UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
811-21396
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Investment Company Act file number
Excelsior Absolute Return Fund of Funds, 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, 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, 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
Statement of Operations................................................ 3
Statement of Changes in Members' Equity - Net Assets................... 4
Statement of Cash Flows................................................ 5
Notes to Financial Statements.......................................... 6
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Members and Board of Managers of
Excelsior Absolute Return Fund of Funds, LLC
We have audited the accompanying statement of assets, liabilities and members'
equity - net assets of Excelsior Absolute Return Fund of Funds, LLC (the "Fund")
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 Fund'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. 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, 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, LLC
Statement of Assets, Liabilities and Members' Equity - Net Assets
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March 31, 2004
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ASSETS
Investment in Excelsior Absolute Return Fund of Funds Master
Fund, LLC at fair value (cost $76,256,144) $79,676,252
Cash and cash equivalents 1,000
Advance investment in Excelsior Absolute Return
Fund of Funds Master Fund, LLC 38,995,000
Due from Advisor 52,089
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Total Assets 118,724,341
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LIABILITIES
Member interests received in advance 38,995,000
Advisor management fee payable 97,789
Professional fees payable 20,000
Administration fees payable 19,303
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Total Liabilities 39,132,092
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Net Assets $79,592,249
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MEMBERS' EQUITY - NET ASSETS
Represented by:
Capital subscriptions - net $ 75,811,208
Net unrealized appreciation on investments 3,781,041
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Members' Equity - Net Assets $79,592,249
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The accompanying notes and attached audited financial statement of Excelsior
Absolute Return Fund of Funds Master Fund, LLC are an integral part of these
financial statements.
Excelsior Absolute Return Fund of Funds, LLC
Statement of Operations
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Period from December 1, 2003 (Commencement of Operations) to March 31, 2004
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Net investment Loss allocated from
Excelsior Absolute Return Fund of Funds
Master Fund, LLC:
Interest $ 4,834
Expenses (373,876)
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Net investment loss allocated from Excelsior Absolute
Return Fund of Funds Master Fund, LLC (369,042)
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Fund Expenses:
Advisor management fees 120,363
Organizational costs 281,581
Professional fees 46,317
Administration fees 23,818
Board of Managers' fees 19,500
Miscellaneous 200
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Total Expenses 491,779
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Expenses reimbursed by the Advisor (449,109)
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Net Expenses 42,670
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Net Investment Loss (411,712)
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Realized and unrealized gain on investments
allocated from Excelsior Absolute Return Fund
of Funds Master Fund, LLC:
Net realized gain on investments 8,109
Net unrealized appreciation on investments 3,781,041
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Net Realized and Unrealized Gain on Investments 3,789,150
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INCREASE IN MEMBERS' EQUITY - NET ASSETS
DERIVED FROM OPERATIONS $3,377,438
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The accompanying notes and attached audited financial statement of Excelsior
Absolute Return Fund of Funds Master Fund, LLC are an integral part of these
financial statements.
Excelsior Absolute Return Fund of Funds, 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 $ (411,712)
Net realized gain on investments 8,109
Net unrealized appreciation on investments 3,781,041
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Increase in Members' Equity - Net Assets
Derived from Operations 3,377,438
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CAPITAL TRANSACTIONS
Member subscriptions 76,279,718
Member interests repurchased -
Offering costs (64,907)
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Increase in Members' Equity - Net Assets
Derived From Capital Transactions 76,214,811
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Net Increase in Members' Equity - Net Assets 79,592,249
MEMBERS' EQUITY - NET ASSETS
AT BEGINNING OF PERIOD -
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MEMBERS' EQUITY - NET ASSETS
AT END OF PERIOD $79,592,249
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The accompanying notes and attached audited financial statement of Excelsior
Absolute Return Fund of Funds Master Fund, LLC are an integral part of these
financial statements.
Excelsior Absolute Return Fund of Funds, 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 $ 3,377,438
Adjustments to reconcile net increase in members' equity -
net assets derived from operations to net cash used in
operating activities:
Net unrealized appreciation on investment allocated from
Excelsior Absolute Return Fund of Funds Master Fund, LLC (3,781,041)
Net realized gain on investment allocated from Excelsior
Absolute Return Fund of Funds Master Fund, LLC (8,109)
Net investment loss allocated from Excelsior Absolute
Return Fund of Funds Master Fund, LLC 369,042
Purchases of investment in Excelsior Absolute Return
Fund of Funds Master Fund, LLC (76,256,144)
Increase in advance investment in Excelsior Absolute
Return Fund of Funds Master Fund, LLC (38,995,000)
Increase in due from Advisor (52,089)
Increase in Advisor management fee payable 97,789
Increase in professional fees payable 20,000
Increase in administration fees payable 19,303
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Net Cash Used in Operating Activities (115,208,811)
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CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from member subscriptions 115,274,718
Payments for member interests repurchased -
Offering costs paid (64,907)
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Net Cash Provided by Financing Activities 115,209,811
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Net increase in cash and cash equivalents 1,000
Cash and cash equivalents at beginning of period -
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Cash and Cash Equivalents at End of Period $ 1,000
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The accompanying notes and attached audited financial statement of Excelsior
Absolute Return Fund of Funds Master Fund, LLC are an integral part of these
financial statements.
Excelsior Absolute Return Fund of Funds, LLC
Notes to Financial Statements
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March 31, 2004
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1. Organization
Excelsior Absolute Return Fund of Funds, LLC (the "Fund") was organized as a
limited liability company under the laws of Delaware on June 17, 2003, and
commenced operations on December 1, 2003. The Fund is registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), as a closed-end,
non-diversified, management investment company. The Fund's investment objective
is to provide long-term, risk-adjusted absolute returns in a variety of capital
market conditions. The Fund pursues its investment objective by investing
substantially all of its assets in Excelsior Absolute Return Fund of Funds
Master Fund, LLC, (the "Company"), a closed-end, non-diversified, management
investment company which has the same investment objective as the Fund. The
Company seeks to achieve its investment objective by investing its assets
primarily in private investment limited partnerships or limited liability
companies and other similar investment vehicles (collectively, "Investment
Funds") that are managed by investment managers utilizing a broad range of
alternative investment strategies.
The financial statements of the Company, including the Schedule of Investments,
are attached to this report and should be read with the Fund's financial
statements. The percentage of the Company's members' equity owned by the Fund at
March 31, 2004 was 95.96%.
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 adviser under the Investment
Advisers Act of 1940, as amended. The Advisor provides various management and
administrative services to the Company and the Fund.
The Fund's Board of Managers (the "Managers") has overall responsibility to
manage and supervise the operations of the Fund and the Company, including the
exclusive authority to oversee and to establish policies regarding the
management, conduct and operation of the Fund's business.
Initial and additional subscriptions for investment interests by eligible
investors 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 Fund. The Fund 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 Manager.
Excelsior Absolute Return Fund of Funds, LLC
Notes to Financial Statements (continued)
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March 31, 2004
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1. Organization (continued)
The Advisor expects that, generally, it will recommend to the Managers that the
Fund 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 Fund 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 Fund's financial statements are reasonable and prudent; however, actual
results could differ from these estimates.
a. Portfolio Valuation
The net asset value of the Fund 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 Fund'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.
The Fund records its investment in the Company at fair value and is represented
by the Fund's proportionate interest in the Company's members' equity - net
assets at March 31, 2004. Valuation of investments held by the Company is
discussed in the notes to the Company's financial statements attached to this
report.
The net unrealized appreciation on investments, which is included in the
components of Members' Equity - Net Assets on the Statement of Assets,
Liabilities and Members' Equity - Net Assets, reflects the Fund's allocated
share of the Company's net unrealized gain on investments. However, the total
unrealized gain on the Fund's investment in the Company includes cumulative
allocated net investment loss and net realized gain, which both are included in
Capital Subscriptions - Net.
Advance investment in Excelsior Absolute Return Fund of Funds Master Fund, LLC
of $38,995,000 represents amounts transferred to the Company prior to or as of
March 31, 2004 relating to investments to be made effective April 1, 2004
pursuant to the Company's limited liability agreement.
Distributions received from the Company, 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.
Excelsior Absolute Return Fund of Funds, LLC
Notes to Financial Statements (continued)
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March 31, 2004
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2. Significant Accounting Policies (continued)
b. Company Expenses
The Fund bears its own expenses and, indirectly, bears a pro rata portion of the
Company's expenses, including, but not limited to: 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; certain legal fees; accounting and auditing fees; custodial
and escrow fees; fees paid to the Fund's administrator; costs of insurance; the
advisory management fee; travel and related expenses of Managers; all costs with
respect to communications regarding the Fund's transactions among the Advisor
and any custodian or other agent engaged by the Fund; and other types of
expenses approved by the Managers.
The Advisor and the Fund have entered into an expense limitation and
reimbursement agreement (the "Expense Limitation Agreement"), under which the
Advisor has agreed to waive its fees, or to pay or absorb the ordinary operating
expenses of the Fund, to the extent necessary to limit the ordinary operating
expenses of the Fund, including organizational and offering costs and the
proportionate share of the Company's expenses to 2% per annum of the Fund's
average monthly net assets. In consideration of the Advisor's agreement to limit
the Fund's expenses, the Fund will carry forward the amount of expenses waived,
paid or absorbed by the Advisor in excess of the Expense Limitation for a period
not to exceed three years from the end of the fiscal year in which they were
incurred, and will reimburse the Advisor such amounts. Reimbursement will be
made as promptly as possible, but only to the extent it does not cause the
Fund's ordinary operating expenses to exceed the Expense Limitation.
As of March 31, 2004, and for the period then ended, the Advisor has paid
$397,020 of expenses and costs on behalf of the Fund and has agreed to reimburse
an additional $52,089 of expenses of the Fund per the Expense Limitation
Agreement. The Fund will carry forward these amounts and reimburse the Advisor
as promptly as possible pursuant to the Expense Limitation Agreement. The
reimbursement of these expenses is reasonably possible, but is dependent on
future levels of members' equity - net assets and expenses of the Fund.
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 Fund. Each member is individually
required to report on its own tax return its share of the Fund's taxable income
or loss. The Fund has a tax year end of December 31.
Excelsior Absolute Return Fund of Funds, 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 (continued)
For the period from December 1, 2003 (Commencement of Operations) to March 31,
2004, the Fund reclassified $411,712 and $8,109 from accumulated net investment
loss and realized gain from investments 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 Fund'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 Fund 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 Fund's Limited Liability
Company Agreement.
d. Other
Cash and cash equivalents consist of monies invested in a PFPC interest-bearing
account. Interest income is recorded on the accrual basis.
The Fund records its proportionate share of the Company's investment income,
expenses and realized and unrealized gain and losses.
3. Management Fee, Related Party Transactions and Other
As of March 31, 2004, the Fund's employees and affiliates have a combined
interest of approximately 2.74% of the Fund's members' equity. As of March 31,
2004, two members own a combined interest of approximately 23.67% of the Fund's
members' equity - net assets - net assets.
The Advisor provides certain investment advisory services and incurs travel and
other expenses related to the selection and monitoring of investment managers
for the Company's Investment Funds. Further, the Advisor provides certain
management and administrative services to the Fund including providing office
space and other support services, maintaining files and records, and preparing
and filing various regulatory materials. In consideration for such services, the
Fund pays the Advisor a quarterly management fee at an annual rate of 0.5% of
the Fund's net assets on the first business day of each quarter after
adjustments for any subscriptions effective on that date. For the period from
December 1, 2003 (Commencement of Operations) to March 31, 2004, the management
fee was $120,363, of which $97,789 was payable as of March 31, 2004.
Excelsior Absolute Return Fund of Funds, LLC
Notes to Financial Statements (continued)
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March 31, 2004
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3. Management Fee, Related Party Transactions and Other (continued)
Each Manager, who is not an "interested person" of the Fund, as defined by the
1940 Act, receives an annual retainer of $5,000 ($2,500 for the initial period)
plus a fee for each meeting attended. Any Manager who is an "interested person"
does not receive any annual or other fee from the Fund. All Managers are
reimbursed by the Fund for all reasonable out-of-pocket expenses. The Fund
incurred $19,500 of such expense for the period from December 1, 2003
(Commencement of Operations) to 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. 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 $ 79,592,249
Ratio of net investment loss to average
members' equity - net assets (a),(c) (0.60%)
Ratio of total expenses to average
members' equity - net assets (a),(c),(d) 1.25%
Ratio of net expenses to average members' equity - net assets 0.59%
Total return (a),(b) 4.85%
(a) The ratios and total return are not annualized for the period.
(b) Total return assumes a purchase of an interest in the Fund on the first day
and a sale of interest on the last day of the period.
(c) The ratio reflects the income and expenses assuming inclusion of the Fund's
proportionate share of income and expenses of the Company.
(d) The expense ratio is before the waiver of fees and reimbursement of expenses
by the Advisor.
Excelsior Absolute Return Fund of Funds, LLC
Notes to Financial Statements (continued)
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March 31, 2004
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6. Subsequent Events
As of March 31, 2004, the Fund received subscriptions from members in the amount
of $38,995,000, which is reflected as member interests received in advance on
the Statement of Assets, Liabilities, and Members' Equity - Net Assets. These
subscriptions will become interests in the Fund effective April 1, 2004. The
Fund also invested $38,871,218 in the Company as of April 1, 2004.
7. Guarantees
In the normal course of business, the Fund enters into contracts that provide
general indemnifications. The Fund's maximum exposure under these arrangements
is dependent on future claims that may be made against the Fund, and therefore,
cannot be established; however, based on experience, the risk of loss from such
claim is considered remote.
8.Fund Management (Unaudited)
Information pertaining to the Board of Managers and officers of the Fund 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 Return
Age 39 Fund of Funds Master
Fund,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 Master
Fund, 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 Master
Fund, LLC.
Excelsior Absolute Return Fund of Funds, LLC
Notes to Financial Statements (continued)
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March 31, 2004
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8. Fund 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
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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 Master
Fund, LLC.
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
* Manager is an "interested person" (as defined by the 1940 Act) of the Fund
because of his affiliation with the Advisor and its affiliates.
All officers of the Fund are employees and/or officers of the Investment
Advisor.
The SAI (or Statement of Additional Information) includes additional information
about the managers of the Fund 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 $20,000 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.
- ------------------------------------------------
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
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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
- --------------------------------------------------------------------------
COMPANY AND AFFILIATED PURCHASERS.
- ----------------------------------
None
ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
- --------------------------------------------------------------
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.
- ----------------------------------
(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, 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, 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, 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, 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.