UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
811-21395
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Investment Company Act file number
Excelsior Absolute Return Fund of Funds Master Fund, LLC
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(Exact name of registrant as specified in charter)
225 High Ridge Road
Stamford, CT 06905
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(Address of principal executive offices) (Zip code)
U.S. Trust Hedge Fund Management, Inc.
225 High Ridge Road
Stamford, CT 06905
--------------------------------------
(Name and address of agent for Service)
Registrant's telephone number, including area code: (203) 352-4497
--------------
Date of fiscal year end: 3/31/2005
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Date of reporting period: 3/31/2005
-----------
ITEM 1. REPORTS TO STOCKHOLDERS.
- ----------------------------------
Excelsior Absolute Return Fund of Funds Master Fund, LLC
Financial Statements
With Report of Independent Registered Public Accounting Firm
Year Ended March 31, 2005
Excelsior Absolute Return Fund of Funds Master Fund, LLC
Financial Statements
Year Ended March 31, 2005
Contents
Report of Independent Registered Public Accounting Firm................... 1
Statement of Assets, Liabilities and Members' Equity - Net Assets......... 2
Schedule of Investments................................................... 3
Statement of Operations................................................... 4
Statement of Changes in Members' Equity - Net Assets...................... 5
Statement of Cash Flows................................................... 6
Notes to Financial Statements............................................. 7
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Members and Board of Managers of
Excelsior Absolute Return Fund of Funds Master Fund, LLC
We have audited the accompanying statements of asset, liabilities and members'
equity - net assets of Excelsior Absolute Return Fund of Funds Master fund, LLC
(the "Company"), including the schedule of investments, as of March 31, 2005,
and the related statements of operations, and cash flows for the year then ended
and the statement of changes in members' equity - net assets and the financial
highlights for the year ended March 31, 2005 and for the period December 1, 2003
(commencement of operations) through March 31, 2004. These financial statements
and financial highlights are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material misstatement.
The Company is not required to have, nor were we engaged to perform, an audit of
its internal control over financial reporting. Our audits included consideration
of internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Company's internal control
over financial reporting. Accordingly, we express no such opinion. An audit also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. Our procedures included confirmation
of investment funds owned as of March 31, 2005, by correspondence with
management of the investment funds; where replies were not received, we
performed other auditing procedures. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Excelsior Absolute Return Fund
of Funds Master Fund, LLC as of March 31, 2005, and the results of its
operations and its cash flows for the year then ended and the changes in
members' equity - net assets and the financial highlights for the years ended
March 31, 2005 and for the period December 1, 2003 (commencement of operations)
through March 31, 2004, in conformity with accounting principles generally
accepted in the United States of America.
/s/ Deloitte & Touche LLP
May 26, 2005
Excelsior Absolute Return Fund of Funds Master Fund, LLC
Statement of Assets, Liabilities and Members' Equity - Net Assets
March 31, 2005
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ASSETS
Investments in Investment Funds, at fair value (cost $232,850,000) $250,627,011
Advance investment in Investment Funds 21,200,000
Due from investment fund 440,744
Other assets 2,605
- --------------------------------------------------------------------------------
Total Assets 272,270,360
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LIABILITIES
Due to Custodian 19,698,746
Due to Advisor 775,785
Professional fees payable 60,000
Administration fees payable 6,000
- --------------------------------------------------------------------------------
Total Liabilities 20,540,531
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Net Assets $251,729,829
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MEMBERS' EQUITY - NET ASSETS
Represented by:
Capital subscriptions - net $233,952,818
Net unrealized appreciation on investments 17,777,011
- --------------------------------------------------------------------------------
Members' Equity - Net Assets $251,729,829
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The accompanying notes are an integral part of these financial statements.
Excelsior Absolute Return Fund of Funds Master Fund, LLC
Schedule of Investments
March 31, 2005
- --------------------------------------------------------------------------------
% of
First Members' % Ownership First Available
Acquisition Fair Equity-Net of Investment Redemption
Investment Funds Date Cost* Value* Assets Funds Date** Liquidity***
- ------------------------------------------------------------------------------------------------------------------------------------
<s> <c> <c> <c> <c> <c> <c> <c>
Fixed Income
- ------------
Citadel Wellington, LLC 12/01/2003 21,750,000 23,127,012 9.18% 0.71% N/A Quarterly
Highbridge Capital Corporation 12/01/2003 11,250,000 11,762,315 4.67% 0.19% N/A Quarterly
Class A
MKP Opportunity Partners, L.P. 12/01/2003 5,000,000 5,275,365 2.10% 2.92% N/A Monthly
MKP Partners, L.P. 12/01/2003 5,600,000 5,905,080 2.35% 2.15% N/A Quarterly
Polygon Global Opportunities 8/01/2004 6,500,000 6,974,028 2.77% 3.00% N/A Quarterly
Fund,L.P.
Silverback Partners, L.P. 1/01/2004 6,500,000 6,144,215 2.44% 3.60% N/A Quarterly
Suttonbrook Capital Partners, L.P. 10/01/2004 6,500,000 6,606,190 2.62% 3.16% 10/01/2005 Quarterly
---------------------------------
Strategy Total 63,100,000 65,794,205 26.13%
---------------------------------
Equity
- ------
Galleon Diversified Fund Ltd 12/01/2003 10,600,000 10,495,966 4.17% 1.72% N/A Quarterly
Class E
Copper Beech Partners II, L.P. 12/01/2003 10,850,000 11,450,496 4.55% 4.02% N/A Quarterly
Heirloom Qualified Partners, L.P. 12/01/2003 10,350,000 10,964,228 4.36% 6.94% N/A Quarterly
Glenview Capital Partners, L.P. 12/01/2003 11,300,000 14,481,421 5.75% 4.67% N/A Quarterly
The Mako Europe Fund, L.P. 12/01/2003 9,500,000 9,870,420 3.92% 18.54% N/A Monthly
Cantillon World, L.P. 12/01/2003 3,050,000 3,964,293 1.57% 0.95% N/A Quarterly
Shoshone Partners, L.P. 12/01/2002 10,500,000 11,790,772 4.68% 4.83% N/A Annually
Maverick Levered Partners, L.P. 5/01/2004 4,000,000 4,602,335 1.83% 0.82% 5/1/07 Quarterly
---------------------------------
Strategy Total 70,150,000 77,619,931 30.83%
---------------------------------
Macro/CTA/Short-Term Trading
- ----------------------------
Sunrise Commodities Select
Portfolio- Davco Fund, L.P. 12/01/2003 7,450,000 7,273,312 2.89% 2.55% N/A Monthly
The Capital Fund (Domestic), LLC 12/01/2003 4,750,000 4,841,101 1.92% 5.26% N/A Monthly
Bridgewater Pure
Alpha Trading Co.Ltd.- Class B 2/01/2004 4,400,000 5,098,381 2.03% 0.12% N/A Monthly
OLEA Global Partners, L.P. 10/01/2004 3,000,000 2,999,462 1.19% 2.25% 10/1/05 Quarterly
Caxton Global Investments
(USA) LLC 1/01/2005 9,000,000 9,007,433 3.58% 4.87% 1/1/06 Quarterly
---------------------------------
Strategy Total 28,600,000 29,219,688 11.61%
---------------------------------
Event Driven
- ------------
Castlerigg Partners, L.P. 12/01/2003 16,000,000 17,701,850 7.03% 3.18% N/A Quarterly
Canyon Value Realization Fund, L.P.12/01/2003 12,500,000 14,363,981 5.71% 0.99% N/A Annually
K Capital II, L.P. 12/01/2003 14,000,000 15,006,523 5.96% 3.26% N/A Quarterly
Brencourt Arbitrage, L.P. 4/01/2004 5,000,000 5,223,596 2.08% 7.12% N/A Quarterly
York Capital Management, L.P. 7/01/2004 14,500,000 16,260,520 6.46% 3.39% N/A Annually
Empyrean Capital Fund, L.P. 7/01/2004 9,000,000 9,436,716 3.75% 2.32% 7/1/05 Quarterly
---------------------------------
Strategy Toal 71,000,000 77,993,186 30.99%
---------------------------------
Total Investments in investment funds $232,850,000 250,627,011 99.56%
============
Other Assets, Less Liabilities 1,102,818 0.44%
---------------------
Members' Equity - Net Assets $251,729,829 100.00%
=====================
* See definition in Note 2a. N/A Initial lock-up period has either expired prior to
** From original investment date. March 31, 2005 or the Investment Fund did not
*** Available frequency of redemptions after initial lock-up have an initial lock-up period. However specific
period. redemption restrictions apply.
The accompanying notes are an integral part of these financial statements.
Excelsior Absolute Return Fund of Funds Master Fund, LLC
Statement of Operations
Year Ended March 31, 2005
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INVESTMENT INCOME
Interest $ 37,028
Other 38
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Total Investment Income 37,066
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OPERATING EXPENSES
Advisory fee 2,011,297
Professional fees 123,127
Administration fees 24,000
Other 32,675
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Total Operating Expenses 2,191,099
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Net Investment Loss (2,154,033)
- --------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain from investments in 362,933
Investment Funds
Net unrealized appreciation on investments in 13,832,449
Investment Funds
- --------------------------------------------------------------------------------
Net Realized and Unrealized Gain on Investments 14,195,382
- --------------------------------------------------------------------------------
INCREASE IN MEMBERS' EQUITY - NET ASSETS
DERIVED FROM OPERATIONS $ 12,041,349
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The accompanying notes are an integral part of these financial statements.
Excelsior Absolute Return Fund of Funds Master Fund, LLC
Statement of Changes in Members' Equity - Net Assets
- --------------------------------------------------------------------------------
December 1, 2003
(Commencement
For the year ended of Operations)
March 31, 2005 to March 31, 2004
- --------------------------------------------------------------------------------
OPERATIONS
Net investment loss $ (2,154,033) $ (388,597)
Net realized gain from investments 362,933 8,460
Net unrealized appreciation on
investments 13,832,449 3,944,562
- --------------------------------------------------------------------------------
Increase in Members' Equity - Net 12,041,349 3,564,425
Assets Derived from Operations
- --------------------------------------------------------------------------------
CAPITAL TRANSACTIONS
Members' subscriptions 164,246,463 79,465,098
Members' interests repurchased (7,587,506) -
- --------------------------------------------------------------------------------
Increase in Members' Equity - Net Assets
Derived From Capital Transactions 156,658,957 79,465,098
- --------------------------------------------------------------------------------
Net Increase in Members' Equity - Net Assets 168,700,306 83,029,523
MEMBERS' EQUITY - NET ASSETS
AT BEGINNING OF PERIOD 83,029,523 -
- --------------------------------------------------------------------------------
MEMBERS' EQUITY - NET ASSETS
AT END OF PERIOD $251,729,829 $ 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
Year Ended March 31, 2005
- --------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net increase in members' equity - net assets
derived from operations $ 12,041,349
Adjustments to reconcile net increase in members' equity -
net assets derived from operations to net cash used in
operating activities:
Net unrealized appreciation on investments (13,832,449)
Net realized gain from investments in Investment Funds (362,933)
Proceeds from Investment Funds 13,862,933
Purchases of Investment Funds (168,500,000)
Decrease in advance investment in Investment Funds 32,300,000
Decrease in due from Investment Funds 617,716
Increase in other assets (2,335)
Increase in due to Advisor 472,549
Increase in professional fees 25,000
Decrease in other liabilities (110)
- --------------------------------------------------------------------------------
Net Cash Used in Operating Activities (123,378,280)
- --------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from member subscriptions 110,226,255
Payments for member interests repurchased (7,587,506)
Increase in due to Custodian 19,698,746
- --------------------------------------------------------------------------------
Net Cash Provided by Financing Activities 122,337,495
- --------------------------------------------------------------------------------
Net increase in cash and cash equivalents (1,040,785)
Cash and cash equivalents at beginning of period 1,040,785
- --------------------------------------------------------------------------------
Cash and Cash Equivalents at End of Year $ 0
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
Excelsior Absolute Return Fund of Funds Master Fund, LLC
Notes to Financial Statements
March 31, 2005
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1. Organization
Excelsior Absolute Return Fund of Funds Master Fund, LLC (the "Company") was
organized as a limited liability company under the laws of Delaware on June 17,
2003, and commenced operations on December 1, 2003. The Company is registered
under the Investment Company Act of 1940, as amended (the "1940 Act"), as a
non-diversified, closed-ended management investment company. The Company's
investment objective is to provide long-term, risk-adjusted absolute returns in
a variety of capital market conditions. The Company pursues its investment
objective by investing its assets primarily in private investment limited
partnerships, limited liability companies, joint ventures and other similar
investment vehicles (collectively, the "Investment Funds") that are managed by a
select group of alternative investment managers ("Investment Managers") that
utilize a broad range of alternative investment strategies.
U.S. Trust Hedge Fund Management, Inc. serves as the investment advisor of the
Company (the "Advisor"). The Advisor is a wholly-owned subsidiary of U.S. Trust
Corporation, and is registered as an investment 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 March 31, 2005, Excelsior Absolute Return Fund of Funds,
LLC and Excelsior Absolute Return Fund of Funds, Ltd. ownership of the Company's
members' equity - net assets were 89.30% and 10.70%, respectively.
Excelsior Absolute Return Fund of Funds Master Fund, LLC
Notes to Financial Statements (continued)
March 31, 2005
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1. Organization (continued)
Member 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 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.
2. Significant Accounting Policies
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Management believes that the estimates utilized in preparing
the Company's financial statements are reasonable and prudent; however, actual
results could differ from these estimates.
a. Portfolio Valuation
The net asset value of the Company is determined by, or at the direction of, the
Advisor as of the close of business at the end of any fiscal period (as defined
in the Company's Limited Liability Company Agreement), in accordance with the
valuation principles set forth below, or as may be determined from time to time
pursuant to policies established by the Managers.
Ordinarily, the Company's investments in Investment Funds are carried at fair
value as determined by the Company's pro-rata interest in the net assets of each
Investment Fund as reported by the Investment Manager who determines the value
of the Investment Fund's net assets. The values of the Investment Funds' net
assets are determined in accordance with their valuation policies as described
in their respective offering memoranda or operating agreements. All valuations
utilize financial information supplied by the Investment Manager of each
Investment Fund and are net of management and performance incentive fees or
allocations pursuant to the Investment Funds' agreements.
Excelsior Absolute Return Fund of Funds Master Fund, LLC
Notes to Financial Statements (continued)
March 31, 2005
- --------------------------------------------------------------------------------
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 reasonably expect to
receive from the Investment Fund if the Company's interest were redeemed at the
time of valuation, based on information reasonably available at the time the
valuation is made and that the Advisor believes to be reliable. The Advisor or,
in certain cases, the Managers, will consider such information, and may conclude
in certain circumstances that the information provided by an Investment Fund's
manager does not represent the fair value of the Company's interests in an
Investment Fund. Following procedures adopted by the Managers, and in the
absence of specific transaction activity in interests in a particular Investment
Fund, the Company could consider whether it was appropriate, in light of all
relevant circumstances, to value such a position at the Investment Fund's net
asset value as reported at the time of valuation, or whether to adjust such
value to reflect a premium or discount to net asset value. Any such decision
must be made in good faith, and subject to the review and supervision of the
Managers. Because of the inherent uncertainty of valuation, the values of the
Company's investments may differ significantly from the values that would have
been used had a ready market for the investments held by the Company been
available.
Distributions received from Investment Funds, whether in the form of cash or
securities, are applied first as a reduction of the investment's cost and, if
any, any excess as a realized gain from investments in investment fund.
b. Company Expenses
The Company bears certain expenses incurred in its business, including, but not
limited to, the following: fees paid directly or indirectly to the Investment
Managers of the Investment Funds, all costs and expenses directly related to
portfolio transactions and positions for the Company's account; legal fees;
accounting and auditing fees; custodial fees; fees paid to the Company's
administrator; costs of insurance; advisory fees; travel and related expenses of
the Managers; all costs with respect to communications regarding the Company's
transactions among the Advisor and any custodian or other agent engaged by the
Company; and other types of expenses approved by the Managers.
Excelsior Absolute Return Fund of Funds Master Fund, LLC
Notes to Financial Statements (continued)
March 31, 2005
- --------------------------------------------------------------------------------
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.
Net investment income or loss and net realized and unrealized gain or loss from
investments of the Company for each fiscal period are allocated among, and
credited to or debited against, the capital accounts of all members as of the
last day of the fiscal period in accordance with each member's respective
investment percentages for the fiscal period, as defined in the Company's
Limited Liability Company Agreement.
The cost of the Company's investment in Investment Funds for federal income tax
purposes is based on amounts reported to the Company by the Investment Funds on
a Schedule K-1 or PFIC annual information statement for the year ended December
31, 2004. Based on Investment Funds owned at December 31, 2004, the cost of
investments for federal income tax purposes was $221,169,866. This consisted of
aggregate gross unrealized appreciation of $6,972,038 and aggregate gross
unrealized depreciation of $270,806.
3. Due to Custodian
Due to Custodian is a result of the Company investing $21,200,000 at March 31,
2005 in investments in Investment Funds effective April 1, 2005. This
$21,200,000 investment was made based upon member subscriptions of $22,741,949
received April 1, 2005. On April 1, 2005 the Company repaid the custodian the
full amount of $19,698,746.
4. 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 year ended
March 31, 2005, the advisory fee was $2,011,297, of which $627,024 was included
in Due to Advisor as of March 31, 2005.
Excelsior Absolute Return Fund of Funds Master Fund, LLC
Notes to Financial Statements (continued)
March 31, 2005
- --------------------------------------------------------------------------------
4. Advisory Fee, Related Party Transactions and Other (continued)
The Advisor paid $148,761 of certain reimbursable operating expenses and
organizational costs on behalf of the Company for the year ended March 31, 2005,
of which all is payable to the Advisor as of March 31, 2005.
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 year ended March 31, 2005, the Company incurred
$24,000 in expenses related to such administrative services, of which $6,000 was
payable as of March 31, 2005. On March 1, 2005 the Managers approved a new
agreement with J.D. Clark & Co beginning April 1, 2005.
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. Investments in Investment Funds
As of March 31, 2005, the Company had investments in twenty-six 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 year
ended March 31, 2005 are $168,500,000 and $13,862,933, respectively.
Advance investment in Investment Funds of $21,200,000 represents amounts
transferred to Investment Funds prior to or as of March 31, 2005 and relates to
the investments to be made effective April 1, 2005 pursuant to each Investment
Fund's offering memorandum or member limited partnership agreement.
Excelsior Absolute Return Fund of Funds Master Fund, LLC
Notes to Financial Statements (continued)
March 31, 2005
- --------------------------------------------------------------------------------
7. 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 from
For the year ended December 1, 2003* -
March 31, 2005 March 31, 2004
-------------------------------------------
Net assets, end of period $251,729,829 $ 83,029,523
Ratio of net investment loss to
average members' equity - net
assets (a) (b) (1.09%) (0.54%)
Ratio of expenses to average 1.11% 0.54%
members' equity - net assets
(a) (b)
Portfolio turnover 7.07% -
Total return (c) 5.26% 5.02%
* Commencement of Operations. The ratios and total return are not annualized
for the period.
(a) Ratio doesn't reflect the Company's proportionate share of the net income
(loss) and expenses, including incentive allocation, of the Investment
Funds.
(b) Average members' equity - net assets is determined using the net assets at
the end of each month during the period.
(c) 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.
8. Subsequent Events
As of April 1, 2005, the Company received subscriptions from members in the
amount of $22,741,949. These subscriptions became interests in the Company
effective April 1, 2005. The Company also invested $21,200,000 in ten existing
Investment Funds as of April 1, 2005, which is reflected as Advance investment
in Investment Funds on the Statement of Assets, Liabilities and Members' Equity
- - Net Assets.
9. Guarantees
In the normal course of business, the Company enters into contracts that provide
general indemnifications. The Company's maximum exposure under these
arrangements is dependent on future claims that may be made against the Company,
and therefore, cannot be established; however, based on experience, the risk of
loss from such claim is considered remote.
Excelsior Absolute Return Fund of Funds Master Fund, LLC
Notes to Financial Statements (continued)
March 31, 2005
- --------------------------------------------------------------------------------
10. Company Management (Unaudited)
Information pertaining to the Board of Managers and officers of the Company is
set forth below:
Position(s) Term of Office Principal Number of
Held and Length Occupation Portfolios in
With the of Time During Past Fund Complex
Name, Address and Age Company Served Five Years Overseen by Manager
- ------------------------------------------------------------------------------------------------------------------------------------
Disinterested Managers
<s> <c> <c> <c> <c>
Virginia G. Breen Manager Term - Partner, Sienna Ventures 4
230 Lackwanna Dr Indefinite (1/05 - present);
Andover, NJ 07821 Length Partner, Blue Rock (8/95
Age 40 - since to present); Also a
June manager of Excelsior
2003 Buyout Investors LLC,
Excelsior Absolute
Return Fund of Funds LLC
and Excelsior LaSalle
Property Fund, Inc.
Jonathan B. Bulkeley Manager Term - Non-Executive Chairman 4
1133 5th Ave., Apt 3 Indefinite of QXL, PLC (2/98 to
New York, NY 10128 Length 2/05); Chairman and CEO,
Age 43 - since Lifeminders (2/01 to
June 10/01); CEO,
2003 barnesandnoble.com
(12/98 to 1/00);
Managing Director and V.P.,
AOL (3/93 to 12/98). Also
a manager of Excelsior
Buyout Investors LLC,
Excelsior Absolute
Return Fund of Funds
LLC and Excelsior LaSalle
Property Fund, Inc.
Thomas F. McDevitt Manager Term - Managing Partner, 4
Edgewood Capital Indefinite Edgewood Capital
1055 summer ST. Length Partners (5/02 to
Stamford, CT 06905 - June present); Managing
Age 47 . 2003 Director, Societe
Generale (6/98 to 3/02);
Founder and Partner,
Meenan, McDevitt & Co.
(5/91 to 5/98). Also a
manager of Excelsior
Buyout Investors LLC,
Excelsior Absolute
Return Fund of Funds LLC
and Excelsior LaSalle
Property Fund, Inc.
Interested Manager
Douglas Lindgren* Principal Term - Chair of U.S. Trust's 7
U.S. Trust Compamy Executive Indefinite Alternative Investments
225 High Ridge Rd Trust Manager Length Division, Managing
Stamford, CT 06905 - June Director and Senior V.P.
Age 44 2003 of U.S. Trust (4/95 to
present). Also a
manager of Excelsior
Buyout Investors LLC and
Excelsior Absolute
Return Fund of Funds LLC.
</Table>
* Manager is an "interested person" (as defined by the 1940 Act) of the Company
because of his affiliation with the Advisor and its affiliates.
Excelsior Absolute Return Fund of Funds Master Fund, LLC
Notes to Financial Statements (continued)
March 31, 2005
- --------------------------------------------------------------------------------
10. Company Management (Unaudited) (continued)
Position(s) Term of Principal Number of
Held Office and Occupation Portfolios in
With Length of During Fund Complex
the Time Past Ovrerseen by
Name, Address and Age Company Served Five Years Manager
- ------------------------------------------------------------------------------------------------------------------------------------
Officers who are not Managers
<s> <c> <c> <c> <c>
Robert F. Aufenanger Chief Term - Chief Financial Officer N/A
U.S. Trust Company Financial Indefinite of U.S. Trust's
225 High Ridge Road Officer Length Alternative Investments
Stamford, CT 06905 - since Division and Senior V.P.
Age 51 June of U.S. Trust (4/03 to
2003 present); Independent
consultant to private
equity funds (1/02 to
3/03); Chief Financial
Officer, Icon Holding
Corp. (12/99 to 12/01);
Chief Financial Officer,
Partnership Group,
Merrill Lynch & Co.,
Inc. (6/85 to 10/99).
Lee Gardella Vice Term - Senior Vice President N/A
U.S. Trust Company President Indefinite and Vice President in
225 High Ridge Road Length U.S. Trust's Alternative
Stamfor, CT 06908 - since Investment Division
Age 37 June (9/97 to present); Vice
2003 President of Excelsior
Private Equity Fund II,
Inc. (10/97 to present)
and Excelsior Venture
Partners III, LLC (5/00
to present).
Cynthia Englert Secretary Term - V. P. of U.S. Trust N/A
U.S. Trust Comapny Indefinite (8/01 to present);
225 High Ridge Road Length Controller, Whitney &
Stamford, Ct 06905 - since Company (5/99 to 8/01);
Age 40 June Financial analyst,
2003 Greenwich Capital
Markets (7/93 to 3/99).
All officers of the Company are employees and/or officers of the Investment
Advisor.
The SAI (or Statement of Additional Information) includes additional information
about the managers of the Company and is available upon request.
ITEM 2. CODE OF ETHICS.
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The Registrant has adopted a code of ethics that applies to the Registrant's
principal executive officer, principal financial officer, principal accounting
officer or controller or persons performing similar functions. For the fiscal
year ended March 31, 2005, there were no amendments to a provision of the code
of ethics, nor were any waivers granted from a provision of the code of ethics.
A copy of the Registrant's code of ethics is filed with this form N-CSR under
ITEM 12(a)(1).
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
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The Board of Managers of the registrant has determined that Virginia G. Breen
and Jonathan B. Bulkeley possess the technical attributes identified in
Instruction 2(b) of Item 3 to Form N-CSR to qualify as "audit committee
financial experts", and has designated Ms. Breen and Mr. Bulkeley as the Audit
Committee's financial experts. Ms. Breen and Mr. Bulkeley are "independent"
Managers pursuant to paragraph (a)(2) of Item 3 on Form N-CSR.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
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(a) Audit Fees
The aggregate fees, billed for professional services rendered by the
Registrant's principal accountant for the audit of the Registrant's annual
financial statements and security counts required under Rule 17f-2 of the
Investment Company Act of 1940, (the "1940 Act") for the fiscal years ended
March 31, 2004 and March 31, 2005 were $41,000 and $45,000 respectively.
(b) Audit-Related Fees
There were no audit related services provided by the principal accountant to the
Registrant for the last two fiscal years.
(c) Tax Fees
The principal accountant for the audit of the Registrant's annual financial
statements billed no fees for tax compliance, tax advice or tax planning
services to the Registrant during the last two fiscal years.
(d) All Other Fees
The principal accountant billed no other fees to the Registrant during the last
two fiscal years.
(e) (1)
During its regularly scheduled periodic meetings, the Registrant's audit
committee will pre-approve all audit, audit-related, tax and other services to
be provided by the principal accountants of the Registrant. The audit committee
has delegated pre-approval authority to its Chairman for any subsequent new
engagements that arise between regularly scheduled meeting dates provided that
any such pre-approved fees are presented to the audit committee at its next
regularly scheduled meeting.
(e) (2) None
(f) Not applicable.
(g) The amount of non-audit fees that were billed by the registrant's accountant
for services rendered to (i) the registrant, and (ii) the registrant's
investment adviser and any control person of the adviser that provides ongoing
services to the registrant for the fiscal year ended March 31, 2005, were $0 and
$618,675, respectively.
The amount of non-audit fees that were billed by the registrant's accountant for
services rendered to (i) the registrant, and (ii) the registrant's investment
adviser and any control person of the adviser that provides ongoing services to
the registrant for the fiscal year ended December 31, 2003, were $0 and
$623,000, respectively.
(h) The Registrant's audit committee of the board of managers has considered
whether the provision of non-audit services that may be rendered to the
Registrant's investment adviser, and any entity controlling, controlled by, or
under common control with the investment adviser that provides ongoing services
to the Registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of
Rule 2-01 of Regulation S-X is compatible with maintaining the principal
account's independence. No such services were rendered.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
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Not applicable.
ITEM 6. SCHEDULE OF INVESTMENTS.
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The Schedule of Investments is included as part of the report to members filed
under Item 1 of this form.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
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MANAGEMENT INVESTMENT COMPANIES.
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A copy of the Proxy Voting Policies and Procedures is included as Exhibit 2 to
this form.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES
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Not yet applicable.
ITEM 9. PURCHASE OF EQUITY SECURITIES BY CLOSE-END MANAGEMENT INVESTMENT
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COMPANY AND AFFILIATED PURCHASERS.
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Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
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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.
ITEM 11. CONTROLS AND PROCEDURES.
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(a) The Registrant's Principal Executive Officer and Principal Financial Officer
have concluded that the Registrant's disclosure controls and procedures (as
defined in Rule 30a-3(c) under the 1940 Act) were effective as of a date within
90 days prior to the filing date of this report, based on their evaluation of
the effectiveness of the Registrant's disclosure controls and procedures, as
required by Rule 30a-3(b) of the 1940 Act.
(b) There were no changes in the Registrant's internal control over financial
reporting that occurred during the Registrant's second fiscal quarter of the
period covered by this report that has materially affected, or is reasonably
likely to materially affect, the registrant's internal control over financial
reporting.
ITEM 12. EXHIBITS.
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(a)(1) CODE OF ETHICS (see Exhibit 1)
(a)(2) Separate certifications for the Registrant's Principal Executive
Officer
and Principal Financial Officer, as required by Rule 30a-2(a) under the
1940 Act 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, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) Excelsior Absolute Return Fund of Funds Master Fund, LLC
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By (Signature and Title) /s/ Douglas A. Lindgren
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Douglas A. Lindgren, Principal Executive Officer
Date June 7, 2005
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Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) Excelsior Absolute Return Fund of Funds Master Fund, LLC
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By (Signature and Title) /s/ Robert Aufenanger
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Robert Aufenanger, Principal Financial Officer
Date June 7, 2005
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