Van Global Hedge Fund Index Falls -0.1% Net in January; Hedge Funds Limit Losses amidst Much Worse Month for Stocks.

NASHVILLE, Tenn. -- The Van Global Hedge Fund Index lost -0.1% net of fees in January according to an updated report released today by hedge fund consultant Van Hedge Fund Advisors International, LLC (VAN). The Index, one of the hedge fund industry's longest running benchmarks, represents the average reported monthly net return of hedge funds following a broad range of investment strategies.

The Van U.S. Hedge Fund Index, which includes only those funds domiciled in the United States, lost -0.6% net in January. Hedge funds domiciled outside the U.S., however, started the year off better as the Van International Hedge Fund Index posted a 0.4% net gain. (The Van International Hedge Fund Index was previously referred to as the Van Offshore Hedge Fund Index.)

Hedge Funds vs. the Markets

"January was a tough month for the stock market, reminding investors of the importance of a hedged portfolio," noted George Van, Chairman of VAN. "Concerns over interest rate hikes and disappointing earnings reports contributed to a -2.4% loss for the S&P 500 last month. Hedge funds, on the other hand, benefited from their short positions and their use of low-correlation investment strategies, keeping losses to a minimum overall. In fact, about 53% of the hedge funds in our Global Index reported a net gain for January and 88% beat the S&P 500 for the month."

Hedge fund managers faced unfriendly markets outside the U.S. as well. The MSCI World Equity Index dropped -2.3% in January while the Dow Jones Europe Stoxx 50 fell -2.8%. Hedge funds have a history of capital preservation, and even growth, during stock market sell-offs. Since its inception in 1988, the Van Global Hedge Fund Index has posted a positive return every year, including those years when the broad market dropped.

Performance by Strategy Group

Hedge fund performance was split in January, with two of VAN's four broad global strategy groups showing a loss, one posting a gain, and one flat for the month. The Specialty Strategies Group gained 0.8% net as constituent strategies such as Short Selling and Income fared well. The Market Neutral Group was largely unaffected by the January sell-off, posting a flat return. The Long/Short Equity Group lost -0.4% net and the Directional Trading Group, weighed down by losses among Futures strategy funds, fell -2.1% net.

Performance by Individual Strategy

Five of VAN's thirteen individual hedge fund strategy indices generated profits in January. Unsurprisingly, Short Selling, a strategy that bets on falling stock prices, had the best performance with a 2.4% net gain. Market Neutral Securities Hedging, a strategy that invests as much in long positions as short positions, came in second for the month with a 1.0% net return. Emerging Markets, Income, and Market Neutral Arbitrage rounded out the winners with January net gains of 0.9%, 0.8%, and 0.1%, respectively.

Among the eight strategy indices that fell last month, Futures posted the largest loss, a net return of -3.2%. Aggressive Growth, a long/short equity strategy that focuses on earnings-sensitive growth companies, fell -2.3% net. All other losing Global strategy indices fell from -0.1% net to -0.3% net.

This month, VAN introduced a new strategy index, Event-Driven. This strategy invests in the equity and/or fixed income of companies involved in unusual events such as bankruptcies, mergers, divestitures, and earnings surprises. This new strategy index combines two previous strategy indices, Distressed Securities and Special Situations. Those indices continue to exist as sub-strategy indices in the Event-Driven category.

VAN also calculates four sub-strategy indices within the Market Neutral Arbitrage strategy. Convertible Arbitrage, the most widely utilized type of arbitrage among hedge funds, lost -0.8% net in January. Statistical Arbitrage, however, gained 1.1% net. Fixed Income Arbitrage and Merger Arbitrage also had positive returns, earning 0.9% net and 0.3% net, respectively.

January Index Value

The Van Global Hedge Fund Index declined to a value of 12,373.78 in January. The Index had an initial value of 1,000 at the beginning of 1988. Over its 17 year and 1 month history, the Index has generated a net compound annualized return of 15.9%, compared to a 12.2% compound annualized return for the S&P 500. Past performance of the Van Global Hedge Fund Index may be viewed at www.hedgefund.com.

Final January returns for the Van Hedge Fund Indices will be calculated at the end of January, after additional funds have submitted their returns to VAN. Those results will supercede the returns reported herein. Final January returns for the Van Hedge Fund Indices will be posted at www.hedgefund.com when they become available.

As currently calculated, January 2005 returns for the Van Hedge Fund Indices are shown below. (Funds in the Global Index are an aggregate of funds from both the U.S. and International Indices.)

Van Hedge Fund Indices, January 2005
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                                Global         U.S.      International
                             ------------- ------------- -------------
Market Neutral Group             0.0%          -0.1%         0.1%
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  Event-Driven                  -0.1%          -0.1%        -0.1%
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     Distressed Securities       0.4%           0.4%         0.4%
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     Special Situations         -0.3%          -0.3%        -0.4%
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  Market Neutral Arbitrage       0.1%          -0.1%         0.2%
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     Convertible Arbitrage      -0.8%          -0.8%        -0.9%
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     Fixed Income Arbitrage      0.9%           0.6%         1.1%
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     Merger Arbitrage            0.3%           0.3%         0.3%
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     Statistical Arbitrage       1.1%           0.1%         1.6%
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Long/Short Equity Group         -0.4%          -1.4%         0.6%
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  Aggressive Growth             -2.3%          -3.3%        -1.1%
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  Market Neutral
  Securities Hedging             1.0%          -0.4%         1.7%
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  Opportunistic                 -0.3%          -0.9%         0.4%
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  Value                         -0.1%          -1.0%         0.8%
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Directional Trading Group       -2.1%          -1.8%        -2.3%
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  Macro                         -0.1%          -0.7%         0.2%
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  Market Timing                 -0.2%          -0.2%        -0.1%
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  Futures                       -3.2%          -2.4%        -3.8%
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Specialty Strategies Group       0.8%           1.1%         0.5%
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  Emerging Markets               0.9%           1.4%         0.7%
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  Income                         0.8%           0.8%         0.8%
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  Multi-Strategy                -0.1%           0.1%        -0.2%
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  Short Selling                  2.4%           3.0%         1.4%
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Van Hedge Fund Index            -0.1%          -0.6%         0.4%
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Van Hedge Fund Advisors International, LLC ("VAN") is a global hedge fund advisory firm which constructs hedge fund portfolios for international institutions and wealthy investors. VAN bases its work on its pioneering research on hedge funds begun in the early 1990s and by drawing on one of the world's largest hedge fund databases.

The Company's hedge fund index information is based on information received (and not audited or independently verified) from the hedge funds in an affiliate's databases and may not be representative of all hedge funds. Hedge fund returns are net of fees and performance allocations. The timing of the deduction of such fees and performance allocations may affect the reported performance. The January Indices as reported herein were created using a sample of 873 funds (785 excluding Futures funds). Different statistics may be based on different numbers of funds. Averages are not dollar-weighted. Past results are not necessarily indicative of future performance. The Van International Hedge Fund Index was formerly named the Van Offshore Hedge Fund Index. The overall Van Hedge Fund Index results do not include the performance of Futures funds. All historical Index returns and values have been restated to exclude funds of funds. MSCI World Equity Index and Dow Jones Europe Stoxx 50 returns are U.S. dollar denominated.