Mid-Year Survey of Hedge Fund Investor

Sentiment

Credit Suisse Capital Services

July 2013

CREDIT SUISSE CAPITAL SERVICES | PERIODIC SURVEY OF HEDGE FUND INVESTOR SENTIMENT – JULY 2013

Please read important disclaimer at end. This document represents the opinion of the Prime Services and Capital Services teams and has not been prepared by Credit Suisse Research. 2

Credit Suisse

Credit Suisse AG is one of the world's leading financial services providers and is part of the Credit Suisse group of companies (referred to here as 'Credit Suisse'). As an integrated bank, Credit Suisse offers clients its combined expertise in the areas of private banking, investment banking and asset management. Credit Suisse provides advisory services, comprehensive solutions and innovative products to companies, institutional clients and high-net-worth private clients

globally, as well as to retail clients in Switzerland. Credit Suisse is headquartered in Zurich and operates in over 50 countries worldwide. The group employs approximately 49,700 people. Credit Suisse Prime Services

Credit Suisse Securities (Europe) Limited Prime Services delivers outstanding core financing and operating services that hedge fund and institutional clients require, including start-up services, product access, high-touch client service, financing, access to sources of capital, risk management, and managed lending. Prime Services delivers the strengths of Credit

Suisse's investment banking, private banking and asset management business to a focused number of clients. As a partner, Prime Services is committed to bridging the gap between idea and execution and ultimately functioning as the provider of choice for both the alternative and traditional investment communities. Credit Suisse Capital Services

The Prime Services’ Capital Services is a team of over 30 professionals located in New York, London, Hong Kong, Zurich, Geneva, Dubai, Sydney, Boston, San Francisco, Tokyo and Mumbai responsible for maximizing sustainable flow of capital

between hedge fund managers and a broad range of institutional investors (including funds of hedge funds, family offices, private banks, endowments and foundations, and public and corporate pensions) who are seeking to allocate capital to hedge funds. It is critical to our success that we treat both managers and investors as “clients”, and we strive to be of equal utility to both communities, providing them with regular insight and research, as well as frequent opportunities to interact with each other. Credit Suisse was the first firm to combine into a single team the 3 services that managers and

investors use to connect with each other – Capital Introductions for Prime Services clients seeking to diversify and upgrade their capital base, a Placement Agent for established managers seeking to accelerate their growth strategy and Capital Solutions in cooperation with our market-leading Fund-Linked Products Group. For more information on this survey or on our Prime Services business generally, please contact:

Prime Services Capital Services

Americas + 1 212 325 3116 + 1 212 325 3156

Europe + 44 20 7888 8165 + 44 20 7888 1212

Asia + 852 2101 7242 + 852 2101 7141

CREDIT SUISSE CAPITAL SERVICES | PERIODIC SURVEY OF HEDGE FUND INVESTOR SENTIMENT – JULY 2013

Please read important disclaimer at end. This document represents the opinion of the Prime Services and Capital Services teams and has not been prepared by Credit Suisse Research. 3

Introduction and Executive Summary

Overview

Building on from our annual global hedge fund investor survey published earlier this year, where investors forecasted a cautiously optimistic outlook for 2013, we wanted to take a fresh look at investors’ current appetite and level of activity.

Investors from all regions participated in our brief mid-year survey, with a breakdown as follows:

Number of Participants

All: 185

Americas: 77

Asia: 10

Europe: 98

In summary

The top 3 most sought after strategies are Long/Short Equity, Event-Driven and Macro.

Investors are predicted to continue to be active in the second half of the year, with 88% indicating that they will make allocations. The indicated total number of subscriptions across participants in 2H 2013 are in-line with the first half of the year, however, the number of redemptions are predicted to decrease to 68%, lower than the 77% in the first half

of the year.

CREDIT SUISSE CAPITAL SERVICES | PERIODIC SURVEY OF HEDGE FUND INVESTOR SENTIMENT – JULY 2013

Please read important disclaimer at end. This document represents the opinion of the Prime Services and Capital Services teams and has not been prepared by Credit Suisse Research. 4

Part I – Strategy Appetite

The top three strategies ranked by current net demand (% increasing - % decreasing) are Long/Short Equity (Fundamental), Event Driven and Macro.

Emerging Market strategies represented the most negative movement from the start of the year, with EM Fixed Income now ranked 12th from 6th at the start of the year and EM Equity now ranked 9th from 2nd at the start of the year.

Long/Short Equity continued to be the most favourable strategy since the start of the year; a trend which was prominent across the different regions.

Source: Credit Suisse Mid-Year Investor Survey July 2013

Rankings from our survey at the beginning of the year:

Overview of strategy appetite by region

Out of a total of 13 strategies:

Emerging market equity is ranked 3rd in Americas, 11th in Asia and 9th in EMEA

Long/Short Equity (Trading Orientated) is ranked 11th in Americas, 4th is Asia and 3rd in EMEA

Credit-Distressed is ranked 10th in Americas, 7th in Asia and 5th in EMEA

CTA is ranked 8th in Americas, 5th in Asia and 11th in EMEA

Source: Credit Suisse Annual Global Investor Survey Feb 2013

CREDIT SUISSE CAPITAL SERVICES | PERIODIC SURVEY OF HEDGE FUND INVESTOR SENTIMENT – JULY 2013

Please read important disclaimer at end. This document represents the opinion of the Prime Services and Capital Services teams and has not been prepared by Credit Suisse Research. 5

Overview of strategy appetite per region

Credit Distressed strategies were particularly favoured in APAC by 30% of investors, while the investors based in the Americas favoured more liquid credit strategies (13%).

CTA strategies are predicted to show net allocations from APAC investors, while the Americas and EMEA based investors indicated net redemptions in the strategy.

The Americas based investors still favour emerging markets strategies, with both EM Equity and Fixed Income showing net positive demand. However, investors from EMEA and APAC both indicated net redemptions from both of these EM strategies.

Source: Credit Suisse Mid-Year Investor Survey July 2013

Source: Credit Suisse Mid-Year Investor Survey July 2013

CREDIT SUISSE CAPITAL SERVICES | PERIODIC SURVEY OF HEDGE FUND INVESTOR SENTIMENT – JULY 2013

Please read important disclaimer at end. This document represents the opinion of the Prime Services and Capital Services teams and has not been prepared by Credit Suisse Research. 6

Source: Credit Suisse Mid-Year Investor Survey July 2013

CREDIT SUISSE CAPITAL SERVICES | PERIODIC SURVEY OF HEDGE FUND INVESTOR SENTIMENT – JULY 2013

Please read important disclaimer at end. This document represents the opinion of the Prime Services and Capital Services teams and has not been prepared by Credit Suisse Research. 7

Overview of allocation appetite by strategy

Long/Short Equity is likely to see the most gross allocation activity in 2H 2013, with 61% of investors indicating a plan to allocate, followed by Event Driven, with 51% planning to allocate.

Commodity strategies are likely to see the most redemption activity in 2H 2013, with 32% of investors indicating that they plan to decrease their allocations to the strategy (particularly those in APAC and the Americas), followed by Emerging Markets Credit, with 29% planning to reduce their allocations (particularly those in APAC and EMEA).

(+ for increasing allocation, 0 for stable, - for decreasing allocation and N/A for no allocation)

Source: Credit Suisse Mid-Year Investor Survey July 2013

CREDIT SUISSE CAPITAL SERVICES | PERIODIC SURVEY OF HEDGE FUND INVESTOR SENTIMENT – JULY 2013

Please read important disclaimer at end. This document represents the opinion of the Prime Services and Capital Services teams and has not been prepared by Credit Suisse Research. 8

Source: Credit Suisse Mid-Year Investor Survey July 2013

CREDIT SUISSE CAPITAL SERVICES | PERIODIC SURVEY OF HEDGE FUND INVESTOR SENTIMENT – JULY 2013

Please read important disclaimer at end. This document represents the opinion of the Prime Services and Capital Services teams and has not been prepared by Credit Suisse Research. 9

Source: Credit Suisse Mid-Year Investor Survey July 2013

CREDIT SUISSE CAPITAL SERVICES | PERIODIC SURVEY OF HEDGE FUND INVESTOR SENTIMENT – JULY 2013

Please read important disclaimer at end. This document represents the opinion of the Prime Services and Capital Services teams and has not been prepared by Credit Suisse Research. 10

Source: Credit Suisse Mid-Year Investor Survey July 2013

CREDIT SUISSE CAPITAL SERVICES | PERIODIC SURVEY OF HEDGE FUND INVESTOR SENTIMENT – JULY 2013

Please read important disclaimer at end. This document represents the opinion of the Prime Services and Capital Services teams and has not been prepared by Credit Suisse Research. 11

Source: Credit Suisse Mid-Year Investor Survey July 2013

CREDIT SUISSE CAPITAL SERVICES | PERIODIC SURVEY OF HEDGE FUND INVESTOR SENTIMENT – JULY 2013

Please read important disclaimer at end. This document represents the opinion of the Prime Services and Capital Services teams and has not been prepared by Credit Suisse Research. 12

Part II – Allocation Activity

Allocation Activity

Investors are predicted to continue to be active in the second half of the year, with 88% indicating that they will make

allocations. The indicated total number of subscriptions across participants in 1H 2013 are in-line with the first half of the year, however, the number of redemptions are predicted to decrease to 68%, lower than the 77% in the first half of the year, with the average number of redemptions per investor decreasing to 2.7 from 3.7.

Source: Credit Suisse Mid-Year Investor Survey July 2013

CREDIT SUISSE CAPITAL SERVICES | PERIODIC SURVEY OF HEDGE FUND INVESTOR SENTIMENT – JULY 2013

Please read important disclaimer at end. This document represents the opinion of the Prime Services and Capital Services teams and has not been prepared by Credit Suisse Research. 13

Important Information and Disclaimers

This material has been prepared by Credit Suisse Securities (Europe) Ltd or an affiliate or subsidiary ("Credit Suisse") thereof and is presented solely for informational purposes. Credit Suisse Securities (Europe) Limited is authorised by the

Prudential Regulation Authority and regulated by the Financial Conduct Authority and Prudential Regulation Authority. Nothing herein constitutes investment, legal, accounting or tax advice or a personal recommendation, and no representation is being made as to whether any investment or strategy is suitable or appropriate for a particular individual. Any views or opinions expressed are subject to change at any time without notice and may not reflect the views of CREDIT SUISSE as a whole. Credit Suisse provides its clients with investment banking, private banking and asset management

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