58% of Hedge Funds Are Registered With a Regulatory Agency

    NEW YORK, Aug. 2 /PRNewswire/ -- The Hennessee Hedge Fund Advisory Group
("Hennessee Group LLC"), a global adviser to hedge fund investors, today
announced the findings for its 10th Annual Hennessee Hedge Fund(R) Manager
Survey, as sourced by the SEC in its recent submission to the Senate Banking
Committee on hedge fund regulation.  In a strong year for the broad markets,
survey results indicate that the hedge fund industry grew 34% from $592
billion to $795 billion.  Growth was due to manager performance (20%) and new
capital inflows (14%).  In addition, the number of hedge funds grew 23% from
5,700 to 7,000 funds. Since 1987 hedge funds have generated an annualized
return of +15.34% with 40% less volatility than the S&P 500 return of +12.11%
over the same time period.
    "The Survey continues to dispel common misperceptions about hedge funds
being 'highly leveraged investment pools' or that hedge funds 'have a greater
impact on the broad market than mutual funds or institutional, long only
funds'," stated Charles Gradante, Managing Principal of Hennessee Group LLC.
"According to the Survey, 85% of hedge funds have never exceeded Reg T
leverage.  Furthermore, hedge funds represent less than 2% of the world
financial markets."
    Introduced in 1994, the Annual Hennessee Hedge Fund(R) Manager Survey is
the oldest and most comprehensive hedge fund industry survey.  The 2004 survey
respondents include 789 hedge funds from 174 management companies and over
$144 billion in assets. The Survey excluded CTAs who use 100% futures
contracts since they predominantly take directional market risk without
hedging. Findings in the Survey include:

     * Individuals and family offices continue to represent the largest source
       of capital for hedge funds, comprising 44% of total industry assets.

     * Fund of funds continue to be the fastest growing source of capital for
       hedge funds, increasing 810% since January 1997 (from $21 billion to
       $191 billion).

     * While fund of funds remain the fastest growing source of capital,
       pensions who invest directly in hedge funds have grown 453% since
       January 1997 (from $13 billion to $72 billion).

     * Hedge funds reported they have the capacity to grow assets by 197% on
       average from current levels.

     * On average, hedge funds have the highest short exposure (-50%) since
       1999, when it was -55%, expressing concerns over the market's explosive
       liquidity driven performance in 2003.

     * In 2003, the average hedge fund's gross exposure (longs plus shorts)
       was 141%, further dispelling the notion that hedge funds are a highly
       levered asset class.

     * On average, hedge funds turned their portfolio over 3 times per year.

     * 58% of hedge funds are registered with a regulatory agency (NASD, SEC,
       CFTC).

     * 48% of hedge funds are registered as RIAs (Registered Investment
       Advisers), however, 39% are RIAs only and 9% are RIAs and registered
       with at least one other regulatory agency.

    The Hennessee Group conducts its Annual Hennessee Hedge Fund(R) Manager
Survey to provide insight to the firm's advisory clients and the investment
community as a whole.  For details or questions regarding the 10th Annual
Hennessee Hedge Fund(R) Manager Survey, please contact Alexander Smith-Ryland
of the Hennessee Group at (212) 857-4444.

    About Hennessee Group LLC
    Hennessee Group LLC is a Registered Investment Adviser that consults hedge
fund investors on asset allocation, manager selection, and ongoing monitoring
of hedge fund managers.  Hennessee Group LLC is not a tracker of hedge funds.
The Hennessee Hedge Fund Indices(R) are for the sole purpose of benchmarking
individual hedge fund manager performance.  The Hennessee Group does not sell
a hedge fund-of-funds product nor does it market individual hedge fund
managers.

     Press Contacts:
     Alexander Smith-Ryland
     Hennessee Group LLC
     Alex.SmithRyland@hhfd.com
     212-857-4444