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While our short-term fixed income funds strive to generate income, there are some important distinctions. The table below compares some of the key differences between our short-term fixed income funds.

Short-Term Fixed Income Key Differences

  Prime Reserve*
(PRRXX)
Ultra Short-Term Bond Fund
(TRBUX)
Short-Term Bond Fund
(PRWBX)

Investors looking for potential…

Income Lowest Lower Moderate
Stability Green Checkmark Red X Red X

Fund Features

Offers checkwriting Green Checkmark Green Checkmark Green Checkmark
Unlimited trading frequency Green Checkmark Green Checkmark Red X
Available as brokerage sweep Green Checkmark Red X Red X

Fund details

Asset class Money market Bond Bond
Seeks… Preservation of capital; liquidity; and, consistent with these, the highest possible current income. Highest level of income commensurate with liquidity and minimal fluctuations in principal value. Highest level of income commensurate with liquidity and minimal fluctuations in principal value.
Expense ratio 0.56%1 0.35%2 0.53%1
Typical holding maturities Less than 13 months Approximately 1.5 years Approximately 3 years
Duration range 0.1 to 0.2 years 0.75 to 1.0 years 1.5 to 2.3 years
Credit quality Must be rated between AAA and AA Investment Grade Investment Grade
Risk/return potential3 Lowest Lower Moderate
Net asset value (NAV) Stable at $1* Fluctuates Fluctuates

Invests in, but not limited to,

U.S. Treasury and agency issues Green Checkmark Green Checkmark Green Checkmark
Corporate debt Green Checkmark Green Checkmark Green Checkmark
Certificates of deposit Green Checkmark Green Checkmark Green Checkmark
Mortgage-backed securities Red X Green Checkmark Green Checkmark
Emerging markets debt Red X Red X Green Checkmark
Foreign currency Red X Red X Green Checkmark

Comparative fund risks

Credit risk Lowest Low Moderate
Interest rate risk Lower Low Moderate
Liquidity risk Lowest Low Moderate

*An investment in a money market fund is not insured or guaranteed by the FDIC or any other government agency. Although a money market fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in a money market fund.

1As of fiscal year-end 5/31/2012.

2Note about the Ultra Short-Term Bond Fund's expense ratio: The fund's estimated expense ratio as of its inception date on 12/3/2012 was 0.61%. To protect the interests of shareholders, T. Rowe Price will waive its fees and/or bear any expenses that would cause the fund's expense ratio to exceed 0.35%. This contractual expense limitation expires on 9/30/2015.

3Funds are placed in general risk/return categories based on their past performance or, for newer funds, the performance of the types of securities in which they invest. There is no assurance past trends will continue.

Duration: The average time (expressed in years) needed for an investor to receive the present value of the future cash flows on a fixed income investment. It is used to measure a bond or bond fund's sensitivity to interest rate changes. For example, a fund with a duration of six years would fall about 6% in price in response to a one-percentage-point rise in interest rates, and vice versa.

Copyright 2014, T. Rowe Price Investment Services, Inc., Distributor. All rights reserved.