UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
811-10083
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Investment Company Act file number
Excelsior Directional Hedge Fund of Funds, LLC
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(Exact name of registrant as specified in charter)
225 High Ridge Road
Stamford, CT 06905
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(Address of principal executive offices) (Zip code)
U.S. Trust Hedge Fund Management, Inc.
225 High Ridge Road
Stamford, CT 06905
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(Name and address of agent for Service)
Registrant's telephone number, including area code: (203) 352-4497
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Date of fiscal year end: March 31
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Date of reporting period: September 30, 2004
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ITEM 1. REPORTS TO STOCKHOLDERS.
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EXCELSIOR DIRECTIONAL HEDGE FUND OF FUNDS, LLC
Financial Statements
(Unaudited)
Period from April 1, 2004 to September 30, 2004
Excelsior Directional Hedge 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
Schedule of Investments.............................................. 2
Statement of Operations.............................................. 3
Statements of Changes in Members' Equity - Net Assets................ 4
Statement of Cash Flows.............................................. 5
Notes to Financial Statements........................................ 6
Excelsior Directional Hedge Fund of Funds, LLC
Statement of Assets, Liabilities and Members' Equity - Net Assets
(Unaudited)
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September 30, 2004
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ASSETS
Investments in investment funds, at fair value (cost $174,646,490) $200,739,173
Cash and cash equivalents 18,453,505
Due from investment fund 8,717,898
Other assets 14,215
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Total Assets 227,924,791
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LIABILITIES
Members' interests received in advance 16,648,500
Payable for members' interests repurchased 373,187
Due to advisor 785,662
Professional fees payable 111,321
Board of Managers' fees payable 33,000
Administration fees payable 37,500
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Total Liabilities 17,989,170
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Net Assets $209,935,621
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MEMBERS' EQUITY - NET ASSETS
Represented by:
Capital subscriptions - net $183,842,939
Net unrealized appreciation on investments 26,092,682
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Members' Equity - Net Assets $209,935,621
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The accompanying notes are an integral part of these financial statements.
Excelsior Directional Hedge Fund of Funds, LLC
Schedule of Investments (Unaudited)
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September 30, 2004
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% of
Members' % Ownership First
First Equity of Available
Acquisition Fair - Net Investment Redemption
Investment Funds Date Cost * Value Assets Funds Date ** Liquidity ***
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Hedged Long/Short Equity Funds
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Basix Capital Fund, L.P. 7/1/2004 $ 3,000,000 $ 2,971,220 1.42% 3.57% 7/1/05 Quarterly
Foundation Partners, L.P. 7/1/2002 8,000,000 8,576,716 4.09% 8.19% N/A Quarterly
JL Partners, L.P. 4/1/2002 5,250,000 6,187,943 2.95% 1.08% N/A Annually
SAB Capital Partners, L.P. 4/1/2001 5,000,000 6,100,959 2.91% 0.91% N/A Annually
Spring Point Institutional Partners, L.P. 1/1/2004 7,000,000 7,121,202 3.39% 2.03% 12/31/04 Quarterly
Swiftcurrent Partners, L.P. 10/1/2000 3,550,000 5,247,242 2.50% 1.45% N/A Annually
Tonga Partners, L.P. 10/1/2000 3,060,553 6,668,538 3.18% 3.60% N/A Semi-annually
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Strategy Total 34,860,553 42,873,820 20.44%
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Opportunistic Long/Short Equity Funds
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Alson Signature Fund I, L.P. 10/1/2002 8,748,954 9,565,450 4.56% 7.43% N/A Quarterly
Bedford Falls Investors, L.P. 7/1/2002 2,000,000 2,327,231 1.11% 0.56% N/A Annually
Cadmus Capital Partners (QP), L.P. 7/1/2003 3,500,000 3,679,857 1.75% 3.04% N/A Quarterly
Indus Asia Pacific Fund, L.P. 3/1/2004 3,000,000 2,995,126 1.43% 0.47% 3/31/05 Quarterly
Indus Japan Fund, L.P. 3/1/2004 6,000,000 6,529,849 3.11% 0.87% 3/31/05 Quarterly
Palmyra Capital Institutional Fund, L.P. 1/1/2004 9,000,000 8,235,185 3.92% 3.36% N/A Quarterly
Quaker Capital Partners I, L.P. 1/1/2001 6,000,000 10,183,730 4.85% 3.22% N/A Annually
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Strategy Total 38,248,954 43,516,428 20.73%
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Hedged Sector Funds
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Argus Healthcare Partners, L.P. 11/1/2003 5,000,000 4,818,726 2.30% 1.75% 12/31/04 Semi-annually
Chilton New Era Partners, L.P. 1/1/2001 4,000,000 4,126,475 1.97% 0.93% N/A Annually
Coatue Qualified Partners, L.P. 1/1/2002 6,000,000 6,339,062 3.02% 0.14% N/A Quarterly
Durus Life Sciences Fund, LLC 1/1/2001 586,983 1,091,919 0.52% 2.05% N/A (1)
Endicott Partners II, L.P. 1/1/2003 6,500,000 7,026,778 3.35% 4.28% N/A Semi-annually
Heirloom Qualified Partners, L.P. 4/1/2004 7,000,000 7,034,052 3.35% 5.15% 4/1/05 Quarterly
Longbow Partners, L.P. 5/1/2004 7,500,000 7,641,909 3.64% 6.93% N/A Quarterly
Narragansett I, L.P. 10/1/2000 3,850,000 4,609,424 2.20% 1.69% N/A Annually
P.A.W. Partners, L.P. 10/1/2000 3,100,000 3,061,215 1.46% 0.83% N/A Quarterly
Vardon Partners II, L.P. 10/1/2002 9,000,000 10,020,914 4.77% 8.80% N/A Annually
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Strategy Total 52,536,983 55,770,474 26.58%
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Arbitrage/Distressed Funds
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Aviator Partners, L.P. 8/1/2004 4,000,000 3,926,953 1.87% 5.30% N/A Quarterly
Canyon Value Realization Fund, L.P. 7/1/2003 8,000,000 9,244,741 4.40% 0.77% N/A Annually
Castlerigg Partners, L.P. 4/1/2004 6,000,000 6,197,961 2.95% 1.28% 4/1/05 Quarterly
JMG Capital Partners, L.P. 10/1/2000 6,750,000 10,814,960 5.15% 1.22% N/A Quarterly
K Capital II, L.P. 1/1/2001 8,000,000 8,817,956 4.20% 1.47% N/A Quarterly
M&M Arbitrage LLC 4/1/2004 4,000,000 3,720,210 1.77% 2.11% 4/1/05 Quarterly
Satellite Fund II, L.P. 10/1/2000 3,000,000 4,146,164 1.97% 0.43% N/A Annually
Stark Investments Limited Partnership 10/1/2000 9,250,000 11,709,507 5.58% 0.70% N/A Annually
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Strategy Total 49,000,000 58,578,451 27.89%
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Total Investments in Investment Funds $174,646,490 200,739,173 95.62%
============
Other Assets, Less Liabilities 9,196,448 4.38%
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Members' Equity - Net Assets $209,935,621 100.00%
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* See definition in Note 2a. N/A Initial lock-up period has either expired prior to September 30, 2004 or
** From original investment date. Investment Fund did not have an initial lock-up period.
*** Available frequency of redemptions after initial (1) The Investment Fund is currently in liquidation and has eliminated
lock-up period. partner withdrawal rights.
The accompanying notes are an integral part of these financial statements.
Excelsior Directional Hedge Fund of Funds, LLC
Statement of Operations (Unaudited)
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Period from April 1, 2004 to September 30, 2004
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INVESTMENT INCOME
Interest $ 41,466
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Total Investment Income 41,466
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OPERATING EXPENSES
Management fee 1,543,078
Professional fees 87,000
Administration fees 75,000
Board of Managers' fees and expenses 24,750
Other 95,117
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Total Operating Expenses 1,824,945
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Net Investment Loss (1,783,479)
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REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENTS
Net realized gain from investments in investment funds 1,217,898
Change in net unrealized depreciation on investments in
investment funds (724,419)
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Net Realized and Unrealized Gain (Loss) from Investments 493,479
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DECREASE IN MEMBERS' EQUITY - NET ASSETS DERIVED FROM OPERATIONS $(1,290,000)
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The accompanying notes are an integral part of these financial statements.
Excelsior Directional Hedge Fund of Funds, LLC
Statements of Changes in Members' Equity - Net Assets (Unaudited)
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Period from
April 1, 2004 to Year ended
September 30, March 31,
2004 2004
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OPERATIONS
Net investment loss $ (1,783,479) $ (2,855,805)
Net realized gain from investments 1,217,898 2,991,622
Change in net unrealized (depreciation)
appreciation on investments (724,419) 19,855,356
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(Decrease)/Increase in Members' Equity - Net
Assets Derived from Operations (1,290,000) 19,991,173
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CAPITAL TRANSACTIONS
Members' subscriptions 41,743,308 38,682,473
Members' interests repurchased (4,481,870) (19,745,980)
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Increase in Members' Equity - Net Assets
Derived From Capital Transactions 37,261,438 18,936,493
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Net increase in Members' Equity - Net Assets 35,971,438 38,927,666
MEMBERS' EQUITY - NET ASSETS
AT BEGINNING OF PERIOD 173,964,183 135,036,517
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MEMBERS' EQUITY - NET ASSETS
AT END OF PERIOD $ 209,935,621 $ 173,964,183
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The accompanying notes are an integral part of these financial statements.
Excelsior Directional Hedge Fund of Funds, LLC
Statement of Cash Flows (Unaudited)
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Period from April 1, 2004 to September 30, 2004
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CASH FLOWS FROM OPERATING ACTIVITIES
Net decrease in members' equity - net assets derived
from operations $ (1,290,000)
Adjustments to reconcile net decrease in members'
equity - net assets derived from operations to net
cash used in operating activities:
Change in net unrealized depreciation on investments 724,419
Net realized gain from investments (1,217,898)
Purchases of investment funds (44,500,000)
Proceeds from sales of investment funds 605,132
Decrease in other assets 42,440
Increase in due to Advisor 146,564
Increase in Board of Managers' fees payable 24,750
Increase in professional fees payable 26,321
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Net Cash Used in Operating Activities (45,438,272)
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CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from members' subscriptions 30,123,500
Payments for members' interests repurchased (5,251,974)
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Net Cash Provided by Financing Activities 24,871,526
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Net decrease in cash and cash equivalents (20,566,746)
Cash and cash equivalents at beginning of period 39,020,251
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Cash and Cash Equivalents at End of Period $ 18,453,505
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The accompanying notes are an integral part of these financial statements.
Excelsior Directional Hedge Fund of Funds, LLC
Notes to Financial Statements (Unaudited)
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September 30, 2004
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1. Organization
Excelsior Directional Hedge Fund of Funds, LLC (the "Company") was organized as
a limited liability company under the laws of Delaware on July 6, 2000, and
commenced operations on October 1, 2000. The Company is registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), as a closed-end,
non-diversified, management investment company. The Company's investment
objective is to maximize capital appreciation. The Company pursues its
investment objective principally through a multi-manager, multi-strategy program
of investments in a diverse group of investment funds that primarily invest or
trade in a wide range of equity and debt securities. The investment managers
selected by the Company generally conduct their investment programs through
unregistered investment funds (collectively, the "Investment Funds") in which
the Company invests as a limited partner or member along with other investors.
U.S. Trust Hedge Fund Management, Inc. (formerly known as NCT Opportunities,
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 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 Managers have engaged the Advisor
to provide investment advice regarding the selection of Investment Funds and the
responsibility of the day-to-day management of the Company.
Effective July 1, 2003, the Managers approved the change of the Company's name
from Excelsior Hedge Fund of Funds I, LLC to Excelsior Directional Hedge Fund of
Funds, LLC.
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 Company. The Company may, from time
to time, offer to repurchase interests from members pursuant to written tenders
by the 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 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.
Excelsior Directional Hedge Fund of Funds, LLC
Notes to Financial Statements (Unaudited) continued
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September 30, 2004
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2. Significant Accounting Policies
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires that management 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 this 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. 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
Board of 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.
The Company's investment in Durus Life Sciences Fund, LLC, valued at $1,091,919
and representing 0.52% of members' equity - net assets as of September 30, 2004,
was fair valued in good faith by the Advisor at a value different than the value
supplied by this Investment Fund's manager. This Investment Fund is in
liquidation at September 30, 2004, and therefore, the Advisor determined the
fair value of the Company's investment based on information provided to the
Advisor. This Investment Fund is in liquidation, and accordingly, there are no
ongoing redemption rights available to partners.
Excelsior Directional Hedge Fund of Funds, LLC
Notes to Financial Statements (Unaudited) continued
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September 30, 2004
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2. Significant Accounting Policies (continued)
a. Portfolio Valuation (continued)
Such Investment Fund's fair value does not reflect any potential contingent
liabilities associated with either the liquidation of the Investment Fund or, if
any, pending litigation against it.
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.
b. Company Expenses
The Company will bear 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;
certain legal fees; accounting and auditing fees; custodial fees; fees paid to
the Company's administrator; costs of insurance; management fee; 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.
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 $1,783,479 and $1,217,898 from accumulated net investment loss and
accumulated net realized gain from investments, respectively, to capital
subscriptions - net. This reclassification was a result of permanent book-to-tax
differences to reflect, as an adjustment to net capital subscribed, the amounts
of taxable income or loss that have been allocated to the Company's members, and
had no effect on net assets.
Excelsior Directional Hedge Fund of Funds, LLC
Notes to Financial Statements (Unaudited) continued
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September 30, 2004
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2. Significant Accounting Policies (continued)
c. Income Taxes (continued)
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 percentage 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 U.S. Trust Company of
North Carolina custody account, which earn interest at money market rates.
Interest income is recorded on the accrual basis.
3. Management Fee, Related Party Transactions and Other
As of September 30, 2004, the employees and affiliates of the Advisor have a
combined interest of approximately 13.51% of the Company's members' equity - net
assets.
The Advisor provides certain investment advisory services and incurs research,
travel and other expenses related to the selection and monitoring of investment
managers. Further, the Advisor provides certain management and administrative
services to the Company, 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 Company pays the
Advisor a quarterly management fee at an annual rate of 1.5% based on the
Company's net assets on the first business day of each quarter after adjustment
for any subscriptions effective on that date. For the period ended September 30,
2004, the management fee was $1,543,078, of which $785,662 was payable as of
September 30, 2004.
The Company earned $41,466 of interest income on their cash balances maintained
at U.S. Trust Company of North Carolina, an affiliate of the Company. At
September 30, 2004, the Company had a cash balance of $18,453,505 held by this
affiliate.
Excelsior Directional Hedge Fund of Funds, LLC
Notes to Financial Statements (Unaudited) continued
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September 30, 2004
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3. Management Fee, Related Party Transactions and Other (continued)
Each Manager, who is not an "interested person" of the Company as defined by the
1940 Act, receives an annual retainer of $7,000 plus a fee for each meeting
attended. Any Manager who is an "interested person" does not receive any annual
or other fee from the Company. All Managers are reimbursed by the Company for
all reasonable out-of-pocket expenses. The Company incurred $24,750 of such
expenses for the period ended September 30, 2004, of which $24,750 is payable as
of September 30, 2004.
The Company incurred $6,000 in fees for the period ended September 30, 2004
related to custodian services provided by U.S. Trust.
The Company has retained J.D. Clark & Co. to provide accounting and certain
administrative and investor services to the Company for a fixed fee as agreed
from time to time. For the period ended September 30, 2004, the Company incurred
$75,000 in expenses related to such administrative services, of which $37,500
was payable 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 thirty-two Investment
Funds, none of which were affiliates as defined in 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 of its 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 0.5% to 2.0% (per annum) of net assets
and incentive fees or allocations ranging from 15% to 20% of net profits earned.
The Investment Funds provide for periodic redemptions, with lock-up provisions
ranging from three months to one year from initial investment.
Aggregate purchases of interest in Investment Funds for the period ended
September 30, 2004 amounted to $44,500,000.
Excelsior Directional Hedge Fund of Funds, LLC
Notes to Financial Statements Unaudited) continued
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September 30, 2004
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6. Financial Highlights
The following represents the ratios to average members' equity - net assets,
total return and other supplemental information for the periods indicated:
For the period October 1,
April 1, 2004 to For the year For the year For the year 2000 * -
September 30, ended ended ended March 31,
2004 ** March 31, 2004 March 31, 2003 March 31, 2002 2001 **
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Net assets, end of period $ 209,935,621 $ 173,964,183 $ 135,036,517 $ 75,655,074 $ 21,109,962
Ratio of net investment loss to (0.87)% (1.82)% (1.88)% (2.15)% (1.32)%
average members' equity - net
assets (b),(c)
Ratio of expenses to average 0.89% 1.87% 1.92% 2.16% 1.33%
members' equity - net
assets (b),(c)
Portfolio turnover 4.47% 22.70% 14.31% - -
Total return (a) (0.65)% 13.68% (1.98)% 6.98% 5.44%
* Commencement of operations.
** The ratios, portfolio turnover and total return are not annualized for
these periods.
(a) Total return assumes a purchase of an interest in the Company on the first
day and the sale of the interest on the last day of the period, and
doesn't reflect the special one-time fee charged by the Advisor.
(b) Average members' equity - net assets is determined using the net assets at
the end of each month during the period indicated.
(c) Ratios do not reflect the Company's proportionate share of the net
investment income (loss) and expenses, including incentive allocation, of
the Investment Funds.
Excelsior Directional Hedge Fund of Funds, LLC
Notes to Financial Statements (Unaudited) continued
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September 30, 2004
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7. Subsequent Events
As of September 30, 2004, the Company received capital subscriptions from
members in the amount of $16,648,500, which is reflected as members interests
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 $14,000,000 in three
existing and one new Investment Fund 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.
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 Directional Hedge Fund of Funds, LLC
Notes to Financial Statements (Unaudited) continued
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September 30, 2004
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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
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Disinterested Managers
<s> <c> <c> <c> <c>
Gene M. Bernstein Manager Term - Indefinite; Director of NIC Holding Corp; Dean of the Skodneck 4
U.S. Trust Company Length - since Business Development Center at Hofstra University
114 West 47th Street October 2000 (2000 to 2001); President and Vice Chairman at
New York, NY 10036 Northville Industries, a petroleum marketing,
Age 57 distribution, trading and storage company and
wholly-owned subsidiary of NIC Holding Corp.;
Director or Manager of UST Private Equity Investors
Fund, Inc., Excelsior Private Equity Fund II, Inc.,
Excelsior Venture Partners III, LLC, Excelsior
Venture Investors III, LLC and Excelsior Directional
Hedge Fund of Funds, LLC.
Stephen V. Murphy Manager Term - Indefinite; President, S.V. Murphy & Co., Inc. (1991 to present). 4
U.S. Trust Copmany Length - since Director of UST Private Equity Investors Fund, Inc.,
114 West 47th Street October 2000 Excelsior Private Equity Fund II, Inc., Excelsior
New York, NY 10036 Venture Partners III, L.L.C., Excelsior Venture
Age 59 Investors III, LLC and Excelsior Directional Hedge
Fund of Funds, LLC.
Victor F. Imbimbo Manager Term - Indefinite; Head of healthcare marketing in the United States for 4
U.S. Trust Company Length - since TBWA, a global marketing agency (October 2002 to
114 West 47th Street October 2000 present); Founder, President and Chief Executive
New York, NY 10036 Officer, Bedrock Communications, Inc. (1996 to 2002);
Age 52 Founder, President and Chief Executive Officer,
Hadley Group (1985 to 1996). Director of UST Private
Equity Investors Fund, Inc., Excelsior Private Equity
Fund II, Inc., Excelsior Venture Partners III, L.L.C.,
Excelsior Venture Investors III, LLC and Excelsior
Directional Hedge Fund of Funds, LLC.
Excelsior Directional Hedge Fund of Funds, 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
- ------------------------------------------------------------------------------------------------------------------------------------
Interested Manager
<s> <c> <c> <c> <c>
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 Directional Hedge Fund of Funds LLC.
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 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 and Treasurer of U.S. N/A
U.S. Trust Company Officer and Length - since Trust's Alternative Investments Division and Senior
225 High Ridge Road Treasure July 2003 V.P. of U.S. Trust (4/03 to present); Independent
Stamford, CT 06905 consultant to private equity funds (1/02 to 3/03);
Age 51 Chief Financial Officer, Icon Holding Corp. (12/99
to 12/01); Chief Financial Officer, Partnership
Group, Merrill Lynch & Co., Inc. (6/85 to 10/99).
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
Manager is an "interested person" (as defined by the 1940 Act) of the Company
because of his affiliation with the Advisor and its affiliates.
All officers of the Company are employees and/ or officers of the Investment
Advisor.
The SAI (or Statement of Additional Information) includes additional information
about the managers of the Company and is available upon request.
ITEM 2. CODE OF ETHICS.
- -------------------------
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 Directional Hedge 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 Directional Hedge Fund of Funds, LLC
----------------------------------------------
By (Signature and Title)* /s/ Robert Aufenanger
------------------------------------------------
Robert Aufenanger, Principal Financial Officer
Date December 9, 2004
------------------
* Print the name and title of each signing officer under his or her signature.