Hedge Funds Decline 2.69% in November

New York, NY – Hennessee Group LLC, an adviser to hedge
fund investors, announced today that the Hennessee Hedge Fund Index declined
-2.69% in November (-18.44% YTD), while  the  S&P  500 declined -7.48%
(-38.97% YTD), the Dow Jones Industrial Average declined -5.32% (-33.44%
YTD), and the NASDAQ Composite Index declined -10.77% (-42.09% YTD).  Bonds
advanced, as the Lehman Aggregate Bond Index increased +3.30% (+1.50% YTD).

"While the Hennessee Hedge Fund Index is down -18.44% this year, it has
significantly outperformed equity benchmarks on a relative basis," commented
Lee Hennessee, Managing Principal of Hennessee Group.  "While not an
attractive absolute return, many investors are thankful to have hedge fund
allocations this year, especially when compared to traditional asset

"While many managers are seeing attractive investment opportunities, many
are struggling to retain investors and their capital bases.  In 2008, we
have seen dramatically more hedge funds freeze redemptions/enact redemption
gates and force liquidate than in the history of the hedge fund industry."
said Charles Gradante. "We expect year-end investors’ redemptions to be
significant, with the average fund returning 15% to 25% of investors’
assets.  When you consider the significant number of liquidations,
redemptions and the negative performance of hedge funds this year, it is
possible that the entire hedge fund industry could start 2009 at 40% the
size it was at the beginning of 2008."

The Hennessee Long/Short Equity Index declined -3.00% in November (-17.65%
YTD).  Managers continue to position portfolios very defensively with
significantly reduced exposures; however, managers still suffered losses as
equity markets declined substantially and as funds faced heavy volatility.
Several managers report that equity valuations have reached attractive
levels, and they have started to leg into long positions with a long-term
time horizon.  However, they realize that stocks may continue to get
cheaper.  Many are selling for tax purposes, but are planning on putting
money to work in the future.

The Hennessee Arbitrage/Event Driven Index declined -3.25% in November
(-23.23% YTD).  The Hennessee Distressed Index declined -1.81% in November
(-21.64% YTD), as the spread on the Merrill Lynch High Yield Index widened
sharply from 1617 bps to 1988 bps during the month, hitting a new all-time
high of 1992 bps mid month.  Many managers have started to shift from their
defensive view of credit as they are seeing attractive opportunities.  The
Hennessee Merger Arbitrage Index increased +0.36% in November (-2.47 % YTD),
but is one of the best performing strategies this year.  Despite the failed
Rio Tinto takeover attempt by BHP, managers outperformed on a relative
basis, largely due to the completion of the widely-held InBev-Anheuser Busch
merger. The Hennessee Convertible Arbitrage Index declined -4.50% (-24.63%
YTD).  While the sell-off in converts slowed in November, funds suffered
losses due to a widening of credit spreads, despite elevated volatility and
declining interest rates.

"As Hennessee Group predicted in its October 8
<http://hennesseegroup.com/releases/release20081008.html> th and November
<http://hennesseegroup.com/releases/release20081111.html>  10th press
releases, Europe continued to dramatically lower short term rates, lowering
the ECB target to 2.00% in early December," said Charles Gradante. "Now,
Japan looks like it may enter the worst recession since World War II, with
serious risk of contagion to the rest of Asia and the globe.  The Bank of
Japan must decrease rates in order to stimulate the economy. "

The Hennessee Global/Macro Index declined -2.11% in November (-20.41% YTD).
International equities  continued  to  decline  in  November with  the  MSCI
EAFE  Index  declining  -5.70% (-48.16% YTD).  The Hennessee International
Index declined -1.90% (-21.53% YTD) as managers maintained significant cash
balances and benefited from a late month rally.  Managers state that while
it appears that the developed markets, including the U.S., Europe and Japan,
appear to be heading into a recession, emerging markets are compelling as
they are likely to account for the majority of world economic growth in 2009
and are trading at, or near, historically low levels.  The Hennessee Macro
Index advanced +1.23% for the month (+1.21% YTD).  Managers profited from
continued momentum trades in currencies, in ‘global recession trade’ where
they are long duration bonds while short equities and credit, and from
betting that short term interest rates would decline.

About the  <http://www.hennesseegroup.com/> Hennessee Group LLC

Hennessee Group LLC is a Registered Investment Adviser that consults direct
investors in hedge funds on asset allocation, manager selection, and ongoing
monitoring of hedge fund managers.  Hennessee Group LLC is not a tracker of
hedge funds.  The Hennessee
<http://www.hennesseegroup.com/indices/index.html>  Hedge Fund IndicesR 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.    For additional
Hennessee <http://www.hennesseegroup.com/releases/index.html>  Group Press
Releases, please visit the Hennessee Group’s website.  The Hennessee Group
also publishes the Hennessee <http://www.hennesseegroup.com/hhfr/index.html>
Hedge Fund Review monthly, which provides a comprehensive hedge fund
performance review, statistics, and market analysis; all of which is value
added to hedge fund managers and investors alike.

Description of Hennessee Hedge Fund
<http://www.hennesseegroup.com/indices/index.html> Indices
<http://www.hennesseegroup.com/indices/index.html> R

The Hennessee Hedge Fund <http://www.hennesseegroup.com/indices/index.html>
IndicesR are calculated from performance data reported to the Hennessee
Group by a diversified group of over 1,000 hedge funds.  The Hennessee Hedge
Fund <http://www.hennesseegroup.com/indices/index.html>  Index is an equally
weighted average of the funds in the Hennessee Hedge Fund IndicesR. The
funds in the Hennessee <http://www.hennesseegroup.com/indices/index.html>
Hedge Fund Index are derived from the Hennessee Group’s database of over
3,500 hedge funds and are net of fees and unaudited.  Past performance is no
guarantee of future returns.  ALL RIGHTS RESERVED. This material is for
general information only and is not an offer or solicitation to buy or sell
any security including any interest in a hedge fund. 


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