‌

Net

realized

and

unrealized

gain/loss

—‌

(4)

(0.10‌)

(0.01‌)

(5)

Total

from

investment

activities

0.15‌

(0.05‌)

0.01‌

Distributions

Net

investment

income

(0.15‌)

(0.05‌)

(0.02‌)

Net

realized

gain

(0.02‌)

(0.02‌)

—‌

Total

distributions

(0.17‌)

(0.07‌)

(0.02‌)

NET

ASSET

VALUE

End

of

period

$

4.95‌

$

4.97‌

$

5.09‌

T.

ROWE

PRICE

Ultra

Short-Term

Bond

Fund

Financial

Highlights

20

For

a

share

outstanding

throughout

each

period

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

Z

Class

(1)

..

Year

..

..

Ended

.

2/22/21

(1)

Through

5/31/21

5/31/23

5/31/22

Ratios/Supplemental

Data

Total

return

(3)(6)

3.05‌%

(0.89‌)%

0.11‌%

Ratios

to

average

net

assets:

(3)

Gross

expenses

before

waivers/payments

by

Price

Associates

0.19‌%

0.25‌%

0.33‌%

(7)

Net

expenses

after

waivers/payments

by

Price

Associates

0.00‌%

0.00‌%

0.00‌%

(7)

Net

investment

income

3.03‌%

1.06‌%

1.13‌%

(7)

Portfolio

turnover

rate

38.5‌%

56.2‌%

45.8‌%

Net

assets,

end

of

period

(in

thousands)

$97

$97

$100

0‌%

0‌%

0‌%

(1)

Inception

date

(2)

Per

share

amounts

calculated

using

average

shares

outstanding

method.

(3)

See

Note

6

for

details

of

expense-related

arrangements

with

Price

Associates.

(4)

Amounts

round

to

less

than

$0.01

per

share.

(5)

The

amount

presented

is

inconsistent

with

the

fund's

aggregate

gains

and

losses

because

of

the

timing

of

sales

and

redemptions

of

fund

shares

in

relation

to

fluctuating

market

values

for

the

investment

portfolio.

(6)

Total

return

reflects

the

rate

that

an

investor

would

have

earned

on

an

investment

in

the

fund

during

each

period,

assuming

reinvestment

of

all

distributions,

and

payment

of

no

redemption

or

account

fees,

if

applicable.

Total

return

is

not

annualized

for

periods

less

than

one

year.

(7)

Annualized

T.

ROWE

PRICE

Ultra

Short-Term

Bond

Fund

May

31,

2023

21

Portfolio

of

Investments

‡

Par/Shares

$

Value

(Amounts

in

000s)

‡

ASSET-BACKED

SECURITIES

14.2%

Auto

Backed

8.9%

AmeriCredit

Automobile

Receivables

Trust

Series

2020-2,

Class

B

0.97%,

2/18/26 

520‌

515‌

AmeriCredit

Automobile

Receivables

Trust

Series

2020-3,

Class

B

0.76%,

12/18/25 

7,500‌

7,287‌

ARI

Fleet

Lease

Trust

Series

2020-A,

Class

B

2.06%,

11/15/28  (1)

270‌

267‌

Avis

Budget

Rental

Car

Funding

AESOP

Series

2018-1A,

Class

D

5.25%,

9/20/24  (1)

4,353‌

4,339‌

CarMax

Auto

Owner

Trust

Series

2020-4,

Class

B

0.85%,

6/15/26 

500‌

465‌

CarMax

Auto

Owner

Trust

Series

2023-1,

Class

A2A

5.23%,

1/15/26 

6,190‌

6,158‌

Carvana

Auto

Receivables

Trust

Series

2021-N4,

Class

B

1.24%,

9/11/28 

2,891‌

2,671‌

Carvana

Auto

Receivables

Trust

Series

2023-N1,

Class

A

6.36%,

4/12/27  (1)

10,536‌

10,508‌

Chase

Auto

Credit

Linked

Notes

Series

2020-1,

Class

B

0.991%,

1/25/28  (1)

260‌

258‌

Chase

Auto

Credit

Linked

Notes

Series

2020-2,

Class

B

0.84%,

2/25/28  (1)

891‌

873‌

Chase

Auto

Credit

Linked

Notes

Series

2021-2,

Class

B

0.889%,

12/26/28  (1)

7,020‌

6,758‌

Enterprise

Fleet

Financing

Series

2023-1,

Class

A2

5.51%,

1/22/29  (1)

12,345‌

12,307‌

Enterprise

Fleet

Financing

Series

2023-2,

Class

A2

5.56%,

4/22/30  (1)

9,575‌

9,573‌

Exeter

Automobile

Receivables

Trust

Series

2022-3A,

Class

B

4.86%,

12/15/26 

5,400‌

5,329‌

Exeter

Automobile

Receivables

Trust

Series

2022-5A,

Class

B

5.97%,

3/15/27 

3,034‌

3,026‌

T.

ROWE

PRICE

Ultra

Short-Term

Bond

Fund

22

Par/Shares

$

Value

(Amounts

in

000s)

Exeter

Automobile

Receivables

Trust

Series

2023-1A,

Class

B

5.72%,

4/15/27 

8,978‌

8,928‌

Ford

Credit

Auto

Lease

Trust

Series

2023-A,

Class

B

5.29%,

6/15/26 

4,690‌

4,668‌

Ford

Credit

Floorplan

Master

Owner

Trust

Series

2020-1,

Class

B

0.98%,

9/15/25 

5,195‌

5,120‌

Ford

Credit

Floorplan

Master

Owner

Trust

Series

2023-1,

Class

B

5.31%,

5/15/28  (1)

4,495‌

4,458‌

GM

Financial

Automobile

Leasing

Trust

Series

2022-2,

Class

B

4.02%,

5/20/26 

6,700‌

6,538‌

GM

Financial

Automobile

Leasing

Trust

Series

2023-2,

Class

B

5.54%,

5/20/27 

3,920‌

3,905‌

GMF

Floorplan

Owner

Revolving

Trust

Series

2020-1,

Class

B

1.03%,

8/15/25  (1)

1,435‌

1,419‌

GMF

Floorplan

Owner

Revolving

Trust

Series

2020-2,

Class

B

0.96%,

10/15/25  (1)

2,145‌

2,101‌

HPEFS

Equipment

Trust

Series

2023-1A,

Class

A2

5.43%,

8/20/25  (1)

3,425‌

3,409‌

Hyundai

Auto

Lease

Securitization

Trust

Series

2021-A,

Class

B

0.61%,

10/15/25  (1)

8,700‌

8,643‌

Hyundai

Auto

Lease

Securitization

Trust

Series

2021-B,

Class

B

0.62%,

3/16/26  (1)

20,345‌

19,741‌

JPMorgan

Chase

Bank

-

CACLN

Series

2021-1,

Class

B

0.875%,

9/25/28  (1)

612‌

593‌

JPMorgan

Chase

Bank

-

CACLN

Series

2021-3,

Class

B

0.76%,

2/26/29  (1)

6,625‌

6,271‌

Octane

Receivables

Trust

Series

2023-1A,

Class

A

5.87%,

5/21/29  (1)

3,332‌

3,319‌

Octane

Receivables

Trust

Series

2023-1A,

Class

B

5.96%,

7/20/29  (1)

3,904‌

3,885‌

Santander

Consumer

Auto

Receivables

Trust

Series

2021-BA,

Class

B

1.45%,

10/16/28  (1)

604‌

594‌

T.

ROWE

PRICE

Ultra

Short-Term

Bond

Fund

23

Par/Shares

$

Value

(Amounts

in

000s)

Santander

Drive

Auto

Receivables

Trust

Series

2020-3,

Class

C

1.12%,

1/15/26 

169‌

169‌

Santander

Drive

Auto

Receivables

Trust

Series

2022-6,

Class

B

4.72%,

6/15/27 

10,350‌

10,152‌

Santander

Drive

Auto

Receivables

Trust

Series

2023-1,

Class

B

4.98%,

2/15/28 

3,385‌

3,351‌

Santander

Retail

Auto

Lease

Trust

Series

2020-B,

Class

B

0.82%,

12/20/24  (1)

11,555‌

11,271‌

Santander

Retail

Auto

Lease

Trust

Series

2021-B,

Class

B

0.84%,

6/20/25  (1)

13,860‌

13,291‌

Santander

Retail

Auto

Lease

Trust

Series

2021-C,

Class

B

0.83%,

3/20/26  (1)

10,135‌

9,661‌

World

Omni

Automobile

Lease

Securitization

Trust

Series

2020-B,

Class

B

0.70%,

2/17/26 

6,774‌

6,759‌

World

Omni

Select

Auto

Trust

Series

2020-A,

Class

B

0.84%,

6/15/26 

5,585‌

5,457‌

214,037‌

Collateralized

Debt

Obligation

0.6%

Symphony

Static

I

Series

2021-1A,

Class

A,

CLO,

FRN

3M

USD

LIBOR

+

0.83%,

6.085%,

10/25/29  (1)

13,464‌

13,297‌

13,297‌

Equip

Lease

Heavy

Duty

0.1%

MMAF

Equipment

Finance

Series

2020-BA,

Class

A5

0.85%,

4/14/42  (1)

2,400‌

2,202‌

2,202‌

Home

Equity

Loans

Backed

0.3%

Citigroup

Mortgage

Loan

Trust

Series

2020-EXP2,

Class

A3,

CMO,

ARM

2.50%,

8/25/50  (1)

6,397‌

5,392‌

Citigroup

Mortgage

Loan

Trust

Series

2020-EXP2,

Class

A4,

CMO,

ARM

2.50%,

8/25/50  (1)

1,547‌

1,275‌

6,667‌

Other

Asset-Backed

Securities

3.4%

ARI

Fleet

Lease

Trust

Series

2021-A,

Class

A2

0.37%,

3/15/30  (1)

2,595‌

2,573‌

T.

ROWE

PRICE

Ultra

Short-Term

Bond

Fund

24

Par/Shares

$

Value

(Amounts

in

000s)

DLLAD

Series

2023-1A,

Class

A2

5.19%,

4/20/26  (1)

4,355‌

4,319‌

Elara

HGV

Timeshare

Issuer

Series

2016-A,

Class

A

2.73%,

4/25/28  (1)

467‌

466‌

Elara

HGV

Timeshare

Issuer

Series

2017-A,

Class

A

2.69%,

3/25/30  (1)

2,601‌

2,523‌

Hilton

Grand

Vacations

Trust

Series

2017-AA,

Class

A

2.66%,

12/26/28  (1)

30‌

30‌

Hilton

Grand

Vacations

Trust

Series

2019-AA,

Class

A

2.34%,

7/25/33  (1)

542‌

508‌

HPEFS

Equipment

Trust

Series

2021-2A,

Class

B

0.61%,

9/20/28  (1)

5,250‌

5,134‌

MVW

Series

2020-1A,

Class

A

1.74%,

10/20/37  (1)

55‌

50‌

MVW

Series

2021-1WA,

Class

A

1.14%,

1/22/41  (1)

3,063‌

2,780‌

Navient

Private

Education

Refi

Loan

Trust

Series

2021-CA,

Class

A

1.06%,

10/15/69  (1)

12,015‌

10,468‌

Nelnet

Student

Loan

Trust

Series

2021-DA,

Class

AFL,

FRN

1M

USD

LIBOR

+

0.69%,

5.838%,

4/20/62  (1)

4,329‌

4,228‌

Octane

Receivables

Trust

Series

2021-1A,

Class

A

0.93%,

3/22/27  (1)

4,928‌

4,777‌

Octane

Receivables

Trust

Series

2021-2A,

Class

A

1.21%,

9/20/28  (1)

5,558‌

5,327‌

Octane

Receivables

Trust

Series

2022-1A,

Class

A2

4.18%,

3/20/28  (1)

4,029‌

3,955‌

Octane

Receivables

Trust

Series

2023-2A,

Class

A2

5.88%,

6/20/31  (1)

8,645‌

8,645‌

Santander

Bank

Series

2021-1A,

Class

B

1.833%,

12/15/31  (1)

2,016‌

1,941‌

Santander

Bank

Auto

Credit-Linked

Notes

Series

2022-A,

Class

B

5.281%,

5/15/32  (1)

8,271‌

8,109‌

T.

ROWE

PRICE

Ultra

Short-Term

Bond

Fund

25

Par/Shares

$

Value

(Amounts

in

000s)

Santander

Bank

Auto

Credit-Linked

Notes

Series

2022-B,

Class

B

5.721%,

8/16/32  (1)

3,006‌

2,982‌

Santander

Retail

Auto

Lease

Trust

Series

2022-A,

Class

B

1.61%,

1/20/26  (1)

7,555‌

7,120‌

Sierra

Timeshare

Receivables

Funding

Series

2019-3A,

Class

A

2.34%,

8/20/36  (1)

2,533‌

2,393‌

Sierra

Timeshare

Receivables

Funding

Series

2020-2A,

Class

A

1.33%,

7/20/37  (1)

153‌

142‌

Verizon

Master

Trust

Series

2023-2,

Class

A

4.89%,

4/13/28 

2,180‌

2,172‌

80,642‌

Student

Loans

0.9%

Navient

Private

Education

Loan

Trust

Series

2016-AA,

Class

A2A

3.91%,

12/15/45  (1)

7,913‌

7,644‌

Navient

Private

Education

Loan

Trust

Series

2017-A,

Class

A2B,

FRN

1M

USD

LIBOR

+

0.90%,

6.007%,

12/16/58  (1)

180‌

180‌

Navient

Private

Education

Refi

Loan

Trust

Series

2020-DA,

Class

A

1.69%,

5/15/69  (1)

594‌

538‌

Navient

Private

Education

Refi

Loan

Trust

Series

2020-FA,

Class

A

1.22%,

7/15/69  (1)

2,433‌

2,175‌

Navient

Private

Education

Refi

Loan

Trust

Series

2021-GA,

Class

A

1.58%,

4/15/70  (1)

11,119‌

9,664‌

SMB

Private

Education

Loan

Trust

Series

2014-A,

Class

A3,

FRN

1M

USD

LIBOR

+

1.50%,

6.607%,

4/15/32  (1)

826‌

827‌

SMB

Private

Education

Loan

Trust

Series

2019-A,

Class

A2A

3.44%,

7/15/36  (1)

1,757‌

1,683‌

22,711‌

Total

Asset-Backed

Securities

(Cost

$351,002)

339,556‌

CORPORATE

BONDS

62.6%

Advertising

0.7%

WPP

Finance

2010,

3.75%,

9/19/24 

18,350‌

17,801‌

17,801‌

T.

ROWE

PRICE

Ultra

Short-Term

Bond

Fund

26

Par/Shares

$

Value

(Amounts

in

000s)

Airlines

0.6%

SMBC

Aviation

Capital

Finance,

4.125%,

7/15/23  (1)

13,698‌

13,657‌

13,657‌

Automotive

3.3%

BMW

U.S.

Capital,

FRN,

SOFRINDX

+

0.53%,

5.524%,

4/1/24  (1)

10,000‌

9,978‌

Daimler

Truck

Finance

North

America,

FRN,

SOFR

+

0.75%,

5.671%,

12/13/24  (1)

12,843‌

12,822‌

Daimler

Truck

Finance

North

America,

FRN,

SOFR

+

1.00%,

5.999%,

4/5/24  (1)

10,000‌

10,016‌

Hyundai

Capital

America,

1.00%,

9/17/24  (1)

9,874‌

9,282‌

Hyundai

Capital

America,

1.80%,

10/15/25  (1)

5,000‌

4,585‌

Hyundai

Capital

America,

5.50%,

3/30/26  (1)

1,610‌

1,611‌

Mercedes-Benz

Finance

North

America,

4.80%,

3/30/26  (1)

5,255‌

5,251‌

Mercedes-Benz

Finance

North

America,

4.95%,

3/30/25  (1)

4,095‌

4,083‌

Nissan

Motor,

3.043%,

9/15/23  (1)

17,346‌

17,170‌

Nissan

Motor

Acceptance,

3.875%,

9/21/23  (1)

5,000‌

4,955‌

79,753‌

Banking

21.7%

AIB

Group,

4.75%,

10/12/23  (1)

21,035‌

20,926‌

Banco

Santander,

FRN,

SOFR

+

1.24%,

6.331%,

5/24/24 

5,000‌

5,020‌

Bank

of

America,

FRN,

SOFR

+

0.69%,

5.752%,

4/22/25 

15,000‌

14,907‌

Bank

of

Ireland

Group,

4.50%,

11/25/23  (1)

27,452‌

27,099‌

Bank

of

Montreal,

FRN,

SOFRINDX

+

0.32%,

5.331%,

7/9/24 

10,000‌

9,962‌

Bank

of

Nova

Scotia,

FRN,

SOFRINDX

+

0.445%,

5.475%,

4/15/24 

7,145‌

7,127‌

Bank

of

Nova

Scotia,

FRN,

SOFRINDX

+

0.55%,

5.471%,

9/15/23 

12,544‌

12,544‌

Barclays,

4.375%,

9/11/24 

11,420‌

11,140‌

Barclays,

VR,

5.304%,

8/9/26  (2)

8,300‌

8,164‌

BPCE,

5.70%,

10/22/23  (1)

34,423‌

34,131‌

Canadian

Imperial

Bank

of

Commerce,

FRN,

SOFRINDX

+

0.40%,

5.308%,

12/14/23 

6,257‌

6,241‌

Capital

One

Financial,

4.25%,

4/30/25 

1,890‌

1,825‌

Capital

One

Financial,

FRN,

SOFR

+

1.35%,

6.441%,

5/9/25 

10,000‌

9,841‌

Capital

One

Financial,

VR,

SOFR

+

1.29%,

2.636%,

3/3/26  (2)

7,060‌

6,566‌

Credit

Suisse,

Series

FRN,

FRN,

SOFRINDX

+

1.26%,

6.351%,

2/21/25 

4,000‌

3,803‌

Credit

Suisse

Group,

3.75%,

3/26/25 

9,000‌

8,471‌

Credit

Suisse

Group,

VR,

3M

USD

LIBOR

+

1.24%,

4.207%,

6/12/24  (1)(2)

10,000‌

9,862‌

Danske

Bank,

5.375%,

1/12/24  (1)

2,916‌

2,893‌

Danske

Bank,

VR,

3.773%,

3/28/25  (1)(2)

6,675‌

6,531‌

Danske

Bank,

VR,

6.466%,

1/9/26  (1)(2)

12,695‌

12,711‌

Deutsche

Bank,

3.70%,

5/30/24 

800‌

776‌

Deutsche

Bank,

Series

E,

FRN,

SOFR

+

0.50%,

5.591%,

11/8/23 

20,000‌

19,881‌

Discover

Bank,

2.45%,

9/12/24 

11,017‌

10,399‌

Emirates

NBD

Bank,

2.625%,

2/18/25 

6,400‌

6,129‌

Goldman

Sachs

Group,

FRN,

SOFR

+

0.50%,

5.393%,

9/10/24 

10,000‌

9,937‌

T.

ROWE

PRICE

Ultra

Short-Term

Bond

Fund

27

Par/Shares

$

Value

(Amounts

in

000s)

Goldman

Sachs

Group,

FRN,

SOFR

+

0.70%,

5.751%,

1/24/25 

9,950‌

9,900‌

Goldman

Sachs

Group,

FRN,

SOFR

+

1.39%,

6.311%,

3/15/24 

5,000‌

5,027‌

HSBC

Holdings,

4.25%,

3/14/24 

20,041‌

19,741‌

HSBC

Holdings,

FRN,

SOFR

+

0.58%,

5.671%,

11/22/24 

10,000‌

9,840‌

ING

Bank,

5.80%,

9/25/23 

3,307‌

3,294‌

Intesa

Sanpaolo,

5.25%,

1/12/24 

9,510‌

9,429‌

Intesa

Sanpaolo,

Series

XR,

3.25%,

9/23/24  (1)

5,775‌

5,554‌

KEB

Hana

Bank,

4.625%,

10/24/23 

12,500‌

12,431‌

Mitsubishi

UFJ

Financial

Group,

VR,

5.063%,

9/12/25  (2)

17,165‌

17,019‌

Mitsubishi

UFJ

Financial

Group,

VR,

5.719%,

2/20/26  (2)

4,310‌

4,314‌

Morgan

Stanley,

FRN,

SOFR

+

1.165%,

6.195%,

4/17/25 

10,000‌

10,000‌

NatWest

Group,

VR,

5.847%,

3/2/27  (2)

3,200‌

3,209‌

NatWest

Markets,

FRN,

SOFR

+

0.53%,

5.621%,

8/12/24  (1)

6,315‌

6,244‌

NatWest

Markets,

FRN,

SOFR

+

1.45%,

6.409%,

3/22/25  (1)

2,483‌

2,468‌

Northern

Trust,

3.95%,

10/30/25 

3,440‌

3,332‌

PNC

Bank,

3.875%,

4/10/25 

6,125‌

5,855‌

PNC

Bank,

4.20%,

11/1/25 

5,948‌

5,692‌

Santander

U.K.,

5.00%,

11/7/23  (1)

5,000‌

4,955‌

Santander

U.K.

Group

Holdings,

VR,

SOFR

+

0.787%,

1.089%,

3/15/25  (2)

10,510‌

10,024‌

Siam

Commercial

Bank,

3.90%,

2/11/24 

9,800‌

9,699‌

Societe

Generale,

5.00%,

1/17/24  (1)

7,815‌

7,662‌

Societe

Generale,

FRN,

SOFR

+

1.05%,

6.098%,

1/21/26  (1)

10,000‌

9,804‌

Standard

Chartered,

5.20%,

1/26/24  (1)

2,157‌

2,135‌

Standard

Chartered,

FRN,

SOFR

+

0.93%,

6.022%,

11/23/25  (1)

5,000‌

4,900‌

State

Bank

of

India,

4.50%,

9/28/23 

13,300‌

13,254‌

Toronto-Dominion

Bank,

FRN,

SOFR

+

0.22%,

5.068%,

6/2/23 

10,000‌

10,000‌

Toronto-Dominion

Bank,

FRN,

SOFR

+

0.35%,

5.243%,

9/10/24 

10,000‌

9,938‌

Truist

Financial,

FRN,

SOFR

+

0.40%,

5.287%,

6/9/25 

20,000‌

19,274‌

U.S.

Bancorp,

3.60%,

9/11/24 

4,900‌

4,718‌

U.S.

Bancorp,

VR,

SOFR

+

1.43%,

5.727%,

10/21/26  (2)

6,370‌

6,333‌

Woori

Bank,

4.75%,

4/30/24 

6,800‌

6,721‌

519,652‌

Cable

Operators

0.8%

Charter

Communications

Operating,

4.908%,

7/23/25 

12,940‌

12,721‌

Cox

Communications,

3.15%,

8/15/24  (1)

7,900‌

7,665‌

20,386‌

Chemicals

0.6%

Celanese

U.S.

Holdings,

5.90%,

7/5/24 

15,000‌

14,982‌

14,982‌

Computer

Service

&

Software

0.1%

Oracle,

2.50%,

4/1/25 

3,000‌

2,861‌

2,861‌

Drugs

1.4%

AbbVie,

3.80%,

3/15/25 

5,428‌

5,308‌

Perrigo

Finance

Unlimited,

3.90%,

12/15/24 

3,364‌

3,259‌

T.

ROWE

PRICE

Ultra

Short-Term

Bond

Fund

28

Par/Shares

$

Value

(Amounts

in

000s)

Pfizer

Investment

Enterprises,

4.45%,

5/19/26 

9,750‌

9,706‌

Pfizer

Investment

Enterprises,

4.65%,

5/19/25 

9,750‌

9,710‌

Viatris,

1.65%,

6/22/25 

5,207‌

4,805‌

32,788‌

Energy

5.9%

Cheniere

Corpus

Christi

Holdings,

5.875%,

3/31/25 

9,818‌

9,818‌

DCP

Midstream

Operating,

5.375%,

7/15/25 

18,925‌

18,736‌

Devon

Energy,

8.25%,

8/1/23 

35,159‌

35,226‌

Ecopetrol,

5.875%,

9/18/23 

7,900‌

7,889‌

Energy

Transfer

Partners,

4.50%,

11/1/23 

4,209‌

4,181‌

EQT,

6.125%,

2/1/25 

7,000‌

6,999‌

Gray

Oak

Pipeline,

2.00%,

9/15/23  (1)

24,536‌

24,245‌

Kinder

Morgan,

5.625%,

11/15/23  (1)

6,186‌

6,155‌

Occidental

Petroleum,

5.55%,

3/15/26 

3,725‌

3,706‌

Occidental

Petroleum,

5.875%,

9/1/25 

8,400‌

8,400‌

Occidental

Petroleum,

8.50%,

7/15/27 

2,100‌

2,300‌

Pioneer

Natural

Resources,

5.10%,

3/29/26 

2,585‌

2,586‌

Western

Midstream

Operating,

3.35%,

2/1/25 

6,623‌

6,317‌

Williams,

5.40%,

3/2/26 

4,850‌

4,883‌

141,441‌

Exploration

&

Production

0.2%

Ovintiv,

5.65%,

5/15/25 

5,920‌

5,907‌

5,907‌

Financial

3.9%

AerCap

Ireland

Capital,

1.65%,

10/29/24 

7,230‌

6,779‌

AerCap

Ireland

Capital,

4.875%,

1/16/24 

2,000‌

1,970‌

AerCap

Ireland

Capital,

FRN,

SOFR

+

0.68%,

5.668%,

9/29/23 

6,835‌

6,809‌

Ally

Financial,

1.45%,

10/2/23 

8,500‌

8,364‌

Ally

Financial,

5.125%,

9/30/24 

6,400‌

6,238‌

CNO

Financial

Group,

5.25%,

5/30/25 

3,012‌

2,982‌

General

Motors

Financial,

4.15%,

6/19/23 

1,390‌

1,389‌

General

Motors

Financial,

FRN,

SOFR

+

0.62%,

5.65%,

10/15/24 

15,000‌

14,842‌

General

Motors

Financial,

FRN,

SOFR

+

0.76%,

5.641%,

3/8/24 

20,000‌

19,916‌

Indian

Railway

Finance,

3.73%,

3/29/24 

8,000‌

7,874‌

LSEGA

Financing,

0.65%,

4/6/24  (1)

14,175‌

13,551‌

Western

Union,

4.25%,

6/9/23 

3,050‌

3,048‌

93,762‌

Food/Tobacco

0.9%

BAT

International

Finance,

3.95%,

6/15/25  (1)

815‌

789‌

Imperial

Brands

Finance,

3.125%,

7/26/24  (1)

4,200‌

4,053‌

Imperial

Brands

Finance,

4.25%,

7/21/25  (1)

9,935‌

9,567‌

Reynolds

American,

4.45%,

6/12/25 

6,855‌

6,706‌

21,115‌

Forest

Products

0.4%

Celulosa

Arauco

y

Constitucion,

4.50%,

8/1/24 

10,000‌

9,909‌

9,909‌

T.

ROWE

PRICE

Ultra

Short-Term

Bond

Fund

29

Par/Shares

$

Value

(Amounts

in

000s)

Health

Care

1.6%

HCA,

5.00%,

3/15/24 

100‌

99‌

HCA,

5.375%,

2/1/25 

15,750‌

15,652‌

Mylan,

4.20%,

11/29/23 

8,761‌

8,718‌

Thermo

Fisher

Scientific,

FRN,

SOFRINDX

+

0.53%,

5.563%,

10/18/24 

8,250‌

8,242‌

Utah

Acquisition

Sub,

3.95%,

6/15/26 

6,605‌

6,280‌

38,991‌

Information

Technology

2.3%

Amphenol,

4.75%,

3/30/26 

1,685‌

1,677‌

Analog

Devices,

FRN,

SOFR

+

0.25%,

5.244%,

10/1/24 

3,225‌

3,200‌

Baidu,

3.875%,

9/29/23 

7,700‌

7,657‌

Equifax,

3.95%,

6/15/23 

4,000‌

3,997‌

Marvell

Technology,

4.20%,

6/22/23 

7,624‌

7,614‌

Microchip

Technology,

0.972%,

2/15/24 

7,600‌

7,333‌

Microchip

Technology,

2.67%,

9/1/23 

4,595‌

4,554‌

Microchip

Technology,

4.333%,

6/1/23 

9,764‌

9,740‌

Micron

Technology,

4.975%,

2/6/26 

6,528‌

6,455‌

Skyworks

Solutions,

0.90%,

6/1/23 

3,075‌

3,074‌

55,301‌

Insurance

3.7%

Athene

Global

Funding,

1.20%,

10/13/23  (1)

4,040‌

3,953‌

Athene

Global

Funding,

2.50%,

1/14/25  (1)

4,103‌

3,868‌

Athene

Global

Funding,

2.514%,

3/8/24  (1)

5,000‌

4,822‌

Athene

Global

Funding,

FRN,

SOFRINDX

+

0.70%,

5.792%,

5/24/24  (1)

5,000‌

4,939‌

Athene

Global

Funding,

FRN,

SOFRINDX

+

0.715%,

5.723%,

1/7/25  (1)

9,850‌

9,594‌

Brighthouse

Financial

Global

Funding,

1.00%,

4/12/24  (1)

970‌

927‌

Brighthouse

Financial

Global

Funding,

1.75%,

1/13/25  (1)

5,000‌

4,681‌

Brighthouse

Financial

Global

Funding,

FRN,

SOFR

+

0.76%,

5.782%,

4/12/24  (1)

18,003‌

17,793‌

Brown

&

Brown,

4.20%,

9/15/24 

2,850‌

2,798‌

CNO

Global

Funding,

1.65%,

1/6/25  (1)

2,966‌

2,765‌

Corebridge

Financial,

3.50%,

4/4/25 

9,650‌

9,201‌

Equitable

Financial

Life

Global

Funding,

1.40%,

7/7/25  (1)

4,885‌

4,464‌

Equitable

Financial

Life

Global

Funding,

5.50%,

12/2/25  (1)

6,820‌

6,844‌

Liberty

Mutual

Group,

4.25%,

6/15/23  (1)

2,504‌

2,503‌

Principal

Financial

Group,

3.40%,

5/15/25 

3,557‌

3,420‌

Principal

Life

Global

Funding

II,

FRN,

SOFR

+

0.45%,

5.472%,

4/12/24  (1)

4,800‌

4,795‌

Trinity

Acquisition,

4.625%,

8/15/23 

2,202‌

2,185‌

89,552‌

Investment

Dealers

0.5%

Ameriprise

Financial,

3.00%,

4/2/25 

1,067‌

1,022‌

T.

ROWE

PRICE

Ultra

Short-Term

Bond

Fund

30

Par/Shares

$

Value

(Amounts

in

000s)

Charles

Schwab,

FRN,

SOFRINDX

+

0.50%,

5.435%,

3/18/24 

10,000‌

9,902‌

10,924‌

Lodging

0.3%

Hyatt

Hotels,

1.30%,

10/1/23 

6,255‌

6,160‌

6,160‌

Manufacturing

0.4%

Siemens

Financieringsmaatschappij,

FRN,

SOFR

+

0.43%,

5.326%,

3/11/24  (1)

10,000‌

10,008‌

10,008‌

Media

&

Communications

1.1%

Warnermedia

Holdings,

3.428%,

3/15/24 

1,390‌

1,364‌

Warnermedia

Holdings,

3.638%,

3/15/25 

14,430‌

13,907‌

Warnermedia

Holdings,

FRN,

SOFRINDX

+

1.78%,

6.701%,

3/15/24 

9,925‌

9,962‌

25,233‌

Media

&

Entertainment

0.3%

Take-Two

Interactive

Software,

5.00%,

3/28/26 

6,250‌

6,240‌

6,240‌

Metals

&

Mining

0.7%

ABJA

Investment,

4.45%,

7/24/23 

11,300‌

11,258‌

POSCO

Holdings,

4.00%,

8/1/23 

5,225‌

5,212‌

16,470‌

Oil

Field

Services

0.3%

Energy

Transfer,

5.875%,

1/15/24 

6,578‌

6,554‌

6,554‌

Petroleum

1.0%

Aker

BP,

3.00%,

1/15/25  (1)

9,752‌

9,313‌

Enbridge,

FRN,

SOFRINDX

+

0.63%,

5.722%,

2/16/24 

14,625‌

14,599‌

23,912‌

Railroads

0.3%

Eastern

Creation

II

Investment

Holdings,

1.00%,

9/10/23 

7,970‌

7,878‌

7,878‌

Real

Estate

Investment

Trust

Securities

0.8%

Brixmor

Operating

Partnership,

3.65%,

6/15/24 

605‌

585‌

Public

Storage,

FRN,

SOFR

+

0.47%,

5.521%,

4/23/24 

6,305‌

6,289‌

Realty

Income,

4.60%,

2/6/24 

1,636‌

1,627‌

Scentre

Group

Trust

1,

3.50%,

2/12/25  (1)

10,550‌

10,183‌

18,684‌

Retail

1.1%

Advance

Auto

Parts,

5.90%,

3/9/26 

1,895‌

1,920‌

Nordstrom,

2.30%,

4/8/24 

9,395‌

8,925‌

QVC,

4.85%,

4/1/24 

16,245‌

15,433‌

26,278‌

Services

0.2%

CDW,

5.50%,

12/1/24 

3,675‌

3,634‌

Nature

Conservancy,

Series

A,

0.467%,

7/1/23 

850‌

847‌

T.

ROWE

PRICE

Ultra

Short-Term

Bond

Fund

31

$

Value

$

Value

(Amounts

in

000s)

Nature

Conservancy,

Series

A,

0.625%,

7/1/24 

650‌

620‌

5,101‌

Telephones

0.6%

AT&T,

FRN,

SOFRINDX

+

0.64%,

5.614%,

3/25/24 

13,328‌

13,328‌

13,328‌

Transportation

0.6%

Penske

Truck

Leasing,

2.70%,

11/1/24  (1)

2,519‌

2,407‌

Penske

Truck

Leasing,

3.95%,

3/10/25  (1)

2,900‌

2,806‌

Triton

Container

International,

0.80%,

8/1/23  (1)

9,230‌

9,082‌

14,295‌

Transportation

Services

0.3%

HPHT

Finance,

2.875%,

11/5/24 

7,278‌

7,016‌

7,016‌

Utilities

4.6%

Alexander

Funding

Trust,

1.841%,

11/15/23  (1)

10,990‌

10,704‌

American

Electric

Power,

5.699%,

8/15/25 

6,665‌

6,091‌

Constellation

Energy

Generation,

3.25%,

6/1/25 

1,272‌

1,217‌

Hero

Asia

Investment,

1.50%,

11/18/23  (3)

12,800‌

12,569‌

NextEra

Energy

Capital

Holdings,

6.051%,

3/1/25 

5,120‌

5,177‌

NextEra

Energy

Capital

Holdings,

FRN,

SOFRINDX

+

0.40%,

5.482%,

11/3/23 

9,800‌

9,790‌

NRG

Energy,

3.75%,

6/15/24  (1)

670‌

649‌

Pacific

Gas

&

Electric,

3.25%,

6/15/23 

5,000‌

4,995‌

Pacific

Gas

&

Electric,

4.25%,

8/1/23 

2,500‌

2,493‌

Pacific

Gas

&

Electric,

4.95%,

6/8/25 

9,900‌

9,698‌

Perusahaan

Gas

Negara,

5.125%,

5/16/24 

9,500‌

9,479‌

Southern,

STEP,

4.475%,

8/1/24 

8,315‌

8,180‌

Southern

California

Edison,

FRN,

SOFRINDX

+

0.83%,

5.824%,

4/1/24 

2,475‌

2,469‌

Southern

California

Edison,

Series

D,

3.40%,

6/1/23 

2,350‌

2,347‌

Vistra

Operations,

3.55%,

7/15/24  (1)

24,655‌

23,823‌

109,681‌

Wireless

Communications

1.4%

Rogers

Communications,

2.95%,

3/15/25  (1)

16,000‌

15,247‌

Rogers

Communications,

3.625%,

12/15/25 

3,000‌

2,855‌

Sprint,

7.125%,

6/15/24 

14,750‌

14,879‌

32,981‌

Total

Corporate

Bonds

(Cost

$1,518,843)

1,498,601‌

T.

ROWE

PRICE

Ultra

Short-Term

Bond

Fund

32

$

Value

$

Value

(Amounts

in

000s)

FOREIGN

GOVERNMENT

OBLIGATIONS

&

MUNICIPALITIES

0.5%

Foreign

Govt

&

Muni

(Excl

Canadian)

0.5%

Japan

Treasury

Discount

Bill,

(0.20)%,

8/14/23

(JPY) 

1,602,050‌

11,503‌

11,503‌

Total

Foreign

Government

Obligations

&

Municipalities

(Cost

$11,845)

11,503‌

MUNICIPAL

SECURITIES

0.7%

Illinois

0.0%

Chicago

Transit

Auth.

Capital

Grant

Receipts

Revenue,

5.00%,

6/1/25 

100‌

102‌

Chicago

Transit

Auth.

Sales

Tax

Receipts

Fund,

Series

B,

1.838%,

12/1/23 

870‌

854‌

956‌

Iowa

0.1%

Iowa

Tobacco

Settlement

Auth.,

Series

A-1,

0.663%,

6/1/23 

1,500‌

1,500‌

1,500‌

Michigan

0.1%

Great

Lakes

Water

Auth.

Sewage

Disposal

System

Revenue,

Series

A,

1.503%,

7/1/23 

250‌

249‌

Michigan

Fin.

Auth.,

Series

A-1,

1.086%,

6/1/23 

2,125‌

2,125‌

2,374‌

Oregon

0.1%

Medford

Hosp.

Fac.

Auth.,

Asante

Project,

Series

B,

1.73%,

8/15/23 

1,710‌

1,697‌

1,697‌

South

Dakota

0.1%

Educational

Enhancement

Funding,

0.706%,

6/1/23 

2,700‌

2,700‌

2,700‌

Texas

0.1%

Central

Texas

Regional

Mobility

Auth.,

Senior

Lien,

Series

C,

1.345%,

1/1/24 

500‌

488‌

Central

Texas

Regional

Mobility

Auth.,

Subordinate,

Series

D,

1.645%,

1/1/24 

510‌

498‌

Dallas/Fort

Worth

Int'l.

Airport,

Series

C,

1.041%,

11/1/23 

500‌

491‌

Tarrant

County

Cultural

Ed.

Fac.

Fin.,

Hendrick

Medical

Center,

1.071%,

9/1/23  (4)

475‌

469‌

1,946‌

T.

ROWE

PRICE

Ultra

Short-Term

Bond

Fund

33

$

Value

$

Value

(Amounts

in

000s)

West

Virginia

0.2%

Tobacco

Settlement

Fin.

Auth.,

Class

1

Senior

Bonds,

Series

A,

1.193%,

6/1/23 

5,415‌

5,415‌

5,415‌

Total

Municipal

Securities

(Cost

$16,660)

16,588‌

NON-U.S.

GOVERNMENT

MORTGAGE-BACKED

SECURITIES

9.8%

Commercial

Mortgage-Backed

Securities

2.0%

BX

Commercial

Mortgage

Trust

Series

2019-XL,

Class

A,

ARM

1M

TSFR

+

1.034%,

6.094%,

10/15/36  (1)

1,414‌

1,404‌

BX

Commercial

Mortgage

Trust

Series

2020-VKNG,

Class

A,

ARM

1M

TSFR

+

1.044%,

6.104%,

10/15/37  (1)

3,876‌

3,812‌

BX

Commercial

Mortgage

Trust

Series

2021-SOAR,

Class

A,

ARM

1M

USD

LIBOR

+

0.67%,

5.778%,

6/15/38  (1)

4,847‌

4,695‌

BX

Trust

Series

2021-ARIA,

Class

A,

ARM

1M

USD

LIBOR

+

0.899%,

6.006%,

10/15/36  (1)

3,100‌

2,998‌

Goldman

Sachs

Mortgage

Securities

Trust

Series

2021-ROSS,

Class

A,

ARM

1M

USD

LIBOR

+

1.15%,

6.258%,

5/15/26  (1)

6,665‌

6,029‌

Great

Wolf

Trust

Series

2019-WOLF,

Class

A,

ARM

1M

TSFR

+

1.148%,

6.207%,

12/15/36  (1)

10,000‌

9,865‌

JPMorgan

Chase

Commercial

Mortgage

Securities

Trust

Series

2020-609M,

Class

A,

ARM

1M

USD

LIBOR

+

1.37%,

6.478%,

10/15/33  (1)

9,870‌

8,976‌

KKR

Industrial

Portfolio

Trust

Series

2021-KDIP,

Class

A,

ARM

1M

TSFR

+

0.664%,

5.724%,

12/15/37  (1)

2,840‌

2,805‌

ONE

Mortgage

Trust

Series

2021-PARK,

Class

A,

ARM

1M

TSFR

+

0.814%,

5.873%,

3/15/36  (1)

7,110‌

6,674‌

47,258‌

Whole

Loans

Backed

7.8%

Angel

Oak

Mortgage

Trust

Series

2019-5,

Class

A1,

CMO,

ARM

2.593%,

10/25/49  (1)

1,095‌

1,044‌

Angel

Oak

Mortgage

Trust

Series

2021-2,

Class

A1,

CMO,

ARM

0.985%,

4/25/66  (1)

4,929‌

4,069‌

T.

ROWE

PRICE

Ultra

Short-Term

Bond

Fund

34

$

Value

$

Value

(Amounts

in

000s)

BINOM

Securitization

Trust

Series

2021-INV1,

Class

A1,

CMO,

ARM

2.034%,

6/25/56  (1)

10,752‌

9,260‌

COLT

Mortgage

Loan

Trust

Series

2020-3,

Class

A1,

CMO,

ARM

1.506%,

4/27/65  (1)

1,230‌

1,142‌

Connecticut

Avenue

Securities

Series

2017-C05,

Class

1ED3,

CMO,

ARM

1M

USD

LIBOR

+

1.20%,

6.338%,

1/25/30 

922‌

922‌

Connecticut

Avenue

Securities

Series

2018-C03,

Class

1EB2,

CMO,

ARM

1M

USD

LIBOR

+

0.85%,

5.988%,

10/25/30 

2,030‌

2,023‌

Connecticut

Avenue

Securities

Series

2018-C03,

Class

1ED2,

CMO,

ARM

1M

USD

LIBOR

+

0.85%,

5.988%,

10/25/30 

1,008‌

1,004‌

Connecticut

Avenue

Securities

Series

2021-R01,

Class

1M1,

CMO,

ARM

SOFR30A

+

0.75%,

5.723%,

10/25/41  (1)

315‌

314‌

Connecticut

Avenue

Securities

Trust

Series

2023-R02,

Class

1M1,

CMO,

ARM

SOFR30A

+

2.30%,

7.273%,

1/25/43  (1)

6,536‌

6,578‌

Deephaven

Residential

Mortgage

Trust

Series

2021-1,

Class

A1,

CMO,

ARM

0.715%,

5/25/65  (1)

5,433‌

4,860‌

Eagle

RE

Series

2021-2,

Class

M1A,

CMO,

ARM

SOFR30A

+

1.55%,

6.523%,

4/25/34  (1)

4,551‌

4,551‌

Galton

Funding

Mortgage

Trust

Series

2019-2,

Class

A21,

CMO,

ARM

4.00%,

6/25/59  (1)

300‌

286‌

Galton

Funding

Mortgage

Trust

Series

2020-H1,

Class

A2,

CMO,

ARM

2.413%,

1/25/60  (1)

3,356‌

3,013‌

Goldman

Sachs

Mortgage-Backed

Securities

Trust

Series

2020-NQM1,

Class

A1,

CMO,

ARM

1.382%,

9/27/60  (1)

994‌

904‌

Goldman

Sachs

Mortgage-Backed

Securities

Trust

Series

2021-PJ5,

Class

A6,

CMO,

ARM

2.50%,

10/25/51  (1)

14,849‌

13,349‌

Imperial

Fund

Mortgage

Trust

Series

2021-NQM2,

Class

A1,

CMO,

ARM

1.073%,

9/25/56  (1)

9,013‌

7,273‌

JPMorgan

Mortgage

Trust

Series

2020-INV2,

Class

A4A,

CMO,

ARM

2.50%,

10/25/50  (1)

152‌

149‌

NLT

Trust

Series

2021-INV2,

Class

A1,

CMO,

ARM

1.162%,

8/25/56  (1)

16,895‌

13,755‌

T.

ROWE

PRICE

Ultra

Short-Term

Bond

Fund

35

$

Value

$

Value

(Amounts

in

000s)

OBX

Trust

Series

2018-EXP1,

Class

2A1,

CMO,

ARM

1M

USD

LIBOR

+

0.85%,

5.988%,

4/25/48  (1)

116‌

115‌

OBX

Trust

Series

2019-EXP3,

Class

2A1,

CMO,

ARM

1M

USD

LIBOR

+

0.90%,

6.038%,

10/25/59  (1)

172‌

167‌

OBX

Trust

Series

2020-EXP1,

Class

1A8,

CMO,

ARM

3.50%,

2/25/60  (1)

719‌

639‌

OBX

Trust

Series

2020-EXP3,

Class

1A8,

CMO,

ARM

3.00%,

1/25/60  (1)

3,929‌

3,402‌

OBX

Trust

Series

2020-INV1,

Class

A11,

CMO,

ARM

1M

USD

LIBOR

+

0.90%,

5.92%,

12/25/49  (1)

534‌

494‌

PSMC

Trust

Series

2021-1,

Class

A11,

CMO,

ARM

2.50%,

3/25/51  (1)

10,606‌

9,254‌

PSMC

Trust

Series

2021-2,

Class

A3,

CMO,

ARM

2.50%,

5/25/51  (1)

11,380‌

9,957‌

Sequoia

Mortgage

Trust

Series

2018-CH1,

Class

A1,

CMO,

ARM

4.00%,

3/25/48  (1)

220‌

206‌

SG

Residential

Mortgage

Trust

Series

2019-3,

Class

A1,

CMO,

ARM

2.703%,

9/25/59  (1)

66‌

63‌

SG

Residential

Mortgage

Trust

Series

2021-1,

Class

A1,

CMO,

ARM

1.16%,

7/25/61  (1)

15,747‌

12,448‌

Starwood

Mortgage

Residential

Trust

Series

2020-INV1,

Class

A1,

CMO,

ARM

1.027%,

11/25/55  (1)

3,319‌

2,916‌

Starwood

Mortgage

Residential

Trust

Series

2021-2,

Class

A1,

CMO,

ARM

0.943%,

5/25/65  (1)

2,458‌

2,182‌

Structured

Agency

Credit

Risk

Debt

Notes

Series

2021-DNA3,

Class

M1,

CMO,

ARM

SOFR30A

+

0.75%,

5.723%,

10/25/33  (1)

4,848‌

4,818‌

Structured

Agency

Credit

Risk

Debt

Notes

Series

2021-HQA2,

Class

M1,

CMO,

ARM

SOFR30A

+

0.70%,

5.673%,

12/25/33  (1)

1,860‌

1,851‌

Structured

Agency

Credit

Risk

Debt

Notes

Series

2022-DNA2,

Class

M1A,

CMO,

ARM

SOFR30A

+

1.30%,

6.273%,

2/25/42  (1)

3,832‌

3,809‌

Structured

Agency

Credit

Risk

Debt

Notes

Series

2022-DNA5,

Class

M1A,

CMO,

ARM

SOFR30A

+

2.95%,

7.923%,

6/25/42  (1)

7,117‌

7,235‌

T.

ROWE

PRICE

Ultra

Short-Term

Bond

Fund

36

$

Value

$

Value

(Amounts

in

000s)

Structured

Agency

Credit

Risk

Debt

Notes

Series

2023-DNA1,

Class

M1A,

CMO,

ARM

SOFR30A

+

2.10%,

7.081%,

3/25/43  (1)

2,610‌

2,614‌

Towd

Point

Mortgage

Trust

Series

2017-1,

Class

A1,

CMO,

ARM

2.75%,

10/25/56  (1)

17‌

17‌

Towd

Point

Mortgage

Trust

Series

2017-3,

Class

A1,

CMO,

ARM

2.75%,

7/25/57  (1)

58‌

56‌

Towd

Point

Mortgage

Trust

Series

2017-4,

Class

A1,

CMO,

ARM

2.75%,

6/25/57  (1)

149‌

141‌

Towd

Point

Mortgage

Trust

Series

2017-5,

Class

A1,

CMO,

ARM

1M

USD

LIBOR

+

0.60%,

4.455%,

2/25/57  (1)

117‌

117‌

Towd

Point

Mortgage

Trust

Series

2017-6,

Class

A1,

CMO,

ARM

2.75%,

10/25/57  (1)

314‌

298‌

Towd

Point

Mortgage

Trust

Series

2018-2,

Class

A1,

CMO,

ARM

3.25%,

3/25/58  (1)

497‌

475‌

Verus

Securitization

Trust

Series

2019-4,

Class

A1,

CMO,

STEP

2.642%,

11/25/59  (1)

1,127‌

1,081‌

Verus

Securitization

Trust

Series

2019-INV2,

Class

A1,

CMO,

ARM

2.913%,

7/25/59  (1)

502‌

483‌

Verus

Securitization

Trust

Series

2019-INV3,

Class

A1,

CMO,

ARM

2.692%,

11/25/59  (1)

870‌

834‌

Verus

Securitization

Trust

Series

2020-1,

Class

A1,

CMO,

STEP

2.417%,

1/25/60  (1)

673‌

631‌

Verus

Securitization

Trust

Series

2020-2,

Class

A1,

CMO,

ARM

2.226%,

5/25/60  (1)

617‌

594‌

Verus

Securitization

Trust

Series

2020-4,

Class

A1,

CMO,

STEP

1.502%,

5/25/65  (1)

996‌

911‌

Verus

Securitization

Trust

Series

2020-5,

Class

A1,

CMO,

STEP

1.218%,

5/25/65  (1)

2,836‌

2,567‌

Verus

Securitization

Trust

Series

2020-INV1,

Class

A1,

CMO,

ARM

1.977%,

3/25/60  (1)

546‌

529‌

Verus

Securitization

Trust

Series

2021-1,

Class

A1,

CMO,

ARM

0.815%,

1/25/66  (1)

5,737‌

4,885‌

T.

ROWE

PRICE

Ultra

Short-Term

Bond

Fund

37

$

Value

$

Value

(Amounts

in

000s)

Verus

Securitization

Trust

Series

2021-2,

Class

A1,

CMO,

ARM

1.031%,

2/25/66  (1)

4,789‌

4,090‌

Verus

Securitization

Trust

Series

2021-5,

Class

A1,

CMO,

ARM

1.013%,

9/25/66  (1)

13,299‌

10,768‌

Verus

Securitization

Trust

Series

2021-R1,

Class

A1,

CMO,

ARM

0.82%,

10/25/63  (1)

2,138‌

1,911‌

Verus

Securitization

Trust

Series

2021-R3,

Class

A1,

CMO,

ARM

1.02%,

4/25/64  (1)

8,322‌

7,369‌

Verus

Securitization

Trust

Series

2023-3,

Class

A1,

CMO,

STEP

5.93%,

3/25/68  (1)

9,493‌

9,491‌

Vista

Point

Securitization

Trust

Series

2020-2,

Class

A1,

CMO,

ARM

1.475%,

4/25/65  (1)

2,588‌

2,295‌

186,209‌

Total

Non-U.S.

Government

Mortgage-Backed

Securities

(Cost

$260,526)

233,467‌

U.S.

GOVERNMENT

&

AGENCY

MORTGAGE-BACKED

SECURITIES

0.0%

U.S.

Government

Agency

Obligations

0.0%

Federal

Home

Loan

Mortgage,

CMO,

ARM,

1M

USD

LIBOR

+

0.35%,

5.457%,

2/15/45 

179‌

173‌

Federal

National

Mortgage

Assn.,

CMO,

ARM,

1M

USD

LIBOR

+

0.40%,

5.538%,

1/25/45 

147‌

142‌

Total

U.S.

Government

&

Agency

Mortgage-Backed

Securities

(Cost

$327)

315‌

U.S.

GOVERNMENT

AGENCY

OBLIGATIONS

(EXCLUDING

MORTGAGE-BACKED)

4.3%

U

S

Treasury

Obligations

4.3%

U.S.

Treasury

Bills,

4.70%,

1/25/24  (5)

31,865‌

30,846‌

U.S.

Treasury

Bills,

4.74%,

6/15/23  (5)

10,500‌

10,479‌

U.S.

Treasury

Bills,

5.43%,

11/9/23 

24,420‌

23,843‌

U.S.

Treasury

Notes,

3.75%,

4/15/26 

24,500‌

24,286‌

T.

ROWE

PRICE

Ultra

Short-Term

Bond

Fund

38

$

Value

$

Value

(Amounts

in

000s)

U.S.

Treasury

Notes,

3.88%,

3/31/25 

12,500‌

12,355‌

101,809‌

Total

U.S.

Government

Agency

Obligations

(Excluding

Mortgage-

Backed)

(Cost

$102,251)

101,809‌

SHORT-TERM

INVESTMENTS

9.0%

Commercial

Paper

9.0%

4(2)

7.8%(6)

Arrow

Electronics,

5.82%,

6/15/23 

4,600‌

4,589‌

Bacardi

Martini,

5.782%,

6/21/23 

1,600‌

1,595‌

Canadian

Natural

Resources,

5.701%,

6/1/23 

16,000‌

15,998‌

Canadian

Natural

Resources,

5.926%,

6/26/23 

14,550‌

14,489‌

Crown

Castle

International,

5.927%,

6/6/23 

10,000‌

9,991‌

Crown

Castle

International,

5.968%,

6/20/23 

3,600‌

3,589‌

CVS

Health,

5.261%,

6/1/23 

24,400‌

24,397‌

Energy

Transfer

Partners,

5.751%,

6/1/23 

19,700‌

19,697‌

International

Flavors

&

Fragrance,

6.029%,

6/20/23 

19,700‌

19,642‌

Paramount

Global,

5.781%,

6/22/23 

19,537‌

19,470‌

Syngenta

Wilmington,

5.962%,

6/6/23 

5,000‌

4,995‌

Syngenta

Wilmington,

5.977%,

6/20/23 

9,275‌

9,245‌

Targa

Resources,

5.978%,

6/23/23 

14,300‌

14,254‌

Targa

Resources,

5.983%,

6/20/23 

5,000‌

4,986‌

Walgreens

Boots

Alliance,

6/22/23 

4,600‌

4,584‌

Walgreens

Boots

Alliance,

7/3/23 

15,000‌

14,919‌

186,440‌

Non-4(2)

1.2%

Motorola

Solutions,

5.765%,

6/5/23 

14,250‌

14,240‌

Quanta

Services,

6/20/23 

10,000‌

9,969‌

Quanta

Services,

5.851%,

6/1/23 

4,300‌

4,299‌

28,508‌

Total

Commercial

Paper

214,948‌

Money

Market

Funds

0.0%

T.

Rowe

Price

Government

Reserve

Fund,

5.11%  (7)(8)

2‌

2‌

Total

Money

Market

Funds

2‌

Total

Short-Term

Investments

(Cost

$214,954)

214,950‌

T.

ROWE

PRICE

Ultra

Short-Term

Bond

Fund

39

$

Value

$

Value

(Amounts

in

000s)

SECURITIES

LENDING

COLLATERAL

0.0%

INVESTMENTS

IN

A

POOLED

ACCOUNT

THROUGH

SECURITIES

LENDING

PROGRAM

WITH

JPMORGAN

CHASE

BANK

0.0%

Money

Market

Funds

0.0%

T.

Rowe

Price

Government

Reserve

Fund,

5.11%  (7)(8)

675‌

675‌

Total

Investments

in

a

Pooled

Account

through

Securities

Lending

Program

with

JPMorgan

Chase

Bank

675‌

Total

Securities

Lending

Collateral

(Cost

$675)

675‌

(Amounts

in

000s,

except

for

contracts)

OPTIONS

PURCHASED

0.0%

Exchange-Traded

Options

Purchased

0.0%

Description

Contracts

Notional

Amount

$

Value

U.S.

Treasury

2-Year

Notes

Futures,

Call,

6/23/23

@

$103.50  (9)

200‌

41,166‌

59‌

Total

Options

Purchased

(Cost

$60)

59‌

Total

Investments

in

Securities

101.1%

of

Net

Assets

(Cost

$2,477,143)

$

2,417,523‌

‡

Par/Shares

and

Notional

Amount

are

denominated

in

U.S.

dollars

unless

otherwise

noted.

(1)

Security

was

purchased

pursuant

to

Rule

144A

under

the

Securities

Act

of

1933

and

may

be

resold

in

transactions

exempt

from

registration

only

to

qualified

institutional

buyers.

Total

value

of

such

securities

at

period-end

amounts

to

$969,884

and

represents

40.5%

of

net

assets.

(2)

Security

is

a

fix-to-float

security,

which

carries

a

fixed

coupon

until

a

certain

date,

upon

which

it

switches

to

a

floating

rate.

Reference

rate

and

spread

are

provided

if

the

rate

is

currently

floating.

(3)

See

Note

4

.

All

or

a

portion

of

this

security

is

on

loan

at

May

31,

2023.

(4)

Insured

by

Assured

Guaranty

Municipal

Corporation

(5)

At

May

31,

2023,

all

or

a

portion

of

this

security

is

pledged

as

collateral

and/or

margin

deposit

to

cover

future

funding

obligations.

T.

ROWE

PRICE

Ultra

Short-Term

Bond

Fund

40

.

.

.

.

.

.

.

.

.

.

(6)

Commercial

paper

exempt

from

registration

under

Section

4(2)

of

the

Securities

Act

of

1933

and

may

be

resold

in

transactions

exempt

from

registration

only

to

dealers

in

that

program

or

other

"accredited

investors".

Total

value

of

such

securities

at

period-end

amounts

to

$186,440

and

represents

7.8%

of

net

assets.

(7)

Seven-day

yield

(8)

Affiliated

Companies

(9)

Non-income

producing

1M

TSFR

One

month

term

SOFR

(Secured

overnight

financing

rate)

1M

USD

LIBOR

One

month

USD

LIBOR

(London

interbank

offered

rate)

3M

USD

LIBOR

Three

month

USD

LIBOR

(London

interbank

offered

rate)

ARM

Adjustable

Rate

Mortgage

(ARM);

rate

shown

is

effective

rate

at

period-end.

The

rates

for

certain

ARMs

are

not

based

on

a

published

reference

rate

and

spread

but

may

be

determined

using

a

formula

based

on

the

rates

of

the

underlying

loans. 

CLO

Collateralized

Loan

Obligation

CMO

Collateralized

Mortgage

Obligation

FRN

Floating

Rate

Note

JPY

Japanese

Yen

SOFR

Secured

overnight

financing

rate

SOFRINDX

SOFR

(Secured

overnight

financing

rate)

Index

SOFR30A

30-day

Average

SOFR

(Secured

overnight

financing

rate)

STEP

Stepped

coupon

bond

for

which

the

coupon

rate

of

interest

adjusts

on

specified

date(s);

rate

shown

is

effective

rate

at

period-end.

USD

U.S.

Dollar

VR

Variable

Rate;

rate

shown

is

effective

rate

at

period-end.

The

rates

for

certain

variable

rate

securities

are

not

based

on

a

published

reference

rate

and

spread

but

are

determined

by

the

issuer

or

agent

and

based

on

current

market

conditions.

T.

ROWE

PRICE

Ultra

Short-Term

Bond

Fund

41

(Amounts

in

000s,

except

for

contracts)

OPTIONS

WRITTEN

(0.0)%

Exchange-Traded

Options

Written

(0.0)%

Description

Contracts

Notional

Amount

$

Value

U.S.

Treasury

2-Year

Notes

Futures,

Call,

6/23/23

@

$105.38

300

61,748

(5‌)

U.S.

Treasury

2-Year

Notes

Futures,

Put,

6/23/23

@

$101.38

400

82,331

(19‌)

U.S.

Treasury

2-Year

Notes

Futures,

Put,

6/23/23

@

$102.88

300

61,748

(201‌)

Total

Options

Written

(Premiums

$(112))

$

(225‌)

T.

ROWE

PRICE

Ultra

Short-Term

Bond

Fund

42

(Amounts

in

000s)

SWAPS

0.0%

Description

Notional

Amount

$

Value

Initial

$

Value

Unrealized

$

Gain/(Loss)

CENTRALLY

CLEARED

SWAPS

0.0%

Credit

Default

Swaps,

Protection

Sold

0.0%

Protection

Sold

(Relevant

Credit:

AT&T,

Baa2*),

Receive

1.00%

Quarterly,

Pay

upon

credit

default,

12/20/23

25,000

120

295

(175‌)

Protection

Sold

(Relevant

Credit:

Bank

of

America,

A1*),

Receive

1.00%

Quarterly,

Pay

upon

credit

default,

12/20/23

20,000

90

277

(187‌)

Protection

Sold

(Relevant

Credit:

Citibank,

A3*),

Receive

1.00%

Quarterly,

Pay

upon

credit

default,

12/20/23

*

20,000

112

269

(157‌)

Protection

Sold

(Relevant

Credit:

Devon

Energy,

Baa2*),

Receive

1.00%

Quarterly,

Pay

upon

credit

default,

6/20/23

10,000

23

22

1‌

Protection

Sold

(Relevant

Credit:

Devon

Energy,

Baa2*),

Receive

1.00%

Quarterly,

Pay

upon

credit

default,

6/20/24

10,000

74

19

55‌

Protection

Sold

(Relevant

Credit:

Hess,

Baa3*),

Receive

1.00%

Quarterly,

Pay

upon

credit

default,

6/20/24

10,000

79

53

26‌

Protection

Sold

(Relevant

Credit:

Lennar,

Baa2*),

Receive

5.00%

Quarterly,

Pay

upon

credit

default,

6/20/23

10,000

127

516

(389‌)

Protection

Sold

(Relevant

Credit:

T-Mobile

US,

Baa2*),

Receive

5.00%

Quarterly,

Pay

upon

credit

default,

6/20/23

10,000

126

525

(399‌)

Protection

Sold

(Relevant

Credit:

Verizon

Communications,

Baa1*),

Receive

1.00%

Quarterly,

Pay

upon

credit

default,

12/20/23

25,000

122

343

(221‌)

Total

Centrally

Cleared

Credit

Default

Swaps,

Protection

Sold

(1,446‌)

Total

Centrally

Cleared

Swaps

(1,446‌)

Net

payments

(receipts)

of

variation

margin

to

date

1,441‌

Variation

margin

receivable

(payable)

on

centrally

cleared

swaps

$

(5‌)

*

Credit

ratings

as

of

May

31,

2023.

Ratings

shown

are

from

Moody’s

Investors

Service

and

if

Moody’s

does

not

rate

a

security,

then

Standard

&

Poor’s

(S&P)

is

used.

Fitch

is

used

for

securities

that

are

not

rated

by

either

Moody’s

or

S&P.

T.

ROWE

PRICE

Ultra

Short-Term

Bond

Fund

43

(Amounts

in

000s)

FORWARD

CURRENCY

EXCHANGE

CONTRACTS

Counterparty

Settlement

Receive

Deliver

Unrealized

Gain/(Loss)

Bank

of

America

8/14/23

USD

12,070‌

JPY

1,602,050‌

$

434‌

Net

unrealized

gain

(loss)

on

open

forward

currency

exchange

contracts

$

434‌

T.

ROWE

PRICE

Ultra

Short-Term

Bond

Fund

44

FUTURES

CONTRACTS

($000s)

Expiration

Date

Notional

Amount

Value

and

Unrealized

Gain

(Loss)

Short,

22

U.S.

Treasury

Long

Bond

contracts

9/23

(2,824)

$

(33‌)

Short,

622

U.S.

Treasury

Notes

five

year

contracts

9/23

(67,847)

28‌

Short,

387

U.S.

Treasury

Notes

ten

year

contracts

9/23

(44,299)

(109‌)

Short,

327

U.S.

Treasury

Notes

two

year

contracts

9/23

(67,306)

(98‌)

Short,

49

Ultra

U.S.

Treasury

Notes

ten

year

contracts

9/23

(5,902)

(29‌)

Net

payments

(receipts)

of

variation

margin

to

date

(295‌)

Variation

margin

receivable

(payable)

on

open

futures

contracts

$

(536‌)

T.

ROWE

PRICE

Ultra

Short-Term

Bond

Fund

45

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

AFFILIATED

COMPANIES

($000s)

The

fund

may

invest

in

certain

securities

that

are

considered

affiliated

companies.

As

defined

by

the

1940

Act,

an

affiliated

company

is

one

in

which

the

fund

owns

5%

or

more

of

the

outstanding

voting

securities,

or

a

company

that

is

under

common

ownership

or

control.

The

following

securities

were

considered

affiliated

companies

for

all

or

some

portion

of

the

year

ended

May

31,

2023.

Net

realized

gain

(loss),

investment

income,

change

in

net

unrealized

gain/loss,

and

purchase

and

sales

cost

reflect

all

activity

for

the

period

then

ended.

Affiliate

Net

Realized

Gain

(Loss)

Change

in

Net

Unrealized

Gain/Loss

Investment

Income

T.

Rowe

Price

Government

Reserve

Fund,

5.11%

$

—‌

$

—‌

$

10‌++

Totals

$

—‌#

$

—‌

$

10‌+

Supplementary

Investment

Schedule

Affiliate

Value

05/31/22

Purchase

Cost

Sales

Cost

Value

05/31/23

T.

Rowe

Price

Government

Reserve

Fund,

5.11%

$

3‌

 ¤

  ¤

$

677‌

Total

$

677‌^

#

Capital

gain

distributions

from

underlying

Price

funds

represented

$0

of

the

net

realized

gain

(loss).

++

Excludes

earnings

on

securities

lending

collateral,

which

are

subject

to

rebates

and

fees

as

described

in

Note

4

.

+

Investment

income

comprised

$10

of

dividend

income

and

$0

of

interest

income.

¤

Purchase

and

sale

information

not

shown

for

cash

management

funds.

^

The

cost

basis

of

investments

in

affiliated

companies

was

$677.

T.

ROWE

PRICE

Ultra

Short-Term

Bond

Fund

May

31,

2023

Statement

of

Assets

and

Liabilities

46

($000s,

except

shares

and

per

share

amounts)

Assets

Investments

in

securities,

at

value

(cost

$2,477,143)

$

2,417,523‌

Receivable

for

investment

securities

sold

23,849‌

Interest

receivable

16,433‌

Receivable

for

shares

sold

12,924‌

Unrealized

gain

on

forward

currency

exchange

contracts

434‌

Cash

348‌

Other

assets

45‌

Total

assets

2,471,556‌

Liabilities

Payable

for

investment

securities

purchased

72,701‌

Payable

for

shares

redeemed

4,130‌

Obligation

to

return

securities

lending

collateral

675‌

Variation

margin

payable

on

futures

contracts

536‌

Investment

management

fees

payable

323‌

Options

written

(premiums

$112)

225‌

Due

to

affiliates

24‌

Variation

margin

payable

on

centrally

cleared

swaps

5‌

Payable

to

directors

1‌

Other

liabilities

806‌

Total

liabilities

79,426‌

NET

ASSETS

$

2,392,130‌

T.

ROWE

PRICE

Ultra

Short-Term

Bond

Fund

May

31,

2023

Statement

of

Assets

and

Liabilities

47

($000s,

except

shares

and

per

share

amounts)

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

Net

Assets

Consist

of:

Total

distributable

earnings

(loss)

$

(103,729‌)

Paid-in

capital

applicable

to

483,732,572

shares

of

$0.01

par

value

capital

stock

outstanding;

6,000,000,000

shares

of

the

Corporation

authorized

2,495,859‌

NET

ASSETS

$

2,392,130‌

NET

ASSET

VALUE

PER

SHARE

Investor

Class

(Net

assets:

$1,459,253;

Shares

outstanding:

295,251,256)

$

4.94‌

I

Class

(Net

assets:

$932,780;

Shares

outstanding:

188,461,708)

$

4.95‌

Z

Class

(Net

assets:

$97;

Shares

outstanding:

19,608)

$

4.95‌

T.

ROWE

PRICE

Ultra

Short-Term

Bond

Fund

Statement

of

Operations

48

($000s)

Year

Ended

5/31/23

Investment

Income

(Loss)

Income

    Interest

$

85,642‌

Securities

lending

74‌

Dividend

10‌

Total

income

85,726‌

Expenses

Investment

management

4,698‌

Shareholder

servicing

Investor

Class

$

2,739‌

I

Class

123‌

2,862‌

Prospectus

and

shareholder

reports

Investor

Class

110‌

I

Class

23‌

133‌

Custody

and

accounting

285‌

Registration

123‌

Legal

and

audit

35‌

Proxy

and

annual

meeting

15‌

Directors

9‌

Miscellaneous

50‌

Waived

/

paid

by

Price

Associates

(384‌)

Total

expenses

7,826‌

Net

investment

income

77,900‌

T.

ROWE

PRICE

Ultra

Short-Term

Bond

Fund

Statement

of

Operations

49

($000s)

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

Year

Ended

5/31/23

Realized

and

Unrealized

Gain

/

Loss

–

Net

realized

gain

(loss)

Securities

(57,470‌)

Futures

10,541‌

Swaps

2,168‌

Options

written

57‌

Forward

currency

exchange

contracts

12,209‌

Foreign

currency

transactions

(152‌)

Net

realized

loss

(32,647‌)

Change

in

net

unrealized

gain

/

loss

Securities

27,281‌

Futures

(97‌)

Swaps

(1,127‌)

Options

written

(113‌)

Forward

currency

exchange

contracts

(4,330‌)

Change

in

net

unrealized

gain

/

loss

21,614‌

Net

realized

and

unrealized

gain

/

loss

(11,033‌)

INCREASE

IN

NET

ASSETS

FROM

OPERATIONS

$

66,867‌

T.

ROWE

PRICE

Ultra

Short-Term

Bond

Fund

Statement

of

Changes

in

Net

Assets

50

($000s)

Year

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

Ended

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

5/31/23

5/31/22

Increase

(Decrease)

in

Net

Assets

Operations

Net

investment

income

$

77,900‌

$

35,124‌

Net

realized

gain

(loss)

(32,647‌)

16,397‌

Change

in

net

unrealized

gain

/

loss

21,614‌

(103,685‌)

Increase

(decrease)

in

net

assets

from

operations

66,867‌

(52,164‌)

Distributions

to

shareholders

Net

earnings

Investor

Class

(55,203‌)

(39,919‌)

I

Class

(33,631‌)

(15,021‌)

Z

Class

(3‌)

(1‌)

Decrease

in

net

assets

from

distributions

(88,837‌)

(54,941‌)

Capital

share

transactions

*

Shares

sold

Investor

Class

697,788‌

1,854,223‌

I

Class

479,797‌

1,188,222‌

Distributions

reinvested

Investor

Class

54,647‌

37,405‌

I

Class

30,130‌

13,992‌

Shares

redeemed

Investor

Class

(1,688,262‌)

(3,573,857‌)

I

Class

(857,597‌)

(739,696‌)

Decrease

in

net

assets

from

capital

share

transactions

(1,283,497‌)

(1,219,711‌)

T.

ROWE

PRICE

Ultra

Short-Term

Bond

Fund

Statement

of

Changes

in

Net

Assets

51

($000s)

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

Year

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

Ended

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

5/31/23

5/31/22

Net

Assets

Decrease

during

period

(1,305,467‌)

(1,326,816‌)

Beginning

of

period

3,697,597‌

5,024,413‌

End

of

period

$

2,392,130‌

$

3,697,597‌

*Share

information

(000s)

Shares

sold

Investor

Class

141,730‌

367,268‌

I

Class

97,228‌

235,337‌

Distributions

reinvested

Investor

Class

11,110‌

7,422‌

I

Class

6,114‌

2,775‌

Shares

redeemed

Investor

Class

(342,815‌)

(708,733‌)

I

Class

(174,012‌)

(146,763‌)

Decrease

in

shares

outstanding

(260,645‌)

(242,694‌)

T.

ROWE

PRICE

Ultra

Short-Term

Bond

Fund

NOTES

TO

FINANCIAL

STATEMENTS

52

T.

Rowe

Price

Short-Term

Bond

Fund,

Inc.

(the

corporation) is

registered

under

the

Investment

Company

Act

of

1940

(the

1940

Act).

The

Ultra

Short-Term

Bond

Fund

(the

fund)

is a

diversified,

open-end

management

investment

company

established

by

the

corporation. The

fund

seeks

a

high

level

of

income

consistent

with

minimal

fluctuation

in

principal

value

and

liquidity.

The

fund

has

three classes

of

shares:

the

Ultra

Short-Term

Bond

Fund

(Investor

Class),

the

Ultra

Short-Term

Bond

Fund–I

Class

(I

Class)

and

the

Ultra

Short-Term

Bond

Fund–Z

Class

(Z

Class).

I

Class

shares

require

a

$500,000

initial

investment

minimum,

although

the

minimum

generally

is

waived

or

reduced

for

financial

intermediaries,

eligible

retirement

plans,

and

certain

other

accounts.

Prior

to

November

15,

2021,

the

initial

investment

minimum

was

$1

million

and

was

generally

waived

for

financial

intermediaries,

eligible

retirement

plans,

and

other

certain

accounts.

As

a

result

of

the

reduction

in

the

I

Class

minimum,

certain

assets

transferred

from

the

Investor

Class

to

the

I

Class.

This

transfer

of

shares

from

Investor

Class

to

I

Class

is

reflected

in

the

Statement

of

Changes

in

Net

Assets

within

the

Capital

shares

transactions

as

Shares

redeemed

and

Shares

sold,

respectively.

The

Z

Class

is

only

available

to

funds

advised

by

T.

Rowe

Price

Associates,

Inc.

and

its

affiliates

and

other

clients

that

are

subject

to

a

contractual

fee

for

investment

management

services. Each

class

has

exclusive

voting

rights

on

matters

related

solely

to

that

class;

separate

voting

rights

on

matters

that

relate

to

all classes;

and,

in

all

other

respects,

the

same

rights

and

obligations

as

the

other

classes.

NOTE

1

-

SIGNIFICANT

ACCOUNTING

POLICIES 

Basis

of

Preparation

 The fund

is

an

investment

company

and

follows

accounting

and

reporting

guidance

in

the

Financial

Accounting

Standards

Board

(FASB)

Accounting

Standards

Codification

Topic

946

(ASC

946).

The

accompanying

financial

statements

were

prepared

in

accordance

with

accounting

principles

generally

accepted

in

the

United

States

of

America

(GAAP),

including,

but

not

limited

to,

ASC

946.

GAAP

requires

the

use

of

estimates

made

by

management.

Management

believes

that

estimates

and

valuations

are

appropriate;

however,

actual

results

may

differ

from

those

estimates,

and

the

valuations

reflected

in

the

accompanying

financial

statements

may

differ

from

the

value

ultimately

realized

upon

sale

or

maturity.

Investment

Transactions,

Investment

Income,

and

Distributions

 Investment

transactions

are

accounted

for

on

the

trade

date

basis.

Income

and

expenses

are

recorded

on

the

accrual

basis.

Realized

gains

and

losses

are

reported

on

the

identified

cost

basis.

Premiums

and

discounts

on

debt

securities

are

amortized

for

financial

T.

ROWE

PRICE

Ultra

Short-Term

Bond

Fund

53

reporting

purposes.

Paydown

gains

and

losses

are

recorded

as

an

adjustment

to

interest

income.

Income

tax-related

interest

and

penalties,

if

incurred,

are

recorded

as

income

tax

expense.

Dividends

received

from other

investment

companies are

reflected

as

dividend

income;

capital

gain

distributions

are

reflected

as

realized

gain/loss.

Dividend

income and

capital

gain

distributions

are

recorded

on

the

ex-dividend

date.

Non-cash

dividends,

if

any,

are

recorded

at

the

fair

market

value

of

the

asset

received.

Proceeds

from

litigation

payments,

if

any,

are

included

in

either

net

realized

gain

(loss)

or

change

in

net

unrealized

gain/loss

from

securities.

Distributions

to

shareholders

are

recorded

on

the

ex-dividend

date.

Income

distributions,

if

any, are

declared

by

each

class daily

and

paid

monthly.

A

capital

gain

distribution,

if

any, may

also

be

declared

and

paid

by

the

fund

annually.

Currency

Translation

 Assets,

including

investments,

and

liabilities

denominated

in

foreign

currencies

are

translated

into

U.S.

dollar

values

each

day

at

the

prevailing

exchange

rate,

using

the

mean

of

the

bid

and

asked

prices

of

such

currencies

against

U.S.

dollars

as

provided

by

an

outside

pricing

service.

Purchases

and

sales

of

securities,

income,

and

expenses

are

translated

into

U.S.

dollars

at

the

prevailing

exchange

rate

on

the

respective

date

of

such

transaction.

The

effect

of

changes

in

foreign

currency

exchange

rates

on

realized

and

unrealized

security

gains

and

losses

is

not

bifurcated

from

the

portion

attributable

to

changes

in

market

prices.

Class

Accounting

 Shareholder

servicing,

prospectus,

and

shareholder

report

expenses

incurred

by

each

class

are

charged

directly

to

the

class

to

which

they

relate.

Expenses

common

to

all

classes

and

investment

income

are

allocated

to

the

classes

based

upon

the

relative

daily

net

assets

of

each

class’s

settled

shares;

realized

and

unrealized

gains

and

losses

are

allocated

based

upon

the

relative

daily

net

assets

of

each

class’s

outstanding

shares.

Capital

Transactions

 Each

investor’s

interest

in

the

net

assets

of the

fund

is

represented

by

fund

shares. The

fund’s

net

asset

value

(NAV)

per

share

is

computed

at

the

close

of

the

New

York

Stock

Exchange

(NYSE),

normally

4

p.m.

ET,

each

day

the

NYSE

is

open

for

business.

However,

the

NAV

per

share

may

be

calculated

at

a

time

other

than

the

normal

close

of

the

NYSE

if

trading

on

the

NYSE

is

restricted,

if

the

NYSE

closes

earlier,

or

as

may

be

permitted

by

the

SEC.

Purchases

and

redemptions

of

fund

shares

are

transacted

at

the

next-computed

NAV

per

share,

after

receipt

of

the

transaction

order

by

T.

Rowe

Price

Associates,

Inc.,

or

its

agents.

New

Accounting

Guidance

The

FASB

issued

Accounting

Standards

Update

(ASU),

ASU

2020–04,

Reference

Rate

Reform

(Topic

848) –

Facilitation

of

the

Effects

of

Reference

Rate

Reform

on

Financial

Reporting

in

March

2020

and

ASU

2021-01

in

January

2021

which

provided

further

amendments

and

clarifications

to

Topic

848.

T.

ROWE

PRICE

Ultra

Short-Term

Bond

Fund

54

These

ASUs provide

optional,

temporary

relief

with

respect

to

the

financial

reporting

of

contracts

subject

to

certain

types

of

modifications

due

to

the

planned

discontinuation

of

the

London

Interbank

Offered

Rate

(LIBOR),

and

other

interbank-offered

based

reference

rates,

through December

31,

2022.

In

December

2022,

FASB

issued

ASU

2022-

06

which

defers

the

sunset

date

of

Topic

848

from

December

31,

2022

to

December

31,

2024,

after

which

entities

will

no

longer

be

permitted

to

apply

the

relief

in

Topic

848.

Management

intends

to

rely

upon

the

relief

provided

under

Topic

848,

which

is

not

expected to

have

a

material

impact

on

the fund's

financial  statements.

Indemnification

 In

the

normal

course

of

business, the

fund

may

provide

indemnification

in

connection

with

its

officers

and

directors,

service

providers,

and/or

private

company

investments. The

fund’s

maximum

exposure

under

these

arrangements

is

unknown;

however,

the

risk

of

material

loss

is

currently

considered

to

be

remote.

NOTE

2

-

VALUATION 

Fair

Value

  The

fund’s

financial

instruments

are

valued

at

the

close

of

the

NYSE

and

are

reported

at

fair

value,

which

GAAP

defines

as

the

price

that

would

be

received

to

sell

an

asset

or

paid

to

transfer

a

liability

in

an

orderly

transaction

between

market

participants

at

the

measurement

date. The fund’s

Board

of

Directors

(the

Board)

has

designated

T.

Rowe

Price

Associates,

Inc.

as

the

fund’s

valuation

designee

(Valuation

Designee).

Subject

to

oversight

by

the

Board,

the

Valuation

Designee

performs

the

following

functions

in

performing

fair

value

determinations:

assesses

and

manages

valuation

risks;

establishes

and

applies

fair

value

methodologies;

tests

fair

value

methodologies;

and

evaluates

pricing

vendors

and

pricing

agents.

The

duties

and

responsibilities

of

the

Valuation

Designee

are

performed

by

its

Valuation

Committee. The

Valuation

Designee provides

periodic

reporting

to

the

Board

on

valuation

matters.

Various

valuation

techniques

and

inputs

are

used

to

determine

the

fair

value

of

financial

instruments.

GAAP

establishes

the

following

fair

value

hierarchy

that

categorizes

the

inputs

used

to

measure

fair

value:

Level

1

–

quoted

prices

(unadjusted)

in

active

markets

for

identical

financial

instruments

that

the

fund

can

access

at

the

reporting

date

Level

2

–

inputs

other

than

Level

1

quoted

prices

that

are

observable,

either

directly

or

indirectly

(including,

but

not

limited

to,

quoted

prices

for

similar

financial

instruments

in

active

markets,

quoted

prices

for

identical

or

similar

financial

instruments

in

inactive

markets,

interest

rates

and

yield

curves,

implied

volatilities,

and

credit

spreads)

T.

ROWE

PRICE

Ultra

Short-Term

Bond

Fund

55

Level

3

–

unobservable

inputs

(including

the Valuation

Designee’s assumptions

in

determining

fair

value)

Observable

inputs

are

developed

using

market

data,

such

as

publicly

available

information

about

actual

events

or

transactions,

and

reflect

the

assumptions

that

market

participants

would

use

to

price

the

financial

instrument.

Unobservable

inputs

are

those

for

which

market

data

are

not

available

and

are

developed

using

the

best

information

available

about

the

assumptions

that

market

participants

would

use

to

price

the

financial

instrument.

GAAP

requires

valuation

techniques

to

maximize

the

use

of

relevant

observable

inputs

and

minimize

the

use

of

unobservable

inputs.

When

multiple

inputs

are

used

to

derive

fair

value,

the

financial

instrument

is

assigned

to

the

level

within

the

fair

value

hierarchy

based

on

the

lowest-level

input

that

is

significant

to

the

fair

value

of

the

financial

instrument.

Input

levels

are

not

necessarily

an

indication

of

the

risk

or

liquidity

associated

with

financial

instruments

at

that

level

but

rather

the

degree

of

judgment

used

in

determining

those

values.

Valuation

Techniques 

Debt

securities

generally

are

traded

in

the over-the-counter

(OTC)

market

and

are

valued

at

prices

furnished

by

independent

pricing

services

or

by

broker

dealers

who

make

markets

in

such

securities.

When

valuing

securities,

the

independent

pricing

services

consider

factors

such

as,

but

not

limited

to,

the

yield

or

price

of

bonds

of

comparable

quality,

coupon,

maturity,

and

type,

as

well

as

prices

quoted

by

dealers

who

make

markets

in

such

securities.   

Investments

in

mutual

funds

are

valued

at

the

mutual

fund’s

closing

NAV

per

share

on

the

day

of

valuation.

Listed

options,

and

OTC

options

with

a

listed

equivalent,

are

valued

at

the

mean

of

the

closing

bid

and

asked

prices

and

exchange-traded

options

on

futures

contracts

are

valued

at

closing

settlement

prices.

Futures

contracts

are

valued

at

closing

settlement

prices.

Forward

currency

exchange

contracts

are

valued

using

the

prevailing

forward

exchange

rate.

Swaps

are

valued

at

prices

furnished

by

an

independent

pricing

service

or

independent

swap

dealers.

Assets

and

liabilities

other

than

financial

instruments,

including

short-term

receivables

and

payables,

are

carried

at

cost,

or

estimated

realizable

value,

if

less,

which

approximates

fair

value. 

Investments

for

which

market

quotations are

not

readily

available

or

deemed

unreliable

are

valued

at

fair

value

as

determined

in

good

faith

by

the

Valuation

Designee.

The

Valuation

Designee

has

adopted

methodologies

for

determining

the

fair

value

of

investments

for

which

market

quotations

are

not

readily

available

or

deemed

unreliable,

including

the

use

of

other

pricing

sources.

Factors

used

in

determining

fair

value

vary

by

type

of

investment

and

may

include

market

or

investment

specific

considerations.

The

Valuation

Designee typically

will

afford

greatest

weight

to

actual

prices

in

arm’s

length

transactions,

to

the

extent

they

represent

orderly

transactions

between

market

T.

ROWE

PRICE

Ultra

Short-Term

Bond

Fund

56

participants,

transaction

information

can

be

reliably

obtained,

and

prices

are

deemed

representative

of

fair

value.

However,

the

Valuation

Designee may

also

consider

other

valuation

methods

such

as

market-based

valuation

multiples;

a

discount

or

premium

from

market

value

of

a

similar,

freely

traded

security

of

the

same

issuer;

discounted

cash

flows;

yield

to

maturity;

or

some

combination.

Fair

value

determinations

are

reviewed

on

a

regular

basis.

Because

any

fair

value

determination

involves

a

significant

amount

of

judgment,

there

is

a

degree

of

subjectivity

inherent

in

such

pricing

decisions. Fair

value

prices

determined

by

the

Valuation

Designee could

differ

from

those

of

other

market

participants,

and

it

is

possible

that

the

fair

value

determined

for

a

security

may

be

materially

different

from

the

value

that

could

be

realized

upon

the

sale

of

that

security.

Valuation

Inputs

  The

following

table

summarizes

the

fund’s

financial

instruments,

based

on

the

inputs

used

to

determine

their

fair

values

on

May

31,

2023

(for

further

detail

by

category,

please

refer

to

the

accompanying

Portfolio

of

Investments):

($000s)

Level

1

Level

2

Level

3

Total

Value

Assets

Fixed

Income

Securities

1

$

—‌

$

2,201,839‌

$

—‌

$

2,201,839‌

Short-Term

Investments

2‌

214,948‌

—‌

214,950‌

Securities

Lending

Collateral

675‌

—‌

—‌

675‌

Options

Purchased

59‌

—‌

—‌

59‌

Total

Securities

736‌

2,416,787‌

—‌

2,417,523‌

Swaps*

—‌

82‌

—‌

82‌

Forward

Currency

Exchange

Contracts

—‌

434‌

—‌

434‌

Futures

Contracts*

28‌

—‌

—‌

28‌

Total

$

764‌

$

2,417,303‌

$

—‌

$

2,418,067‌

Liabilities

Options

Written

$

225‌

$

—‌

$

—‌

$

225‌

Swaps*

—‌

1,528‌

—‌

1,528‌

Futures

Contracts*

269‌

—‌

—‌

269‌

Total

$

494‌

$

1,528‌

$

—‌

$

2,022‌

T.

ROWE

PRICE

Ultra

Short-Term

Bond

Fund

57

NOTE

3

-

DERIVATIVE

INSTRUMENTS 

During

the

year ended

May

31,

2023,

the

fund

invested

in

derivative

instruments.

As

defined

by

GAAP,

a

derivative

is

a

financial

instrument

whose

value

is

derived

from

an

underlying

security

price,

foreign

exchange

rate,

interest

rate,

index

of

prices

or

rates,

or

other

variable;

it

requires

little

or

no

initial

investment

and

permits

or

requires

net

settlement.

The

fund

invests

in

derivatives

only

if

the

expected

risks

and

rewards

are

consistent

with

its

investment

objectives,

policies,

and

overall

risk

profile,

as

described

in

its

prospectus

and

Statement

of

Additional

Information.

The

fund

may

use

derivatives

for

a

variety

of

purposes

and

may

use

them

to

establish

both

long

and

short

positions

within

the

fund’s

portfolio.

Potential

uses

include

to

hedge

against

declines

in

principal

value,

increase

yield,

invest

in

an

asset

with

greater

efficiency

and

at

a

lower

cost

than

is

possible

through

direct

investment,

to

enhance

return,

or

to

adjust

portfolio

duration

and

credit

exposure.

The

risks

associated

with

the

use

of

derivatives

are

different

from,

and

potentially

much

greater

than,

the

risks

associated

with

investing

directly

in

the

instruments

on

which

the

derivatives

are

based.

The

fund

values

its

derivatives

at

fair

value

and

recognizes

changes

in

fair

value

currently

in

its

results

of

operations.

Accordingly,

the

fund

does

not

follow

hedge

accounting,

even

for

derivatives

employed

as

economic

hedges.

Generally,

the

fund

accounts

for

its

derivatives

on

a

gross

basis.

It

does

not

offset

the

fair

value

of

derivative

liabilities

against

the

fair

value

of

derivative

assets

on

its

financial

statements,

nor

does

it

offset

the

fair

value

of

derivative

instruments

against

the

right

to

reclaim

or

obligation

to

return

collateral.

The

following

table

summarizes

the

fair

value

of

the

fund’s

derivative

instruments

held

as

of

May

31,

2023,

and

the

related

location

on

the

accompanying

Statement

of

Assets

and

Liabilities,

presented

by

primary

underlying

risk

exposure:

1

Includes

Asset-Backed

Securities,

Corporate

Bonds,

Foreign

Government

Obligations

&

Municipalities,

Municipal

Securities,

Non-U.S.

Government

Mortgage-Backed

Securities,

U.S.

Government

&

Agency

Mortgage-Backed

Securities

and

U.S.

Government

Agency

Obligations

(Excluding

Mortgage-Backed).

*

The

fair

value

presented

includes

cumulative

gain

(loss)

on

open

futures

contracts

and

centrally

cleared

swaps;

however,

the

net

value

reflected

on

the

accompanying

Portfolio

of

Investments

is

only

the

unsettled

variation

margin

receivable

(payable)

at

that

date.

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Additionally,

the

amount

of

gains

and

losses

on

derivative

instruments

recognized

in

fund

earnings

during

the

year ended

May

31,

2023,

and

the

related

location

on

the

accompanying

Statement

of

Operations

is

summarized

in

the

following

table

by

primary

underlying

risk

exposure: 

($000s)

Location

on

Statement

of

Assets

and

Liabilities

Fair

Value*

Assets

Interest

rate

derivatives

Futures

,

Securities^

$

87‌

Foreign

exchange

derivatives

Forwards

434‌

Credit

derivatives

Centrally

Cleared

Swaps

82‌

^

,*

Total

$

603‌

^

,*

Liabilities

Interest

rate

derivatives

Futures,

Options

Written

$

494‌

Credit

derivatives

Centrally

Cleared

Swaps

1,528‌

Total

$

2,022‌

*

The

fair

value

presented

includes

cumulative

gain

(loss)

on

open

futures

contracts

and

centrally

cleared

swaps;

however,

the

value

reflected

on

the

accompanying

Statement

of

Assets

and

Liabilities

is

only

the

unsettled

variation

margin

receivable

(payable)

at

that

date.

^

Options

purchased

are

reported

as

securities

and

are

reflected

in

the

accompanying

Portfolio

of

Investments.

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Counterparty

Risk

and

Collateral

 The

fund

invests

in

derivatives

in

various

markets,

which

expose

it

to

differing

levels

of

counterparty

risk.

Counterparty

risk

on

exchange-

traded

and

centrally

cleared

derivative

contracts,

such

as

futures,

exchange-traded

options,

and

centrally

cleared

swaps,

is

minimal

because

the

clearinghouse

provides

protection

against

counterparty

defaults.

For

futures

and

centrally

cleared

swaps,

the

fund

is

required

to

deposit

collateral

in

an

amount

specified

by

the

clearinghouse

($000s)                                               

Location

of

Gain

(Loss)

on

Statement

of

Operations

Securities^

Options

Written

Futures

Forward

Currency

Exchange

Contracts

Swaps

Total

Realized

Gain

(Loss)

Interest

rate

derivatives

$

73‌

$

57‌

$

10,541‌

$

—‌

$

—‌

$

10,671‌

Foreign

exchange

derivatives

—‌

—‌

—‌

12,209‌

—‌

12,209‌

Credit

derivatives

—‌

—‌

—‌

—‌

2,168‌

2,168‌

Total

$

73‌

$

57‌

$

10,541‌

$

12,209‌

$

2,168‌

$

25,048‌

Change

in

Unrealized

Gain

(Loss)

Interest

rate

derivatives

$

(1‌)

$

(113‌)

$

(97‌)

$

—‌

$

—‌

$

(211‌)

Foreign

exchange

derivatives

—‌

—‌

—‌

(4,330‌)

—‌

(4,330‌)

Credit

derivatives

—‌

—‌

—‌

—‌

(1,127‌)

(1,127‌)

Total

$

(1‌)

$

(113‌)

$

(97‌)

$

(4,330‌)

$

(1,127‌)

$

(5,668‌)

^

Options

purchased

are

reported

as

securities.

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and

the

clearing

firm

(margin

requirement),

and

the

margin

requirement

must

be

maintained

over

the

life

of

the

contract.

Each

clearinghouse

and

clearing

firm,

in

its

sole

discretion,

may

adjust

the

margin

requirements

applicable

to

the

fund.

Derivatives,

such

as

non-cleared bilateral

swaps,

forward

currency

exchange

contracts,

and

OTC

options,

that

are

transacted

and

settle

directly

with

a

counterparty

(bilateral

derivatives)

may

expose

the

fund

to

greater

counterparty

risk.

To

mitigate

this

risk,

the

fund

has

entered

into

master

netting

arrangements

(MNAs)

with

certain

counterparties

that

permit

net

settlement

under

specified

conditions

and,

for

certain

counterparties,

also

require

the

exchange

of

collateral

to

cover

mark-to-market

exposure.

MNAs

may

be

in

the

form

of

International

Swaps

and

Derivatives

Association

master

agreements

(ISDAs)

or

foreign

exchange

letter

agreements

(FX

letters).

MNAs

provide

the

ability

to

offset

amounts

the

fund

owes

a

counterparty

against

amounts

the

counterparty

owes

the

fund

(net

settlement).

Both

ISDAs

and

FX

letters

generally

allow

termination

of

transactions

and

net

settlement

upon

the

occurrence

of

contractually

specified

events,

such

as

failure

to

pay

or

bankruptcy.

In

addition,

ISDAs

specify

other

events,

the

occurrence

of

which

would

allow

one

of

the

parties

to

terminate.

For

example,

a

downgrade

in

credit

rating

of

a

counterparty

below

a

specified

rating

would

allow

the

fund

to

terminate,

while

a

decline

in

the

fund’s

net

assets

of

more

than

a

specified

percentage

would

allow

the

counterparty

to

terminate.

Upon

termination,

all

transactions

with

that

counterparty

would

be

liquidated

and

a

net

termination

amount

settled.

ISDAs

typically

include

collateral

agreements

whereas

FX

letters

do

not.

Collateral

requirements

are

determined

daily

based

on

the

net

aggregate

unrealized

gain

or

loss

on

all

bilateral

derivatives

with

a

counterparty,

subject

to

minimum

transfer

amounts

that

typically

range

from

$100,000

to

$250,000.

Any

additional

collateral

required

due

to

changes

in

security

values

is

typically

transferred

the

next

business

day.

Collateral

may

be

in

the

form

of

cash

or

debt

securities

issued

by

the

U.S.

government

or

related

agencies,

although

other

securities

may

be

used

depending

on

the

terms

outlined

in

the

applicable

MNA.

Cash

posted

by

the

fund

is

reflected

as

cash

deposits

in

the

accompanying

financial

statements

and

generally

is

restricted

from

withdrawal

by

the

fund;

securities

posted

by

the

fund

are

so

noted

in

the

accompanying

Portfolio

of

Investments;

both

remain

in

the

fund’s

assets.

Collateral

pledged

by

counterparties

is

not

included

in

the

fund’s

assets

because

the

fund

does

not

obtain

effective

control

over

those

assets.

For

bilateral

derivatives,

collateral

posted

or

received

by

the

fund

is

held

in

a

segregated

account

at

the

fund’s

custodian.

While

typically

not

sold

in

the

same

manner

as

equity

or

fixed

income

securities,

exchange-traded

or

centrally

cleared

derivatives

may

be

closed

out

only

on

the

exchange

or

clearinghouse

where

the

contracts

were

cleared,

and

OTC

and

bilateral

derivatives

may

be

unwound

with

T.

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counterparties

or

transactions

assigned

to

other

counterparties

to

allow

the

fund

to

exit

the

transaction.

This

ability

is

subject

to

the

liquidity

of

underlying

positions. As

of

May

31,

2023,

no

collateral had

been

pledged

or

posted

by

the

fund

to

counterparties

for

bilateral

derivatives. As

of

May

31,

2023,

collateral

pledged

by

counterparties

to

the

fund

for

bilateral

derivatives

consisted

of

securities

valued

at

$295,000. As

of

May

31,

2023,

securities

valued

at $24,131,000

had

been

posted

by

the

fund

for

exchange-traded

and/or

centrally

cleared

derivatives.

Forward

Currency

Exchange

Contracts

 The

fund

is

subject

to

foreign

currency

exchange

rate

risk

in

the

normal

course

of

pursuing

its

investment

objectives.

It may use

forward

currency

exchange

contracts

(forwards)

primarily

to

protect

its

non-U.S.

dollar-

denominated

securities

from

adverse

currency

movements

or

to

increase

exposure

to

a

particular

foreign

currency,

to

shift

the

fund’s

foreign

currency

exposure

from

one

country

to

another,

or

to

enhance

the

fund’s

return.

A

forward

involves

an

obligation

to

purchase

or

sell

a

fixed

amount

of

a

specific

currency

on

a

future

date

at

a

price

set

at

the

time

of

the

contract.

Although

certain

forwards

may

be

settled

by

exchanging

only

the

net

gain

or

loss

on

the

contract,

most

forwards

are

settled

with

the

exchange

of

the

underlying

currencies

in

accordance

with

the

specified

terms.

Forwards

are

valued

at

the

unrealized

gain

or

loss

on

the

contract,

which

reflects

the

net

amount

the

fund

either

is

entitled

to

receive

or

obligated

to

deliver,

as

measured

by

the

difference

between

the

forward

exchange

rates

at

the

date

of

entry

into

the

contract

and

the

forward

rates

at

the

reporting

date.

Appreciated

forwards

are

reflected

as

assets

and

depreciated

forwards

are

reflected

as

liabilities

on

the

accompanying

Statement

of

Assets

and

Liabilities.

Risks

related

to

the

use

of

forwards

include

the

possible

failure

of

counterparties

to

meet

the

terms

of

the

agreements;

that

anticipated

currency

movements

will

not

occur,

thereby

reducing

the

fund’s

total

return;

and

the

potential

for

losses

in

excess

of

the

fund’s

initial

investment.

During

the

year ended

May

31,

2023,

the

volume

of

the

fund’s

activity

in

forwards,

based

on

underlying

notional

amounts,

was

generally

between

0%

and

3%

of

net

assets.

Futures

Contracts

 The

fund

is

subject

to interest

rate

risk in

the

normal

course

of

pursuing

its

investment

objectives

and

uses

futures

contracts

to

help

manage

such

risk.

The

fund

may

enter

into

futures

contracts

to

manage

exposure

to

interest

rate

and

yield

curve

movements,

security

prices,

foreign

currencies,

credit

quality,

and

mortgage

prepayments;

as

an

efficient

means

of

adjusting

exposure

to

all

or

part

of

a

target

market;

to

enhance

income;

as

a

cash

management

tool;

or

to

adjust

portfolio

duration

and

credit

exposure. A

futures

contract

provides

for

the

future

sale

by

one

party

and

purchase

by

another

of

a

specified

amount

of

a

specific

underlying

financial

instrument

at

an

agreed-upon

price,

date,

time,

and

place.

The

fund

currently

invests

only

in

exchange-traded

futures,

which

generally

are

standardized

as

to

maturity

date,

T.

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underlying

financial

instrument,

and

other

contract

terms.

Payments

are

made

or

received

by

the

fund

each

day

to

settle

daily

fluctuations

in

the

value

of

the

contract

(variation

margin),

which

reflect

changes

in

the

value

of

the

underlying

financial

instrument.

Variation

margin

is

recorded

as

unrealized

gain

or

loss

until

the

contract

is

closed.

The

value

of

a

futures

contract

included

in

net

assets

is

the

amount

of

unsettled

variation

margin;

net

variation

margin

receivable

is

reflected

as

an

asset

and

net

variation

margin

payable

is

reflected

as

a

liability

on

the

accompanying

Statement

of

Assets

and

Liabilities.

Risks

related

to

the

use

of

futures

contracts

include

possible

illiquidity

of

the

futures

markets,

contract

prices

that

can

be

highly

volatile

and

imperfectly

correlated

to

movements

in

hedged

security

values

and/or

interest

rates,

and

potential

losses

in

excess

of

the

fund’s

initial

investment.

During

the

year ended

May

31,

2023,

the

volume

of

the

fund’s

activity

in

futures,

based

on

underlying

notional

amounts,

was

generally

between

4%

and

19%

of

net

assets.

Options 

 The

fund

is

subject

to interest

rate

risk in

the

normal

course

of

pursuing

its

investment

objectives

and

uses

options

to

help

manage

such

risk.

The

fund

may

use

options

to

manage

exposure

to

security

prices,

interest

rates,

foreign

currencies,

and

credit

quality;

as

an

efficient

means

of

adjusting

exposure

to

all

or

a

part

of

a

target

market;

to

enhance

income;

as

a

cash

management

tool;

or

to

adjust

credit

exposure.

Options

are

included

in

net

assets

at

fair

value,

options

purchased

are

included

in

Investments

in

Securities,

and

options

written

are

separately

reflected

as

a

liability

on

the

accompanying

Statement

of

Assets

and

Liabilities.

Premiums

on

unexercised,

expired

options

are

recorded

as

realized

gains

or

losses;

premiums

on

exercised

options

are

recorded

as

an

adjustment

to

the

proceeds

from

the

sale

or

cost

of

the

purchase.

The

difference

between

the

premium

and

the

amount

received

or

paid

in

a

closing

transaction

is

also

treated

as

realized

gain

or

loss.

In

return

for

a

premium

paid,

call

and

put

options

on

futures

give

the

holder

the

right,

but

not

the

obligation,

to

purchase

or

sell,

respectively,

a

position

in

a

particular

futures

contract

at

a

specified

exercise

price.

Risks related

to

the

use

of

options

include

possible

illiquidity

of

the

options

markets;

trading

restrictions

imposed

by

an

exchange

or

counterparty;

possible

failure

of

counterparties

to

meet

the

terms

of

the

agreements;

movements

in

the

underlying

asset

values

and

interest

rates;

and,

for

options

written,

the

potential

for

losses

to

exceed

any

premium

received

by

the

fund.

During

the

year ended

May

31,

2023,

the

volume

of

the

fund’s

activity

in

options,

based

on

underlying

notional

amounts,

was

generally

between

0%

and

11%

of

net

assets.

Swaps

 The

fund

is

subject

to

credit

risk in

the

normal

course

of

pursuing

its

investment

objectives

and

uses

swap

contracts

to

help

manage

such

risk.

The

fund

may

use

swaps

in

an

effort

to

manage

both

long

and

short

exposure

to

changes

in

interest

rates,

inflation

rates,

and

credit

quality;

to

adjust

overall

exposure

to

certain

markets;

to

enhance

total

T.

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Fund

63

return

or

protect

the

value

of

portfolio

securities;

to

serve

as

a

cash

management

tool;

or

to

adjust

portfolio

duration

and

credit

exposure.

Swap

agreements

can

be

settled

either

directly

with

the

counterparty

(bilateral

swap)

or

through

a

central

clearinghouse

(centrally

cleared

swap).

Fluctuations

in

the

fair

value

of

a

contract

are

reflected

in

unrealized

gain

or

loss

and

are

reclassified

to

realized

gain

or

loss

upon

contract

termination

or

cash

settlement.

Net

periodic

receipts

or

payments

required

by

a

contract

increase

or

decrease,

respectively,

the

value

of

the

contract

until

the

contractual

payment

date,

at

which

time

such

amounts

are

reclassified

from

unrealized

to

realized

gain

or

loss.

For

bilateral

swaps,

cash

payments

are

made

or

received

by

the

fund

on

a

periodic

basis

in

accordance

with

contract

terms;

unrealized

gain

on

contracts

and

premiums

paid

are

reflected

as

assets

and

unrealized

loss

on

contracts

and

premiums

received

are

reflected

as

liabilities

on

the

accompanying

Statement

of

Assets

and

Liabilities.

For

bilateral

swaps,

premiums

paid

or

received

are

amortized

over

the

life

of

the

swap

and

are

recognized

as

realized

gain

or

loss

in

the

Statement

of

Operations.

For

centrally

cleared

swaps,

payments

are

made

or

received

by

the

fund

each

day

to

settle

the

daily

fluctuation

in

the

value

of

the

contract

(variation

margin).

Accordingly,

the

value

of

a

centrally

cleared

swap

included

in

net

assets

is

the

unsettled

variation

margin;

net

variation

margin

receivable

is

reflected

as

an

asset

and

net

variation

margin

payable

is

reflected

as

a

liability

on

the

accompanying

Statement

of

Assets

and

Liabilities.

Credit

default

swaps

are

agreements

where

one

party

(the

protection

buyer)

agrees

to

make

periodic

payments

to

another

party

(the

protection

seller)

in

exchange

for

protection

against

specified

credit

events,

such

as

certain

defaults

and

bankruptcies

related

to

an

underlying

credit

instrument,

or

issuer

or

index

of

such

instruments.

Upon

occurrence

of

a

specified

credit

event,

the

protection

seller

is

required

to

pay

the

buyer

the

difference

between

the

notional

amount

of

the

swap

and

the

value

of

the

underlying

credit,

either

in

the

form

of

a

net

cash

settlement

or

by

paying

the

gross

notional

amount

and

accepting

delivery

of

the

relevant

underlying

credit.

For

credit

default

swaps

where

the

underlying

credit

is

an

index,

a

specified

credit

event

may

affect

all

or

individual

underlying

securities

included

in

the

index

and

will

be

settled

based

upon

the

relative

weighting

of

the

affected

underlying

security(ies)

within

the

index. Generally,

the

payment

risk

for

the

seller

of

protection

is

inversely

related

to

the

current

market

price

or

credit

rating

of

the

underlying

credit

or

the

market

value

of

the

contract

relative

to

the

notional

amount,

which

are

indicators

of

the

markets’

valuation

of

credit

quality.

As

of

May

31,

2023,

the

notional

amount

of

protection

sold

by

the

fund

totaled $140,000,000

(5.9%

of

net

assets),

which

reflects

the

maximum

potential

amount

the

fund

could

be

required

to

pay

under

such

contracts.

Risks

related

to

the

use

of

credit

default

swaps

include

the

possible

inability

of

the

fund

to

accurately

assess

the

current

and

future

creditworthiness

of

underlying

issuers,

the

possible

failure

of

a

counterparty

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to

perform

in

accordance

with

the

terms

of

the

swap

agreements,

potential

government

regulation

that

could

adversely

affect

the

fund’s

swap

investments,

and

potential

losses

in

excess

of

the

fund’s

initial

investment.

During

the

year ended

May

31,

2023,

the

volume

of

the

fund’s

activity

in

swaps,

based

on

underlying

notional

amounts,

was

generally

between

5%

and

6%

of

net

assets.

NOTE

4

-

OTHER

INVESTMENT

TRANSACTIONS 

Consistent

with

its

investment

objective,

the

fund

engages

in

the

following

practices

to

manage

exposure

to

certain

risks

and/or

to

enhance

performance.

The

investment

objective,

policies,

program,

and

risk

factors

of

the

fund

are

described

more

fully

in

the

fund's

prospectus

and

Statement

of

Additional

Information.

Restricted

Securities

 The

fund

invests

in

securities

that

are

subject

to

legal

or

contractual

restrictions

on

resale.

Prompt

sale

of

such

securities

at

an

acceptable

price

may

be

difficult

and

may

involve

substantial

delays

and

additional

costs.

Collateralized

Loan

Obligations 

 The

fund

invests

in

collateralized

loan

obligations

(CLOs)

which

are

entities

backed

by

a

diversified

pool

of

syndicated

bank

loans.

The

cash

flows

of

the

CLO

can

be

split

into

multiple

segments,

called

“tranches”

or

“classes”,

which

will

vary

in

risk

profile

and

yield.

The

riskiest

segments,

which

are

the

subordinate

or

“equity”

tranches,

bear

the

greatest

risk

of

loss

from

defaults

in

the

underlying

assets

of

the

CLO

and

serve

to

protect

the

other,

more

senior,

tranches.

Senior

tranches

will

typically

have

higher

credit

ratings

and

lower

yields

than

the

securities

underlying

the

CLO.

Despite

the

protection

from

the

more

junior

tranches,

senior

tranches

can

experience

substantial

losses. 

Mortgage-Backed

Securities

 The

fund

invests

in

mortgage-backed

securities

(MBS

or

pass-through

certificates)

that

represent

an

interest

in

a

pool

of

specific

underlying

mortgage

loans

and

entitle

the

fund

to

the

periodic

payments

of

principal

and

interest

from

those

mortgages.

MBS

may

be

issued

by

government

agencies

or

corporations,

or

private

issuers.

Most

MBS

issued

by

government

agencies

are

guaranteed;

however,

the

degree

of

protection

differs

based

on

the

issuer.

MBS are

sensitive

to

changes

in

economic

conditions

that

affect

the

rate

of

prepayments

and

defaults

on

the

underlying

mortgages;

accordingly,

the

value,

income,

and

related

cash

flows

from

MBS

may

be

more

volatile

than

other

debt

instruments.

LIBOR

Transition

 The fund

may

invest

in

instruments

that

are

tied

to

reference

rates,

including

LIBOR.

Over

the

course

of

the

last

several

years,

global

regulators

have

indicated

an

intent

to

phase

out

the

use

of

LIBOR

and

similar

interbank

offered

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rates

(IBOR). There

remains

uncertainty

regarding

the

future

utilization

of

LIBOR

and

the

nature

of

any

replacement

rate.

Any

potential

effects

of

the

transition

away

from

LIBOR

on

the fund,

or

on

certain

instruments

in

which

the fund

invests,

cannot

yet

be

determined.

The

transition

process

may

result

in,

among

other

things,

an

increase

in

volatility

or

illiquidity

of

markets

for

instruments

that

currently

rely

on

LIBOR,

a

reduction

in

the

value

of

certain

instruments

held

by

the fund,

or

a

reduction

in

the

effectiveness

of

related

fund

transactions

such

as

hedges.

Any

such

effects

could

have

an

adverse

impact

on

the fund's

performance.

Securities

Lending

 The fund

may

lend

its

securities

to

approved

borrowers

to

earn

additional

income.

Its

securities

lending

activities

are

administered

by

a

lending

agent

in

accordance

with

a

securities

lending

agreement.

Security

loans

generally

do

not

have

stated

maturity

dates,

and

the

fund

may

recall

a

security

at

any

time.

The

fund

receives

collateral

in

the

form

of

cash

or

U.S.

government

securities.

Collateral

is

maintained

over

the

life

of

the

loan

in

an

amount

not

less

than

the

value

of

loaned

securities;

any

additional

collateral

required

due

to

changes

in

security

values

is

delivered

to

the

fund

the

next

business

day.

Cash

collateral

is

invested

in

accordance

with

investment

guidelines

approved

by

fund

management.

Additionally,

the

lending

agent

indemnifies

the

fund

against

losses

resulting

from

borrower

default.

Although

risk

is

mitigated

by

the

collateral

and

indemnification,

the

fund

could

experience

a

delay

in

recovering

its

securities

and

a

possible

loss

of

income

or

value

if

the

borrower

fails

to

return

the

securities,

collateral

investments

decline

in

value,

and

the

lending

agent

fails

to

perform.

Securities

lending

revenue

consists

of

earnings

on

invested

collateral

and

borrowing

fees,

net

of

any

rebates

to

the

borrower,

compensation

to

the

lending

agent,

and

other

administrative

costs.

In

accordance

with

GAAP,

investments

made

with

cash

collateral

are

reflected

in

the

accompanying

financial

statements,

but

collateral

received

in

the

form

of

securities

is

not.

At

May

31,

2023,

the

value

of

loaned

securities

was

$658,000;

the

value

of

cash

collateral

and

related

investments

was

$675,000.

Other 

Purchases

and

sales

of

portfolio

securities

other

than

short-term and

U.S.

government

securities

aggregated $883,376,000 and

$1,663,988,000,

respectively,

for

the

year ended

May

31,

2023.

Purchases

and

sales

of

U.S.

government

securities

aggregated

$55,191,000 and

$106,244,000,

respectively,

for

the

year ended

May

31,

2023.

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NOTE

5

-

FEDERAL

INCOME

TAXES

Generally,

no

provision

for

federal

income

taxes

is

required

since

the

fund

intends

to

continue

to

qualify

as

a

regulated

investment

company

under

Subchapter

M

of

the

Internal

Revenue

Code

and

distribute

to

shareholders

all

of

its

taxable

income

and

gains.

Distributions

determined

in

accordance

with

federal

income

tax

regulations

may

differ

in

amount

or

character

from

net

investment

income

and

realized

gains

for

financial

reporting

purposes.

The fund

files

U.S.

federal,

state,

and

local

tax

returns

as

required. The

fund’s

tax

returns

are

subject

to

examination

by

the

relevant

tax

authorities

until

expiration

of

the

applicable

statute

of

limitations,

which

is

generally

three

years

after

the

filing

of

the

tax

return,

but

which

can

be

extended

to

six

years

in

certain

circumstances.

Tax

returns

for

open

years

have

incorporated

no

uncertain

tax

positions

that

require

a

provision

for

income

taxes.

Capital

accounts

within

the

financial

reporting

records

are

adjusted

for

permanent

book/tax

differences

to

reflect

tax

character

but

are

not

adjusted

for

temporary

differences.

The

permanent

book/tax

adjustments,

if

any,

have

no

impact

on

results

of

operations

or

net

assets.

The

permanent

book/tax

adjustments

relate

primarily

to

the

character

of

income

on

swaps.

The

tax

character

of

distributions

paid

for

the

periods

presented

was

as

follows:

At

May

31,

2023,

the

tax-basis

cost

of

investments

(including

derivatives,

if

any)

and

gross

unrealized

appreciation

and

depreciation

were

as

follows:

($000s)

May

31,

2023

May

31,

2022

Ordinary

income

(including

short-term

capital

gains,

if

any)

$

80,097‌

$

47,653‌

Long-term

capital

gain

8,740‌

7,288‌

Total

distributions

$

88,837‌

$

54,941‌

($000s)

Cost

of

investments

$

2,477,031‌

Unrealized

appreciation

$

705‌

Unrealized

depreciation

(60,325‌)

Net

unrealized

appreciation

(depreciation)

$

(59,620‌)

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At

May

31,

2023,

the

tax-basis

components

of

accumulated

net

earnings

(loss)

were

as

follows:

Temporary

differences

between

book-basis

and

tax-basis

components

of

total

distributable

earnings

(loss)

arise

when

certain

items

of

income,

gain,

or

loss

are

recognized

in

different

periods

for

financial

statement

purposes

versus

for

tax

purposes;

these

differences

will

reverse

in

a

subsequent

reporting

period.

The

temporary

differences

relate

primarily

to

the

deferral

of

losses

from

certain

derivative

contracts

and

wash

sales

and

the

realization

of

gains/losses

on

certain

open

derivative

contracts.

The

loss

carryforwards

and

deferrals

primarily

relate

to

capital

loss

carryforwards

and

straddle

deferrals.

Capital

loss

carryforwards

are

available

indefinitely

to

offset

future

realized

capital

gains.

NOTE

6

-

RELATED

PARTY

TRANSACTIONS

The

fund

is

managed

by

T.

Rowe

Price

Associates,

Inc.

(Price

Associates),

a

wholly

owned

subsidiary

of

T.

Rowe

Price

Group,

Inc.

(Price

Group). Price

Associates

has

entered

into

a

sub-advisory

agreement(s)

with

one

or

more

of

its

wholly

owned

subsidiaries,

to

provide

investment

advisory

services

to

the

fund. 

The

investment

management

agreement

between

the

fund

and

Price

Associates

provides

for

an

annual

investment

management

fee

equal

to 0.16%

of

the

fund’s

average

daily

net

assets.

The

fee

is

computed

daily

and

paid

monthly.

The Investor Class

is

subject

to

a

contractual

expense

limitation

through

the

expense

limitation

date

indicated

in

the

table

below.

During

the

limitation

period,

Price

Associates

is

required

to

waive

its

management

fee

or

pay

any

expenses

(excluding

interest;

expenses

related

to

borrowings,

taxes,

and

brokerage;

non-recurring,

extraordinary expenses;

and

acquired

fund

fees

and

expenses) that

would

otherwise

cause

the

class’s

ratio

of

annualized

total

expenses

to

average

net

assets

(net

expense

ratio)

to

exceed

its

expense

limitation.

The

class

is

required

to

repay

Price

Associates

for

expenses

previously

waived/paid

to

the

extent

the

class’s

net

assets

grow

or

expenses

decline

sufficiently

to

allow

repayment

without

causing

the

class’s

net

expense

ratio

(after

the

repayment

is

taken

into

account)

to

exceed

the

lesser

of:

(1)

the

expense

($000s)

Overdistributed

ordinary

income

$

(6,183‌)

Net

unrealized

appreciation

(depreciation)

(59,620‌)

Loss

carryforwards

and

deferrals

(37,926‌)

Total

distributable

earnings

(loss)

$

(103,729‌)

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limitation

in

place

at

the

time

such

amounts

were

waived;

or

(2)

the

class’s

current

expense

limitation.

However,

no

repayment

will

be

made

more

than

three

years

after

the

date

of

a

payment

or

waiver.

The

I

Class

is

also

subject

to

an

operating

expense

limitation

(I

Class

Limit)

pursuant

to

which

Price

Associates

is

contractually

required

to

pay

all

operating

expenses

of

the

I

Class,

excluding

management

fees;

interest;

expenses

related

to

borrowings,

taxes,

and

brokerage; non-recurring,

extraordinary expenses; and

acquired

fund

fees

and

expenses, to

the

extent

such

operating

expenses,

on

an

annualized

basis,

exceed

the

I

Class

Limit. This

agreement

will

continue

through

the

expense

limitation

date

indicated

in

the

table

below,

and

may

be

renewed,

revised,

or

revoked

only

with

approval

of

the

fund’s

Board.

The

I

Class

is

required

to

repay

Price

Associates

for

expenses

previously

paid

to

the

extent

the

class’s

net

assets

grow

or

expenses

decline

sufficiently

to

allow

repayment

without

causing

the

class’s

operating

expenses

(after

the

repayment

is

taken

into

account)

to

exceed

the

lesser

of:

(1)

the

I

Class

Limit

in

place

at

the

time

such

amounts

were

paid;

or

(2)

the

current

I

Class

Limit.

However,

no

repayment

will

be

made

more

than

three

years

after

the

date

of

a

payment

or

waiver.

The

Z

Class

is

also

subject

to

a

contractual

expense

limitation

agreement

whereby

Price

Associates

has

agreed

to

waive

and/or

bear

all

of

the

Z

Class’

expenses

(excluding

interest;

expenses

related

to

borrowings,

taxes,

and

brokerage;

non-recurring,

extraordinary

expenses;

and

acquired

fund

fees

and

expenses)

in

their

entirety.

This

fee

waiver

and/or

expense

reimbursement

arrangement

is

expected

to

remain

in

place

indefinitely,

and

the

agreement

may

only

be

amended

or

terminated

with

approval

by

the

fund’s

Board.

Expenses

of

the

fund

waived/paid

by

the

manager

are

not

subject

to

later

repayment

by

the

fund.

Pursuant

to

these

agreements,

expenses

were

waived/paid

by

and/or

repaid

to

Price

Associates

during

the

year ended May

31,

2023

as

indicated

in

the

table

below.

Including

this

amount,

expenses

previously

waived/paid

by

Price

Associates

in

the

amount

of $583,000 remain

subject

to

repayment

by

the

fund

at

May

31,

2023.

Any

repayment

of

expenses

previously

waived/paid

by

Price

Associates

during

the

period

would

be

included

in

the

net

investment

income

and

expense

ratios

presented

on

the

accompanying

Financial

Highlights.

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In

addition,

the

fund

has

entered

into

service

agreements

with

Price

Associates

and

two

wholly

owned

subsidiaries

of

Price

Associates,

each

an

affiliate

of

the

fund

(collectively,

Price).

Price

Associates

provides

certain

accounting

and

administrative

services

to

the

fund.

T.

Rowe

Price

Services,

Inc.

provides

shareholder

and

administrative

services

in

its

capacity

as

the

fund’s

transfer

and

dividend-disbursing

agent.

T.

Rowe

Price

Retirement

Plan

Services,

Inc.

provides

subaccounting

and

recordkeeping

services

for

certain

retirement

accounts

invested

in

the

Investor

Class.

For

the

year

ended

May

31,

2023,

expenses

incurred

pursuant

to

these

service

agreements

were

$110,000

for

Price

Associates;

$382,000

for

T.

Rowe

Price

Services,

Inc.;

and

$6,000

for

T.

Rowe

Price

Retirement

Plan

Services,

Inc.

All

amounts

due

to

and

due

from

Price,

exclusive

of

investment

management

fees

payable,

are

presented

net

on

the

accompanying

Statement

of

Assets

and

Liabilities.

The fund

may

invest

its

cash

reserves

in

certain

open-end

management

investment

companies

managed

by

Price

Associates

and

considered

affiliates

of

the

fund:

the

T.

Rowe

Price

Government

Reserve

Fund

or

the

T.

Rowe

Price

Treasury

Reserve

Fund,

organized

as

money

market

funds

(together,

the

Price

Reserve

Funds).

The

Price

Reserve

Funds

are

offered

as

short-term

investment

options

to

mutual

funds,

trusts,

and

other

accounts

managed

by

Price

Associates

or

its

affiliates

and

are

not

available

for

direct

purchase

by

members

of

the

public.

Cash

collateral

from

securities

lending,

if

any,

is

invested

in

the

T.

Rowe

Price

Government

Reserve Fund. The

Price

Reserve

Funds

pay

no

investment

management

fees.

As

of

May

31,

2023,

T.

Rowe

Price

Group,

Inc.,

or

its

wholly

owned

subsidiaries,

owned

891,069

shares

of

the

Investor

Class,

representing

less

than

1%

of

the

Investor

Class's

net

assets,

3,285,413

shares

of

the

I

Class,

representing

2%

of

the

I

Class's

net

assets,

and

19,608

shares

of

the

Z

Class,

representing

100%

of

the

Z

Class's

net

assets. 

The

fund may

participate

in

securities

purchase

and

sale

transactions

with

other

funds

or

accounts

advised

by

Price

Associates

(cross

trades),

in

accordance

with

procedures

adopted

by the

fund’s

Board

and

Securities

and

Exchange

Commission

rules,

which

require,

among

other

things,

that

such

purchase

and

sale

cross

trades

be

effected

at

the

Investor

Class

I

Class

Z

Class

Expense

limitation/I

Class

Limit

0.31%

0.05%

0.00%

Expense

limitation

date

09/30/23

09/30/23

N/A

(Waived)/repaid

during

the

period

($000s)

$(384)

$—

$—

(1)

(1)

Amount

rounds

to

less

than

$1,000

T.

ROWE

PRICE

Ultra

Short-Term

Bond

Fund

70

independent

current

market

price

of

the

security.

During

the

year

ended

May

31,

2023,

the

fund

had

no

purchases

or

sales

cross

trades

with

other

funds

or

accounts

advised

by

Price

Associates.

NOTE

7

-

OTHER

MATTERS

Unpredictable

events

such

as

environmental

or

natural

disasters,

war,

terrorism,

pandemics,

outbreaks

of

infectious

diseases,

and

similar

public

health

threats

may

significantly

affect

the

economy

and

the

markets

and

issuers

in

which

the fund

invests.

Certain

events

may

cause

instability

across

global

markets,

including

reduced

liquidity

and

disruptions

in

trading

markets,

while

some

events

may

affect

certain

geographic

regions,

countries,

sectors,

and

industries

more

significantly

than

others,

and

exacerbate

other

pre-existing

political,

social,

and

economic

risks.

Since

2020,

a

novel

strain

of

coronavirus

(COVID-19)

has

resulted

in

disruptions

to

global

business

activity

and

caused

significant

volatility

and

declines

in

global

financial

markets.

In

February

2022,

Russian

forces

entered

Ukraine

and

commenced

an

armed

conflict

leading

to

economic

sanctions

being

imposed

on

Russia

and

certain

of

its

citizens,

creating

impacts

on

Russian-related

stocks

and

debt

and

greater

volatility

in

global

markets.

In

March

2023,

the

collapse

of

some

US

regional

and

global

banks

as

well

as

overall

concerns

around

the

soundness

and

stability

of

the

global

banking

sector

has

sparked

concerns

of

a

broader

financial

crisis

impacting

the

overall

global

banking

sector.

In

certain

cases,

government

agencies

have

assumed

control

or

otherwise

intervened

in

the

operations

of

certain

banks

due

to

liquidity

and

solvency

concerns.

The

extent

of

impact

of

these

events

on

the

US

and

global

markets

is

highly

uncertain.

These

are

recent

examples

of

global

events

which

may

have

a

negative

impact

on

the

values

of

certain

portfolio

holdings

or

the

fund’s

overall

performance.

Management

is

actively

monitoring

the

risks

and

financial

impacts

arising

from

these

events.

T.

ROWE

PRICE

Ultra

Short-Term

Bond

Fund

71

REPORT

OF

INDEPENDENT

REGISTERED

PUBLIC

ACCOUNTING

FIRM

To

the

Board

of

Directors

of

T.

Rowe

Price

Short-Term

Bond

Fund,

Inc.

and

Shareholders

of

T.

Rowe

Price

Ultra

Short-Term

Bond

Fund

Opinion

on

the

Financial

Statements

We

have

audited

the

accompanying

statement

of

assets

and

liabilities,

including

the

portfolio

of

investments,

of

T.

Rowe

Price

Ultra

Short-Term

Bond

Fund

(one

of

the

funds

constituting

T.

Rowe

Price

Short-Term

Bond

Fund,

Inc.,

referred

to

hereafter

as

the

"Fund")

as

of

May

31,

2023,

the

related

statement

of

operations

for

the

year

ended

May

31,

2023,

the

statement

of

changes

in

net

assets

for

each

of

the

two

years

in

the

period

ended

May

31,

2023,

including

the

related

notes,

and

the

financial

highlights

for

each

of

the

periods

indicated

therein

(collectively

referred

to

as

the

“financial

statements”).

In

our

opinion,

the

financial

statements

present

fairly,

in

all

material

respects,

the

financial

position

of

the

Fund

as

of

May

31,

2023,

the

results

of

its

operations

for

the

year

then

ended,

the

changes

in

its

net

assets

for

each

of

the

two

years

in

the

period

ended

May

31,

2023

and

the

financial

highlights

for

each

of

the

periods

indicated

therein,

in

conformity

with

accounting

principles

generally

accepted

in

the

United

States

of

America.

Basis

for

Opinion

These

financial

statements

are

the

responsibility

of

the

Fund’s

management.

Our

responsibility

is

to

express

an

opinion

on

the

Fund’s

financial

statements

based

on

our

audits.

We

are

a

public

accounting

firm

registered

with

the

Public

Company

Accounting

Oversight

Board

(United

States)

(PCAOB)

and

are

required

to

be

independent

with

respect

to

the

Fund

in

accordance

with

the

U.S.

federal

securities

laws

and

the

applicable

rules

and

regulations

of

the

Securities

and

Exchange

Commission

and

the

PCAOB.

We

conducted

our

audits

of

these

financial

statements

in

accordance

with

the

standards

of

the

PCAOB.

Those

standards

require

that

we

plan

and

perform

the

audit

to

obtain

reasonable

assurance

about

whether

the

financial

statements

are

free

of

material

misstatement,

whether

due

to

error

or

fraud.

T.

ROWE

PRICE

Ultra

Short-Term

Bond

Fund

72

Our

audits

included

performing

procedures

to

assess

the

risks

of

material

misstatement

of

the

financial

statements,

whether

due

to

error

or

fraud,

and

performing

procedures

that

respond

to

those

risks.

Such

procedures

included

examining,

on

a

test

basis,

evidence

regarding

the

amounts

and

disclosures

in

the

financial

statements.

Our

audits

also

included

evaluating

the

accounting

principles

used

and

significant

estimates

made

by

management,

as

well

as

evaluating

the

overall

presentation

of

the

financial

statements.

Our

procedures

included

confirmation

of

securities

owned

as

of

May

31,

2023

by

correspondence

with

the

custodians,

transfer

agent

and

brokers;

when

replies

were

not

received

from

brokers,

we

performed

other

auditing

procedures.

We

believe

that

our

audits

provide

a

reasonable

basis

for

our

opinion.   

/s/

PricewaterhouseCoopers

LLP

Baltimore,

Maryland

July

20,

2023

We

have

served

as

the

auditor

of

one

or

more

investment

companies

in

the

T.

Rowe

Price

group

of

investment

companies

since

1973.

REPORT

OF

INDEPENDENT

REGISTERED

PUBLIC

ACCOUNTING

FIRM

(continued)

T.

ROWE

PRICE

Ultra

Short-Term

Bond

Fund

73

TAX

INFORMATION

(UNAUDITED)

FOR

THE

TAX

YEAR

ENDED 5/31/23

We

are

providing

this

information

as

required

by

the

Internal

Revenue

Code.

The

amounts

shown

may

differ

from

those

elsewhere

in

this

report

because

of

differences

between

tax

and

financial

reporting

requirements.

The

fund’s

distributions

to

shareholders

included

$8,740,000 from

long-term

capital

gains,

subject

to

a

long-term

capital

gains

tax

rate

of

not

greater

than

20%.

For

shareholders

subject

to

interest

expense

deduction

limitation

under

Section

163(j), $77,549,000 of

the

fund’s

income

qualifies

as

a

Section

163(j)

interest

dividend

and

can

be

treated

as

interest

income

for

purposes

of

Section

163(j),

subject

to

holding

period

requirements

and

other

limitations.

T.

ROWE

PRICE

Ultra

Short-Term

Bond

Fund

74

INFORMATION

ON

PROXY

VOTING

POLICIES,

PROCEDURES,

AND

RECORDS

A

description

of

the

policies

and

procedures

used

by

T.

Rowe

Price

funds

to

determine

how

to

vote

proxies

relating

to

portfolio

securities

is

available

in

each

fund’s

Statement

of

Additional

Information.

You

may

request

this

document

by

calling

1-800-225-5132

or

by

accessing

the

SEC’s

website,

sec.gov.

The

description

of

our

proxy

voting

policies

and

procedures

is

also

available

on

our

corporate

website.

To

access

it,

please

visit

the

following

Web

page:

https://www.troweprice.com/corporate/us/en/utility/policies.html

Scroll

down

to

the

section

near

the

bottom

of

the

page

that

says,

“Proxy

Voting

Guidelines.”

Click

on

the

links

in

the

shaded

box.

Each

fund’s

most

recent

annual

proxy

voting

record

is

available

on

our

website

and

through

the

SEC’s

website.

To

access

it

through

T.

Rowe

Price,

visit

the

website

location

shown

above,

and

scroll

down

to

the

section

near

the

bottom

of

the

page

that

says,

“Proxy

Voting

Records.”

Click

on

the

Proxy

Voting

Records

link

in

the

shaded

box.

HOW

TO

OBTAIN

QUARTERLY

PORTFOLIO

HOLDINGS

The

fund

files

a

complete

schedule

of

portfolio

holdings

with

the

Securities

and

Exchange

Commission

(SEC)

for

the

first

and

third

quarters

of

each

fiscal

year

as

an

exhibit

to

its

reports

on

Form

N-PORT.

The

fund’s

reports

on

Form

N-PORT

are

available

electronically

on

the

SEC’s

website

(sec.gov).

In

addition,

most

T.

Rowe

Price

funds

disclose

their

first

and

third

fiscal

quarter-end

holdings

on

troweprice.com

.

T.

ROWE

PRICE

Ultra

Short-Term

Bond

Fund

75

Approval

of

Investment

Management

Agreement

and

Subadvisory

Agreements

Each

year,

the

fund’s

Board

of

Directors

(Board)

considers

the

continuation

of

the

investment

management

agreement

(Advisory

Contract)

between

the

fund

and

its

investment

adviser,

T.

Rowe

Price

Associates,

Inc.

(Adviser),

as

well

as

the

investment

subadvisory

agreements

(Subadvisory

Contracts)

that

the

Adviser

has

entered

into

with

T.

Rowe

Price

International

Ltd

and

T.

Rowe

Price

Hong

Kong

Limited

(Subadvisers)

on

behalf

of

the

fund.

In

that

regard,

at

a

meeting

held

on

March

6–7,

2023

(Meeting),

the

Board,

including

all

of

the

fund’s

independent

directors,

approved

the

continuation

of

the

fund’s

Advisory

Contract

and

Subadvisory

Contracts.

At

the

Meeting,

the

Board

considered

the

factors

and

reached

the

conclusions

described

below

relating

to

the

selection

of

the

Adviser

and

Subadvisers

and

the

approval

of

the

Advisory

Contract

and

Subadvisory

Contracts.

The

independent

directors

were

assisted

in

their

evaluation

of

the

Advisory

Contract

and

Subadvisory

Contracts

by

independent

legal

counsel

from

whom

they

received

separate

legal

advice

and

with

whom

they

met

separately.

In

providing

information

to

the

Board,

the

Adviser

was

guided

by

a

detailed

set

of

requests

for

information

submitted

by

independent

legal

counsel

on

behalf

of

the

independent

directors.

In

considering

and

approving

the

continuation

of

the

Advisory

Contract

and

Subadvisory

Contracts,

the

Board

considered

the

information

it

believed

was

relevant,

including,

but

not

limited

to,

the

information

discussed

below.

The

Board

considered

not

only

the

specific

information

presented

in

connection

with

the

Meeting

but

also

the

knowledge

gained

over

time

through

interaction

with

the

Adviser

and

Subadvisers

about

various

topics.

The

Board

meets

regularly

and,

at

each

of

its

meetings,

covers

an

extensive

agenda

of

topics

and

materials

and

considers

factors

that

are

relevant

to

its

annual

consideration

of

the

renewal

of

the

T.

Rowe

Price

funds’

advisory

contracts,

including

performance

and

the

services

and

support

provided

to

the

funds

and

their

shareholders.

Services

Provided

by

the

Adviser

and

Subadvisers

The

Board

considered

the

nature,

quality,

and

extent

of

the

services

provided

to

the

fund

by

the

Adviser

and

Subadvisers.

These

services

included,

but

were

not

limited

to,

directing

the

fund’s

investments

in

accordance

with

its

investment

program

and

the

overall

management

of

the

fund’s

portfolio,

as

well

as

a

variety

of

related

activities

such

as

financial,

investment

operations,

and

administrative

services;

compliance;

maintaining

the

fund’s

records

and

registrations;

and

shareholder

communications.

The

Board

also

reviewed

the

background

and

experience

of

the

Adviser’s

and

Subadvisers’

senior

management

teams

and

investment

personnel

involved

in

the

management

of

the

fund,

as

well

as

the

Adviser’s

compliance

record.

The

Board

concluded

that

the

information

it

considered

with

respect

to

the

nature,

quality,

and

extent

of

the

services

provided

by

the

Adviser

and

Subadvisers,

as

well

as

the

other

factors

considered

at

the

Meeting,

supported

the

Board’s

approval

of

the

continuation

of

the

Advisory

Contract

and

Subadvisory

Contracts.

T.

ROWE

PRICE

Ultra

Short-Term

Bond

Fund

76

Investment

Performance

of

the

Fund

The

Board

took

into

account

discussions

with

the

Adviser

and

detailed

reports

that

it

regularly

receives

throughout

the

year

on

relative

and

absolute

performance

for

the

T.

Rowe

Price

funds.

In

connection

with

the

Meeting,

the

Board

reviewed

information

provided

by

the

Adviser

that

compared

the

fund’s

total

returns,

as

well

as

a

wide

variety

of

other

previously

agreed-upon

performance

measures

and

market

data,

against

relevant

benchmark

indexes

and

peer

groups

of

funds

with

similar

investment

programs

for

various

periods

through

December

31,

2022. Additionally,

the

Board

reviewed

the

fund’s

relative

performance

information

as

of

September

30,

2022,

which

ranked

the

returns

of

the

fund’s

Investor

Class

for

various

periods

against

a

universe

of

funds

with

similar

investment

programs

selected

by

Broadridge,

an

independent

provider

of

mutual

fund

data.

In

the

course

of

its

deliberations,

the

Board

considered

performance

information

provided

throughout

the

year

and

in

connection

with

the

Advisory

Contract

review

at

the

Meeting,

as

well

as

information

provided

during

investment

review

meetings

conducted

with

portfolio

managers

and

senior

investment

personnel

during

the

course

of

the

year

regarding

the

fund’s

performance.

The

Board

also

considered

relevant

factors,

such

as

overall

market

conditions

and

trends

that

could

adversely

impact

the

fund’s

performance,

length

of

the

fund’s

performance

track

record,

and

how

closely

the

fund’s

strategies

align

with

its

benchmarks

and

peer

groups.

The

Board

concluded

that

the

information

it

considered

with

respect

to

the

fund’s

performance,

as

well

as

the

other

factors

considered

at

the

Meeting,

supported

the

Board’s

approval

of

the

continuation

of

the

Advisory

Contract

and

Subadvisory

Contracts.

Costs,

Benefits,

Profits,

and

Economies

of

Scale

The

Board

reviewed

detailed

information

regarding

the

revenues

received

by

the

Adviser

under

the

Advisory

Contract

and

other

direct

and

indirect

benefits

that

the

Adviser

(and

its

affiliates)

may

have

realized

from

its

relationship

with

the

fund.

In

considering

soft-

dollar

arrangements

pursuant

to

which

research

may

be

received

from

broker-dealers

that

execute

the

fund’s

portfolio

transactions,

the

Board

noted

that

the

Adviser

bears

the

cost

of

research

services

for

all

client

accounts

that

it

advises,

including

the

T.

Rowe

Price

funds.

The

Board

received

information

on

the

estimated

costs

incurred

and

profits

realized

by

the

Adviser

from

managing

the

T.

Rowe

Price

funds.

The

Board

also

reviewed

estimates

of

the

profits

realized

from

managing

the

fund

in

particular,

and

the

Board

concluded

that

the

Adviser’s

profits

were

reasonable

in

light

of

the

services

provided

to

the

fund.

The

Board

also

considered

whether

the

fund

benefits

under

the

fee

levels

set

forth

in

the

Advisory

Contract

or

otherwise

from

any

economies

of

scale

realized

by

the

Adviser.

Under

the

Advisory

Contract,

the

fund

pays

a

fee

to

the

Adviser

for

investment

management

services

based

on

the

fund’s

average

daily

net

assets

and

the

fund

pays

its

own

expenses

of

operations.

Under

each

Subadvisory

Contract,

the

Adviser

may

Approval

of

Investment

Management

Agreement

and

Subadvisory

Agreements

(continued)

T.

ROWE

PRICE

Ultra

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Fund

77

pay

the

Subadviser

up

to

60%

of

the

advisory

fees

that

the

Adviser

receives

from

the

fund.

Assets

of

the

fund

are

included

in

the

calculation

of

the

group

fee

rate,

which

serves

as

a

component

of

the

management

fee

for

many

other

T.

Rowe

Price

funds

and

declines

at

certain

asset

levels

based

on

the

combined

average

net

assets

of

most

of

the

T.

Rowe

Price

funds

(including

the

fund).

Although

the

fund

does

not

have

a

group

fee

component

to

its

management

fee,

its

assets

are

included

in

the

calculation

because

certain

resources

utilized

to

operate

the

fund

are

shared

with

other

T.

Rowe

Price

funds.

The

fund

is

also

subject

to

contractual

expense

limitations

that

require

the

Adviser

to

waive

its

fees

and/or

bear

any

expenses

that

would

cause

a

share

class

of

the

fund

to

exceed

a

certain

percentage

based

on

the

class’s

net

assets.

The

expense

limitations

mitigate

the

potential

for

an

increase

in

operating

expenses

above

a

certain

level

that

could

impact

shareholders.

The

fund

also

offers

a

Z

Class,

which

serves

as

an

underlying

investment

within

certain

T.

Rowe

Price

fund

of

funds

arrangements.

The

Adviser

waives

its

advisory

fee

on

the

Z

Class

and

waives

or

bears

the

Z

Class’s

other

operating

expenses,

with

certain

exceptions.

The

Board

considered

whether

the

advisory

fee

and

operating

expense

waivers

on

the

Z

Class

may

present

a

means

for

cross-subsidization

of

the

Z

Class

by

other

share

classes

of

the

fund.

In

that

regard,

the

Board

noted

that

the

Z

Class

operating

expenses

are

largely

covered

by

the

all-inclusive

fees

charged

by

the

investing

T.

Rowe

Price

fund

of

funds

and

that

any

Z

Class

operating

expenses

not

covered

by

the

investing

T.

Rowe

Price

funds

of

funds’

fees

are

paid

by

the

Adviser

and

not

by

shareholders

of

any

other

share

class

of

the

fund.

In

addition,

the

Board

noted

that

the

fund

potentially

shares

in

indirect

economies

of

scale

through

the

Adviser’s

ongoing

investments

in

its

business

in

support

of

the

T.

Rowe

Price

funds,

including

investments

in

trading

systems,

technology,

and

regulatory

support

enhancements,

and

the

ability

to

possibly

negotiate

lower

fee

arrangements

with

third-

party

service

providers.

The

Board

concluded

that

the

advisory

fee

structure

for

the

fund

provides

for

a

reasonable

sharing

of

benefits

from

any

economies

of

scale

with

the

fund’s

investors.

Fees

and

Expenses

The

Board

was

provided

with

information

regarding

industry

trends

in

management

fees

and

expenses.

Among

other

things,

the

Board

reviewed

data

for

peer

groups

that

were

compiled

by

Broadridge,

which

compared:

(i)

contractual

management

fees,

actual

management

fees,

nonmanagement

expenses,

and

total

expenses

of

the

Investor

Class

of

the

fund

with

a

group

of

competitor

funds

selected

by

Broadridge

(Expense

Group)

and

(ii)

actual

management

fees,

nonmanagement

expenses,

and

total

expenses

of

the

Investor

Class

of

the

fund

with

a

broader

set

of

funds

within

the

Lipper

investment

classification

(Expense

Universe).

The

Board

considered

the

fund’s

contractual

management

fee

rate,

actual

management

fee

rate

(which

reflects

the

management

fees

Approval

of

Investment

Management

Agreement

and

Subadvisory

Agreements

(continued)

T.

ROWE

PRICE

Ultra

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Fund

78

actually

received

from

the

fund

by

the

Adviser

after

any

applicable

waivers,

reductions,

or

reimbursements),

operating

expenses,

and

total

expenses

(which

reflect

the

net

total

expense

ratio

of

the

fund

after

any

waivers,

reductions,

or

reimbursements)

in

comparison

with

the

information

for

the

Broadridge

peer

groups.

Broadridge

generally

constructed

the

peer

groups

by

seeking

the

most

comparable

funds

based

on

similar

investment

classifications

and

objectives,

expense

structure,

asset

size,

and

operating

components

and

attributes

and

ranked

funds

into

quintiles,

with

the

first

quintile

representing

the

funds

with

the

lowest

relative

expenses

and

the

fifth

quintile

representing

the

funds

with

the

highest

relative

expenses.

The

information

provided

to

the

Board

indicated

that

the

fund’s

contractual

management

fee

ranked

in

the

first

quintile

(Expense

Group),

the

fund’s

actual

management

fee

rate

ranked

in

the

first

quintile

(Expense

Group)

and

second

quintile

(Expense

Universe),

and

the

fund’s

total

expenses

ranked

in

the

fourth

quintile

(Expense

Group)

and

third

quintile

(Expense

Universe).

The

Board

also

reviewed

the

fee

schedules

for

other

investment

portfolios

with

similar

mandates

that

are

advised

or

subadvised

by

the

Adviser

and

its

affiliates,

including

separately

managed

accounts

for

institutional

and

individual

investors;

subadvised

funds;

and

other

sponsored

investment

portfolios,

including

collective

investment

trusts

and

pooled

vehicles

organized

and

offered

to

investors

outside

the

United

States.

Management

provided

the

Board

with

information

about

the

Adviser’s

responsibilities

and

services

provided

to

subadvisory

and

other

institutional

account

clients,

including

information

about

how

the

requirements

and

economics

of

the

institutional

business

are

fundamentally

different

from

those

of

the

proprietary

mutual

fund

business.

The

Board

considered

information

showing

that

the

Adviser’s

mutual

fund

business

is

generally

more

complex

from

a

business

and

compliance

perspective

than

its

institutional

account

business

and

considered

various

relevant

factors,

such

as

the

broader

scope

of

operations

and

oversight,

more

extensive

shareholder

communication

infrastructure,

greater

asset

flows,

heightened

business

risks,

and

differences

in

applicable

laws

and

regulations

associated

with

the

Adviser’s

proprietary

mutual

fund

business.

In

assessing

the

reasonableness

of

the

fund’s

management

fee

rate,

the

Board

considered

the

differences

in

the

nature

of

the

services

required

for

the

Adviser

to

manage

its

mutual

fund

business

versus

managing

a

discrete

pool

of

assets

as

a

subadviser

to

another

institution’s

mutual

fund

or

for

an

institutional

account

and

that

the

Adviser

generally

performs

significant

additional

services

and

assumes

greater

risk

in

managing

the

fund

and

other

T.

Rowe

Price

funds

than

it

does

for

institutional

account

clients,

including

subadvised

funds.

On

the

basis

of

the

information

provided

and

the

factors

considered,

the

Board

concluded

that

the

fees

paid

by

the

fund

under

the

Advisory

Contract

are

reasonable.

Approval

of

Investment

Management

Agreement

and

Subadvisory

Agreements

(continued)

T.

ROWE

PRICE

Ultra

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Fund

79

Approval

of

the

Advisory

Contract

and

Subadvisory

Contracts

As

noted,

the

Board

approved

the

continuation

of

the

Advisory

Contract

and

Subadvisory

Contracts.

No

single

factor

was

considered

in

isolation

or

to

be

determinative

to

the

decision.

Rather,

the

Board

concluded,

in

light

of

a

weighting

and

balancing

of

all

factors

considered,

that

it

was

in

the

best

interests

of

the

fund

and

its

shareholders

for

the

Board

to

approve

the

continuation

of

the

Advisory

Contract

and

Subadvisory

Contracts

(including

the

fees

to

be

charged

for

services

thereunder).

Approval

of

Investment

Management

Agreement

and

Subadvisory

Agreements

(continued)

T.

ROWE

PRICE

Ultra

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Fund

80

ABOUT

THE

FUND'S

DIRECTORS

AND

OFFICERS

Your

fund

is

overseen

by

a

Board

of

Directors

(Board)

that

meets

regularly

to

review

a

wide

variety

of

matters

affecting

or

potentially

affecting

the

fund,

including

performance,

investment

programs,

compliance

matters,

advisory

fees

and

expenses,

service

providers,

and

business

and

regulatory

affairs.

The

Board

elects

the

fund’s

officers,

who

are

listed

in

the

final

table.

The

directors

who

are

also

employees

or

officers

of

T.

Rowe

Price

are

considered

to

be

“interested”

directors

as

defined

in

Section

2(a)(19)

of

the

1940

Act

because

of

their

relationships

with

T.

Rowe

Price

Associates,

Inc. (T.

Rowe

Price),

and

its

affiliates.

The

business

address

of

each

director

and

officer

is

100

East

Pratt

Street,

Baltimore,

Maryland

21202.

The

Statement

of

Additional

Information

includes

additional

information

about

the

fund

directors

and

is

available

without

charge

by

calling

a

T.

Rowe

Price

representative

at

1-800-638-5660.

INDEPENDENT

DIRECTORS

(a)

Name

(Year

of

Birth)

Year

Elected

[Number

of

T.

Rowe

Price

Portfolios

Overseen]

Principal

Occupation(s)

and

Directorships

of

Public

Companies

and

Other

Investment

Companies

During

the

Past

Five

Years

Teresa

Bryce

Bazemore

(1959)

2018

[210]

President

and

Chief

Executive

Officer,

Federal

Home

Loan

Bank

of

San

Francisco

(2021

to

present);

Chief

Executive

Officer,

Bazemore

Consulting

LLC

(2018

to

2021);

Director,

Chimera

Investment

Corporation

(2017

to

2021);

Director,

First

Industrial

Realty

Trust

(2020

to

present);

Director,

Federal

Home

Loan

Bank

of

Pittsburgh

(2017

to

2019)

Melody

Bianchetto

(1966)

2023

[210]

Advisory

Board

Member;

Vice

President

for

Finance,

University

of

Virginia

(2015

to

2023)

Bruce

W.

Duncan

(1951)

2013

[210]

President,

Chief

Executive

Officer,

and

Director,

CyrusOne,

Inc.

(2020

to

2021);

Chair

of

the

Board

(2016

to

2020)

and

President

(2009

to

2016),

First

Industrial

Realty

Trust,

owner

and

operator

of

industrial

properties;

Member,

Investment

Company

Institute

Board

of

Governors

(2017

to

2019);

Member,

Independent

Directors

Council

Governing

Board

(2017

to

2019);

Senior

Advisor,

KKR

(2018

to

2022);

Director,

Boston

Properties

(2016

to

present);

Director,

Marriott

International,

Inc.

(2016

to

2020)

Robert

J.

Gerrard,

Jr.

(1952)

2013

[210]

Chair

of

the

Board,

all

funds

(July

2018

to

present)

Paul

F.

McBride

(1956)

2013

[210]

Advisory

Board

Member,

Vizzia

Technologies

(2015

to

present);

Board

Member,

Dunbar

Armored

(2012

to

2018)

T.

ROWE

PRICE

Ultra

Short-Term

Bond

Fund

81

INTERESTED  DIRECTORS

(a)

Name

(Year

of

Birth)

Year

Elected

[Number

of

T.

Rowe

Price

Portfolios

Overseen]

Principal

Occupation(s)

and

Directorships

of

Public

Companies

and

Other

Investment

Companies

During

the

Past

Five

Years

Mark

J.

Parrell

(1966)

2023

[210]

Advisory

Board

Member;

Board

of

Trustees

Member

and

Chief

Executive

Officer

(2019

to

present),

President

(2018

to

present),

Executive

Vice

President

and

Chief

Financial

Officer

(2007

to

2018),

and

Senior

Vice

President

and

Treasurer

(2005

to

2007),

EQR;

Member

and

Chair,

Nareit

Dividends

Through

Diversity,

Equity

&

Inclusion

CEO

Council,

Nareit

2021

Audit

and

Investment

Committee

(2021);

Advisory

Board,

Ross

Business

School

at

University

of

Michigan

(2015

to

2016);

Member

and

Chair

of

the

Finance

Committee,

National

Multifamily

Housing

Council

(2015

to

2016);

Member,

Economic

Club

of

Chicago;

Director,

Brookdale

Senior

Living,

Inc.

(2015

to

2017);

Director,

Aviv

REIT,

Inc.

(2013

to

2015);

Director,

Real

Estate

Roundtable

(July

2021

to

present)

and

the

2022

Executive

Board

Nareit

(November

2021

to

present);

Board

of

Directors

and

Chair

of

the

Finance

Committee,

Greater

Chicago

Food

Depository

(July

2017

to

present)  

Kellye

L.

Walker

(1966)

2021

[210]

Executive

Vice

President

and

Chief

Legal

Officer,

Eastman

Chemical

Company

(April

2020

to

present);

Executive

Vice

President

and

Chief

Legal

Officer,

Huntington

Ingalls

Industries,

Inc.

(January

2015

to

March

2020);

Director,

Lincoln

Electric

Company

(October

2020

to

present)

(a)

All

information

about

the

independent

directors

was

current

as

of

December

31,

2022,

unless

otherwise

indicated,

except

for

the

number

of

portfolios

overseen,

which

is

current

as

of

the

date

of

this

report.

Name

(Year

of

Birth)

Year

Elected

[Number

of

T.

Rowe

Price

Portfolios

Overseen]

Principal

Occupation(s)

and

Directorships

of

Public

Companies

and

Other

Investment

Companies

During

the

Past

Five

Years

David

Oestreicher

(1967)

2018

[210]

Director,

Vice

President,

and

Secretary,

T.

Rowe

Price,

T.

Rowe

Price

Investment

Services,

Inc.,

T.

Rowe

Price

Retirement

Plan

Services,

Inc.,

and

T.

Rowe

Price

Services,

Inc.;

Director

and

Secretary,

T.

Rowe

Price

Investment

Management,

Inc.

(Price

Investment

Management);

Vice

President

and

Secretary,

T.

Rowe

Price

International

(Price

International);

Vice

President,

T.

Rowe

Price

Hong

Kong

(Price

Hong

Kong),

T. Rowe

Price

Japan

(Price

Japan),

and

T.

Rowe

Price

Singapore

(Price

Singapore);

General

Counsel,

Vice

President,

and

Secretary,

T.

Rowe

Price

Group,

Inc.;

Chair

of

the

Board,

Chief

Executive

Officer,

President,

and

Secretary,

T.

Rowe

Price

Trust

Company;

Principal

Executive

Officer

and

Executive

Vice

President,

all

funds

INDEPENDENT

DIRECTORS

(a)

(CONTINUED)

T.

ROWE

PRICE

Ultra

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Bond

Fund

82

OFFICERS

Name

(Year

of

Birth)

Year

Elected

[Number

of

T.

Rowe

Price

Portfolios

Overseen]

Principal

Occupation(s)

and

Directorships

of

Public

Companies

and

Other

Investment

Companies

During

the

Past

Five

Years

Eric

L.

Veiel,

CFA

(1972)

2022

[210]

Director

and

Vice

President,

T.

Rowe

Price;

Vice

President,

T.

Rowe

Price

Group,

Inc.,

and

T.

Rowe

Price

Trust

Company

(a)

All

information

about

the

interested

directors

was

current

as

of

December

31,

2022,

unless

otherwise

indicated,

except

for

the

number

of

portfolios

overseen,

which

is

current

as

of

the

date

of

this

report.

Name

(Year

of

Birth)

Position

Held

With

Ultra

Short-Term

Bond

Fund

Principal

Occupation(s) 

Austin

Applegate

(1974)

Vice

President

Vice

President,

T.

Rowe

Price

and

T.

Rowe

Price

Group,

Inc.

Christopher

P.

Brown, CFA

(1977)

Vice

President

Vice

President,

T.

Rowe

Price

and

T.

Rowe

Price

Group,

Inc.

Armando

(Dino)

Capasso

(1974)

Chief

Compliance

Officer

Chief

Compliance

Officer

and

Vice

President,

T.

Rowe

Price

and

Price

Investment

Management;

Vice

President,

T.

Rowe

Price

Group,

Inc.;

formerly,

Chief

Compliance

Officer,

PGIM

Investments

LLC

and

AST

Investment

Services,

Inc.

(ASTIS)

(to

2022);

Chief

Compliance

Officer,

PGIM

Retail

Funds

complex

and

Prudential

Insurance

Funds

(to

2022);

Vice

President

and

Deputy

Chief

Compliance

Officer,

PGIM

Investments

LLC

and

ASTIS

(to

2019)

Shiu

Tak

(Sheldon)

Chan

(1981)

Vice

President

Vice

President,

Price

Hong

Kong

and

T.

Rowe

Price

Group,

Inc.

Jason

T.

Collins,

CFA

(1971)

Vice

President

Vice

President,

T.

Rowe

Price,

T.

Rowe

Price

Group,

Inc.,

and

T.

Rowe

Price

Trust

Company

Michael

F.

Connelly,

CFA

(1977)

Vice

President

Vice

President,

T.

Rowe

Price

and

T.

Rowe

Price

Group,

Inc.

Ramon

Roberto

de

Castro

(1966)

Vice

President

Vice

President,

T.

Rowe

Price

and

T.

Rowe

Price

Group,

Inc.

Levent

Demirekler,

CFA

(1974)

Vice

President

Vice

President,

T.

Rowe

Price

and

T.

Rowe

Price

Group,

Inc.

Unless

otherwise

noted,

officers

have

been

employees

of

T.

Rowe

Price

or

Price

International

for

at

least

5

years.

INTERESTED  DIRECTORS

(a)

(CONTINUED)

T.

ROWE

PRICE

Ultra

Short-Term

Bond

Fund

83

Name

(Year

of

Birth)

Position

Held

With

Ultra

Short-Term

Bond

Fund

Principal

Occupation(s) 

Alan

S.

Dupski,

CPA

(1982)

Principal

Financial

Officer,

Vice

President

and

Treasurer

Vice

President,

Price

Investment

Management,

T.

Rowe

Price,

T.

Rowe

Price

Group,

Inc.,

and

T.

Rowe

Price

Trust

Company

Gary

J.

Greb

(1961)

Vice

President

Vice

President,

Price

Investment

Management,

T.

Rowe

Price,

Price

International,

and

T.

Rowe

Price

Trust

Company

Cheryl

Hampton,

CPA

(1969)

Vice

President

Vice

President,

T.

Rowe

Price;

formerly,

Tax

Director,

Invesco

Ltd.

(to

2021);

Vice

President,

Oppenheimer

Funds,

Inc.

(to

2019)

Charles

B.

Hill,

CFA

(1961)

Vice

President

Vice

President,

T.

Rowe

Price

and

T.

Rowe

Price

Group,

Inc.

Benjamin

Kersse,

CPA

(1989)

Vice

President

Vice

President,

T.

Rowe

Price

Steven

M.

Kohlenstein,

CFA

(1987)

Executive

Vice

President

Vice

President,

T.

Rowe

Price

and

T.

Rowe

Price

Group,

Inc.

Paul

J.

Krug,

CPA

(1964)

Vice

President

Vice

President,

T.

Rowe

Price,

T.

Rowe

Price

Group,

Inc.,

and

T.

Rowe

Price

Trust

Company

Matthew

Lawton,

CFA

(1983)

Vice

President

Vice

President,

T.

Rowe

Price

and

T.

Rowe

Price

Group,

Inc.

Cheryl

A.

Mickel,

CFA

(1967)

President

Director

and

Vice

President,

T.

Rowe

Price

Trust

Company;

Vice

President,

T.

Rowe

Price

and

T.

Rowe

Price

Group,

Inc.

Samy

B.

Muaddi,

CFA

(1984)

Vice

President

Vice

President,

T.

Rowe

Price,

T.

Rowe

Price

Group,

Inc.,

and

T.

Rowe

Price

Trust

Company

Alexander

S.

Obaza

(1981)

Executive

Vice

President

Vice

President,

T.

Rowe

Price,

T.

Rowe

Price

Group,

Inc.,

and

T.

Rowe

Price

Trust

Company

Fran

M.

Pollack-Matz

(1961)

Vice

President

and

Secretary 

Vice

President,

T.

Rowe

Price,

T.

Rowe

Price

Group,

Inc.,

T.

Rowe

Price

Investment

Services,

Inc.,

and

T.

Rowe

Price

Services,

Inc.

Rachel

Protzman

(1988)

Vice

President

Assistant

Vice

President,

T.

Rowe

Price

Shannon

H.

Rauser

(1987)

Assistant

Secretary 

Assistant

Vice

President,

T.

Rowe

Price

Michael

F.

Reinartz,

CFA

(1973)

Executive

Vice

President

Vice

President,

T.

Rowe

Price,

T.

Rowe

Price

Group,

Inc.,

and

T.

Rowe

Price

Trust

Company

Richard

Sennett,

CPA

(1970)

Assistant

Treasurer

Vice

President,

T.

Rowe

Price,

T.

Rowe

Price

Group,

Inc.,

and

T.

Rowe

Price

Trust

Company

Unless

otherwise

noted,

officers

have

been

employees

of

T.

Rowe

Price

or

Price

International

for

at

least

5

years.

OFFICERS

(CONTINUED)

T.

ROWE

PRICE

Ultra

Short-Term

Bond

Fund

84

Name

(Year

of

Birth)

Position

Held

With

Ultra

Short-Term

Bond

Fund

Principal

Occupation(s) 

Michael

K.

Sewell

(1982)

Vice

President

Vice

President,

T.

Rowe

Price

and

T.

Rowe

Price

Group,

Inc.

Chen

Shao

(1980)

Vice

President

Vice

President,

T.

Rowe

Price

and

T.

Rowe

Price

Group,

Inc.

Douglas

D.

Spratley,

CFA

(1969)

Vice

President

Vice

President,

T.

Rowe

Price,

T.

Rowe

Price

Group,

Inc.,

and

T.

Rowe

Price

Trust

Company

Siby

Thomas

(1979)

Vice

President

Vice

President,

T.

Rowe

Price

and

T.

Rowe

Price

Group,

Inc.

Lauren

T.

Wagandt

(1984)

Vice

President

Vice

President,

T.

Rowe

Price

and

T.

Rowe

Price

Group,

Inc.

Megan

Warren

(1968)

Vice

President

OFAC

Sanctions

Compliance

Officer

and

Vice

President,

Price

Investment

Management;

Vice

President,

T.

Rowe

Price,

T.

Rowe

Price

Group,

Inc.,

T.

Rowe

Price

Retirement

Plan

Services,

Inc.,

T.

Rowe

Price

Services,

Inc.,

and

T.

Rowe

Price

Trust

Company

Unless

otherwise

noted,

officers

have

been

employees

of

T.

Rowe

Price

or

Price

International

for

at

least

5

years.

OFFICERS

(CONTINUED)

100

East

Pratt

Street

Baltimore,

MD

21202

T.

Rowe

Price

Investment

Services,

Inc.

Call

1-800-225-5132

to

request

a

prospectus

or

summary

prospectus;

each

includes

investment

objectives,

risks,

fees,

expenses,

and

other

information

that

you

should

read

and

consider

carefully

before

investing.

202307-2916634

F188-050

7/23

Item 1. (b) Notice pursuant to Rule 30e-3.

Not applicable.

Item 2. Code of Ethics.

The registrant has adopted a code of ethics, as defined in Item 2 of Form N-CSR, applicable to its principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. A copy of this code of ethics is filed as an exhibit to this Form N-CSR. No substantive amendments were approved or waivers were granted to this code of ethics during the period covered by this report.

Item 3. Audit Committee Financial Expert.

The registrant’s Board of Directors has determined that Ms. Teresa Bryce Bazemore qualifies as an audit committee financial expert, as defined in Item 3 of Form N-CSR. Ms. Bazemore is considered independent for purposes of Item 3 of Form N-CSR.

Item 4. Principal Accountant Fees and Services.

(a) – (d)  Aggregate fees billed for the last two fiscal years for professional services rendered to, or on behalf of, the registrant by the registrant’s principal accountant were as follows:

	2023		2022
Audit Fees	$	33,192	$	30,268
Audit-Related Fees		-		-
Tax Fees		-		2,074
All Other Fees		-		-

Audit fees include amounts related to the audit of the registrant’s annual financial statements and services normally provided by the accountant in connection with statutory and regulatory filings. Audit-related fees include amounts reasonably related to the performance of the audit of the registrant’s financial statements and specifically include the issuance of a report on internal controls and, if applicable, agreed-upon procedures related to fund acquisitions. Tax fees include amounts related to services for tax compliance, tax planning, and tax advice. The nature of these services specifically includes the review of distribution calculations and the preparation of Federal, state, and excise tax returns. All other fees include the registrant’s pro-rata share of amounts for agreed-upon procedures in conjunction with service contract approvals by the registrant’s Board of Directors/Trustees.

(e)(1) The registrant’s audit committee has adopted a policy whereby audit and non-audit services performed by the registrant’s principal accountant for the registrant, its investment adviser, and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant require pre-approval in advance at regularly scheduled audit committee meetings. If such a service is required between regularly scheduled audit committee meetings, pre-approval may be authorized by one audit committee member with ratification at the next scheduled audit committee meeting. Waiver of pre-approval for audit or non-audit services requiring fees of a de minimis amount is not permitted.

(2) No services included in (b) – (d) above were approved pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.

(f) Less than 50 percent of the hours expended on the principal accountant’s engagement to audit the registrant’s financial statements for the most recent fiscal year were attributed to work performed by persons other than the principal accountant’s full-time, permanent employees.

(g) The aggregate fees billed for the most recent fiscal year and the preceding fiscal year by the registrant’s principal accountant for non-audit services rendered to the registrant, its investment adviser, and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant were $1,521,000 and $2,959,000, respectively.

(h) All non-audit services rendered in (g) above were pre-approved by the registrant’s audit committee. Accordingly, these services were considered by the registrant’s audit committee in maintaining the principal accountant’s independence.

Item 5. Audit Committee of Listed Registrants.

Not applicable.

Item 6. Investments.

(a) Not applicable. The complete schedule of investments is included in Item 1 of this Form N-CSR.

(b) Not applicable.

Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.

Not applicable.

Item 8. Portfolio Managers of Closed-End Management Investment Companies.

Not applicable.

Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.

Not applicable.

Item 10. Submission of Matters to a Vote of Security Holders.

There has been no change to the procedures by which shareholders may recommend nominees to the registrant’s board of directors.

Item 11. Controls and Procedures.

(a) The registrant’s principal executive officer and principal financial officer have evaluated the registrant’s disclosure controls and procedures within 90 days of this filing and have concluded that the registrant’s disclosure controls and procedures were effective, as of that date, in ensuring that information required to be disclosed by the registrant in this Form N-CSR was recorded, processed, summarized, and reported timely.

(b) The registrant’s principal executive officer and principal financial officer are aware of no change in the registrant’s internal control over financial reporting that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

Item 12. Disclosure of Securities Lending Activities for Closed-End Management Investment Companies.

Not applicable.

Item 13. Exhibits.

(a)(1)	The registrant’s code of ethics pursuant to Item 2 of Form N-CSR is attached.
(2)	Separate certifications by the registrant’s principal executive officer and principal financial officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 and required by Rule 30a-2(a) under the Investment Company Act of 1940, are attached.
(3)	Written solicitation to repurchase securities issued by closed-end companies: not applicable.
(b)	A certification by the registrant’s principal executive officer and principal financial officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and required by Rule 30a-2(b) under the Investment Company Act of 1940, is attached.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

T. Rowe Price Short-Term Bond Fund, Inc.
By	/s/ David Oestreicher
	David Oestreicher
	Principal Executive Officer
Date	July 20, 2023

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

By	/s/ David Oestreicher
	David Oestreicher
	Principal Executive Officer
Date	July 20, 2023

By	/s/ Alan S. Dupski
	Alan S. Dupski
	Principal Financial Officer
Date	July 20, 2023