Fidelity Maryland Municipal Income Fund

PORTFOLIO MANAGER Q&A | AS OF AUGUST 31, 2020

Fidelity? Maryland Municipal Income Fund

Key Takeaways

? For the fiscal year ending August 31, 2020, the fund gained 1.45%,

lagging, net of fees, the 3.81% advance of the state benchmark, the Bloomberg Barclays Maryland 2+ Year Enhanced Municipal Bond Index Linked. The fund very slightly outperformed its Lipper peer group average.

? The co-portfolio managers continued to focus on longer-term

objectives and sought to generate attractive tax-exempt income and competitive risk-adjusted returns over time.

? The fund's overweighting in lower-rated securities detracted from

performance, particularly two holdings that performed poorly when their credit ratings were downgraded.

? Underweighting higher-quality securities also held back the fund's

performance versus the state benchmark.

? Differences in the way fund holdings and index components were

priced hurt the fund's relative result as well.

? In contrast, the fund's holdings cumulatively produced more income

than the index, which helped on a relative basis.

? As of August 31, the co-portfolio managers believe there are reasons

for optimism, but that the strength of the economy and municipal market will depend on the path of the coronavirus.

? On March 1, 2020, Michael Maka assumed co-management

responsibilities for the fund. He will succeed Kevin Ramundo, who retired from Fidelity on June 30, 2020, after more than 20 years with the firm.

Not FDIC Insured ? May Lose Value ? No Bank Guarantee

MARKET RECAP

Tax-exempt municipal bonds posted a gain for the 12 months ending August 31, 2020, overcoming market volatility related to economic and credit fears caused by the coronavirus. The Bloomberg Barclays Municipal Bond Index rose 3.24% for the period. Munis gained 7.54% in 2019 and began 2020 on an upswing, driven by extremely robust investor demand. By the second week of March, however, the emerging coronavirus pandemic began to raise the prospect of a broad economic slowdown that would present financial challenges for muni issuers across sectors. For example, revenue bonds used to finance airport projects were hampered by a sharp reduction in air travel. Also, bonds issued by hospitals received scrutiny due to uncertain reimbursement for coronavirus-related treatment and the halt of elective medical procedures. State and local government tax revenue was impacted by the delay in the income-tax filing date to July 15 and the collapse in revenue from sales taxes, activity taxes and fees. Muni yields rose substantially as a result of this heightened credit uncertainty. The U.S. Federal Reserve responded to the risk of rapid economic contraction and dysfunction in the credit markets with a substantial stimulus. This led to increased market liquidity and a return of new issuance in the primary market, which continued through August 31.

PORTFOLIO MANAGER Q&A | AS OF AUGUST 31, 2020

Q&A

Michael Maka Co-Manager

Cormac Cullen Co-Manager

Elizah McLaughlin Co-Manager

Fund Facts

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

SMDMX April 22, 1993 $223.27

Investment Approach

? Fidelity? Maryland Municipal Income Fund is a singlestate-focused 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.

? We emphasize a total-return approach that seeks to generate a high level of tax-exempt income, consistent with the preservation of capital.

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

Q: Elizah, how did the fund perform for the fiscal year ending August 31, 2020

E.M. The municipal bond market and the fund faced unprecedented disruption, volatility and uncertainty as the COVID-19 pandemic triggered a broad global financial market sell-off, followed by a partial rebound.

The fund gained 1.45% the past 12 months, lagging, net of fees, the 3.81% advance of the state benchmark, the Bloomberg Barclays Maryland 2+ Year Enhanced Municipal Bond Index Linked. The fund very slightly outperformed its Lipper peer group average.

In managing the fund, we attempted to generate attractive tax-exempt income and competitive risk-adjusted total returns, including both price appreciation and income, over time. We did this with an eye toward carefully managing risk exposures through close collaboration with our team of portfolio managers, credit and quantitative research analysts, and traders.

Q: We understand there were some changes to the fund's management team.

E.M. Yes, Kevin Ramundo retired from Fidelity on June 30, after more than 20 years with the firm.

He was instrumental in advancing Fidelity's municipal research and analytics process, which is partly why Elizah and I were sorry to see him go. We considered it a sincere honor to have worked with him and we wish him well.

We are excited to welcome Michael Maka, who assumed comanagement responsibilities on March 1. Michael brings 20 years of experience to the municipal bond team, having most recently served as head of municipal bond trading.

Q: Welcome, Michael. Why did the fund trail the state benchmark the past 12 months

M.M. The fund lagged mostly because of our overweighting in lower-quality bonds.

These holdings had served us well from the beginning of the reporting period through early 2020, providing incremental income to the fund and posting above-average price gains as investors sought higher-yielding munis. However, they

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 AUGUST 31, 2020

performed poorly in March, April and May, as investors reduced their holdings in riskier segments of the muni market. Lower-quality munis staged a rebound from June through the end of August, but the gain wasn't enough to fully offset the price decline they suffered in the early spring. Among these lower-rated securities, we invested in some issuers that faced acute pressure due to their ties to the spread of the coronavirus.

Specifically, two lower-quality holdings performed poorly when their credit ratings were downgraded.

We overweighted Baltimore Convention Center Hotel revenue bonds. Declining hotel revenues due to the COVIDrelated shutdown of the economy put these securities under stress.

Similarly, bonds from the Maryland Economic Development Corporation lost ground due to concerns about the on-time completion of the Purple Line light-rail transit project.

At the same time, we were hurt on a relative basis by underweighting higher-quality bonds that fared comparatively well this past year.

Specifically, our underweighting in general-obligation bonds issued by the state hurt us. These securities were boosted by investor demand for higher-quality bonds.

Q: Were there any other factors that detracted from relative performance

M.M. Yes. Fund holdings are priced by a third-party pricing service and validated daily by Fidelity Management & Research's fair-value processes. Securities within the index, however, are priced by the index provider.

These two approaches employ somewhat different methodologies in estimating the prices of municipal securities, most of which trade infrequently. We estimate that these pricing differences notably detracted from the fund's performance versus the state benchmark.

M.M. At period end, we saw some reasons for optimism. From mid-April through period end, investors began to return to the municipal market.

The market experienced a wave of new issuance, and investors oversubscribed to a number of these offerings, reflecting healthy demand.

We think investors saw comparatively high yields for municipals versus many taxable alternatives. For example, relative to corporate bonds, which have a lower average credit quality, municipals provided a similar after-tax yield.

That said, we believe the municipal market ? like all financial markets ? could experience bouts of volatility as investors try to gauge the uncertain path of the coronavirus.

Against this backdrop, we're taking a balanced approach. We continue to hold lower-rated bonds we believe have further room to recover from their March lows should the economy and muni market continue to strengthen. We're also focused on higher-quality securities we believe will provide the fund with liquidity should economic conditions and demand for municipals weaken.

E.M. As our experienced municipal team navigates an uncertain 2020, it's important to remember our portfolios employ a multistep investment process and substantial risk oversight. This time-tested approach is governed by our robust risk-management framework and is driven by Fidelity's vast research capabilities.

Q: Which factors helped the relative result

M.M. The main positive for the fund's relative performance the past year was that its holdings cumulatively produced more income than those in the index. Since municipal bond total returns are composed of income plus price changes, having more income helped.

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

C.C. The strength of the economy and the direction of the municipal market depends largely on the path of the coronavirus. Forecasts from various market participants reflect a wide range of views about the course ahead.

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 AUGUST 31, 2020

Co-Manager Michael Maka on Maryland's credit outlook:

"We're guardedly optimistic about Maryland's credit outlook. Despite having above-average debt and pension liabilities, the state continues to benefit from a comparatively stable economy and conservative budgeting practices. "Maryland's well-educated workforce has strong ties to the federal government due to the state's proximity to the nation's capital. "Although exposure to federal budget cuts has contributed to revenue volatility for the state, leadership has proactively made changes to reduce the impact of future revenue shortfalls. Entering the COVID-19 pandemic, Maryland's reserve balance was $2.7 billion, or roughly 8% of revenues, which was slightly below its highly rated peers. "Like all states, Maryland's fiscal 2020 revenue collections lagged estimates due to measures taken to reduce the spread of the virus. Gov. Larry Hogan signed a statewide stay-at-home order effective March 30, which resulted in a decline in statewide economic activity. He also delayed the tax-filing deadline from April 15 to July 15, which pushed revenue collections into the 2021 fiscal year that began on July 1. "State leaders closed Maryland's fiscal 2020 budget shortfall with a combination of roughly $120 million in expenditure reductions and a $144 million draw on the state's $1.2 billion rainy-day fund. "In March, Maryland's General Assembly passed the state's fiscal 2021 budget, which relied on a flat year-over-year revenue projection and 1.4% expense growth. However, in May, the state estimated a $2.1 billion or 11% revenue shortfall for fiscal 2021 versus the initial budget. "Positively, Maryland has ample access to liquidity to help address this shortfall. In addition, the state's ability to raise revenue and its strong management practices will be beneficial as the state reacts to economic developments."

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 AUGUST 31, 2020

MUNICIPAL-SECTOR DIVERSIFICATION

Sector

Portfolio Weight Index Weight

Relative Weight

Relative Change From Six Months

Ago

Health Care

34.24%

10.76%

23.48%

0.72%

Local Obligations

18.00%

37.36%

-19.36%

-7.20%

Water & Sewer

10.18%

4.64%

5.54%

-0.48%

Pre-Refunded

9.59%

5.21%

4.38%

4.52%

Higher Education

7.25%

3.40%

3.85%

0.79%

Transportation

6.80%

2.75%

4.05%

-0.80%

Special Tax

5.66%

10.15%

-4.49%

-0.58%

State Obligations

3.70%

20.99%

-17.29%

1.05%

Housing

1.86%

4.19%

-2.33%

0.09%

Corporate-Backed

0.00%

0.45%

-0.45%

0.03%

Electric & Gas

0.00%

0.00%

0.00%

0.00%

Lease/Other

0.00%

0.10%

-0.10%

0.08%

Tobacco

0.00%

0.00%

0.00%

0.00%

Cash & Net Other Assets

2.72%

0.00%

2.72%

1.78%

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

5.7

5.8

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

DURATION

Years

Six Months Ago

5.6

5.5

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

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