T. Rowe Price Tax-Free High Yield Fund, Inc. | T. Rowe Price Tax-Free High Yield Fund, Inc.

T. Rowe Price Tax-Free High Yield Fund

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.

Fees and Expenses

This table describes the fees and expenses that you may pay if you buy and hold shares of the fund.

Fees and Expenses of the Fund

Shareholder fees (fees paid directly from your investment)

Shareholder Fees - (USD $)		T. Rowe Price Tax-Free High Yield Fund, Inc.
Maximum sales charge (load) imposed on purchases		none
Maximum deferred sales charge (load)		none
Redemption fee (as a percentage of amount redeemed on shares held for 90 days or less)	^[1]	2.00%
Maximum account fee	^[2]	20

[1]	Applies to any shares purchased on or after August 15, 2011.
[2]	Subject to certain exceptions, accounts with a balance of less than $10,000 are charged an annual $20 fee.

Annual fund operating expenses
(expenses that you pay each year as a
percentage of the value of your investment)

Annual Fund Operating Expenses -	T. Rowe Price Tax-Free High Yield Fund, Inc.
Management fees	0.60%
Distribution and service (12b-1) fees	none
Other expenses	0.08%
Total annual fund operating expenses	0.68%

Example

This example is intended to help you compare the cost of investing in the fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in the fund for the time periods indicated and then redeem all of your shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the fund's operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be:

Expense Example - (USD $)	1 Year	3 Years	5 Years	10 Years
T. Rowe Price Tax-Free High Yield Fund, Inc.	69	218	379	847

Portfolio Turnover

The fund pays transaction costs, such as commissions, when it buys and sells securities (or "turns over" its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, affect the fund's performance. During the most recent fiscal year, the fund's portfolio turnover rate was 24.0 % of the average value of its portfolio.

Investments, Risks, and Performance

Principal Investment Strategies

The fund invests primarily in long-term municipal securities and its weighted average maturity is expected to normally exceed 10 years. The fund invests a substantial portion of its assets in below investment-grade (or "junk") municipal bonds and may buy bonds in default as long as they do not exceed 10% of total assets. Normally, at least 80% of the fund's income will be exempt from federal income taxes. However, up to 20% of the fund's income could be derived from securities subject to the alternative minimum tax .

Investment decisions for the fund reflect the portfolio manager's outlook for interest rates and the economy, as well as the prices , yields , and credit qualityof various securities. This approach is designed to help the portfolio manager capture appreciation opportunities when rates are falling and reduce the impact of falling bond prices when rates are rising. For example, if interest rates are expected to fall, the fund may purchase longer-term securities in an attempt to seek higher yields and/or capital appreciation. Conversely, if interest rates are expected to rise, the fund may seek securities with shorter maturities. And if our economic outlook is positive or if valuations for lower-quality bonds are attractive, the portfolio manager may take advantage of the fund's "basket" for noninvestment-grade bonds.

From time to time, the fund may invest a significant portion of its assets in sectors with special risks, such as hospitals, electric utility, or private activity bonds. 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 securities.

Principal Risks

As with any mutual fund, there is no guarantee that the fund will achieve its objective. The fund's share price fluctuates, which means you could lose money by investing in the fund. The principal risks of investing in this fund are summarized as follows:

Active management risk The fund is subject to the risk that the investment adviser's judgments about the attractiveness, value, or potential appreciation of the fund's investments may prove to be incorrect. If the securities selected and strategies employed by the fund fail to produce the intended results, the fund could underperform other funds with similar objectives and investment strategies.

Credit risk This is the risk that an issuer of a debt security could suffer an adverse change in financial condition that results in a payment default, security downgrade, or inability to meet a financial obligation. Economic downturns often result in reduced levels of taxes collected and revenues earned for municipalities. This, in turn, lessens the financial strength of a municipality and increases the credit risk of the securities it issues.

The fund is exposed to much greater credit risk than most other municipal bond funds because of its focus on below investment-grade ("junk") bonds. Municipalities issuing junk bonds are usually not as strong financially and are more likely to suffer an adverse change in financial condition. As a result, junk bonds carry a higher risk of default and should be considered speculative .

Interest rate risk This is the risk that a rise in interest rates will cause the price of a fixed rate debt security to fall. Generally, the longer the maturity of a security or weighted average maturity of a fund, the greater the interest rate risk.

Municipal securities risk The fund will be highly impacted by events tied to the overall municipal securities markets, which can be very volatile and significantly affected by unfavorable legislative or political developments and adverse changes in the financial conditions of municipal securities issuers. Income from municipal securities held by the fund could be declared taxable because of changes in tax laws or interpretations by taxing authorities, or noncompliant conduct of a municipal security issuer. In addition, a portion of the fund's otherwise tax-exempt dividends may be taxable to those shareholders subject to the alternative minimum tax. Any fund investments in obligations of Puerto Rico or U.S. territories involve additional credit and tax risks .

Certain sectors of the municipal bond market have special risks that can impact such sectors more significantly than the market as a whole. For example, health care can be hurt by rising expenses and dependency on third party reimbursements, electric utilities are subject to governmental rate regulation, and private activity bonds rely on project revenues and the creditworthiness of the corporate user as opposed to governmental support.

Liquidity risk This is the risk that the fund may not be able to sell a security in a timely manner at a desired price . The fund may experience heavy redemptions, particularly during periods of declining or illiquid markets, which could cause the fund to liquidate its assets at inopportune times or at a depressed value and affect the fund's ability to maintain a $1.00 share price. In addition, the fund may suspend redemptions when permitted by applicable regulations. The secondary market for certain municipal bonds tends to be less developed and liquid than many other securities markets, which may adversely affect the fund's ability to sell such municipal bonds at attractive prices.

Performance

The bar chart showing calendar year returns and the average annual total returns table indicate risk by illustrating how much returns can differ from one year to the next and how fund performance compares with that of a comparable market index. The fund's past performance (before and after taxes) is not necessarily an indication of future performance.

The fund can also experience short-term performance swings, as shown by the best and worst calendar quarter returns during the years depicted.

Tax-Free High Yield Fund

Calendar Year Returns

	*Quarter*	*Total*
	Ended	Return
Best Quarter	9/30/09	13.13%
Worst Quarter	12/31/08	-15.99%
The fund's return for the three months ended 3/31/11 was -0.47%.

In addition, the average annual total returns table shows hypothetical after-tax returns to suggest how taxes paid by a shareholder may influence returns. After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on an investor's tax situation and may differ from those shown. After-tax returns shown are not relevant to investors who hold their fund shares through tax-deferred arrangements, such as a 401(k) account or individual retirement account .

Average Annual Total Returns

Periods ended

December 31, 2010

Average Annual Total Returns - T. Rowe Price Tax-Free High Yield Fund, Inc.	1 Year	5 Years	10 Years
T. Rowe Price Tax-Free High Yield Fund, Inc.	3.91%	2.52%	4.35%
T. Rowe Price Tax-Free High Yield Fund, Inc. Returns after taxes on distributions	3.90%	2.51%	4.34%
T. Rowe Price Tax-Free High Yield Fund, Inc. Returns after taxes on distributions and sale of fund shares	4.43%	2.90%	4.49%
Barclays Capital Revenue Municipal Bond Index	2.57%	3.77%	4.89%
Lipper High Yield Municipal Debt Funds Average	3.83%	1.08%	3.66%

Updated performance information is available through troweprice.com or may be obtained by calling 1-800-225-5132.