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From: Jacknow, Bret [mailto:bret.jacknow@credit-suisse.com]
Sent: Wednesday, December 15, 2010 4:41 PM
To: Jacknow, Bret
Subject: Prime Services' Monthly Hedge Fund Industry Update - December 2010


Attached please find the PDF which complements the Monthly Hedge Fund
Industry Update call held today.

<<Credit Suisse December 2010 Call.pdf>>

The Investor Perspective

. Sentiment & Flows: After particularly healthy inflows in October
and November, December 1st was somewhat slower, both for seasonal reasons
and because of caution linked to the US insider trading investigation. But
we still expect that Q4 may be the best quarter for inflows since Q4 '07.

. Performance: The industry struggled to make money amidst market
volatility, but preserved capital well, falling just 0.18% in November,
which left the index up +7.82% YTD. Fixed Income Arbitrage was at the top,
both for the month and YTD, but even more notable was that Long/Short Equity
was the 2nd highest performing for the month despite losses in many equity
markets. Managed futures flipped from being the top performing strategy last
month to being the laggard in November.

. Strategy Appetite: Investor searches for EM Equity hedge funds
continued to increase, leaving it as the most sought after strategy in both
the US and Europe; by contrast, investors seem to have completed much of
their research into Macro funds, as live searches for Macro started to slow
down.

The Risk Perspective

. Gross Leverage: The overall gross market exposure of our book
decreased from September's 2.63x level to 2.54x.

. Equity Long/Short Bias: The overall ratio of longs to shorts in
our books continued to rise, from 53% to 58%, a second consecutive YTD high.

. Regional Long/Short Bias: Long/Short Bias increased in November
for all regions, except Europe. The most pronounced increase was for North
America.

. Sector Long/Short Bias: Utilities joined the Index/ETF products as
the only sectors with a short bias. In aggregate the bias decreased but the
movement up/down was split evenly between the sectors.


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