Should you invest in Mutual Funds?

I will give you an idea of underperformance of several mutual funds over the last two years compared to their benchmark indices. The NAV of the mutual funds have been taken on 20 June. Sensex was at 14571.29 and BSE500 was at 5747.63 on 20 June.

Scheme	Launch Date	Mutual Fund Return	Sensex Return	BSE 500 Return
UTI Contra Fund	22 March 2006	-0.016%	10905.2 33.62%	4355.5 31.96%
Reliance Equity Fund RP(G)	7 March 2006	24.7%	10735.36 35.73%	4286.73 34.08%
UTI Leadership Equity Fund	30 Jan 2006	25.2%	9919.89 46.89%	3982.17 44.33%
ICICI Pru Fusion Fund	27 Feb 2006		10282.09 41.71%	4113.14 39.74%
SBI Blue Chip Fund	20 Jan 2006	12.1%	9520.96 53.04%	3892.38 47.66%
Franklin India Smaller Companies Fund	14 Dec 2005	-0.013%	9241.76 57.67%	3745.57 53.45%
HDFC Long Term Equity Fund	27 Jan 2006	10%	9870.79 47.62%	4005.33 43.5%

The schemes cover from all the different mutual fund houses, ICICI, HDFC, Franklin, SBI and UTI. Nobody has been able to outperform the indices over the last 2 - 2.5 years. Is it a better idea then to invest in Index funds?