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)
51W 52nd Street, 23rd Floor
New York, NY 10019
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(Address of principal executive offices) (Zip code)
James Dwyer
c/o UBS Financial Services, Inc.
51W 52nd Street, 23rd Floor
New York, NY 10019
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(Name and address of agent for service)
registrant's telephone number, including area code: 212-882-5819
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Date of fiscal year end: December 31
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Date of reporting period: December 31, 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.
UBS MULTI-STRAT FUND, L.L.C.
FINANCIAL STATEMENTS
WITH REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
YEAR ENDED
DECEMBER 31, 2006
UBS MULTI-STRAT FUND, L.L.C.
FINANCIAL STATEMENTS
WITH REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
YEAR ENDED
DECEMBER 31, 2006
CONTENTS
Report of Independent Registered Public Accounting Firm .................. 1
Statement of Assets, Liabilities and Members' Capital .................... 2
Statement of Operations .................................................. 3
Statements of Changes in Members' Capital ................................ 4
Statement of Cash Flows .................................................. 5
Notes to Financial Statements ............................................ 6
Schedule of Portfolio Investments ........................................ 13
[GRAPHIC OMITTED] ERNST & YOUNG LLP
[GRAPHIC OMITTED] ERNST & YOUNG
5 Times Square
New York, New York 10036-6530
[GRAPHIC OMITTED] Phone: (212) 773-3000
www.ey.com
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, 2006, and the related statement of
operations and cash flows for the year then ended and the statements of changes
in members' capital for each of the two years in the period then ended. 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 audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. We were not engaged to perform an
audit of the Fund's internal control over financial reporting. Our audit
included consideration of internal control over financial reporting as a basis
for designing audit procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effectiveness of the Fund's
internal control over financial reporting. Accordingly, we express no such
opinion. An audit also includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. Our procedures included
confirmation of securities owned as of December 31, 2006 by correspondence with
the custodian and others or by the other appropriate auditing procedures where
replies from others were not received. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of UBS Multi-Strat Fund, L.L.C. at
December 31, 2006, the results of its operations and its cash flows for the year
then ended and the changes in its members' capital for each of the two years in
the period then ended, in conformity with U.S. generally accepted accounting
principles.
/s/ Ernst & Young LLP
New York, NY
February 26, 2007
A Member Practice of Ernst & Young Global
1
UBS MULTI-STRAT FUND, L.L.C.
STATEMENT OF ASSETS, LIABILITIES AND MEMBERS' CAPITAL
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DECEMBER 31, 2006
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ASSETS
Investments in Investment Funds, at value (cost $97,472,412) $121,300,621
Cash and cash equivalents 8,202,026
Receivables from Investment Funds 13,118,627
Interest receivable 11,428
Other assets 519
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TOTAL ASSETS 142,633,221
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LIABILITIES
Payables:
Loan payable 9,160,000
Withdrawals payable 8,726,904
Fund Asset Based fee 140,211
Loan interest 131,371
Professional fees 132,140
Administrator fee 32,356
Administration fee 23,494
Other 36,310
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TOTAL LIABILITIES 18,382,786
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NET ASSETS $124,250,435
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MEMBERS' CAPITAL
Represented by:
Net capital contributions $100,422,226
Accumulated net unrealized appreciation on investments 23,828,209
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MEMBERS' CAPITAL $124,250,435
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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
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YEAR ENDED DECEMBER 31, 2006
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INVESTMENT INCOME
Interest $ 59,145
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TOTAL INVESTMENT INCOME 59,145
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EXPENSES
Fund Asset Based fee 1,599,731
Loan interest 866,130
Administrator fee 369,169
Professional fees 227,442
Administration fee 118,517
Other 90,262
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TOTAL EXPENSES 3,271,251
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NET INVESTMENT LOSS (3,212,106)
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REALIZED AND UNREALIZED GAIN FROM INVESTMENTS
Net realized gain from investments 1,317,055
Change in net unrealized appreciation/depreciation from investments 15,808,699
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NET REALIZED AND UNREALIZED GAIN FROM INVESTMENTS 17,125,754
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NET INCREASE IN MEMBERS' CAPITAL
DERIVED FROM OPERATIONS $ 13,913,648
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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
YEARS ENDED DECEMBER 31, 2006 AND 2005
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UBS FUND
ADVISOR, L.L.C. MEMBERS TOTAL
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MEMBERS' CAPITAL AT JANUARY 1, 2005 $102,645 $ 66,018,991 $ 66,121,636
INCREASE (DECREASE) FROM OPERATIONS
Pro rata allocation:
Net investment loss (1,709) (2,385,440) (2,387,149)
Net realized gain/loss from investments (1,438) (1,956,810) (1,958,248)
Change in net unrealized
appreciation/depreciation from investments 3,563 6,090,766 6,094,329
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NET INCREASE IN MEMBERS' CAPITAL
DERIVED FROM OPERATIONS 416 1,748,516 1,748,932
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MEMBERS' CAPITAL TRANSACTIONS
Proceeds from Members' subscriptions -- 91,504,678 91,504,678
Members' withdrawals -- (41,102,715) (41,102,715)
Offering costs (34) (43,472) (43,506)
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NET INCREASE IN MEMBERS' CAPITAL DERIVED
FROM CAPITAL TRANSACTIONS (34) 50,358,491 50,358,457
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MEMBERS' CAPITAL AT DECEMBER 31, 2005 $103,027 $118,125,998 $118,229,025
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INCREASE (DECREASE) FROM OPERATIONS
Pro rata allocation:
Net investment loss (1,883) (3,210,223) (3,212,106)
Net realized gain from investments 1,141 1,315,914 1,317,055
Change in net unrealized
appreciation/depreciation from investments 13,989 15,794,710 15,808,699
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NET INCREASE IN MEMBERS' CAPITAL
DERIVED FROM OPERATIONS 13,247 13,900,401 13,913,648
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MEMBERS' CAPITAL TRANSACTIONS
Proceeds from Members' subscriptions -- 14,672,686 14,672,686
Members' withdrawals -- (22,562,379) (22,562,379)
Offering costs (2) (2,543) (2,545)
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NET DECREASE IN MEMBERS' CAPITAL
DERIVED FROM CAPITAL TRANSACTIONS (2) (7,892,236) (7,892,238)
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MEMBERS' CAPITAL AT DECEMBER 31, 2006 $116,272 $124,134,163 $124,250,435
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The accompanying notes are an integral part of these financial statements.
4
UBS MULTI-STRAT FUND, L.L.C.
STATEMENT OF CASH FLOWS
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YEAR ENDED DECEMBER 31, 2006
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CASH FLOWS FROM OPERATING ACTIVITIES
Net increase in Members' capital derived from operations $ 13,913,648
Adjustments to reconcile net increase in Members' capital derived from operations
to net cash provided by operating activities:
Purchases of investments (19,500,000)
Proceeds from disposition of investments 29,746,643
Net realized gain (loss) on investments
Net realized gain from investments (1,317,055)
Change in net unrealized appreciation/depreciation from investments (15,808,699)
Changes in assets and liabilities:
(Increase) decrease in assets:
Advanced subscription in Investment Funds 12,500,000
Receivables from Investment Funds 11,223,499
Interest receivable (2,365)
Other assets (295)
Increase (decrease) in payables:
Loan payable 9,160,000
Fund Asset Based fee (30,013)
Loan interest 131,371
Professional fees 62,770
Administrator fee (6,926)
Administration fee (4,839)
Registration fees (23,921)
Other 25,163
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NET CASH PROVIDED BY OPERATING ACTIVITIES 40,068,981
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from Members' subscriptions 14,672,686
Members withdrawal (54,938,190)
Offering cost (2,545)
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NET CASH USED IN FINANCING ACTIVITIES (40,268,049)
Net decrease in cash and cash equivalents (199,068)
Cash and cash equivalents--beginning of year 8,401,094
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CASH AND CASH EQUIVALENTS--END OF YEAR $ 8,202,026
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Supplemental cash flows disclosure:
Interest paid $ 734,759
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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, 2006
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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 a direct 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 Manager expects that, generally
it will recommend to the Directors that the Fund offer to repurchase
interests from Members twice each year, near mid year and year end.
Members can only transfer or assign their membership interests, or a
portion thereof, (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. Such transfers may be made even if the balance
of the capital account to such transferee is equal to or less than the
transferor's initial capital contribution.
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)
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DECEMBER 31, 2006
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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
Directors 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 $3,212,106 and $1,317,055 from accumulated
net investment loss and accumulated net realized gain from investments,
respectively, to net capital contributions during the year ended
December 31, 2006. 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)
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DECEMBER 31, 2006
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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, 2006, there were no outstanding repurchase agreements.
G. USE OF ESTIMATES
The preparation of financial statements in conformity with U.S.
generally accepted accounting principles requires the Manager to make
estimates and assumptions that affect the amounts reported in the
financial statements and accompanying notes. The Manager 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 annual rate of 1.30% 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.
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
8
UBS MULTI-STRAT FUND, L.L.C.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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DECEMBER 31, 2006
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3. RELATED PARTY TRANSACTIONS (CONTINUED)
and the Administrator Fee which are similarly allocated to all Members
other than the Adviser or Administrator as described above.
Each Director of the Fund receives an annual retainer of $7,500 plus a
fee for each meeting attended. 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 year ended December 31, 2006 were
$29,446.
Other investment partnerships sponsored by UBS Americas or its
affiliates may also maintain investment interests in the Investment
Funds owned by the Fund.
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 July 1, 2006 the Fund, along with other UBS sponsored funds,
entered into a $200,000,000 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 31, 2007. 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. For the year ended December 31, 2006, the Fund's average
interest rate paid on borrowings was 6.66% per annum and the average
borrowings outstanding were $13,005,326. The Fund had $9,160,000 in
borrowings outstanding at December 31, 2006. Interest expense for the
year ended December 31, 2006 was $866,130 of which $131,371 was payable
at the end of the year.
6. SECURITIES TRANSACTIONS
Aggregate purchases and sales of Investment Funds for the year ended
December 31, 2006 amounted to $19,500,000 and $29,746,643,
respectively.
9
UBS MULTI-STRAT FUND, L.L.C.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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DECEMBER 31, 2006
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6. SECURITIES TRANSACTIONS (CONTINUED)
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 Schedule K-1's for the year ended December 31, 2006.
7. INVESTMENTS
As of December 31, 2006, 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, 2006.
Investment Objective Cost Fair Value
-------------------- ---- ----------
Long/Short Equity $30,400,000 $ 36,554,896
Special Situations 15,950,000 22,146,276
Multi-Strategy 14,500,000 17,476,992
Direct Loans/Structured Finance 11,500,000 13,638,977
Global Macro 9,500,000 12,971,277
Convertible Arbitrage 9,100,000 10,568,402
Distressed/Credit 6,522,412 7,943,801
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Total $97,472,412 $121,300,621
=========== ============
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 20% to 25% of net profits
earned. One or more underlying fund investments have entered into a
side pocket arrangement. Detailed information about the Investment
Funds' portfolios is not available.
8. 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.
9. 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.
10
UBS MULTI-STRAT FUND, L.L.C.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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DECEMBER 31, 2006
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10. NEW ACCOUNTING PRONOUNCEMENTS
A. FINANCIAL ACCOUNTING STANDARDS BOARD (FASB) INTERPRETATION NO. 48
(FIN 48)
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 the 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 on the financial statements has not yet been
determined.
B. STATEMENT OF FINANCIAL ACCOUNTING STANDARDS NO. 157 (FAS 157)
On September 20, 2006, the FASB released Statement of Financial
Accounting Standards No. 157 "Fair Value Measurements" ("FAS 157"). FAS
157 establishes an authoritative definition of fair value, sets out a
framework for measuring fair value, and requires additional disclosures
about fair-value measurements. The application of FAS 157 is required
for fiscal years beginning after November 15, 2007 and interim periods
within those fiscal years. At this time, management is evaluating the
implications of FAS 157 and its impact on the financial statements has
not yet been determined.
11
11. Financial Highlights
The following represents the ratios to average net assets and other
supplemental information for the years and period indicated:
PERIOD OCTOBER 1, 2004
YEAR ENDED (COMMENCEMENT OF
YEAR ENDED DECEMBER 31, DECEMBER 31, OPERATIONS) THROUGH
2006 2005 DECEMBER 31, 2004
----------------------- -------------- ----------------------
Ratio of net investment loss to average net
assets*** (2.59)% (1.95)% (3.94%)*
Ratio of total expenses to average net
assets(a), *** 2.64% 2.18% 4.33%*
Portfolio turnover rate 14.81% 50.12% 0.00%
Total return** 11.88% 0.38% 2.65%
Average debt ratio 10.50% -- --
Net asset value at end of year/period $124,250,435 $118,229,025 $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 using
pre-tender net assets.
12
UBS MULTI-STRAT FUND, L.L.C.
SCHEDULE OF PORTFOLIO INVESTMENTS
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DECEMBER 31, 2006
- --------------------------------------------------------------------------------
REALIZED AND
% OF UNREALIZED
MEMBERS' GAIN (LOSS)
INVESTMENT FUND COST FAIR VALUE CAPITAL FROM INVESTMENTS LIQUIDITY LOCK UP*
- -------------------------------------------- ----------- ------------ ------- ---------------- ------------ --------
Amber Fund, Ltd. $ 6,000,000 $ 8,102,373 6.52% $ 2,102,373 Quarterly X
Aspen Partners, L.P. Series A 522,412 415,949 0.33 180,865 Annually
Bridgewater Pure Alpha Trading Company, Ltd. 4,500,000 5,083,687 4.09 270,914 Monthly
Brookdale International Partners, LP 5,250,000 6,759,385 5.44 1,242,786 Quarterly X
CPIM Structured Credit Fund 1000, LP 5,000,000 5,756,121 4.63 811,046 Quarterly
Davidson Kempner Partners, LP 5,000,000 5,930,374 4.78 930,374 Annually
DE Shaw Oculus Fund, LLC 5,000,000 7,887,590 6.35 1,688,111 Quarterly
D. Jabro Partners, LP 5,000,000 5,466,206 4.40 466,206 Annually X
East Side Capital, LP 2,750,000 4,033,940 3.25 481,364 Annually
Eminence Partners, LP 5,000,000 6,816,629 5.49 822,858 Semi-Annually
Kamunting Street, L.P. 4,300,000 5,449,057 4.39 1,074,180 Quarterly
Loch Capital Fund I, LP 6,650,000 8,713,097 7.01 1,478,057 Quarterly
Marathon Structured Finance Fund, LP 6,500,000 7,882,856 6.34 986,436 Quarterly
OZ Domestic Partners, LP 9,500,000 11,546,618 9.29 1,451,623 Annually
Seneca Capital, LP 4,700,000 7,284,518 5.86 1,564,833 Annually
Trilogy Financial Partners, LP 6,000,000 7,527,852 6.06 1,198,293 Quarterly
Waterstone Market Neutral Fund, L.P. 4,800,000 5,119,345 4.12 889,272 Quarterly
Whitney New Japan Partners, LP 5,000,000 4,855,823 3.91 (2,077,305) Quarterly
Wohl Capital Partners, LP 6,000,000 6,669,201 5.37 572,376 Quarterly
Reedeemed Investment Funds -- -- 991,092
----------- ------------ ----- -----------
TOTAL $97,472,412 $121,300,621 97.63% $17,125,754
=========== ============ ===== ===========
* The Investment Fund provides for periodic redemptions. As of December 31,
2006, the Fund was subject to lock up provisions of up to three years from
initial investment.
The preceding notes are an integral part of these financial statements.
13
UBS MULTI-STRAT FUND, L.L.C.
RIDER FOR 2006 N-CSR
--------------------
The Directors (including the Independent Directors) last evaluated the
Investment Advisory Agreement at a meeting on September 14, 2006. The Directors
met in an executive session during which they were advised by and had the
opportunity to discuss with independent legal counsel the approval of the
Investment Advisory Agreement. The Directors reviewed materials furnished by the
Adviser, including information regarding the Adviser, its affiliates and its
personnel, operations and financial condition. Tables indicating comparative fee
information, and comparative performance information, as well as a summary
financial analysis for the Fund, were also included in the meeting materials and
were reviewed and discussed. The Directors discussed with representatives of the
Adviser the Fund's operations and the Adviser's ability to provide advisory and
other services to the Fund.
The Directors reviewed, among other things, the nature of the advisory
services to be provided to the Fund by the Adviser, including its investment
process, and the experience of the investment advisory and other personnel
proposing to provide services to the Fund. The Directors discussed the ability
of the Adviser to manage the Fund's investments in accordance with the Fund's
stated investment objectives and policies, as well as the services to be
provided by the Adviser to the Fund, including administrative and compliance
services, oversight of Fund accounting, marketing services, assistance in
meeting legal and regulatory requirements and other services necessary for the
operation of the Fund. The Directors acknowledged the Adviser's employment of
highly skilled investment professionals, research analysts and administrative,
legal and compliance staff members to ensure that a high level of quality in
compliance and administrative services would be provided to the Fund. The
Directors also recognized the benefits which the Fund derives from the resources
available to the Adviser and the Adviser's affiliates, including UBS AG and UBS
Financial Services Inc. ("UBS Financial"). Accordingly, the Directors felt that
the quality of service offered by the Adviser to the Fund was appropriate, and
that the Adviser's personnel had sufficient expertise to manage the Fund.
The Directors reviewed the performance of the Fund and compared that
performance to the performance of other investment companies presented by UBS
Financial which had objectives and strategies similar to those of the Fund and
which are managed by other, third-party investment advisers ("Comparable
Funds"). The Directors acknowledged that the Fund was less than two years old.
The Directors noted that, while the Fund's performance since inception was below
that of its Comparable Funds, the Fund's 2006 performance through July 31 was
exceeded by only one of its six Comparable Funds. The Directors also compared
the volatility of the Fund to that of its Comparable Funds. The Directors
observed that the Fund's volatility was below the median volatility of its
Comparable Funds and was the next-to-lowest of the six Comparable Funds.
The Directors considered the fees being charged by the Adviser for its
services to the Fund as compared to those charged to the Comparable Funds, and
as compared to the fees charged by UBS Fund Advisor, L.L.C. ("UBSFA") and its
affiliates for other UBS alternative investment products. The information
presented to the Directors showed that the management fee being charged to the
Fund was higher than the median management fees being charged to its Comparable
Funds, although lower than the highest management fee being charged to a
Comparable Fund. The Directors also noted that the Fund was not subject to any
incentive fee. In comparing the management fee being charged to the Fund to the
fees being charged by UBSFA and its affiliates for other UBS alternative
investment products, the Directors observed that although the combination of its
management fee and administrative services fee was the third highest being
charged to an Alternative Investment Group multi-manager Fund, the Fund was not
subject to any incentive fee. In light of the foregoing, the Directors felt that
the management fee being charged to the Fund was appropriate.
The Directors also considered the profitability of UBSFA both before
payment to brokers and after payment to brokers and concluded that the profits
to be realized by UBSFA and its affiliates under the Fund's Investment Advisory
Agreement and from other relationships between the Fund and UBSFA were within a
range the Directors considered reasonable and appropriate. The Directors also
discussed the fact that the Fund was not large enough at that time to support a
request for breakpoints due to economies of scale. The Directors determined that
the fees were reasonable. The Directors concluded that approval of the
Investment Advisory Agreement was in the best interests of the Fund and its
shareholders.
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 Services Inc.'s, Alternative Investment Group at
800-580-2359.
- ----------------------------------------------------------------------------------------------------------------------
Number of
Portfolios
in Fund
Complex Other Trusteeships/
Term of Office Overseen Directorships Held
and Length of Principal Occupation(s) by by Director Outside
Name, Age and Address Time Served(1) During Past 5 Years Director(2) Fund Complex
- ----------------------------------------------------------------------------------------------------------------------
INDEPENDENT DIRECTORS
- ----------------------------------------------------------------------------------------------------------------------
George W. Gowen (77) Term -- Law partner of Dunnington, 13 None
UBS Financial Services Inc. Indefinite Bartholow & Miller
1285 Avenue of the Americas Length--since
New York, NY 10019 Commencement of
Director Operations
- ----------------------------------------------------------------------------------------------------------------------
Stephen H. Penman (60) Term -- Professor of Financial 13 None
UBS Financial Services Inc. Indefinite Accounting of the Graduate
1285 Avenue of the Americas Length--since School of Business, Columbia
New York, NY 10019 Commencement of University
Director Operations
- ----------------------------------------------------------------------------------------------------------------------
INTERESTED DIRECTOR
- ----------------------------------------------------------------------------------------------------------------------
Meyer Feldberg (64) (3) Term -- Senior Advisor for Morgan 35 Director of:
UBS Financial Services Inc. Indefinite Stanley & Co. Incorporated and Primedia, Inc.,
1285 Avenue of the Americas Length--since Dean Emeritus and Professor at Federated
New York, NY 10019 Commencement of Columbia Business School Department Stores,
Director Operations Inc.,
Revlon, Inc. and
SAPPI, Ltd.
- ----------------------------------------------------------------------------------------------------------------------
OFFICERS WHO ARE NOT DIRECTORS
- ----------------------------------------------------------------------------------------------------------------------
Douglas Lindgren (45) Term -- Managing Director of UBS N/A N/A
UBS Financial Services Inc. Indefinite Financial Services Inc. since
1285 Avenue of the Americas Length--since June 2005
New York, NY 10019 July 19, 2005 Prior to June 2005, Managing
Principal Executive Officer Director and Head of
Alternative Investments at
United States Trust Company,
N.A.
- ----------------------------------------------------------------------------------------------------------------------
Philip Tazza (48) Term -- Executive Director of UBS N/A N/A
UBS Financial Services Inc. Indefinite Financial Services, Inc. since
51 West 52nd Street Length--since May 22, 2006. Prior to May 22,
New York, NY 10019 May 22, 2006 2006, Head of Regulatory
Principal Accounting Officer Implementation and Chief
Operating Officer of Investment
Management at Bank of America
- ----------------------------------------------------------------------------------------------------------------------
Frank S. Pluchino (47) Term -- Assistant Director of N/A N/A
UBS Financial Services Inc. Indefinite Compliance of UBS Financial
51 West 52nd Street Length--since Services Inc. since 2003
New York, NY 10019 July 19, 2005 Prior to 2003, Chief Compliance
Chief Compliance Officer Officer of LibertyView Capital
Management, Inc., an investment
adviser, and LibertyView
Alternative Asset Management,
Inc., an NASD broker-dealer
- ----------------------------------------------------------------------------------------------------------------------
<FN>
(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 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 the cast by all Members.
(2) Of the 35 funds/portfolios in the complex as of December 31, 2006, 22 are
advised by an affiliate of UBS Financial Services Inc. and 13 comprise UBS
Financial Services' Alternative Investment Group of Funds.
(3) Mr. Feldberg is an "interested person" of the Fund because he is an
affiliated person of a broker-dealer with which the UBS Financial Services
Alternative Investment Group of Funds does business. Mr. Feldberg is not an
affiliated person of UBS Financial Services or its affiliates.
</FN>
UBS FINANCIAL SERVICES INC. IS A SUBSIDIARY OF UBS AG
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 UBS Financial Services Inc.'s Alternative Investment
Group at 800-580-2329.
UBS FINANCIAL SERVICES INC. IS A SUBSIDIARY OF UBS AG 2
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
- ----------
(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
$64,140 in 2006 and $41,539 in 2005. Such audit fees include fees
associated with annual audits for providing a report in connection
with the registrant's report on form N-SAR.
Audit-Related Fees
- ------------------
(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 $5,000 in 2006 and $4,500 in 2005. Audit related fees
principally include fees associated with reviewing and providing
comments on semi-annual reports.
Tax Fees
- --------
(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 $78,000 in 2006 and
$63,000 in 2005. Tax fees include fees for tax compliance services and
assisting management in preparation of tax estimates.
All Other Fees
- --------------
(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 in 2006 and $0 in 2005.
(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 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 adviser that provides ongoing
services to the registrant for each of the last two fiscal years of
the registrant was $3.0 million in 2006 and $3.1 million in 2005.
(h) The registrant's audit committee of the board of directors has
considered whether the provision of non-audit services that were
rendered 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
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 Proxy Voting Policies are as follows:
UBS FUND ADVISOR, L.L.C.
PROXY-VOTING POLICIES AND PROCEDURES
A. INTRODUCTION
UBS Fund Advisor, L.L.C. (the "Adviser") votes proxies for each fund
(each a "Fund," collectively, the "Funds") for which it acts as the Adviser and
as such, has adopted these Proxy-Voting Policies and Procedures (these "Policies
and Procedures"). The Funds are funds of funds that invest primarily in
unregistered investment vehicles ("Investment Funds") which have investors other
than the Fund. Generally, each of the Funds may invest a majority of its assets
in non-voting securities of Investment Funds. The Investment Funds typically do
not submit matters to investors for vote; however, should a matter be submitted
for vote and provided the Fund holds voting interests in the Investment Fund,
the Adviser will vote proxies in what it views to be in the best interest of the
Fund and in accordance with these Policies and Procedures. The Board of
Directors (the "Board") of the Funds has adopted these Policies and Procedures
as the Funds'. The Adviser will notify the Board of any changes to the Adviser's
Policies and Procedures.
B. FIDUCIARY DUTY
Proxy-voting is an integral part of the Adviser's investment management
process. The Adviser is under a fiduciary duty to act in the best interest of
the Fund(s) and to vote in a manner it believes to be consistent with efforts to
maximize shareholder value. This authority carries with it a responsibility on
the Adviser's part to analyze the issues connected with the votes and to
evaluate the probable impact of its vote on the value of the investment.
C. VOTING PROCEDURES
Generally speaking, where the Adviser holds voting rights, it will vote
consistent with management's recommendations on routine matters, absent a
particular reason to the contrary. Non-routine matters will be voted on a
case-by-case basis taking into consideration the best interests of the Fund(s)
and the maximization of shareholder value.
D. CONFLICTS OF INTEREST
Any circumstance or relationship which would compromise a portfolio
manager's objectivity in voting proxies in the best interest of the Fund(s)
would constitute a conflict of interest. In such situations, the Adviser will
address any material conflicts before voting proxies on behalf of the Fund(s).
As a matter of policy, the Adviser will presume the existence of a conflict of
interest for proxy-voting purposes in situations where:
> A current investor of the Adviser is affiliated with an Investment
Fund soliciting proxies or has communicated its view to the Adviser on
an impending proxy vote;
> The portfolio manager responsible for proxy-voting has identified a
personal interest in the Investment Fund soliciting proxies or in the
outcome of a shareholder vote;
> Members of the portfolio management team, including the portfolio
manager responsible for proxy-voting, and/or members of senior
management, have a personal interest through investment in the
Investment Fund soliciting proxies;
> Members of the Investment Fund or a third party with an interest in
the outcome of a shareholder vote have attempted to influence either
the Adviser or the portfolio manager responsible for voting a proxy.
Employees of the Adviser should be aware of the potential for
conflicts of interest that may result, on the part of the Adviser, from
employees' personal relationships or special circumstances that may result as
part of the Adviser's normal course of business. Employees who become aware of
any such conflicts of interest are under obligation to bring them to the
attention of the Chief Compliance Officer or Legal who will work with
appropriate personnel of the Adviser to determine the materiality of the
conflict.
ADDRESSING MATERIAL CONFLICTS OF INTEREST. A conflict of interest will
be considered material to the extent it is determined that such conflict has the
potential to influence the Adviser's decision-making in the proxy-voting process
and the determination will be based on an assessment of the particular facts and
circumstances.
If it is determined that a conflict of interest is not material,
the Adviser may vote proxies notwithstanding the existence of the conflict. The
Adviser shall maintain a written record of all conflicts of interest identified,
the materiality determination, and the method used to resolve the material
conflict of interest.
If it is determined that a conflict of interest is material, the Adviser's Chief
Compliance Officer or Legal will work with appropriate personnel of the Adviser
to determine a resolution before voting proxies affected by such conflict of
interest. Resolutions may include:
> Disclosing the conflict and obtaining consent before voting (which
consent in the case of the Fund(s) may be obtained from the Fund's
board of directors);
> Engaging another party on behalf of the Fund(s) to vote the proxy on
its behalf;
> Engaging a third party to recommend a vote with respect to the proxy
based on application of the policies set forth herein; or
> Such other method as is deemed appropriate under the circumstances
given the nature of the conflict.
E. ANNUAL FILING OF PROXY VOTING RECORD
The Adviser will file an annual report of each proxy voted with
respect to the Fund(s) during the preceding twelve-month period ended June 30 on
Form N-PX, no later than August 31st of the then year.
F. PROXY-VOTING DISCLOSURES
Where the Funds hold voting rights, the Funds shall include in their
Form N-CSR (Certified Shareholder Report): (i) a description of these Policies
and Procedures; (ii) a statement that a description of these Policies and
Procedures is available without charge, upon request by taking the specified
action; and (iii) a statement that information regarding how the Adviser voted
proxies relating to the Funds during the most recent 12-month period, is
available upon request, without charge by taking the specified action.
G. CONTROL PROCESS
To ensure compliance with these Policies and Procedures, at the time of a fund's
investment in an Investment Fund, the subscription document will be reviewed to
ensure that voting rights have been waived, as is current practice. In the event
a fund does not waive voting rights, the Adviser will adhere to these Policies
and Procedures.
H. RECORD-KEEPING
The Adviser shall maintain the following records relating to proxy-
voting in an easily accessible place for a period of not less than six years
from the end of the fiscal year during which the last entry was made on such
record, the first two years on-site:
> A copy of the Adviser's current Proxy-Voting Policies and Procedures;
> A record of each vote cast by the Adviser on behalf of the Fund(s);
> A copy of each proxy solicitation (including proxy statements) and
related materials with regard to each vote;
> A copy of any document relating to the identification and resolution
of conflicts of interest;
> A copy of any document created by the Adviser that was material to a
proxy -voting decision or that memorialized the basis for that
decision; and
> A copy of each written investor request for information on how the
Adviser voted proxies on behalf of the Fund(s), and a copy of any
written response from the Adviser to any (written or oral) investor
request for information on how the Adviser voted proxies on behalf of
the Fund(s).
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
UBS MULTI-STRAT FUND, L.L.C.
PORTFOLIO MANAGER DISCLOSURE
The Fund is managed by a portfolio management team, each member of
which (each, a "Portfolio Manager" and together, the "Portfolio Managers") is
responsible for the day-to-day management of the Fund's portfolio. Norman E.
Sienko, Jr., the lead member of the portfolio management team, is primarily
responsible for the selection of the Fund's investments, and is jointly
responsible for the allocation of the Fund's assets among Investment Funds.
Russell Sinder and Joseph M. Sciortino, the other members of the portfolio
management team, are jointly and primarily responsible for the allocation of the
Fund's investments.
Mr. Sienko has served as a Portfolio Manager of the Fund since October
2004, and as head of the Adviser's portfolio management group since 1998. Prior
thereto, Mr. Sienko served from 1996 to 1997 as Product Manager, and from 1997
to 1998 as a Fund Manager in the UBS Financial Services Alternative Investment
Group. He is also currently an Executive Director of UBS Financial Services. Mr.
Sinder has been associated with the Fund since October 2004 and joined the
portfolio management team in 2005. Mr. Sinder has been associated with the
Adviser since 1998 and is also a Director of UBS Financial Services. Mr.
Sciortino has been associated with the Fund since December 2006 and joined the
portfolio management team at that time. Mr. Sciortino has been associated with
the Adviser since 2006 and is also an Associate Director of UBS Financial
Services. Previously, he served as Senior Analyst at Lake Partners, Inc. from
April 2001 though August 2006.
The Fund's Portfolio Managers manage multiple accounts for the Adviser,
including registered closed-end funds and private domestic and offshore pooled
investment vehicles.
Potential conflicts of interest may arise because of the Portfolio
Managers' management of the Fund and other accounts. For example, conflicts of
interest may arise with the allocation of investment transactions and allocation
of limited investment opportunities. Allocations of investment opportunities
generally could raise a potential conflict of interest to the extent that the
Portfolio Managers may have an incentive to allocate investments that are
expected to increase in value to preferred accounts. Conversely, a Portfolio
Manager could favor one account over another in the amount or the sequence in
which orders to redeem investments are placed. The Portfolio Managers may be
perceived to have a conflict of interest if there are a large number of other
accounts, in addition to the Fund, that they are managing on behalf of the
Adviser. In addition, each Portfolio Manager could be viewed as having a
conflict of interest to the extent that one or more Portfolio Managers have an
investment in accounts other than the Fund. The Adviser periodically reviews the
Portfolio Managers' overall responsibilities to ensure that they are able to
allocate the necessary time and resources to effectively manage the Fund.
Other accounts may have investment objectives, strategies and risks
that differ from those of the Fund. For these or other reasons, the Portfolio
Managers may purchase different investments for the Fund and the other accounts,
and the performance of investments purchased for the Fund may vary from the
performance of the investments purchased for other accounts. The Portfolio
Managers may place transactions on behalf of other accounts that are directly or
indirectly contrary to investment decisions made for the Fund, which could have
the potential to adversely impact the Fund, depending on market conditions.
A potential conflict of interest may be perceived if the Adviser
receives a performance-based advisory fee as to one account but not another,
because a Portfolio Manager may favor the account subject to the performance
fee, whether or not the performance of that account directly determines the
Portfolio Manager's compensation.
The Adviser's goal is to provide high quality investment services to
all of its clients, while meeting its fiduciary obligation to treat all clients
fairly. The Adviser has adopted and implemented policies and procedures,
including brokerage and trade allocation policies and procedures, that it
believes address the conflicts associated with managing multiple accounts for
multiple clients. In addition, the Adviser monitors a variety of areas,
including compliance with Fund guidelines. Furthermore, senior investment and
business personnel at UBS Financial Services periodically review the performance
of the Portfolio Managers.
The Portfolio Managers' compensation is comprised primarily of a fixed
salary and a discretionary bonus paid by UBS Financial Services or its
affiliates and not by the Fund. A portion of the discretionary bonus may be paid
in shares of stock or stock options of UBS AG, the ultimate parent company of
the Adviser, subject to certain vesting periods. The amount of a Portfolio
Manager's discretionary bonus, and the portion to be paid in shares or stock
options of UBS AG, is determined by senior officers of UBS Financial Services.
In general, the amount of the bonus will be based on a combination of factors,
none of which is necessarily weighted more than any other factor. These factors
may include: the overall performance of UBS Financial Services and its
Alternative Investment Group; the overall performance of UBS AG; the
profitability to UBS Financial Services derived from the management of the Fund
and the other accounts managed by the Alternative Investment Group; the absolute
performance of the Fund and such other accounts for the preceding year;
contributions by the Portfolio Manager to assisting in managing the Alternative
Investment Group; participation by the Portfolio Manager in training of
personnel; and support by the Portfolio Manager generally to colleagues. The
bonus is not based on a precise formula, benchmark or other metric.
The following table lists the number and types of other accounts
advised by the Fund's Portfolio Managers and approximate assets under management
in those accounts as of the end of the Fund's most recent fiscal year.
NORMAN E. SIENKO, JR.
REGISTERED INVESTMENT COMPANIES POOLED ACCOUNTS OTHER ACCOUNTS
NUMBER OF NUMBER OF NUMBER OF
ACCOUNTS(1) ASSETS MANAGED ACCOUNTS(2) ASSETS MANAGED ACCOUNTS ASSETS MANAGED
---------- -------------- ---------- -------------- ---------- --------------
7 $2.37 billion 3 $165 million 0 N/A
RUSSELL SINDER
REGISTERED INVESTMENT COMPANIES POOLED ACCOUNTS OTHER ACCOUNTS
NUMBER OF NUMBER OF NUMBER OF
ACCOUNTS(3) ASSETS MANAGED ACCOUNTS(2) ASSETS MANAGED ACCOUNTS ASSETS MANAGED
---------- -------------- ---------- -------------- ---------- --------------
3 $908 million 1 $27 million 0 N/A
JOSEPH M. SCIORTINO
REGISTERED INVESTMENT COMPANIES POOLED ACCOUNTS OTHER ACCOUNTS
NUMBER OF NUMBER OF NUMBER OF
ACCOUNTS(3) ASSETS MANAGED ACCOUNTS(2) ASSETS MANAGED ACCOUNTS ASSETS MANAGED
---------- -------------- ---------- -------------- ---------- --------------
3 $908 million 1 $27 million 0 N/A
(1) Of these accounts, 5 accounts with total assets of approximately $1.27
billion charge performance-based advisory fees.
(2) All of these accounts charge performance-based advisory fees.
(3) Of these accounts, 2 accounts with total assets of approximately $633
million charge performance-based advisory fees.
None of the Fund's Portfolio Managers beneficially owns any interests in the
Fund.
(B) Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have been no material changes to the procedures by which the shareholders
may recommend nominees to the registrant's board of directors, where those
changes were implemented after the registrant last provided disclosure in
response to the requirements of Item 407(c)(2)(iv) of Regulation S-K (17 CFR
229.407) (as required by Item 22(b)(15) 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) UBS Multi-Strat Fund, L.L.C.
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By (Signature and Title)* /s/ Douglas Lindgren
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Douglas Lindgren, Principal Executive Officer
(principal executive officer)
Date March 8, 2007
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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/ Douglas Lindgren
----------------------------------------------------
Douglas Lindgren, Principal Executive Officer
(principal executive officer)
Date March 8, 2007
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By (Signature and Title)* /s/ C. Philip Tazza
----------------------------------------------------
C. Philip Tazza, Principal Accounting Officer
(principal financial officer)
Date March 8, 2007
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* Print the name and title of each signing officer under his or her signature.