Great point! The only quibble I have is that 'compound return' doesn't include fees. However, 'total return' includes both fees & distributions (such as dividends).

If we use fairly common fees, the table looks more like this:

  Option 1: 0.25% fee, Option 2: 1.5% fee
  Year 1       7.75%    13.5%
  Year 2       7.75%     5.5%
  Year 3       7.75%     2.5%
  Year 4       7.75%    17.5%
  Year 5       7.75%     4.5%

  Total gain:   45.2%      50.7%
  Compound/yr    7.75%      8.5%

Once you include the fees (especially if the fund has a 'load' or sales fee) actively managed funds have to do significantly better than low fee index funds just to match total performance.

Edit: formatting