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The HFRX Equity Hedge Index gained +1.09% through mid-February, the 9th consecutive monthly gain. The HFRX Fundamental Value Index posted a gain of +1.48% with contributions from European and US large cap Financials, Cyclical and Telecom equities. The HFRX Fundamental Growth Index gained +0.50%, with contributions from Emerging Markets, US small cap, Financials, Consumer and Healthcare sectors. HFRX Market Neutral Index gained +0.35% for the period, with contributions from Fundamental small cap and pair trading strategies.

The HFRX Event Driven Index posted a gain of +0.61% through mid-February, as M&A activity surged on strategic, financial and distressed transactions. Activity spanned across range of deals including Dell, Heinz, American-US Airways, Liberty Global /Virgin Media, Dish Network/Clearwire, and including continuing activist and special situations activity in Apple and Herbalife. The HFRX ED: Special Situations Index gained +1.18%, with robust activity across the Energy, Basic Materials, and Industrial sectors. The HFRX Merger Arbitrage Index gained +0.24%, with contributions from Dell, Allergan, UPS/TNT and Avis/Zipcar deals. HFRX ED: Distressed Index declined -0.13% for the month, partially offsetting other ED gains.

The HFRX Relative Value Index gained +0.25% through mid-February, with gains across Convertible and Multi-Strategy FI Arbitrage. The HFRX RV: Multi-Strategy Index gained +0.28%, with positive contributions from US and Asian credit exposures and active commodity spread trading strategies. The HFRX RV: Convertible Arbitrage Index gained +0.60% with strong contribution from US and Japanese exposure, while the HFRX Fixed Income - Credit Index gained +0.33%. The HFRX MLP Index gained +2.02% as MLPs continued to recover from the year-end tax related selloff, with activity driven by both retail and institutional investors searching for high quality yield in low interest rate environment.

The HFRX Macro Index posted a modest gain of +0.08% through mid-February, with positive contributions from Currency and Fixed Income Discretionary managers, which were partially offset by mixed performance of Systematic CTAs. Discretionary Macro posted gains in long Euro & short Yen currency positions, complemented by fixed income trading gains; HFRX Emerging Markets Index posted a gain of +0.26%. Long-term trend following managers posted gains offset by shorter-term models, with the HFRX Macro: Systematic Diversified Index posting a modest decline of -0.03%.

Global equity markets extended 2013 gains through mid-February, as both active currency exposure and increased M&A activity contributed to hedge fund performance gains. US equities gained across most market capitalization, with leadership from small cap and value exposures. Semiconductors and Oil Services led sector gains, with additional contributions from REITS and Non-Cyclicals. European equities were mixed across regions, with gains in UK, Switzerland and Sweden offset by declines in France, Germany and Italy; Asian equities continued recent strong performance, with gains across Japan, China, Australia and the Philippines. The US dollar posted gains against most major currencies through mid-February, including the Euro, Swiss Franc, British Pound Sterling and the Japanese Yen; US/Yen traded actively to a 33 month high in early February on expectations of continued Bank of Japan stimulus. Despite the active currency trading, sovereign yields were little changed across US, France, Germany, Spain and the Netherlands through mid-February, and modest increases in UK and Italy. Platinum, Oil & Lumber led commodity gains which were offset by declines in Natural Gas, Silver and Wheat. M&A activity spiked through mid-month, with activity across range of deals and continuing activist and special situations activity contributing to strong Event Driven performance.

(press release)

www.hedgefundresearch.com/hfrx

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