UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
811-21396
---------------------------------
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
--------------------------------------
(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: March 31
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Date of reporting period: September 30, 2004
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ITEM 1. REPORTS TO STOCKHOLDERS.
- ----------------------------------
EXCELSIOR ABSOLUTE RETURN FUND OF FUNDS, LLC
Financial Statements
(Unaudited)
Period from April 1, 2004 to September 30, 2004
Excelsior Absolute Return Fund of Funds, LLC
Financial Statements
(Unaudited)
Period from April 1, 2004 to September 30, 2004
Contents
Statement of Assets, Liabilities and Members' Equity - Net Assets....... 1
Statement of Operations................................................. 2
Statement of Changes in Members' Equity - Net Assets.................... 3
Statement of Cash Flows................................................. 4
Notes to Financial Statements........................................... 5
Excelsior Absolute Return Fund of Funds, LLC
Statement of Assets, Liabilities and Members' Equity - Net Assets (Unaudited)
- --------------------------------------------------------------------------------
September 30, 2004
- --------------------------------------------------------------------------------
ASSETS
Investment in Excelsior Absolute Return Fund of Funds
Master Fund, LLC at fair value (cost $170,160,696) $173,844,965
Cash and cash equivalents 103,421
Advance investment in Excelsior Absolute Return Fund
of Funds Master Fund, LLC 19,205,000
Other assets 83
- --------------------------------------------------------------------------------
Total Assets 193,153,469
- --------------------------------------------------------------------------------
LIABILITIES
Members' interests received in advance 19,205,000
Advisor management fee payable 215,480
Due to investment advisor 35,419
Board of managers' fee payable 7,500
Professional fees payable 50,808
Administration fees payable 13,303
- --------------------------------------------------------------------------------
Total Liabilities 19,527,510
- --------------------------------------------------------------------------------
Net Assets $173,625,959
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MEMBERS' EQUITY - NET ASSETS
Represented by:
Capital subscriptions - net $ 168,815,308
Net unrealized appreciation on investments 4,810,651
- --------------------------------------------------------------------------------
Members' Equity - Net Assets $173,625,959
- --------------------------------------------------------------------------------
The accompanying notes and attached 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 (Unaudited)
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Period from April 1, 2004 to September 30, 2004
- --------------------------------------------------------------------------------
Net investment LOSS allocated from Excelsior Absolute Return
Fund of Funds Master Fund, LLC:
Interest $ 5,143
Expenses (797,545)
- --------------------------------------------------------------------------------
Net investment loss allocated from Excelsior
Absolute Return Fund of Funds Master Fund, LLC (792,402)
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Fund Income:
Interest Income 559
- --------------------------------------------------------------------------------
Total Income 559
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Fund Expenses:
Advisor management fees 363,749
Professional fees 60,000
Administration fees 67,284
Board of Managers' fees 19,500
Other 11,910
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Total Expenses 522,443
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Expenses reimbursed to the Advisor 108,530
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Net Expenses 630,973
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Net Investment Loss (1,422,816)
- --------------------------------------------------------------------------------
Realized and unrealized gain on investments allocated from
Excelsior Absolute Return Fund of Funds Master Fund, LLC:
Net realized gain on investments 26,953
Net unrealized appreciation on investments 1,029,610
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Net Realized and Unrealized Gain on Investments 1,056,563
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DECREASE IN MEMBERS' EQUITY - NET ASSETS DERIVED FROM OPERATIONS $ (366,253)
- --------------------------------------------------------------------------------
The accompanying notes and attached 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 (Unaudited)
- --------------------------------------------------------------------------------
Period from
December 1, 2003
Period from (Commencement of
April 1, 2004 to Operations) to
September 30, 2004 March 31, 2004
- --------------------------------------------------------------------------------
OPERATIONS
Net investment loss $ (1,422,816) $ (411,712)
Net realized gain on investments 26,953 8,109
Net unrealized appreciation on investments 1,029,610 3,781,041
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(Decrease)/ Increase in Members' Equity -
Net Assets Derived from Operations (366,253) 3,377,438
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CAPITAL TRANSACTIONS
Members' subscriptions 94,427,000 76,279,718
Members' interests repurchased - -
Offering costs (27,037) (64,907)
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Increase in Members' Equity - Net Assets
Derived From Capital Transactions 94,399,963 76,214,811
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Net Increase in Members' Equity - Net Assets 94,033,710 79,592,249
MEMBERS' EQUITY - NET ASSETS AT
BEGINNING OF PERIOD 79,592,249 -
- --------------------------------------------------------------------------------
MEMBERS' EQUITY - NET ASSETS AT
END OF PERIOD $173,625,959 $ 79,592,249
- --------------------------------------------------------------------------------
The accompanying notes and attached 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 (Unaudited)
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Period from April 1, 2004 to September 30, 2004
- --------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net decrease in members' equity - net assets derived
from operations $ (366,253)
Adjustments to reconcile net decrease 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 (1,029,610)
Net realized gain on investment allocated from Excelsior
Absolute Return Fund of Funds Master Fund, LLC (26,953)
Net investment loss allocated from Excelsior Absolute
Return Fund of Funds Master Fund, LLC 792,402
Purchases of investment in Excelsior Absolute Return Fund
of Funds Master Fund, LLC (93,904,553)
Decrease in advance investment in Excelsior Absolute
Return Fund of Funds Master Fund, LLC 19,790,000
Decrease in due from Advisor 52,089
Increase in other assets (82)
Increase in Advisor management fee payable 117,691
Increase in due to Investment Advisor 35,419
Increase in Board of Managers' fee payable 7,500
Decrease in administration fees payable (6,000)
Increase in professional fees payable 30,808
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Net Cash Used in Operating Activities (74,507,542)
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CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from member subscriptions 74,637,000
Offering costs paid (27,037)
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Net Cash Provided by Financing Activities 74,609,963
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Net increase in cash and cash equivalents 102,421
Cash and cash equivalents at beginning of period 1,000
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Cash and Cash Equivalents at End of Period $ 103,421
- --------------------------------------------------------------------------------
The accompanying notes and attached 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 (Unaudited)
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September 30, 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
September 30, 2004 was 88.10%.
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 (Unaudited) continued
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September 30, 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 September 30, 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 $19,205,000 represents amounts transferred to the Company prior to or as of
September 30, 2004 relating to investments to be made effective October 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 (Unaudited) continued
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September 30, 2004
- --------------------------------------------------------------------------------
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 for 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 September 30, 2004, the Advisor has paid $375,998 of reimbursable expenses
and costs of the Fund per the Expense Limitation Agreement. Of this amount, the
Fund is able to reimburse $35,419 at September 30, 2004 of which is reflected as
Due to Advisor on the Statement of Assets, Liabilities, and Members' Equity- Net
Assets. The Fund will carry forward the remaining $340,579 of reimbursable
expenses paid by the Advisor 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 (Unaudited) continued
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September 30, 2004
- --------------------------------------------------------------------------------
2. Significant Accounting Policies (continued)
c. Income Taxes (continued)
For the period from April 1, 2004 to September 30, 2004, the Fund reclassified
$1,449,853 and $26,953 from accumulated net investment loss and realized loss
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 September 30, 2004, the Fund's employees and affiliates have a combined
interest of approximately 1.43% of the Fund's members' equity. As of September
30, 2004, three members own a combined interest of approximately 19.47% of the
Fund's members' equity - 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
April 1, 2004 to September 30, 2004, the management fee was $363,749, of which
$215,480 was payable as of September 30, 2004.
Excelsior Absolute Return Fund of Funds, LLC
Notes to Financial Statements (Unaudited) continued
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September 30, 2004
- --------------------------------------------------------------------------------
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 April 1, 2004 to September
30, 2004.
4. Financial Highlights
The following represents the ratios to average members' equity - net assets,
total return and other supplemental information for the periods indicated:
For the For the
period period
April 1, December 1,
2004- 2003 * -
September March 31,
30, 2004 2004
--------------------------------
Net assets, end of period $ 173,625,959 $ 79,592,249
Ratio of net investment loss to average
members' equity - net assets (a) (c) (1.05)% (0.60)%
Ratio of total expenses to average
members' equity - net assets (a) (c) (d) 0.97% 1.25%
Ratio of net expenses to average members'
equity-net assets (a) (c) 1.05% 0.59%
Total return (a) (b) (0.53)% 4.85%
* Commencement of operations.
(a) The ratios and total return are not annualized for the periods.
(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) The ratio reflects the income and expenses assuming inclusion of the
Fund's proportionate share of income and expenses of the Company.
(d) The ratio reflects total expenses before the impact of the expense
limitation and reimbursement agreement with the Advisor.
Excelsior Absolute Return Fund of Funds, LLC
Notes to Financial Statements (Unaudited) continued
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September 30, 2004
- --------------------------------------------------------------------------------
5. 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.
6. Subsequent Events
As of September 30, 2004, the Fund received subscriptions from members in the
amount of $19,205,000, 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 October
1, 2004. The Fund also invested $19,205,000 in the Company as of October 1,
2004.
The Fund's Boards of Managers and Audit Committee, on October 28, 2004,
terminated Ernst & Young, LLP ("E&Y") as the Funds' independent registered
public accounting firm as a result of concerns regarding their independence at
the time of the issuance of their report on the Fund's March 31, 2004 financial
statements. These concerns are the result of certain real estate consulting
services performed by E&Y on a contingent fee basis for Charles Schwab & Co.,
Inc., which is an affiliate of the Investment Adviser. During the period in
which E&Y served as independent registered public accounting firm for the Fund,
there was no disagreement between E&Y and the Fund on any matter of accounting
principles or practices, financial statement disclosure or auditing scope or
procedures. The Fund has no reason to believe that the Fund's March 31, 2004
financial statements were not prepared in accordance with generally accepted
accounting principles or that such financial statements do not fairly present,
in all material respects, the financial condition of the Fund as of that date.
The Board and the Audit Committee engaged Deloitte & Touche LLP ("D&T") as the
Fund's independent registered public accounting firm and D&T will perform a
re-audit of the Fund's March 31, 2004 financial statements.
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.
Excelsior Absolute Return Fund of Funds, LLC
Notes to Financial Statements (Unaudited) continued
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September 30, 2004
- --------------------------------------------------------------------------------
8. Fund Management
Information pertaining to the Board of Managers and officers of the Fund is set
forth below:
Number of
Portfolios in
Position(s) Term of Office Fund Complex
Held with the and Length of Overseen by
Name, Address and Age Company Time Served Principal Occupation During Past Five Years Manager
- ------------------------------------------------------------------------------------------------------------------------------------
Disinterested Managers
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Virginia G. Bonker Manager Term - Indefinite; Partner, Blue Rock (8/95 to present; Also a manager 3
230 Lackwanna Dr. Length - since of Excelsior Buyout Investors LLC and Excelsior
Andover, NJ 07821 June 2003 Absolute Return Fund of Funds Master Fund LLC.
Age 39
Jonathan B. Bulkeley Manager Term - Indefinite; Non-Executive Chairman of ZXL, PLC ( 2/98 to present); 3
1133 5th Ave., Apt. 3 Length - since Chairman and CEO, Lifeminders (2/01 to 10/01); CEO,
New York, NY 10128 June 2003 barnesandnoble.com (12/98 to 1/00); Managing Director
Age 43 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. McDevitt Manager Term - Indefinite; Managing Partner, Edgewood Capital Partners (5/02 to 3
1055 Summer St. Length - since present); Managing Director, Societe Generale (6/98 to
Stamford, CT 06905 June 2003 3/02); Founder and Partner, 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.
Interested Manager
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Douglas Lindgren* Manager and Term - Indefinite; Chair of U.S. Trust's Alternative Investments 7
U.S. Trust Company Chairman Length - since Division, Managing Director and Senior V.P. of
225 High Ridge Road July 2003 U.S. Trust (4/95 to present). Also a manager of
Stamford, CT 06905 Excelsior Buyout Investors LLC and Excelsior
Age 44 Absolute Return Fund of Funds Master Fund LLC.
* Manager is an "interested person" (as defined by the 1940 Act) of the Fund
because of his affiliation with the Advisor and its affiliates.
Excelsior Absolute Return Fund of Funds, LLC
Notes to Financial Statements (Unaudited) continued
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September 30, 2004
- --------------------------------------------------------------------------------
8. Fund Management (Continued)
Number of
Portfolios in
Position(s) Term of Office Fund Complex
Held with the and Length of Overseen by
Name, Address and Age Company Time Served Principal Occupation During Past Five Years Manager
- ------------------------------------------------------------------------------------------------------------------------------------
Officers who are not Managers
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Spencer Boggess Chief Executive Term - Indefinite; Chief Executive Officer of U.S. Trust Hedge Fund N/A
U.S. Trust Company Officer Length - since Management, Inc. (7/04 to present); Portfolio
225 High Ridge Road July 2004 manager of Excelsior Directional Hedge Fund of
Stamford, CT 06905 Funds, LLC (7/03 to present); Senior V.P. and Co-
Age 37 Director of Research of CTC Consulting, Inc. (10/00
to 6/03); Principal of Winston Partners (9/96 to
9/00).
Robert F. Aufenanger Chief Financial Term - Indefinite; Chief Financial Officer of U.S. Trust's Alternative N/A
U.S. Trust Company Officer and Length - since Investments Division and Senior V.P. of U.S. Trust
225 High Ridge Road Treasure July 2003 (4/03 to present); Independent consultant to private
Stamford, CT 06905 equity funds (1/02 to 3/03); Chief Financial Officer,
Age 51 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 President Term - Indefinite; Senior Vice President and Vice President in U.S. N/A
U.S. Trust Company Length - since Trust's Alternative Investments Division (9/97 to
225 High Ridge Road Jund 2003 present); Vice President of Excelsior Private
Stamford, CT 06905 Equity Fund II, Inc. (10/97 to present) and Excelsior
Age 37 Venture Partners III, LLC (5/00 to present).
Cynthia Englert Secretary Term - Indefinite; V.P. of U.S. Trust (8/01 to present); Controller, N/A
U.S. Trust Company Length - since Whitney & Company (5/99 to 8/01); Financial analyst,
225 High Ridge Road June 2003 Greenwich Capital Markets (7/93 to 3/99).
Stamford, CT 06905
Age 40
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.
EXCELSIOR ABSOLUTE RETURN FUND OF FUNDS MASTER FUND, LLC
Financial Statements
(Unaudited)
Period from April 1, 2004 to September 30, 2004
Excelsior Absolute Return Fund of Funds Master Fund, LLC
Financial Statements
(Unaudited)
Period from April 1, 2004 to September 30, 2004
Contents
Statement of Assets, Liabilities and Members' Equity - Net Assets........ 1
Schedule of Investments.................................................. 2
Statement of Operations.................................................. 3
Statement of Changes in Members' Equity - Net Assets..................... 4
Statement of Cash Flows.................................................. 5
Notes to Financial Statements............................................ 6
Excelsior Absolute Return Fund of Funds Master Fund, LLC
Statement of Assets, Liabilities and Members' Equity - Net Assets (Unaudited)
- --------------------------------------------------------------------------------
September 30, 2004
- --------------------------------------------------------------------------------
ASSETS
Investments in investment funds, at fair value
(cost $189,750,000) $ 194,852,685
Cash and cash equivalents 1,420,127
Advance investment in investment funds 20,000,000
Due from investment funds 3,083,504
Other assets 12
- --------------------------------------------------------------------------------
Total Assets 219,356,328
- --------------------------------------------------------------------------------
LIABILITIES
Members' interests received in advance 21,405,000
Due to Advisor 551,913
Professional fees payable 50,185
Administration fees payable 12,000
- --------------------------------------------------------------------------------
Total Liabilities 22,019,098
- --------------------------------------------------------------------------------
Net Assets $ 197,337,230
- --------------------------------------------------------------------------------
MEMBERS' EQUITY - NET ASSETS
Represented by:
Capital subscriptions - net $ 192,234,545
Net unrealized appreciation on investments 5,102,685
- --------------------------------------------------------------------------------
Members' Equity - Net Assets $ 197,337,230
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
Excelsior Absolute Return Fund of Funds Master Fund, LLC
Schedule of Investments (Unaudited)
- --------------------------------------------------------------------------------
September 30, 2004
- --------------------------------------------------------------------------------
% of Shares or
Members' % Ownership First
First Equity of Available
Acquisition Fair - Net Investment Redemption
Investment Funds Date Cost * Value Assets Funds Date ** Liquidity ***
- ------------------------------------------------------------------------------------------------------------------------------------
Fixed Income
- ------------
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Citadel Wellington Partners, L.P. SE 12/01/2003 $ 18,250,000 $ 18,773,165 9.51% 3.79% N/A Quarterly
Highbridge Capital Corporatoin - Class A 12/01/2003 11,250,000 11,517,513 5.84% 215 N/A Quarterly
MKP Opportunity Partners, L.P. 12/01/2003 5,000,000 5,196,475 2.63% 3.08% N/A Monthly
MKP Partners, L.P. 12/01/2003 5,600,000 5,823,549 2.95% 2.65% N/A Quarterly
Polygon Global Opportunities Fund, L.P. 8/01/2004 1,900,000 1,897,301 0.96% 1.07% N/A Quarterly
Silverback Partners, L.P. 1/01/2004 6,500,000 6,291,195 3.19% 0.46% 12/31/04 Quarterly
---------------------------------------
Strategy Total 48,500,000 49,499,198 25.08%
---------------------------------------
Equity
- ------
<s> <c> <c> <c> <c> <c> <c> <c>
Galleon Diversified Fund, Ltd. Class E 12/01/2003 9,600,000 9,369,275 4.75% 9,187 N/A Quarterly
Copper Beech Partners II, L.P. 12/01/2003 7,850,000 8,675,774 4.40% 1.42% 12/31/04 Quarterly
Heirloom Qualified Partners, L.P. 12/01/2003 7,850,000 7,916,834 4.01% 5.80% 12/31/04 Quarterly
Glenview Capital Partners, L.P. 12/01/2003 7,300,000 7,824,626 3.97% 0.39% 12/31/04 Quarterly
The Mako Europe Fund, L.P. 12/01/2003 8,500,000 8,511,795 4.31% 15.68% N/A Monthly
Cantillon World, L.P. 12/01/2003 3,050,000 3,601,892 1.83% 0.94% N/A Quarterly
Maverick Levered Partners, L.P. 5/01/2004 4,000,000 3,974,183 2.01% 0.92% 5/01/07 Quarterly
Shoshone Partners, L.P. 12/01/2003 8,000,000 8,520,826 4.32% 4.37% N/A Annually
---------------------------------------
Strategy Total 56,150,000 58,395,205 29.60%
---------------------------------------
Macro/CTA/Short-Term Trading
- ----------------------------
<s> <c> <c> <c> <c> <c> <c> <c>
Sunrise Commodities Select Portfolio-
Davco Fund, L.P. 12/01/2003 6,450,000 6,068,329 3.08% 2.17% N/A Monthly
Catequil Partners, L.P. 12/01/2003 7,250,000 7,679,236 3.89% 1.77% 12/31/04 Annually
The Capital Fund (Domestic), LLC 12/01/2003 4,750,000 4,743,176 2.40% 5.63% N/A Monthly
WoodAllen Global Fund, L.P. 12/01/200. 3,250,000 3,042,718 1.54% 1.94% 12/31/04 Quarterly
Bridgewater Pure Alpha Trading Co. Ltd.-
Class B 2/01/2004 4,400,000 4,560,996 2.31% 4,338 N/A Monthly
---------------------------------------
Strategy Total 26,100,000 26,094,455 13.22%
---------------------------------------
Event Driven
- ------------
<s> <c> <c> <c> <c> <c> <c> <c>
Brencourt Arbitrage, L.P. 4/01/2004 5,000,000 5,014,888 2.54% 0.68% 4/01/05 Quarterly
Castlerigg Partners, L.P. 12/01/2003 12,500,000 13,187,391 6.68% 2.72% 12/31/04 Quarterly
Canyon Value Realization Fund, L.P. 12/01/2003 12,500,000 13,380,590 6.78% 1.12% 12/31/04 Annually
Empyrean Capital Fund, L.P. 7/01/2004 4,000,000 4,010,440 2.03% 1.64% 7/01/05 Quarterly
K Capital II, L.P. 12/01/2003 14,000,000 14,251,704 7.22% 2.38% 12/31/04 Quarterly
York Capital Management, L.P. 7/01/2004 11,000,000 11,018,815 5.58% 2.62% N/A Annually
---------------------------------------
Strategy Total 59,000,000 60,863,828 30.83%
---------------------------------------
Total Investments in investment funds $189,750,000 194,852,685 98.74%
============
Other Assets, Less Liabilities 2,484,545 1.26%
-------------------------
Members' Equity - Net Assets $197,337,230 100.00%
=========================
* 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 September 30, 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 (Unaudited)
- --------------------------------------------------------------------------------
Period from April 1, 2004 to September 30, 2004
- --------------------------------------------------------------------------------
INVESTMENT INCOME
Interest $ 5,881
- --------------------------------------------------------------------------------
Total Investment Income 5,881
- --------------------------------------------------------------------------------
OPERATING EXPENSES
Advisory fee 831,578
Professional fees 60,000
Administration fees 12,000
Other expenses 13,210
- --------------------------------------------------------------------------------
Total Operating Expenses 916,788
- --------------------------------------------------------------------------------
Net Investment Loss (910,907)
- --------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain from investments in investment funds 30,595
Net unrealized appreciation on investments in investment funds 1,158,123
- --------------------------------------------------------------------------------
Net Realized and Unrealized Gain on Investments 1,188,718
- --------------------------------------------------------------------------------
INCREASE IN MEMBERS' EQUITY - NET ASSETS DERIVED FROM OPERATIONS $ 277,811
- --------------------------------------------------------------------------------
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 (Unaudited)
- --------------------------------------------------------------------------------
Period from
December 1, 2003
Period from (Commencement of
April 1, 2004 to Operations) to
September 30, 2004 March 31, 2004
- --------------------------------------------------------------------------------
OPERATIONS
Net investment loss $ (910,907) $ (388,597)
Net realized gain from investments - 8,460
Net unrealized appreciation on investments 1,188,718 3,944,562
- --------------------------------------------------------------------------------
Increase in Members' Equity - Net Assets
Derived from Operations 277,811 3,564,425
- --------------------------------------------------------------------------------
CAPITAL TRANSACTIONS
Members' subscriptions 114,029,896 79,465,098
Members' interests repurchased - -
- --------------------------------------------------------------------------------
Increase in Members' Equity - Net Assets
Derived From Capital Transactions 114,029,896 79,465,098
- --------------------------------------------------------------------------------
Net Increase in Members' Equity - Net Assets 114,307,707 83,029,523
MEMBERS' EQUITY - NET ASSETS AT
BEGINNING OF PERIOD 83,029,523 -
- --------------------------------------------------------------------------------
MEMBERS' EQUITY - NET ASSETS AT
END OF PERIOD $197,337,230 $83,029,523
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
Excelsior Absolute Return Fund of Funds Master Fund, LLC
Statement of Cash Flows (Unaudited)
- --------------------------------------------------------------------------------
Period from April 1, 2004 to September 30, 2004
- --------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net increase in members' equity - net assets derived from
operations $ 277,811
Adjustments to reconcile net increase in members' equity -
net assets derived from operations to net cash used in
operating activities:
Change in net unrealized appreciation on investments (1,158,123)
Net realized gain from investments in investment funds (30,595)
Purchases of investment funds (114,900,000)
Proceeds from sale of investment fund 1,005,551
Decrease in advance investment in investment funds 33,500,000
Decrease in other assets 258
Increase in due to Advisor 248,677
Increase in administration fees payable 6,000
Decrease in other accrued expenses (110)
Increase in professional fees payable 15,185
- --------------------------------------------------------------------------------
Net Cash Used in Operating Activities (81,035,346)
- --------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from member subscriptions 81,414,688
Payments for member interests repurchased -
- --------------------------------------------------------------------------------
Net Cash Provided by Financing Activities 81,414,688
- --------------------------------------------------------------------------------
Net increase in cash and cash equivalents 379,342
Cash and cash equivalents at beginning of period 1,040,785
- --------------------------------------------------------------------------------
Cash and Cash Equivalents at End of Period $ 1,420,127
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
Excelsior Absolute Return Fund of Funds Master Fund, LLC
Notes to Financial Statements (Unaudited)
- --------------------------------------------------------------------------------
September 30, 2004
- --------------------------------------------------------------------------------
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 adviser 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 September 30, 2004, these members' ownership of the
Company's members' equity - net assets were 88.10% and 11.90%, respectively.
Excelsior Absolute Return Fund of Funds Master Fund, LLC
Notes to Financial Statements (Unaudited) continued
- --------------------------------------------------------------------------------
September 30, 2004
- --------------------------------------------------------------------------------
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 (Unaudited) continued
- --------------------------------------------------------------------------------
September 30, 2004
- --------------------------------------------------------------------------------
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 (Unaudited) continued
- --------------------------------------------------------------------------------
September 30, 2004
- --------------------------------------------------------------------------------
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 April 1, 2004 to September 30, 2004, the Company
reclassified $910,907 from accumulated net investment loss 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.
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
April 1, 2004 to September 30, 2004, the advisory fee was $831,578, of which
$489,608 was payable as of September 30, 2004.
Excelsior Absolute Return Fund of Funds Master Fund, LLC
Notes to Financial Statements (Unaudited) continued
- --------------------------------------------------------------------------------
September 30, 2004
- --------------------------------------------------------------------------------
3. Advisory Fee, Related Party Transactions and Other (continued)
The Advisor paid $62,305 of certain reimbursable operating expenses on behalf of
the Company for the period from April 1,2004 to September 30, 2004, of which all
is payable to the Advisor as of September 30, 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 September 30, 2004, the Company had investments in twenty-five 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 fund's voting
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 April 1, 2004 to September 30, 2004 is $114,900,000 and $3,030,595,
respectively.
Advance investment in investment funds of $20,000,000 represents amounts
transferred to Investment Funds prior to or as of September 30, 2004 and relates
to the investments to be made effective October 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 (Unaudited) continued
- --------------------------------------------------------------------------------
September 30, 2004
- --------------------------------------------------------------------------------
6. Financial Highlights
The following represents the ratios to average members' equity - net assets,
total return and other supplemental information for the periods indicated:
For the For the
period period
April 1, December 1,
2004- 2003 * -
September March 31,
30, 2004 2004
--------------------------------
Net assets, end of period $197,337,230 $ 83,029,523
Ratio of net investment loss to average
members' equity - net assets (a) (c) (d) (0.55)% (0.54)%
Ratio of expenses to average members' equity
- net assets (a) (c) (d) 0.55% 0.54%
Portfolio turnover 1.97% -
Total return (a) (b) (0.08)% 5.02%
* Commencement of operations.
(a) The ratios and total return are not annualized for the periods.
(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 September 30, 2004, the Company received subscriptions from members in the
amount of $21,405,000, 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
October 1, 2004. The Company also invested $20,000,000 in eight existing and two
new Investment Funds as of October 1, 2004.
Excelsior Absolute Return Fund of Funds Master Fund, LLC
Notes to Financial Statements (Unaudited) continued
- --------------------------------------------------------------------------------
September 30, 2004
- --------------------------------------------------------------------------------
7. Subsequent Events (continued)
The Fund's Boards of Managers and Audit Committee, on October 28, 2004,
terminated Ernst & Young, LLP ("E&Y") as the Funds' independent registered
public accounting firm as a result of concerns regarding their independence at
the time of the issuance of their report on the Fund's March 31, 2004 financial
statements. These concerns are the result of certain real estate consulting
services performed by E&Y on a contingent fee basis for Charles Schwab & Co.,
Inc., which is an affiliate of the Investment Adviser. During the period in
which E&Y served as independent registered public accounting firm for the Fund,
there was no disagreement between E&Y and the Fund on any matter of accounting
principles or practices, financial statement disclosure or auditing scope or
procedures. The Fund has no reason to believe that the Fund's March 31, 2004
financial statements were not prepared in accordance with generally accepted
accounting principles or that such financial statements do not fairly present,
in all material respects, the financial condition of the Fund as of that date.
The Board and the Audit Committee engaged Deloitte & Touche LLP ("D&T") as the
Fund's independent registered public accounting firm and D&T will perform a
re-audit of the Fund's March 31, 2004 financial statements.
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 (Unaudited) continued
- --------------------------------------------------------------------------------
September 30, 2004
- --------------------------------------------------------------------------------
9. Company Management
Information pertaining to the Board of Managers and officers of the Company is
set forth below:
Number of
Portfolios in
Position(s) Term of Office Fund Complex
Held with the and Length of Overseen by
Name, Address and Age Company Time Served Principal Occupation During Past Five Years Manager
- ------------------------------------------------------------------------------------------------------------------------------------
Disinterested Managers
<s> <c> <c> <c> <c>
Virginia G. Bonker Manager Term - Indefinite; Partner, Blue Rock (8/95 to present; Also a manager 3
230 Lackwanna Dr. Length - since of Excelsior Buyout Investors LLC and Excelsior
Andover, NJ 07821 June 2003 Absolute Return Fund of Funds LLC.
Age 39
Jonathan B. Bulkeley Manager Term - Indefinite; Non-Executive Chairman of ZXL, PLC ( 2/98 to present); 3
1133 5th Ave., Apt. 3 Length - since Chairman and CEO, Lifeminders (2/01 to 10/01); CEO,
New York, NY 10128 June 2003 barnesandnoble.com (12/98 to 1/00); Managing Director
Age 43 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. McDevitt Manager Term - Indefinite; Managing Partner, Edgewood Capital Partners (5/02 to 3
1055 Summer St. Length - since present); Managing Director, Societe Generale (6/98 to
Stamford, CT 06905 June 2003 3/02); Founder and Partner, 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
<s> <c> <c> <c> <c>
Douglas Lindgren* Principal Term - Indefinite; Chair of U.S. Trust's Alternative Investments 7
U.S. Trust Company Executive Length - since Division, Managing Director and Senior V.P. of
225 High Ridge Road Manager July 2003 U.S. Trust (4/95 to present). Also a manager of
Stamford, CT 06905 Excelsior Buyout Investors LLC and Excelsior
Age 44 Absolute Return Fund of Funds LLC.
* Manager is an "interested person" (as defined by the 1940 Act) of the Fund
because of his affiliation with the Advisor and its affiliates.
Excelsior Absolute Return Fund of Funds Master Fund, LLC
Notes to Financial Statements (Unaudited) continued
- --------------------------------------------------------------------------------
September 30, 2004
- --------------------------------------------------------------------------------
9. Company Management (continued)
Number of
Portfolios in
Position(s) Term of Office Fund Complex
Held with the and Length of Overseen by
Name, Address and Age Company Time Served Principal Occupation During Past Five Years Manager
- ------------------------------------------------------------------------------------------------------------------------------------
Officers who are not Managers
<s> <c> <c> <c> <c>
Spencer Boggess Chief Executive Term - Indefinite; Chief Executive Officer of U.S. Trust Hedge Fund N/A
U.S. Trust Company Officer Length - since Management, Inc. (7/04 to present); Portfolio
225 High Ridge Road July 2004 manager of Excelsior Directional Hedge Fund of
Stamford, CT 06905 Funds, LLC (7/03 to present); Senior V.P. and Co-
Age 37 Director of Research of CTC Consulting, Inc. (10/00
to 6/03); Principal of Winston Partners (9/96 to
9/00).
Robert F. Aufenanger Chief Financial Term - Indefinite; Chief Financial Officer of U.S. Trust's Alternative N/A
U.S. Trust Company Officer and Length - since Investments Division and Senior V.P. of U.S. Trust
225 High Ridge Road Treasure July 2003 (4/03 to present); Independent consultant to private
Stamford, CT 06905 equity funds (1/02 to 3/03); Chief Financial Officer,
Age 51 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 President Term - Indefinite; Senior Vice President and Vice President in U.S. N/A
U.S. Trust Company Length - since Trust's Alternative Investments Division (9/97 to
225 High Ridge Road Jund 2003 present); Vice President of Excelsior Private
Stamford, CT 06905 Equity Fund II, Inc. (10/97 to present) and Excelsior
Age 37 Venture Partners III, LLC (5/00 to present).
Cynthia Englert Secretary Term - Indefinite; V.P. of U.S. Trust (8/01 to present); Controller, N/A
U.S. Trust Company Length - since Whitney & Company (5/99 to 8/01); Financial analyst,
225 High Ridge Road June 2003 Greenwich Capital Markets (7/93 to 3/99).
Stamford, CT 06905
Age 40
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.
- -------------------------
Not applicable for semi-annual reports.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
- ------------------------------------------
Not applicable for semi-annual reports.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
- ------------------------------------------------
Not applicable for semi-annual reports.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
- ------------------------------------------------
Not applicable for semi-annual reports.
ITEM 6. SCHEDULE OF INVESTMENTS.
- ----------------------------------
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.
- --------------------------------
Not applicable for semi-annual reports.
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 material changes to the procedures by which members may
recommend nominees to the registrant's board of managers that would require
disclosure since the registrant last submitted a response to this item.
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 the 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.
- -------------------
(a)(1) Not applicable for semi-annual reports.
(a)(2) Separate certifications for the registrant's principal executive officer
and principal financial officer, as required by Section 302 of the
Sarbanes-Oxley Act of 2002 and Rule 30a-2(a) under the Investment Company
Act of 1940 are filed herewith.
(a)(3) Not applicable to the registrant.
(b) Not applicable to the registrant.
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. Lindgren, Principal Executive Officer
Date December 9, 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 December 9, 2004
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* Print the name and title of each signing officer under his or her signature.