Viking Onshore - 4q 2008 Letter

To: Viking Investors From: O. Andreas Halvorsen Date: January 9, 2009

Viking’s objective is to achieve maximum capital appreciation commensurate with reasonable risk. We began positioning the portfolio more conservatively to preserve capital in 2007 due to heightened counterparty risks and deterioration in market liquidity and did so increasingly in 2008 as we became concerned about the unpredictable nature of government and regulatory actions as well. As a result, we are in a strong position to take advantage of future opportunities. I will expand on this topic in this letter as well as discuss a pending personnel change: Dan Cahill, our President, intends to transition to an Advisory Director over the course of 2009 in order to spend more time with his family.

Performance and Portfolio Our performance net of all fees on a composite 1 basis was flat in the fourth quarter compared to a loss of 20.6% for the MSCI World Index and a loss of 21.9% for the S&P 500 Index. For the full year, our performance net of all fees on a composite1 basis was a positive 0.1% compared to a loss of 38.7% for the MSCI World Index and a loss of 37.0% for the S&P 500 Index. VGE Net Return1 Fourth Quarter Full Year Annualized Volatility Fourth Quarter Full Year

MSCI World Index

S&P 500 Index

0.0% 0.1%

-20.6% -38.7%

-21.9% -37.0%

15.7% 11.5%

55.3% 31.9%

67.9% 40.9%

I believe our outperformance relative to the market in 2008 was primarily due to two factors: (1) disciplined stock-picking which led to alpha generation and lower net

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Viking composite return is the weighted average of investor returns across all Viking hedge fund products (VGE LP, VGE II LP and VGE III) assuming investors are subject to a 1.5% management fee and a 20% incentive fee taken at calendar year-end. Actual investor returns will vary based on fund, class, hot issue eligibility, and timing of individual contributions and withdrawals. The attached Performance Report provides further details by fund, class, and hot issue eligibility.

exposure, and (2) significantly reduced gross exposure which gave us the flexibility to continue our stock-picking throughout the year rather than put us on the defensive. (1) Stock-Picking The desired output of our analytical effort is a positive spread between the unlevered performance of our longs and the unlevered performance of our shorts. For the fourth quarter, our longs were down 7.8% and our shorts were down 21.7% yielding a positive 13.9% spread on an unlevered basis. For the year, our longs were down 23.9% and our shorts were down 42.4% yielding a positive 18.5% spread on an unlevered basis (see the attached Base Case Analyses). Our new investment structure served us well and, in my view, was one of the reasons behind the strong relative performance in 2008. In part, the good performance of our largest positions came as a result of the strong alignment of incentives on the investment staff. Analysts are now 100% focused on the Viking portfolio, rather than individual sub-portfolios. Our investment team has never been stronger. Running a low net exposure served us well in the past year. The benefit can be split in two: (1) the component arising from our Base Case practice of employing 40% net exposure and (2) the component arising from our actual net exposure being lower than the Base Case in the fourth quarter and for the year as a whole. By definition, a fund that runs 40% net will be advantaged in down markets (and similarly disadvantaged in strong markets). For example, if the market is down 40% in a particular year, a hedge fund with 40% net exposure would be down 16% as a starting point and hence outperform the market by 24 percentage points without any benefit accruing from superior stock-picking. Our net exposure of 19% on average in the fourth quarter and 30% on average for the year benefited performance by a further 5.2% and 3.8%, respectively, relative to the Base Case. We do not actively manage our net exposure. Each position in the portfolio, long and short, is sized according to its relative attractiveness. Therefore, net exposure is an outcome of the portfolio construction process. Given our strong belief in the integrity of our investment selection process, we do not second-guess the resulting net exposure based on top-down analysis. To the extent we have macro-related views, they are formed by our company-specific research and typically correspond with our bottom-up portfolio construction. Sticking to our business model led us to a lower net exposure which benefited performance in the fourth quarter and for the year. (2) Reduced Gross Exposure We do actively manage our gross exposure, which steadily dropped from 196% in July 2007 to an all-time low of 70% in November 2008. Viking’s gross exposure on December 31, 2008 was 91% comprised of 57% long and 34% short for a net

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long exposure of 23% and a long/short ratio of 1.7x. At 91%, our year-end gross exposure was well below our typical range of 150-210% and appropriately reflected our conservative stance and emphasis on capital preservation. We were never forced to reduce leverage, but deliberately took down risk for reasons I discussed at our Annual Meeting and in the third quarter letter. Instead of recapping what I have already said, attached is an email Dave Ott sent to “All Vikings” in October that you may find of interest. This email gives a realistic picture of our outlook following lengthy deliberations about the state of affairs last summer and early fall. Over the past two months, we have slowly increased gross exposure and expect to continue doing so at a rate resembling the gradual decrease over the prior fifteen months. The factors that led us to reduce gross exposure are all moderating: government actions are more consistent and predictable; it has been several weeks since a new, significant crisis emerged; the TED Spread (the difference between interest rates on interbank loans and shortterm U.S. government debt or T-bills) is falling; and flows into prime money market accounts appear to have stabilized and last month exceeded flows into U.S. Treasuries. Given the environment in which we have been operating, we feel that we have managed the portfolio prudently and that the reduction in gross exposure was timely. A result of this conservative stance was annualized daily volatility of returns well below that of the broad indices (16% for the fourth quarter versus 55% and 68% for the MSCI and S&P 500 indices, respectively; 12% for the year versus 32% and 41% for the MSCI and S&P 500 indices, respectively). Had we not reduced gross, we would have experienced higher volatility in returns and likely a loss of freedom to act from a position of strength, as well as a potentially higher rate of redemptions than the 6.1% of external capital that was redeemed at year-end. The most tangible benefits of our lower gross exposure are virtually no losses on counterparty exposures due in part to limited dependence on portfolio financing (our active management of counterparty relationships played a significant role too) and a content staff that remained unconcerned about Viking’s health. Any of these factors could easily have gone against us and limited our effectiveness as investors and risk managers. I cannot recall a single Viking investor or analyst raising concern about our low gross exposure. Without the constant pressure of managing a leveraged balance sheet in a very difficult environment, our investment staff showed up at work every day and did what we do best: pick stocks and reliably produce value over time. While the merits of reducing leverage are obvious, the costs of doing it are less so. Running at a lower gross exposure than normal actually hurt our performance given the positive spread between our longs and shorts. By not leveraging our portfolio to this positive spread, we sacrificed several percentage points of returns in the fourth quarter. To illustrate, had we kept our net exposure at 19%, the average during the fourth quarter, and expanded our longs and shorts to yield 188% gross exposure (the average for the 2005-07 period), the fourth quarter

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returns would have been 6.5% 2 . We believe that the non-quantifiable benefits of running the portfolio unleveraged in the quarter far offset this opportunity cost. Our basic investment model of creating alpha over time works and we are confident that we will capitalize on it as we once again increase exposures to historic levels. At the end of the year, Apollo Group was our largest long position at 6.7% of capital. Our ten largest longs comprised 29.8% of capital and the ten largest shorts accounted for 11.5% of capital. The largest individual short position represented 2.0% of capital. The following is a list of our ten largest long positions on December 31, 2008 (in order of size): Apollo Group, Inc. (APOL.O) Experian PLC (EXPN.L) BCE Inc. (BCE.TO) Invesco Limited (IVZ.N) Telefonica S.A. (TEF.MC) ITT Educational Services Inc. (ESI.N) Bank of America Corp. (BAC.N) Qualcomm Inc. (QCOM.O) DaVita Inc. (DVA.N) Priceline.com Inc. (PCLN.O) Five of the top ten long positions were new to, or reentered, the list this quarter: BCE, Telefonica, ITT Educational Services, Bank of America, and Priceline.com. We seek to actively manage every position in the portfolio and to take advantage of opportunities in the marketplace to size our positions based on their relative attractiveness at various points in time. Our biggest winner for the fourth quarter and the year was Apollo Group. In the fourth quarter, the stock price increased 29% and the position contributed 2.0% to our performance. Since we began buying Apollo in May 2008 through the end of the year, the stock price increased 58% and the position contributed 3.8% to our performance for the year. As discussed at our Annual Meeting, Apollo represents an investment where we have a differentiated view from the street. Apollo is a for-profit education company that operates the University of Phoenix online and on-ground campuses, which offer a wide range of post-secondary degrees. Having known and invested in the company and the sector for many years, we took a closer look at Apollo in the second quarter of 2008 when the company was challenged operationally. We believed the street was pricing in a 2

This calculation is somewhat academic in that it assumes a proportional increase in all equity positions without regard for firm position limits. Since the calculation roughly doubles every long position and more than triples every short position, Apollo and Volkswagen would have been in violation of our 8% and 5% position limits for longs and shorts, respectively. Apollo was our most profitable long position in the quarter and Volkswagen was our largest loss-maker. 4

scenario that indicated the business model was broken and there appeared to be a full loss of confidence in the company. Upon closer examination, we felt that the operational missteps were being rectified and simultaneously there was an increase in Federal loan limits for student loans that created an opportunity for Apollo to re-price its product offering. During this difficult economic environment, Apollo has experienced an acceleration in enrollments and there are clear signs of an operational turnaround. The combination of stronger enrollments and improving operations has led to an increasing top line, higher margins, strong earnings and solid free cash flow. Apollo remains the firm's largest position today as we continue to believe the shares are attractively priced. Our largest loss for the quarter and the year was Volkswagen. We had been short Volkswagen for some time and the position was sized at approximately 2%. Based on our fundamental analysis, we felt that the company was worth approximately 80 Euros based on 8 Euros of earnings and a 9-10x PE multiple at a time when the stock traded around 170 Euros. The ownership structure of Volkswagen was split among Porsche, which owned 30% of the company outright and had an additional 20%+ under option; the State of Lower Saxony, which owned 20%; and free float representing the balance. In October, Porsche announced that it had acquired additional options giving it the right to own nearly 75% of Volkswagen which meant that the combined ownership of Porsche and the State of Lower Saxony was approximately 95%; this left the free float (~5%) at a level materially below the number of shares reported as having been sold short (~15%). At that point we made the risk management decision to cover the entire position, regardless of the 4.0% loss to the portfolio and our confidence in our estimate that the company was fundamentally worth 80 Euros. The following exhibit shows our portfolio broken down by investment themes: VGE Portfolio Overview as of December 31, 2008 Gross Exposure Weighting

Net Exposure Weighting

Banks Industrials Market Sensitive Credit Japan

12% 8% 7% 7% 4%

-4% -7% -1% 5% 0%

Total Themes

38%

-7%

Stand-alone Positions

53%

30%

Total

91%

23%

Themes

Our 8% gross exposure in the Industrials theme is the highest it has ever been and deserves explanation given the fact that we have no team that consistently covers the sector. Over the 12 month period ending last summer, when it became clear that credit markets where in severe decline and banks and brokers were reducing rather than expanding their balance sheets, I became increasingly concerned about the impact these developments would have on the real economy. With banks effectively exiting the 5

lending business and consumers increasingly under pressure, I was convinced that economic activity would be impaired. In particular, this would have a detrimental effect on capital expenditures as productive capacity would be in surplus. If this view proved correct, the industrial sector should face significant headwinds. Since we had no dedicated analyst, I called a meeting last summer with Dave Ott, Tom Purcell, Dan Sundheim and Jim Parsons to share my concerns. I pushed the group to deploy analytical resources to the sector in the belief that great short opportunities would most certainly emerge. In turn, Tom, Dan and Jim each called upon one analyst from their teams to devote their time to gaining expertise on the sector and a list of chosen companies. In short order, these analysts had mapped the industrials world with a particular focus on companies for which downward earnings revisions were most likely. They conducted customary Viking due diligence and built financial models and valuation frameworks with detailed forecasts for each company. Their analysis resulted in a number of investments in industrial companies in the U.S. and abroad. This is a great example of how our flexible structure and collaborative team culture enable us to be nimble and reallocate resources quickly and effectively to take advantage of opportunities when they emerge across all industries and geographies. Our fundamentally driven research process is repeatable regardless of sector and we go to great lengths to direct our analysts to go wherever the investment opportunities take them. Our credit investments, consisting primarily of bank debt, cost us 3.2% of performance this year. The bank debt market has seen significant declines, in large part due to structural dislocations but also due to deteriorating underlying fundamentals. While we have benefited from combining the capital structure expertise of our credit team with the sector and company expertise of our equity teams, there is great potential for the credit team to have a stronger impact on Viking’s profits going forward. As a result, I will increase my involvement in our credit-related investment activities.

Viking Team As mentioned at the beginning of this letter, Dan Cahill, who has served as our President since 2003 and Head Trader prior to that, intends to transition to an Advisory Director over the course of 2009 in order to spend more time with his family. I am saddened by Dan’s decision and envious of his wife and five children who will now see more of him than I will. On the other hand, I am extremely thankful that Dan devoted a decade of his life tirelessly contributing to the management of the firm. Viking simply would not have been in the strong position it is in today had Dan not been on our team for the past ten years. Dan believes the Vikings he has handpicked to step into his many roles are better equipped to take Viking to the next level than he is. While we are not prepared to appoint a new president at this time, Dan will remain very involved in the transitioning of his duties and the entire Management Committee is engaged in making sure all of Dan’s job responsibilities are capably handled by others. Please join me in thanking Dan for the

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many contributions he has made to Viking and to you since he joined in the summer of 1999.

Viking Operations I have written extensively over the year about our risk management efforts across all functions. Risk management has been central to our operations from the very beginning and while most of the emphasis has been on our investment activities, the asset side of our balance sheet, we have addressed the liability side of the balance sheet as well. We continue to reap the benefits of this approach. To highlight a recent example, when we established Viking in 1999, we determined that having different fiscal year-ends for our onshore and offshore funds would give us greater operational flexibility. The fiscal yearend of our onshore fund is December 31; we were able to compensate our people well in 2007 based on the absolute performance of the onshore fund. Our offshore fund has a fiscal year-end of June 30; we were able to compensate our people well in 2008 based on the absolute performance of the offshore fund from July 1, 2007 through June 30, 2008, primarily driven by the strong absolute performance in the second half of 2007. There is always the concern in a flat or down year that people leave for economic reasons. We were able to mitigate this concern by effectively spreading the fee income to the management company from one year with high returns (2007) to two years (2007 and 2008). Our endeavors on risk mitigation are ongoing and incorporate input from Vikings throughout the firm. I have highlighted several of our senior managers and their hard work to safeguard your capital in past letters and you should know that their tireless efforts continue unabated. In 2009, Rose Shabet is spearheading a “best practices” review of all our non-investment functions. While I remain convinced that Viking ranks high in all of its operating functions, with Rose’s help, I’m convinced we can do even better. Much like we constantly encourage our analyst teams to interact and share expertise and practices, we can do the same in a more systematic way on the noninvestment side. Rose will work with senior managers in all operating functions at the firm and I look forward to report on our findings over the next several quarters. You should feel free to push us in this area through your continued operational due diligence requests and meetings. We welcome your involvement in this regard for the simple reason that you help make us better. With respect to our business practices related to the liability side of our business, you are aware that our lock-ups are spread throughout the year with year-end representing the largest redemption period. Gross external redemptions at year-end amounted to 6.1% of our external capital and we anticipate replacing all of it over the next few months based on existing subscriptions and indications of interest. The replacement capital is sourced from a list we keep of interested parties, both existing and new investors, who have explicitly expressed a desire to increase or initiate their investment in Viking. If you have an interest in adding to your investment, please contact Rebecca Ginzburg (212672-7012 or [email protected]) who will note your interest.

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Other We launched Viking Long Fund (VLF) on January 2nd, 2009 at $89 million in paid-in capital with over 50% of the total coming from Viking employees. Conventional wisdom might suggest that we launched VLF at a suboptimal time; we are comfortable taking a contrarian view. VLF is fully invested largely as a replication of the long equity positions in our hedge fund. While the launch size is significantly smaller than anticipated when we wrote to you about our plans to launch the fund in August, we believe this product is well-suited to benefit from our alpha generation on the long side. We will keep VLF open to additional capital contributions until it reaches $2 billion, which represents the amount that we currently believe can be managed without adversely impacting the success of our flagship hedge fund. If you have an interest in investing in VLF or receiving additional information, please contact Rebecca. Even though we were essentially flat for 2008, VGE LP had significant realized gains for the year. While we strive to be tax-efficient, our first concern is always to protect our investors' capital. As mentioned, we significantly reduced our gross exposure over the past year. This caused us to generate substantial realized gains, most of which pertained to prior years' unrealized profits (some of which were on the short side and thus short term for tax purposes). The reduction in gross exposure combined with steps we took to reduce our counterparty risk, limited our ability to mitigate the tax impact. Please note that the VGE LP limited partnership agreement allows investors to withdraw funds for this tax liability (without fees or penalties). Please contact Rebecca if you would like to discuss VGE LP's tax situation in further detail. Requests for tax liability withdrawals must be received by January 31 and distributions will be made on April 1st. In conclusion, I believe we have worked harder in 2008 than in any year since Viking was formed and I am pleased with the results we delivered. While market and regulatory forces will likely keep us equally busy in 2009, I feel very good about our business model and our team. Our constant push to raise the bar in everything we do and be best-in-class across the board has positioned us well. We are relentless in our striving for excellence and thrive on the continual challenge to be better than we were yesterday. We thank you for the opportunity to go to work everyday with the simple goal to serve your interest. Every Viking joins me in wishing you a very prosperous 2009.

Confidentiality This document contains proprietary and confidential information and is intended only for the use of the investor to whom it is addressed. Its contents may not be disclosed to any person except as expressly permitted under the investor's Subscription Agreement. If you are not the addressee, please destroy all copies of the letter and its attachments and notify us immediately. Thank you.

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Investment Advisers Act Disclosure It should not be assumed that investments made in the future will be profitable or will equal the performance of the securities discussed in this letter. The specific securities described herein do not represent all of the securities purchased, sold or recommended by Viking during the applicable period.

Disclosure Relating to Commission Payments During the 12 months ending December 31, 2008, the aggregate commission payments to brokers from VGE LP, VGE II LP and VGE III were $97.3 million or approximately 1.0% of average capital under management. The average global commission rate of all trades was 12.7 basis points. Of this total, $87.8 million (90.2%) was paid to brokers for order execution. In return, brokers provide best execution, access to their published research and their analysts, as well as access to corporate management teams. The remaining $9.5 million (9.8%) was paid to brokers who redirect payments to third party providers of research and services (“Soft Dollars”). Our use of Soft Dollars is restricted to investment research and research-related services including news services, quote services, exchange fees and independent research and consulting services.

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From: Ott, David Sent: Monday, October 13, 2008 8:24 AM To: All Vikings Subject: VGE Gross Exposure

I was recently asked what signs we were looking for that would indicate that we should take our gross exposure back to historical levels. I thought there may be value in explaining the reasons behind our current conservative posture and the factors that may cause us to reevaluate this stance. Viking is in the business of taking risk. We put our investor’s capital at risk in pursuit of attractive returns. Shying away from risk-taking goes against our reason to exist, and this is not something I do lightly. Market volatility is high and the economic outlook is uncertain. If that was all that was going on, we’d be maintaining or increasing our exposure levels, as we have done in similar periods of volatility or uncertainty in the past. Market volatility plays to our advantage, due to our strong conviction in our fundamental and valuation analysis. Similarly, Viking is well equipped to profitably invest during periods of economic uncertainty, as our diligent research enables us to identify changes in fundamental trends quickly and accurately […]. The complexities in the current investing environment, however, are much deeper than simply high volatility and economic uncertainty. This environment is unlike anything I’ve experienced before. There are two broad areas where I believe it is hard to have confidence in any predictions. The first relates to the role of the government. Rules are changing in ways I can’t predict, and not just with regard to relatively narrow topics, such as a temporary short-selling ban. Rather, there is much broader uncertainty regarding the government’s role in the economy and the markets. Will financial institutions be allowed to fail? Will the US Government pick the winners and losers? Will governments around the world routinely take ownership stakes in financial institutions? The answers to these questions will shape not only the financial system but the expectations for economic recovery. It’s impossible, in my view, to predict these outcomes with confidence. The second area of uncertainty results from the current strain on the financial system. The efficient functioning of the money markets, which I have taken as a given throughout my investing career, has been called into question. The effects of rapid deleveraging and investors’ flight to safety are leading to events that, until recently, were unimaginable, such as money market funds “breaking the buck” and General Electric needing to do an equity offering to relieve short term funding pressure. The consequences resulting from a breakdown in the efficient flow of money through the financial system are likely to be far-reaching and are difficult to predict. These two factors have, for the time being, changed the rules of the game. Unlike volatility and economic uncertainty, which play to our strengths, the unpredictability inherent in the current situation

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should, in my opinion, cause us to hunker down and do what we can to weather the storm. With that as the background, what are the signs we should be looking for prior to increasing our gross exposure? First, I’d like to see several weeks, at least, pass without a heretofore inconceivable financial event occurring. Over just the past four weeks, we’ve seen a Lehman bankruptcy, a fire sale of Merrill Lynch, a bailout of AIG, and runs on Wachovia and Washington Mutual. When events of this magnitude are occurring on a weekly basis, it is hard to invest with the longterm timeframe that we typically do. Additionally, I’d like to see signs that the money markets are functioning smoothly. The TED Spread, which Tom was very early in highlighting as a concern, continues to be at an historically extreme high, and tells me that we’re nowhere near back to normal in terms of money flowing freely through the system. As long as the flight to safety continues, and individual investors are shifting billions out of prime accounts into treasuries, it’s difficult to predict a return to normalcy in the money markets. Of course, other investors are looking for the same signs as we are to return to the equity markets. I do not expect, nor even intend, that we will be the first to figure out when the storm has passed. In fact, I would rather err on the side of waiting longer to collect additional evidence. Accordingly, it’s likely that the market indices will have bounced off the bottom by [the] time we are comfortable operating with a significantly higher gross exposure. However, I am not worried about missing the bottom because I don’t view changes to our net exposure as an important driver of our investment performance. Rather, I view gross exposure as Viking’s profit engine. The opportunities to profit from an increase in our gross exposure, when the investing environment warrants it, are much greater than the opportunity to call the market bottom and increase our net exposure. Consider the following example. Suppose we take our net exposure from the current level of 30% up to 50%. This would be a significant change. Further suppose the market appreciates 20% over the next year, a larger than average move. The combination of these two events, all else equal, would lead to 4% of investment performance (and that presumes we catch the bottom; if we take our net up prior to another 20% drop similar to last week, the result would be a 4% loss). Now consider the effect of an increase in our gross exposure from the current level of 85% up to 185%. 185% would still be below the 200% level at which I prefer to operate in normal times. Further assume that we achieve a spread of 15% between our longs and shorts (our actual spread is 23% since inception and 22% since 2005). If we increase our gross exposure equally on the long and short side, these two assumptions would lead to 7.5% of investment performance, nearly double the assumed results from the large increase in net exposure. For any business, it’s more fun to operate in a period of expansion than contraction. The enjoyment in our business comes from making bets and watching the results come in. Whether I’m putting $200mm behind our latest idea, or anxiously reading through the earnings release for a big position, my enjoyment level is directly proportional to the

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number and size of our bets. And we’re now in a period during which the number and size of our bets have been declining. However, what would be even less fun than shrinking the portfolio is shrinking the organization. We’re doing the opposite. We’ve just made offers, and received acceptances, from two great summer analysts, and we have a number of talented candidates currently in the queue. I can’t tell you when the environment will allow us to more fully deploy our capital, but I can tell you that it will eventually happen and, when it does, we will have the team in place and be ready to take advantage.

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Base Case Analysis for Period 10/1/2008 - 12/31/2008

Base Case Variation from Base Case Actual Long Performance (-7.8%) Actual Short Performance (-21.7%) Actual Net Exposure (19%) Actual Gross Exposure (77%) Total Variation from Base Case

Return

Exposure

Contribution

-24.7%

40%

-9.9%

17.0% -3.1% -24.7%

120% 80% -21%

20.4% -2.5% 5.2% -9.5% 13.6%

Total Return from Equity Positions Total Return from Credit Positions Other (Interest & Fees)

3.7% -3.2% -0.5%

Gross Return

0.0%

Net Composite Return

0.0%

Past performance is not a guarantee of future results.

Overview The base case quantifies alpha generation on our equity portfolio relative to the average performance of our investable universe (~2,000 stocks that trade $20+ million on average per day selected across all sectors and geographies). We reconcile the average return of this universe to our actual performance based on alpha generation on longs and shorts and a reconciliation of our actual exposures to our base case exposures of 120% long, 80% short, 200% gross and 40% net. Calculations Base Case: The base case return of -24.7% is the average return of the stocks in our investable universe. The universe returns are calculated on a currency-protected basis and are inclusive of dividends. When the average return of the universe is multiplied by the 40% net exposure, the base case portfolio yielded a 9.9% loss for the period. Actual Long Performance: The actual unlevered performance of our long equity portfolio was a loss of 7.8%. The differential between our unlevered long performance and the -24.7% mean return of the universe was 17.0%, which is the alpha generated from our longs. The long alpha multiplied by 120% base case long exposure yields 20.4% of performance contribution from our longs. Actual Short Performance: The actual unlevered performance of our short equity portfolio was -21.7%. When compared to the -24.7% mean return of the universe, the differential (or alpha) generated by our shorts was -3.1%. The short alpha multiplied by 80% base case short exposure yields -2.5% of performance contribution from our shorts. Actual Net Exposure: The actual average net exposure of 19% deviated from the base case 40% net exposure by -21%. The -21% differential multiplied by the base case return of -24.7% yields a contribution from the variation in net exposure of 5.2%. Actual Gross Exposure: The actual average gross exposure (77%: 49% long, 29% short) deviated from the base case gross exposure (200%: 120% long, 80% short). The deviation in the level and composition of gross exposure contributed to a base case variation of -9.5%. Total Variation from Base Case: The sum of the above variations. Total Return from Equity Positions: The sum of Base Case Contribution and Total Variation from Base Case. Total Return from Credit Positions: The contribution to Viking's return generated by Viking's credit positions (bank debt, corporate bonds, CDS, LCDS, etc.). Other (Interest & Fees): The contribution to Viking's return generated by management fees, debit/credit interest on broker balances, and net short rebate income. Gross Return: The sum of Total Return from Equity Positions plus Total Return from Credit Positions plus Other (Interest & Fees). Net Composite Return: Gross Return, net of fees for an investor assuming one year lockup terms (20% incentive fee). Actual returns will vary based on fund, class, hot issue eligibility and timing of individual contributions and withdrawals.

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Base Case Analysis for Period 1/2/2008 - 12/31/2008

Base Case Variation from Base Case Actual Long Performance (-23.9%) Actual Short Performance (-42.4%) Actual Net Exposure (30%) Actual Gross Exposure (122%) Total Variation from Base Case

Return

Exposure

Contribution

-40.0%

40%

-16.0%

16.1% 2.4% -40.0%

120% 80% -10%

19.3% 2.0% 3.8% -4.6% 20.5%

Total Return from Equity Positions Total Return from Credit Positions Other (Interest & Fees)

4.6% -3.2% -1.2%

Gross Return

0.1%

Net Composite Return

0.1%

Past performance is not a guarantee of future results.

Overview The base case quantifies alpha generation on our equity portfolio relative to the average performance of our investable universe (~2,000 stocks that trade $20+ million on average per day selected across all sectors and geographies). We reconcile the average return of this universe to our actual performance based on alpha generation on longs and shorts and a reconciliation of our actual exposures to our base case exposures of 120% long, 80% short, 200% gross and 40% net. Calculations Base Case: The base case return of -40.0% is the average return of the stocks in our investable universe. The universe returns are calculated on a currency-protected basis and are inclusive of dividends. When the average return of the universe is multiplied by the 40% net exposure, the base case portfolio yielded a 16% loss for the period. Actual Long Performance: The actual unlevered performance of our long equity portfolio was a loss of 23.9%. The differential between our unlevered long performance and the -40.0% mean return of the universe was 16.1%, which is the alpha generated from our longs. The long alpha multiplied by 120% base case long exposure yields 19.3% of performance contribution from our longs. Actual Short Performance: The actual unlevered performance of our short equity portfolio was -42.4%. When compared to the -40.0% mean return of the universe, the differential (or alpha) generated by our shorts was –2.4%. The short alpha multiplied by 80% base case short exposure yields -2.0% of performance contribution from our shorts. Actual Net Exposure: The actual average net exposure of 30% deviated from the base case 40% net exposure by -10%. The -10% differential multiplied by the base case return of -40.0% yields a contribution from the variation in net exposure of 3.8%. Actual Gross Exposure: The actual average gross exposure (122%: 76% long, 46% short) deviated from the base case gross exposure (200%: 120% long, 80% short). The deviation in the level and composition of gross exposure contributed to a base case variation of -4.6%. Total Variation from Base Case: The sum of the above variations. Total Return from Equity Positions: The sum of Base Case Contribution and Total Variation from Base Case. Total Return from Credit Positions: The contribution to Viking's return generated by Viking's credit positions (bank debt, corporate bonds, CDS, LCDS, etc.). Other (Interest & Fees): The contribution to Viking's return generated by management fees, debit/credit interest on broker balances, and net short rebate income. Gross Return: The sum of Total Return from Equity Positions plus Total Return from Credit Positions plus Other (Interest & Fees). Net Composite Return: Gross Return, net of fees for an investor assuming one year lockup terms (20% incentive fee). Actual returns will vary based on fund, class, hot issue eligibility and timing of individual contributions and withdrawals.

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Viking Global Equities LP Exposure Report as of December 31, 2008 Fund AUM (in $millions): Firm AUM (in $millions):

$3,383 $9,656

Equity Exposure By Sector

Long

Short

Gross

Net

Consumer Discretionary Consumer Staples Energy Financials Health Care Industrials Information Technology Materials Telecommunication Services Utilities Other

12.4% 1.0% 1.7% 12.2% 6.7% 3.6% 6.4% 0.2% 7.1% 0.0% 0.0%

-4.3% 0.0% 0.0% -13.4% -3.4% -7.6% -2.3% -1.8% -0.2% 0.0% 0.0%

16.8% 1.0% 1.7% 25.6% 10.2% 11.2% 8.8% 2.0% 7.3% 0.0% 0.0%

8.1% 1.0% 1.7% -1.3% 3.3% -4.1% 4.1% -1.6% 6.9% 0.0% 0.0%

Total

51.3%

-33.1%

84.4%

18.2%

Long

Short

Gross

Net

U.S. & Canada Western Europe Japan Asia (ex-Japan) Emerging Markets Other

34.4% 12.5% 2.2% 2.1% 0.0% 0.0%

-21.1% -9.6% -2.1% -0.3% 0.0% 0.0%

55.4% 22.2% 4.3% 2.4% 0.0% 0.0%

13.3% 2.9% 0.2% 1.8% 0.0% 0.0%

Total

51.3%

-33.1%

84.4%

18.2%

Long

Short

Gross

Net

Large Cap Mid Cap Small Cap

41.0% 10.1% 0.2%

-24.2% -8.3% -0.6%

65.2% 18.4% 0.7%

16.8% 1.7% -0.4%

Total

51.3%

-33.1%

84.4%

18.2%

Non- Equity Exposure

Long

Short

Gross

Net

Corporate Bonds Bank Loans

0.6% 5.0%

0.0% 0.0%

0.6% 5.0%

0.6% 5.0%

Total

5.5%

0.0%

5.5%

5.5%

Notional

Unrealized

8.5% 0.7%

0.3% 0.4%

0.6% 0.0%

0.1% 0.0%

Long

Short

41 6.7% 29.9%

78 -2.0% -11.6%

Equity Exposure By Geography

Equity Exposure By Market Cap

CDS Exposure Single name CDS Purchased Protection Written Protection Index CDS Purchased Protection Written Protection Concentration # of Equity Positions Largest Position Top 10 Positions

FAS 157 Disclosure (value expressed as % of capital) Level 1 Positions Level 2 Positions Level 3 Positions

92.8% 6.7% 0.5%

Viking Global Equities LP - Performance Report as of December 31, 2008 Performance Attribution by Sector

Fund AUM (in $millions): Firm AUM (in $millions): Aug-08 Sep-08 Oct-08

Nov-08

$3,383 $9,656 Dec-08

0.5% 0.0% -0.2% -2.0% -0.6% -0.4% -1.7% -0.2% 0.0% 0.0% 0.0% -4.4%

1.0% 0.0% 0.0% -0.9% -0.7% 0.4% -0.5% -0.1% 0.3% 0.0% 0.0% -0.5%

0.2% -0.1% 0.0% 0.2% 0.3% 0.3% 0.2% 0.0% 0.6% 0.0% 0.0% 1.6%

-1.7% -0.5% -3.4% -10.3% 0.1% -1.6% -0.1% -1.7% 0.9% 0.0% 0.0% -18.3%

-0.3% 0.0% 0.4% 1.2% 0.0% 0.1% 0.3% 0.1% 0.0% 0.0% 0.0% 1.8%

-2.3% 0.0% 0.1% 4.6% 0.8% 0.7% 0.5% 0.3% 0.0% 0.0% 0.0% 4.8%

0.5% 0.0% 0.0% 1.8% 0.2% -0.2% 0.3% 0.0% 0.0% 0.0% 0.0% 2.7%

-0.4% 0.0% 0.0% 0.3% 0.1% -0.2% -0.1% 0.0% 0.0% 0.0% 0.0% -0.3%

-0.9% -0.1% 0.2% 17.0% 1.7% 2.5% 1.8% 0.3% 0.2% 0.0% 0.1% 22.8%

0.0%

-0.8%

-1.6%

-1.7%

-0.2%

-3.4%

-0.1%

-0.1%

-0.2%

-0.2%

-0.2%

-0.2%

-1.4%

-0.2% -0.2% -0.2%

0.9% 0.9% 0.9%

0.6% 0.6% 0.6%

-9.5% -9.5% -9.5%

-1.4% -1.4% -1.4%

0.2% 0.2% 0.2%

0.9% 0.9% 0.9%

-0.4% -0.1% -0.9%

May-08

Jun-08

Jul-08

Aug-08

Sep-08

Oct-08

Nov-08

Dec-08

5.2% 1.4% 0.2% 0.9% 0.3% 0.0% 8.0%

3.0% 1.0% 0.1% -0.2% 0.1% 0.0% 4.0%

-2.8% -3.1% -0.2% -0.8% -0.2% 0.0% -7.1%

1.2% -1.1% -0.1% 0.3% -0.1% 0.0% 0.2%

1.6% -0.5% -0.1% -0.3% 0.3% 0.0% 1.1%

-5.8% -2.8% -0.3% -0.8% -0.5% 0.0% -10.3%

-2.2% -1.0% -0.4% -0.4% -0.4% 0.0% -4.4%

-1.2% 0.9% -0.1% 0.1% -0.2% 0.0% -0.5%

1.0% 0.5% 0.1% -0.1% 0.0% 0.0% 1.6%

-3.2% -10.7% -1.1% -2.1% -1.2% 0.0% -18.3%

-2.2% -0.3% -0.3% -0.9% 0.0% 0.0% -3.6%

0.7% -0.1% 0.0% 0.5% -0.2% 0.0% 0.9%

4.5% 1.4% 0.2% 0.6% 0.1% 0.0% 6.8%

0.1% 0.5% 0.1% 0.2% 0.1% 0.0% 1.0%

-0.8% -0.1% 0.3% 0.1% 0.2% 0.0% -0.4%

0.7% 0.3% 0.2% 0.4% 0.1% 0.0% 1.8%

5.8% -2.4% 0.6% 0.7% 0.0% 0.0% 4.8%

2.4% 0.3% 0.0% -0.1% 0.1% 0.0% 2.6%

0.0% -0.4% 0.2% -0.1% 0.0% 0.0% -0.3%

16.8% 0.8% 1.6% 2.9% 0.5% 0.0% 22.7%

0.0%

0.1%

-0.2%

0.0%

-0.8%

-1.6%

-1.7%

-0.2%

-3.4%

-0.1%

-0.1%

-0.1%

-0.1%

-0.2%

-0.2%

-0.2%

-0.2%

-1.4%

-0.2% -0.2% -0.2%

0.9% 0.9% 0.9%

0.6% 0.6% 0.6%

-9.5% -9.5% -9.5%

-1.4% -1.4% -1.4%

0.2% 0.2% 0.2%

0.9% 0.9% 0.9%

-0.4% -0.1% -0.9%

Jan-08

Feb-08

Mar-08

Apr-08

May-08

Jun-08

Jul-08

Long: Consumer Discretionary Consumer Staples Energy Financials Health Care Industrials Information Technology Materials Telecommunication Services Utilities Other Total Long Performance

-1.7% -0.1% -1.5% -3.2% -0.1% -0.2% -0.7% -0.7% -0.3% 0.0% 0.0% -8.5%

0.0% 0.0% 1.5% -0.5% 0.4% 0.0% -0.7% 0.2% 0.0% 0.0% 0.0% 1.0%

0.0% 0.0% 0.0% -1.2% -0.3% -1.3% 1.7% -0.1% -0.7% 0.0% 0.0% -1.8%

0.5% 0.2% 1.1% 1.8% 0.5% 0.3% 2.9% 0.1% 0.6% 0.0% 0.0% 8.0%

0.4% 0.0% 0.8% 0.5% 0.3% 0.3% 1.2% 0.1% 0.3% 0.0% 0.0% 4.0%

-2.2% 0.1% -0.2% -2.8% 0.0% -0.4% -1.0% -0.6% 0.0% 0.0% 0.0% -7.1%

1.7% -0.4% -2.0% 0.0% 0.4% 0.0% 0.3% -0.2% 0.4% 0.0% 0.0% 0.2%

-0.2% 0.1% 0.0% 0.6% 0.1% 0.2% 0.2% 0.2% 0.0% 0.0% 0.0% 1.1%

-1.8% -0.1% -2.4% -2.4% -0.3% -0.7% -1.8% -0.3% -0.3% 0.0% 0.0% -10.3%

Short: Consumer Discretionary Consumer Staples Energy Financials Health Care Industrials Information Technology Materials Telecommunication Services Utilities Other Total Short Performance

0.6% 0.1% 0.4% 1.6% 0.3% 0.5% 0.8% 0.0% 0.1% 0.0% 0.1% 4.3%

0.4% 0.0% -0.4% 2.8% 0.1% 0.1% 0.0% 0.0% 0.0% 0.0% 0.1% 3.2%

0.2% 0.0% 0.0% 0.6% 0.0% -0.1% 0.1% 0.0% 0.0% 0.0% 0.0% 0.8%

-0.5% 0.0% -0.6% -2.0% 0.0% 0.0% -0.3% 0.0% -0.1% 0.0% -0.2% -3.6%

0.2% 0.1% -0.3% 1.1% 0.1% 0.0% -0.3% 0.0% 0.0% 0.0% 0.0% 0.9%

1.2% 0.0% -0.2% 4.1% 0.3% 0.9% 0.5% 0.0% 0.1% 0.0% 0.0% 6.8%

0.3% 0.0% 0.7% -0.3% 0.0% 0.3% 0.1% 0.0% 0.1% 0.0% 0.0% 1.0%

-0.7% 0.0% 0.0% 0.6% -0.3% 0.2% -0.2% 0.0% 0.0% 0.0% 0.0% -0.4%

P&L from Credit Portfolio

0.3%

0.2%

0.1%

0.4%

0.0%

0.1%

-0.2%

Other Items (mgmt fees, interest)

0.1%

-0.1%

-0.1%

-0.2%

-0.1%

-0.1%

-3.8% -3.8% -3.8%

4.3% 4.3% 4.3%

-1.0% -0.7% -1.5%

4.6% 4.6% 4.6%

4.8% 4.8% 4.8%

Jan-08

Feb-08

Mar-08

Apr-08

Long: U.S. & Canada Western Europe Japan Asia (ex-Japan) Emerging Markets Other Total Long Performance

-3.2% -4.2% -0.1% -0.5% -0.4% 0.0% -8.5%

-0.1% 0.9% 0.0% 0.1% 0.1% 0.0% 1.0%

0.6% -2.1% -0.1% -0.1% -0.1% 0.0% -1.8%

Short: U.S. & Canada Western Europe Japan Asia (ex-Japan) Emerging Markets Other Total Short Performance

2.0% 1.2% 0.1% 1.0% 0.0% 0.0% 4.3%

2.8% 0.1% 0.1% 0.1% 0.1% 0.0% 3.2%

0.6% 0.0% 0.1% 0.2% 0.0% 0.0% 0.8%

P&L from Credit Portfolio

0.3%

0.2%

0.1%

0.4%

Other Items (mgmt fees, interest)

0.1%

-0.1%

-0.1%

-0.2%

Total Gross Return - Composite Total Gross Return - New Issue Eligible Total Gross Return - Ineligible

-3.8% -3.8% -3.8%

4.3% 4.3% 4.3%

-1.0% -0.7% -1.5%

4.6% 4.6% 4.6%

4.8% 4.8% 4.8%

Schedule of Net Performance:

MTD 0.9% 0.9% 0.9% 0.9% 0.9% 0.9% 0.9% 0.9% 0.9% 0.9%

QTD -0.2% -0.2% -0.2% -0.2% -0.2% -0.2% -0.2% -0.2% -0.2% -0.2%

YTD 0.0% -0.9% 0.0% -0.9% 0.0% -0.9% 0.0% -0.9% 0.0% -0.9%

Total Gross Return - Composite Total Gross Return - New Issue Eligible Total Gross Return - Ineligible

Performance Attribution by Geography

Class A - New Issues Eligible Class A - New Issues Non-Eligible Class B - New Issues Eligible Class B - New Issues Non-Eligible Class F - New Issues Eligible Class F - New Issues Non-Eligible Class H - New Issues Eligible Class H - New Issues Non-Eligible Class I - New Issues Eligible Class I - New Issues Non-Eligible

YTD

YTD

Index Returns: MTD QTD YTD S&P 500 Index* 1.1% -21.9% -37.0% MSCI World Index** 1.0% -20.6% -38.7% *Returns presented with dividend income reinvested. **Returns presented with dividend income reinvested net of withholding taxes; measured in local currency terms NOTES: (1) The performance attribution and exposure figures provided above are as of December 31, 2008; the fund's performance attribution and exposure figures will likely vary in subsequent periods. (2) All performance figures are unaudited. Gross performance is after management fees and fund expenses but before the incentive allocation. (3) All profit attribution and exposure figures are expressed as a % of total fund capital. (4) Miscellaneous includes management fees and interest on broker balances. (5) Individual investor returns may vary based on timing of contributions and withdrawals. (6) Values may not add due to rounding. (7) Past performance is not an indication of future performance. (8) The S&P 500 Index and the MSCI World Index are provided for comparison purposes only. The fund does not restrict its investments solely to securities included in the S&P 500 Index and the MSCI World Index.