December 2005 Performance Review Of The Dow Jones Hedge Fund Strategy Benchmarks - A Monthly Report From Dow Jones Indexes On The Performance Of The Dow Jones Hedge Fund Strategy Benchmarks

December was an up month for all six hedge fund strategies covered by Dow Jones Hedge Fund Indexes. Five of the six strategies posted gains in 2005.

With net-of-fees returns of 6.50% and 6.48%, event driven and distressed securities were the top two performing strategies for the year. For the distressed securities benchmark, 2005 also marked the fourth consecutive year that the strategy posted gains – which means the benchmark has been up in every year since its inception in January 2002. The event driven benchmark ended 2002, its first year of existence, in a drawdown of nearly 10%, but since then has posted gains in 2003 and 2004 and reached a new high water mark in 2005. The performance of the merger arbitrage benchmark was similar – a down year in 2002 followed by three years of gains – most recently a net-of-fee gain of 2.91% in 2005.

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Hedge Fund Fact Sheet - December