Question: The following is reproduced from the Prospectus of the T. Rowe Price Institutional Core Plus Fund dated October 1, 2010:

Principal Investment Strategies The fund intends to invest at least 65% of its net assets in a "core" portfolio of investment grade, U.S. dollar-denominated fixed income securities which may include, but are not limited to, debt securities of the U.S. government and its agencies, corporate bonds, mortgages, and asset-backed securities. Normally, the fund will also maintain a "plus" portion of its portfolio in other sectors of the bond market, including high yield, non-U.S. dollar-denominated, and emerging market securities, to seek additional value.

Under normal conditions, the fund expects to maintain an effective duration within !/-20% of the Barclays Capital U.S. Aggregate Bond Index. As of July 31, 2010, the effective duration of this index was 4.05; however, it will change over time. The fund, in the aggregate, will seek to maintain a weighted average credit rating of A# or better, based on the weighted average credit quality of the fund's portfolio securities.

Individual bond investments in the core portfolio will be investment grade, with a minimum credit quality of BBB-. Ratings will be as determined, at the time of purchase, by at least one nationally recognized statistical rating organization (NRSRO) or, if not so rated, a comparable rating by T. Rowe Price. If a security is split rated (i.e., one rating below investment grade and one at or above investment grade), the higher rating will be used.

The plus portion of the fund's portfolio may consist of below investment-grade (junk) bonds of U.S. and other developed country companies (not to exceed 20% of net assets), below investment-grade emerging market fixed income securities (not to exceed 10% of net assets), non-U.S. dollar-denominated securities (not to exceed 20% of net assets), and convertible and preferred securities (not to exceed 10% of net assets), as well as other investments. The fund may hold non-U.S. currencies without holding any bonds or other securities denominated in those currencies.

The fund may continue to hold an investment in its core portfolio that is downgraded to below investment grade after purchase. If such rating downgrades cause high yield exposure to exceed 20% of net assets or below investment-grade emerging market securities to exceed 10% of net assets, the fund will reduce exposure within a reasonable period of time.

In keeping with the fund's objective, it may also use futures, options, and swaps. The fund may sell holdings for a variety of reasons, such as to adjust the portfolio's average maturity, duration, or credit quality or to shift assets into and out of higher yielding or lower yielding securities or different sectors.

Discuss in detail the strategy of this fund.