February 23, 2007
FILED AS EDGAR CORRESPONDENCE
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Richard Pforte, Branch Chief
Kimberly Browning
Division of Investment Company Regulation
U.S. Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549
Re: Excelsior Directional Hedge Fund of Funds, LLC
File No.: 811-10083
Dear Mr. Pforte and Ms. Browning:
Set forth below is a summary of your comments, which you provided by
telephone on February 2, 2007, and our responses to your comments, on the
preliminary Schedule 14A, notice, proxy statement and proxy card (collectively,
the "Proxy Statement") filed on behalf of Excelsior Directional Hedge Fund of
Funds, LLC (the "Fund"), pursuant to the Securities Exchange Act of 1934, as
amended (the "1934 Act"), and the Investment Company Act of 1940, as amended
(the "1940 Act"). All capitalized terms have the same meaning as in the Proxy
Statement.
1. COMMENT: Please revise the disclosure under the heading entitled
"Description of the Reorganization" to include a discussion of why the
Fund's reorganization is structured as a merger of the Fund with a
wholly-owned subsidiary of the New Fund.
RESPONSE: The disclosure has been revised to include the following
sentence: "The structure of the Reorganization is designed to avoid a
transfer of assets of the Fund that would otherwise require the consent
of the underlying funds in which the Fund invests, which consent may
not be timely or given at all."
2. COMMENT: Under the heading entitled "Effect of the Reorganization," please
include a pro forma table comparing current fees and expenses incurred by
the Fund and fees and expenses expected to be incurred by the New Fund
after the reorganization becomes effective.
RESPONSE: The table has been included as requested.
3. COMMENT: In the pertinent sections of the Proxy Statement please
include a conspicuous statement that all costs associated with the
reorganization of the Fund will be borne by the Adviser and not by the
Fund or the New Fund.
RESPONSE: The statement has been included as requested.
Richard Pforte
Kimberly Browning
February 23, 2007
Page 2 of 3
4. COMMENT: The second sentence of the first paragraph under the heading
entitled "REORGANIZATION OF THE FUND" reads as follows: "The new fund
will have the same investment objective and substantially the same
investment policies as the Fund." Please revise this sentence to read
as follows: "The new fund will have the same investment objective and
the same investment policies as the Fund, except the new fund would
pursue its investment objective by investing in the Fund." Please make
the corresponding changes throughout the Proxy Statement.
RESPONSE: The disclosure has been revised as requested.
5. COMMENT: In the section of the Proxy Statement related to the
reorganization of the Fund, please include a discussion of risk factors
associated with a "master/feeder" investment structure.
RESPONSE: The disclosure has been included as requested.
6. COMMENT: Please revise the disclosure under the heading entitled
"Benefits of a Master/Feeder Structure" to include a disclaimer with
respect to expected cost economies that may result from the
reorganization.
RESPONSE: The disclosure has been revised to include the following
sentence: "However, there is no guarantee that such other investment
funds will be successful in raising capital, or that any capital raised
would be significant enough to result in any cost economies or lower
the expense ratio currently borne by the Fund."
7. COMMENT: Please revise the disclosure in the second paragraph under the
heading entitled "Effect of the Reorganization" to clarify that the
advisory fee reduction is contractual and cannot be changed without the
approval of the board of managers of the Master Fund.
RESPONSE: The disclosure has been revised as requested.
8. COMMENT: The fourth paragraph on page i of the Proxy Statement reads, in
part, as follows: "All properly-executed proxies received before the
Meeting will be voted at the Meeting and any adjournment thereof in
accordance with the instructions marked thereon or otherwise as provided
therein. Unless instructions to the contrary are marked, such executed
proxies will be voted "FOR" each of the Proposals. IF NO INSTRUCTIONS ARE
MARKED, THE EXECUTED PROXIES WILL BE VOTED "FOR" EACH OF THE PROPOSALS AND
IN ACCORDANCE WITH THE JUDGMENT OF THE PERSONS APPOINTED AS PROXIES UPON
ANY OTHER MATTER THAT MAY PROPERLY COME BEFORE THE MEETING." Please revise
this disclosure to indicate that executed proxies received with no
specified instructions will be counted for purposes of determining whether
a quorum is present at the Meeting, but will have the same effect as a vote
"against" the Proposal in accordance with Section 2(a)(42) of the 1940 Act.
RESPONSE: In reliance on Rule 14a-4(b)(1) of the 1934 Act, the Fund has
conferred discretionary authority to the persons appointed as proxies
with respect to matters as to which a choice is not specified by the
shareholder in a duly executed proxy. As required by Rule 14a-4(b)(1)
of the 1934 Act, the Fund's proxy card states, in bold-face type, how
it intends to vote interests represented by duly executed proxies that
do not specify a choice on a matter.
Richard Pforte
Kimberly Browning
February 23, 2007
Page 3 of 3
Section 2(a)(42) of the 1940 Act addresses the requirements relating to
the vote of a majority of the outstanding voting securities of a
company, but does not specifically address the procedures for
determining whether a form of proxy appropriately confers discretionary
authority to the persons appointed as proxies nor does it address
whether the proxies may use such discretionary authority to vote
interests represented by duly executed proxies with no specified
instructions. We believe that the approach taken by the Fund is
consistent with applicable law and we have not amended the proxy
statement or proxy card.
I hereby acknowledge on behalf of, and with the express authority granted
by, the Fund that: (i) the Fund is responsible for the adequacy and accuracy of
the disclosure in its definitive proxy statement; (ii) SEC staff comments or
changes to disclosure in response to staff comments in the definitive proxy
statement reviewed by the staff do not foreclose the SEC from taking any action
with respect to the definitive proxy statement; and (iii) the Fund may not
assert SEC staff comments as a defense in any proceeding initiated by the SEC or
any person under the federal securities laws of the United States.
Please do not hesitate to call the undersigned at (203) 975-4057 with any
questions or comments.
Very truly yours,
/s/ Marina Belaya
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Marina Belaya, Esq.