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I'm looking at "FIDELITY GOVERNMENT MONEY MARKET" and there's two numbers: 0.01% 7-Day Yield and 0.75% Average Annual Total Returns. I don't understand the difference between these two because money market fund doesn't really have much capital gains/returns. All of the earnings are from yield, so shouldn't the two be the same?

0.01% 7-Day Yield * $10000 investment $1 after a year. Isn't the 0.75% Annual Total Return used for the same thing?

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The 7-day yield is what it yields in 7 days. To calculate the yield in 365 days, use the compound interest formula:

(1 + 0.01/100)^(365/7) = 1.0052

So if it yields (exactly) 0.01% in 7 days, it yields 0.52% in 365 days.

However, a problem here is that 0.01% could be anything between 0.005% and 0.015%. So the 365-day yield could be anything between:

(1 + 0.005/100)^(365/7) = 1.0026
(1 + 0.015/100)^(365/7) = 1.0079

or anything between 0.26% and 0.79%.

I suspect the 0.75% annual total return is the most accurate figure here. The 0.01% yield for 7 days is told with such low precision that it's practically useless, as you can see from the calculations.

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  • Thats what i thought initially, but if you look at the wikipedia page, it uses 7-day yield like in my example
    – JobHunter69
    Commented Sep 6, 2020 at 14:16
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    en.wikipedia.org/wiki/7-day_SEC_yield
    – JobHunter69
    Commented Sep 6, 2020 at 14:16
  • Oh. Perhaps the rates have went down and the 0.75% is just historical returns. Past returns are past, future returns are what you care about.
    – juhist
    Commented Sep 6, 2020 at 16:28
  • No they also have a Annual Returns YTD number which is much higher than 0.01%. 0.01% is way too low for a money market fund anyways.
    – JobHunter69
    Commented Sep 6, 2020 at 18:42
  • @StackOverflowOfficial No it isn't. Where I live (Eurozone), money market returns are negative currently!
    – juhist
    Commented Sep 6, 2020 at 19:05

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