How to understand "7-Day Yield" of a Money Market Fund?

Question

FIDELITY MUNICIPAL MONEY MARKET (FTEXX) has a 7-Day Yield of 0.01%. I was wondering what 7-Day Yield means and how it is calculated.

I am also wondering if it would be better to buy a T-bill with Discount Rate of 0.1% or buy some Fidelity money market funds? How can I compare them? Any suggestions?

Thanks and regards!

mpenrow · Accepted Answer

Here is an excellent article on the 7-Day yield and how to calculate the interest you would receive.

So if you invested $1000 for 30 days:
(0.0001 * $1000) / 365 ~= $0.000274 per day.
Multiply by 30 days to yield $0.008 in interest.

How to understand "7-Day Yield" of a Money Market Fund?

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