Fidelity Tax-Free Bond Fund

[Pages:7]QUARTERLY FUND REVIEW | AS OF DECEMBER 31, 2021

Fidelity? Tax-Free Bond Fund

Investment Approach

? Fidelity? Tax-Free Bond Fund is a diversified national municipal bond strategy investing in general obligation and revenue-backed municipal securities across the yield curve.

? Our investment approach focuses on fundamental credit analysis, yield-curve positioning and an analysis of the structural characteristics of each security.

? The fund's interest rate sensitivity is targeted closely to that of its benchmark to prevent interest rate speculation from overwhelming research-based strategies that we deem to have a higher likelihood of success.

? In managing the fund, we emphasize a total-return approach that seeks to generate a level of taxexempt income that is consistent with the preservation of capital.

PERFORMANCE SUMMARY

Fidelity Tax-Free Bond Fund Gross Expense Ratio: 0.46%2 Bloomberg 3+ Year Non-AMT Municipal Bond Index Lipper General & Insured Municipal Debt Funds Classification Morningstar Fund Muni National Long

Cumulative

3 Month

YTD

0.87% 2.62%

0.82% 0.84% 1.06%

1.63% 2.28% 2.88%

1 Year 2.62%

1.63% 2.28% 2.88%

Annualized

3 Year

5 Year

10 Year/ LOF1

5.37% 4.66% 4.24%

5.12% 4.84% 5.51%

4.52% 4.14% 4.49%

4.04% 3.81% 4.10%

1 Life of Fund (LOF) if performance is less than 10 years. Fund inception date: 04/10/2001. 2 This expense ratio is from the most recent prospectus and generally is based on amounts incurred during the

most recent fiscal year, or estimated amounts for the current fiscal year in the case of a newly launched fund. It does not include any fee waivers or reimbursements, which would be reflected in the fund's net expense ratio.

Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate; therefore, you may have a gain or loss when you sell your shares. Current performance may be higher or lower than the performance stated. Performance shown is that of the fund's Retail Class shares (if multiclass). You may own another share class of the fund with a different expense structure and, thus, have different returns. To learn more or to obtain the most recent month-end or other share-class performance, visit performance, institutional., or . Total returns are historical and include change in share value and reinvestment of dividends and capital gains, if any. Cumulative total returns are reported as of the period indicated.

For definitions and other important information, please see the Definitions and Important Information section of this Fund Review.

FUND INFORMATION

Manager(s): Team Managed

Trading Symbol: FTABX

Start Date: April 10, 2001

Size (in millions): $4,716.29

Morningstar Category: Fund Muni National Long The municipal market is volatile and can be significantly affected by adverse tax, legislative, or political changes and the financial condition of the issuers of municipal securities. Interest rate increases can cause the price of a debt security to decrease. A portion of the dividends you receive may be subject to federal, state, or local income tax or may be subject to the federal alternative minimum tax. Leverage can increase market exposure and magnify investment risk.

Not FDIC Insured ? May Lose Value ? No Bank Guarantee

QUARTERLY FUND REVIEW: Fidelity? Tax-Free Bond Fund | AS OF DECEMBER 31, 2021

Municipal Market Review

Investment-grade municipal bonds posted a moderate gain for the fourth quarter of 2021, benefiting from strong investor demand for tax-exempt income, limited supply, and newfound clarity regarding federal infrastructure investment. The Bloomberg Municipal Bond Index returned 0.72% for the three months.

Market liquidity remained robust, aided by reinvestment and significant investor money seeking to buy munis. Many municipal issuers benefited throughout the period from an improved outlook for fiscal 2022, bolstered by better-than-expected tax revenue and the substantial federal aid in the American Rescue Plan (ARP) Act.

The muni market experienced volatility in October and a temporary slump in demand. Also, the Democrats removed several provisions in their Build Back Better bill seen as favorable to muni investors, including the ability of state and local governments to issue "advance refunding" bonds, or tax-free munis issued for the purpose of helping municipalities refinance their existing bonds during the call protection period. The Tax Cuts and Jobs Act of 2017 eliminated issuing new tax-exempt bonds to advance refund outstanding tax-exempt bonds.

Munis then rebounded strongly in November as coronavirus variants led investors to believe the U.S. Federal Reserve could delay interest rate increases.

The passage of the Infrastructure Investment and Jobs Act (IIJA) in November had minimal market impact. This bipartisan effort earmarked $550 billion of new spending on roads, bridges, railways, water infrastructure and electric grids. While providing needed additional infrastructure funding, the IIJA was relatively modest relative to infrastructure needs and is not expected to result in significant additional tax-exempt bond issuance.

Muni investors weighed several crosscurrents throughout the fourth quarter, including the pace of inflation, which rose 6.8% in the year through November, reaching the highest reported level since 1982. By early December, U.S. Fed Chair Jerome Powell stated it was time to retire the term "transitory" in describing U.S. inflation. This led to higher short-term bond yields, as investors believed the Fed was more committed to lowering the rate of inflation.

Notably, by period end, the Fed had accelerated its plans to tighten monetary policy, heralding a swifter end to its pandemic-era bondbuying program and the prospects for three quarter-point rate hikes in 2022.

For the period, revenue bonds used to finance specific projects slightly outperformed general-obligation bonds issued by state and local governments. Overall, bonds rated A and BAA (the Bloomberg equivalent to BBB) performed roughly in line with higher-quality AA and AAA issues. All states and territories posted a positive return for the quarter.

THREE-MONTH MUNI INDEX RETURNS BY SECTOR

Sector Insured Education Special Tax Transportation Local GO Hospital Water & Sewer Housing Index Leasing Electric State GO Industrial Revenue Prerefunded Resource Recovery

Total Return --

0.91% 0.89% 0.83% 0.81% 0.81% 0.79% 0.72% 0.72% 0.70% 0.60% 0.60% 0.49% -0.05% -0.21%

Returns represent those of the Bloomberg Municipal Bond Index.

THREE-MONTH MUNI INDEX RETURNS BY CREDIT QUALITY

Quality

Total Return

AAA

0.82%

AA

0.69%

A

0.69%

BAA

0.80%

Index

0.72%

Returns represent those of the Bloomberg Municipal Bond Index.

2 | For definitions and other important information, please see Definitions and Important Information section of this Fund Review.

QUARTERLY FUND REVIEW: Fidelity? Tax-Free Bond Fund | AS OF DECEMBER 31, 2021

Performance Review

DETAILED FUND ATTRIBUTION RELATIVE TO BENCHMARK

Strategy: Sector Allocation

Strategy: Credit

Market Environment

Short-term muni yields rose for the quarter. Across maturities, the market experienced very modest performance differentiation by sector.

Market Environment

Lower-rated investment-grade municipal bonds performed roughly in line with higher-quality munis. Noninvestment grade munis outperformed.

Fund Positioning (Impact vs. Benchmark)

? Overweighting transportation municipals contributed to the fund's relative result. (Positive)

Fund Positioning (Impact vs. Benchmark)

? Overweighting lower-quality investment-grade and noninvestment-grade securities boosted the fund's relative return. (Positive)

? Overweighting the bonds of the Metropolitan Pier and Exposition Authority detracted. (Negative)

Strategy: Yield Curve

Market Environment

The yield curve flattened during the quarter, with yields on shorter-term bonds rising and yields on long-term bonds declining.

Fund Positioning (Impact vs. Benchmark)

The fund's modest overweight to shorter-maturity bonds detracted as interest rates rose. (Negative)

Strategy: Additional Factors

Market Environment

The fund and its benchmark employ somewhat different methodologies in estimating the prices of municipal securities, most of which trade infrequently.

Fund Positioning (Impact vs. Benchmark)

? We estimate that pricingmethodology differences contributed to the fund's relative performance. (Positive)

3 | For definitions and other important information, please see Definitions and Important Information section of this Fund Review.

QUARTERLY FUND REVIEW: Fidelity? Tax-Free Bond Fund | AS OF DECEMBER 31, 2021

Outlook and Positioning

We're optimistic about fundamentals for municipal credit, based on solid economic performance and significant federal aid to municipal issuers included in the ARP Act.

Potential moves to raise taxes on higher income earners at the state and federal levels could fuel continued demand for tax-exempt municipal bonds, despite rich valuations.

As of December 31, we're taking a balanced approach. We continue to hold lower-quality investment-grade bonds we believe have potential upside should the economy and muni market continue to strengthen. We're also focused on maintaining an appropriate allocation to higher-quality securities and cash that we believe will provide us with liquidity should market conditions weaken.

The Fed's ability to keep inflation expectations muted while tapering its open-market bond purchases and raising the range for the federal funds rate could impact the shape of the yield curve.

It is important for investors to remember that our portfolios are constructed with a careful and intentional emphasis on issue selection, especially with consideration to the individual level of liquidity of the security and overall financial resiliency of its issuer. In the current environment, we continue to evaluate each of the fund's investments and are monitoring those that may be more financially challenged than others. Overall, we continue to remain committed to the approach of building individual exposures in the portfolio that reflect risks with which we are comfortable, at entry prices that we believe offer strong relative value.

MUNICIPAL-SECTOR DIVERSIFICATION

Sector

Portfolio Weight

Index Weight

Relative Change Relative From Prior Weight Quarter

Health Care

20.80% 10.61% 10.19% -0.31%

Transportation

16.60% 11.76% 4.84% -0.68%

State Obligations

15.11% 17.72% -2.61% 0.54%

Local Obligations

12.10% 17.04% -4.94% -0.51%

Higher Education

7.83% 5.90% 1.93% -0.02%

Special Tax

7.12% 13.21% -6.09% 0.56%

Electric & Gas

6.65% 5.22% 1.43% 0.48%

Corporate-Backed

6.02% 2.22% 3.80% 0.36%

Water & Sewer

2.46% 9.32% -6.86% -0.19%

Housing

1.51% 2.68% -1.17% -0.12%

Pre-Refunded

1.46% 2.49% -1.03% -0.71%

Tobacco

0.70% 0.55% 0.15% -0.01%

Lease/Other

0.01% 0.79% -0.78% -0.18%

Cash & Net Other Assets 1.63% 0.49% 1.14% 0.79%

Futures, Options & Swaps

0.00% 0.00% 0.00% 0.00%

Net Other Assets can include fund receivables, fund payables, and offsets to other derivative positions, as well as certain assets that do not fall into any of the portfolio composition categories. Depending on the extent to which the fund invests in derivatives and the number of positions that are held for future settlement, Net Other Assets can be a negative number.

CREDIT-QUALITY DIVERSIFICATION

Credit Quality

Portfolio Weight

Index Weight

Relative Weight

Relative Change From Prior Quarter

U.S. Government

0.00%

0.00%

0.00%

0.00%

AAA

5.24%

21.19% -15.95%

0.26%

AA

38.94% 54.45% -15.51% 1.37%

A

35.38% 17.77% 17.61% -2.42%

BBB

14.46%

6.25%

8.21%

-0.08%

BB

2.29%

0.00%

2.29%

-0.18%

B

0.00%

0.00%

0.00%

0.00%

CCC & Below

0.01%

0.00%

0.01%

0.00%

Short-Term Rated

0.00%

0.00%

0.00%

0.00%

Not Rated/Not Available

2.06%

0.34%

1.72%

0.07%

Cash & Net Other Assets

1.62%

0.00%

1.62%

0.98%

Net Other Assets can include fund receivables, fund payables, and offsets to other derivative positions, as well as certain assets that do not fall into any of the portfolio composition categories. Depending on the extent to which the fund invests in derivatives and the number of positions that are held for future settlement, Net Other Assets can be a negative number.

Credit ratings for a rated issuer or security are categorized using the highest credit rating among the following three Nationally Recognized Statistical Rating Organizations ("NRSRO"): Moody's Investors Service (Moody's); Standard & Poor's Rating Services (S&P); or Fitch, Inc. Securities that are not rated by any of these three NRSRO's (e.g. equity securities) are categorized as Not Rated. All U.S. government securities are included in the U.S. Government category. The table information is based on the combined investments of the fund and its pro-rata share of any investments in other Fidelity funds.

4 | For definitions and other important information, please see Definitions and Important Information section of this Fund Review.

QUARTERLY FUND REVIEW: Fidelity? Tax-Free Bond Fund | AS OF DECEMBER 31, 2021

10 LARGEST STATE WEIGHTS

State Illinois New York Florida Texas New Jersey Pennsylvania California Georgia Washington Kentucky

Portfolio Weight 15.46% 8.16% 6.57% 6.03% 5.54% 5.17% 4.66% 3.94% 3.11% 3.09%

Index Weight 4.46% 16.17% 3.89% 9.49% 3.85% 3.76% 16.96% 2.30% 3.20% 0.75%

CHARACTERISTICS

Duration 30-Day SEC Yield 30-Day SEC Restated Yield 30-Day SEC Tax-Equivalent Yield Net Asset Value Subject to Alternative Minimum Tax

Portfolio 5.76 years

1.07% 0.87% 1.81% $12.15 0.00%

Index 5.81 years

------

5 | For definitions and other important information, please see Definitions and Important Information section of this Fund Review.

QUARTERLY FUND REVIEW: Fidelity? Tax-Free Bond Fund | AS OF DECEMBER 31, 2021

Definitions and Important Information

Information provided in this document is for informational and educational purposes only. To the extent any investment information in this material is deemed to be a recommendation, it is not meant to be impartial investment advice or advice in a fiduciary capacity and is not intended to be used as a primary basis for you or your client's investment decisions. Fidelity, and its representatives may have a conflict of interest in the products or services mentioned in this material because they have a financial interest in, and receive compensation, directly or indirectly, in connection with the management, distribution and/or servicing of these products or services including Fidelity funds, certain third-party funds and products, and certain investment services.

CHARACTERISTICS

Duration is a measure of a security's price sensitivity to changes in interest rates. Duration differs from maturity in that it considers a security's interest payments in addition to the amount of time until the security reaches maturity, and also takes into account certain maturity shortening features (e.g., demand features, interest rate resets, and call options) when applicable. Securities with longer durations generally tend to be more sensitive to interest rate changes than securities with shorter durations. A fund with a longer average duration generally can be expected to be more sensitive to interest rate changes than a fund with a shorter average duration.

30-day SEC Yield is a standard yield calculation developed by the Securities and Exchange Commission for bond funds. The yield is calculated by dividing the net investment income per share earned during the 30-day period by the maximum offering price per share on the last day of the period. The yield figure reflects the dividends and interest earned during the 30-day period, after the deduction of the fund's expenses. It is sometimes referred to as "SEC 30-Day Yield" or "standardized yield".

30-Day SEC Restated Yield is the fund's 30-day yield without applicable waivers or reimbursements, stated as of month-end.

30-day SEC Tax-Equivalent Yield shows what you would have to earn on a taxable investment to equal the fund's tax-free yield, if you are in the 37% effective federal income tax bracket and also subject to the 3.8% Medicare Contribution tax, but does not reflect the payment of the federal alternative minimum tax, if applicable. Medicare Contribution tax is a tax on non-municipal investment income that applies to individuals with incomes over $200,000 (or $250,000, filing jointly). For state-specific funds, TEY is based not only on the highest federal tax rate (40.8%) but also the highest state tax rate. For state-specific funds, TEYs assume investors are state residents and would not be able to take an itemized deduction on their federal returns for state taxes on investment income. For NY funds, TEYs reflect NYC income taxes and treat them the same as state taxes. For MD funds, TEYs reflect the highest city/county tax rates in MD and treat them the same as state taxes. Consult a tax professional for further detail.

Net Asset Value is the dollar value of one share of a fund; determined by taking the total assets of a fund, subtracting the total liabilities, and dividing by the total number of shares outstanding.

Subject to Alternative Minimum Tax is the percent of interest income subject to the alternative minimum tax (AMT) based on

total net assets within a portfolio.

IMPORTANT FUND INFORMATION Relative positioning data presented in this commentary is based on the fund's primary benchmark (index) unless a secondary benchmark is provided to assess performance.

INDICES It is not possible to invest directly in an index. All indices represented are unmanaged. All indices include reinvestment of dividends and interest income unless otherwise noted.

Bloomberg 3+ Year Non-AMT Municipal Bond Index is a marketvalue-weighted index of investment-grade fixed-rate NonAlternative Minimum Tax (AMT) municipal bonds with maturities of three years or more.

LIPPER INFORMATION Lipper Averages are averages of the performance of all mutual funds with their respective investment classification category. The number of funds in each category periodically changes. Lipper, a Refinitiv company, is a nationally recognized organization that ranks the performance of mutual funds.

MORNINGSTAR INFORMATION ? 2022 Morningstar, Inc. All rights reserved. The Morningstar information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or redistributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Fidelity does not review the Morningstar data and, for mutual fund performance, you should check the fund's current prospectus for the most up-to-date information concerning applicable loads, fees and expenses.

SECTOR WEIGHTS Sector weights illustrate examples of market segments in which the fund may invest, and may not be representative of the fund's current or future investments. They should not be construed or used as a recommendation for any subset of the market.

6 |

Before investing in any mutual fund, please carefully consider the investment objectives, risks, charges, and expenses. For this and other information, call or write Fidelity for a free prospectus or, if available, a summary prospectus. Read it carefully before you invest.

Past performance is no guarantee of future results.

Views expressed are through the end of the period stated and do not necessarily represent the views of Fidelity. Views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund. The securities mentioned are not necessarily holdings invested in by the portfolio manager(s) or FMR LLC. References to specific company securities should not be construed as recommendations or investment advice.

Diversification does not ensure a profit or guarantee against a loss.

S&P 500 is a registered service mark of Standard & Poor's Financial Services LLC.

Other third-party marks appearing herein are the property of their respective owners.

All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company.

Fidelity Brokerage Services LLC, Member NYSE, SIPC, 900 Salem Street, Smithfield, RI 02917.

Fidelity Distributors Company LLC, 500 Salem Street, Smithfield, RI 02917.

? 2022 FMR LLC. All rights reserved.

Not NCUA or NCUSIF insured. May lose value. No credit union guarantee.

656626.36.0

 ................
................

In order to avoid copyright disputes, this page is only a partial summary.

Google Online Preview   Download