All Tax-Free Municipal Bond Funds Aren't the Same

These days, a muni fund is only as good as the credit research behind it. Our researchers go beyond the numbers that credit agencies provide and carefully examine each muni bond we consider for purchase.

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Yield and share price will vary with changes in interest rates and market conditions. Investors should note that if interest rates rise significantly from current levels, bond fund total returns will decline and may even turn negative in the short term. Some income may be subject to the federal alternative minimum tax.

The T. Rowe Price Tax-Free Income Fund received an Overall Morningstar RatingTM of 4 stars for its risk-adjusted performance. Morningstar rated this fund among 204, 204, 185, and 151 muni national long funds for the overall rating and the 3-, 5-, and 10-year periods (as applicable) ended 12/31/14, respectively. The Overall Morningstar RatingTM is derived from a weighted average of the performance figures associated with a fund's 3-, 5-, and 10-year (if applicable) Morningstar RatingTM metrics.

For funds with at least a 3-year history, a Morningstar RatingTM is based on a risk-adjusted return measure (including the effects of sales charges, loads, and redemption fees) with emphasis on downward variations and consistent performance. The top 10% of funds in each category receive 5 stars, the next 22.5% 4 stars, the next 35% 3 stars, the next 22.5% 2 stars, and the bottom 10% 1 star. Each share class is counted as a fraction of 1 fund within this scale and rated separately. The Morningstar RatingTM is for the retail share class only; other classes may have different performance characteristics. The fund received 4, 3, and 4 stars for the 3-, 5-, and 10-year periods ended 12/31/14, respectively.

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