January 2011 Hedge Fund Performance Commentary

Eurekahedge Introduction Hedge funds were up for the sixth consecutive month in December, posting a return of 3.01% for the month as global markets rallied at year end on the back of an upbeat US market outlook. The µs Eurekahedge Hedge Fund Index posted double digit growth during 2010, ending the year with a gain of 10.93% and beating the underlying markets by more than 3.10%. The MSCI World Index2 was up 5.55% in December and 7.83% for the year. All regions delivered healthy performance in December, with Japanese managers coming out ahead with an excellent return of 4.09%. Japanese managers outperformed the Nikkei, which was up 2.94% in the month as positive momentum built up in November continued into the next month. Japanese hedge funds focusing on small caps raked in the largest gains, as the TSE Mothers Index witnessed double-digit growth in December. Going into 2011, the outlook for Japanese hedge funds remains positive as corporate earnings continue to grow and the overall economic environment seems to be improving with positive forecast revisions from economists. The Eurekahedge North American Hedge Fund Index advanced 3.25% in December as managers maintained a net long bias throughout the month Increased risk appetite led to a strong market rally ± . the S&P 500 was up 6.53% in December as improving economic indicators in the US and better-thanexpected earnings estimates drove up investor sentiment In addition to equities, high yields also . 3 made significant gains as risk assets were in high demand the Merrill Lynch High Yield Index ended the month 1.76% higher. European managers posted excellent figures for December with the Eurekahedge European Hedge Fund Index up 3.20%, while Latin American and Asia ex-Japan hedge funds delivered strong gains of 1.44% and 1.23%, respectively. Figure 1: November and December 2010 returns
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Based on 58.32% of the funds reporting their NAV for December 2010 asof 14 January 2011. MSCI The World Index Free ± Local Currency Bank of American Merrill Lynch High Yield Master II Index± Local Currency

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In terms of total 2010 returns, North American hedge funds were the best performers among the major hedge fund regions after posting...

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January 2011

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