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
------------------------------------------------
(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: 3/31/2005
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Date of reporting period: 3/31/2005
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ITEM 1. REPORTS TO STOCKHOLDERS.
- ----------------------------------
EXCELSIOR ABSOLUTE RETURN FUND OF FUNDS, LLC
Financial Statements
With Report of Independent Registered Public Accounting Firm
Year Ended March 31, 2005
Excelsior Absolute Return Fund of Funds, 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
Statement of Operations....................................................... 3
Statement of Changes in Members' Equity - Net Assets.......................... 4
Statement of Cash Flows....................................................... 5
Notes to Financial Statements................................................. 6
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Members and Board of Managers of
Excelsior Absolute Return Fund of Funds, LLC
We have audited the accompanying statements of assets, liabilities and members'
equity - net assets of Excelsior Absolute Return Fund of Funds, LLC (the
"Company"), as of March 31, 2005, and the related statements of operations and
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.
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 Fund 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 Fund'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 fund. 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, 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 its 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, LLC
Statement of Assets, Liabilities and Members' Equity - Net Assets
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March 31, 2005
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ASSETS
Investment in Excelsior Absolute Return Fund of Funds Master
Fund, LLC at fair value (cost $208,781,176) $224,795,617
Cash and cash equivalents 671
Prepaid Fees 56,015
Interest Receivable 307
- --------------------------------------------------------------------------------
Total Assets 224,852,610
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LIABILITIES
Advisor management fee payable 280,024
Due to Advisor 69,423
Board of Managers' fees payable 6,000
Professional fees payable 53,000
Administration fees payable 19,303
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Total Liabilities 427,750
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Net Assets $224,424,860
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MEMBERS' EQUITY - NET ASSETS
Represented by:
Capital subscriptions - net $208,410,419
Accumulated net unrealized appreciation on investments 16,014,441
- --------------------------------------------------------------------------------
Members' Equity - Net Assets $224,424,860
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The accompanying notes and attached audited financial statement of Excelsior
Absolute Return Fund of Funds Master Fund, LLC are an integral part of these
financial statements.
Excelsior Absolute Return Fund of Funds, LLC
Statement of Operations
- --------------------------------------------------------------------------------
Year Ended March 31, 2005
- --------------------------------------------------------------------------------
Net investment loss allocated from Excelsior Absolute Return Fund of Funds
Master Fund, LLC:
Interest $ 32,840
Expenses (1,924,607)
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Net investment loss allocated from Excelsior Absolute Return
Fund of Funds Master Fund, LLC (1,891,767)
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Fund Income:
Interest 3,251
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Fund Expenses:
Advisor management fees 887,788
Professional fees 226,325
Administration fees 142,284
Board of Managers' fees 57,000
Miscellaneous 35,316
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Total Expenses 1,348,713
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Expenses reimbursed to the Advisor 246,027
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Net Expenses 1,594,740
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Net Investment Loss (3,483,256)
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Realized and unrealized gain on investments allocated from
Excelsior Absolute Return Fund of Funds Master Fund, LLC:
Net realized gain on investments 320,977
Net unrealized appreciation on investments 12,233,400
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Net Realized and Unrealized Gain on Investments Allocated
from Excelsior Absolute Return Fund of Funds Master Fund, LLC 12,554,377
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INCREASE IN MEMBERS' EQUITY - NET ASSETS
DERIVED FROM OPERATIONS $ 9,071,121
- --------------------------------------------------------------------------------
The accompanying notes and attached audited financial statement of Excelsior
Absolute Return Fund of Funds Master Fund, LLC are an integral part of these
financial statements.
Excelsior Absolute Return Fund of Funds, LLC
Statement of Changes in Members' Equity - Net Assets
- --------------------------------------------------------------------------------
December 1,2003
For the (Commencement of
Year Ended Operations) to
March 31,200 March 31,2004
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Operations
Net investment loss $(3,483,256) $ (411,712)
Net realized gain on investments 320,977 8,109
Net unrealized appreciation on investments 12,233,400 3,781,041
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Increase in Members' Equity - Net
Assets Derived from Operations 9,071,121 3,377,438
- --------------------------------------------------------------------------------
CAPITAL TRANSACTIONS
Members' subscriptions 145,459,090 76,279,718
Members' interests repurchased (9,665,795) -
Offering costs (31,805) (64,907)
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Increase in Members' Equity - Net
Assets Derived from Capital
Transactions 135,761,490 76,214,811
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Net Increase in Members' Equity -
Net Assets 144,832,611 79,592,249
MEMBERS' EQUITY - NET ASSETS
AT BEGINNING OF PERIOD 79,592,249 -
- --------------------------------------------------------------------------------
MEMBERS' EQUITY - NET ASSETS
AT END OF PERIOD $224,424,860 $79,592,249
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The accompanying notes and attached audited financial statement of Excelsior
Absolute Return Fund of Funds Master Fund, LLC are an integral part of these
financial statements.
Excelsior Absolute Return Fund of Funds, LLC
Statements of Cash Flows Year Ended
March 31, 2005
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CASH FLOWS FROM OPERATING ACTIVITIES
Net increase in members' equity - net assets
derived from operations $ 9,071,121
Adjustments to reconcile net increase in members' equity - net
assets derived from operations to net cash used in operating
activities:
Net unrealized appreciation on investment allocated from
Excelsior Absolute Return Fund of Funds Master
Fund, LLC (12,233,400)
Net realized gain on investment allocated from Excelsior
Absolute Return Fund of Funds Master Fund, LLC (320,997)
Net investment loss allocated from Excelsior Absolute
Return Fund of Funds Master Fund, LLC 1,891,767
Purchases of investment in Excelsior Absolute Return Fund
of Funds Master Fund, LLC (141,875,375)
Proceeds from investment in Excelsior Absolute Return Fund
of Funds Master Fund, LLC 7,418,620
Decrease in advance investment in Excelsior Absolute Return
Fund of Funds Master Fund, LLC 38,995,000
Increase in prepaid fees (56,015)
Increase in interest receivable (307)
Decrease in due from Advisor 52,089
Increase in due to Advisor 69,423
Increase in Advisor management fee payable 182,235
Increase in professional fees payable 33,000
Increase in Board of Mangers fees' payable 6,000
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Net Cash Used in Operating Activities (96,766,819)
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CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from members' subscriptions 106,464,090
Payments for members' interests repurchased (9,665,795)
Offering costs paid (31,805)
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Net Cash Provided by Financing Activities 96,766,490
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Net increase in cash and cash equivalents (329)
Cash and cash equivalents at beginning of period 1,000
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Cash and Cash Equivalents at End of Year $ 671
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The accompanying notes and attached audited financial statement of Excelsior
Absolute Return Fund of Funds Master Fund, LLC are an integral part of these
financial statements.
Excelsior Absolute Return Fund of Funds, LLC
Notes to Financial Statements
March 31, 2005
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1. Organization
Excelsior Absolute Return Fund of Funds, LLC (the "Fund") was organized as a
limited liability company under the laws of Delaware on June 17, 2003, and
commenced operations on December 1, 2003. The Fund is registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), as a closed-end,
non-diversified, management investment company. The Fund's investment objective
is to provide long-term, risk-adjusted absolute returns in a variety of capital
market conditions. The Fund pursues its investment objective by investing
substantially all of its assets in Excelsior Absolute Return Fund of Funds
Master Fund, LLC (the "Company"), a closed-end, non-diversified, management
investment company which has the same investment objective as the Fund. The
Company seeks to achieve its investment objective by investing its assets
primarily in private investment limited partnerships or limited liability
companies and other similar investment vehicles (collectively, "Investment
Funds") that are managed by investment managers utilizing a broad range of
alternative investment strategies.
The financial statements of the Company, including the Schedule of Investments,
are attached to this report and should be read with the Fund's financial
statements. The percentage of the Company's members' equity owned by the Fund at
March 31, 2005 was 89.30%.
U.S. Trust Hedge Fund Management, Inc. serves as the investment advisor of the
Company (the "Advisor"). The Advisor is a wholly-owned subsidiary of U.S.
Trust Corporation, and is registered as an investment adviser under the
Investment Advisers Act of 1940, as amended. The Advisor provides various
management and administrative services to the Company and the Fund.
The Fund's Board of Managers (the "Managers") has overall responsibility to
manage and supervise the operations of the Fund and the Company, including the
exclusive authority to oversee and to establish policies regarding the
management, conduct and operation of the Fund's business.
Initial and additional subscriptions for investment interests by eligible
investors may be accepted as of the first day of each calendar quarter, or at
such times as the Managers may determine. The Managers reserve the right to
reject any application for interests in the Fund. The Fund may, from time to
time, offer to repurchase interests from members pursuant to written tenders by
members. These repurchases will be made at such times and on such terms as may
be determined by the Managers, in their sole discretion, subject to the
liquidity of the Company's assets and other factors considered by the Manager.
Excelsior Absolute Return Fund of Funds, LLC
Notes to Financial Statements (continued)
March 31, 2005
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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 twice in each year, at June 30th
and December 31st. Members can only transfer or assign their Fund 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 Fund's financial statements are reasonable and prudent; however, actual
results could differ from these estimates.
a. Portfolio Valuation
The net asset value of the Fund is determined by, or at the direction of, the
Advisor as of the close of business at the end of any fiscal period (as defined
in the Fund's Limited Liability Company Agreement), in accordance with the
valuation principles set forth below, or as may be determined from time to time
pursuant to policies established by the Managers.
The Fund records its investment in the Company at fair value and is represented
by the Fund's proportionate interest in the Company's members' equity - net
assets at March 31, 2005. 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 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.
Distributions received from the Company, whether in the form of cash or
securities, are applied first as a reduction of the investment's cost and, if
any, any excess as a realized gain from investments.
Excelsior Absolute Return Fund of Funds, LLC
Notes to Financial Statements (continued)
March 31, 2005
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2. Significant Accounting Policies (continued)
b. Company Expenses
The Fund bears its own expenses and, indirectly, bears a pro rata portion of the
Company's expenses, including, but not limited to: fees paid directly or
indirectly to the investment managers of the Investment Funds, all costs and
expenses directly related to portfolio transactions and positions for the
Company's account; certain legal fees; accounting and auditing fees; custodial
and escrow fees; fees paid to the Fund's administrator; costs of insurance; the
advisory management fee; travel and related expenses of Managers; all costs with
respect to communications regarding the Fund's transactions among the Advisor
and any custodian or other agent engaged by the Fund; and other types of
expenses approved by the Managers.
The Advisor and the Fund have entered into an expense limitation and
reimbursement agreement (the "Expense Limitation Agreement"), under which the
Advisor has agreed to waive its fees, or to pay or absorb the ordinary operating
expenses of the Fund, to the extent necessary to limit the ordinary operating
expenses of the Fund, including organizational and offering costs and the
proportionate share of the Company's expenses to 2% per annum of the Fund's
average monthly net assets. In consideration of the Advisor's agreement to limit
the Fund's expenses, the Fund will carry forward the amount of expenses waived,
paid or absorbed by the Advisor in excess of the Expense Limitation for a period
not to exceed three years from the end of the fiscal year in which they were
incurred, and will reimburse the Advisor such amounts. Reimbursement will be
made as promptly as possible, but only to the extent it does not cause the
Fund's ordinary operating expenses to exceed the Expense Limitation.
As of March 31, 2005, the Advisor has paid $906,262 of expenses on behalf of the
Fund per the Expense Limitation Agreement. Of this amount, the Fund has
reimbursed $633,757 of expenses to the Advisor and is able to reimburse another
$69,423 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 $203,082 of excess expenses and reimburse the Advisor as promptly as
possible pursuant to the Expense Limitation Agreement. The reimbursement of
these expenses is dependent on future levels of members' equity - net assets and
expenses of the Fund.
Excelsior Absolute Return Fund of Funds, 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 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.
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.
The cost of the Fund's investment in the Company for federal income tax purposes
is based on amounts reported to the Fund by the Company on Schedule K-1 for the
year ended December 31, 2004. At December 31, 2004, the cost for federal income
tax purposes was $195,744,998. This consisted of aggregate gross unrealized
appreciation of $6,062,389.
d. Other
Cash and cash equivalents consist of monies invested in a PFPC Trust Company
interest-bearing account. Interest income is recorded on the accrual basis.
The Fund records its proportionate share of the Company's investment income,
expenses and realized and unrealized gain and losses.
3. Management Fee, Related Party Transactions and Other
As of March 31, 2005, the Fund's employees and affiliates have a combined
interest of approximately 15.48% of the Fund's members' equity - net assets.
Excelsior Absolute Return Fund of Funds, LLC
Notes to Financial Statements (continued)
March 31, 2005
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3. Management Fee, Related Party Transactions and Other (continued)
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
March 31, 2004 to March 31, 2005, the management fee was $887,788, of which
$280,024 was payable as of March 31, 2005.
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 who are not
an "interested person" of the Fund are reimbursed by the Fund for all reasonable
out-of-pocket expenses. The Fund incurred $57,000 of such expense for the period
from March 31, 2004 to March 31, 2005 of which $6,000 was payable 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
$142,284 in expenses related to such administrative services, of which $19,303
was payable as of March 31, 2005. On February 23, 2005 the Managers approved a
new agreement with J.D. Clark & Co beginning April 1, 2005.
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.
Excelsior Absolute Return Fund of Funds, LLC
Notes to Financial Statements (continued)
March 31, 2005
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5. 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.
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 year December 1,
Ended 2003* -
March 31, 2005 March 31, 2004
-----------------------------------
Net assets, end of period $224,424,860 $ 79,592,249
Ratio of net investment
loss to average members' (2.00%) (0.60%)
equity - net assets (a)
Ratio of total expenses to 1.88% 1.25%
average members' equity -
net assets (b), (c)
Ratio of net expenses to average 2.03% 0.59%
members' equity - net assets (b)
Total return (d) 4.31% 4.85%
* Commencement of operations. The ratios and total return are not annualized
for the initial period.
(a) The ratio reflects the income and expenses assuming inclusion of the Fund's
proportionate share of income and expenses of the Company.
(b) The ratio reflects the expenses assuming inclusion of the Fund's
proportionate share of expenses of the Company.
(c) The ratio is before any expense limitation or reimbursement per the Expense
Limitation Agreement.
(d) Total return assumes a purchase of an interest in the Fund on the first day
and a sale of interest on the last day of the period.
Excelsior Absolute Return Fund of Funds, LLC
Notes to Financial Statements (continued)
March 31, 2005
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7. Subsequent Events
Subsequent to March 31, 2005, the Fund received subscriptions from members in
the amount of $12,671,949. These subscriptions became interests in the Fund
effective April 1, 2005. The Fund also invested $11,991,949 in the Company as of
April 1, 2005.
8. Company Management (Unaudited)
Information pertaining to the Board of Managers and officers of the Fund is set
forth below:
Term of
Position Office Number of
Held and Principal Portfolios in
with Length Occupation Fund Complex
the of Time During Past Five Overseen by
Name, Address and Age Fund Served Years 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 Master
Fund LLC and Excelsior
LaSalle Property Fund Inc.
Jonathan B. Bulkley Manager Term - Non-Executive Chairman 4
1133 5th Ave., Apt 3 Indefinite of QXL, PLC (2/98 to
New York, NY 10125 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 Master Fund
LLC, and Excelsior LaSalle
Property Fund Inc.
Thomas F. McDevitt Manager Term - Managing Partner, 3
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
Master Fund LLC and
Excelsior LaSalle
Property Inc.
Interested Manager
Douglas Lindgren* Manager Term - Chair of U.S. Trust's 7
U.S. Trust Company and Indefinite Alternative Investments
225 High Ridge President Length Division, Managing
Stamford, CT - 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
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 (continued)
March 31, 2005
- --------------------------------------------------------------------------------
8.Fund Management (Unaudited) (continued)
Term of
Position Office Number of
Held and Principal Portfolios in
with Length Occupation Fund Complex
the of Time During Past Five Overseen by
Name, Address and Age Fund Served 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 and Treasurer of U.S.
225 High Ridge Road Officer Length Trust's Alternative
Stamford, CT 06905 and - since Investments Division and
Age 51 Treasurer June Senior V.P. of U.S.
2003 Trust (4/03 to 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
Stamford, CT 06905 - since Investments Division
Age 37 June 2003 (9/97 to present); Vice
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 Company Indefinite (8/01 to present);
225 High Ridge Road Length Controller, Whitney &
Stamfor,CT 06905 - since Company (5/99 to 8/01);
Age 40 June 2003 Financial analyst,
Greenwich Capital
Markets (7/93 to 3/99).
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.
- -------------------------
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 from 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 if filed with this form N-CSR under
ITEM 12(a)(1).
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
- ------------------------------------------
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.
- ------------------------------------------------
(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 for the fiscal year ended March 31, 2004 and March 31, 2005 were
$20,000 and $29,000 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.
- -------------------
(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, LLC
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By (Signature and Title) /s/ Douglas A. Lindgren
--------------------------
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, LLC
--------------------------------------------
By (Signature and Title) /s/ Robert Aufenanger
------------------------
Robert Aufenanger, Principal Financial Officer
Date June 7, 2005
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