SEC 30-day yield annualizes a fund's standardized net investment income, with a worked formula, fee-waiver comparison, and distribution-yield limits.
SEC 30-day yield is an annualized measure of a fund’s net investment income over a recent 30-day or one-month period, calculated using a U.S. Securities and Exchange Commission method. It helps compare income yields, particularly among bond mutual funds and bond ETFs, without treating the latest cash distribution as the fund’s earnings.
The percentage is already annualized. A quoted 6% SEC yield does not mean the fund earned or paid 6% in one month, and it does not promise a 6% total return over the next year.
Form N-1A, Item 26(b)(4) specifies:
| Input | Meaning |
|---|---|
| (a) | Dividends and interest earned during the measurement period under the prescribed method |
| (b) | Expenses accrued for that period, net of reimbursements |
| (c) | Average daily shares outstanding entitled to dividends during the period |
| (d) | Maximum offering price per share at the end of the period |
The formula returns a decimal; express it as a percentage.
The ratio ((a-b)/(cd)) is the period’s net investment income per eligible share divided by the price base. The sixth power compounds that ratio over six periods. Subtracting one and multiplying by two expresses it on an annualized, semiannual-equivalent basis.
It is not the same operation as doubling one month’s income ratio, multiplying it by 12, or compounding it for 12 periods. It is also not a bank deposit APY.
Assume a hypothetical fund share class has these inputs:
| Input | Amount |
|---|---|
| Standardized dividends and interest earned | $60,000 |
| Accrued expenses after a reimbursement | $10,000 |
| Average daily eligible shares | 1,000,000 |
| Ending maximum offering price per share | $10.00 |
Net income is $50,000, or $0.05 per eligible share. The period’s income-to-price ratio is:
Apply the SEC annualization:
| Calculation | Result | Interpretation |
|---|---|---|
| Period income ratio | 0.50% | Not an annual yield |
| Twice the period ratio | 1.00% | Incorrect SEC annualization |
| Twelve times the period ratio | 6.00% | Simple annualization, not the specified formula |
| SEC formula | 6.08% | Standardized annualized quotation |
The $0.05 per share is a calculation input, not proof that the fund paid a $0.05 distribution. The example illustrates the method; it is not a current fund quotation.
A fund can earn interest between coupon payment dates. It can also distribute cash in a month different from the month in which income was earned.
The SEC instructions prescribe how to calculate portfolio interest and dividend accruals, including special treatment for some securities. Consequently, the fund’s published SEC yield should not be reconstructed simply by summing this month’s cash coupons or distributions. See the instructions following the formula in Form N-1A.
Likewise, multiplying an ending share count by ending NAV does not necessarily reproduce (cd). The formula uses an average eligible share count and a specified offering-price input. For a share class priced without a sales load, that price input may be NAV; do not substitute an ETF’s exchange price or a brokerage account’s value without checking the disclosure.
A fund sponsor may waive fees or reimburse expenses. That lowers the expense deduction and can raise the reported SEC yield.
Fidelity’s fund glossary distinguishes 30-day yield from yield calculated without applicable expense waivers or reimbursements. Providers may label the latter unsubsidized yield, yield without subsidy, or a restated yield.
Extend the worked example. Suppose accrued expenses before reimbursement were $15,000, and the sponsor reimbursed $5,000:
| Basis | Expense deduction | Period net income | SEC yield |
|---|---|---|---|
| With the $5,000 reimbursement | $10,000 | $50,000 | 6.08% |
| Without reimbursement | $15,000 | $45,000 | 5.46% |
For the unsubsidized calculation:
The roughly 0.62-percentage-point difference comes from expense treatment in this example, not a different portfolio. If a waiver ends, the future result also depends on income, expenses, and prices at that time.
Read the waiver terms and expiration date rather than assuming the subsidized figure is permanent.
| Measure | What it describes | Main limitation |
|---|---|---|
| SEC 30-day yield | Standardized recent net investment income, annualized | Does not measure the full investment result |
| Distribution yield or rate | Cash payouts relative to a stated price or NAV basis | Depends on payout policy, period, and included components |
| Portfolio yield to maturity | Yield calculations on underlying bond holdings | Is not automatically the fund’s net shareholder yield |
| Total return | Distributions plus price or NAV changes under a stated method | Historical performance is not a promise of future results |
A fund’s distribution yield may be higher or lower than its SEC yield. Different measurement windows, changing rates, expense treatment, and distribution composition can explain the gap.
A higher distribution yield does not, by itself, prove that the fund is returning capital. Check the distribution breakdown rather than inferring its source from two percentages. The SEC’s fund-distributions bulletin distinguishes payouts from investment performance.
An income yield can remain positive while a fund’s NAV falls enough to produce a negative total return.
Do not subtract the published expense ratio from SEC yield again as if no fund expenses had been deducted. Separately charged advisory fees, trading costs paid by the investor, and investor-specific taxes still require attention.
A tax-equivalent yield is another calculation with a stated tax-rate assumption. It is not interchangeable with an unadjusted taxable or tax-exempt SEC yield.
Thirty days is a short observation window. Changes in holdings, interest rates, expenses, or unusual income accruals can affect the result. Annualization does not establish that the same income rate will continue.
The method improves comparability; it does not make two funds equally risky. A higher figure can accompany greater credit exposure, longer interest-rate sensitivity, or leverage. The SEC’s name identifies a calculation convention, not an endorsement of the fund.
This article explains a U.S. fund-disclosure measure for educational purposes. It is not personalized investment or tax advice.