Fidelity money market funds basically invest in short-term debt instruments and target to earn interest for the shareholders. Fidelity money market funds bear higher yields than other sort of money market accounts like and savings accounts and CDs(Certificate of Deposits). One of the additional advantages is that Fidelity money market funds have higher liquidity than CDs.

Yields on Fidelity money market funds:

The seven day yields of Fidelity money market funds as on 7/24/07 is 5.01% and the fidelity cash reserves is 4.97%.

Striking features

Some of the major features of Fidelity money market funds are:

• Stability: Fidelity money market funds normally uphold a steady $1.00 Net Asset Value (NAV) per share. Fidelity money market funds are comparatively stable in nature and that is why it has the ability to reduce the volatility of the market (volatility can be defined as the amount of risk associated with the variation of the value of the security).
• Liquidity: Fidelity money market funds shares are generally priced once a day and these shares can be sold or purchased at any flexible time at the present share price of Fidelity money market funds.
• Safety: As the Fidelity money market funds invest entirely in dollar denomination, so, investors can expect the superiority of this short-term instruments, which are issued by municipalities, corporations, banks, and the federal government.
• Short term holding facility: Investors prefer to use money market funds for holding cash between their investments and as the yields of Fidelity money market funds are competitive in nature, so it is very mush acceptable to them.
• Tax benefits: Fidelity money market funds enable the investors to earn tax- free income.

Some of the basic risks associated with Fidelity money market funds are:

• Risks associated with inflation: In the event of any inflation, Fidelity money market funds returns may not always hold the pace with the inflation and eventually can cut down the purchasing power.
• Risk associated with income: The yields of Fidelity money market funds tend to fall sharply within a very short period of time. So, these short term yields holds comparatively more volatility than long-term rates.

Some of the types of Fidelity money market funds are Federal Municipal Money Market Funds, State Municipal Money Market Funds, Taxable Money Market Funds .