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May 27, 2009

To Our Clients and Friends:

I am writing to you, our loyal clients and friends, to let you know that I have reached the painful
conclusion that it is necessary to wind down Pequot’s business.

In the coming months, we plan to liquidate the Core Funds and return cash to investors while
spinning out Matawin under the leadership of Mike Corasaniti and Special Opportunities under
the leadership of Rob Webster and Paul Mellinger.

As you know, my trading in 2001 on behalf of the Core Funds has been the subject
of investigations by the SEC and US Attorney’s Office. Those agencies closed their
investigations in 2006 without bringing any charges, but Pequot nonetheless suffered from
adverse publicity. In late 2008, the government reopened its investigation. Public disclosures
about the continuing investigation have cast a cloud over the firm and have become a source of
personal distraction. With the situation increasingly untenable for the firm and for me, I have
concluded that Pequot can no longer stay in business as an investment advisor.

I am enormously proud of Pequot’s long-term track record. A client who invested in the Pequot
Partners Fund at inception earned a net annualized 16.8% return over 22 years vs. the S&P’s
8.5% return during this period. More recently, the Pequot Partners Fund has generated net
annualized returns of 10.1% over the past five years and 1.8% in 2009 through April 30 vs. the
S&P’s declines of 2.7% and 2.5%, respectively.

We intend to distribute to Core Fund investors a significant amount of cash by June 30, with the
remainder substantially paid out over the next few months, pending completion of the year-end
audit, liquidation of certain less liquid assets and payment of expenses. Details for each
individual fund will be forthcoming. Pequot will retain the necessary infrastructure to support
the wind down process.

The Matawin and Special Opportunities funds will become independent entities no later than
year-end, and we will take steps to ensure a smooth transition. These funds will have a robust
infrastructure and we believe they will be well positioned to deliver strong returns in the years to
come. Investors in these funds will receive information about the process shortly.

I know this news may come as a surprise to you, but I am convinced it is the right decision for all
concerned. I remain grateful to all who have contributed to Pequot’s success over the years.
This has been an extremely difficult decision for me, especially because of the impact it will
have on our talented and dedicated employees. The Pequot team is the best of the best, and I
thank them as I thank you for many years of loyalty and friendship.

Sincerely,

Arthur J. Samberg

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