The Vanguard Variable Annuity - REIT Index Fund pays quarterly distributions consisting of dividend income, return of capital, and capital gains. However, the tax characteristics of these distributions cannot be determined until after the end of the year since the REITs in which the fund invests do not designate the composition (i.e., dividend income, return of capital, and capital gains) of their payments until the new calendar year.
Since Vanguard cannot know the taxability of the portfolio's distributions during the year, unadjusted and adjusted effective yields are calculated.
The current unadjusted effective yield is 3.73% as of 03/31/2014, which is based on the full amount of REIT distributions (dividend income, as well as return of capital and capital gain).
The current adjusted effective yield is 2.45% as of 03/31/2014. The adjusted yield reflects a reduction in the income included in the yield based on the average return of capital and capital gain distributions received from the fund's REIT investments for the past 2 calendar years. (These percentages are 30.29% for 2013 and 28.85% for 2012.)
Please remember that the yield is calculated monthly like other stock funds and that Vanguard is not quoting a 30-day SEC yield.