Step 4: Evaluating Investment Performance

Regardless of how often you choose to review performance information, it’s important to understand it. Since mutual fund performance isn’t always reported in the same way, you should learn to recognize the different types of total returns and the significance of benchmark indices.

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Taxable vs. Tax-Free

Evaluating Investment Performance

Total Return

Total Return is one of the most common ways to measure mutual fund performance. A mutual fund’s total return includes its yield (dividends, interest, and capital gains paid on the investments held by the fund), as well as changes in its share price, and is presented as a percentage. Total returns are commonly quoted for 1-, 3-, 5-, and 10-year periods, as well as over the life of the fund. They can be presented as cumulative returns or average annual returns.

Cumulative Total Return

Cumulative return reflects a mutual fund's actual performance over the period of time quoted, with dividends and gains reinvested.

Average Annual Total Return

An average annual total return is a hypothetical, annualized return that simply divides the cumulative total return by the number of years it represents. For instance, if a hypothetical fund had an 80% return over 10 years, you would divide 80% by 10 years. The fund’s average annual total return would be 8%.

Benchmarks

Benchmarks are one of the best ways to evaluate your fund’s total return because, by themselves, returns tell you very little. A fund with a return of 20% may be performing poorly while a fund that is down 5% may have performed wonderfully. Benchmarks are an effective way to measure your fund’s performance. There are hundreds of benchmarks; however, each fund's prospectus describes the benchmark used by the portfolio managers to gauge their performance.

Common Mutual Fund Benchmarks

Large Company Stock Benchmarks
S&P 500 Composite Stock Index	A measure of the broader market’s performance based on the average performance of 500 widely traded stocks.
Dow Jones Industrial Average	A measure of market performance based on the price-weighted average of thirty actively traded blue chip stocks.
Russell 1000 Growth Index	Measures the performance of those Russell 1000 companies with higher price-to-book ratios and higher forecasted growth values.
Russell 1000 Value Index	Measures the performance of those Russell 1000 companies with lower price-to-book ratios and lower forecasted growth values.
Small- and Mid-Sized Company Stock Benchmarks
Russell 2000 Growth Index	Measures the performance of those Russell 2000 companies with higher price-to-book ratios and higher forecasted growth values.
Russell 2000 Value Index	Measures the performance of those Russell 2000 companies with lower price-to-book ratios and lower forecasted growth values.
International Stock Benchmark
Morgan Stanley MSCI EAFE Index	A measure of the performance of international stock portfolios./egional indicator Europe, Australiasia, FarEast.
Taxable Bond Benchmarks
Lehman Brothers Aggregate Bond Index	An unmanaged index composed of securities from the Lehman Brothers Government/Corporate Bond Index, Mortgage-Backed Securities Index and the Asset-Backed Securities Index.
Lehman GNMA Index	A total comprehensive GNMA index comprised of 30-year GNMA pass-throughs, 15-year GNMA pass-throughs, and GNMA Graduated Payments Mortgages.
Lehman Intermediate Government/Credit Index	An unmanaged index of debt securities with maturities from one to 10 years, issued or guaranteed by the U.S. Treasury, U.S. Government agencies and quasi-federal corporations and fixed rate dollar denominated SEC-registered corporate debt that are rated investment grade or better.
Merrill Lynch 1-3 Year U.S. Government Corporate Index	An unmanaged index trading short-term U.S. government securities and short-term domestic investment-grade corporate bonds with maturities between 1 and 2.99 years.
Lehman Fixed Rate Mortgage Backed Securities Index	An unmanaged Index composed of fixed rate 15- and 30-year securities backed by pools of mortgages, balloon mortgages, and graduated payment mortgages backed by Government National Mortgage Association, Federal National Mortgage Association, and Federal Home Loan Mortgage Corporation that are rated investment grade or higher.
Municipal Bond Benchmark
Lehman 7-Year Municipal Bond Index	An unmanaged index that tracks debt obligations of the U.S. government with a maturity date of one to seven years.
Money Market Fund Benchmark
Merrill Lynch 6-Month Treasury Index	A measure of the performance of short term paper composed of 6-month U.S. government securities.

NOT FDIC INSURED · NO BANK GUARANTEE · MAY LOSE VALUE

You should consider the investment objectives, risks, charges and expenses of the Armada Funds carefully before investing. A prospectus may be downloaded and viewed with this and other information about the Funds or may be obtained by contacting an investment professional or by calling 1-800-622-FUND (3863.) Please read it carefully before you invest or send money.

National City Investment Management Company (IMC) serves as investment adviser to Armada Funds for which it receives an investment advisory fee. Shares of Armada Funds are distributed by Professional Funds Distributor, LLC (PFD), 760 Moore Road, King of Prussia, PA 19406. PFD is not affiliated with IMC and is not a bank.