Fidelity Tax-Free Bond Fund

[Pages:11]PORTFOLIO MANAGER Q&A | AS OF JANUARY 31, 2022

Fidelity? Tax-Free Bond Fund

Key Takeaways

? The fund returned -1.16% for the fiscal year ending January 31, 2022,

outpacing, net of fees, the -2.08% result of the benchmark, the Bloomberg 3+ Year Non-AMT Municipal Bond Index. The fund slightly topped its Lipper peer group average.

? Co-Portfolio Managers Cormac Cullen, Michael Maka and Elizah

McLaughlin continued to focus on longer-term objectives the past 12 months and sought to generate attractive tax-exempt income and competitive risk-adjusted returns over time.

? Larger-than-benchmark exposure to bonds issued by Illinois and its

related entities helped the fund's performance versus the index.

? Overweighting health care and higher-education bonds with lower

credit ratings within the investment-grade category also contributed to the fund's relative result.

? Differences in the way fund holdings and benchmark components

were priced provided a performance tailwind for the fund.

? Conversely, yield-curve positioning detracted versus the benchmark

due to the fund's overweighting in shorter-term securities, which lagged longer-term bonds.

? As of January 31, Cormac, Michael and Elizah are optimistic about

municipal credit. They see attractive valuations for the longer term, but believe the muni market could be volatile in the short term.

Not FDIC Insured ? May Lose Value ? No Bank Guarantee

MARKET RECAP

Tax-exempt municipal bonds declined modestly for the 12 months ending January 31, 2022, as expectations for higher policy interest rates, failure to pass the income-tax increases included in the Build Back Better legislation, and the perceived richness of municipals relative to Treasury bonds caused shareholder flows to turn negative late in the period. The Bloomberg Municipal Bond Index returned -1.89% for the 12 months. In 2021, the muni market benefited from an improved fiscal outlook for many municipal issuers, economic optimism and strong demand for tax-exempt munis amid expectations for higher tax rates on upper-income tax brackets. Early in the period, munis declined amid concerns that stimulus-induced inflation could diminish real bond returns over time. Munis then gained from March through July 2021, propelled by better-thanexpected tax revenue from many state and local governments and reduced inflation expectations. Munis lost slight ground in August and September, then rose in the fourth quarter, partly driven by newfound clarity regarding infrastructure investment due to the passage of the Infrastructure Investment and Jobs Act (IIJA), which earmarked $550 for new infrastructure spending and limited new tax-exempt bond issuance. Then, in January 2022, the muni market experienced rate volatility and shareholder outflows that more than erased its 2021 gain. Muni credit fundamentals remained solid for the 12 months and, for most issuers, the risk of credit-rating downgrades appeared low.

PORTFOLIO MANAGER Q&A | AS OF JANUARY 31, 2022

Q&A

Cormac Cullen Co-Manager

Michael Maka Co-Manager

Elizah McLaughlin Co-Manager

Fund Facts

Trading Symbol: Start Date: Size (in millions):

FTABX April 10, 2001 $4,525.37

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 tax-exempt income that is consistent with the preservation of capital.

An interview with Co-Managers Michael Maka, Cormac Cullen and Elizah McLaughlin

Q: Michael, how did the fund perform for the fiscal year ending January 31, 2022

M.M. The fund returned -1.16% the past 12 months, outpacing, net of fees, the -2.08% result of the benchmark, the Bloomberg 3+ Year Non-AMT Municipal Bond Index. The fund slightly topped its Lipper peer group average.

Q: What shaped the environment for municipals the past 12 months

M.M. Munis benefited broadly from a relatively stable interest-rate backdrop for much of the past 12 months. Also, massive federal emergency aid, along with greater-thanbudgeted tax revenue as the U.S. economy gradually reopened from coronavirus-induced shutdowns, enhanced the fiscal outlooks of many muni-bond issuers at both the state and local levels.

Investors also moved past worries the coronavirus pandemic would drive a wave of defaults and bankruptcies. To the contrary, federal stimulus funds strengthened the balance sheets of many municipalities.

Then, early in 2022, munis and the rest of the fixed-income market faced growing concerns that the U.S. Federal Reserve could soon raise policy interest rates to fight inflation, which stood at a 40-year high at period's end. This pushed municipal bond yields higher, even as the financial outlooks for most state and local governments continued to improve. Since prices move opposite yields, muni returns suffered in January and more than erased the gains they made the previous 11 months.

This period, as always, Elizah, Cormac and I attempted to generate attractive tax-exempt income and a competitive risk-adjusted total return, including both price appreciation and income. We did this with an eye toward carefully managing the fund's risk exposures through close collaboration with our team of portfolio managers, credit and quantitative research analysts and traders.

Q: What drove the fund's outperformance of the benchmark

M.M. Overweighting bonds issued by Illinois and its related entities ? including the Metropolitan Pier and Exposition

2 | For definitions, fund risks and other important information, please see the Definitions and Important Information section of this Q&A.

PORTFOLIO MANAGER Q&A | AS OF JANUARY 31, 2022

Authority ? helped versus the benchmark. They were some of the muni market's biggest gainers this period, as both Moody's Investors Service and S&P upgraded the state's general-obligation credit.

The fund also held larger-than-index exposure to lower-rated investment-grade securities (rated BBB and A) in the health care and higher-education segments. This positioning reflected our bottom-up analysis, which suggested many health care and higher-education bonds that had come under severe pressure in the worst days of the COVID-19 crisis in 2020 remained undervalued and carried an attractive long-term risk/reward profile.

Bonds in each segment rallied the past 12 months and produced better total returns than the benchmark. They benefited from the comparatively high income they produced and better-than-average price performance as credit spreads tightened.

As a reminder, lower-rated investment-grade bonds typically pay higher yields to compensate investors for the added credit risk of owning these securities. Many investors preferred to own lower-rated securities this period in an environment of low overall yields.

Q: Cormac, what else helped

C.C. Pricing factors boosted the fund's relative result. Fund holdings are priced by a third-party pricing service and validated daily by Fidelity Management & Research's fairvalue processes. Securities within the index, however, are priced by the index provider.

We view the $1.2 billion Infrastructure Investment and Jobs Act (IIJA), signed by President Biden on November 15, as another slightly positive development. We expect this legislation could support economic activity and municipalrevenue collections.

M.M. The past 12 months saw a record inflow of shareholder money into municipal bonds, driving yields and credit spreads down and supporting fund performance. Looking ahead, credit spreads and yields could increase if investor demand for munis wanes, perhaps due to rising interest rates and failure to pass tax increases contained in the Build Back Better bill. Flagging demand also could result in near-term price declines for the asset class.

That said, by several measures, we saw more-attractive muni valuations at the end of January than we had since the depths of the coronavirus market disruptions in spring 2020. To the extent investors seek out relative value, we believe munis could benefit from increased demand.

E.M. The muni market seems likely to see elevated volatility in 2022, which could present more opportunities to generate outperformance over the longer term. We believe this will play into our strengths, since the fund is constructed with a careful and intentional emphasis on security selection.

We remain committed to the approach of building individual exposures in the fund that reflect risks with which we are comfortable, at entry prices that we believe offer strong relative value.

These two approaches employ somewhat different methodologies in estimating the prices of municipal securities, most of which trade infrequently.

Q: Elizah, what factors detracted

E.M. Our yield-curve positioning, meaning how we allocated investments across bonds with various interest-rate sensitivity (duration), slightly detracted versus the benchmark. We held more exposure to shorter-term bonds than the benchmark. These securities lagged longer-term bonds as the yield curve flattened, meaning shorter-term yields rose more than longer-term yields.

This flattening reflected investors' concerns about long-term economic growth and potential policy interest-rate hikes over the short- to medium-term.

Q: Team, what's your outlook for the muni market as of January 31

C.C. We're optimistic about the fundamental outlook for municipal credit. Strong tax revenue and federal stimulus continue to support credit quality for muni issuers.

3 | For definitions, fund risks and other important information, please see the Definitions and Important Information section of this Q&A.

PORTFOLIO MANAGER Q&A | AS OF JANUARY 31, 2022

The co-managers on the Infrastructure Investment and Jobs Act:

C.C. "On November 15, 2021, President Joe Biden signed into law the $1.2 billion bipartisan Infrastructure Investment and Jobs Act (IIJA), legislation that we believe will have a minimal impact on municipal issuers, as well as the municipal market, for several years to come. "Of the total $1.2 trillion in federal spending, only $550 billion is new spending. The remainder will fund the reauthorization of the Highway Trust Fund. New spending will be divided among a range of investments, including roads and bridges ($100 billion), electric-grid infrastructure ($73 billion), rail ($66 billion), broadband projects ($65 billion), and water infrastructure ($55 billion)." E.M. "We view the IIJA as a modest credit development for munis. We expect infrastructure investment will support economic growth and tax and fee revenue for issuers. "It also will allow muni-market issuers to address a portion of the significant deferred maintenance costs, an area of increased focus for credit-rating agencies over the past decade. "We don't believe the IIJA will lead to a major boom in muni-bond issuance over the near term. The $1.2 trillion will be spent in increments over the next several years as projects are selected and plans are executed." M.M. "Lastly, we're closely watching developments surrounding the Build Back Better Act, which, if passed and signed into law, also could bring creditand supply-related changes to the municipal market, including either the removal of or adjustments to the SALT (state and local tax) deduction cap."

4 | For definitions, fund risks and other important information, please see the Definitions and Important Information section of this Q&A.

PORTFOLIO MANAGER Q&A | AS OF JANUARY 31, 2022

MUNICIPAL-SECTOR DIVERSIFICATION

Sector

Portfolio Weight Index Weight

Relative Weight

Relative Change From Six Months

Ago

Health Care

21.09%

10.66%

10.43%

-0.12%

Transportation

17.24%

11.74%

5.50%

0.18%

State Obligations

14.94%

17.64%

-2.70%

0.95%

Local Obligations

12.11%

16.85%

-4.74%

1.07%

Higher Education

7.80%

5.91%

1.89%

-0.06%

Special Tax

7.18%

13.39%

-6.21%

0.06%

Electric & Gas

6.78%

5.19%

1.59%

0.65%

Corporate-Backed

6.10%

2.25%

3.85%

1.21%

Water & Sewer

2.50%

9.28%

-6.78%

-0.19%

Pre-Refunded

1.60%

2.59%

-0.99%

0.00%

Housing

1.52%

2.74%

-1.22%

-0.28%

Tobacco

0.71%

0.52%

0.19%

-0.03%

Lease/Other

0.01%

0.79%

-0.78%

-0.33%

Cash & Net Other Assets

0.42%

0.45%

-0.03%

-3.11%

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.

WEIGHTED AVERAGE MATURITY

Six Months Ago

Years

5.9

5.8

This is a weighted average of all maturities held in the fund.

DURATION

Years

Six Months Ago

6.0

5.8

5 | For definitions, fund risks and other important information, please see the Definitions and Important Information section of this Q&A.

PORTFOLIO MANAGER Q&A | AS OF JANUARY 31, 2022

CREDIT-QUALITY DIVERSIFICATION

Credit Quality

Portfolio Weight

Index Weight

Relative Weight

Relative Change From Six Months

Ago

U.S. Government

0.00%

0.00%

0.00%

0.00%

AAA

5.27%

21.09%

-15.82%

0.99%

AA

39.10%

54.57%

-15.47%

2.94%

A

36.22%

17.79%

18.43%

-1.39%

BBB

14.55%

6.22%

8.33%

-0.14%

BB

2.34%

0.00%

2.34%

-0.15%

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

2.09%

0.33%

1.76%

0.67%

Cash & Net Other Assets

0.42%

0.00%

0.42%

-2.92%

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.

10 LARGEST STATE WEIGHTS

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

Portfolio Weight 15.67% 8.29% 6.61% 6.09% 5.58% 5.22% 5.08% 3.91% 3.14% 3.12%

Index Weight 4.49% 16.36% 3.96% 9.42% 3.76% 3.79% 16.91% 2.21% 3.19% 0.75%

Relative Weight 11.18% -8.07% 2.65% -3.33% 1.82% 1.43% -11.83% 1.70% -0.05% 2.37%

Relative Change From Six Months

Ago -0.95% 1.20% -0.29% 0.19% 0.00% 0.59% 0.67% 0.79% -0.12% 0.01%

6 | For definitions, fund risks and other important information, please see the Definitions and Important Information section of this Q&A.

PORTFOLIO MANAGER Q&A | AS OF JANUARY 31, 2022

FISCAL PERFORMANCE SUMMARY: Periods ending January 31, 2022

Cumulative

6 Month

YTD

1 Year

Annualized

3 Year

5 Year

10 Year/ LOF1

Fidelity Tax-Free Bond Fund Gross Expense Ratio: 0.46%2

-3.13%

-2.76%

-1.16%

4.12%

3.97%

3.70%

Bloomberg 3+ Year Non-AMT Municipal Bond Index

-3.38%

-2.99%

-2.08%

3.78%

3.75%

3.46%

Lipper General & Insured Municipal Debt Funds Classification -3.14%

-2.70%

-1.35%

3.68%

3.49%

3.21%

Morningstar Fund Muni National Long

-3.61%

-3.18%

-1.39%

4.08%

3.69%

3.45%

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 prospectus in effect as of the date shown above and generally is based on amounts incurred during that 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. Please see the last page(s) of this Q&A document for most-recent calendar-quarter performance.

DIVIDENDS AND YIELD: Fiscal Periods ending January 31, 2022

Past One Month

30-Day SEC Yield

1.33%

30-Day SEC Restated Yield

1.13%

30-Day SEC Tax-Equivalent Yield

2.30%

Average Share Price

$11.99

Dividends Per Share

2.45?

Fiscal period represents the fund's semiannual or annual review period.

Past Six Months ----

$12.16 14.47?

Past One Year ----

$12.19 29.11?

7 | For definitions, fund risks and other important information, please see the Definitions and Important Information section of this Q&A.

PORTFOLIO MANAGER Q&A | AS OF JANUARY 31, 2022

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.

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.

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.

DIVIDENDS AND 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 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 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 do not reflect the NY state tax rate that applies to income in excess of $5 million. 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.

Dividends per share show the income paid by the fund for a set period of time. If you annualize this number, you can compare the fund's income over different periods.

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 Non-Alternative Minimum Tax (AMT) municipal bonds with maturities of three years or more.

Bloomberg Municipal Bond Index is a market-value-weighted index of investment-grade municipal bonds with maturities of one year or more.

LIPPER INFORMATION Lipper Averages are averages of the performance of all mutual funds within 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.

DURATION 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.

FUND RISKS

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.

WEIGHTED AVERAGE MATURITY Weighted average maturity (WAM) can be used as a measure of sensitivity to interest rate changes and market changes. Generally, the longer the maturity, the greater the sensitivity to such changes. WAM is based on the dollar-weighted average length of time until principal payments must be paid. Depending on the types of

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