Virginia Tax - Free Bond Fund - T. Rowe Price · Virginia Tax-Free Bond Fund ... calculate a municipal bond’s taxable-equivalent yield, ... rate demand notes considered by T. Rowe

February 28, 2018

ANNuAlREPORT

Virginia Tax-Free Bond Fund

Virginia Tax-Free Bond Fund– I Class

T. Rowe PRICe

The fund primarily invests in high-quality Virginia municipal bonds and is well suited for investors seeking income that is exempt from federal and Virginia state income taxes.

PRVAX

TFBVX

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HIGHLIGHTS

• Municipalbondsproducedmoderategainsduringthefund’s12-monthreportingperiod,supportedbysteadydemand.Longer-termmunicipalbondsoutperformedshorter-termsecurities,andlower-qualitydebtgenerallyoutpacedhigher-qualityissuesasinvestorssoughthigheryields.

• TheVirginiaTax-FreeBondFundproducedpositivereturnsduringitsfiscalyearandoutperformeditspeergroupaverage.Thefund’srevenuebondoverweightandcautiousapproachtointerestrateriskcontributedtosolidresults.

• Virginia’screditratings—AAAatallthreemajorratingagencies—reflectitsrelativelyfavorablefiscalposition,pensionconcernsnotwithstanding.However,inApril2017,S&Pplacedthestateonanegativeoutlookbasedontherecentstructuralbudgetimbalance.

• Whilehigheryieldsweighonbondprices,municipalbondsshouldbelesssusceptibletoslowlyrisingratesthanTreasuriesgiventheirattractivetax-equivalentyieldsandthesteadydemandfortax-exemptincome.

T. Rowe Price Virginia Tax-Free Bond Fund

TheviewsandopinionsinthisreportwerecurrentasofFebruary28,2018.They are not guarantees of performance or investment results andshouldnotbe takenas investmentadvice. Investmentdecisionsreflectavarietyof factors,and themanagers reserve the right tochange theirviews about individual stocks, sectors, and the markets at any time.As a result, the views expressed should not be relied upon as a fore-castof the fund’s future investment intent.Thereport iscertifiedunderthe Sarbanes-Oxley Act, which requiresmutual funds and other publiccompanies to affirm that, to the best of their knowledge, the informa-tionintheirfinancialreportsisfairlyandaccuratelystatedinallmaterialrespects.

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Manager’s Letter

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Fellow Shareholders

Tax-free municipal bonds produced moderate gains but outperformed taxable bonds

as Treasury interest rates increased in the 12-month period ended February 28, 2018.

The Bloomberg Barclays Municipal Bond Index returned 2.50% versus 0.51% for the

Bloomberg Barclays U.S. Aggregate Bond Index. Throughout most of our fiscal year,

municipal securities were supported by strong demand and limited issuance. However,

there was a surge of new supply in late 2017, as municipalities accelerated issuance

amid uncertainty surrounding tax reform and its possible impact on municipal bonds.

The Virginia Tax-Free Bond Fund outperformed its peer group in the 12-month

period, and the fund’s longer-term relative performance record remains favorable.

ECONOMY AND INTEREST RATES

According to the most recent estimate, the U.S. economy expanded at a solid 2.5% annual rate in the fourth quarter of 2017, in line with the average over the first three quarters of the year. The U.S. labor market has been healthy, with the national unemployment rate holding at a 17-year low of 4.1% in the last few months. Inflation, while still low, is rising from its mid-2017 low and is likely to increase further in 2018 amid rising wages and expectations for stronger economic growth.

Citing the strengthening labor market and expectations that inflation would move higher over the medium term, the Federal Reserve raised short-term interest rates three times over the last year, lifting the federal funds target rate to a range of 1.25% to 1.50% by the end of February 2018. After our reporting period ended, the Fed raised rates again at its March 20–21 monetary policy meeting; the central bank is expected to raise rates at least two more times in 2018. Additionally, in October 2017, the Fed began the process of slowly unwinding its $4.5 trillion balance sheet, a legacy of its massive purchases of Treasury bonds

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and mortgage-backed securities in the aftermath of the 2008 financial crisis, by slowing reinvestment of principal payments from its holdings.

In the closing months of our reporting period, the 10-year Treasury note yield climbed to a four-year high in anticipation of faster economic growth and higher inflation stemming from tax cuts, increased government spending, and stronger wage growth. Yields on short- and

intermediate-term municipal securities also increased over the last year, as the Fed continued to gradually reverse its highly accommodative monetary policy. Long-term yields rose only slightly as the yields on 30-year municipal bonds rated AAA were virtually unchanged from 12 months ago. The result was a flatter municipal yield curve. At the end of February, high-quality 30-year muni yields were modestly lower than the 30-year Treasury yield but still offer relative value for many fixed income investors on an after-tax basis.

As an illustration of their relative attractiveness, on February 28, 2018, the 3.06% yield offered by a 30-year tax-free general obligation (GO) bond rated AAA was about 98% of the 3.13% pretax yield offered by a 30-year Treasury bond. Including the 3.8% net investment income tax that took effect in 2013 as part of the Affordable Care Act (ACA), the top marginal federal tax rate (after tax reform) stood at 40.8%. An investor in this tax bracket would need to invest in a taxable bond of similar credit quality and maturity yielding about 5.17% to receive the same after-tax income as that generated by the municipal bond. (To calculate a municipal bond’s taxable-equivalent yield, divide the yield by the quantity of 1.00 minus your federal tax bracket expressed as a decimal—in this case, 1.00–0.408, or 0.592.)

2/28/17 2/28/185/17 8/17 11/17

Municipal Yields

Sources: Municipal Market Data and T. Rowe Price Associates.7-day yields consist of the average of all municipal variablerate demand notes considered by T. Rowe Price to be eligiblemoney market fund investments.

30-Year AAA General Obligation

7-Day Municipal Securities

5-Year AAA General Obligation

0

1

2

3

4

5

6%

3

Despitelownominalyields,municipalbondsremainattractiveforinvestorsfacinghighincometaxes.Theinterestincomefromatax-freemunicipalbondisexemptfromfederalincometaxes.*Inaddition,moststatesandcitiesdonottaxincomeearnedontheirownbondsfortheirresidents.Amunicipalbondcould,therefore,betriple-tax-free—exemptfromfederal,state,andlocaltaxes.Tax-freemunicipalbondincomeisalsoexemptfromanetinvestmentincometaxthattookeffectin2013,inwhicha3.8%taxisimposedonthelesserofyourtotalnetinvestmentincomeoryourmodifiedadjustedgrossincomeinexcessof$250,000formarriedcouplesfilingjointlyor$200,000forsingleindividuals.

Eventhoughmunistypicallypaylessthantaxableissues,investorsinthehighesttaxbracketsarelikelytorealizehigherafter-tax,bottom-lineresultsfromtax-exemptsecurities.Asyoucanseeinthetablebelow,whichreflectsthechangesinthe2017taxreformlegislation,aninvestorinthe32%federaltaxbracketwouldneedtopurchaseataxablesecurityyielding7.4%tomatchtheafter-taxreturnofamunicipalsecurityyielding5.0%.

Factoringinstateandlocalincometaxrates—which,ofcourse,varywidely—makescalculatingthetaxable-equivalentyieldmorecomplicated.However,thetaxable-equivalentyieldslistedinthetablewouldbeevenhigher.Thisunderscorestheadvantageoftax-freeincomeprovidedbymunicipalsecurities.

Tax-Exempt Yields and Taxable-Equivalent Yields

Tax-Exempt Yields

Taxable-Equivalent Yields

Your Federal Marginal Tax Bracket

22.0% 24.0% 32.0% 35.8%** 38.8%** 40.8%**

1.0% 1.3% 1.3% 1.5% 1.6% 1.6% 1.7%

1.5 1.9 2.0 2.2 2.3 2.5 2.5

2.0 2.6 2.6 2.9 3.1 3.3 3.4

2.5 3.2 3.3 3.7 3.9 4.1 4.2

3.0 3.8 3.9 4.4 4.7 4.9 5.1

3.5 4.5 4.6 5.1 5.5 5.7 5.9

4.0 5.1 5.3 5.9 6.2 6.5 6.8

4.5 5.8 5.9 6.6 7.0 7.4 7.6

5.0 6.4 6.6 7.4 7.8 8.2 8.4

*Somemunicipalbondincomemaybesubjecttothefederalalternativeminimumtax(AMT).**Thesefederalmarginaltaxbracketsincludeanadditional3.8%netinvestmentincometax.Some

filersinthe24%and32%bracketsmayalsobeaffectedbythenetinvestmentincometax.Note: When comparing yields in this manner, make sure to compare securities or mutual funds of similar credit quality and maturity or the comparison will not be valid. This chart is for illustrative purposes only and does not represent the performance of any specific security.

When Less Is Really More

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MUNICIPAL MARKET NEWS

According to The Bond Buyer, total municipal bond issuance in 2017 was approximately $436 billion, about 3% lower than 2016’s record total. Supply spiked in the fourth quarter as issuers rushed to bring new deals ahead of any potential tax law changes, but mostly positive fund flows helped absorb the new supply. The quarter was marked by concerns that the new tax law would no longer allow the tax-exempt issuance of private activity bonds (PABs), which can be used to fund projects such as hospitals and airports. Ultimately, the new tax law eliminated advance refundings, which had allowed issuers to refinance existing debt with new bonds, but PAB issuers retained their ability to issue tax-exempt debt. Issuance in the first two months of 2018 was meager because municipalities had accelerated a substantial amount of planned 2018 issuance into late 2017.

Generally, fundamentals for municipal issuers remain solid, and most issuers in the $3.8 trillion municipal bond market have been fiscally responsible. State and local governments, in general, have been cautious about adding to indebtedness since the 2008–2009 financial crisis, and a strengthening economy has helped tax revenues rebound. Over 60% of the market, as measured by the Bloomberg Barclays Municipal Bond Index, is AAA or AA rated.

Although the market is overwhelmingly high quality, many states and municipalities are grappling with underfunded pensions and other post-employment benefit (OPEB) obligations. New reporting rules from the Governmental Accounting Standards Board are bringing greater transparency to state and local governments’ pension funding gaps, long-term risks that investors often overlooked in the past.

Bonds from some troubled municipal issuers, such as Illinois and New Jersey, outperformed the broad municipal market over the last 12 months, as their higher yields attracted investors. In October, Illinois issued a total of $6 billion of new bonds to help pay a portion of the backlog of bills it ran up during its multiyear budget standoff that was finally resolved in July 2017. Illinois has the lowest credit rating of any state and was teetering on the verge of a downgrade to the below investment-grade category before passing a budget.

Puerto Rico’s debt remained under pressure, and its long path to recovery was derailed by the catastrophic damage caused by Hurricane Maria last September. Even before the storm, Puerto Rico was in bankruptcy as the financial oversight board had filed petitions with the U.S. District Court seeking help with what could amount to the largest restructuring of municipal debt in U.S. history.

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Longer-term municipal bonds outperformed shorter-term securities over the year, and lower-quality debt generally outpaced higher-quality issues as investors sought higher yields. Most major segments of the municipal market generated positive returns. Revenue bonds outperformed general obligation debt, but prerefunded bonds were flat as rising short-term yields offset income. All subsectors of investment-grade revenue bonds produced positive returns, led by industrial/pollution control, hospital, and leasing revenue debt, while the special tax and power subsectors lagged the broader index. High yield tobacco debt outperformed other municipal segments, returning more than 7% during our fiscal year.

VIRGINIA MARKET NEWS

Virginia’s economy remains predominantly sound. The common-wealth’s 3.7% unemployment rate in December 2017 was down slightly from 4.1% a year earlier and is lower than the 4.1% national rate. Virginia’s population continues to grow steadily at about 0.5% per year, and Virginians remain relatively wealthy, with per capita income in 2017 that is 108% of the national average and ranks 12th among the states. However, at 0.7%, employment growth in the commonwealth over the past year has been slow, trailing the national growth rate of 1.2%.

For the fiscal year ended June 30, 2017, general fund revenues (at $20 billion) grew by 2.6% compared with the prior year and were favorably above final budget expectations. Most of the outperformance was due to higher-than-expected personal income tax collections. Expenditures, however, grew at a higher rate (3.3%), which led to fiscal year 2017 ending with a $252 million, or 1.3%, deficit. The 2017 amended budget bill, which covers fiscal 2018, makes reductions to general fund spending while also increasing revenues.

Despite these measures, a budget shortfall is projected for fiscal 2018, necessitating continued transfers from reserves built up over prior years to offset the gap. Fortunately, state tax revenues have remained strong in fiscal 2018. Collections for the first seven months of fiscal 2018 are up 5.8% from the same period in the prior year and remain above forecast growth of 3.4%. It is important to note, however, that some of this outperformance may be a result of the recent tax reform legislation, as individuals tried to realize discretionary income in 2017.

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Virginia has historically enjoyed a favorable reserve profile, although recent budgetary shortfalls have reduced the size of the Revenue Stabilization Fund. This “rainy day” fund held $549 million, or 2.7% of revenues, as of June 30, 2017. Another withdrawal from the fund is budgeted in fiscal year 2018, bringing its expected balance down to $282 million. While the commonwealth’s fiscal position compares favorably with that of other states, we are keeping a close eye on monthly revenue performance versus the budget. Officials have been proactive in managing Virginia’s finances, and we continue to take comfort in their solid record of fiscal stewardship.

Virginia’s debt burden has grown but is still manageable. The commonwealth has $12.5 billion of total net tax-supported debt outstanding, ranking it in the top half among states when measured by debt per capita and debt relative to personal income, according to Moody’s Investors Service. While Virginia does not face as dire a crisis in pension liabilities as some other states, we are concerned at the growth in the unfunded portion of its pension system.

As of June 30, 2017 (the most recent data available), the Virginia Retirement System (VRS) was funded at 77%. The unfunded portion of the VRS was high, at $21 billion, but fell during the most recent fiscal year as pension assets achieved strong returns. Virginia’s unfunded liabilities associated with OPEB are modest in comparison with other states. The state’s credit ratings—AAA at all three major rating agencies—reflect its relatively favorable fiscal position, pension concerns notwithstanding. However, in April 2017, S&P placed Virginia on a negative outlook based on the recent structural imbalance. Government officials appear to be appropriately focused on resolving S&P’s concerns as part of fiscal 2019 budget negotiations.

PORTFOLIO REVIEW

The Virginia Tax-Free Bond Fund returned 2.53% for the 12-month period ended February 28, 2018, outperforming the Lipper Virginia Municipal Debt Funds Average, which returned -0.66%. (Performance varies for the I Class shares, reflecting their different fee structure.) The fund lost ground over the most recent six months but held up better than its peer group average. We outperformed our peers for both periods on the strength of the portfolio’s concentration in revenue bonds and our overall caution on interest rate risk.

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The fund’s longer-term performance is also solid, placing it in the top decile in its peer group over the past 3- and 10-year periods and top quintile for the five-year period. Based on cumulative total returns, Lipper ranked the Virginia Tax-Free Bond Fund 4 of 32, 3 of 30, 3 of 27, and 2 of 23 funds in the Virginia municipal debt funds universe for the 1-, 3-, 5-, and 10-year periods ended February 28, 2018, respectively. (Past performance cannot guarantee future results.)

Our lingering concern about the risk of rising interest rates paid dividends in the second half of our fiscal year as rates rose. While our average maturity extended somewhat to 17.0 years, our duration—a measure of the fund’s sensitivity to changes in interest rates—fell to 4.4 years, a conservative level compared with a representative sampling of our peers. We added to our longer-maturity holdings during the 12-month period but offset any increase in risk that came from holding these longer positions

TotalReturnPeriodsEnded2/28/18 6Months 12Months

VirginiaTax-FreeBondFund -0.59% 2.53%

VirginiaTax-FreeBondFund–IClass -0.54 0.77*

LipperVirginiaMunicipalDebtFundsAverage -2.91 -0.66

*Sinceinception7/6/17.

Performance Comparison

PeriodsEnded 8/31/17 2/28/18

VirginiaTax-FreeBondFundSharePrice $12.08 $11.82

DividendsPerShare For6months 0.19 0.19

For12months 0.38 0.38

SECYield(30-day) 1.79% 2.17%

VirginiaTax-FreeBondFund–IClassSharePrice $12.08 $11.82

DividendsPerShare For6months – 0.19

Sinceinception7/6/17 0.06 0.25

SECYield(30-day) 1.86% 2.26%

SECYield(30-day)–Unsubsidized* 1.86 2.26

WeightedAverageMaturity(years) 16.7 17.0

WeightedAverageDuration(years) 4.6 4.4

12-monthdividendsmaynotequalthecombined6-monthfiguresduetorounding.

*ThefundoperatesundercontractualexpenselimitationsthatexpireonJune30,2019.Pleaseseetheprospectusformoredetails.

Portfolio Characteristics

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with a good concentration of securities on the front end of the yield curve, including a healthy store of high-quality, short-maturity prerefunded securities. While we are not overly bearish on interest rates, we do believe that rates will move higher gradually over time. As such, we expect to maintain our mildly defensive interest rate posture.

At the sector level, our revenue bond overweight and our concentration in transportation and health care bonds, both long-term strategic positions, enhanced our overall absolute and relative returns. Both sectors are excellent sources of above-average yield. In the transportation sector, we added to our existing positions in Metropolitan DC Airport Authority and Interstate 95 Express Lanes, and we initiated new positions in Interstate 66 P3 Project and Hampton Roads Transportation Accountability Commission. The tolls on newly constructed lanes for the I-95 and

PercentofNetAssets 8/31/17 2/28/18

Transportation 25.0% 24.0%

HealthCare 19.9 19.2

Prerefunded 13.7 15.0

Education 11.4 11.5

WaterandSewer 12.2 10.7

SpecialTax 5.4 6.5

Housing 2.9 2.9

GeneralObligation–Local 3.0 2.4

OtherAssetsandReserves 6.5 7.8

Total 100.0% 100.0%

Historicalweightingsreflectcurrentindustry/sectorclassifications.

Portfolio Diversification

AAA16%BBB

13%

BB andBelow

1%

A14%

AA49%

Not Rated7%

Based on net assets as of 2/28/18.Sources: Moody’s Investors Service; if Moody’s does not rate a security, then Standard & Poor’s (S&P) is used as a secondary source. When available, T. Rowe Price will use Fitch for securities that are not rated by Moody’s or S&P. T. Rowe Price does not evaluate these ratings but simply assigns them to the appropriate credit quality category as determined by the rating agency. Prerefunded securities are rated based on their current prerefunded status, regardless of which nationally recognized statistical rating organization provided the original rating.

Quality Diversification

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I-66 projects provide the financial support for these bonds. Among our top-performing bonds for the year were a number of securities in both health care and transportation. (Please refer to the fund’s portfolio of investments for a complete list of holdings and the amount each represents in the portfolio.)

With regard to the portfolio’s credit quality, our transportation and health care additions tended to be lower quality, though still a good value in our view. Our health care sector additions were mostly securities from continuing care retirement facilities that came to market without published ratings. As with every security we purchase, we rate all new purchases internally and do not rely on the opinions of the rating agencies. Even with these new additions to the portfolio, our overall credit quality weightings did not change significantly during the period as maturing bonds leaving the portfolio canceled out any additions.

OUTLOOK

We believe that the municipal bond market remains a high-quality market that offers good opportunities for long-term investors seeking tax-free income. While the uncertainty around the long-term impacts of tax reform and the increased chance of rising yields represent near-term headwinds for broad muni market performance, we believe fundamentals are sound overall, and global economic uncertainties could spur demand for the asset class. As the Fed continues on the path to interest rate normalization, muni bond yields are likely to rise along with Treasury yields—although probably not to the same extent. While higher yields pressure bond prices, munis should be less susceptible to slowly rising rates than Treasuries given their attractive tax-equivalent yields and the steady demand for tax-exempt income. We expect any potential Fed rate increases to be gradual and believe we could remain in a relatively low rate environment for some time.

While we believe that many states deserve high credit ratings and will be able to continue servicing their debts, we have longer-term concerns about significant funding shortfalls for pensions and OPEB obligations in some jurisdictions. These funding gaps stem from investment losses during the 2008–2009 financial crisis, insufficient plan contributions over time, and unrealistic return assumptions. Although few large plans are at risk of insolvency in the near term, the magnitude of unfunded liabilities is becoming more conspicuous in a few states.

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Ultimately, we believe independent credit research is our greatest strength and will remain an asset for our investors as we navigate the current market environment. As always, we focus on finding attractively valued bonds issued by municipalities with good long-term fundamentals—an investment strategy that we believe will continue to serve our investors well.

Thank you for investing with T. Rowe Price.

Respectfully submitted,

Hugh D. McGuirkChairman of the fund’s Investment Advisory Committee

March 21, 2018

The committee chairman has day-to-day responsibility for managing the portfolio and works with committee members in developing and executing the fund’s investment program.


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Risks of Investing in Fixed Income Securities

Bondsaresubjecttointerestraterisk(thedeclineinbondpricesthatusuallyaccompaniesariseininterestrates)andcreditrisk(thechancethatanyfundholdingcouldhaveitscreditratingdowngradedorthatabondissuerwilldefaultbyfailingtomaketimelypaymentsofinterestorprincipal),potentiallyreducingthefund’sincomelevelandshareprice.Thefundislessdiversifiedthanoneinvestingnationally.Someincomemaybesubjecttostateandlocaltaxesandthefederalalternativeminimumtax.

Glossary

Bloomberg Barclays Municipal Bond Index:Abroadlydiversifiedindexoftax-exemptbonds.

Bloomberg Barclays U.S. Aggregate Bond Index:Anunmanagedindexthattracksdomesticinvestment-gradebonds,includingcorporate,government,andmortgage-backedsecurities.

Duration:Ameasureofabondfund’ssensitivitytochangesininterestrates.Forexample,afundwithadurationoffiveyearswouldfallabout5%inpriceinresponsetoaone-percentage-pointriseininterestrates,andviceversa.

Federal funds rate (or target rate):TheinterestratechargedonovernightloansofreservesbyonefinancialinstitutiontoanotherintheUnitedStates.TheFederalReservesetsatargetfederalfundsratetoaffectthedirectionofinterestrates.

General obligation (GO) debt: Agovernment’sstrongestpledgethatobligatesitsfullfaithandcredit,including,ifnecessary,itsabilitytoraisetaxes.

Lipper averages: TheaveragesofavailablemutualfundperformancereturnsforspecifiedtimeperiodsincategoriesdefinedbyLipperInc.

Other post-employment benefits (OPEB):Benefitspaidtoanemployeeafterretirement,suchaspremiumsforlifeandhealthinsurance.

Prerefunded bond: AbondthatoriginallymayhavebeenissuedasageneralobligationorrevenuebondbutthatisnowsecuredbyanescrowfundconsistingentirelyofdirectU.S.governmentobligationsthataresufficientforpayingthebondholders.

Revenue (or revenue-backed) bond:Abondissuedtofundspecificprojects,suchasairports,bridges,hospitals,ortollroads,whereaportionoftherevenuegeneratedisusedtoservicetheinterestpaymentsonthebonds.

SEC yield (30-day):Amethodofcalculatingafund’syieldthatassumesallportfoliosecuritiesarehelduntilmaturity.Yieldwillvaryandisnotguaranteed.


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Glossary (continued)

Weighted average maturity: Ameasureofafund’sinterestratesensitivity.Ingeneral,thelongertheaveragematurity,thegreaterthefund’ssensitivitytointerestratechanges.Theweightedaveragematuritymaytakeintoaccounttheinterestratereadjustmentdatesforcertainsecurities.Moneyfundsmustmaintainaweightedaveragematurityoflessthan60days.

Yield curve: Agraphdepictingtherelationshipbetweenyieldsandmaturitydatesforasetofsimilarsecurities.Asecuritywithalongermaturityusuallyhasahigheryield.Ifashort-termsecurityoffersahigheryield,thenthecurveissaidtobe“inverted.”Ifshort-andlong-termbondsareofferingequivalentyields,thenthecurveissaidtobe“flat.”

Note:BloombergIndexServicesLtd.Copyright2018,BloombergIndexServicesLtd.Usedwithpermission.


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Performance and Expenses

Bloomberg Barclays Municipal Bond Index $15,769

Virginia Tax-Free Bond Fund $15,669

As of 2/28/18

2/08 2/142/132/122/112/102/09 2/182/15

V I R G I N I A T A X - F R E E B O N D F U N D

Lipper Virginia Municipal Debt Funds Average $13,953

10,000

13,000

16,000

19,000

22,000

$25,000

Note: Performance for the I Class will vary due to its differing fee structure. See returnstable below.

2/16 2/17

Growth of $10,000

Thischartshowsthevalueofahypothetical$10,000investmentinthefundoverthepast10fiscalyearperiodsorsinceinception(forfundslacking10-yearrecords).Theresultiscomparedwithbenchmarks,whichmayincludeabroad-basedmarketindexandapeergroupaverageorindex.Marketindexesdonotincludeexpenses,whicharedeductedfromfundreturnsaswellasmutualfundaveragesandindexes.

Since InceptionPeriodsEnded2/28/18 1Year 5Years 10Years Inception Date

VirginiaTax-FreeBondFund 2.53% 2.51% 4.59% – –

VirginiaTax-FreeBondFund–IClass – – – 0.77% 7/6/17

Thistableshowshowthefundwouldhaveperformedeachyearifitsactual(orcumulative)returnsfortheperiodsshownhadbeenearnedataconstantrate.Averageannualtotalreturnfiguresincludechangesinprincipalvalue,reinvesteddividends,andcapitalgaindistributions.Returnsdonotreflecttaxesthattheshareholdermaypayonfunddistributionsortheredemptionoffundshares.Pastperformancecannotguaranteefutureresults.Whenassessingperformance,investorsshouldconsiderbothshort-andlong-termreturns.

Average Annual Compound Total Return


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Fund Expense Example

Asamutualfundshareholder,youmayincurtwotypesofcosts:(1)transactioncosts,suchasredemptionfeesorsalesloads,and(2)ongoingcosts,includingmanagementfees,distributionandservice(12b-1)fees,andotherfundexpenses.Thefollowingexampleisintendedtohelpyouunderstandyourongoingcosts(indollars)ofinvestinginthefundandtocomparethesecostswiththeongoingcostsofinvestinginothermutualfunds.Theexampleisbasedonaninvestmentof$1,000investedatthebeginningofthemostrecentsix-monthperiodandheldfortheentireperiod.

Pleasenotethatthefundhastwoshareclasses:Theoriginalshareclass(InvestorClass)chargesnodistributionandservice(12b-1)fee,andtheIClasssharesarealsoavailabletoinstitutionallyorientedclientsandimposeno12b-1oradministrativefeepayment.Eachshareclassispresentedseparatelyinthetable.

Actual ExpensesThefirstlineofthefollowingtable(Actual)providesinformationaboutactualaccountvaluesandexpensesbasedonthefund’sactualreturns.Youmayusetheinformationonthisline,togetherwithyouraccountbalance,toestimatetheexpensesthatyoupaidovertheperiod.Simplydivideyouraccountvalueby$1,000(forexample,an$8,600accountvaluedividedby$1,000=8.6),thenmultiplytheresultbythenumberonthefirstlineundertheheading“ExpensesPaidDuringPeriod”toestimatetheexpensesyoupaidonyouraccountduringthisperiod.

Hypothetical Example for Comparison PurposesTheinformationonthesecondlineofthetable(Hypothetical)isbasedonhypotheticalaccountvaluesandexpensesderivedfromthefund’sactualexpenseratioandanassumed5%peryearrateofreturnbeforeexpenses(notthefund’sactualreturn).Youmaycomparetheongoingcostsofinvestinginthefundwithotherfundsbycontrastingthis5%hypotheticalexampleandthe5%hypotheticalexamplesthatappearintheshareholderreportsoftheotherfunds.Thehypotheticalaccountvaluesandexpensesmaynotbeusedtoestimatetheactualendingaccountbalanceorexpensesyoupaidfortheperiod.

Note:T.RowePricechargesanannualaccountservicefeeof$20,generallyforaccountswithlessthan$10,000.ThefeeiswaivedforanyinvestorwhoseT.RowePricemutualfundaccountstotal$50,000ormore;accountselectingtoreceiveelectronicdeliveryofaccountstatements,transactionconfirmations,prospectuses,andshareholderreports;oraccountsofaninvestorwhoisaT.RowePricePersonalServicesorEnhancedPersonalServicesclient(enrollmentintheseprogramsgenerallyrequiresT.RowePriceassetsofatleast$250,000).Thisfeeisnotincludedintheaccompanyingtable.Ifyouaresubjecttothefee,keepitinmindwhenyouareestimatingtheongoingexpensesofinvestinginthefundandwhencomparingtheexpensesofthisfundwithotherfunds.

Youshouldalsobeawarethattheexpensesshowninthetablehighlightonlyyourongoingcostsanddonotreflectanytransactioncosts,suchasredemptionfeesorsalesloads.Therefore,thesecondlineofthetableisusefulincomparingongoingcostsonlyandwillnothelpyoudeterminetherelativetotalcostsofowningdifferentfunds.Totheextentafundchargestransactioncosts,however,thetotalcostofowningthatfundishigher.


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Beginning Ending ExpensesPaid AccountValue AccountValue DuringPeriod* 9/1/17 2/28/18 9/1/17to2/28/18

Investor ClassActual $1,000.00 $994.10 $2.57

Hypothetical(assumes5%returnbeforeexpenses) 1,000.00 1,022.22 2.61

I ClassActual 1,000.00 994.60 2.08

Hypothetical(assumes5%returnbeforeexpenses) 1,000.00 1,022.71 2.11

*Expensesareequaltothefund’sannualizedexpenseratioforthe6-monthperiod,multipliedbytheaverageaccountvalueovertheperiod,multipliedbythenumberofdaysinthemostrecentfiscalhalfyear(181),anddividedbythedaysintheyear(365)toreflectthehalf-yearperiod.TheannualizedexpenseratiooftheInvestorClasswas0.52%,andtheIClasswas0.42%.

Virginia Tax-Free Bond Fund

Fund Expense Example (continued)


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Since InceptionPeriodsEnded12/31/17 1Year 5Years 10Years Inception Date

VirginiaTax-FreeBondFund 4.71% 2.93% 4.32% – –

VirginiaTax-FreeBondFund–IClass – – – 2.01% 7/6/17

Current performance may be higher or lower 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. For the most recent month-end performance, please visit our website (troweprice.com) or contact a T. Rowe Price representative at 1-800-225-5132 or, for I Class shares, 1-800-638-7890.

Thistableprovidesreturnsnetofexpensesthroughthemostrecentcalendarquarter-endratherthanthroughtheendofthefund’sfiscalperiod.Itshowshowthefundwouldhaveperformedeachyearifitsactual(orcumulative)returnsfortheperiodsshownhadbeenearnedataconstantrate.Averageannualtotalreturnfiguresincludechangesinprincipalvalue,reinvesteddividends,andcapitalgaindistributions.Returnsdonotreflecttaxesthattheshareholdermaypayonfunddistributionsortheredemptionoffundshares.Whenassessingperformance,investorsshouldconsiderbothshort-andlong-termreturns.

Quarter-End Returns

VirginiaTax-FreeBondFund 0.47%

VirginiaTax-FreeBondFund–IClass 0.45

Theexpenseratioshownisasofthefund’sfiscalyearended2/28/17.TheexpenseratioshownfortheVirginiaTax-FreeBondFund–IClassisestimatedasoftheclass’sinceptiondateof7/6/17.Thisnumbermayvaryfromtheexpenseratioshownelsewhereinthisreportbecauseitisbasedonadifferenttimeperiodand,ifapplicable,includesacquiredfundfeesandexpensesbutdoesnotincludefeeorexpensewaivers.

Expense Ratio


17

Financial Highlights For a share outstanding throughout each period

The accompanying notes are an integral part of these financial statements.

Investor Class

Year Ended

2/28/18

2/28/17

2/29/16

2/28/15

2/28/14

NET ASSET VALUE

Beginning of period

$ 11.90

$ 12.21

$ 12.18

$ 11.78

$ 12.34

Investment activities

Net investment income(1)

0.38

0.38

0.41

0.41

0.43

Net realized and unrealized gain / loss

(0.08)

(0.31)

0.03

0.40

(0.56)

Total from investment activities

0.30

0.07

0.44

0.81

(0.13)

Distributions

Net investment income

(0.38)

(0.38)

(0.41)

(0.41)

(0.43)

Net realized gain

–(2)

– –(2)

– – Total distributions

(0.38)

(0.38)

(0.41)

(0.41)

(0.43)

NET ASSET VALUE

End of period $ 11.82 $ 11.90 $ 12.21 $ 12.18 $ 11.78

Ratios/Supplemental Data

Total return(3) 2.53% 0.56% 3.67% 6.97% (0.99)% Ratio of total expenses to average net assets

0.50%

0.47%

0.47%

0.47%

0.48%

Ratio of net investment income to average net assets

3.15%

3.13%

3.36%

3.42%

3.64%

Portfolio turnover rate

9.0%

11.8%

11.0%

6.2%

9.6%

Net assets, end of period

(in millions)

$ 1,218

$ 1,178

$ 1,131

$ 1,000

$ 906

(1) Per share amounts calculated using average shares outstanding method. (2) Amounts round to less than $0.01 per share. (3) Total return reflects the rate that an investor would have earned on an investment in the fund

during each period, assuming reinvestment of all distributions.


18

Financial Highlights


Forashareoutstandingthroughouttheperiod

I Class

7/6/17(1)

Through 2/28/18

NET ASSET VALUE

Beginning of period

$ 11.98

Investment activities

Net investment income(2)

0.23

Net realized and unrealized gain / loss

(0.14)

Total from investment activities

0.09

Distributions

Net investment income

(0.25)

Net realized gain

–(3)

Total distributions

(0.25)

NET ASSET VALUE

End of period $ 11.82

Ratios/Supplemental Data Total return(4) 0.77%

Ratio of total expenses to average net assets 0.42%

(5)

Ratio of net investment income to average net assets 3.23%

(5)

Portfolio turnover rate

9.0%

Net assets, end of period (in thousands)

$ 21,758

(1) Inception date (2) Per share amounts calculated using average shares outstanding method. (3) Amounts round to less than $0.01 per share. (4) Total return reflects the rate that an investor would have earned on an investment in the fund

during the period, assuming reinvestment of all distributions. Total return is not annualized for periods less than one year.

(5) Annualized

T. Rowe Price Virginia Tax-Free Bond Fund February 28, 2018

Portfolio of Investments ‡ Par/Shares $ Value

(Amounts in 000s)

19

First Page Footer

MUNICIPAL SECURITIES 98.9%

VIRGINIA 87.9%

Albemarle County Economic Dev. Auth., Westminster-Canterbury Blue Ridge, Series A, 4.625%, 1/1/32 3,500 3,569

Albemarle County Economic Dev. Auth., Westminster-Canterbury Blue Ridge, Series A, 5.00%, 1/1/42 3,200 3,308

Alexandria IDA, Episcopal High School, 4.00%, 1/1/25 400 434



Alexandria IDA, Episcopal High School, 4.00%, 1/1/35 1,500 1,548




Alexandria IDA, Episcopal High School, Series A, 4.75%, 1/1/36

(Prerefunded 1/1/20) (1) 1,450 1,532

Alexandria IDA, Episcopal High School, Series A, 5.00%, 1/1/40 (Prerefunded 1/1/20) (1) 2,920 3,099

Alexandria IDA, Goodwin House, 5.00%, 10/1/35 1,845 2,047



Arlington County, Series A, GO, 5.00%, 8/15/32 1,555 1,824

Arlington County, Series A, GO, 5.00%, 8/15/34 1,500 1,747

Arlington County IDA, Virginia Hosp. Center, 5.00%, 7/1/31 8,640 9,070

Botetourt County, Residential Care Fac., The Glebe, Series A 6.00%, 7/1/34 525 577

Botetourt County, Residential Care Fac., The Glebe, Series A 6.00%, 7/1/44 3,000 3,269

Capital Region Airport Commission, Series A, 4.00%, 7/1/19 600 619

Capital Region Airport Commission, Series A, 4.00%, 7/1/20 1,160 1,218

Capital Region Airport Commission, Series A, 4.00%, 7/1/24 1,000 1,074


20

Par/Shares $ Value

(Amounts in 000s)







Capital Region Airport Commission, Series A, 5.00%, 7/1/30 995 1,133



Cherry Hill CDA, Potomac Shores, 4.50%, 3/1/25 (2) 855 871

Cherry Hill CDA, Potomac Shores, 5.15%, 3/1/35 (2) 1,125 1,152

Cherry Hill CDA, Potomac Shores, 5.40%, 3/1/45 (2) 2,200 2,250

Chesapeake Bay Bridge & Tunnel Dist., 5.50%, 7/1/25 (3)(4) 6,235 7,378

Chesapeake Bay Bridge & Tunnel Dist., First Tier 5.00%, 7/1/46 8,560 9,487

Chesapeake Bay Bridge & Tunnel Dist., First Tier 5.00%, 7/1/51 5,895 6,493

Chesapeake Toll Road, Series B, STEP, 0.00%, 7/15/40 3,875 3,294

Chesterfield County Economic Dev. Auth., Bon Secours Health Series C1, 5.00%, 11/1/42 (5) 7,640 8,127

Chesterfield County Economic Dev. Auth., PCR, Virginia Electric & Power, Series A, 5.00%, 5/1/23 4,930 5,119

Fairfax County, Sewer, 5.00%, 7/15/40 10,810 12,555

Fairfax County Economic Dev. Auth., Goodwin House 5.00%, 10/1/36 6,460 7,180

Fairfax County Economic Dev. Auth., Goodwin House 5.00%, 10/1/42 4,350 4,813

Fairfax County Economic Dev. Auth., Metrorail Parking 5.00%, 4/1/42 9,000 10,268


21

Par/Shares $ Value

(Amounts in 000s)

Fairfax County Economic Dev. Auth., Route 28, 4.50%, 4/1/36

(Prerefunded 4/1/18) (1) 4,550 4,563

Fairfax County Economic Dev. Auth., Silver Line Phase I 4.00%, 4/1/34 8,000 8,447

Fairfax County Economic Dev. Auth., Silver Line Phase I 4.00%, 4/1/35 5,765 6,070

Fairfax County Economic Dev. Auth., Silver Line Phase I 5.00%, 4/1/29 (Prerefunded 4/1/20) (1) 1,390 1,486



Fairfax County Economic Dev. Auth., Vinson Hall, Series A 4.50%, 12/1/32 1,000 1,032

Fairfax County Economic Dev. Auth., Vinson Hall, Series A 5.00%, 12/1/47 4,000 4,162

Fairfax County IDA, Inova Health, 5.00%, 5/15/37 1,465 1,603

Fairfax County IDA, Inova Health, Series A, 5.00%, 5/15/40 26,785 29,213

Fairfax County IDA, Inova Health, Series A, 5.00%, 5/15/44 13,020 14,448

Fairfax County IDA, Inova Health, Series A, 5.50%, 5/15/35 (Prerefunded 5/15/19) (1) 3,535 3,701

Fairfax County IDA, Inova Health, Series C, 5.00%, 5/15/25 (Prerefunded 5/15/19) (1) 2,750 2,866

Fairfax County IDA, Inova Health, Series C, VRDN 1.07%, 5/15/42 2,850 2,850

Fairfax County IDA, Inova Health, Series D, 5.00%, 5/15/28 3,075 3,422

Fairfax County IDA, Inova Health, Unrefunded Balance, Series A 5.50%, 5/15/35 (Prerefunded 5/15/19) (1) 6,490 6,803

Fairfax County IDA, Public Improvement, Series A, GO 5.00%, 10/1/35 6,000 6,939

Fairfax County Redev. & Housing Auth., 5.00%, 10/1/39 3,515 3,660

Fairfax County Water Auth., 5.00%, 4/1/44 4,720 5,445

Fairfax County Water Auth., 5.00%, 4/1/45 9,230 10,640


22

Par/Shares $ Value

(Amounts in 000s)

Fairfax County Water Auth., Series B, 4.00%, 4/1/29 3,925 4,078

Fredericksburg, Series A, GO, 4.75%, 7/15/37 7,790 8,257

Fredericksburg Economic Dev. Auth., Medicorp Health Mary Washington Healthcare, 5.00%, 6/15/29 1,600 1,776

Fredericksburg Economic Dev. Auth., Medicorp Health Mary Washington Healthcare, 5.00%, 6/15/31 425 469





Greater Richmond Convention Center, Hotel Tax 5.00%, 6/15/29 3,750 4,295




Hampton Roads Sanitation Dist., Wastewater, 5.00%, 4/1/26 (Prerefunded 4/1/18) (1) 3,000 3,010



Hampton Roads Sanitation Dist., Wastewater, Series A 5.00%, 8/1/34 1,775 2,050

Hampton Roads Sanitation Dist., Wastewater, Series A 5.00%, 8/1/37 10,020 11,492

Hampton Roads Transportation Accountability Commission Series A, 5.50%, 7/1/57 20,000 23,649


23

Par/Shares $ Value

(Amounts in 000s)

Hanover County Economic Dev. Auth., Covenant Woods Retirement Community, Series A, 5.00%, 7/1/42 1,000 1,032

Hanover County Economic Dev. Auth., Covenant Woods Retirement Community, Series A, 5.00%, 7/1/47 6,170 6,351

Hanover County IDA, Bon Secours Health, 6.375%, 8/15/18 (4) 155 158

Henrico County, Public Improvement, Series A, 4.00%, 8/1/28 (Prerefunded 8/1/20) (1) 420 444

Henrico County, Public Improvement, Series A, 5.00%, 12/1/25 (Prerefunded 12/1/18) (1) 1,250 1,285

Henrico County Economic Dev. Auth., Bon Secours Health System, 5.00%, 11/1/30 7,035 7,746

Henrico County Economic Dev. Auth., Collegiate School 4.00%, 4/15/37 4,065 4,127

Henrico County Economic Dev. Auth., Collegiate School 4.00%, 4/15/42 3,595 3,628

Henrico County Economic Dev. Auth., Collegiate School 5.25%, 4/15/32 (Prerefunded 4/15/19) (1) 4,350 4,531

Henrico County Economic Dev. Auth., Lifespire of Virginia Obligated Group, Series C, 5.00%, 12/1/37 1,900 2,031

Henrico County Economic Dev. Auth., Lifespire of Virginia Obligated Group, Series C, 5.00%, 12/1/47 3,250 3,448

Henrico County IDA, Bon Secours Health, 6.25%, 8/15/20 (4) 1,350 1,436

Henrico County Water & Sewer, 4.75%, 5/1/27 (Prerefunded 5/1/19) (1) 4,535 4,708

Henrico County Water & Sewer, 5.00%, 5/1/46 11,220 12,764

Hopewell IDA, Smurfit-Stone Container, EC, 5.25%, 6/1/49 (6) 2,000 —

Isle of Wight County, 5.00%, 7/1/43 (Prerefunded 7/1/22) (1) 2,495 2,806

Isle of Wight County, GO, 5.00%, 7/1/43 795 880

James City County Economic Dev. Auth., United Methodist Homes, Windsormeade, Series A, 2.00%, 10/1/48 (7)(12) 753 56

James City County Economic Dev. Auth., United Methodist Homes, Windsormeade, Series A, 6.00%, 6/1/43 2,919 2,810

Lexington IDA, Kendal at Lexington, 4.00%, 1/1/31 750 771

Lexington IDA, Kendal at Lexington, Series A, 5.00%, 1/1/42 1,000 1,078


24

Par/Shares $ Value

(Amounts in 000s)

Lexington IDA, Kendal at Lexington, Series A, 5.00%, 1/1/48 3,250 3,496

Lexington IDA, V.M. I. Dev. Board, 4.00%, 12/1/30 2,835 3,027

Lexington IDA, V.M.I. Dev. Board, Series C, 5.00%, 12/1/36 (Prerefunded 6/1/19) (1) 6,325 6,601

Lexington IDA, Washington & Lee Univ., 4.75%, 1/1/43 1,225 1,312

Lexington IDA, Washington & Lee Univ., 5.00%, 1/1/43 6,975 7,643

Lynchburg Economic Dev. Auth., Centra Health, Series A 5.00%, 1/1/47 4,500 4,927

Lynchburg Economic Dev. Auth., Centra Health, Series B, VRDN 1.09%, 1/1/47 1,700 1,700

Manassas Park Economic Dev. Auth., Series A 5.00%, 7/15/20 (3) 640 689

Manassas Park Economic Dev. Auth., Series A 6.00%, 7/15/35 (Prerefunded 7/15/20) (1) 3,495 3,841

Montgomery County Economic Dev Auth., Virginia Tech Foundation, Series A, 4.00%, 6/1/37 725 754

New Port CDA, Special Assessment, 5.60%, 9/1/36 (6)(8) 978 450

Newport News, Water, 5.00%, 7/15/32 1,260 1,468

Newport News Economic Dev. Auth., Lifespire of Virginia Obligated Group, 5.00%, 12/1/38 2,500 2,626

Norfolk, Series A, GO, 5.00%, 10/1/41 1,050 1,198

Norfolk, Series A, GO, 5.00%, 10/1/46 2,300 2,614

Norfolk Airport Auth., Series A, 5.00%, 7/1/20 1,385 1,471

Norfolk Airport Auth., Series A, 5.00%, 7/1/21 1,000 1,083

Norfolk Economic Dev. Auth., BBL ODU, Series A 6.00%, 11/1/36 (9) 1,365 1,365

Norfolk Economic Dev. Auth., Sentara Health Care, Series B 5.00%, 11/1/43 5,575 6,094

Norfolk Redev. & Housing Auth., Harbors Edge Retirement Community, 5.375%, 1/1/35 3,620 3,817

Norfolk Redev. & Housing Auth., Harbors Edge Retirement Community, 5.375%, 1/1/46 480 501


25

Par/Shares $ Value

(Amounts in 000s)

Norfolk Water, 5.00%, 11/1/28 25 28

Norfolk Water, 5.00%, 11/1/28 (Prerefunded 5/1/22) (1) 1,705 1,910

Norfolk Water, 5.00%, 11/1/29 20 22


Norfolk Water, 5.00%, 11/1/31 15 17


Norfolk Water, 5.00%, 11/1/38 2,805 3,054

Norfolk Water, 5.00%, 11/1/42 12,735 13,851

Norfolk Water, Series A, 5.25%, 11/1/44 17,250 19,950

Pittsylvania County, Series B, 5.75%, 2/1/30 (Prerefunded 2/1/19) (1) 1,500 1,559

Portsmouth, Series B, 5.25%, 7/15/21 (Prerefunded 7/15/19) (1) 745 782


Portsmouth, Series B, 5.25%, 7/15/24

(Prerefunded 7/15/19) (1) 300 315


Portsmouth, Unrefunded Balance, Series B, 5.25%, 7/15/21 (Prerefunded 7/15/19) (1) 555 583



Portsmouth, Unrefunded Balance, Series B, 5.25%, 7/15/25

(Prerefunded 7/15/19) (1) 285 299

Powhatan County, GO, 5.00%, 1/15/32 2,000 2,116

Prince William County IDA, Novant Health, Series B 4.00%, 11/1/33 7,660 7,887

Prince William County IDA, Westminster at Lake Ridge 5.00%, 1/1/37 1,000 1,071

Prince William County IDA, Westminster at Lake Ridge 5.00%, 1/1/46 4,025 4,254


26

Par/Shares $ Value

(Amounts in 000s)

Richmond Metropolitan Auth., Expressway 5.25%, 7/15/22 (3)(10) 1,740 1,865

Richmond Metropolitan Auth., Expressway, 5.25%, 7/15/22 (10) 3,000 3,195

Richmond Metropolitan Auth., Expressway, Unrefunded Balance, 5.25%, 7/15/22 (10) 10,615 11,305

Richmond Public Utility, Series A, 5.00%, 1/15/28 (Prerefunded 1/15/19) (1) 1,000 1,030

Richmond Public Utility, Series A, 5.00%, 1/15/40 (Prerefunded 1/15/19) (1) 10,150 10,459

Riverside Regional Jail Auth., 5.00%, 7/1/30 5,770 6,659

Roanoke Economic Dev. Auth., Carilion Clinic, 5.00%, 7/1/33 4,970 5,264

Roanoke Economic Dev. Auth., Carilion Clinic, Series C 5.00%, 7/1/27 (5) 4,250 4,490

Roanoke Economic Dev. Auth., Lutheran Homes Brandon Oaks 6.625%, 12/1/44 3,900 4,227

Russell County IDA, Appalachian Power, Series K, PCR 4.625%, 11/1/21 10,520 11,022

Stafford County Economic Dev. Auth., Mary Washington Healthcare, 5.00%, 6/15/30 1,025 1,142

Suffolk Economic Dev. Auth., United Church, 5.00%, 9/1/31 4,000 4,313

Tobacco Settlement Fin. Corp., Tobacco Industry, Series B1 5.00%, 6/1/47 3,025 2,936

Univ. of Virginia, 5.00%, 6/1/40 (Prerefunded 6/1/18) (1) 9,655 9,746

Univ. of Virginia, Series A, 5.00%, 4/1/42 5,000 5,764

Univ. of Virginia, Series A, 5.00%, 6/1/43 3,440 3,875

Univ. of Virginia, Series A2, 5.00%, 4/1/45 20,705 23,399

Univ. of Virginia, Series B, 5.00%, 4/1/46 5,000 5,747

Upper Occoquan Sewage Auth., 4.00%, 7/1/34 5,515 5,834

Upper Occoquan Sewage Auth., 4.00%, 7/1/40 10,805 11,243

Virginia, Series B, 5.00%, 6/1/27 (Prerefunded 6/1/18) (1) 2,000 2,019

Virginia, Series B, 5.00%, 6/1/30 (Prerefunded 6/1/18) (1) 320 323

Virginia College Building Auth., 21st Century College & Equipment, Series A, 4.00%, 2/1/34 4,500 4,747


27

Par/Shares $ Value

(Amounts in 000s)

Virginia College Building Auth., 21st Century College & Equipment, Series A, 4.75%, 2/1/29 (Prerefunded 2/1/19) (1) 2,050 2,112



Virginia College Building Auth., Public Higher Ed. Fin. Program Series A, 5.00%, 9/1/26 (Prerefunded 9/1/18) (1) 45 46

Virginia College Building Auth., Public Higher Ed. Fin. Program Series A, 5.00%, 9/1/28 (Prerefunded 9/1/18) (1) 45 46

Virginia College Building Auth., Public Higher Ed. Fin. Program Series B, 5.00%, 9/1/29 (Prerefunded 9/1/19) (1) 10,000 10,516

Virginia College Building Auth., Public Higher Ed. Fin. Program Unrefunded Balance, Series A, 5.00%, 9/1/26

(Prerefunded 9/1/18) (1) 5,455 5,558

Virginia College Building Auth., Public Higher Ed. Fin. Program Unrefunded Balance, Series A, 5.00%, 9/1/28

(Prerefunded 9/1/18) (1) 5,955 6,068

Virginia College Building Auth., Univ. of Richmond 4.00%, 3/1/42 8,010 8,278

Virginia College Building Auth., Washington & Lee Univ. 5.25%, 1/1/26 (4) 840 955

Virginia College Building Auth., Washington & Lee Univ. 5.25%, 1/1/31 (4) 7,900 9,432

Virginia College Building Auth., Washington & Lee Univ. 5.75%, 1/1/34 10,520 13,604

Virginia College Building Auth., Washington & Lee Univ. Series A, 5.00%, 1/1/40 3,650 4,105

Virginia Commonwealth Univ. Health, Series A, 5.00%, 7/1/34 5,000 5,725

Virginia Commonwealth Univ. Health, Series B, 5.00%, 7/1/34 2,795 3,200


28

Par/Shares $ Value

(Amounts in 000s)

Virginia Commonwealth Univ. Health, Series B, 5.00%, 7/1/46 5,500 6,180

Virginia HDA, Multi-Family, Rental Housing, Series B 5.00%, 6/1/45 3,050 3,171



Virginia HDA, Multi-Family, Rental Housing, Series E 5.00%, 10/1/44 6,540 6,705

Virginia HDA, Multi-Family, Rental Housing, Series F 5.00%, 12/1/39 5,000 5,157



Virginia Polytechnic Institute & State Univ., Dormitory & Dining Hall, Series A, 4.00%, 6/1/30 2,135 2,262



Virginia Port Auth., 5.00%, 7/1/35 3,500 3,747

Virginia Port Auth., 5.00%, 7/1/36 3,500 3,745

Virginia Port Auth., Series B, 5.00%, 7/1/41 (9) 1,000 1,111

Virginia Port Auth., Series B, 5.00%, 7/1/45 (9) 11,500 12,684

Virginia Public Building Auth., Series A, 5.00%, 8/1/31 (Prerefunded 8/1/21) (1) 80 88

Virginia Public Building Auth., Series A-2017, 5.00%, 8/1/31 (Prerefunded 8/1/21) (1) 1,090 1,203

Virginia Public Building Auth., Unrefunded Balance Series A-2017, 5.00%, 8/1/31 (Prerefunded 8/1/21) (1) 10,995 12,178


29

Par/Shares $ Value

(Amounts in 000s)

Virginia Public Building Auth., Series B, 5.00%, 8/1/29

(Prerefunded 8/1/19) (1) 170 178

Virginia Public Building Auth., Series B, 5.25%, 8/1/28 (Prerefunded 8/1/18) (1) 1,475 1,500

Virginia Public Building Auth., Unrefunded Balance, Series B 5.00%, 8/1/29 (Prerefunded 8/1/19) (1) 1,580 1,657

Virginia Public School Auth., 1997 Resolution, Series A 4.50%, 8/1/37 (Prerefunded 8/1/18) (1) 1,475 1,495

Virginia Public School Auth., 1997 Resolution, Series B 5.00%, 8/1/28 (Prerefunded 8/1/18) (1) 5,500 5,587

Virginia Public School Auth., 1997 Resolution, Series B 5.25%, 8/1/33 (Prerefunded 8/1/18) (1) 1,000 1,017

Virginia Public School Auth., Series C, GO, 5.00%, 8/1/18 2,280 2,315

Virginia Resources Auth., Clean Water, 5.00%, 10/1/29 (Prerefunded 10/1/19) (1) 1,500 1,581

Virginia Resources Auth., Clean Water, 5.00%, 10/1/30 5,290 6,186

Virginia Resources Auth., Clean Water, 5.00%, 10/1/31 (Prerefunded 10/1/19) (1) 2,400 2,530

Virginia Resources Auth., Infrastructure Pooled Fin. 5.00%, 11/1/30 (Prerefunded 11/1/20) (1) 135 147

Virginia Resources Auth., Infrastructure Pooled Fin. 5.00%, 11/1/33 (Prerefunded 11/1/20) (1) 880 955

Virginia Resources Auth., Infrastructure Pooled Fin., Series A 5.00%, 11/1/42 1,680 1,900

Virginia Resources Auth., Infrastructure Pooled Fin., Series A1 5.00%, 11/1/42 9,000 10,060

Virginia Resources Auth., Infrastructure Pooled Fin., Series B 5.00%, 11/1/31 (Prerefunded 11/1/21) (1) 2,220 2,462

Virginia Resources Auth., Infrastructure Pooled Fin., Series B 5.00%, 11/1/33 (Prerefunded 11/1/18) (1) 255 261




30

Par/Shares $ Value

(Amounts in 000s)



Virginia Resources Auth., Infrastructure Pooled Fin., Series B-2014, 5.00%, 11/1/33 (Prerefunded 11/1/18) (1) 2,900 2,971

Virginia Resources Auth., Infrastructure Pooled Fin., Series B-2014, 5.25%, 11/1/25 (Prerefunded 11/1/18) (1) 1,625 1,668

Virginia Resources Auth., Infrastructure Pooled Fin., Series C 4.00%, 11/1/37 545 575

Virginia Resources Auth., Infrastructure Pooled Fin., Series D 5.00%, 11/1/40 9,070 10,384

Virginia Resources Auth., Infrastructure Pooled Fin., Series D 5.00%, 11/1/45 9,365 10,694

Virginia Resources Auth., Infrastructure Pooled Fin., Unrefunded Balance, 5.00%, 11/1/30 525 569

Virginia Resources Auth., Infrastructure Pooled Fin., Unrefunded Balance, 5.00%, 11/1/33 1,030 1,114

Virginia Resources Auth., Infrastructure Pooled Fin., Unrefunded Balance, Series B, 5.00%, 11/1/31 1,170 1,296



Virginia Resources Auth., Infrastructure Pooled Fin., Unrefunded Balance, Series B, 5.125%, 11/1/38 425 435

Virginia Resources Auth., Infrastructure Pooled Fin., Unrefunded Balance, Series B, 5.25%, 11/1/25 240 246

Virginia Small Business Fin. Auth., 95 Express Lanes 5.00%, 7/1/34 (9) 1,250 1,339

Virginia Small Business Fin. Auth., 95 Express Lanes Series 2012, 5.00%, 1/1/40 (9) 13,155 14,012

Virginia Small Business Fin. Auth., 95 Express Lanes Series 2017, 5.00%, 1/1/40 (9) 11,590 12,345


31

Par/Shares $ Value

(Amounts in 000s)

Virginia Small Business Fin. Auth., Elizabeth River Crossings 5.50%, 1/1/42 (9) 10,020 11,034

Virginia Small Business Fin. Auth., Elizabeth River Crossings 6.00%, 1/1/37 (9) 6,240 7,013

Virginia Small Business Fin. Auth., I-66 Express Mobility Partners, 5.00%, 12/31/47 (9) 1,500 1,623




Virginia Small Business Fin. Auth., Sentara Healthcare 4.50%, 11/1/25 2,100 2,195

Virginia Small Business Fin. Auth., Sentara Healthcare 5.00%, 11/1/40 6,190 6,540

Virginia Transportation Board, 4.00%, 5/15/30 12,310 13,080

Virginia Transportation Board, 4.00%, 5/15/32 6,860 7,241

Virginia Transportation Board, Capital Projects, 4.75%, 5/15/35 (Prerefunded 5/15/21) (1) 14,500 15,863

Virginia Transportation Board, Capital Projects, 5.00%, 5/15/33 (Prerefunded 5/15/21) (1) 12,500 13,772

Virginia Transportation Board, Federal Highway, GAN 5.00%, 9/15/31 11,000 12,835

Virginia Transportation Board, Series A, 4.00%, 5/15/34 2,100 2,223



Washington County IDA, Mountain States Health Alliance Series C, 7.25%, 7/1/19 720 752

Washington County IDA, Mountain States Health Alliance Series C, 7.75%, 7/1/38 2,000 2,089

Winchester IDA, Valley Health, 5.00%, 1/1/30 250 284

Winchester IDA, Valley Health, 5.00%, 1/1/34 2,250 2,514


32

Par/Shares $ Value

(Amounts in 000s)



Winchester IDA, Valley Health, Series A, 5.00%, 1/1/44 10,455 11,315

Winchester IDA, Valley Health, Series E, 5.625%, 1/1/44 (Prerefunded 1/1/19) (1) 3,550 3,670

1,090,944

DISTRICT OF COLUMBIA 10.4%

Metropolitan Washington Airports Auth., 5.00%, 10/1/35 (9) 4,360 4,926





Metropolitan Washington Airports Auth., Dulles Toll Road 5.25%, 10/1/44 17,155 17,960

Metropolitan Washington Airports Auth., Dulles Toll Road Series C, VR, 6.50%, 10/1/41 (11) 2,000 2,526

Metropolitan Washington Airports Auth., Series A 5.00%, 10/1/29 1,500 1,618

Metropolitan Washington Airports Auth., Series A 5.00%, 10/1/31 (9) 1,000 1,104

Metropolitan Washington Airports Auth., Series A 5.00%, 10/1/34 (9) 10,500 11,783



Metropolitan Washington Airports Auth., Series B 5.00%, 10/1/22 5,550 5,850

Metropolitan Washington Airports Auth., Series B 5.00%, 10/1/29 7,230 7,604

Metropolitan Washington Airports Auth., Series C 5.00%, 10/1/28 (9) 2,000 2,175


33

Par/Shares $ Value

(Amounts in 000s)

Metropolitan Washington Airports Auth., Series C 5.625%, 10/1/39 15,500 15,877

Washington Metropolitan Area Transit Auth., Series A 5.25%, 7/1/24 (Prerefunded 7/1/19) (1) 5,300 5,562

Washington Metropolitan Area Transit Auth., Series A 5.25%, 7/1/26 (Prerefunded 7/1/19) (1) 5,670 5,951

Washington Metropolitan Area Transit Auth., Series A1 5.00%, 7/1/30 2,975 3,498


Washington Metropolitan Area Transit Auth., Series A1 5.00%, 7/1/32 940 1,098




Washington Metropolitian Area Transit Auth., Series B 5.00%, 7/1/42 4,655 5,314

128,708

NEW YORK 0.2%

New York City, Series G7, GO, VRDN, 1.11%, 4/1/42 2,700 2,700

2,700

VIRGIN ISLANDS 0.2%

Virgin Islands PFA, 6.625%, 10/1/29 670 412

Virgin Islands PFA, Series B, 5.00%, 10/1/25 2,500 1,757

2,169

TEXAS 0.1%

Gulf Coast Waste Disposal Auth., ExxonMobil, VRDN 1.14%, 6/1/30 (9) 1,000 1,000

1,000


34

Par/Shares $ Value

(Amounts in 000s)

WYOMING 0.1%

Uinta Pollution Control, Chevron USA, VRDN, 1.12%, 8/15/20 900 900

900

ARIZONA 0.0%

Arizona HFA, Banner Health, Series B, VRDN, 1.10%, 1/1/46 500 500

500

Total Municipal Securities (Cost $1,199,594) 1,226,921

COMMON STOCKS 0.0%

Ingevity (6) — 1

WestRock — 8

Total Common Stocks (Cost $7) 9

Total Investments in Securities

98.9% of Net Assets (Cost $1,199,601) $ 1,226,930

‡ Par/Shares are denominated in U.S. dollars unless otherwise noted. (1) Prerefunded date is used in determining portfolio maturity. (2)

Security was purchased pursuant to Rule 144A under the Securities Act of 1933 and may be resold in transactions exempt from registration only to qualified institutional buyers -- total value of such securities at period-end amounts to $4,273 and represents 0.3% of net assets.

(3) Escrowed to maturity (4) Insured by National Public Finance Guarantee Corp. (5) Insured by Assured Guaranty Municipal Corp. (6) Non-income producing (7) Distressed security. (8) In default with respect to payment of interest. (9) Interest subject to alternative minimum tax

(10) Insured by Financial Guaranty Insurance Company (11) Insured by Assured Guaranty U.S. Holdings (12)

Security has the ability to pay in kind or pay in cash. When applicable, separate rates of such payments are disclosed.

CDA Community Development Administration/Authority EC

Escrow CUSIP; represents a beneficial interest in a residual pool of bankruptcy assets; the amount and timing of future distributions, if any, is uncertain; when presented, interest rate and maturity date are those of the original security.

GAN Grant Anticipation Note


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GO General Obligation HDA Housing Development Authority HFA Health Facility Authority IDA Industrial Development Authority/Agency PCR Pollution Control Revenue PFA Public Finance Authority/Agency

STEP

Stepped coupon bond for which the coupon rate of interest adjusts on specified date(s); rate shown is effective rate at period-end.

VR

Variable Rate; rate shown is effective rate at period-end. The rates for certain variable rate securities are not based on a published reference rate and spread but are determined by the issuer or agent and based on current market conditions.

VRDN

Variable Rate Demand Note under which the holder has the right to sell the security to the issuer or the issuer's agent at a predetermined price on specified dates; such specified dates are considered the effective maturity for purposes of the fund's weighted average maturity; rate shown is effective rate at period-end and maturity date shown is final maturity. Certain VRDN rates are not based on a published reference rate and spread but may adjust periodically.


36

February 28, 2018


($000s, except shares and per share amounts)

Statement of Assets and Liabilities

Assets

Investments in securities, at value (cost $1,199,601) $ 1,226,930

Interest receivable 15,205

Receivable for investment securities sold 7,071

Receivable for shares sold 1,239

Cash 69

Other assets 50

Total assets 1,250,564

Liabilities

Payable for investment securities purchased 8,302

Payable for shares redeemed 926

Investment management fees payable 369

Due to affiliates 25

Payable to directors 1

Other liabilities 838

Total liabilities 10,461

NET ASSETS $ 1,240,103 Net Assets Consist of:

Undistributed net investment income $ 410

Accumulated undistributed net realized loss (4,498)

Net unrealized gain 27,329

Paid-in capital applicable to 104,917,016 of $0.0001 par value capital stock outstanding; 2,000,000,000 shares of the Corporation authorized 1,216,862

NET ASSETS $ 1,240,103 NET ASSET VALUE PER SHARE

Investor Class ($1,218,344,962 / 103,075,835 shares outstanding) $ 11.82

I Class ($21,757,646 / 1,841,181 shares outstanding) $ 11.82


($000s)

Statement of Operations

37


Year Ended

2/28/18Investment Income (Loss)

Income Interest $ 44,411 Other 112

Total income 44,523

Expenses Investment management 4,734 Shareholder servicing

Investor Class $ 981 I Class 1 982

Prospectus and shareholder reports Investor Class 40

Custody and accounting 175 Registration 85 Legal and audit 43 Directors 4 Proxy and annual meeting 38 Miscellaneous 19

Total expenses 6,120

Net investment income 38,403

Realized and Unrealized Gain / Loss Net realized loss on securities (272) Change in net unrealized gain / loss on securities (8,809)

Net realized and unrealized gain / loss (9,081)

INCREASE IN NET ASSETS FROM OPERATIONS $ 29,322


($000s)

38

Statement of Changes in Net Assets

Year Ended

2/28/18 2/28/17Increase (Decrease) in Net Assets

Operations Net investment income $ 38,403 $ 37,299 Net realized gain (loss) (272) 1,320 Change in net unrealized gain / loss (8,809) (33,218) Increase in net assets from operations 29,322 5,401

Distributions to shareholders

Net investment income Investor Class (38,044) (37,218) I Class (296) –

Net realized gain Investor Class (305) – I Class (5) –

Decrease in net assets from distributions (38,650) (37,218)

Capital share transactions*

Shares sold Investor Class 181,081 233,668 I Class 21,948 –

Distributions reinvested Investor Class 30,589 29,430 I Class 238 –

Shares redeemed Investor Class (162,663) (183,908) I Class (80) –

Increase in net assets from capital share transactions 71,113 79,190

Net Assets

Increase during period 61,785 47,373 Beginning of period 1,178,318 1,130,945

End of period $ 1,240,103 $ 1,178,318

Undistributed net investment income 410 420


39


Statement of Changes in Net Assets

(000s)

Year Ended

2/28/18 2/28/17 *Share information

Shares sold Investor Class 15,113 19,185 I Class 1,828 –

Distributions reinvested Investor Class 2,555 2,417 I Class 20 –

Shares redeemed Investor Class (13,583) (15,250) I Class (7) –

Increase in shares outstanding 5,926 6,352


40

February 28, 2018

Notes to Financial Statements

T. Rowe Price State Tax-Free Funds, Inc. (the corporation) is registered under the Investment Company Act of 1940 (the 1940 Act). The Virginia Tax-Free Bond Fund (the fund) is a nondiversified, open-end management investment company established by the corporation. The fund seeks to provide, consistent with prudent portfolio management, the highest level of income exempt from federal and Virginia state income taxes by investing primarily in investment-grade Virginia municipal bonds. The corporation, organized as a Maryland corporation, and the fund are the successors to the T. Rowe Price State Tax-Free Income Trust and its corresponding sub-trust pursuant to an agreement and plan of reorganization for a change in domicile, effective October 30, 2017. Prior to October 30, 2017, the corporation was organized as a Massachusetts business trust. The reorganization and redomiciliation had no effect on the fund’s investment objective and strategies or on the fund’s net assets. The fund has two classes of shares: the Virginia Tax-Free Bond Fund (Investor Class) and the Virginia Tax-Free Bond Fund–I Class (I Class). I Class shares generally are available only to investors meeting a $1,000,000 minimum investment or certain other criteria. Each class has exclusive voting rights on matters related solely to that class; separate voting rights on matters that relate to both classes; and, in all other respects, the same rights and obligations as the other class.

NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES

Basis of Preparation The fund is an investment company and follows accounting and reporting guidance in the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946 (ASC 946). The accompanying financial statements were prepared in accordance with accounting principles generally accepted in the United States of America (GAAP), including, but not limited to, ASC 946. GAAP requires the use of estimates made by management. Management believes that estimates and valuations are appropriate; however, actual results may differ from those estimates, and the valuations reflected in the accompanying financial statements may differ from the value ultimately realized upon sale or maturity.

Investment Transactions, Investment Income, and Distributions Investment transactions are accounted for on the trade date basis. Income and expenses are recorded on the accrual basis. Realized gains and losses are reported on the identified cost basis. Premiums and discounts on debt securities are amortized for financial reporting purposes. Dividend income is recorded on


41

the ex-dividend date. Income tax-related interest and penalties, if incurred, are recorded as income tax expense. Income distributions are declared by each class daily and paid monthly. Distributions to shareholders are recorded on the ex-dividend date. A capital gain distribution may also be declared and paid by the fund annually.

Class Accounting Shareholder servicing, prospectus, and shareholder report expenses incurred by each class are charged directly to the class to which they relate. Expenses common to both classes and investment income are allocated to the classes based upon the relative daily net assets of each class’s settled shares; realized and unrealized gains and losses are allocated based upon the relative daily net assets of each class’s outstanding shares. To the extent any expenses are waived or reimbursed in accordance with an expense limitation (see Note 5), the waiver or reimbursement is charged to the applicable class or allocated across the classes in the same manner as the related expense.

New Accounting Guidance In March 2017, the FASB issued amended guidance to shorten the amortization period for certain callable debt securities held at a premium. The guidance is effective for fiscal years and interim periods beginning after December 15, 2018. Adoption will have no effect on the fund’s net assets or results of operations.

On August 1, 2017, the fund implemented amendments to Regulation S-X, issued by the Securities and Exchange Commission, which require standardized, enhanced disclosures, particularly related to derivatives, in investment company financial statements. Adoption had no effect on the fund’s net assets or results of operations.

Indemnification In the normal course of business, the fund may provide indemnification in connection with its officers and directors, service providers, and/or private company investments. The fund’s maximum exposure under these arrangements is unknown; however, the risk of material loss is currently considered to be remote.

NOTE 2 - VALUATION

The fund’s financial instruments are valued and each class’s net asset value (NAV) per share is computed at the close of the New York Stock Exchange (NYSE), normally 4 p.m. ET, each day the NYSE is open for business. However, the NAV per share may be calculated at a time other than the normal close of the NYSE if trading on the NYSE is restricted, if the NYSE closes earlier, or as may be permitted by the SEC.


42

Fair Value The fund’s financial instruments are reported at fair value, which GAAP defines as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The T. Rowe Price Valuation Committee (the Valuation Committee) is an internal committee that has been delegated certain responsibilities by the fund’s Board of Directors (the Board) to ensure that financial instruments are appropriately priced at fair value in accordance with GAAP and the 1940 Act. Subject to oversight by the Board, the Valuation Committee develops and oversees pricing-related policies and procedures and approves all fair value determinations. Specifically, the Valuation Committee establishes procedures to value securities; determines pricing techniques, sources, and persons eligible to effect fair value pricing actions; oversees the selection, services, and performance of pricing vendors; oversees valuation-related business continuity practices; and provides guidance on internal controls and valuation-related matters. The Valuation Committee reports to the Board and has representation from legal, portfolio management and trading, operations, risk management, and the fund’s treasurer.

Various valuation techniques and inputs are used to determine the fair value of financial instruments. GAAP establishes the following fair value hierarchy that categorizes the inputs used to measure fair value:

Level 1 – quoted prices (unadjusted) in active markets for identical financial instruments that the fund can access at the reporting date

Level 2 – inputs other than Level 1 quoted prices that are observable, either directly or indirectly (including, but not limited to, quoted prices for similar financial instruments in active markets, quoted prices for identical or similar financial instruments in inactive markets, interest rates and yield curves, implied volatilities, and credit spreads)

Level 3 – unobservable inputs

Observable inputs are developed using market data, such as publicly available information about actual events or transactions, and reflect the assumptions that market participants would use to price the financial instrument. Unobservable inputs are those for which market data are not available and are developed using the best information available about the assumptions that market participants would use to price the financial instrument. GAAP requires valuation techniques to maximize the use of relevant observable inputs and minimize the use of unobservable inputs. When multiple inputs are used to


43

derive fair value, the financial instrument is assigned to the level within the fair value hierarchy based on the lowest-level input that is significant to the fair value of the financial instrument. Input levels are not necessarily an indication of the risk or liquidity associated with financial instruments at that level but rather the degree of judgment used in determining those values.

Valuation Techniques Debt securities generally are traded in the over-the-counter (OTC) market. Securities with remaining maturities of one year or more at the time of acquisition are valued at prices furnished by dealers who make markets in such securities or by an independent pricing service, which considers the yield or price of bonds of comparable quality, coupon, maturity, and type, as well as prices quoted by dealers who make markets in such securities. Securities with remaining maturities of less than one year at the time of acquisition generally use amortized cost in local currency to approximate fair value. However, if amortized cost is deemed not to reflect fair value or the fund holds a significant amount of such securities with remaining maturities of more than 60 days, the securities are valued at prices furnished by dealers who make markets in such securities or by an independent pricing service. Generally, debt securities are categorized in Level 2 of the fair value hierarchy; however, to the extent the valuations include significant unobservable inputs, the securities would be categorized in Level 3.

Equity securities listed or regularly traded on a securities exchange or in the OTC market are valued at the last quoted sale price or, for certain markets, the official closing price at the time the valuations are made. OTC Bulletin Board securities are valued at the mean of the closing bid and asked prices. A security that is listed or traded on more than one exchange is valued at the quotation on the exchange determined to be the primary market for such security. Listed securities not traded on a particular day are valued at the mean of the closing bid and asked prices. Actively traded equity securities listed on a domestic exchange generally are categorized in Level 1 of the fair value hierarchy. OTC Bulletin Board securities, certain preferred securities, and equity securities traded in inactive markets generally are categorized in Level 2 of the fair value hierarchy.

Assets and liabilities other than financial instruments, including short-term receivables and payables, are carried at cost, or estimated realizable value, if less, which approximates fair value.


44

Thinly traded financial instruments and those for which the above valuation procedures are inappropriate or are deemed not to reflect fair value are stated at fair value as determined in good faith by the Valuation Committee. The objective of any fair value pricing determination is to arrive at a price that could reasonably be expected from a current sale. Financial instruments fair valued by the Valuation Committee are primarily private placements, restricted securities, warrants, rights, and other securities that are not publicly traded.

Subject to oversight by the Board, the Valuation Committee regularly makes good faith judgments to establish and adjust the fair valuations of certain securities as events occur and circumstances warrant. For instance, in determining the fair value of troubled or thinly traded debt instruments, the Valuation Committee considers a variety of factors, which may include, but are not limited to, the issuer’s business prospects, its financial standing and performance, recent investment transactions in the issuer, strategic events affecting the company, market liquidity for the issuer, and general economic conditions and events. In consultation with the investment and pricing teams, the Valuation Committee will determine an appropriate valuation technique based on available information, which may include both observable and unobservable inputs. The Valuation Committee typically will afford greatest weight to actual prices in arm’s length transactions, to the extent they represent orderly transactions between market participants, transaction information can be reliably obtained, and prices are deemed representative of fair value. However, the Valuation Committee may also consider other valuation methods such as a discount or premium from market value of a similar, freely traded security of the same issuer; discounted cash flows; yield to maturity; or some combination. Fair value determinations are reviewed on a regular basis and updated as information becomes available, including actual purchase and sale transactions of the issue. Because any fair value determination involves a significant amount of judgment, there is a degree of subjectivity inherent in such pricing decisions, and fair value prices determined by the Valuation Committee could differ from those of other market participants. Depending on the relative significance of unobservable inputs, including the valuation technique(s) used, fair valued securities may be categorized in Level 2 or 3 of the fair value hierarchy.


45

Valuation Inputs The following table summarizes the fund’s financial instruments, based on the inputs used to determine their fair values on February 28, 2018:

($000s) Level 1 Level 2 Level 3 Total Value

Quoted Prices

Significant Observable

Inputs

Significant Unobservable

Inputs

InvestmentsinSecurities,except: $ — $ 1,226,921 $ — $ 1,226,921

CommonStocks 9 — — 9

Total $ 9 $ 1,226,921 $ — $ 1,226,930

There were no material transfers between Levels 1 and 2 during the year ended February 28, 2018.

NOTE 3 - OTHER INVESTMENT TRANSACTIONS

Consistent with its investment objective, the fund engages in the following practices to manage exposure to certain risks and/or to enhance performance. The investment objective, policies, program, and risk factors of the fund are described more fully in the fund’s prospectus and Statement of Additional Information.

Restricted Securities The fund may invest in securities that are subject to legal or contractual restrictions on resale. Prompt sale of such securities at an acceptable price may be difficult and may involve substantial delays and additional costs.

Other Purchases and sales of portfolio securities other than short-term securities aggregated $189,650,000 and $107,760,000, respectively, for the year ended February 28, 2018.


46

NOTE 4 - FEDERAL INCOME TAxES

No provision for federal income taxes is required since the fund intends to continue to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code and distribute to shareholders all of its income and gains. Distributions determined in accordance with federal income tax regulations may differ in amount or character from net investment income and realized gains for financial reporting purposes. Financial reporting records are adjusted for permanent book/tax differences to reflect tax character but are not adjusted for temporary differences.

The fund files U.S. federal, state, and local tax returns as required. The fund’s tax returns are subject to examination by the relevant tax authorities until expiration of the applicable statute of limitations, which is generally three years after the filing of the tax return but which can be extended to six years in certain circumstances. Tax returns for open years have incorporated no uncertain tax positions that require a provision for income taxes.

Reclassifications to paid-in capital relate primarily to expiring capital loss carryforwards. Reclassifications between income and gain relate primarily to differences between book/tax amortization policies. For the year ended February 28, 2018, the following reclassifications were recorded to reflect tax character (there was no impact on results of operations or net assets):

Undistributednetinvestmentincome $ (73)

Undistributednetrealizedgain 1,684

Paid-incapital (1,611)

($000s)

Distributions during the years ended February 28, 2018 and February 28, 2017, were characterized for tax purposes as follows:

($000s)

February 282018 2017

Ordinaryincome $ 310 $ —

Tax-exemptincome 38,340 37,218

Totaldistributions $ 38,650 $ 37,218


47

At February 28, 2018, the tax-basis cost of investments and components of net assets were as follows:

Costofinvestments $ 1,199,531

Unrealizedappreciation $ 36,283

Unrealizeddepreciation (8,884)

Netunrealizedappreciation(depreciation) 27,399

Undistributedtax-exemptincome 48

Capitallosscarryforwards (4,206)

Paid-incapital 1,216,862

Netassets $ 1,240,103

($000s)

The fund intends to retain realized gains to the extent of available capital loss carryforwards. Net realized capital losses may be carried forward indefinitely to offset future realized capital gains.

NOTE 5 - RELATED PARTY TRANSACTIONS

The fund is managed by T. Rowe Price Associates, Inc. (Price Associates), a wholly owned subsidiary of T. Rowe Price Group, Inc. (Price Group). The investment management agreement between the fund and Price Associates provides for an annual investment management fee, which is computed daily and paid monthly. The fee consists of an individual fund fee, equal to 0.10% of the fund’s average daily net assets, and a group fee. The group fee rate is calculated based on the combined net assets of certain mutual funds sponsored by Price Associates (the group) applied to a graduated fee schedule, with rates ranging from 0.48% for the first $1 billion of assets to 0.265% for assets in excess of $650 billion. The fund’s group fee is determined by applying the group fee rate to the fund’s average daily net assets. At February 28, 2018, the effective annual group fee rate was 0.29%.

The I Class is subject to an operating expense limitation (I Class limit) pursuant to which Price Associates is contractually required to pay all operating expenses of the I Class, excluding management fees, interest, expenses related to borrowings, taxes, brokerage, and other non-recurring expenses permitted by the investment management agreement, to the extent such operating expenses,


48

on an annualized basis, exceed 0.05% of average net assets. This agreement will continue until June 30, 2019, and may be renewed, revised, or revoked only with approval of the fund’s Board. The I Class is required to repay Price Associates for expenses previously paid to the extent the class’s net assets grow or expenses decline sufficiently to allow repayment without causing the class’s operating expenses (after the repayment is taken into account) to exceed both: (1) the expense limitation in place at the time such amounts were paid; and (2) the class’s current expense limitation. However, no repayment will be made more than three years after the date of a payment or waiver.

In addition, the fund has entered into service agreements with Price Associates and two wholly owned subsidiaries of Price Associates, each an affiliate of the fund (collectively, Price). Price Associates provides certain accounting and administrative services to the fund. T. Rowe Price Services, Inc. provides shareholder and administrative services in its capacity as the fund’s transfer and dividend-disbursing agent. T. Rowe Price Retirement Plan Services, Inc. provides subaccounting and recordkeeping services for certain retirement accounts invested in the Investor Class and I Class. For the year ended February 28, 2018, expenses incurred pursuant to these service agreements were $86,000 for Price Associates; $206,000 for T. Rowe Price Services, Inc.; and less than $1,000 for T. Rowe Price Retirement Plan Services, Inc. The total amount payable at period-end pursuant to these service agreements is reflected as Due to Affiliates on the accompanying Statement of Assets and Liabilities.

As of February 28, 2018, T. Rowe Price Group, Inc., or its wholly owned subsidiaries owned 20,868 shares of the I Class, representing 1% of the I Class’s net assets.

The fund may participate in securities purchase and sale transactions with other funds or accounts advised by Price Associates (cross trades), in accordance with procedures adopted by the fund’s Board and Securities and Exchange Commission rules, which require, among other things, that such purchase and sale cross trades be effected at the independent current market price of the security. During the year ended February 28, 2018, the aggregate value of purchases and sales cross trades with other funds or accounts advised by Price Associates was less than 1% of the fund’s net assets as of February 28, 2018.

49

Report of Independent Registered Public Accounting Firm


To the Board of Directors of T. Rowe Price State Tax-Free Funds, Inc. and Shareholders of T. Rowe Price Virginia Tax-Free Bond Fund

Opinion on the Financial Statements

We have audited the accompanying statement of assets and liabilities, including the portfolio of investments, of T. Rowe Price Virginia Tax-Free Bond Fund (one of the funds constituting T. Rowe Price State Tax-Free Funds, Inc., hereafter referred to as the “Fund”) as of February 28, 2018, the related statement of operations for the year ended February 28, 2018, the statement of changes in net assets for each of the two years in the period ended February 28, 2018, including the related notes, and the financial highlights for each of the periods indicated therein (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of February 28, 2018, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period ended February 28, 2018 and the financial highlights for each of the periods indicated therein, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.


50

Report of Independent Registered Public Accounting Firm (continued)

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of February 28, 2018 by correspondence with the custodian and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP Baltimore, Maryland April 18, 2018

We have served as the auditor of one or more investment companies in the T. Rowe Price group of investment companies since 1973.

51

Information on Proxy Voting Policies, Procedures, and Records

AdescriptionofthepoliciesandproceduresusedbyT.RowePricefundsandportfoliostodeterminehowtovoteproxiesrelatingtoportfoliosecuritiesisavailableineachfund’sStatementofAdditionalInformation.Youmayrequestthisdocumentbycalling1-800-225-5132orbyaccessingtheSEC’swebsite,sec.gov.

Thedescriptionofourproxyvotingpoliciesandproceduresisalsoavailableonourcorporatewebsite.Toaccessit,pleasevisitthefollowingWebpage:

https://www3.troweprice.com/usis/corporate/en/utility/policies.html

Scrolldowntothesectionnearthebottomofthepagethatsays,“ProxyVotingPolicies.”ClickontheProxyVotingPolicieslinkintheshadedbox.

Eachfund’smostrecentannualproxyvotingrecordisavailableonourwebsiteandthroughtheSEC’swebsite.ToaccessitthroughT.RowePrice,visitthewebsitelocationshownabove,andscrolldowntothesectionnearthebottomofthepagethatsays,“ProxyVotingRecords.”ClickontheProxyVotingRecordslinkintheshadedbox.

How to Obtain Quarterly Portfolio Holdings

ThefundfilesacompletescheduleofportfolioholdingswiththeSecuritiesandExchangeCommissionforthefirstandthirdquartersofeachfiscalyearonFormN-Q.Thefund’sFormN-QisavailableelectronicallyontheSEC’swebsite(sec.gov);hardcopiesmaybereviewedandcopiedattheSEC’sPublicReferenceRoom,100FSt.N.E.,Washington,DC20549.FormoreinformationonthePublicReferenceRoom,call1-800-SEC-0330.

Tax Information (Unaudited) for the Tax Year Ended 2/28/18

WeareprovidingthisinformationasrequiredbytheInternalRevenueCode.Theamountsshownmaydifferfromthoseelsewhereinthisreportbecauseofdifferencesbetweentaxandfinancialreportingrequirements.

Thefund’sdistributionstoshareholdersincluded:

• $310,000fromshort-termcapitalgains

• $38,199,000whichqualifiedasexempt-interestdividends.

Fortaxablenon-corporateshareholders,lessthan$1,000ofthefund’sincomerepresentsqualifieddividendincomesubjecttoalong-termcapitalgainstaxrateofnotgreaterthan20%.

Forcorporateshareholders,lessthan$1,000ofthefund’sincomequalifiesforthedividends-receiveddeduction.


52


About the Fund’s Directors and Officers

YourfundisoverseenbyaBoardofDirectors(Board)thatmeetsregularlytoreviewawidevarietyofmattersaffectingorpotentiallyaffectingthefund,includingperformance,investmentprograms,compliancematters,advisoryfeesandexpenses,serviceproviders,andbusinessandregulatoryaffairs.TheBoardelectsthefund’sofficers,whoarelistedinthefinaltable.Atleast75%oftheBoard’smembersareindependentofT.RowePriceAssociates,Inc.(T.RowePrice),anditsaffiliates;“inside”or“interested”directorsareemployeesorofficersofT.RowePrice.Thebusinessaddressofeachdirectorandofficeris100EastPrattStreet,Baltimore,Maryland21202.TheStatementofAdditionalInformationincludesadditionalinformationaboutthefunddirectorsandisavailablewithoutchargebycallingaT.RowePricerepresentativeat1-800-638-5660.

Independent Directors(a)

Name(Year of Birth)Year Elected[Number of T. Rowe PricePortfolios Overseen]

Principal Occupation(s) and Directorships of Public Companies and Other Investment Companies During the Past Five Years

TeresaBryceBazemore*(1959)2018[191]

President,RadianGuaranty(2008to2017);Member,BazemoreConsultingLLC(2018topresent);ChimeraInvestmentCorporation(2017topresent);FederalHomeLoanBankofPittsburgh(2017topresent)

RonaldJ.Daniels*(1959)2018[191]

President,TheJohnsHopkinsUniversity(b)andProfessor,PoliticalScienceDepartment,TheJohnsHopkinsUniversity(2009topresent);Director,LyndhurstHoldings(2015topresent)

AnthonyW.Deering**(1945)1986[0]

Chairman,ExeterCapital,LLC,aprivateinvestmentfirm(2004to2017);DirectorandAdvisoryBoardMember,DeutscheBankNorthAmerica(2004to2017);Director,VornadoRealEstateInvestmentTrust(2004to2012);Director,UnderArmour(2008to2017);Director,BrixmorRealEstateInvestmentTrust(2012to2017)

BruceW.Duncan(1951)2013[191]

ChiefExecutiveOfficerandDirector(January2009toDecember2016),ChairmanoftheBoard(January2016topresent),andPresident(January2009toSeptember2016),FirstIndustrialRealtyTrust,anownerandoperatorofindustrialproperties;ChairmanoftheBoard(2005toSeptember2016)andDirector(1999toSeptember2016),StarwoodHotels&Resorts,ahotelandleisurecompany;Director,BostonProperties(May2016topresent);Director,MarriottInternational,Inc.(September2016topresent)

RobertJ.Gerrard,Jr.(1952)2013[191]

AdvisoryBoardMember,PipelineCrisis/WinningStrategies,acollaborativeworkingtoimproveopportunitiesforyoungAfricanAmericans(1997toJanuary2016)

53


Independent Directors(a) (continued)

Name(Year of Birth)Year Elected[Number of T. Rowe PricePortfolios Overseen]


PaulF.McBride(1956)2013[191]

AdvisoryBoardMember,VizziaTechnologies(2015topresent)

CeciliaE.Rouse,Ph.D.(1963)2013[191]

Dean,WoodrowWilsonSchool(2012topresent);ProfessorandResearcher,PrincetonUniversity(1992topresent);MemberofNationalAcademyofEducation(2010topresent);Director,MDRC,anonprofiteducationandsocialpolicyresearchorganization(2011topresent);ResearchAssociateofLaborStudiesProgram(2011to2015)andBoardMember(2015topresent),NationalBureauofEconomicResearch(2011topresent);ChairofCommitteeontheStatusofMinorityGroupsintheEconomicProfession(2012topresent);VicePresident,AmericanEconomicAssociation(2015topresent)

JohnG.Schreiber(1946)1992[191]

Owner/President,CentaurCapitalPartners,Inc.,arealestateinvestmentcompany(1991topresent);Cofounder,Partner,andCochairmanoftheInvestmentCommittee,BlackstoneRealEstateAdvisors,L.P.(1992to2015);Director,GeneralGrowthProperties,Inc.(2010to2013);Director,BlackstoneMortgageTrust,arealestatefinancecompany(2012to2016);DirectorandChairmanoftheBoard,BrixmorPropertyGroup,Inc.(2013topresent);Director,HiltonWorldwide(2013topresent);Director,HudsonPacificProperties(2014to2016);Director,InvitationHomes(2014topresent)

MarkR.Tercek(1957)2009[191]

PresidentandChiefExecutiveOfficer,TheNatureConservancy(2008topresent)

*EffectiveJanuary1,2018,Ms.BazemoreandMr.DanielswereelectedasindependentdirectorsofthePriceFunds.

**Mr.DeeringservedasanindependentdirectorofthePriceFundsuntilNovember17,2017. (a)AllinformationabouttheindependentdirectorswascurrentasofDecember31,2017,

exceptfortheinformationprovidedforMs.BazemoreandMr.Daniels,whichiscurrentasofJanuary1,2018.

(b)WilliamJ.Stromberg,presidentandCEOofT.RowePriceGroup,Inc.,whichistheparentcompanyofthePriceFunds’investmentadviser,hasservedontheBoardofTrusteesofJohnsHopkinsUniversitysince2014andisamemberoftheJohnsHopkinsUniversityBoard’sCompensationCommittee.

54


Inside Directors

Name(Year of Birth)Year Elected*[Number of T. Rowe Price Portfolios Overseen]


EdwardC.Bernard(1956)2006[191]

DirectorandVicePresident,T.RowePrice;ViceChairmanoftheBoard,Director,andVicePresident,T.RowePriceGroup,Inc.;ChairmanoftheBoard,Director,andVicePresident,T.RowePriceInvestmentServices,Inc.,andT.RowePriceServices,Inc.;ChairmanoftheBoardandDirector,T.RowePriceRetirementPlanServices,Inc.;ChairmanoftheBoard,ChiefExecutiveOfficer,Director,andPresident,T.RowePriceInternationalandT.RowePriceTrustCompany;ChairmanoftheBoard,allfunds

EdwardA.Wiese,CFA(1959)2015[56]

VicePresident,T.RowePrice,T.RowePriceGroup,Inc.,T.RowePriceInternational,andT.RowePriceTrustCompany;VicePresident,StateTax-FreeIncomeTrust

*Eachinsidedirectorservesuntilretirement,resignation,orelectionofasuccessor.

Officers

Name (Year of Birth)Position Held With State Tax-Free Income Trust Principal Occupation(s)

AustinApplegate(1974)VicePresident

VicePresident,T.RowePriceandT.RowePriceGroup,Inc.

R.LeeArnold,Jr.,CFA,CPA(1970)VicePresident


DarrellN.Braman(1963)VicePresidentandSecretary

VicePresident,PriceHongKong,PriceSingapore,T.RowePrice,T.RowePriceGroup,Inc.,T.RowePriceInternational,T.RowePriceInvestmentServices,Inc.,andT.RowePriceServices,Inc.

StevenG.Brooks,CFA(1954)VicePresident


M.HelenaCondez(1962)VicePresident


Unlessotherwisenoted,officershavebeenemployeesofT.RowePriceorT.RowePriceInternationalforatleast5years.

55


Officers (continued)


G.RichardDent(1960)VicePresident


SarahJ.Engle(1979)VicePresident


StephanieA.Gentile,CFA(1956)VicePresident

VicePresident,T.RowePrice;formerly,Director,CreditSuisseSecurities(to2014)

JohnR.Gilner(1961)ChiefComplianceOfficer

ChiefComplianceOfficerandVicePresident,T.RowePrice;VicePresident,T.RowePriceGroup,Inc.,andT.RowePriceInvestmentServices,Inc.

CharlesB.Hill,CFA(1961)ExecutiveVicePresident


DylanJones,CFA(1971)VicePresident


MariannaKorpusova,CFA(1984)VicePresident

VicePresident,T.RowePriceandT.RowePriceGroup,Inc.;formerly,student,TheUniversityofChicago(to2014)

PaulJ.Krug,CPA(1964)VicePresident

VicePresident,T.RowePrice,T.RowePriceGroup,Inc.,andT.RowePriceTrustCompany

MarcyM.Lash(1963)VicePresident


AlanD.Levenson,Ph.D.(1958)VicePresident


JosephK.Lynagh,CFA(1958)ExecutiveVicePresident


JamesT.Lynch,CFA(1983)VicePresident

VicePresident,T.RowePrice

KonstantineB.Mallas(1963)ExecutiveVicePresident


CatherineD.Mathews(1963)TreasurerandVicePresident


HughD.McGuirk,CFA(1960)President



56


Officers (continued)


JamesM.Murphy,CFA(1967)VicePresident


LindaA.Murphy(1959)VicePresident


DavidOestreicher(1967)VicePresident

DirectorandVicePresident,T.RowePriceInvestmentServices,Inc.,T.RowePriceRetirementPlanServices,Inc.,T.RowePriceServices,Inc.,andT.RowePriceTrustCompany;ChiefLegalOfficerandVicePresident,T.RowePriceGroup,Inc.;VicePresident,T.RowePriceandT.RowePriceInternational;VicePresident,PriceHongKongandPriceSingapore

JohnW.Ratzesberger(1975)VicePresident

VicePresident,T.RowePrice,T.RowePriceGroup,Inc.,andT.RowePriceTrustCompany;formerly,NorthAmericanHeadofListedDerivativesOperation,MorganStanley(to2013)

ShannonH.Rauser(1987)AssistantSecretary

Employee,T.RowePrice

ChenShao(1980)VicePresident


DouglasD.Spratley,CFA(1969)VicePresident


TimothyG.Taylor,CFA(1975)VicePresident


RobertD.Thomas(1971)VicePresident

VicePresident,T.RowePriceGroup,Inc.,andT.RowePriceInternational

MeganWarren(1968)VicePresident

VicePresident,T.RowePrice,T.RowePriceGroup,Inc.,T.RowePriceRetirementPlanServices,Inc.,T.RowePriceServices,Inc.,andT.RowePriceTrustCompany;formerly,ExecutiveDirector,JPMorganChase(to2017)


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F48-050 4/18

STOCK FUNDSDomestic Blue Chip GrowthCapital Appreciation‡

Capital OpportunityDiversified Mid-Cap GrowthDividend GrowthEquity IncomeEquity Index 500Extended Equity Market IndexFinancial ServicesGrowth & IncomeGrowth StockHealth SciencesMedia & TelecommunicationsMid-Cap Growth‡

Mid-Cap Value‡

New America GrowthNew EraNew Horizons‡

QM U.S. Small & Mid-Cap Core EquityQM U.S. Small-Cap Growth EquityQM U.S. Value EquityReal EstateScience & TechnologySmall-Cap Stock‡

Small-Cap ValueTax-Efficient Equity Total Equity Market IndexU.S. Large-Cap CoreValue

ASSET ALLOCATION FUNDSBalanced Global AllocationMulti-Strategy Total ReturnPersonal Strategy BalancedPersonal Strategy GrowthPersonal Strategy IncomeReal AssetsSpectrum GrowthSpectrum IncomeSpectrum InternationalTarget Date Fundsˆ

BOND FUNDSDomestic TaxableCorporate IncomeCredit OpportunitiesFloating RateGNMA High Yield‡

Inflation Protected BondLimited Duration Inflation

Focused BondNew IncomeShort-Term BondTotal ReturnUltra Short-Term BondU.S. Bond Enhanced IndexU.S. High YieldU.S. Treasury IntermediateU.S. Treasury Long-Term

Domestic Tax-FreeCalifornia Tax-Free BondGeorgia Tax-Free BondIntermediate Tax-Free High YieldMaryland Short-Term Tax-Free BondMaryland Tax-Free BondNew Jersey Tax-Free BondNew York Tax-Free BondSummit Municipal IncomeSummit Municipal IntermediateTax-Free High YieldTax-Free IncomeTax-Free Short-IntermediateVirginia Tax-Free Bond

MONEY MARKET FUNDSTaxableCash Reserves1

Government Money2

U.S. Treasury Money2

MONEY MARKET FUNDS (cont.)Tax-FreeCalifornia Tax-Free Money1

Maryland Tax-Free Money1

New York Tax-Free Money1

Summit Municipal Money Market1

Tax-Exempt Money1

INTERNATIONAL/GLOBAL FUNDSStockAfrica & Middle EastAsia OpportunitiesEmerging EuropeEmerging Markets StockEmerging Markets Value StockEuropean Stock Global ConsumerGlobal Growth StockGlobal IndustrialsGlobal Real EstateGlobal StockGlobal Technology‡

International Concentrated EquityInternational Discovery‡

International Equity IndexInternational StockInternational Value EquityJapanLatin AmericaNew AsiaOverseas StockQM Global Equity

BondDynamic Global BondEmerging Markets BondEmerging Markets Corporate BondEmerging Markets Local Currency BondGlobal High Income BondGlobal Multi-Sector BondInternational BondInternational Bond (USD Hedged)

T.RowePriceInvestmentServices,Inc.100EastPrattStreetBaltimore,MD21202

Thispagecontainssupplementaryinformationthatisnotpartoftheshareholderreport.

T. Rowe Price Mutual Funds

201804-440661

Call 1-800-225-5132 to request a prospectus or summary prospectus; each includes investment objectives, risks, fees, expenses, and other information that you should read and consider carefully before investing. ‡Subjecttocertainexceptions,thefundiscurrentlyclosedtonewinvestorsandnewaccounts.

ˆTheTargetDateFundsareinclusiveoftheRetirementFunds,theTargetFunds,andtheRetirementBalancedFund.

1 Retail Funds: You could lose money by investing in the Fund. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it cannot guarantee it will do so. Beginning October 14, 2016, the Fund may impose a fee upon the sale of your shares or may temporarily suspend your ability to sell shares if the Fund’s liquidity falls below required minimums because of market conditions or other factors. An investment in the Fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The Fund’s sponsor has no legal obligation to provide financial support to the Fund, and you should not expect that the sponsor will provide financial support to the Fund at any time.

2 Government Funds: You could lose money by investing in the Fund. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it cannot guarantee it will do so. An investment in the Fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The Fund’s sponsor has no legal obligation to provide financial support to the Fund, and you should not expect that the sponsor will provide financial support to the Fund at any time.

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