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Please see the back page for important disclosures November 12, 2010 The Opportunity for Alternative Investments and Credit in SRI

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Page 1: Steve Friedman

Please see the back page for important disclosures

November 12, 2010

The Opportunity for Alternative Investments and Credit in SRI

Page 2: Steve Friedman

Eos Credit Funds 2

Table of Contents

I. Summary

II. Eos Overview

III. Current SRI Investment Universe

IV. Details of ECO SRI Class

V. Why Long / Short Credit?

VI. 2010 / 2011 Macroeconomic Overview

VII. Strategy

VIII. Performance

Page 3: Steve Friedman

I. Summary

Page 4: Steve Friedman

Eos Credit Funds 4

Summary

Why Credit and Hedge Funds 

in SRI?

Risk and Liquidity Diversification

Hedging Opportunity

BalancedPortfolio

Multi‐Strategy Approach

Active Investment Management

Absolute Return / Low Market Correlation

Page 5: Steve Friedman

II. Eos Overview

Page 6: Steve Friedman

Eos Credit Funds 6

Eos Firm Overview

• Eos is a $1.8 billion asset management firm with substantial infrastructure to supportbusiness operations

• Diversified asset management company with strong track record of investing acrossvarious asset classes throughout the investment cycle

• Private equity approach to both public and private market investments

• Formed in 1994 by Steven M. Friedman and Brian D. Young, formerly General Partners ofOdyssey Partners

• Strong principal vs. agent culture: approximately 55% of Eos Partners, L.P.’s capital isrepresented by principals and employees

• Disciplined group of 30 professionals with an expertise in fixed income securities, bankloans, distressed debt, restructurings, private equity and long / short equity markets

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Eos Credit Funds 7

Eos Credit Funds Summary

• Eos Credit offers investors a multi‐strategy approach to investing in the credit markets

• Eos Credit has achieved attractive risk adjusted absolute returns throughout the credit cycle over the last 8 years by combining a strong culture of bottoms‐up analysis with intense focus on global macroeconomic trends

• Principals’ extensive experience / track record as investors across credit cycles, geographies and asset classes is, in our opinion, a key competitive advantage to achieving superior risk adjusted returns (over 100 years of investment experience)

• Eos has substantial corporate finance expertise to take advantage of event driven opportunities

• Investment team’s flexible investment style within the credit universe allows us to adapt to the constantly changing investment environment

• Culture of risk management at both the individual investment and portfolio level, utilizing both quantitative and qualitative risk management techniques

• We believe it is the combination of experience, bottoms‐up diligence, macroeconomic focus,flexible investment style and culture of risk management that allows Eos Credit to maximizerisk adjusted relative returns throughout any economic / credit cycle

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Eos Credit Funds 8

Eos$1.8 billion Total Capital Firm‐Wide1

Credit Funds2$712 million Total Capital

Eos Credit Opportunities (ECO)4$281 million Capital A Class$240 million Capital R Classes

ECO SRI(Separate Share Class within ECO)4

$37 million Total Capital

Eos Senior Loans (ESL)$87 million Total Capital

Public Equities$195 million Total Capital

Eos Mortar Rock (EMR)$145 million Total Capital

Eos Special Situations Equity (ESSE)$50 million Eos Partners, L.P.

(Internal Fund)

Private Equity$925 million Total Capital

Eos Capital Partners III (ECP III, 2004)3$325 million Total Capital

Eos Capital Partners IV (ECP IV, 2007)3$600 million Total Capital

Eos Partners, L.P. 1$380 million Capital

Note: Assets under management are approximate and as of October 31, 2010.(1) A substantial portion of Eos Partner’s capital is invested and included in the below funds.  (2) Includes Eos Credit Recovery $67 million total capital.  ECR is closed and is currently being wound‐down.  (3) Committed but not yet fully funded.(4) $558 million in ECO Master with $281 million in ECO A class, $37 million in ECO SRI class and $240 million in ECO R classes. Investors in the existing slow pay redemption classes, or “R” classes, have realized a minimum of 80% of the original NAV of the R class that they are in. 

Eos Firm Overview

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Eos Credit Funds 9

Eos Principles of Investing

• Principal Culture – Approximately 55% of Eos Partners, L.P.’s capital is represented by principals and employees

• Objective is for top tier performance while focused on preservation of capital, no use of leverage and strategic use of cash

• Research‐driven, bottoms‐up diligence across all asset classes, including private equity, credit and public equity

• Macroeconomic overlay with focus on trends and themes in global economy and industries

Page 10: Steve Friedman

Eos Credit Funds 10

Eos Credit Funds 

• We offer separate investor share classes and managed account opportunities for the following credit funds • Returns generated without leverage

Note: Assets under management are approximate and as of October 31, 2010 and performance as of September 30, 2010. (1) $558 million in ECO Master with $281 million in ECO A class, $37 million in ECO SRI class and $240 million in ECO R classes. Investors in the existing slow pay redemption classes, or “R” classes, have realized a minimum of 80% of the original NAV of the R class that they are in. (2)  ECO’s returns until Oct. ’04 (included) represent Eos Partners’ Total Return fixed income portfolio (hereafter: TRFIP), a portfolio managed by the principals of ECO’s investment  manager using the same investment strategy as ECO.  Returns are net of annual management fees of 1.5% and incentive fees applicable to an investment in ECO. Returns after Nov. ’04 (included) are actual ECO returns, initial Offshore Class A.  Cumulative monthly returns are unaudited time‐weighted returns from May 2002 through October 2004 for Eos Partners’ TRFIP. Throughout this document the blended returns of both the Eos Partners’ TRFIP and ECO are used when describing historical performance.  Many factors may cause ECO’s results to differ materially from the results of the TRFIP including the facts that no leverage was employed in the TRFIP; the data is based upon varying amounts of average capital deployed from month to month and monthly performance data reflects return on average net invested capital (which Eos Partners could increase or decrease daily); and the data presented reflects Eos Partners’ judgment as to the allocation of currency hedges and various expenses between the TRFIP and the Eos Partners Short Term Portfolio. Past performance of Eos’ Total Return fixed income portfolio is not an indication of future results for Eos Credit Opportunities. (3)  Returns are net of annual management fees (ECO 1.5% / ESL: 1.0%) and incentive fees applicable to an investment in ECO / ESL. Past performance of ECO / ESL is not an indication of future results.

Eos Credit OpportunitiesEos Credit Opportunities ‐ SRI (Socially Responsible Investing) 

ClassEos Senior Loans

Abbreviation ECO ECO SRI ESL

AUM $281mm(1) $37mm $87mm

Inception May 2002 November 2009 May 2008

Cumulative Return Since Inception

172.9%(2)(3) 13.8%(3) 24.4%(3)

Annualized Return Since Inception

12.6%(2)(3) 15.2%(3) 9.4%(3)

Strategy Invests in long / short across the credit spectrum

Invests in long / short across the credit spectrum with SRI screen

Long‐only subset of the senior loan strategy within ECO. 

Page 11: Steve Friedman

Eos Credit Funds 11

‐20.0%

0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

120.0%

140.0%

160.0%

180.0%

2002 2003 2004 2005 2006 2007 2008 2009 YTD 9/30/10

Cumulative Re

turn

ECO

Dow Jones Credit Suisse Hedge FundIndex

Barclays High Yield

10yr US Treasury

S&P 500

S&P LCD (Loan Index)

Dow Jones Credit Suisse EventDriven Distressed Hedge Fund Index

Barclay Event Driven Index

ECO Historical Performance

ECO has outperformed numerous benchmarks over the long‐term since its inception

(1) Performance shown for onshore vehicle and for November 1, 2004 investor after high water mark. Returns until Oct. ’04 (included) represent Eos Partners’ Total Return fixed income portfolio, a portfolio managed by the principals of ECO’s investment manager using the same investment strategy as ECO.*Returns are net of annual management fees (ECO 1.5%) and incentive fees applicable to an investment in ECO.  Past performance represents the reinvestment of all dividends, income and profits.  Past performance of ECO is not an indication of future results.Source: Eos, Dow Jones Credit Suisse, BarclaysDow Jones Credit Suisse Hedge Fund Indices are compiled by Credit Suisse Hedge Index LLC and CME Group Index Services LLC.   They are asset‐weighted hedge fund indices and include only funds, as opposed to separate accounts. The Indices use the Credit Suisse Hedge Fund Database, which tracks approximately 8000 funds, and consists only of funds with a minimum of US$50 million under management, a 12‐month track record, and audited financial statements. It is calculated and rebalanced on a monthly basis, and shown net of all performance fees and expenses.  The Barclays High Yield Bond Index is an index that measures that performance of a broad universe of high yield bonds.  The index includes all fixed‐income securities having a maximum quality rating of Ba1 (including defaulted issues), a minimum amount outstanding of $100mm, and at least one year to maturity.  It is not possible to invest directly in the Barclays High Yield Bond Index.  The Barclays High Yield Bond Index is not subject to the fees and expenses applicable to the Fund.  It also should not be considered a comparable investment program to the Fund.  It is being presented for comparison purposes to show how the Fund's performance compares with the performance of a broad universe of high yield bonds. The S&P LCD index is a derivative index which references the first lien debt for 100 of the largest leveraged loan issuers. It is being presented for comparison purposes to show how the Fund's performance compares with the performance of a broad universe of first lien debt. The S&P 500 tracks the performance of the equity securities of a representative sample of 500 U.S. based large‐cap companies.  The S&P 500 is an unmanaged, market‐value weighted index with each stock's weight in the index proportionate to its market value.  The Barclay Event Driven Index is a measure of the average return of funds with a ‘special situations’ strategy (excludes Funds of Funds) in the Barclay database. The index is simply the arithmetic average of the net returns of all the funds that have reported that month.  There are significant differences between the Funds’ investments and the indices.  The Funds may use leverage and have a greater degree of risk and volatility as well as less liquidity than securities that comprise the indices.  Moreover, the indices do not reflect the reinvestment of dividends or income and, unlike the Funds, are not subject to fees or expenses.  It should not be assumed that the Fund will invest in any specific securities that comprise any index, nor should it be understood to mean that there is a correlation between the Fund’s returns and the performance of any index presented.

(1)

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III. Current SRI Investment Universe

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Eos Credit Funds 13

SRI Market Overview

• The size of the SRI market can be difficult to quantify, but we look to the United Nation’s Principles for Responsible Investment (PRI) as a proxy

• The PRI has now been signed by 812 signatories globally, and the total value of assets under signatories’ management now stands at $22 trillion 

• Internally active managed assets subject to environmental, social and governance factors via PRI signatories total approximately $6.8 trillion

Sources: The Principles for Responsible Investment 2010 Report on Progress and www.unpri.org.

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Eos Credit Funds 14

SRI Data Points

According to PRI’s 2010 Report on Progress, the asset classes in which the lowest percentage of signatories have integrated ESG issues are fixed income and hedge funds

88%

83%

81%

73%

72%

70%

52%

65%

38%30%

39%

44%

58%

61%

64%

56%

60%

72%

20% 40% 60% 80% 100%

Listed equity (developed markets)

Infrastructure

Listed equity (emerging markets)

Listed real estate or property

Non‐listed real estate or property

Private equity

Fixed income ‐ corporate issuers

Fixed income ‐ sovereign

Hedge funds

Internal Integration External Integration

Sources: The Principles for Responsible Investment 2010 Report on Progress.

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Eos Credit Funds 15

2%

34%

19%

6%8%

9%

1% 2%1%

13%

0%

5%

10%

15%

20%

25%

30%

35%

40%

Hedge funds Commodities Infrastructure Listed realestate orproperty

Non‐listed realestate orproperty

Listed equity(emergingmarkets)

Private equity Fixed income ‐corporateissuers

Fixed income ‐sovereign

Listed equity(developedmarkets)

SRI Data Points (Cont’d)

Hedge Funds are currently only a very small percentage of the SRI market, as measured by the PRI signatory holdings

Sources: The Principles for Responsible Investment 2010 Report on Progress.

Average percentage of PRI signatory holdings by asset class

Page 16: Steve Friedman

IV. Details of ECO SRI Class

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Eos Credit Funds 17

ECO SRI (Socially Responsible Investing) Class Overview

• ECO SRI is a subset and separate share class within ECO launched on November 1, 2009

• Socially responsible investing describes an investment strategy which seeks to maximize both financial return and social good in terms of environment, social justice, and corporate governance

• Belair is our screening partner for our ECO SRI class

• Belair is a collaboration between Folksam/KPA, Storebrand and Harcourt

• These three parties developed detailed and comprehensive criteria for socially responsible investing

• The Belair team screens all ECO investments and only compliant investments are purchased for the ECO SRI fund

• Folksam/KPA, Storebrand and Harcourt each have extensive expertise and experience in the field of sustainable investing

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Eos Credit Funds 18

ECO SRI Class Screening Process

• Belair conducts a robust and thorough SRI screening process which consists of the following multiple approaches:

8Negative Screening: Avoid investments in companies engaged in non approved sectors or business activities

8Engagement: Engage with companies to improve their SRI compliance

8Positive Screening: Invest with companies with positive SRI attribute

• Given the characteristics of credit, negative screening is the prominent method that we use.  Nevertheless, as the market matures, we expect to expand into positive screening further. 

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Eos Credit Funds 19

ECO SRI Class Screening Criteria

• The investments in this class adhere to the following criteria:

8Entities that respect international conventions in the areas of Human Rights, Corruption and Environment

8Entities that do not produce Tobacco, Alcohol, Weapons or that do not have material revenues from Gambling

8Commodity instruments sourced from non‐renewable energy sources are not traded

8Instruments that originate from countries that are not subject to sanctions by the UN Security Council

• The SRI policy does not differentiate between long or short positions or between ‘direct’ (e.g. bonds) or ‘indirect’ (e.g. derivatives) exposures

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Eos Credit Funds 20

ECO SRI Class Screening Partner (Cont’d)

• Folksam is a leading Swedish insurance group. KPA Pension, part of Folksam group, offers pension solutions to the public sector.

• Year‐end 2009, Folksam Group had assets under management in excess of USD 35 billion. 

• Folksam and KPA Pension are leading SRI Investors. KPA have had a strict SRI Policy which has been applied on all investments, both internally and externally managed, since 1998. 

• As a co‐founding member of Principles for Responsible Investment (“PRI”), Folksam is actively engaged in the global SRI industry.

• The Storebrand Group is a leading institution in the Nordic market for long‐term savings and insurance.

• As of 2009, the Storebrand Group has USD 54 billion in assets under management.

• Storebrand adopted an SRI Policy in 1995 and has developed a complete in‐house SRI research department which governs all investments done throughout the Storebrand group. 

• As a co‐founding member of UNEP FI and a signatory of PRI; Storebrand is actively engaged in the global SRI industry.

• Harcourt is one of the globally leading providers of alternative investment solutions for institutional investors.

• Harcourt manages in excess of USD 4.5 billion and employs a staff of over 70 professionals. 

• Harcourt has a long tradition of innovative solutions for professional investors why it is a natural evolution to also unlock the global hedge fund space for professional SRI investors. 

• As the first hedge fund manager to sign PRI, Harcourt is influencing other hedge funds to embrace SRI.

Belair is a collaborative partnership between the following three parties:

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V. Why Long / Short Credit?

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Eos Credit Funds 22

Why Credit As Part Of An SRI Portfolio?

(1)  Non‐sovereign debt.

Asset class diversity is key to a balanced portfolio given differing assets’ characteristics

Risk

Stage

Market /Issue Size

Liquidity

Low High

Early Late

Small Large

Liquid Less Liquid

Public Debt1 Public Equity Venture Capital

Venture Capital Public Equity Public Debt1 / Equity

Venture Capital Public Debt1 Public Equity

Public Equity Public Debt1 Venture Capital

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Eos Credit Funds 23

Why Long / Short Credit?  Fundamentals Remain Attractive

• Current spreads imply higher default rates that are likely to be realized

• As corporate profitability / cash flow generation stabilizes, many high yield / levered loan issuers should be able to support valuations in excess to those implied by their current debt trading levels

• Therefore high yield / levered loans should still provide attractive return opportunities on a fundamental basis

• In a low growth environment, credit may outperform equities

• Low growth environment likely to provide many liquid restructurings and event driven opportunities

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Eos Credit Funds 24

Why Long / Short Credit? Spreads Remain Elevated

Source: S&P LCD & JPMorgan Notes: HY spreads prior to 1999 from S&P, after 1999 from JPMorgan

Credit spreads remain elevated compared to spreads in a normal growth environment, and if the economy maintains positive GDP growth, spreads should tighten

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

Dec 89 Jan 92 Feb 94 Mar 96 Apr 98 May 00 Jun 02 Jul 04 Aug 06 Sep 08 Sep 10‐8%

‐6%

‐4%

‐2%

0%

2%

4%

6%

8%

10%HY Spread GDP %QoQ2002: Corporate frauds

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Eos Credit Funds 25

Why Long / Short Credit? Technicals Remain Supportive

• Low default activity – Defaults continued to decrease in October with the high‐yield par‐weighted default rate declining to 2.4% from 2.5% and the loan par‐weighted default rate dropping to 3.3% from 3.9%.

• Positive mutual fund flows – October was another steady month of positive inflows for leveraged credit.  High‐yield funds saw an inflow of $1.2 billion bringing YTD volume to $10.6 billion.  Bank loan mutual funds also saw solid inflows of $975 million bringing YTD volume to $7.7 billion. 

• Healthy capital markets  – High‐yield market conditions remain strong, pricing $34 billion of bonds in October.  This is the 5th time this year where monthly volume has topped $30 billion, a feat never before reached prior to this year.  YTD new‐issue volume stands at $245 billion, which is $65 billion more than last year’s full‐year record.  Leveraged loan new‐issue volume also remains healthy with $16 billion of volume.  YTD loan new‐issue volume stands at $115 billion, which is 3x last year’s $38 billion of full year volume.

Source of data: JPMorgan, LCD, AMG Data Services 

Page 26: Steve Friedman

VI. 2010 / 2011 Macroeconomic Overview

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Eos Credit Funds 27

• Lower GDP growth than past 10 years

• Persistent housing overhang

• Higher unemployment

• Higher savings rates

• Higher government deficits / fiscal stimulus reversal

Below Trend Growth Macro Environment in US

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Eos Credit Funds 28

30

35

40

45

50

55

60

65

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

0 = Weak   100 = Strong

+ 1 Standard Deviation

‐ 1 Standard Deviation

Macroeconomic Overview (Cont’d)

Source: ISI

Recent Findings: After a strong move off the bottom in ISI’s Company Surveys(1) from March 2009 through March 2010, thesurveys remain in a soft patch. A little better retail activity in late October boosted the Company Surveys slightly.Nonetheless, the overall tone from participants has not changed much in recent weeks despite the rise in the equitymarket. October sales for retailers were slower than last month. The auto dealers survey is softer. And housing soundsweaker. On the bright side, capital goods companies report better orders domestically and internationally – continuing asolid trend in demand. Staffing firms also report further strength in temp employment and some pickup in permanentstaffing at the end of October. (ISI Group commentary)

Note: As of October 31, 2010. (1) Economists at the ISI group conduct ‘Company Surveys’ that indicate the strength / weakness of a particular sector. The industries they survey include: Broadline & Specialty Retailers, Auto Dealers, Homebuilders, Shopping Guide Companies, Credit Card Companies, Banks, Airlines, Technology Companies, Capital Goods Companies and Manufacturing Companies.  The chart is based on information for all of these industries combined. 

ISI Company Surveys(1)

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Eos Credit Funds 29

Below Trend Growth Macro Environment (Cont’d)

Source: Goldman Sachs Global ECS Research

Fiscal Policy Turns Restrictive

3%

4%

5%

6%

7%

8%

9%

10%

11%

1972 1977 1982 1987 1992 1997 2002 2007

Percentage of All Residential Mortgages Past Dueseasonally adjusted

Last Point 2Q 2010: 9.85%

Source: The Mortgage Bankers Association and A. Gary Shilling

65%

70%

75%

80%

85%

90%

Jan-67 Jan-75 Jan-83 Jan-91 Jan-99 Jan-07

Last Point Sept. 2010: 74.7%

Source: The Federal Reserve and A. Gary Shilling

Capacity Utilizationseasonally adjusted

-200

-150

-100

-50

0

50

100

150

1947-I 1957-I 1967-I 1977-I 1987-I 1997-I 2007-I

Last Point 2Q 2010: 68.8

Source: The Bureau of Economic Analysis and A. Gary Shilling

Real Change in Private Inventoriesbil. 2005$, seasonally adjusted annual rate

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Eos Credit Funds 30

Below Trend Growth Macro Environment (Cont’d)

Source: The Levy Forecasting Center, LLC

Initial Claims for UnemploymentInitial Jobless Claims, in Thousands, Seasonally Adjusted, 4-wk Moving Ave

250

300

350

400

450

500

550

600

650

700

00 01 02 03 04 05 06 07 08 09 10

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Eos Credit Funds 31

Impact of “QE2”

• Timing / size unclear

• Transmission Mechanism is not well tested

q Lower mortgage rates

q Lower corporate yields

q Higher stock prices

q Higher house prices

q Lower dollar

q Higher consumers and business confidence

• May be priced into markets

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Eos Credit Funds 32

Investing Implications of Current Macro Environment

• Companies that do not require significant economic growth on a sustainedbasis to support their current capital structures

• Companies that do not rely on robust consumer discretionary spending

• Companies which will benefit / not be hindered by government intervention

• Companies that are not overly reliant on the capital markets to fund futurecapital projects

Following are key characteristics of companies that we look for in this belowtrend growth macroeconomic environment:

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Eos Credit Funds 33

‐4

‐2

0

2

4

6

8

10

12

14

1947 1949 1951 1953 1955 1957 1959 1961 1963‐4

‐2

0

2

4

6

8

10

1964 1966 1968 1970 1972 1974 1976 1978‐4

‐2

0

2

4

6

8

10

1979 1982 1985 1988 1991 1994 1997 2000 2003 2006 2009

Recession Watch 

Source: ISI.

1949 19561953 19601957 1970 19811973 1979 20011990 2008

When GDP drops below 2% historically, it always has continued to drop, eventually reaching 0% or lower.

U.S. Real GDP1947 – 1963

Y/Y %

U.S. Real GDP1964 – 1978

Y/Y %

U.S. Real GDP1979 – 2010

Y/Y %

Page 34: Steve Friedman

VII. Strategy

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Eos Credit Funds 35

= High Emphasis = No Emphasis

Eos Strategy Emphasis Over Time

2002 2003 2004 2005 2006 2007 2008 2009 2010

Market CycleDefensive Going to Aggressive

Aggressive Aggressive Aggressive Neutral Defensive Defensive AggressiveAggressive Going to Neutral

Geographic Focus US US US Going to Europe Europe Europe Europe Europe 

Going to US US US and UK

Senior Secured

HY / Unsecured and 2nd Liens

Distressed and Special Situations

Investment Grade

Convertible and Preferreds

Shorts / Hedges

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Eos Credit Funds 36

ECO Long and Short Exposure Represents Opportunistic Approach

‐80%

‐60%

‐40%

‐20%

0%

20%

40%

60%

80%

100%

120%

140%

Jan 06

Mar 06

May 06

Jul 06

Sep 06

Nov 06

Jan 07

Mar 07

May 07

Jul 07

Sep 07

Nov 07

Jan 08

Mar 08

May 08

Jul 08

Sep 08

Nov 08

Jan 09

Mar 09

May 09

Jul 09

Sep 09

Nov 09

Jan 10

Mar 10

May 10

Jul 10

Long Short Net exposure

Note: Long and short percentages defined as a percent of NAV, as of August 31, 2010(1) Long exposure over 100% due to inclusion of face value of unfunded revolvers and full notional exposure on derivative products. 

(1)

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VIII. Performance

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Eos Credit Funds 38

Credit Funds Historical Performance

JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC YEAR2008 0.9% 0.0% (1.2%) (0.1%) (2.9%) (11.5%) (2.8%) 0.9% (16.0%)2009 4.6% (0.9%) 0.7% 7.1% 6.1% 3.6% 3.0% 2.2% 4.7% 0.6% 0.3% 2.2% 39.8%2010 2.3% (0.2%) 1.9% 1.1% (2.4%) (0.2%) 1.8% 0.3% 1.2% 1.4% 7.3%

  Eos Senior Loans ("ESL")(3)

JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC YEAR2002 0.1% (2.3%) 4.8% 2.9% (2.7%) 0.5% 2.7% 0.1% 6.0%2003 2.6% 1.6% 0.3% 3.2% 1.9% 2.7% 1.0% 1.0% 1.0% 4.5% 3.1% 4.9% 31.6%2004 3.9% 1.3% (1.4%) 3.9% (0.8%) 3.3% 1.3% 2.8% 3.9% 6.4% 2.5% 3.0% 34.2%2005 0.9% 1.8% 1.5% 0.2% (0.9%) 3.2% 2.6% 1.8% 0.9% (0.0%) 0.3% 1.8% 15.2%2006 2.0% 1.3% 2.9% 2.0% (0.2%) (1.6%) 0.0% (0.1%) 0.3% 0.9% 1.3% 1.0% 10.1%2007 1.9% 2.3% 0.7% 0.7% 0.5% 1.0% 2.1% 0.7% 0.8% 0.6% 0.3% (0.5%) 11.7%2008 (1.6%) (1.0%) (0.7%) 1.4% 0.1% (1.2%) (1.0%) 0.1% (3.5%) (4.5%) (4.8%) (10.1%) (24.2%)2009 1.7% (1.0%) 1.0% 2.4% 3.4% 0.3% 2.1% 2.7% 3.7% 1.1% 0.9% 1.9% 21.9%2010 4.0% 0.1% 3.9% 1.9% (3.4%) 0.0% 2.2% 0.9% 1.6% 1.8% 13.4%

  Eos Credit Opportunities ("ECO")(1)

(1) Performance shown for onshore vehicle and for November 1, 2004 class A investor after high water mark. ECO returns until Oct. ’04 (included) represent Eos Partners’ Total Return fixed income portfolio (hereafter: TRFIP), a portfolio managed by the principals of ECO’s investment  manager using the same investment strategy as ECO.  Returns are net of annual management fees of 1.5% and incentive fees applicable to an investment in ECO. Cumulative monthly returns are unaudited time‐weighted returns from May 2002 through October 2004 for Eos Partners’ TRFIP. Throughout this document the blended returns of both the Eos Partners’ TRFIP and ECO are used when describing historical performance.  Many factors may cause ECO’s results to differ materially from the results of the TRFIP including the facts that no leverage was employed in the TRFIP; the data is based upon varying amounts of average capital deployed from month to month and monthly performance data reflects return on average net invested capital (which Eos Partners could increase or decrease daily); and the data presented reflects Eos Partners’ judgment as to the allocation of currency hedges and various expenses between the TRFIP and the Eos Partners Short Term Portfolio. Past performance of Eos’ Total Return fixed income portfolio is not an indication of future results for Eos Credit Opportunities. (2) Performance shown for offshore vehicle and for November 1, 2009 investor.(3) Performance shown for onshore vehicle and for May 1, 2008 hypothetical third party investor after high water mark.(4) The October 31, 2010 unaudited data is an initial estimate that was internally determined, represents only a preliminary estimate of results for the period referenced, has not been reviewed by the Fund's Administrator or auditor and is subject to change. Note: Returns are net of annual management fees (ECO 1.5% / ESL: 1.0%) and incentive fees applicable to an investment in ECO / ESL. Past performance represents the reinvestment of all dividends, income and profits.  Past performance of ECO / ESL is not an indication of future results.

JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC YEAR2009 1.0% 2.5% 3.5%2010 2.7% (0.1%) 3.5% 1.9% (2.6%) 0.3% 2.0% 0.6% 1.3% 1.5% 11.6%

  Eos Credit Opportunities ‐ SRI ("ECO SRI")(2)

(4)

(4)

(4)

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Eos Credit Funds 39

Credit Funds Historical Performance

Net Returns* 2002 2003 2004 2005 2006 2007 2008 2009 2010(1) Cumulative

Eos Credit Opportunities(2) 6.0% 31.6% 34.2% 15.2% 10.1% 11.7% (24.2%) 21.9% 11.4% 172.9%

Eos Credit Opportunities ‐ SRI(3) 3.5% 9.9% 13.8%

Eos Senior Loans(4) (15.9%) 39.8% 5.8% 24.4%

Dow Jones Credit Suisse Hedge Fund Index 1.5% 15.4% 9.6% 7.6% 13.9% 12.6% (19.1%) 18.6% 6.0% 80.2%

Barclays High Yield (4.5%) 29.0% 11.1% 2.7% 11.9% 1.9% (26.2%) 58.2% 11.5% 108.7%

10yr US Treasury 13.6% 1.3% 4.9% 2.1% 1.3% 9.7% 20.1% (9.8%) 14.4% 69.7%

S&P 500 (18.3%) 26.4% 9.0% 3.0% 13.6% 3.5% (38.5%) 23.5% 2.3% 6.0%

S&P LCD (Loan Index) 1.9% 10.0% 5.2% 5.1% 6.8% 2.0% (29.1%) 51.6% 6.8% 54.9%

Barclay Event Driven Index (4.7%) 22.0% 16.1% 8.2% 15.6% 8.4% (17.5%) 29.1% 5.3% 105.3%

(3.7%) 25.1% 15.6% 11.7% 15.6% 8.4% (20.5%) 20.9% 5.6% 98.1%Dow Jones Credit Suisse Event Driven Distressed Hedge Fund Index

*Returns are net of annual management fees (ECO 1.5% / ESL: 1.0%) and incentive fees applicable to an investment in ECO / ESL. Past performance represents the reinvestment of all dividends, income and profits.  Past performance of ECO / ESL is not an indication of future results.(1) YTD as of September 30, 2010. (2) Performance shown for onshore vehicle and for November 1, 2004 investor after high water mark. ECO returns until Oct. ’04 (included) represent Eos Partners’ Total Return fixed income portfolio, a portfolio managed by the principals of ECO’s investment manager using the same investment strategy as ECO.(3) Performance shown for offshore vehicle and for November 1, 2009 investor.(4) Performance shown for onshore vehicle and for May 1, 2008 hypothetical third party investor after high water mark.Source: Eos, Dow Jones Credit Suisse, BarclaysDow Jones Credit Suisse Hedge Fund Indices are compiled by Credit Suisse Hedge Index LLC and CME Group Index Services LLC.   They are asset‐weighted hedge fund indices and include only funds, as opposed to separate accounts. The Indices use the Credit Suisse Hedge Fund Database, which tracks approximately 8000 funds, and consists only of funds with a minimum of US$50 million under management, a 12‐month track record, and audited financial statements. It is calculated and rebalanced on a monthly basis, and shown net of all performance fees and expenses.  The Barclays High Yield Bond Index is an index that measures that performance of a broad universe of high yield bonds.  The index includes all fixed‐income securities having a maximum quality rating of Ba1 (including defaulted issues), a minimum amount outstanding of $100mm, and at least one year to maturity.  It is not possible to invest directly in the Barclays High Yield Bond Index.  The Barclays High Yield Bond Index is not subject to the fees and expenses applicable to the Fund.  It also should not be considered a comparable investment program to the Fund.  It is being presented for comparison purposes to show how the Fund's performance compares with the performance of a broad universe of high yield bonds. The S&P LCD index is a derivative index which references the first lien debt for 100 of the largest leveraged loan issuers. It is being presented for comparison purposes to show how the Fund's performance compares with the performance of a broad universe of first lien debt. The S&P 500 tracks the performance of the equity securities of a representative sample of 500 U.S. based large‐cap companies.  The S&P 500 is an unmanaged, market‐value weighted index with each stock's weight in the index proportionate to its market value.  The Barclay Event Driven Index is a measure of the average return of funds with a ‘special situations’ strategy (excludes Funds of Funds) in the Barclay database. The index is simply the arithmetic average of the net returns of all the funds that have reported that month.  There are significant differences between the Funds’ investments and the indices.  The Funds may use leverage and have a greater degree of risk and volatility as well as less liquidity than securities that comprise the indices.  Moreover, the indices do not reflect the reinvestment of dividends or income and, unlike the Funds, are not subject to fees or expenses.  It should not be assumed that the Fund will invest in any specific securities that comprise any index, nor should it be understood to mean that there is a correlation between the Fund’s returns and the performance of any index presented.

Page 40: Steve Friedman

Eos Credit Funds 40

THIS DOCUMENT DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, A FUNDINTEREST IN EOS CREDIT OPPORTUNITIES, L.P. OR IN EOS CREDIT OPPORTUNITIES OFFSHORE LIMITED AS DESCRIBEDHEREIN. NO SUCH OFFER OR SOLICITATION WILL BE MADE PRIOR TO THE DELIVERY OF AN OFFERING MEMORANDUMAND OTHER MATERIALS (THE “OFFERING MATERIALS”) RELATING TO THE MATTERS MENTIONED HEREIN.

THIS DOCUMENT CONTAINS A PRELIMINARY SUMMARY OF THE PURPOSE OF THE FUND AND ITS PRINCIPAL BUSINESS;THIS SUMMARY DOES NOT PURPORT TO BE COMPLETE, IS FOR DISCUSSION PURPOSES ONLY AND IS QUALIFIED IN ITSENTIRETY BY REFERENCE TO THE MORE DETAILED DISCUSSION CONTAINED IN THE ACTUAL OFFERING MATERIALS ANDTHE ACTUAL TEXT OF THE FUND’S PARTNERSHIP AGREEMENT.

NO REPRESENTATION OR WARRANTY IS MADE BY THE FUND OR ANY OTHER PERSON (INCLUDING ANY OF ITS AGENTSOR OTHER REPRENTATIVES) AS TO THE ACCURACY OR COMPLETENESS OF THE INFORMATION CONTAINED HEREIN.ONLY THOSE PARTICULAR REPRESENTATIONS AND WARRANTIES WHICH MAY BE MADE IN DEFINITIVE AGREEMENTSRELATING TO THE FUND, WHEN, AS AND IF EXECUTED, AND SUBJECT TO SUCH LIMITATIONS AND RESTRICTIONS ASMAY BE SPECIFIED IN SUCH DEFINITIVE AGREEMENTS, SHALL HAVE ANY LEGAL EFFECT.

INVESTING IN FINANCIAL MARKETS INVOLVES A SUBSTANTIAL DEGREE OF RISK. THERE CAN BE NO ASSURANCE THATTHE INVESTMENT OBJECTIVES DESCRIBED HEREIN WILL BE ACHIEVED. INVESTMENT LOSSES MAY OCCUR, ANDINVESTORS COULD LOSE SOME OR ALL OF THEIR INVESTMENT. NOTHING HEREIN IS INTENDED TO IMPLY THAT ANINVESTMENT IN THE FUND OR THE FUND'S INVESTMENT STRATEGIES MAY BE CONSIDERED "CONSERVATIVE," "SAFE,""RISK FREE" OR "RISK AVERSE." NO REGULATORY AUTHORITY HAS PASSED UPON OR ENDORSED THIS SUMMARY ORTHE MERITS OF AN INVESTMENT IN THE FUND.

THIS DOCUMENT IS BEING PROVIDED TO YOU ON A CONFIDENTIAL BASIS. ACCORDINGLY, THIS DOCUMENT MAY NOTBE REPRODUCED IN WHOLE OR IN PART, AND MAY NOT BE DELIVERED TO ANY PERSON WITHOUT THE PRIOR WRITTENCONSENT OF ECO MANAGEMENT L.P.