Fidelity VIP Freedom Funds

PORTFOLIO MANAGER Q&A | AS OF DECEMBER 31, 2023

Fidelity? VIP Freedom Funds

Key Takeaways

FUND NAMES

? In 2023, the Initial Class shares of each Fidelity? VIP Freedom Fund

VIP Freedom Income Portfolio

produced a gain, ranging from 7.91% for VIP Freedom Income

Portfolio to 14.70% for VIP Freedom 2030 Portfolio. Each VIP Freedom

Portfolio trailed its corresponding Composite index.

? Co-Portfolio Managers Andrew Dierdorf and Brett Sumsion point out

that many asset classes rebounded in 2023 from weak performance in

2022, aided by global economic expansion, falling commodity prices,

a slowing in the pace of inflation, and a fourth-quarter shift in

monetary policy by the U.S. Federal Reserve and other key central

banks, potentially signaling the end of their aggressive rate-hike

campaigns.

? U.S. and non-U.S. equities were the top-performing asset classes for

the year, contributing to positive returns for all Portfolios.

? Longer-dated Portfolios ¨C suitable for investors with a longer

investment horizon to retirement and that hold more exposure to

stocks ¨C outperformed shorter-dated Portfolios, which held higher

exposure to weaker-performing fixed-income and short-term debt

securities.

? Active asset allocation decisions, such as underweighting market-

leading U.S. equities, weighed on the Portfolios' performance versus

Composites in 2023.

? Security selection among the underlying investment funds contributed

to the Portfolios' relative results, especially among non-U.S. equities.

? Looking ahead to 2024, Andrew and Brett remain focused on the longterm objective of Fidelity? VIP Freedom Funds and continue to believe

there are opportunities to actively position the Portfolios in areas of

the market trading at a discount to their view of fair value.

Not FDIC Insured ? May Lose Value ? No Bank Guarantee

VIP Freedom 2005 Portfolio

VIP Freedom 2010 Portfolio

VIP Freedom 2015 Portfolio

VIP Freedom 2020 Portfolio

VIP Freedom 2025 Portfolio

VIP Freedom 2030 Portfolio

PORTFOLIO MANAGER Q&A | AS OF DECEMBER 31, 2023

Market Recap

For 2023, continued global economic expansion and a slowing

in the pace of inflation contributed to a favorable backdrop for

risk assets. After struggling throughout much of 2022, risk assets

strongly rebounded the past year, with U.S. large-cap stocks

leading, driven partly by a narrow set of companies in the

information technology and communication services sectors

amid excitement for generative artificial intelligence. Assets

broadly gained in the final two months of 2023 after investor

sentiment largely shifted to a view that policy interest rates had

peaked in most countries following one of the most dramatic

monetary tightening cycles on record by the U.S. Federal

Reserve and other central banks.

International equities rose 15.82% for the 12 months, according

to the MSCI ACWI (All Country World Index) ex USA Index. Each

of the six regions advanced, with Europe ex U.K. (+23%) and

Japan (+21%) leading, whereas Asia Pacific ex Japan (+7%)

lagged by the widest margin. Each of the 11 sectors also

advanced, with tech (+37%) and industrials (+24%) leading the

way. Financials (+17%) also topped the return of the broad

index. Conversely, consumer staples (+5%) lagged most,

followed by real estate (+6%).

U.S. stocks gained 26.06% for the year, as measured by the Dow

Jones U.S. Total Stock Market Index, as all but two sectors rose.

Information technology (+60%), communication services (+53%)

and consumer discretionary (+41%) led by the widest margins.

Conversely, utilities (-7%) and energy (0%) lagged most. Growth

stocks broadly outpaced value, while larger-caps topped smallcaps. Commodities returned -7.91%, according to the

Bloomberg Commodity Index Total Return.

U.S. taxable investment-grade bonds returned 5.53% for the 12

months, per the Bloomberg U.S. Aggregate Bond Index, as the

Fed slowed the pace of, and eventually paused, interest rate

increases, allowing bond prices to stabilize. Since March 2022,

the Fed has hiked its benchmark interest rate 11 times, by 5.25

percentage points, while allowing billions in bonds to mature

each month without investing the proceeds. U.S. investmentgrade corporate bonds (+8.18%) outperformed short-term U.S.

Treasurys (+5.15%), while commercial mortgage-backed

securities (+5.42%) and agencies (+5.13%) also advanced.

Outside the index, leveraged loans (+13.72%), U.S. high-yield

bonds (+13.47%), emerging-markets debt (+10.45%) and

Treasury Inflation-Protected Securities (+3.90%) all gained. ¡ö

BROAD ASSET CLASS RETURNS (%)

PERIOD ENDING DECEMBER 31, 2023

Calendar-Year Returns

Best

P

e

r

f

o

r

m

a

n

c

e

Worst

Dispersion

of Returns*

Average Annual

Cumulative

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

5 Year

3 Year

1 Year

6 Mos

3 Mos

25.1

13.6

17.5

37.3

1.9

30.9

20.8

27.1

16.1

26.1

15.0

10.8

26.1

8.4

12.7

16.9

4.1

12.6

24.5

0.7

22.8

18.3

25.7

1.5

18.2

8.7

8.4

18.2

7.6

12.1

12.5

1.2

11.8

21.2

0.6

18.5

17.7

12.9

-0.8

13.7

7.2

6.0

13.7

6.7

10.5

12.1

0.5

11.2

9.3

0.0

18.4

8.4

9.9

-7.3

13.5

6.0

4.6

13.5

6.4

9.6

7.0

0.4

10.4

8.5

-0.3

14.8

7.8

5.7

-11.2

11.8

5.2

2.2

11.8

6.2

9.3

6.0

0.2

10.2

8.3

-1.8

14.4

7.5

5.4

-13.0

10.5

4.1

2.0

10.5

6.0

7.9

5.5

0.1

5.3

7.5

-2.3

14.4

6.4

5.3

-13.1

9.9

3.7

0.7

9.9

5.7

7.1

1.8

0.1

4.9

4.7

-4.1

10.3

6.1

0.0

-14.1

8.7

3.4

-0.1

8.7

4.7

6.8

0.9

-0.5

4.0

4.3

-4.6

8.7

5.9

-1.0

-16.5

5.5

1.9

-2.2

5.5

3.4

6.4

0.1

-1.2

3.0

3.5

-5.3

8.7

3.5

-1.5

-18.8

5.2

1.9

-3.1

5.2

2.8

3.9

-2.1

-2.9

2.6

1.9

-11.2

7.7

3.4

-1.5

-19.5

4.4

1.9

-3.3

4.4

2.7

3.0

-4.2

-14.9

1.3

1.7

-13.9

6.9

0.7

-2.5

-20.1

3.1

1.1

-5.1

3.1

-0.1

1.4

-17.0

-24.7

0.3

0.9

-14.5

2.3

-3.1

-4.6

-29.3

-7.9

-1.2

-11.4

-7.9

-0.6

-4.6

42.1

38.3

17.1

36.5

16.4

28.6

23.9

31.8

45.3

34.0

16.3

22.2

34.0

9.1

17.3

¡ö U.S. Equities

¡ö Non-U.S. DevelopedMarkets Equities

¡ö Emerging-Markets Equities

¡ö Commodities

¡ö High-Yield Debt

¡ö Floating-Rate Debt

¡ö International Debt

¡ö Emerging-Markets Debt

¡ö Real Estate Debt

¡ö Investment-Grade Debt

¡ö Inflation-Protected Debt

¡ö Short-Term Debt

¡ö Long-Term U.S. Treasury Debt

Periods greater than one year are annualized. Source: FMR

*Difference between best- and worst-performing asset classes over the given time period

You cannot invest directly in an index. Past performance is no guarantee of future results.

U.S. Equities - Dow Jones U.S. Total Stock Market Index, Non-U.S. Developed-Markets Equities - MSCI World ex USA Net Mass, Emerging-Markets Equities MSCI Emerging Markets Index, Commodities - Bloomberg Commodity Index Total Return, High-Yield Debt - ICE BofA U.S. High Yield Constrained Index,

Floating-Rate Debt - S&P/LSTA Leveraged Performing Loan Index, International Debt - Bloomberg Global Aggregate Credit Ex U.S. Index Hedged (USD),

Emerging-Markets Debt - J.P. Morgan Emerging Markets Bond Index Global, Real Estate Debt - Fidelity Real Estate Income Composite Index, InvestmentGrade Debt - Bloomberg U.S. Aggregate Bond Index, Inflation-Protected Debt - Bloomberg U.S. 1-10 Year Treasury Inflation-Protected Securities (TIPS) Index

(Series-L), Short-Term Debt - Bloomberg U.S. 3 Month Treasury Bellwether Index, Long-Term U.S. Treasury Debt - Bloomberg U.S. Long Treasury Index

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 DECEMBER 31, 2023

Q&A

Andrew Dierdorf

Co-Manager

Brett Sumsion

Co-Manager

Fund Facts

Size (in

millions)

$69.9

VIP Freedom Fund

Start Date

Income

04/26/2005

2005

04/26/2005

$8.9

2010

04/26/2005

$272.8

2015

04/26/2005

$62.3

2020

04/26/2005

$577.7

2025

04/26/2005

$383.9

2030

04/26/2005

$703.3

Investment Approach

? Fidelity? VIP Freedom FundsSM (the Funds) are designed

so that the target date referenced in the Fund name is

the approximate year when we expect investors to retire

and begin gradually withdrawing their investment.

? Each of the Funds seeks high total return with a

secondary objective of principal preservation.

? Except for Fidelity? VIP Freedom Income PortfolioSM,

each Fund's asset allocation strategy becomes

increasingly conservative as it approaches its target

retirement date ¨C and beyond. Ultimately, the Funds are

expected to merge with Fidelity? VIP Freedom Income

PortfolioSM.

? The Funds employ a robust investment process focused

on helping investors solve the challenge of investing

through retirement by leveraging the depth and strength

of Fidelity's investment research and resources.

An interview with Co-Portfolio

Managers Andrew Dierdorf and Brett

Sumsion

Q: Andrew, how did Fidelity? VIP Freedom

Funds perform in 2023?

A.D. The Initial Class shares of each Fidelity? VIP Freedom

Fund produced a gain, ranging from 7.91% for VIP Freedom

Income Portfolio to 14.70% for VIP Freedom 2030 Portfolio.

Each VIP Freedom Portfolio underperformed its

corresponding Composite index in 2023.

Given that equities were one of the better-performing asset

classes the past year, longer-dated Portfolios ¨C which are

suitable for investors with a longer investment horizon before

retirement and that hold greater exposure to stocks ¨C

outperformed shorter-dated Portfolios, which had higher

exposure to weaker-performing fixed-income and short-term

debt securities and are intended for those with a shorter

investment horizon. (For specific Portfolio results, please refer

to the Fiscal Performance Summaries.)

Q: How would you characterize the market

environment the past year?

A.D. After a challenging 2022, many asset classes rebounded

in 2023, aided by global economic expansion, falling

commodity prices, a slowing in the pace of inflation, and a

fourth-quarter shift in monetary policy by the U.S. Federal

Reserve and other key central banks, signaling the potential

end of their aggressive rate-hike campaigns.

Looking at U.S. monetary policy, the Fed's monetary

tightening campaign, launched in March 2022, continued

until late July, when the central bank said it was too soon to

tell if its latest hike would conclude a series of increases

aimed at cooling the economy and bringing down inflation.

At its next three meetings, the Fed decided to hold rates at a

22-year high while it observes the effect on inflation and the

economy. In the fourth quarter, the Fed signaled that

disinflationary trends were sufficient to project a shift to

monetary easing in 2024. This news, along with resilient latecycle expansion of the U.S. economy and a sharp decline in

U.S. Treasury yields, provided a favorable backdrop for

higher-risk assets. After the November 1 meeting, when the

central bank hinted it might be done raising rates, the Dow

Jones U.S. Total Stock Market Index reversed a three-month

decline stemming from rising yields on longer-term

government bonds and mixed earnings from some big and

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 DECEMBER 31, 2023

influential firms. Favorable data on inflation provided a

further boost, and the index shook off a sluggish October

(-2.69%) to gain 9.39% in November, as market breadth

improved. The momentum carried through December, as the

index gained 5.35% for the month and 26.06% for the year.

Within the broader Dow Jones U.S. Total Market Index, the

information technology sector (+60%) led the 2023 rally in

domestic stocks, and within that sector, a small group of

mega-cap companies contributed an outsized portion of the

gain amid growing demand for artificial intelligence across

many industries. Outside the U.S., equities also rallied, as

reflected by the 15.82% advance of the MSCI ACWI (All

Country World Index) ex USA Index.

Investors' confidence in the Fed's view on disinflation helped

drive 10-year U.S. Treasury yields from their peak of 5% in Q3

to below 4%, finishing the year roughly where they began.

Fixed income categories largely rebounded with the decline

in yields. Corporate credit and longer-duration bonds

advanced the most. Against this backdrop, returns for all

asset classes within the strategic allocation of Fidelity's target

date strategies were positive in 2023.

Q: What lessons can be learned from the market

volatility in 2022 and 2023?

A.D. One major takeaway is the importance of maintaining a

diversified portfolio like those we aim for in managing VIP

Freedom Funds. Although many asset classes declined in

2022, there was a considerable rebound in performance for

most in 2023. For example, U.S. equities returned -19.53% in

2022, according to the Dow Jones U.S. Total Stock Market

Index, but gained 26.06% this past year.

The turnaround for this particular asset class is representative

of the volatility that can occur over a short-term period, and

it's a key reason why having a diversified portfolio can help

provide resiliency over time. For example, each asset class

has varying exposure to factors such as the pace of economic

growth, the rate of inflation, the direction of interest rates

and corporate earnings growth, all of which tend to influence

performance. So having a portfolio of multiple asset classes

can provide improved risk-adjusted returns over an extended

horizon, our research shows.

Q: Brett, what notably influenced the Portfolios'

performance versus their corresponding

Composite indexes?

B.S. Overall, our active asset allocation positioning detracted

from the Portfolios' relative results. In particular, an

underweight in U.S. equity investments, based on our view

of valuation, was a headwind, given the market-leading

performance of the asset class in 2023. Larger-thanComposite exposure to U.S. Treasury inflation-protected

securities also detracted.

Meanwhile, an overweight allocation to non-U.S. equities

added relative value for the Portfolios, especially exposure to

developed-markets equities. An underweight in U.S.

investment-grade bonds also meaningfully contributed.

Q: What else influenced the Portfolios' relative

performance for the year?

B.S. The performance among the underlying investment

funds modestly lifted the Portfolios' relative performance for

the year. In particular, security selection among non-U.S.

equities contributed the most value, especially in developedmarkets equities. In this category, Fidelity? VIP Overseas

Portfolio (+20.51%) outperformed its benchmark, the MSCI

EAFE Index (+18.49%).

Our investments in underlying U.S. investment-grade bond

funds also proved beneficial. Specifically, an allocation to

Fidelity? VIP Investment Grade Bond Portfolio (+5.91%)

notably helped, given that it topped its benchmark, the

Bloomberg U.S. Aggregate Bond Index (+5.53%).

Conversely, investments in U.S. equity funds held back the

Portfolios' relative results. Specifically, Fidelity? VIP Growth &

Income Portfolio gained 18.72% for the year, trailing the

26.29% advance of its benchmark, the S&P 500? index.

Q: Andrew, what are you focusing on as you

look ahead to 2024?

A.D. We remain focused on the long-term investment

horizon and the objectives of the Portfolios. Our investment

process emphasizes selecting strategic asset classes that we

think will provide compelling long-term performance,

independent sources of return and risk, and favorable

implementation attributes of Portfolios. We strive to deliver

long-term outcomes that help investors maintain their

standard of living in retirement, through both strategic asset

allocation and active management decisions.

It's quite possible that volatility may once again increase in

the capital markets, thus we believe our diversified approach

and rigorous investment process, which are grounded in

research, are as important as ever.

Furthermore, we continue to leverage our investment

resources ¨C especially our global research expertise across

asset classes, and our relationships with corporations and

other entities ¨C to closely monitor the macroeconomic

backdrop, gain insight into market dynamics as they evolve

and choose investments we think have the potential to

outperform the broader markets over time. ¡ö

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 DECEMBER 31, 2023

Co-Manager Brett Sumsion on the

Portfolios' active positioning:

"As of year-end, the Portfolios' active positioning

emphasizes asset classes for which we see a gap

between the current price and our management

team's view of fair value. We plan to continue to

navigate bouts of market volatility by focusing on

fundamentals (e.g., discount rates and cash flow,

among many others) to determine the appeal of

various investment opportunities.

"Specifically, the Portfolios are underweight U.S.

equities and overweight non-U.S. equities versus

their Composite indexes because we believe U.S.

equities are overvalued relative to non-U.S. equities.

Looking abroad, the Portfolios' active equity

positioning emphasizes non-U.S. stocks in

developed and emerging markets. In our view, nonU.S. equities have a more favorable distribution of

outcomes than U.S. equities. We believe non-U.S.

developed and emerging markets have low

expectations, providing ample opportunity for

positive surprises. We also believe that a

combination of higher earnings yields and

potentially improving fundamentals are a tailwind to

lower risk premiums in non-U.S. markets.

"In comparison, while the current fundamental story

for the U.S. is strong, we believe it is fully priced into

equity valuations. The realization of elevated

earnings expectations depends on the continuation

of persistently high corporate profit margins,

constructive economic growth and declining interest

rates. U.S. equity valuations do not sufficiently

reflect the potential for the economy to slow and

profits to compress. In addition, non-U.S. assets may

benefit from a weakening U.S. dollar, which has had

a prolonged period of strength driven by superior

economic growth in the U.S. and higher interest

rates ¨C two trends we see as poised to reverse.

"Lastly, the Portfolios are overweight fixed income

versus Composites. We believe the U.S. Treasury

market represents a good value, given prevailing

macroeconomic uncertainty. Real yields provide a

buffer if inflation surges, while U.S. Treasuries have

room to move if the U.S. economy enters recession.

The inverted yield curve will need to normalize to

argue that a landing has taken place, and we are

skeptical of the market's view that short rates will fall

without a recession. We believe the most favorable

opportunity is in the five-year portion of the curve."

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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