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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 MSCI World Index S&P 500 Index


Net Return1
Fourth Quarter 0.0% -20.6% -21.9%
Full Year 0.1% -38.7% -37.0%
Annualized Volatility
Fourth Quarter 15.7% 55.3% 67.9%
Full Year 11.5% 31.9% 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

1
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 short-
term 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.

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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 Net Exposure


Themes Weighting Weighting

Banks 12% -4%


Industrials 8% -7%
Market Sensitive 7% -1%
Credit 7% 5%
Japan 4% 0%
Total Themes 38% -7%
Stand-alone Positions 53% 30%
Total 91% 23%

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

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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 year-
end 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 non-
investment 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 (212-
672-7012 or rebecca@vikingglobal.com) 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 long-
term 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

Return Exposure Contribution


Base Case -24.7% 40% -9.9%
Variation from Base Case
Actual Long Performance (-7.8%) 17.0% 120% 20.4%
Actual Short Performance (-21.7%) -3.1% 80% -2.5%
Actual Net Exposure (19%) -24.7% -21% 5.2%
Actual Gross Exposure (77%) -9.5%
Total Variation from Base Case 13.6%
Total Return from Equity Positions 3.7%
Total Return from Credit Positions -3.2%
Other (Interest & Fees) -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.

13
Base Case Analysis for Period 1/2/2008 - 12/31/2008

Return Exposure Contribution


Base Case -40.0% 40% -16.0%
Variation from Base Case
Actual Long Performance (-23.9%) 16.1% 120% 19.3%
Actual Short Performance (-42.4%) 2.4% 80% 2.0%
Actual Net Exposure (30%) -40.0% -10% 3.8%
Actual Gross Exposure (122%) -4.6%
Total Variation from Base Case 20.5%
Total Return from Equity Positions 4.6%
Total Return from Credit Positions -3.2%
Other (Interest & Fees) -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.

14
Viking Global Equities LP
Exposure Report as of December 31, 2008
Fund AUM (in $millions): $3,383
Firm AUM (in $millions): $9,656

Equity Exposure By Sector Long Short Gross Net

Consumer Discretionary 12.4% -4.3% 16.8% 8.1%


Consumer Staples 1.0% 0.0% 1.0% 1.0%
Energy 1.7% 0.0% 1.7% 1.7%
Financials 12.2% -13.4% 25.6% -1.3%
Health Care 6.7% -3.4% 10.2% 3.3%
Industrials 3.6% -7.6% 11.2% -4.1%
Information Technology 6.4% -2.3% 8.8% 4.1%
Materials 0.2% -1.8% 2.0% -1.6%
Telecommunication Services 7.1% -0.2% 7.3% 6.9%
Utilities 0.0% 0.0% 0.0% 0.0%
Other 0.0% 0.0% 0.0% 0.0%

Total 51.3% -33.1% 84.4% 18.2%

Equity Exposure By Geography Long Short Gross Net

U.S. & Canada 34.4% -21.1% 55.4% 13.3%


Western Europe 12.5% -9.6% 22.2% 2.9%
Japan 2.2% -2.1% 4.3% 0.2%
Asia (ex-Japan) 2.1% -0.3% 2.4% 1.8%
Emerging Markets 0.0% 0.0% 0.0% 0.0%
Other 0.0% 0.0% 0.0% 0.0%

Total 51.3% -33.1% 84.4% 18.2%

Equity Exposure By Market Cap Long Short Gross Net

Large Cap 41.0% -24.2% 65.2% 16.8%


Mid Cap 10.1% -8.3% 18.4% 1.7%
Small Cap 0.2% -0.6% 0.7% -0.4%

Total 51.3% -33.1% 84.4% 18.2%

Non- Equity Exposure Long Short Gross Net

Corporate Bonds 0.6% 0.0% 0.6% 0.6%


Bank Loans 5.0% 0.0% 5.0% 5.0%

Total 5.5% 0.0% 5.5% 5.5%

CDS Exposure Notional Unrealized


Single name CDS
Purchased Protection 8.5% 0.3%
Written Protection 0.7% 0.4%
Index CDS
Purchased Protection 0.6% 0.1%
Written Protection 0.0% 0.0%

Concentration Long Short

# of Equity Positions 41 78
Largest Position 6.7% -2.0%
Top 10 Positions 29.9% -11.6%

FAS 157 Disclosure (value expressed as % of capital)

Level 1 Positions 92.8%


Level 2 Positions 6.7%
Level 3 Positions 0.5%
Viking Global Equities LP - Performance Report as of December 31, 2008 Fund AUM (in $millions): $3,383
Firm AUM (in $millions): $9,656
Performance Attribution Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08 Jul-08 Aug-08 Sep-08 Oct-08 Nov-08 Dec-08 YTD
by Sector

Long:
Consumer Discretionary -1.7% 0.0% 0.0% 0.5% 0.4% -2.2% 1.7% -0.2% -1.8% 0.5% 1.0% 0.2% -1.7%
Consumer Staples -0.1% 0.0% 0.0% 0.2% 0.0% 0.1% -0.4% 0.1% -0.1% 0.0% 0.0% -0.1% -0.5%
Energy -1.5% 1.5% 0.0% 1.1% 0.8% -0.2% -2.0% 0.0% -2.4% -0.2% 0.0% 0.0% -3.4%
Financials -3.2% -0.5% -1.2% 1.8% 0.5% -2.8% 0.0% 0.6% -2.4% -2.0% -0.9% 0.2% -10.3%
Health Care -0.1% 0.4% -0.3% 0.5% 0.3% 0.0% 0.4% 0.1% -0.3% -0.6% -0.7% 0.3% 0.1%
Industrials -0.2% 0.0% -1.3% 0.3% 0.3% -0.4% 0.0% 0.2% -0.7% -0.4% 0.4% 0.3% -1.6%
Information Technology -0.7% -0.7% 1.7% 2.9% 1.2% -1.0% 0.3% 0.2% -1.8% -1.7% -0.5% 0.2% -0.1%
Materials -0.7% 0.2% -0.1% 0.1% 0.1% -0.6% -0.2% 0.2% -0.3% -0.2% -0.1% 0.0% -1.7%
Telecommunication Services -0.3% 0.0% -0.7% 0.6% 0.3% 0.0% 0.4% 0.0% -0.3% 0.0% 0.3% 0.6% 0.9%
Utilities 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Other 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Total Long Performance -8.5% 1.0% -1.8% 8.0% 4.0% -7.1% 0.2% 1.1% -10.3% -4.4% -0.5% 1.6% -18.3%

Short:
Consumer Discretionary 0.6% 0.4% 0.2% -0.5% 0.2% 1.2% 0.3% -0.7% -0.3% -2.3% 0.5% -0.4% -0.9%
Consumer Staples 0.1% 0.0% 0.0% 0.0% 0.1% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% -0.1%
Energy 0.4% -0.4% 0.0% -0.6% -0.3% -0.2% 0.7% 0.0% 0.4% 0.1% 0.0% 0.0% 0.2%
Financials 1.6% 2.8% 0.6% -2.0% 1.1% 4.1% -0.3% 0.6% 1.2% 4.6% 1.8% 0.3% 17.0%
Health Care 0.3% 0.1% 0.0% 0.0% 0.1% 0.3% 0.0% -0.3% 0.0% 0.8% 0.2% 0.1% 1.7%
Industrials 0.5% 0.1% -0.1% 0.0% 0.0% 0.9% 0.3% 0.2% 0.1% 0.7% -0.2% -0.2% 2.5%
Information Technology 0.8% 0.0% 0.1% -0.3% -0.3% 0.5% 0.1% -0.2% 0.3% 0.5% 0.3% -0.1% 1.8%
Materials 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.1% 0.3% 0.0% 0.0% 0.3%
Telecommunication Services 0.1% 0.0% 0.0% -0.1% 0.0% 0.1% 0.1% 0.0% 0.0% 0.0% 0.0% 0.0% 0.2%
Utilities 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Other 0.1% 0.1% 0.0% -0.2% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.1%
Total Short Performance 4.3% 3.2% 0.8% -3.6% 0.9% 6.8% 1.0% -0.4% 1.8% 4.8% 2.7% -0.3% 22.8%

P&L from Credit Portfolio 0.3% 0.2% 0.1% 0.4% 0.0% 0.1% -0.2% 0.0% -0.8% -1.6% -1.7% -0.2% -3.4%

Other Items (mgmt fees, interest) 0.1% -0.1% -0.1% -0.2% -0.1% -0.1% -0.1% -0.1% -0.2% -0.2% -0.2% -0.2% -1.4%

Total Gross Return - Composite -3.8% 4.3% -1.0% 4.6% 4.8% -0.2% 0.9% 0.6% -9.5% -1.4% 0.2% 0.9% -0.4%
Total Gross Return - New Issue Eligible -3.8% 4.3% -0.7% 4.6% 4.8% -0.2% 0.9% 0.6% -9.5% -1.4% 0.2% 0.9% -0.1%
Total Gross Return - Ineligible -3.8% 4.3% -1.5% 4.6% 4.8% -0.2% 0.9% 0.6% -9.5% -1.4% 0.2% 0.9% -0.9%

Performance Attribution Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08 Jul-08 Aug-08 Sep-08 Oct-08 Nov-08 Dec-08 YTD
by Geography

Long:
U.S. & Canada -3.2% -0.1% 0.6% 5.2% 3.0% -2.8% 1.2% 1.6% -5.8% -2.2% -1.2% 1.0% -3.2%
Western Europe -4.2% 0.9% -2.1% 1.4% 1.0% -3.1% -1.1% -0.5% -2.8% -1.0% 0.9% 0.5% -10.7%
Japan -0.1% 0.0% -0.1% 0.2% 0.1% -0.2% -0.1% -0.1% -0.3% -0.4% -0.1% 0.1% -1.1%
Asia (ex-Japan) -0.5% 0.1% -0.1% 0.9% -0.2% -0.8% 0.3% -0.3% -0.8% -0.4% 0.1% -0.1% -2.1%
Emerging Markets -0.4% 0.1% -0.1% 0.3% 0.1% -0.2% -0.1% 0.3% -0.5% -0.4% -0.2% 0.0% -1.2%
Other 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Total Long Performance -8.5% 1.0% -1.8% 8.0% 4.0% -7.1% 0.2% 1.1% -10.3% -4.4% -0.5% 1.6% -18.3%

Short:
U.S. & Canada 2.0% 2.8% 0.6% -2.2% 0.7% 4.5% 0.1% -0.8% 0.7% 5.8% 2.4% 0.0% 16.8%
Western Europe 1.2% 0.1% 0.0% -0.3% -0.1% 1.4% 0.5% -0.1% 0.3% -2.4% 0.3% -0.4% 0.8%
Japan 0.1% 0.1% 0.1% -0.3% 0.0% 0.2% 0.1% 0.3% 0.2% 0.6% 0.0% 0.2% 1.6%
Asia (ex-Japan) 1.0% 0.1% 0.2% -0.9% 0.5% 0.6% 0.2% 0.1% 0.4% 0.7% -0.1% -0.1% 2.9%
Emerging Markets 0.0% 0.1% 0.0% 0.0% -0.2% 0.1% 0.1% 0.2% 0.1% 0.0% 0.1% 0.0% 0.5%
Other 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Total Short Performance 4.3% 3.2% 0.8% -3.6% 0.9% 6.8% 1.0% -0.4% 1.8% 4.8% 2.6% -0.3% 22.7%

P&L from Credit Portfolio 0.3% 0.2% 0.1% 0.4% 0.0% 0.1% -0.2% 0.0% -0.8% -1.6% -1.7% -0.2% -3.4%

Other Items (mgmt fees, interest) 0.1% -0.1% -0.1% -0.2% -0.1% -0.1% -0.1% -0.1% -0.2% -0.2% -0.2% -0.2% -1.4%

Total Gross Return - Composite -3.8% 4.3% -1.0% 4.6% 4.8% -0.2% 0.9% 0.6% -9.5% -1.4% 0.2% 0.9% -0.4%
Total Gross Return - New Issue Eligible -3.8% 4.3% -0.7% 4.6% 4.8% -0.2% 0.9% 0.6% -9.5% -1.4% 0.2% 0.9% -0.1%
Total Gross Return - Ineligible -3.8% 4.3% -1.5% 4.6% 4.8% -0.2% 0.9% 0.6% -9.5% -1.4% 0.2% 0.9% -0.9%

Schedule of Net Performance: MTD QTD YTD Index Returns: MTD QTD YTD
Class A - New Issues Eligible 0.9% -0.2% 0.0% S&P 500 Index* 1.1% -21.9% -37.0%
Class A - New Issues Non-Eligible 0.9% -0.2% -0.9% MSCI World Index** 1.0% -20.6% -38.7%
Class B - New Issues Eligible 0.9% -0.2% 0.0% *Returns presented with dividend income reinvested.
Class B - New Issues Non-Eligible 0.9% -0.2% -0.9% **Returns presented with dividend income reinvested net of withholding taxes;
Class F - New Issues Eligible 0.9% -0.2% 0.0% measured in local currency terms
Class F - New Issues Non-Eligible 0.9% -0.2% -0.9% NOTES:
Class H - New Issues Eligible 0.9% -0.2% 0.0% (1) The performance attribution and exposure figures provided above are as of December 31, 2008;
Class H - New Issues Non-Eligible 0.9% -0.2% -0.9% the fund's performance attribution and exposure figures will likely vary in subsequent periods.
Class I - New Issues Eligible 0.9% -0.2% 0.0% (2) All performance figures are unaudited. Gross performance is after management fees and fund expenses
Class I - New Issues Non-Eligible 0.9% -0.2% -0.9% 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.