(PUB) Investing 2015

Morningstar FundInvestor

June 2015

considers the former to be one of the firm's best

actively managed funds.

Fidelity Contrafund

FCNTX

is also on her short list (and is also rated

Silver), but she's concerned that ongoing redemptions,

plus the fund's sizable embedded capital gains

exposure, could translate into unwanted capital

gains distributions. (That shouldn't be a concern for

investors who own the fund in a tax-sheltered

account like an

IRA

401

(k).) Index enthusiasts or

investors in taxable accounts could simply use

Fidelity Spartan Total Market Index for their entire

U.S. stock exposure. Fidelity International Discovery

provides foreign-stock exposure, including a stake

in emerging markets. Here, again, index believers

and/or tax-conscious investors could go with Fidelity's

excellent Spartan index funds; however, they'll

have to maintain separate index funds for developed-

and developing-markets exposure.

Fidelity Strategic Income divides itself between

junkier, high-risk bonds (including emerging markets)

and high-quality credits; but overall, it's aggressive.

Thus, its best home is as part of Bucket

— the

idea being that investors in such products should

have suitably long time horizons.

Moderate Bucket Portfolio

Anticipated Time Horizon: 20 Years

This portfolio contains the same holdings as the

aggressive Fidelity portfolio, differing only in its allo-

cations to them. Its cash stake is the same, but

because it's geared toward retirees with shorter time

horizons, it includes larger positions in high-

quality short- and intermediate-term bonds and

smaller positions in equities.

Bucket 1: Years 1–2

: Cash (certificates of deposit, money market

accounts, and so forth; percentages will vary based

on amount of assets and spending rate)

Bucket 2: Years 3–10

: Fidelity Short-Term Bond

25%

: Fidelity Total Bond

15%

: Fidelity Strategic Real Return

Bucket 3: Years 11 and Beyond

15%

: Fidelity Large Cap Stock

10%

: Fidelity Spartan Total Market Index

10%

: Fidelity International Discovery

10%

: Fidelity Strategic Income

Conservative Bucket Portfolio

Anticipated Time Horizon: 15 Years

In contrast with the aggressive and moderate

portfolios, both of which emphasize growth

to varying extents, this portfolio is geared toward

older retirees with shorter time horizons. As such,

its focus is on preserving purchasing power

and funding living expenses; capital appreciation

is secondary. Because its growth prospects are

relatively low, it would not be appropriate for younger

retirees unless they are extremely risk-averse and—

more importantly—have more than enough money

to last throughout their retirement years.