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JANA Master Fund, Ltd.

Performance Update – December 2010


Fourth Quarter and Year in Review

JANA Master Fund, Ltd. is a value-oriented fund with an event-driven strategy which invests in companies
considering or implementing strategic change. Investors subscribe to the fund’s feeders – JANA Partners, L.P.,
JANA Partners Qualified, L.P. and JANA Offshore Partners, Ltd. The fund is managed by JANA Partners LLC and

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began operations in April 2001.

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PERFORMANCE UPDATE

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2010 by Quarter Q1 Q2 Q3 Q4 Year 2010 Total Return
JANA Master Fund
S&P 500 Total Return Index
4.7% (4.2%)
5.4% (11.4%)
3.1%
pa4.9%
11.3% 10.7%
8.4%
15.1%
268.0%
30.6%
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From Inception
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(April 2001)
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Annualized
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JANA Master Fund 27.4% 10.3% 45.9% 25.6% 11.3% 16.4% 7.6% (23.6%) 23.8% 8.4% 14.3%
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S&P 500 Total Return Index 0.0% (22.1%) 28.7% 10.9% 4.9% 15.8% 5.5% (37.0%) 26.5% 15.1% 2.8%
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Performance is quoted net of all fees and expenses


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for JANA Partners, L.P., the original feeder entity.


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Results for 2010 are preliminary and pending audit.


Net returns among feeders may differ slightly.
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Most financial assets rose in value in 2010 in response to the persistent spur of zero percent interest rates,
quantitative easing and coordinated bailouts. But it was not a steady advance. At mid-year, markets were
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down. Investors were focused on the unsustainablity of sovereign budget imbalances. It looked like the
historic stimulus gamble had failed to achieve organic follow through. But the Fed went back to its one
trick in September with the unabashed goal of boosting risk assets through year end. In the fourth quarter,
we saw markets continue to climb without the dollar falling in tandem. This will likely be interpreted by
many as the green shoots of recovery, setting a continued bullish tone for the new year. Nevertheless, we
note that few if any of the economy’s problematic imbalances have been constructively addressed.

In spite of a pretty good success rate on individual investments we are disappointed with last year’s end
result. For much of the year, we were challenged by a highly-correlated market reacting more to fund
flows and political pressures than to company fundamentals or catalysts. We feel that a good deal of
prudence and caution in portfolio construction was not rewarded. However, as we move forward, we
sense that several recent developments may set the stage for a more promising new year.
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For instance, our current activist positions in the public domain have each been successful during 2010
from the standpoint of achieving desired reform. But, as we have noted before, we feel the investment
upside predominantly lies ahead toward the completion of pending catalytic events. TNT NV is heading
for a value-unlocking breakup around mid-year; Charles River Labs is in process of buying back over
one-third of its float; and Convergys will begin to show comparisons that demonstrate great progress
under its new CEO whom we introduced. We consider each to be promising 2011 plays. Plus we expect
there will be more activist opportunities to follow, including a few currently under accumulation.

The policy-driven, correlated market phenomena also show signs of giving way to a better stock-picking
environment for 2011. Individual stock correlations fell over the second half of last year and the
government’s anti-business rhetoric has softened considerably since the mid-term elections. In addition, a
steady flow of funds out of equities into patently overpriced credit finally reversed late in the year,
suggesting a reversion to the mean for which we feel well-positioned.

More importantly, the challenges of 2010 forced us to work harder at building conviction in individual

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positions and identifying segments of the market that do not need an improving economy to work. As a

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result, we carry higher than average position concentration into the new year centered around investments

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that we believe are cheap and compelling under modest macro-economic assumptions.

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Finally and most importantly, we feel over the past year we have built the right team and infrastructure to
enhance our chances of sustained success. Our increased position concentration and more robust
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exposure levels are testament to a sharper focus and crisper decision-making process. We are confident
we can meet the challenges ahead, and we note that, as a group, we are among the funds’ largest
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investors.
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PERFORMANCE ATTRIBUTION
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4th Quarter 2010 (Manager’s estimates) Oct. Nov. Dec. Q4 2010 YTD 2010
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Gross performance – Longs 2.4% 0.1% 5.7% 8.2% 14.0%


Gross performance – Shorts (1.2%) 2.6% (2.9%) (1.5%) (2.6%)
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Gross performance – Total 1.2% 2.7% 2.8% 6.7% 11.4%


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Avg. long exposure 90.5% 107.6% 112.8% 103.6% 102.2%


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Avg. short exposure 54.4% 54.4% 54.8% 54.6% 50.3%


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Avg. net exposure 36.1% 53.2% 58.0% 49.1% 51.9%


Avg. beta-adjusted net exposure 28.3% 42.2% 43.5% 38.0% 38.6%
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Year 2010 (Manager’s estimates) Q1 Q2 Q3 Q4 Full Year


Gross performance – Longs 8.8% (8.9%) 6.5% 8.2% 14.0%
Gross performance – Shorts (2.5%) 3.4% (1.8%) (1.5%) (2.6%)
Gross performance – Total 6.3% (5.5%) 4.7% 6.7% 11.4%

Avg. long exposure 109.1% 100.4% 96.8% 103.6% 102.2%


Avg. short exposure 45.3% 46.5% 46.2% 54.6% 50.3%
Avg. net exposure 63.8% 54.0% 50.7% 49.1% 51.9%
Avg. beta-adjusted net exposure 50.9% 35.9% 34.9% 38.0% 38.6%

Our latest risk report shows that top 10 long positions represent 54% of capital. This considerably
exceeds our usual average of 40-45%. In addition, we have taken the number of long positions down
markedly year over year from 78 to 47. While many factors, deliberate and arbitrary, may contribute to

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these data points, we feel that they largely reflect the strengthening of our investment team and processes
during the past year. Our investment team has greater unity of mission and clearer lines of reporting,
resulting in more accountability and follow-through across the firm. We believe this enhanced
cohesiveness will result in incrementally better decision-making that will drive better performance going
forward. In any event, the improved esprit de corps throughout the company has been noticed by all of
us.

The short side of the portfolio also has become populated with fewer, more meaningful positions. In a
very tough market for short sellers, we made a conscious decision not to fight the Fed by generally
avoiding crowded equities and purely valuation-driven shorts. We relied more on thematic shorts often
expressed through credit default swap protection. Our CDS portfolio roughly broke even in a challenging
environment and our carefully-selected equity shorts at least added alpha.

In spite of the market advance, we still feel that valuations are quite attractive in selective situations. We
subscribe to the widely-held opinion that 2011 will be a year of much M&A and LBO activity, as

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companies address their cash-laden stagnant positions. Special-situation idea flow will continue to be

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plentiful. We are cautiously optimistic that the same level of diligence, careful underwriting standards

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and portfolio exposures in 2011 is likely to yield a better result than last year.

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PORTFOLIO HIGHLIGHTS
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Probably the biggest portfolio development for us recently was the December announcement by TNT, NV
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(TNT NA) of the structure and timing of the anticipated demerger of its TNT Express unit. As you know,
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we and our partner, Alberta Investment Management Corporation, collectively own over 7% of TNT and
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have been shareholder advocates for this demerger. We are also pleased that the company has structured
the transaction in a maximally shareholder-friendly manner. Specifically, TNT Mail will temporarily
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retain a stake of 29.9% in Express, rather than pursue a more dilutive financing of the separation, and will
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return this stake to shareholders as soon as it is not needed for balance sheet support. Furthermore, TNT
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addressed concerns that this stake could serve as a blocking interest against a sale of Express by requiring
that such shares will be required to tender into any recommended sale of Express or to vote along with the
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majority of shares on any hostile approach for Express. TNT also explicitly stated as a rationale for the
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separation that it “will facilitate participation in sector consolidation and M&A.” This statement and
actions represent a significant change in strategic direction from management which augurs well for value
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creation in 2011.
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While TNT shares have responded positively since the announcement, we believe the market is still
significantly under-appreciating recent developments. Many analysts continue to evaluate TNT as a
whole, which penalizes the company in comparisons to other express package businesses. Furthermore,
TNT Mail will become independent with one fewer competitor, having made material progress on labor
and regulatory issues, and having bolstered its balance sheet. With TNT currently at about 12 times
depressed earnings with a 3% yield, we believe the market still does not get it. Since TNT is bound to be
an exciting value+catalyst situation in 2011, it remains our largest position.

Charles River Laboratories (CRL) is another company that has been strategically transformed for the
benefit of shareholders. While we have been actively engaged with CRL, the company has acquired the
capital discipline to terminate a speculative merger in favor of an initial $500 million stock buyback
program. More recently the total buyback authorization was raised to $750 million, which should help
CRL retire about one-third of its total shares. During this time, we have had a constructive dialog with
management which has, among other things, resulted in the addition of two highly qualified new board

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members. Recently, it was announced that Robert Bertolini, the former CFO of Shering-Plough
Corporation, and Richard Wallman, who serves with Barry Rosenstein on the Convergys board, will
replace existing directors on the CRL board and sit on a newly-created Strategic Planning and Capital
Allocation Committee of the board. We believe these directors will help ensure that CRL succeeds with
its new mission of improving capital allocation decisions and boosting operating efficiency.

We believe Charles River remains unduly cheap based on our estimate of pro forma earnings after the
completion of stock buybacks. We feel many analysts are failing to look ahead and disregarding, not only
buyback accretion, but also the increasing probability of a rebound in the pre-clinical services business.
The long-term secular trends in favor of market-leading CROs are intact, and we now expect smart capital
stewardship until an eventual rebound toward pre-crisis growth trends.

New Position Highlights. The event calendar for other equity special situations remains robust. A variety
of companies of all sizes are considering value-maximizing moves after a period of stagnation. The
companies highlighted below were recent purchases of ours that fit this theme. All have good

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fundamental trends at undemanding prices with plans in the works to remove valuation discounts, thus

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meeting our investment requirement of offering multiple ways to win.

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x Cablevision Systems/Rainbow Media (CVC) – At long last we see our local cable company

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engaging in a series of value-unlocking moves. In the past year CVC has completed the spin-off
of Madison Square Garden (MSG, which we also own), and initiated a dividend and a share
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buyback program. More recently, they announced the spin-off of Rainbow Media, their
collection of cable networks that includes the popular show Mad Men. The transaction will be
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completed tax-free by mid-year. We believe the full value of Rainbow Media has been obscured
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within CVC. As that discount dissipates, we also believe the pure-play cable and broadband part
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of CVC deserves to re-rate positively. Its inherent advantages of covering an affluent and
densely-populated region make it a desired consolidation target, which should merit some
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valuation premium.
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x The Williams Companies, Inc. (WMB) – We return to a company we have owned before and a
theme we find compelling for the coming year. After Williams aggressively grew its majority-
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owned master limited partnership Williams Pipeline Partners (WPZ) in a large asset transfer in
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early 2010, WPZ steadily appreciated while WMB languished. This created the need for further
restructuring. A surprise CEO retirement in October 2010, we believe, set off a process of
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exploring value-unlocking options and created our entry point. We expect that WMB will find a
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way to separate their large exploration and production portfolio from their pipeline assets. A
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recent Bakken Shale asset purchase within E&P makes it more diversified and ready to stand
alone. Furthermore, we believe that pipeline general partnerships, such as the one controlled by
WMB, have unique and attractive long-term value-creation characteristics. Not many are public,
but that is rapidly changing. With successful IPOs like Targa Resources (TRGP) and the
upcoming Kinder Morgan Inc. (KMI), investors will likely come to appreciate this latent value
within Williams in the near term.

x Renault SA (RNO FP) – The French automaker run by the dynamic Carlos Ghosn has
underperformed the recovery of the auto sector. In fact, net of its minority equity stakes in
Nissan, Daimler and Avtovaz, Renault has a negative value. We suspected that last year’s sale of
a stake in Volvo was the beginning of a more comprehensive plan by Ghosn to address this value
dislocation. At the upcoming release of year-end results in February, we believe more aspects of
Renault’s plan will be unveiled. We expect Ghosn to set materially higher free cash objectives

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for core Renault. In addition, we will be looking for his commitment to resume dividend
payments. The cash stream to Renault from Nissan has rebounded considerably and shareholders
are demanding their fair share in the form of a pass-through. We note that Renault traded
positively and at a much narrower discount to the sum of its parts when it was a dividend payer in
the past.

ORGANIZATIONAL UPDATE

Investor Meeting. Please save the date April 13, 2011 from 4:00 - 7:00 pm for our second-ever JANA
Partners LLC Investor Meeting at The Pierre Hotel. A formal e-mail invitation will be sent shortly. The
event coincides with JANA’s 10-year anniversary. Similar to our first event in 2009, the meeting will
provide an overview of our portfolio and investment process and touch upon our organization followed by
questions, answers and cocktails. We look forward to seeing many of you there and for those who cannot
attend, we are happy to keep you updated through other means.

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Audits. The 2010 audits are underway. As reported in our previous letter, all of our funds are now

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audited by Ernst & Young LLP. Last year we distributed K-1s around mid-March and we expect to meet

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an equivalent timetable this year.

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Personnel Notes. We are always proud to honor members of our team with promotions in light of their
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excellent work and substantial contribution to the success of JANA Partners. Therefore we are pleased to
report that Jennifer Fanjiang, formerly Deputy General Counsel, has been promoted to General Counsel
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(and Charles Penner will be Partner and Chief Legal Officer). Congratulations to Jennifer.
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Kevin Lynch, a Partner, has decided to pursue other interests after more than nine years with JANA. As
you know, Kevin ran our JANA Piranha Fund from 2005 to 2009. We thank Kevin for his valuable
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contributions and wish him the best in his future endeavors.


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Update on Special Investment Portfolio of March 31, 2009. As of December 31, 2010, the value of the
March 31, 2009 Special Investment Portfolio is approximately $55 million, representing approximately
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3.0% of investors’ March 31, 2009 capital. Three distributions totaling about $93 million were made
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during 2009. The performance of this Special Investment Portfolio was marked by a modest decline
during this year. The timeframe for complete monetization of this Special Investment Portfolio is not
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definitive, but we continue to explore all reasonable possibilities to monetize remaining


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investments. Should we have opportunity for any meaningful monetizations from here, we will distribute
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proceeds as soon as practicable and consider the unwind of the resulting portfolio.

Update on Special Investment Portfolio of September 2008 (LBIE Exposure). We have another Special
Investment Portfolio relating to assets caught in the administration process at Lehman Brothers
International (Europe) (“LBIE”), which constituted approximately 2.1% of investors’ capital at
September 30, 2008. We continue to be engaged in discussions with the LBIE administrators regarding
the return of assets within their control and a net settlement amount related to other claims for cash and
assets not within their control. The resolution of the remainder of our claim will depend, among other
factors, upon the outcome of ongoing efforts by the administrators to reconcile their accounts with those
of other parties including Lehman Brothers International.

Our Valuation Committee reviews this Special Investment periodically and is currently (as of December
31, 2010) marking the investment at a recovery rate of approximately 43%, versus last year’s mark of
about 24%, to reflect the current market trading of these claims less appropriate discounts. The Valuation

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Committee notes that, until our reconciliation with the administrators is reasonably complete, it is
premature to consider a sale of claims. This mark is based upon best available information at this time.
Actual amounts ultimately distributed may differ.

Website. Updated materials, such as Investor Presentations, Due Diligence Questionnaire, Offering
Memoranda and archived quarterly letters, are always available on our website,
www.JANApartners.com. Investors may apply for a password on the site.

Please note that the Firm’s Form ADV Part II is available upon request.

CONCLUSION

As we near the conclusion of ten years in business, we reflect upon how much has occurred and changed
and how much has stayed the same. Who could have predicted that the past decade would have brought

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not only the fall of the Twin Towers and Hussein’s Iraq, but also the fall of Fannie Mae, AIG and Lehman

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Brothers? Yet as we look at the investment opportunity landscape today, it looks remarkably similar to

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that which existed at our inception. Recall that a decade ago we were coming out of a recession and a

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bear market, cash had built up on balance sheets and public valuations were often well below strategic

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and private market values. This led to a multi-year wave of corporate value-unlocking that certainly
played to our strategy and our strengths. We believe that we are now experiencing a similarly robust
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environment for value+catalyst investing with a particularly critical role for value-minded shareholder
activists.
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This cycle will surely have its differences. One thing that has definitely evolved is our experience gained
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and expertise derived from ten years of investing together and building an institution that suits our
approach. When we launched in 2001, we had four professionals. In 2005, when we had a similar asset
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base to today, we were comprised of a dozen people. Today we have over 40 in staff and are SEC
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registered. We remain strongly committed to our business and strategy. We believe JANA’s best days
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are yet to come as evidenced by our own substantial investment in the funds.
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We hope to connect with many of you at the tenth anniversary Investor Meeting on April 13th in New
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York. As we will discuss a few current investments in more detail, it will be a good opportunity to see
firsthand the depth of our team and the rigor of our approach. As always, we appreciate our investors’
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continued support and hope this finds you all in good health and spirits.
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JANA Partners LLC

Addendum – JANA Nirvana Fund Performance Update

Click here to visit MarketFolly.com for more


hedge fund tracking

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Disclaimer: This letter should not be relied upon in making an investment decision. Except where noted,
performance is quoted net of all Class A fees and expenses. Performance and exposure figures are for JANA
Partners, L.P., which invests in JANA Master Fund, Ltd. and for which JANA Partners LLC serves as investment
manager (the “Fund”). Results for 2010 are preliminary and pending audit. Past performance is not a predictor of
future results. Year 2009 performance figures reflect a reduced incentive allocation/fee. Individual investors’
experience may vary depending on, among other things, the following factors: the timing of subscriptions and
redemptions; differing fee structures; and differing tax treatment. Side-pocketed investments are excluded from
performance, exposure and attribution figures. All investments involve risk including the potential loss of all
principal invested. The specific securities discussed herein do not represent all of the securities purchased or sold
or recommended during the quarter, and it should not be assumed that investments in such securities were or will be
profitable. There is no assurance that any securities discussed herein remain in the Fund at the time you receive
this or that securities sold have not been repurchased. The S&P 500 Total Return Index is a broad-based, float-cap
weighted measurement of the average performance of 500 widely-held U.S. companies. The Index is unmanaged,
with no fees, expenses or taxes. It is not possible to invest directly in an unmanaged index. The performance results
have been compared to the Index. For various reasons, the Index may not be an appropriate benchmark for
comparison to the Fund. This letter is confidential, may not be distributed without our express written consent, and

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does not constitute an offer to sell or the solicitation of an offer to purchase any security or investment product.

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JANA Nirvana Fund


Performance Update – December 2010
Fourth Quarter

JANA Nirvana Fund, with domestic and offshore counterparts, launched in April 2007 to offer a more concentrated
fund to co-invest in select ideas of JANA Master Fund, which pursues a value-oriented, event driven investment
strategy, and to execute other opportunistic directional trades. The fund is managed by JANA Partners LLC.

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PERFORMANCE UPDATE

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2010 Fourth Quarter Oct. Nov. Dec. Q4 2010 YTD 2010

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JANA Nirvana Fund, L.P. 1.2% 1.9% 3.0% 6.2% 10.0%

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JANA Nirvana Offshore Fund, Ltd. 1.1% 1.8% 3.1% 6.1% 10.1%
S&P 500 Total Return Index 3.8% 0.0% 6.7% 10.7% 15.1%
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(April 2007)
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2007 2008 2009 Total Return Annualized
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JANA Nirvana Fund, L.P. 15.8% (24.3%) 40.5% 35.4% 8.4%


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JANA Nirvana Offshore Fund, Ltd. 19.0% (25.9%) 41.5% 37.2% 8.8%
S&P 500 Total Return Index 4.8% (37.0%) (3.9%) (1.1%)
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26.5%
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The JANA Nirvana Fund (“Nirvana”) was launched in April 2007 to co-invest in select ideas of JANA
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Master Fund (“JANA”) in a more concentrated manner and to execute other opportunistic directional
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trades. This update is meant to be read in conjunction with the quarterly letter of JANA, since the two
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funds have substantial overlap. It should also be read together with the latest monthly Nirvana Risk
Report, which provides quantitative data on portfolio exposures.
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Nirvana generally invests in select ideas of JANA in a more concentrated manner. The number of
positions is kept smaller, while the average position size is typically 1.5 times or greater that of JANA
(depending upon liquidity). As always, please note that Nirvana’s more concentrated style may lead to
more volatile returns. Nirvana begins 2011 with approximately $360 MM in capital.

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PERFORMANCE ATTRIBUTION

4th Quarter 2010 (Manager’s estimates) Oct. Nov. Dec. Q4 2010 YTD 2010
Gross performance – Longs 2.8% 0.5% 6.9% 10.2% 18.4%
Gross performance – Shorts (1.1%) 2.1% (2.8)% (1.8%) (3.5%)
Gross performance – Total 1.7% 2.6% 4.1% 8.4% 14.9%

Avg. long exposure 106.5% 114.2% 116.6% 112.4% 108.5%


Avg. short exposure 56.7% 55.3% 54.4% 55.5% 49.3%
Avg. net exposure 49.8% 58.9% 62.2% 57.0% 59.2%
Avg. beta-adjusted net exposure 40.4% 46.5% 45.7% 44.2% 43.9%

Year 2010 (Manager’s estimates) Q1 Q2 Q3 Q4 Full Year


Gross performance – Longs 8.1% (8.9%) 9.2% 10.2% 18.4%

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Gross performance – Shorts (1.9%) 2.8% (2.5%) (1.8%) (3.5%)

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Gross performance – Total 6.2% (6.1%) 6.7% 8.4% 14.9%

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Avg. long exposure 106.2% 100.5% 106.0% 112.4% 108.5%

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Avg. short exposure 39.4% 40.5% 46.5% 55.3% 49.3%

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Avg. net exposure 66.8% 59.9% 59.5% 57.1% 59.3%
Avg. beta-adjusted net exposure 48.2% 39.1% 43.4% 44.2% 43.9%
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COMMENTARY
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Nirvana performed admirably during the fourth quarter and respectably for the full year, especially given
the defensive and cautious posture of the fund for most of the year. Our long book drove performance,
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while the short book was the main detractor of performance. The second quarter was a reminder to us of
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the importance of maintaining a balanced portfolio.


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Although already concentrated by design, Nirvana has also benefitted from the strengthening of our
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investment team and processes during the past year. Our latest risk report shows that top 10 long
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positions represent over 62% of capital. This compares to the Nirvana figure of 50% from a year ago and
in accordance with its distinct mandate, the latest figure of 54% for JANA. We continue to work hard to
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ensure that Nirvana remains differentiated from JANA.


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As we have noted before, “beta-adjusted net exposure” is the primary internal portfolio measure that we
monitor. Over the fourth quarter, beta-adjusted next exposure was almost 45%. This is down from
approximately 50% over the first quarter, but reflects an increase over the second and third quarters as we
found selective attractive situations to deploy additional capital. Going forward, we are keen to carefully
use our buying power to take advantage of the numerous opportunities that we expect to find as the
market shows signs of giving way to a better stock-picking environment for 2011.

Please see the accompanying JANA letter for further details regarding our current investment outlook and
some of the key portfolio positions.

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Page 10

CONCLUSION

Nirvana has meaningful capacity and continues to remain open to new capital. We strongly believe that
we are well-positioned to benefit from a promising opportunity set in this new year for our style of
value+catalyst investing. As usual, Nirvana remains a valuable partner to JANA in activist situations
where we endeavor to “make our own luck”, while offering a differentiated product for those clients able
and willing to tolerate potentially greater volatility.

For further information, please contact IR@janapartners.com or 212-455-0920.

Thank you to our investors for your continued support of Nirvana and as always, we hope that this update
finds you in good health and spirits.

JANA Partners LLC

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Disclaimer: This letter should not be relied upon in making an investment decision. Except where noted,
performance is quoted net of all Class A fees and expenses. Results for 2010 are preliminary and pending audit.
Past performance is not a predictor of future results. Year 2009 performance figures reflect a reduced incentive
allocation/fee. Individual investors’ experience may vary depending on, among other things, the following factors:
the timing of subscriptions and redemptions; differing fee structures; and differing tax treatment. All investments
involve risk including the potential loss of all principal invested. The specific securities discussed herein do not
represent all of the securities purchased or sold or recommended during the quarter, and it should not be assumed
that investments in such securities were or will be profitable. There is no assurance that any securities discussed
herein remain in the Fund at the time you receive this or that securities sold have not been repurchased. The S&P
500 Total Return Index is a broad-based, float-cap weighted measurement of the average performance of 500
widely-held U.S. companies. The Index is unmanaged, with no fees, expenses or taxes. It is not possible to invest
directly in an unmanaged index. The performance results have been compared to the Index. For various reasons,
the Index may not be an appropriate benchmark for comparison to the Fund. This letter is confidential, may not be
distributed without our express written consent and does not constitute an offer to sell or the solicitation of an offer
to purchase any security or investment product.

767 Fifth Avenue, 8th Floor, New York, NY 10153 Tel. 212-455-0900 / Fax 212-455-0901