Eminence

May 4, 2010 Dear Limited Partner:

C A P I TA L , L L C

Eminence Partners advanced 1.7% gross and net1 in the first quarter 2010. The first quarter and the month of April in particular have been a struggle for us. Cheap money and signs of life in the domestic economy have combined with a stock market environment where trading momentum seems obsessed with current data points vs. long term value. This has led to an accelerated widening in the performance and valuations between low quality vs. high quality, small capitalization vs. large capitalization and cyclical vs. consistent growth. As investors, our portfolio is generally positioned opposite these recent trends as we seek value and quality on the long side and low quality and over-valued on the short side. We have been less surprised with the strength of the recovery and first quarter earnings than we have been with the markets reaction to those data points. The stock market has become enamored with companies that beat and raise near term earnings expectations regardless of valuation or long term business prospects. We have been of the belief that many low quality, small capitalization and cyclical businesses are more than fully priced for several years worth of very strong earnings growth, an outcome we dont think is likely based on both structural issues muting economic growth and structural issues facing numerous businesses that fit those criteria. It has been quite a bifurcated market recently where stocks that only meet expectations or slightly temper expectations are being sold regardless of valuation, business quality or their long term prospects while companies that beat estimates and raise guidance are going up without regard to valuation, business quality or long term earnings sustainability. Experience has taught us that markets like these are not sustainable, but we respect that predicting when it will end or how far it will carry is difficult. Below we present our 3 and 5 year CAGR in addition to the respective inception to date performance information: 2010 Q1
Eminence Partners gross 2 Eminence Partners net1 S&P 5003 Russell 20003 Avg. US Stock Fund4 1.7% 1.7% 5.4% 8.9% 6.2%

3 year returns
6.3% 4.8% (4.2%) (4.0%) (3.9%)

CAGR 5 year Since inception returns (January 1999)

9.5% 7.5% 1.9% 3.4% 2.3% 18.7% 15.1% 1.3% 5.7% 2.7%

Note: Past performance is not indicative of future results See last page for all note descriptions

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Q1
Eminence Leveraged Long Alpha gross 2 Eminence Leveraged Long Alpha net 1 S&P 5003 Russell 20003 Avg. US Stock Fund4 2.6% 2.6% 5.4% 8.9% 6.2%

3 year Since inception returns (July 2005)

1.9% 0.8% (4.2%) (4.0%) (3.9%) 6.8% 5.0% 1.7% 2.6% 1.9%

Note: Past performance is not indicative of future results See last page for all note descriptions

Performance Review Our average long position did fine in the first quarter, advancing about 7% which is above all the indices except the small cap index. Our average short position, on the other hand, advanced between 9% and 10%, generating negative alpha to both the market and our longs.

Contribution to Return5
Eminence Partners
Long Investments Short Investments Management Fees & Operating Expenses Portfolio Return & Avg. Net Exposure2

Q1 10.2% (8.0%) (0.5%) 1.7%

Average Exposure 151% 85% 66% Average Exposure 226% 127% 99%

Eminence Leveraged Long Alpha

Long Investments Short Investments Management Fees & Operating Expenses Portfolio Return & Avg. Net Exposure2
(Figures may not add due to rounding)

Q1 15.2% (12.0%) (0.6%) 2.6%

See last page for all note descriptions.

Winners on the long side (and their respective contribution) included Nintendo (90bps), Hasbro (60bps), Carnival (60bps), US Bancorp (50bps) and Ross Stores (50bps). No long position hurt the fund by more than 20bps. The short side unfortunately had only a handful of winners and an abundance of losers. Our biggest losses outside of indices were a printing company, an aerospace and defense company, an apparel manufacturer and a media distribution company. Portfolio Update Throughout the first quarter, gross exposure averaged 235%, net exposure averaged 66% net long and our long / short ratio averaged 1.8x. Currently, gross exposure is 260%, net exposure is 60% net long and our long / short ratio is 1.6x. We have used the strength in the market in Q1 and April to reduce longs that have less favorable risk / rewards and add to or initiate short positions in low quality companies that seem priced for more than perfection.

Increasingly, we have been positioning the portfolio for an eventual rotation to higher quality, larger capitalization and more defensive growth companies. The intrinsic value gap between businesses with these characteristics and those with the opposite is increasingly wide. The strength of near term business conditions has caused the market to buy the cyclical, lower quality companies that get a bigger bang from this strength without regard for valuation. As first quarter earnings seasons comes to a close we are hopeful that the lack of catalysts will cause investors to shift from beat and raise to what is it worth? We have been cognizant that the broad advance in stocks combined with the decline in our equity in April has caused an increase to gross exposure. We plan to manage gross exposure limits at or near current levels. Further, we continue to manage position sizes on the short side such that no stock specific short position exceeds 2% of capital. Since our last letter, we added new long positions in Aon, Coca-Cola Enterprises, Raytheon, Monsanto, TD Ameritrade, Research in Motion, Avon Products, Dollar Tree Stores, American Eagle Outfitters and Beckman Coulter. We added to existing long positions in JP Morgan, Google, Charles Schwab and Fidelity National Information Services. We exited long positions in Nestle, General Mills and Northrup Grumman and reduced position sizes in Nintendo, Hasbro, Abbott, Carnival, Ross Stores, CSX and Reed Elsevier. Aon is the largest commercial insurance broker in the world with global operations in over 40 countries. Commercial insurance brokers help corporate clients manage risk and obtain fair pricing amongst a wide market of insurers in areas such as workers comp, property and general liability insurance. Aon is a high quality business that generates a high return on equity, produces strong and consistent cash flow and requires little capital to grow. Aons stock price and its earnings have been under pressure as the commercial insurance market has been going through a period of declining, or soft pricing for the past few years. There are a number of factors contributing to this including the lack of catastrophic events and the global economic downturn. This soft market impairs both the dollar amount of commissions earned and the number of transactions. The current low interest rate environment has also hurt the industry as the brokers derive short term investment income on cash they hold on behalf of their clients. Aon has been executing a series of restructuring programs to help streamline their business and bring margins to best in class under the leadership of CEO Greg Case. Greg was a partner at McKinsey and is known throughout the industry as one of the brightest minds in the business. Despite a difficult industry backdrop, Greg has been delivering on the improvements to Aons business. The combination of continued execution by management including increased share repurchases, an eventual harder pricing cycle, rising short term yields and the recent lift of the ban of contingent commissions all provide tremendous upside for Aons earnings. We purchased Aon for 10x normalized earnings and believe we could see 50% upside in the stock over the next 2 years. Coca Cola Enterprises (CCE) owns the rights to bottle and distribute Coca Cola (KO) products and other non alcoholic beverages in a number of US markets as well as several European countries. In late February, the company and KO announced a transaction whereby KO would buy the US bottling assets from CCE. Following the closing of this transaction in Q4, CCE shareholders will receive a $10 dividend and maintain an investment in the European bottling assets.

We think that the European assets have been a hidden gem inside of CCE. While the US assets being sold were at best a mediocre business, the retained European assets are substantially better and quite good in absolute terms. There are several key reasons for this including much greater regional concentration among bottlers (bottling and distribution are scale businesses), much higher market shares for KO product (Pepsi is a weak competitor in Europe) and lower per capita consumption of carbonated soft drinks (greater potential to grow volume). As a result, new CCE has higher margins, higher returns on capital, greater free cash flow conversion, faster volume growth and greater pricing power. Further, the proforma valuation of new CCE is very attractive both in absolute terms and relative to the price paid for inferior US assets and the markets valuation of old CCE prior to the transaction. At todays price we are creating an investment in new CCE at 11x 2011 earnings and 9x 2012 earnings, a price that severely discounts the value and growth prospects of this business. Our current top ten positions represent 40% of equity and are: Oracle JP Morgan US Bancorp Thermo Fisher Scientific Fiserv Ebay Aon Walmart Google Reed Elsevier Organizational Update As previewed in our last letter, we have returned the fund to a soft closed status and plan to limit investor subscriptions to a level that roughly matches redemptions. At the end of the quarter, capital under management was approximately $5.4 billion. During the quarter, we had several new additions to the team at Eminence and no departures. Peter Goodson joined Eminence as an Analyst following nearly eight years of experience in private equity and investment banking at Fortress Group, Carlyle and Deutsche Bank. Bobby Moss became the third person we hired on our field research team. Bobby previously worked with Glenview Capital as a primary research analyst in their London office. Prior to Glenview, Bobby was a strategy consultant for Deloitte Consulting. We also hired Jordan Rubin as a Research Associate. He joins us following 18-months on the sell side research team at Oppenheimer & Co. Outside of the research team, we hired Mike Vasiliou in IT. In total, we now have 40 employees including 20 on the research team. As always, feel free to call with any questions or comments. Thank you for your interest. Sincerely,

Ricky Sandler Managing Member

End Notes: 1. Net returns represent the account of a Day One investor in the fund, net of operating expenses, management fee and incentive allocation. New investors from January 1, 2009 and forward may not be subject to a high-water mark depending on the timing of their investment and therefore may be subject to an incentive allocation. For those investors not subject to a high-water mark, the net return likely will be less than that presented. Numbers are net of management fees, gross of incentive allocation. Performance reflects the monthly reinvestment of dividends earned by the index. Source: Lipper (diversified funds only) Returns and exposure are presented net for stub investments.

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