Pershing Square Holdings Annual Report 2020

Summary

The 2020 annual report documents the best year in Pershing Square's history: NAV performance of 70.2% and a total shareholder return of 84.8%, beating the S&P 500 by more than fifty percentage points. The engine was the COVID-19 credit hedge — $27 million of premiums converted into $2.6 billion of proceeds in March 2020 — and, as the letter insists on quantifying, the redeployment of those proceeds into the portfolio at panic prices: together, hedge and reinvestment produced 70% of the year's net investment gains, "unrelated to our companies' underlying performance." Beyond the trade, the letter deepens the structural argument of the renaissance: PSH as a tax-efficient conglomerate of minority "subsidiaries," a rebuttal of the copycat "PSH Replicator" critique, the first disclosure of a new interest rate swaption hedge against inflation, and the arrival of Pershing Square Tontine Holdings, the SPAC that would test the firm's ambitions next. The famous CNBC appearance is context the letter assumes; what it supplies is the numbers.

Full Text

The Chairman's Statement and Investment Manager's Report, complete; audited financial statements remain in the archive. Words unchanged.

Chairman’s Statement INTRODUCTION When I wrote to you last year, we were mere months into what became a year that none of us will ever forget. COVID-19 has infected more than 100 million people around the world and millions have died. Our thoughts continue to be with all those who have lost family members and friends to the virus, or have suff ered great hardship due to the impact it has had on their daily lives. It may take years for certain aspects of our lives to return to the way they were before COVID-19, and many things we took for granted have been irrevocably changed. In 2020, both our portfolio companies and our Investment Manager faced rapidly changing conditions and challenges. They were forced to adapt and pivot in record time to protect their employees and preserve their businesses. You will read more about the actions of our portfolio companies in the Investment Manager’s Report. Our Investment Manager’s employees have been working remotely for over a year now. Fortunately, they have adapted exceptionally well to the change in circumstances, and the investment team has continued to work effi ciently and eff ectively with great support from the operational team. Amid such a challenging period of time, I am pleased to report that not only did the Investment Manager protect your investment in PSH last year, but it delivered exceptional returns, making 2020 the best year of performance since the inception of the Investment Manager’s strategy in 2004. In addition to successfully navigating the volatile fi nancial markets and tumultuous business conditions, the Investment Manager and the PSH Board were active on a number of fronts throughout the year. To highlight several: PSH issued two tranches of debt totaling $700 million, repurchased $286 million of PSH’s outstanding Public Shares, continued PSH’s dividend program, welcomed a new Board member, and gained entry to the FTSE 100 in December 2020.

The Investment Manager, with oversight from the PSH Board, committed to a new investment by forming Pershing Square Tontine Holdings, Ltd. (“PSTH”). PSTH is a special purpose acquisition company, (or “SPAC”) and it listed on the New York Stock Exchange on July 22, 2020. PSTH is expected to combine with a private business in an initial business combination (or de-SPAC transaction) which will result in PSH owning a minority shareholding in a newly listed public company. I discuss these initiatives, among others, in detail below.

INVESTMENT PERFORMANCE

During the year ended December 31, 2020, PSH’s total Net Asset Value (“NAV”) return including dividends was 70.2%, ending the year at $45.46 per share.i PSH generated a total shareholder return of 84.8% as a result of the narrowing of the discount to NAV at which PSH shares trade.ii Over the same period, the S&P 500 increased 18.4%.iii PSH’s outperformance was driven by its purchase of index credit default swaps in February 2020, and the subsequent unwinding of those hedges. When we published our 2019 Annual Report in April 2020, I stated that the PSH Board appreciated the Investment Manager’s foresight in using the hedges to protect the portfolio from severe declines in the stock market in Q1 2020. Now that we can refl ect on the events of the full year of 2020, we also commend the Investment Manager’s actions in successfully identifying the optimal moment to reinvest the proceeds from the hedges as the markets recovered. The Investment Manager continues to engage with PSH’s portfolio companies through direct board representation in some situations, and less formal, private engagement in others. PSH’s portfolio companies have responded well to the challenges of the pandemic, and the Investment Manager believes that they will continue to recover and thrive over the long term, allowing for signifi cant further share price appreciation.

The outlook for PSH’s portfolio companies is described further in the Investment Manager’s Report. Pershing Square Holdings, Ltd. Annual Report 2020 3

INVESTMENT MANAGER The Board has delegated the task of managing the Company’s assets to the Investment Manager as set out in the Investment Management Agreement (the “IMA”) entered into by PSH and Pershing Square Capital Management, L.P. at the inception of PSH. Although the Board does not make individual investment decisions, the Board is ultimately accountable for oversight of the Investment Manager. In 2020, the Board adopted terms of reference describing its principal responsibilities, which are available on the PSH website. The Investment Manager is a fundamental value investor that utilizes a range of activist strategies to unlock long-term value for shareholders, and seeks to invest in excellent businesses with opportunities for improvement. These businesses tend to be largecap companies that generate relatively predictable and growing free-cash-fl ows, with formidable barriers to entry and a compelling value proposition.

PORTFOLIO CHANGES

As mentioned above, PSH invested in index credit default swaps in February 2020 and unwound the positions in March. When faced with the challenge of re-investing the considerable proceeds from the hedges, the Investment Manager prudently chose to primarily invest in existing portfolio companies it knew well, including Agilent (“A”), Hilton (“HLT”), Lowe’s (“LOW”), and Restaurant Brands (“QSR”), and to re-establish a core investment in Starbucks (“SBUX”). In the summer of 2020, the Investment Manager initiated a new portfolio investment for PSH by launching a SPAC, PSTH. On July 22, 2020, PSTH raised $4 billion in its IPO on the New York Stock Exchange. The Company, Pershing Square, L.P. and Pershing Square International, Ltd.

(collectively, the “Pershing Square Funds”) entered into a Forward Purchase Agreement where they committed to contributing an additional $1 billion, with the option to increase their investment up to $3 billion (including capital from Pershing Square co-investment funds) such that in total, PSTH has $5 billion to $7 billion of equity capital for use in its initial business combination. In addition, the Pershing Square Funds purchased a Sponsor Warrant exercisable at $24 per share to purchase 5.95% of the fully diluted business combination. In typical SPAC transactions, the sponsor is owned by the investment manager. However, the SPAC sponsor for PSTH is 100% owned by the Pershing Square Funds, ensuring that the Investment Manager’s incentives are fully aligned with the performance of the funds, and that there is no confl ict of interest between the Investment Manager and PSH. The creation of PSTH did not require PSH Board approval, but the Investment Manager kept the Board informed of its actions and processes as they were considered and executed. In 2020, the Investment Manager also increased PSH’s ownership of HHC and exited its investment in Berkshire Hathaway. During the period of heightened volatility last spring, a number of non-core investments were also initiated and sold. Later in the year, smaller notional amounts of CDS were purchased as spreads narrowed. The Investment Manager will provide a more detailed portfolio update in the following pages. Pershing Square Holdings, Ltd. Annual Report 2020 4

CORPORATE ACTIONS The PSH Board took several corporate actions in 2020 that we believe will contribute to the long-term success of the Company. • Bond Issuances In 2020, PSH completed two new bond issuances, raising a total of $700 million of additional capital at highly attractive interest rates: $500 million of 3.250% 10-year unsecured Bonds due November 2030 (the “2030 Bonds”) and $200 million of 3.000% 12-year unsecured Bonds due July 2032 (the “2032 Bonds”). The Company currently has $2.1 billion of debt in four tranches. The 2030 Bonds and 2032 Bonds rank equally in right of payment with PSH's existing $1 billion of 5.500% Bonds due July 2022 (the “2022 Bonds”), and PSH's $400 million of 4.950% Bonds due July 2039 (the “2039 Bonds”). The Company's total debt to capital ratio was 18.8% as of December 31, 2020, and 18.0% as of March 23, 2021.iv PSH maintains conservative leverage levels and investment grade ratings on its debt. PSH's long-term debt management strategy focuses on managing leverage over time by increasing NAV through strong performance and laddering its maturities through new issuances. The Board believes that it is appropriate for PSH to use a prudent amount of debt to enhance our returns to shareholders, and that our laddered maturities from 2022 to 2039 are well matched to our long-term investment horizon. • Dividend Since February 2019, PSH has paid a quarterly dividend of $0.10 per Public Share, a 1.1% yield at the current PSH share price.v The dividend represents a return of capital at NAV which can currently be reinvested in PSH shares at a discount to NAV. In 2020, PSH returned $81 million of capital to shareholders via the dividend. The Board has continued the quarterly dividend as it believes that the payment expands PSH’s potential investor base to include shareholders who prefer or are required to invest in dividend-paying equities.

As PSH’s current dividend yield is similar to that of the S&P 500, we believe this further emphasizes that PSH is an attractive alternative to an S&P 500 portfolio.vi • Share Buyback Programs As we have discussed in previous letters, when considering potential share repurchase programs, the Board consults with the Investment Manager and considers a number of factors including: the available free cash and the likelihood that such cash would be deployed into an attractive new investment in a given market environment; the level at which our current portfolio holdings trade relative to their intrinsic values; our leverage levels; the discount to NAV at which the shares would be repurchased; and the impact further reductions would have on the free fl oat of PSH shares. In 2020, PSH repurchased a total of $286 million of PSH Public shares, representing 13.7 million PSH Public Shares at an average price of $20.81 per share and an average discount of 32%. Since May 2, 2017, when PSH initiated its fi rst share repurchase program, through March 23, 2021, the Company has repurchased 50.8 million PSH Public Shares at a total cost of $837 million at an average price of $16.46 per share and an average discount of 26.5%. PSH buybacks and purchases by PSCM affi liates reduced the free fl oat by 9.9% in 2020 and by 37% since PSH’s IPO.vii Today, as a result of purchases by PSCM affi liates and the buyback programs, PSCM affi liates now own approximately 25% of PSH on a fully diluted basis.viii Pershing Square Holdings, Ltd. Annual Report 2020 5

FTSE 100 INCLUSION The FTSE 100 Index represents the 100 largest companies by market capitalization on the London Stock Exchange. I am pleased to report that in December 2020, PSH gained entry to the FTSE 100. This achievement is both symbolic, as it is an honor to be a part of this prestigious group, but also it has materially positive practical implications. Inclusion in the FTSE 100 has led to increased demand for PSH shares by funds who track the index and are required to purchase the shares. The inclusion also provides added global visibility and an opportunity to share our investment story with a wider audience. Over time, we hope investors will realise that PSH is undervalued relative to the other FTSE 100 constituents as PSH’s market capitalisation is at a signifi cant discount to its underlying NAV.

DISCOUNT TO NET ASSET VALUE

The Board pays close attention to the discount to NAV at which PSH’s Public Shares currently trade. The Board was pleased to see PSH’s discount narrowed by 5.9%, from 28.9% in the beginning of 2020 to 23.0% as of December 31, 2020, although it has widened slightly to 24.7% as of March 23, 2021.ix The Board continues to hold the view that PSH shares are undervalued at current levels. The Board believes that the recent narrowing of the discount occurred largely as a result of continued positive NAV performance, increased awareness of PSH, and additional buying demand for PSH shares following our inclusion in the FTSE 100 in December 2020. It is however an anomaly that PSH, which owns almost 91% of the PSTH Sponsor Warrant, trades at a discount to NAV, while PSTH, which does not share in the potential upside of the Sponsor Warrant, trades at a 33.1% premium to its IPO price.x We expect that continued strong performance and appreciation of the fact that PSH is undervalued will lead to a further narrowing of the discount over time.

CORPORATE GOVERNANCE / BOARD

The Board continues to work eff ectively and diligently on behalf of all shareholders. Despite the challenges of 2020, the Investment Manager and the PSH Board have been able to maintain open and productive channels of communication in what has been a very busy year. I would like to thank my fellow directors for all of their contributions and time commitment throughout the year. Richard Battey and Richard Wohanka will not be off ering themselves for re-election to the PSH Board at our Annual General Meeting (“AGM”) in April 2021. We will miss their thoughtful insight at our Board meetings and thank them for their many contributions. In September 2020, we welcomed a new independent director, Andrew Henton, to the Board. Andrew will assume the role of Chairman of the Audit Committee upon Richard Battey’s departure. Following a thorough search process for prospective PSH Board candidates, the Nomination Committee (which is comprised of only the independent directors) recommended that the Board submit Tope Lawani, Rupert Morley and Tracy Palandjian for election as non-executive directors at the upcoming AGM. Tope’s deep global investing experience, Rupert’s extensive operational, entrepreneurial and investing roles, and Tracy’s background in social impact investing and alternative investment management will provide valuable perspectives, and will complement the Board’s existing expertise. The election of Tope, Rupert and Tracy would expand the board to seven members, six of whom are independent. Pershing Square Holdings, Ltd. Annual Report 2020 6

EVENTS / SHAREHOLDER ENGAGEMENT I enjoyed meeting many of our shareholders at the PSH investor meetings in New York and London in February 2020. Since then, COVID-19 has made it much more diffi cult to meet investors in person, but the widespread adoption of Zoom has allowed me to interact virtually with shareholders around the world. I look forward to returning to in-person meetings at the appropriate time while maintaining the option to meet virtually when that is more convenient. The Investment Manager operates a robust investor relations program that acts as a resource for existing shareholders, and actively seeks to engage with potential future shareholders. The Board coordinates closely with the Investment Manager to ensure that we remain apprised of shareholder feedback, and the Board regularly reviews the communications we receive from shareholders. We held a virtual PSH investor meeting on February 18, 2021, and we welcomed more shareholders to that event than to any other previous PSH meeting. The Investment Manager presented a portfolio update. Slides from the presentation are available on PSH’s website: www.pershingsquareholdings.com. PSH’s 2021 AGM will be held on April 28, 2021. To protect the health of our shareholders and in accordance with public safety measures enacted by the States of Guernsey to reduce the transmission of COVID-19, the Board requests that shareholders not attend the AGM in person, but instead submit proxy votes in electronic form. Arrangements will be made by the Company to ensure that the minimum number of Shareholders required to form a quorum will attend the AGM so that it may proceed. The results of the voting will be announced as soon as practicable after the conclusion of the AGM.

I will report to you on the fi rst half of 2021 in August 2021, and the Investment Manager will keep you informed of any signifi cant developments in the portfolio before then, when appropriate. /s/ Anne Farlow Anne Farlow Chairman of the Board March 29, 2021 Pershing Square Holdings, Ltd. Annual Report 2020 7

Investment Manager’s Report LETTER TO SHAREHOLDERS To the Shareholders of Pershing Square Holdings, Ltd.: 2020 was the best year in the 17-year history of Pershing Square. We generated NAV performance of 70.2% and a total shareholder return (TSR) including dividends of 84.8% due to the reduction in the discount to NAV at which PSH’s shares trade.5 Our NAV performance and TSR exceeded our benchmark’s performance, the S&P 500, by 5,180 and 6,640 basis points respectively.6 Investors who invested in Pershing Square, L.P. at its inception on January 1, 2004, and transferred their investment to PSH at its inception on December 31, 2012 have grown their equity investment at a 17.1% compounded annual return as of March 23, 2021, compared with a 9.8% return had one invested in the S&P 500 over the same period. With the magic of compounding, our 17.1% compound annual NAV return translates into a cumulative total NAV return since inception of 1,413% versus 399% for the S&P 500 over the same period.7 In other words, investors in Pershing Square since inception have multiplied their equity investment by 15 times, versus the 5 times multiple they would have achieved had they invested in a zero-cost S&P 500 index fund. Our returns to investors using the market value of our common stock rather than NAV are somewhat lower, as PSH currently trades at a 25% discount to NAV. Using PSH’s stock market value rather than NAV, investors in Pershing Square since inception have earned a 15.2% compounded return, or an 11.5 times multiple of their original investment.8 With continued strong performance, we expect that our discount to NAV will narrow, and our NAV and market value returns will be comparable. 2020 was also an excellent year for our portfolio companies, which we discuss in greater detail later in this letter. The wellcapitalized, high-quality, durable growth companies that represent nearly all of our holdings comfortably weathered the COVID-19 storm.

Each has executed initiatives that have and will likely lead to greater market share, improved long-term profi tability, and the acceleration of shareholder value creation. The majority of our NAV performance last year was driven by our large hedging gain (45% of our net investment gain) and the reinvestment of those proceeds in our portfolio companies from March through the beginning of April of last year (25% of our net investment gains).9 As a result of the hedge and reinvestment, 70% of our net investment gains were unrelated to our companies’ underlying performance. Therefore, despite the large increase in NAV in 2020, our portfolio composition and the inherent investment opportunities in our holdings remain about the same as one year ago, as our companies’ share price increases were generally in line with improvements in their underlying intrinsic value. We also generated a substantial mark-to-market gain on our Forward Purchase Agreement (“FPA”) and Sponsor Warrants in Pershing Square Tontine Holdings, Ltd. (NYSE:PSTH) due to the requirement under IFRS for PSH to mark to market these instruments with the benefi t of a third-party valuation service. PSTH is trading at a premium to its $20 per share cash in trust, driven, we believe, by PSTH’s highly favorable and diff erentiated shareholder/merger friendly structure, and our investors’ expectation that PSTH will create substantial shareholder value from its initial business combination. Eight months since PSTH’s launch, we remain convinced that an investment in PSTH will generate highly attractive longterm returns, even from PSTH’s current stock price. While we previously believed that we would be able to announce a potential transaction by the end of this quarter, we will not be in a position to do so. We do not intend to make any announcements about PSTH’s transaction progress until we enter into a defi nitive agreement. Pershing Square Holdings, Ltd. Annual Report 2020 8

If we are successful in completing such a transaction, we expect that PSTH will be an important contributor to our shorterterm and long-term performance. This is due to our investment expectations from the transaction, the large size of this investment due to the Pershing Square funds’ minimum FPA commitment of $1 billion, and the large notional investment underlying the Sponsor Warrants, 91% of which are held by PSH. We are likely to launch a second SPAC, PSTH2 after PSTH completes a business combination transaction. If we do so, we believe it is appropriate for the right to invest in PSTH2 to be owned by our current PSTH shareholders, including PSH and the Pershing Square private funds. We like the idea of providing investors who backed us in PSTH with the opportunity to invest in PSTH2 without paying a premium to its cash-in-trust value. We have always believed in giving existing investors the right to participate in new Pershing Square opportunities, and we intend to continue this tradition with PSTH.a Conglomerates In this year’s Berkshire Hathaway annual letter, Warren Buff ett writes about the “terrible reputation” that has been “earned” by conglomerates. He explains that this bad reputation is due to the fact that conglomerates: (1) are generally required, for regulatory, tax and other reasons, to own controlling interests in businesses, (2) must pay large premiums for these controlling interests, and (3) fi nd it diffi cult to buy control of great businesses, as they are rarely available for sale. Berkshire has managed these issues with a more open mandate than a typical conglomerate due to its large insurance company investment portfolios, which have enabled Berkshire to invest a large portion of its assets in non-controlling interests in publicly traded companies.

In last year’s letter, I wrote: PSH is legally a closed-ended fund, [but] in our view it is best thought of as a tax-effi cient investment holding company that owns minority interests in public companies which are of a quality and scale where legal control is often diffi cult if not impossible to achieve. Our strategy is to acquire smaller pieces of superb businesses over which we have substantial infl uence, rather than controlling interests in lower quality businesses… The formal defi nition of a subsidiary is a corporation controlled by a holding company, where control is typically represented by a 50% or greater ownership interest. In the case of PSH’s “subsidiaries,” however, we have generally owned less than 20% of shares outstanding, and usually less than 10% of shares outstanding. Even so, we are typically one of the largest shareholders of our investees, and we are an infl uential and supportive owner whether or not we have board seats, regardless of what percentage of the company we own. If one were to think of PSH as a conglomerate, one should consider PSH’s important distinguishing attributes. Since PSH is structured as a closed-ended fund, there are no securities law, tax or other issues that require any of our assets to be invested in companies we legally control. As a result, there is no limitation on the nature of our ownership stakes; they can be controlling or non-controlling. We did, however, intentionally include an ownership restriction in the investment management agreement which limits PSH’s investment universe to publicly traded companies. a This letter does not constitute an off er of PSTH2 securities. Pershing Square Holdings, Ltd. Annual Report 2020 9

While it is extremely rare for a controlling interest in a truly outstanding business to be available without the payment of a large control premium, this is not the case for minority interests in the best publicly traded businesses. Just one year ago, we saw all of our holdings, which represent among the best businesses in the world, become available at massive discounts to their intrinsic values, and we took advantage of this, albeit short-term, opportunity. We have always believed that the common stocks of even the best businesses can trade at almost any price for brief periods. And it is this volatility – often driven by a disappointing short-term event, missed expectations, macro factors, political events, shareholder frustration with management and/or governance, that has enabled us to acquire large minority stakes in great businesses at bargain prices. In light of the nature of our strategy, and our long-term track record for eff ectuating corporate change, we have often been able to obtain infl uence over our portfolio holdings that is similar to that of a control shareholder, but without the need to pay a control premium. This aspect of our strategy has given us the best of both worlds, that is, the ability to own great businesses as an important and infl uential shareholder, and the occasional opportunity to purchase them at bargain prices in the stock market. Furthermore, unlike most conglomerates, including Berkshire Hathaway, which are structured as tax-paying C corporations, PSH is a Guernsey closed-ended fund which generally does not pay any corporate taxes.b As a result, PSH does not have the same “switching costs” as a tax-paying conglomerate, which must pay corporate taxes if it sells an investment at a price in excess of its tax basis.

Unlike the typical conglomerate which: (1) has an extremely limited universe of opportunities to buy controlling interests in great businesses at sensible prices, (2) must pay corporate taxes when it sells an existing holding, and (3) is limited in the amount of its assets it can invest in non-controlling interests, PSH suff ers from none of these constraints. PSH has another important benefi t because of its closed-ended fund structure and the highly liquid nature of our portfolio, which is almost entirely comprised of publicly traded, large capitalization, investment-grade U.S. equities. We have been able to access low-cost, long-term, non-margin debt in the form of publicly traded bonds to fi nance our investments and reduce our cost of capital, which should enhance our ability to generate high, long-term rates of return. While in recent years, we have been able to issue bonds at attractive long-term rates, we still believe that PSH remains an underappreciated and underrated credit. Our credit remains misunderstood likely because we are a one-of-a-kind company, and it will therefore take time for fi xed income investors and analysts to fully appreciate our story. Discount and Valuation PSH has traded at a persistently wide discount to NAV in recent years. As a result, the Board and we have taken a number of steps to address the discount including obtaining a premium listing on the London Stock Exchange, repurchasing 21% of our shares outstanding, and initiating a quarterly dividend. In addition, I and other affi liates of the Investment Manager have increased our stake in PSH from 4% to 25% via open market purchases over the last three years. Employees and affi liates of PSCM now have an investment of approximately $2.4 billion in PSH equity, which is one of the largest insider investments of any FTSE 100 or FTSE 250 company. Despite the above actions, PSH’s discount to NAV remains wide.

The discount was as high as 35% in September prior to PSH’s recent FTSE 100 inclusion, which we believe has contributed to the discount narrowing to 25% today. b PSH is, however, obligated to pay so-called FIRPTA tax in the event it generates capital gains from ownership stakes of more than 5% in U.S. Real Property Holding Companies. The Howard Hughes Corporation is the only USRPHC we have owned where we have exceeded the 5% FIRPTA ownership threshold. Our reported NAV refl ects an accrual for FIRPTA taxes on our HHC shares. Pershing Square Holdings, Ltd. Annual Report 2020 10

We believe that PSH’s discount to NAV or book value is anomalously large, particularly when PSH is compared with our peers in the FTSE 100. In general, companies which earn higher, long-term returns on equity should trade at greater multiples of book value or NAV than companies that earn lower returns on equity. When our long-term track record’s 17% ROE is compared with that of other FTSE 100 companies over the same 17-year period, there is no other company that has earned similar or greater long-term returns on equity that trades at a meaningful discount to NAV or book value. When compared over the short term, the last three years for example, the disparately low valuation of PSH becomes that much more stark. PSH’s ROE of 39% over the last three years compares favorably to the FTSE 100’s weighted average, three-year ROE of approximately 8%. Despite earning an ROE nearly fi ve times greater than the FTSE 100 index, PSH trades at only 0.7 times book value, while the FTSE 100 index, weighted by market cap, currently trades at approximately 1.8 times book value. PSH Replication Some investors have suggested that PSH should trade at a discount to book value because our portfolio is publicly traded, and copycat investors (let’s call them PSH Replicators) can simply purchase our companies in the same proportions as we own them, thereby replicating our portfolio without paying investment management fees. The problem with this approach is that investors can only replicate changes in our portfolio when we disclose them. By the date on which we are required or choose to disclose a new position, its trading price is typically well above PSH’s average cost of acquisition. As a result, investors who attempt to track and replicate the portfolio will likely have a substantially higher cost basis in our investments, and therefore will earn lower returns.

More signifi cantly, there are limited disclosure requirements for the various hedging transactions we have historically executed. For example, had PSH Replicators simply purchased and held PSH’s portfolio as of the beginning of last year until the end of the year and paid no fees, they would have realized a 15.4% return.10 Had they purchased PSH shares instead, they would have earned a 70.2% NAV total return and an 84.8% TSR as the opportunity to realize returns from the credit hedge and reinvest the proceeds in our existing holdings would not have been in the PSH Replicator’s portfolio. As of this writing, in addition to investment grade credit hedges, PSH owns very large notional hedges in the form of interest rate swaptions that we purchased beginning in December through early February. Like our credit hedge, our interest rate swaption position is highly asymmetric; it has a potential payoff that is many multiples of our capital at risk. While this hedge started as a small percentage of the portfolio – at a cost of $157 million it represented 1.4% of assets at that time – it has more than tripled in value, and now represents 4.2% of the portfolio with a market value of $493 million.11 There is no requirement that we make timely disclosures of our hedging transactions, and the timing of their purchase and sale. As a result, a PSH Replicator has no ability to participate in these investments, which have historically generated large profi ts and important hedging benefi ts for PSH. Net of fees, long-term PSH investors have earned substantially superior returns than that of the theoretical PSH Replicator. For the above reasons, we believe that PSH is an attractive acquisition at its NAV, and an even better investment when it is trading at a discount to NAV. Pershing Square Holdings, Ltd. Annual Report 2020 11

ESG Earlier in my career, I thought business was about making money, and philanthropy was about doing good. To that end, the Pershing Square Foundation has given away hundreds of millions of dollars in an attempt to address U.S. and global problems in income inequality, education, healthcare, social and criminal justice, and other areas. As a result of a successful venture investment I made more than a decade ago, the Foundation and an affi liated donor advised fund now have more than a billion dollars of additional philanthropic resources. Despite these growing resources and the excellent works of many important organizations the Foundation has supported, over time it has become increasingly clear to us that philanthropy alone cannot save the world. Unfortunately, we cannot rely on governments either. With the benefi t of substantial philanthropic and investing experience, I have come to believe that capitalism is likely the most powerful potential force for good in addressing society’s long-term problems. A successful business operating ethically and sustainably can create many thousands of high-paying jobs, deliver high long-term returns for pensioners, long-term savers and other investors, and provide goods and services that materially increase its customers’ quality of life, broadly defi ned. That said, capitalism is far from perfect. Poorly designed compensation structures can lead management to pursue short-term profi ts at the expense of longterm sustainability, with negative externalities that are borne by others. On the other hand, with well-aligned incentive structures, supportive corporate values, and strong leadership, a successful business can generate both strong returns for its shareholders, and positively impact the society and environment in which it operates. Environmental, social and governance (“ESG”) issues have emerged into the Zeitgeist, with considerable study and discussion in board rooms, and among investors around the world.

Companies are evaluating how they interact with their stakeholders and what role they play in society. This self-examination will lead managements and boards to elevate the importance of ESG in how they govern and manage their companies, and implement their long-term strategies. We believe that good ESG practices are fundamentally aligned with running a successful business. As consumers and other corporate customers have become increasingly educated on matters of ESG, they have begun to avoid companies that contribute to climate change or do not treat their employees well, while rewarding companies with their business that have sustainable and responsible policies. Similarly, a growing number of investors have become increasingly concerned about the risks of companies which do not take ESG issues seriously. These investors avoid investing in companies which do not meet high ESG standards, reducing the valuations and investment returns of these businesses, negatively impacting their cost of capital. As capital is reallocated away from companies that rate poorly on ESG issues, boards’ and managements’ likely response will be to pivot their company’s business models to ones that are better for the environment and society. As a long-term, concentrated and engaged owner of publicly traded companies, we can help accelerate this process in a manner that is closely aligned with our strategy, which seeks to generate high long-term rates of returns for our shareholders. The emergence of ESG has provided an additional lens with which to evaluate how companies perform. We therefore thought it would be helpful to share how we think about ESG at Pershing Square, and its role in our investment process. ESG As Part of Our Investment Process We believe that good corporate governance, including the management of sustainability risks, creates long-term value for shareholders.

We consider ESG issues in our investment selection process, and as part of our ongoing stewardship once we have made an investment. Pershing Square Holdings, Ltd. Annual Report 2020 12

We do not view ESG as a way to market our funds to investors or to raise additional capital. As you likely are aware, we decided several years ago that we would no longer market our private funds to new investors, and PSH has returned substantial capital through large share buybacks and dividends. Our interest in ESG issues therefore entirely relates to their impact on our investments, and our long-term track record. The most important criterion in our investment selection process is our assessment of the long-term quality of a business, which is informed by, among other considerations, our assessment of the long-term impact of the company on all of its stakeholders and society at large. As a result, assessing the sustainability risks of a potential investment is a critical component of our investment selection process. Our focus on business quality has largely enabled us to avoid investments in businesses which make products or deliver services which we do not believe to be desirable, which treat their employees poorly, and/or which have long-term fi nancial and legal risks that are a consequence of their negative externalities. We believe that this approach has helped us to avoid losses and generate profi ts by identifying great businesses that have contributed to our long-term investment returns, and by avoiding others which would likely have generated losses in the portfolio. We have still made mistakes (you know them well) when in certain cases, we failed to fully consider certain ESG shortcomings in a company’s approach to business. The relevant ESG issues we consider as part of our due diligence process can vary depending on a given company and the sector in which it operates. We therefore do not utilize a uniform set of sustainability factors to evaluate companies that we are considering for potential investment.

In many instances, we have chosen to invest in companies which already have excellent ESG practices, including good governance, robust environmental stewardship programs, and diversity and inclusion initiatives. The majority of the companies in our portfolio today exhibited those characteristics at the time of our initial investment, and all, to varying degrees, do so today. A few examples from our portfolio: For the third year in a row, Agilent ranked in the top three of Barron’s Most Sustainable Companies in America as it continues to invest in infrastructure improvements to further reduce its environmental impact. Starbucks has made signifi cant investments in eco-friendly operations, regenerative agricultural practices, and an environmentally friendly menu, and has committed to cut its carbon, water, and waste footprints by half by 2030. Lowe’s is enhancing the sustainability of its products and promoting consumers’ ability to reduce their own environmental footprints through the sale of eco-conscious products. During the pandemic, Lowe’s invested more than $1 billion in employee support, community donations, and enhanced store safety. The Howard Hughes Corporation (HHC) has set 10-year goals for energy, water, waste, and carbon emissions, and established an ESG Committee that reports directly to the CEO to guide its sustainability program. HHC has regularly received awards for owning and managing communities and small cities that are considered among the best places to live in the United States. In some instances, we have used our infl uence and engagement with boards and management to improve ESG practices that pose sustainability risks to a business in order to catalyze long-term value creation. For example, Chipotle is a business for which sustainability has been a core value since its founding. For years, the company has earned accolades for sustainably sourcing its food, and for reducing its environmental impact over time.

Consumers understand that the company’s commitment is genuine and reward it with their business. When we fi rst invested in the Pershing Square Holdings, Ltd. Annual Report 2020 13

company, we recognized that the opportunity to work with the company to improve its governance could create signifi cant shareholder and stakeholder value, while allowing the company to continue to grow rapidly and stay true to its core values. Following our investment, the Board and management were refreshed, and have since done a remarkable job of turning around and accelerating the growth and profi tability of the company. As evidence of the company’s continued commitment to good ESG practices, in March 2021, Chipotle announced that 10% of its offi cers’ annual incentive bonus will be tied to the company’s progress toward achieving ESG objectives in three categories: Food & Animals, People, and the Environment. Each of our companies’ ESG initiatives generates a materially positive benefi t to society, and fosters customer and stakeholder loyalty, which contribute to the creation of shareholder value. The above examples represent a small sample of our portfolio companies’ approach to ESG issues. Each of our portfolio companies produces robust sustainability reports which track the initiatives that are most relevant to their businesses. You can learn more about these programs from their respective websites. Our ability to consider ESG issues in our investment selection is greatly enhanced by the long duration of our capital base. As a public company where the investment manager is the largest shareholder with a more than 25% stake, we do not need to think or act short-term. With a long-term mindset, we can be highly supportive of investments that reduce short-term earnings, but increase a company’s long-term net present value.12 Compared with the entire universe of global investment entities, PSH is extremely advantaged due to our long-term structure and large insider ownership.

We are grateful to you for supporting PSH’s long-term approach to investing, and we are very pleased to have delivered the third consecutive year of returns well in excess of our S&P 500 benchmark. We do not believe it is coincidental that our performance over the last three years coincides with the increased stability of our capital base that resulted from management’s larger investment in the company several years ago, our decision to no longer market the private funds for investment, and our refocusing the fi rm on our core investment strategy. 2020 will go down in history as one of the world’s most challenging years primarily due to the pandemic, but also because of the political divisiveness that plagues the U.S. and many countries around the world. During this diffi cult time for all, we are fortunate to have been able to generate strong returns for our shareholders, which include many healthcare, educational, and other institutions that have been at the frontlines dealing with this crisis, and to whom we are very grateful. Unlike other alternative investment fi rms, we are pleased that our publicly traded corporate form allows us to have a highly diversifi ed investor base which includes thousands of smaller investors who can invest in PSH at a very low entry price, the less than forty dollars it costs to purchase one share. We take our responsibility for managing our highly disparate investors’ savings extremely seriously, and remain focused on delivering outstanding long-term results for all of you. Lastly, I would like to thank the entire Pershing Square team. This was without question our most productive year. The entire organization transitioned seamlessly to working from home, and executed extraordinarily well under highly challenging circumstances. We are looking forward to the day when we will return to the offi ce, which is hopefully only a few more months from now. Please contact us if you have questions about any of the above. Sincerely, William A.

Ackman Pershing Square Holdings, Ltd. Annual Report 2020 14

2020 PORTFOLIO UPDATE Performance Attribution Below are the contributors and detractors to gross performance of the portfolio of the Company for 2020 and year-to-date 2021(13). January 1, 2020 – December 31, 2020 January 1, 2021 – March 23, 2021 Index CDS 36.6 % Interest Rate Swaptions 3.8 % Pershing Square Tontine Holdings, Ltd. 13.1 % Lowe's Companies Inc. 2.4 % Lowe's Companies Inc. 10.7 % The Howard Hughes Corporation 1.5 % Chipotle Mexican Grill, Inc. 10.2 % Hilton Worldwide Holdings Inc. 1.0 % Starbucks Corporation 7.6 % Restaurant Brands International Inc. 1.0 % Agilent Technologies Inc. 7.2 % Chipotle Mexican Grill, Inc. 0.7 % Restaurant Brands International Inc. 3.0 % Bond Interest Expense (0.3)% Hilton Worldwide Holdings Inc. 2.7 % Federal National Mortgage Association (0.7)% Share Buyback Accretion 2.4 % Federal Home Loan Mortgage Corporation (0.7)% Federal Home Loan Mortgage Corporation (0.9)% Pershing Square Tontine Holdings, Ltd. (1.8)% Bond Interest Expense (1.5)% All Other Positions and Other Income and Expense 0.4 % Federal National Mortgage Association (1.6)% Berkshire Hathaway Inc. (3.1)% All Other Positions and Other Income and Expense (0.6)% Net Contributors and Detractors 85.8 % Net Contributors and Detractors 7.3 % Contributors or detractors to performance of 50 basis points or more are listed above separately, while contributors or detractors to performance of less than 50 basis points are aggregated, except for share buyback accretion and bond interest expense. Past performance is not a guarantee of future results. All investments involve risk, including the loss of principal. Please see accompanying endnotes and important disclaimers on pages 110-112. Lowe’s (“LOW”) Lowe’s is a high-quality business with signifi cant long-term earnings growth potential.

We initiated our investment in the company in April 2018 largely because we believed that the hiring of a new high-caliber management team could dramatically improve the business and close the performance gap to its closest competitor, Home Depot. Marvin Ellison became CEO in July 2018, and immediately began working on a multi-year transformation plan to bolster Lowe’s retail fundamentals, reduce structural costs, expand distribution capabilities, and modernize systems and the company’s online capabilities. In 2020, Lowe’s experienced unprecedented demand driven by consumers nesting at home, higher home asset utilization and a reallocation of discretionary spend. Lowe’s earlier decision to modernize the company’s online off ering allowed it to meet consumers’ surging demand. Further, its commitment to improve the company’s retail fundamentals allowed Lowe’s to showcase its enhanced merchandising, greater in-stock-levels, and excellent customer service. In the fourth quarter, the company completed 95% of its store layout resets which include a more intuitive shopping experience complete with a more Pro-centric layout (by “Pro” we refer to the professional tradesmen that perform repair and maintenance, remodeling and construction services). The company is also rolling out a new Pro CRM tool, which should improve Lowe’s Pro market share. Pershing Square Holdings, Ltd. Annual Report 2020 15

Lowe’s experienced comparable sales growth of more than 26% in 2020, while generating signifi cant margin expansion and robust earnings growth. The company shared its success with its employees and the community by investing more than $1.2 billion in special associate support, community donations and enhanced store safety. Management remains focused on a myriad of operational initiatives designed to improve the customer shopping experience and the company’s long-term earnings power. In the near-to-medium-term, these initiatives include improving Lowe’s omnichannel capabilities including simplifying search and checkout features, launching three additional ecommerce fulfi llment centers, enabling faster mobile order fulfi llment, standing up dedicated store fulfi llment teams, rolling out touchless Buy-Online-Pick-Up-In-Store lockers to all U.S. stores by April 2021, and reimagining scheduling and modes of delivery for certain large-format order deliveries (notably, appliances). These initiatives are examples of Lowe’s “Perpetual Productivity Improvement” program which is designed to improve market share and profi t margins. Lowe’s is making important strategic investments to position the business to continue to thrive. The company’s long-term outlook implies signifi cant opportunity for continued earnings appreciation and margin expansion as it executes its multiyear business transformation. Chipotle (“CMG”) Chipotle’s superb 2020 performance amid a challenging backdrop was due to the successful business transformation led by CEO Brian Niccol and his team. Improved digital access, which has been a pillar of management’s transformation strategy and a growing sales driver in recent years, enabled the company to serve customers with digital pickup and delivery as the pandemic began. Only three months after the onset of COVID-19 in the U.S., Chipotle returned to growth, achieving samestore sales growth of 6% in Q4, or 20% over two years.

The pandemic accelerated a shift in the company’s digital sales mix from just under 20% of sales at the end of 2019 to 70% in April, before settling to about 50% in July, a level which has been maintained through the start of 2021. Management believes that the majority of these digital sales are incremental, noting that in the 60% of stores with dining rooms open, 80% to 85% of digital sales gains are being retained while 50% to 60% of in-store sales have been recovered. Management remains confi dent that the company will emerge even stronger from the COVID-19 pandemic as it continues to execute on a number of long-term strategic initiatives. Chipotle plans to open 200 new restaurants in 2021, a 24% increase from 2020 opening levels, with more than 70% of these new locations featuring a Chipotlane, the company’s high-return, digital drive-thru format. Chipotle has already launched two new menu innovations in 2021, including caulifl ower rice, which was introduced in January and has garnered very favorable early feedback, and the much-anticipated quesadilla, which was launched as a digital-only menu item on March 11th. Chipotle Rewards, a highly eff ective marketing tool for the company, continues to see enrollment growth with over 19.5 million members as of year-end, compared to 8.5 million members at the end of 2019. Chipotle is extremely well positioned to execute on the company’s long-term strategy, which should drive substantial shareholder value in the future. Agilent (“A”) Amid a challenging backdrop, Agilent’s highly resilient performance throughout 2020 demonstrated the durable and highquality nature of its business model. Despite the impact of the COVID crisis, the company generated positive revenue growth and improved profi tability, with 1% organic growth and 20 basis points of operating profi t margin expansion in fi scal year 2020. Pershing Square Holdings, Ltd. Annual Report 2020 16

The company was able to achieve these results without furloughing a single employee. The resulting organizational stability allowed the Agilent team to remain focused on customer-centric initiatives and new product innovation to drive market share gains. For example, the company launched several new instrument lines designed to improve throughput for high volume testing in the pharmaceutical end market. Likewise, in its CrossLab services segment, the company is capitalizing on the trend of labs increasingly outsourcing multiple services to a single vendor, and has recently won several large, lab-wide, enterprise service contracts. The pandemic provided the company with a timely opportunity to accelerate its digital transformation. Agilent quickly adopted online engagement channels and digital tools to remotely respond to customer service requests and sales inquiries in a timely and reliable manner. This online service approach yielded record high customer satisfaction scores. As the business emerges from the pandemic, we expect Agilent to remain committed to its digital transformation as it not only supports a higher standard of customer engagement, but also allows for more effi cient internal operations and cost savings. In December, Agilent held an Analyst Day to highlight the acceleration in the company’s long-term revenue growth outlook and margin expansion opportunity. Management signifi cantly raised its guidance from its Analyst Day, and the company is now targeting long-term organic growth of 5% to 7%, and margin expansion of up to 100 basis points per annum. Agilent’s strong business momentum was clearly refl ected in its most recent quarter, where the company delivered 11% organic growth and an impressive 260 basis points of margin expansion. We believe that Agilent will be a more profi table and competitive company post COVID-19.

Hilton (“HLT”) Hilton is a high-quality, asset light, high-margin business with signifi cant long-term growth potential, led by a superb management team. The hotel industry was one of the most negatively impacted as a result of the COVID-19 pandemic. As the pandemic set in, Hilton’s management team deftly navigated a challenging situation and took decisive actions to right size Hilton’s cost structure for the current economic environment, and fortify its balance sheet. As a result, Hilton managed through the pandemic and positioned the company to generate enhanced margins, improved cash fl ows and returns, once the business recovers to pre-COVID-19 demand levels. Hilton’s systemwide occupancy bottomed at 13% in April 2020, but rebounded to approximately 40% during Q3 and Q4 as COVID-19 became better understood and travel restrictions lifted. Positive demand momentum experienced in the summer and early fall were disrupted in November and December due to rising COVID-19 cases and tightening travel restrictions. Hilton management expects a more pronounced and sustained recovery to commence in the second half of 2021, particularly as the COVID-19 vaccine is rolled out more broadly, driven by increased leisure demand and a rebound in business travel. Management’s conviction is driven by a number of factors which include: (1) pent-up leisure travel demand, (2) large amounts of unspent consumer savings, (3) large corporations indicating a desire to resume business travel, (4) improving business transient booking trends, (5) proprietary survey work in which 80% of respondents express a desire to travel, and a substantially better second half of 2021 group booking calendar. Despite signifi cant headwinds, Hilton continued to execute on its long-term strategy, and opened 47,400 net new rooms in 2020 (+5%). Hilton’s pipeline expanded 3% year-over-year to 397,000 rooms, or 39% of the existing room footprint, 51% of which are currently under construction.

We believe Hilton will continue to grow its market share over time given independent hotels’ increased interest in seeking an affi liation with global brands, particularly in the wake of the pandemic. Pershing Square Holdings, Ltd. Annual Report 2020 17

Hilton is well positioned to thrive as the recovery sets in due to its best-in-class management team, portfolio of great brands, dominant market position, capital-light economic model, deep development pipeline and strong balance sheet. Hilton is in the early stages of a multi-year recovery, which we believe will deliver long-term earnings that are meaningfully greater than pre-2020 levels. Restaurant Brands International (“QSR”) QSR’s franchised business model is a high-quality, capital-light, growing annuity that generates high-margin brand royalty fees from three leading brands: Burger King, Tim Hortons and Popeyes. The company nimbly navigated diffi cult market conditions in 2020 by assisting franchisees, while maintaining its long-term growth potential. As the COVID-19 pandemic began, management undertook a series of steps to secure and strengthen the business. The company quickly bolstered safety procedures and shifted marketing spend to highlight the off -premise options available to customers, while supporting its franchisees with fee/cap ex deferrals and liquidity programs. Throughout the year, the company accelerated its digital investments by expanding its delivery footprint, modernizing its drive-thru experience, increasing mobile ordering adoption, and improving its loyalty programs. While the company’s sales were negatively impacted by the pandemic, comparable sales have already recovered or are well on their way to recovery. Burger King U.S. returned to growth in January; Tim Hortons improved to a high-single-digit decline in Canada during the fourth quarter, and Popeyes U.S. grew 16% in 2020. To accelerate the recovery at Tim Hortons in Canada, the company has committed additional funds to bolster its advertising, and support continued enhancements to its Tim’s Rewards program.

We continue to believe each of Restaurant Brands’ concepts will emerge stronger from this crisis as their business models are competitively advantaged in a socially distant and more budget-conscious consumption environment, and as the company continues to invest in drive-thru, delivery, and digital. We believe QSR’s long-term unit growth opportunity is still intact, and we expect unit growth to return to its mid-single-digit growth rate this year. As investors begin to see the results of these eff orts, and underlying sales trends at each of its brands continue to improve, QSR’s share price should more accurately refl ect our view of its business fundamentals. The Howard Hughes Corporation (“HHC”) In 2019, HHC’s Board of Directors announced a strategic transformation plan to streamline the company’s organizational structure, sell $2 billion of non-core assets, and accelerate growth in its core master planned community (“MPC”) business. In 2020, David O’Reilly, formerly HHC’s CFO and President, became the company’s new CEO, and Jay Cross, formerly President of Hudson Yards, became the new President. This transformation into a leaner and more focused organization allowed the company to successfully navigate the impact of COVID-19. When the pandemic began, it was clear that it would have a draconian eff ect on the company’s assets. Management acted quickly and decisively to stabilize the business by raising $600 million of equity in March 2020 to strengthen the company’s balance sheet. The Pershing Square funds invested $500 million in that off ering. Additionally, HHC’s transition to a decentralized operating model signifi cantly reduced overhead expenses and enabled each MPC to more nimbly react to challenging local market conditions. Pershing Square Holdings, Ltd. Annual Report 2020 18

Since the second quarter of 2020, the company has experienced a robust recovery across all of its assets, which we expect will continue into 2021. Despite the impact of the pandemic, new home sales across HHC’s MPCs grew an impressive 10% in 2020. Demand for residential land in HHC’s MPCs continues to accelerate, benefi ting from out-of-state migration from higher cost-of-living and higher tax states. New homebuyers are drawn to HHC’s walkable communities, expansive open spaces, and amenity-rich urban cores in Summerlin, Bridgeland and the Woodlands Hills, the three MPCs which own the substantial majority of HHC’s remaining unsold land. Within HHC’s portfolio of income-producing commercial properties, offi ce and multi-family assets have remained highly resilient. The company has collected 97% of offi ce and 98% of multi-family rents from the beginning of Q2 2020 to year-end. Retail and hospitality fundamentals are steadily improving with phased re-openings and a gradual rebound in foot traffi c. Highlighting management’s conviction in the recovery, in February 2021, the company announced the acceleration of plans for approximately two million square feet of commercial development across the company’s MPCs. In Ward Village, the company experienced strong condo sales activity with the help of an innovative digital sales platform which provides homebuyers with a completely online experience, including virtual 3D condo tours and live chat capabilities. The company’s latest luxury condo project, Victoria Place, is already 77% pre-sold after launching sales in December 2019. At the Seaport, which has begun to reopen after being impacted by New York City’s stay-at-home orders, the company has found creative ways to activate the property with innovative new off erings like “The Greens,” a rooftop dining venue.

We believe that the impact of the COVID-19 pandemic is largely transitory, and expect Howard Hughes’s uniquely well positioned MPCs and portfolio of high-quality operating assets to deliver substantial growth for years to come. Fannie Mae (“FNMA” or “Fannie”) and Freddie Mac (“FMCC or “Freddie”) (together “the GSEs”) Fannie and Freddie continue to move towards the ending of their conservatorships. While the progress made during the Trump administration fell short of its articulated goals, there were a number of positive developments in 2020. The Preferred Stock Purchase Agreement (“PSPA”) modifi cation announced in January 2021 suspended the net worth sweep, allowing the GSEs to increase their maximum capital retention from $45 billion to over $300 billion. The amended PSPA, however, did not provide recognition that Treasury’s Senior Preferred investment has been repaid and the balance due to Treasury continues to increase for every dollar of capital retained. We were not surprised that the Treasury’s Senior Preferred remains unresolved in light of existing shareholder litigation. In July, the U.S. Supreme Court agreed to hear appeals by both the plaintiff and the Federal Government from the Fifth Circuit Court of Appeals’ decision in the Collins case. The Fifth Circuit, sitting en banc, ruled in favor of the plaintiff shareholders. On appeal to the Supreme Court, the parties argued about the legality of FHFA’s structure, and the lawfulness of the net worth sweep, and the scope of various provisions under the HERA statute under which the Fannie and Freddie conservatorships were created. We expect a decision by the Court by June 2021, which if a ruling is issued in shareholders’ favor, would be a game-changing event.

Regardless of the decision by the Court, we continue to believe that our investment in the GSEs is a valuable perpetual option on their eventual exit from conservatorship due to their widely acknowledged irreplaceable role in the U.S. housing fi nance system. Pershing Square Holdings, Ltd. Annual Report 2020 19

Starbucks (“SBUX”) We exited our initial investment in Starbucks in January 2020, and opportunistically repurchased a stake in the company at a highly attractive valuation during the March market downturn. Management has handled the COVID-19 crisis incredibly well, which we believe will enable the company to emerge even stronger following the pandemic. At the company’s current valuation, about twice the price we paid one year ago, our expected returns from owning Starbucks are below our long-term targets. As a result, we recently sold our stake. Below we summarize our thoughts on the company. Despite the sale, we expect that Starbucks will continue to be a good, long-term investment. Starbucks was well-prepared for the arrival of COVID-19 in the U.S. given the company’s large presence in China. As a result, the company quickly shifted to a drive-thru and delivery-only model at the beginning of the pandemic. As management reopened locations and in-store ordering, Starbucks began to experience a robust sales recovery. Today, the company is already nearing a full sales recovery, and should be a major benefi ciary of a reopened global economy in 2021. By January 2021, same-store sales in the U.S. only declined by 2%. By the second quarter of 2021, Starbucks expects same-store sales in the U.S. to grow by 5% to 10% year over year, implying cumulative two-year comps of 2% to 7% with average-unit volumes above pre-COVID-19 levels. Starbucks is continuing to experience robust growth in China, following the demise of its closest competitor in the region, Luckin Coff ee, and plans to open 600 stores in China in 2021. We expect Starbucks to benefi t from a number of post-COVID-19 tailwinds including pent-up consumer demand for the “third place” experience as many consumers who prefer to enjoy their beverages in store with friends and colleagues have not been able to do so for the past year.

Starbucks has historically generated 50% of its sales from breakfast, a daypart geared towards work and school commuting, which should benefi t from a return of consumers to their pre-COVID-19 routines. In addition to managing the COVID-19 crisis, management continues to invest in important growth initiatives including digital, new store formats, and menu innovation. In December 2020, Starbucks’ management underscored their confi dence in the company’s future and increased its long-term outlook for revenue growth, margins, and earnings growth. Other Positions As discussed in detail in the 2020 Interim Financial Statements, we invested in index credit default swaps in February 2020 and unwound the positions in March. In the summer of 2020, we initiated a new portfolio investment by launching a SPAC, PSTH. On July 22, 2020, PSTH raised $4 billion in its IPO on the New York Stock Exchange. The SPAC sponsor for PSTH is 100% owned by the Pershing Square Funds. Other Exited Investments As previously disclosed in our Interim Financial Statements, we exited our investment in Berkshire Hathaway (“BRK.B”) in 2020. Pershing Square Holdings, Ltd. Annual Report 2020 20

PUBLIC ACTIVIST INVESTMENTS SINCE INCEPTION (14) Long Activist Positions 2004 2004 2004 2004 2004 2005 2005 ® 2006 2006 2007 2008 2008 2008 2009 Justice Holdings Ltd. 2010 2010 2010 2010 2010 2011 2011 2012 2013 2013 2013 2013 2014 2014 2015 2015 2015 2016 2017 2018 2018 2018 2018 2019 2020 2020 2020 Short Activist Positions* 2004 2005 2007 2007 2007 2012

• Short Activist Positions includes options, credit default swaps and other instruments that provide short economic exposure. The companies on this page reflect all of the portfolio companies, long and short, as of March 23, 2021, in respect of which (a) PSCM or any Pershing Square Fund, as applicable, has designated a representative to the board, filed Schedule 13D, Form 4 or a similar non-US filing or has made a Hart-Scott Rodino filing; or (b) PSCM has publicly recommended changes to the company’s strategy in an investment-specific white paper, letter or presentation. Past performance is not a guarantee of future results. All investments involve risk, including the loss of principal. Please see accompanying endnotes and disclaimers on pages 110-112. Pershing Square Holdings, Ltd. Annual Report 2020 21

Principal Risks and Uncertainties The Board has ultimate responsibility for the Company’s The Risk Committee’s assessment identifi ed 43 existing risks risk management. The Board believes that identifying the relevant to the Company’s business in 2020, including risks inherent risks related to the business and operations of the arising from the Company’s investment activities, structure Company and developing an eff ective strategy to manage and operations as well as risks relating to shareholder and mitigate these risks is crucial to the ongoing viability and engagement and regulatory compliance. The Risk Committee success of the Company. has considered the cause of each risk, the likelihood of a risk occurring, and the severity of the impact on the Company if In order to identify these risks, the Board reviews the the risk occurs, both before and after taking into account the management of investment risk and the operations of the controls in place to mitigate them. Based on this assessment, Investment Manager at each quarterly Board meeting. the Risk Committee has identifi ed the subset of risks set out In addition, the Board has established a Risk Committee, below as the principal risks faced by the Company. which has carried out a robust assessment of the existing and emerging risks facing the Company, including those The Risk Committee identifi ed the eff ect of the Covid-19 that could threaten its business model, future performance, pandemic on the Company and the Investment Manager, and solvency or liquidity. risks relating to remote operations, such as cybersecurity and service provider concerns, as 2020 emerging risks. The eff ect of these emerging risks is discussed as part of each applicable principal risk below. Risk Description Mitigating Factors Investment Risk The Company’s investments are exposed to the The Investment Manager is an experienced investor and makes investment risk of the loss of capital.

There is no assurance decisions in accordance with its investment principles as described in the that the Company’s portfolio investments will Company’s Investment Policy. increase in value and shareholders may lose all, or substantially all, of their investment in the The most important criterion in the Investment Manager’s investment Company. selection process is its view of the long-term quality of a business, which is informed by, among other things, the Investment Manager’s assessment Failure to appropriately integrate risks into of the long-term impact of the company on all of its stakeholders and investment decisions or to manage risks society at large, and how its management and board manage ESG risks. to which the Company’s investments are The Investment Manager assesses risks to the long-term success of the exposed, including ESG risks, may have a Company’s investments by performing extensive research prior to making material negative impact on the Company’s an investment decision and ongoing monitoring to deeply understand each performance. business and the industry in which it operates. As discussed in the Chairman’s Statement and the Investment Manager’s Report, the Investment Manager’s early implementation of a hedging program in response to the Covid-19 pandemic successfully mitigated the impact of Covid-19 on the Company’s investments. The Board receives quarterly updates on the performance of the Company’s portfolio positions. The interests of the Investment Manager are aligned with the Company’s shareholders as a result of the substantial investment made by Investment Manager’s personnel in the Company. Pershing Square Holdings, Ltd. Annual Report 2020 22

Risk Description Mitigating Factors Investment The Investment Manager has broad investment The Board receives a report from the Investment Manager at each Manager’s Authority authority in executing the Company’s strategy quarterly Board meeting, or as necessary, on developments and and may use whatever investment techniques it risks relating to portfolio positions, activist engagements, financial believes are suitable for the Company, including instruments used in the portfolio and the portfolio composition as a novel or untested approaches. whole. In addition, the Company’s strategy depends The Board receives a daily summary of media reports regarding the on the ability of the Investment Manager to activities of the Investment Manager and the Company’s underlying successfully identify attractive investment portfolio positions. opportunities. The interests of the Investment Manager are aligned with the Company’s shareholders as a result of the substantial investment made by Investment Manager’s personnel in the Company. Portfolio The Investment Manager may invest a The Investment Manager performs extensive research prior to making Concentration significant proportion of the Company’s capital new investments, along with ongoing monitoring of positions held in the in a limited number of investments, subject Company’s portfolio. The Investment Manager is mindful of sector and to the Company’s Investment Policy. Because industry exposures and other correlations between businesses in which the Company’s portfolio is highly concentrated the Company invests. and primarily invested in public equities (or derivatives referencing public equities), it is The Board reviews portfolio concentration and receives a detailed sensitive to fluctuations in equity prices and overview of the portfolio positions no less than quarterly, but more investment results over time may be volatile. frequently as necessary.

A concentrated portfolio also exacerbates the risk that a loss in any one position could have The Investment Policy prohibits investments by the Company in, or a material adverse impact on the Company’s giving exposure to, the securities of any one issuer representing more assets. than 25% of the Company’s gross assets (assets on the statement of fi nancial position prior to deduction of liabilities) measured at the time of making the investment. Activist Strategies The Investment Manager may pursue an The Investment Manager has significant experience conducting activist activist role with respect to an investment, campaigns. which may involve substantial use of time, resources and capital and litigation The Board reviews the Investment Manager’s activist engagements at by or opposition of the target company’s each Board meeting, or more frequently as necessary. management, board or shareholders. Portfolio Liquidity The Company may be restricted from trading in The Investment Manager actively monitors positions with trading Risk certain securities in its portfolio for which the restrictions to identify future selling opportunities. The Investment Investment Manager has board representation Manager may sell securities subject to restrictions through block sales, or for contractual, regulatory or other reasons. during open trading windows or pursuant to automatic trading plans. Stressful market conditions may prevent the The Company invests primarily in large-capitalization securities which Company from having suffi cient liquidity to are highly liquid under normal market conditions. The Investment meet its liabilities when due. Manager actively manages the Company’s cash and cash equivalents to ensure, as much as possible, that the Company will have suffi cient liquidity under both normal and stressful market conditions. Pershing Square Holdings, Ltd. Annual Report 2020 23

Risk Description Mitigating Factors NAV Discount The Public Shares of the Company have in the For a summary of actions the Company has taken to address the past, currently and may in the future trade at a discount, please see “Discount to NAV” in the Report of the Directors. significant discount to NAV. The Board monitors the trading activity of the shares on a regular basis and reviews the discount to NAV at its quarterly meetings. The Company has also retained advisers to engage with existing and potential shareholders and to consider other potential measures to reduce the discount of share price to NAV. Regulatory Risk Regulatory risk can negatively impact the Prior to initiating an investment, the Investment Manager considers the Company in a number of ways. For example, possible legal and regulatory issues that could impact its ability to achieve changes in laws or regulations could have a its objective with respect to such position. The Investment Manager’s detrimental impact on the Company’s ability to legal and compliance team monitors regulatory changes on an ongoing freely acquire and dispose of certain securities basis and informs the Board of emerging risks. or deploy certain investment techniques. In addition, failure to comply with laws or The Board and the Investment Manager maintain policies and procedures regulations can subject the Company to designed to prevent violations of applicable laws and regulations. The reputational damage and prosecutions. Board is provided with the Investment Manager’s compliance manual and any updates thereto. The Board is apprised of any regulatory inquiries or material regulatory developments and receives quarterly updates from the Investment Manager’s Chief Legal and Compliance Offi cer.

Key Man The Investment Manager is dependent on The investment team and other senior personnel of the Investment William Ackman to provide its investment Manager are experienced, longstanding employees. advisory services to the Company as he has ultimate discretion with respect to all The Investment Manager maintains a contingency plan to facilitate an investment decisions. orderly transition in the management of the Company’s aff airs upon the occurrence of a key man event. Until October 2021, if a key man event occurs, provisions in place in the Company’s Articles of Incorporation will trigger a continuation vote. Tax Risk The Company may conduct its aff airs in a way The Company aims to avoid adverse tax consequences and engages that places its tax status at risk. Changes to experienced tax advisors as appropriate. the tax laws of, or practice in a tax jurisdiction aff ecting the Company could adversely aff ect the value of the Company’s investments and decrease the post-tax returns to shareholders. Investments in the Company may not be tax effi cient for certain shareholders. Although the investment decisions of the Investment Manager are based primarily on economic considerations, the Investment Manager may make an investment decision which is tax effi cient for some shareholders but which may result in adverse tax or economic consequences for other shareholders. Pershing Square Holdings, Ltd. Annual Report 2020 24

Risk Description Mitigating Factors Market Risk Adverse changes aff ecting the global fi nancial The Investment Manager monitors emerging risks to global markets markets and economy as a whole may have a that may impact the Company’s portfolio. In order to mitigate marketmaterial negative impact on the performance related downside risk, the Company may acquire put options, short of the Company’s investments or may cause the market indices or baskets of securities and/or purchase index or singleprices of financial and derivative instruments in name credit default swaps or engage in other hedging strategies, but the which the Company invests to be highly volatile. Company is not committed to maintaining market hedges at any time. The Investment Manager identifi ed Covid-19 as an emerging market risk in early 2020 and entered into a series of large hedging transactions in the credit default swap market that off set the stock price declines of the Company’s investment holdings due to Covid-19. Business Continuity An incident signifi cantly disrupts the business The Investment Manager maintains and regularly tests a business operations of the Investment Manager or continuity plan that emphasizes incident preparedness and anticipates another key service provider to the Company. responses to a variety of potential disruptions, including natural disasters, pandemics and equipment failures. The Investment Manager has invested in systems that allow its personnel to work remotely for an indefi nite period of time. The Investment Manager reviews the business continuity planning of service providers whose disruption in service would impact the Investment Manager’s operations and has confi rmed that the Company’s prime brokers, the Administrator, and trading systems have welldocumented plans that are tested on a regular basis.

The Investment Manager has identifi ed alternate means of conducting critical functions provided by service providers and can perform many critical functions internally. The Board receives quarterly operational updates from the Investment Manager regarding upgrades to systems and any operational issues. The Investment Manager and other service providers activated business continuity plans and transitioned to remote operations in response to the threat of the Covid-19 pandemic. The Company did not experience any service disruptions as a result of the transition and all key service providers continue to perform well. Pershing Square Holdings, Ltd. Annual Report 2020 25

Risk Description Mitigating Factors Cybersecurity An information security breach results in The Company’s sensitive information is maintained by the Investment the disclosure of the Company’s sensitive Manager, which has implemented robust information security controls information. and monitoring of cybersecurity threats. The Investment Manager reviews the information security controls of service providers with access to sensitive Company information to ensure appropriate protections are in place. The Cybersecurity Committee of the Investment Manager meets quarterly or more frequently as needed to evaluate cybersecurity risks and to review the eff ectiveness of Investment Manager’s cybersecurity controls. The Board receives quarterly updates on cybersecurity and an annual overview of the Investment Manager’s cybersecurity program. The Investment Manager has adopted additional precautions to mitigate the additional cybersecurity risks presented by its transition to remote operations, including additional monitoring of network traffi c and user activity as well as employee training to prevent successful phishing/ ransomware attacks. Service Providers Key service providers perform inadequately or The Investment Manager has adopted a vendor supervision policy expose Company to risk. and performs due diligence on service providers in accordance with its assessment of their risk to the Company. The Investment Manager monitors key service providers through frequent contact and reports to the Board as needed. The Management Engagement Committee reviews key service providers at least annually. The Company has not experienced any disruption in services from its service providers as a result of the Covid-19 pandemic and all service providers continue to meet expectations.

Insurance The Company is liable for claims due to The Company and the Investment Manager maintain insurance policies the failure of an insurance underwriter or with reputable insurance underwriters. inadequate insurance coverage. Insurance arrangements and limits are reviewed annually by the Board to ensure they remain appropriate. Pershing Square Holdings, Ltd. Annual Report 2020 26

Key Themes

• Asymmetric Hedging — the trade's definitive accounting plus the disclosure that it was already repeating itself in rates
• Volatility vs. Permanent Loss of Capital — the letter's core claim: panic prices are opportunity, and only structure determines who gets to buy
• Capital Allocation Discipline — hedge proceeds as the highest-certainty allocation the firm has ever made
• Concentration as Risk Mitigation — the PSH Replicator thought experiment: the same ten names, held passively, returned 15.4% instead of 70.2%

Context & Significance

This is Act IV, the renaissance, at full stride — and the letter's most striking quality is its insistence on deflating its own triumph. A lesser document would have let 70.2% stand as vindication of stockpicking. This one does the opposite: it attributes 45% of net investment gains to the hedge and 25% to the reinvestment, concluding that the portfolio's composition and prospects "remain about the same as one year ago." That is the post-Valeant Ackman speaking — allergic to unearned credit, determined that shareholders understand the mechanism rather than applaud the number. The mechanism, of course, is the valley's curriculum applied: risk defined as permanent loss, not drawdown, is what made holding through March possible; permanent capital is what made buying possible; and the CDS instrument — the same tool that carried the MBIA short — is what made the payoff asymmetric.

The structural essays carry equal weight. The conglomerate section answers Warren Buffett's annual-letter critique of conglomerates by arguing PSH is the better machine: no control premiums, no corporate-level taxes, no switching costs, low-cost bond financing — with influence "similar to that of a control shareholder" achieved through reputation rather than purchase. The PSH Replicator section is a small masterpiece of defensive analysis, conceding the copycat premise and then refuting it with arithmetic: a theoretical replicator holding the disclosed portfolio all year earned 15.4%, because hedges and their redeployment carry no disclosure requirement. Both essays are really about one question — what exactly is PSH? — and the answer consolidates the primer begun in the 2018 letter.

The honest hindsight is twofold. First, the letter's humility about 2020's drivers was precisely correct: the following year tested the portfolio without a hedge windfall, and the swaption program disclosed here became 2022's rescue. Second, one passage reads differently now — the confident expectation that PSTH "will create substantial shareholder value from its initial business combination." The SPAC was the renaissance's one overreach, an attempt to extend the permanent-capital idea into acquisition currency, and its unwinding is the subject of the 2021 report. Even at the summit, the document contains the seed of the next lesson. But the balance sheet of the moment is unambiguous: the firm that nearly broke in 2016 had just produced, and explained, one of the great single years in hedge fund history.