Assets held in hedge funds increased to $795 billion in 2003, up 34 percent on the year, according to Hennessee Hedge Fund Advisory Group’s seventh annual survey of hedge fund investors. Since the beginning of 2000, the hedge fund industry has growth from $324 billion in assets, representing cumulative growth of 145 percent. However, hedge funds underperformed the market last year, with the Hennessee Hedge Fund Index up 19.69 percent, compared to 28.55 percent for the S&P 500 and 50.01 percent for the Nasdaq. According to the latest survey, 88 percent of hedge fund investors said that hedge funds met or topped expectations, and 55 percent of respondents said they planned to increase their exposure to the highly volatile funds. Asset growth of $203 billion during 2003 indicated "hedge funds are growing in use for portfolio diversification and downside risk protection," Hennessee said.