Question: What is a Side Pocket?

To: Our Investors and Other Interested Parties

Re: Mid-Quarter Update - Establishing Special Investment Portfolio

As our investors know, we have made every effort to steer clear of the common problems in our industry in these unusual times. We responsibly managed liquidity during the 2008 market downturn and timely honored investor redemptions exceeding 35% of capital in January 2009, rather than exercising our "gates" or suspending redemptions, because we have always understood the value of investor relationships. We have also made a special effort to keep our investors informed of how we are navigating the current environment.

We also note that 2009 has started well for each of our funds. We have seen the rebound of certain long positions that were greatly oversold last year plus continued success with short positions. We are cautiously optimistic that 2009 will be a year that rewards those still willing and able to take calculated risks. A down market will surprise no one and we believe the panicky swings of 2008 should be less severe and less likely.

As unjustified as it strikes us, however, our efforts to navigate these trying times without disadvantaging our investors has left us in the position of being a source of liquidity while many other funds exercise gates or suspend redemptions. For now we therefore continue to see considerable redemptions. For JANA Master Fund, investors plan to withdraw a further 20% of capital, approximately, at the end of the first quarter. For JANA Piranha Fund, such indicated redemptions exceed 30%. Nevertheless, we still consider the gating or suspending of redemptions to be unwarranted given the good overall liquidity profile of our portfolios, which we will work to maintain.

However, to ensure fair treatment of all investors, we have determined that it is necessary to segregate some less-liquid investments in our overall portfolio. Even within the context of a very liquid overall portfolio, if we were to permit these investments to grow as a percentage of capital due to redemptions, this could restrict our ability to invest for optimal results and leave our continuing investors overly concentrated in such less liquid investments.

Therefore, we intend to establish a side-pocket or "Special Investment Portfolio" as of March 31, 2009 comprised of some thinly-traded equities, private financings and distressed positions. The total amount of side pocketed positions following this action will not exceed 15% of capital in either JANA Master Fund or JANA Piranha Fund, in conformity with our previously established caps on side pockets. These investments were all conservatively and fairly marked at December 31, 2008 and the marks will be reviewed once again before establishing the Special Investment Portfolio. It should not be assumed that these are "problem" investments; they are simply positions we believe should be retained until an appropriate liquidation event occurs rather than sold at adverse prices to meet redemptions. We will provide more detail when we finalize the Special Investment Portfolio at the end of the quarter.

As a result, investors redeeming at March 31 will receive timely cash distributions except for the portion attributable to their interests in Special Investments and standard audit holdbacks. Our mandate will be to work out of the investments in the Special Investment Portfolio as appropriate liquidity opportunities arise and then make distributions directly to redeemed investors and back into the fund on behalf of continuing investors.

We understand the inconvenience of side pockets and have reached this decision reluctantly as the relevant considerations have clearly changed. We stand by our portfolio liquidity rules which have been consistently applied since day one and allow us to hold a certain amount of less-liquid positions provided the expected returns are great enough to justify the sacrifice of liquidity. Overall, such less-liquid positions must be monitored and will not exceed 33% of capital in any of our funds. These rules have served us very well but given the extreme level of redemptions we are experiencing we believe these additional measures are needed to protect our investors' interests.

More than ever, we appreciate your support and understanding. Please feel free to contact JANA Investor Relations at (212) 455-0920 with any questions about the foregoing matter.