The CSFB/Tremont Hedge Fund Index rose 3.04% over 2002 with an end-of-year rally putting a gloss on an otherwise disappointing year for the industry.

Oliver Schupp, president of CSFB/Tremont, said: "Hedge funds faced a difficult environment last year. But nonetheless, they preserved capital, and certain strategies delivered outstanding returns as compared with long-only equity indices which mostly finished down double digits."