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How Fidelity Manages Freedom® Funds

If you've decided that a target date fund may be a smart way to save for retirement, there are many reasons to consider a Fidelity Freedom® Fund.

The Freedom Funds follow a "glide path," which is illustrated below. This glide path is based on Fidelity's research and shows the funds' anticipated exposure to equity, bond, and short-term funds over time. Our glide path strategy strives to balance investment returns and risks while seeking to meet retirement income objectives.

Each Freedom Fund name includes a date, which can help investors to choose the fund that represents their anticipated year of retirement, their "target date." For example, the Fidelity Freedom® 2030 Fund is for investors expecting to retire around 2030. Each Freedom Fund's neutral asset allocation strategy becomes increasingly more conservative as the target date approaches and passes.

The Freedom Funds are generally expected to reach their most conservative allocation 10–19 years after the target date. At that point, the target asset allocation will include approximately 24% equity funds, 46% bond funds, and 30% short-term funds.

Note that the above chart is meant to show an approximation of future neutral asset allocation adjustment and is meant for illustration purposes only. All Freedom Funds are subject to the volatility of U.S. and international equity and fixed income markets, and may be subject to risks associated with investing in high-yield, small-cap, and foreign securities. Principal invested is not guaranteed at any time, including on or after a fund’s target date. Actual Freedom Fund future target asset allocations may differ.

Professional portfolio management

Fidelity has been managing the Freedom Funds since 1996 through a range of market cycles. During that time we have developed a strategy that allows investors to potentially benefit from both a disciplined approach to fund management, and the experience and judgment of our fund managers. Although our fund managers take a long-term approach to key asset allocation decisions, they also review each portfolio on a daily basis and can make adjustments as needed.

Each Fidelity Freedom Fund, with the exception of the Freedom Income Fund, is managed to a specific target retirement date. For instance, the Fidelity Freedom 2020 Fund is designed for investors who plan to make contributions until about the year 2020, at which point they expect to retire, stop making contributions, and may start withdrawing money from their account.

The Fidelity Freedom Income Fund is designed for investors in retirement. It seeks to maintain a stable asset allocation that emphasizes bonds and short-term investments, along with some exposure to domestic and international equities.

Dynamic asset allocation

At the outset, when the target date is many years away, each fund's asset allocation tends to be more aggressive, with a larger portion of the holdings in equities. As the target date approaches, that allocation automatically becomes more conservative, with a greater percentage of bonds and short-term investments introduced into the mix. This helps increase the chances that the asset allocation remains aligned with investment needs as investors save for, approach, and draw down savings in retirement. The Freedom Funds' glide path guides each fund’s transformation from a more aggressive approach to a more conservative approach.

Our risk management practices are designed to seek the kinds of investment returns that will help customers reach their retirement income goals. Toward this end, all investment decisions are informed by analytical frameworks and sound portfolio manager judgment. We focus on minimizing downside risk while seeking to reduce the chances that customers will not meet their retirement income needs.

Diversified allocation to various asset classes

Fidelity Freedom Funds allow you to create a diversified portfolio without having to choose several funds on your own. Each Freedom Fund has a target asset allocation composed entirely of Fidelity funds across a broad range of asset classes. These underlying funds go through a rigorous selection and ongoing evaluation process that includes an analysis of each fund’s performance, risk, style consistency, and how it works with the other funds in the portfolio.

The table below contains a list of all the underlying funds grouped by category. The funds marked with an asterisk (*) are called Series Funds,* which are mutual funds that are managed exclusively for Fidelity's asset allocation products. We believe the utilization of the Series Funds structure allows the Freedom Fund portfolio managers to more effectively manage the allocation of asset classes and more closely align the risk and return characteristics of the underlying funds with the overall objectives of the various Freedom Funds.

Diversification and asset allocation do not ensure a profit or protect against loss.

Domestic Equity Funds International Equity Funds Bond Funds Short-Term Funds & Net Other Assets

Fidelity Series 100 Index Fund*

Fidelity Series Growth & Income Fund*

Fidelity Series All-Sector Equity Fund*

Fidelity Series Stock Selector Large Cap Value Fund*

Fidelity Series Equity-Income Fund*

Fidelity Series Growth Company Fund*

Fidelity Series Blue Chip Growth Fund*

Fidelity Series Opportunistic Insights Fund*

Fidelity Series Intrinsic Opportunities Fund*

Fidelity Series Small Cap Opportunities Fund*

Fidelity Series Real Estate Equity Fund*

Fidelity Series Small Cap Discovery Fund*

Fidelity Series 1000 Value Index Fund* 

Commodity Funds

Fidelity Series Commodity Strategy Fund*

Fidelity Series International Value Fund*

Fidelity Series International Growth Fund*

Fidelity Series International Small-Cap Fund*

Fidelity Series Emerging Markets Fund*

Investment Grade Debt Funds

Fidelity Series Investment Grade Bond Funds*

Inflation-Protected Debt Funds

Fidelity Series Inflation-Protected Bond Index*

High Yield Bond Funds

Fidelity Series High Income Fund*

Floating Rate Debt Funds

Fidelity Series Floating Rate High Income Fund*

Emerging Market Debt Funds

Fidelity Series Emerging Markets Debt Fund*

Real Estate Debt Funds

Fidelity Series Real Estate Income Fund*

Fidelity Series Short-Term Credit Fund

Fidelity Institutional Money Market

Before investing, consider the funds' investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information.  Read it carefully.
Fidelity Freedom Funds are designed for investors expecting to retire around the year indicated in each fund’s name. When choosing a Freedom Fund, investors should consider whether they anticipate retiring significantly earlier or later than age 65 even if such investors retire on or near a fund’s approximate target date. There may be other considerations relevant to fund selection and investors should select the fund that best meets their individual circumstances and investment goals. Except for the Freedom Income Fund, the funds' asset allocation strategy becomes increasingly conservative as it approaches the target date and beyond. Ultimately, they are expected to merge with the Freedom Income Fund. The investment risks of each Fidelity Freedom Fund change over time as its asset allocation changes. They are subject to the volatility of the financial markets, including equity and fixed income investments in the U.S. and abroad and may be subject to risks associated with investing in high yield, small cap and, commodity-related, foreign securities. Principal invested is not guaranteed at any time, including at or after their target dates.
An investment in this fund is not guaranteed, and you may experience losses, including losses near, at, or after the target date. There is no guarantee that the fund will provide adequate income at or through your retirement.
Investors should allocate assets based on individual risk tolerance, investment time horizon, and personal financial situation. A particular asset allocation may be achieved by using different allocations in different accounts or by using the same one across multiple accounts. The glide path discussed herein is not intended as a benchmark for individual investors; rather, it is a range of equity allocations that may be appropriate for many investors saving for retirement.
The Adviser may use an active asset allocation strategy to increase or decrease neutral asset class exposures reflected above by up to 10 percentage points for Equity Funds (includes domestic and international equity funds), Bond Funds and Short-Term Funds to reflect the Adviser's market outlook, which is primarily focused on the intermediate term. The asset allocations in the target allocation table above are referred to as "neutral" because they do not reflect any decisions made by the Adviser to overweight or underweight an asset class.
The Adviser may also make active asset allocations within other asset classes (including Commodities, High Yield Debt, Floating Rate Debt, Real Estate Debt, Inflation-Protected Debt, and Emerging Markets Debt) from 0% to 10% individually but no more than 25% in aggregate within those other asset classes. Such asset classes are not reflected in the neutral allocations reflected in the target allocation table above. This strategy may not be successful in adding value, may increase losses to the Fund and/or cause the Fund to have a risk profile different than that portrayed above from time to time.
Asset Allocation does not ensure a profit or guarantee against a loss.

In general, the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk, liquidity risk, call risk, and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so holding them until maturity to avoid losses caused by price volatility is not possible.

High yield/non-investment grade bonds involve greater price volatility and risk of default than investment grade bonds.

Stock markets are volatile and can decline significantly in response to adverse issuer, political, regulatory, market, or economic developments.

The securities of smaller, less well-known companies can be more volatile than those of larger companies.

Foreign markets can be more volatile than U.S. markets due to increased risks of adverse issuer, political, market, or economic developments, all of which are magnified in emerging markets. These risks are particularly significant for funds that focus on a single country or region.

The commodities industry can be significantly affected by commodity prices, world events, import controls, worldwide competition, government regulations, and economic conditions.

Changes in real estate values or economic conditions can have a positive or negative effect on issuers in the real estate industry, which may affect the fund.
* Shares of Series Funds are available for purchase only by mutual funds for which FMR or an affiliate serves as investment manager and by FMR investment professionals, including the fund's portfolio managers.