I am a California resident, so if I invest in a California municipal bond fund, I will not pay taxes on both the federal and state level. I’m having difficulty interpreting the “Growth of $10,000” chart for municipal bond funds on the Charles Schwab website. Let’s look at BCHYX for example:

BCHYX

• Approximately $2,000 growth over 3 years
• Tax Equivalent Yield: 2.55%
• 30-Day SEC Yield: 1.66%
• TTM: 3.09%
• Expense Ratio: 0.5%

Question

1. The fine print under the graph says it does not reflect the effects of taxes. So does that mean it is representing the tax-equivalent yield or the 30-day SEC yield? It’s ambiguous because you can remove the effect of taxes from both yields. The former can have tax effects removed by living in California. The latter can have tax effects removed by being in a lower tax bracket.
2. The fine print also says it doesn’t reflect certain fees. It is unclear if the expense ratio of 0.5% falls under that definition of fees. Are they saying the expense ratio has already been subtracted from the graph or has it not?