The member funds in each of the individual HedgeIndex Composite Index Strategy Indexes represent approximately the top 70% of eligible funds by assets under management (AUM) in the represented strategy, subject to a minimum (where available) of 10 funds and a maximum of 25 funds per index. On the basis that once an eligible fund is included in a particular strategy index, another eligible fund managed by the same or an affiliated investment manager will not be included in the same strategy index. The HedgeIndex Composite Index is constructed by aggregating the nine strategy indexes. 

The HedgeIndex Composite Indexes are derived from the HedgeIndex Main Index, but include only open, or investable, funds. When defining open funds and other terms for eligibility, HedgeIndex LLC relies on information provided to it, its affiliates and any third party advised by them. The HedgeIndex Composite Indexes can therefore include funds that may generally be closed. The HedgeIndex Main Index includes closed funds. Funds in the HedgeIndex Composite Indexes are also selected solely from the set of funds that meet specified eligibility conditions.

We believe the HedgeIndex Composite Indexes are the industry's most representative asset-weighted and fully investable strategy-based indexes. The member funds are subject to transparent and rules-based selection criteria; and the rules-based construction methodology, by which all member funds are selected, limits subjectivity in the selection process.

Index data is net of all fees. Further, the HedgeIndex Composite Indexes are calculated net of a 0.07% per month index calculation fee.

Funds of funds are not included in the indexes.

Funds that are generally closed for new investment may be included in the indexes.

The indexes include funds worldwide.

The indexes commenced with a starting value of 100.00 as of October 1, 2004.

Managed accounts are excluded from the HedgeIndex Composite Index and the HedgeIndex Main Index.

Only offshore funds are included in the indexes. However, should a manager have both a US fund and an offshore fund in the HedgeIndex Main Index, the sum of their respective assets is used to determine the weight of the offshore fund in the HedgeIndex Composite Indexes.

The indexes are rebalanced annually, with a semiannual “partial rebalancing” occurring between each rebalancing. Rebalancings take effect each April 1 (each a rebalancing effective date), based upon selections and weights that are determined on or about the previous December 15 (each a rebalancing selection date), using the latest data available to the calculation agent. Partial rebalancings take effect each October 1 (each a rebalancing effective date), based upon selections and weights that are determined on or about the previous June 15 (each a rebalancing selection date), using the latest data available to the calculation agent.

A fund can be dropped from indexes at the semiannual rebalancing for reasons other than changes in AUM if any of the following occur:

• The fund does not comply with the reporting requirements;
• The fund fails to comply with the rules relating to the provision of financial information;
• The fund ceases operation.

The indexes are rebalanced annually, with a semiannual “Partial Rebalancing” occurring between each rebalancing. Member funds are added and removed on a "going forward" basis only. 

Funds must have a current audited financial statement and a minimum one-year track record to qualify for the indexes. However, funds with $500 million or more under management that have less than a one year track record can be included in the HedgeIndex Composite Indexes provided that they can supply audited financials or comparable verification of performance and assets.

No. Any new funds added to the indexes will contribute on a "going-forward" basis only. The historic monthly figures will not be adjusted.

Any adjustments will be made on a "going-forward" basis only, as is the typical practice with all other major hedge fund indexes

Yes. All figures are converted into US dollars.

Index figures are typically released on the 15th of each month or the subsequent business day (should the 15th fall on a holiday or weekend). Index values may be calculated from estimated performance as reported by the managers. As a result, on each publication date, the most recent month's estimated rate of return and index value will be published along with the previous month’s confirmed rate of return.

Most indexes are affected by some form of survivorship bias. In order to reduce this effect, the HedgeIndex Composite Indexes do not remove funds in the process of liquidation, and therefore capture most of the potential negative performance before a fund ceases to operate. If a fund enters liquidation, its performance remains in the HedgeIndex Composite Indexes until it fully liquidates, at which time it is removed because it no longer meets investability requirements. 

While derived from the HedgeIndex Main Index, the HedgeIndex Composite Indexes were not designed to track the HedgeIndex Main Index and its corresponding sub-indexes. The HedgeIndex Composite Indexes were constructed as investable, liquid, strategy-specific indexes with their own characteristics, and thus performance may be significantly different.

HedgeIndex LLC has relationships with a number of closed funds that have agreed to participate in the AllHedge Indexes, regardless of their closed status. Further, empirical evidence suggests that closed funds do not necessarily outperform open funds.