Hedgebay

GLOBAL HEDGE FUND SECONDARY MARKET INDEX

Edition 11 July 2010

 SMI for July was 75.00

A ctivity for the month of July was average for this time of the year. The index decreased in value by a little more than 300
basis points to 75. Dispersion narrowed to 35 points. The lack of “near par” transactions was abundantly obvious again in
July with all of the activity taking place in gated, suspended or side pocketed assets. With investors continuing to put money to
work on the primary side of the market in liquid funds, they continue to show their general lack of willingness to accept lock ups.

With a lot of attention focused on economic factors, the degree to which hedge fund performance exceeds interests rates and
equity returns will largely govern demand for the asset class, and consequently whether we begin to see more funds closing to
new investment. On the flip side, if hedge funds disappoint during another downturn in the economy and/or markets, will we
return to the illiquid times of 2008 and 2009 as investors scramble to get their cash back?

ALL FIGURES BELOW ARE RELATIVE TO A TRADE AT NAV EQUALLING 100%

 Average discount or premium (to NAV) since 1999  Average price of trades
Date Average % Monthly %
108.00
106.00
of NAV change
104.00 Hedgebay SMI (ex-distressed)
102.00
100.00 31-Jul-10 75.00% -4.26%
(at NAV)
98.00
96.00 30-Jun-10 78.34% 8.11%
94.00
92.00
90.00 31-May-10 71.99% -21.56%
88.00
86.00 30-Apr-10 91.78% 7.34%
84.00
82.00
80.00 31-Mar-10 85.04% -7.02%
78.00
76.00
28-Feb-10 91.46% 3.86%
74.00
72.00
70.00 31-Jan-10 87.93% 9.27%
01-Aug-99
01-Nov-99
01-Feb-00
01-May-00
01-Aug-00
01-Nov-00
01-Feb-01
01-May-01
01-Aug-01
01-Nov-01
01-Feb-02
01-May-02
01-Aug-02
01-Nov-02
01-Feb-03
01-May-03
01-Aug-03
01-Nov-03
01-Feb-04
01-May-04
01-Aug-04
01-Nov-04
01-Feb-05
01-May-05
01-Aug-05
01-Nov-05
01-Feb-06
01-May-06
01-Aug-06
01-Nov-06
01-Feb-07
01-May-07
01-Aug-07
01-Nov-07
01-Feb-08
01-May-08
01-Aug-08
01-Nov-08
01-Feb-09
01-May-09
01-Aug-09
01-Nov-09
01-Feb-10
01-May-10
01-Jul-10

31-Dec-09 79.78% -7.34%

30-Nov-09 86.10% -0.72%

30-Oct-09 86.73% 4.41%

 Top traded strategy
30-Sep-09 82.90% -6.22%
Date 1st 2nd
31-Aug-09 88.40% -0.33%
Jul-10 Relative Value Private Equity

The Hedgebay Global Secondary Market Index (GSMI) is a proprietary, asset-weighted index that describes the average premium or discount paid for hedge funds that trade in the secondary market
in any given month. An investor may wish to use the index as a sentiment indicator to describe hedge fund investors’ future expectations for performance, a benchmarking tool for hedge fund inves-
tors to assess latent value in their portfolios or as indicators of the cost of liquidity.

GSMI information is obtained through the Hedgebay website and its associated marketing licensees. There are limitations in using indices for comparison purposes because such indices may have dif-
ferent inclusion criteria and other material characteristics. No representation is made about the value of GSMI as a predictive or other indicator or benchmarking tool or that any investor will achieve
any results shown. This information is not intended to be, nor should it be construed or used as, a recommendation, or investment or other advice, or an offer, or the solicitation of an offer, to buy or
sell any security, including an interest in any hedge fund, which may only be made through delivery of a fund’s confidential offering documents, which must be read carefully. There are substantial
risks in investing in hedge funds. Certain information has been obtained from third party sources and, although believed to be reliable, it has not been independently verified and its accuracy or
completeness cannot be guaranteed. Past performance is not indicative of future results. The GSMI may not be distributed without our consent.

© 2004-2010 Hedgebay Trading Corporation. All rights reserved.

Hedgebay
GLOBAL HEDGE FUND ILLIQUID ASSET INDEX
Edition 11 July 2010

 IAI for July was 67.95

T he IAI rose in value to 67.95. Transactions varied between emerging markets, private equity and credit and related assets. Buy-
ers have continued to search for assets in this category as July’s level reached the highest point in almost 12 months. The last
time the difference between the two indices was this close there was a major price correction in the IAI. In fact, as of the middle of
August, the index has declined substantially from its July levels. Many different factors could be at work here and any speculation on
which ones are driving this phenomenon would be just that; speculation.

ALL FIGURES BELOW ARE RELATIVE TO A TRADE AT NAV EQUALLING 100%

 Global Illiquid Assets Index (GIAI)  GIA

Date GIA Monthly %
100.00 change
90.00
Jul-10 67.95 12.52%
80.00
Jun-10 59.44 46.80%
70.00
May-10 31.62 -27.06%
60.00
Apr-10 43.35 -16.25%
50.00
Mar-10 51.76 10.41%
40.00
Feb-10 46.37 7.05%
30.00 Jan-10 43.10 10.58%
20.00 Dec-09 38.54 -0.13%
10.00 Nov-09 38.59 -5.88%
0.00 Oct-09 41.00 -49.34%
01 Feb 07
01 Mar 07
01 Apr 07
01 May 07
01 Jun 07
01 Jul 07
01 Aug 07
01 Sep 07
01 Oct 07
01 Nov 07
01 Dec 07
01 Jan 08
01 Feb 08
01 Mar 08
01 Apr 08
01 May 08
01 Jun 08
01 Jul 08
01 Aug 08
01 Sep 08
01 Oct 08
01 Nov 08
01 Dec 08
01 Jan 09
01 Feb 09
01 Mar 09
01 Apr 09
01 May 09
01 Jun 09
01 Jul 09
01 Aug 09
01 Sep 09
01 Oct 09
01 Nov 09
01 Dec 09
01 Jan 10
01 Feb 10
01 Mar 10
01 Apr 10
01 May 10
01 June 10
01 July 10

Sep-09 80.93 12.28%

Aug-09 70.99 18.21%

www.hedgebay.com

The Hedgebay Global Illiquid Asset Index (GIAI) is a proprietary, asset-weighted index that describes the average discount paid for assets that have no contractual redemption rights to their investors
(including, but not limited to hedge funds and private equity) that trade in the secondary market in any given month. An investor may wish to use the index as an indicator of the cost of liquidity or a
sentiment indicator to describe investors’ future expectations for illiquid assets.

GIAI information is obtained through the Hedgebay website and its associated marketing licensees. There are limitations in using indices for comparison purposes because such indices may have
different inclusion criteria and other material characteristics. No representation is made about the value of GIAI as a predictive or other indicator or benchmarking tool or that any investor will achieve
any results shown. This information is not intended to be, nor
should it be construed or used as, a recommendation, or investment or other advice, or an offer, or the solicitation of an offer, to buy or sell any security, including an interest in any hedge fund, which
may only be made through delivery of a fund’s confidential offering documents, which must be read carefully. There are substantial risks in investing in hedge funds. Certain information has been
obtained from third party sources and, although believed to be reliable, it has not been independently verified and its accuracy or completeness cannot be guaranteed. Past performance is not indica-
tive of future results. The GIAI may not be distributed without our consent.

© 2004-2010 Hedgebay Trading Corporation. All rights reserved.