I recently review the performance of a fund after its five year cumulative return ending March 31, 2007 fell below the five year return of its appointed index. The fund returned 13.3% over a five year period, just slightly underperforming the 13.5% return of the index. However, in looking at the fund’s performance more closely it is interesting to note that the fund outperformed its index by 350 bps over the past four years and 130 bps over the past six years ending in March 31, 2007. I also reviewed the fund’s risk adjusted statistics over the same time periods and they too reflect a similar pattern. Over a five year period the fund’s alpha is negative, -1.56%, but over a four and six year period the fund’s alpha is positive. Further analysis revealed that the fund’s underperformance over a five year period was the result of just two slightly underperforming years where the fund had significant exposure to the underperforming financial sector. However, this analysis also clearly illustrates how point in time analysis is often very misleading and doesn’t always accurately reflect a fund’s true performance. For example, this same fund has outperformed the index in 8 out of the last 10 annual periods and 8 out of the last 9 rolling three year periods. This consistency over a long period of time and during numerous market environments more accurately reflects the Fund’s true performance. However, most investors who read various financial periodicals will be hard pressed to find these types of consistency measures. Instead time and time again you will see periodicals highlighting mutual funds with the best 1, 3, or 5 year cumulative return. Though these measures do have some value, they certainly don’t tell the whole story. Did the fund with the best 5 year return have two spectacular years followed by three poor performing years? It is difficult to know looking only at cumulative point in time returns. Therefore, if investors are seeking consistent long term performance they need to beware of the flaws of cumulative point in time analysis and rather seek performance measures that more accurately reflect a fund true performance over various market cycles.