UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
811-21395
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Investment Company Act file number
Excelsior Absolute Return Fund of Funds Master Fund, LLC
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(Exact name of registrant as specified in charter)
225 High Ridge Road
Stamford, CT 06905
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(Address of principal executive offices) (Zip code)
U.S. Trust Hedge Fund Management, Inc.
225 High Ridge Road
Stamford, CT 06905
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(Name and address of agent for Service)
Registrant's telephone number, including area code: (203) 352-4497
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Date of fiscal year end: 3/31/2004
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Date of reporting period: 3/31/2004
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ITEM 1. REPORTS TO STOCKHOLDERS.
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EXCELSIOR ABSOLUTE RETURN FUND OF FUNDS MASTER FUND, LLC
Financial Statements
With Report of Independent Registered Public Accounting Firm
Period from December 1, 2003 (Commencement of Operations) to March 31, 2004
Excelsior Absolute Return Fund of Funds Master Fund, LLC
Financial Statements
Period from December 1, 2003 (Commencement of Operations) to March 31, 2004
Contents
Report of Independent Registered Public Accounting Firm................ 1
Statement of Assets, Liabilities and Members' Equity - Net Assets...... 2
Schedule of Investments................................................ 3
Statement of Operations................................................ 4
Statement of Changes in Members' Equity - Net Assets................... 5
Statement of Cash Flows................................................ 6
Notes to Financial Statements.......................................... 7
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Members and Board of Managers of
Excelsior Absolute Return Fund of Funds Master Fund, LLC
We have audited the accompanying statement of assets, liabilities and members'
equity - net assets of Excelsior Absolute Return Fund of Funds Master Fund, LLC
(the "Company"), including the schedule of investments, as of March 31, 2004,
and the related statements of operations, cash flows and changes in members'
equity - net assets for the period from December 1, 2003 (commencement of
operations) to March 31, 2004. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audit.
We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of March
31, 2004, by correspondence with management of the investment funds. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Excelsior Absolute Return Fund
of Funds Master Fund, LLC at March 31, 2004, the results of its operations, its
cash flows and changes in its members' equity - net assets for the period from
December 1, 2003 (commencement of operations) to March 31, 2004, in conformity
with U.S. generally accepted accounting principles.
Ernst & Young LLP
Boston, Massachusetts
May 24, 2004
Excelsior Absolute Return Fund of Funds Master Fund, LLC
Statement of Assets, Liabilities and Members' Equity - Net Assets
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March 31, 2004
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ASSETS
Investments in investment funds, at fair value
(cost $77,850,000) $ 81,794,562
Cash and cash equivalents 1,040,785
Advance investment in investment funds 53,500,000
Due from investment fund 1,058,460
Other assets 270
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Total Assets 137,394,077
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LIABILITIES
Member interests received in advance 54,020,208
Due to Advisor 303,236
Professional fees payable 35,000
Administration fees payable 6,000
Other 110
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Total Liabilities 54,364,554
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Net Assets $ 83,029,523
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MEMBERS' EQUITY - NET ASSETS
Represented by:
Capital subscriptions - net $ 79,084,961
Net unrealized appreciation on investments 3,944,562
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Members' Equity - Net Assets $ 83,029,523
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The accompanying notes are an integral part of these financial statements.
Excelsior Absolute Return Fund of Funds Master Fund, LLC
Schedule of Investments
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March 31, 2004
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% of
Members' Shares or First
First Equity - % Ownership vailable
Investment Acquisition Fair Net of Investment Redemption
Funds Date Cost * Value Assets Funds Date ** Liquidity ***
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Fixed Income
- ------------
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Argent Lowlev Convertible
Arbitrage Fund, LLC 12/01/2003 $ 3,000,000 $ 3,054,978 3.68% 1.45% N/A Monthly
Citadel Wellington Partners, L.P. SE 12/01/2003 7,250,000 7,594,196 9.14% 2.40% N/A Quarterly
Highbridge Capital Corporation - Class A 12/01/2003 7,250,000 7,595,574 9.15% 141 08/31/04 Quarterly
MKP Opportunity Partners, L.P. 12/01/2003 1,500,000 1,542,520 1.86% 1.33% N/A Monthly
MKP Partners, L.P. 12/01/2003 2,600,000 2,665,874 3.21% 2.33% N/A Quarterly
Silverback Partners, L.P. 1/01/2004 2,000,000 2,056,525 2.48% 0.83% 12/31/04 Quarterly
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Strategy Total 23,600,000 24,509,667 29.52%
Equity
- ------
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Galleon Diversified Fund, Ltd. - Class E 12/01/2003 3,100,000 3,181,138 3.83% 2,687 N/A Quarterly
Copper Beech Partners II, L.P. 12/01/2003 3,350,000 3,545,686 4.27% 2.00% 12/31/04 Quarterly
Heirloom Qualified Partners, L.P. 12/01/2003 3,350,000 3,405,353 4.10% 5.73% 12/31/04 Quarterly
Glenview Capital Partners, L.P. 12/01/2003 3,000,000 3,311,766 3.99% 1.85% 12/31/04 Quarterly
The Mako Europe Fund, L.P. 12/01/2003 2,500,000 2,587,803 3.12% 5.72% N/A Monthly
Cantillon World, L.P. 12/01/2003 3,050,000 3,223,481 3.88% 1.01% N/A Quarterly
Shoshone Partners, L.P. 12/01/2003 3,000,000 3,271,900 3.94% 2.57% N/A Annually
----------------------------------
Strategy Total 21,350,000 22,527,127 27.13%
Macro/CTA/Short Term Trading
- ----------------------------
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Sunrise Commodities Select Portfolio-
Davco Fund, L.P. 12/01/2003 2,250,000 2,656,826 3.20% 0.95% N/A Monthly
Catequil Partners, L.P. 12/01/2003 2,250,000 2,388,416 2.88% 1.18% 12/31/04 Annually
The Capital Fund (Domestic), LLC 12/01/2003 2,250,000 2,390,113 2.88% 2.51% N/A Monthly
WoodAllen Global Fund, L.P. 12/01/2003 2,250,000 2,367,914 2.85% 1.36% 12/31/04 Quarterly
Bridgewater Pure Alpha Trading Co. Ltd.-
Class B 2/01/2004 1,400,000 1,434,443 1.72% 1,400 N/A Monthly
----------------------------------
Strategy Total 10,400,000 11,237,712 13.53%
Event Driven
- ------------
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Castlerigg Partners, L.P. 12/01/2003 7,500,000 7,799,724 9.39% 2.32% 12/31/04 Quarterly
Canyon Value Realization Fund, L.P. 12/01/2003 7,500,000 7,902,199 9.52% 0.85% 12/31/04 Annually
K Capital II, L.P. 12/01/2003 7,500,000 7,818,133 9.42% 1.26% 12/31/04 Quarterly
----------------------------------
Strategy Total 22,500,000 23,520,056 28.33%
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Total Investments in investment funds $77,850,000 81,794,562 98.51%
============
Other Assets, Less Liabilities 1,234,961 1.49%
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Members' Equity - Net Assets $83,029,523 100.00%
====================
* See definition in Note 2a.
** From original investment date.
*** Available frequency of redemptions after initial lock-up period.
N/A Initial lock-up period has either expired prior to March 31, 2004 or
the Investment Fund did not have an initial lock-up period.
The accompanying notes are an integral part of these financial statements.
Excelsior Absolute Return Fund of Funds Master Fund, LLC
Statement of Operations
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Period from December 1, 2003 (Commencement of Operations) to March 31, 2004
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INVESTMENT INCOME
Interest $ 5,047
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Total Investment Income 5,047
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OPERATING EXPENSES
Advisory fee 251,269
Organizational costs 87,145
Professional fees 35,000
Administration fees 8,000
Other expenses 12,230
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Total Operating Expenses 393,644
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Net Investment Loss (388,597)
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REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain from investments in investment funds 8,460
Net unrealized appreciation on investments in investment funds 3,944,562
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Net Realized and Unrealized Gain on Investments 3,953,022
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INCREASE IN MEMBERS' EQUITY - NET ASSETS DERIVED FROM OPERATIONS $3,564,425
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The accompanying notes are an integral part of these financial Statements.
Excelsior Absolute Return Fund of Funds Master Fund, LLC
Statement of Changes in Members' Equity - Net Assets
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Period from December 1, 2003 (Commencement of Operations) to March 31, 2004
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OPERATIONS
Net investment loss $ (388,597)
Net realized gain from investments 8,460
Net unrealized appreciation on investments 3,944,562
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Increase in Members' Equity - Net Assets Derived from Operations 3,564,425
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CAPITAL TRANSACTIONS
Member subscriptions 79,465,098
Member interests repurchased -
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Increase in Members' Equity - Net Assets Derived
from Capital Transactions 79,465,098
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Net Increase in Members' Equity - Net Assets 83,029,523
MEMBERS' EQUITY - NET ASSETS AT BEGINNING OF PERIOD -
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MEMBERS' EQUITY - NET ASSETS AT END OF PERIOD $83,029,523
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The accompanying notes are an integral part of these financial statements.
Excelsior Absolute Return Fund of Funds Master Fund, LLC
Statement of Cash Flows
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Period from December 1, 2003 (Commencement of Operations) to March 31, 2004
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CASH FLOWS FROM OPERATING ACTIVITIES
Net increase in members' equity - net assets
derived from operations $ 3,564,425
Adjustments to reconcile net increase in members' equity -
net assets derived from operations to net cash used in
operating activities:
Net unrealized appreciation on investments (3,944,562)
Net realized gain from investments in investment funds (8,460)
Purchases of investment funds (78,900,000)
Increase in advance investment in investment funds (53,500,000)
Increase in other assets (270)
Increase in due to Advisor 303,236
Increase in other accrued expenses 41,110
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Net Cash Used in Operating Activities (132,444,521)
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CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from member subscriptions 133,485,306
Payments for member interests repurchased -
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Net Cash Provided by Financing Activities 133,485,306
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Net increase in cash and cash equivalents 1,040,785
Cash and cash equivalents at beginning of period -
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Cash and Cash Equivalents at End of Period $1,040,785
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The accompanying notes are an integral part of these financial statements.
Excelsior Absolute Return Fund of Funds Master Fund, LLC
Notes to Financial Statements
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March 31, 2004
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1. Organization
Excelsior Absolute Return Fund of Funds Master Fund, LLC (the "Company") was
organized as a limited liability company under the laws of Delaware on June 17,
2003, and commenced operations on December 1, 2003. The Company is registered
under the Investment Company Act of 1940, as amended (the "1940 Act"), as a
non-diversified, closed-ended management investment company. The Company's
investment objective is to provide long-term, risk-adjusted absolute returns in
a variety of capital market conditions. The Company pursues its investment
objective by investing its assets primarily in private investment limited
partnerships, limited liability companies, joint ventures and other similar
investment vehicles (collectively, the "Investment Funds") that are managed by a
select group of alternative investment managers ("Investment Managers") that
utilize a broad range of alternative investment strategies.
U.S. Trust Hedge Fund Management, Inc. serves as the investment advisor of the
Company (the "Advisor"). The Advisor is a wholly-owned subsidiary of U.S. Trust
Corporation, and is registered as an investment advisor under the Investment
Advisers Act of 1940, as amended. The Advisor is responsible for developing,
implementing and supervising the investment program and providing day-to-day
management services.
The Advisor has retained AIG Global Investment Corp., an indirect wholly-owned
subsidiary of American International Group, Inc., to serve as the investment
manager (the "Manager"). The Manager is responsible for Investment Fund
selection and determining the portion of the Company's assets to be allocated to
each Investment Fund, subject to the general supervision of the Advisor.
The Company's Board of Managers (the "Managers") has overall responsibility to
manage and supervise the operations of the Company, including the exclusive
authority to oversee and to establish policies regarding the management, conduct
and operation of the Company's business.
The Company was established to hold substantially all of the assets of Excelsior
Absolute Return Fund of Funds, LLC and Excelsior Absolute Return Fund of Funds,
Ltd. as Members. As of March 31, 2004, these members' ownership of the Company's
members' equity - net assets were 95.96% and 4.04%, respectively.
Excelsior Absolute Return Fund of Funds Master Fund, LLC
Notes to Financial Statements (continued)
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March 31, 2004
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1. Organization (continued)
Member subscriptions may be accepted as of the first day of each calendar
quarter, or at such times as the Managers may determine. The Managers reserve
the right to reject any application for interests in the Company. The Company
may, from time to time, offer to repurchase interests from members pursuant to
written tenders by members. These repurchases will be made at such times and on
such terms as may be determined by the Managers, in their sole discretion,
subject to the liquidity of the Company's assets and other factors considered by
the Managers. The Advisor expects that, generally, it will recommend to the
Managers that the Company offer to repurchase interests from members as of
December 31, 2004, and thereafter, twice in each year, at June 30th and December
31st. Members can only transfer or assign their Company interests under certain
limited circumstances or with the written consent of the Managers, which may be
withheld in their sole discretion.
2. Significant Accounting Policies
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Management believes that the estimates utilized in preparing
the Company's financial statements are reasonable and prudent; however, actual
results could differ from these estimates.
a. Portfolio Valuation
The net asset value of the Company is determined by, or at the direction of, the
Advisor as of the close of business at the end of any fiscal period (as defined
in the Company's Limited Liability Company Agreement), in accordance with the
valuation principles set forth below, or as may be determined from time to time
pursuant to policies established by the Managers.
Ordinarily, the Company's investments in Investment Funds are carried at fair
value as determined by the Company's pro-rata interest in the net assets of each
Investment Fund as reported by the Investment Manager who determines the value
of the Investment Fund's net assets. The values of the Investment Funds' net
assets are determined in accordance with their valuation policies as described
in their respective offering memoranda or operating agreements. All valuations
utilize financial information supplied by the Investment Manager of each
Investment Fund and are net of management and performance incentive fees or
allocations pursuant to the Investment Funds' agreements.
Excelsior Absolute Return Fund of Funds Master Fund, LLC
Notes to Financial Statements (continued)
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March 31, 2004
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2. Significant Accounting Policies (continued)
a. Portfolio Valuation (continued)
As a general matter, the fair value of the Company's interest in an Investment
Fund will represent the amount that the Advisor could reasonable expect to
receive from the Investment Fund if the Company's interest were redeemed at the
time of valuation, based on information reasonably available at the time the
valuation is made and that the Advisor believes to be reliable. The Advisor or,
in certain cases, the Managers, will consider such information, and may conclude
in certain circumstances that the information provided by an Investment Fund's
manager does not represent the fair value of the Company's interests in an
Investment Fund. Following procedures adopted by the Managers, and in the
absence of specific transaction activity in interests in a particular Investment
Fund, the Company could consider whether it was appropriate, in light of all
relevant circumstances, to value such a position at the Investment Fund's net
asset value as reported at the time of valuation, or whether to adjust such
value to reflect a premium or discount to net asset value. Any such decision
must be made in good faith, and subject to the review and supervision of the
Managers. Because of the inherent uncertainty of valuation, the values of the
Company's investments may differ significantly from the values that would have
been used had a ready market for the investments held by the Company been
available.
Distributions received from Investment Funds, whether in the form of cash or
securities, are applied first as a reduction of the investment's cost and, if
any, any excess as a realized gain from investments in investment fund.
b. Company Expenses
The Company bears certain expenses incurred in its business, including, but not
limited to, the following: fees paid directly or indirectly to the Investment
Managers of the Investment Funds, all costs and expenses directly related to
portfolio transactions and positions for the Company's account; legal fees;
accounting and auditing fees; custodial fees; fees paid to the Company's
administrator; costs of insurance; advisory fees; travel and related expenses of
the Managers; all costs with respect to communications regarding the Company's
transactions among the Advisor and any custodian or other agent engaged by the
Company; and other types of expenses approved by the Managers.
Excelsior Absolute Return Fund of Funds Master Fund, LLC
Notes to Financial Statements (continued)
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March 31, 2004
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2. Significant Accounting Policies (continued)
c. Income Taxes
As a limited liability company, no provision for the payment of Federal, state
or local income taxes has been provided by the Company since each member is
individually required to report on its own tax return its share of the Company's
taxable income or loss. The Company has a tax year end of December 31.
For the period from December 1, 2003 (Commencement of Operations) to March 31,
2004, the Company reclassified $388,597 and $8,460 from accumulated net
investment loss and net realized gain from investments, respectively, to capital
subscriptions - net. This reclassification was a result of permanent book-to-tax
differences to reflect, as an adjustment to net capital subscribed, the amounts
of taxable income or loss that have been allocated to the Company's members and
had no effect on net assets.
Net investment income or loss and net realized and unrealized gain or loss from
investments of the Company for each fiscal period are allocated among, and
credited to or debited against, the capital accounts of all members as of the
last day of the fiscal period in accordance with each member's respective
investment percentages for the fiscal period, as defined in the Company's
Limited Liability Company Agreement.
The cost of the Company's investment in Investment Funds for federal income tax
purposes is based on amounts reported to the Company by the Investment Funds on
a Schedule K-1 or PFIC annual information statement for the year ended December
31, 2003. Based on Investment Funds owned at December 31, 2003, the cost of
investments for federal income tax purposes was $56,370,039. This consisted of
aggregate gross appreciation of $796,995.
d. Other
Cash and cash equivalents consist of monies invested in a PFPC interest-bearing
account. Interest income is recorded on the accrual basis.
3. Advisory Fee, Related Party Transactions and Other
The Company pays the Advisor a quarterly advisory fee at an annual rate of 1%,
based on the Company's net assets on the first business day of each month, after
adjustments for any subscriptions effective on that date. For the period from
December 1, 2003 (Commencement of Operations) to March 31, 2004, the advisory
fee was $251,269, of which $204,028 was payable as of March 31, 2004.
Excelsior Absolute Return Fund of Funds Master Fund, LLC
Notes to Financial Statements (continued)
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March 31, 2004
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3. Advisory Fee, Related Party Transactions and Other (continued)
The Advisor paid $99,208 of certain reimbursable operating expenses and
organizational costs on behalf of the Company for the period from December 1,
2003 (Commencement of Operations) to March 31, 2004, of which all is payable to
the Advisor as of March 31, 2004.
4. Financial Instruments with Off-Balance Sheet Risk
In the normal course of business, the Investment Funds in which the Company
invests trade various financial instruments and enter into various investment
activities with off-balance sheet risk. These may include, but are not limited
to, short selling activities, writing option contracts, contracts for
differences and equity swaps. However, as a result of the investments by the
Company as a limited partner or member, the Company's liability with respect to
its investments in the Investment Funds is limited to the net asset value of its
interest in each Investment Fund.
5. Investments in Investment Funds
As of March 31, 2004, the Company had investments in twenty-one Investment
Funds, none of which were affiliates, as defined by the 1940 Act. An affiliate
is a fund in which the Company has ownership of over 5% of the voting fund's
securities. The Company has waived its voting rights for all investments in
Investment Funds. The agreements related to investments in Investment Funds
provide for compensation to the general partners/managers of the Investment
Funds in the form of management fees of 1.0% to 2.0% (per annum) of net assets
and incentive fees or allocations ranging from 20% to 25% of net profits earned.
The Investment Funds provide for periodic redemptions, with lock-up provisions
ranging from one month to one year from initial investment.
Aggregate purchases and proceeds of interests in Investment Funds for the period
from December 1, 2003 (Commencement of Operations) to March 31, 2004 is
$78,900,000 and $1,058,460, respectively.
Advance investment in investment funds of $53,500,000 represents amounts
transferred to Investment Funds prior to or as of March 31, 2004 and relates to
the investments to be made effective April 1, 2004 pursuant to each Investment
Fund's offering memorandum or member limited partnership agreement.
Excelsior Absolute Return Fund of Funds Master Fund, LLC
Notes to Financial Statements (continued)
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March 31, 2004
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6. Financial Highlights
The following represents the ratios to average members' equity - net assets,
total return and other supplemental information for the period from December 1,
2003 (Commencement of Operations) through March 31, 2004:
Net assets, end of period $ 83,029,523
Ratio of net investment loss to average
members' equity - net assets (a) (c) (d) (0.54%)
Ratio of expenses to average members' 0.54%
equity - net assets (a) (c) (d)
Portfolio turnover -
Total return (a) (b) 5.02%
(a) The ratios and total return are not annualized for the period.
(b) Total return assumes a purchase of an interest in the Company on the first
day and a sale of interest on the last day of the period.
(c) Ratio doesn't reflect the Company's proportionate share of the net
income (loss) and expenses, including incentive allocation, of the
Investment Funds.
(d) Average members' equity - net assets is determined using the net assets at
the end of each month during the period.
7. Subsequent Events
As of March 31, 2004, the Company received subscriptions from members in the
amount of $54,020,208, which is reflected as members' interest received in
advance on the Statement of Assets, Liabilities and Members' Equity - Net
Assets. These subscriptions will become interests in the Company effective April
1, 2004. The Company also invested $53,500,000 in nineteen existing and one new
Investment Funds as of April 1, 2004.
8. Guarantees
In the normal course of business, the Company enters into contracts that provide
general indemnifications. The Company's maximum exposure under these
arrangements is dependent on future claims that may be made against the Company,
and therefore, cannot be established; however, based on experience, the risk of
loss from such claim is considered remote.
Excelsior Absolute Return Fund of Funds Master Fund, LLC
Notes to Financial Statements (continued)
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March 31, 2004
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9. Company Management (Unaudited)
Information pertaining to the Board of Managers and officers of the Company is
set forth below:
Number of
Term of Portfolios in
Position(s) Office and Principal Fund Complex
Name, Address Held with Length of Occupation During Overseen by
and Age the Company Time Served Past Five Years Manager
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Disinterested Managers
Virginia G. Manager Term - Partner, Blue Rock (8/95 3
Bonker, Indefinite to present); Also a
230 Lackwanna Length manager of Excelsior
Dr. Andover, - since Buyout Investors LLC and
NJ 07821 June 203 Excelsior Absolute
Age 39 Return Fund of Funds LLC.
Jonathan B. Manager Term - Non-Executive Chairman 3
Bulkeley, Indefinite of QXL, PLC (2/98 to
1133 5th Ave., Length present); Chairman and
Apt. 3 - since CEO, Lifeminders (2/01
New York, NY June 2003 to 10/01); Non-Executive
10128 Chairman, Logikeep (3/01
Age 43 to 10/01); CEO,
barnesandnoble.com
(12/98 to 1/00);
Managing Director and
V.P., AOL (3/93 to
12/98). Also a manager
of Excelsior Buyout
Investors LLC and
Excelsior Absolute
Return Fund of Funds LLC.
Thomas F. Manager Term - Managing Partner, 3
McDevitt, Indefinite Edgewood Capital Partners
Edgewood Length (5/02 to present);
Capital - June Managing Director,
1055 Summer St. 2003 Societe Generale (6/98 to
Stamford, CT 3/02); Founder and Partner,
06905 Meenan, McDevitt & Co.
Age 47 (5/91 to 5/98). Also a
manager of Excelsior
Buyout Investors LLC and
Excelsior Absolute Return
Fund of Funds LLC.
Interested Manager
Douglas Principal Term - Chair of U.S. Trust's 7
Lindgren* Executive Indefinite Alternative Investments
U.S. Trust Manager Length Division, Managing
Company - June Director and Senior V.P.
225 High Ridge 2003 of U.S. Trust (4/95 to
Road present). Also a manager
Stamford, CT of Excelsior Buyout
06905 Investors LLC and
Age 43 Excelsior Absolute Return
Fund of Funds LLC.
* Manager is an "interested person" (as defined by the 1940 Act) of the Company
because of his affiliation with the Advisor and its affiliates.
Excelsior Absolute Return Fund of Funds Master Fund, LLC
Notes to Financial Statements (continued)
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March 31, 2004
- --------------------------------------------------------------------------------
9. Company Management (Unaudited)(continued)
Number of
Term of Portfolios in
Position(s) Office and Principal Fund Complex
Name, Address Held with Length of Occupation During Overseen by
and Age the Company Time Served Past Five Years Manager
- --------------------------------------------------------------------------------
Officers who are not Managers
Robert F. Chief Term - Chief Financial Officer N/A
Aufenanger Financial Indefinite of U.S. Trust's
U.S. Trust Officer Length Alternative Investments
Company - since Division and Senior V.P.
225 High Ridge June of U.S. Trust (4/03 to
Road 2003 present); Independent
Stamford, CT consultant to private
06905 equity funds (1/02 to
Age 50 3/03); Chief Financial
Officer, Icon Holding
Corp. (12/99 to 12/01);
Chief Financial Officer,
Partnership Group,
Merrill Lynch & Co.,
Inc. (6/85 to 10/99).
Lee Gardella Vice Term - Senior Vice President N/A
U.S. Trust President Indefinite and Vice President in
Company Length U.S. Trust's Alternative
225 High Ridge - since Investment Division
Road June (9/97 to present); Vice
Stamford, CT 2003 President of Excelsior
06905 Private Equity Fund II,
Age 36 Inc. (10/97 to present)
and Excelsior Venture
Partners III, LLC (5/00
to present).
Cynthia Englert Secretary Term - V. P. of U.S. Trust N/A
U.S. Trust Indefinite (8/01 to present);
Company Length Controller, Whitney &
225 High Ridge - since Company (5/99 to 8/01);
Road June Financial analyst,
Stamford, CT 2003 Greenwich Capital Markets
06905 (7/93 to 3/99).
Age 39
All officers of the Company are employees and/or officers of the Investment
Advisor.
The SAI (or Statement of Additional Information) includes additional information
about the managers of the Company and is available upon request.
ITEM 2. CODE OF ETHICS.
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The registrant has adopted a code of ethics that applies to the registrant's
principal executive officer, principal financial officer, principal accounting
officer or controller or persons performing similar functions.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
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The Board of Managers of the registrant has determined that Virginia G. Bonker
and Jonathan B. Bulkeley possess the technical attributes identified in
Instruction 2(b) of Item 3 to Form N-CSR to qualify as "audit committee
financial experts", and has designated Ms. Bonker and Mr. Murphy as the Audit
Committee's financial experts. Ms. Bonker and Mr. Murphy are "independent"
Managers pursuant to paragraph (a)(2) of Item 3 to Form N-CSR.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
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(a) Audit Fees
The principal accountant fees for the audit of the registrant's annual financial
statements and security count required under the Rule 17f-2 of the Investment
Company Act of 1940 was $41,000 for the period December 1, 2003 through March
31, 2004, the initial period of operations.
(b) Audit-Related Fees
There were no audit related services provided by the principal accountant to the
registrant during the period December 1, 2003 through March 31, 2004, the
initial period of operations.
(c) Tax Fees
The principal accountant for the audit of the registrant's annual financial
statements billed no such fees to the registrant during the period December 1,
2003 through March 31, 2004, the initial period of operations.
(d) All Other Fees
The principal accountant for the audit of the registrant's annual financial
statements billed no such fees to the registrant during the period December 1,
2003 through March 31, 2004, the initial period of operations.
(e) (1)
During its regularly scheduled periodic meetings, the registrant's audit
committee will pre-approve all audit, audit-related, tax and other services to
be provided by the principal accountants of the registrant. The audit committee
has delegated pre-approval authority to its Chairman for any subsequent new
engagements that arise between regularly scheduled meeting dates provided that
any fees such pre-approved are presented to the audit committee at its next
regularly scheduled meeting.
(e) (2) None
(f) Not applicable as less than 50%.
(g) The principal accountant for the audit of the registrant's annual financial
statements billed no such fees to the registrant during the period December 1,
2003 through March 31, 2004, the initial period of operations.
(h) The registrant's audit committee of the board of managers has considered
whether the provision of non-audit services that may be rendered to the
registrant's investment adviser, and any entity controlling, controlled by, or
under common control with the investment adviser that provides ongoing services
to the registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of
Rule 2-01 of Regulation S-X is compatible with maintaining the principal
account's independence. No such services were rendered.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
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The registrant has a separately-designated standing audit committee established
in accordance with Section 3(a)(58)(A) of the Exchange Act (15 U.S.C. 78c(a)(58)
(A)). The entire Board of Managers is acting as the registrants' audit
committee as specified in Section 3(a)(58)(B) of the Exchange Act (15 U.S.C.
78c(a)(58)(B)).
ITEM 6. SCHEDULE OF INVESTMENTS.
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The Schedule of Investments is included as part of the report to members filed
under Item 1 of this form.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
- ---------------------------------------------------------------------------
MANAGEMENT INVESTMENT COMPANIES.
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A copy of the Proxy Voting Policies and Procedures is included as Attachment 2
to this form.
ITEM 8. PURCHASE OF EQUITY SECURITIES BY CLOSE-END MANAGEMENT INVESTMENT
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COMPANY AND AFFILIATED PURCHASERS.
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None
ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
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There have been no changes to the procedures by which members may recommend
nominees to the registrant's board of managers that would require disclosure.
ITEM 10. CONTROLS AND PROCEDURES.
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(a) It is the conclusion of the registrant's principal executive officer and
principal financial officer and persons performing similar functions that the
effectiveness of the registrant's current disclosure controls and procedures
(such disclosure controls and procedures having been evaluated within 90 days of
the date of this filing) provide reasonable assurance that the information
required to be disclosed by the registrant has been recorded, processed,
summarized and reported within the time period specified in the Commission's
rules and forms and that the information required to be disclosed by the
registrant has been accumulated and communicated to the persons that perform
similar functions as registrant's principal executive officer and principal
financial officer in order to allow timely decisions regarding required
disclosure.
(b) There were no changes in the registrant's internal control over financial
reporting that occurred during the registrant's last fiscal half-year that
has materially affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting.
ITEM 11. EXHIBITS.
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(a)(1) CODE OF ETHICS (see Attachment 1)
(a)(2) CERTIFICATIONS
Certifications
I, Douglas A. Lindgren, certify that:
1. I have reviewed this report on Form N-CSR of Excelsior Absolute Return Fund
of Funds Master Fund, LLC;
2. Based on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects
the financial condition, results of operations, changes in net assets, and
cash flows (if the financial statements are required to include a statement
of cash flows) of the registrant as of, and for, the periods presented in
this report;
4. The registrant's other certifying officers(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Rule 30a-3(c) under the Investment Company Act of 1940) and internal
control over financial reporting (as defined in Rule 30a-3(d) under the
Investment Company Act of 1940) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being
prepared;
(b) Designed such internal control over financial reporting, or caused
such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of a date within
90 days prior to the filing date of this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the registrant's most
recent fiscal half-year (the registrant's second fiscal half-year in the case
of an annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial
reporting;
5. The registrant's other certifying officer(s) and I have disclosed to the
registrant's auditors and the audit committee of the registrant's board of
directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant's ability to record, process,
summarize, and report financial information; and
(b)Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
control over financial reporting.
Date: June 7, 2004 /s/ Douglas A. Lindgren
----------------- ------------------------------------------------
Douglas A. Lindgren, Principal Executive Officer
CERTIFICATIONS
I, Robert Aufenanger, certify that:
1. I have reviewed this report on Form N-CSR of Excelsior Absolute Return Fund
of Funds Master Fund, LLC;
2. Based on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects
the financial condition, results of operations, changes in net assets, and
cash flows (if the financial statements are required to include a statement
of cash flows) of the registrant as of, and for, the periods presented in
this report;
4. The registrant's other certifying officers(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Rule 30a-3(c) under the Investment Company Act of 1940) and internal
control over financial reporting (as defined in Rule 30a-3(d) under the
Investment Company Act of 1940) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being
prepared;
(b) Designed such internal control over financial reporting, or caused
such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of a date within
90 days prior to the filing date of this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the registrant's most
recent fiscal half-year (the registrant's second fiscal half-year in the case
of an annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial
reporting;
5. The registrant's other certifying officer(s) and I have disclosed to the
registrant's auditors and the audit committee of the registrant's board of
directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant's ability to record, process,
summarize, and report financial information; and
(b)Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
control over financial reporting.
Date: June 7, 2004 /s/ Robert Aufenanger
----------------- ---------------------------------------------
Robert Aufenanger, Principal Financial Officer
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates as indicated.
(Registrant) Excelsior Absolute Return Fund of Funds Master Fund, LLC
--------------------------------------------------------
By (Signature and Title)* /s/ Douglas A. Lindgren
-------------------------------------------------
Douglas A. Lindren, Principal Executive Officer
Date June 7, 2004
-----------------
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates as indicated.
(Registrant) Excelsior Absolute Return Fund of Funds Master Fund, LLC
--------------------------------------------------------
By (Signature and Title)* /s/ Robert Aufenanger
------------------------------------------------
Robert Aufenanger, Principal Financial Officer
Date June 7, 2004
-----------------
* Print the name and title of each signing officer under his or her signature.