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Tax-Free High Yield Fund

Invests a substantial portion of assets in below-investment-grade municipal or “junk“ bonds and may buy bonds in default as long as they do not exceed 10% of assets.

If interest rates rise significantly from current levels, bond fund total returns will decline and may even turn negative in the short term. High-yield bonds carry a significant level of credit risk.

PRFHXCUSIP 741486104
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Prospectus

Morningstar (Category)

Morningstar
(Overall Rating)1

High Yield Muni
  (144 funds)

Data as of 04/30/2017

Data as of 04/30/2017

Fund Manager Tenure2

Net Assets3
(USD)

15yrs
$4.8b

Data as of 04/30/2017

Data as of 04/30/2017

Price
(USD)

Daily Price Change

$11.97
$+0.02

Data as of 05/23/2017

Data as of 05/23/2017

Morningstar Ratings™ are based on risk-adjusted returns. Click on "Overall Rating" for the fund's 3-, 5-, and 10-year (if applicable) Morningstar Ratings™.

James M.  Murphy
James M. Murphy, Portfolio Manager

Jim Murphy is a portfolio manager in the Fixed Income Division at T. Rowe Price. Mr. Murphy has lead portfolio management responsibilities for the US Municipal High Yield and Intermediate High Yield Bond Strategies. He is a vice president of T. Rowe Price Group, Inc., and T. Rowe Price Associates, Inc.

Strategy

Investment Objective

The fund seeks to provide a high level of income exempt from federal income taxes by investing primarily in long-term low- to upper-medium-grade municipal securities.

Morningstar Fixed Income Style

Low / Extensive

Data as of 04/30/2017

The Morningstar Style Box™, a proprietary Morningstar data point, is a 9-square grid that provides a graphical representation of the "investment style" of stocks and mutual funds. See disclaimer at bottom of page for more information.

Morningstar Rating

Period Rating Rank Funds In Category (High Yield Muni)
Overall N/A 144
3 Years 78 144
5 Years 48 118
10 Years 7 85

The Morningstar Rating™ for funds, or "star rating", is calculated for funds with at least a three-year history. Exchange-traded funds and open-ended mutual funds are considered a single population for comparative purposes. It is calculated based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a managed product's monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance. The top 10% of products in each product category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star. The Overall Morningstar Rating for a managed product is derived from a weighted average of the performance figures associated with its three-, five-, and 10-year (if applicable) Morningstar Rating metrics.

Yields & Dividends (Investor Class)

30-Day SEC Standardized Yield
with waiver
2.97%
without waiver
2.97%

Data as of 04/30/2017

30-Day Annualized Dividend Yield
with waiver
3.52%

Data as of 05/23/2017

Monthly Dividend
(USD)
$0.033536313

Data as of 04/30/2017

Monthly Dividend
Rate
0.03%

Data as of 05/23/2017

Average Annual Total Returns (Investor Class)

1 YR
1.23%
Benchmark
1.60%
Value
-0.37% -0.50%

Data as of 03/31/2017

3 YR
5.29%
Benchmark
4.23%
Value
1.06% 0.92%
5 YR
5.05%
Benchmark
4.09%
Value
0.96% 1.00%
10 YR
4.53%
Benchmark
4.36%
Value
0.17% 0.18%

Expense Ratio

Gross
0.69%
Net
0.69%

Redemption Fee

90 days or less
2.00%

Benchmark: Bloomberg Barclays 65% High-Grade/35% High-Yield Index

Fund Inception: 03/01/1985

Current performance may be lower or higher than the quoted past performance, which cannot guarantee future results. Share price, principal value, and return will vary and you may have a gain or loss when you sell your shares. Average annual total return figures include changes in principal value, reinvested dividends, and capital gain distributions.

The gross expense ratio reflects the fund expenses as stated in the fee table of the fund's prospectus prior to the deduction of any waiver or reimbursement. The net expense ratio reflects fund expenses after the deduction of any waiver or reimbursement.  If a fund has an active contractual expense ratio limitation, the expiration date is shown below the gross and net expense ratio values above.  Expense ratios are as of the most recent prospectus.

The 30-day dividend yield represents the average daily dividends for the 30-day period, annualized and divided by the net asset values per share at the end of the period; it is available the first quarter after the fund's inception. The SEC standardized yield is computed under an SEC standardized formula and reflects an estimated yield to maturity (assuming all portfolio securities are held to maturity); it is available the first month after the fund's inception.

The performance information shown does not reflect the deduction of a 2.00% redemption fee on shares held for 90 days or less; if it did, the performance would be lower.

Current Year Performance (Investor Class)

Daily YTD
3.88%
Benchmark
N/A
Value
N/A

Data as of 05/23/2017

Monthly YTD
2.62%
Benchmark
3.17%
Value
-0.55%

Data as of 04/30/2017

One Month
0.79%
Benchmark
0.71%
Value
0.08%
Three Months
2.14%
Benchmark
2.23%
Value
-0.09%

Benchmark: Bloomberg Barclays 65% High-Grade/35% High-Yield Index

Fund Inception: 03/01/1985

Asset Allocation

Net Assets
(USD)
$4.8b
Largest US Bonds 94.94% $4.5b
Other View complete Asset Allocation

Data as of 04/30/2017

Holdings

Total
Holdings
840
Largest Holding TX MUN GAS ACQ & SUPPLY SR LIEN D 1.10% Was (12/31/2016) 1.12%
Other View complete Full Holdings
Top 10 Guarantors 16.02% View the latest Top 10 Guarantors

Data as of 03/31/2017

Quality

N/A

Maturity

Weighted Average

19.70 Years

Duration

Weighted Average

5.31 Years

Top

BBB
32.90%
Was (03/31/2017) 33.67%

Top

10+ Years
81.43%
Was (03/31/2017) 81.43%

Top

7-10 Years
35.84%
Was (03/31/2017) 36.95%

Over

BBB
By 27.29%
Fund 32.90%
Benchmark 5.61%

Over

10+ Years
By 16.67%
Fund 81.43%
Benchmark 64.76%

Over

Under 1 Year
By 7.90%
Fund 9.93%
Benchmark 2.04%

Under

AA
By -30.58%
Fund 5.75%
Benchmark 36.33%

Under

1-3 Years
By -6.68%
Fund 3.73%
Benchmark 10.41%

Under

1-3 Years
By -9.61%
Fund 9.43%
Benchmark 19.04%

Data as of 04/30/2017

Benchmark: Bloomberg Barclays 65% High-Grade/35% High-Yield Index

Industry

Total
Industries
34
Largest Industry Rev-Health Care 28.20% Was (03/31/2017) 28.40%
Other View complete Industry Diversification

Data as of 04/30/2017

Benchmark: Bloomberg Barclays 65% High-Grade/35% High-Yield Index

Over

Rev-Health Care
By 15.75%
Fund 28.20%
Benchmark 12.46%

Under

Go-State
By -8.48%
Fund 1.22%
Benchmark 9.70%

Data as of 04/30/2017

Team (As of )

James M.  Murphy

James M. Murphy
Portfolio Manager

Jim Murphy is a portfolio manager in the Fixed Income Division at T. Rowe Price. Mr. Murphy has lead portfolio management responsibilities for the US Municipal High Yield and Intermediate High Yield Bond Strategies. He is a vice president of T. Rowe Price Group, Inc., and T. Rowe Price Associates, Inc.

  • Fund manager
    since 2002
  • Years at
    T. Rowe Price 16
  • Years investment
    experience 23
Christopher Dillon

Christopher Dillon
Portfolio Specialist

Chris Dillon is a portfolio specialist in the Fixed Income Division at T. Rowe Price. He supports the Municipal Bond, International Bond, and Global Unconstrained Bond Strategies, working closely with clients, prospects, and consultants. Mr. Dillon is a vice president of T. Rowe Price Group, Inc., and T. Rowe Price Associates, Inc.

  • Years at
    T. Rowe Price 11
  • Years investment
    experience 20

For a complete list of the members of the fund's Investment Advisory Committee, please refer to the fund's prospectus.

How to Invest

View platform information
Share Class Min Initial Investment (USD) Min Subsequent Investment (USD) Redemption Fee 12b-1 Fee Expense Ratio
Gross Net Limitation Type Limitation Expiration Date
Investor Class
Cusip 741486104
$2,500 $100 2.00%
90 days or less
0.00% 0.69% 0.69% N/A N/A
Advisor Class
Cusip 741486203
$2,500 $100 2.00%
90 days or less
0.25% 1.04% 1.04% N/A
N/A
I Class
Cusip 741486302
$1,000,000* N/A 2.00%
90 days or less
0.00% 0.63% 0.63% N/A
06/30/2019

* Minimum initial investment $1,000,000, certain exceptions may apply. Minimum waived for I Classes offered through Workplace Retirement plans.

1

© 2017 Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results.

2

Number of years managing the fund.  In the case of co-portfolio management, the longer tenure is displayed.

3

Figure applies to all share classes.

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