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
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The Topiary Fund for Benefit Plan Investors (BPI) LLC
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(Exact name of registrant as specified in charter)
345 Park Avenue
New York, NY 10154
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(Address of principal executive offices) (Zip code)
John H. Kim, Director & Senior Counsel
Deutsche Asset Management
345 Park Avenue
New York, NY 10154
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(Name and address of agent for service)
registrant's telephone number, including area code: 212-454-6849
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Date of fiscal year end: March 31
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Date of reporting period: September 30, 2006
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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, 100 F Street, NE,
Washington, DC 20549. 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
CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
For the Six Months Ended September 30, 2006
The Topiary Fund for Benefit Plan Investors (BPI) LLC
Consolidated Financial Statements
(unaudited)
For the Six Months Ended September 30, 2006
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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................................ 6-11
Directors and Officers Biographical Data.................................. 12-16
Portfolio Proxy Voting Policies and Procedures; SEC Filings .............. 17
Continuation of Management Arrangements .................................. 18-19
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, 2006
ASSETS
Investments in the Master Fund $ 84,793,898
Receivable from Adviser 95,960
----------------
TOTAL ASSETS $ 84,889,858
================
LIABILITIES
Professional fees payable $ 85,950
Administration fees payable 8,000
Custodian fees payable 2,010
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TOTAL LIABILITIES 95,960
----------------
MEMBERS' CAPITAL 84,793,898
----------------
TOTAL LIABILITIES AND MEMBERS' CAPITAL $ 84,889,858
================
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 Months Ended September 30, 2006
NET INVESTMENT LOSS ALLOCATED FROM THE MASTER FUND:
Income $ 61,604
Expenses (706,458)
---------------
Net investment loss allocated from the Master Fund (644,854)
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FUND INCOME
Interest income 684
FUND EXPENSES
Professional fees 62,250
Administration fees 12,000
Custodian fees 5,948
------------
Total expenses 80,198
Fund expenses reimbursed (80,198)
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Net expenses -
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NET INVESTMENT INCOME FROM FUND 684
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Net investment loss (644,170)
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LOSSES FROM INVESTMENT FUND TRANSACTIONS
Net realized losses from investment funds allocated from the
Master Fund (230,634)
Net change in unrealized depreciation on investment funds allocated
from the Master Fund (net of taxes: $40,601) (435,835)
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NET LOSSES FROM INVESTMENT FUNDS TRANSACTIONS (666,469)
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NET DECREASE IN MEMBERS' CAPITAL DERIVED FROM OPERATIONS $ (1,310,639)
===============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE
CONSOLIDATED FINANCIAL STATEMENTS.
2
The Topiary Fund for Benefit Plan Investors (BPI) LLC
Consolidated Statements of Changes in Members' Capital
SPECIAL ADVISORY OTHER
MEMBER MEMBERS' CAPITAL
-------------------- ---------------------
FOR THE YEAR ENDED MARCH 31, 2006 (AUDITED)
FROM INVESTMENT ACTIVITIES
Net investment loss $ (860,033)
-
Net realized gain from investment funds allocated from the Master
Fund - 841,534
Net change in unrealized appreciation on investment funds allocated
from the Master Fund - 6,662,200
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NET INCREASE IN MEMBERS' CAPITAL DERIVED FROM OPERATIONS - $ 6,643,701
FROM MEMBERS' CAPITAL TRANSACTIONS
Subscriptions - 36,250,624
Redemptions $ (57,188) (1,145,178)
Reallocation of incentive allocation 464,280 (464,280)
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NET CHANGE IN MEMBERS' CAPITAL FROM CAPITAL TRANSACTIONS 407,092 34,641,166
------------ ------------
NET CHANGE IN MEMBERS' CAPITAL 407,092 41,284,867
Members' Capital at beginning of year 57,188 29,116,174
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Members' Capital at end of year $ 464,280 $70,401,041
============ ============
TOTAL CAPITAL ($70,865,321)
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2006 (UNAUDITED)
FROM INVESTMENT ACTIVITIES
Net investment loss - $ (644,170)
Net realized loss from investment funds allocated from the Master
Fund - (230,634)
Net change in unrealized depreciation on investment funds allocated
from the Master Fund - (435,835)
------------ ------------
NET DECREASE IN MEMBERS' CAPITAL DERIVED FROM OPERATIONS - $ (1,310,639)
FROM MEMBERS' CAPITAL TRANSACTIONS
Subscriptions - 19,094,495
Redemptions $ (464,280) (3,390,999)
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NET CHANGE IN MEMBERS' CAPITAL FROM CAPITAL TRANSACTIONS (464,280) 15,703,496
------------ ------------
NET CHANGE IN MEMBERS' CAPITAL (464,280) 14,392,857
Members' Capital at beginning of period 464,280 70,401,041
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Members' Capital at end of period $ - $ 84,793,898
============ ============
TOTAL CAPITAL ($84,793,898)
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 Months Ended September 30, 2006
CASH FLOWS FROM OPERATING ACTIVITIES
Net decrease in Members' capital from operations $ (1,310,639)
Adjustments to reconcile net decrease in Members' Capital from operations to net
cash used in operating activities:
Purchases of investment in Master Fund (16,664,810)
Redemption of investment in Master Fund 1,424,904
Net investment loss allocated from the Master Fund 644,854
Net realized losses from investment funds allocated from the Master Fund 230,634
Net change in unrealized depreciation on investment funds allocated from the
Master Fund 435,835
Decrease in receivable from Master Fund 3,223,157
Increase in receivable from Adviser (8,595)
Decrease in interest receivable 6
Increase in professional fees payable 4,475
Increase in administration fees payable 4,000
Increase in custodian fees payable 120
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NET CASH USED IN OPERATING ACTIVITIES (12,016,059)
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CASH FLOWS FROM FINANCING ACTIVITIES
Subscriptions 15,871,338
Redemptions (3,855,279)
----------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 12,016,059
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NET CHANGE IN CASH -
Cash and cash equivalents at beginning of period -
----------------
Cash and cash equivalents at end of period $ -
================
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
PERIOD FROM OCTOBER 1,
FOR THE SIX 2004 (COMMENCEMENT OF
THE FOLLOWING REPRESENTS THE RATIOS TO AVERAGE NET MONTHS ENDED YEAR ENDED OPERATIONS) THROUGH
ASSETS AND OTHER FINANCIAL HIGHLIGHTS INFORMATION FOR SEPTEMBER 30, 2006 MARCH 31, 2006 MARCH 31, 2005
THE PERIOD/YEAR: (UNAUDITED) (AUDITED) (AUDITED)
------------------ ----------------- ----------------------
Ratios to average net assets:
Net investment loss (b) (1.60%)(a) (1.57%) (1.67%)(a)
Net expenses (b)(c) 1.75% (a) 1.75% 1.75% (a)
Incentive allocation 0.00% 0.82% 0.58%
--------- ---------- ----------
Net expenses and incentive allocation
1.75% 2.57% 2.33%
Total return (1.43%)(d) 11.18% 5.04% (d)
Incentive allocation (0.00%)(d) (0.70%) (0.20%)(d)
--------- ---------- ----------
Total return net of incentive allocation (1.43%) (d) 10.48% 4.84% (d)
Portfolio turnover rate of Master Fund 6% 39% 3%
Members' capital, end of year (thousands)
$ 84,794 $ 70,865 $ 29,173
(a) Annualized for periods of less than one year.
(b) The Adviser waived and reimbursed $80,198 of fees for the six months ended
September 30, 2006. The net investment loss ratio would have been 0.37%
greater and the net expenses ratio would have been 0.37% greater had these
fees and expenses not been waived and reimbursed by the Adviser. The
Adviser waived and reimbursed $322,273 and $349,691 of fees and expenses
for the periods ended March 31, 2006 and 2005, respectively. The net
investment loss ratio would have been 0.59% and 3.57% greater and the net
expenses ratio would have been 0.59% and 3.57% greater had these fees and
expenses not been waived and reimbursed by the Adviser.
(c) Expenses of 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 transactions.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE
CONSOLIDATED FINANCIAL STATEMENTS.
5
THE TOPIARY FUND FOR BENEFIT PLAN INVESTORS (BPI) LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
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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
seeks 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 Islands limited duration company with the same
investment objectives as the Fund. The Offshore Fund in turn invests
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 98.7% of the beneficial interests in the Master
Fund at September 30, 2006. 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"). All 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 (the
"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
6
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 has been 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.
7
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 by the Members as withholding tax credits for Federal income
tax purposes. The actual amount of such taxes is not known until all K-1s 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, if any, consist of monies on deposit at PNC Bank,
N.A. 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
8
THE TOPIARY FUND FOR BENEFIT PLAN INVESTORS (BPI) LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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 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 months ended September 30, 2006, the Adviser did not earn an
Incentive Allocation.
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, 2006,
the average Hurdle Rate was 4.811%.
9
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.
4. ADMINISTRATION AND OTHER FEES
In accordance with the terms of the administration agreement (the
"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, 2006, the Fund's only investment was its investment in the
Master Fund. Aggregate purchases of the Master Fund amounted to $16,664,810 and
aggregate sales of the Master Fund amounted to $1,424,904 for the six months
ended September 30, 2006.
10
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 (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 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. RECENT ACCOUNTING PRONOUNCEMENT
On July 13, 2006, the Financial Accounting Standards Board (FASB) released FASB
Interpretation No. 48 "Accounting for Uncertainty in Income Taxes" (FIN 48). FIN
48 provides guidance for how uncertain tax positions should be recognized,
measured, presented and disclosed in the financial statements. FIN 48 requires
evaluation of tax positions taken or expected to be taken in the course of
preparing the Fund's tax returns to determine whether the tax positions are
"more-likely-than-not" of being sustained by the applicable tax authority. Tax
positions not deemed to meet the more-likely-than-not threshold would be
recorded as a tax benefit or expense in the current year. Adoption of FIN 48 is
required for fiscal years beginning after December 15, 2006 and is to be applied
to all open tax years as of the effective date. At this time, management is
evaluating the implications of FIN 48 and its impact in the financial statements
has not yet been determined.
10. SUBSEQUENT EVENT
In October 2006, the Fund effected subscriptions from Members of $3,351,678 of
which $3,221,728 were received prior to October 1, 2006.
11
THE TOPIARY FUND FOR BENEFIT PLAN INVESTORS (BPI) LLC
DIRECTORS AND OFFICERS BIOGRAPHICAL DATA (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
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.
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TERM OF NUMBER OF
OFFICE(i) & PRINCIPAL PORTFOLIOS IN
POSITIONS(S) LENGTH OF OCCUPATION(S) FUND COMPLEX OTHER
HELD WITH TIME DURING THE PAST OVERSEEN BY DIRECTORSHIPS
NAME, ADDRESS AND AGE FUND SERVED 5 YEARS DIRECTOR HELD BY DIRECTOR
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INDEPENDENT DIRECTORS
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Nolan T. Altman (ii) Director Since President, NTA 3 Director, State
c/o The Topiary Fund for Benefit inception Consulting (financial University of New York at
Plan Investors (BPI) LLC services consulting) Albany Foundation (1998
25 DeForest Ave. (2001 to present). to present); Director,
Summit, NJ 07901-2154 Formerly, Chief Phinity Offshore Fund,
(9/18/55) Financial Officer, Ltd., Tiger Asia Overseas
Tiger Management Fund, Ltd. Offshore Fund;
(investment adviser Tiger Global, Ltd., TS I
to hedge funds) (1993 Offshore Limited (2004 to
to 2001). present); Tiger Consumer
Partners Offshore Fund,
Ltd (2006).
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(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.
12
THE TOPIARY FUND FOR BENEFIT PLAN INVESTORS (BPI) LLC
DIRECTORS AND OFFICERS BIOGRAPHICAL DATA (CONTINUED) (UNAUDITED)
--------------------------------------------------------------------------------
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TERM OF NUMBER OF
OFFICE(i) & PRINCIPAL PORTFOLIOS IN
POSITIONS(S) LENGTH OF OCCUPATION(S) FUND COMPLEX OTHER
HELD WITH TIME DURING THE PAST OVERSEEN BY DIRECTORSHIPS
NAME, ADDRESS AND AGE FUND SERVED 5 YEARS DIRECTOR HELD BY DIRECTOR
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INDEPENDENT DIRECTORS (CONTINUED)
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Louis S. Citron (ii) Director Since General Counsel, New 3 None
c/o The Topiary Fund for Benefit Inception Enterprise Associates
Plan Investors (BPI) LLC (venture capital firm)
25 DeForest Ave. (2001 to present).
Summit, NJ 07901-2154
(1/31/65)
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13
THE TOPIARY FUND FOR BENEFIT PLAN INVESTORS (BPI) LLC
DIRECTORS AND OFFICERS BIOGRAPHICAL DATA (CONTINUED) (UNAUDITED)
--------------------------------------------------------------------------------
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TERM OF NUMBER OF
OFFICE(i) & PRINCIPAL PORTFOLIOS IN
POSITIONS(S) LENGTH OF OCCUPATION(S) FUND COMPLEX OTHER
HELD WITH TIME DURING THE PAST OVERSEEN BY DIRECTORSHIPS
NAME, ADDRESS AND AGE FUND SERVED 5 YEARS DIRECTOR HELD BY DIRECTOR
------------------------------------------------------------------------------------------------------------------------------------
INDEPENDENT DIRECTORS (CONTINUED)
------------------------------------------------------------------------------------------------------------------------------------
Edward T. Tokar Director Since Sr. Managing Director 3 Director, Gabelli
c/o The Topiary Fund for Benefit Inception of Investments, Beacon Dividend and Income
Plan Investors (BPI) LLC Trust Company (2004 to Trust (2003 to
25 DeForest Ave. present); Chief present); Trustee,
Summit, NJ 07901-2154 Executive Officer, Levco Series Trust
(6/12/47) Allied Capital Mutual Funds (2
Management LLC portfolios) (2001 to
(registered investment present); Director,
adviser - wholly owned Allied Capital
subsidiary of Manage-ment LLC (1998
Honeywell) (1998 to to 2004). Formerly,
2004); and Vice Trustee, Scudder MG
President - Investment Trust
Investments, Honeywell (formerly Morgan
International, Inc. Grenfell Investment
(advanced tech-nology Trust (11 portfolios)
and manufacturer) (1977 (1994 to 2002).
to 2004).
------------------------------------------------------------------------------------------------------------------------------------
14
THE TOPIARY FUND FOR BENEFIT PLAN INVESTORS (BPI) LLC
DIRECTORS AND OFFICERS BIOGRAPHICAL DATA (CONTINUED) (UNAUDITED)
--------------------------------------------------------------------------------
OFFICERS
------------------------------------------------------------------------------------------------------------------------------------
NAME, ADDRESS AND AGE POSITIONS HELD WITH FUND PRINCIPAL OCCUPATION(S) DURING THE
LAST 5 YEARS
------------------------------------------------------------------------------------------------------------------------------------
Pamela Kiernan(iii) 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, Deutsche
(9/16/68) Bank Global Equities (2002 to 2004); Business
Management - Trading, Deutsche Bank Global Equities
(1997 to 2002).
------------------------------------------------------------------------------------------------------------------------------------
Joshua Kestler(iii) 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 Clerk,
Summit, NJ 07901-2154 Hon. James H. Coleman, New Jersey Supreme Court
(04/27/75) (2000-2001).
------------------------------------------------------------------------------------------------------------------------------------
Marielena Glassman(iii) Treasurer, Chief Administration Officer, DB Absolute Return
Deutsche Asset Management Principal Strategies (2002 to present). Formerly Global Head
25 DeForest Ave., 2nd Floor Financial & Accounting of Business Management, Deutsche Asset Management
Summit, NJ 07901-2154 Officer (1990 to 2002): Co-Head of Global Portfolio
(06/06/63) Management product, Bankers Trust Private Banking
(1996-1999).
------------------------------------------------------------------------------------------------------------------------------------
Neil Novembre(iii) 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).
------------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
(iii) All Officers also serve in similar capacities as Officers for other funds
advised by the Investment Manager or its affiliates.
15
THE TOPIARY FUND FOR BENEFIT PLAN INVESTORS (BPI) LLC
DIRECTORS AND OFFICERS BIOGRAPHICAL DATA (CONTINUED) (UNAUDITED)
--------------------------------------------------------------------------------
OFFICERS
------------------------------------------------------------------------------------------------------------------------------------
NAME, ADDRESS AND AGE POSITIONS HELD WITH FUND PRINCIPAL OCCUPATION(S) DURING THE
LAST 5 YEARS
------------------------------------------------------------------------------------------------------------------------------------
Anthony Conte(iii) Assistant Treasurer Head of Alternative Assets Compliance
Deutsche Asset Management (06/2005 to present); Head of Compliance, DB
345 Park Avenue Absolute Return Strategies (2003 to
New York, NY 10154 present); Head of Business Risk, DB Absolute
3/28/69) Return Strategies (2001 to 2003); Head of
Asset Management Compliance, CIBC World
Markets Corp. (1999 to 2001).
------------------------------------------------------------------------------------------------------------------------------------
John H. Kim(iii) Secretary Director and Senior Counsel, Deutsche Asset
Deutsche Asset Management Management (asset management division of
345 Park Avenue Deutsche Bank) (2001 to present); Sr.
New York, NY 10154 Associate, Wilkie Farr & Gallagher (law firm)
(1/9/71) (1995 to 2001).
------------------------------------------------------------------------------------------------------------------------------------
David Goldman Assistant Secretary Vice President, Deutsche Asset Management (legal
Deutsche Asset Management department) (2006 to present); Assistant Vice
345 Park Avenue President, Deutsche Asset Management (2002 to
New York, NY 10154 2005).
(12/24/73)
------------------------------------------------------------------------------------------------------------------------------------
Philip Gallo Chief Compliance Managing Director (April 2003 to present), Global
Deutsche Asset Management Officer Head of Asset Management Compliance (January 2004
345 Park Avenue to present and formerly Head of asset Management
New York, NY 10154 Compliance (April 2003 to December 2004), Deutsche
(8/02/62) Asset Management. Chief Compliance Officer, DWS,
Scudder Family of Funds (October 2004 to present).
Prior to joining Deutsche Asset Management, Vice
President and Associate General Counsel at Goldman
Sachs until March 2003.
------------------------------------------------------------------------------------------------------------------------------------
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.
16
THE TOPIARY 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.
17
THE TOPIARY FUND FOR BENEFIT PLAN INVESTORS (BPI) LLC
CONTINUATION OF MANAGEMENT ARRANGEMENTS (UNAUDITED)
--------------------------------------------------------------------------------
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 8, 2006 (the "September 8 Meeting"), the Board,
comprised of the Independent Directors, unanimously approved the continuance of
the Investment Management Agreement.
At the September 8 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
18
THE TOPIARY FUND FOR BENEFIT PLAN INVESTORS (BPI) LLC
CONTINUATION OF MANAGEMENT ARRANGEMENTS (CONTINUED) (UNAUDITED)
--------------------------------------------------------------------------------
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, DBIM earned advisory fees of $680,393 for the year ended
March 31, 2006 of which $113,973 was reimbursed by DBIM. Pursuant to the
operating agreement, the Fund paid to DBIM an incentive allocation of $464,280
for the year ended March 31, 2006. 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 $85 million at August 31, 2006 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, 2007.
19
ATTACHMENT A
THE TOPIARY MASTER FUND FOR BENEFIT PLAN INVESTORS (BPI) LLC
FINANCIAL STATEMENTS
(unaudited)
For the Six Months Ended September 30, 2006
The Topiary Master Fund for Benefit Plan Investors (BPI) LLC
Financial Statements
(unaudited)
For the Six Months Ended September 30, 2006
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 Net Assets by Investment Strategy ...... ................. 20
1
The Topiary Master Fund for Benefit Plan Investors (BPI) LLC
Statement of Assets, Liabilities and Members' Capital
(unaudited)
SEPTEMBER 30, 2006
ASSETS
Investments in investment funds, at fair value (cost $71,836,108) $81,627,381
Cash and cash equivalents 4,984,871
Investments in investment funds made in advance 1,900,000
Receivable for investment funds sold 1,118,856
Receivable from Advisor 71,603
Prepaid expenses 39,168
Other assets 13,706
-----------
TOTAL ASSETS $89,755,585
===========
LIABILITIES
Subscriptions received in advance 3,221,728
Management fee payable 227,537
Professional fees payable 101,760
Taxes payable 95,966
Board preparation fees payable 68,750
Registration fees payable 37,004
Administration fees payable 26,668
Investor services fees payable 26,510
Custodian fees payable 2,200
Other fees payable 23,350
-----------
TOTAL LIABILITIES 3,831,473
-----------
MEMBERS' CAPITAL 85,924,112
-----------
TOTAL LIABILITIES AND MEMBERS' CAPITAL $89,755,585
===========
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, 2006
% OF
MEMBERS'
STRATEGY INVESTMENT FUND COST FAIR VALUE LIQUIDITY CAPITAL
-------- --------------- ---- ---------- --------- -------
Event Driven Avenue Europe Investments, L.P. $ 932,212 $ 1,175,564 Quarterly 1.4%
Gracie Capital L.P. 2,000,000 2,241,634 Annually 2.6%
Harbinger Capital Partners I, L.P. 1,374,965 1,721,302 Quarterly 2.0%
Jana Partners Qualified, L.P. 2,450,000 2,696,026 Quarterly 3.1%
Marathon Special Opportunity Fund, L.P. 1,500,000 1,758,638 Annually 2.0%
Merced Partners, L.P. 1,550,000 1,906,150 Annually 2.2%
Perry Partners, L.P. 2,600,000 3,004,144 Annually 3.5%
Strategic Value Restructuring Fund, L.P. 870,036 1,211,576 Annually 1.5%
Venor Capital Partners, L.P. 1,500,000 1,577,606 Quarterly 1.8%
---------------------------------------------------------
Total Event Driven 14,777,213 17,292,640 20.1%
Global Macro Anglian Commodities U.S. Feeder Fund, L.L.C. 900,000 1,032,063 Annually 1.2%
Bear Stearns Emerging Markets Macro Fund, L.P. 700,000 803,785 Monthly 0.9%
Bridgewater Pure Alpha Trading Fund I 1,112,167 1,248,284 Monthly 1.4%
Drawbridge Global Macro Fund, L.P. 1,352,845 1,798,332 Quarterly 2.1%
Gondwana Fund, Ltd. 850,000 822,225 Monthly 1.0%
Grinham Diversified Fund Ltd. 800,000 784,517 Monthly 0.9%
GSA Capital Macro Partners, L.P. 700,000 684,864 Monthly 0.8%
Red Kite Compass Fund, L.P. 500,000 573,750 Quarterly 0.7%
---------------------------- -----
Total Global Macro 6,915,012 7,747,820 9.0%
Long/Short Equity Artha Emerging Markets Fund, L.P. 1,050,000 1,505,040 Quarterly 1.8%
Blue Crest Equity Fund, L.P. 1,650,000 1,638,828 Quarterly 1.9%
Bonanza Partners L.P. 1,250,000 1,434,326 Quarterly 1.7%
Delta Fund Europe L.P. 1,532,438 2,250,741 Quarterly 2.6%
Delta Institutional L.P. 1,650,000 1,623,131 Quarterly 1.9%
Gandhara Fund L.P. 1,870,000 2,076,287 Quarterly 2.4%
Hard Assets Partners, L.P. 1,200,000 1,546,322 Monthly 1.8%
Hayground Cove Institutional Partners, L.P. 1,150,000 1,336,084 Quarterly 1.5%
Ivory Flagship Fund, L.P. 1,400,000 1,813,578 Monthly 2.1%
Kinetics Partners, L.P. 1,260,805 1,769,782 Quarterly 2.1%
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, 2006
% OF
MEMBERS'
STRATEGY INVESTMENT FUND COST FAIR VALUE LIQUIDITY CAPITAL
-------- --------------- ---- ---------- --------- -------
Prism Partners QP, L.P. $1,575,000 $1,639,872 Quarterly 1.9%
Seligman Tech Spectrum Fund LLC 1,375,000 1,620,330 Quarterly 1.9%
SR Global, L.P. Asia 1,625,000 2,160,823 Monthly 2.5%
TCS Capital II, L.P. 1,475,000 2,001,934 Annually 2.3%
Third Coast Capital QP, L.P. 1,400,000 1,398,790 Quarterly 1.6%
Torrey Pines Fund, L.L.C 899,024 1,040,476 Quarterly 1.2%
Tracer Capital Partners QP, LP 1,700,000 2,033,952 Quarterly 2.4%
UC Financials Fund Limited 1,350,000 1,876,981 Monthly 2.2%
WF Japan Fund Limited 750,000 774,348 Monthly 0.9%
---------------------------- -----
Total Long/Short Equity 26,162,267 31,541,625 36.7%
Relative Value All Blue Limited 1,600,000 1,548,580 Monthly 1.8%
Amaranth Capital Partners, LLC 2,150,000 1,021,375 Annually 1.2%
Black River Global Multi-Strategy
Leveraged Fund, L.L.C. 2,900,000 3,033,179 Annually 3.5%
Blue Crest Capital, L.P. 750,000 719,405 Quarterly 0.8%
Bogle World Fund, L.P. 2,400,000 2,773,974 Quarterly 3.2%
Citadel Wellington Partners, L.L.C 3,400,000 4,394,568 Quarterly 5.1%
D.B. Zwirn Special Opportunities, L.P. 1,250,000 1,341,165 Annually 1.6%
Ellington Overseas Partners, Ltd. 1,150,000 1,289,183 Annually 1.5%
HBK Offshore Fund Ltd. 3,400,000 3,691,894 Quarterly 4.3%
Highbridge Asia Opportunities Fund, L.P. 1,150,000 1,154,830 Quarterly 1.4%
Julius Baer Diversified Fixed Income Hedge
Fund 881,616 977,351 Monthly 1.2%
Linden International Ltd. 1,950,000 2,003,714 Quarterly 2.3%
Marathon Fund L.P. 1,000,000 1,096,078 Monthly 1.3%
---------------------------- -----
Total Relative Value 23,981,616 25,045,296 29.2%
---------------------------- -----
Total $71,836,108 $81,627,381 95.0%
------
Other Assets in Excess of Liabilities 4,296,731 5.0%
----------- ------
Members' Capital $85,924,112 100.0%
=========== ======
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 Months Ended September 30, 2006
INVESTMENT INCOME
Interest income $ 62,468
EXPENSES
Management fees $ 408,588
Professional fees 160,798
Board of Directors fees and expenses 61,233
Administration fees 55,388
Investor services fees 38,563
Insurance fees 32,955
Registration fees 14,438
Custodian fees 8,509
Printing fees 5,000
Other expenses 618
---------
Total expenses 786,090
Management fees waived by Adviser (69,547)
---------
Net expenses 716,543
-----------
NET INVESTMENT LOSS (654,075)
-----------
Losses from investment fund transactions
Net realized loss from investment funds redeemed (234,133)
Net change in unrealized depreciation on investment funds (398,307)
---------
NET LOSSES FROM INVESTMENT FUNDS TRANSACTIONS (632,440)
-----------
NET DECREASE IN MEMBERS' CAPITAL DERIVED FROM OPERATIONS $(1,286,515)
============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
4
The Topiary Master Fund for Benefit Plan Investors (BPI) LLC
Statements of Changes in Members' Capital
FOR THE SIX
MONTHS ENDED YEAR ENDED
SEPTEMBER 30, 2006 MARCH 31, 2006
(UNAUDITED) (UNAUDITED)
------------------ --------------
FROM INVESTMENT ACTIVITIES
Net investment loss $ (654,075) $(1,084,665)
Net realized gains (losses) of investment funds
redeemed (234,133) 998,415
Net change in unrealized appreciation (depreciation)
on investment funds (398,307) 7,700,870
----------- -----------
NET INCREASE (DECREASE) IN MEMBERS' CAPITAL
DERIVED FROM OPERATIONS (1,286,515) 7,614,620
FROM MEMBERS' CAPITAL TRANSACTIONS
Subscriptions 16,664,810 36,559,361
Redemptions (1,424,904) (27,011,363)
Distributions (40,601) (165,055)
----------- -----------
NET CHANGE IN MEMBERS' CAPITAL FROM CAPITAL
TRANSACTIONS 15,199,305 9,382,943
----------- -----------
NET CHANGE IN MEMBERS' CAPITAL 13,912,790 16,997,563
Members' Capital at beginning of period 72,011,322 55,013,759
----------- -----------
Members' Capital at end of period $85,924,112 $72,011,322
=========== ===========
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 Months Ended September 30, 2006
CASH FLOWS FROM OPERATING ACTIVITIES
Net decrease in Members' Capital from operations $ (1,286,515)
Adjustments to reconcile net decrease in Members' Capital from
operations to net cash used in operating
activities:
Purchases of investment funds (18,475,000)
Sales of investment funds 4,652,338
Net realized losses from investment funds redeemed 234,133
Net change in unrealized depreciation on investment funds 398,307
Decrease in investment in investment funds made in advance 3,050,000
Decrease in receivable for investment funds sold 942,015
Increase in receivable from Advisor (43,106)
Increase in prepaid expenses (26,635)
Increase in other assets (7,823)
Increase in management fee payable 120,634
Decrease in professional fees payable (86,252)
Increase in taxes payable 65,118
Increase in board preparation fees payable 18,750
Increase in registration fees payable 7,403
Increase in administration fees payable 13,334
Increase in investor services fees payable 15,000
Increase in other fees payable 13,063
------------
NET CASH USED IN OPERATING ACTIVITIES (10,395,236)
------------
CASH FLOWS FROM FINANCING ACTIVITIES
Subscriptions 16,663,381
Redemptions (1,424,904)
Distributions (40,601)
------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 15,197,876
------------
NET INCREASE IN CASH 4,802,640
Cash and cash equivalents at beginning of period 182,231
------------
Cash and cash equivalents at end of period $ 4,984,871
============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW ACTIVITY
Taxes paid $ 983
------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
6
The Topiary Master Fund for Benefit Plan Investors (BPI) LLC
Financial Highlights
PERIOD FROM
THE FOLLOWING REPRESENTS OCTOBER 1, 2004
THE RATIOS TO AVERAGE (COMMENCEMENT
NET ASSETS AND OTHER FOR THE SIX OF OPERATIONS)
FINANCIAL HIGHLIGHTS MONTHS ENDED YEAR ENDED THROUGH MARCH
INFORMATION FOR THE SEPTEMBER 30, 2006 MARCH 31, 2006 31, 2005
PERIOD/YEAR: (UNAUDITED) (UNAUDITED) (UNAUDITED)
---------------------------------------------------------
Ratios to average net assets:
Net investment loss (b) (1.60%)(a) (1.60%) (1.67%)(a)
Net expenses (b)(c) 1.75% (a) 1.75% 1.75% (a)
Total return (1.43%)(d) 11.27% 5.04% (d)
Portfolio turnover rate 6% 39% 3%
Members' Capital, end of
period (thousands) $ 85,924 $72,011 $55,014
(a) Annualized for periods of less than one year.
(b) The Adviser waived $69,547 of fees for the six months ended September 30, 2006. The net
investment loss ratio would have been 0.17% greater and the total expenses ratio would have
been 0.17% greater had these fees and expenses not been waived and reimbursed by the Adviser.
The Adviser waived and reimbursed $113,973 and $265,284 of fees and expenses for the periods
ended March 31, 2006 and 2005, respectively. The net investment loss ratio would have been
0.17% and 1.17% greater and the total expenses ratio would have been 0.17% and 1.17% greater
had these fees and expenses not been waived and 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 transactions.
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, 2006,
the investment by the Offshore Fund constitutes 98.7% 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
1.3%, 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 (the "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"). All 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 (the
"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 Investment Funds to the
extent such income is not exempted from withholdings under the Internal Revenue
Code and Regulations there under. Such amounts are treated by the Members as
withholding tax credits for federal income tax purposes. The actual amount of
such taxes is not known until all K-1s 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 PNC Bank, N.A. 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)
--------------------------------------------------------------------------------
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
H. EXPENSE LIMITATION
Pursuant to the Expense Limitation Agreement, the Adviser has contractually
agreed to waive fees 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%. 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 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. 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 fee for the six months ended September 30, 2006 was $408,588
of which $227,537 was payable at period end.
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 year through March 31, 2006. For the six months ended September 30, 2006,
the Adviser waived management fees of $69,547.
In accordance with the terms of the administration agreement (the
"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. 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.
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 this agreement, ICCC, among other things: drafts Board agendas and
resolutions; prepares Board materials; communicates with the Directors; and
drafts Board-meeting minutes. As compensation for services set forth herein that
are rendered by ICCC during the term of this Agreement, the Funds pays ICCC a
fee for services rendered.
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.
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, 2006, the Fund had investments in Investment Funds, none of
which were related parties. Aggregate purchases of Investment Funds amounted to
$18,475,000 and aggregate sales of Investment Funds amounted to $4,652,338 for
the six months ended September 30, 2006.
At September 30, 2006, the estimated cost of investments for Federal income tax
purposes was $71,836,108. As of that date, net unrealized appreciation on
investments was estimated to be $9,791,273, made up of gross unrealized
appreciation on investments of $11,099,558 and gross unrealized depreciation on
investments of $1,308,285.
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.
12
THE TOPIARY MASTER FUND FOR BENEFIT PLAN INVESTORS (BPI) LLC
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)(CONTINUED)
--------------------------------------------------------------------------------
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.
7. GUARANTOR OBLIGATIONS AND INDEMNIFICATIONS
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. RECENT ACCOUNTING PRONOUNCEMENT
On July 13, 2006, the Financial Accounting Standards Board (FASB) released FASB
Interpretation No. 48 "Accounting for Uncertainty in Income Taxes" (FIN 48). FIN
48 provides guidance for how uncertain tax positions should be recognized,
measured, presented and disclosed in the financial statements. FIN 48 requires
evaluation of tax positions taken or expected to be taken in the course of
preparing the Fund's tax returns to determine whether the tax positions are
"more-likely-than-not" of being sustained by the applicable tax authority. Tax
positions not deemed to meet the more-likely-than-not threshold would be
recorded as a tax benefit or expense in the current year. Adoption of FIN 48 is
required for fiscal years beginning after December 15, 2006 and is to be applied
to all open tax years as of the effective date. At this time, management is
evaluating the implications of FIN 48 and its impact in the financial statements
has not yet been determined.
9. SUBSEQUENT EVENT
In October 2006, the Fund effected subscriptions from Members of $3,351,678, of
which $3,221,728 were received prior to October 1, 2006.
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
PORTFOLIOS
TERM OF PRINCIPAL IN FUND
POSITION(S) OFFICE(i) & OCCUPATION(S) COMPLEX OTHER
HELD WITH LENGTH OF DURING THE PAST OVERSEEN BY DIRECTORSHIPS
NAME, ADDRESS AND AGE FUND TIME SERVED 5 YEARS DIRECTOR HELD BY DIRECTOR
------------------------------------------------------------------------------------------------------------------------------------
INDEPENDENT DIRECTORS
------------------------------------------------------------------------------------------------------------------------------------
Nolan T. Altman (ii) Director Since President, NTA 3 Director, State
c/o The Topiary Master Fund for inception Consulting (financial University of New York at
Benefit Plan Investors (BPI) LLC services consulting) Albany Foundation (1998
25 DeForest Ave. (2001 to present). to present); Director,
Summit, NJ 07901-2154 Formerly, Chief Phinity Offshore Fund,
(9/18/55) Financial Officer, Ltd., Tiger Asia Overseas
Tiger Management Fund, Ltd. Offshore Fund;
(Investment adviser Tiger Global, Ltd., TS I
to hedge funds) (1993 Offshore Limited (2004 to
to 2001). present); Tiger Consumer
Partners Offshore Fund,
Ltd (2006).
------------------------------------------------------------------------------------------------------------------------------------
----------
(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 (CONTINUED)(UNAUDITED)
--------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
NUMBER OF
PORTFOLIOS
TERM OF PRINCIPAL IN FUND
POSITION(S) OFFICE(i) & OCCUPATION(S) COMPLEX OTHER
HELD WITH LENGTH OF DURING THE PAST OVERSEEN BY DIRECTORSHIPS
NAME, ADDRESS AND AGE FUND TIME SERVED 5 YEARS DIRECTOR HELD BY DIRECTOR
------------------------------------------------------------------------------------------------------------------------------------
INDEPENDENT DIRECTORS (CONTINUED)
------------------------------------------------------------------------------------------------------------------------------------
Louis S. Citron (ii) Director Since General Counsel, New 3 None
c/o The Topiary Master Fund for Inception Enterprise Associates
Benefit Plan Investors (BPI) LLC (venture capital firm)
25 DeForest Ave. (2001 to present).
Summit, NJ 07901-2154
(1/31/65)
------------------------------------------------------------------------------------------------------------------------------------
15
THE TOPIARY MASTER FUND FOR BENEFIT PLAN INVESTORS (BPI) LLC
DIRECTORS AND OFFICERS BIOGRAPHICAL DATA (CONTINUED)(UNAUDITED)
--------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
NUMBER OF
PORTFOLIOS
TERM OF PRINCIPAL IN FUND
POSITION(S) OFFICE(i) & OCCUPATION(S) COMPLEX OTHER
HELD WITH LENGTH OF DURING THE PAST OVERSEEN BY DIRECTORSHIPS
NAME, ADDRESS AND AGE FUND TIME SERVED 5 YEARS DIRECTOR HELD BY DIRECTOR
------------------------------------------------------------------------------------------------------------------------------------
INDEPENDENT DIRECTORS (CONTINUED)
------------------------------------------------------------------------------------------------------------------------------------
Edward T. Tokar Director Since Sr. Managing Director 3 Director, Gabelli
c/o The Topiary Master Fund for Inception of Investments, Beacon Dividend & Income
Benefit Plan Investors (BPI) LLC Trust Co. (2004 to Trust (2003 to
25 DeForest Ave. present); Chief present); Trustee,
Summit, NJ 07901-2154 Executive Officer, Levco Series Trust
(6/12/47) Allied Capital Mgmt. Mutual Funds (2
LLC (registered portfolios) (2001 to
investment adviser - present); Director,
wholly owned subsidiary Allied Capital
of Honeywell) (1998 to Manage-ment LLC (1998
2004); and Vice to 2004). Formerly,
President - Trustee, Scudder MG
Investments, Honeywell Investment Trust
International, Inc. (formerly Morgan
(advanced technology Grenfell Investment
and manufacturer) (1977 Trust (11 portfolios)
to 2004). (1994 to 2002).
------------------------------------------------------------------------------------------------------------------------------------
16
THE TOPIARY MASTER FUND FOR BENEFIT PLAN INVESTORS (BPI) LLC
DIRECTORS AND OFFICERS BIOGRAPHICAL DATA (CONTINUED)(UNAUDITED)
--------------------------------------------------------------------------------
OFFICERS
---------------------------------------------------------------------------------------------------------------------
NAME, ADDRESS AND AGE POSITIONS HELD WITH FUND PRINCIPAL OCCUPATION(S) DURING THE
LAST 5 YEARS
---------------------------------------------------------------------------------------------------------------------
Pamela Kiernan(iii) 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, Deutsche
(9/16/68) Bank Global Equities (2002 to 2004); Business
Management - Trading, Deutsche Bank Global Equities
(1997 to 2002).
---------------------------------------------------------------------------------------------------------------------
Joshua Kestler(iii) 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 Clerk,
Summit, NJ 07901-2154 Hon. James H. Coleman, New Jersey Supreme Court
(04/27/75) (2000-2001).
---------------------------------------------------------------------------------------------------------------------
Marielena Glassman(iii) Treasurer, Chief Administration Officer, DB Absolute Return
Deutsche Asset Management Principal Strategies (2002 to present). Formerly Global Head
25 DeForest Ave., 2nd Floor Financial & Accounting of Business Management, Deutsche Asset Management
Summit, NJ 07901-2154 Officer (1990 to 2002): Co-Head of Global Portfolio
(06/06/63) Management product, Bankers Trust Private Banking
(1996-1999).
---------------------------------------------------------------------------------------------------------------------
Neil Novembre(iii) 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).
---------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
(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 (CONTINUED)(UNAUDITED)
--------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Anthony Conte(iii) Assistant Head of Alternative Assets Compliance (06/2005 to present); Head of Compliance, DB
Treasurer Absolute Return Deutsche Asset Management Strategies (2003 to present); Head of
Business Risk, 345 Park Avenue DB Absolute Return Strategies (2001 to 2003); Head of
New York, NY 10154 Asset Management Compliance, CIBC World Markets Corp. (3/28/69)
(1999 to 2001).
------------------------------------------------------------------------------------------------------------------------------------
John H. Kim(iii) Secretary Director and Senior Counsel, Deutsche Asset Management Deutsche Asset Management
(asset management division of Deutsche Bank) (2001 to 345 Park Avenue present); Sr.
Associate, Wilkie Farr & Gallagher (law New York, NY 10154 firm) (1995 to 2001).
(1/9/71)
------------------------------------------------------------------------------------------------------------------------------------
David Goldman Assistant Vice President, Deutsche Asset Management (legal department) (2006 to present);
Deutsche Asset Secretary Assistant Vice 345 Park Avenue President, Deutsche Asset Management (2002 to 2005).
Management New York, NY 10154 (12/24/73)
------------------------------------------------------------------------------------------------------------------------------------
Philip Gallo Chief Compliance Managing Director (April 2003 to present), Global Head of Asset Management Compliance
Deutsche Asset Officer (January 2004 to present and formerly Head of asset Management Compliance (April 2003
Management to December 2004), Deutsche Asset Management. Chief Compliance Officer, DWS, Scudder
345 Park Avenue Family of Funds (October 2004 to present). Prior to joining Deutsche Asset
New York, NY 10154 Management, Vice President and Associate General Counsel at Goldman Sachs until March
(8/02/62) 2003.
------------------------------------------------------------------------------------------------------------------------------------
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)
--------------------------------------------------------------------------------
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA USED IN PRINTED GRAPHIC AS FOLLOWS:
Long/Short Equity 36.7%
Relative Value 29.2%
Event Driven 20.1%
Global Macro 9.0%
Other Assets 5.0%
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.
There has been no change, as of the date of this filing, in any of the portfolio
managers identified in response to paragraph (a)(1) of this Item in the
registrant's most recently filed annual report on Form N-CSR.
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/ Pamela Kiernan
-------------------------------------------------------
Pamela Kiernan, President
(principal executive officer)
Date December 4, 2006
----------------------------------------------------------------------------
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/ Pamela Kiernan
-------------------------------------------------------
Pamela Kiernan, President
(principal executive officer)
Date December 4, 2006
----------------------------------------------------------------------------
By (Signature and Title)* /s/ Marie Glassman
-------------------------------------------------------
Marie Glassman, Treasurer, Principal Financial
Officer and Accounting Officer
(principal financial officer)
Date December 4, 2006
----------------------------------------------------------------------------
* Print the name and title of each signing officer under his or her signature.