Fidelity Cash Reserves (FDRXX): Understanding Low-Risk Cash Investments

Fidelity Cash Reserves (FDRXX) is a mutual fund provided by Fidelity Investments. The primary investment strategy is to invest in money market securities from foreign and domestic issuers, as well as repurchase agreements (repos). The Fidelity Cash Reserves (FDRXX) will invest at least 25 percent of the fund's total assets in the financial services sector.

Performance And Risk

Fidelity Cash Reserves (FDRXX) is a low-return, low-risk fund. As of September 2014, performance corresponds to 1-year return (0.01 percent), 3-year return (0.01 percent), and 5-year return (0.03 percent). As with all investments, there is potential risk associated with this fund. However, money market securities are considered a safe investment due to the unlikelihood of securities default. It is important to understand that a money market security is not insured by the Federal Deposit Insurance Corporation, or any other agency. Be aware that this fund invests largely in foreign securities, which can be effected by market or political conditions.

Lipper Ratings

Lipper, an independent investment research group, ranked Fidelity Cash Reserve (FDRXX) high among its peers, and the ranking is based on total return. Rankings were compiled by comparing funds with similar investment objectives; rankings include reinvestment of dividends and capital gains. In 2014, Lipper rated Fidelity Cash Reserve No. 65 of 219 funds for 1-year overall performance, No. 35 of 198 funds for 5-year overall performance and No. 8 of 169 funds for 10-year performance.

Minimums, expenses, and fees

For investors wishing to invest in Fidelity's Cash Reserve, there is a minimum initial investment of $2,500. However, an investor must maintain a account balance of $2,000. As of 2014, the expense ratio for the fund is .24 percent. The expense ratio is the amount it cost the Fund to operate. A fee of $12 will be deducted if the account balance dips below $2,000.

Potential

Fidelity Cash Reserve (FDRXX) can provide a safe, low-risk place to invest funds over the short-term. The low return and monthly dividend of .000008494 per share in 2014 may not fit into every investor's objectives. Lipper, an independent research company, highly ranks this fund among peer funds. An investor can gain exposure to foreign money market instruments.

Warning

Please consult your financial adviser. All investments carry the risk of losing part or all of the initial investment. Carefully read the fund's prospectus, which will contain all pertinent information regarding the fund's objectives, risk, fees and performance.