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 811-21516
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UBS Multi-Strat Fund, L.L.C.
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(Exact name of registrant as specified in charter)
1285 Avenue of the Americas
New York, New York 010019
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(Address of principal executive offices) (Zip code)
Michael Mascis
c/o UBS Financial Services Inc.
1285 Avenue of the Americas
New York, New York 10019
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(Name and address of agent for service)
registrant's telephone number, including area code: (212) 713-9036
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Date of fiscal year end: December 31, 2004
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Date of reporting period: December 31, 2004
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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, 450 Fifth Street, NW,
Washington, DC 20549-0609. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C. ss. 3507.
ITEM 1. REPORTS TO STOCKHOLDERS.
The Report to Shareholders is attached herewith.
UBS MULTI-STRAT FUND, L.L.C.
FINANCIAL STATEMENTS
WITH REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
FOR THE PERIOD OCTOBER 1, 2004
(COMMENCEMENT OF OPERATIONS)
THROUGH DECEMBER 31, 2004
UBS MULTI-STRAT FUND, L.L.C.
FINANCIAL STATEMENTS
WITH REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
FOR THE PERIOD OCTOBER 1, 2004
(COMMENCEMENT OF OPERATIONS)
THROUGH DECEMBER 31, 2004
CONTENTS
Report of Independent Registered Public Accounting Firm .................. 1
Statement of Assets, Liabilities and Members' Capital .................... 2
Statement of Operations .................................................. 3
Statement of Changes in Members' Capital ................................. 4
Statement of Cash Flows .................................................. 5
Notes to Financial Statements ............................................ 6
Schedule of Portfolio Investments ........................................ 12
[LETTERHEAD OF ERNST & YOUNG LLP]
Report of Independent Registered Public Accounting Firm
To the Members and Board of Directors of
UBS Multi-Strat Fund, L.L.C.
We have audited the accompanying statement of assets, liabilities and members'
capital of UBS Multi-Strat Fund, L.L.C. (the "Fund"), including the schedule of
portfolio investments, as of December 31, 2004, and the related statements of
operations and cash flows for the period then ended and the statements of
changes in members' capital for the period of October 1, 2004 (commencement of
operations) to December 31, 2004. These financial statements are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Fund's internal control over
financial reporting. Accordingly, we express no such opinion. An audit also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. Our procedures included confirmation of
investments owned as of December 31, 2004, by correspondence with management of
the investment funds. We believe that our audit provides a reasonable basis for
our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of UBS Multi-Strat Fund, L.L.C. at
December 31, 2004, the results of its operations and its cash flows for the
period then ended and the changes in its members' capital for the period from
October 1, 2004 (commencement of operations) to December 31, 2004, in conformity
with U.S. generally accepted accounting principles.
/s/ Ernst & Young LLP
February 25, 2005
1
UBS MULTI-STRAT FUND, L.L.C.
STATEMENT OF ASSETS, LIABILITIES AND MEMBERS' CAPITAL
- --------------------------------------------------------------------------------
DECEMBER 31, 2004
- --------------------------------------------------------------------------------
ASSETS
Investments in Investment Funds, at value (cost $52,000,000) $ 53,925,181
Cash and cash equivalents 11,056,647
Advanced subscription in Investment Funds 1,500,000
Interest receivable 16,257
- --------------------------------------------------------------------------------
TOTAL ASSETS 66,498,085
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LIABILITIES
Payables:
Organization costs 163,744
Fund Asset-Based Fee 70,846
Professional fees 64,200
Registration fees 42,999
Administrator fee 16,349
Administration fee 9,935
Other 8,376
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TOTAL LIABILITIES 376,449
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NET ASSETS $ 66,121,636
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MEMBERS' CAPITAL
Represented by:
Net capital contributions $ 64,196,455
Accumulated net unrealized appreciation on investments 1,925,181
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MEMBERS' CAPITAL $ 66,121,636
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The accompanying notes are an integral part of these financial statements.
2
UBS MULTI-STRAT FUND, L.L.C.
STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
FOR THE PERIOD OCTOBER 1, 2004 (COMMENCEMENT OF OPERATIONS) THROUGH
DECEMBER 31, 2004
- --------------------------------------------------------------------------------
INVESTMENT INCOME
Interest $ 46,364
- -------------------------------------------------------------------------------------
TOTAL INVESTMENT INCOME 46,364
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EXPENSES
Fund Asset Based-Fee 166,051
Organization costs 163,744
Professional fees 77,000
Registration fees 42,999
Administrator fee 38,319
Administration fee 11,881
Miscellaneous 15,852
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TOTAL EXPENSES 515,846
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NET INVESTMENT LOSS (469,482)
- -------------------------------------------------------------------------------------
UNREALIZED GAIN FROM INVESTMENTS
Change in net unrealized appreciation/depreciation from investments 1,925,181
- -------------------------------------------------------------------------------------
NET UNREALIZED GAIN FROM INVESTMENTS 1,925,181
- -------------------------------------------------------------------------------------
NET INCREASE IN MEMBERS' CAPITAL
DERIVED FROM OPERATIONS $ 1,455,699
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The accompanying notes are an integral part of these financial statements.
3
UBS MULTI-STRAT FUND, L.L.C.
STATEMENT OF CHANGES IN MEMBERS' CAPITAL
FOR THE PERIOD OCTOBER 1, 2004 (COMMENCEMENT OF OPERATIONS) THROUGH
DECEMBER 31, 2004
- --------------------------------------------------------------------------------
UBS FUND
ADVISOR, L.L.C. MEMBERS TOTAL
- -------------------------------------------------------------------------------------------------------------
MEMBERS' CAPITAL AT OCTOBER 1, 2004 $ -- $ -- $ --
INCREASE (DECREASE) FROM OPERATIONS
Pro rata allocation:
Net investment loss (876) (468,606) (469,482)
Change in net unrealized
appreciation/depreciation from investments 3,533 1,921,648 1,925,181
- -------------------------------------------------------------------------------------------------------------
NET INCREASE IN MEMBERS' CAPITAL
DERIVED FROM OPERATIONS 2,657 1,453,042 1,455,699
- -------------------------------------------------------------------------------------------------------------
MEMBERS' CAPITAL TRANSACTIONS
Proceeds from Members' subscriptions 100,000 64,569,917 64,669,917
Offering costs (12) (3,968) (3,980)
- -------------------------------------------------------------------------------------------------------------
NET INCREASE IN MEMBERS' CAPITAL DERIVED
FROM CAPITAL TRANSACTIONS 99,988 64,565,949 64,665,937
- -------------------------------------------------------------------------------------------------------------
MEMBERS' CAPITAL AT DECEMBER 31, 2004 $ 102,645 $ 66,018,991 $ 66,121,636
- -------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
4
UBS MULTI-STRAT FUND, L.L.C.
STATEMENT OF CASH FLOWS
- --------------------------------------------------------------------------------
FOR THE PERIOD OCTOBER 1, 2004 (COMMENCEMENT OF OPERATIONS)
THROUGH DECEMBER 31, 2004
- --------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net increase in Members' capital derived from operations $ 1,455,699
Adjustments to reconcile net increase in Members' capital derived from operations
to net cash used in operating activities:
Purchases of investments (52,000,000)
Change in net unrealized appreciation/depreciation from investments (1,925,181)
Changes in assets and liabilities:
(Increase) decrease in assets:
Advance subscription in Investment Funds (1,500,000)
Interest receivable (16,257)
Increase in payables:
Organization costs 163,744
Investment management fee 70,846
Professional fees 64,200
Registration fees 42,999
Administrator fee 16,349
Administration fee 9,935
Other 8,376
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NET CASH USED IN OPERATING ACTIVITIES (53,609,290)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from Members' subscriptions 64,569,917
Adviser subscriptions 100,000
Offering costs (3,980)
- ----------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 64,665,937
Net increase in cash and cash equivalents 11,056,647
Cash and cash equivalents - beginning of period --
- ----------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS--END OF PERIOD $ 11,056,647
- ----------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
5
UBS MULTI-STRAT FUND, L.L.C.
NOTES TO FINANCIAL STATEMENTS
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DECEMBER 31, 2004
- --------------------------------------------------------------------------------
1. ORGANIZATION
UBS Multi-Strat Fund, L.L.C. (the "Fund") was organized as a limited
liability company under the laws of Delaware on July 29, 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 investment objective is to seek capital appreciation over the
long term. The Fund is a multi-manager fund that seeks to achieve its
objective by deploying its assets among a select group of portfolio
managers who over time have produced attractive returns. Generally, such
portfolio managers conduct their investment programs through unregistered
investment funds (collectively, the "Investment Funds"), in which the Fund
invests as a limited partner, member or shareholder along with other
investors. The Fund commenced operations on October 1, 2004.
The Fund's Board of Directors (the "Directors") has overall responsibility
to manage and control the business affairs of the Fund, including the
exclusive authority to oversee and to establish policies regarding the
management, conduct and operation of the Fund's business. The Directors
have engaged UBS Fund Advisor, L.L.C. ("UBSFA", the "Adviser" and, when
providing services under the Administration Agreement, the
"Administrator"), a Delaware limited liability company, to provide
investment advice regarding the selection of Investment Funds and to be
responsible for the day-to-day management of the Fund.
The Adviser is an indirect wholly owned subsidiary of UBS Americas, Inc.,
which is a wholly owned subsidiary of UBS AG, and is registered as an
investment adviser under the Investment Advisers Act of 1940, as amended.
Initial and additional applications for interests by eligible investors
may be accepted at such times as the Adviser may determine and are
generally accepted monthly. The Fund reserves the right to reject any
application for interests in the Fund.
The Fund from time to time may offer to repurchase interests pursuant to
written tenders to Members. These repurchases will be made at such times
and on such terms as may be determined by the Directors, in their complete
and exclusive discretion. The Adviser expects that it will recommend to
the Directors that the Fund offer to repurchase interests from Members in
September 2005 and December 2005 and, thereafter, twice each year, near
mid-year and year-end. Members can only transfer or assign their
membership interests (i) by operation of law pursuant to the death,
bankruptcy, insolvency or dissolution of a Member, or (ii) with the
written approval of the Directors, which may be withheld in their sole and
absolute discretion.
2. SIGNIFICANT ACCOUNTING POLICIES
A. PORTFOLIO VALUATION
Net asset value of the Fund is determined by or at the direction of the
Adviser as of the close of business at the end of any fiscal period in
accordance with the valuation principles set forth below or as may be
6
UBS MULTI-STRAT FUND, L.L.C.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
DECEMBER 31, 2004
- --------------------------------------------------------------------------------
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
A. PORTFOLIO VALUATION (CONTINUED)
determined from time to time pursuant to policies established by the
Directors. The Fund's investments in Investment Funds are subject to the
terms and conditions of the respective operating agreements and offering
memoranda, as appropriate. The Fund's investments in Investment Funds are
carried at fair value as determined by the Fund's pro rata interest in the
net assets of each Investment Fund. All valuations utilize financial
information supplied by each Investment Fund and are net of management and
performance incentive fees or allocations payable to the Investment Funds'
managers or pursuant to the Investment Funds' agreements. The Fund's
valuation procedures require the Adviser to consider all relevant
information available at the time the Fund values its portfolio. The
Adviser and/or the Board will consider such information and consider
whether it is appropriate, in light of all relevant circumstances, to
value such a position at its net asset value as reported or whether to
adjust such value. The underlying investments of each Investment Fund are
accounted for at fair value as described in each Investment Fund's
financial statements. (See Schedule of Portfolio Investments)
Distributions received or withdrawals from Investment Funds, whether in
the form of cash or securities, are first applied as a reduction of the
investment's cost.
B. INCOME RECOGNITION
Interest income is recorded on the accrual basis. Realized gains and
losses from Investment Fund transactions are calculated on the identified
cost basis.
C. FUND COSTS
The Fund bears all expenses incurred in its business, including, but not
limited to, the following: all costs and expenses related to portfolio
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; certain organization
costs; due diligence, including travel and related expenses; expenses of
meetings of Directors and Members; all costs with respect to
communications to Members; and other types of expenses approved by the
Directors. Offering costs are charged to capital as incurred.
D. INCOME TAXES
No provision for the payment of Federal, state or local income taxes has
been provided, since the Fund is not subject to income tax. Each Member is
individually required to report on its own tax return its distributive
share of the Fund's taxable income or loss.
The Fund has reclassified $469,482 from accumulated net investment loss to
net capital contributions during the period ended December 31, 2004. The
reclassification was to reflect, as an adjustment to net capital
contributions, the amount of taxable income or loss that have been
allocated to the Fund's Members and had no effect on net assets.
7
UBS MULTI-STRAT FUND, L.L.C.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
DECEMBER 31, 2004
- --------------------------------------------------------------------------------
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
E. CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist of monies invested in a PNC Bank, NA
account that pays money market rates and are accounted for at cost plus
accrued interest, which is included in interest receivable on the
Statement of Assets, Liabilities and Members' Capital.
F. REPURCHASE AGREEMENTS
From time to time the Fund may enter into repurchase agreements. In
connection with such transactions it is the Fund's policy that its
custodian take possession of the underlying collateral securities, the
fair value of which exceeds the principal amount of the repurchase
transaction, including accrued interest, at all times. If the seller
defaults, and the fair value of the collateral declines, realization of
the collateral by the Fund may be delayed or limited. As of December 31,
2004 there were no open repurchase agreements.
G. USE OF ESTIMATES
The preparation of financial statements in conformity with U.S. generally
accepted accounting principles 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.
3. RELATED PARTY TRANSACTIONS
The Adviser provides investment advisory services to the Fund pursuant to
an Investment Advisory Agreement. In consideration for such services, the
Fund pays the Adviser a monthly fee (the "Fund Asset-Based Fee") at an
aggregate annual rate of 1.60% of the Fund's net assets, excluding assets
attributable to the Adviser's capital account. The Administrator provides
certain other administrative services to the Fund including, among other
things, providing office space and other support services. In
consideration for such services, the Fund pays the Administrator a monthly
fee (the "Administrator Fee") at an annual rate of 0.30% of the Fund's net
assets, excluding assets attributable to the Administrator's and the
Adviser's capital account. The Fund Asset-Based Fee will be paid to the
Adviser out of the Fund's assets and debited against the Members' capital
accounts, excluding net assets attributable to the Adviser's capital
account. A portion of the Fund Asset-Based Fee is paid by UBSFA to its
affiliates.
UBS Financial Services Inc. ("UBS FSI"), a wholly-owned subsidiary of UBS
Americas, Inc., acts as a placement agent for the Fund, without special
compensation from the Fund, and will bear its own costs associated with
its activities as placement agent. Placement fees, if any, charged on
contributions are debited against the contribution amount to arrive at a
net subscription amount. The placement fee does not constitute assets of
the Fund.
8
UBS MULTI-STRAT FUND, L.L.C.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
DECEMBER 31, 2004
- --------------------------------------------------------------------------------
3. RELATED PARTY TRANSACTIONS (CONTINUED)
The net increase (or decrease) in Members' capital derived from operations
(net income or loss) is allocated to the capital accounts of all Members
on a pro-rata basis, other than the Fund Asset-Based Fee and the
Administrator Fee which are similarly allocated to all Members other than
the Adviser or Administrator as described above.
The Adviser has voluntarily undertaken to bear certain initial
organization and offering costs otherwise borne by the Fund and its
Members during the Fund's first twelve months of operations. The Adviser's
undertaking provides that Members will not bear initial organization and
offering costs in excess of 0.25% of total Members' capital as a result of
the Fund's start-up.
In order to achieve a more equitable distribution of the impact of certain
initial organization and offering costs, the Fund has either credited to
or debited against the Members' capital accounts the sum of such initial
costs based on each individual Member's percentage of capital in the Fund.
The reallocation of these costs will occur for the first twelve months
after the initial closing date of the Fund.
Each Director who is not an "interested person" of the Fund, as defined by
the 1940 Act, receives an annual retainer of $5,000 plus a fee for each
meeting attended. Any Director who is an "interested person" does not
receive any annual or other fee from the Fund. All Directors are
reimbursed by the Fund for all reasonable out of pocket expenses. Total
amounts expensed by the Fund related to Directors for the period ended
December 31, 2004 were $12,251.
4. ADMINISTRATION AND CUSTODIAN FEES
PFPC Trust Company (an affiliate of PNC Bank, NA) serves as the custodian
(the "Custodian") of the Fund's assets and provides custodial services for
the Fund.
PFPC Inc. (also an affiliate of PNC Bank, NA) serves as Accounting and
Investor Servicing Agent to the Fund and in that capacity provides certain
administrative, accounting, record keeping, tax and Member related
services. PFPC Inc. receives a monthly fee primarily based upon (i) the
average net assets of the Fund subject to a minimum monthly fee, and (ii)
the aggregate net assets of the Fund and certain other investment funds
sponsored or advised by UBS Americas, Inc. or its affiliates.
Additionally, the Fund reimburses certain out of pocket expenses incurred
by PFPC Inc.
5. CREDIT FACILITY
Effective December 16, 2004 the Fund, along with other UBS sponsored
funds, entered into a $75,000,000 committed, unsecured revolving line of
credit with Harris Trust and Savings Bank. Under the most restrictive
arrangement, the Fund may borrow an amount that combined with the other
borrowings of the Fund would not exceed 20% of its net assets. The Fund's
borrowing capacity is also limited to the portion of the unused line of
credit at any point in time. The Fund is only liable under the line of
credit to the extent of its own borrowing there under. The interest rate
on the borrowing is based on the Federal Funds rate plus 150 basis points
per annum. The expiration date of such credit agreements is July 1, 2005.
The committed facility also requires a fee to be paid by the Fund, on a
pro rata basis, based on the amount of the aggregate commitment, which has
not been utilized of 25 basis points per annum. The Fund had no borrowings
outstanding at December 31, 2004.
9
UBS MULTI-STRAT FUND, L.L.C.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
DECEMBER 31, 2004
- --------------------------------------------------------------------------------
6. SECURITIES TRANSACTIONS
Aggregate purchases of Investment Funds for the period ended December 31,
2004 amounted to $52,000,000.
The cost of investments for Federal income tax purposes is adjusted for
items of taxable income allocated to the Fund from the Investment Funds.
The allocated taxable income is reported to the Fund by the Investment
Funds on Schedules K-1. The Fund has not yet received all such Schedules
K-1 for the period ended December 31, 2004.
7. INVESTMENTS
As of December 31, 2004, the Fund had investments in Investment Funds,
none of which were related parties. The Fund's investments are summarized
below based on the investment objectives of the specific Investment Funds
at December 31, 2004.
INVESTMENT OBJECTIVE COST FAIR VALUE
-------------------- ---- ----------
Long/Short Equity $12,400,000 $13,033,800
Special Situations 12,100,000 12,732,969
Distressed/Cap Structure 9,700,000 9,980,502
Global Macro 7,000,000 7,297,182
Convertible Arbitrage 4,600,000 4,686,078
Fixed Income Arbitrage 3,700,000 3,656,650
Multi Strategy Arbitrage 2,500,000 2,538,000
----------- -----------
Total $52,000,000 $53,925,181
=========== ===========
The agreements related to investments in Investment Funds provide for
compensation to the general partners/managers in the form of management
fees of between 1% and 2.5% (per annum) of net assets and performance
incentive fees or allocations ranging from 15% to 25% of net profits
earned. The Investment Funds provide for periodic redemptions, with lock
up provisions of up to two years from initial investment. Detailed
information about the Investment Funds' portfolios is not available.
8. INDEMNIFICATION
In the ordinary course of business, the Fund may enter into contracts or
agreements that contain indemnifications or warranties. Future events
could occur that lead to the execution of these provisions against the
Fund. Based on its history and experience, management feels that the
likelihood of such an event is remote.
9. 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 equity swaps. The Fund's risk of loss in
these Investment Funds is limited to the value of these investments as
reported by the Fund.
10
UBS MULTI-STRAT FUND, L.L.C.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
DECEMBER 31, 2004
- --------------------------------------------------------------------------------
10. FINANCIAL HIGHLIGHTS
The following represents the ratios to average net assets and other
supplemental information for the period indicated:
PERIOD
OCTOBER 1, 2004
(COMMENCEMENT OF
OPERATIONS) THROUGH
DECEMBER 31, 2004
-----------------
Ratio of net investment loss to average net assets*** (3.94)%*
Ratio of total expenses to average net assets (a),*** 4.33%*
Portfolio turnover rate 0.00%
Total return** 2.65%
Net asset value at end of period $66,121,636
(a) Ratio of total expenses to average net assets does not include the
impact of expenses for incentive allocations or incentive fees
related to the underlying Investment Funds.
* Annualized.
** Total return assumes a purchase of an interest in the Fund at the
beginning of the period and a sale of the Fund interest on the last
day of the period noted and does not reflect the deduction of
placement fees, if any, incurred when subscribing to the Fund. Total
returns for a period of less than a full year are not annualized. An
individual member's ratios and return may vary from the above based
on the timing of capital transactions.
*** The average net assets used in the above ratios are calculated by
adding any withdrawals payable effective at the end of the period to
the net assets for such period.
11. SUBSEQUENT EVENT
Effective January 12, 2005, the unsecured revolving line of credit with
Harris Trust and Savings Bank was increased to a commitment of
$150,000,000.
11
UBS MULTI-STRAT FUND, L.L.C.
SCHEDULE OF PORTFOLIO INVESTMENTS
- --------------------------------------------------------------------------------
DECEMBER 31, 2004
- --------------------------------------------------------------------------------
REALIZED AND
UNREALIZED
% OF GAIN/(LOSS)
MEMBERS' FROM
INVESTMENT FUND: COST FAIR VALUE CAPITAL INVESTMENTS LIQUIDITY
- ---------------- ---- ---------- ------- ----------- ---------
Aspen Partners Series A $ 1,500,000 $ 1,641,242 2.48% $ 141,242 Annually
Atticus Alpha, Ltd. 4,450,000 4,692,521 7.10 242,521 Quarterly
Bridgewater Pure Alpha Trading Company, Ltd. 2,000,000 2,132,285 3.22 132,285 Monthly
Chatham Asset Partners High Yield Fund 4,450,000 4,544,628 6.87 94,628 Quarterly
D.E. Shaw Oculus Fund, LLC 2,000,000 2,179,534 3.30 179,534 Quarterly
Epsilon Global Active Fund II, L.P. 4,450,000 4,469,006 6.76 19,006 Quarterly
Imperium Market Neutral Fund (QP), L.P. 4,450,000 4,773,589 7.22 323,589 Quarterly
Kamunting Street Capital Management, L.P. 2,300,000 2,363,972 3.58 63,972 Quarterly
Loch Capital Fund I 4,450,000 4,527,922 6.85 77,922 Quarterly
Mariner Credit Risk Advisors Relative Value Fund, L.P. 3,750,000 3,794,632 5.74 44,632 Quarterly
Meditor Cobra Fund (C) Limited 3,500,000 3,732,289 5.64 232,289 Monthly
Olea Global Partners Fund 3,000,000 2,985,363 4.51 (14,637) Monthly
OTA Multi-Strategy Fund, LP 2,500,000 2,538,000 3.84 38,000 Monthly
Precept Domestic Fund II, LP 3,700,000 3,656,651 5.53 (43,349) Quarterly
Seneca Capital, LP 3,200,000 3,571,442 5.40 371,442 Annually
Waterstone Market Neutral Fund, L.P. 2,300,000 2,322,106 3.51 22,106 Quarterly
----------- ----------- ----- -----------
TOTAL $52,000,000 $53,925,181 81.55% $ 1,925,181
=========== =========== ===== ===========
The preceding notes are an integral part of these financial statements.
12
THIS PAGE INTENTIONALLY LEFT BLANK.
DIRECTORS AND OFFICERS (Unaudited)
Information pertaining to the Directors and officers of the Fund is set forth
below. The statement of additional information (SAI) includes additional
information about the Directors and is available without charge, upon request,
by calling UBS Financial Service Inc.'s, Alternative Investment Group at
800-580-2359.
- -------------------------------------------------------------------------------------------------------------------------
NUMBER OF
PORTFOLIOS
IN FUND
COMPLEX OTHER TRUSTEESHIPS/
TERM OF OFFICE OVERSEEN DIRECTORSHIPS
NAME, AGE, ADDRESS AND AND LENGTH OF PRINCIPAL OCCUPATION(S) BY HELD BY DIRECTOR
POSITION(S) WITH FUND TIME SERVED(1) DURING PAST 5 YEARS DIRECTOR(2) OUTSIDE FUND COMPANY
- --------------------- -------------- ------------------- ----------- --------------------
- -------------------------------------------------------------------------------------------------------------------------
DISINTERESTED DIRECTORS
- -------------------------------------------------------------------------------------------------------------------------
Meyer Feldberg, (62) Term - Dean and Professor of Mgmt of 48 Director of:
UBS Financial Services Inc. Indefinite Graduate School of Business, Primedia, Inc.,
1285 Avenue of the Americas Length-since Columbia University Federated Department
New York, NY 10019 Inception Stores, Inc.,
Director Revlon, Inc., Select
Medical, Inc. and
SAPPI, Ltd.
- -------------------------------------------------------------------------------------------------------------------------
George W. Gowen, (75) Term - Law partner for Dunnington, 14 None
UBS Financial Services Inc. Indefinite Bartholow & Miller
1285 Avenue of the Americas Length-since
New York, NY 10019 Inception
Director
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Stephen H. Penman, (58) Term - Professor of Financial 14 None
UBS Financial Services Inc. Indefinite Accounting of Graduate School
1285 Avenue of the Americas Length-since of Business, Columbia University
New York, NY 10019 Inception
Director
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INTERESTED DIRECTORS
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Mitchell Tanzman (45) Term - Managing Director of UBS 2 None
UBS Financial Services Inc. Indefinite Financial Services Inc.
1285 Avenue of the Americas Length-since Alternative Investment Group
New York, NY 10019 Inception
Director
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OFFICER(S) WHO ARE NOT DIRECTORS
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Michael Mascis, (37) Term-Indefinite Senior Vice President / CFO of N/A N/A
UBS Financial Services Inc. Length- since UBS Financial Services Inc.
1285 Avenue of the Americas Inception Alternative Investment Group,
New York, NY 10019 since July 2002. Prior to July
Principal Accounting Officer 2002, Partner Arthur Andersen
and Secretary LLP
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(1) For Directors, their terms are for the duration of the term of the Fund,
unless his status as a Director shall be sooner terminated by death, adjudicated
incompetent, voluntarily withdraw, physically unable to perform duties, removed
either by vote or written consent of at least two-thirds of the Directors or
vote or written consent of Members holding not less than two-thirds of the total
number of votes eligible to be cast by all Members.
(2) Of the 48 funds/portfolios in the complex, 34 are advised by an affiliate of
UBS Financial Services, Inc., and 14 comprise UBS Financial Services Inc.'s,
Alternative Investment Group of Funds.
The Fund files its complete schedule of portfolio holdings with the Securities
and Exchange Commission ("SEC") for the first and third quarters of each fiscal
year on Form N-Q. The Fund's Forms N-Q are available on the SEC's website at
HTTP://WWW.SEC.GOV and may be reviewed or 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.
Proxy Voting
A description of the policies and procedures that the Fund uses to determine how
to vote proxies relating to portfolio securities is available with out charge
upon request by calling the Alternative Investment Group at 800-580-2329.
ITEM 2. CODE OF ETHICS.
(a)The registrant, as of the end of the period covered by this report,
has adopted a code of ethics that applies to the registrant's principal
executive officer, principal financial officer, principal accounting
officer or controller, or persons performing similar functions,
regardless of whether these individuals are employed by the registrant
or a third party. The code of ethics may be obtained without charge by
calling 800-486-2608.
(c)There have been no amendments, during the period covered by this
report, to a provision of the code of ethics that applies to the
registrant's principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing
similar functions, regardless of whether these individuals are employed
by the registrant or a third party, and that relates to any element of
the code of ethics.
(d)The registrant has not granted any waivers, including an implicit
waiver, from a provision of the code of ethics that applies to the
registrant's principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing
similar functions, regardless of whether these individuals are employed
by the registrant or a third party, that relates to one or more of the
items set forth in paragraph (b) of this item's instructions.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
As of the end of the period covered by the report, the registrant's Board had
determined that Professor Stephen Penman, a member of the audit committee of the
Board, is the audit committee financial expert and that he is "independent," as
defined by Item 3 of Form N-CSR.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Audit Fees
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(a)The aggregate fees billed for each of the last two fiscal years for
professional services rendered by the principal accountant for the
audit of the registrant's annual financial statements or services that
are normally provided by the accountant in connection with statutory
and regulatory filings or engagements for those fiscal years are $0 for
2003 and $33,000 for 2004. Such audit fees include fees associated with
the annual audits and fees for providing a report in connection with
the registrant's report on Form N-SAR.
Audit-Related Fees
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(b)The aggregate fees billed in each of the last two fiscal years for
assurance and related services by the principal accountant that are
reasonably related to the performance of the audit of the registrant's
financial statements and are not reported under paragraph (a) of this
Item are $0 for 2003 and $0 for 2004. Audit-related fees principally
include fees associated with reviewing and providing comments on
semi-annual reports.
Tax Fees
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(c)The aggregate fees billed in each of the last two fiscal years for
professional services rendered by the principal accountant for tax
compliance, tax advice, and tax planning are $0 for 2003 and $42,000
for 2004. Tax fees include fees for tax compliance services and
assisting management in the preparation of tax estimates.
All Other Fees
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(d)The aggregate fees billed in each of the last two fiscal years for
products and services provided by the principal accountant, other than
the services reported in paragraphs (a) through (c) of this Item, are
$0 for 2003 and $1,000 for 2004. Fees for all other services include
fees for administrative services associated with preparing the K-1's
for mailing. There were no fees billed in the last fiscal two years for
services rendered by the principal accountant to the registrant's
investment adviser (not including any sub-adviser whose role is
primarily portfolio management and is subcontracted with or overseen by
another investment adviser), and any entity controlling, controlled by,
or under common control with the investment adviser that provides
ongoing services to the registrant ("Service Affiliates") which were
required to be pre-approved by the audit committee.
(e)(1)The registrant's audit committee pre-approves the principal
accountant's engagements for audit and non-audit services to the
registrant, and certain non-audit services to service Affiliates
that are required to be pre-approved, on a case-by-case basis.
Pre-approval considerations include whether the proposed services
are compatible with maintaining the principal accountant's
independence.
(e)(2)There were no services described in each of paragraphs (b) through
(d) of this Item that were approved by the audit committee pursuant
to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X, because
such services were pre-approved.
(f) Not applicable.
(g)The aggregate non-audit fees billed by the registrant's accountant for
services rendered to the registrant, and rendered to Service Affiliates
for each of the last two fiscal years of the registrant was $1.2
million for 2003 and 1.5 million for 2004.
(h)The registrant's audit committee of the board of directors HAS
considered whether the provision of non-audit services that were
rendered to Service Affiliates that were not pre-approved pursuant to
paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with
maintaining the principal accountant's independence.
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.
The registrant is a fund of funds that invests primarily in unregistered
investment vehicles that have investors other than the registrant, and in other
registered investment companies ("Investment Funds"). The Fund may invest a
majority of its assets in non-voting securities of Investment Funds.
The registrant has delegated voting of proxies in respect of portfolio holdings
to UBS Fund Advisor, L.L.C. (the "Adviser"), to vote the Fund's proxies in
accordance with the Adviser's proxy voting guidelines and procedures. However,
Investment Funds typically do not submit matters to investors for vote. If an
Investment Fund submits a matter to the registrant for vote (and the registrant
holds voting interests in the Investment Fund), the Adviser will vote on the
matter in a way that it believes is in the best interest of the registrant and
in accordance with the following proxy voting guidelines (the "Voting
Guidelines"):
o In voting proxies, the Adviser is guided by general fiduciary
principles. The Adviser's goal is to act prudently, solely in the
best interest of the registrant.
o The Adviser attempts to consider all factors of its vote that could
affect the value of the investment and will vote proxies in the
manner that it believes will be consistent with efforts to maximize
shareholder values.
o The Adviser, absent a particular reason to the contrary, generally
will vote with management's recommendations on routine matters.
Other matters will be voted on a case-by-case basis.
The Adviser applies its Voting Guidelines in a manner designed to identify and
address material conflicts that may arise between the Adviser's interests and
those of its clients before voting proxies on behalf of such clients. The
Adviser relies on the following to seek to identify conflicts of interest with
respect to proxy voting and assess their materiality:
o The Adviser's employees are under an obligation (i) to be aware of
the potential for conflicts of interest on the part of the Adviser
with respect to voting proxies on behalf of client accounts both as
a result of an employee's personal relationships and due to special
circumstances that may arise during the conduct of the Adviser's
business, and (ii) to bring conflicts of interest of which they
become aware to the attention of certain designated persons.
o Such designated persons work with appropriate personnel of the
Adviser to determine whether an identified conflict of interest is
material. A conflict of interest will be considered material to the
extent that it is determined that such conflict has the potential
to influence the Adviser's decision-making in voting the proxy. All
materiality determinations will be based on an assessment of the
particular facts and circumstances. The Adviser shall maintain a
written record of all materiality determinations.
o If it is determined that a conflict of interest is not material,
the Adviser may vote proxies notwithstanding the existence of the
conflict.
o If it is determined that a conflict of interest is material, the
Adviser's legal department works with appropriate personnel of the
Adviser to agree upon a method to resolve such conflict of interest
before voting proxies affected by the conflict of interest. Such
methods may include:
o disclosing the conflict to the registrant's Board and
obtaining the consent from registrant's Board before voting;
o engaging another party on behalf of the client to vote the
proxy on its behalf;
o engaging a third party to recommend a vote with respect to the
proxy based on application of the policies set forth herein;
or
o such other method as is deemed appropriate under the
circumstances given the nature of the conflict.
o The Adviser shall maintain a written record of the method used to
resolve a material conflict of interest.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not yet applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have been no material changes to the procedures by which the shareholders
may recommend nominees to the registrant's Board, 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 have
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) UBS Multi-Strat Fund, L.L.C.
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By (Signature and Title)* /s/ Richard Sipes
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Richard Sipes, Principal Executive Officer
Date February 28, 2005
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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/ Richard Sipes
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Richard Sipes, Principal Executive Officer
Date February 28, 2005
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By (Signature and Title)* /s/ Michael Mascis
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Michael Mascis, Principal Accounting Officer
(principal financial officer)
Date February 28, 2005
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* Print the name and title of each signing officer under his or her signature.