Van Global Hedge Fund Index Falls -1.0% Net in April; Hedge Funds Outperform Broad Markets As Rising Interest Rates Spook Investors.

Business Editors

NASHVILLE, Tenn.--(BUSINESS WIRE)--May 13, 2004

The Van Global Hedge Fund Index lost -1.0% net in April according to industry consultant Van Hedge Fund Advisors International, LLC (VAN). The Index is one of the longest running indicators of average hedge fund performance and serves as a benchmark for the industry. The April Index return is based on the net returns of over 800 funds. Less than half of the funds in the April Index, 41%, posted a positive return for the month.

The Van Global Hedge Fund Index excluding Funds of Funds also returned -1.0% net last month. The Van U.S. Hedge Fund Index, which includes only U.S.-domiciled funds, lost -1.3% net in April, while the Van Offshore Hedge Fund Index, which includes only non-U.S.-domiciled funds, fell -0.8% net. Final Index results will be released at the end of the month, after additional hedge funds have reported their returns to VAN.

Hedge Funds vs. the Markets

"It became clearer in April that the Fed won't keep the federal funds rate at its historically low current level too much longer. Greenspan's comments gave the stock market the jitters and added to the downward trend in bond prices, spelling a difficult month for investors of all sorts," noted George Van, Chairman of VAN. "Hedge funds did not emerge unscathed but they did manage to blunt the impact of market losses, outperforming many other investment options in April. For instance, two-thirds of funds in the Van Global Hedge Fund Index beat the S&P 500 last month. The Index's -1.0% net loss in April, its worst loss since September 2002, did outperform the S&P 500's -1.6% loss, the Average Equity Mutual Fund's -3.2% loss and the Lehman Brothers Aggregate Bond Index's -2.6% loss."

For the year to date, the Van Global Hedge Fund Index has gained 2.3% net of fees, placing it ahead of all major equity indices, which range from NASDAQ's -4.0% loss to the small-cap Russell 2000's 0.8% gain. The Lehman Brothers Aggregate Bond Index is flat for the year to date while the Average Equity Mutual Fund has returned a slight 0.2% gain.

Performance by Strategy Group

The Directional Trading Group was clearly the hardest hit by April's hostile markets, falling -4.5% in the Global Index. The Directional Trading Group consists of Futures, Emerging Markets, and Market Timing strategy hedge funds, all of which saw losses for the month. Unsurprisingly, the Market Neutral Group fared best, gaining 0.1% net. That group, which consists of Market Neutral Arbitrage, Distressed Securities, and Special Situations strategy funds, was the only one of the four Strategy Group Indices to post a gain. The two other Strategy Group Indices, Long/Short Equity and Specialty Strategies, fell -1.7% net and -1.3% net, respectively. For the year to date, all four Strategy Group Indices are positive, led by the Market Neutral Group's 2.8% net return.

Performance by Individual Strategy

Among the fifteen individual strategies tracked by VAN, Futures fared worst by far in April, plummeting -6.9% net on a Global basis. Those funds, which often use quantitative systems to invest in financial derivatives, commodities, and currencies, can be quite volatile and were particularly impacted by last month's rising interest rate environment. Emerging Markets, one of the Global Index's strongest performers in prior months, fell -3.3% net in April. Short Selling, on the other hand, had the best return in the Global Index, rising 3.6% net. Such funds are typically used to help offset losses in the remainder of investors' holdings during periods of market stress. Last month marked only the second positive showing for Short Selling since March of last year as the equity market's recovery during that period favored long-biased strategies. The only other winning strategies for last month were Distressed Securities, Income, and Market Neutral Arbitrage, which posted net gains in the Global Index of 1.4%, 0.4%, and 0.2%, respectively. For the year to date, Distressed Securities leads all strategies with a 6.2% net gain, followed by Emerging Markets at 3.5% net and Value at 2.5% net.

April Index Value

The Van Global Hedge Fund Index declined to a value of 10,884.00 in April. The Index began with a value of 1,000 in January 1988. Over its 16 year and four month history, the Index has generated a net compound annualized return of 15.7%, 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 April returns for the Van Hedge Fund Indices will be calculated at the end of May, after several hundred more funds have submitted their returns to VAN. Those results will supercede the returns reported herein. Final April returns for the Van Hedge Fund Indices will be posted at www.hedgefund.com when they become available.

As currently calculated, April and year-to-date 2004 returns for the Van Hedge Fund Indices are as follows:

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                        Van Hedge Fund Indices
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                                      Global       U.S.      Offshore
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                                     Apr.  YTD   Apr.  YTD   Apr.  YTD
                                    2004  2004  2004  2004  2004  2004
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Market Neutral Group                0.1%  2.8%  0.0%  2.9%  0.2%  2.7%
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  Distressed Securities             1.4%  6.2%  1.3%  6.3%  1.5%  6.1%
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  Market Neutral Arbitrage          0.2%  2.3%  0.1%  2.2%  0.3%  2.5%
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    Convertible Arbitrage           0.1%  2.1% -0.1%  1.7%  0.3%  2.4%
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    Fixed Income Arbitrage          0.7%  2.7%  0.3%  2.7%  1.0%  2.9%
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    Merger Arbitrage               -0.3%  0.9% -0.5%  0.7% -0.2%  1.1%
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    Statistical Arbitrage           0.3%  1.6%  0.4%  0.9%  0.2%  1.8%
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  Special Situations               -0.9%  2.3% -1.0%  2.8% -0.7%  1.6%
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Long/Short Equity Group            -1.7%  1.8% -2.1%  1.1% -1.3%  2.7%
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  Aggressive Growth                -2.5%  0.3% -2.8% -0.4% -2.2%  1.1%
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  Market Neutral
  Securities Hedging               -1.3%  1.4% -1.7%  0.8% -1.0%  1.8%
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  Opportunistic                    -1.5%  2.1% -1.7%  1.7% -1.3%  2.5%
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  Value                            -1.7%  2.5% -2.1%  1.8% -1.2%  3.5%
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Directional Trading Group          -4.5%  0.1% -4.6%  0.8% -4.5% -0.7%
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  Macro                            -0.8%  1.4% -1.4%  1.6% -0.4%  1.2%
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  Market Timing                    -1.5% -0.5% -1.9% -0.4% -0.9% -0.8%
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  Futures                          -6.9%  0.4% -6.4%  1.5% -7.4% -0.7%
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Specialty Strategies Group         -1.3%  2.6% -0.5%  1.6% -1.8%  3.0%
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  Emerging Markets                 -3.3%  3.5% -3.0%  3.8% -3.4%  3.5%
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  Income                            0.4%  2.0% -0.6%  1.6%  1.8%  2.7%
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  Multi-Strategy                   -2.0%  0.5% -1.3%  0.3% -2.7%  0.2%
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  Short Selling                     3.6%  0.4%  3.2%  0.1%  4.0%  0.6%
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Van Hedge Fund Index
(ex Funds of Funds)                -1.0%  2.2% -1.2%  1.8% -0.9%  2.6%
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  Fund of Funds                    -1.1%  2.2% -2.1%  0.8% -0.2%  3.3%
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Van Hedge Fund Index               -1.0%  2.3% -1.3%  1.6% -0.8%  2.7%
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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 April Indices as reported herein were created using a sample of 887 funds (814 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. Average Equity Mutual Fund and Average Taxable Bond Mutual Fund statistics are derived from Morningstar data. "Multi-Strategy" was formerly referred to as "Several Strategies". The overall Van Hedge Fund Index results (with and ex Funds of Funds) do not include the performance of Futures funds.