Strategy. Normally, at least 80% of the funds income will be exempt from federal income taxes. However, up to 20% of the funds income could be derived from securities subject to the alternative minimum tax. Any derivatives that provide exposure to the investment focus suggested by the funds name, or to one or more market risk factors associated with the investment focus suggested by the funds name, are counted (as applicable) toward compliance with the funds 80% investment policy. Although the fund may purchase securities of any maturity, the fund invests primarily in longer-term municipal securities. The fund generally seeks higher-yielding municipal bonds, including those that are rated below investment grade (BB and lower, or an equivalent rating) by a credit … Show more… Normally, at least 80% of the funds income will be exempt from federal income taxes. However, up to 20% of the funds income could be derived from securities subject to the alternative minimum tax. Any derivatives that provide exposure to the investment focus suggested by the funds name, or to one or more market risk factors associated with the investment focus suggested by the funds name, are counted (as applicable) toward compliance with the funds 80% investment policy. Although the fund may purchase securities of any maturity, the fund invests primarily in longer-term municipal securities. The fund generally seeks higher-yielding municipal bonds, including those that are rated below investment grade (BB and lower, or an equivalent rating) by a credit rating agency or by T. Rowe Price, known as junk bonds. T. Rowe Prices active investment management approach emphasizes the value of in-depth fundamental credit research, diversification, and risk management practices. By using fundamental research, T. Rowe Price seeks to select investments for the funds portfolio based on its outlook for the different sectors of the tax-free municipal market (for example, T. Rowe Price may emphasize revenue bonds instead of state and local general obligation debt) and specific issuers or securities. The goal of this approach is to seek higher yields while taking a risk-conscious approach. Risk management practices include managing the funds duration (which is a measurement of the price sensitivity of a bond or bond fund to changes in interest rates), while also focusing on striking a balance between (i) investing more heavily in certain sectors or issuers and (ii) diversifying the funds investments across the broader municipal market. From time to time, the fund may invest a significant portion of its assets in sectors with special risks, such as health care, transportation, utilities, or private activity bonds. Show less