EXCELSIOR ABSOLUTE RETURN FUND OF FUNDS, LLC
EXCELSIOR ABSOLUTE RETURN FUND OF FUNDS MASTER FUND, LLC
JOINT CODE OF ETHICS
I. Applicability
This Joint Code of Ethics (the "Code"), adopted by the Board of
Managers, including a majority of the Managers who are not interested persons,
of each of Excelsior Absolute Return Fund of Funds, LLC and Excelsior Absolute
Return Fund of Funds Master Fund, LLC (each, a "Company" and collectively, the
"Companies") in accordance with Rule 17j-1 under the Investment Company Act of
1940, as amended (the "Investment Company Act"), establishes rules of conduct
for "Covered Persons" or "Access Persons" (each as defined in this Code) of the
Companies. For purposes of this Code, "Covered Person" or "Access Person" shall
mean the following persons of each Company:
(A) any employee of the Company or any company in a control
relationship to the Company who, in connection with his regular functions or
duties, makes, participates in or obtains information regarding the purchase
or sale of securities by the Company or whose functions or duties as part of
the ordinary course of his business relate to the making of any
recommendations with respect to the Company regarding the purchase or sale
of securities (an "Advisory Person");
(B) any manager or officer of the Company, regardless of whether such
manager or officer is an Advisory Person; and
(C) any natural person in a control relationship to the Company who
obtains information concerning recommendations made to the Company with
regard to the purchase or sale of securities.
For purposes of this Article I, a person does not become a Covered
Person solely by reason of (i) normally assisting in the preparation of public
reports or receiving public reports, but not receiving information about current
recommendations or trading; or (ii) a single instance of obtaining knowledge of
current recommendations or trading activity, or infrequently and inadvertently
obtaining such knowledge.
II. Statement of General Principles
The general fiduciary principles that govern the personal trading
activities of a Covered Person are as follows:
(A) the duty at all times to place the interests of the Interest
holders of such Company first;
(B) the requirement that all personal securities transactions be
conducted in a manner which does not interfere with a Company's portfolio
transactions so as to avoid any actual or potential conflict of interest or
any abuse of an individual's position of trust and responsibility; and
(C) the fundamental standard that Covered Persons should not take
inappropriate or unfair advantage of their relationship with a Company.
Covered Persons must adhere to these general principles as well as
comply with the Code's specific provisions.
III. Prohibitions
(A) No Covered Person shall purchase or sell, directly or indirectly,
any security in which he has, or by reason of such transaction acquires, any
direct or indirect beneficial ownership (as defined in Attachment A hereto)
and which he knows or should know at the time of such purchase or sale:
(1) is being considered for purchase or sale by a Company; or
(2) is being purchased or sold by a Company.
For purposes of this Article (A), no Advisory Person shall purchase
or sell a security within at least seven calendar days before and after a
Company purchases or sells such security. No Advisory Person shall profit in the
purchase and sale or sale and purchase, of the same (or equivalent) securities
within 60 calendar days. Any profit realized on such short-term trades shall be
disgorged.
For purposes of this Article (A)(1), a security is "being considered
for purchase or sale" when a recommendation to purchase or sell a security has
been made and communicated and, with respect to the person making the
recommendation, when such person seriously considers making such a
recommendation.
(B) No Covered Person shall recommend any securities transaction by a
Company without having disclosed his interest, if any, in such securities or
the issuer of the securities, including without limitation:
(1) his direct or indirect beneficial ownership of any securities
of such issuer;
(2) any contemplated transaction by such person in such
securities;
(3) any position with such issuer or its affiliates; and
(4) any present or proposed business relationship between such
issuer or its affiliates and such person or any party in which such
person has a significant interest.
(C) No Covered Person shall, directly or indirectly in connection with
the purchase or sale of any securities held or to be acquired by a Company:
(1) employ any device, scheme or artifice to defraud such
Company; or
(2) make to such Company any untrue statement of a material fact
or omit to state to such Company a material fact necessary in order to
make the statements made, in light of the circumstances under which they
are made, not misleading;
(3) engage in any act, practice or course of business which
operates or would operate as a fraud or deceit upon such Company; or
(4) engage in any manipulative practice with respect to such
Company.
(D) No Covered Person shall:
(1) purchase, directly or indirectly, or by reason of such
transaction acquire, any direct or indirect beneficial ownership (as
defined in Attachment A hereto) of any securities in an initial public
offering or a private placement transaction eligible for purchase or
sale by a Company, without prior approval in accordance with this Code;
or
(2) accept any gift or other thing of more than de minimis value
from any person or entity that does business with or on behalf of the
Covered Investment Company.
For purposes of this Code, the term "security" shall have the meaning
set forth in Section 2(a)(36) of the Investment Company Act, except that it
shall not include securities issued by the Government of the United States,
short term securities which are "government securities" as defined in Section
2(a)(16) of the Investment Company Act, bankers' acceptances, bank certificates
of deposit, commercial paper, shares of registered open-end investment companies
and such other money market instruments as are designated by the Board of
Managers of each Company.
IV. Exempt Transactions
The prohibitions described in paragraph (A) of Article shall not
apply to:
(A) purchases or sales effected in any account over which the Covered
Person has no direct or indirect influence or control;
(B) purchases or sales of securities which are not eligible for
purchase or sale by the Companies;
(C) purchases or sales that are non-volitional on the part of the
Covered Person;
(D) purchases that are part of an automatic dividend reinvestment
plan;
(E) purchases effected upon the exercise of rights issued by an issuer
pro rata to all holders of a class of its securities, to the extent such
rights were acquired from the issuer, and sales of such rights so acquired;
(F) any securities transaction, or series of related transactions,
involving 500 shares or less in the aggregate, if the issuer has a market
capitalization (outstanding shares multiplied by the current price per
share) greater than $1 billion; or
(G) purchases or sales for which the Covered Person has received prior
approval from a supervisory person designated by a Company, whichever is
most appropriate under the circumstances (the "Designated Supervisory
Person") in accordance with this Code.
V. Prior Approval
Upon written request from a Covered Person as provided in this
Article V(C) below, a Designated Supervisory Person shall have the sole
discretion to pre-approve a personal securities transaction, and thereby exempt
such transaction from the restrictions of this Code. A Designated Supervisory
Person shall make such determination in accordance with the following:
(A) Prior approval shall be granted only if a purchase or sale of
securities is consistent with the purposes of this Code and Section 17(j) of
the Investment Company Act. To illustrate, a purchase or sale shall be
considered consistent with those purposes if such purchase or sale is only
remotely potentially harmful to a Company because such purchase or sale
would be unlikely to affect a highly institutional market, or because such
purchase or sale is clearly not related economically to the securities held,
purchased or sold by such Company.
(B) Prior approval shall take into account, among other factors:
(1) whether the investment opportunity should be reserved for a
Company and its Interest holders and whether the opportunity is being
offered to the Covered Person by virtue of the Covered Person's position
with such Company;
(2) whether the amount or nature of the transaction or person
making it is likely to affect the price or market for the security;
(3) whether the Covered Person making the proposed purchase or
sale is likely to benefit from purchases or sales being made or being
considered by such Company;
(4) whether the security proposed to be purchased or sold is one
that would qualify for purchase or sale by such Company; and
(5) whether the transaction is non-volitional on the part of the
individual, such as receipt of a stock dividend or a sinking fund call.
(C) Covered Persons must submit in writing a completed and executed
Request for Permission to Engage in a Personal Transaction (a form of which
is appended hereto as Attachment B), which shall set forth the details of
the proposed transaction. Approval of the transaction as described on such
form shall be evidenced by the signature of a Designated Supervisory Person
thereon. A copy of all prior approval forms, with all required signatures,
shall be retained by the Designated Supervisory Person.
If approval is given to the Covered Person in accordance with this
Code to engage in a securities transaction, the Covered Person is under an
affirmative obligation to disclose that position if such Covered Person plays a
material role in a Company's subsequent investment decision regarding the same
issuer. In such circumstances, an independent review of such Company's
investment decision to purchase securities of the issuer by investment personnel
with no personal interest in the issuer shall be conducted.
Approval granted to the Covered Person in accordance with this Code
is only effective for seven days from the date of such approval. If the trade is
not made within seven days, a new clearance must be obtained.
VI. Reporting
(A) Every Covered Person must submit an initial report, quarterly
reports and annual reports on such dates as shall be determined by a
Designated Supervisory Person containing the information set forth below
about each transaction, if any, by which the Covered Person acquires any
direct or indirect beneficial ownership of a security; provided, however,
that:
(1) a Covered Person shall not be required to include in such
reports any transaction effected for any account over which such Covered
Person does not have any direct or indirect influence or control; and
(2) any person who is a Covered Person with respect to a Company
by virtue of being a manager such Company, but who is not an "interested
person" (as defined in the Investment Company Act) with respect to such
Company, shall not be required to submit an initial report or annual
holdings reports, and shall be required to submit a quarterly report of
a transaction only if such person, at the time of that transaction,
knew, or in the ordinary course of fulfilling his official duties as a
manager of such company should have known, that during the 15-day period
immediately preceding or after the date of the transaction by such
person, the security such person purchased or sold is or was purchased
or sold by such Company or was being considered for purchase or sale by
such Company or its investment adviser.
(B) Every Covered Person must submit an initial report (a form of
which is appended as Attachment C) to a Designated Supervisory Person no
later than 10 days after the person becomes a Covered Person containing the
following information:
(1) the title and the number of shares, and the principal amount
of each security involved;
(2) the name of the broker, dealer or bank with or through whom
the transaction was effected; and
(3) the date that the report is submitted by the Covered Person.
(C) A Covered Person must submit each quarterly report (a form of
which is appended as Attachment D) required by this Article VI to a
Designated Supervisory Person no later than 10 days after the end of each
calendar quarter containing the following information:
(1) the date of the transaction, the title and the number of
shares, and the principal amount of each security involved;
(2) the nature of the transaction (i.e., purchase, sale or other
acquisition or disposition);
(3) the price at which the transaction was effected; and
(4) the name of the broker, dealer or bank with or through whom
the transaction was effected.
(D) Every Covered Person must submit an annual holdings report (a form
of which is appended as Attachment E) to a Designated Supervisory Person,
which information must be current as of a date no more than 30 days before
the report is submitted containing the following information:
(1) the title and the number of shares, and the principal amount
of each security;
(2) the name of any broker, dealer or bank with whom the Covered
Person maintains an account; and
(3) the date that the report is submitted by the Covered Person.
Any report submitted to comply with the requirements of this Article
VI may contain a statement that the report shall not be construed as an
admission by the person making such report that he has any direct or indirect
beneficial ownership in the security to which the report relates.
A Covered Person will be deemed to have complied with the
requirements of Section A of this Article VI by (i) causing to be sent to a
Designated Supervisory Person duplicate monthly brokerage statements on all
transactions required to be reported hereunder, or (ii) providing to a
Designated Supervisory Person the requisite information on all transactions
required to be reported hereunder through a transaction monitoring system, which
may or may not be automated, each in a manner acceptable to the Designated
Supervisory Persons.
VII. Administration and Procedural Matters
(A) The Designated Supervisory Persons of each Company shall:
(1) furnish a copy of this Code to each Covered Person;
(2) notify each Covered Person of his or her obligation to file
reports as provided by this Code;
(3) report to the Board of Managers the facts contained in any
reports filed with the Designated Supervisory Persons pursuant to this
Code when any such report indicates that a Covered Person purchased or
sold a security held or to be acquired by such Company;
(4) supervise the implementation of this Code by the Adviser and
the enforcement of the terms hereof by the Adviser;
(5) determine whether any particular securities transaction should
be exempted pursuant to the provisions of this Code;
(6) issue either personally or with the assistance of counsel as
may be appropriate, any interpretation of this Code which may appear
consistent with the objectives of Rule 17j-1 and this Code;
(7) conduct such inspections or investigations as shall reasonably
be required to detect and report any apparent violations of this Code to
the Board of Managers of such Company or any Committee appointed by
them to deal with such information; and
(8) maintain and cause to be maintained in an easily accessible
place, the following records:
(i) a copy of any Code adopted pursuant to Rule 17j-1 which
has been in effect during the past five (5) years;
(ii) a record of any violation of any such Code and of any
action taken as a result of such violation;
(iii) a copy of each report made by the Designated Supervisory
Persons during the past five (5) years;
(iv) a list of all persons who are, or within the past five
(5) years have been, required to make reports pursuant to Rule
17j-1 and this Code with an appropriate description of their title
or employment;
(v) a copy of each report made by a Covered Person as
required by Article VI of the Code, including any information
provided in lieu of the reports under Article VI of the Code,
during the past five (5) years; and
(vi) a copy of each report to the Board of Managers required
by Section B of this Article VII during the past five (5) years.
(B) Each Company, its investment advisers and the principal
underwriter must furnish to such Company's Board of Managers an annual
written report that:
(1) describes any issues arising under the Code since the last
report to the Board of Managers including information about material
violations of the Code and sanctions imposed in response to those
violations; and
(2) certifies that such Company, the investment advisers and the
principal underwriter have adopted procedures reasonably necessary to
prevent Covered Persons from violating the Code.
VIII. Sanctions
Upon discovering that a Covered Person has not complied with the
requirements of this Code, the Board of Managers of each Company may impose on
such Covered Person whatever sanctions the Board deems appropriate, including,
among other things, a letter of censure, suspension or termination of such
Covered Person's position with such Company and/or restitution of an amount
equal to the difference between the price paid or received by the Company and
the more advantageous price paid or received by such Covered Person.
The Board of Managers, in their discretion, may impose any of the
sanctions set forth in this Article V for any violations of the requirements of
this Code, including but not limited to, the filing by any Covered Person of any
false, incomplete or untimely reports contemplated by Article VI of the Code.
IX. Confidentiality
All information obtained from any Covered Person hereunder shall be
kept in strict confidence, except that reports of securities transactions
hereunder will be made available to the Securities and Exchange Commission or
any other regulatory or self-regulatory organization only to the extent required
by law or regulation.
X. Other Laws, Rules and Statements of Policy
Nothing contained in this Code shall be interpreted as relieving any
Covered Person from acting in accordance with the provisions of any applicable
law, rule or regulation or any other statement of policy or procedure governing
the conduct of such person adopted by the applicable Company.
XI. Further Information
If any person has any question with regard to the applicability of
the provisions of this Code generally or with regard to any securities
transaction or transactions, he or she should consult a Designated Supervisory
Person.
As of the date hereof, the Designated Supervisory
Persons of each Company are James F. Dorment and David I. Fann.
XII. Certification By Covered Persons
All Covered Persons of a Company must submit a certificate (a form of
which is appended as Attachment F) that they have read and understand this Code
and recognize that as a Covered Person they are subject to the terms of this
Code. All Covered Persons of a Company shall agree to certify on an annual basis
that they have complied with the requirements of this Code and that they have
disclosed or reported all personal securities transactions required to be
disclosed or reported pursuant to the requirements of this Code.
Dated: July ____, 2003.
Attachment A
The term "beneficial ownership" as used in the attached Code of
Ethics (the "Code") is to be interpreted by reference to Rule 16a-1 under the
Securities Exchange Act of 1934, as amended (the "Rule"), except that the
determination of direct or indirect beneficial ownership for purposes of the
Code must be made with respect to all securities that a Covered Person has or
acquires. Under the Rule, a person is generally deemed to have beneficial
ownership of securities if: (1) the person, directly or indirectly, through any
contract, arrangement, understanding, relationship or otherwise, has or shares
(a) voting power, which includes the power to vote, or to direct the voting of,
the securities and/or (b) investment power, which includes the power to dispose
of, or to direct the disposition of, the securities; and (2) the person,
directly or indirectly, through any contract, arrangement, understanding,
relationship or otherwise, has or shares a direct or indirect pecuniary interest
in the securities. A person is deemed to have voting and/or investment power
with respect to securities within the meaning of the Rule if the person has the
right to acquire beneficial ownership of the security within 60 days, including
any right to acquire the security; through the exercise of any option, warrant
or right; through the conversion of a security; pursuant to the power to revoke
a trust, discretionary account or similar arrangement; or pursuant to the
automatic termination of a trust, discretionary account or similar arrangement.
The term "pecuniary interest" in particular securities is generally
defined in the Rule to mean the opportunity, directly or indirectly, to profit
or share in any profit derived from a transaction in the securities. A person is
deemed to have an "indirect pecuniary interest" within the meaning of the Rule
in any securities held by members of the person's immediate family sharing the
same household, the term "immediate family" includes any child, stepchild,
grandchild, parent, stepparent, grandparent, spouse, sibling, mother-in-law,
father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law, as
well as adoptive relationships. Under the Rule, an indirect pecuniary interest
also includes, among other things: a general partner's proportionate interest in
the portfolio securities held by a general or limited partnership; a
performance-related fee, other than an asset-based fee, received by any broker,
dealer, bank, insurance company, investment company, investment advisor,
investment manager, trustee or person or entity performing a single function
(other than (i) a performance-related fee calculated based upon net capital
gains or net capital appreciation generated from the portfolio or the
fiduciary's overall performance over a period of one year or more; (ii) when
equity securities of the issuer do not account for more than ten percent of the
market value of the portfolio or () a nonperformance-related fee alone); a
person's right to dividends that is separated or separable from the underlying
securities; a person's interest in certain trusts; and a person's right to
acquire equity securities through the exercise or conversion of any derivative
security, whether or not presently exercisable, the term "derivative security"
being generally defined as any option, warrant, convertible security, stock
appreciation right or similar right with an exercise or conversion privilege at
a price related to an equity security, or similar securities with, or value
derived from, the value of an equity security. For purposes of the Rule, a
person who is a shareholder of a corporation or similar entity is not deemed to
have a pecuniary interest in portfolio securities held by the corporation or
entity, so long as the shareholder is not a controlling shareholder of the
corporation or the entity and does not have or share investment control over the
corporation's or the entity's portfolio.
Attachment B
[NAME OF COMPANY]
REQUEST FOR PERMISSION TO
ENGAGE IN PERSONAL SECURITIES TRANSACTION
To the Designated Supervisory Persons:
On each of the dates proposed below, I hereby request permission to
effect a transaction in securities as indicated below on behalf of myself, my
family (spouse, minor children or adults living in my household), trusts of
which I am trustee or other account in which I have a beneficial ownership
interest or legal title, and which are required to be pre-approved pursuant to
the Code of Ethics adopted by the Board of Managers of Excelsior Absolute Return
Fund of Funds, LLC pursuant to Rule 17j-1 under the Investment Company Act of
1940, as amended.
(Use approximate dates and amounts of proposed transactions.)
- --------------------------------------------------------------------------------
No. of Nature of
Shares Dollar Transaction
Proposed or Amount (Purchase,
Name of Date of Principal of Sale, Broker/Dealer
Security Transaction Amount Transaction Other) or Bank Price
- --------------------------------------------------------------------------------
Name:_______________________________________
Position
with Company________________________________
Date:___________________________ Signature:__________________________________
Permission Granted Permission Denied
Date:____________________________ Signature:__________________________________
Designated Supervisory Person
Attachment C
[NAME OF COMPANY]
INITIAL REPORT OF SECURITIES
To the Designated Supervisory Person:
On the date indicated, the following are securities of which I, my
family (spouse, minor children or adults living in my household) or trusts of
which I am trustee, possessed direct or indirect "beneficial ownership," and
which are required to be reported pursuant to the Code of Ethics (the "Code")
adopted by the Board of Managers of Excelsior Absolute Return Fund of Funds, LLC
pursuant to Rule 17j-1 under the Investment Company Act of 1940, as amended (the
"Investment Company Act"). If there were no such securities, I have so indicated
by typing or printing "NONE."
- --------------------------------------------------------------------------------
No. of Shares
Name of or Principal Broker/Dealer
Security Amount or Bank
- --------------------------------------------------------------------------------
This report (i) excludes transactions with respect to which I had no
direct or indirect influence or control, (ii) any other transactions not
required to be reported under the Code and (iii) is not an admission that I have
or had any direct or indirect beneficial ownership in the securities listed
above.
Date:__________________________ Signature:__________________________________
Print Name:_________________________________
Company:____________________________________
Position
with Company:_______________________________
Attachment D
[NAME OF COMPANY]
QUARTERLY REPORT OF SECURITIES TRANSACTIONS
To the Designated Supervisory Person:
On the dates indicated, the following transactions, if any, were
effected in securities of which I, my family (spouse, minor children or adults
living in my household) or trusts of which I am trustee, participated or
acquired, direct or indirect "beneficial ownership," and which are required to
be reported pursuant to the Code of Ethics (the "Code") adopted by the Board of
Managers of Excelsior Absolute Return Fund of Funds, LLC pursuant to Rule 17j-1
under the Investment Company Act of 1940, as amended (the "Investment Company
Act"). If no such transactions were effected, I have so indicated by typing or
printing "NONE."
- --------------------------------------------------------------------------------
No. of Nature of
Shares Dollar Transaction
or Amount (Purchase,
Name of Date of Principal of Sale, Broker/Dealer
Security Transaction Amount Transaction Other) Price or Bank
- --------------------------------------------------------------------------------
This report (i) excludes transactions with respect to which I had no
direct or indirect influence or control, (ii) any other transactions not
required to be reported under the Code and (iii) is not an admission that I have
or had any direct or indirect beneficial ownership in the securities listed
above.
Date:____________________________ Signature:__________________________________
Print Name:_________________________________
Company:____________________________________
Position
with Company:_______________________________
Attachment E
[NAME OF COMPANY]
ANNUAL REPORT OF SECURITIES
To the Designated Supervisory Person:
On the date indicated, the following are securities of which I, my
family (spouse, minor children or adults living in my household) or trusts of
which I am trustee, possessed direct or indirect "beneficial ownership," and
which are required to be reported pursuant to the Code of Ethics (the "Code")
adopted by the Board of Managers of Excelsior Absolute Return Fund of Funds, LLC
pursuant to Rule 17j-1 under the Investment Company Act of 1940, as amended (the
"Investment Company Act"). If there were no such securities, I have so indicated
by typing or printing "NONE."
- --------------------------------------------------------------------------------
No. of Shares
Name of or Principal Broker/Dealer
Security Amount or Bank
- --------------------------------------------------------------------------------
This report (i) excludes transactions with respect to which I had no
direct or indirect influence or control, (ii) any other transactions not
required to be reported under the Code and (iii) is not an admission that I have
or had any direct or indirect beneficial ownership in the securities listed
above.
Date:__________________________ Signature:__________________________________
Print Name:_________________________________
Company:____________________________________
Position
with Company:_______________________________
Attachment F
FORM OF CERTIFICATION OF COVERED PERSONS
Attention: Designated Supervisory Persons
Gentlemen:
[Covered Person] hereby certifies that:
I have read and understand the Code of Ethics of Excelsior Absolute
Return Fund of Funds, LLC and recognize that I am subject thereto. I hereby
agree to certify on an annual basis that I have complied with the requirements
of the Code of Ethics and I have disclosed or reported all personal securities
transactions required to be disclosed or reported pursuant to the requirements
of the Code of Ethics of Excelsior Absolute Return Fund of Funds, LLC.
IN WITNESS WHEREOF, the undersigned has caused this Certification to
be executed and delivered as of the date hereof.
[COVERED PERSON]
By:____________________________________________
Name:
Title: