The 13.7% one-year performance of the FTSE All-World index trounced the 2.7% return of the FTSE Hedge index for the year ended Dec. 31, according to FTSE. However, over five years the 6.9% annualized return of the FTSE Hedge index strongly surpassed the -14% return of the FTSE All-World index. In 2004, the FTSE hedge fund style index found that the distressed and opportunity strategy returned 10.8%, followed by merger arbitrage at 5.9%. The worst performer among the style indexes was equity arbitrage with a -3% return. Managed futures had the best five-year performance with an annualized return of 10.8%, followed by convertible arbitrage with an annualized 10.5%. Worst performers among the hedge fund style indexes over the five years were fixed income relative value, with an annualized 2.4%, and merger arbitrage, with an annualized 2.8%.