Evaluating Mutual Fund Performance When buying a mutual fund, you might expect to earn money through future current income (from dividends), future capital appreciation (from increases in share price of the fund's underlying securities), or both. You can calculate your total earnings from a given investment by determining the approximate yield. This value makes it easier to compare investment options. Using Approximate Yield with Mutual Funds The formula for approximate yield of an investment can look intimidating, but it's just a function of three things: (1) dividends earned, (2) capital gains distributions received, and (3) change in share price. Based on the information in the table, compute the approximate yield for each of the two funds that follow. Annual dividends and capital gains distributions Beginning mutual fund share price Ending mutual fund share price Mutual Fund 1 Mutual Fund 2 $1.30 $3.00 $50 $120 $65 $147 The approximate yield for Mutual Fund 1 is and the approximate yield for Mutual Fund 2 is True or False: If both investments carry the same rate of risk, Mutual Fund 2 is a better investment than Mutual Fund 1. True False