UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-21480
THE TOPIARY FUND FOR BENEFIT PLAN INVESTORS (BPI) LLC
(Exact name of registrant as specified in charter)
25 DEFOREST AVENUE
SUMMIT, NEW JERSEY 07901
(Address of principal executive offices) (Zip code)
JOHN H. KIM, DIRECTOR & SENIOR COUNSEL
DEUTSCHE ASSET MANAGEMENT
345 PARK AVENUE
NEW YORK, NEW YORK 10154
(Name and address of agent for service)
registrant's telephone number, including area code: (908) 608-3160
Date of fiscal year end: MARCH 31
Date of reporting period: SEPTEMBER 30, 2005
Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW,
Washington, DC 20549-0609. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C. ss. 3507.
ITEM 1. REPORTS TO STOCKHOLDERS.
The Report to Shareholders is attached herewith.
THE TOPIARY FUND FOR BENEFIT PLAN INVESTORS (BPI) LLC
ADDENDUM TO CONSOLIDATED FINANCIAL STATEMENTS
For the Six Month Period from April 1, 2005 through September 30, 2005
BOARD REVIEW OF THE CURRENT INVESTMENT MANAGEMENT AGREEMENT
The Board of Directors of the Fund (the "Board") presently consists of
three directors, all of whom are independent, or non-interested, directors (the
"Independent Directors"). The Board considers matters relating to the investment
management agreement (the "Investment Management Agreement") between DB
Investment Managers, Inc. ("DBIM") and The Topiary Master Fund for Benefit Plan
Investors (BPI) LLC (the fund in which the Fund invests) throughout the year. On
an annual basis, the Board specifically considers whether to approve the
continuance of the Investment Management Agreement for an additional one-year
period. In considering the approval of the Investment Management Agreement, the
Board considers the terms of such agreement and the incentive compensation
payable to DBIM under the Fund's operating agreement.
At a meeting held on September 9, 2005 (the "September 9 Meeting"), the
Board, comprised of the Independent Directors, unanimously approved the
continuance of the Investment Management Agreement.
At the September 9 Meeting, the Board reviewed, among other information, a
memorandum from outside counsel outlining factors to be considered in evaluating
investment management and underwriting arrangements, written and oral reports
and compilations from DBIM, including comparative data as to investment
performance, advisory fees and other expenses of peer funds, and expense
comparisons of the Fund over a number of time periods. The Board also reviewed
an Investment Management Group Review, which detailed the current and future
business plans of DBIM and its affiliate DB ARS, and a memorandum from DBIM
detailing the possible incidental benefits to DBIM resulting from the Investment
Management Agreement. In addition, the Board took into account information
provided at previous meetings and other knowledge about DBIM the Board had
accumulated over the years.
In approving the continuance of the Investment Management Agreement, the
Board of Directors considered the following factors, among others:
NATURE, EXTENT AND QUALITY OF SERVICES. The Board examined the nature,
extent and quality of the investment management services provided and to be
provided to the Fund by DBIM and its affiliates. The Board considered the terms
of the Investment Management Agreement and the experience and qualifications of
DBIM and its personnel. The Board also considered DBIM's attention to compliance
matters and the absence of material regulatory issues relating to the Fund.
Further, the Board considered DBIM's past organizational changes and turnover in
its personnel, the overall commitment of DBIM to the Fund, and the general
financial condition, resources and reputation of DBIM and its parent. The Board
was generally satisfied with the nature, extent and quality of the investment
management services provided to the Fund.
INVESTMENT PERFORMANCE. The Board considered performance information
provided by DBIM over a number of time periods. DBIM also provided the Directors
with comparative performance information of peer funds that they had requested.
The Board also reviewed the ways in which the investment strategies employed by
DBIM contributed to the Fund's investment performance. After considering all
factors deemed appropriate, the Board concluded that the Fund's performance
supported the continuance of the Investment Management Agreement.
COSTS OF SERVICES. The Board examined the expenses paid by the Fund,
together with the expense information concerning other similar funds. The Board
also noted that DBIM had provided a 1.75% cap on the annual operating expenses
of the Fund (exclusive of any incentive fee payments). Based on this
information, the Board concluded that the investment management fee and expense
ratio of the Fund were generally competitive.
PROFITS REALIZED BY DBIM. DBIM advised the Board that its investment
advisory arrangement with the Fund was not profitable at the current time, due
primarily to the current size of the Fund and the agreement to cap operating
expenses provided by DBIM as described above. Pursuant to the agreement to limit
operating expenses, the entire advisory fee of $227,311 for the year ended March
31, 2005 was reimbursed by DBIM. Pursuant to the operating agreement, the Fund
paid to DBIM an incentive allocation of $57,188 for the year ended March 31,
2005. The Board reviewed this information and concluded that any profit expected
to be earned by DBIM from the Investment Management Agreement under the current
circumstances was limited, which warranted the continuance of these advisory
arrangements.
ECONOMIES OF SCALE. The Board considered the extent to which economies of
scale would be realized as the Fund grows and whether fee levels reflect these
economies of scale for the benefit of Fund investors. The Fund had net assets of
approximately $69 million at August 31, 2005 and the Board did not identify any
economies of scale realized by DBIM at this asset level. The Board and DBIM
agreed that the issue would be reviewed in the future to the extent that the
Fund's assets increase.
OTHER BENEFITS TO DBIM. The Board recognized that DBIM might realize
others benefits from its relationship with the Fund, including receipt of fees
by affiliates performing services for the Fund. These other potential benefits
did not, however, affect the Board's decision to approve of the continuance of
the Investment Management Agreement.
Based on an evaluation of all factors deemed relevant, including the
factors described above, the Board concluded that the Agreement should be
continued through September 30, 2006.
2
THE TOPIARY FUND FOR BENEFIT PLAN INVESTORS (BPI) LLC
CONSOLIDATED FINANCIAL STATEMENTS
For the Six Month Period from April 1, 2005 through September 30, 2005
The Topiary Fund for Benefit Plan Investors (BPI) LLC
Consolidated Financial Statements
(unaudited)
For the Six Month Period from April 1, 2005 through September 30, 2005
--------------------------------------------------------------------------------
The financial statements of The Topiary Master Fund for Benefit Plan Investors
(BPI) LLC are attached and should be read in conjunction with the consolidated
financial statements of The Topiary Fund for Benefit Plan Investors (BPI) LLC.
CONTENTS
Consolidated Statement of Assets, Liabilities and Members' Capital....... 1
Consolidated Statement of Operations..................................... 2
Consolidated Statement of Changes in Members' Capital.................... 3
Consolidated Statement of Cash Flows..................................... 4
Consolidated Financial Highlights........................................ 5
Notes to Consolidated Financial Statements................................6-12
Directors and Officers Biographical Data.................................13-17
Portfolio Proxy Voting Policies and Procedures; SEC Filings ............. 18
THE TOPIARY MASTER FUND FOR BENEFIT PLAN INVESTORS (BPI) LLC .....ATTACHMENT A
The Topiary Fund for Benefit Plan Investors (BPI) LLC
Consolidated Statement of Assets, Liabilities and Members' Capital
(unaudited)
September 30, 2005
ASSETS
Investments in the Master Fund $53,601,457
Cash and cash equivalents 5,009,760
Receivable from Adviser 362,261
Prepaid legal fees 18,667
-----------
TOTAL ASSETS $58,992,145
===========
LIABILITIES
Subscriptions received in advance $ 5,009,759
Professional fees payable 73,705
Administration fees payable 4,000
Custodian fees payable 666
Other 252
-----------
TOTAL LIABILITIES 5,088,382
-----------
MEMBERS' CAPITAL 53,903,763
-----------
TOTAL LIABILITIES AND MEMBERS' CAPITAL $58,992,145
===========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
1
The Topiary Fund for Benefit Plan Investors (BPI) LLC
Consolidated Statement of Operations
(unaudited)
For the Six Month Period from April 1, 2005 through September 30, 2005
NET INVESTMENT LOSS ALLOCATED FROM THE MASTER FUND :
Income $ 29,962
Expenses (396,174)
-----------
Net investment loss allocated from the Master Fund (366,212)
-----------
FUND INCOME
Interest income 3,074
FUND EXPENSES
Amortization of offering costs 152,040
Professional fees 81,023
Administration fees 12,000
Custodian fees 5,670
-----------
Total expenses 250,733
Fund expenses reimbursed (249,211)
-----------
Net expenses (1,522)
-----------
NET INVESTMENT INCOME FROM FUND 1,552
-----------
Net investment loss (364,660)
-----------
GAIN FROM INVESTMENT FUND TRANSACTIONS
Net realized gain from investment funds allocated from the
Master Fund 235,135
Net change in unrealized appreciation on investment funds allocated from the
Master Fund (net of taxes $46,972) 2,094,524
-----------
NET GAIN FROM INVESTMENT FUNDS TRANSACTIONS 2,329,659
-----------
NET INCREASE IN MEMBERS' CAPITAL DERIVED FROM OPERATIONS $ 1,964,999
===========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
2
The Topiary Fund for Benefit Plan Investors (BPI) LLC
Consolidated Statement of Changes in Members' Capital
SPECIAL ADVISORY OTHER
MEMBER MEMBERS' CAPITAL
MEMBERS' CAPITAL AT OCTOBER 1, 2004 $ -- $ 100,000
------------ ------------
PERIOD FROM OCTOBER 1, 2004 (COMMENCEMENT OF
OPERATIONS)
THROUGH MARCH 31, 2005
Net investment loss -- (164,880)
Net realized gain from investment funds allocated from the Master
Fund (54,354)
Net unrealized appreciation on investment funds allocated from
the Master Fund -- 979,071
------------ ------------
NET INCREASE IN MEMBERS' CAPITAL DERIVED FROM OPERATIONS -- 759,837
FROM MEMBERS' CAPITAL TRANSACTIONS
Subscriptions -- 28,313,525
Redemptions -- --
Reallocation of incentive allocation 57,188 (57,188)
------------ ------------
NET CHANGE IN MEMBERS' CAPITAL FROM CAPITAL TRANSACTIONS 57,188 28,256,337
------------ ------------
NET CHANGE IN MEMBERS' CAPITAL 57,188 29,016,174
------------ ------------
Members' capital at end of period $ 57,188 $ 29,116,174
============ ============
TOTAL CAPITAL ($29,173,362)
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2005 (UNAUDITED)
Net investment loss -- (364,660)
Net realized gain from investment funds allocated from the Master
Fund -- 235,135
Net unrealized appreciation on investment funds allocated from
the Master Fund -- 2,094,524
------------ ------------
NET INCREASE IN MEMBERS' CAPITAL DERIVED FROM OPERATIONS -- 1,964,999
FROM MEMBERS' CAPITAL TRANSACTIONS
Subscriptions -- 22,822,590
Redemptions (57,188) --
Reallocation of incentive allocation 121,225 (121,225)
------------ ------------
NET CHANGE IN MEMBERS' CAPITAL FROM CAPITAL TRANSACTIONS 64,037 22,701,365
------------ ------------
NET CHANGE IN MEMBERS' CAPITAL 64,037 24,666,364
------------ ------------
Members' capital at end of period $ 121,225 $ 53,782,538
============ ============
TOTAL CAPITAL ($53,903,763)
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
3
The Topiary Fund for Benefit Plan Investors (BPI) LLC
Consolidated Statement of Cash Flows
(unaudited)
For the Six Month Period from April 1, 2005 through September 30, 2005
CASH FLOWS FROM OPERATING ACTIVITIES
Net increase in Members' capital from operations $ 1,964,999
Adjustments to reconcile net increase in Members' capital from operations to net cash used in
operating activities:
Purchases of investment in Master Fund (22,825,915)
Redemption of investment in Master Fund 57,188
Net investment loss allocated from the Master Fund 366,212
Net realized gain from investment funds allocated from the Master Fund (235,135)
Net unrealized appreciation on investment funds allocated from the Master
Fund (2,094,524)
Decrease in advance subscription to
the Master Fund 3,771,167
Decrease in prepaid expenses 152,040
Increase in receivable from Adviser (124,605)
Increase in prepaid legal (18,667)
Decrease in administration fees payable (8,000)
Increase in professional fees payable 2,080
Decrease in custodian fees payable (1,326)
Increase in other liabilities 252
------------
NET CASH USED IN OPERATING ACTIVITIES (18,994,234)
------------
CASH FLOWS FROM FINANCING ACTIVITIES
Subscriptions 24,061,182
Redemptions (57,188)
------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 24,003,994
------------
NET INCREASE IN CASH 5,009,760
Cash and cash equivalents at beginning of period --
------------
Cash and cash equivalents at end of period $ 5,009,760
============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
4
The Topiary Fund for Benefit Plan Investors (BPI) LLC
Consolidated Financial Highlights
RATIOS AND OTHER FINANCIAL HIGHLIGHTS
SIX MONTH PERIOD
FROM PERIOD FROM
APRIL 1, 2005 OCTOBER 1, 2004
THE FOLLOWING REPRESENTS THE RATIOS TO THROUGH (COMMENCEMENT OF
AVERAGE NET ASSETS AND OTHER FINANCIAL SEPTEMBER 30, 2005 OPERATIONS) THROUGH
HIGHLIGHTS INFORMATION FOR THE PERIOD: (UNAUDITED) MARCH 31, 2005
------------------ -------------------
Ratios to average net assets:
Net investment loss (a)(b) (1.60%) (1.67%)
Net expenses (a)(b)(c) 1.75% 1.75%
Incentive allocation 0.53% 0.58%
---------- ----------
Net expenses and incentive allocation
2.28% 2.33%
Total return(d) 3.56% 5.04%
Incentive allocation(d) (0.24%) (0.20%)
---------- ----------
Total return net of incentive allocation(d) 3.32% 4.84%
Portfolio turnover rate of Master Fund 12% 3%
Members' capital, end of period (thousands) $ 53,904 $ 29,173
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
5
(a) Annualized for periods of less than one year.
(b) The Adviser waived and reimbursed $251,127 of fees for the six month
period ended September 30, 2005. The net investment loss ratio would have
been 1.11% greater and the total expenses ratio would have been 1.11%
greater had these fees and expenses not been waived and reimbursed by the
Adviser. The Adviser waived and reimbursed $349,691 of fees and expenses
for the period ended March 31, 2005. The net investment loss ratio would
have been 3.57% greater and the total expenses ratio would have been 3.57%
greater on an annualized basis had these fees and expenses not been
waived/reimbursed by the Adviser.
(c) Expense ratios for the underlying Investment funds are not included in the
expense ratio, however expenses of the Master Fund are included.
(d) Not annualized.
The above ratios and total returns are calculated for all Members taken as a
whole. An individual investor's return may vary from these returns based on the
timing of capital contributions.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
6
THE TOPIARY FUND FOR BENEFIT PLAN INVESTORS (BPI) LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
--------------------------------------------------------------------------------
1. ORGANIZATION
The Topiary Fund for Benefit Plan Investors (BPI) LLC (the "Fund") was organized
as a Delaware limited liability company on July 16, 2004 and commenced
operations October 1, 2004. 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 interests (the "Interests") are
registered under the Securities Act of 1933, as amended (the "1933 Act"), but
are subject to substantial limits on transferability and resale. The Fund's
investment objective is to generate long-term capital appreciation. The Fund
will seek to achieve this objective by investing substantially all of its
investable assets into The Topiary Offshore Fund for Benefit Plan Investors
(BPI) LDC (the "Offshore Fund"), a Cayman Island limited duration company with
the same investment objectives as the Fund. The Offshore Fund in turn will
invest substantially all of its investable assets in The Topiary Master Fund for
Benefit Plan Investors (BPI) LLC (the "Master Fund"), a registered investment
company with the same investment objectives as the Fund and the Offshore Fund.
The Fund owns 100% of the beneficial interests of the Offshore Fund, and the
Offshore Fund owns approximately 86% of the beneficial interests in the Master
Fund at September 30, 2005. The remaining balance of the Master Fund is owned by
DBAH Capital, L.L.C, an affiliate of DB Investment Managers, Inc. These
financials statements are the consolidation of the Fund and the Offshore Fund.
Inter-company balances have been eliminated through consolidation. The Offshore
Fund commenced operations on October 1, 2004.
The Fund's Board of Directors (the "Board") has overall responsibility to manage
and control the business operations of the Fund on behalf of the members (the
"Members"). At least a majority of the Board is and will be persons who are not
"interested persons" (as defined in the 1940 Act) with respect to the Fund.
DB Investment Managers, Inc. (the "Adviser") serves as the investment adviser of
the Fund subject to the ultimate supervision of and subject to any policies
established by the Board, pursuant to the terms of an investment management
agreement with the Fund (the "Investment Management Agreement"). Pursuant to the
Investment Management Agreement, the Adviser provides the Fund with ongoing
investment guidance, policy direction, and monitoring of the Fund. The Adviser
is an indirect wholly owned subsidiary of Deutsche Bank AG ("Deutsche Bank"), an
international commercial and investment banking group, and is registered as an
investment adviser under the Investment Advisers Act of 1940, as amended
("Advisers Act").
Generally, initial and additional applications for Interests by eligible
investors may be accepted at such times as the Fund's operating agreement may
determine. The Fund reserves the right to reject any applications for interests
in the Fund. The Fund from time
7
THE TOPIARY FUND FOR BENEFIT PLAN INVESTORS (BPI) LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
1. ORGANIZATION (CONTINUED)
to time may offer to repurchase Interests. These repurchases will be made at
such times and on such terms as may be determined by the Board, in its complete
and absolute discretion. A Member's Interest in the Fund can only be transferred
or assigned with the written consent of the Board, which may be withheld in its
sole discretion.
The performance of the Fund is directly affected by the performance of the
Master Fund. Attached are the financial statements of the Master Fund, which are
an integral part of these financial statements.
2. SIGNIFICANT ACCOUNTING POLICIES
A. VALUATIONS
The Fund's investment in the Master Fund represents substantially all of the
Fund's assets. All investments owned are carried at value which is the portion
of the net asset value of the Master Fund held by the Fund. The accounting for
and valuation of investments by the Master Fund is discussed in the notes to the
financial statements for the Master Fund, which are included elsewhere in this
report.
B. INCOME RECOGNITION AND SECURITY TRANSACTIONS
Investments in the Master Fund are recorded on the effective date of the
subscription in the Master Fund. The Fund records its proportionate share of the
Master Fund's income, expenses, and realized and unrealized gains and losses. In
addition, interest income on the Fund's cash balance is recorded on an accrual
basis and the Fund accrues its own expenses as incurred.
C. FUND COSTS
The Fund bears all expenses incurred in its business other than those that the
Adviser assumes. The expenses of the Fund include, but are not limited to, the
following: all costs and expenses related to investment transactions and
positions for the Fund's account; legal fees; accounting and auditing fees;
custodial fees; costs of computing the Fund's net asset value; costs of
insurance; registration expenses; due diligence, including travel and related
expenses; expenses of meetings of the Board and Members; all costs with respect
to communications to Members; and other types of expenses as may be approved
from time to time by the Board.
The Fund's offering expense is being amortized over a twelve month period
beginning upon commencement of the Fund's operations. The organizational
expenses of the Fund, the Offshore Fund, and the Master Fund were paid by the
Adviser.
8
THE TOPIARY FUND FOR BENEFIT PLAN INVESTORS (BPI) LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
D. INCOME TAXES
The Fund intends to operate and has elected to be treated as a partnership for
Federal income tax purposes. Accordingly, no provision for the payment of
Federal, state or local income taxes has been provided. Each Member is
individually required to report on its own tax return its distributive share of
the Fund's taxable income or loss. The Master Fund withholds and pays taxes on
U.S. source income and U.S. effectively connected income, if any, allocated from
underlying investments to the extent such income is not exempted from
withholding under the Internal Revenue Code and Regulations there under. Such
amounts are treated as withholding tax credits for federal income tax purposes.
The actual amount of such taxes is not known until all K-1's from underlying
funds are received, usually in the following tax year. Prior to the final
determination, the amount of the tax is estimated based on information
available. The final tax could be different from the estimated tax and the
difference could be significant.
E. CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist of monies on deposit at PFPC Trust Company.
The Fund treats all financial instruments that mature within three months as
cash equivalents.
F. USE OF ESTIMATES
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires the Adviser to make
estimates and assumptions that affect the amounts and disclosures in the
financial statements and accompanying notes. The Adviser believes that the
estimates utilized in preparing the Fund's financial statements are reasonable
and prudent, however, actual results could differ from these estimates.
G. ALLOCATION OF NET PROFITS AND LOSSES
Net investment income and net realized and unrealized gains and losses on
investments for the Fund are allocated to the Members' Capital Accounts based on
their respective capital balances at the beginning of each allocation period
relative to the capital of all Members' Capital Accounts. The beginning of an
allocation period is defined as the beginning of each fiscal year, the date of
admission of any new member, or the date of any additional subscription or
redemption by a member.
H. EXPENSE LIMITATION
Pursuant to the Expense Limitation Agreement, the Adviser has contractually
agreed to waive and/or reimburse the Fund's expenses to the extent necessary to
ensure that the Fund's annualized expenses (excluding the Incentive Allocation,
if any) will not exceed 1.75% including the Fund's allocated portion of expense
incurred by the Master Fund. The initial term of the Expense Limitation
Agreement is the first fiscal year of the Fund's operations, and will be
automatically renewed for each fiscal year thereafter unless the Adviser
provides
9
THE TOPIARY FUND FOR BENEFIT PLAN INVESTORS (BPI) LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
written notice to the Fund and the Master Fund of the termination of the Expense
Limitation Agreement at least 30 days prior to the end of the then-current term.
3. RELATED PARTY TRANSACTIONS
A. MANAGEMENT FEE
The Adviser provides certain management and administration services to the Fund,
including, among other things, providing office space and other support
services. In consideration for such management services, the Master Fund pays
the Adviser a management fee (the "Management Fee") at an annual rate of 1.00%
of the Master Fund's month end net assets, including assets attributable to the
Adviser (or its affiliates) and before giving effect to any repurchases by the
Master Fund of interests in the Master Fund. The Management Fee accrues monthly
and is payable at the end of each quarter. As an investor in the Master Fund,
the Fund's value of its investment in the Master Fund is reduced by the
Management Fee accrued by the Master Fund.
B. BOARD FEES
Board fees are paid at the Master Fund level. See accompanying note in the
Master Fund notes attached.
C. INCENTIVE ALLOCATION
As of each March 31, upon any repurchases of Interests (solely with respect to
the Interest repurchased), and upon termination of the Fund (each, a
"Performance Period"), a reallocation (the "Incentive Allocation") will be made
from the Capital Account of each Member to the Capital Account of the Special
Advisory Member (the Adviser) equal to 10% of the amount, if any, by which the
net profit allocated to such Member's Capital Account for such Performance
Period in excess of the Hurdle Rate (based on the 90-day U.S. Treasury bill
rates) for such Performance Period exceeds the positive balance of such Member's
Loss Carryforward Account. The Incentive Allocation will be applied on a "high
water mark" basis such that in the event a Capital Account suffers a net loss in
a particular Performance Period, no Incentive Allocation will be made with
respect to such Performance Period or any subsequent Performance Period, until
such net loss is first recovered (taking into account interim repurchases, if
any). For the six month period ended September 30, 2005, the Adviser earned an
Incentive Allocation of $121,225.
The Hurdle Rate is calculated monthly using the average of the weekly 90-day
U.S. Treasury bill for that month. For the six months ended September 30, 2005,
the average Hurdle Rate was 3.129%.
10
THE TOPIARY FUND FOR BENEFIT PLAN INVESTORS (BPI) LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
3. RELATED PARTY TRANSACTIONS (CONTINUED)
D. UNDERWRITING
Under the terms of an investor servicing agreement (the " Underwriting
Agreement") between the Fund and Scudder Distributors, Inc. (the "Distributor"),
the Distributor is authorized to retain brokers, dealers and certain financial
advisers ("Investor Service Providers") to provide ongoing investor services and
account maintenance services to Members that are their customers. The
Distributor bears all of its expenses of providing distribution services as
described under the Underwriting Agreement.
E. SUB-ADMINISTRATION
The Adviser has also retained one of its affiliates, Investment Company Capital
Corporation ("ICCC"), to provide sub-administration services pursuant to the
Board services agreement. Under this agreement, ICCC, among other things: drafts
Board agendas and resolutions; prepares Board materials; communicates with the
Directors; and drafts Board-meeting minutes. For the services performed by ICCC
pursuant to this Agreement, the Adviser compensates ICCC at no additional
expense to the Fund.
4. ADMINISTRATION AND OTHER FEES
In accordance with the terms of the administration agreement ("Administration
Agreement") and with the approval of the Fund's Board, PFPC, Inc. (an affiliate
of PNC Bank, N.A.) ("PFPC") serves as the Fund's administrator pursuant to the
administration agreement between PFPC and the Fund (Administration Agreement").
Under the Administration Agreement, PFPC provides administrative and accounting
services to the Fund. As compensation for services set forth herein that are
rendered by PFPC during the term of this Agreement, the Fund pays PFPC a fee for
services rendered.
The Fund has entered into an investor services agreement with PFPC, whereby PFPC
provides investor services and transfer agency functions for the Fund. As
compensation for services set forth herein that are rendered by PFPC during the
term of this Agreement, the Fund pays PFPC a fee for services rendered.
PFPC Trust Company (also an affiliate of PNC Bank, N.A.) serves as custodian of
the Fund's assets and provides custodial services to the Fund.
5. SECURITY TRANSACTIONS
As of September 30, 2005, the Fund's only investment was its investment in the
Master Fund. Aggregate purchases of the Master Fund amounted to $22,825,915 and
aggregate sales of the Master Fund amounted to $57,188 for the six month period
ended September 30, 2005.
11
THE TOPIARY FUND FOR BENEFIT PLAN INVESTORS (BPI) LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
6. FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK
In the normal course of business, the investment funds in which the Master Fund
invests trade various financial instruments and enter into various investment
activities with off-balance sheet risk. The Master Fund's off-balance sheet risk
in these financial instruments as discussed in the notes to the Master Fund's
financial statements.
7. CONCENTRATION OF RISK
The Master Fund invests primarily in Investment funds that are not registered
under the 1940 Act and invest in and actively trade securities and other
financial instruments using different strategies and investment techniques,
including leverage that may involve significant risks.
The Master Fund's concentration of risk is discussed in the notes to the Master
Fund's financial statements.
8. GUARANTOR OBLIGATIONS AND INDEMNIFICATIONS
In November 2002, the Financial Accounting Standards Board ("FASB") issued FASB
Interpretation No. 45, GUARANTOR'S ACCOUNTING AND DISCLOSURE REQUIREMENTS FOR
GUARANTEES, INCLUDING INDIRECT GUARANTEES OF INDEBTEDNESS OF OTHERS, AN
INTERPRETATION OF FASB STATEMENTS NO. 5, 57, AND 107 AND RESCISSION OF FASB
INTERPRETATION NO. 34 ("FIN 45"). FIN 45 requires certain disclosure that was
intended to improve the transparency of the financial statement information
about a guarantor's obligations and liquidity risks related to guarantees
issued. In the normal course of business, the Fund enters into contracts that
contain a variety of warranties and representations that provide general
indemnifications. The Fund's maximum exposure under these arrangements is
unknown, as this would involve future claims that may be made against the Fund
that have not yet occurred. However, the Fund expects the risk of loss to be
remote.
9. SUBSEQUENT EVENT
In October 2005, the Fund effected subscriptions from Members of $5,401,325 of
which $5,009,759 were received prior to October 1, 2005.
12
THE TOPIARY FUND FOR BENEFIT PLAN INVESTORS (BPI) LLC
DIRECTORS AND OFFICERS BIOGRAPHICAL DATA (UNAUDITED)
--------------------------------------------------------------------------------
The business of the Fund is managed under the direction of the Board. Subject to
the provisions of the Operating Agreement and Delaware law, the Directors have
all powers necessary and convenient to carry out the responsibility. The
Directors and Officers of the Fund, their addresses, their ages and descriptions
of their principal occupations during the past five years are listed below.
------------------------------------------------------------------------------------------------------------------------------------
NUMBER OF
TERM OF PORTFOLIOS IN
OFFICE(i) & PRINCIPAL FUND
POSITION(S) LENGTH OF OCCUPATION(S) COMPLEX OTHER
HELD TIME DURING THE PAST OVERSEEN BY DIRECTORSHIPS
NAME, ADDRESS AND AGE WITH FUND SERVED 5 YEARS DIRECTOR HELD BY DIRECTOR
------------------------------------------------------------------------------------------------------------------------------------
INDEPENDENT DIRECTORS
------------------------------------------------------------------------------------------------------------------------------------
Nolan T. Altman (ii) Director Since President, NTA 3 Director, State University
c/o DB Hedge Strategies Fund LLC inception Consulting (financial of New York at Albany
25 DeForest Ave. services consulting) Foundation (1998 to
Summit, NJ 07901-2154 (2001 to present). present); Director, Phinity
(9/18/55) Formerly, Chief Offshore Fund, Ltd.,
Financial Officer, Tiger Asia Overseas
Tiger Management Fund, Ltd. Offshore Fund;
(investment adviser to Tiger Technology Fund
hedge funds) (1993 to Ltd., TS I Offshore
2001). Limited (2004 to present).
------------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
(i) Each Director serves for the duration of the Fund, or until his death,
resignation, termination, removal or retirement.
(ii) Since March 2003, Messrs. Altman and Citron have served as members of the
Conflicts Advisory Board of certain private investment funds managed by
DBIM or its affiliates. This Conflicts Advisory Board meets on an
intermittent basis to evaluate whether specific transactions involving the
private investment funds raise conflicts of interest with DBIM, its
affiliates, or accounts managed by DBIM or its affiliates.
13
THE TOPIARY FUND FOR BENEFIT PLAN INVESTORS (BPI) LLC
DIRECTORS AND OFFICERS BIOGRAPHICAL DATA (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------------
NUMBER OF
TERM OF PORTFOLIOS
OFFICE(i) & IN FUND OTHER
POSITION(S) LENGTH OF PRINCIPAL OCCUPATION(S) COMPLEX DIRECTORSHIPS
HELD WITH TIME DURING THE PAST OVERSEEN HELD
NAME, ADDRESS AND AGE FUND SERVED 5 YEARS BY DIRECTOR BY DIRECTOR
-----------------------------------------------------------------------------------------------------------------------------------
INDEPENDENT DIRECTORS (CONTINUED)
-----------------------------------------------------------------------------------------------------------------------------------
Louis S. Citron (ii) Director Since General Counsel, New 3 None
c/o DB Hedge Strategies Fund LLC Inception Enterprise Associates (venture
25 DeForest Ave. capital firm) (2001 to present).
Summit, NJ 07901-2154 Formerly, General Counsel and
(1/31/65) Sr. Vice President, the ING
mutual funds (1998 to 2000);
Vice President, ING Mutual
Funds Management Co. LLC
(registered investment adviser)
(1998 to 2000); Vice President,
ING Funds Distributors, Inc.
(principal underwriter for the
ING mutual funds) (1998 to
2000); Vice President, ING
Funds Services Co. LLC
(administrator to the ING
mutual funds) (1998 to 2000).
-----------------------------------------------------------------------------------------------------------------------------------
14
THE TOPIARY FUND FOR BENEFIT PLAN INVESTORS (BPI) LLC
DIRECTORS AND OFFICERS BIOGRAPHICAL DATA (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
NUMBER OF
TERM OF PORTFOLIOS
OFFICE(i) & PRINCIPAL IN FUND OTHER
POSITION(S) LENGTH OF OCCUPATION(S) COMPLEX DIRECTORSHIPS
HELD WITH TIME DURING THE PAST OVERSEEN HELD
NAME, ADDRESS AND AGE FUND SERVED 5 YEARS BY DIRECTOR BY DIRECTOR
------------------------------------------------------------------------------------------------------------------------------------
INDEPENDENT DIRECTORS (CONTINUED)
------------------------------------------------------------------------------------------------------------------------------------
Edward T. Tokar Director Since Sr. Managing Director of 3 Director, Gabelli
c/o DB Hedge Strategies Fund LLC Inception Investments, Beacon Dividend and Income
25 DeForest Ave. Trust Company (2004 to Trust (2003 to present);
Summit, NJ 07901-2154 present); Chief Executive Trustee, Levco Series
(6/12/47) Officer, Allied Capital Trust Mutual Funds (2
Management LLC portfolios) (2001 to
(registered investment present); Director,
adviser - wholly owned Allied Capital Manage-
subsidiary of Honeywell) ment LLC (1998 to
(1998 to 2004); and Vice 2004). Formerly,
President - Investments, Trustee, Scudder MG
Honeywell International, Investment Trust
Inc. (advanced tech- (formerly Morgan
nology and Grenfell Investment
manufacturer) (1977 to Trust (11 portfolios)
2004). (1994 to 2002).
------------------------------------------------------------------------------------------------------------------------------------
15
THE TOPIARY FUND FOR BENEFIT PLAN INVESTORS (BPI) LLC
DIRECTORS AND OFFICERS BIOGRAPHICAL DATA (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
OFFICERS
------------------------------------------------------------------------------------------------------------------------------
NAME, ADDRESS AND AGE POSITIONS HELD WITH FUND PRINCIPAL OCCUPATION(S) DURING THE LAST
5 YEARS
------------------------------------------------------------------------------------------------------------------------------
Julian F. Sluyters(iii) Chief Executive Officer President (as of May 24, 2005) and Chief Executive
345 Park Ave. Officer (as of June 18, 2004); Managing Director,
New York, NY 10154 Deutsche Asset Management (May 2004-present);
(7/14/60) President and Chief Executive Officer, UBS Fund
Services (2001 to 2003); Chief Administrative Officer
(1998 to 2001) and Sr. Vice President and Director of
Mutual Fund Operations (1991 to 1998), UBS Global
Asset Management.
------------------------------------------------------------------------------------------------------------------------------
Pamela Kiernan President Chief Operating Officer, DB Absolute Return
DB Absolute Return Strategies Strategies (2005 to present). Formerly, Chief
280 Park Avenue, 9Th Floor Operating Officer - Americas, DB Advisors LLC
New York, NY 10017 (2004); Chief Operations Officer - America,
(9/16/68) Deutsche Bank Global Equities (2002 to 2004);
Business Management - Trading, Deutsche Bank
Global Equities (1997 to 2002).
------------------------------------------------------------------------------------------------------------------------------
Marielena Glassman Treasurer, Principal Chief Administration Officer, DB Absolute Return
Deutsche Asset Management Financial & Accounting Strategies (2002 to present). Formerly Global Head
25 DeForest Ave., 2nd Floor Officer of Business Management, Deutsche Asset
Summit, NJ 07901-2154 Management (1990 to 2002): Co-Head of Global
(06/06/63) Portfolio Management product, Bankers Trust Private
Banking (1996-1999).
------------------------------------------------------------------------------------------------------------------------------
Carole Coleman(iii) Secretary Vice President and Secretary; Director, Deutsche
Deutsche Asset Management Asset Management (since 2005); Associate General
345 Park Avenue, 16th Floor Counsel, Fred Alger & Company (2002-2005);
New York, NY 10154 Associate Attorney, Charpie & Associates (1995-
(08/23/69) 2002).
------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
(iii) All Officers also serve in similar capacities as Officers for other funds
advised by the Investment Manager or its affiliates.
16
THE TOPIARY FUND FOR BENEFIT PLAN INVESTORS (BPI) LLC
DIRECTORS AND OFFICERS BIOGRAPHICAL DATA (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------
Daniel O. Hirsch(iii) Assistant Secretary Consultant. Formerly, Managing Director,
Deutsche Asset Management Deutsche Asset Management (asset management
1 South St. division of Deutsche Bank) (2002 to 2005);
Baltimore, MD 21202-3298 Director, Deutsche Asset Management (1999 to
(3/27/54) 2002); Principal, BT Alex. Brown Inc. (now
Deutsche Bank Securities Inc.) (1998 -1999);
Assistant General Counsel, U.S. Securities and
Exchange Commission (1993 to 1998); Director,
Deutsche Global Funds Ltd. (2002 to 2004).
--------------------------------------------------------------------------------------------------------------------------------
John H. Kim Assistant Secretary Director and Senior Counsel, Deutsche Asset
Deutsche Asset Management Management (asset management division of
345 Park Avenue Deutsche Bank) (2001 to present); Sr. Associate,
New York, NY 10154 Wilkie Farr & Gallagher (law firm) (1995 to
(1/9/71) 2001).
--------------------------------------------------------------------------------------------------------------------------------
Anthony Conte Assistant Treasurer Head of Alternative Assets Compliance (06/2005
Deutsche Asset Management to present); Head of Compliance, DB Absolute
345 Park Avenue Return Strategies (2003 to present); Head of
New York, NY 10154 Business Risk, DB Absolute Return Strategies
(3/28/69) (2001 to 2003); Head of Asset Management
Compliance, CIBC World Markets Corp. (1999 to
2001).
--------------------------------------------------------------------------------------------------------------------------------
Neil Novembre Assistant Treasurer Head of Fund Accounting, DB Absolute Return
Deutsche Asset Management Strategies (2002 to present). Formerly,
25 DeForest Ave., 2nd Floor Assurance/Business Advisory Services,
Summit, NJ 07901-2154 PricewaterhouseCoopers, New York (2000-2002);
(06/18/73) Rothstein, Kass & Company, New Jersey (hedge
fund administrator) (1996-2000).
--------------------------------------------------------------------------------------------------------------------------------
Joshua Kestler Vice President Head of Product Structuring, DB Absolute Return
Deutsche Asset Management Strategies (2004 to present); Associate, Schulte
25 DeForest Ave., 2nd Floor Roth & Zabel LLP (law firm) (2001-2004); Law
Summit, NJ 07901-2154 Clerk, Hon. James H. Coleman, New Jersey
(04/27/75) Supreme Court (2000-2001).
--------------------------------------------------------------------------------------------------------------------------------
The Fund's Statement of Additional Information ("SAI") has additional
information about the Fund's Directors and Officers and is available without
charge upon request. Contact your financial representative for a free prospectus
or SAI.
--------------------------------------------------------------------------------
(iii) All Officers also serve in similar capacities as Officers for other funds
advised by the Investment Manager or its affiliates.
17
THE TOPIARY FUND FOR BENEFIT PLAN INVESTORS (BPI) LLC
PORTFOLIO PROXY VOTING PROCEDURES; SEC FILINGS (UNAUDITED)
--------------------------------------------------------------------------------
The Fund invests substantially all of its assets in the securities of Investment
funds, which are privately placed investment vehicles, typically referred to as
"hedge funds." These securities do not typically convey traditional voting
rights to the holder and the occurrence of corporate governance or other notices
for this type of investment is substantially less than that encountered in
connection with registered equity securities. However, to the extent the Fund
receives notices or proxies from Investment funds (or receives proxy statements
or similar notices in connection with any other portfolio securities), the Fund
has delegated proxy voting responsibilities to the Adviser. The Adviser has
adopted its own Proxy Voting Policies and Procedures ("Policies"). The Policies
address, among other things, conflicts of interest that may arise between the
interests of the Fund, and the interests of the Adviser and its affiliates,
including the Fund's principal underwriter.
A description of the Adviser's Policies is available (i) without charge, upon
request, by calling the Fund toll-free at 1-888-262-0695, and (ii) on the SEC's
website at WWW.SEC.GOV.
In addition, the Fund is required to file new Form N-PX with its complete proxy
voting record for the 12 months ended June 30th, no later than August 31st of
each year. The funds Form N-PX is available (i) without charge, upon request, by
calling the Fund toll free at 1-888-262-0695 and (ii) on the SEC's website at
WWW.SEC.GOV.
The Fund files its complete schedule of portfolio holdings with the SEC for the
first quarter and the third quarter of each fiscal year on Form N-Q. The Fund's
Form N-Q filings are available on the SEC's website at WWW.SEC.GOV. Those forms
may be reviewed and copied at the SEC's Public Reference Room in Washington D.C.
Information on the operation of the Public Reference Room may be obtained by
calling 1-800-SEC-0330.
18
ATTACHMENT A
THE TOPIARY MASTER FUND FOR BENEFIT PLAN INVESTORS (BPI) LLC
FINANCIAL STATEMENTS
For the Six Month Period from April 1, 2005 through September 30, 2005
The Topiary Master Fund for Benefit Plan Investors (BPI) LLC
Financial Statements
(unaudited)
For the Six Month Period from April 1, 2005 through September 30, 2005
CONTENTS
Statement of Assets, Liabilities and Members' Capital .................. 1
Schedule of Investments ................................................ 2-3
Statement of Operations ................................................ 4
Statement of Changes in Members' Capital ............................... 5
Statement of Cash Flows ................................................ 6
Financial Highlights ................................................... 7
Notes to Financial Statements .......................................... 8-13
Directors and Officers Biographical Data ............................... 14-18
Portfolio Proxy Voting Policies and Procedures; SEC Filings ............ 19
Components of Market Value by Investment Strategy ...................... 20
The Topiary Master Fund for Benefit Plan Investors (BPI) LLC
Statement of Assets, Liabilities and Members' Capital
(unaudited)
September 30, 2005
ASSETS
Investments in investment funds, at fair value (cost $58,415,217) $63,771,604
Cash and cash equivalents 143,257
Receivable for investment funds sold 5,058,688
Investment funds paid in advance 3,500,000
Receivable from Domestic Feeder Fund 59,933
Prepaid expenses 27,835
Other assets 44,010
-----------
TOTAL ASSETS $72,605,327
===========
LIABILITIES
Redemptions payable $ 9,500,000
Management fees payable 334,118
Professional fees payable 77,325
Registration fees payable 58,200
Investor services fees payable 9,750
Administration fees payable 9,394
Custodian fees payable 3,444
Other fees payable 49,030
-----------
TOTAL LIABILITIES 10,041,261
-----------
MEMBERS' CAPITAL 62,564,066
-----------
TOTAL LIABILITIES AND MEMBERS' CAPITAL $72,605,327
===========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
1
The Topiary Master Fund for Benefit Plan Investors (BPI) LLC
Schedule of Investments
(unaudited)
September 30, 2005
% OF
MEMBERS'
STRATEGY INVESTMENT FUND COST FAIR VALUE LIQUIDITY CAPITAL
-------- --------------- ---- ---------- --------- --------
Event Driven Avenue Asia Investments, L.P. $ 1,000,000 $ 1,040,631 Annually 1.7%
Avenue Europe Investments, L.P. 1,382,924 1,510,848 Quarterly 2.4%
Gracie Capital L.P. 1,500,000 1,655,831 Annually 2.7%
Harbert Distressed Investment Fund, L.P. 1,750,000 1,961,381 Quarterly 3.1%
Marathon Special Opportunity Fund, L.P. 1,500,000 1,576,992 Annually 2.5%
Merced Partners, L.P. 1,550,000 1,771,593 Annually 2.8%
Perry Partners, L.P. 2,600,000 2,838,118 Annually 4.5%
Special K Capital II, L.P. 1,750,000 1,547,764 Annually 2.5%
Strategic Value Restructuring Fund, L.P. 870,036 1,086,960 Annually 1.7%
-----------------------------------------------------
Total Event Driven 13,902,960 14,990,118 23.9%
Global Macro Anglian Commodities U.S. Feeder Monthly
Fund, L.L.C. 900,000 880,977 1.4%
Bridgewater Pure Alpha Trading Fund I 1,250,000 1,382,783 Monthly 2.2%
Drawbridge Global Macro Fund, L.P. 1,402,817 1,641,284 Quarterly 2.6%
FX Concepts Global Fund Master Monthly
Trust - Multi Strategy Series 700,000 796,854 1.3%
Graham Global Investment Fund Ltd. 500,000 485,216 Monthly 0.8%
Vega Select Opportunities Fund Limited 1,450,000 1,366,643 Monthly 2.2%
------------------------------- --------
Total Global Macro 6,202,817 6,553,757 10.5%
Long/Short Equity Amaranth Global Equities, L.L.C. 1,200,000 1,433,044 Annually 2.3%
Artha Emerging Markets Fund, L.P. 1,050,000 1,268,635 Quarterly 2.0%
Bonanza Partners LP 700,000 756,269 Quarterly 1.2%
Delta Fund Europe LP 1,700,000 2,061,908 Quarterly 3.3%
FrontPoint Value Discovery Fund, L.P. 1,400,000 1,586,480 Quarterly 2.5%
Gandhara Fund L.P. 1,120,000 1,200,746 Quarterly 1.9%
Hard Assets Partners, L.P. 1,200,000 1,406,546 Monthly 2.3%
Hayground Cove Institutional Partners, Quarterly
L.P. 1,150,000 1,201,127 1.9%
Jana Partners Qualified, L.P. 1,700,000 1,789,107 Quarterly 2.9%
Kinetics Partners, L.P. 1,550,000 1,942,471 Quarterly 3.1%
MPC Pilgrim, L.P. 1,400,000 1,495,787 Monthly 2.4%
Miramar Capital Partners, L.P. 1,250,000 1,159,869 Quarterly 1.9%
RX Healthcare Partners II, L.P. 1,275,000 1,361,228 Quarterly 2.2%
Seligman Tech Spectrum Fund LLC 500,000 508,924 Monthly 0.8%
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
2
The Topiary Master Fund for Benefit Plan Investors (BPI) LLC
Schedule of Investments (continued)
(unaudited)
September 30, 2005
SR Global, L.P. Asia $ 1,000,000 $ 1,320,011 Monthly 2.1%
Stadia Consumer Fund (QP), L.P. 1,275,000 1,264,054 Quarterly 2.0%
TCS Capital II, L.P. 1,175,000 1,513,079 Annually 2.4%
Torrey Pines Fund, L.L.C. 1,400,000 1,507,193 Quarterly 2.4%
Tracer Capital Partners QP, LP 1,000,000 1,186,187 Quarterly 1.9%
UC Financials Fund Limited 1,350,000 1,508,392 Monthly 2.4%
--------------------------- -----
Total Long/Short Equity 24,395,000 27,471,057 43.9%
--------------------------- -----
Relative Value Affinium Fund Ltd 500,000 501,444 Annually 0.8%
Amaranth Capital Partners, L.L.C. 2,150,000 2,489,832 Annually 4.0%
Aristeia Capital Partners, L.P. 1,000,000 1,043,483 Quarterly 1.7%
Bogle World Fund, L.P. 1,600,000 1,758,256 Quarterly 2.8%
Citadel Wellington Partners, L.L.C. 3,400,000 3,534,773 Quarterly 5.6%
Clinton Multistrategy Fund, L.L.C. 1,900,000 1,982,431 Monthly 3.2%
Ellington Overseas Partners, Ltd. 700,000 751,455 Quarterly 1.2%
Julius Baer Diversified Fixed Income Quarterly
Hedge Fund 1,200,000 1,328,876 2.1%
Marathon Global Convertible Fund L.P 750,000 743,166 Monthly 1.2%
Silverback Partners, L.P. 714,440 622,956 Quarterly 1.0%
--------------------------- -----
Total Relative Value 13,914,440 14,756,672 23.6%
--------------------------- -----
Total $58,415,217 $ 63,771,604 101.9%
--------------------------- -----
Liabilities in Excess of Other Assets (1,207,538) (1.9%)
------------ -----
Members' Capital $ 62,564,066 100.0%
============ =====
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
3
The Topiary Master Fund for Benefit Plan Investors (BPI) LLC
Statement of Operations
(unaudited)
For the Six Month Period from April 1, 2005 through September 30, 2005
INVESTMENT INCOME
Interest income $ 43,654
-----------
Total income 43,654
EXPENSES
Management fees $ 336,034
Professional fees 94,126
Administration fees 38,600
Investor services fees 35,377
Insurance 26,992
Board of Directors fees and expenses 26,653
Registration 26,900
Custodian fees 6,600
Other expenses 250
-----------
Total expenses 591,532
Management fees waived by Adviser (1,916)
-----------
Total amounts waived by Adviser (1,916)
Net expenses (589,616)
-----------
NET INVESTMENT LOSS (545,962)
-----------
Gain from investment fund transactions
Net realized gain from investment funds redeemed 315,906
Net unrealized appreciation on investment funds 2,867,677
-----------
NET GAIN FROM INVESTMENT FUNDS TRANSACTIONS 3,183,583
-----------
NET INCREASE IN MEMBERS' CAPITAL DERIVED FROM
OPERATIONS $ 2,637,621
===========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
4
The Topiary Master Fund for Benefit Plan Investors (BPI) LLC
Statement of Changes in Members' Capital
FOR THE SIX
MONTH PERIOD PERIOD FROM
APRIL 1, 2005 OCTOBER 1, 2004
THROUGH (COMMENCEMENT OF
SEPTEMBER 30, OPERATIONS)
2005 THROUGH
(UNAUDITED) MARCH 31, 2005
-------------- ---------------
FROM INVESTMENT ACTIVITIES
Net investment loss $ (545,962) $ (377,657)
Net realized gain/(loss) from sale of investment funds
redeemed 315,906 (107,093)
Net change in unrealized appreciation on investments
funds 2,867,677 2,488,710
------------ ------------
NET INCREASE IN MEMBERS' CAPITAL DERIVED FROM OPERATIONS
2,637,621 2,003,960
FROM MEMBERS' CAPITAL TRANSACTIONS
Subscriptions 22,825,915 53,213,878
Redemptions (17,866,257) (304,079)
Distributions
(46,972) --
------------ ------------
NET CHANGE IN MEMBERS' CAPITAL FROM CAPITAL
TRANSACTIONS 4,912,686 52,909,799
------------ ------------
NET CHANGE IN MEMBERS' CAPITAL 7,550,307 54,913,759
Members' capital at beginning of period 55,013,759 100,000
------------ ------------
Members' capital at end of period $ 62,564,066 $ 55,013,759
============ ============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
5
The Topiary Master Fund for Benefit Plan Investors (BPI) LLC
Statement of Cash Flows
(unaudited)
For the Six Month Period from April 1, 2005 through September 30, 2005
CASH FLOWS FROM OPERATING ACTIVITIES
Net increase in Members' capital from operations $ 2,637,621
Adjustments to reconcile net increase in Members' capital from
operations to net cash used in operating activities:
Purchases of investment funds (14,920,000)
Sales of investment funds 7,545,689
Net realized gain from investment funds redeemed (315,906)
Net unrealized appreciation on investment funds (2,867,677)
Decrease in investment funds paid in advance 750,000
Increase in receivable for investment funds sold (4,166,324)
Increase in receivable from Domestic Feeder Fund (59,933)
Decrease in receivable from advisor 37,973
Decrease in prepaid expenses 36,989
Increase in other assets (39,805)
Increase in management fees payable 334,118
Decrease in professional fees payable (107,495)
Increase in registration fees payable 19,400
Decrease in administration fees payable (8,791)
Increase in investor services fees payable 3,750
Increase in custodian fees payable 1,858
Increase in other fees payable 25,848
------------
NET CASH USED IN OPERATING ACTIVITIES (11,092,685)
------------
CASH FLOWS FROM FINANCING ACTIVITIES
Subscriptions 19,054,748
Redemptions (8,366,257)
Distributions (46,972)
------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 10,641,519
------------
NET DECREASE IN CASH (451,166)
Cash and cash equivalents at beginning of period 594,423
------------
Cash and cash equivalents at end of period $ 143,257
============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
6
The Topiary Master Fund for Benefit Plan Investors (BPI) LLC
Financial Highlights
FOR THE SIX MONTH
THE FOLLOWING REPRESENTS THE RATIOS PERIOD PERIOD FROM OCTOBER 1,
TO AVERAGE NET ASSETS AND OTHER APRIL 1, 2005 THROUGH 2004 (COMMENCEMENT
FINANCIAL HIGHLIGHTS INFORMATION FOR SEPTEMBER 30, 2005 OF OPERATIONS) THROUGH
THE PERIOD: (UNAUDITED) MARCH 31, 2005
----------------------- -----------------------
Ratios to average net assets:
Net investment loss (a)(b) (1.62%) (1.67%)
Net expenses (a)(b)(c) 1.75% 1.75%
Total return (d) 3.64% 5.04%
Portfolio turnover rate 12% 3%
Members' capital, end of period (thousands) $ 62,564 $ 55,014
(a) Annualized for periods of less than one year.
(b) The Adviser waived $1,916 of fees for the six month period ended September
30, 2005. The net investment loss ratio would have been 0.01% greater and
the total expenses ratio would have been 0.01% greater had these fees not
been waived and reimbursed by the Adviser. The Adviser waived and
reimbursed $265,284 of fees and expenses for the period ended March 31,
2005. The net investment loss ratio would have been 1.17% greater and the
total expenses ratio would have been 1.17% greater on an annualized basis
had these fees and expenses not been waived/reimbursed by the Adviser.
(c) Expense ratios for the underlying Investment funds are not included in the
Fund's expense ratio.
(d) Not annualized.
The above ratios and total returns are calculated for all Members taken as
a whole. An individual investor's return may vary from these returns based
on the timing of capital contributions.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
7
THE TOPIARY MASTER FUND FOR BENEFIT PLAN INVESTORS (BPI) LLC
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
--------------------------------------------------------------------------------
1. ORGANIZATION
The Topiary Master Fund for Benefit Plan Investors (BPI) LLC (the "Fund") was
organized as a Delaware limited liability company on July 16, 2004. 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 interests (the "Interests") are registered under the Securities Act of
1933, as amended (the "1933 Act"), but are subject to substantial limits on
transferability and resale.
The Fund's investment objective is to generate long-term capital appreciation
through a diversified portfolio with volatility that is lower than that of the
equity markets and returns that demonstrate little to no correlation with either
equity or bond markets. The Fund acts as a "Master Fund" utilizing capital
generated by investments by The Topiary Offshore Fund for Benefit Plan Investors
(BPI) LDC (the "Offshore Fund") and through direct investments by other Members.
The Offshore Fund's capital is generated by investments by The Topiary Fund for
Benefit Plan Investors (BPI) LLC (the "Onshore Fund"). At September 30, 2005,
the investment by the Offshore Fund constitutes 86% of the investment capital of
the Master Fund, and the Onshore Fund constitutes 100% of the investment capital
of the Offshore Fund. The balance of the Fund's capital, approximately 14%,
comprises a direct investment by DBAH Capital LLC, an affiliate of DB Investment
Managers, Inc. The Fund will attempt to achieve its investment objective by
investing in the securities of approximately 50 to 100 Investment funds to be
managed pursuant to various alternatives or non-traditional investment
strategies, which may be viewed as encompassing four broadly defined primary
categories; Relative Value; Event Driven; Long/Short Equity; and Global Macro.
The Fund commenced operations on October 1, 2004.
The Fund's Board of Directors (the "Board") has overall responsibility to manage
and control the business operations of the Fund on behalf of the members (the
"Members"). At least a majority of the Board are and will be persons who are not
"interested persons" (as defined in the 1940 Act) with respect to the Fund.
DB Investment Managers, Inc. (the "Adviser") serves as the investment adviser of
the Fund subject to the ultimate supervision of and subject to any policies
established by the Board, pursuant to the terms of an investment management
agreement with the Fund (the "Investment Management Agreement"). Pursuant to the
Investment Management Agreement, the Adviser provides the Fund with ongoing
investment guidance, policy direction, and monitoring of the Fund. The Adviser
is an indirect wholly owned subsidiary of Deutsche Bank AG ("Deutsche Bank"), an
international commercial and investment banking group, and is registered as an
investment adviser under the Investment Advisers Act of 1940, as amended
("Advisers Act").
Generally, initial and additional applications for interests by eligible
investors may be accepted at such times as the Fund may determine. The Fund
reserves the right to reject any applications for interests in the Fund. The
Fund from time to time may offer to
8
THE TOPIARY MASTER FUND FOR BENEFIT PLAN INVESTORS (BPI) LLC
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
1. ORGANIZATION (CONTINUED)
repurchase Interests. These repurchases will be made at such times and on such
terms as may be determined by the Board, in its complete and absolute
discretion. On behalf of non-U.S. Members the Fund withholds and pays taxes on
U.S. source income allocated from investment funds.
2. SIGNIFICANT ACCOUNTING POLICIES
A. PORTFOLIO VALUATION
The net asset value of the Fund is determined by or at the direction of the
Adviser as of the last business day of each month in accordance with the
valuation principles set forth below or as may be determined from time to time
pursuant to policies established by the Board.
The net asset value of the Fund equals the value of the Fund's assets less the
Fund's liabilities, including accrued fees and expenses. The Fund's investments
in the Investment funds are considered to be illiquid and can only be redeemed
periodically. The Board has approved procedures pursuant to which the Fund
values its investments in Investment funds at fair value. In accordance with
these procedures, fair value as of each month-end ordinarily is the value
determined as of such month-end for each Investment Fund in accordance with the
Investment Fund's valuation policies and reported at the time of the Fund's
valuation. As a general matter, the fair value of the Fund's interest in an
Investment Fund represents the amount that the Fund could reasonably expect to
receive from an Investment Fund if the Fund's interest were redeemed at the time
of the valuation, based on information reasonably available at the time the
valuation is made and that the Fund believes to be reliable. In the event that
an Investment Fund does not report a month-end value to the Fund on a timely
basis, the Fund would determine the fair value of such Investment Fund based on
the most recent value reported by the Investment Fund, as well any other
relevant information available at the time the Fund values its portfolio. The
values assigned to these investments are based on available information and do
not necessarily represent amounts that might ultimately be realized, as such
amounts depend on future circumstances and cannot reasonably be determined until
the individual investments are actually liquidated.
B. INCOME RECOGNITION AND SECURITY TRANSACTIONS
Interest income is recorded on an accrual basis. Dividend income is recorded on
the ex-dividend date. Realized gains and losses from investment fund
transactions are calculated on the identified cost basis. Investments are
recorded on the effective date of the subscription in the investment fund.
9
THE TOPIARY MASTER FUND FOR BENEFIT PLAN INVESTORS (BPI) LLC
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
C. FUND COSTS
The Fund bears all expenses incurred in its business other than those that the
Adviser assumes. The expenses of the Fund include, but are not limited to, the
following: all costs and expenses related to investment transactions and
positions for the Fund's account; legal fees; accounting and auditing fees;
custodial fees; costs of computing the Fund's net asset value; costs of
insurance; registration expenses; due diligence, including travel and related
expenses; expenses of meetings of the Board and Members; all costs with respect
to communications to Members; and other types of expenses as may be approved
from time to time by the Board.
D. INCOME TAXES
The Fund intends to operate and has elected to be treated as a partnership for
Federal income tax purposes. Accordingly, no provision for the payment of
Federal, state or local income taxes has been provided. Each Member is
individually required to report on its own tax return its distributive share of
the Fund's taxable income or loss. On behalf of the Fund's foreign members', the
Fund withholds and pays taxes on U.S. source income and U.S. effectively
connected income, if any, allocated from underlying investments to the extent
such income is not exempted from withholdings under the Internal Revenue Code
and Regulations there under. Such amounts are treated as withholding tax credits
for federal income tax purposes. The actual amount of such taxes is not known
until all K-1's from underlying funds are received, usually in the following tax
year. Prior to the final determination, the amount of the tax is estimated based
on information available. The final tax could be different from the estimated
tax and the difference could be significant.
E. CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist of monies on deposit at PFPC Trust Company.
The Fund treats all financial instruments that mature within three months as
cash equivalents.
F. USE OF ESTIMATES
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires the Adviser to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. The Adviser believes that the estimates
utilized in preparing the Fund's financial statements are reasonable and
prudent; however, actual results could differ from these estimates.
10
THE TOPIARY MASTER FUND FOR BENEFIT PLAN INVESTORS (BPI) LLC
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
3. MANAGEMENT FEE, RELATED PARTY TRANSACTIONS AND OTHER
The Adviser provides certain management and administration services to the Fund,
including, among other things, providing office space and other support
services. In consideration for such management services, the Fund pays the
Adviser a monthly management fee (the "Management Fee") at an annual rate of
1.00% of the Fund's month end net assets, including assets attributable to the
Adviser (or its affiliates) and before giving effect to any repurchases by the
Fund. The Management Fee accrues monthly and is payable at the end of each
quarter. Management fees for the six month period ended September 30, 2005 were
$336,034, $334,118 of which was payable at September 30, 2005.
The Adviser has contractually agreed to a waiver of its fees and/or
reimbursement of the Fund's expenses to the extent necessary so that the Fund's
annualized expenses do not exceed 1.75% ("Expense Limitation Agreement") during
the period through March 31, 2006. For the period, the Adviser waived management
fees of $1,916 for the expenses the Fund accrued.
In accordance with the terms of the administration agreement ("Administration
Agreement") and with the approval of the Fund's Board, PFPC, Inc. (an affiliate
of PNC Bank, N.A.) ("PFPC") serves as the Fund's administrator pursuant to the
administration agreement between PFPC and the Fund (Administration Agreement").
Under the Administration Agreement, PFPC provides administrative and accounting
services to the Fund. As compensation for services set forth herein that are
rendered by PFPC during the term of this Agreement, the Fund pays PFPC a fee for
services rendered.
The Fund has entered into an investor services agreement with PFPC, whereby PFPC
provides investor services and transfer agency functions for the Fund. As
compensation for services set forth herein that are rendered by PFPC during the
term of this Agreement, the Fund pays PFPC a fee for services rendered.
The Adviser has also retained one of its affiliates, Investment Company Capital
Corporation ("ICCC"), to provide sub-administration services pursuant to the
Board services agreement. Under this agreement, ICCC, among other things: drafts
Board agendas and resolutions; prepares Board materials; communicates with the
Directors; and drafts Board-meeting minutes. For the services performed by ICCC
pursuant to this Agreement, the Adviser compensates ICCC at no additional
expense to the Fund.
Each Board member who is not an employee of the Adviser, or one of its
affiliates, receives an annual retainer of $8,000 plus a fee for each meeting
attended. The chairman of the audit committee also receives an additional annual
fee of $1,000. These Board members are also reimbursed by the Fund for all
reasonable out of pocket expenses.
PFPC Trust Company (also an affiliate of PNC Bank, N.A.) serves as custodian of
the Fund's assets and provides custodial services to the Fund.
11
THE TOPIARY MASTER FUND FOR BENEFIT PLAN INVESTORS (BPI) LLC
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
3. MANAGEMENT FEE, RELATED PARTY TRANSACTIONS AND OTHER (CONTINUED)
Under the terms of an investor servicing agreement (the " Underwriting
Agreement") between the Fund and Scudder Distributors, Inc. (the "Distributor"),
the Distributor is authorized to retain brokers, dealers and certain financial
advisers ("Investor Service Providers") to provide ongoing investor services and
account maintenance services to Members that are their customers. The
Distributor bears all of its expenses of providing distribution services as
described under the Underwriting Agreement.
4. SECURITY TRANSACTIONS
As of September 30, 2005, the Fund had investments in Investment funds, none of
which were related parties. Aggregate purchases of Investment funds amounted to
$14,920,000 and aggregate sales of Investment funds amounted to $7,545,689 for
the period ended September 30, 2005.
At September 30, 2005, the estimated cost of investments for Federal income tax
purposes was $58,415,217. As of that date, net unrealized appreciation on
investments was estimated to be $5,356,387, made up of gross unrealized
appreciation on investments of $5,875,182 and gross unrealized depreciation on
investments of $518,795.
5. FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK
In the normal course of business, the Investment funds in which the Fund invests
trade various financial instruments and enter into various investment activities
with off-balance sheet risk. These include, but are not limited to, short
selling activities, writing option contracts, contracts for differences, and
interest rate, credit default and total return equity swaps contracts. The
Fund's risk of loss in these Investment funds is limited to the value of these
investments reported by the Fund. The Fund itself does not invest in securities
with off-balance sheet risk.
6. CONCENTRATION OF RISK
The Master Fund invests primarily in Investment funds that are not registered
under the 1940 Act and invest in and actively trade securities and other
financial instruments using different strategies and investment techniques,
including leverage, that may involve significant risks. These Investment funds
may invest a high percentage of their assets in specific sectors of the market
in order to achieve a potentially greater investment return. As a result, the
Investment funds may be more susceptible to economic, political, and regulatory
developments in a particular sector of the market, positive or negative, and may
experience increased volatility of the Investment funds' net asset value.
Various risks are also associated with an investment in the Fund, including
risks relating to the multi-manager structure of the Fund, risks relating to
compensation arrangements and risks relating to limited liquidity.
12
THE TOPIARY MASTER FUND FOR BENEFIT PLAN INVESTORS (BPI) LLC
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
7. GUARANTOR OBLIGATIONS AND INDEMNIFICATIONS
In November 2002, the Financial Accounting Standards Board ("FASB") issued FASB
Interpretation No. 45, GUARANTOR'S ACCOUNTING AND DISCLOSURE REQUIREMENTS FOR
GUARANTEES, INCLUDING INDIRECT GUARANTEES OF INDEBTEDNESS OF OTHERS, AN
INTERPRETATION OF FASB STATEMENTS NO. 5, 57, AND 107 AND RESCISSION OF FASB
INTERPRETATION NO. 34 ("FIN 45"). FIN 45 requires certain disclosure that was
intended to improve the transparency of the financial statement information
about a guarantor's obligations and liquidity risks related to guarantees
issued. In the normal course of business, the Fund enters into contracts that
contain a variety of warranties and representations that provide general
indemnifications. The Fund's maximum exposure under these arrangements is
unknown, as this would involve future claims that may be made against the Fund
that have not yet occurred. However, the Fund's management expects the risk of
loss to be remote.
8. SUBSEQUENT EVENT
In October, 2005, the Fund effected subscriptions from Members of $5,401,325 of
which none were received prior to October 1, 2005.
13
THE TOPIARY MASTER FUND FOR BENEFIT PLAN INVESTORS (BPI) LLC
DIRECTORS AND OFFICERS BIOGRAPHICAL DATA (UNAUDITED)
--------------------------------------------------------------------------------
The business of the Fund is managed under the direction of the Board. Subject to
the provisions of the Operating Agreement and Delaware law, the Directors have
all powers necessary and convenient to carry out the responsibility. The
Directors and Officers of the Fund, their addresses, their ages and descriptions
of their principal occupations during the past five years are listed below.
------------------------------------------------------------------------------------------------------------------------------------
NUMBER OF
TERM OF PORTFOLIOS IN
OFFICE(i) & PRINCIPAL FUND
POSITION(S) LENGTH OF OCCUPATION(S) COMPLEX OTHER
HELD TIME DURING THE PAST OVERSEEN BY DIRECTORSHIPS
NAME, ADDRESS AND AGE WITH FUND SERVED 5 YEARS DIRECTOR HELD BY DIRECTOR
------------------------------------------------------------------------------------------------------------------------------------
INDEPENDENT DIRECTORS
------------------------------------------------------------------------------------------------------------------------------------
Nolan T. Altman (ii) Director Since President, NTA 3 Director, State University
c/o DB Hedge Strategies Fund LLC inception Consulting (financial of New York at Albany
25 DeForest Ave. services consulting) Foundation (1998 to
Summit, NJ 07901-2154 (2001 to present). present); Director, Phinity
(9/18/55) Formerly, Chief Offshore Fund, Ltd.,
Financial Officer, Tiger Asia Overseas
Tiger Management Fund, Ltd. Off-shore
(Investment adviser to Fund; Tiger Technology
hedge funds) (1993 to Fund Ltd., TS I Offshore
2001). Limited (2004 to present).
------------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
(i) Each Director serves for the duration of the Fund, or until his death,
resignation, termination, removal or retirement.
(ii) Since March 2003, Messrs. Altman and Citron have served as members of the
Conflicts Advisory Board of certain private investment funds managed by
DBIM or its affiliates. This Conflicts Advisory Board meets on an
intermittent basis to evaluate whether specific transactions involving the
private investment funds raise conflicts of interest with DBIM, its
affiliates, or accounts managed by DBIM or its affiliates.
14
THE TOPIARY MASTER FUND FOR BENEFIT PLAN INVESTORS (BPI) LLC
DIRECTORS AND OFFICERS BIOGRAPHICAL DATA (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------------
NUMBER OF
TERM OF PORTFOLIOS
OFFICE(I) & IN FUND OTHER
POSITION(S) LENGTH OF PRINCIPAL OCCUPATION(S) COMPLEX DIRECTORSHIPS
HELD WITH TIME DURING THE PAST OVERSEEN HELD
NAME, ADDRESS AND AGE FUND SERVED 5 YEARS BY DIRECTOR BY DIRECTOR
----------------------------------------------------------------------------------------------------------------------------------
INDEPENDENT DIRECTORS (CONTINUED)
----------------------------------------------------------------------------------------------------------------------------------
Louis S. Citron (ii) Director Since General Counsel, New 3 None
c/o DB Hedge Strategies Fund LLC Inception Enterprise Associates (venture
25 DeForest Ave. capital firm) (2001 to present).
Summit, NJ 07901-2154 Formerly, General Counsel and
(1/31/65) Sr. Vice President, the ING
mutual funds (1998 to 2000);
Vice President, ING Mutual
Funds Management Co. LLC
(registered investment adviser)
(1998 to 2000); Vice President,
ING Funds Distributors, Inc.
(principal underwriter for the
ING mutual funds) (1998 to
2000); Vice President, ING
Funds Services Co. LLC
(administrator to the ING
mutual funds) (1998 to 2000).
----------------------------------------------------------------------------------------------------------------------------------
15
THE TOPIARY MASTER FUND FOR BENEFIT PLAN INVESTORS (BPI) LLC
DIRECTORS AND OFFICERS BIOGRAPHICAL DATA (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
NUMBER OF
TERM OF PORTFOLIOS
OFFICE(I) & IN FUND
POSITION(S) LENGTH OF PRINCIPAL COMPLEX
HELD WITH TIME OCCUPATION(S) DURING OVERSEEN OTHER DIRECTORSHIPS
NAME, ADDRESS AND AGE FUND SERVED THE PAST 5 YEARS BY DIRECTOR HELD BY DIRECTOR
------------------------------------------------------------------------------------------------------------------------------------
INDEPENDENT DIRECTORS (CONTINUED)
------------------------------------------------------------------------------------------------------------------------------------
Edward T. Tokar Director Since Sr. Managing Director of 3 Director, Gabelli
c/o DB Hedge Strategies Fund LLC Inception Investments, Beacon Dividend & Income
25 DeForest Ave. Trust Co. (2004 to Trust (2003 to present);
Summit, NJ 07901-2154 present); Chief Executive Trustee, Levco Series
(6/12/47) Officer, Allied Capital Trust Mutual Funds
Mgmt. LLC (registered (2 portfolios) (2001 to
investment adviser - present); Director,
wholly owned subsidiary Allied Capital Manage-
of Honeywell) (1998 to ment LLC (1998 to
2004); and Vice 2004). Formerly,
President - Investments, Trustee, Scudder MG
Honeywell International, Investment Trust
Inc. (advanced (formerly Morgan
technology and Grenfell Investment
manufacturer) (1977 to Trust (11 portfolios)
2004). (1994 to 2002).
------------------------------------------------------------------------------------------------------------------------------------
16
THE TOPIARY MASTER FUND FOR BENEFIT PLAN INVESTORS (BPI) LLC
DIRECTORS AND OFFICERS BIOGRAPHICAL DATA (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
OFFICERS
----------------------------------------------------------------------------------------------------------------------------
NAME, ADDRESS AND AGE POSITIONS HELD WITH FUND PRINCIPAL OCCUPATION(S) DURING THE LAST
5 YEARS
----------------------------------------------------------------------------------------------------------------------------
Julian F. Sluyters(iii) Chief Executive Officer President (as of May 24, 2005) and Chief Executive
345 Park Ave. Officer (as of June 18, 2004); Managing Director,
New York, NY 10154 Deutsche Asset Management (May 2004 to present);
(7/14/60) President and Chief Executive Officer, UBS Fund
Services (2001 to 2003); Chief Administrative Officer
(1998 to 2001) and Sr. Vice President and Director of
Mutual Fund Operations (1991 to 1998), UBS Global
Asset Management.
----------------------------------------------------------------------------------------------------------------------------
Pamela Kiernan President Chief Operating Officer, DB Absolute Return
DB Absolute Return Strategies Strategies (2005 to present). Formerly, Chief
280 Park Avenue, 9Th Floor Operating Officer - Americas, DB Advisors LLC
New York, NY 10017 (2004); Chief Operations Officer - America,
(9/16/68) Deutsche Bank Global Equities (2002 to 2004);
Business Management - Trading, Deutsche Bank
Global Equities (1997 to 2002).
----------------------------------------------------------------------------------------------------------------------------
Marielena Glassman Treasurer, Principal Chief Administration Officer, DB Absolute Return
Deutsche Asset Management Financial & Accounting Strategies (2002 to present). Formerly Global Head
25 DeForest Ave., 2nd Floor Officer of Business Management, Deutsche Asset
Summit, NJ 07901-2154 Management (1990 to 2002): Co-Head of Global
(06/06/63) Portfolio Management product, Bankers Trust Private
Banking (1996-1999).
----------------------------------------------------------------------------------------------------------------------------
Carole Coleman(iii) Secretary Vice President and Secretary; Director, Deutsche
Deutsche Asset Management Asset Management (since 2005); Associate General
345 Park Avenue, 16th Floor Counsel, Fred Alger & Company (2002-2005);
New York, NY 10154 Associate Attorney, Charpie & Associates (1995-
(08/23/69) 2002).
----------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
(iii) All Officers also serve in similar capacities as Officers for other funds
advised by the Investment Manager or its affiliates.
17
THE TOPIARY MASTER FUND FOR BENEFIT PLAN INVESTORS (BPI) LLC
DIRECTORS AND OFFICERS BIOGRAPHICAL DATA (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------
Daniel O. Hirsch(iii) Assistant Consultant. Formerly, Managing Director, Deutsche
Deutsche Asset Management Secretary Asset Management (asset management division of
1 South St. Deutsche Bank) (2002 to 2005); Director, Deutsche
Baltimore, MD 21202-3298 Asset Management (1999 to 2002); Principal, BT Alex.
(3/27/54) Brown Inc. (now Deutsche Bank Securities Inc.) (1998 -
1999); Assistant General Counsel, U.S. Securities and
Exchange Commission (1993 to 1998); Director,
Deutsche Global Funds Ltd. (2002 to 2004).
----------------------------------------------------------------------------------------------------------
John H. Kim Assistant Director and Senior Counsel, Deutsche Asset
Deutsche Asset Management Secretary Management (asset management division of Deutsche
345 Park Avenue Bank) (2001 to present); Sr. Associate, Wilkie Farr &
New York, NY 10154 Gallagher (law firm) (1995 to 2001).
(1/9/71)
----------------------------------------------------------------------------------------------------------
Anthony Conte Assistant Head of Alternative Assets Compliance (06/2005 to
Deutsche Asset Management Treasurer present); Head of Compliance, DB Absolute Return
345 Park Avenue Strategies (2003 to present); Head of Business Risk, DB
New York, NY 10154 Absolute Return Strategies (2001 to 2003); Head of
(3/28/69) Asset Management Compliance, CIBC World Markets
Corp. (1999 to 2001).
----------------------------------------------------------------------------------------------------------
Neil Novembre Assistant Head of Fund Accounting, DB Absolute Return
Deutsche Asset Management Treasurer Strategies (2002 to present). Formerly,
25 DeForest Ave., 2nd Floor Assurance/Business Advisory Services,
Summit, NJ 07901-2154 PricewaterhouseCoopers, New York (2000-2002);
(06/18/73) Rothstein, Kass & Company, New Jersey (hedge fund
administrator) (1996-2000).
----------------------------------------------------------------------------------------------------------
Joshua Kestler Vice President Head of Product Structuring, DB Absolute Return
Deutsche Asset Management Strategies (2004 to present); Associate, Schulte Roth &
25 DeForest Ave., 2nd Floor Zabel LLP (law firm) (2001-2004); Law Clerk, Hon.
Summit, NJ 07901-2154 James H. Coleman, New Jersey Supreme Court (2000-
(04/27/75) 2001).
----------------------------------------------------------------------------------------------------------
The Fund's Statement of Additional Information ("SAI") has additional
information about the Fund's Directors and Officers and is available without
charge upon request. Contact your financial representative for a free prospectus
or SAI.
--------------------------------------------------------------------------------
(iii) All Officers also serve in similar capacities as Officers for other funds
advised by the Investment Manager or its affiliates.
18
THE TOPIARY MASTER FUND FOR BENEFIT PLAN INVESTORS (BPI) LLC
PORTFOLIO PROXY VOTING POLICIES AND PROCEDURES; SEC FILINGS (UNAUDITED)
--------------------------------------------------------------------------------
The Fund invests substantially all of its assets in the securities of Investment
funds, which are privately placed investment vehicles, typically referred to as
"hedge funds." These securities do not typically convey traditional voting
rights to the holder and the occurrence of corporate governance or other notices
for this type of investment is substantially less than that encountered in
connection with registered equity securities. However, to the extent the Fund
receives notices or proxies from Investment funds (or receives proxy statements
or similar notices in connection with any other portfolio securities), the Fund
has delegated proxy voting responsibilities to the Adviser. The Adviser has
adopted its own Proxy Voting Policies and Procedures ("Policies"). The Policies
address, among other things, conflicts of interest that may arise between the
interests of the Fund, and the interests of the Adviser and its affiliates,
including the Fund's principal underwriter.
A description of the Adviser's Policies is available (i) without charge, upon
request, by calling the Fund toll-free at 1-888-262-0695, and (ii) on the SEC's
website at WWW.SEC.GOV.
In addition, the Fund is required to file new Form N-PX with its complete proxy
voting record for the 12 months ended June 30th, no later than August 31st of
each year. The funds Form N-PX is available (i) without charge, upon request, by
calling the Fund toll free at 1-888-262-0695 and (ii) on the SEC's website at
WWW.SEC.GOV.
The Fund files its complete schedule of portfolio holdings with the SEC for the
first quarter and the third quarter of each fiscal year on Form N-Q. The Fund's
Form N-Q filings are available on the SEC's website at WWW.SEC.GOV. Those forms
may be reviewed and copied at the SEC's Public Reference Room in Washington D.C.
Information on the operation of the Public Reference Room may be obtained by
calling 1-800-SEC-0330.
19
THE TOPIARY MASTER FUND FOR BENEFIT PLAN INVESTORS (BPI) LLC
COMPONENTS OF NET ASSETS BY INVESTMENT STRATEGY (UNAUDITED)
--------------------------------------------------------------------------------
COMPONENTS OF MARKET VALUE BY
INVESTMENT STRATEGY
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
EVENT DRIVEN GLOBAL MACRO LONG/ SHORT EQUITY RELATIVE VALUE
23.5% 10.3% 43.1% 23.1%
20
ITEM 2. CODE OF ETHICS.
Not applicable.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. SCHEDULE OF INVESTMENTS.
Schedule of Investments in securities of unaffiliated issuers as of the close of
the reporting period is included as part of the report to shareholders filed
under Item 1 of this form.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not yet applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have been no material changes to the procedures by which the shareholders
may recommend nominees to the registrant's board of directors, where those
changes were implemented after the registrant last provided disclosure in
response to the requirements of Item 7(d)(2)(ii)(G) of Schedule 14A (17 CFR
240.14a-101), or this Item.
ITEM 11. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive and principal financial
officers, or persons performing similar functions, have concluded
that the registrant's disclosure controls and procedures (as defined
in Rule 30a-3(c) under the Investment Company Act of 1940, as
amended (the "1940 Act") (17 CFR 270.30a-3(c))) are effective, as of
a date within 90 days of the filing date of the report that includes
the disclosure required by this paragraph, based on their evaluation
of these controls and procedures required by Rule 30a-3(b) under the
1940 Act (17 CFR 270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b)
under the Securities Exchange Act of 1934, as amended (17 CFR
240.13a-15(b) or 240.15d-15(b)).
(b) There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the 1940 Act
(17 CFR 270.30a-3(d)) 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) Not applicable.
(a)(2) Certifications pursuant to Rule 30a-2(a) under the 1940 Act
and Section 302 of the Sarbanes-Oxley Act of 2002 are attached
hereto.
(a)(3) Not applicable.
(b) Certifications pursuant to Rule 30a-2(b) under the 1940 Act
and Section 906 of the Sarbanes-Oxley Act of 2002 are attached
hereto.
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) The Topiary Fund for Benefit Plan Investors (BPI) LLC
--------------------------------------------------------------------
By (Signature and Title)* /s/ Julian Sluyters
-------------------------------------------------------
Julian Sluyters, Chief Executive Officer
(principal executive officer)
Date December 7, 2005
----------------------------------------------------------------------------
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 indicated.
By (Signature and Title)* /s/ Julian Sluyters
-------------------------------------------------------
Julian Sluyters, Chief Executive Officer
(principal executive officer)
Date December 7, 2005
----------------------------------------------------------------------------
By (Signature and Title)* /s/ Marie Glassman
-------------------------------------------------------
Marie Glassman, Treasurer, Principal Financial
Officer and Accounting Officer
(principal financial officer)
Date December 7, 2005
----------------------------------------------------------------------------
* Print the name and title of each signing officer under his or her
signature.