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Fidelity Water Sustainability Fund (FLOWX) – Wall Street’s Best Digest Daily Alert – 9/3/21

The top five holdings in this fund are: Roper Technologies Inc (ROP, 10.71% of assets); Pentair PLC (PNR, 7.90%); Xylem Inc (XYL, 6.80%); Tetra Tech Inc (TTEK, 5.63%); and Rexnord Corp (RXN, 5.45%).

The top five holdings in this fund are: Roper Technologies Inc (ROP, 10.71% of assets); Pentair PLC (PNR, 7.90%); Xylem Inc (XYL, 6.80%); Tetra Tech Inc (TTEK, 5.63%); and Rexnord Corp (RXN, 5.45%).

Fidelity Water Sustainability Fund (FLOWX)
From Fidelity Monitor & Insight

Flooding in Europe and China, mudslides in India and, here in the U.S., a historic drought accompanied by record heat and wildfires—each is stoking the global debate about climate change and what can be done about it. Enter several new Fidelity funds whose investment objectives are more expansive and ambitious than the boilerplate maxim: “long-term growth of capital.” Notably, their investment strategies include the subjective and more altruistic goal of improving earth’s health.

In offering Fidelity Climate Action Fund - Retail Class (FCAEX), Fidelity Water Sustainability, Fidelity Environmental Bond Fund (FFEBX), and others, naysayers might argue that Fidelity’s marketing people are targeting a new generation of investors. And they are! Regardless of their motives (we assume larger profits), “socially conscious” funds broaden the typical total return investment objective to include something that really can’t be quantified by us in our ratings.

Nevertheless, Fidelity Water Sustainability has been upgraded to OK to Buy this month largely because of its 63% stake in various industrials. While the economic recovery should benefit cyclicals, companies engaged in the treatment, distribution and conservation of water may be especially well-positioned over the long term. Surging 7.3% in July, the narrow subsector got a shot in the arm last week when Congress moved one small step closer to passing a $1 trillion infrastructure improvement bill. The plan contains $55 billion to replace lead water lines and $50 billion more to guard against climate-induced droughts and floods.

With expenses presently capped at a highish 1%, Water Sustainability holds the promise of doing well while also doing good.

Jack Bowers, John M. Boyd and John Bonnanzio, Fidelity Monitor & Insight, fidelitymonitor.com, 800-397-3094, August 2021