https://www.sec.gov/Archives/edgar/data/1169187/000174177320002223/c497.htm497 1 c497.htm
T. Rowe Price Institutional Core Plus Fund
Supplement to Prospectus Dated October 1, 2019, as supplemented
On July 31, 2020, the Board of Directors (“Board”) of the T. Rowe Price Institutional Core Plus Fund (“Fund”) approved restructuring the Fund’s fees and expenses, effective September 1, 2020. In addition, the Board approved a plan of reorganization pursuant to which the Fund will transfer substantially all of its assets and liabilities to the T. Rowe Price Total Return Fund (“Acquiring Fund”) in exchange for I Class shares of equal value of the Acquiring Fund on or about November 30, 2020 (“Reorganization”). Following the transfer, the I Class shares received in the exchange will be distributed to the Fund’s shareholders in complete liquidation of the Fund. The Reorganization does not require approval by the Fund’s shareholders.
The Fund currently pays T. Rowe Price Associates, Inc. (“T. Rowe Price”) an all-inclusive management fee of 0.40% based on the Fund’s average daily net assets that includes investment management services and ordinary, recurring operating expenses (with certain limited exceptions). Effective September 1, 2020, the management fee will no longer include ordinary recurring operating expenses, and the Fund will incur its ordinary operating expenses directly. The management fee will consist of two components—an “individual fund fee,” and a “group fee” that declines as the combined assets of the T. Rowe Price Funds rise, so shareholders benefit from the overall growth in mutual fund assets. On September 1, 2020, the annual group fee rate was 0.29%. The individual fund fee, also applied to the fund’s average daily net assets, will be 0.08%, which, when combined with the group fee rate, will result in a combined management fee rate of 0.37% of average daily net assets. In order to ensure that Fund shareholders will not pay more under the new fee and expense structure, T. Rowe Price has agreed to indefinitely waive the Fund’s fees and/or bear any expenses (excluding interest; expenses related to borrowings, taxes, and brokerage and other transaction costs; or nonrecurring, extraordinary expenses, which are the expenses excluded under the Fund’s all-inclusive management fee) that would cause the Fund’s ratio of expenses to average daily net assets to exceed 0.40%...
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