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Posted by John Pollard on September 4, 2006, 8:54 pm
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>>> FWIW, a Fidelity rep recently explained to me that, as
>>> regards brokerage
>>> accounts, the default core MM fund for a retirement account
>>> is Fidelity Cash
>>> Reserves (FCR). This is a bonafide MM mutual fund whose
>>> performance is
>>> routinely reported, and whose balance can be adjusted in
>>> Quicken using the
>>> reinvestment recategorization. However, for a
>>> *non*-retirement account, the
>>> default core "fund" is something called FCASH. I've yet to
>>> locate any
>>> information that indicates that FCASH is a real money market
>>> mutual fund, or
>>> even find published performance data for it. (From
>>> statement data, it has a
>>> lower rate of return than FCR. It seems to be some
>>> proprietary vehicle
>>> Fidelity uses.
>>
>> I believe you misunderstood what the rep told you. I'm
>> looking at my
>> monthly reports from Fido for 1/06 & 7/06. The cash position
>> in my
>> taxable "Fidelity Account" (a brokerage-type account) is
>> shown as FCR
>> (symbol FDRXX). The same fund is shown in MY rollover IRA,
>> my wife's
>> Rollover, my wife's SEP-IRA, my wife's Roth -- all of which
>> are,
>> likewise, brokerage-type accounts. As I've said previously,
>> the only 2
>> m/f type accounts that we own have no cash position (directly
>> or MMF),
>> so I can't comment on those.
>
> Well he may not have explicitly mentioned FCASH, but he did
> say that FCR (FDRXX) is NOT the current default core for a
> taxable brokerage account at the balance level we were
> discussing. This is supported by my own experience (below).
> He also implied that their policy has evolved, so maybe this
> wasn't always the case. Also, I know their policies tend to
> loosen up as account balances and/or trading activities
> increase to a higher "tier level."
>
> Below is the core account selection section from the (online
> PDF) Fidelity new account application. I oversee several
> Fidelity accounts for family members. For two taxable
> brokerage accounts that I set up this year, I chose the final
> option. Certainly, I can attest that after each account
> opened, the first cash sweep showed up in "FCASH."
> Subsequently, I was able to negotiate a change in this to the
> FDRXX. (The online history clearly shows the withdrawal of
> cash from the one and deposit to the other.) Perhaps you did
> the same for your taxable account, or perhaps it was
> grandfathered under a prior policy, or perhaps its tier level
> was "high" at the outset? In another taxable account I
> oversee, one of the state municipal MM funds was requested for
> the core account on setup, and it has always been reported as
> a separate fund.
>
> Incidentally, Fidelity purportedly reviews its MM options here
> (you may need to login to see it):
>
> https://communications.fidelity.com/mm_rates.html
>
> Nowhere do I see there a reference to "FCASH."
>
> -Ron
> CORE ACCOUNT (CHOOSE ONE)
>
> All income from securities (dividends, capital gains, or sale
> proceeds) is automatically deposited into your core account.
> Dividends from mutual funds are reinvested in the originating
> fund. You can elect to change your distributions by phone at
> 1-800-FIDELITY, or online at Fidelity.com.
>
> Select a core account option where all of your cash is held
> and transactions are processed (choose one).
>
> Fidelity state municipal money market funds seek income from
> investments that is free from both federal and state or city
> income tax. [several state options were listed here]
>
> Fidelity federal municipal money market funds seek income from
> investments that is free from federal income tax.
>
> Fidelity Municipal Money Market Fund
>
> Fidelity Tax-Free Money Market Fund (This fund will not
> normally invest in municipal securities whose interest is
> subject to the Federal Alternative Minimum Tax.)
>
> Fidelity taxable interest-bearing cash account is intended for
> money awaiting reinvestment; interest rate may vary depending
> on assets. (This account will be selected if no information is
> supplied or if your initial investment is less than $5,000.)
>
> Taxable Cash Account
Here's another data point.
My Fidelity brokerage account has always held its "cash" in a
tax-free mm fund; varying between California, Virginia, and
Florida.
The following is a repeat, not because I think anyone can't
read, but because this thread has gotten long and pertinent
information may be many posts behind (and my ISP only keeps
posts for about 24 hours).
I have a Fidelity non-tax-deferred brokerage account that has
always held its "cash" in tax-free money market funds
(California, Virginia, and Florida). Fidelity never reports
those holdings as cash, and never reports those holdings as
being in the mm funds ... it never reports those holdings at
all.
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