Last updated: November 2, 2026 · Yield data as of October 27, 2026
If you keep cash at Fidelity, you’ve probably seen people recommend FDLXX over the default SPAXX and wondered whether switching is worth it.
If you live in a high-tax state like California, New York, or New Jersey, the answer can be yes: the state income tax savings alone can add up to hundreds of dollars a year.
This guide explains what FDLXX is, how its yield and taxes work, how to calculate your return, and who should (and shouldn’t) use it.
FDLXX at a Glance
A Treasury-focused money market fund designed for investors who want a stable $1 share price and potential state tax advantages on qualifying income.
TREASURY-ONLY MONEY MARKET FUNDPotential State Tax Advantage
Of FDLXX’s 2025 income came from U.S. government obligations, potentially making that portion exempt from state and local income taxes.
✓ Advantages
- Potential state and local tax savings
- U.S. Treasury-focused portfolio
- Targets a stable $1 NAV
- No minimum investment
- Monthly distributions
! Drawbacks
- Cannot be used as a core position
- Manual transactions required
- Yield changes with market rates
- Expense ratio reduces returns
- Not FDIC-insured
★ Who Should Consider FDLXX?
Fidelity customers in high-tax states who want to hold emergency savings or extra cash in a Treasury-focused money market fund and potentially reduce state and local income taxes on qualifying distributions.
What Is FDLXX?
FDLXX is the ticker for the Fidelity® Treasury Only Money Market Fund, part of the Fidelity Hereford Street Trust (CUSIP 31617H300).
It’s a government money market fund, a type of mutual fund regulated by the SEC under Rule 2a-7 of the Investment Company Act of 1940.
That rule limits money funds to short-term, high-quality securities.
Its goal, per the prospectus, is “high current income” while preserving principal and liquidity.
To do that, it normally keeps at least 99.5% of total assets in cash and U.S. Treasury securities, such as Treasury bills, notes and floating-rate notes, all backed by the full faith and credit of the U.S. government.
How is FDLXX different from other Fidelity money market funds?
The key word is “Treasury Only.”
- SPAXX (Fidelity Government Money Market Fund) holds government securities plus repurchase agreements (“repos”), which are short-term loans backed by government collateral.
- FZFXX (Fidelity Treasury Money Market Fund) holds Treasuries plus Treasury-backed repos.
- FDLXX holds Treasuries directly and avoids repos.
Repo income is not state-tax-exempt, but income from direct Treasury holdings usually is. That difference is why FDLXX exists.
Why FDLXX Matters Right Now (2026)
Interest rates have not fallen as quickly as many expected.
On October 28, 2026, the Federal Reserve held the federal funds target range at 3.75%–4.00%, and two officials voted for an increase.
Inflation is still above the Fed’s 2% goal.
For savers, that means:
- Cash yields are still meaningful. FDLXX’s 7-day yield rose from 3.48% at the end of September to 3.61% in late October 2026.
- Taxes take a real share of those earnings. At a ~3.6% yield, a 9.3% California tax bracket costs you about a third of a percentage point every year. On a $50,000 balance, that’s roughly $170/year you can keep with a state-tax-exempt fund.
- More people are moving cash out of bank accounts and into money market funds, so getting the fund choice right matters.
FDLXX Yield Explained: 7-Day Yield vs. APY vs. Annual Return
Finance sites use several “yield” numbers for FDLXX. Here’s what each means:
Understanding FDLXX’s Different Yields
Not all yield numbers measure the same thing. Here’s how to understand the four common yield figures before choosing a money market fund.
7-Day SEC Yield
Measures income earned over the past seven days, after fees, and annualizes it. This is the standardized yield commonly used to compare money market funds.
October 27, 20267-Day Effective Yield
Reflects the effect of reinvesting dividends over the year. It is generally higher than the simple annualized seven-day yield.
Approximate figure30-Day Yield
Measures income over a 30-day period and annualizes it. It can offer a longer snapshot than the seven-day yield.
October 27, 2026Trailing 12-Month Yield
Looks backward at distributions actually paid over the previous 12 months relative to the relevant investment value. It may differ significantly from today’s yield.
Past 12 months💡 Why Are the Yield Numbers Different?
The seven-day SEC yield reflects recent income, while the effective yield accounts for reinvestment. The 30-day yield uses a longer measurement window, and the trailing 12-month figure reflects historical distributions. Because interest rates change, these figures do not have to match.
When comparing FDLXX with SPAXX, FZFXX, or other money market funds, start with the 7-day SEC yield. Also compare expense ratios, state tax treatment, liquidity, and your personal tax situation. Use effective yield as a supplemental measure.
What’s the FDLXX APY?
Money market funds don’t technically quote an APY (annual percentage yield).
APY is a bank term regulated by the Truth in Savings Act.
The closest equivalent is the 7-day effective yield, which includes monthly compounding. At a 3.61% 7-day yield, reinvested monthly, the effective yield is about 3.67%.
What’s the FDLXX return?
A money market fund’s total return is essentially its dividend income, because the share price stays at $1.00.
Your return over a year will roughly equal the average yield during that year.
The 0.42% expense ratio is already deducted from the quoted yield, so there’s nothing extra to subtract.
Check Morningstar’s or Fidelity’s “Performance” tab for official 1-, 3- and 5-year returns.
PRO TIP: FDLXX YIELD ISN’T FIXED
The yield you see today is not guaranteed. It moves with short-term Treasury rates, which are influenced by Federal Reserve policy. If the Fed raises rates, FDLXX’s yield generally tends to rise as its portfolio reinvests at higher rates. If the Fed cuts rates, FDLXX’s yield generally falls as existing holdings mature and are replaced with lower-yielding securities.
FDLXX Calculator: How Much Will You Earn?
Use this simple formula:
How Much Can FDLXX Earn?
See how different cash balances could generate annual earnings and monthly income at the supplied fund yields.
| Investment | Annual Earnings | Monthly Average | At ~3.67% Effective Yield |
|---|---|---|---|
| $10,000 | $361 | $30 | $367 |
| $25,000 | $903 | $75 | $918 |
| $50,000 | $1,805 | $150 | $1,835 |
| $100,000 | $3,610 | $301 | $3,670 |
The annual earnings column assumes a constant 3.61% annualized yield. The monthly amount is an annual average divided by 12, not a guaranteed monthly dividend. The final column illustrates the approximate effect of using a 3.67% effective annual yield with reinvestment. Actual distributions and returns will vary.
FDLXX Tax Treatment: How the State Tax Exemption Works
This is the main reason to own FDLXX.
Federal taxes
FDLXX dividends are fully taxable at the federal level as ordinary income (not “qualified” dividends). Fidelity reports them on Form 1099-DIV, and the IRS covers this in Publication 550.
State and local taxes
Under federal law, interest on U.S. Treasury obligations is exempt from state and local income tax. When a fund holds Treasuries, most states let you exclude the share of its dividends that came from those Treasuries.
Fidelity publishes this percentage every year. For FDLXX, it’s very high:
FDLXX’s U.S. Government Income by Year
See how much of the fund’s annual income came from U.S. government obligations over the past three tax years.
The percentage increased from 90.39% in 2023 to 98.67% in 2025. This indicates that a larger share of FDLXX’s income came from qualifying U.S. government obligations in 2025. Eligible portions may receive favorable state and local income tax treatment, depending on your state’s rules.
The 50% rule in California, New York, and Connecticut
California, Connecticut, and New York add an extra test: a fund must hold at least 50% of its assets in U.S. government obligations at the end of each quarter for any of its dividends to be exempt.
- FDLXX passes this test.
- SPAXX has not passed it in recent years. Residents of these three states get no state exemption on SPAXX dividends.
California Investor: SPAXX vs. FDLXX
See how the state-tax treatment of Treasury income can affect your annual earnings.
| Comparison | SPAXX | FDLXX |
|---|---|---|
| Assumed yield | 3.60% | 3.60% |
| State-taxable share | 100% | ~1.33% |
| After-state-tax yield | 3.27% | 3.60% |
| Annual earnings on $50,000 | $1,633 | $1,798 |
Potential additional annual earnings with FDLXX under these assumptions.
Important: This is an illustrative estimate, not a guaranteed return or tax outcome. It assumes both funds earn a 3.60% yield and uses the stated taxable-income percentages. Actual state-tax treatment depends on each fund’s qualifying government-income percentage, California rules, and your individual tax situation. Verify the latest fund tax supplement and consult a qualified tax professional.
How to claim the exemption
- In early February, find Fidelity’s “U.S. Government Income” tax information for the prior year.
- Multiply your FDLXX dividends (from your 1099-DIV) by the published percentage.
- Subtract that amount on your state return (tax software usually has a “U.S. government interest” field).
The exemption is not automatic. Many investors may pay state tax on Treasury income simply because they skip Step 3 of the process. Don’t leave a potential tax benefit unclaimed. Read our guide on how to avoid state taxes on Treasury interest to learn what to check and how to report qualifying income correctly.
If you live in a state with no income tax (Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, Wyoming), the tax advantage disappears. Just pick the highest yield.
How Does FDLXX Work at Fidelity? (Buying, Selling, Core Position)
Can FDLXX be my core position?
No. Your core position is the account where Fidelity automatically holds uninvested cash (usually SPAXX). FDLXX isn’t available as a core option in standard brokerage accounts, so you must buy it like any other mutual fund.
How to buy FDLXX (step by step)
- Log in to Fidelity → Trade → Mutual Funds.
- Enter FDLXX and choose Buy.
- Enter a dollar amount (no minimum) and submit.
- Optional: set up an automatic recurring purchase (weekly, biweekly, or monthly) to move new cash from your core position into FDLXX automatically.
What happens when I need the money?
- Sell FDLXX manually, and proceeds generally go to your core position by the next business day.
- If your core balance runs out when a bill or debit hits, Fidelity may automatically sell eligible money market funds (like FDLXX) to cover it. Fidelity recommends selling ahead of time instead of relying on this.
Keep a small cash buffer, such as one month of expenses, in SPAXX or your bank checking account for instant access. Hold the remaining cash in FDLXX if its Treasury exposure and tax treatment fit your needs. This approach can help you balance everyday liquidity with potential state-tax savings, without moving all your cash out of easy reach.
Is FDLXX Safe?
FDLXX is one of the lowest-risk investments available, but it’s important to know what protects it and what doesn’t:
- ✅ Holdings: U.S. Treasuries, backed by the U.S. government.
- ✅ Stable $1.00 NAV: government money funds have a strong record of holding $1.00.
- ✅ SIPC protection: covers your shares if Fidelity as a broker fails (up to $500,000, including $250,000 cash). It does not cover investment losses.
- ❌ Not FDIC-insured: unlike a bank savings account, a money market fund can lose value, though it’s rare.
FDLXX vs. SPAXX vs. FZFXX vs. SGOV
Compare fund structure, Treasury exposure, state-tax considerations, account flexibility, and trading convenience.
| Feature | FDLXX Treasury money fund | SPAXX Government money fund | FZFXX Treasury money fund | SGOV Treasury bill ETF |
|---|---|---|---|---|
| Fund type | Treasury-only money market fund | Government money market fund | Treasury money market fund | Short-term Treasury bill ETF |
| Holds repos? | No | Yes | Yes Treasury repos |
No |
| Expense ratio | ~0.42% | ~0.42% | ~0.42% | ~0.09% |
| State-tax-exempt share | Very high (~98%) | Low May fail certain state thresholds |
Partial May fail certain state thresholds |
Very high |
| Can be core position? | No | Yes | Some accounts | No |
| How you trade it | Manual mutual fund order | Automatic core position | Automatic in eligible accounts | Exchange-traded; intraday |
For a deeper comparison, see FDLXX vs SPAXX, FDLXX vs SGOV, and SPAXX vs FZFXX.
Who Should Use FDLXX?
FDLXX is a good fit if you:
- Live in a state with income tax, especially California, New York, Connecticut, New Jersey, Oregon, Minnesota, or similar.
- Keep a meaningful cash balance at Fidelity: an emergency fund, a house down payment, or money waiting to be invested.
- Don’t mind placing a mutual fund order to move money in and out.
You might skip FDLXX if you:
- Live in a no-income-tax state. Choose whichever fund yields more.
- Need money to move instantly for bill pay or debit card use. Keep that in your core position.
- Want FDIC insurance. Use a high-yield savings account instead.
- Hold cash in an IRA or 401(k), where state tax doesn’t apply, so the main advantage is gone.
Frequently Asked Questions
What is FDLXX?
FDLXX is the Fidelity Treasury Only Money Market Fund. It invests at least 99.5% of its assets in cash and U.S. Treasury securities, aims to keep a $1.00 share price, and pays dividends monthly.
What is the FDLXX 7-day yield?
As of October 27, 2026, FDLXX’s 7-day yield was 3.61%. It changes daily with short-term Treasury rates, so check Fidelity’s fund page for today’s number.
Is FDLXX exempt from state taxes?
Mostly. In 2025, 98.67% of FDLXX’s income came from U.S. government obligations, which are exempt from state and local income tax in most states. You must claim the exemption on your state return.
Is FDLXX better than SPAXX?
For investors in states with income tax, often yes. FDLXX’s income is almost entirely state-tax-exempt, while SPAXX’s is mostly taxable and fully taxable in CA, NY, and CT. SPAXX is more convenient because it can be your core position.
Does FDLXX have a minimum investment?
No. FDLXX has a $0 minimum investment in standard Fidelity accounts.
Is FDLXX FDIC insured?
No. FDLXX is a money market mutual fund, not a bank deposit. It’s protected by SIPC against broker failure, but not against investment losses.
The Bottom Line
FDLXX is one of the simplest ways for Fidelity customers to earn a competitive yield on cash and keep more of it after state taxes. If you live in a state with income tax and keep more than a few thousand dollars in SPAXX, moving most of it to FDLXX is a low-effort, low-risk upgrade.
Your next step: Log in to Fidelity, check FDLXX’s current 7-day yield, and compare your after-tax yield using the table above. Then read our FDLXX vs SPAXX guide to decide how much cash to keep in your core position.
Disclaimer: This article is for informational and educational purposes only and does not constitute financial, investment, tax, or legal advice. Yields, expense ratios, and tax percentages change and are not guaranteed; past performance does not guarantee future results. Money market funds are not FDIC-insured and can lose value. State tax rules vary. Consult a qualified tax professional or fiduciary financial advisor about your situation, and read the fund’s prospectus at Fidelity.com before investing.
Related Posts:
- What Is FDLXX? Yield, Tax Perks & Who Should Use It
- ACA Open Enrollment 2027: Key Dates, Premium Increases, and What Lost Subsidies Mean for You
- Tax Brackets Married Filing Jointly: Rates & Calculator Guide
- How to Avoid State Taxes on Treasury Interest: A Guide for U.S. Investors
- Treasury Bills vs. CDs: Which Is Right for Short-Term Savings?
