Fixed Income

FHYRX Franklin High Yield Tax-Free Income Fund

Tax-Free Income. Monthly income exempt from federal income taxes.
Broad access. Invests across all sectors and maturities within the investment grade rated municipal bond universe.
Portfolio diversification. Can be used as a core portfolio holding, providing diversification from equities.

Overview

See the risks and other important information.

Fund Facts

Fund description

The fund seeks to provide a high current yield exempt from regular federal income taxes. Its secondary goal is capital appreciation to the extent possible and consistent with the fund's principal investment goal.

Benchmark: Bloomberg Municipal Bond Index
Fund Inception Date: 03/18/1986
Dividend Frequency, if any: Monthly
Distribution Rate at NAV⁴As of 09/17/2026 (Updated Daily): 4.76%
30-Day SEC Yield—With Waiver^5,6,7As of 08/31/2026 (Updated Monthly): 4.65%
30-Day SEC Yield—Without Waiver^6,7As of 08/31/2026 (Updated Monthly): 4.65%
Taxable Equivalent Yield—With WaiverAs of 08/31/2026 (Updated Monthly): 7.85%
Taxable Equivalent Yield—Without WaiverAs of 08/31/2026 (Updated Monthly): 7.85%

Sales Charges, Expenses & Fees

As of 07/01/2026

Gross Expense Ratio: 0.51%
Net Expense Ratio⁸: 0.51%
Maximum Initial Charge: —
CDSC: N/A
12b-1 Fee: N/A

Identifiers

Ticker: FHYRX
Fund Number: 8130
CUSIP Code: 354724585

Average Annual Total Returns As of 08/31/2026

View performance section for additional info As of 08/31/2026

Class R6

With Sales Charge (POP)

Without Sales Charge (NAV)

6.78%1 Year
5.55%3 Years
0.72%5 Years
2.28%10 Years
5.41%Since Inception
03/18/1986

Performance data quoted represents past performance, which does not guarantee future results. Current performance may be lower or higher than the figures shown. Principal value and investment returns will fluctuate, and investors' shares, when redeemed, may be worth more or less than the original cost. Performance would have been lower if fees had not been waived in various periods. Total returns assume the reinvestment of all distributions and the deduction of all Fund expenses. Returns with sales charge reflect a deduction of the stated maximum sales charge. Returns without sales charge would have been lower had sales charges been reflected. An investor cannot invest directly in an index, and unmanaged index returns do not reflect any fees, expenses or sales charges. Returns for periods of less than one year are not annualized.

See the risks and other important information.

Top Sectors

View portfolio section for additional info

As of 08/31/2026 % of Total (Updated Monthly)

Top Sectors
Special Tax31.31%
Housing15.33%
Health Care13.12%
Industrial Dev. Revenue and Pollution Control10.25%
Transportation7.85%

Additional Fund Info

Share Class Inception Date: 08/01/2017
Investment Style: Municipals
Lipper Classification: High Yield Municipal Debt Funds
Morningstar Category⁹: High Yield Muni

Manager and Commentary

About the Team

Franklin Templeton Fixed Income

A global leader in fixed income, the team strives to provide consistent and resilient returns by combining deep fundamental research with rigorous portfolio construction. This solutions-driven approach means maintaining portfolio and risk exposures that align with client expectations.

Commentary Highlights

June 30, 2026

Markets : In the second quarter of 2026, new issuance of municipal (muni) bonds continued at a pace of more than 8% ahead of last year. By quarter-end, the yield on the benchmark 10-year (UST) had risen by 15 basis points (bps) to 4.47%, and the yield on the 30-year UST bond stood four bps higher at 4.95%. The June Federal Open Market Committee (FOMC) meeting was the first held under new Federal Reserve Chair Kevin Warsh. The FOMC left the policy rate unchanged at 3.50%-3.75%, but the meeting delivered a notable split: the dot plot and Summary of Economic Projections turned more hawkish and the statement removed the prior easing guidance, while Chair Warsh's press conference leaned dovish.
Contributors : Overweight allocation to muni bonds with 20 or more years to maturity, an overweight allocation to muni bonds with no external credit rating and an overweight to bonds rated below investment grade.
Detractors : Underweight allocation to muni bonds with two to five years to maturity, security selection in AA rated bonds and an underweight allocation to A rated bonds.
Outlook : Municipal bond valuations continue to appear attractive relative to other fixed income sectors, particularly for tax-sensitive investors seeking durable income in a normalized rate environment. In a more challenging environment, strong bottom-up research and disciplined security selection will be essential to identifying relative value and preserving portfolio quality.

For complete information, please see the full commentary:

Franklin Templeton Fixed Income

Managed Fund Since 2020

Managed Fund Since 2024

Managed Fund Since 2004

Managed Fund Since 2009

Latest Insights

September 9, 2026

Global Macro Insights: August 2026

September 8, 2026

Municipal Bond Market Monthly Brief: August 2026

August 31, 2026

On My Mind: Rearranging the Debt Chairs

August 17, 2026

Balanced Budgets, Uneven Pressures

Performance

Portfolio

Distributions & Tax

Pricing

Documents

Important Information

Total Returns include change in share price, assume reinvestment of all distributions, and reflect the deduction of fund expenses and applicable fees. Total returns, distribution rate, and yields reflect any applicable expense reductions and fee waivers; without these reductions, the results would have been lower.

Franklin Distributors, LLC. Member FINRA, SIPC. All entities mentioned are Franklin Templeton affiliated companies. Investment Products: NOT FDIC INSURED | NO BANK GUARANTEE | MAY LOSE VALUE.
Reports and other information about the funds are available on the EDGAR Database on the SEC's Internet site at www.sec.gov.

Most funds offer multiple share classes. Share classes are subject to different fees and expenses, which will affect their performance.

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Certain share classes are only offered to eligible investors as stated in the prospectus. Different minimums may apply to clients of certain service agents. All classes of shares are not available through all distribution channels. See the Fund's prospectus for additional information.

Important data provider notices and terms available at www.franklintempletondatasources.com.

Performance data quoted represents past performance, which does not guarantee future results.

CFA® and Chartered Financial Analyst® are trademarks owned by CFA Institute.

Indexes are unmanaged and one cannot invest directly in an index. They do not reflect any fees, expenses or sales charges.

Investors should carefully consider a fund's investment goals, risks, sales charges and expenses before investing. The prospectus contains this and other information. Please read the prospectus carefully before investing or sending money.

The Bloomberg Municipal Bond Index is a broad measure of the municipal bond market with maturities of at least one year.
Source: Bloomberg Indices.

Click here for funds sales charge and breakpoint information.

Footnotes

Net Asset Value - the amount per share you would receive if you sold shares that day. NAV Change indicates a change in the Net Asset Value from the previous business day.
Figures are aggregate total return figures, have not been annualized and represent the change in value of an investment over the period indicated.
The Morningstar Rating™ for funds, or “star rating”, is calculated for managed products with at least a three-year history, and subject to change monthly. 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 is derived from a weighted average of the performance figures associated with its three-, five-, and 10-year (if applicable) Morningstar Rating metrics. The weights are: 100% three-year rating for 36-59 months of total return, 60% five-year rating/40% three-year rating for 60-119 months of total returns, and 50% 10-year rating/30% five-year rating/20% three-year rating for 120 or more months of total return. While the 10-year overall star rating formula seems to give the most weight to the 10-year period, the most recent three-year period actually has the greatest impact because it is included in all three rating periods. Ratings do not take into account the effects of sales charges and loads. Morningstar Rating is for the specified share class(es) only; other classes may have different performance characteristics. ©2025 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.
Distribution Rate is calculated by annualizing the most recent distribution amount paid, divided by the NAV as of the date indicated. The Distribution Rate calculation includes income and excludes special distributions. The Distribution Rate is subject to change and is not guaranteed nor a quotation of fund performance.
With Waiver means the performance quote reflects any applicable expense reductions and fee waivers.
During periods of rising inflation, fund yields can vary significantly from month-to-month and may not be repeated.
30-Day SEC Yield is calculated using the net income (interest and dividends) per share earned over a trailing 30-day period (annualized), divided by the fund’s share price at the end of that period. It may not equal the fund’s actual income distribution rate, which reflects the fund’s past dividends paid to shareholders.
Net Expense Ratio represents the expense ratio applicable to investors.
©2026 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.

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