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How Fidelity Manages Asset Allocation Funds

Understanding how to balance risk and return is one of the key principles behind successful investing. At Fidelity, we believe that a diversified investment strategy is critical to creating this balance. That means building a portfolio that offers exposure to a mix of different types of assets, and adjusting that mix in response to—or in anticipation of—changes in the investing environment.

We offer a number of different kinds of asset allocation funds, each of which is managed to serve a different investor need. Some are designed to take the guesswork out of investing for retirement, while others are designed to provide a stream of income in retirement. We also offer funds that allow you to invest in a fixed asset allocation that matches your tolerance for volatility or risk, as well as funds that are managed dynamically to adjust their asset class exposure as market conditions change. We even offer funds that give managers the flexibility to pursue opportunities anywhere in the world they may arise.

While each Fidelity asset allocation fund is a little different, every one is backed by our steadfast commitment to research and our careful adherence to strategic goals and principles.

We offer an extensive range of asset allocation portfolios managed to suit the risk/return preferences of many types of investors, including funds that seek to balance investments in global stocks and bonds, target allocation funds that range from conservative to most aggressive, and target date funds, whose asset allocation dynamically shifts in an attempt to reduce exposure to volatility over time. A portfolio that offers exposure to a mix of different types of assets can help reduce the impact of market volatility, and help balance the need for income and capital appreciation.

Fidelity's Asset Allocation Group is composed of a dedicated team of investment professionals averaging over 20 years of investment experience, and including experts in global economic analysis as well as asset allocation. In addition, we're backed by the world-class research and portfolio management skills of over 800 investment professionals located around the globe. Fidelity conducts its own comprehensive research on government and corporate issuers worldwide, and specialists in asset allocation and security selection can draw on tens of thousands of proprietary research notes generated annually by our bond, money market, equity, and asset allocation divisions to evaluate the implications for investors in both debt and equity

We seek to maximize risk-adjusted returns for our investors by leveraging the expertise of an integrated organization dedicated to multi-asset investing, including business cycle analysts, inflation analysts, and additional quantitative analysts. While many fund companies apply either fundamental or quantitative analysis to the management of these types of funds, Fidelity seeks to combine fundamental, quantitative, and macroeconomic analysis in the pursuit of benchmark outperformance and risk management. The ability to do this consistently across all funds, sub-portfolios, and tools is grounded in our practice of applying both strategic and tactical approaches while combining bottom-up fundamental research with an innate understanding of macroeconomic events and their impact on our portfolios. Our areas of expertise—allocation modeling, credit research, quantitative research, and trading—work together to help us identify investment ideas that can potentially address a wide range of investor objectives.

Our extensive research platform includes access to Fidelity's vast network of fixed income and equity analysts, as well as specialists in the high yield, emerging markets, and equity sectors. This network, and the proprietary empirical data it generates, is critical to our ability to manage investors' asset allocation in today’s complex global environment.

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.
All data as of 12/31/15

Diversification/Asset Allocation does not ensure a profit or guarantee against 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.

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.

Each Fidelity Income Replacement Fund's investment objective is intended to support a payment strategy through the Smart Payment Program® (SPP). Monthly payments may not keep pace with inflation, will fluctuate year over year and will result in the gradual liquidation of an investment in the fund by its horizon date. As with any mutual fund, withdrawals will reduce the investment balance and future returns are not earned on amounts withdrawn. The funds and SPP may not be appropriate for all investors. Please consult the fund's prospectus for more details.

* Fidelity Freedom Funds are designed for investors expecting to retire around the year indicated in each fund's name. 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.