Explanatory Notes

 
About the Greenwich Hedge Fund Indices
Our flagship indices, the Greenwich Global Hedge Fund Indices, have been published since 1995 and are among the industry's oldest and most widely utilized composite benchmarks of the entire hedge fund universe. The Greenwich UCITS and Mutual Fund Hedge Fund Indices are additional series of hedge fund benchmarks designed to represent expected performance of 'investable' hedge funds that are open and considered suitable for institutional investment. Indices are based on information provided by US, European, Asian and emerging market hedge fund managers, are subject to change, and are not independently verified or audited. Indices are updated monthly and calculated as simple averages (not asset weighted averages) based on underlying hedge fund returns that are net of manager fees and performance allocations and do not include fund-of-funds. The timing of the deductions of such fees and performance allocations may affect the reported performance. Index results are based on the performance of funds reporting returns by a given time and represent a subset of the Greenwich Alternative Investments’ database. As a result, funds becoming defunct in that reporting period are unlikely to be included in the Index for that period. ‘Survivor bias’ is a factor in most databases. This term describes the inability of trackers to adequately include all information, including all losses, if any, of all defunct funds. Some survivor bias is expected and aggregate statistics therefore may be skewed positively. Currently a minimum of 800 funds are used to calculate the Greenwich Global Hedge Fund Index at mid-month while a minimum of 1,000 funds are used to calculate the Greenwich Global Hedge Fund Index at month-end. The sample of funds will differ from period to period. If a fund’s performance history began in the middle of a quarter, statistics are calculated assuming that the fund’s performance history began at the beginning of the quarter. Statistics may have been adjusted due to the effects of rounding. In some cases predecessor portfolios (established prior to inception of the fund) have been included in performance numbers. Different statistics may be based on different numbers of funds, for technical reasons. Prior to 2003, quarterly index returns were based on a separate (and generally larger) sample of hedge fund returns than any of the samples used to create the monthly indices. Therefore, geometrically linking three monthly results (ie., Jan, Feb, Mar of 2000) did not necessarily yield a quarterly result (ie., 1Q 2000). Annual index results were calculated by geometrically linking the four quarterly results. Beginning in 2003, quarterly and annual index results are calculated by geometrically linking the underlying monthly index results. Beginning in 2003, monthly index results are recalculated and restated at month end in order to produce a more robust index based on a larger sample of hedge fund returns. Index results for a given month are initially released in the middle of the following month. Index returns are finalized on the last business day of the month and replace the mid-month results and are published on our website www.greenwichai.com as the Month-End return. Standard deviation and compound annual returns are calculated using monthly return data rather than the quarterly index data reported as the official Greenwich Global Hedge Fund Index return prior to 2003. Our Index methodology has changed over time. Beginning in 2004, funds of funds are no longer included in the Greenwich Global Hedge Fund Index and results have been restated retroactively back to inception in 1988 to exclude funds of funds. Prior to 2004, ‘Multi-Strategy’ was referred to as ‘Several Strategies’. See www.Greenwichai.com for a summary of changes and complete index construction methodology.
 
Source for market statistics is Bloomberg Business News. Hedge fund averages, S&P 500, DJIA< NASDAQ (1988 and forward) Russell 2000 (1998 and forward), Average Equity Mutual Fund, and Average Bond Mutual Fund have dividends reinvested. The Morgan Stanley Emerging Markets Index returns do not reflect the reinvestment of dividends. The index returns are from sources believed to be reliable but have not been independently verified. Correlation of .3 generally is considered to be relatively ‘uncorrelated’, a perfect correlation would be 1.0 while 0.0 would be perfectly uncorrelated; -1.0 would be perfectly negatively correlated. ‘Market neutral’ is standard industry terminology referring to certain styles, which in actuality may not be ‘neutral’ in relation to the returns of the market. Perfect market neutrality would be exhibited by a correlation to the market of 0.
 
Hedge funds: often engage in leveraging and other speculative investment practices that may increase the risk of investment loss; can be highly illiquid; are not required to provide periodic pricing or valuation information to investors; may involve complex tax structures and delays in distributing important tax information; are not subject to the same regulatory requirements as mutual funds; and often charge high fees.
 
The use of leverage by managers applied to positive returns will raise returns. Applying leverage in losing moths will increase losses. There can be no guarantee that hedge funds will hedge or that their hedging techniques will be effective. Changes in economic conditions will affect the managers and comparative indices in various ways. There can be no guarantee that past comparisons will be replicated.
 
About Greenwich Alternative Investments
Greenwich Alternative Investments is a division of HedgeFund.com, LLC. We are a hedge fund research firm providing performance benchmarks and manager information.
 
This material is not intended as an offer or solicitation for the purposes or sale of any financial instrument or advisory service and is for informational purposes only and should not be construed as investment or legal advice. As with any investment investors in hedge funds are subject to a risk of loss. Neither statistics nor past results are indicative of future performance. In providing this information, we make every attempt to ensure accuracy of the information; however, we do not audit and cannot guarantee the completeness or accuracy of such information. Information on hedge funds is based on a sample of funds in the Greenwich Alternative Investments database and may not be representative of all hedge funds. Changes in economic conditions will affect returns of the Indices and comparative indices in different ways. Opinions and estimates constitute our judgment and are subject to change without notice. Greenwich Alternative Investments assumes no responsibility for the interpretation, accuracy or completeness of the information. Each reader is solely liable for any use such reader may make of this information.
 
INVESTORS ASSUME RESPONSIBILITY FOR PERFORMANCE OF ALL DUE DILIGENCE. THE FINAL DECISION WHETHER OR NOT TO INVEST WITH HEDGE FUNDS RESTS SOLELY WITH THE INVESTOR, AND THE INVESTOR AGREES IT SHALL NOT BE BASED ON ANY INFORMATION PROVIDED BY GREENWICH ALTERNATIVE INVESTMENTS.
 
INVESTMENTS IN HEDGE FUNDS ARE SPECULATIVE AND INCLUDE A HIGH DEGREE OF RISK. INVESTORS COULD LOSE THEIR ENTIRE INVESTMENT. HEDGE FUNDS ARE SUITABLE ONLY FOR PERSONS WHO ARE ABLE TO LOSE THEIR ENTIRE INVESTMENT. PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER THESE RISKS BEFORE INVESTING.
 
Greenwich Alternative Investments can assume no responsibility for investments in hedge funds by investors who review these pages. Investors are urged to seek professional advice in selecting individual hedge funds and to perform extensive due diligence on funds prior to investing.
 
IMPORTANT CONSUMER INFORMATION:
 
  1. A broker-dealer, investment adviser, BD agent or IA rep may only transact business in a particular state after licensure or satisfying qualifications requirements of that state, or only if they are excluded or exempted from the state's broker-dear, investment adviser, BD agent or IA rep requirements, as the case may be; and
  2. Follow-up, individualized responses to consumers in a particular state by broker-dealer, investment adviser, BD agent or IA rep that involve either the effecting or attempting to effect transactions in securities or the rendering or personalized investment advice for compensation, as the case may be, shall not be made without first complying with the state's broker-dealer, investment adviser, BD agent or IA rep requirements, or pursuant to an applicable state exemption or exclusion.
  3. For information concerning the licensure status or disciplinary history of a broker-dealer, investment adviser, BD agent or IA rep, a consumer should contact his or her state securities law administrator.